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How to Improve Your Sales Skills, Even If You’re Not a Salesperson

May 22, 2017 - 12:00pm

At some point in your career, even if you’re not a salesperson, you’re going to have to sell something — whether it’s your idea, your team, or yourself. So how can you improve your sales skills, especially if you don’t pitch people often? What should you focus on first? And what should you do if you lose a sale?

What the Experts Say
Selling has a bad rap, says Thomas Steenburgh, professor at the University of Virginia Darden School of Business. “Very few parents say they want their kids to grow up to be a salesperson,” he says. His MBA students are no different. “Many of them tell me that sales is something they never want to do in their careers.” And yet, he says, “Sales is the most fundamental skill.” Scott Edinger, the founder of Edinger Consulting Group and the author of The Hidden Leader, says that the resistance to sales stems from an “antiquated idea that selling is pushing people to buy something they don’t want, don’t need, or can’t afford.” But that notion is outdated. “Selling is moving somebody else to action,” he says. And that is part and parcel of professional life. “If you look at things you do over the course of your day, from internal meetings with colleagues to clients calls, almost all of your interactions involve some form of selling.” Here’s how to get better at it.

Reflect
Getting comfortable with sales requires an “understanding of what selling is,” says Edinger. Move beyond the used car salesman cliché. “Selling is not about putting undue pressure on and talking incessantly,” all while “wearing a light blue polyester suit,” he says. Rather, selling “is persuading, inspiring, and leading.” Your goal is “to work in collaboration” with a client or colleague “to drive change.” To get into the right mindset, Steenburgh recommends reflecting on your past positive experiences as a customer. “When you think about the best sales interactions you’ve had in your life, it’s almost like the salesperson wasn’t there,” he says. The seller was just “a person who’d taken a genuine interest in your problem and was helping you solve it.”

Put yourself in your counterpart’s shoes
“People buy for two reasons,” says Steenburgh. They either have a business problem that needs to be solved or they have a personal need, such as a desire to move up in the organization” that your idea helps accelerate. It’s your job to figure out your customer’s motivations: “What would it take to get your boss to sign off on a project or to get your clients excited about what you have to offer?” says Edinger. Do your research by talking with the people you’re trying to win over, and others in the know, well in advance of making your proposal. Think about what information you need to uncover. “Be empathetic. Focus on understanding the other party — what they need to accomplish and how they measure success.” This will help you tailor your recommendations.

Plan and practice
Crafting your sales pitch should not be a solo endeavor. Edinger suggests enlisting “a trusted peer or manager” to “role-play” so you can “see what works and what doesn’t.” Your goal is “to understand how the flow of these conversations feels and sounds.” Your colleague can coach you on how you come across and how to improve your delivery. Steenburgh recommends practicing in front of novices. “Talk to someone who is not an expert in the field, such as your grandmother,” he says. “Her questions will help you frame the problem.” Chances are, your first attempt at a pitch will miss the mark. “People spend so much time in their own heads, thinking about their idea, that they fail to draw the connection to how the product will improve someone else’s life,” he says.

Stay calm and don’t brag
Even with meticulous preparation, pitches can go awry. Your adrenaline is surging, so you may end up talking too much or failing to get to the point quickly. There is no easy solution, says Edinger. His advice: “Chill out.” Try to “relax your facial expressions” and keep your body language confident and loose. Check your tone and pacing. “Nobody wants to be lectured. Be respectful” but not overly deferential, he adds. “Establish a peer-level interaction. You’re not begging on bended knee.” Another common problem, says Steenbergh, is “letting your ego get in the way.” Sometimes, you get caught up in “talking about your strengths, and not what your counterpart wants,” he says. “At best, the person gets bored. And worst, it sends a message that you’re [not right] for the job.”

Close the deal
Being good at selling means you both “understand the ‘customer’ and understand the path they need to go through to buy,” says Steenburgh. It’s rare that anyone will immediately bite upon hearing your pitch — no matter how brilliant it is. Your counterpart “might need to assess the financial impact of such a purchase,” review competitors, or check with a higher-up before signing off. Regardless of what that next phase may be, you should “ask permission to move forward.” He recommends saying something like, “Are you ready to take the next step? What else can I do to help you make this decision?” Be “flexible” and willing to brainstorm, says Edinger. Think about ways you can “work together in collaboration to improve a product, service, or idea.” If the answer is no, or not yet, use the opportunity to gently probe. “Is the new idea too threatening? Too difficult? Or too expensive?”

Think long term
Veteran salespeople know it’s possible that “you’re going to fail more than you will succeed,” says Steenburgh. “You just have to have the guts to keep moving forward.” To summon that courage, remind yourself “that it’s not always about you.” Your counterpart has to take many interests into account. Remember, too, that sales is rarely “a one-and-done deal.” If your pitch is unsuccessful, “go back to your target in three months and ask, ‘How’s it going? Are your needs being met?’ If they are, great, but if not,” you may have another shot. “Think about the big picture.”

Principles to Remember

Do:

  • Your research. Figure out what’s important to your counterpart and what business problems they’re trying to solve.
  • Role-play your pitch with a trusted colleague and ask for feedback on ways to improve your presentation
  • Ask permission to move forward after your initial pitch by saying something like, “Are you ready to take the next step?”

Don’t:

  • Tense up. Relax your facial expressions and keep your body language loose.
  • Talk too much — and especially don’t brag. Focus on how you can help your counterpart.
  • Beat yourself up if you’re unsuccessful. Think big picture. Stay in touch and look for opportunities to try again.

Case Study #1: Develop an understanding of your customer’s needs, and show empathic concern
Damian Vaughn, head of programs at BetterUp, a San Francisco–based company that connects employees with executive-level coaching, believes that being good at sales means that you understand both the “political and personal element” behind every buying decision.

“You need to be able to connect the dots between [your customer’s] business needs and their personal needs,” says Damian, a former NFL player turned entrepreneur. “And you need to show empathic concern.”

Earlier in his career, Damian worked as a management consultant. He wanted to sell his company’s organizational assessment and leadership development services to “George,” a CEO who had taken the reins of a technology firm poised for a great deal of change.

Before he developed his pitch, Damian did his research. “I needed to get a sense of the broader macroeconomic environment George was operating in,” he says.

He talked to George’s colleagues to develop a deeper understanding of the CEO’s personal motivations. The conversations were illuminating. “George was a seasoned CEO but not a veteran, and this was his first transformation,” he says. “He wanted to deliver business results, but he also had a need for significance. He wanted to prove that he belonged in this orbit.”

In addition, George was eager to connect with his employees. “The people component was really important to him,” Damian says.

He used this information to tailor his pitch to George. It was subtle: “The messaging was that the success we were going to achieve would tie directly back to him,” he says.

Damian also demonstrated how his consulting services would allow George “to engage and collaborate with his employees. I showed him how everyone would feel connected.”

At the beginning of the pitch, Damian provided a brief overview of his company’s services. Then he paused. It was George’s turn to talk. “I listened to George’s vision and intentions,” he says.

After George was done, Damian presented his case. “Our solution was what I’m sure felt like a customized service,” he says. “It was what the business needed and what he wanted.”

George signed on, and the successful engagement lasted about 18 months.

Case Study #2: Learn from mistakes and be willing to collaborate with your customers on a solution
David Neenan, president of international at TransUnion, a consumer credit reporting agency, often attends sales meetings at the C-suite level. “I am not a salesperson, but I have to represent the best of what we do and why it’s relevant,” he says.

Early on, he made mistakes. “I sometimes came in with too many ideas of where we might be helpful, and it overwhelmed the listener,” he says. “I have learned that sales takes discipline and that I need to pick and choose what to talk about once I understand the customer’s problem.”

Other times, “I left regretting that we didn’t make ‘the ask,’ or that we didn’t make it aggressively enough,” he says. Now he knows that the team needs someone in the meeting who is “not afraid to ask the customer to commit to a next step.”

He says he’s picked up a lot from TransUnion’s best salespeople, and from conversations with customers: “A client once said to me, ‘A good salesperson takes you where you want to go. A great salesperson takes you where you need to go,’ and it’s true,” he explains.

A few years ago, David was in a sales meeting with a big bank that wanted to cut its approval process for credit seekers to less than 10 seconds.

“We understood that this was not going to be a quick fix, because we did not have an off-the-shelf solution,” he recalls. “We needed to take a couple of leaps forward and brainstorm with the client to see how we might build a model or framework to solve the issue.”

David enjoys this kind of collaboration. “I work in 30 countries, and I like sharing experiences from other markets by taking what we know works in Market A and applying it to Market B,” he says. “That’s when you start to use the word we, as in ‘We are solving the problem together.’”

David and his team marshaled the internal resources to build a solution for the bank, and it signed with TransUnion.

Why Is Cybersecurity So Hard?

May 22, 2017 - 11:20am

After nearly 20 years of trying and billions of dollars in investment, why are organizations are still struggling with cybersecurity? In fact, the problem seems to be getting worse, not better. Answering this question requires moving beyond a purely technical examination of cybersecurity. It’s true that the technical challenges are very real; we don’t know how to write bug-free code, for example. But if you look at the challenge more broadly, even if we resolved the technical issues, cybersecurity would remain a hard problem for three reasons:

  • It’s not just a technical problem
  • The rules of cyberspace are different from the physical world’s
  • Cybersecurity law, policy, and practice are not yet fully developed

The first reason — that cybersecurity is more than just a technical problem, incorporating aspects of economics, human psychology, and other disciplines — has been explored in other articles in this cybersecurity series. However, the other two reasons also contribute strongly to making cybersecurity difficult, and our approaches must take them into account.

Differing Rules in Cyberspace

Cyberspace operates according to different rules than the physical world. I don’t mean the social “rules” but rather the physics and math of cyberspace. The nodal nature of a light-speed network means that concepts like distance, borders, and proximity all operate differently, which has profound implications for security. First, with distances greatly reduced, threats can literally come from anywhere and from any actor. Second, the borders in cyberspace don’t follow the same lines we have imposed on the physical world; instead they are marked by routers, firewalls, and other gateways. Proximity is a matter of who’s connected along what paths, not their physical location.

Insight Center

As a result, our physical-world mental models simply won’t work in cyberspace. For example, in the physical world, we assign the federal government the task of border security. But given the physics of cyberspace, everyone’s network is at the border. If everyone lives and works right on the border, how can we assign border security solely to the federal government? In the physical world, crime is local — you have to be at a location to steal an object, so police have jurisdictions based on physical boundaries. But in cyberspace you can be anywhere and carry out the action, so local police jurisdictions don’t work very well.

The same principles of cyberspace that allow businesses to reach their customers directly also allow bad guys to reach businesses directly. Yet you can’t have governments get in the way of the latter without also getting in the way of the former. Sharing information among people at human speed may work in many physical contexts, but it clearly falls short in cyberspace. As long we continue to try to map physical-world models onto cyberspace, they will fall short in some fashion.

Legal and Policy Frameworks

Next, cyberspace is still very new from a legal and policy point of view. In the modern form, the internet and cyberspace have existed for only about 25 years and have constantly changed over that time period. Therefore, we have not developed the comprehensive frameworks we need. In fact, we don’t yet have clear answers to key questions:

  • What is the right division of responsibility between governments and the private sector in terms of defense?
  • What standard of care should we expect companies to exercise in handling our data?
  • How should regulators approach cybersecurity in their industries?
  • What actions are acceptable for governments, companies, and individuals to take and which actions are not?
  • Who is responsible for software flaws?
  • How do we hold individuals and organizations accountable across international boundaries?

Some answers are beginning to emerge. For example, we should not expect the federal government to protect every business from all online threats all the time — it’s simply not practical, nor is it desirable, because it would significantly impact the way we’re able to do business. On the other hand, we can hardly expect most organizations to thwart the activities of sophisticated nation-state actors. So how do we resolve this dilemma?

Perhaps we should borrow concepts from the disaster response world, and divide responsibility in a fluid manner that adapts over time in response to changing circumstances. In disaster response, preparedness and initial response reside at the local level; if a given incident overwhelms or threatens to overwhelm local responders, then steadily higher levels of government can step in. We could apply these principles to allocating responsibility in cyberspace — businesses and organizations remain responsible for securing their own networks, up to a point. But if it becomes clear that a nation-state is involved, or even if the federal government merely suspects that a nation-state is involved, then the federal government would start bringing its capabilities to bear. Fully answering these questions is the key cybersecurity policy task for the next five to 10 years.

As long as we treat cybersecurity as a technical problem that should have easy technical solutions, we will continue to fail. If we instead develop solutions that address the reasons why cybersecurity is a hard problem, then we will make progress. The Cyber Threat Alliance (CTA) is just one example of this approach (disclosure: I’m the president of CTA). A little over two years ago, a group of cybersecurity practitioners from several organizations concluded that the industry’s operational model was not producing the desired results and decided to adopt a new one — to work together in good faith to begin sharing threat information in an automated fashion, with everyone contributing to the system, and with the context of threats being given a lot more weight. CTA’s structure is an attempt to deal with the known flaws in existing information sharing efforts. If we can continue to innovate in this manner, we can finally begin to make some progress against this seemingly intractable problem.

8 Ways to Get a Difficult Conversation Back on Track

May 22, 2017 - 10:00am

Despite our best intentions, conversations can frequently veer into difficult territory, producing frustration, resentment, and wasted time and effort. Take David, one of my coaching clients. Recently appointed to a business school leadership role, he was eager to advance his strategic agenda. Doing so required building his team members’ commitment to and sense of ownership over the proposed changes. When people were slow to step up and take on key tasks and roles, David felt frustrated by what he saw as their unwillingness to assume responsibility.

For example, when he spoke with Leela, the head of the school’s specialized online master’s degree programs, he shared his plan to increase enrollment in these programs to boost revenue. He believed that the programs could accommodate 20% more students at the same staffing level with no loss of student satisfaction; Leela disagreed. David argued, and when Leela pushed back with concerns and counterarguments, he batted them away. Nothing got resolved. David believed that if he “won” an argument — through logic, force, or stamina — that meant his conversational partner had accepted his argument and would proceed to act upon their agreement. Instead, his team members left unconvinced and uncommitted.

David’s conversational inflexibility made it near impossible for him to lead change. Instead of motivating and facilitating progress, he exasperated and exhausted his team.

To have more-effective conversations, he needed to add more tools to his conversational toolbox and learn to use them skillfully. Below are eight strategies David put into practice, all of which you can use to get conversations back on track and then move them forward.

Shift the relationship from opposition to partnership. In the midst of a difficult conversation, it’s easy to see your conversational partner as your opponent. Try repositioning yourself — both mentally and physically — to be side by side with the other person, so that you’re focused on the same problem. David told me that trying to convince his team to follow him felt like trying to break into a fortified castle. “How are you trying to get in?” I asked. “I’m trying to break through the wall with a battering ram. It’s the only way in!” he said. David realized that instead of approaching conversations like a frontal assault on a guarded building, it was better to knock politely on the castle door, where he was more likely to be welcomed inside. He now uses the metaphor of “coming around to the same side of the table” to remind himself to seek to build an alliance when a conversation gets stuck.

Further Reading

Reframe your purpose from convincing to learning. Conversations often go off track when we try to get someone to adopt our view or approach. When our purpose is to make another person see things our way, they are likely to resist — and arguing blocks learning and sends conversations into a ditch. No matter how well-spoken and logical we may be, we can’t understand and solve the problem without exploring how the other person sees it. Whenever David fixated on persuasion as his conversational objective, he became ineffective. As Leela explained, “There’s a lot David doesn’t understand. It would be better if he would work with us rather than trying to ram his plans through, but he doesn’t seem to be interested in learning about our experience and expertise.” Consciously shifting into a learning mode helps us gain the insight we need to be creative, to collaborate, and to move the conversation forward. Loosen your grip on your own viewpoint, at least temporarily, so you can make space to take in your partner’s. David employs the mental trick of being a fly on the wall, a neutral, objective third party who’s witnessing the conversation. From that mental perch up, he’s not trying to convince and he doesn’t have the urge to defend his viewpoint. He doesn’t feel invested in either side, so he can accurately see what and how each is communicating.

Verbalize your intention. Transparency helps facilitate productive conversations. Share your purpose and what you hope to achieve with your partner. For example, you might say, “I’d like each of us to get all of our concerns out on the table, so that we can be confident we’re not missing anything.” Ask what they’d like to get out of the conversation. Be explicit, not just about the topic and desired outcome of the conversation but also about process. For example, David said, “I want to remain open-minded and nonjudgmental. Will you let me know if I slip up at this?”

Avoid assumptions. Ask someone who’s just had a difficult conversation what went wrong, and they’ll likely describe what they believe was in the other person’s mind: “He’s totally focused on his own career and couldn’t care less whether the team succeeds.” Or, “She’s after my job. She wants me to fail.” The assumptions we make about another person’s intentions usually reveal more about ourselves than about what’s going on in their mind. Making assumptions also limits our effectiveness because it prevents us from fully understanding the situation and narrows the range of solutions we consider.

Examine the other’s perspective with openness and curiosity. To understand your conversational partner’s perspective, switch off defensiveness and turn on curiosity. Avoid asking leading questions such as, “You don’t want to become known as the difficult person in the office, do you?” Rather, try asking open-ended questions like these: “How does this affect you?” “What’s at stake for you?” “What is this conversation like for you?” “What do I need to understand?” “What would help us to get on the same page?” Thank them for their responses without rebutting what they’ve said.

Acknowledge your part. It’s very easy to identify what the other person has done wrong, and much harder to identify one’s own contribution to the problem. But acknowledging your part demonstrates how to take responsibility and encourages others to do the same. By asking open-ended questions and listening with detachment, David came to see that his desire for fast results led him to cut off discussion too quickly, giving his conversational partners the impression that he wasn’t interested in their ideas.

Learn your A-BCDs. University of Washington psychologist John Gottman identified four communication behaviors that derail conversations so consistently that he refers to them as “the four horsemen of the apocalypse.” With a mnemonic modification to Gottman’s formulation, I teach clients to avoid torpedoing conversations by “learning your A-BCDs,” by which I mean learning to Avoid Blame, Contempt, Defensiveness, and Stonewalling. In the absence of Leela’s enthusiasm for his plan, David rolled his eyes with exasperation (an expression of contempt) and barked, “Oh, come on. How are we supposed to get things moving if you won’t take on responsibility?” Here he was blaming her for the delay, while she still felt he hadn’t heard or responded to her concerns. When she raised her eyebrows at his outburst, he realized that he’d slipped up on his stated intention to remain open-minded during the conversation, which he acknowledged with a self-deprecating “oops.”

Defensiveness shows up when we deny responsibility for our own contribution to the difficult conversation. Leela contended that David should involve an assistant dean in the planning process. David felt defensive at what he interpreted as a suggestion that he was cutting out important players. He said, “If we have to talk with everyone, we’ll never get anywhere.” By defending his approach with a blanket statement about how involving more people will block progress, he signaled that he’s not open to input on how to move the process along.

Stonewalling can take a number of forms, including passivity, avoiding a certain topic, refusal to participate in or contribute to discussion, or withholding relevant information. If you find yourself engaging in any of these behaviors, refocus on what you’re trying to achieve and remember that examining difficult issues with openness and curiosity, while sometimes uncomfortable, is key to having productive conversations. Discuss the four behaviors with your team and agree that you’ll hold each other accountable for avoiding them.

Seek input to problem solving. Humans are motivated to preserve and protect our self-image, so feedback can be difficult to receive. We tend to reject information that threatens our identity (e.g., “The customer reports that you were impatient and uninformed”) and, therefore, we don’t learn from it. Executive coach Marshall Goldsmith recommends the simple and effective practice of “feedforward.” Instead of digging into what has happened in the past, tell the person what you hope to learn or achieve, and ask them for their suggestions. For example, David eventually asked Leela, “What can I do to invite greater participation in the change process?” She was so surprised the first time he tried this that it took her a few minutes to respond. Then she said, “I think it would help if, before moving to a decision, you ask if there’s anything else anyone would like to add and give people time to respond.” David appreciated the suggested tactic and added it to his tool kit.

Practicing any of these techniques will increase your ability to have productive conversations about even the most difficult or contentious issues. Then try out a second technique. The goal is to incorporate all eight into your repertoire, increasing your conversational agility and improving your ability to influence your colleagues.

As Machines Take Jobs, Companies Need to Get Creative About Making New Ones

May 22, 2017 - 9:00am

Jobs in retail, transportation, manufacturing, and agriculture are highly vulnerable to technological change. Retailers such as Macy’s and The Limited are closing hundreds of stores and cutting tens of thousands of jobs as people buy more and more products online, and others are testing robotic assistants or planning for autonomous stores. Over 33 companies are now working on autonomous vehicles, which will soon replace transport jobs. Robots have probably taken about 85% of the 5 million manufacturing jobs that have disappeared from the United States since 2000. Automated farming is also quickly advancing.

While our first instinct might be to help employees find new jobs, what we really need to do is help companies shift into new markets focused on human services and adopt new business models that will allow employees, customers, and communities to benefit from technological change.

First, companies, especially those with big brick-and-mortar stores that are being pinched by online retail, can turn their strategically located buildings into stores that benefit communities. This is already beginning to happen. For example, Walmart now offers optometry services, beauty salons, and restaurants. But why stop there? Why not also offer classes in yoga, fitness, cooking, nutrition, or well-being at an affordable price? Or child care, elder care, psychological services, rehabilitation, or meeting space for community groups? This would create new sources of revenue, improve communities, and offer new jobs and skill sets to employees who used to ring cash registers, stock shelves, or mop floors.

Another way to redefine the terms of the automation debate is to provide stock to employees, something many of the world’s most innovative companies already do. This practice helps companies recruit and incentivize workers. It also offers a buffer against the downsides of technological unemployment for employees.

Many people think stock only works with entrepreneurs and tech industry workers. However, a number of companies in the food industry, including Chobani and Starbucks, are leading the way in proving this model can work with factory and retail workers. In 2016 Hamdi Ulukaya, founder of Chobani, decided to give 10% of his yogurt company in stock to his 2,000 employees. He likely made several of them millionaires, and the rest received stock options worth about $150,000 each — a great deal of money for factory workers in Idaho and central New York, where the average cost of a home is $153,600 and $85,800, respectively. While this kind of approach helps employees prepare for technological unemployment by simply transferring more wealth to them and increasing their economic security, it is particularly valuable if a company plans to automate its jobs.

If an employee holds stock in a company, and is replaced by a robot, they may actually benefit from the robot taking their job and doing it better, since their stock’s value will increase as the company becomes more successful. Imagine if Uber gave out stock to its drivers today — several years from now, if Uber becomes a successful autonomous car company, its former drivers would gain financially. Stock options allow workers the possibility of becoming future owners and beneficiaries of the robots that replace them.

Some of the most innovative companies today are using technology to create win-win business models that allow their customers to generate income. For example, Tesla plans to let its customers to rent out their vehicles to pay off car loans and earn extra cash. Similarly, homeowners who have bought solar tiles will be able to sell energy back to power grids for additional income once they pay off their loans, which can take from eight to 11 years.

ReGen Villages, known as the “Tesla of Eco-Villages” is planning to apply this same model to village communities, where residents will employ technology to grow their own food and produce their own energy and water, and can sell excess goods to help pay off their original housing loans or generate additional income. ReGen is building its first village in the Netherlands, with plans to expand across northern Europe and the world.

As these business models scale and go mainstream, they will help create an economy that generates a bigger pie for everyone.

This transition won’t be easy, of course. Company leaders will need to invest time and money in studying their industries and how they will be impacted by technology. This includes not just understanding how competitors might use new technologies to create competing products and services more efficiently at lower cost but also exploring new business models and corporate models. While past business models succeeded by extracting value from employees and customers, future business models will succeed by partnering with employees and customers to create new wealth together.

In addition to traditional companies, we need those building the innovation economy to step up. For example, the growing ecosystem of incubators, accelerators, universities, institutions, investors, and others who support the startup ecosystem need to reach out to some of the more traditional players — such as the Teamsters, United Farm Workers, other labor unions, and big-box stores — and bring them along. Shouldn’t the next autonomous truck company be cofounded by technologists and truck drivers? Shouldn’t next-generation autonomous farms be cofounded by technologists and farmers?

Many argue that the workers, many of whom don’t have college educations and have worked in repetitive jobs for their entire lives, will have a hard time transitioning to the innovation economy. That isn’t true.

In Werner Herzog’s 2016 film Lo and Behold, Reveries of the Connected World, Stanford professor Sebastian Thrun shared that when he opened up the enrollment of a computer science class on programming self-driving cars, the top 412 grades went to non-Stanford students — a startling fact echoed by many other technical MOOCs. While universities are very important in educating and training future entrepreneurs (and I am not advocating for entrepreneurs not attending college), we must realize that there are potentially millions of underemployed people who could make the leap if the right doors opened.

There is also evidence that people who work repetitive jobs can make the transition to jobs that require completely different skill sets. For example, the nonprofit Truckers Against Trafficking engages those in the trucking industry in social entrepreneurship to help end human trafficking. Green for All and DreamCorps have helped some of America’s most vulnerable people transition into cutting-edge jobs in solar technology and coding, respectively. The Prison Entrepreneurship Program helps prisoners create business plans and relationships with business leaders, so that they can work as entrepreneurs once they leave prison. The leaders of these initiatives saw no limits to human potential and worked to create the uncommon partnerships and alliances necessary to help people succeed.

As we add more technology to our lives, we must continue to invest as much, if not more, in our human potential. It’s only our imagination about what we can do that is holding us back.

Research: How You Feel About Individualism Is Influenced by Your Social Class

May 22, 2017 - 8:05am

It’s often assumed that getting a college education or professional job means that a person from a working-class or low-income background has finally “made it” and will seamlessly join the middle or upper class. The reality, however, is often quite different. As Della Mae Justice, a successful lawyer who was raised in poverty, explained to the New York Times in 2005, “My stomach’s always in knots getting ready to go to a party, wondering if I’m wearing the right thing, if I’ll know what to do.” She continued, “I’m always thinking: How does everybody else know that? How do they know how to act? Why do they all seem so at ease?”

Despite Justice’s success as a lawyer, she still feels like an outsider in social settings with her colleagues. Her experience as an upwardly mobile professional is quite common. In fact, a growing body of research shows that one’s social class background — defined by the educational attainment, income, and occupation of one’s parents — continues to shape people’s experiences after they enter college and professional life. As people navigate these institutions, their backgrounds can impact the nature of their experiences and, ultimately, whether they reach their full potential. This is because social class is about more than the financial resources afforded by higher education and a prestigious occupation; having or lacking resources over time shapes people’s understandings of who they are and how they should interact with others.

Our body of ongoing research shows that people from working-class backgrounds tend to understand themselves as interdependent with and highly connected to others. Parents teach their children the importance of following the rules and adjusting to the needs of others, in part because there is no economic safety net to fall back on. Common sayings include “You can’t always get what you want” and “It’s not all about you”; values such as solidarity, humility, and loyalty take precedence.

In contrast, people from middle- and upper-class contexts tend to understand themselves as independent and separate from others. Parents teach kids the importance of cultivating their personal preferences, needs, and interests. Common sayings include “The world is your oyster” and “Your voice matters”; values such as uniqueness, self-expression, and influence take precedence.

Although many institutions, such as school and workplaces, can benefit from a strong dose of interdependence and collaboration, they tend to prioritize independence as the cultural ideal. Cornell University encourages students to pave their own path by choosing among a wide range of courses to design their own “independent major.” Likewise, Dartmouth College’s admissions website endorses the importance of individual self-expression: “What will impress us is YOU. You, letting your application express some aspect of your own story.” Workplaces tend to recruit and reward employees who take charge, confidently express their ideas and opinions, and promote themselves. For example, on its website, the consulting firm Deloitte says: “We want all our people to develop in their own way, playing to their own strengths as they hone their leadership skills.“ At the time we conducted our 2015 research, the website for the investment bank Morgan Stanley emphasized, “This is a great environment for the self-starter, someone who relishes a lot of autonomy…. The firm will support that and reward that quality.”

The mismatch between institutions’ cultural ideal of independence and the interdependent norms common among working-class individuals can reduce their opportunity to succeed. In higher education, for example, students from working-class backgrounds (i.e., students whose parents do not have four-year degrees) report wanting to help their families and give back to their communities, yet they confront a college setting that stresses paving one’s own path and exploring personal passions. This cultural mismatch is associated with earning lower grades in college. In a series of experiments we found that simply reminding students about the independent culture of college (for example, paving their own path) can increase their levels of stress, reduce their sense of fit or belonging, and undermine their performance on academic tasks.

The good news is that this social class gap in experience and performance is not static. When colleges include messages about the importance of interdependence, students from working-class backgrounds benefit. In the series of experiments described above, we also showed students a college welcome message that focused on either independence or interdependence (for example, giving back to your community). In the interdependent condition, first-generation students felt just as comfortable and performed just as well on an academic task as their peers from middle- and upper-class backgrounds. Further, with doctoral student Andrea Dittmann, our analysis of archival data of college sports teams showed that people from working-class backgrounds report greater fit with the team and ability to perform up to their potential when participating in teams that prioritize interdependence.

Drawing from this research, teachers and managers can use certain strategies to help their students and employees from working-class backgrounds realize their potential. One is to simply acknowledge that social class matters. Although some colleges and universities have begun to appreciate this, workplaces often ignore social class background altogether, even while they devote a great detail of attention to racial and gender diversity. As a first step toward maximizing the potential of students and employees from working-class backgrounds, institutions need to recognize social class as a form of diversity. In the same way that organizations provide affinity groups and mentoring programs for women and racial minorities, they should offer programs attuned to social class.

Another strategy is to provide people with opportunities to develop their independent selves in addition to their interdependent ones. Schools and workplaces could offer training sessions in which students and employees could learn and practice the expected independent behaviors, such as asserting oneself, showing confidence, and exerting influence. In addition, college advisors and workplace mentors could be trained to better understand the needs of working-class students and employees to provide them with the structured feedback they need to become more familiar with the largely independence-based “rules of the game.”

A final strategy is for institutions to meet students and employees where they are by tapping their interdependent strengths. Although most of us realize that excelling at skills like working together and adjusting to others can benefit organizations’ performance, we believe these skills are not valued as much as they should be. While many organizations talk the talk of valuing collaboration, they could do better by incorporating the value of interdependence into their everyday policies and practices, such as criteria for evaluation (i.e., hiring and promotion) and performance incentives. Hiring managers and admissions officers could be trained to look for students or employees who have demonstrated an ability to be a team player and adjust to others. In terms of performance, institutions could provide additional opportunities to work on teams, and incentives could be rewarded to teams based on their collective performance, rather than to individuals.

The story of the American dream is one of being able to achieve success through hard work and perseverance while coming from a humble upbringing. Despite its obvious appeal, the American dream is out of reach for many Americans. In many Western countries, even when people work hard to get a college degree or a job at a prestigious organization, they are at a disadvantage because of prevailing institutional norms. Although our suggestions are not a panacea, they are an important first step toward ensuring that “class migrants” have an equal opportunity to succeed in schools and workplaces. The potential benefits are huge — not only for students and workers but also for schools and workplaces.

Being the Boss’s Favorite Is Great, Until It’s Not

May 19, 2017 - 12:00pm

We’ve all been in situations where the boss has a favorite. It’s frustrating to feel underresourced and underrecognized while someone else is getting all the attention. Ironically, though, it can be just as challenging to realize that you’re the boss’s new “pet.”

While it’s great to get extra attention and have your work recognized, there’s often a price to pay for being the favorite. You could find yourself at risk in four ways. First, your teammates can start to resent you because of your proximity to power. They may see you as an informant or interloper, stop trusting you, and cut back on the typical mutual support among colleagues, such as sharing crucial information, connections, and other resources.

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Next, if you get too attached to your boss, your objectivity and ability to think independently may fade. You can get trapped in a version of groupthink, with a single set of shared relationships. Your joint creativity and decision making will begin to suffer from insularity, and it’s the more junior member of the duo — you — who’s most likely to be found wanting if performance lags.

Plus, sooner or later, you’ll lose your special status. Bosses who play favorites almost always change to new favorites. No matter what perks you’re getting today, your boss is not your friend. As a consultant to senior leaders for more than 25 years, I’ve seen executives swap out their favorites as their own needs and loyalties shift; today’s star eventually falls, and someone new gets to experience both the benefits and the burden.

Finally, being the favorite can derail your goals for professional advancement. This can happen if your boss delegates too many projects to you, leaving you with too little time to do your own work. It can also happen if your colleagues try to use you as a conduit to get their requests or concerns to the boss. Either way, you can end up without the bandwidth to seek out your own projects or skill development. Worse, if you’re too closely affiliated with your boss, you may no longer be evaluated on your own merits. Your boss’s detractors may regard you as no more than a stooge, meaning you risk further isolation and loss of influence if your boss’s stature is diminished in any way.

You can’t just keep your head down and wait things out — you need to be intentional about protecting your reputation as well as your career trajectory. Here are three tactics that will help you endure your stint in the spotlight.

Never oversell your clout. Preserve your role as a team player, instead of acting like the boss’s messenger or sharing confidential information you’re suddenly privy to. Don’t leak information from your boss to the team, and don’t pass along off-the-record information from the team to your boss.

A VP of marketing whom I coached learned that most people don’t like to help someone who makes too big a deal of himself, particularly when he couldn’t deliver consistently once colleagues started to lean on him to speak to the boss on their behalf.

The excitement this VP felt about having access to breaking news was a habit he didn’t want to give up, despite his peers’ obvious resentment. It took several difficult conversations to convince him not to stir the pot by being an unofficial source of “secret” data. Over time, he learned to share fewer indirect criticisms and to give credit where it was due, and his colleagues started treating him as a member of their team again, rather than as his boss’s errand boy.

Preserve — or reinvigorate — your objectivity. Get over any work crush you have on your boss, and interact with other executives to learn from their insights and savvy.

A midlevel executive I worked with had become so closely associated with his boss that he was treated as a minion with nothing to contribute in larger discussions. He felt frustrated and insulted when his opinions were ignored or distrusted as mere parroting of his boss’s views and goals, but he didn’t know how to change the situation.

We looked for opportunities for him to acknowledge and incorporate others’ perspectives, initially with his boss to ensure there were no hard feelings, and subsequently in public. His boss appreciated his growing input and acumen, and over time he got more attention from his boss’s peers and his own.

Protect your career options. Research what your next move could be and find ways to develop relationships with other leaders.

It’s always risky to be too close to your boss, because the situation can change in an instant — from warm and welcoming to cold and distant. If you appear to be spoken for, or if you’re treated as a prized possession, other executives may assume you’re not available for developmental experiences or high-profile experiments. You could be overlooked for opportunities that are available to others at your level.

One of my clients had been told not to consult with other executives by her somewhat paranoid leader. We brainstormed about how she could lay the foundations of relationships with other leaders, even if their work wasn’t directly related, and she spent time outside of her work assignments to keep her skills up to date. Now she’s been identified to participate in numerous special projects, and other senior leaders have expressed interest in having her join their projects or teams.

Sometimes, though, your boss simply won’t loosen the leash. Depending on how controlling — and how dependent — your boss is, even these approaches may not work quickly enough for you. If you’re feeling forced to function too much as a trusted sidekick and not enough as a whole person, it may be time to consider looking for a new opportunity, one where you can operate more independently and succeed through your own efforts.

But before you do anything drastic, talk with past recipients of your boss’s favoritism whom you trust, and learn how they managed to stick it out. If you have an active, trustworthy HR department, ask about the typical career development and growth paths for someone in your role. HR may have suggestions to help you survive being the “beneficiary” of your boss’s partiality. Apply these approaches, and you can successfully survive the mixed blessing of getting your boss’s extra attention.

How We Closed the Gap Between Men’s and Women’s Retention Rates

May 19, 2017 - 11:00am

Many companies continue to struggle with advancing and retaining women. As we’ve studied our own progress at BCG, we have found that gender disparities in our senior cohorts are not completely explained by traditional workplace concerns, such as work-life balance, maternity leave, unequal pay, and differential ambitions. We have identified a very different explanation, which is just as critical: the quality of the day-to-day apprenticeship experience.

Apprenticeship, the working relationships of junior team members learning alongside experienced colleagues, is critical to mastering the consulting craft and succeeding in professional services. It’s a model that’s increasingly used in companies of all kinds looking to accelerate the development of their high-potential people. Management consulting is a challenging environment in which to cultivate apprenticeship, because staff regularly jump from project to project and manager to manager. As in many fast-paced companies today, consulting staff operate without formal job descriptions or handbooks. So relationships are where employees develop critical skills and leadership capabilities.

However, when we analyzed the annual employee survey data specifically for high-potential, mid-career women who regrettably left the firm, we found the lowest scores were around the statement “I am satisfied with the apprenticeship and feedback I received.” Moreover, in a survey of employees leaving BCG, departing women ranked mentorship, not work-life balance, as the number one topic that the firm needs to improve on. Finally, in a survey of all North American staff, asking about 16 options of what people seek from a manager, “forming a strong relationship with my manager(s)” and “having someone in leadership who cares about me and reached out long after the project ended” were the most valued dimensions for women.

Equipped with this data, BCG teamed with leadership development consultancy BRANDspeak to launch a bold transformation across North America: Apprenticeship-in-Action (AiA). The AiA program focuses on the three components of apprenticeship that drive satisfaction and retention: relational connectedness, strengths-based development, and coaching for a range of effective communication styles — levers that are relevant to any manager who strives to get the best from individuals and teams.

Five years into the journey, we have seen remarkable improvements. Female promotion rates have increased nationwide across all cohorts, with a 22-percentage-point rise among senior managers, while the attrition of senior women has slowed by five percentage points. Retention of women in mid-career levels is now at parity with that of men. Satisfaction with BCG’s efforts to retain women has increased by 20 percentage points for all women and by 30 percentage points for senior women.

While it would be difficult to attribute all of this improvement directly to AiA, we believe it is a clear driver. Here’s why.

Improving Connectedness

Our research found that both genders, but particularly women, viewed many work relationships as transactional. To remedy this, AiA equipped managers to be more deliberate about investing in relationships, focusing on four elements: (1) making personal connections, (2) investing in individuals’ success, (3) guiding and advising, and (4) staying in touch between projects. We gave tactical suggestions for how managers could do this (e.g., use travel time to connect with team members and establish an open-door policy). We also reinforced connections through mentorship and sponsorships.

Since the program’s rollout, the firm has seen a nine-point improvement across both genders for those who report having a manager that proactively coached and developed them in their first year. One male partner shared that he now tracks check-ins with teammates on his to-do list and spends time “making sure they are meaningful conversations.” A female partner commented, “Now I’m vocal about the importance of having a personal connection, and someone who is invested in and is watching out for you.”

Using Strengths-Based Development

Our research showed that 63% of BCG staff across all levels and genders felt that our feedback focused too heavily on areas for development.

To address that, AiA introduced training and tools to enable managers to ground personal development in an individual’s differentiating strengths by creating a strengths inventory and linking each strength to a specific area for development. This allows people to leverage their strengths to accelerate improvement. For example, instead of telling someone who is quiet that they need to speak up in meetings, we may highlight their ability to extract insights out of analysis and suggest they think about what insights to share at the next meeting. This linkage has enabled a powerful transformation in the way managers and advisors give feedback and coach. One female consultant reflected that “understanding how my core strengths can help me to address my development areas and propel me forward in my career is much more helpful than focusing solely on where I need to improve.”

Training around leveraging strengths has contributed to an 18-percentage-point drop in the number of senior managers who think that feedback centers excessively on development areas. One male senior partner said, “Personally, I had my own philosophy about how to give feedback, but AiA has evolved it.” The female senior partner who leads the firm’s career development process commented, “We’ve introduced an entirely new vocabulary into our apprenticeship model. Our old rubric was that you’re ‘missing something.’ Now we’re looking for linkages between strengths and development areas, and all our written and verbal communication reflects that.”

Acknowledging a Range of Effective Communication Styles

As with many workplaces, BCG has traditionally operated according to male communication norms. Before AiA, women reported receiving feedback from managers to “be more aggressive” or “take up more space,” advice viewed by many women as ineffective or inauthentic (among other reasons, it’s difficult for a five-foot-tall woman to internalize how to take up space). BCG recognized that many talented leaders, particularly women, have strong communication skills that differ from the dominant style. The most effective communicators span a range of styles and tailor their approach to fit the audience.

AiA acknowledges the importance of communication range and has pioneered a new, comprehensive training, which includes coaching around “building rapport” and “reading the room.” More women and men now see a range of styles as being necessary to navigate diverse situations. Coaching helps individuals identify where they have gaps in their range and develop new skills. For example, while coaching previously focused on delivering tough messages and landing a point of view, today we are focused on facilitating two-way dialogues and building connectivity. This portion of the program is in the early stages, but the firm has already seen an eight-percentage-point decrease in the number of people who report that their own communication style is different from that of successful BCG employees. One male partner noted, “I’m much more careful of not trying to force-fit everyone to be like me.” Similarly, a female partner reflected, “Before AiA, the fights in career reviews were insane. Now I hear, ‘She needs to be more aggressive,’ and I hit the pause button and ask the room, ‘What if she doesn’t want to be more aggressive?’”

Reflecting on our five-year journey and the results we have achieved, we recommend three actions for any company in which talent management defines competitive advantage:

Embed apprenticeship into the delivery of core products and services. Identify a model that develops the talent you need and resonates with the diverse set of individuals you employ, and embed it: Make it part of training, professional development, the way managers are coached and evaluated. Monitor the impact — are your employees more satisfied on key dimensions? Are you retaining more top talent? As a leadership team, take ownership for addressing individuals and behaviors that don’t meet the target model.

Prioritize and monitor relationships. Build opportunities for relationships to develop and flourish. Incentivize leadership to invest in relationships and monitor their effectiveness. For high-performing talent and underrepresented groups, ensure they have performance-enhancing relationships at all levels. Collect information from individuals on which work relationships they consider their strongest, so you make sure there is someone who is supporting key talent.

Encourage diverse strengths and styles. A lot of organizations state that they want people with diverse backgrounds on their teams — but then coach people to behave uniformly. A truly diverse organization that reaps the benefits of diversity, better serving customers or clients in different situations, needs to value a range of communication and working styles. Feedback needs to build on the differentiating strengths of the individual, rather than their weaknesses.

BCG is in the process of implementing the AiA model beyond North America, aspiring to a global rollout. We also have plans to introduce AiA to other companies through our client work. And while originally designed with a gender focus, the program has benefited both men and women, with broader applicability to other diversity networks, including ethnic diversity, LGBT employees, and veterans.

We recognize that we have further to go before we reach our ambition of gender parity. Nonetheless, our experimentation offers a rare example of long-term progress on diversity goals. Results to date make us optimistic that transforming the day-to-day apprenticeship experience is fundamental to improving the satisfaction, retention, and advancement of our diverse workforce.

Research: Political Polarization Is Changing How Americans Work and Shop

May 19, 2017 - 10:00am

After the bruising and contentious 2016 U.S. presidential election, it’s not surprising that Americans’ evaluations of members of the opposite political party have reached an all-time low. According to data from the Pew Research Center, 45% of Republicans and 41% of Democrats think the other party is so dangerous that it is a threat to the health of the nation. This animus has spilled over into social networks: According to a HuffPost/YouGov poll, nearly half of Americans got into an argument with someone (a friend, family member, coworker, etc.) about the election last year. Fifty years ago few people expressed any anger when asked how they would feel if their child married someone from the other party. Today, one-third of Democrats and nearly half of Republicans would be deeply upset. On item after item, Americans not only disagree on the issues but also increasingly personally dislike those from the other party.

This is a phenomenon scholars call affective polarization. Political scientists have attributed a number of important consequences to the increase of affective polarization in the United States, chief among them increased gridlock and dysfunction in Washington, DC. But much less is known about whether affective polarization changes how we interact outside of politics. Do these partisan sentiments affect economic exchanges between individuals from opposing parties?

This question is especially timely given recent, post-election discussions of American consumers either supporting or boycotting companies for their association with the opposing party. For example, the group Grab Your Wallet has suggested that people boycott several companies over their ties to the Trump administration, including L.L. Bean and Macy’s, and the #DeleteUber hashtag spread after Uber failed to support New York taxi drivers’ protest of the administration’s travel ban. Ivanka Trump’s brand has been a political football used by both the left and the right. Are these simply highly publicized but isolated incidents, or do they represent a broader trend of partisanship shaping how people make economic decisions even in the absence of a public campaign calling for a specific boycott?

We conducted four experiments to address these questions by exploring the role of partisanship in shaping economic behavior. (The details of our analysis will be available in our forthcoming article in the American Journal of Political Science.) In the first experiment, a field study carried out in an online labor market, we assessed whether individuals are more likely to demand higher wages when they learn that their boss’s political party is different from their own. The second study examined whether people are less likely to purchase a heavily discounted gift card if the seller was affiliated with the other party, but more likely to do so if the seller is from their own party; the third study replicated this in a larger online marketplace. In our fourth study, an incentivized survey, we offered participants the ability to make money, but we told them that we would also make a donation to the opposing political party. Each of these experiments allowed us to assess how participants’ economic choices and actions are shaped by their partisan commitments.

All four experiments offer evidence that partisanship influences economic behavior, even when it is costly. For example, in the labor market experiment people were willing to work for less money for fellow partisans; this effect is as large as the effect of factors like relevant employment experience. When presented with a purchasing opportunity, consumers were almost twice as likely to engage in a transaction when their partisanship matched the seller’s. In our survey experiment, three-quarters of the subjects refused a higher monetary payment to avoid helping the other party —  in other words, they preferred to make themselves worse off so that they would not benefit the other party. Taken together, these results clearly indicate that the trends we highlighted earlier are unlikely to be isolated incidents. The impact of party attachments on economic choices is likely to be stronger and more widespread than generally recognized.

Our results highlight another point about partisanship in contemporary society: It has become an important social identity. It extends beyond particular policy beliefs or support for specific politicians. Our findings show that people evaluate the exact same transaction differently based on whether the other party is a Democrat or a Republican, even though their partisanship ostensibly provides no information about their quality as an employer or seller. (Other studies have found that partisanship shapes how people judge the seriousness of criminal acts, the suitability of someone for a merit scholarship, or whether they would want to date someone.) The mechanism behind this difference remains murky. People may infer characteristics such as trustworthiness based on partisanship, or may simply be reacting emotionally. Either explanation would fit the patterns we have found in our work. But what seems clear is that partisanship’s power is not limited to politics.

Our results call for paying greater attention to potential discrimination based on partisan affiliation. To date, few social norms constrain such behavior, and because social media makes political expression increasingly visible, it is now common to know the partisan attachments of those around us. Our analysis suggests that partisan-based discrimination may occur even in the most ordinary economic settings, and not just in response to highly publicized campaigns. As such, this type of discrimination should be the subject of more systematic scrutiny — not only from scholars but also from businesspeople, workers, and consumers. Lastly, our study raises the possibility that corporate executives who inject politics into their businesses can boost support among those who agree with them, but may alienate those who do not.

How to Make Raising Difficult Issues Everyone’s Job

May 19, 2017 - 9:23am
Laura Schneider for HBR

The CEO of a large real estate development company recently complained to me about a frustrating executive team meeting he’d just finished. One of the company’s historically high-performing businesses was struggling. Its leader had been in the job only six months and had made some changes to their marketing plan. The CEO believed this to be the culprit behind the slipping performance, and knew everyone on the team shared his view. But nobody raised it during the meeting. Frustrated and confused, he vented to me, “It’s not like we’re shy about having spirited debates. We are very blunt with one another. So why didn’t anyone volunteer their insight to help out a struggling peer? If I’m the one that always has to do it, it just looks like I’m doing group performance management!”

His views were accurate. In general, people in his organization didn’t shy away from conflict; they could comfortably spar with one another when their views differed. But when I asked them why they didn’t bring up their concerns about their colleague’s marketing shift, I got similar answers: People didn’t think it was their responsibility to address issues outside their business. They wanted to stay in their lane. It never would have occurred to them to interfere in the business of a colleague, especially if they hadn’t been asked. They didn’t want to look like a know-it-all or a busybody.

You and Your Team Series Difficult Conversations

While this team was comfortable with heated debate and hard pushback, the notion of initiating such conversations about each other was foreign. James Detert’s research at Harvard Business School reveals that even when people are comfortable speaking up, they often withhold information and concerns when they don’t believe there’s a good reason to do otherwise. In my experience working with more than 40 leadership teams, it’s not uncommon for leaders to have unspoken agreements not to tread on one another’s territories. And this is true even in environments where speaking up is safe and leaders actively solicit feedback.

Making it psychologically safe to speak up is one thing. Setting an expectation that people actually do it is another. If people only raise issues that specifically concerns them, you are reinforcing a type of individualism that undermines teamwork and cohesion. Research from the MIT Center for Collective Intelligence found that high-performing teams have even levels of participation across a group and empathetic engagement of team members’ concerns.

If you want people in your organization and leaders on your team to routinely raise difficult issues, regardless of who does or doesn’t benefit, you have to do more than let them know it’s safe to do so. You have to make it an expectation, and back it up with processes and behavior that reinforce it. Here are a few examples of what I’ve seen great organizations do.

Set the expectation. Let those you lead know that when they have insights about a colleague’s organization or strategy, you expect them to freely share them in a respectful and helpful way. When this doesn’t happen, the default mode for many groups and teams becomes a hub-and-spoke model of operating, where the leader becomes the primary source of keeping things synchronized and everyone else is excused to worry only about their own “spoke.” If leaders reinforce this for too long, it conveys that the only issues you must be concerned with are your own. Don’t assume people will see the self-evident need to avoid this. The higher up a leader is, the more pronounced the individualism that distinguished them to get there will be. Help leaders shift from standing apart to advancing their careers to joining forces with peers to create collective success.

Orchestrate “speed dating” exchanges. With many of the teams I have worked with, we spend a few hours in 20–30 minute one-on-one meetings, varying the questions we use to guide the conversations. Some teams do this on a quarterly basis. You could shape the conversation around leadership effectiveness, strategy execution, or the health of each respective relationship. In each round, both leaders exchange prepared views with each other, with commitments to follow up where necessary. This mechanism has been transformative for some teams, whose comfort with making each colleague’s success their agenda has become the norm for the rest of the organization.

Build shared problem solving into your regular meeting agendas. Here’s how it works: One member brings a business challenge they are facing. They frame the challenge at the outset of the conversation with about 15 minutes of context setting. Using a structured process, the rest of the team asks questions to clarify their understanding. After the questions have been addressed, the team offers ideas, feedback, and even support to help address the challenge. Using this method, I’ve seen leaders discover issues with their own leadership, view challenges from an entirely new perspective, and even out the resources spread across departments. This approach helps minimize feeling defensive or dismissive of others’ challenging views because you are expressly asking for them. Building it into your regular meeting agendas (and all your meetings have agendas, right?) helps reinforce the notion that speaking up is routine, expected behavior.

Measure trust. The foundational currency that fuels the freedom to exchange difficult views is trust. Like any currency, it has different values to different people. For some, it is extended or withheld based on competence. For others, it’s based on consistency in actions and words. For still others, it depends on common personality traits or how well they feel they know someone. In any group or team it’s almost always a blend of all of these. Whatever builds trust on your team, measure it. Through simple devices like short pulse-check surveys or smartphone apps that collect quick data, assess the strength of your team’s trust as they define it. Data on the health of collective trust acts like a report card. Teams are compelled to continually improve when their agreed-upon rules of the road are regularly reviewed. At least once or twice per year, teams should compare how they are performing with those norms and correct course when necessary.

Don’t leave raising difficult issues to chance. Embedded in those unspoken challenging views are the insights that could unlock great solutions or advance stalled strategies. Do more than try to convince people that it is safe to speak up. Make it an expectation that they actually do so.

Does It Pay to Hire Consultants? Evidence from the Bordeaux Wine Industry

May 19, 2017 - 8:05am

Consulting is pervasive in many industries. Yet the use of consultants remains controversial. Why would firms give away key activities to hired guns? Why would these “mercenaries” perform these activities better than in-house employees? Many employees dismiss consultants as people who “borrow your watch to tell you the time” — and then charge you for the privilege.

To evaluate the impact of hiring consultants and to figure out when they might offer the most value, I turned to the wine industry, where over two-thirds of wineries hire consultants to improve the quality of their wines. As a winemaking consultant put it: “My job is to make my client’s wine better. Even if the wine or the winery is awful, we have to do our best in the conditions we have.” The underlying rationale is straightforward: Better wines can be sold at high prices. Overall, I studied 311 Bordeaux wineries over a 10-year period. Wine quality was assessed using tasting scores from Wine Spectator and Robert Parker’s Wine Advocate.

In this study I distinguished between mean quality and variance in quality. On average, I found that wines made with the help of consultants had higher quality ratings. However, they also had less extreme quality ratings. Use of consultants, therefore, correlated with middle-of-the-road, less extreme wine ratings: neither excellent nor terrible. Many outstanding wineries did not use consultants, preferring to use only in-house talent. For instance, the owners of Pétrus have never used winemaking consultants. From 1963 to 2007, wines were made by Jean-Claude Berrouet, an in-house winemaker. When he retired, in 2007, his son Olivier took over as the in-house winemaker.

This is because the coin of the consultant’s realm is knowledge, which has two main origins: expertise, gained through education and training, and experience, accumulated by working with clients. Importantly, the raison d’être of consultants is not to provide their clients with ordinary knowledge. It is to develop best practices and to use them to improve their clients’ performance. The wine industry is no exception. As a winemaking consultant explained: “I studied the history of the great harvests we’d had here in Bordeaux, I looked for the common denominators. And what I found was that on those years there had been a lot of sun and low production. Very simple, very obvious. So I thought, OK, here are two factors that we can act on. What we’ll do is lower the production and seek to harvest more mature grapes.”

Because best practices are more tested than the practices of individual firms, they decrease the likelihood of very low performance. On the other hand, uniqueness is a necessary condition for outstanding performance. Because best practices are less unique than the practices of individual firms, they also decrease the likelihood of very high performance.

Moreover, I found that the quality of a winery’s resources make a big difference in how valuable it will find consultants. In the Bordeaux wine industry the terroir is the main resource. My study found that wineries with low-quality terroir benefit more from the help of winemaking consultants than wineries with high-quality terroir. For instance, so-called “garagiste” wineries are properties that have a low-quality terroir. They produce wines in small quantities (hence the label of “garage wine”) using the most advanced winemaking best practices. Without the help of wine consultants, some of them never would have been considered “outstanding producers” by wine critic Robert Parker.

My study focused on winemaking consultants. However, there are many similarities between winemaking consultants and other consultants. Like other consultants, winemaking consultants are essentially “knowledge workers” who create and disseminate knowledge. Thus, this study provides two important implications for firms that contemplate hiring consultants.

First, the decision to hire consultants should hinge on a firm’s strategy. If the objective is to improve performance, a firm should consider hiring consultants. If the objective is to achieve outstanding performance, “playing it safe” by hiring consultants is unlikely to be the right decision. Because their advice is not unique, consultants may actually be an obstacle to achieving success. As Steve Jobs, former CEO of Apple, once explained: “We don’t hire consultants. The only consultants I’ve ever hired…is one firm to analyze Gateway’s retail strategy so I would not make some of the same mistakes they made [when launching Apple’s retail stores]. But we never hire consultants, per se. We just want to make great products.” Importantly, uniqueness does not guarantee success; it may also lead to failure. Some of Apple’s products were huge successes (Apple II, Mac, iPod, iPhone, iPad), whereas others were complete failures (Lisa, Newton, eWorld online service).

Second, the decision to hire consultants should depend on the quality of a firm’s resources. Compared with firms with high-quality resources, firms with low-quality resources tend to benefit more from the help of consultants. When clients have low-quality resources, consultants have a lot of room to add value by leveraging their best practices. Hence, their (positive) impact on performance is very strong. Compared with low-quality resources, high-quality resources tend to be very productive no matter how well they are managed. Thus, consultants have fewer opportunities to enhance performance by implementing their best practices.

However, my research also found that firms may not be making their decisions about consultants in this rational way. Wineries with the best terroirs were actually more likely to hire consultants, despite benefiting less from their advice. The problem seems to be that these wineries were the ones with money to burn. By contrast, the firms with low-quality resources tended to be less profitable and less able to afford consulting fees. Paradoxically, the firms that could benefit the most from help are the very ones that are less likely to hire the help they need.

Why Doesn’t More of the Working Class Move for Jobs?

May 18, 2017 - 5:46pm

Joan C. Williams, director of the Center for WorkLife Law at the University of California Hastings College of the Law in San Francisco, discusses serious misconceptions that the U.S. managerial and professional elite in the United States have about the so-called working class. Many people conflate “working class” with “poor” — but the working class is, in fact, the elusive, purportedly disappearing middle class. Williams argues that economic mobility has declined, and explains why suggestions like “they should move to where the jobs are” or “they should just go to college” are insufficient. She has some ideas for policy makers to create more and meaningful jobs for this demographic, an influential voting bloc. Williams is the author of the new book, White Working Class: Overcoming Class Cluelessness in America.

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How Laws and Culture Hold Back Socially Minded Companies

May 18, 2017 - 12:01pm

Paul Garbett for HBR

Lots of business leaders want their organizations to have a positive social impact. They’d like to pursue a purpose and do good, not just deliver financial results. So why don’t they? In our conversations with business leaders we have heard two recurring obstacles: a culture of short-termism and the fact that corporate law puts shareholders first.

While culture relates to the informal rules that influence behavior (such as societal norms and codes of conduct), law addresses the formal rules that govern the behavior of individuals and institutions. But which is more important in shaping how firms behave? Our new research on the value of corporate purpose suggests that both law and culture are important.

We created a measure of how oriented a country’s laws were toward shareholder primacy by analyzing and coding legal documents from the Sustainable Development Task Force of the American Bar Association, which provide a standardized list of questions and answers from law firms on the legal frameworks underpinning the fiduciary duties of directors. To measure the short-term orientation of a country, we gathered information on the cultural dimensions of the sample countries using information from Geert Hofstede’s dimensions of national culture.

Using data for 32 countries, we compared a country’s level of shareholder primacy in the law and its short- or long-term cultural orientation to the number of certified “B Corps” present. B Corps are companies that have signed up to have their social and environmental performance assessed by an organization called B Lab. The emergence of over 2,000 B Corps around the world is significant because these organizations are redefining the idea of success in business to include social and environmental goals alongside profits. Our analyses control for the number of corporations and economic development in each country, to account for different levels of private sector development.

Our aim was to see how both law and culture affect how companies think about purpose and long-term thinking. Would law and culture predict the number of B Corps in a country? The idea isn’t that more B Corps in a country means more purpose-driven firms, since companies can pursue purpose without B Corp certification. (In fact, as we’ll explain, we expected to see more B Corps in places less friendly to long-term and purpose-driven firms.) But a correlation between the number of B Corps and our measures of law and culture would suggest that these two factors influence companies’ positioning and decision making around purpose and long-termism.

We discovered that there are more B Corps in countries that are culturally more orientated toward the short term. This is because in environments where short-termism is more prevalent, there is a higher need for differentiation and commitment to long-termism. In places where culture prioritizes the short term, entrepreneurs seeking to build purpose-driven organizations feel the need to seek out supporting institutions like the B Lab, whereas in long-term-oriented cultures they’re freer to pursue purpose under traditional structures.

The same can be said of environments with legal interpretations that prioritize shareholders over other stakeholders. We also found that there are more B Corps in countries with a higher degree of shareholder primacy present in the law. The evidence suggests that law and culture both play an important role in enabling purpose-driven companies to scale and achieve profitability.

Unfortunately, in our experience the dialogue around creating a more inclusive and sustainable form of capitalism is happening in silos. There’s one conversation happening about culture, and another one, largely disconnected, happening about law. Given the critical interplay between law and culture, that needs to change.

A cultural shift away from short-termism can create momentum to effect change in corporate law. And by changing the law, we receive formal recognition and enhanced legitimacy for the culture to shift even further. Business leaders interested in promoting purpose-driven organizations must recognize that neither force will succeed without the other.

Reflecting on David Garvin’s Imprint on Management

May 18, 2017 - 12:00pm

David Garvin, who died earlier this month, was by all accounts one of the great Harvard Business School teachers, lighting up the classroom and the minds of his students over the past 38 years. He was deeply generous to colleagues, younger faculty members, students — and, yes, to editors.

Garvin was a generalist more than a specialist, perhaps because he came of age at HBS during the 1980s, when the school’s primary focus was the development of skilled general managers. That quality made him (arguably) the quintessential HBR author. He didn’t produce one signature idea, like Robert S. Kaplan’s balanced scorecard or Clayton Christensen’s disruptive innovation. But he gave us something just as important, I think: curiosity about — and great insight into — the gnarly, complicated work that general managers do.

I’ll give a few examples, starting with his first HBR article but mostly concerning later work. (A review of his contributions, it turns out, provides a quick tour of several big ideas that practitioner-focused academics were consumed with in the relatively recent past.)

Garvin generally got right down in the weeds, examining how managerial work really gets done. “Managing as if Tomorrow Mattered” (1982), coauthored with Robert Hayes, certainly did that, looking in detail at how manufacturers’ use of “hurdle rates” to judge investment possibilities led to systematic underinvestment in both plants and human capital. But the article aimed higher, arguing that when corporate leaders invest with short-term results in mind, they put long-term performance at risk. (Sound familiar? One of the many articles circling back to this topic of late revisited the still-common use of NPV hurdles in investment decisions.) This prescient piece won the McKinsey Award, given each year to the HBR article judged to be the most significant — the first of several that Garvin took home.

I’ll fast-forward through the next decade, when Garvin, trained in operations, helped to answer the question much of America was obsessed with at the time: How Japanese automakers could make higher-quality, more-reliable cars than Americans, while charging less for them. The articles — “Competing on the Eight Dimensions of Quality” (1987) and “What Does ‘Product Quality’ Really Mean?” (Sloan Management Review, 1984) — hold up well, but as the new millennium approached and the economy grew less dependent on manufacturing, Garvin became less focused on quality management specifically and more concerned with all the processes organizations use to get work done.

A Sloan Management Review article (which I had the pleasure of working on) provides valuable context for Garvin’s most-read HBR articles. “The Processes of Organization and Management” (1998) explains why Garvin and others had grown so interested in using processes as a window into general management. For starters, examining processes is a good intermediate way to study organizations, more aggregated than looking at individual tasks and more specific than looking at the organization as a whole. Beyond that, it’s a coherent way to study managerial work holistically. To quote the article, “If organizations are ‘systems for getting work done,’ processes provide a fine-grained description of the means.” Garvin offers a framework for classifying processes and describes some of the ones he would return to in-depth in the pages of HBR: decision making, organizational learning, and communication.

For my money, “What You Don’t Know About Making Decisions” (2001), which Garvin wrote with Michael Roberto, is the best piece on organizational decision making in HBR’s archive. The central idea is that decision making is a process, not an event. The article defines the types of decisions executives have to make; lays out best practices for structuring major decisions; and warns about typical mistakes that get made along the way. Pair it with “The Hidden Traps in Decision Making” (2006), by John S. Hammond, Ralph L. Keeney, and Howard Raiffa, which looks at the cognitive biases that distort individual decision making, and you’ve got a beautiful primer on this most important of managerial tasks. No disrespect to recent articles on the topic, several of which break new ground. But if you could read only two articles, those would be the ones to go with.

I love two things about “Building a Learning Organization” (1993), Garvin’s initial foray into that topic in our pages (and his most-cited article). First is the fact that he mocks the overinflated claims that even respected scholars make when they’ve gotten excited about something: “Discussions of learning organizations have often been reverential and utopian, filled with near-mystical terminology,” he writes. “Paradise, they would have you believe, is just around the corner.” Second, as that quote demonstrates, the article is tough-minded. Garvin stresses the importance of rigorous experiments (years before experimentation became the rallying cry for a new generation of innovators); thoughtful problem definition; and smart, well-designed metrics. He doesn’t neglect the softer side of the topic (providing time for reflection, opening up boundaries), but they’re not the main course.

A follow-up article, coauthored with Amy Edmondson and Francesca Gino, delved more deeply into such issues as psychological safety, openness to new ideas, and leadership attention. But the main contribution of “Is Yours a Learning Organization?” (2008), it seems to me, is that it serves as an assessment tool that allows managers and executives to benchmark their organizations against other units and companies. Again, creating the right atmosphere won’t accomplish anything unless you define, measure, and manage what you’re trying to do.

Garvin was a prolific case writer, and although the cases informed his articles, they rarely took center stage. In “Change Through Persuasion” (2005), another piece coauthored with Michael Roberto, he departed from that norm, describing how Paul Levy, then CEO of Boston’s Beth Israel Deaconess Medical Center, led a painful turnaround. The article takes the reader through Levy’s process step by step, describing who needed to be persuaded, of what, when, and how Levy structured those communications. Turning around a troubled organization is tough — it may be the toughest thing managers are called on to do — and the authors don’t pretend to have discovered a secret ingredient. However, they build a good case that by treating a turnaround as a political campaign, one in which you must persuade disparate parties to join you, you’re starting in the right place.

When Garvin pitched the article that became “How Google Sold Its Engineers on Management” (2013), I laughed — how could anyone intelligent doubt that management matters? But it became clear, as my colleague Lisa Burrell worked on the piece, that while old-economy workers assume that management is important (even if they sometimes doubt the usefulness of their own managers), both founders and employees at the tech firms taking over the economy don’t necessarily share that belief. (This may pose a bigger problem for HBR and for business schools than anyone has acknowledged.) When Google’s founders realized that, yes, they did in fact need managers to help run things, they persuaded engineers of that necessity in a typically Google-esque (and Garvin-esque) way: They collected data, ran experiments, and shared their results with the staff. The bottom line was that teams with good managers perform far better than teams with average managers. Case closed (until engineers develop an algorithm that does the job better).

Garvin was famous at HBS for being a good mentor and a great listener. His last piece for us, “The Art of Giving and Receiving Advice” (2015), must have drawn on his own experience, although it’s research-based and filled with case examples. Coauthored with Josh Margolis, it takes what looks like an art and breaks it down into its parts: the stages of mentoring someone (or being mentored) through a big decision; the mistakes people typically make, on both sides of the relationship; the roadblocks to watch for; the troubles that arise after you think you’re done; and how to know whether the decision was the right one.

My impression is that David Garvin took more satisfaction from his reputation as a generous teacher and colleague than he did from his stature as a management thinker. Yet his published work is rich in wisdom and practical insight. Great leadership is extraordinarily difficult. Even basic managerial competence is way harder to achieve than most people imagine. For anyone aspiring to do that important work, Garvin on management is a must-read.

Research: Workplace Injuries Are More Common When Companies Face Earnings Pressure

May 18, 2017 - 10:00am

At a steel mill in Seguin, Texas, an employee suffered burns to more than 60% of his body after hot liquid steel spilled onto him. He died in a hospital three days later.

A 21-year-old plastics worker was treated for severe burns to his hand and had to have four fingers amputated after he was injured on his first day on the job at a factory in Elyria, Ohio.

A flawed network of pipes and valves at a manufacturing plant in La Porte, Texas, led to the release of a poisonous pesticide that killed four workers.

These are just three examples of recent workplace injuries and fatalities. U.S. companies are facing pressure to meet earnings expectations, and research indicates that meeting analyst forecasts is a more important benchmark than meeting the prior year’s earnings or avoiding losses. While these issues may seem unrelated, we wondered whether there is a connection or correlation. Do workplace injuries occur more commonly in companies that are facing increased pressure to meet earnings expectations?

In our study recently published in the Journal of Accounting and Economics, we test whether there is any relationship between workplace safety and managers’ attempts to meet earnings expectations. To do so, we used establishment-level injury data (e.g., individual store or factory) compiled by the Occupational Safety and Health Administration (OSHA) from 2002 to 2011 and matched it to earnings data. This yielded a sample of 35,350 establishment-year observations for 868 firms, excluding financial firms and firms in regulated industries. Our investigation focused on those companies that met or barely beat analysts’ expectations, and we uncovered a previously undocumented phenomenon of higher workplace injuries at these firms in particular.

The numbers are telling. Controlling for other factors, injury/illness rates are 5%–15% higher in periods where a firm meets or just beats analyst forecasts. The injury/illness rates for such firms are also significantly higher than those for firms that miss or comfortably beat analyst forecasts.

We found that pressure to meet earnings forecasts can relate to workplace safety in at least two ways: high workload and cuts to safety-related expenditures. When managers believe their company may be close to missing earnings benchmarks, they may increase employees’ workloads by pressuring them to work faster or for longer hours. In addition, employees may compromise their own safety by overexerting themselves or ignoring safety protocols that slow workflows. All of these behaviors can undermine worker safety.

Managers may also circumvent or overlook explicit and implicit safety-related measures, such as maintenance spending on equipment and employee training. When managers engage in such practices, workplace safety deteriorates and workplace injuries mount.

What does this mean in terms of real people? According to the injury data from OSHA, we find that about one in every 24 employees is injured in firms that meet or just beat analyst earnings forecasts, compared with about one in 27 workers in firms that miss or comfortably beat forecasts.

We identified three factors that characterized the companies that beat earnings benchmarks. First, we found that benchmark beaters in industries with high unionization report lower injury rates than those in industries with low unionization by about 6.4%. That’s because unions typically serve as a proxy for employees’ power to ensure safe work environments. They negotiate safety protocols and compliance into their contracts, and workers can report safety issues to their union representatives.

A second factor emerged when we compared the insurance premiums of workers’ compensation programs. These state-mandated programs differ considerably in their policies and coverage requirements. The premium in North Dakota, for instance, is $0.88 per $100 of payroll, while California’s is $3.48 per $100 of payroll.

It turns out that benchmark beaters in states with high workers’ compensation premiums have a nearly 5% lower injury rate, compared with those in lower-premium states. In other words, in states where workplace injuries are more costly, managers appear to be more diligent about their workers’ safety and less willing to increase workloads and demands on employees.

Finally, we found that companies doing considerable business with the government have better workplace safety records. Federal and state governments typically require that companies submitting bids for contracts maintain adequate workplace safety. Indeed, companies that do not meet certain workplace safety benchmarks may be barred from competing for such work. It’s likely that contract requirements cause managers to remain cognizant of workplace safety as they race to meet or beat expectations.

The effects that we document may represent the tip of the iceberg about employee health, as OSHA only collects data on relatively serious and physical injuries and illnesses that require hospitalization or days away from work. Additionally, our results suggest that disclosures about workplace safety could serve as signals to investors that managers are engaged in short-sighted activities to meet earnings targets. In other words, unusually high injury rates may signal that the firm is engaged in practices that resulted in a transitory boost to earnings that investors should not expect to persist.

When managers and workers lose sight of workplace safety while focusing short-term financial targets, the consequences can be severe. At the company level, the costs include fines, litigation, increased insurance and workers’ compensation premiums, and negative publicity. For workers, however, the price may be significantly worse: pain, lost wages, and, in the very worst scenarios, loss of life.

What to Do When You Have a Dysfunctional Team Member - SPONSOR CONTENT FROM KELLOGG EXECUTIVE EDUCATION

May 18, 2017 - 9:55am

Every team seems to have an alpha member — someone who is naturally dominant. Every team seems to also have a problematic or dysfunctional team member. Let’s call that person a delta.

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Take the case of Matthew, an executive at a large company in one of my courses last year. Matthew described the delta member on his team — a man he called Neal. According to Matthew, Neal was a “narcissistic, passive-aggressive egomaniac who was impervious to criticism or personal development.”

“How long has Neal been a problem on your team?” I asked Matthew.

Matthew sighed, “Five years.”

I asked Matthew what steps he had taken to deal with Neal. He had confronted Neal several times and told him he needed to change, and Neal had grudgingly agreed. But nothing changed: Neal continued to be dysfunctional.

Matthew tried talking to Neal a few more times, but to no avail. What was Matthew doing wrong?

The mistake that we see leaders make most often is that they want to “fix” the problem team member, much akin to taking a car to the shop.

However, it is likely that the entire car needs a tune-up. Leaders should resist the urge to ambush the delta member and instead, follow a four-step approach:

  1. Reassess and, if necessary, reassign the roles. What are the work tasks? What are the roles and responsibilities? More often than not, by changing one or more of these factors, the problem can be solved. Case in point: In one university task force, one team member was not contributing and was not responding to communications. When we queried this team member, we learned he felt resentful because he did not want the responsibility of scheduling the meeting room or managing the calendar.

    Instead, he wanted to focus on conducting an important competitive analysis. Once he was alleviated of “secretarial” responsibilities, he became a productive and positive contributor.

  2. If you still have a problem, revise the team process. How do team members communicate? What are the norms of engagement? What is the meeting style? One member on a financial services team was not contributing, lacked motivation and had no energy. The leader tried an experiment and moved the late-afternoon team meetings to the mornings. The “dysfunctional” team member became a high producer.

    On another organizational team, a newcomer stopped contributing because the senior team members arrived 10 minutes late for every meeting. The issue of punctuality was raised in a meeting and the group agreed to hold one another accountable for arriving on time. In many companies, members became resentful when they see others using their smart phones during meetings and openly multitasking. At Edmunds, team leaders bring in a large basket at the beginning of each meeting and collect all phones, computers and tablets, from the CEO on down. The result is a more engaged group.

  3. Give everybody a crash course on how to engage in healthy conflict. Problem team members often emerge in groups because conflict is being repressed. Team members often feel that they need to be polite and accommodating. Group researchers call this the politeness ritual, and it essentially leads to a superficial small talk with no one really knowing where they stand.

    Charlan Nemeth and her colleagues coached some teams to follow debate rules, while other teams followed brainstorming rules or did not have any particular rules. The teams who followed debate rules suggested more ideas and better ideas. This was replicated across different cultures.

  4. As a final resort, invite the team to coach each other. Don’t gang up on one person; put everyone under the microscope. We’ve developed an approach at Kellogg called 50-50 Qualitative Feedback, in which all team members give each other one piece of positive feedback and one piece of development feedback using simple notecards. My guiding rules are to write the feedback in a way you would want to see it for yourself. As the facilitator, I collect all the cards, distribute them into envelopes, vet anything that is unnecessarily vicious and carefully instruct members to not reveal or even guess who said what.

    On one occasion, I worked with the senior leadership team of a large health care organization. Before everybody opened their envelope, I instructed each team member to anticipate the feedback they thought they would receive. Everybody then summarized the positive and the critical feedback they received and developed a personal action plan for change.

The bottom line: Think of the delta member of your team as a “check your engine” light. Open the hood, roll up your sleeves and test all systems.

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With Kellogg’s Executive Education Program

Leigh Thompson is director of the Leading High-Impact Teams program, and co-director of the Constructive Collaboration Executive program and the Negotiation Strategies Executive program. You can work with Leigh Thompson and her colleagues in the Kellogg programs to improve your executive skills throughout the year.

For more information, visit the program website.

Be a team player: let Kellogg Executive Education teach you to be a better team member and leader.

Your Team Is Brainstorming All Wrong

May 18, 2017 - 9:00am

Jennifer Maravillas for HBR

When your team is tasked with generating ideas to solve a problem, suggesting a brainstorming session is a natural reaction. But does that approach actually work?

Although the term “brainstorming” is now used as a generic term for having groups develop ideas, it began as the name of a specific technique proposed by advertising executive Alex Osborn in the 1950s. He codified the basic rules that many of us follow when getting people together to generate ideas: Toss out as many ideas as possible. Don’t worry if they’re too crazy. Build on the ideas people generate. Don’t criticize initially.

These rules seem so obvious and clear that it’s hard to believe they don’t work. However, decades of studies demonstrate that groups that use Osborn’s rules of brainstorming come up with fewer ideas (and fewer good ideas) than the individuals would have developed alone.

Related Video Brainswarming: Because Brainstorming Doesn't Work Dr. Tony McCaffrey outlines a new way to generate ideas. See More Videos > See More Videos >

There are several reasons for this productivity loss, as academics call it. For one, when people work together, their ideas tend to converge. As soon as one person throws out an idea, it affects the memory of everyone in the group and makes them think a bit more similarly about the problem than they did before. In contrast, when people work alone, they tend to diverge in their thinking, because everyone takes a slightly different path to thinking about the problem.

You can harness the power of divergence and convergence to fix brainstorming, and several studies demonstrate that this works effectively. Here are some of the lessons from this research.

Let Individuals Work Alone First

Early in creative acts it’s important to diverge, that is, to think about what you are doing in as many ways as possible. Later, you want to converge on a small number of paths to follow in more detail.

You and Your Team Series Thinking Creatively

Many techniques use a structure like this. For example, in the 6-3-5 method, six people sit around a table and write down three ideas. They pass their stack of ideas to the person on their right, who builds on them. This passing is done five times, until everyone has had the chance to build on each of the ideas. Afterward, the group can get together to evaluate the ideas generated.

There are many variations of techniques like this. What they have in common is that they allow individual work during divergent phases of creativity and group work during convergent phases.

Techniques like this can be used in multiple rounds. For example, it is often important to spend time agreeing on the problem to be solved. A whole round of divergence and convergence on the problem statement can be done before giving people a chance to suggest solutions. 

Take Your Time

Another difficulty with brainstorming is that there are often some people in the group who don’t like uncertainty. They want to finish the process quickly and get on with implementing the new solution. These people are high in a personality characteristic called need for closure.

It’s important that groups have time to explore enough ideas that they can consider more than just the first few possibilities that people generate. One reason why techniques like 6-3-5 are successful is that they slow the creative process down. They alert everyone in the group up front that evaluation isn’t going to happen until everyone has generated ideas and has had a chance to build on them. As a result, even people high in need for closure are forced to wait until the ideas are developed.

Let People Draw

Many brainstorming sessions involve people talking about solutions. That biases people toward solutions that are easy to talk about. It may also lead to solutions that are abstract and may never work in practice.

As a result, many techniques (such as C-Sketching) require people to draw pictures rather than writing. Our studies suggest that a combination of drawing and writing is ideal for generating creative solutions to problems.

There are several reasons why drawing is helpful.

First, it’s hard for people to describe spatial relationships, so any solution that requires a spatial layout is better described with pictures than with words. Second, a large amount of the brain is devoted to visual processing, so sketching and interpreting drawings increases the involvement of those brain regions in idea generation. Third, it is often difficult to describe processes purely in words, so diagrams are helpful.

One caution about drawing: People tend to sketch quickly, in ways that make their sketches hard to interpret, so it’s useful to have words in the diagrams to help with the interpretation of these sketches. But haste may not be all bad. The same studies I referenced above also demonstrate that when other people look at crudely drawn sketches, they may misinterpret elements of the drawings in ways that serendipitously lead to new ideas.

One of the joys of the brainstorming session is you, as the group leader, don’t need to spend that much time facilitating or preparing. You just get people in a room and go. But while this makes things easier for you, it’s not good for the group. To develop stronger ideas, you need to manage the conversation so that the team doesn’t converge on a solution before everyone hears what others are thinking. Until you develop some expertise in helping groups to develop ideas, use a technique like 6-3-5. It’s often easier to follow a process and watch how it unfolds than to try to manage a group dynamically and sense when the group is ready to start working together.

How Digital Technology Is Changing Farming in Africa

May 18, 2017 - 8:05am

According to the Food and Agriculture Organization of the United Nations, the world population will reach 9.1 billion by 2050, and to feed that number of people, global food production will need to grow by 70%. For Africa, which is projected to be home to about 2 billion people by then, farm productivity must accelerate at a faster rate than the global average to avoid continued mass hunger.

The food challenges in Africa are multipronged: The population is growing, but it is threatened by low farm productivity exacerbated by weather changes, shorter fallow periods, and rural-urban migration that deprives farming communities of young people. In Northern Nigeria, herdsmen are moving south looking for pasture as their ancestral lands face severe deforestation. In Somalia, the Shebelle River, which supports many farmers, is drying up, causing additional pains in the war-torn country. The combination of higher food demand, stunted yield potential, and increasingly worse farmland must stimulate a redesigned agro-sector for assured food security. Agriculture accounts for more than 30% of the continent’s GDP and employs more than 60% of its working population.

For decades, African governments have used many policy instruments to improve farm productivity. But most farmers are still only marginally improving yields. Some continue to use traditional processes that depend heavily on historical norms, or use tools like hoes and cutlasses that have not evolved for centuries. In some Igbo communities in Nigeria, where I live, it’s common for farmers to plant according to the phases of the moon and attribute variability in their harvests to gods rather than to their own methods.

Those that do look to leverage new technologies run into financial issues. Foreign-made farm technologies remain unappealing to farmers in Africa because they are cumbersome for those who control, on average, 1.6 hectares of farmland. What’s more, less than 1% of commercial lending goes into agriculture (usually to the few large-scale farmers), so smaller farms cannot acquire such expensive tools.

But this is about to change. African entrepreneurs are now interested in how farmers work and how they can help improve yields. The barrier of entry into farming technology has dropped, as cloud computing, computing systems, connectivity, open-source software, and other digital tools have become increasingly affordable and accessible. Entrepreneurs can now deliver solutions to small-size African farms at cost models that farmers can afford.

For example, aerial images from satellites or drones, weather forecasts, and soil sensors are making it possible to manage crop growth in real time. Automated systems provide early warnings if there are deviations from normal growth or other factors. Zenvus, a Nigerian precision farming startup (which I own), measures and analyzes soil data like temperature, nutrients, and vegetative health to help farmers apply the right fertilizer and optimally irrigate their farms. The process improves farm productivity and reduces input waste by using analytics to facilitate data-driven farming practices for small-scale farmers. UjuziKilimo, a Kenyan startup, uses big data and analytic capabilities to transform farmers into a knowledge-based community, with the goal of improving productivity through precision insights. This helps to adjust irrigation and determine the needs of individual plants. And SunCulture, which sells drip irrigation kits that use solar energy to pump water from any source, has made irrigation affordable.

Beyond precision farming, financial solutions designed for farmers are blossoming. FarmDrive, a Kenyan enterprise, connects unbanked and underserved smallholder farmers to credit, while helping financial institutions cost-effectively increase their agricultural loan portfolios. Kenyan startup M-Farm and Cameroon’s AgroSpaces provide pricing data to remove price asymmetry between farmers and buyers, making it possible for farmers to earn more.

Ghana-based Farmerline and AgroCenta deploy mobile and web technologies that bring farming advice, weather forecasts, market information, and financial tips to farmers, who are traditionally out of reach, due to barriers in connectivity, literacy, or language. Sokopepe uses SMS and web tools to offer market information and farm record management services to farmers.

Major global corporations have tried to advance digitalization of African agriculture by launching payment systems, credit platforms, and digital insurance. But to serve largely subsistence farmers, they have to compete against the local startups — particularly on cost of service in a highly fragmented business, with no easy path to scale, owing to illiteracy, language, border constraints, and native dogmas. The microentrepreneurs with a specific focus on their domains have inherent advantages.

While it is still early to evaluate the impacts of this digitalization of farming systems in Africa, in terms of productivity and improvement of human welfare, there is already a promising trend: Technology is making farming exciting for young people. As they see that developing mobile apps alone cannot feed Africa, many will turn to farming as a business.

But they must be ready to confront institutional challenges in the industry. Critical infrastructure is still required to truly digitally transform agriculture in Africa. The continent does not have a comprehensive soil map similar to the U.S. Web Soil Survey to provide soil data and information. The implication is that the smart farming startups must build such a map as they introduce their technologies across the continent. Alternatively, governments or the African Union could fund large-scale soil map to accelerate precision farming.

Most of the farms are in areas with limited connectivity, making full technology integration in real time challenging. As countries such as Ethiopia launch satellites, considering how farmers can benefit from such initiatives will be critical. Improved farm connectivity will usher in a new dawn in agriculture technology in the continent.

But entrepreneurs will need to work with the people themselves. Norms and traditions are prevalent in African agriculture, and just as many farmers initially rejected inorganic fertilizers, fearing that they would irreversibly poison the land, individuals may be resistant to changing their farming methods. Agro-tech pioneers must turn farmers into believers by using field demonstrations to show that new technologies can deliver better results.

Finally, Africa needs to cut its food waste in regions where electricity is unreliable or unavailable. The biggest impact will come when the little that is produced can be effectively utilized through appropriate preservation and storage techniques. Pioneering affordable solutions on food safety and tracking food supply chains will boost the overall value of the sector.

Digital technology opens vast untapped potential for farmers, investors, and entrepreneurs to improve efficiency of food production and consumption in Africa. From precision farming to an efficient food supply chain, technology could bring major economic, social, and environmental benefits. Indeed, the sheer optimism across the startup ecosystem is that extreme hunger can be cured in Africa, in this generation, by significantly transforming the industry that employs most of its citizens.

To Change Your Strategy, First Change How You Think

May 17, 2017 - 12:00pm

Tim Evans for HBR

It seems that everyone these days is looking for a disruptive business model. But a business model is only one part of the equation. Equally important is the mental model behind the business model, as well as a measurement model for both. It’s the combination of mental, business, and measurement models that allows real transformation to occur.

The airline industry is a cautionary tale of what happens when companies emulate new business models without bringing over the associated mental models.

For over 40 years, Southwest Airlines has been a disruptive force in the airline industry, creating an entirely new category and a record 43 consecutive years of profitability. Traditional carriers like United, American, and Delta have a wide range of fares with multiclass cabins, heterogenous fleets, and hub-and-spoke routes. Southwest’s innovation was to focus on low fares with one-class cabins, homogenous fleets, and point-to-point routes.

From the start, Southwest cofounder Herb Kelleher saw his competition not as other airlines but as alternative forms of transportation, whether cars, buses, or trains. He wanted to enable people to fly who wouldn’t otherwise have been able to. Therefore his mental model was not how to gain market share from other airlines, but how to create a completely new market for air travel.

This wasn’t the only difference in mental models between Southwest and traditional carriers. Kelleher is known for saying: “I tell my employees that we’re in the service business, and it’s incidental that we fly airplanes.” Other carriers fly airplanes that carry people. Southwest serves people using airplanes.

In the early years, other airlines tried to copy Southwest’s business model with efforts such as Continental Lite, Ted by United, and Song by Delta. All of these efforts failed. The carriers blamed poor execution. When Continental shuttered Lite, then CEO Gordon Bethune said, “It wasn’t implemented in an orchestrated way.” The deeper reason was that a new business model was implemented without a new mental or measurement model.

Traditional carriers were still thinking about their business as flying planes rather than thinking about serving people, still worrying about capturing share rather than growing the market, and still measuring success based on how well they utilized planes rather than how well they served passengers.

In contrast, companies like JetBlue decided to emulate Southwest’s entire system: mental model, business model, and measurement model. Like Southwest, JetBlue focuses on people over planes, with a mission to “bring humanity back to air travel.” Beyond the usual financial metrics, JetBlue also measures the strength of its culture and the quality of its experience. As a result, JetBlue is a regular winner of the “Best Places to Work” award, leads the industry in customer loyalty, and is consistently profitable.

It’s easy to blame a failed business on doing the wrong things, but rarely do leaders realize that the failure lies in their own thinking. Bethune and the other airline leaders thought that the Southwest model was about taking out costs. But that was the outcome, not the strategy. What Bethune should have said was, “We weren’t ready to prioritize people over planes.” The lesson is one that United’s CEO, Oscar Munoz, would be advised to heed as he seeks to turn the backlash over Flight 3411 into a “watershed moment” for the airline as it seeks to “put our customers at the center of everything we do.”

We are in the midst of a massive migration in business models, from managing assets and delivering services to creating technologies and orchestrating networks. According to research by one of us (Barry), technology- and network-based business models are more profitable, enable faster growth, and are more rewarded in the marketplace.

Many companies have “platform envy” and are trying to emulate the network-based business models of companies like Uber, Amazon, Airbnb, and Paypal. But before you start copying their business models, let the example of Southwest be a lesson. Copying a business model without copying a mental model will lead to disappointing results. You have to change how you think before you can change what you do, and then change what you measure to close the loop.

Consider the recent announcement by Volkswagen that it plans to overtake Tesla in the electric car race. The head of VW’s brand said that the company will have “leapfrogging cost advantages” thanks to its MQB platform, a modular architecture for building cars.

VW is replicating Tesla’s business model but with the wrong mental model. VW thinks of itself as a car manufacturer that uses technology. Tesla, on the other hand, thinks of itself as a technology company that manufactures cars. VW would say its cars have sophisticated computers. Tesla CEO Elon Musk has said of the Model S, “It’s a very sophisticated computer on wheels.”

This difference in mental models generates very different measurement models. With a manufacturer mindset, the car industry is heavily focused on measuring changes from one model year to the next. By contrast, Tesla’s technology mindset has it thinking in terms of software releases and downloads rather than model years and shipments. Musk has said, “Most cars don’t improve over time. But the Model S gets faster and better.”

Related Video Identify Your Thinking Style It depends on two factors. See More Videos > See More Videos >

GE shows that legacy companies can adopt a new mental and measurement model with a change in business model. CEO Jeff Immelt has said, “We’ve made the decision that we’re going to try to be both a platform company and an application company…. We want to treat analytics like it’s as core to the company over the next 20 years as material science has been over the past 50 years.”

GE recognizes that a networked business model requires a networked organization. Vice chair Beth Comstock is focused on transforming GE into an “emergent organization.” GE is also using very different metrics for its platform businesses. The key metrics are assets on the platform, rather than margin or revenue growth. This is appropriate for a platform business, as it measures capacity for exponential growth in the future rather than the results of incremental change in the past or present.

There are opportunities to bring new thinking to every industry and function. For example, most retailers are merchants using technology. Amazon is a technologist empowering merchants. Traditional retailers obsess over incremental metrics like same-store sales that are tied to business goals. By contrast, 80% of Amazon’s metrics provide feedback on how well it is helping customers achieve their goals.

The digital revolution is forcing every company to move from business models focused on products and services to those that leverage networks and platforms. This shift requires dispelling myopia, embracing new organizational models, and unlearning old habits. It’s a fundamental change in how you think and what you measure. But once you align your mental, business, and measurement models, you will be well on your way to a successful digital transformation.

How Blockchain Could Help Emerging Markets Leap Ahead

May 17, 2017 - 11:00am

Much has been made of the potential for blockchain technologies to open up new vistas for business and society. But is there a way for this revolutionary technology to empower the rich and poor alike? We argue that, like previous revolutionary ideas, blockchain has the potential to help developing nations leapfrog more-developed economies.

Leapfrogging — using the lack of existing infrastructure as an opportunity to adopt the most advanced methods — has been a highly effective strategy for developing nations over the last few decades. The most visible example of leapfrogging today is in nations like Kenya and South Africa, which have rolled out near-universal telephone access using 3G networks instead of laying down copper cables, and provided internet access by smartphone rather than with desktop PCs. But it’s not just physical infrastructure that can be leapfrogged.

One of the 20th century’s most celebrated examples of leapfrogging happened in Japan, when the country recovered from the ravages of World War II by embracing sophisticated new manufacturing techniques. Quality control revolutionized Japanese manufacturing in the 1960s and 1970s, even though the concept could not find a foothold in American manufacturing (although it was originally developed by an American, W. Edwards Deming). Quality control became a cornerstone of industry in Japan, reshaping the country’s national brand around companies known for manufacturing excellence, such as Toyota, Canon, and Nikon. European and American companies had to play catch-up for decades.

How Blockchain Works

Here are five basic principles underlying the technology.

1. Distributed Database

Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.

2. Peer-to-Peer Transmission

Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.

3. Transparency with Pseudonymity

Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others. Transactions occur between blockchain addresses.

4. Irreversibility of Records

Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.

5. Computational Logic

The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.

One of today’s most celebrated examples of leapfrogging is the M-Pesa mobile payment system in Kenya and Tanzania, which lets people bank in their national currency using only their phones, leapfrogging traditional banking practices and creating a mobile banking revolution. This in turn boosted development by allowing relatively poor farmers to reliably send and receive payments at affordable rates, fostering economic growth by lowering transaction costs. Research funded by the Bill & Melinda Gates Foundation has found that mobile money services have lifted 194,000 Kenyans out of poverty, with a particularly large impact in female-headed households.

Simply copying the banking systems of the West, which have been built up over centuries, would not have been as easy or as effective for the people of Kenya and Tanzania. An added benefit is that mobile money services such as M-Pesa are more advanced and sophisticated than those found in many developed economies. It simply made more sense to leapfrog the financial infrastructure of the developed world, rather than support outdated legacy systems.

Where are the opportunities for developing economies to leapfrog now?

India’s Aadhaar biometric ID card system is a great example. It secures transactions by “anchoring” people’s identities, thus facilitating trade. The system assigns a unique 12-digit number to all Indian residents, which is stored in a central database along with biometrics such as fingerprints and iris scans. If someone wants to perform a transaction, such as opening a bank account, they present the card and have their fingerprint or iris scanned. This helps to prove their identity, cutting down on fraud and creating market efficiencies. The system currently serves a billion people. This is by far the largest and most comprehensive adoption of biometrics technology by any government in the world; transactional security is a priority in India. Aadhaar can be used to sign up for new mobile phone service, a process that still requires paper ID in many countries and is frequently subject to fraud.

Transactional security extends beyond biometrics, which only secure the last link in a financial transaction; blockchain could secure the entire transactional process. For developing economies, this security is vital for ordinary people who want to trade. Even better, blockchains can spur local high-tech innovation. The natural decentralization of blockchain means that distance to infrastructure like data centers doesn’t matter. Developing nations can build their own technology hubs, and any code created there would be as secure as services created anywhere else in the world. Everywhere is the same to blockchain, which could support home-grown technology industries in many developing countries.

Blockchains can also address the most pressing needs of developing-world governments: the modernization and digitization of government functions. The current world leader in blockchain adoption is Dubai, and there is much in Dubai’s approach that could be adopted by developing world nations. The Dubai Blockchain Strategy (disclosure: Vinay is the designer) envisions moving all government documents — more than 100 million documents per year — onto a blockchain by 2020, creating a new platform for innovation and huge cost savings.

The approach Dubai is taking to blockchain adoption, with the central government providing services on the blockchain as a way to spur innovation, could be an example for developing countries looking to kick their economic growth into a higher gear by establishing standards of integrity in fundamental systems of trade — particularly where exports require strong evidence about the origins of goods, like coffee or timber.

The Internet of Agreements is our technology vision for trade facilitation, building on core concepts in the blockchain space. We believe that any agreement or transaction can be supported by technology, and our vision is simple: global trade, local regulation, and computers handle the red tape.

Global trade, with local regulation facilitated by technology, works because technology makes the transaction costs manageable. We don’t necessarily need huge unifying platform agreements like the Trans-Pacific Partnership or even the European Economic Area to reduce the paperwork associated with trade and borders — if we have the right technologies. Blockchains default to being open data, which would allow governments and companies to rapidly learn from, test, and evolve new, more efficient best practices for conducting and facilitating trade. In such a future, the transaction costs of economic activity are drastically reduced in much the same way that the internet reduced the transaction costs of publishing and communication, resulting in the explosion of ideas we associate with it today. The usefulness of blockchain has similar promise. Just getting the costs of regulation and compliance down would open world markets and create wealth, but that doesn’t have to mean changing local regulations.

Blockchain has already drawn the attention of the economist Hernando de Soto, who has worked for decades on improving access to the formal economy for the world’s poor. He has commented that the reason poor people don’t have more access to the formal economy is twofold: (1) the record-keeping systems in their developing world countries are unreliable and (2) they won’t give up information about themselves and their transactions because they don’t trust the people they’d be giving it to (i.e., their own governments). “They don’t want to be vulnerable to something that can be used against them,” says de Soto. “And that’s what’s interesting about the tamper-proof blockchain — if you can get the right message about it out there, [people will see] that it’s worthwhile recording yourself.”

Because it was explicitly designed to function in an environment where participants cannot necessarily trust each other, blockchain technology is extremely secure. Records held on a blockchain database are immune to being tampered with by third parties, and can thus be authoritative. Smart contracts can provide automatic and predictable execution, again removing the ability for third parties to subvert agreed-upon processes. The benefits for a developing economy are clear: There’s less potential for fraud and corruption, trade becomes more efficient and less costly, government becomes more effective, and local technology hubs can form to build out the infrastructure and export the knowledge gained.

If M-Pesa and similar services could lift tens of thousands of people out of poverty, imagine what a full-scale transformation built on blockchain might do. It could create hyperefficient government with provably trustworthy infrastructure; new markets and opportunities for citizens to access the formal economy on equal terms; efficiencies of operations that lower prices and improve the quality of goods for all consumers; and a kickstart to high-tech innovation around the world. All the goods flowing in and out of developing world countries could be tagged. For example, safe medication, protected from fraud, could flow in, while properly harvested wood and safely manufactured goods flow out. Educational records, business histories, health care information, and credit ratings could all be made usable the world over, helping those who want to trade or travel to prove their credentials. Anybody who has ever paid too much for a college transcript or tried to clear a shadow on their credit score can see how systems like this would be helpful in our daily lives.

Nations that already have somewhat efficient systems might lack the incentive to adopt blockchain technologies at this time, but the rest of the world may well see an opportunity to innovate on internet time. If they do, the many ways they might leapfrog developed nations are limited only by the imagination of billions of people whose first real access to governance and trade infrastructure will look entirely 21st-century. Those are big dreams, and we should not be surprised if some of the world’s next leading megabrands and global platforms are born far away from the traditional centers of technology development. The future is global, and so is blockchain innovation.

Samsung, Shame, and Corporate Atonement

May 17, 2017 - 10:05am

For the past several months, South Korea has been roiled by accusations of corruption in its government and major businesses. The role of the country’s family-run businesses, and whether or how they are held to account for wrongdoing, is under intense scrutiny.

In February Samsung’s de facto leader Lee Jae-yong was arrested on bribery charges. Lee is accused of donating $36 million to nonprofit foundations operated by a friend of the former president in return for political favors. Lee has denied the charges. Then, in March, South Korea’s president, Park Geun-hye, was removed from office, in part because of accusations that she helped a friend, Choi Soon-sil, pressure companies into making donations to nonprofits controlled by Choi and gave her access to secret government documents. The outrage at these and similar scandals helped propel liberal candidate Moon Jae-in to the presidency; he campaigned on promises to clamp down on the country’s family-controlled business dynasties in the wake of Park’s cronyism and corruption scandal.

Many South Koreans feel envy and resentment toward family-run conglomerates such as Samsung, SK, LG, and Hyundai. Known as chaebol, these businesses make up more than half the value of the companies traded on South Korea’s stock exchange. However, their contribution to the world’s 11th-largest economy is overshadowed by repeated cases of bribery, weak corporate governance, and complicated shareholding plans that help the families accumulate wealth and inherit management. (Most of the chaebol are in their third generation of family control.) Moon has vowed to stop families from using such methods to keep control of these ostensibly public companies.

The political scandal and ensuing election rekindled the public’s anger at the chaebol for previous misdeeds; many people feel they never properly sought redemption. But to rectify that and repair their reputations, Samsung and others need to chart a different path than their Western corporate peers. The hidden rules of atonement differ greatly across cultures.

Redemption in Guilt Culture

In guilt culture, which exists mainly in Western countries, redemption derives from the individual’s recognition that their conduct has violated the laws of society. When the individual believes they are innocent, denial and proving their innocence in court is expected. However, if they are found guilty, jail time serves to make things right.

That’s why in some major corporate scandals in the United States people expect executives to serve jail time to make amends. For example, after the Enron scandal former CEO Kenneth Lay was convicted of fraud and conspiracy and received a 45-year sentence. Former president and CEO Jeffrey Skilling appealed to shorten his 24-year sentence. Andrew Fastow, the former CFO, was sentenced to six years in prison.

Admittedly, guilt culture showed little enthusiasm for criminally sanctioning executives involved in the 2008 banking crisis. For example, nine years after Lehman Brothers went bankrupt, former CEO Richard Fuld is a free man; in fact, no executives were jailed for their role in the U.S. financial crisis. Three former Anglo Irish Bank executives were sentenced to just a few years for conspiring to mislead investors, depositors, and lenders. (The fraudulent €7.2 billion transaction eventually led to Ireland’s financial crisis.) In the UK, a few former executives of Royal Bank of Scotland and HBOS were stripped of their knighthood but avoided criminal charges.

Sometimes the absence of criminal prosecutions can be attributed to unease over the wider implications such actions would have on the national economy. Other times, it seems that, in guilt culture, you can hate the crime and still respect the criminal. The UK’s Financial Services Authority declared that it would be unjust to single out individual wrongdoers for punishment; that the bankers’ actions around the financial crisis were the product of a pervasive culture; and that a one-off symbolic punishment would be of little significance.

Even so, in guilt culture the punishment of serving prison time is still seen as a way for individuals to “pay their debt to society.” Similarly, companies can be hit with big fines or settlements by government regulators. Time behind bars for executives and big-figure forfeitures such as Volkswagen’s $4.3 billion guilty plea act as targeted punishments that restore the corporate reputation.

Redemption in Shame Culture

By contrast, in places like South Korea and Japan, CEOs are not often sent to jail. Toshiba’s former CEO Hisao Tanaka and the other executives who resigned over $1.2 billion in financial fraud received only suspended prison terms. Similarly, Hyundai Motor chair Chung Mong-koo, Samsung chair Lee Kun-hee (the father of the arrested Lee Jae-yong), and SK former chair Chey Jong-hyun were each convicted on separate occasions of corruption but were granted presidential pardons.

If a business executive is accused of a crime, punishment begins as soon as the suspicion is made public, through the photos in handcuffs or sensationalized news stories about their detention. That’s because, in shame culture, face metaphorically means honor. The more an unethically behaving CEO gets shamed, the more the public is prepared to forgive. A leader recovers honor more sincerely through a deep, bowing apology than through a multiyear jail term.

In extreme cases in shame culture, losing face can even lead to suicide. For example, former South Korean president Roh Moo-hyun threw himself off a cliff in 2009 after his wife was accused of receiving payments from businesses, while he claimed he was transforming the chaebol. His suicide changed his status from criminal to hero, and the investigation was closed. This is usually only possible in a shame culture.

The need for people in many Asian countries to save face and avoid shame is often difficult for Westerners to understand. For example, researchers have found that, in Japan, an apology is a sign of personal remorse; in the U.S., it’s more likely to be seen as an admission of culpability.

Samsung’s Situation

What could Samsung do to improve its reputation in its home country? The corporation needs to actively accept moral and social responsibility beyond defending itself in court.

Following the arrest of Lee Jae-yong, Samsung decided to disband its Future Strategy Office, considered the family’s most loyal body — and that’s a good start. But it’s not enough. The company’s existing social contribution department, which focuses on marketing activities, should also be overhauled. A more authentic CSR program and a more public commitment to ethical leadership by the controlling Lee family would signal to the government and the public that Samsung is taking change to heart.

To see such reforms through, Samsung could draw on a historic strength: its superior internal reputation. My research work suggests that Samsung’s superior employee loyalty was key to surpassing Sony as a global electronics firm. However, I believe now is the time for the executives’ culture of loyalty to the family to be replaced by a culture of loyalty to the organization. That’s a transformation that will need to be thoughtfully designed and carried out.

Samsung has a long history of turning crises into opportunities. Without learning from the Asian financial crisis of the late 1990s, Samsung wouldn’t be the global powerhouse it is now. Its stock hit an all-time high during the Galaxy Note 7 recall. If the company takes the right steps to repair its reputation, employees and South Korean citizens alike can again fully respect the “three-star” brand that started in 1938 with an investment of just two dollars.

There’s plenty of blame to go around when it comes to Samsung’s situation and the wider reputation of the chaebol. Certainly, South Korean politicians and news outlets deserve criticism for their role in hyping scandals. Even so, the decisive election of Moon Jae-in and the ongoing investigation of Samsung’s heir show that political leaders and prosecutors are determined to correct the country’s reputation for being too lenient on business executives. Unlike past attempts to reform the chaebol, this new government effort should start by focusing on policies that reduce corruption and cronyism, rather than finding a scapegoat to appease public anger.

And, importantly, this is an opportunity for Samsung and the other chaebol to redeem themselves in the eyes of the South Korean public and the world.

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