Harvard Business Review 5 years 2004 – 2009

Social Strategies That Work – George Eberstadt. Successful social media is like the difference between teaching a class and hosting a party. In both cases all the participants are in the same room, but the dynamic could not be more different. In the class room the teacher (the brand) dominates the conversation, and the flow is hub and spoke, with the teacher at the hub. At the party the guests (customers and prospects) may or may not interact directly with the host, spending most of their time with one another. But since most of the guests know and like the host, most of the comments are likely to be favorable. Even though the host cannot control exactly what is said, the guests at the party are every bit as likely to go home with positive feelings towards the teacher.
How much inequality is necessary for growth? By Fuad Hasanov and Oded Izraeli. Reducing inequality has clear benefits over time: It strengthens people’s sense that society is fair, improves social cohesion and mobility, and broadens support for growth initiatives. Policies that aim for growth but ignore inequality may ultimately be self-defeating, whereas policies that decrease inequality by say boosting employment and education have beneficial effects on the human capital that modern economies increasingly need.
When naming a CEO, Ignore the Market Reaction by James M Citrin. This article shows how appointments which lead to first day share price hikes often end up in disappointments. And appointments that lead to first day falls work out to be long term successes. This may reflect investor’s imperfect understanding of the highly specific challenges facing companies, their unrealistic expectation that new leaders will act as saviors, and their unawareness of the nuanced capabilities of many new CEOs.
Candor, Criticism and Teamwork by Keith Ferrazzi. Lack of candor leads to longer cycle times, slow decision making and unnecessarily iterative discussions! A too polite veneer often signals an overly politicized workplace; People who are afraid to speak honestly to people’s faces do it behind their backs. This behavior exacts a price. Remedy; 1. Break meetings into smaller groups. 2. Designate a Yoda – one or two to be the official advocates of candor. 3. Teach “caring criticism.”
Stop Tying Pay to Performance by Bruno S. Fray. Unlink pay from performance. The evidence keeps growing that pay for performance is ineffective. It also may induce executives to take company-killing risks. There are other ways to motivate employees that yield better results at lower cost. In USA CEO compensation has sky-rocketed while its correlation with actual corporate performance has remained as weak as ever. All variable-pay-for-performance suffer from four inescapable flaws: 1. In a modern economy, where new challenges emerge constantly, it’s impossible to determine the tasks that will need to be done in the future precisely enough for variable pay for performance to work well. 2. People subject to variable pay for performance don’t passively accept the criteria. They spend a lot of time and energy trying to manipulate the criteria in their favor, helped by the fact that they often know the specifics of their work better than their superiors do. 3. Variable pay for performance often leads employees to focus exclusively on areas covered by the criteria and neglect other important tasks. 4. Variable pay for performance tends to crow out intrinsic motivation and thus the joy of fulfilling work. Such motivation is of great importance to business, because it supports innovation and encourages beyond-the ordinary contributions.
Variable pay for performance, while it may seem attractive in theory, creates more problems than it solves. There is no proof that it helps achieve its intended purposes, and other approaches not only work better but also strengthens employee loyalty.

Runaway Capitalism by Christopher Meyer and Julia Kirkby. Any manager who has had to design a compensation scheme knows this; as often as not, bonuses end up rewarding behavior contrary to the organization’s espoused mission and values. There is no more powerful question in the US corporation than “What’s the ROE on that?” Social media spending? Wellness checkups? Better working conditions? Elimination of bribes overseas? Return-on-equity hurdles threaten them all.
Conversely, why market cigarettes? ROE justifies the means. The overall objective of commerce in society must be to better people’s welfare! Enormous political weight is given to GDP and GDP per capita, but very little to the many other indicators of value creation. Rankings of crime, education, health, and happiness have only recently become available, and no one’s bonus depends on them.
Please note that no firm actually wants to compete. Individually, all firms seek a so-called sustainable advantage, which is to say the relief from competitive pressure that allows for ample margins, innovation on their own schedule, the pick of the graduating class, and many other perks. In our competition-obsessed business culture, the way to defend oligopoly is to spend money to deter entry by new competitors. Fixation on competition leads to failure to notice – and to cultivate and preserve – an equally rich source of innovation in our newly connected world: collaboration.

With some simple shifts in perspective, capitalism can evolve and centre on new pursuits that reflect society’s broader goals – and doing so, bring its selection process back into alignment. Capitalism can adapt and continue to thrive. Competition, still very much part of the system but unseated from its central position, moves over to allow for collaboration. Or suppose the pursuit of financial gain were not really the heart, much less the soul, of capitalism. Suppose capitalism really centered on the pursuit of value – the greatest good for the greatest number.

It is almost impossible to change habits of mind in an incumbent firm, even when there’s a compelling logic to do so. People tend to cling to the rules they grew up with.
In 2000 more than ¾ of world GDP was accounted for by the rich countries. By 2050 that number is expected to fall to 32%. With 85% mobile phone ownership and spectacular population growth emerging economies are likely to dominate the world scene in 2050. Those of us who believe capitalism can adapt and should not succumb to the excesses that are crippling it will keep looking for new markers of fitness and sharing the new rules. Collectively we are capable of setting the new rules of capitalism.
The Economics of Well-Being, Have we found a better gauge of success than GDP by Justin Fox. GDP is under siege for three main reasons. One is that, even on its own terms, it is flawed: It misses lots of economic activity (unpaid household work, for example) and, as a single-number representation of vast, complex systems, is inevitably skewed. Another is that it fails to factor in economic and environmental sustainability. Finally, existing, readily available measures – educational achievement, life expectancy, and so on – may reflect well-being far better than economic output does. Top Countries by Human Development, adjusted for inequality: Norway, Australia, Sweden, Netherlands, Iceland, Ireland, Germany, Denmark, Switzerland and Slovenia.

The Science Behind the Smile by Daniel Gilbert. Happy people are more creative and more productive. Has there ever been a human being whose misery was the source of his creativity? I know of no data that says that anxious fearful employees are more creative or productive. People blossom when challenged and wither when threatened. If I wanted to predict your happiness and could know only one thing about you, I would not want to know your gender, religion, health or income. I’d want to know about your social network – about your friends and family and the strengths of your bonds with them. Achieving happiness requires the same approach as losing weight. To lose weight you need to eat less and exercise more. You don’t have to eat much less or exercise much more – you just have to do it consistently. Over time it adds up. Happiness is like that. The things you can do to increase your happiness are small and take just a little time. But you have to do them every day and wait for the results.
Creating Sustainable Advantage by Gretchen Spreitzer and Christian Porath. If you give your employees the chance to learn and grow, they will thrive – and so will your organization. Thriving people reported 16% better performance and 125 % less burnout (self-reported) than their peers. They were 32% more committed to their organization and 46% more satisfied with their jobs. They also missed much less work and reported fewer doctor visits, which meant health care savings and less lost time for the company. Companies generate vitality by giving people a sense that what they do on a daily basis makes a difference. People who are learning are likely to be more confident about their future growth.
Southwest Airlines is a well-known story, largely because of the company’s reputation for having a fun and caring culture. Flight attendants are often eager to sing, joke around, and in general entertain customers. They also radiate energy and passion for learning. (Southwest has consistently outperformed all competitors for a long time).
How the Growth Outliers Do It by Rita Gunther McGrath. Only 8 % of 4,793 companies (in a worldwide sample of companies with sales exceeding one billion USD) grew their revenues by at least 5 % a year and only 4 % achieved income growth of 5 % in each of last five years. Over ten years, only 10 qualified and only five grew both revenues and income by 5 % each year. There is a great contrast between what investors and observers expect and what the vast majority of companies deliver. The data suggest a need to rethink assumptions about corporate performance. Steady consistent growth is difficult to achieve even at modest rates, never mind by double digits that corporate leaders are fond of promising. (in his book ‘Exile on Wall Street’ the author Mike Mayo says that the two banks with the highest growth ambitions, Citi and First Third, had the poorest stock price performance – my comment)
The growth outliers do a tremendous amount of experimentation and innovation. They develop and deploy technologies, move into new markets, explore new business models, and even open up new industries. They take on acquisitions and aggressively seek input from people and organizations quite unlike their own. They rapidly adjust and readjust resources and are comfortable moving executives and other employees from one role to another. Outliers favor adaptability over pure efficiency, even though it occasionally leads to less-than-perfect outcomes. They focus management attention on culture and shared values. “When we decide to get out of something, we slow down allocating resources to it. You don’t need to chop it off – you need to let it live its life. Since we are in talent business, it is easy for us to repurpose the leadership and the talent.”

The outliers keep their senior leadership stable. All ten companies had internally promoted CEOs; there were no white knights or outside-the-industry saviors. Interestingly - and consistent with the findings of other researchers over the years – these CEOs kept a low profile. They were respected, known to have made major contributions, and somewhat visible in the press, but not charismatic (or narcissistic). The five leaders we had the pleasure to meet with were all low-key, courteous and attentive.

Some companies are investing in their workers and reaping healthy profits by Zeynep Ton. Almost one-fifth of American workers have bad jobs. They endure low wages, poor benefits, schedules that change with little, if any, notice, and few opportunities for advancement. Highly successful retail chains have demonstrated that even in the lowest-price segment of retail, bad jobs are not a cost driven necessity but a choice. Many retailers see staff as a cost driver rather than as a sales driver and therefore focus on minimizing its costs. When retailers view labor not as a cost to be minimized but as a driver of sales and profits, they create a virtuous cycle. Investment in employees allows for excellent operational execution, which boosts sales and profits, which allows for a larger labor budget, which results in even more investment in store employees.
Dividing attention deliberately by Cathy Davidson. We all know the story of contemporary distractions. In the past decade the world has gone from a total of 12 billion emails a day to 247 billion, from 400,000 texts messages to 4.5 billion, from individual weekly 2.7 hours on the net to 18 hours. Research shows that accident, disruption, distraction, and difference increase our motivation to learn and to solve problems, both individually and collectively. The key is to embrace and even encourage interruptions. In future, continuous partial attention will perhaps be seen not as a problem but as a critical new skill. And maybe we won’t call it multitasking – we’ll call it multi-inspiring.

Notes by [e-mail] 14 Jan 2012

Harvard Business Review December 2011
The December issue has a brilliant article by management guru Gary Hamel called ‘First, Let’s Fire all the Managers.’ Practices described may be a little extreme but there is a lot for any and all companies/ organizations to consider and incorporate. In addition there are some interesting articles on good retailing integrating online and store activity. Please find below a few notes from the issue.
First Let’s Fire all the Managers by Gary Hamel
Management is the least efficient activity in your organization. A hierarchy of managers exacts a heavy tax on any organization. An organization with 100,000 staff and one manager per ten staff needs not only 10,000 managers but 1,111 managers to manage the managers. In their eagerness to exercise authority, managers often impede, rather than expedite, decision making. The problem isn’t the occasional control freak; it is the hierarchical structure that systematically disempowers lower level employees. For example, as a consumer you have the freedom to spend $20,000 on a new car, but as an employee you probably don’t have the authority to requisition an office chair for $ 500. Narrow an individual’s scope of authority, and you shrink the incentive to dream, imagine and contribute.
I am driven by my mission and my commitments, not by my manager.

What strengthens my resume is more responsibility, not a bigger title. Moving up is about competency and reputation, not the office you hold.

Advantages with self management include; lower cost, deeper expertise, more collegiality, better decisions, greater initiative, increased flexibility and higher loyalty.

As many as 50% of seasoned hires leave within two years because they have a hard time adapting to a system where they can’t play god.

Everyone is a manager here. Morning Star’s (the company profiled) long running experiment suggests it is both possible and profitable to syndicate the task to just about everyone. When individuals have the right information, incentives, tools, and accountabilities, they can mostly manage themselves.
Morning Star runs with hierarchies of influence, not of position, and they are built from the bottom up. No one believes that everyone should have an equal vote on every decision, but neither does anyone believe that one person should have the last word simply because he or she is the boss.
With a little bit of imagination it is possible to transcend the seemingly intractable trade-offs, such as freedom versus control that have long bedeviled organizations. We don’t have to be starry eyed romantics to dream of organizations where managing is no longer the right of a vaunted few but the responsibility of all.
Reinventing Retail – three interesting articles on how retailers must act and think to survive.

The Power of Collective Ambition by Douglas A Ready and Emily Truelove.

Standard Chartered Bank articulated its new brand promise: to stay around for the long term and do good for communities. SCB has also begun to bake ‘Here for Good’ into its core business processes. For example, a loan applicant must write a paragraph about why SCB should trust that they, too, will be here for good. We recommend that you put purpose at the heart of your company’s story. Purpose is the center around which vision, strategy, brand, values, and leaders behaviors must orbit.
The path to excellence is not terribly complicated. Commit to collaborating to shape a powerful story about why people should come to work and how they can pull together to build a future. The glue and the grease – combined with a dose of good old fashion discipline – will allow the team to unleash your company’s collective ambition.
Who Really Makes the Big Decisions in Your Company by Bob Frisch
Acknowledge that the nameless decision making exists, and ask how you can make more deliberate use of them.
Much of the ambiguity about corporate decision making stems from the misconception that an org chart reflects how a company is run.

Having regular dialogue about the senior team’s world view is one hallmark of a strategically well-managed business.

Whichever approach a CEO chooses, the goal is not necessarily to win the consent, real or resigned, of all members of the executive committee but instead to base a decision on the best possible input. The enterprise does well by freeing itself from the tyranny of the org chart, and leaders can create structures that let them manage best.
[e-mail] 21 November 2011

Harvard Business Review November 2011

Another very interesting issue. The thrust (again) really is on aligning business with societal value. “Great companies create value for society, solve the world’s problems, and still make money, too.” This key sentence is already on the cover of this issue. It also harmonizes with what has come out of HBR the last five years. Profits, happiness and success will ensue when what you are doing also makes sense for the people – employees, customers and the general public. Please find a few notes from this issue below.
People don’t need a profit motive to innovate by Eric von Hippel
User innovation by people and firms who invent things intending to use them rather than to sell them is increasing. Many costs associated with innovating have fallen precipitously because of advances in technology. Users are finding it cheaper and cheaper to develop exactly the products they want for themselves. Unlike commercial developers, users are motivated by the private return they get from using their innovations. Monopolies created and supported by the patent system increase prices and retard follow-on innovation.
Corporate Boards for S&P 500 by Spencer Stuart
37% of directors are over 64 years old. 83% of boards have 12 or less members. 84% of directors are independent. 9% of boards have female directors and 16.2% of corporate directors are female. Average board retainer plus meeting fees per director is $ 95,000.
Co-opt the Old Boys’ Club: Make it Work for Women by Ilene H Lang.

 Women who highlighted their achievements advanced further, were more satisfied with their careers, and had greater compensation growth than women who failed to blow their own horns. The strategy of appraising your manager of your accomplishments, seeking feedback and credit appropriately, and asking for well deserved promotions – was the only one associated with compensation growth.

The Good Company (theme with several articles)
How Great Companies Think Differently by Rosabeth Moss Kanter
Instead of being mere money-generating machines, they combine financial and social logic to build enduring success. It is time that beliefs and theories about business catch up with the way great companies operate and how they see their role in the world today. Great companies work to make money, but in their choice of how to do so, they consider whether they are building enduring institutions. As a result, they invest in the future while being aware of the needs of people and society. Meaning making is a central function of leaders, and purpose gives coherence to the organization. Social purpose needs to be at the forefront of everyone’s mind and organizational values must be used as a guide for business decisions.

In companies that think of themselves as social institutions, work is emotionally compelling and meaning resides in the organization as a whole rather than in less sustainable cult of personality.  IBM’s CEO, Samuel Palmisano, circumnavigates the globe six or seven times a year to meet with national and regional officials, discussing how IBM can help their countries reach their goals. This is not sales or marketing; it is a high level conversation to demonstrate the company’s commitment to furthering the development of countries it operates in.

The more interested that top leaders are in external relations, the more likely they are to involve others and reward them for building relationships with the nation or the community. Although relatively few people might hold formal responsibility for these external interfaces, a great many might perform institutional work by volunteering, attending public meetings, and participating in community service.

Managers in great companies understand that formal structures can be too general or too rigid to accommodate multidirectional pathways for resource and ideas flows. Rigidity stifles innovation. Job descriptions nowadays document only part of what people do; performance reviews and salary bands capture only some of the activities through which people might add the most value for the company.

A logic that justifies treating employees as self-determining volunteers – in essence, as true professionals who care about high performance because they believe in the company as an institution – makes it important to have a motivating purpose and values to provide coherence and common identity. Great leaders already use an institutional or social logic to supplement economic or financial logic in guiding and growing their enterprise. Leaders in great companies can tell a different story about the basis for their decisions. In so doing they are able to produce new models for action that can restore confidence in business and will change the world we live in.
Trying to be India’s Most Respected Company? N R Narayana Morthy
If you seek respect from customers you must deliver what you promise. If you seek respect from employees, you must treat the fairly and with dignity. If you seek respect from investors, you must operate with transparency and accountability. If you seek respect from vendor-partners, you must deal with them on merit. If you seek respect from governments, you must never violate any laws. If you seek respect from society, you must live in harmony with it and create good will. If we can do all that we would attract customers, employees, vendors and investors; revenues, profits, and market capitalization would follow.
Let the good news take the stairs, but make sure the bad news take the elevator.

Our parents taught us the importance of education, hard work, decency, courtesy, honesty, respect for others, and putting the community’s interest ahead of that of the individual. Our external role models were our teachers, both in school and university, who taught us to be inquisitive, analytical, articulate, and team oriented.

It takes time to benefit from putting values first. You feel the pain immediately and you reap the gains only in the long run. Values cannot be just part of the strategy process, they need to be second nature for everything in the organization.
Five companies are presented whose success is built on responsible business practices; Royal DSM, Southwest Airlines, Broad Group, Potash Corporation and Unilever.
The For Benefit Enterprise by Heerad Sabeti
For profit businesses are tackling social and environmental issues, nonprofits are developing sustainable business models, and governments are forging market-based approaches to service delivery. Better to call not-for-profit