Managing Up

David Bradford and Allan Cohen have written a new book, Influencing Up.  They are the authors of the previous best-selling leadership book, Influence Without Authority.   Stanford Business School has posted an interview with Bradford about the duo's latest work.  Bradford has a key insight about how we perceive ourselves relative to our bosses:

What does it take for a direct report to gain power in the employee-boss relationship?

First, not falling into the trap of accentuating the power gap. Research, much of it done here at Stanford, shows that when there is a significant gap between the most powerful and the least powerful, dysfunctional things happen for both parties. In the book, we say that "high power makes you deaf and low power gives you laryngitis." When you have high power, you tend to overestimate your abilities and can be closed to influence, which can be very dangerous in a fast-changing world. On the other hand, if you perceive you have very little power, you tend to shut down instead of offering alternate points of view, which is really what is needed. Now, sometimes power is objective: some people have a lot of money and others have very little; someone is CEO and another is a clerk. But we often exaggerate the power gaps, and when we do that we hurt ourselves and our bosses.

I think Bradford has made a good point.  Sometimes, employees do exaggerate the power gaps.   They do not realize the other sources of power that they may have. Clearly, the boss has the formal authority.  However, the subordinate may have deep expertise on a particular specialized subject.  The subordinate also may have cultivated a network of collaborators and allies in other parts of the organization.  That network may be a source of power.  The subordinate may have key facts on their side.  The question becomes:  How do you present that data most effectively?   In short, managing up does indeed require a thorough assessment of one's power in a particular situation.  Avoiding the knee-jerk conclusion that a massive power gap exists is good advice.   

Startup Funeral

Kevin Galligan is one of the organizers of an event called Startup Funeral that takes place in Manhattan.  A group of young professionals get together to hear the stories of startup failures.  The point is for entrepreneurs to share the lessons from an in-depth postmortem analysis of a startup failure.  At the same time, the event is supposed to be fun.... a party, according to Galligan.  Another organizer, Valerie Lisyansky, tells Fortune magazine: “It’s equally as important to be successful as it is to understand your failure, understand what happened, and educate community.”   Publicly sharing postmortems has become more commonplace in the startup community.   People want others to hear the lessons that they have learned the hard way.  

Is this type of event taking the entire "celebrate failure" movement a bit too far?   I don't think so, though I would note that the article refers to the fact that many entrepreneurs back out after initially committing to present at such events.  I think the key to a successful sharing of lessons learned from a startup postmortem is a safe environment.   I'm not sure an open invitation public party is the most safe environment.   You want to have a place where people are comfortable putting themselves out there and taking an interpersonal risk. I also think it's important to hear the perspective of multiple people involved in a startup, not simply the founder(s).   Multiple perspectives can shed light on causes of the failure that are not apparent to the founder(s), or that the founder(s) aren't ready to acknowledge. 

Reed Hastings: Make as Few Decisions as Possible

Netflix CEO Reed Hastings sat down for a terrific interview with Bill Snyder of Stanford's Graduate School of Business.   I found several terrific nuggets in the piece.  In the first quote, Hastings makes the point that he's given people a great deal of autonomy at Netflix.  However, with that autonomy comes responsibility.   He has high expectations.  In the second quote, he points out that the CEO does not have be the ultimate product expert.   In fact, there may be a downside to that type of situation.  I like the concept of a "distributed set of great thinkers."  Great leaders, I believe, know how to marshal the collective intellect of an organization. 

“I take pride in making as few decisions as possible, as opposed to making as many as possible,” Hastings says. One example: Netflix’s decision to produce the popular House of Cards was a huge one, but the meeting that gave the project a green light lasted just 30 minutes. Others had already laid down the groundwork and details, making it easy for Hastings to sign off. “It’s creating a sense [in your employees] that ‘If I want to make a difference, I can make a difference.’” Freedom is only one part of the Netflix culture; the other is responsibility. Netflix, says Hastings, has created a culture of high performance. “Adequate performance gets a generous severance package,” he says, adding that “we turn over a lot of people.”

 Without mentioning Apple or the late CEO Steve Jobs by name, Hastings says certain companies’ conception of the top job was very different than his view. “Some companies operate by the principle of the product genius at the top,’’ Hastings says. “There’s this whole motif that to be a great CEO you have to be a great product person. That’s intoxicating and fun, but you build in incredible amounts of dependence on yourselves. You’re much stronger building a distributed set of great thinkers,” he says.

Understanding Your Rivals' Time Horizon

Great firms engage in rigorous competitor analysis.  They try to understand their rivals' goals, strategies, capabilities, and weaknesses.    Beyond that, I believe that good competitor analysis entails an understanding of your competitor's time horizon.  Are they managing the business quarter to quarter, so as to meet Wall Street expectations?  Or, does your rival have a long term orientation?  Are they willing to make significant investments today with payoffs expected well down the road? 

Why does the time horizon of competitors matter?  Suppose that your small firm is contemplating entering a new product market segment.   You are trying to anticipate the incumbents' response to your entry.  Will they retaliate aggressively when you try to take share?  If they are very short-term oriented, they may not want to hurt their margins substantially so as to attack a small new entrant.  On other hand, if they are very long term oriented, they might bite the bullet today to try to retain market share and deter future entrants.  

Similarly, suppose that technological change is taking place in your industry, and firms are examining an unproven new technology with uncertain payoffs.   A rival with a long term orientation may be willing to make a big, bold bet, knowing that the payoff may not come for a number of years.  A rival who is focused on next quarter may hold off on such risky investments. 

Onboarding Employees the Whirlpool Way: "Real Whirled"

Companies are experimenting with many new ways to onboard young employees.   Whirlpool has one of the more novel systems.   They have run a program called "Real Whirled" for 15 years.  A group of new young employees live together for 10 weeks in a two-story condo in Michigan.  According to this article in Fast Company, "For those 10 weeks you're spending most of your waking hours using their products in the kitchen and laundry room and comparing them with competitors, hosting dinners for executives, going to product testing labs—essentially becoming one with the appliances you will eventually sell on the sales floor."  Nearly 400 people have gone through this program at Whirlpool.   Not everyone thrives in this environment.  However, Fast Company reports that, "Since 2009, Whirlpool has retained 80% of everyone who has participated. There is also an extensive alumni network, filled with people in all parts of the company..."  

GM Turns "Chevy Guy" Gaffe Into Positive Promotion

During the presentation of the World Series MVP trophy, a Chevy manager (Rikk Wilde) became very nervous.  He had a hard time getting the right words out, and eventually he described the Chevy truck as, "class-winning and leading, you know, technology and stuff."   Soon, #chevyguy and #technologyandstuff began to trend on Twitter.  GM didn't reprimand the employee.  Instead, Wilde's bosses understood why he had become so nervous.  Moreover, GM decided to capitalize on the social media buzz created by the gaffe.  They even incorporated the gaffe into their online promotions.  Jamie Barbour, a social media manager at GM, began the company's efforts by tweeting at 1:29am: "Truck yeah the 2015 #ChevyColorado has awesome #TechnologyAndStuff!"  Then the company used #TechnologyAndStuff with three online video ads the next day.   They even bought prime time spots during late night comedy shows to run one of those ads.   I love these types of stories.  Companies should be willing to laugh at themselves sometimes, and they should turn these types of gaffes into marketing opportunities whenever possible. 

Do Corporate Skunk Works Need to Die?

Successful entrepreneur, Stanford faculty member, and lean startup guru Steve Blank has written an intriguing blog post titled, "Why Corporate Skunk Works Need to Die."  Blank argues, "But as successful as skunks works were to the companies that executed them well, innovation and execution couldn’t co-exist in the same corporate structure. Skunk works were emblematic of corporate structures that focused on execution and devalued innovation."  He argues that companies today must master the art of continuous innovation.  Innovation and execution must be enacted together in organizations.   He explains, "To start it requires board support and CEO and executive staff agreement. And recognition that cultural, process and procedure changes are needed to embrace learning and experimentation alongside the existing culture of execution."  I would agree with Blank that companies must stimulate learning and experimentation.  I do wonder whether that can be done by those who have their heads down focused on daily execution.  It's easier said than done, in my experience.  Blank promises future blog posts with more details on how innovation and execution can co-exist side-by-side in large organizations. I'll be looking forward to those writings. 

Who is More Biased? The Crowd or the Expert?

 Shane Greenstein and Feng Zhu have published a new working paper titled, "Do Experts or Collective Intelligence Write With More Bias:  Evidence from Encyclopedia Brittanica and Wikipedia."  Their results surprised me.  I would have expected more bias from experts.  I thought the work of the crowd would mitigate biases by any particular contributors.  However, they found that Wikipedia entries exhibited more political bias than encyclopedia entries.  Here's what they said in their paper:  "Using a matched sample of pairs of articles from Britannica and Wikipedia, we show that, overall, Wikipedia articles are more slanted towards Democrat than Britannica articles, as well as more biased."  Perhaps not surprisingly, they did find that the Wikipedia articles tend to become less biased as they receive more and more revisions.  However, the overall analysis does show more bias with Wikipedia.  The scholars conclude, "It is surprising because the average Wikipedia article receives over 1,900 revisions and that is still not enough for eliminating bias."  

The Stay Interview: Retaining Top Talent

The Wall Street Journal has a great how-to guide regarding employee retention.  I especially liked the tactic of a "stay interview."  Here's a description:

– Conduct “stay” interviews. In addition to performing exit interviews to learn why employees are leaving, consider asking longer-tenured employees why they stay. Ask questions such as: Why did you come to work here? Why have you stayed? What would make you leave? And what are your nonnegotiable issues? What about your managers? What would you change or improve? Then use that information to strengthen your employee-retention st

Entrepreneurs: Are They Truly Different Than Others?

Conventional wisdom about entrepreneurs tends to focus on their mental make-up.  They are risk-seekers.  They are creative.  They are daring.  They are ambitious.   They are not afraid to make mistakes or to fail.   Perhaps we should take a step back and question this conventional wisdom..   Laura Huang and Peter Cappelli of Wharton have a terrific article in the Wall Street Journal today that challenges these prevailing view about entrepreneurs.  They write, "There’s only one problem with the conventional wisdom: There is no direct evidence to support it and some solid research to suggest it isn’t true."  I suggest reading their article for more details about their review of the academic literature. 

Why has this conventional wisdom dominated our thinking about entrepreneurs for so long?  Why do we believe that entrepreneurs have a different make-up than the rest of us?   Huang and Cappelli explain that the fundamental attribution error plays a key role:

"Why are we so inclined to believe that entrepreneurs are different and better people than the average? The answer is something known in social psychology as the fundamental attribution error: We tend to assume that behaviors are caused by someone’s disposition, even when circumstances are the real factor, such as assuming that the driver of the speeding car must be an irresponsible person rather than thinking he might be going to an emergency."

Bryant's Collegiate Entrepreneurs Organization Wins Best Chapter in the Nation!

I serve as the adviser to Bryant University's chapter of the Collegiate Entrepreneurs Organization.  Our student group competed against 400 other chapters throughout the nation at this year's CEO conference in Orlando, FL.  On Saturday, the group earned the Best Chapter in the Nation Award!  This recognition marks the fifth time in the past decade that the Bryant group as earned the best chapter award.  The prize demonstrates the vibrant culture of entrepreneurship that thrives at our university.   Very proud!

Congratulations to Renee Lawlor, President of our chapter, and her entire executive board.  Congrats also to Harris Roberts, past president and now alumnus of Bryant, who helped create the foundation for this big win during his two years leading the group.  Thank you, Harris, for traveling with the group to Orlando.

Mayor Tom Menino: Leadership is about more than making speeches

Tom Menino, long-time mayor of the city of Boston, died yesterday at age 71.  He served as Boston's mayor for two decades.   He enjoyed widespread popularity and respect.   Menino accomplished a great deal during his time as the city's leader.   I think we can take an important lesson away from Menino's incredible success.   Was Tom Menino a terrific speaker?  Not at all.  People made fun of how inarticulate he could be at times.  They referred to him as "Mumbles Menino."    However, Menino had tremendous leadership skills.   Too often, we became enamored with political candidates who deliver a wonderful speech.   That does not make them a leader.   They have to be able to execute.   Menino could do just that.   He understand how to get things done, and he knew how to stay incredibly connected with his constituents.  

Source:  Boston's official website

What is Critical Thinking?

The Wall Street Journal published a terrific article by Melissa Korn this week.   The article focuses on the fact that many executives say that they want to hire people with "critical thinking" skills. However, the definition of that term seems elusive.  In fact, some people don't have a clear definition of the term. Others disagree over the meaning of critical thinking skills.   Perhaps, the article suggests, you simply know them when you see them.   The article does offer a few intriguing definitions of the term:

• “The ability to cross-examine evidence and logical argument. To sift through all the noise.”
  -Richard Arum, New York University sociology professor
• “Thinking about your thinking, while you’re thinking, in order to improve your thinking.”
  -Linda Elder, educational psychologist; president, Foundation for Critical Thinking
• “Do they make use of information that’s available in their journey to arrive at a conclusion or decision? How do they make use of that?”
  -Michael Desmarais, global head of recruiting, Goldman Sachs Group

Breaking Up Isn't Always the Optimal Solution: The Curious Case of Dan Loeb and Amgen

Corporate breakups seem to happening every other day.   I blogged last week about some of the reasons for the recent surge in breakup activity.   In general, I think many of these breakups make sense, as firms tend to prosper when they are more focused.  Moreover, many of these firms are experiencing significant diseconomies of scale and scope.   However, I think we may be taking it too far in some cases.

Let's take the case of hedge fund investor Dan Loeb pushing Amgen to break into two independent firms.   Loeb proposes that Amgen split into one business focused on its mature products and another focused on its high growth products.   Typically, when investors propose such splits, they want the mature business to generate lots of cash and return much of it to shareholders.  They want the growth business to reinvest profits to stimulate even more growth.   

Here's the problem with proposals such as the Amgen deal though.   In the old BCG model of corporate strategy, firms were supposed to milk the cash cow and use those proceeds to fund promising growth businesses.   That model has since been completely debunked.  Cross-subsidization amongst unrelated business units makes no sense if external markets are reasonably efficient.  Chas cows should return excess cash to shareholders, and growth businesses should find their own sources of funds from private equity, venture capital, or public equity and bond markets.  Note the word "unrelated" though.  The BCG model is faulty if we are talking about using it to justify an unrelated diversification strategy.  However, a firm such as Amgen is clearly not an unrelated diversifier.  It has a set of highly related businesses.  Strong synergies exist among its lines of business.  In fact, some would say that it's a focused firm, not even a related diversifier.  Thus, Amgen is not in any way inappropriately using funds from a cash cow to fund a growth business. They are managing multiple products that each have stronger competitive advantage because they co-exist together in the same firm.  I don't see how you create real value by splitting a firm such as Amgen in two.  In fact, you may destroy value by doing so, because synergies are lost.  You create real value if you split an unrelated diversifier in two. 

Attracting and Retaining Better Workers: Higher Wages Alone Won't Do the Trick

We have heard a great deal of commentary about the low wages paid to front-line employees in some industries, particularly the retail and restaurant sectors.   While politicians debate the merits of raising the minimum wage, some people point to the companies paying higher wages as a model.  They argue that these companies attract and retain more productive workers because they pay higher-than-usual wages.   For instance, people point to firms such as Costco, Trader Joe's, and Whole Foods as examples.   I think that we have to be very careful about these arguments though.  These firms attract and retain highly productive, engaged employees for reasons well beyond the wages that they pay.  Yes, they pay their employees more than some of their rivals.  However, these firms also have built an entire organizational system that supports an engaged, productive, and collaborative workforce.  They have developed a culture that attracts talented people.  They have embraced certain values and principles.  They have articulated a sense of purpose that people find compelling.  They have developed managers and supervisors who know how to engage employees.   I could go on.  The point is simple: they have built an entire system that attracts and retains these workers, and helps them produce great value for the firm.   Paying someone a few bucks more without doing these other things won't have any significant effect on engagement, customer satisfaction, employee retention, or profits. 

How PWC Engages Millennials

Bob Moritz, the U.S. Chairman of PWC, has written an article for Harvard Business Review regarding his firm's efforts to attract, engage, and retain millennials.  Moritz and his firm collaborated with researchers from USC and LBS to understand key generational differences.  From that work, PWC began to develop initiatives to foster higher levels of engagement and retention among millennials.  They have tracked the effectiveness of various efforts.  Moritz cites four major areas of emphasis:

1. Give them voice. Millennials want to have input regarding the future direction of the organization.  Therefore, PWC gave them voice in several powerful ways.  They asked millennials to offer ideas regarding the most effective methods for talent development in the firm.  In addition, they asked people for suggestions regarding the next $100 million opportunity for PWC.  More than 70% of the employees offered suggestions.  
2. Provide flexible career paths.   Millennials do not want to stay in the same role for a lengthy period of time.  They want to shift positions and roles, try new things, and embrace different opportunities.  Moreover, they want greater flexibility in their careers.  PWC has created several programs that enable talented employees to take time off or to work part-time for the firm while pursuing other opportunities (such as graduate school). 
3. Recognize them often and in multiple ways.  Millennials want to be recognized, and that does not mean only monetary awards.  PWC implemented more frequent recognition, and they began to offer a host of non-monetary rewards.   For instance, PWC created a sabbatical program as a reward for millennials who perform well and stay at the firm for a certain period of time.
4. Give them a chance to give back.  Millennials want to make a broader impact, and they want to work for a firm that has that same aspiration.  PWC found that employees who participate in a corporate responsibility initiative tend to stay at the firm for a longer period of time.  For example, participants in one program to enhance students' financial literacy tended to exhibit much less turnover than those who did not participate (only 8% of participants had left PWC a year later, while 16% of non-participants had left the firm). 

Jimmy Kimmel, the Uber Driver

Uber has to love this free publicity.   Jimmy Kimmel became an Uber driver for one afternoon.  Check it out!

HBO's Big Decision and the Disruption of the Cable Business

HBO made a major announcement yesterday.  They informed investors that they would be offering a stand-alone digital subscription to customers outside of the usual cable distribution model.  Time Warner (parent company of HBO) indicated that the firm would be targeting customers (typically millennials) who have chosen to "cut the cord" - i.e., to go without a cable television subscription. 

Today's Wall Street Journal article about the move has quotes from several experts. Some indicate that the move is revolutionary, while others downplay its potential to disrupt the cable business.  One expert (USC's Jeff Cole) regards the announcement as a "seismic event."  On the other hand, Tom Larsen, an executive at Mediacom Communications, states, "I don't view it as overly disruptive."  Some cable companies regard the move as not disruptive so long as HBO does not undercut the price which the cable firms charge customers for HBO.

Where do I come down on this move?  In and of itself, I don't think it's hugely disruptive.  However, the strategic decision by HBO may have a large ripple effect.  We have already heard that CBS will follow suit and offer a streaming subscription service.  The next big shoe to drop could be Disney.  If that firm offered its networks (children's programming, ESPN networks) directly to consumers, that would be a major jolt to the cable business.  If consumers can package together subscriptions to Netflix, Disney/ESPN, and HBO, would they still purchase an expensive cable package? Many consumers would not.   Yes, the cable companies also make money selling broadband service.  However, that cannot make up for the loss of significant numbers of cable subscriptions.  The price that HBO charges for its standalone service may not be the key factor.  Why?  People are not thinking about HBO in isolation.  The key is whether other firms follow, and consumers can begin to patch together a whole set of desirable entertainment options for less than the total price of their cable package. 

The entertainment industry has been known for herd behavior in the past.   Consider the moves by many large players to vertically integrate in the 1990s (CBS/Viacom, AOL/Time Warner, Disney/ABC).  They watch each other closely.   Herd behavior can sometimes occur in an industry because managers are risk averse.  In this case, perhaps managers at other entertainment companies will view a move to sell directly to consumers as less risky if a few leaders, such as HBO and Disney, make the move first.  Bob Iger, the industry... and the consumer is watching... 

Playing Catch Up Can Be Very Problematic

You have worked for months on the planning of a new initiative or project.  You have been meticulous.  You have identified the key phases in the implementation process, built a budget and schedule, and marked milestones that need to be achieved at each stage.  You have assembled a terrific team with talented individuals who possess complementary skill sets.  Unfortunately, as you begin to execute the plan, unexpected obstacles arise.  You begin to fall behind schedule, and the results do not match expectations.  As you approach the first major milestone meeting, you realize that you also have exceeded your budget to date.  

What do many managers do?  They try to get back on plan.  They work harder.  They implore their team members to work harder.   They throw more resources at the project.  They try to catch up.  That strategy can be very problematic though. Doing more of what got you into trouble in the first place does not constitute an effective strategy.   Yet, that is the initial tactic often chosen when execution does not match our plan.  Even worse, playing catch up can burn our people out and expend precious organizational resources.   To be effective, we have to be willing to modify that original plan, or perhaps move to Plan B.  However, managers often become overly committed to their original plans.  They don't want to be accused of having put together a "bad plan" for the project.  Instead, though, they may find themselves conducting a very "bad implementation" in part because they are trying to save face. 

Bryant Collegiate Entrepreneurs Organization (CEO) Video

I'm very proud to serve as the CEO club adviser here on campus.   In this video, the club makes its case for National CEO chapter of the year in advance of the national conference in Orlando, Florida later this month.