Why Do We Stick with Poor Hiring Practices?

Iris Bohnet wrote in Harvard Business Review last month about the hiring process. She asked the question: Why do employers continue to use unstructured interviews as their primary method of evaluating candidates when this technique has many known flaws?   She points to many studies showing that unstructured interviews are not effective predictors of on-the-job effectiveness.  Biases plague the unstructured interview methodology.  Bohnet writes:  

Why do we stick with a method that so clearly does not work, when decision aids, including tests, structured interviews, and a combination of mechanical predictors, substantially reduce error in predicting employee performance? The organizational psychologist Scott Highhouse called this resistance “the greatest failure of I-O [industrial and organizational] psychology.”

The unwillingness to give up a much-loved evaluation approach seems to be driven by two factors: Managers are overconfident about their own expertise and experience, and they dislike deferring to more structured approaches that might outsource human judgment to a machine.

Bohnet argues for much more emphasis on procedures such as work-sample tests, structured interviews, and comparative evaluation.  These procedures help overcome many of the biases inherent in the unstructured interview process.    

Jimmy Kimmel on Uber's New Late Fee

Lands' End: Another J.C. Penney Scenario?

Columbia Business School Professor Rita McGrath asks an interesting question on her blog this week. She ponders whether the situation unfolding at Lands' End may be eerily similar to the fiasco that took place at J.C. Penney when Ron Johnson was hired as CEO. She's commenting about a Wall Street Journal feature story about the culture clash taking place at Lands' End as new CEO Federica Marchionni attempts to revitalize the apparel retailer. The former Ferrari and Dolce & Gabbana executive has taken over as CEO of the Wisconsin-based retailer, and she's trying to make the brand more fashionable. She tells the Wall Street Journal that her goal "is to evolve Lands’ End into a meaningful, global lifestyle brand.”  The key question:  Can she reignite growth at the firm without alienating traditional customers as well as her long-tenured employees?  

Why has a culture clash emerged? For starters, Marchionni has decided not to work primarily from the corporate headquarters. The Wall Street Journal reports:

As part of her contract, the Lands’ End board agreed to let Ms. Marchionni work primarily from an office in New York’s garment district—an arrangement that rubbed some in Dodgeville the wrong way, according to former employees. Her employment agreement says she must be in Wisconsin for holiday parties and other social events that the Lands’ End CEO “historically has attended.”  Joining her in Manhattan is a small group of fashion veterans including Joseph Boitano, a former Saks executive who serves as the company’s chief merchandising and design officer.

Marchionni has also been critical of some of her own company's clothes, describing certain traditional Lands' End items as "ugly" in one presentation.   There are other changes that have made some waves:  

The CEO ordered up a slate of new ads to run in the September issue of Vogue and other fashion titles. She commissioned celebrity photographer Bruce Weber to shoot a major holiday campaign. The full-page newspaper and magazine inserts showed patrician-looking models in coastal settings. Spiked red heels now featured alongside comfy slip-on moccasins.

Professor McGrath acknowledges that Lands' End faces substantial challenges and needs to change.  She wonders, however, whether Marchionni can lead in a way that brings her people along.  Can she create an inclusive vision for the key employees?   Or, will culture eat her bold new strategy for lunch?  I don't know the answer to these questions, but I cannot imagine how leading a company from 1,000 miles away makes much sense.  It creates problems at two levels.  First, symbolically, it sends a message to employees that you don't want to engage with them, be available to them, etc.  Second, substantively, it isolates you from the rank-and-file, making it more difficult for critical information (including bad news) to reach you in a timely manner.  

20 Years Later: The Mount Everest Tragedy

Source: National Geographic

This week marks the 20th anniversary of the tragedy that took the lives of Rob Hall,  Scott Fisher, and other members of their expeditions. Many of you may have read Jon Krakaeur's book, Into Thin Air, which chronicled the events of May 1996 in detail.  Others may have watched the Everest movie that came out last year.  Still others have seen the tremendous documentaries produced by David Breashears about the events of May 1996.  

As most of my blog readers know, I've conducted extensive research on the decision-making processes of Everest climbers.    As part of that research, I've spent a considerable amount of time learning about the events of May 1996, including through multiple conversations with the leaders of the IMAX expedition team, Ed Viesturs and David Breashears.   Ed and David turned around, while the Hall and Fisher teams continued up the mountain.   Later Viesturs and Breashears helped rescue the survivors of the tragedy that took place when a blizzard occurred.  

What are some lasting leadership lessons from that tragedy?  

1.  Great leaders exercise restraint.   As David Breashears has told me, the best leaders don't simply order you up the mountain no matter what.   They listen to others' ideas before expressing their views.  They must be willing to gather input from a variety of people.  Unfortunately, he says, some leaders are not willing to listen to dissenting views.   The best leaders create a climate of psychological safety, where everyone is willing to speak up.   After gathering input and advice from multiple sources, the leader can make a more informed and thoughtful decision.  

2.  Great leaders don't attribute all their past success to their own qualities and choices.  Instead, they acknowledge that past success hinged upon favorable environmental conditions, a strong team to support and assist them, an effective support network back at base camp and at home, and a significant dose of good fortune.   When leaders begin believing that past success is all about their own excellence, and fail to recognize other contributing causes, they get in big trouble.  

3.  Great leaders recognize how cognitive biases can impair decision making, particularly in stressful situations.  They don't escalate commitment to failing courses of action in the presence of substantial sunk costs.   In other words, climbers don't simply keep climbing because they have put so much into the expedition (money, effort, time, and other resources that they cannot get back).   You can't look back; you must look ahead.  Don't keep moving forward simply because  you don't want to waste the investment you have already made.  Don't throw good money, or good effort, after bad!  Other biases include confirmation bias (looking for data that confirms what you already believe) and compensatory behavior (taking more risk because you know a safety mechanism or system redundancy is in place; in Everest's case, carrying supplemental oxygen can create a false sense of security according to Ed Viesturs).  

4.  Great leaders don't build rigid plans.  As Dwight Eisenhower once said, "Planning is everything.  Plans are useless."   In other words, be incredibly prepared.  Be ready for all scenarios.  Prepare meticulously.  However, once the execution of your plan begins, be ready to adjust and adapt to conditions on the ground.  Don't build a rigid plan in a turbulent environment.  Retain flexibility.  Don't just try to work harder to "get back on plan" when things start unfolding in ways you did not predict.  In fact, great planning is not about predicting the future.  It's about preparing for multiple scenarios that might unfold in the future.  

5.  Great leaders build a team around a shared vision, not simply a common goal.  What do I mean by that?  The Hall and Fisher expedition team members certainly all had a common goal: to reach the summit (we might argue that the more appropriate goal is to return safely to base camp).  The problem, though, is that each person was focused on their own personal attainment of that goal.  They didn't strive necessarily to achieve the summit as a team.  Contrast that with the shared vision of the IMAX team there in May 1996.  They strove to put a fifty pound camera on top of the mountain.  They wanted to create a great documentary.  It was not about individual accomplishment; it was truly a shared vision to create something extraordinary.   

For more of my work on the 1996 Everest tragedy, see the HBS case study that I wrote, as well as the California Management Review article that I published.  In recent years, I also co-created (with Amy Edmondson) the Everest Leadership and Team Simulation, available from Harvard Business Publishing.  

A Conference Call in Real Life

Using Big Data to Create Better Presentations

Matt Abrahams has written a good article for Stanford Business School's Insights website. He describes the research conducted by Noah Zandan, founder and CEO of Quantified Communications. Zandan's company has used analytics to identify the key attributes of the most effective presentations by speakers and leaders of various kinds. Zandan's conclusions are based on the study of more than 100,000 presentations. Abraham's article is filled with great suggestions for improving your public speaking. Here are a few of the key points (excerpts below):

Avoid hedging language. Qualifying phrases such as “kind of” and hesitant language like “I think” can be beneficial in interpersonal communication, where they invite contribution and adjust your status relative to the person with whom you are conversing. But in contexts like presenting in public, they can reduce your credibility.

Vocal elements include volume, rate, and cadence. The keys to vocal elements are variation and fluency. Think of your voice like a wind instrument. You can make it louder, softer, faster, or slower. We are wired to pay attention to these kinds of vocal change, which is why it is so hard to listen to a monotonous speaker. In fact, even just a 10% increase in vocal variety can have a highly significant impact on your audience’s attention to and retention of your message.

Vital elements capture a speaker’s true nature — it is what some refer to as authenticity. For authenticity, Zandan’s team has found that the top 10% of authentic speakers were considered to be 1.3 times more trustworthy and 1.3 times more persuasive than the average communicator. Authenticity is made up of the passion and warmth that people have when presenting.  Passion comes from exuding energy and enthusiasm.

Going Public With Your Mistakes: The Brigham & Women's Hospital in Boston

Imagine a hospital that discusses its mistakes publicly.   Does that sound like a good idea?  Could it help advance the cause of patient safety.  Yesterday we learned that scholars at Johns Hopkins have conducted research demonstrating that medical errors are the third leading cause of death in the United States.   That's alarming in its own right, but especially so since many hospitals have been  trying to reduce medical accidents over the past decade.   

The Brigham & Women's Hospital in Boston has been trying to reduce errors, and now they have taken their efforts one step further.   They have decided to go public with a safety blog that they have been publishing internally for several years. I applaud their courageous decision. Karen Fiumara, senior director of patient safety at Brigham and Women’s Hospital, explains the decision to go public about the hospital's mistakes.  

Hospitals celebrate their safety records, but rarely discuss their mistakes. Yet it’s difficult, if not impossible, to improve safety without identifying and learning from errors. That’s why Brigham and Women’s Hospital has launched Safety Matters. This blog aims to describe mistakes made at the hospital along with steps the hospital is taking to prevent them in the future.  We began Safety Matters in 2011. At the time, it was an internal communication available only to Brigham and Women’s employees via the hospital’s intranet. One goal is to make sure that everyone on the staff knows that the hospital is committed to being open and transparent about mistakes and learning from them. Another goal is to convey that reporting mistakes is not only encouraged, but is also the right thing to do.  Another element of some blog entries is the “Just Culture Corner.” It helps promote a culture in which hospital staff and patients feel safe and supported when speaking up about mistakes and risks.

Safety Matters went public in January 2016. We did this for several reasons:

• It’s now more accessible to the entire staff, and can be read from home or a mobile device.
• It demonstrates to patients, prospective patients, and other stakeholders that the hospital is committed to transparency and continuous improvement.
• It can be a resource for other hospitals in the United States and around the world to provide safer patient care.

Do Ping Pong Sales Predict Tech Downturns?

Source: Wall Street Journal

Zusha Elinson has written a fun and thought-provoking article in today's Wall Street Journal.  The article is titled, "Is the Tech Bubble Popping?  Ping Pong Offers an Answer."   Elinson found that ping pong table sales decreased 50% in the first three months of 2016.   Venture capital financing decreased by 25% in the same time period.  Elinson cites information from retailers and wholesales indicating that firms such as Twitter, Intel, and Yahoo have all reduced or stopped their purchases recently.  

Is there any truth to the theory that ping pong sales are a leading indicator?  Who knows?!  However, it's worth noting that many large companies have purchased ping pong tables (and other games) in recent years, in hopes of emulating the culture of start-ups in Silicon Valley.   They have learned a hard lesson.  Buying ping pong tables does not create an innovative culture.  In fact, it does nothing really unless you transform the fundamental attitudes, beliefs, and values of the organization.  In fact, you create a skepticism in many employees if you add ping pong tables, but fail to change the shared norms, expectations, reward systems, and leadership style of the organization.   They see the move for just what it is - a superficial attempt to influence employee satisfaction without an underlying shift in how work actually gets done.  

Constraints Promote Creativity

Many people often think that creativity flourishes when people are not constrained in any way.  Give people total freedom to think and generate ideas, and they will be highly creative.  That's the conventional wisdom.  However, some research shows that constraints actually can enhance creativity.   The Boston Globe reported this weekend on a study by Catrinal Haught-Tromp.  The forthcoming article is titled, "The Green Eggs and Ham Hypothesis: How Constraints Facilitate Creativity."   The scholar chose this title because the highly creative book by Dr. Seuss only uses 50 words.   Haught-Tromp conducted experiments to examine whether constraints can stimulate creativity.   Haught-Tromp asked the research subjects to develop two-line rhymes for greeting cards. In some circumstances, she required the subjects to include a particular noun in their rhyme.  Outsiders judged the rhymes developed with this constraint to be more creative.  Moreover, she found that subjects working without the constraint tended to be more creative when developing a rhyme after they had worked in the constrained condition (as opposed to before they faced the constrained condition).  The constraint did not just generate more creativity in the moment; the effect seemed to persist.  

Is there a practical example of how constraints can fuel creativity.   Consider IDEO, one of the world's leading product design firms.  At first glance, when you walk into their offices, you might think that they provide their staff members the freedom to design as they wish.  However, a closer look reveals a clear method/process by which they work.  Moreover, as IDEO staff members brainstorm, they follow certain ground rules for how such sessions should take place.   In short, constraints do exist at the firm, and they seem to enhance rather than detract from the creativity of the solutions that they design.  

Funny Take on Interview Mistakes!

Five Dimensions of Employee Engagement

The Sloan Management Review published a piece recently about the connection between employee engagement and profitability growth. V. Kumar and Anita Pansari conducted research on employee engagement in a wide range of companies.  They first set out to define engagement, given that many people look at the concept differently.   They settled on a definition that encompassed five dimensions of engagement:

We wanted to use our discussions with managers and a review of the literature to understand how employee attitudes and behaviors affected company performance. This led us to define employee engagement as “a multidimensional construct that comprises all of the different facets of the attitudes and behaviors of employees towards the organization.”7 The five dimensions of employee engagement are: employee satisfaction, employee identification, employee commitment, employee loyalty and employee performance.

The scholars used their "employee engagement scorecard" to measure engagement in 75 companies in 7 different countries.  One year later, they examined profitability growth at 30 of those firms in depth.  Here's their conclusion:

After controlling for other relevant factors including GDP level, marketing costs, the nature of the business and the type of goods, we found that the highest level of growth in profits (10% to 15%) occurred in the group of companies whose employees were highly engaged; the lowest level of growth in profits (0% to 1%) occurred in the group of companies whose employees were disengaged.

Is Market Share a Useful Metric?

In a short article for Sloan Management Review, Neil T. Bendle and Charan K. Bagga argue that managers should be cautious about using market share as a key metric for their businesses.  I concur wholeheartedly with their concerns about using market share as a primary objective.  I believe that efforts to grow market share often cause managers to pursue misguided strategies that ultimately undermine competitive advantage and damage long-run profitability.   Bundle and Bagga argue:

In some markets, bigger can be better; the most obvious examples are markets with economies of scale. Companies in such markets can reduce their cost per unit by selling more — thus increasing overall profits. If you think you are in such a market, you should confirm that the economies of scale you think exist actually do. Economies of scale do not automatically apply to all markets. For example, consulting does not get substantially cheaper per hour to provide at higher volumes... In some settings, market share can be a proxy for power. Depending on the setting, relative size can matter, and having a bigger market share can encourage others to treat your company more favorably. For example, when it comes to dealing with retailers, a category leader such as Coca-Cola may be able to negotiate better deals than a weaker brand can; retailers need Coke on their shelves more than they may need a smaller brand. A similar logic applies to network goods, which are products for which the benefit to consumers increases when more people use them. For example, Facebook’s value to its members increases when more of its members’ friends use it. Overall, though, the research on the relationship between profits and market share is ambiguous. There is no general rule; the importance of market share varies from market to market.

Changing the Town Hall Meeting

We have all witnessed how town hall meetings can be dreadful.  The CEO and/or some other senior executive shares an update about the company.  Then, supposedly, he or she would like to answer questions from the staff.  However, few meaningful questions surface.  People do not want to ask the tough questions for fear of being viewed as a "troublemaker" who is challenging or undermining company leaders.  I heard from a senior executive today who has a solution to this problem.  At his firm, they use audience interaction software to enable participants to offer questions anonymously.  Furthermore, the software enables other staff members to "like" the question.  The software then ranks the question by the number of "likes" it has received.   Executives, therefore, can identify quickly and easily the questions on top of mind for their staff members.   It facilitates a much more meaningful and substantive discussion during the town hall meeting.  Naturally, we would like to move beyond the need for such software.  We would like to create a culture in which people do not fear asking the tough questions.  Until that type of climate has been created and reinforced, this type of software may provide a vehicle to begin to open up the dialogue within the firm.  

Eliminating the Four Flaws in Leadership Development

My newest article has been published in the Journal of the American Management Association.  The article its titled, "Eliminating the Four Flaws in Leadership Development."  Please click here to read it.

Uncertainty More Stressful Than Knowing with Certainty That Something Bad Will Occur

What's more stressful for you: knowing for sure that something bad is about to happen or being highly uncertain about a possible negative outcome? Archy de Berker, Robb Rutledge, and their fellow researchers examined this question in a study in Nature Communications. The scholars conducted an experiment in which participants played a computer game. In the game, subjects looked under rocks, and in some cases, they discovered snakes. The subjects received an electric shock in the computer game if a snake appeared. The scholars embedded a great deal of uncertainty in the game, and it fluctuated significantly as participants played. They examined the stress that subjects experienced by measuring certain physiological responses (such as pupil dilation). Participants also reported their self-perceptions about stress as they played. 

What did the scholars find? Subjects experienced the most stress when uncertainty was at its highest levels. Perhaps most interesting though is the finding related to certainty vs. uncertainty. The Guardian recently reported on these findings: 

"So what’s the big deal? Everyone knows that uncertainty is stressful. But what’s not so obvious is that uncertainty is more stressful than predictable negative consequences. Is it really more stressful wondering whether you’ll make it to your meeting on time than knowing you’ll be late? Is it more stressful wondering if you’re about to get sacked than being relatively sure of it? De Berker’s results provide a resounding “yes”."

What's the implication for business leaders? You might be hesitant about communicating bad news because you know it will cause stress for others in your organization. However, this research indicates that the uncertainty leading up to a negative consequence could be much more stressful than knowing for sure that something bad will happen. Keeping people in the dark does not help them; it may cause more harm than good.

Encouraging People to Ask for Help

The New York Times' Corner Office column, by Adam Bryant, featured an interview recently with Amy Pressman. She serves as President (and co-founder) of Medallia.   The firm provides customer experience management software for firms such as Paypal, Delta, Nordstrom, and GE Healthcare.  Pressman describes an important element of Medallia's culture in her interview.  Here's an excerpt:

We work hard to overcome the “impostor syndrome” that a lot of people feel. People present themselves with résumés of unbroken success. But none of us are perfect. Unfortunately, when we hit roadblocks and need help, many of us don’t feel like we can ask for it. So we’re essentially curtailing the pace at which we can learn, because it’s much harder to learn in the shadows without asking for help than to just come out and say, “I am really struggling with this. Please help me. What do I do?” A lot of people are hiding, and we have created environments where we do not learn quickly. Ultimately, the one sustainable competitive advantage that a company can have is a culture that enables its people and the entire organization to learn faster. Fast learning has to come from a place of people feeling safe to talk about what’s working and not working, of recognizing that their job is not to appear perfect but to get better. We run a week-long onboarding to expose new hires to all these ideas. Also, one afternoon during the week we tell them, “Go out and do something that is holding you back and scares you.” It sounds kind of faddish, but the exercise is actually really powerful. It makes a point: Don’t let the fear of failure — or even of imperfection — hold you back. 

I love the concept, and I'm curious about what the onboarding process entails at Medallia.  How does the firm inculcate these values right from the start?  How do they expose people to these ideas?   Most importantly, I love the goal that they have set out to achieve:  How do we create an environment that enables people to learn more quickly?  Every firm should ask themselves that question.  

The Impact of Body Language

Risky Business: How Low Self-Control Leads to Risky Choices

New research examines why people with low self-control may make riskier choices.  Scholars Uzma Khan, Jayson S. Jia, and Ab Litt conducted a series of experiments related to people's choices that impacted automobile safety, heart disease, gambling, and lung cancer.  Prior research has shown that people with low self-control tend to make riskier decisions.   These scholars wanted to know why that was the case.  What was the mechanism by which these people engaged in riskier behaviors?  Here's what they found:  

People perceive risk in two main ways: the probability that something bad will happen, and the consequences of those negative outcomes. And through a series of experiments, they found that those with low self-control focus more on the probability and pay less heed to the consequences.  For a real-life example, the researchers quizzed people on their health. They found that people with low self-control are more concerned if they are told their probability of contracting heart disease is twice as high rather than if they are told the consequences of heart disease are twice as bad as previously thought.   Khan, who studies behavioral judgment and decision-making, found the reverse to be true for people with high self-control, who tend to pay more attention to consequences and less to the probability of a risky outcome. This coincides with previous research showing that high-level executives pay less attention to the probability of negative outcomes. “Because they feel more in control, they think that outside odds don’t apply to them. Their behavior is, therefore, determined disproportionately by the consequence of the outcomes, such as the potential profits,” she explains.

The findings strike me as very interesting.  If we were purely rational decision makers, we would think in terms of expected values (probability multiplied by outcome).   Not only do we not think in such a calculating way about many choices, but we actually pay more attention to one element of expected value than the other, depending on our self-control.  That's a new twist on our prior understanding of how we can be "irrational" with respect to certain choices in life and in business.  What's the implication of this research?  Think carefully about how you craft messages to different audiences.  If you have an audience likely to exhibit low self-control, then focus on probability.  If you have an audience with high self-control, then focus your message on consequences:  "The outcome of this chain of events is very, very bad.  Here's the loss that could result."  

Don't Leave a Vacuum!

What happens when employees experience feelings of fear, uncertainty, and anxiety about the future direction of the organization? What if they are not clear about the plans for the future amidst some challenging financial circumstances? What if the organization's leaders have not explained the strategic direction clearly, concisely, and simply? It's pretty simple: as a leader, if you leave a vacuum, your people will fill it. How will they fill it? They will fill it with speculation, gossip, and assumptions. As a leader, you need to avoid that type of behavior. 

 You need to communicate clearly and frequently, so that no such vacuum exists. Don't leave room for fear and anxiety to fester. What if you don't have the future plans completely figured out? Don't wait until you have it all straightened out to communicate with your people. Tell them what you can about your plans, and explain the process you are using to clarify your course of action. Keep them updated on your progress in the planning process. Finally, make sure you keep you finger on the pulse of the organization, so that you know how people are feeling about the uncertainty facing the organization.  As Jack Welch once said, "You communicate, communicate, and communicate some more. Consistency, simplicity, and repetition is what it's all about."  

Locating Near Talent Pools

The Wall Street Journal writes today that firms are increasingly weighing availability of talent as they make location decisions.  Here's an excerpt:

Fifty years ago, companies opened new locations to be near lumber, copper, or resources needed for their businesses. “Today, people are the natural resources,” said Meredith Amdur, an analytics expert at advisory firm CEB. Facing a tight labor market and a shortage of skilled workers, many large companies say that a city or region’s population of desirable workers is now the top factor in location decisions.

The focus on talent makes a great deal of sense. However, I think firms have to think in terms of identifying areas where hidden gems might exist.  Yes, if you want programmers, you will find a great deal of talent in San Francisco.  However, you will be battling many top firms for that talent, and it will be pricey.  What if another city was home to some terrific universities, but it had a less competitive labor market?  Or, what if some less "prestigious" universities actually were producing great and somewhat underrated talent?  That's what I mean by finding the hidden gems.  

Find a Space that Inspires You

Sometimes, you need to get away from your usual routine, and your usual work area, so as to find inspiration.  The change of scenery can be a powerful stimulating mechanism.  Your mind can roam a bit, and your brain can make connections among ideas and concepts from disparate fields.  Here's entrepreneur Emrecan Dogan explaining to Stanford Insights how he has found inspiration as he has built his business (ScoreBeyond):

A few years ago I went through a period when I could not produce any ideas. My wife suggested I get out and go to the Museum of Modern Art in San Francisco. The art space was so stimulating, and I had a rush of ideas. I ended up sitting in the cafe for the rest of the day and wrote pages and pages of designs. I go there whenever I have a challenge.

Innovative Leaders Tolerate Mavericks

Harvard Professor and former Medtronic CEO Bill George has a terrific article in Fortune this week about what the best innovation leaders do.   He argues, among other things, that these leaders demonstrate a "willingness to tolerate mavericks and protect them from middle management."  Here's an excerpt:

The best innovators are rule-breakers who don’t fit the corporate mold. These people are often threatening to middle managers, many of whom adhere to standard practices. That’s why innovation leaders must protect their mavericks’ projects, budgets, and careers rather than forcing them into traditional management positions.

I think George has hit on something very important.  Innovators often run up against hurdles when they try to position what they are doing in the traditional organization.  Middle managers feel threatened, try to force innovators to follow existing procedures, apply the wrong kinds of metrics to evaluate their work, or worry too much about how new products might cannibalize existing sales.   Moreover, middle managers may be locked in mentally to pre-existing and well-proven business models.   Innovative leaders protect the innovators from these middle managers who might quash new ideas.  However, I would argue that the most important protectors might not be the CEOs that George profiles in his Fortune article.  Often, the key protectors are senior managers in the organization who serve as key champions or sponsors of innovation projects, and who create a protective buffer for these innovators to do their work.   The CEO can only do so much. These folks a layer or two down in the organization must also serve in this maverick-tolerating and maverick-protecting role.  

Tips for Delivering an Awesome Elevator Pitch

Inc.'s Glenn Leibowitz has written a good article with three tips for delivering an impactful elevator pitch.   

First, he argues that you must create three different versions (one-liner, 30-second nugget, and 60-second double-click).   I think it's good advice for two reasons.  You will have different occasions at which to deliver your pitch, and you may want to draw on different versions for these contrasting occasions.  Moreover, boiling a 60-second pitch down to a shorter version forces you to think critically about what is absolutely the essence of your argument.   

Second, Leibowitz explains that you should tell a story.   He says, "You are the protagonist --the hero -- of your own story, and you're on a mission to achieve a goal: "Build a new business", "grow an existing business", "move into a position of greater responsibility."  And, like any good hero, you probably face challenges and obstacles that you'll need to overcome if you hope to achieve your goal.

Finally, Leibowitz argues that you should practice the pitch on a friend, and ask them to play back what they have heard.  He explains that you may get some good ideas from them about how to deliver the pitch, since they may choose different words and phrases to communicate your ideas.  I would add another reason for why taking this approach can be effective.  You may hear back something quite different than what you meant to say.  That unexpected response from your friend will tell you that you need to clarify your pitch.   

Are Millennials Really All That Different?

Fast Company's Jared Lindzon has written a good article this week about the myth vs. reality when it comes to millennials and their differences relative to those of us from other generations.  She draws upon the work of Jessica Kriegel, a researcher from Drexel University.   Here's an excerpt from Lindzon's article:  

When Jessica Kriegel set out to write her doctoral dissertation on the unique attributes of the millennial generation, she discovered one major problem: There weren’t any.  "As I was reading all of the different books, research articles, and peer-reviewed studies on generational difference, I started to realize how much contradiction there is in the literature," says Kriegel, who earned a PhD in educational leadership with a specialization in human resources management from Drexel University in 2013. "I realized it's all kind of made up. There's not a lot of hard data that supports any of these assumptions. It's all anecdotal, case studies, research studies with 200 people that they apply to the broader population, and it's really damaging... People are using the stats to sell whatever it is they're selling, and journalists are using the stats to tell a compelling story, whether one exists or not," she says. "It's way more interesting to say, 'We figured out millennials, they are X,' than it is to say, 'Well, we can't really label because that's stereotyping, and so in reality we're going to just continue to remain vague about what we know."

Netflix: Geography, Age, Gender Not Good Predictors

David Morris wrote an article this week for Fortune titled, "Netflix: Geography, Age, and Gender are 'Garbage' for Predicting Taste." Morris writes, 

"'Geography, age, and gender? We put that in the garbage heap,' VP of product Todd Yellin said. Instead, viewers are grouped into “clusters” almost exclusively by common taste, and their Netflix homepages highlight the relatively small slice of content that matches their taste profile. Those profiles could be the same for someone in New Orleans as someone in New Delhi (though they would likely have access to very different libraries)."

Why is this statement so fascinating?  To me, it speaks directly to Netflix's competitive advantage.  If geography, age, and gender were, in fact, accurate predictors of viewers' preferences, then Netflix would have a far less formidable advantage over rivals.  Why?  Well, those variables are easy to identify and measure.  Others can get access to that data quite easily and build predictive algorithms using that information.  However, if more accurate predictive algorithms involve data that are not as publicly available, then Netflix has a key advantage.  In other words, if the predictive power rests with variables that come from proprietary data that Netflix has collected about us, then the sustainability of Netflix's advantage over competitors rises substantially.  The same holds true for any company trying to take advantage of "big data" to develop predictive algorithms.   The key is to unearth variables that matter, but hopefully, variables that are not easily identified and measured by others.  

Andy Grove: Silicon Valley Legend

Source: Time magazine

Andy Grove died this week.   A Silicon Valley legend, Grove led Intel for many years.  In 1997, Time named him its man of the year for his profound impact on society as the leader of one of the firms behind the computer revolution.  

Grove wrote one of my favorite CEO-authored books of all time - Only the Paranoid Survive.  In the book, he discusses the importance of constructive conflict as a means of making sound decisions particularly at strategic inflection points.   Here's an excerpt:

It is important to realize what the purpose of these debates is and what it isn't.  Don't think for a moment that at the end of such debates all participants will arrive at a unanimous point of view.  That's naive. However, through the process of presenting their opinions, the participants will refine their own arguments and facts so that they are in much clearer focus.  Gradually all parties can cut through the murkiness that surrounds their arguments, clearly understand the issues and each other's point of view.  Debates are like the process through which a photographer sharpens the contrast when developing a print.  The clearer images that result permit management to make a more informed - and more likely correct - call.  The point is strategic inflection points are rarely clear.  Well-informed and well-intentioned people will look at the same picture and assign dramatically different interpretations to it.  So it is extraordinarily important to bring the intellectual power of all parties to this sharpening process. 

Empathy for Workers, not just Users

Much attention has focused in recent years on the need for product developers to demonstrate empathy for the users, so as to understand how products can be improved to suit their needs.  Empathy is at the heart of human-centered design.   However, more attention should also be focused on the notion that leaders need to show empathy for their front-line employees just as much as they should for their customers.   Here's Kamakshi Sivaramakrishnan, CEO of Drawbridge, explaining to Adam Bryant of the New York Times how important empathy is to her leadership style:

The one thing that has remained consistent is that I’ve always respected people who lead from the front. A sense of empathy is extremely crucial to being a good leader. And it comes much more naturally if you’ve walked in their path.  The best way to inspire respect in people is when you can do what they’ve done or when you’re in the trenches with them. You can’t do that every minute of every day, but that is certainly something that I have respected in strong leaders.

The Downside of Employee Recognition Programs

Could there be a potential downside to non-monetary award programs for employees? Management scholars Timothy Gubler, Ian Larkin, Lamar Pierce set out to examine this important question. They collected data from an attendance award program at an industrial laundry plant. The company recognized employees with perfect attendance at an all-hands meeting. From among those recognized, one person's name was randomly selected to receive a $75 gift card. 

The researchers discovered that people did respond positively to the incentive for perfect attendance. However, people also tried to game the system, and their attendance record sagged after they lost eligibility for the recognition. The scholars also found that, "The awards crowded out intrinsic motivation in internally-motivated employees, who were already performing well by coming on time in the absence of rewards. These employees had increased tardiness after the program was implemented and they lost eligibility." In other words, the recognition program caused a drop in motivation among those workers already doing the right thing with regard to attendance.  The drop in internal motivation by these good employees led to a slight drop in productivity in the plant overall. Gubler explained the findings to Science Daily:

"Conscientious internally-motivated employees who were performing well before the award program was introduced felt the program was unfair, as it upset the balance of what was perceived as equitable or fair in the organization. So their performance suffered -- not just in terms of their attendance but also through a motivational spillover that affected other areas of their work -- including productivity."

What's the lesson here?  I do not think we should conclude that organizations should not recognize the good work of their employees.  However, we should think about what precisely we are rewarding, and how it might affect the behavior of our best employees.  They might already be engaging in the behaviors we wish to encourage.  By rewarding people for what our best employees are already doing, we might be demotivating our stars.  

How We Teach Design Thinking at Bryant University

Holacracy at Zappos

Several years ago, Tony Hsieh (founder and CEO of Zappos) made a dramatic change in the company's organizational structure and culture.   The online retailer had achieved a sterling reputation for customer satisfaction and employee engagement since its founding, and that success led to an acquisition by Amazon.  However, Hsieh has always been an innovator, and he wanted to try a different form of organization.  He implemented "holacracy" or a self-management approach.  The results have been mixed, to say the least.  Here's an excerpt from a Fortune article about Zappos:

The emphasis on employees—to the near exclusion of the usual metrics used to evaluate business—has made Zappos, owned by Amazon since 2009, a stalwart on Fortune’s annual list of the 100 Best Companies to Work For. It has been so celebrated for its 10 core values—which include “Create fun and a little weirdness” and “Build open and honest relationships with communication”—that the company has its own consulting unit to help others emulate the Zappos way.But this year, nearing the third anniversary of a shift from a traditional management structure to “holacracy,” a system that replaces hierarchies and bosses with “self-management,” something is different. In between the rapping and the report on the company’s “Pawlidayz” initiative to support pet adoptions, Hsieh, 42, takes to the stage to report disappointing news. He announces that scores on Fortune’s Best Companies to Work For survey have tumbled on 48 of 58 questions. Indeed, Zappos has fallen off the overall list for the first time in eight years. Two questions that generated particularly dismal results: Do employees think management has “a clear view of where the organization is going and how to get there”? And do managers “avoid playing favorites”?

I've been following Zappos for many years.  In fact, I visited the company in 2009 just prior to the Amazon acquisition.   I admire their ability to delight customers and engage their employees.  However, this move has created many problems.   I have three thoughts on this radical shift at Zappos. First, the organization has always adopted the notion that you can achieve great success by putting employees first.  However, I wonder whether this move to holacracy is truly in the best interests of employees.  Creating such confusion and ambiguity can be harmful to many employees.   No wonder then that many employees have left, some as a result of a buyout offer the company provided.  In the end, confusing employees could harm the ability to delight customers.  Second, Fortune reports that Hsieh made this move because he felt that Zappos was becoming too bureaucratic.  However, removing hierarchy does not equate to reducing bureaucracy.   In fact, holacracy brought with it many rules and procedures for how things should get done now.  Many meetings ensued as well.  Some have described holacracy as "doctrinaire."  In other words, the new approach may, in fact, be quite bureaucratic, but just in a different way.  Third, Hsieh purportedly hoped to reduce politics at the organization.  However, political behavior is not simply an outgrowth of hierarchy.  Politics emerges for a variety of reasons in organizations.  A lack of clarity about decision rights and organizational responsibilities, coupled with unclear mechanisms for employee evaluation, can actually lead to enhanced political behavior.  

Meg Whitman: Listening to Millennials

Forbes has a great interview with Meg Whitman this week.  In it, she talks about listening carefully to millennials in her organization.  Here's an excerpt:  

Whitman says “entitled is too strong a word” to define new graduates, but even that isn’t so bad. In fact, the impatience of today’s youth is useful at a $50 billion sales corporation like Hewlett Packard Enterprise. “They refuse to work on things that do not matter,” she says. She receives emails frequently from young hires complaining that a project they are working on isn’t going anywhere. That’s surprising, but it’s also useful.  “You would be surprised how many projects we’ve killed because a 22-year-old says, ‘That’s stupid,’ ” Whitman told the audience. “It’s a little annoying honestly.”

I've argued in the past that senior executives need to listen to young people.  They hear about new trends, ideas, and perspectives from these people.  Moreover, they often represent a key target market for their goods and services.  Finally, as one executive told me, "They are stupid enough to tell me the truth."  It made me laugh, but it was also a profound statement.  He meant that these young people did not worry about offending the boss or losing their job.  They were more willing to speak their mind, in a way that some older workers were not in his organization.   Young people do not have the experience to always know the right answers on tough issues, but they bring a fresh lens to problems.  You do not have to agree with them, or give them their way, but you can learn from them.  

Controversy for Jessica Alba at The Honest Company

Source: Wall Street Journal

By now, you all know the story of actress-turned-entrepreneur Jessica Alba.   Four years ago, she co-founded The Honest Company.   The firm aimed to provide families with eco-friendly products such as diapers and cleaning supplies that would not be harmful to children. The Honest Company enjoyed remarkable success, skyrocketing to a valuation of $1.7 billion as of August 2015. Now the Wall Street Journal reports that the firm may have some problems with one of its products. The newspaper explained: 

One of the primary ingredients Honest tells consumers to avoid is a cleaning agent called sodium lauryl sulfate, or SLS, which can be found in everyday household items from Colgate toothpaste to Tide detergent and Honest says can irritate skin. The company lists SLS first in the “Honestly free of” label of verboten ingredients it puts on bottles of its laundry detergent, one of Honest’s first and most popular products. But two independent lab tests commissioned by The Wall Street Journal determined Honest’s liquid laundry detergent contains SLS.

The company has objected to these conclusions.   Here is where it gets very interesting.   The Honest Company showed the Wall Street Journal a certificate from its supplier, indicating that the laundry detergent had zero SLS content.  The supplier, Earth Friendly Products LLC, told the newspaper that they obtained the document from their supplier, Trichromatic West Inc.  The Wall Street Journal contacted that chemical supplier.  Here is what the firm told the newspaper: 

"Trichromatic told the Journal the certificate wasn’t based on any testing and there was a 'misunderstanding' with the detergent maker. It said the 'SLS content' was listed as zero because it didn’t add any SLS to the material it provided to Earth Friendly and 'there would be no reason to test specifically for SLS.' It said the product in question 'was fairly and honestly represented' to its customer. Honest said it didn’t deal directly with Trichromatic and declined to comment further on the certificate. Earth Friendly reiterated that it relied on Trichromatic to test the ingredient." 

What's the lesson here?  Companies need to have visibility deep into their supply chain.  They need to understand precisely how their product is being manufactured and provided to them.  Such visibility proves especially important if a firm is making claims to consumers about how healthy, eco-friendly, organic or otherwise "good for you" those products are.   A company selling to end users cannot simply rely on its direct supplier to monitor and control other suppliers effectively.   If there's ever a good lesson for every supply chain professor to teach, here's one that certainly fits the bill.  

Vertical Integration at Amazon

The Wall Street Journal reports today that Amazon will be moving aggressively to expand its in-house logistics capabilities.  Here is the lead of the article:

Amazon.com Inc. is taking to the air with a fleet of planes, part of a broader effort to reduce its inflated shipping costs. The Seattle retailer plans to shuttle merchandise around the U.S. using as many as 20 Boeing Co. 767 aircraft it will lease from Air Transport Services Group Inc. News of the deal sent the air-cargo transportation company’s shares soaring as much as 24% on Wednesday.

Does this vertical integration strategy make sense?  Let's start with the first sentence of the Wall Street Journal article.  Will the move reduce costs for Amazon?  One would find it hard to believe that Amazon can move goods around the country more efficiently than UPS and FedEx.  Clearly, they cannot match the efficiency of those established players at the moment.  One does not save money simply by doing something in-house.  Some managers think you save because you eliminate the profit margin earned by the supplier (UPS and FedEx in this case).  However, that is not the case because you must invest heavily in new assets in order to conduct this activity within the firm.  Moreover, you may not be as effective at conducting this activity as your supplier.  Thus, it's not clear that profits will automatically improve.

Why then would they pursue vertical integration?  There may be other valid reasons.  First, they may be trying to offset supplier power in this case. In other words, building an in-house capability gives them negotiating leverage with big players such as UPS and FedEx.   Second, UPS and FedEx may be worried about investing in assets specific to Amazon.   Economists call this situation the "holdup" problem that arises when transaction-specific assets are in place.  If UPS and FedEx invest in assets that are unique to Amazon, they may find themselves in a poor negotiating position vis a vis Amazon.  Thus, Amazon may have to invest in these assets because their partners are reluctant to do so.  Finally, Amazon may make their entire supply chain more efficient through closer integration of their ordering, fulfillment, and delivery services.   Conducting delivery in-house may enable that closer integration and perhaps some resulting efficiency.   

In the end, it will be interesting to see how the vertical integration strategy plays out.  Once again, though, Amazon will have more latitude than most publicly traded companies, because investors have proven to be quite patient with them.   Most publicly traded firms would have a hard time justifying this type of vertical integration strategy, which may take some time to pay off.  Amazon will likely have the time to develop this strategy and realize the efficiency gains over time.  

Google, High Performing Teams, and Psychological Safety

My former MBA student at Harvard, Charles Duhigg, has written an excellent article for the New York Times this week. The article is titled, "Google's Quest to Build the Perfect Team." Duhigg describes an initiative at Google code-named Project Aristotle. The company studied hundreds of teams to determine the attributes of the highest performing teams. They found it difficult to determine why some teams excelled while others did not.  Then they began to hone in on an important determinant of success.  Duhigg describes how the Google researchers focused on psychological safety.    The term comes from the groundbreaking work of my long-time friend Amy Edmondson, with whom I have developed case studies, written articles, and created the award-winning Everest Leadership and Team Simulation.   Edmondson defines psychological safety as the "shared belief held by members of a team that the team is safe for interpersonal risk-taking."  Duhigg explains what the Google researchers discovered:

When Rozovsky and her Google colleagues encountered the concept of psychological safety in academic papers, it was as if everything suddenly fell into place. One engineer, for instance, had told researchers that his team leader was ‘‘direct and straightforward, which creates a safe space for you to take risks.’’ That team, researchers estimated, was among Google’s accomplished groups. By contrast, another engineer had told the researchers that his ‘‘team leader has poor emotional control.’’ He added: ‘‘He panics over small issues and keeps trying to grab control. I would hate to be driving with him being in the passenger seat, because he would keep trying to grab the steering wheel and crash the car.’’ That team, researchers presumed, did not perform well.

Google discovered what Edmondson did many years ago.   High performance does not come from simply designing a team correctly.  It's about more than just picking the right people and putting in place the right goals, structure, rewards, etc.   You have to build the right climate.  That takes a great deal of work over time.   Leaders need to work at it persistently to establish and reinforce that safe climate.   Each team member must commit to maintaining that safe climate as well.  

Can Small Experiments Turn Around J.C. Penney?

The failures of J.C. Penney have been well-documented, particularly with regard to Ron Johnson's rocky tenure at the retailer.  Johnson embarked on a sweeping change initiative that failed miserably. He tried to hit a grand slam, making substantial changes in strategy, marketing, and merchandising all during his first few months on the job.  He did not take the time to test many of his new ideas before rolling them out nationwide.  The failures led to his ouster less than two years after taking the helm.

Now Marvin Ellison, a former Home Depot executive, is trying to turn things around.  While sales are moving in the right direction, the profit picture is still not sound.  Still, I think it's interesting to note that Ellison is focusing on small experiments as a means of innovating and changing the retailer. Here's an excerpt from a lengthy story in Fortune on the Ellison approach:

Question: If you wanted to buy a pair of men’s shoes at a department store, would you look for them next to (a) Men’s Clothing, or (b) Women’s Footwear?  Most shoppers would probably answer “a.” But at J.C. Penney, the 114-year-old retailing mainstay, the answer until very recently was “b.” Women make up about 80% of Penney’s clientele, and Penney managers believed that, generally speaking, those women were likely to buy shoes for their spouses and beaus, just as they did during the Kennedy administration.  “It was a terrible idea,” says Marvin Ellison, shaking his head as he walks a reporter through a Penney store in Frisco, Texas. “It took space away from women’s shoes, and it made it very difficult for men to want to buy shoes.”  

Ellison, Penney’s newly minted 51-year-old CEO, had a better idea. He ran a test to see whether men’s shoes would sell faster when showcased next to, say, men’s suits; once the data showed that they did, he instituted that change last summer across the company’s 1,000-plus stores. Since entrusting guys to buy their own brogues and boots, Penney has seen double-digit sales gains in footwear. “That reset has been one of the smartest things we’ve done,” says Ellison.  This Frisco store, not far from company headquarters in Plano, north of Dallas, serves as Penney’s retail living lab, and as he continues the tour, Ellison proudly points out similar changes. Fashion jewelry now sits closer to its Liz Claiborne apparel brand, so women can try on accessories to go with a dress they might buy. The decor has been gussied up at the store’s traffic-driving in-house salons....As the adage goes, “Retail is detail.” And if the details Ellison is addressing seem forehead-slap obvious, signs of how far J.C. Penney had fallen behind its rivals—well, welcome to his world.

Who Judges Creative Ideas Well... and Who Doesn't

Stanford Professor Justin Berg has conducted some interesting research on people's ability to evaluate creative ideas.   He asked over 300 circus professionals to forecast how popular a series of circus acts would be with audiences.   He then tracked their actual popularity with more than 13,000 circus audience members.  What did Berg find?   The people who actually created the new circus acts are not very good predictors of their success with audiences.  Interestingly, managers are not very good judges of their success either.   Who is a better judge than either the creators or the managers?  It turns out that peers of the creators were more accurate judges.  In particular, peers of the creators were much better at identifying the potential success of novel/unconventional circus acts.   The research found that, "managers tended to undervalue novel ideas in favor of conventional performances."  Interestingly, this finding about the lack of accuracy of managers' predictions holds despite that the fact that many managers were indeed creators themselves at one point in their careers. 

This finding reminded me of the value of the "Brain Trust" at Pixar.   At the animation studio, the brain trust is a group of people who gather to provide unvarnished feedback to the director of a new film.  The brain trust often includes a few higher-level managers at the firm.  However, the focus of the brain trust is peer-to-peer feedback.  Other directors offer their constructive criticism to the person leading a particular project.  The Brain Trust's success at Pixar seems to reinforce the findings of Berg's experimental research.  

Can You Have Too Much Grit?

Amy Morin writes in Forbes this week about an interesting new study about grit. The study, is titled "When the going gets tough: Grit predicts costly perseverance." The authors are Gale Lucas, Jonathan Gratch, Lin Cheng, and Stacy Marsella.  Note that a lengthy stream of research over the past decade or so has extolled the benefits of grit.  What is grit? University of Pennsylvania Professor Angela Duckworth defines grit as "perseverance and passion for long-term goals." Duckworth has studied grit extensively in her academic career. She has found that intelligence is not always a good predictor of academic or professional success. Grit matters. For instance, she has found that, at West Point, a cadet's grit score is the best predictor of success in "Beast Barracks" – the incredibly challenging, six week summer training regimen that all new cadets must endure. Grit predicted success more so than intelligence, leadership ability or physical fitness.

The new study by Lucas and her colleagues examines whether grit may come with some negative consequences.  Could it be possible for someone to exhibit "too much" grit in some circumstances, leading to poor results?  In a series of studies, Lucas and her colleagues had subjects tackle very challenging tasks.  What did they find? 

Across three studies, we found that higher grit individuals invest more effort and persist in tasks that are not going well. Grittier participants were less willing to give up when failing even though they were likely to incur a cost for their persistence. In Study 1, grittier participants were able to complete fewer problems in an anagram task where some of the items should have been passed over (i.e., unsolvable items). This provides initial evidence that they persisted at a cost to themselves, in this case the cost of getting to attempt more problems. Because we incentivized performance (with entries into a lottery for $100), it seems that grittier participants were specifically trading off greater chances at monetary gains to persist at the more difficult questions. Compared to participants with lower grit, grittier participants not only increase effort when they are losing a game (Study 2), but also are more likely to stay and keep fighting a losing battle when they could quit (Study 3).

The Decline of Sears

I've been saying for years now that Sears is doomed to fail.  I just don't see light at the end of the tunnel.  The company's revenues have been dropping for years.  Multiple restructurings have attempted to pare costs, but none of these moves have recharged sales.  Adam Hartung has a good article for Forbes about the reasons for the decline under CEO Ed Lampert.   Two of the reasons cited by Hartung are: "micromanagement in lieu of strategy" and "seeking confirmation rather than disagreement."   For more on the latter point, here's an excerpt from Hartung's article:

Seeking confirmation rather than disagreement. Mr. Lampert had no time for staff who did not see things his way. Mr. Lampert wanted his management team to agree with him – to confirm his Beliefs, Interpretations, Assumptions and Strategies — to believe his BIAS. By seeking managers who would confirm his views, and execute rather than disagree, Mr. Lampert had no one offering alternative data, interpretations, strategies or tactics. And, as Mr. Lampert’s plans kept faltering it led to a revolving door of managers. Leaders came and went in a year or two, blamed for failures that originated at the Chairman’s doorstep. By forcing agreement, rather than disagreement and dialogue, Sears lacked options or alternatives, and the company had no chance of turning around.

I would one other key point to Hartung's insightful analysis.  The Sears decline began long before Lampert took over.  Yes, he has mismanaged the retailer and accelerated its fall toward bankruptcy. However, in many ways, the crisis at Sears stretches back decades.  Harvard Business School Professor Jay Lorsch has said that gradual crises are often much more dangerous than sudden crises. When a sudden jolt occurs, firms often mobilize resources and attack the problem with a sense of urgency.  However, when a decline occurs over many years, beginning with small decreases in performance, managers often find ways to rationalize the diminishing results.  Denial sets in during these crises that unfold over lengthy periods of time.  Sears seems the perfect example of what Lorsch calls gradual crises.  

Whole Foods: Could it Get Stuck in the Middle?

Companies pursuing a differentiation strategy often face a serious challenge when low-cost competitors begin to infringe on their turf.   Some customers may opt for lower-priced options.  As growth slows for the differentiated player, it may try to boost profits by cutting costs.  If it goes too far though, the differentiated player may further erode willingness-to-pay on the part of some customers.  The company may get caught "stuck in the middle" at some point, no longer clearly as premium and differentiated as it once was, but clearly with higher costs and prices than the most efficient low-cost and low-priced rivals.   

Whole Foods faces this conundrum today, as reported this week by the Wall Street Journal.  The company faces slowing growth, in part because low-cost rivals such as Kroger have expanded their organic food offerings, while offering consumers much lower prices.  Whole Foods has responded by announcing a  plan to "save about $300 million a year by September 2017, partly by eliminating more than 2,000 jobs." That plan involves centralizing some key tasks and streamlining processes to generate more efficiency.   Whole Foods Co-CEO John Mackey understands the risks. He said, "We want to evolve the structure in such a way that we take out redundancy and waste, and at the same time though, we’re not diminishing the culture, the empowerment efforts that make Whole Foods Market special." 

 The Wall Street Journal article goes on to explain, "Transferring more authority to headquarters and automating more tasks risks harming Whole Foods’ customer-friendly reputation and turning off shoppers who place a high value on local products, such as blueberries and hometown pasta sauces, and niche items, said Jim Hertel, senior vice president at retail consulting firm Willard Bishop,a unit of Inmar Inc."   

Whole Foods clearly still has a solid position as one of the premium players in the supermarket industry.  However, the warning signs are there.  They must be careful about compromising their well-crafted and highly successful competitive positioning, as they cope with lower growth rates.  

Recognize What Happens When You Enter a Room

The best leaders recognize how they change the climate of a meeting when they enter the room.  They understand whether people are reticent to speak candidly in their presence.  They discern the way in which the dialogue changes, whether people become more or less energized, and how attentive people are to their statements.  They recognize the behaviors that they engage in that may have positive or negative impacts on the team.   Kellogg Professor Karen Cates talks about this issue in more depth in a recent Kellogg Insights article.  Here's an excerpt from the article, in which she describes social awareness and self-awareness - and the importance these concepts have for leaders: 

As Cates sees it, the biggest challenge for leaders moving up in an organization is to cultivate awareness. “People who rise in organizations are usually good self-managers,” she says. “They figure out a job and get it done. They also have great social skills—they know how to work with a team and communicate up and down the hierarchy. But as you get further along, awareness becomes the difference maker when it comes to energizing people.”

Cates distinguishes between two kinds of awareness: social awareness and self-awareness. Social awareness is more or less the ability to read a room. Self-awareness, by contrast, is the understanding that when you enter a room, you change the room. “Being aware of who you are and how you impact other people’s ability to do their work is one of the hallmarks of a good leader,” Cates says. Awareness, a concept linked to emotional intelligence, ties back to the issue of alignment: aware leaders are better able to foster trust by purposefully aligning values and policies—and are better at noticing when they are not in sync.

Varied Practice: Key to Learning New Skills

Charlie Sorrel writes about some fascinating new research on skill development in an article at Fast Company this week.  Sorrel describes research by Johns Hopkins University professor Pablo Celnik.   His studies focus on how people develop new skills.  Celnik has found that how you practice new skills affects the speed with which you acquire and develop those capabilities.    Celnik summarizes his findings:  "What we found is if you practice a slightly modified version of a task you want to master, you actually learn more and faster than if you just keep practicing the exact same thing multiple times in a row."   

Most athletes instinctively understand this finding.  No good coach directs his or her players to engage in the very same practice drills over and over.   Instead, the best coaches vary the routine a bit, while working on the same fundamental skills.   Consider a softball coach working on fielding ground balls.  He or she doesn't just keep pounding grounders at players and asking them to throw the ball to first base.   The coach finds a variety of ways to work on the key skills required to field grounders effectively.  

What's going on when we vary our practice routine a bit?   Celnik describes the process as "reconsolidation."  Natalie Tronson and Jane Taylor have conducted research on the neuroscience of memory.  Consolidation refers to the process by which memories stabilize and solidify over some period of time.   Tronson and Taylor describe reconsolidation as a "distinct process that serves to maintain, strengthen or modify memories."   People retrieve a memory and actively consolidate it again, and in so doing, they strengthen the existing memory.   

Interestingly, Celnik found that reconsolidation works best when you change the task being practiced slightly.   Too much change inhibits the reconsolidation process.   He explains, "If you make the altered task too different, people do not get the gain we observed during reconsolidation. The modification between sessions needs to be subtle."

Keeping Millennials Engaged at Work

Consultant Tracy Benson has written a terrific post this week for Harvard Business Review.  She focuses on how to engage Millennials at work.  Benson argues that work-life balance is important to them, and flexible work policies can attract them to your firm.  However, keeping them engaged, and retaining them, takes much more than just flexibility about hours and location of work. Engaging them requires providing them a compelling sense of purpose, building an entrepreneurial environment, loosening the traditional career ladder, and providing technology that promotes collaboration.  These suggestions make good sense.  Beyond that, I also think we need to challenge them.  They need to be stretched intellectually.  At the same time, we need to provide them excellent learning and development opportunities.  In that way, they will have the tools to succeed at these stretch assignments.  What if they face adversity or fail?  Many may fear failure a great deal.  They have been hovered over for years, and their self-esteem has been boosted relentlessly. Thus, we have to be ready to address their anxieties as they take risks, face adversity, and perhaps stumble badly at times. We have to challenge them to pick themselves up, fix their mistakes, and climb back on the bike. 

Brainstorming vs. Question-Storming?

I read a terrific article by Stephanie Vozza in Fast Company this week.  The article focuses on the notion of asking great questions.  She argues that the best leaders ask good questions so as to enhance their learning and engage more effectively in meetings.  Toward the end of her article, Vozza highlights a particular technique proposed by Hal Gregersen of the MIT Leadership Center.   He proposes that teams should employ "question-storming" sessions from time to time, particularly when they have reached an impasse on a tough issue.  Vozza explains:

Have your team generate at least 50 questions about the problem. At about question 25, Gregersen says it will stall. "I have watched this a hundred times around the world," he says. "People say: 'I don't have any more questions, I am stuck.' Keep going, because it's that pass forward that can sometimes give you some of the greatest questions."  Question storming a long series of questions gets you closer to the right questions that will give you the right answer, says Gregersen. "And that's where question storming complements traditional brainstorming," he says.

I like the notion.  In fact, I think question-storming might be useful at the front end of some challenging problem-solving processes, rather than simply as a tool for when a team is deadlocked.  Generating a list of thoughtful questions can insure that a team looks at a problem from multiple frames, and it can help inform the research that needs to be done to generate key insights about an issue.  

Behavioral Science & Effective Super Bowl Commercials

Great Super Bowl commercials engage us with wonderful stories and some humor as well.  Is there more to it than that though?  Could we use cognitive science to understand why some ads have a bigger impact than others?  Ad Age magazine sat down with Carey Morewedge, associate professor of marketing at Boston University.  Professor Morewedge explained how certain principles from the research on cognitive biases help us explain the power of certain very memorable commercials.  First, Morewedge points to the legendary "1984" ad from Apple as well as last year's BMW Super Bowl commercial.  In both cases, the representativeness heuristic is at work.   Ad Age's Michele Fabrizi explains: 

"Analogies transfer positive associations with a good, old idea to the new idea. In scenes evoking the well-known novel "1984," the hammer-wielding young heroine smashing the existing norm heralds the societal sea change promised by the introduction of Apple's Macintosh.  We see the same principle effectively used again -- albeit with ironic humor -- in last year's BMW "New Fangled Idea" (No. 23 on Ad Age's list). Here a look back at Katie Couric and Bryant Gumbel's failure to initially recognize the massive future impact of the internet is juxtaposed against their confused first response to an electric car."

Morewedge also points to the principle of loss framing as a mechanism by some commercials have a powerful impact on us.   Fabrizi explains: "Loss framing offers an approach to elevate the importance of a brand's benefits. This principle tells us that the pain of losing a thing we own is about twice as powerful as the pleasure we would feel acquiring it." FedEx ran an ad called "We Apologize" that took advantage of loss framing. It didn't focus on the benefits of FedEx's timely service. Instead, it showcased (with humor) the dangers of bad service and delayed deliveries. 

 

Learning by Doing

On Twitter the other day, I saw a great quote from Jerry Sternin. He said, ""It's easier to act your way into a new way of thinking, than think your way into a new way of acting."  Sternin proved the value of learning by doing in an amazing project on malnutrition in Vietnam, while he and his wife were working for Save the Children.   Most efforts to combat malnutrition in developing nations focused on big problems/solutions such as education, infrastructure, sanitation, etc.   Sternin took a different approach.  He talked to many families there, and he discovered that some children were better nourished than others, though they did not have higher incomes.  These mothers had adopted a different approach to meals.  What did he do?  He asked the malnourished families to prepare meals alongside these moms who had discovered a better approach.   The malnourished families learned by doing.  Sternin had much more impact on their behavior than previous programs.  Dan and Chip Heath explained in a column for Fast Company some time ago: 

He (Sternin) knew that telling the mothers about nutrition wouldn't change their behavior. "Knowledge does not change behavior," he told us in the spring of 2008 (Sternin passed away in December of that year). "We have all encountered crazy shrinks and obese doctors and divorced marriage counselors." The mothers would have to practice it. They'd have to act differently until the different started to feel normal.

The community designed a program in which 50 malnourished families, in groups of 10, would meet at a hut each day and prepare food together. The families were required to bring shrimp, crabs, and sweet-potato greens. The mothers washed their hands with soap and cooked the meal together. Sternin said that the moms were "acting their way into a new way of thinking." Most important, it was their change, something that arose from the local wisdom of the village. Sternin's role was only to help them see that they could do it, that they could conquer malnutrition on their own.

Dozens of experts had analyzed the situation in Vietnam, agonizing over the problems — the water supply, the sanitation, the poverty, the ignorance. They'd written position papers and research documents and development plans. But they hadn't changed a thing.  Six months after Sternin's visit to the Vietnamese village, 65% of the kids were better nourished — and they stayed that way.