Harvard Business Review 5 years 2004 – 2009
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| Why Leaders Don’t Learn From Success by Francesca Gino and Gary Pisano
When we succeed, we’re likely to conclude that our talents and our current model or strategy are the reasons. Success increases our self-assurance. Faith in ourselves is a good thing, but too much can make us believe we don’t need to change anything. There is a tendency to not investigate the causes of good performance systematically. We blew our opportunity to change the world by Roger McNamee America has enormous creative energy, but its industries are dominated by lawyers and accountants, not product people. Thirty years of financial engineering and short-term profit optimization has impaired the ability of American companies to innovate. I Think of My Failures as a Gift by former Procter and gamble CEO A G Lafley. What is the single biggest reason that leaders stop developing and growing? They stop becoming adaptable; they stop becoming agile. That is the end of a leader. We learn much more from failure than from success. Failures are not the opposite of success. Failures is about how you can do things better. How to Avoid Catastrophe by Catherine Tinsley, Robin Dillon and Peter Madsen Two forces conspire to make learning from near misses difficult. Cognitive biases make them hard to see, and, even when they are visible, leaders tend not to grasp their significance. Thus, organizations often fail to expose and correct latent errors even when the cost of doing so is small – and so they miss opportunities for organizational improvement before disaster strikes. This tendency is itself a type of organizational failure – a failure to learn from cheap data. Surfacing near misses and correcting root causes is one of the soundest investments organizations can do. Can You Handle Failure by Ben Dattner and Robert Hogan. When failure has occurred, don’t respond impulsively. It’s not always possible to right the wrong, but it is almost always possible to make things worse. Constructive confessions by David Silverman While it is tempting to think that each tale of entrepreneurial woe would be unique, that is not the case. As a failed American dreamer myself, I saw in all the books, chapters, and posts the same core set of mistakes: I didn’t have enough experience – now I know; I thought I knew everything – I did not; I thought it was going to be easy (selling product) – it was extremely hard; People are reluctant to change what they’re used to – I didn’t sell anyone anything; I forgot to make money. Failure happens; it’s what you take from it that makes the difference between a fall and a stumble.
Harvard Business Review March 2011 Move up and step up – leader by Adi Ignatius The talents now in vogue include strong communications, empathy, collaboration, and trust building. The perennial problems that never seem to be addressed are excessive short term thinking, misguided CEO pay and ineffective boards. Don’t get blinded by the Numbers. – Roger L Martin The new approach requires completely new capabilities. The successful strategists of the future will have a holistic, empathetic understanding of customers and the ability to convert somewhat murky insights into a creative business model that they can prototype and revise in real time. To do all that they’ll have to be good communicators, comfortable with ambiguity and ready to abandon the quest for certain, single-point answers. This is what business school deans have to work on teaching in the future. Landing the Next Big Job by Boris Groysberg, Kevin Kelly and Brian McDonald. For top jobs, functional and technical expertise is less important than understanding business fundamentals and strategy. Top team members have more in common with their executive peers than with the people in the functions they lead. Going forward C-level executives will be active members of the firm’s senior leadership who advice the CEO on key decisions. There is a greater need for team-orientation, continuous multitasking and leading without rank, and ability to resist stress and look after subordinates – and all this needs to be done with a big smile in an open plan office. Capitalism for the Long Term by Dominic Barton, MD of McKinsey Business leaders face a choice - reform the system or watch as the government exerts control. Returning to business as usual post GFC simply is not an option. There are three essential elements of the shift required. First business and finance must jettison their short term orientation and revamp incentives and structures in order to focus their organizations on the long term. Second, executives must infuse their organizations with the perspective that serving the interest of all major stake holders – employees, suppliers, customers, creditors, communities, the environment- is not at odds with the goal of maximizing corporate value; on the contrary, it is essential to achieving their goals. Third, public companies must cure the ills stemming from dispersed and disengaged ownership by bolstering boards’ ability to govern like owners.
The Globe’s new challenges require companies to pursue ‘shared value’- that is, organizations must innovate and create economic value in a way that also addresses society’s needs. It starts with companies redefining their purpose around creating products and services that generate social benefit. In the process, business can earn the respect of society again. How to reinvent capitalism – and unleash a wave of innovation and growth by Michael E Porter and Mark R Kramer Capitalism is under siege. Diminished trust in business is causing political leaders to set policies that sap economic growth. Business is caught in a vicious circle. The purpose of the corporation must be redefined around Creating Shared Value. Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack and overall framework for guiding these efforts, and most companies remain stuck in a ‘social responsibility’ mind set in which societal issues are at the periphery and not at the core. The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. This will drive the next wave of innovation and productivity growth in the global economy. Learning how to create shared value is our best chance to legitimate business again. Government and business have each assumed that the other side is an obstacle to pursuing its goals and acted accordingly. For decades business people have studied positioning and the best ways to design activities and integrate them. However, companies have overlooked opportunities to meet fundamental societal needs and misunderstood how societal harms and weaknesses affect value chains. Our field vision has simply been to narrow. Companies can create economic value by creating societal value. There are three distinct ways to do this: by reconceiving products and markets, redefining productivity in the value chain and building supportive industry clusters at the company’s locations. Each of these is part of a virtuous circle of shared value; improving value in one area gives rise to opportunities in the others. The concept of shared value resets the boundaries of capitalism. By better connecting companies’ success with social improvement, it opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets. The new concept blurs the line between for-profit and nonprofit organizations. The congruence between societal progress and productivity in the value chain is far greater than traditionally believed. Heightened environmental awareness and advances in technology are catalyzing new approaches in areas such as utilization of water, raw materials, and packaging, as well as expanding recycling and reuse. The opportunities apply to all resources, not just those that have been identified by environmentalists. Better resource utilization will permeate all parts of the value chain and will spread to suppliers and channels. The focus on holding down wage levels, reducing benefits, and off-shoring is beginning to give way to awareness of the positive effects that a living wage, safety, wellness, training, and opportunities for advancement for employees have on productivity. Leading companies have learned that poor employee health costs more than health benefits. Profits involving a social purpose represent a higher form of capitalism – one that will enable society to advance more rapidly while allowing companies to grow even more. The result is a positive cycle of company and community prosperity, which leads to profits that endure. Most business schools still teach the narrow view of capitalism, even though more and more of their graduates hunger for a greater sense of purpose and a growing number are drawn to societal entrepreneurship. The results have been missed opportunity and public cynicism. There is nothing soft about the concept of shared value. These proposed changes in business school curricula are not qualitative and do not depart from economic value creation. Instead they represent the next stage in our understanding of markets, competition, and business management. My comment: The Article should be read in its entirety. One thing the article doesn’t talk much about is the increased energy and commitment levels achievable by giving people a strong sense of value and purpose, beyond financial return. This in itself has a great potential for increased organizational prosperity. Reinvent Your Business Before it is Too Late. By Paul Nunes and Tim Breene Companies that successfully reinvent themselves 1) Focus on the edges, 2) Shake up the top team, 3) Maintain surplus talent. High performance companies need up-and-comers who can grow a new business, not just manage an old one. If strategy making is t remain on the edge, it cannot be formalized. Although low and average performers tend to make strategy according to the calendar, high performers use many methods and keep the timing dynamic to avoid predictability and to prevent the system from being gamed. One sign that a company is investing enough in talent: Employees have time to think on the job. The CEO’s Role In Business Model Reinvention by Vijay Govindarajan and Chris Trimble. A forward looking CEO needs to do three things: manage the present, selectively forget the past and create the future. Most companies are stuck in the first of these three. If organizational memory is not tamed, it gets in the way of creation. Before you can create, you must forget. Thirty percent of participants in any strategy discussion should be younger than age 30, because they are not wedded to the past. When You’ve Made Enough to Make a Difference by William Foster and Susan Wolf Ditkoff Society is blessed with ambitious philanthropists and promising ideas. To address the world’s most pressing problems, donors must ask themselves if they truly understand what it takes to make change happen, beyond just a great program or idea, and if so, how they can position themselves – through their role, resource, and relationships – to support that change. Without a fully integrated picture, philanthropists can’t effectively communicate and coordinate with other donors, collaborate with grantees and beneficiaries, and improve their decisions. They become vulnerable to wishful thinking and unrealistic expectations. Developing a clear investment model does not have to be complicated or expensive, just deliberate- and the model evolves as philanthropists learn from their experiences. No external force will make donors do this – only self-discipline and a relentless drive for results. Notes by frank@olsson.co.nz 9th Jan 2011 Harvard Business Review December 2010 This issue is focused on Branding. Everything you do including corporate culture really is part of branding. The key message from the branding articles is the need to use new approaches, particularly to be active on the net. Most marketing success is mouth to mouth rather than broadcasting/advertising. So much happens on the net nowadays and no-one can afford to ignore it or not to respond to it. There were some other interesting articles, particularly one about Robert McNamara, previous US defense secretary. Robert McNamara was seen as the ultimate manager/ leader as he used numbers and analysis to try to get better decisions. In the end he recognized that this is not enough. You also need to add a dimension of what is right, ethical, and desirable for any numbers to make any sense. Robert McNamara realized that the Vietnam War was a great mistake as it was built on the wrong premises. It was not primarily communism vs. capitalism; it was at its core a people wanting to run its own affairs free from Western (or other) interference and influence. A people fighting for its basic rights and freedom cannot easily be beaten on the battlefield. Please find below a few notes relating to the December issue. The Hidden Advantage of Quiet Bosses by Adam M Grant, Francesca Gino and David A Hoffman Extroverted leaders have important strengths. However they also tend to command the centre of attention and take over discussions. In a dynamic, unpredictable environment, introverts are often more effective leaders – particularly when workers are proactive, offering ideas for improving the business. Such behavior can make extroverted leaders feel threatened. In contrast, introverted leaders tend to listen more carefully and show greater receptivity to suggestions, making them more effective leaders of vocal teams. While it is often true that extroverts make the best bosses and proactive employees make the best workers, combining the two can be a recipe for failure. Soft spoken leaders may get the most out of proactive employees – so save the outgoing, talkative managers for the teams that function best when they are told what to do. The Case for Professional Boards by Robert C Pozen To improve governance, companies need to move to a model of professional directorship: Board service would be the primary occupation of independent directors, and not an ancillary avocation. The new model would address chronic deficiencies of corporate governance by taking the following measures: Reduce board size to seven members to improve decision making effectiveness; Require that most directors have industry expertise to allow them to better guide today’s complex businesses; Require directors to devote sufficient time to properly understand and monitor the company’s operations. Branding in The Digital Age, You’re Spending Your Money In All the Wrong Places by David C Edelman Shoppers now rely heavily on digital interactions, evaluating a shifting array of options, remaining engaged with the brand through social media after a purchase. Smart marketers will study this consumer decision journey for their products and use the insight gained to revise strategy, media spend and organizational roles. Up to 90 % of spend goes to advertising and retail promotions. Yet the single most powerful impetus to buy is often someone else’s advocacy. The One Thing You Must Get Right When Building a Brand by Patrick Barwise and Sean Meehan Brands should use new media to deliver on 4 basics: offering and communicating a clear customer promise; building trust by delivering on it; continually improving the promise; and innovating beyond the familiar. Try to gain customer insight rather than to sell. Carefully follow the unwritten rules of customer engagement online. Robert S McNamara and the Evolution of Modern Management by Phil Rosenzweig Every generation of managers wrestles with questions about its purpose. In the 1950s and 1960s, to be an able manager was to do four things well: plan, organize, direct and control. Leading business thinkers conceived of managers as rational actors who could solve complex problems through the power of clear analysis. That view shaped the developing profession, but many questions were left unanswered. Planning and directing were essential, yes, but towards what ends? Organizing and controlling, of course, but in whose interest? Chastened by the debacle of the Vietnam War he recognized the limits of data and came to appreciate the intangible and the irrational in human affairs. Reflective in old age he embraced the importance of empathy and remained an idealist. The final measure of a manager, more than amassing wealth or seeking to follow an oath, may be the willingness to examine one’s own actions and seek a measure of wisdom. What is the hard Return on Employee Wellness Programs? By Leonard L Berry, Ann M Mirabito and William B Baun A comprehensive, strategically designed investment in employees’ social, mental, and physical health pays off. J & J leaders estimate that wellness programs cumulatively have saved the company $ 250 million on health care cost over the past decade suggesting a return of $ 2.71 for every one dollar spent. The most successful programs have six pillars; strategic alignment with the company’s identity and aspirations; a design that is broad in scope and high in relevance and quality; broad accessibility; internal and external partnerships; and effective communications. Rewards have been reaped in the form of lower health care costs, greater productivity, and higher morale. frank@olsson.co.nz 5th December 2010 Harvard Business Review November 2010 Some interesting points made in this issue. I liked the brief article on creating beauty. ”Creating beauty is difficult, whether it is the tangible beauty of a brilliant innovation or the intangible essence of exceptional leadership. Beauty exists in an elegant and novel approach to a problem.” I have come to think that aesthetics is as important as ethics. Please find below a few lines from the November issue. Gender gap and new leadership skills There is a gender gap in leadership, but the reason for it isn’t lack of sponsorship; it’s the skills we look for in leaders. Leadership values are at the beginning stages of a transformation. We are starting to see a strong appreciation for trust, authenticity, purpose, empathy, devotion, curiosity and mindfulness – and some argue that these are crucial skills for tomorrow’s leaders. They are also innate skills in women leaders, which is why we will see the gender gap reduced in the near future. /Dawna Maclean Consulting/ Wealth and Jobs, the broken link by Nitin Nohria Executives and politicians must find new ways to link value creation and job creation. If they don’t, business leaders will continue to lose legitimacy in society, especially if they keep prospering, where people around them are struggling. Instead of a virtuous circle, the relationship between business and society will become a vicious circle. When society is angry at business, the risk that government will enforce overreaching regulation is real. Moreover, that anger distances citizens from the source of answers to many of our most urgent issues. None of the major problems that face society today – sustainability, health care, poverty, financial system repair – can be solved unless business plays a significant role. But to do that, business must restore its stature and help to address the anxiety about job creation. To Win, Create What’s Scarce by Seth Godin What is difficult? Creating beauty is difficult, whether it is the tangible beauty of a brilliant innovation or the intangible essence of exceptional leadership. Beauty exists in an elegant and novel approach to a problem. Maybe it’s catapulted in a simple device that works intuitively, reliably and efficiently or in an effective solution – a ‘beautiful’ solution to an organizational dysfunction. And it exists in the fact of connecting with and leading people. Leading change is difficult. It’s difficult to find, hire, and retain people who are eager and able to change the status quo. It is difficult to stick with a project that everyone seems to dislike. It is difficult to motivate a team of people who have been lied to or had their spirits dashed. People who can do difficult work will always be in demand. And yet our default is to the easy work, busywork, work that requires activity, not real effort or guts. That’s true of individuals, and it is true of companies. That’s because we see our roles as cranking out average stuff for average people, pushing down price, and, at best marginally improve value. That used to be the way to grow an organization. No longer. The world will belong to those who create something scarce, not something cheap. The race to the top has just begun. Leadership Lessons From the Military – 4 articles This issue has four articles suggesting that leadership can be learned from the military’s way of doing things. Being an army captain myself I have no doubt that this is true. Similar leadership principles apply and to be effective you need to be decisive, caring and respected by your team. Out of the articles came a few dos and don’ts which I thought made sense; 1 IMPLEMENTING STRATEGY - GET THE BIG PICTURE Avoid assuming
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2 UNCOVER AND COLLABORATE Avoid
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3 ELICIT GENUINE BUY-IN Avoid
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