Harvard Business Review

Subscribe to Harvard Business Review feed Harvard Business Review
Practical insights, tools and resources from leading business thought leaders.
Updated: 1 hour 19 min ago

If You Want to Get Promoted, Say So

January 5, 2017 - 10:00am

Jason, a general manager at a Fortune 100 company, worked hard. His businesses were thriving and his team liked working for him. Given his successes over the past year, Jason was hopeful that he’d soon be promoted to vice president. His company usually announced VP promotions in September and February. But in September, Jason wasn’t promoted; another GM was.

Contrast Jason’s situation with that of Bohdan. Bohdan was considered a high-potential leader, the kind of employee CEOs get excited about. He appeared to have a career on an upward trajectory with a huge future ahead of him. Bohdan is exactly the kind of candidate companies like to invest in, so he and 30 other high-potential leaders were invited to a three-day retreat with the CEO and members of the C-suite. During the retreat, Bohdan asked the CEO and CMO, “Do you have any feedback for me on how to prepare to be a vice president one day?”

After the participants left the retreat, the CEO, other executives, and I sat down to discuss the participants. When it came to discussing Bohdan, the CEO smiled and said, “It was funny. Bohdan asked me if I had feedback for him on becoming a VP. He’s barely a GM and he’s thinking about becoming a VP!”

A couple of the other executives had similar responses. Their comments indicated that they liked Bohdan. A lot. Bohdan had a long series of successes and was well liked by his team and his colleagues. But they also thought it was way too early for Bohdan to be asking for feedback on becoming a VP.

Yet after two years, Bohdan was promoted to VP. He had done something key that day at the retreat. He had asked: What will it take? His direct question indicated to senior leadership, the people he knew would be discussing his career and had the power to decide on his next steps, that he was interested in furthering his career and contributing to the organization. Both Bohdan and Jason had worked hard to prove their capabilities and had delivered exceptional business results. The difference was that Jason had never asked his bosses what it would take for him to get promoted.

You might think it would be obvious that Jason wanted a promotion. Don’t all of us want to advance in our careers? Not necessarily. Some people are content to operate at their current level and do good work because they don’t want the pressures of the level above. Others might not want to relocate (since sometimes that’s necessary to move up). Yet others might want to move up but at a slower pace, once they’re more certain of their skills and the business landscape.

C-suite executives don’t know where you stand if you don’t tell them. As they work on succession planning, they’re eager to help you succeed. Ideally, they’d like to have a phalanx of executives-in-waiting so the organization thrives over the long term. Knowing you are someone who produces stellar results and has the ambition to move forward is the powerful combination they’re looking for, and it will make them more willing to invest in you.

“CEOs, boards, and senior leadership teams in general are always looking to ensure they have bench depth to cover departures, and succession planning is part of that,” Blake Irving, CEO of GoDaddy, told me in an email interview. “While I believe executives (and in fact any employee) should focus on doing a great job at the role they’re in, they also have to let leaders in the company know that they’re hungry to take on more, and when deemed capable, willing to step up. I’ve never believed in blatant self-promotion, but I do believe that you have to let your boss know you’re ready for something bigger.”

What holds you back from asking for what you want? Maybe you think others will see you as overly eager, an aggressive and ambitious attention hound. The truth is, you would risk those negative perceptions if you worked too hard to sell senior management on why you should be promoted. But simply asking the question and then backing up your request with a consistent track record pivots the focus from you and your wants to the well-being of the company.

So where do you start if you want to make it known that your ambitions include a promotion? First, express your overall career objectives with your manager at least once a year. When you ask for feedback, make sure it includes your suitability for the level just above yours or for your desired next career step. You should also make sure that not just your manager but also your manager’s manager and a few of your manager’s peers know your goals and can provide you with feedback. Communicate your plan clearly with your manager so she knows your strategy — you want to make sure she’s not caught off guard when you ask others for feedback and advice. Finally, communicate the breadth of experience you’re looking to build so decision makers can consider you for a wider range of jobs. This might include letting them know whether you’re flexible regarding geographic locations or other logistics.

The executive team wants people who want to lead. Moving up isn’t just a perk; it’s a responsibility. Indicate that you’re willing to take on all the challenges that come with the promotion, and your company’s leaders are more likely to welcome you into their ranks.

Why Being Unpredictable Is a Bad Strategy

January 5, 2017 - 9:00am

My clients and students assume that competitors should surprise one another with their strategies. Your competitors, they think, should have no idea what you’re going to do.

I predict many of you will say: Of course. Being unpredictable is a competi­tive advantage.

Not so fast.

Keeping secrets can protect competitive advantage. Imag­ine the D-Day invasion of Normandy if the Allies had announced dates and locations. Ask Coca-Cola for its secret recipe and listen to a whole corporation laugh.

But secrecy is not the same thing as unpredictability. Secrecy creates an incentive to invest in assets, especially intellectual ones. Unpredictability bluffs, postures, and palters to gain advantage through uncertainty and misdirection. Unpredictability can put another party off-balance. It can confuse them, cloud their thinking, cause them to waste time and effort, and trick them into making a mistake.

There are times when, at least in theory, the potential benefits of unpredictability can exceed its costs. But in my experience with competitive strategy in the real world, they aren’t common.

Unpredictability in competitive strategy is expensive. You don’t build a fake factory or release a fake product. You don’t suddenly pop out of one market and pop into another. (Guess what your shareholders would say.) Moreover, you don’t implement competitive strategy behind closed doors. Everyone else sees and hears what you’re doing and promising. Behaving unpredictably with one group — customers, employees, competitors, suppliers, etc. — means exposing your unpredictability to all. That doesn’t build trust.

A strategy can backfire if it’s perceived as suspiciously unpredictable, as a client and I discovered in a business war game I facilitated. The company wanted to test an innovative, reve­nue-neutral plan to simplify industry pricing. The plan should have been as competitively harmless as changing the color of its corporate logo. It found instead that the plan would panic its competitors into starting a price war.

In business, the opposite of unpredictable isn’t predictable. The opposite of unpredictable is strategic.

Consider head-to-head competition taken to an extreme in a game of chicken, the ultimate test of wit­less testosterone. In that game, two would-be alpha humans race their cars straight at each other. Who­ever swerves is a chicken, a coward. How to win? With conspicuous, irrevocable, strategic commitment: Remove your steering wheel and make sure the other driver sees you throw it out of your car just before impact.

Some people think unpredictability works in competitive strategy. I’ve seen it in my Top Pricer Tournament, a simulation I’ve run with over 1,000 people that allows participants to try different pricing strategies in three generic industries. (You, too, can try it.) In the tournament, participants who selected “be unpredictable” as their pricing strategy caused their prices to randomly rise, hold, or fall in each simulated quarter.

“Be unpredictable” clearly underperformed other tournament strategies. It also had a broader range of results in millions of what-if scenarios. Occasionally, unpredictability led to joy, but usually it led to woe.

But why did unpredictability underperform? Because becoming un­predictable required abandoning a major opportunity: the opportunity to lead.

I don’t mean “lead” in the follow-me sense, especially because I doubt many people would flock to a leadership message of “Keep ‘Em Guessing!” (“I’m with you! Maybe.”) Plus, unpredictability is ride-the-tiger uneasy: How do I know you won’t later do to me what you do now to others? And when you believe in unpredict­ability, what exactly do you believe in?

Rather, I mean “lead” in the sense of shaping events, of taking initiative, of showing not-a-chicken commitment. You lead by influencing others, even, maybe especially, if they are not your friends. You may lead well or you may lead badly, but unpredictability does not lead at all.

Think back to the chicken game and throwing your steering wheel out the window. That’s a good strategy, but it’s not foolproof. What if the other driver does the same thing at the same time? Bet neither you nor the other driver predicted that. The leader — the strategist — installs the world’s best air bags, or an ejector seat, or top-secret foot-controlled steering. They propose a race rather than a duel. They define success as something other than making the other driver swerve first. They choose not to play chicken in the first place.

Leadership lets you choose the game to play and shape how you play it. If you don’t, someone else will.

You Can Improve Your Default Response to Stress

January 5, 2017 - 8:05am

One morning while anchoring The Early Show in New York, one of my coanchors got mixed up and tossed the show to me five minutes before I was slated to appear for my next segment, which was covering breaking news on political corruption in Washington. The teleprompter was cued to a different story, which, if I remember correctly, was about cats at a local shelter. I found myself live on national television in front of millions of viewers — with the wrong setup, and with a video of shelter cats instead of fat cats in Washington.

It is moments like these that test a person. And it’s not the problem itself, but our response to it, that matters in our careers and in our lives. In my work now as a positive psychology researcher, I study the mindset of people who overcome high-stress challenges both big and small and who thrive amid adversity. The conclusion of our most recent study: 91% of us could get better at dealing with stress.

In a study we conducted in partnership with Plasticity Labs, my research colleagues, Shawn Achor (my husband) and Brent Furl, and I found that it’s not so much why we worry that’s important; it’s how we respond to stimuli in the environment that matters. When a challenge strikes, our response can typically be categorized along three specific, testable dimensions:

  • Cool under pressure. Are you calm and collected, giving your brain a chance to see a path forward, or is your mind filled with anxious, worried, and stressful thoughts that wear you out?
  • Open communicator. Do you share your struggles with people in your life in a way that creates connections, or do you keep them to yourself and suffer in silence?
  • Active problem solver. Do you face challenges head-on and make a plan, or do you deny the reality of what’s happening in your life and distract yourself?

These three dimensions are central to optimally responding to stress and are highly predictive of our long-term well-being and success at work. In short, it’s what you think, say, and do that have the biggest impact on your well-being. By understanding our personal pitfalls when it comes to responding to problems, we can shift our thinking and behavior to respond better and pay less of an emotional cost after the stressful event is over.

You and Your Team Series Emotional Intelligence

Understanding your current default response to stress is the first step to crafting a more adaptive cognitive pattern. After testing more than 5,000 people using our validated assessment, the Stress Response Scale, we found that the majority of respondents at work have two suboptimal responses to stress: 27% of people are what we lovingly call “Venters” and 26% are “Five Alarmers.”

We all know a Venter at work. Venters are highly expressive and therefore very open about stressful events in their lives, which is actually a very positive trait. Previous research shows that talking to others about challenges (without overdoing it) can connect us more deeply with the people around us and is connected with having more friends and close colleagues as well as greater happiness. However, Venters don’t fare as well along the other two dimensions: being able to maintain a cool head under pressure and active problem solving to devise a plan. In other words, while Venters are able to acknowledge and communicate about their stress, that is where they stop. They vent without providing or creating a positive action to respond to the stress. Our study found that Venters have a correlation with decreased well-being, performance, and long-term career successes at work, as well as with less overall happiness in life.

Five Alarmers also are very good at communicating that they are stressed (everyone hears about it) but while Venters stop there, Five Alarmers take concrete actions to solve the problem. This sounds great, but because Five Alarmers do not differentiate between low stresses and high stresses, instead responding to every stress as if it is a five-alarm fire, they suffer a massive emotional cost when all is said and done. Being a Five Alarmer is exhausting. Experiencing consistent emotional spikes is also predictive of higher burnout and exhaustion, and guilt after you’ve made a decision.

So while more than half of individuals at work fall into one of these two categories, there is a much more adaptive response to stress and challenge. People who are what we call “Calm Responders,” those who rationally and calmly respond to challenges, test high on the three measures and generally enjoy the highest levels of happiness and success. Calm Responders typically have a handful of trusted advisors, and after tapping one or two, quickly move to the action phase. Studies have shown those who are more expressive — without being so expressive that they get stuck in the venting phase — often have more close friends and are happier overall.

The most important part of this research is that all three of these dimensions are malleable, and therefore can change over time if we focus on them. If you’d like to train your brain to be calmer the next time a stressful event arises, make a list right now of five stressful events from your past that you were successful at solving (for example, maybe you got through the breakup of a relationship or made a tight deadline on a big project), and then look at the list the next time you feel your heart starting to race, to remind yourself of those accomplishments. If you tend to bottle up stress or deny negative events, phone a friend the next time a stressor arises. If you’re distracting yourself instead of creating an action plan, get yourself to choose a “now step,” a small, meaningful action you can take right away that might not solve the whole problem but that will get your brain moving forward.

Rewriting our response to stress can take time, but it is possible, and that effort can have a lasting effect on our success and happiness for the rest of our lives. For me, learning the skill of being cool under pressure helped me better navigate unexpected situations both on TV and off, and that has made all the difference in my life and my career.

The Best Strategic Leaders Balance Agility and Consistency

January 4, 2017 - 12:00pm

As a former consultant, I have a deep and abiding love for the use of 2×2 matrices in business strategy. My favorites are those that highlight two factors that seem, at first glance, in conflict. I find these particularly relevant to personal development, as individuals often must resolve the tensions between competing values and traits and must carefully monitor their own strengths so those strengths don’t lapse into weaknesses.

I’ve recently been thinking about this with regard to how leaders can be more strategic, able to effectively execute the core of their business while remaining open to trends in the market and adapting to meet them. I’ve begun to view this as the ability to hold two specific traits in balance: consistency and agility. You can picture it like this:

 

The best performers are, of course, consistent. Consistent leaders work hard and show up on time. They set goals for themselves and their employees and they achieve them. They plan diligently and produce excellent products and experiences for clients time and time again. They are diligent and possess resilience and grit. Consumers expect consistent products; people appreciate consistent management.

But if organizational leaders are merely consistent, they risk rigidity. In changing environments, they can struggle to adapt and may cling to old habits and practices until those practices become counterproductive, distracting them from the more important new work that needs to be done.

On the other side of the spectrum, great leaders are agile. Markets demand that companies and people adapt and change constantly. By one analysis, 88% of companies appearing on the Fortune 500 list in 1955 were not on it in 2014 (having merged, gone bankrupt, or fallen off the list). As we know, buggy whip makers and telegraph companies must evolve or die. And the most-successful managers must change similarly as they assume additional or different responsibilities through their careers, moving from head of sales to COO or from CFO to CEO. These leaders must pivot when needed, and agility requires that they be intellectually curious, ready to learn from others, communicative, collaborative, and willing to change.

But just as consistency can become rigidity, agility can become a lack of focus when it isn’t tempered by consistency. Purely agile leaders may be visionaries and change agents but lack the single-mindedness and dedication to execute their visions. They often turn to new projects before they’ve finished prior projects, and, in extreme cases, force their teams or organizations into chaos and instability.

It’s in the combination of consistency and agility that leaders can become strategic, performing an organization’s purpose with excellence but changing course when the situation demands. These leaders have high quality standards, achieve goals, and expect consistency, but they are also open to change, keep an eye on the external environment, and understand when old ways of working no longer pass the test of the market in which they compete. They stay the course until it no longer makes sense and combine continuous improvement with ideation and strategy.

Of course, few individuals are equally consistent and agile, just as few people are ambidextrous. So how can leaders hold these traits in balance?

First, to paraphrase Socrates, “know thyself.” Are you more prone to consistency or agility? Are you more naturally capable of deep focus or ideation? Do you thrive in situations of chaos and rapid change or in periods that require relentless pursuit of a clearly defined goal? If in doubt, ask a spouse, best friend, or close work colleague — they almost always know. Understanding and accepting our tendencies is the foundation for growth.

You and Your Team Series Thinking Strategically

With that understanding in hand, surround yourself with others who complement your traits. For managers, it’s wise to find a strong “number two” who can check your worst impulses and enhance your strengths. Are you an agile visionary? Find a structured, methodical, and disciplined deputy or peer. If you are a consistent operator, find a strong voice for agility on your immediate team or a mentor to push your creativity, no matter how frustrating that might be. And empower those people to speak up and challenge you.

Complement this organization model with operational process. To ensure consistency, develop strong dashboards and balanced scorecards to assure outcomes are consistently reached and continually improving. To assure agility, develop a fluid planning model that allows the organization to change outside of the formal annual planning process and create an annual strategic planning process that looks outward to the external environment and forces the organization to contemplate big ideas. As an individual, do this for yourself, perhaps as an end-of-year exercise, to make sure you’re pointed at the right goals and aspirations for where you are as a leader.

Finally, with these people and processes in place, seek to learn and grow. If you’re naturally an agile thinker, you may never be the most consistent operational manager (and some research would argue against attempting it), but you can get better. And you can often do so simply by consciously observing what’s working around you and then forcing yourself to learn and grow. Make note of those traits you admire in others — those that complement your own — and find ways to practice them.

As leaders, all of us will be forced to balance consistency and agility in our careers and in the organizations we serve. Are you doing so today? If not, do you understand yourself and have you thought about the people and processes around you that can help move you into greater balance?

How I Led Change in the U.S. State Department Bureaucracy

January 4, 2017 - 11:00am

Leading change in any large organization is hard, and the U.S. Department of State is a seriously big bureaucracy. Until early November, I helped lead a relatively small (400-person) bureau within it. My experience as a digital leader in the Obama administration confirmed my optimism that change can come to large bureaucracies.

Witnessing both failure and success in government, I saw three common elements required to realize positive organizational change.

Establish Credibility — with Humility

My first challenge was that I was a political appointee, an interloper coming into a sea of dedicated career government workers. Nobody likes the outsider who comes in saying everyone is wrong, and who is arrogantly convinced that they are the smartest person in the room.

I needed to establish my bona fides and credibility. One thing in my favor was that I grew up the son of a Foreign Service officer. I remember the frequent, unfiltered comments my father made regarding political interlopers. Fast-forward 20 years and I was one of those political appointees. Oh, the irony! So of course I called my father for advice on how not to be one of those guys.

His advice was to recognize that everyone I would meet in my bureau could do their jobs just fine without me; they had done so for years, sometimes decades, and would continue long after my departure. I, on the other hand, could do absolutely nothing without their support. If I listened to my team and provided ample backing, they could do incredible things, and together we could really push the place forward.

And so I got to know all 140 people on my team, one by one, over lunch. I asked them questions and listened to their problems and ideas. There was the woman who had a master’s in journalism and now managed global technology projects; the guy who handled multimillion dollar contracts during the day and was an astrophotographer at night; the pilot in the Air Force Reserve who regularly flew congressional delegations overseas.

I shared with them my strong belief that, collectively, we were responsible for leaving the place better than we found it. And that without strong contributions from many individuals, we would not succeed.

Reduce Risk and Demonstrate Its Value

One would think that getting full buy-in from everyone would be the ultimate goal in organizational change, but government does not work that way, and neither does any large organization. Successful change requires strong leadership, working in lockstep with good people to move the rest of the organization in the right direction.

From the beginning, we saw the similarities to political advocacy campaigns:

  • Our base of supporters. Roughly 20% of the workforce was enthusiastic for the radical changes we were pushing. These were the groups we found most innovative, collaborative, and receptive to new ideas, as well as to sharing their own ideas.
  • Our opposition. A small minority of around 10% were cynical and uninterested in changes. Not only that, but a subset of this group was even subversively obstructionist, spreading rumors or disinformation. To them, change was a threat to the status quo with which they had become comfortable.
  • The undecideds and swing voters. The remaining 70% was the group we needed to convince. They were neither enthusiastically in favor of our ideas nor against them.

Winning our campaign for change required two things: reducing the risk of changing and demonstrating its value. We needed to foster a culture that tolerated risk and encouraged new ideas — concepts not readily found in government.

The strategy was to empower our supporters to serve as change ambassadors and encourage their peers to embrace new work philosophies and concepts, namely that taking some risks to deliver results is fully supported by the leadership. Without this, a zero-failure posture would continue making employees reluctant to change, virtually eliminating the possibility of innovation.

There are critical government services that should not fail, such as processing taxes, military operations, or counting votes. But we should recognize that in many daily situations, failure is not bad — it is a sign that you are trying. Repeating failure is bad. Risk is a necessary ingredient for innovation, and we needed to provide the permission and safe space for people to try new things and, most important, fail.

In the private sector, the value of risk can be quantified by increased revenue. In government, we want to see demonstrably better service delivery, increased productivity and efficiency, and improved employee morale.

Enable People with Technology

Technology enables people and amplifies culture. It seems obvious to say that people need the right tools, and yet it seems to be a point that is consistently missed. Inadequate technology can make even rudimentary aspects of a job difficult, negatively impacting employee morale. Aggregate this across an entire organization and the result is a culture of disappointment and frustration.

Sadly, the government is known for stovepiped, outdated, and over-budget technology projects. The technology environment in which I arrived was bleak. We had no Wi-Fi, Bluetooth was prohibited, employees received a five-year-old Dell desktop, some received a BlackBerry, and most received an RSA token so they could log in from home via Citrix — only to experience intermittent freezing and an intermittent one-second delay per keystroke. I should add that this configuration cost the taxpayer approximately $1,900 per employee, per year, just for maintenance!

This was not enabling our people, nor was it amplifying our culture. We had inherited the inertia of years of bad models when it came to how government acquires, deploys, and supports technology solutions. I was there to help challenge these flawed models. We did not want government-specific technology. We needed the best technology available, period.

We added industry-leading platforms such as Slack, G Suite (formerly Google Apps), and open-source technologies, experimenting with them to assess their value. The process was organic and slow at first, but within several months we had half the bureau using these tools. In parallel, we made sure the tools were used in compliance with critical security policies to ensure the permission structure existed for people to use the tools.

Almost immediately there was a remarkable improvement in the flow of information. Google Docs eliminated the frustration of document version control, and collaboration on ideas exploded. Slack made bureau communications open and transparent. Instead of closed conversation threads in email, we had open channels with senior and junior employees discussing strategies. Managers no longer bothered employees for frequent updates because they could now follow the open conversations. We also liberated people from their desks by giving them mobile devices and installing secure Wi-Fi in the office. People needed access to their work data from anywhere, at any time, using any device.

Leaving the State Department after nearly three years, our bureau is empirically better than we found it. The proof is in the department’s time to launch: A project to modernize the global infrastructure for U.S. embassy websites was initially projected to take four years, but with the right people, culture, and technology, it will be wrapping up in a little over a year. Also, we were able to launch a public diplomacy platform for socially optimized content in just three months.

Changing a large organization is a game of inches. Sometimes it can feel Sisyphean, but the big machine can be moved.

Don’t Let Inexperience Stop You from Participating in Meetings

January 4, 2017 - 10:00am

As a young professional, you’ve probably been in this situation: You’re at a meeting and have something to say but wonder if you’re too junior, inexperienced, or new to speak up. Maybe you’re uncertain about whether what you have to say is actually a good point, or you’re afraid that the people running the meeting don’t really want to hear from you, even if they’ve openly encouraged questions and discussion. Or maybe you’re paralyzed by performance anxiety and worry that if you open your mouth, your voice will shake or you’ll embarrass yourself.

The problem, of course, is that unless you do participate, you won’t catch the attention of your senior colleagues who have the power to bring your career to the next level.

The first thing you should do is gauge your company culture. In some companies, participation from junior staff is essential, a key part of the career development process. In other companies, it might not be a big deal — or might even be actively discouraged. Take the pulse of your office. Get a sense from other junior folks and from your colleagues and mentors about the extent to which participation truly matters and is encouraged, where it is appropriate, and how to be heard effectively. Discern what quality participation looks like in your particular organization and team.

Once you’ve established when speaking up in meetings is helpful, prepare carefully. Keep an eye out for meetings on the horizon and review agendas. If you hear of a meeting that you think you should attend but haven’t been invited to, find out if you can join. (Some organizations are more flexible about this than others.) If you see an opportunity to add an item to an agenda that you’re comfortable discussing, suggest it. When you find a topic that you think you might be able to chime in on, do your homework on the issues involved and develop an informed set of questions or contributions in advance of the meeting.

When the actual meeting rolls around, look for ways to participate meaningfully. Find something to share that will make senior staff not only notice you but also see your potential. Don’t underestimate the experience that you do have, which might very well be pertinent to the situation. You can reference the projects you are currently working on: “I’ve been seeing this topic come up in emails with clients” or “Amy asked about how this affects the bottom line — our team has been working on this very issue, and here is how we resolved it.”

Keep in mind that while you’ll want to impress your senior colleagues, you’ll also want to avoid coming across as arrogant. One way to do this is to lean on evidence and preface what you say with a connection to the work you’ve done, such as, “I read a study about X…” This helps you sound impressive, and if people find it interesting, you can email them the link to the study afterward, which gives you permission to build valuable connections outside the meetings. Another way to show you’re smart, insightful, and prepared is to ask good questions. For example, you can try to clarify certain points for the benefit of others in the room. Sometimes asking the right question can be the best way to show that you understand the issue at hand.

Once the meeting has ended, don’t let that be the end of your commitment. Volunteer to help out with any additional work that comes up during the meeting. For example, if a senior partner wonders about whether there is a market for X, Y, or Z, or if a rival firm is already pursuing work in this area, offer to look into it. Participating in this way is a great way to get involved, get to know key people, show your motivation, and have something important to offer in the next meeting. However, be mindful of internal rivalries and territorialism, especially if the work you’re volunteering for is cross-functional or outside your defined job duties, or if you have a territorial supervisor. If you aren’t sure what you will be able to do, you might at least indicate that you are interested in partnering with another meeting participant for further “offline” conversations.

If there aren’t action items to take on, think about other ways to continue the discussion. After all, meetings are one part of a longer conversation. You might find a senior colleague you’re comfortable with and debrief with them, sharing your input and asking for theirs. This type of conversation can help you gain valuable insight into the political and power dynamics of the company and also show your interest and motivation to your senior colleagues. If this person takes you under their wing, they may be willing to set you up for success in future meetings, for example by providing a convenient entrée for your contribution or by remarking on your relevant expertise to the group.

Meetings can be time consuming and stressful, but they provide a great opportunity for junior employees to gain knowledge, show their worth, build relationships, and get involved in the critical work of the organization. Don’t let your inexperience be a liability. Do what you can to be active and involved, and it should pay great dividends in the future.

Execution Is a People Problem, Not a Strategy Problem

January 4, 2017 - 9:00am

Paul,* the CEO of Maxreed, a global publishing company, was having trouble sleeping. Publishing is an industry that’s changing even faster than most other fast-changing industries, but Paul wasn’t awake worrying about his strategy. He had a solid plan that took advantage of new technologies, and the board and his leadership team were aligned around it. Paul and his team had already reorganized the structure — new divisions, revised roles, redesigned processes — to support their strategy.

So what was Paul worrying about? People.

Which is precisely what he should be worrying about. However hard it is to devise a smart strategy, it’s ten times harder to get people to execute on that strategy. And a poorly executed strategy, no matter how clever, is worthless.

In other words, your organization’s biggest strategic challenge isn’t strategic thinking — it’s strategic acting.

If I were to depict the challenge graphically, it would be going from this:

To this:

The conundrum is how to get from the first graphic to the second one. Most organizations rely on communication plans to make that shift. Unfortunately, strategy communication, even if you do it daily, is not the same as — and is not enough to drive — strategy execution.

Because while strategy development and communication are about knowing something, strategy execution is about doing something. And the gap between what you know and what you do is often huge. Add in the necessity of having everyone acting in alignment with each other, and it gets even huger.

The reason strategy execution is often glossed over by even the most astute strategy consultants is because primarily it’s not a strategy challenge. It’s a human behavior one.

To deliver stellar results, people need to be hyperaligned and laser-focused on the highest-impact actions that will drive the organization’s most important outcomes.

But even in well-run, stable organizations, people are misaligned, too broadly focused, and working at cross-purposes.

This isn’t critical only for a changing company in a changing industry like Paul’s. It’s also true for fast-growing startups. And companies in turn-around situations. And those with new leadership. Any time it’s critical to focus on strategy — and when isn’t it? — the most important strategy question you need to answer is: How can we align everyone’s efforts and help them accomplish the organization’s most important work?

That’s the question Paul reached out to ask me. Below is the solution we implemented with him at Maxreed. We call it The Big Arrow Process, and it represents my best thinking after 25 years of experimenting with this very challenge.

Define the Big Arrow

We worked with Paul and a small group of his leaders to identify the most important outcome for Maxreed to achieve over the following 12 months. Their Big Arrow had to do with creating a strategy and product roadmap that was supported by the entire leadership team. The hardest part of this is getting to that one most important thing, the thing that would be a catalyst for driving the rest of the strategy forward.

Once we defined the Big Arrow, we tested it with a series of questions. If you answer “yes” to each of these questions, it’s likely that your Big Arrow is on target:

  • Will success in the Big Arrow drive the mission of the larger organization?
  • Is the Big Arrow supporting, and supported by, your primary business goals?
  • Will achieving it make a statement to the organization about what’s most important?
  • Will it lead to the execution of your strategy?
  • Is it the appropriate stretch?
  • Are you excited about it? Do you have an emotional connection to it?

Along with that outcome clarity, we also created behavioral clarity by identifying the most important behavior that would lead to achieving the outcome. For Maxreed, the behavior was about collaborating with trust and transparency. We determined this by asking a few questions: What current behavior do we see in the organization that will make driving the Big Arrow harder and make success less likely? We then articulated the opposite, which became our Big Arrow behavior. 

Identify the Highest-Impact People

Once the Big Arrow was clear, we worked with Paul and his HR partner to identify the people who were most essential to achieving the goal. Doing this is critical because you want to focus your efforts and resources on the people who will have the most impact on the Big Arrow. In the case of Maxreed, we identified 10 people whose roles were core to the project, who already had organizational authority, and who were highly networked. With other clients, we’ve identified many more people at all levels of the hierarchy. As you think about who might be the appropriate people, ask the questions: Who has the greatest capacity to affect the forward momentum of the arrow? Who is an influencer in the organization? Who has an outsize impact on our Big Arrow outcome or behavior? Those are the people you should choose.

Determine What They Should Focus On

Once we established the key people, we worked with each of them and their managers to determine their:

  • Key contribution to moving the Big Arrow forward
  • Pivotal strength that will allow them to make their key contribution
  • Game changer, the thing that, if the person improves, will most improve their ability to make their key contribution 

One of the things that makes this process successful is its simplicity. It’s why we settled on one pivotal strength and one most critical game changer. Strategy execution needs to be laser-focused, and one of the biggest impediments to forward momentum on our most important work is trying to get forward momentum on all our work. Simplicity requires that we make choices. What will have the biggest impact? Then we make that one thing happen.

Hold Laser-Focused Coaching Sessions

Once we made sure the right people had the right focus, we coached in laser-focused, 30-minute one-on-one coaching sessions. Coaching is often used in organizations to fix a leader’s flaws, but that is not the focus of this kind of coaching. Here, the leaders were coached to focus on making clear headway on their key contribution to the Big Arrow. These conversations only focus on larger behavioral patterns to the extent that they are getting in the way of the task at hand.

Collect and Share Data

Because we were coaching multiple people, we were able to maintain strict confidentiality with the individuals being coached while collecting data about trends and organizational obstacles they were facing, which we reported to Paul and his leadership team. This wasn’t just opinion survey data; it represented the real obstacles preventing Maxreed’s most valuable people from driving the company’s most important priorities forward.

One of the main challenges we uncovered was a lack of cross-functional collaboration. Armed with that insight, Paul was able to address this issue directly, getting the key people in a room together and speaking openly about the issue. Eventually, he initiated a new cross-functional Big Arrow process that included leaders from the groups that weren’t collaborating. Identifying what they needed to achieve together broke down the walls between the groups.

Amplify Performance

While Paul removed organizational obstacles, coaches continued to help Maxreed’s most critical people address the particular obstacles and challenges they faced as they delivered their key contribution. Coaches addressed the typical challenges people struggle with when executing strategy: how to communicate priorities, how to deal with someone who is resistant, how to influence someone who doesn’t report to you, how to say no to distractions, and so on. The coaching prioritized helping people build relationships on their own teams and across silos, which was supported by the data and the Big Arrow key behavior of collaborating with trust and transparency. Individuals aligned with the goals of the organization to drive continued growth and success.

While the Big Arrow process is ongoing, we sent out a survey to people being coached as well as others outside the program to assess progress being made by the key contributors. Compared to before the coaching, are they more effective or less effective at making their key contribution, achieving the outcomes of the Big Arrow, and addressing their game changer? There were 98 responses to the survey:

Key contribution: 90% said either more effective or much more effective.

Big Arrow: 88% said either more effective or much more effective.

Game Changer: 84% said either more effective or much more effective.

In other words, the key contributors were getting massive traction in moving the organization’s most important work — its key strategy — forward. This data was confirmed by Paul’s own observations of the progress they’ve made on their Big Arrow outcome, a strategy and product roadmap that is supported by the entire leadership team.

Maybe most important, the broader organization was noticing. Which, of course, is how you start a movement.

Paul is still working hard to continue the momentum of the strategic shift. That’s the point, really: Strategy execution is not a moment in time. It’s thousands of moments across time.

But now, at least, it’s happening.

*Names and some details have been changed to protect privacy.

80% of Companies Don’t Know If Their Products Contain Conflict Minerals

January 4, 2017 - 8:05am

Manufacturing used to be highly vertically integrated in the U.S. For example, Ford’s River Rouge plant not only assembled cars but also made its own steel, glass, fabrics, power, and cement on-site. But since outsourcing has become an increasingly common approach to cutting costs, many producers now rely heavily on globally dispersed supply chains. For example, Apple works with at least 200 suppliers and 242 smelters and refineries across the world. There are similar stories in the electronics industry, pet food, pharmaceuticals, and even national security. It’s no wonder so many consumers have no idea where their favorite brands come from.

But are businesses any better informed than their customers? We wanted to find out.

In 2010 Congress passed the Dodd–Frank Wall Street Reform and Consumer Protection Act, which included a provision, Section 1502, mandating that companies listed on American stock markets disclose whether their products contain conflict minerals: tantalum, tin, tungsten, and gold originating in the Democratic Republic of the Congo (DRC) or adjoining countries. This regulation came as a result of concerns that the exploitation and trade of conflict minerals by armed groups was helping to finance conflict in the DRC region and contributing to its emergency humanitarian crisis.

The law was meant to encourage firms to shift to conflict-free suppliers in DRC and elsewhere in order to deprive combatants of resources. However, Section 1502 does not require firms to avoid DRC conflict minerals — it simply requires them to make a good faith effort to disclose the source of the minerals in their products.

Eligible companies had more than three years to investigate their supply chains; the first disclosure reports were due in May 2014. We now have three years’ worth of reports in hand, and our analysis, published in the Academy of Management Journal, shows that giant multinational corporations often have little idea where their raw materials come from.

We analyzed every conflict minerals report submitted to the SEC in 2014, 2015, and 2016 (though our paper only includes results for the first two years). Filing companies were primarily based in the U.S. but they included foreign firms listed on U.S. stock markets. Using computerized content analysis and human coders, we categorized every company into one of three groups: “DRC conflict-free,” for companies that certify that their products are free of DRC conflict minerals beyond a reasonable doubt; “no reason to believe,” a somewhat lower standard of evidence, implying that it is more likely than not that products are conflict-free; and “DRC conflict undeterminable,” for those that were unable to answer the question with reasonable certainty. Firms could also admit that their products contained DRC conflict minerals, but thus far none have done so.

Only about 1% of the companies were able to declare that their products were conflict-free beyond a reasonable doubt. Of the rest, 19% declared that they had no reason to believe their products contained DRC conflict minerals. The remaining 80% admitted that they were unable to determine their raw materials’ country of origin.

Two things stood out to us. First, the more global the company (in terms of the range of countries it operated in and the proportion of its sales made outside the U.S.), the less likely it was to declare its products conflict-free. Second, the bigger and more dispersed the supply chain, the less likely the company was to declare itself conflict-free (we used Bloomberg data to create these measures for how global a company is and how dispersed its supply chain is).

We also interviewed a dozen supply chain executives, lawyers, and activists, who told us that their supply chains were simply too complex to track every input. Most notable brands are typically several tiers removed from actual smelters and mining sites that produce the minerals that go into their products. For example, for companies to know where their tantalum comes from — the metal is widely used by the electronics, chemical, pharmaceutical, and aircraft turbine industries — they need to survey their suppliers and persuade them to survey their suppliers, and so on. If suppliers don’t bother to respond to the survey or cannot persuade their own suppliers to respond, the inquiry grinds to a halt, leaving the company in the dark.

One supply chain manager of a multinational Fortune 500 company told us that their firm had over 1,000 first-tier suppliers, and these suppliers had 8,000 second-tier suppliers, and the second-tier suppliers had perhaps 30,000 third-tier suppliers. Conflict minerals might be three, four, or more steps back in the supply chain.

Of course, firms could seek to avoid buying tantalum from any suppliers that source from the DRC. The problem is that doing so harms clean suppliers there. This is what some Western brands did after workplace disasters in Bangladesh: Rather than try to find out which suppliers in Bangladesh followed high standards of safety and human rights, they simply vowed not to buy from Bangladesh anymore. It came at the expense of suppliers (and their employees) in Bangladesh that were making the effort to provide a humane workplace.

Fortunately, there are efforts under way to hold suppliers accountable and give companies more visibility into their supply chains. A few firms, such as Intel, recognized early on that the only way to tackle the problem was to investigate the smelters that process tantalum and certify those that rely on conflict-free sources. Apple implemented a third-party auditing system and has parted ways with dozens of smelters and refiners. Industry groups such as EICC, GeSI, and AIAG have made substantial progress in identifying conflict-free smelters in the region, which enables their suppliers to shift to these smelters.

Despite the real possibility of Dodd-Frank being “revamped” under the Trump administration, these efforts are paying off: According to the Enough Project, “More than 70% of the world’s smelters for the four minerals have now passed conflict-free audits,” a vast improvement since 2010. One sign of progress is that prices of verified conflict-free minerals are now substantially higher than those of untraceable minerals. Contemporary supply chains may seem impossibly complex, but there is some reason for cautious optimism.

How to Get an Employee to Work Faster

January 3, 2017 - 12:00pm

There is no doubt that the pace of work everywhere has increased. We’re all expected to do more in less time. So what do you do if you have a tortoise on your team? How do you diagnose why he takes so long to get his work done? And how do you then help him understand the importance of picking up the pace — and support him in doing so?

What the Experts Say
A slower worker doesn’t just reduce a team’s productivity — he can also hurt his colleagues’ morale, says Lindsay McGregor, the coauthor of Primed to Perform and co-founder of Vega Factor. “When everyone is under pressure to deliver, anything that is holding a team back can become really demotivating.” Yet scaring people into speeding up will only end up backfiring, says Elizabeth Grace Saunders, a time coach and the founder of Real Life E Time Coaching & Training. “You want to be a partner in the improvement process,” she says, and show the employee that working more quickly is also about making him the most successful employee he can be — which is good not only for his work product but for his advancement.

Find the source of the sluggishness
There can be so many different reasons why someone is slower than you would like. But even if you have an idea of the root of the problem, the best path forward is to simply ask. Don’t go into the conversation with preconceived ideas. Your employee might be struggling with a new task, or be so much of a perfectionist that she’s devoting too much time to certain projects. She might be slow because she’s waiting on late work from other team members, or she may not even realize that she’s not meeting expectations. “Start with assuming positive intent,” says McGregor. “Assume this person wants to do a good job and if they knew how, they would.” If you approach the conversation with curiosity, you’ll be better positioned to brainstorm workable, effective solutions.

Set clear, specific expectations
It may be that your lagging worker doesn’t even realize that he’s slow, in part because he doesn’t understand what’s expected of him. “One of the most difficult things for someone to learn in a new role is figuring out what ‘good’ looks like,” says McGregor. “It takes a lot of effort on the part of a manager to show someone what that is.” Rather than haranguing a worker for a late financial report, sit down and create a specific schedule for deliverables. Give her guidance on where you want her to emphasize her time, and also how long something should take. Someone who is a perfectionist will also benefit from clear deadlines. “People who are perfectionists have a really hard time differentiating between where perfection matters and when it doesn’t,” says Saunders. That means it’s up to you to highlight goals, even if it feels at first like micromanaging.

Eliminate roadblocks and hurdles
There may be impediments to an employee’s workflow that you aren’t even aware of.  Getting work done in a timely fashion can be impossible, for instance, if an employee has a steady parade of people coming by his office asking for help or advice. Or you may learn that your lagging employee doesn’t have all the software or equipment that he needs to do his job effectively. “Sometimes systems are outdated, or workers simply don’t know how to use the tools that they have and they need training,” says Saunders. Your worker may be doing some tasks manually, for instance, that would be more quickly done with digital tools. Or she may need regular access to a printer that is all the way across the office. Ask detailed questions about her process, and jointly look for solutions that could help her speed up her workflow. Once you find out where the blockages are, brainstorm ways to clear them and then clearly show your support for those efforts.

Avoid weaponizing data
You may have lots of data at the ready that shows how a certain worker performs at a snail’s pace compared to her colleagues. But such information can be used for both good and ill, says McGregor. If you use such data in the right way — say, as a nudge that focuses the employee on customer results — it may help her improve her work habits over time. “But if you embarrass people with it, or use it for explicit rewards, people will take shortcuts to meet goals in name, but not spirit,” she says. Since you are trying to avoid a confrontational stance anyway, you should also avoid using data as a cudgel to get the results you want.

Divide large assignments into smaller ones
Breaking projects down into smaller deliverables and check in at predetermined deadlines to make sure everything’s proceeding smoothly. This strategy can particularly helps with procrastinators, says Saunders. “Breaking it down into smaller parts can help people that struggle with procrastination to feel a greater sense of urgency and to follow through in a more timely manner.” Research has found that the sense of progress generated by small wins also helps employees stay motivated.

Find projects they enjoy
When you take the time to find out what people enjoy doing, you’ll often find what they are best at. Assigning workers to more projects that they enjoy will naturally improve their work performance. “People absolutely can slow down because of burnout,” says Saunders. “They can slow down because of being bored by things, or not enjoying what they’re doing.” If you have the flexibility to offer assignments that you know they enjoy doing, you’re likely to end up with faster, more productive workers.

Don’t forget to offer feedback
Even if you’ve done an effective job getting to the root of the problem and helping a slower employee look for smart shortcuts, your most important task as a manager is to follow up and offer feedback. If they’ve improved, make sure you tell them so — and often, says McGregor. “And remember to connect the improvements to their personal development and their ability to advance and grow on the job,” she says. Similarly, if you can find ways to recognize that person or their team as a reward for improved behavior, do it, says Saunders. “One of the ways in which people are most motivated is actually their accountability to their colleagues,” she says. “If there is some sort of group reward for a team doing things on time or up to speed, that can actually be incredibly motivating.”

Principles to Remember

Do:

  • Come to the table with curiosity about why the employee is working more slowly than others. You may be surprised by the actual reason.
  • Be clear about specific goals and deadlines to help them understand what you expect of them.
  • Offer them projects and tasks they enjoy doing. Happy workers are naturally faster workers.

Don’t:

  • Confront them with data on how they are slow compared to others. That strategy will likely kill their motivation and morale, or lead to shortcuts with unanticipated consequences.
  • Leave it all to them to make changes to their environment or workflow. Help them brainstorm solutions and get them updated tools if they need them.
  • Forget to follow up by recognizing their improved performance or by asking what else can be done to assist them.

Case Study #1: Support your perfectionists and look for time-saving tools
Mike Catania, co-founder of the savings site PromotionCode.org, had an employee who was both the best and the worst. She worked in data entry confirming promotion codes that were then offered to the site’s customers, and she dominated the accuracy rankings for employees, regularly posting nearly 100 percent accuracy rates for her entries, compared to an 80 percent average for her peers. But she would only submit about half the expected numbers because she was such a perfectionist. Dates and descriptions would be triple checked, and she would call the stores to confirm promotions — something her faster colleagues rarely did.

“Our ‘tortoise’ was neither lazy nor lacked understanding of the expectations,” says Catania. “She was unquestionably the most skillful of our team, which was why getting her to simply work faster was so crucial.”

Catania sat down with the employee several times to get her to work faster, but it was always a difficult conversation, because the quality of her work was beyond reproach. “I enabled her to some degree,” he says. “She was so good that I figured, why should I jeopardize her performance or micromanage her? So we tolerated it.”

A breakthrough came when the company invested in an internal system that could validate a lot of the data entry work automatically. After a few months, the employee became confident enough with the new system to let go of her tried-and-true routines. “Even now, she’s still one of the slower data entry people,” says Catania, “but having a system that supported her work improved her speed by about 30 percent, enough to push her speed into an acceptable range.”

The bottom line, Catania says: “Make systems that support your best people as soon as you know they’re your best people.”

Case Study #2: Set clear expectations and check-in regularly 
After Larissa Nonni, the case manager at a Florida immigration firm, took a brief medical leave, she returned to work to widespread complaints that a new assistant was too slow for the office’s pace. “Translations were lagging, clients were not getting their calls returned, and immigration application forms were taking forever to finish,” she says. As the team leader, it fell to Larissa to address the situation.

Rather than calling out the assistant’s lagging performance, Larissa instituted a new policy, under the guise of getting more organized. It involved a brief one-on-one Monday morning meeting to go over that week’s case load and tasks. “I would go down the list with her about what was pending for each client, and I’d give her a deadline for each one,” Larissa says. By the end of the first week, the assistant’s performance had already markedly improved. She still wasn’t as familiar with the details of cases as some of the other employees who had been working in the office longer, but she was working faster and meeting deadlines. Larissa made sure to compliment her performance and tell her she was a valued member of the team.

“I realized that she probably didn’t even realize she was lagging at first,” says Larissa. Without clear expectations, “how could she know?”

Use Design Thinking to Build Commitment to a New Idea

January 3, 2017 - 11:00am

The logic we use to understand the world as it is can hinder us when we seek to understand the world as it could be. Anyone who comes up with new ideas for a living will recognize the challenges this truism presents. It means that to get organizational support for something new, the designer needs to pay as close attention to how the new idea is created, shared, and brought to life as to the new idea itself.

The Normal Way of Generating Commitment…

Normally, we commit to an idea when we are rationally compelled by the logic of the idea and we feel emotionally comfortable with it. In the modern world, we focus disproportionately on the logic, assuming that the feelings will naturally follow. Analysis has become the primary tool in this regard. A logically plausible proposition, combined with supporting data, is presented to produce a cognitive “sense of proof.” Hence the modern equation is: logic plus data provides proof, which generates emotional comfort, which leads directly to commitment.

The tricky thing about new ideas is that there is no data yet to analyze – otherwise the idea wouldn’t actually be new. The absence of data undermines our modern commitment equation. For a new idea, the equation is likely to be: logic without data produces speculation, which results in emotional discomfort.

…And Its Consequence: an Over-Commitment to Exploitation over Exploration

No wonder so many new ideas are dismissed out of hand. Our training and experience tell us logically that ideas without data can’t reach our standard of proof, and proof is the prompt for emotional comfort. We are biased, then, against new ideas – based on the way we have been trained to see the world. Moreover, our bias toward analysis makes us blind to the limitations of analytical “proof.” Proof comes from the analysis of past data. But, when we look ahead, the proof is only robust to the extent that the future is identical to the past. Despite the obvious fact that the future is notoriously different than the past, the comfort generated by logic and data combined into proof keeps us continuing to exploit what we believe to be proven true rather than exploring unproven directions.

The net result is that we overexploit and underexplore. The consequence in the business world is that start-ups who are more willing to explore new ideas systematically outflank and often demolish established companies trapped in exploitation mode.

The Importance of Intervention Design

In the face of this dynamic, it isn’t enough to create new products and services. Unless we also design new ways of talking about ideas and exploring the future, those product and service innovations will never be embraced by the organization and never make their way out into the world.

The problem of the absence of data in the logic + data + emotions equation means that both logic and emotions have to be exceedingly strong. Strong logic alone is not enough to generate commitment to a new idea because logic alone makes us emotionally uncomfortable. Similarly, appealing singularly to emotions makes us uncomfortable too. We know that we aren’t being rigorous if we make a commitment to a new idea on the basis of emotions alone.

Thus, great intervention design requires attention to both logic and emotions – equally. Commitment is possible only when driven by a strong combination of both of them. Fortunately, the tools of design thinking, which have for many years been used to create great new ideas, can also be brought to bear on the methods of gaining support for those ideas – or what we in design thinking call “the intervention.” The case of John Shuttleworth and his team at BT Financial Group (BTFG) illustrates how this can work.

Gaining Support for New Ideas at BTFG

John Shuttleworth, a member of BTFG’s Executive Management Team, is responsible for Platforms and Investments. The company, Australia’s largest wealth platform provider, is the wealth management arm of the Westpac Group (Australia’s second largest bank in terms of market capitalization).

Related Video The Explainer: Design Thinking Popularized by David M. Kelley and Tim Brown of IDEO and Roger Martin of the Rotman School, design thinking has three major stages. See More Videos > See More Videos >

As of 2010, Shuttleworth had recognized that BTFG needed to transform its wealth management business. Like many other wealth management businesses, BTFG had grown both organically and through acquisitions. As a result, it had myriad, aging, and convoluted back-office IT systems to support its wealth management products. Multiple overlapping systems supported multiple overlapping products. When BTFG wanted to launch a new product or an enhanced service, the IT platform tended to be the limiting factor. As the person with responsibility for the IT platform, Shuttleworth knew things had to change.

To grow the wealth management business, BTFG needed to simplify its legacy systems while at the same time doing a better job of integrating them with the core banking IT infrastructure of parent Westpac. That was going to be tricky in at least four ways. First, it required a holistic approach. If Shuttleworth proceeded one system at a time, the change would take forever. Second, it demanded an entirely new system, unlike any that had been built before. Third, given the first two imperatives, this would also be a big project – from the outset, Shuttleworth knew the project would involve a significant multiyear investment of time and money. Finally, because of the size, importance and structure of the bank, the project would require not just the support of the BTFG function that reported to Shuttleworth, but the leadership team of BTFG (of which he was a member), the executive team of parent Westpac, and the board of directors of Westpac.

Given the magnitude and complexity of the challenge, Shuttleworth instinctively understood that he needed to use design thinking, but not just on the design of the platform. The initiative, which he came to call the Panorama Project, would demand deep user understanding and prototyping applied to both the artifact (the platform) and the intervention designed to bring it about (the process and project).

Designing the New Product

The scope of the Panorama Program was significant. Essentially the team needed to rebuild the entire product and technology architecture for BTFG’s wealth products and then migrate existing customers to the new technology platform. Mindful that many large transformation programs run into difficulties because of scope complexity and traditional “waterfall” software development, Shuttleworth and the team used a design-led approach combined with scaled agile delivery. This meant that they’d focus on taking a collaborative, customer-centric, iterative approach. During early 2011, Shuttleworth’s team interacted with customers of two of the key products to understand their needs. The team sketched out user stories to frame the work (see below for an example). Six weeks later, customers were shown the first low-resolution prototypes. Multiple iterations followed, to improve the product possibilities.

Building on agile methodology, revised prototypes were tested and released as frequently as possible, with input from business partners and users. The entire program was broken up into a series of releases, from managed accounts to mutual funds and retirement accounts.

Designing the Intervention

The deep user engagement, rapid prototyping, and phased, testing-oriented release were required to design a great user experience for the platform. But rather than focus entirely on improving the customer experience (the artifact), Shuttleworth knew that he had to work in parallel on the design of the invention within BTFG and Westpac. He needed both for the customers to be thrilled and for the executives of BTFG and Westpac to be confident in the approach and the outcome. As a start, he needed leaders to feel comfortable enough to invest in the new and unproven approach – and to invest a lot. Shuttleworth describes the challenge: “I knew that I would have to appeal to both their rational and emotional side…I needed to get them to fall in love with the customer experience…But in parallel, we had to do all the analytical stuff – the business case.”

The first challenge for Shuttleworth was to engage his own leadership team, then the management team from BTFG, next the Westpac executive team, and finally the Westpac Board. To accomplish the full series of steps, Shuttleworth first sought to understand the existing journey: the standard internal BTFG and Westpac annual planning process. What were the steps? What was required at each step? Who was involved in the resource-prioritization process? How did they make their choices?

Shuttleworth understood that he needed to design the workflow of his project with his executives in mind. So which products should he tackle first? With careful consideration of the executive commitment challenge in mind, he chose one of the two products – the integration of wealth management and banking – because it was a key priority for Westpac overall. However, the second product – Self-Managed Superannuation Fund (individual retirement savings accounts) – was chosen because many of the senior executive stakeholders actually owned a Self-Managed Superannuation Fund. As business leaders, they were acutely aware that there was no decent solution in the market. But, as consumers, they could meaningfully understand and engage with the emotional experience of the product.

Starting from that deep understanding of the key stakeholders, the intervention continued to take shape. During the ideation and prototyping stage, Shuttleworth simply rang up each executive to ask for an hour of his or her time. There was no pre-reading; no PowerPoint deck. He just wanted to show them the customer experience prototypes that had been designed, to get their reactions, ideas and challenges. (See below for an example of a product sketch).

 

One by one, Shuttleworth visited the executives personally, but not in random order. He wanted to build a momentum across the teams. So, he started with the BTFG Executive Team, and then talked with key members of Westpac’s Executive Team. Finally, he made a more formal presentation to the Board.

One of the key supporters during the process was the Head of Strategy for the Bank, Jon Nicholson. His reflection on the approach is enthusiastic: “The traditional systems proposals process…tends to produce proposals which are vague, overreaching (we will fix everything), poorly costed, and have a largely fictional business case. By contrast, a prototype tends to be much more specific and has actual user feedback; the cost issues have been surfaced more effectively (especially the challenges of integrating into legacy systems, which drives a lot of “overrun” cost) and the business value is more obvious.” After experiencing the approach Shuttleworth used on Panorama, Nicolson reflects that using design thinking would be a better way to run strategy across the group, giving business units seed funding to test their ideas through prototyping rather than asking for analytic proof in advance.

Rather than declare victory and ask for funding for the entire project, Shuttleworth continued on his design-thinking trajectory for the intervention. He knew that the smarter approach to the intervention was to ask for greater levels of investment resources only as both rational and emotional confidence built up over time. That meant sharing key insights from the work (like customer personas) as part of the budget approval process. It also meant, on the basis of the successes of the early prototypes, coming up with a rigorous business case for the first $20 million of investment to build those prototypes into initial products and complete the technical feasibility study.

At the end of 2011, Shuttleworth’s team received approval from Westpac’s executive leadership for the initial $20 million request. Shuttleworth’s assessment: “Success in convincing them came from a combination of a rigorous business case and the prototypes.” Logic plus emotions were strong enough to overcome the lack of compelling data on the future payoff of the investment. Moreover, customer reactions to the prototypes were beginning to produce some data.

During 2012, Shuttleworth’s team took the prototypes and built them into draft products. At the same time, they studied the technical feasibility of the proposed infrastructure replacement. Along the way, they continued to engage with senior leaders through showcase sessions, bringing executives together to engage with rough prototypes, and drive engagement in the work.

Getting the Board’s Approval

Then it was time to go to the Westpac board for approval of the rollout based on the results to date and the technical feasibility report. Here, again, the approach was to combine logic (provided by the rigorous feasibility work) with emotion. Because the vast majority of the board members had a Super Fund, Shuttleworth had the board members actually try using the latest version of the prototype. Based on their experience with the old platform and product, board members were able to truly understand the difference at a visceral level. In addition, Shuttleworth “show[ed] them stunning videos of the customer experience” from their prototyping work with customers.

To Shuttleworth, another key challenge was “how to get the executive team to hold the course over a multi-year program, when there are many priorities across the bank.” They needed reassurance throughout the process. So, in addition to status updates on project milestones, Shuttleworth included demonstrations of functionality and more videos of the customer experience with the ever-improving products.

This iterative approach kept the Board and executive teams comfortable and confident with continuing to invest over a three-year rollout period. Over that time, the logic and emotion were joined by data from the increasingly successful customer use of the products and platforms. In this way, Shuttleworth combined user-centered design with intervention design to bring about a revolution in the way BTFG served its customers.

Design disciplines of deep user understanding and rapid, iterative prototyping have long been used to design better artifacts for customers. However, design won’t make a positive difference if those artifacts never make it to market. That is particularly a challenge with genuinely new ideas, for which no proof currently exists as to their possible success. This challenge necessitates carefully crafted Intervention Design, using design disciplines to guide the design of intervention as well as of the artifact. John Shuttleworth at BTFG demonstrates the power of that combination to deliver great results for the customer and the company.

How Customers Perceive a Price Is as Important as the Price Itself

January 3, 2017 - 10:00am

Price wars have broken out in consumer industries around the world. Retailers such as ALDI and Walmart have used price to position themselves against traditional competitors in their markets, pinching margins all around. Financial asset managers have been out-price-cutting one another in exchange-traded funds in a bid to gain market share. Major U.S. telecommunications carriers now compete fiercely on price as they try to win new customers. And airlines are gearing up for a price war on trans-Atlantic routes as some low-cost carriers plan service between the U.S. and Europe.

These companies are reducing prices because they believe that will boost their perceived value to consumers. As pressure intensifies to reduce prices, either by cutting the list price or offering a discount, managers may act hastily, without the same rigor they apply to investments elsewhere, such as capital deployment or product enhancements.

But when managers reduce prices, a fundamental question sometimes goes unasked: Will customers notice and respond as expected? All too often they don’t. That’s because how customers perceive the price is as important as the price itself. Even if customers fail to notice specific price moves in isolation, companies should make sure customers have a good sense of how the firm’s prices compare to those of competitors. And most companies—luxury purveyors aside—want to be perceived by consumers as having lower prices, relative to competitors, than they in fact do. A store with the same prices as a competitor’s would like to be seen as having lower prices; and a retailer with average prices that are 10% higher than a key competitor’s would love to be perceived as being only 5% higher.

There are clear winners and losers in the battle to manage price perceptions in order to get this so-called “pricing credit” from consumers. Bain & Company and ROI Consultancy Services (formerly PollBuzzer) recently surveyed almost 2,200 consumers in Atlanta and Washington, DC, about the prices at eight retail chains carrying groceries. We found that retailers can get either more or less credit for their pricing than actual shelf prices would suggest.

For example, one retailer’s reputation as an upscale discounter, built through its store and product design, has given consumers the perception that it charges a price premium, when in fact its prices run slightly lower than the average in the two cities. Its pricing strategy does not mesh with its overall proposition to customers, with the result that the retailer does not get the pricing credit it deserves. One option for the retailer would be to raise its prices slightly, since customers have already baked the (incorrectly) perceived premium into their shopping decisions.

The intense competition on pricing that pervades many industries makes consumer perception more important than ever. Aggregator and comparison websites have brought greater price visibility and ease of product comparison to banking, insurance, hotels and other consumer markets. It’s also easier for consumers to split their spending among different providers, depending on which firms offer the best perceived price-value equation. Bain’s grocery survey shows that half of consumers’ monthly spending goes to stores that are not the consumer’s primary store.

Managing price perception, not just pricing structure and actual price points, thus has become a critical capability for firms in consumer markets.

Improving perception

How can companies get more credit from consumers for their pricing, so they can build traffic and earn loyalty?

Companies can choose among tactics in four categories: offering lower prices, shouting out those prices, giving great deals, and tailoring the experience. Examples of tactics within these categories include price-point policies (such as ending a price with the digit 9), in-store or website signage, coupons, and a good/better/best assortment mix. The right combination of tactics, of course, depends on a company’s sector, strategy, and proposition to customers.

A traditional grocer that caters mainly to higher-income customers, for instance, needs to have a broad assortment and high perceived quality. It would focus on very targeted moves to align price perception with its high-end value proposition, including strategic promotions and signage, rather than on tactics that would significantly change the proposition, such as price matching or coupons.

A discount grocer, by contrast, typically uses private-label goods to influence price perceptions. Since its customers are less sensitive to product quality and breadth, the discounter can offer a narrower assortment, which allows it to present a lower-price and lower-end image in stores.

To determine which of these tactics to deploy, a company should first gain a deeper understanding of its current price position relative to consumers’ perceptions. Checking its prices against competitors’ prices on comparable items will reveal actual price gaps. Then, determining consumers’ perceptions will show whether and how they see those price gaps. The key survey techniques involve asking consumers to select a couple of competing providers with whom they shop, and gauging how they view each provider’s pricing on the relevant products. By aggregating hundreds or thousands of responses, a distinct pattern of price perception for each company will emerge.

The next task is to identify the factors that have the strongest influence on perception. These can be gleaned through in-store visits and surveys asking consumers about the provider’s signage, coupons, and so on. Again, aggregating responses allows managers to see how consumers perceive the company’s performance in each tactic relative to competitors. If consumers perceive a chain’s prices as lower than they really are, the analysis can home in on the tactics that most effectively drive that perception.

Data on the factors influencing perception is the foundation of a plan to build an effective price image, a plan that will likely include a mix of direct price changes and indirect tactics like rewards programs.

The experience of a European discount apparel retailer illustrates the power of a disciplined price-perception program. Facing stiff competition from other fashion discounters, the retailer fought back by slashing prices across the board, but customers largely didn’t perceive the price change, and the retailer didn’t achieve the anticipated boost in sales volume.  It decided to step back and take a more nuanced approach. In a process similar to the survey approach described earlier, the retailer analyzed its prices relative to competitors and customer perceptions and discovered that consumers incorrectly perceived that the company had higher prices than its key competitor. One reason was that the retailer offered a broader range of prices than its competitors, which confused people. Also, the company discovered that customers were more price sensitive about certain product categories, like children’s T-shirts.

The retailer defined new “roles” for product categories, based on customers’ perceptions of products, and priced according to these roles; for example, some products were assigned the role of driving foot traffic to stores, while other products played the role of enhancing margins. The retailer refined communications about pricing to make them consistent with the price perceptions it sought, and it reduced the number of price points. As a result, the company achieved its desired “price image” as a value retailer, developed a more strategic approach to pricing, and increased revenues by roughly 1%.

As this retailer discovered, there is a lot more to pricing power than just adjusting prices. Directing investments to lower prices may not supercharge sales. Worse, it might backfire if consumers’ perceptions don’t give the company sufficient credit for its price position. More indirect tactics, such as adjusting signage and using private labels, on the other hand, may have an outsized impact on pricing perception—a proven route to profitable revenue growth.

What So Many Strategists Get Wrong About Digital Disruption

January 3, 2017 - 9:00am

“Digital is coming and it’s coming fast”; “No industry sector is immune to disruption”; “One thing is certain about digital transformation: It will be a big change for your entire organization”; “Digital will disrupt your industry.”

Judging by the headlines and opening lines of recent articles and business books, digital is about to disrupt your industry and you with it – unless you act now (and buy the book).

And, in fact, I don’t disagree – at least not entirely. It would be terribly naïve to assume that nothing in your business will need to change. However, some of the most common beliefs about how this will happen, repeated by conference speakers, self-proclaimed gurus, and consultants, have been oversimplified, misunderstood, or misapplied. In most “normal businesses,” the impact of digital will be different than for digital behemoths like Amazon, Google, and Facebook. Here are four to watch out for.

1. Network effects: The winner does not always take all.

The first common misconception is that in a digital world, the winner takes all. Many business models that make extensive use of digital technology have network-type properties. This means that the more users and content-providers you sign up, the better the business model will work. People flock to Facebook, for example, because most of their friends and family are on it, which in turn allows Facebook to collect a large amount of data about us, and attract advertisers. Given these network effects – as many proclaim – markets get “winner takes all properties”: the largest network will win, crowding out the remaining competitors (like MySpace and Google+). That’s the reason a company like Uber needs to grow big, fast – and why it’s investors didn’t worry about losing money early on. And they are losing money: Uber’s losses in just the first half of 2016 totaled over $1.27 billion.

That logic sometimes holds, but more often it does not. That is because networks are rarely exclusive. Travel to Singapore, for example, and you will see why. Every taxi driver has at least two mobile phones in her window: if a ride comes in on one network, she will click “accept” and turn the other off. Taxi drivers are invariably part of multiple competing networks. Similarly, most riders have at least two apps on their smartphone. When they require a ride, they will quickly check both apps and then use the one where a taxi is available quickest and at the best rate.

It is a misconception to think that network effects inevitably and always lead to a winner-take-all market. Sometimes that may be true, but there are at least as many network-type markets that can easily sustain a variety of players.

2. Complements are not substitutes.

A second misconception about digital disruption is that new technology will inevitably substitute old technology, rendering it obsolete. And indeed, we have witnessed e-mail replace the fax machine, flash memory supersede diskettes, and Wikipedia supplant the Encyclopaedia Britannica. However, industries with perfect substitutes are the exception to the rule; more often than not, digital will offer a new complement, rather than be a substitute. And this leads to a very different dynamic in the market.

Consider my own field of higher education. Many have been proclaiming that online learning will render lectures obsolete, that physical colleges will be replaced by online universities, and that MOOCs will be the new norm. However, this is not what seems to be happening, any more than the invention of the printing press supplanted in-person sermonizing in the 15th century.

Business models and competitive advantages are complex systems. This means that they consist of multiple elements – some of them tangible; some intangible – which interact with one another, meaning that it is their combination that makes it work. In many markets, digital will just add one new factor to the mix or replace one element, but not often all of them. This means that in many businesses, digital technology will complement and alter the incumbents’ existing resources and capabilities, but it certainly won’t always entirely replace them altogether. Therefore, when making strategy, the focus should be on identifying complements, rather than assuming complete substitution.

3. Geography (still) matters.

A third common misconception about how digital disrupt is the assumption that geographic distance has lost relevance since we can now communicate instantaneously with anyone, anywhere around the world. Closeness still matters, however, even though we may not realize it (research tells us, for instance, that people tend to underestimate the value of face-to-face communication).

Consider the management consulting industry. It has been a stable and quite homogeneous industry for many decades. The top firms have been doing pretty much the same type of thing for many years: matching consultants with clients. As a firm, McKinsey finds consulting projects and then matches them with people they have recruited and trained. And that’s how they have always done it.

Recently though, some new companies have figured that, in today’s digital age, there are other and perhaps more efficient ways of matching clients with consultants: online, through search terms, and by building rich databases. Some started digital platforms where supply and demand could match themselves. Others began databases of freelance consultants where they searched for suitable people for the projects they secured. However, most of these upstarts haven’t been able to scale. What they have underestimated is the relevance of human interaction. In consulting work, the ability to read each other’s emotions, intentions, and personalities is paramount, not only in terms of how consultants work with clients, but also for who gets matched with whom. In fact, you cannot successfully do consulting without them.

A company that understood this well is Eden McCallum. They too developed a business model based on a pool of freelance consultants, but rather than rely on a database, a matching platform, or some other digital search function, they understood that in their business – high end strategy consulting – there was no substitute for really knowing people. Therefore, they made the strategic decision to not rely on digital technology, but rather invest heavily in old-school getting-to-know-people: they developed a team of about 20 partners who maintain relationships and interact on a regular basis with about 700 consultants and over 300 major clients. They have opened up offices in London, Amsterdam, and Zurich and were recently highlighted in the Harvard Business Review by Professor Clay Christensen as the prime forerunner of a pending wave of disruption in the consulting industry – albeit with a completely non-digital business model. Eden McCallum shows that not all disruption need to be digital. Digital technology is more likely to make headway in industries and parts of your industry’s value chain where face-to-face interaction is less relevant.

4. Speed? Not so fast.

One of the characteristics of the digital era, people continue to say, is that change is fast. And because the world is changing so fast, companies have to change fast too.

The first part of this claim – that the world is changing faster than ever – is in fact already dubious. Academic research suggests that the rate of change has not been increasing at all. Yet, even if your business is undergoing rapid change, this does not mean your company also has to change rapidly – quite the contrary probably.

If in a fast-changing industry you change equally fast, you’re likely to be jumping onto all sorts of fads. Remember  “Second Life”? The virtual world in which people could live through an avatar? It was supposed to be the next big thing. Dutch bank ING decided to act swiftly, and rapidly assembled a large team of dedicated executives who would explore the new technology, develop applications, and market its products in the virtual world. ING was determined to not miss the boat. But the boat never took off; Second-Life turned out to be a short-lived fad, which disappeared again after a few bleak years; and ING’s big investment came to nothing.

Sometimes it is better to deal with contextual change and uncertainty by not changing at all – at least not immediately – but by giving things time to play out. If your company is in an environment in which new technologies come and go quickly, you may need to slow down rather than speed up. Given the level of market uncertainty, you will really only be able to distinguish the fads from the more substantial developments after some time has passed. It may sound paradoxical, but in an environment of rapid change, sometimes trying to match that speed can backfire.

Digital is changing the nature of competitive advantage in many businesses – just like major technological developments have done before. However, the change will not be uniform across all industries. Digital technology is affecting and will affect different businesses in different ways. Miss these nuances and your strategic decisions could lead you seriously astray.

A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works

January 3, 2017 - 8:05am

Traditional retailers are feeling the heat. Even as competition intensifies, shoppers’ visits to retail stores are declining every year, leading one industry veteran to ominously ask his peers, “Is anyone not seeing large traffic declines?”

Online retail, on the other hand, is thriving. Retail sales through digital channels (including mobile sales) increased by a massive 23% in 2015. Much of these gains have gone to online retailers. Amazon is the biggest beneficiary, now accounting for 26% of all online retail sales. What is more, as it continues to expand aggressively into new categories like grocery and fashion, Amazon’s existential threat to traditional retailers is greater than ever. Just ask Alexa.

Omnichannel strategy is a panacea for a difficult environment

Under these hostile conditions, traditional retailers have staked their futures on omnichannel retailing. The omnichannel strategy hinges on the idea that providing a seamless shopping experience in brick-and-mortar stores and through a variety of digital channels not only differentiates retailers from their peers, but also gives them a competitive edge over online-only retailers by leveraging their store assets.

Such thinking assumes that despite its costs, there is significant economic value to be gained from providing digital channels to traditional store shoppers, and fusing the shopping experience across channels. Retailers are counting on an omnichannel strategy to be their “killer app.” But is this true? Are omnichannel shoppers more valuable to retailers?

We set out to answer this question by collaborating with a major U.S. company, which operates hundreds of retail stores across the country. We studied the shopping behavior of just over 46,000 customers who made a purchase during the 14-month period from June 2015 to August 2016. Customers were asked about every aspect of their shopping journey with the retailer, focusing on which channels they used and why. And they were also asked to evaluate their shopping experience. Of the study participants, only 7% were online-only shoppers and 20% were store-only shoppers. The remaining majority, or 73%, used multiple channels during their shopping journey. We call them omnichannel customers.

Omnichannel customers are avid users of retailer touchpoints

Our findings showed that omnichannel customers loved using the retailer’s touchpoints, in all sorts of combinations and places. Not only did they use smartphone apps to compare prices or download a coupon, but they were also avid users of in-store digital tools such as an interactive catalog, a price-checker, or a tablet. They bought online and picked-up in store, or bought in the store and got their purchases shipped.  In what follows, we count each app, digital tool, and shopping venue provided by the retailer as a separate channel. 

The more channels customers use, the more valuable they are

Our study’s results are revealing. They show that the retailer’s omnichannel customers are more valuable on multiple counts. After controlling for shopping experience, they spent an average of 4% more on every shopping occasion in the store and 10% more online than single-channel customers. Even more compelling, with every additional channel they used, the shoppers spent more money in the store. For example, customers who used 4+ channels spent 9% more in the store, on average, when compared to those who used just one channel.

Surprisingly, conducting prior online research on the retailer’s own site or sites of other retailers led to 13% greater in-store spending among omnichannel shoppers. This finding goes against the grain of the conventional wisdom that spur-of-the-moment, impulsive shopping bulks up the topline of traditional retailers. Instead, our findings suggest that deliberate searching beforehand led customers to greater in-store purchases. And it also flies in the face of conventional thinking about showrooming, which is that traditional shoppers conduct their research in the store and then buy online. Instead, we find that this retailer’s omnichannel shoppers are engaging in webrooming behavior, which has become especially prevalent among Millennial shoppers.

In addition to having bigger shopping baskets, omnichannel shoppers were also more loyal. Within six months after an omnichannel shopping experience, these customers had logged 23% more repeat shopping trips to the retailer’s stores and were more likely to recommend the brand to family and friends than those who used a single channel.

There is one important caveat to our findings. The correlations we report here shouldn’t be confused with causation. We can say from our study that omnichannel shoppers are more valuable to the retailer with confidence. But whether such customers were loyal and engaged with the retailer to begin with or whether the richer, multi-touchpoint shopping experiences of its omnichannels led them to spend, return, and advocate more remains an open question. Regardless, our study firmly endorses traditional retailers’ logic of embracing an omnichannel strategy and using it as a differentiator to fight the online retail onslaught.

In today’s channel-rich environment, omnichannel capabilities drive the engagement of core shoppers with the retail brand and ultimately draw them to the physical store. Traditional retailers with physical stores will do better not only by leveraging the power of the online world, but by synchronizing the physical and the digital worlds to provide shoppers with a seamless, multi-channel experience that online pure plays simply cannot match.

Pages