Human Potential & Leadership

When AI Becomes the New Face of Your Brand

Harvard Business Review -


Cat Yu for HBR

In the world of marketing, brand anthropomorphism can be a powerful mechanism for connecting with consumers. It’s the tactic of giving brand symbols people-like characteristics: Think of Tony the Tiger and the Michelin Man. Today some companies are taking brand anthropomorphism to a whole new level with sophisticated AI technologies.

Consider advanced chatbots, like Apple’s Siri, Amazon’s Alexa, and Microsoft’s Cortana. Thanks to the simplicity of their conversational interfaces, it’s quite possible that customers will spend increasingly more time engaged with a company’s AI than with any other interface, including the firm’s own employees. And over time Siri, Alexa, and Cortana, and their individual “personalities,” could become even more famous than their parent companies.

The implications are numerous. As chatbots and other AI technologies increasingly become the face of many brands, those companies will need to employ people with new types of expertise to ensure that the brands continue to reflect the firm’s desired qualities and values. Executives should also be wary of how AI increases the dangers of brand disintermediation. As brands assume more and more AI functionality, businesses must proactively manage any potential ethical and legal concerns.

To study those issues and others, we surveyed how AI is being implemented at more than 1,000 global companies. We found that many of those firms are already using (or have been experimenting with) AI to orchestrate the brand experience across a number of business processes. These include customer service (39% of companies), marketing and sales (35%), and even the managing of noncustomer external relationships (28%) where brand power is key, such as in attracting top talent into the organization’s recruiting pipeline. Studying those deployments led to several insights around three new types of decisions executives face at the intersection of technology, personality, and strategy.

Beyond Chatbots

The first is that chatbots are just one type of AI technology being used to establish or reinforce company brands. In fact, there’s a spectrum of intelligent personalities and “form factors” (such as screens, voices, physical “boxes” like Amazon Echo, text, and so on) that companies are using to deliver a brand experience. Cognitive agents like IPsoft’s Amelia are incarnated as virtual people on a user’s computer screen, and future advances may deploy hologram technology to make those agents even more lifelike. In Hong Kong Hanson Robotics is developing robots with human features. Those robots, which can see and respond to facial expressions and are equipped with natural language processing, could become the literal front-office brand ambassadors for companies.

Whatever the form factor, companies must skillfully manage any future shifts in customer interactions. Remember that each interaction provides an opportunity for a customer to judge the AI system and therefore the brand and company’s performance. In the same way that people can be delighted or angered by an interaction with a customer service representative, they can also form a lasting impression of a chatbot, physical robot, or other AI system. What’s more, the interactions with AI can be more far-reaching than any one-off conversation with a salesperson or customer service rep: A single bot incarnated on myriad devices, for example, can theoretically interact with tens of thousands of people at once. Because of that, good and bad impressions may have long-term, global reach.

How to Properly Rear Your Brand Ambassador

Executives need to make judicious decisions about their use of an anthropomorphic brand ambassador — its name, voice, personality, and so forth. IBM’s Watson converses in a male voice; Cortana and Alexa use female ones. Siri and the nameless AI of Google Home can use either. And what qualities will best represent the values of the organization? The personalities of all these assistants seem helpful, like a nerdy friend, ready with lots of information or a G-rated joke, yet still a bit stilted — perhaps because they take everything we say so literally. It can also be hard to believe they’re as remorseful as they say when they can’t answer our questions or understand our commands.

And then there are important differences. Alexa comes across as confident and considerate — she doesn’t repeat profanity and doesn’t even use slang very often. Siri, on the other hand, is sassy: Her personality is smart and witty with a slight edge, and she is prone to cheeky responses. When asked about the meaning of life, she might respond, “I find it odd that you would ask this of an inanimate object.” Siri can also become jealous, especially when users confuse her with another voice-search system. When someone makes that mistake, her retort is something along the lines of, “Why don’t you ask Alexa to make that call for you?” All this is very much in keeping with the Apple brand, which has long espoused individuality over conformity. Indeed, Siri seems more persona than product.

It might seem flippant to suggest that AI systems will need to develop specific personalities, but consider how a technology like Siri or Alexa has already become so closely associated with the Apple and Amazon brands. It’s no surprise then that “personality training” is becoming such a serious business, and people who perform that task can come from a variety of backgrounds. Take, for example, Robyn Ewing, who used to develop and pitch TV scripts to film studios in Hollywood. Now Ewing is deploying her creative talents to help engineers develop the personality of Sophie, an AI program in the health care field. As one of its tasks, Sophie reminds consumers to take their medications and regularly checks with them to see how they’re feeling. At Microsoft, a team that includes a poet, a novelist, and a playwright is responsible for helping to develop Cortana’s personality. In other words, executives may need to think about how best to attract and retain different types of talent that they never needed before.

In the future, companies might even be incorporating sympathy into their AI systems. That may sound far-fetched, but the startup Koko, which sprung from the MIT Media Lab, has developed a machine learning system that can help chatbots like Siri and Alexa respond with sympathy and depth to people’s questions. Humans are now training the Koko algorithm to respond more sympathetically to people who might, for example, be frustrated that their luggage has been lost, that the product they purchased is defective, or that their cable service keeps on going on the blink. The goal is for the system to be able to talk people through a problem or difficult situation using the appropriate amount of empathy, compassion, and maybe even humor.

The Curious Incident of Brand Disintermediation

As AI systems increasingly become the anthropomorphic faces of many brands, those brands will evolve from one-way interactions (brand to consumer) to two-way relationships. Furthermore, as those systems become increasingly capable, they could potentially lead to brand disintermediation. Alexa, for example, can already orchestrate a number of interactions on behalf of other companies — allowing people to order pizzas from Domino’s, check their Capital One bank balance, and obtain the status updates of Delta flights. In the past, companies like Domino’s, Capital One, and Delta owned the entire customer experience with their customers. Now, with Alexa, Amazon owns part of that information exchange and controls a fundamental interface between those companies and their customers, and it can use that data to improve its own services. This might be one reason why Capital One, which initially had built capability on top of Alexa, recently developed and introduced its own chatbot, Eno.

And then there are ethical challenges. Amazon, for example, recently added a camera to its Alexa/Echo platform so the company can use its AI technology to offer personality-driven fashion advice. But what are the ethical issues of potentially collecting photos of barely dressed consumers? And as these AI systems become increasingly adept at communicating, they could appear to act as a trusted friend ready with sage or calming advice. Have companies adequately considered how such applications should respond to questions that are deeply personal? What if a person admits to suicidal feelings or recent physical abuse? A 2016 JAMA Internal Medicine study looked at how well Siri, Cortana, Google Now, and S Voice from Samsung responded to various prompts that dealt with mental or physical health issues. The researchers found that the bots were inconsistent and incomplete in their ability to recognize a crisis, respond with respectful language, and refer the person to a helpline or health resource. For companies that are implementing such AI systems, an in-house ethicist could help navigate the complex moral issues.

With many new innovations, the technology often gets ahead of businesses’ ability to address the various ethical, societal, and legal concerns involved. With AI, any issues become all the more pressing as those systems increasingly become the face of many company brands. As Amazon CEO Jeff Bezos once remarked, “Your brand is what other people say about you when you’re not in the room.” And that would presumably hold true even if your AI system might be listening.

Motivating Employees Is Not About Carrots or Sticks

Harvard Business Review -

Vincent Tsui for HBR

Motivating employees seems like it should be easy. And it is — in theory. But while the concept of motivation may be straightforward, motivating employees in real-life situations is far more challenging. As leaders, we’re asked to understand what motivates each individual on our team and manage them accordingly. What a challenging ask of leaders, particularly those with large or dispersed teams and those who are already overwhelmed by their own workloads.

Leaders are also encouraged to rely on the carrot verses stick approach for motivation, where the carrot is a reward for compliance and the stick is a consequence for noncompliance. But when our sole task as leaders becomes compliance, trying to compel others to do something, chances are we’re the only ones who will be motivated.

Why not consider another way to motivate employees? I’d like to suggest a new dialogue that embraces the key concept that motivation is less about employees doing great work and more about employees feeling great about their work. The better employees feel about their work, the more motivated they remain over time. When we step away from the traditional carrot or stick to motivate employees, we can engage in a new and meaningful dialogue about the work instead. Here’s how:

Share context and provide relevance. There is no stronger motivation for employees than an understanding that their work matters and is relevant to someone or something other than a financial statement. To motivate your employees, start by sharing context about the work you’re asking them to do. What are we doing as an organization and as a team? Why are we doing it? Who benefits from our work and how? What does success look like for our team and for each employee? What role does each employee play in delivering on that promise? Employees are motivated when their work has relevance.

Anticipate roadblocks to enable progress. When you ask anything significant of team members, they will undoubtedly encounter roadblocks and challenges along the path to success. Recognize that challenges can materially impact motivation. Be proactive in identifying and addressing them. What might make an employee’s work difficult or cumbersome? What can you do to ease the burden? What roadblocks might surface? How can you knock them down? How can you remain engaged just enough to see trouble coming and pave the way for success? Employees are motivated when they can make progress without unnecessary interruption and undue burdens.

Recognize contributions and show appreciation. As tempting as it is to try to influence employee satisfaction with the use of carrots and sticks, it isn’t necessary for sustained motivation. Far more powerful is your commitment to recognizing and acknowledging contributions so that employees feel appreciated and valued. Leaders consistently underestimate the power of acknowledgment to bring forth employees’ best efforts. What milestones have been achieved? What unexpected or exceptional results have been realized? Who has gone beyond the call of duty to help a colleague or meet a deadline? Who has provided great service or support to a customer in crisis? Who “walked the talk” on your values in a way that sets an example for others and warrants recognition? Employees are motivated when they feel appreciated and recognized for their contributions.

Check in to assess your own motivation. What if you’ve done all of the above but are still struggling to motivate others? You may need to assess your own motivation. Employees are very attuned to whether leaders have a genuine connection to the work. If you’re not engaged and enthusiastic about your company, your team, or the work you do, it’s unlikely that you’ll be a great motivator of others. What aspects of your role do you enjoy? What makes you proud to lead your team? What impact can you and your team have on others both inside and outside the organization? How can you adapt your role to increase your energy and enthusiasm? Employees feel motivated when their leaders are motivated.

The bottom line is: Don’t rely on outdated methods and tricks to motivate employees. Talk with your team about the relevance of the work they do every day. Be proactive in identifying and solving problems for your employees. Recognize employee contributions in specific, meaningful ways on a regular basis. Connect with your own motivation, and share it freely with your team. Put away the carrots and sticks and have meaningful conversations instead. You’ll be well on your way to leading a highly motivated team.

Male and Female Entrepreneurs Get Asked Different Questions by VCs — and It Affects How Much Funding They Get

Harvard Business Review -

There is an enormous gender gap in venture capital funding in the United States. Female entrepreneurs receive only about 2% of all venture funding, despite owning 38% of the businesses in the country. The prevailing hope among academics, policy makers, and practitioners alike has been that this gap will narrow as more women become venture capitalists. However, homophily does not seem to be the only culprit behind the funding gap. Over the past several years, the U.S. has seen an increase in the number of female venture capitalists (from 3% of all VCs in 2014 to an estimated 7% today), but the funding gap has only widened.

Research my colleagues and I conducted offers new evidence as to why female entrepreneurs continue to receive less funding than their male counterparts. We observed Q&A interactions between 140 prominent venture capitalists (40% of them female) and 189 entrepreneurs (12% female) that took place at TechCrunch Disrupt New York, an annual startup funding competition. Our study then tracked all funding rounds for the startups that launched at the competition. These startups were comparable in terms of quality and capital needs, yet their total amounts of funding raised over time differed significantly: Male-led startups in our sample raised five times more funding than female-led ones.

When we analyzed video transcriptions of the Q&A sessions (with a linguistic software program and manual coding), we learned that venture capitalists posed different types of questions to male and female entrepreneurs: They tended to ask men questions about the potential for gains and women about the potential for losses. We found evidence of this bias with both male and female VCs.

According to the psychological theory of regulatory focus, investors adopted what’s called a promotion orientation when quizzing male entrepreneurs, which means they focused on hopes, achievements, advancement, and ideals. Conversely, when questioning female entrepreneurs they embraced a prevention orientation, which is concerned with safety, responsibility, security, and vigilance. We found that 67% of the questions posed to male entrepreneurs were promotion-oriented, while 66% of those posed to female entrepreneurs were prevention-oriented.

The table below illustrates the key differences between promotion and prevention questions. For example, take the topic of customers. A promotion question would look into customer acquisition, whereas a prevention question would inquire about customer retention.

 

This difference in questioning appears to have substantial funding consequences for startups. Examining comparable companies, we observed that entrepreneurs who fielded mostly prevention questions went on to raise an average of $2.3 million in aggregate funds for their startups through 2017 — about seven times less than the $16.8 million raised on average by entrepreneurs who were asked mostly promotion questions. In fact, for every additional prevention question asked of an entrepreneur, the startup raised a staggering $3.8 million less, on average. Controlling for factors that may influence funding outcomes — like measures of startups’ capital needs, quality, and age, as well as entrepreneurs’ past experience — we discovered that the prevalence of prevention questions completely explained the relationship between entrepreneur gender and startup funding.

We also noticed that the majority of entrepreneurs (85%) responded to questions in a manner that matched the question’s orientation: A promotion question begets a promotion answer, and a prevention question begets a prevention answer. This pattern of behavior perpetuates a cycle of bias in the Q&A process that can aggravate the funding disparity. By responding in kind to promotion questions, male entrepreneurs reinforce their association with the favorable domain of gains; female entrepreneurs who respond in kind to prevention questions unwittingly penalize their startups by remaining in the realm of losses. When it comes to venture funding, entrepreneurs need to convince prospective investors of their startups’ “home run” potential — it’s not enough to simply demonstrate that they’re unlikely to lose investors’ money.

Fortunately, there’s an actionable silver lining to our findings: If entrepreneurs change how they respond to prevention questions, they may be able to raise more funds. TechCrunch Disrupt entrepreneurs who were asked mostly prevention questions but gave mostly promotion responses went on to raise an average of $7.9 million in total funding. Conversely, those who responded to mostly prevention questions with mostly prevention answers went on to raise an average of only $563,000. So an entrepreneur who is asked to defend her startup’s market share would be better served by framing her response around the size and growth potential of the overall pie than by merely stating how she plans to protect her share of the pie.

These findings from our field study were correlational, so we crafted an experiment to determine whether the relationship between Q&A orientation and funding is causal. We recruited both professional VCs (194 angel investors, 30% of whom were women) and ordinary people (106 Amazon Mechanical Turk users, 47% women).

Simulating the Q&A setting of TechCrunch Disrupt, we asked participants to listen to four six-minute audio files consisting of Q&A exchanges between investors and entrepreneurs. Each file involved a different company and employed a distinct combination of Q&A orientations, such that one had promotion questions with promotion answers, another had promotion questions with prevention answers, and so on. Since we used actual TechCrunch Disrupt transcripts as the basis for the audio files, we redacted the dialogue for any startup specifics and standardized the clips to control for variations in quality and stage. Participants had to allocate funds to each of the four companies (using a total of $400,000 available to them) based on their reactions.

The experimental results reinforced our findings from the field: Entrepreneurs who were asked promotion questions received twice as much funding as those who were asked prevention questions. More important, we also confirmed the benefits of switching orientation. Angel investors allocated an average of $81,113 to startups in the prevention question, promotion answer condition — 1.6 times larger than the $52,369 average allocated to those in the prevention question, prevention answer condition. Similarly, ordinary investors gave an average of $96,321 to the prevention question, promotion answer condition — 1.7 times larger than the $55,377 average given to the prevention question, prevention answer condition.

Armed with the knowledge that promotion has advantages over prevention, informed entrepreneurs can recognize question orientation and frame their responses to benefit their startups.

Our findings suggest that the gender gap in funding is not likely to narrow simply because more women are becoming VCs. Both men and women who evaluate startups appear to display the same bias in their questioning, inadvertently favoring male entrepreneurs over female ones. Being cognizant of this phenomenon can help investors approach Q&A interactions more evenhandedly. By posing a balance of promotion and prevention questions to men and women, investors grant all startups an equal chance to display their worthiness and may even improve their own decision making in the process.

A New Way to Think About Office Lighting

Harvard Business Review -

Most offices have adequate but aging lighting systems that often operate inefficiently, can waste vast amounts of energy, and annoy employees. Wasted electricity, excessive or uneven illumination, and difficulty concentrating are three top complaints of office workers. More significantly, increasing awareness about the building sector’s growing role in climate change is shifting tenant and investor preferences and influencing owners to improve the performance of their buildings to stay competitive. U.S. buildings consume nearly three-quarters of the country’s electricity and are responsible for 39% of all greenhouse gas emissions.

The technology exists to revolutionize commercial lighting: LED bulbs and today’s intelligent digital controls systems can together provide higher-quality indoor environments while saving significant energy and money. However, even though LEDs are fast becoming the go-to home lighting product because of their long life, energy savings, and precipitous cost decline, LED retrofits in commercial buildings remain a nascent industry, with $63 billion in market value untapped.

Basically, the problem is that everybody wants a better lighting system but nobody wants to pay for it. Owners don’t want to spend their capital budgets, especially where tenants pay the utility bills. Tenants don’t feel empowered to invest in capital projects, especially when their leases are short term. Hence the opportunity for third-party service providers.

We believe that a recent business-model innovation will overcome this barrier and upend commercial lighting and other energy services. Third-party ownership models, which separate the ownership of an asset from the service it provides, have transformed other industries for the better. For example, your company probably doesn’t own its copy machines. Instead, they are owned by a company such as Xerox, which has a service contract with your company based on your needs (e.g., number of copies each month). Lighting is a perfect candidate for this sort of innovative service contract.

Lumens-as-a-Service

When LEDs are paired with smart controls, the new “as-a-service” model becomes a realistic possibility. Advancements in control technology have unlocked the ability to monitor, manage, and control LEDs remotely, which is a critical (and until now missing) element in enabling an as-a-service contract. The ability for remote monitoring and control enables true service contracts that are structured around selling an outcome — in this case lumens, a measure of light intensity in a space — which Rocky Mountain Institute calls “Lumens-as-a-Service” (LaaS). Importantly, this advancement in controls technology allows the lighting system to be controlled, owned, and operated by a third party, shifting the investment off the building’s balance sheet.

How It Works

Similar to other as-a-service models, LaaS allows a customer to “rent” its ceilings to a service provider. The customer specifies the outcomes it requires from its lighting system (e.g., lighting levels) and the service provider designs, installs, and maintains LED lighting with smart controls to provide those outcomes.

The service provider pays a fixed monthly rent to the customer for access to the ceiling space within the building. This fee is set up front, based on the available economics of the project. In exchange, the service provider receives its revenue for the installation and services provided through the customer paying the service provider the full value of the lighting energy savings realized over the term of the agreement.

This approach fully aligns the benefits and risks of the upgrade with the roles and preferences of each party. Customers receive their share of the savings in the form of a fixed rent for the term of the agreement, along with the indirect benefits of a higher-quality lighting system. Service providers bear the performance risk, as they are paid the calculated lighting energy savings realized over the term of the agreement. They receive compensation appropriate to this risk assumption and have the indirect benefit of higher sales through greater uptake of lighting upgrades.

The LaaS model is a game changer in the way it aligns and incentivizes both service providers and customers to deploy the most energy-efficient lighting systems available, not only creating an immediate boost in net operating income for building owners but also saving significant amounts of energy and taking a big bite out of the building stock’s carbon footprint.

When successfully deployed at scale, LaaS might be just the tip of the iceberg of other new as-a-service offerings, such as heating and cooling, which can drive new investment into building performance. Because when you start asking “What do I need from my equipment?” rather than “What equipment do I need?” you’ll start looking at your building in a whole new light.

How to De-Escalate an Argument with a Coworker

Harvard Business Review -

During a conversation with a colleague, you stop following what he’s saying, and focus on how red his face is, as he yells at you about what’s wrong with your proposal. When you tune back in, you hear him scream, “It’s a one-sided, shortsighted approach that shows no respect for my team’s input!” You know you’ve hit a nerve, but you have no idea why. If you’re going to find a mutually acceptable path forward, you know you need to de-escalate this conflict fast. But how?

The bad news is that your instincts are generally useless in a situation like this. The good news is that you can counter your natural reaction — whether you’re more inclined to dig in your heels or run for cover — and slowly shift the conversation from aggressive and adversarial to controlled and cooperative. If you want to take a discussion from overly heated to calm and cool, here are several things you can do.

Don’t disagree. If you’re like most people, you’d want to spout a litany of reasons for why your colleague is wrong. In this example, you might contradict the substance of his criticism by listing seven areas where your proposal incorporates feedback from his team. Alternatively, you might attack his character by saying that his anger is inappropriate. But disagreeing with or contradicting your colleague will immediately escalate the argument.

You and Your Team Series Conflict

A colleague’s emotional outburst likely stems from the perception that they were not being treated fairly. People who feel heard and understood don’t yell and pound tables. If you’re witnessing anger, there is underlying frustration, embarrassment, or a feeling of being neglected or ignored. Anything you do to minimize or deflect what your coworker is saying will only cause their temper to flare. On the contrary, if you demonstrate that you’re listening and genuinely trying to understand their perspective, they’ll have less reason to holler.

Demonstrate support. If you want to de-escalate a conflict, the very first thing out of your mouth needs to be supportive rather than dismissive. In the example above, your response to the “one-sided, shortsighted” comment might be, “I hear you. You don’t see your team’s input in what I just presented. You think this approach is shortsighted.” You’ll immediately see the effect of validating someone who has felt ignored: Their shoulders will drop, they’ll take a breath, and you’ll have a window to open a dialogue.

Watch your body language. You can demonstrate disrespect with your nonverbal behavior even as you’re trying to validate the person with your words. You might be saying all the right things but leaning aggressively into the table or speaking through gritted teeth. Or you might overcorrect your tone so that you sound so calm and dispassionate that it seems condescending to your colleague who is in the process of losing their cool. Your colleague will believe the tone and posture over the content. You will need to control your nonverbal behavior if you want to de-escalate the conflict.

To ensure that your nonverbal behavior supports what you’re saying, adopt a neutral posture (neither leaning in nor out) and tone of voice. Sit upright with your arms at your sides, and fight the urge to lean in, push back, or cross your arms in defense. Talk at the pace, pitch, and volume that you normally speak in. Use every cue you have to signal that this is just another conversation and one you’re comfortable engaging in.

Don’t lead the witness. It’s likely that you’ll be tempted to ask questions that are intended to get your colleague to think like you do. Although you might initially have some success with this technique, it could fan the flames and suggest that your initial attempts to validate the person were only self-serving ploys to make the situation less aversive for you.

Instead of trying to sway the conversation to your point of view, dig in with an open-ended question to understand where your colleague’s anger is coming from. Start with a question based on something he said, such as, “You said the proposal was shortsighted, so what do you see as the longer-term issues we need to consider?” Listen carefully and reflect his answers back before asking another question.

Dig into the emotions. If you focus your questions on the rationale and objective facts of the situation, you’ll just get a convenient set of facts curated to support what your colleague feels and wants. You could go on for hours trying to make sense of facts that are nonsensical — because it’s not the facts that are at the root of the problem.

As you ask successive layers of questions, go beneath the facts and get at the person’s values and motives. If you’re getting an angry reaction, you’ve likely violated something that’s deeply important. There are a variety of questions that will tap into underlying values, such as “What is that about for you?” or “What is the risk of that approach?” or “What am I missing?” Notice that these questions don’t explicitly ask for emotional answers but instead leave room for the person to express how they’re feeling or what they’re worried about. The questions are so neutral that your colleague’s answers will reveal a lot about what’s really going on.

Once you’ve identified the crux of the issue, all that’s left is the grunt work of finding a solution that’s amenable to you both. Although it sounds like that would be the hard part, it’s often easier than you’d expect, because you’ve already done the difficult work of getting the person to show their hand on the problem you have to solve.

When faced with an angry, aggressive colleague, self-defensive reactions will only make matters worse. Respond by signaling that you’re prepared to address the concerns and willing to get to the bottom of the issue. It will take restraint, but it will transform the situation (and perhaps the relationship) from conflict to cooperation.

Worth reconsidering?

Seth Godin's Blog -

The status quo is powerful indeed. We add layers, patches and small improvisations, all to shore up something we don't want to reconsider.

If we had a clean sheet of paper, and could design something that actually worked, what would we do about:

  • Big-time college sports
  • School taxes based on location, and school spending based on income
  • Development costs, transparency and patents related to pharmaceuticals
  • The Electoral College and gerrymandering
  • Allocation of electromagnetic spectrum
  • Stagnant oligopolies
  • What's taxed and what's not
  • School curriculum
  • Online identity
  • Infrastructure priorities

The free market doesn't always do things as well as an enlightened institution can. And institutions often need our help to become more enlightened.

Sometimes, we need to take a deep breath and decide to do it again, better. 

       

White Americans’ Mortality Rates Are Rising. Something Similar Happened in Russia from 1965 to 2005

Harvard Business Review -

In 2015 Princeton economists Anne Case and Angus Deaton published a stunning finding: The mortality rates for working-age white Americans have been rising since 1999. For mortality rates to rise instead of fall is extremely rare in developed countries except as a result of war or pandemic.

 

However, history does offer a recent example of a large industrialized country where mortality rates rose over an extended period: Russia in the decades before and after the Soviet Union’s collapse. Although there are important differences between the two phenomena, there are also sobering similarities.

 

From 1965 to 2005 the mortality rates for nonelderly Russian men and women rose by an average of 1.5% and 0.9%, respectively, per year. For children and the elderly, mortality remained relatively flat. In broad strokes, this event had three phases:

1. From 1965 to 1985 the mortality rate rose steadily as the Soviet economy failed to modernize and an increasing share of government spending shifted from social services to defense.

2. From 1985 to 1988 Mikhail Gorbachev’s anti-alcohol campaign made vodka and other spirits far more difficult for the average Soviet citizen to obtain. This coincided with a large, immediate decline in mortality, making it one of the most effective public health interventions in history.

3. From 1988 to 2005 the winding down of the anti-alcohol campaign coincided with the Soviet Union’s collapse and Russia’s fraught transition to capitalism. It is likely that these events contributed to mortality rates spiking upward again.

By 2005 adult Russian men were nearly twice as likely to die prematurely as they had been in 1965. Since then their mortality rate has fallen, but it remains exceptionally high for a relatively wealthy country.

There are many theories on what caused Russia’s mortality rate to rise for 40 years, but no simple answers. In a purely descriptive sense, death records tell us that four-fifths of the excess deaths were due to cardiovascular disease and accidents. While helpful, this doesn’t tell us why these deaths became so common. Alcohol clearly played an important role, as evidenced by the extraordinary effects of the anti-alcohol campaign. But to some degree alcohol consumption may reflect external conditions, with alcohol abuse acting as the mediator through which insecurity and stress in a population elevate death rates.

And there were obvious sources of insecurity and stress during this period in Russian history. First among them was the country’s political and economic transition from communism to capitalism. For the average Russian citizen, this transition meant the end of the government’s guarantee of housing, work, and a secure pension. Some experts have further argued that economic inequality — while always present during the Soviet years — became far more pronounced and apparent after the transition to capitalism. The collapse of the safety net, coupled with the widening gap between the haves and the have-nots, may have contributed to Russians’ sense of disempowerment and hopelessness that public surveys from this era reveal.

Ultimately, it may be a fool’s errand to try to trace the interwoven strands of cause and effect among culture, economics, politics, and individual behavior — not to mention concurrent degradations in Russia’s health system and environment. Safer to say, it was the historically unique combination of these factors that led to Russia’s health calamity and millions of premature deaths.

The similarities between the mortality rate increases in Russia and the United States are striking and troubling.

First, there are similarities between the affected populations. As in the United States, the Russian phenomenon occurred exclusively among working-age adults, not children or the elderly. In addition, the excess deaths in Russia appear concentrated among the less educated, and spared those with university degrees. The same is true today of the mortality crisis among U.S. whites.

Second, there are similarities in the causes of death driving the upsurge. Rampant substance abuse is a common factor in both countries — alcohol in Russia and opioids in the United States.

Finally, there are similarities in the economic and social contexts. Declines in low-skilled American workers’ wages, economic mobility, and financial security may echo the Soviet economy’s long decline and eventual restructuring. And as in Russia, surveys of white working-class Americans indicate a marked pessimism about the future.

However, despite these resemblances between the two countries’ experiences, there are important differences to bear in mind.

First, the level of mortality in the two countries is vastly different. Even today, adults in Russia face a risk of death more than twice as high as that in the United States. And so a 1% rise in the mortality rate reflects far more excess deaths.

Second, recent U.S. history contains no parallel to 20th–century Russia’s legacy of war and oppression. It is hard to imagine that this legacy was not at least partly responsible for Russians’ worsening health.

The similarities between the U.S. and Russian phenomena may be inexact in some respects but are still sobering. Fundamental societal events that affect the economic and social well-being of populations can have profound effects on a nation’s health. That influence seems to be mediated in diverse settings through substance abuse, and where political will exists (as it did in authoritarian Russia) it can be quickly, though perhaps not sustainably, reversed. The unfortunate recent parallels between American and Russian health experiences serve to further emphasize the importance of attending to the struggles of those falling victim to opioid abuse in the U.S. as well as other vulnerable populations.

Why Your Company Culture Should Match Your Brand

Harvard Business Review -

Ask people how to develop a good corporate culture, and most of them will immediately suggest offering generous employee benefits, like they do at Starbucks, or letting people dress casually, as Southwest Airlines does. Rarely do people point to encouraging employees to disagree with their managers, as Amazon does, or firing top performers, as Jack Welch did at GE.

But in fact, it’s having a distinct corporate culture — not a copycat of another firm’s culture — that allows these great organizations to produce phenomenal results. Each of these companies has aligned and integrated its culture and brand to create a powerful engine of competitive advantage and growth. Their leaders understand that a strong, differentiated company culture contributes to a strong, differentiated brand — and that an extraordinary brand can support and advance an extraordinary culture.

It doesn’t matter if your company culture is friendly or competitive, nurturing or analytical. If your culture and your brand are driven by the same purpose and values and if you weave them together into a single guiding force for your company, you will win the competitive battle for customers and employees, future-proof your business from failures and downturns, and produce an organization that operates with integrity and authenticity.

When you think and operate in unique ways internally, you can produce the unique identity and image you desire externally. You need to have employees who understand and embrace the distinct ways you create value for customers, the points that differentiate your brand from the competition, and the unique personality that your company uses to express itself — and your employees must be empowered to interpret and reinforce these themselves. You achieve this by cultivating a clear, strong, and distinctive brand-led culture.

If your culture and brand are mismatched, you can end up with happy, productive employees who produce the wrong results. For example, at a grocery store chain I worked with, employees were steeped in an operations culture that valued efficiency and productivity. As the industry moved toward an emphasis on customer service and merchandising, the company fell behind, because its employees were focused more on increasing inventory turns and sales per square foot. It had to confront the fact that its culture, though vibrant and vital, was holding it back from serving customers well and improving the brand image.

Without using your brand purpose and values to orient your culture efforts, you’re also likely to waste a lot of money. You may think you need to take extraordinary measures to attract and retain in-demand talent, like providing free lunches to employees, putting foosball tables and beer kegs in break rooms, and offering free gym memberships. As you try to one-up your competition in the war for talent, you’ll probably draw from a pool of perks and benefits that sound great but produce little more than a generic, fun work environment. And you may end up like social media software startup Buffer, which struggled to achieve profitability because its generous cultural practices, including offering vacation bonuses and wellness grants, ate away at cash flow instead of producing employees who were passionate about the brand offering and committed to developing on-brand innovations.

With a single, unifying drive behind both your culture and your brand, however, you reap the benefits of a focused and aligned workforce. No one needs to expend extra energy figuring out what to do or how to act in order to achieve what you want your company to stand for in the world. Your human resources aren’t trying to decipher what skills and behaviors will be needed in the future, or maintaining performance evaluation systems that are out of sync with your values. And your sales and marketing departments aren’t working at cross-purposes, each with its own view of what success looks like. Organizational silos are bridged and disjointed initiatives are minimized because everyone is singularly focused on the same priorities.

How can you tell if your culture and your brand aren’t interdependent and mutually reinforcing? A disconnect between your employee experiences and your customer experiences is a telltale sign. If you engage your employees differently from how you expect them to engage your customers, your organization is operating with two set of values.

I’m not just talking about the obvious problem of managers who treat their employees poorly. I recommend using the same principles to design and manage experiences for both employees and customers. If you want to consistently introduce new products and technologies to your customers, then cultivate a test-and-learn mentality among your employees and encourage them to experiment with the latest gadgets. If your brand is differentiated by the way your products and services look and feel, then infuse your employee experience with design and creativity. You can’t expect your employees to deliver benefits to customers that they don’t experience or embrace themselves.

Another indicator of a mismatch between your culture and your brand is the lack of understanding of and engagement with your brand among your people. Your employees should understand what makes your brand different and special from a customer perspective. They should clearly understand who the company’s target customers are, as well as their primary wants and needs. They should use your brand purpose and values as decision-making filters and they should understand how they contribute to a great customer experience — even if they don’t have direct customer contact. If your people think they don’t play a role in interpreting and reinforcing your brand and that brand building is your marketing department’s responsibility, then your culture lacks brand integrity.

To address these gaps and align and to integrate your brand and culture, start by clearly identifying and articulating your brand aspirations. Do you want your brand to be known for delivering superior performance and dependability? Or is your intent to challenge the existing way of doing things and position your brand as a disruptor? Or is your brand about making a positive social or environmental impact?

Once you know what type of brand you’re aiming for, you can identify the values that your organization should embrace. In the case of a performance brand, you should work on cultivating a culture of achievement, excellence, and consistency inside your organization, while a strong sense of purpose, commitment, and shared values is needed for a socially or environmentally responsible brand. When you have clarity on the values necessary to support your desired brand type, you can use it to inform and ignite other culture efforts, including organizational design, leadership development, policies and procedures, employee experience, etc.

How you operate on the inside should be inextricably linked with how you want to be perceived on the outside. Just as brands differ, there is no single right culture. Identify the distinct cultural elements that enable you to achieve your desired brand identity, and then deliberately cultivate them. When your brand and culture are aligned and integrated, you increase operational efficiency, accuracy, and quality; you improve your ability to compete for talent and customer loyalty with intangibles that can’t be copied; and you move your organization closer to its vision.

(Author’s note: I’ve created an assessment to help you determine how well-aligned and integrated your brand and culture are today. It’s free, but I do need your email address to send you your personalized results.)

Case Study: When You Have to Choose Between Core and New Customers

Harvard Business Review -

It was the Monday morning after the Phoenix race. Erica Jackson, chief marketing officer of the Mendoza Marathon Corporation, had risen early to watch people line up to register for next year’s event and expected an enthusiastic crowd. But when she walked into the field, she saw only dour looks and slumped shoulders.

Alan Kurtz, MMC’s chief operating officer, was standing off to the side, and she moved to join him, but a racer intercepted her. “Do you work for Mendoza?” he asked, sounding annoyed.

Editor's Note

This fictionalized case study will appear in a forthcoming issue of Harvard Business Review, along with commentary from experts and readers. If you’d like your comment to be considered for publication, please be sure to include your full name, company or university affiliation, and email address.

Erica looked down at the MMC logo on her water bottle, remembered putting on the matching hat, and knew she was outed. She’d joined the company six weeks before, following a long stint as CMO of Atawear, a high-end sports apparel company. As an avid runner, she was excited to work directly with CEO Danny Mendoza, the former Olympian and founder of the company, which ran races combining aspects of ultramarathons and military-style obstacle courses. The events started in the late 1990s as an ultimate personal challenge among Danny and his close friends but now had grown to more than 50 annual races across Canada, Europe, and the United States. And while Danny couldn’t compete in or even attend all the races himself anymore, he encouraged his staff to participate as often as they could. Staying connected to MMC athletes—especially the “Mendoza Maniacs,” as the hard-core racers referred to themselves—had always been important to him.

“This is a nightmare,” the racer said. “I didn’t even race yesterday, but because I want to register for next year, I had to drive overnight from LA to get here. I took a day off work, and now the line isn’t even moving.”

“You can also register online,” Erica offered, but the racer’s eyes started to roll before she finished the sentence.

Erica sighed. During her first weeks on the job, Danny had encouraged her to go on a “listening tour,” meeting with MMC staff and athletes, and she quickly learned that the race registration process was a huge pain point, frustrating both diehards and people keen to try a Mendoza Marathon for the first time. Under the current rules, you had two options: compete with thousands of others to register online when slots went on sale (which was usually fruitless; a recent GQ article had noted that MMC bib numbers sold out faster than Springsteen tickets) or stand in line for a select number of tickets at the race site, typically with a few hundred others. Showing up in person afforded you better chances, and it was what enthusiasts typically opted for—even registering in events they probably wouldn’t compete in, just in case they couldn’t get a bib for the race they wanted—claiming the online madness was for mere amateurs. And Mendoza maniacs often started queuing at dawn to earn their entry ticket.

“What’s your name?” Erica asked, noting his MMC tattoo. It was clear from the size of his bicep that he was serious about training.

“Toby, 11.” This was how maniacs often introduced themselves, name and number of races completed. “This part is just maddening. I’m a dedicated athlete. My wife is irritated by the amount of time and money I put into training for these races—the huge time sink just to register makes it even worse.”

“I’m Erica, zero—so far. And I can tell you we’re absolutely working on it. We’re going to change things up. We haven’t nailed down the details, but we’re getting there.” The line started moving, so Toby threw her a skeptical look and shuffled forward. Erica turned around to find Alan right behind her.

“Already making big promises, I see?” he said with a teasing smile. He’d clearly overheard the last part of her conversation.

“Well, he’s right,” she retorted. “I hope your plan makes this better for the Toby’s of the world.”

Exclusive Membership

The following week, Erica and Alan were meeting with Danny at MMC’s Toronto offices to go over the new registration scheme, which Alan had been working on for the past year. His idea was to introduce an exclusive membership program, tentatively called Mendoza Access, which offered advance entrance to any race for a $1,500 annual fee. Market research had shown that committed maniacs like Toby were already shelling out that kind of money (sometimes more) just to travel to registration sites. Moreover, many signed up for multiple events in case later they weren’t able to get into their first choice. This meant they took bibs that then went unused, exacerbating the scarcity problem for the would-be racers who were often shut out. Under the new plan, MMC would increase revenue from the annual fee while offering a hassle-free entry process. Even though she was new, Erica thought Alan’s proposal made a lot of sense—she’d seen VIP programs work well in her previous role and she was eager to put in place a registration process that worked for everyone.

“Does the $1,500 include the cost of registration?” Danny asked.

“No, they’d still be paying the $350 entry fee,” Alan replied. “But if you consider that they’re already paying for anywhere between two and six registration fees, flights, hotels, and meals—not to mention the time they waste getting to the sites—this is a much better deal for them.”

“And this will open more slots for other racers—people who haven’t run with us before?”

“That’s the idea. With Mendoza Access members not participating in the standard registration process and signing up only for the races they actually plan to run in, we’re estimating a gain of several thousand spots across all events,” Erica answered. “We’re actually being more inclusive with the Access program while making more money without raising registration fees. It’s a win-win.” Danny had been clear with Erica and Alan that he didn’t want a proposal that raised prices across the board—keeping the registration fee relatively affordable was important to him. They thought Danny would go for this solution because it was more targeted, focusing on price increases for only those willing to pay in order to save on the hassle and multiple registrations.

“And we’d be doing all of this, of course, without significantly increasing our costs, which is what Carlton is looking for,” Alan said, referring to the private equity firm that had recently invested in MMC. Danny had agreed to work with them because he knew his brand was underexploited, and Carlton had promised to help him expand his customer base (and thus their own returns) while staying true to the company’s mission of ethos of pushing one’s limits of physical and mental fitness. In fact, they’d been the ones to suggest he hire a CMO, and to recommend Erica.

“Telling me it will appeal to the suits won’t help your case,” Danny said. “I don’t care what they think.” Erica and Alan exchanged a quick glance. They both knew that he did care and was under pressure from Carlton to improve the bottom line, but he hated the idea that profits had to be part of MMC’s core strategy. When he talked about expansion it was always in the context of getting more people to embrace the MMC lifestyle, not increasing revenues. “I’m more interested in what our racers will think.”

“Access members will get a ton of other perks. VIP passes for spectators, subscription to our magazine, and discounts in the MMC store,” Alan noted.

Erica could tell Danny still wasn’t convinced.

“Why don’t we float it by some of our fans?” she said.

“Like in focus groups? What is this—1989?” Danny grumbled.

“No, online. Facebook, Twitter. Let’s just get a sense of how people will react. We don’t have to share all the scheme’s details, just the general idea.”

“They’re going to love it,” Alan said. “And if they don’t, they’ll learn to.”

Social Sentiment

“These are actual quotes?” Danny asked incredulously. It was a week later and he was reading through a report Erica just handed him. “‘For $1,500, the membership card better be made of unicorn skin!’” he recited. “‘Buy access to run alongside filthy-rich American weekend warriors who bought themselves past the line instead of real athletes? No thanks.’”

Erica cringed inwardly. She’d been just as surprised by some of the heated responses and was starting to feel lukewarm about the proposal. She knew better than to be swayed by a few vocal and passionate people online, but even in her short tenure as CMO she had come to realize how much Danny valued the maniacs.

“The response has been mixed,” Alan admitted.

“Mixed? These are brutal,” Danny said, reading another. “‘MMC is now just a bunch of money-sucking corporate vampires who don’t care about the people who made these races what they are.’ That doesn’t sound ‘mixed’ to me.”

“We need to look at the overall picture,” Erica pointed out. “There were three times as many positive responses about the program than negatives ones. Quite a few people said, ‘Sign me up!’”

Danny still hadn’t looked up from the report. He read another: “‘I appreciate that you guys are running a business, but this is insulting. Why don’t you just send Danny to my house to kick my puppy?’”

“Should we pull the plug on this?” he asked.

“I think we should go ahead,” Alan said firmly. “There’s risk, no doubt. But Erica has been clear that the people who comment on social media are going to be the most vitriolic, and even if you tally up the negative comments, it’s only a small minority of our Facebook followers. If we lost those people, it wouldn’t be the end of the world. Especially if we end up with the 3,000 Access members we expect. This is about growing the brand—and our revenues. I know you don’t want to piss off our core fans, but we have to gain the participation—and loyalty—of a larger group.

“Look at Porsche,” he continued. “Launching the Cayenne and getting into the SUV market had purists freaking out, but it’s now their best-selling model and no one jumped ship. The brand is as strong as it’s ever been.”

“Do you agree, Erica?” Danny asked.

She hesitated. Alan had a good point about Porsche, but her gut was telling her that maybe their case was different.

“I’m on the fence. I see where Alan is coming from, but I also know how important the maniacs are to our brand. I know you don’t want to be seen as sellouts, and I can’t help but think of Doc Martens. When they started actively marketing their boots to the masses, the out-crowd of punks, rockers, and artists totally abandoned them, causing the brand to lose its cool factor.”

“So you’re saying we might make a lot of money, but we’re going to be as uncool as Doc Martens?”

“I don’t think that analogy holds,” Alan said. “MMC isn’t a fashion trend. It’s a way of life, an addiction even. The maniacs may be annoyed, sure. But they don’t have to buy the membership. And it will take a lot more than this to make them stop racing. Our fans consider themselves part of the MMC family. They’re not going anywhere.”

“And if they do?” Erica asked. “We’re no longer the only game in town.”

“This new scheme doesn’t have to be set in stone. We can give it a shot and roll it back if need be,” Alan said. “We’ll apologize and go back to the way things were. Family forgives, right?”

Skip the Line

Erica was up late, catching up on e-mails when Alan’s name popped up on Slack.

You working too? she typed.

Actually registering my daughter for basketball but couldn’t resist checking messages, he wrote back. How’d you think the meeting went today?

I’d hoped we’d make a decision, she wrote.

Danny likes to mull things over.

Me too, she said. I keep thinking about Toby.

The tattoo guy in Phoenix?

Yeah. I’m trying to figure out how I’d explain Mendoza Access to him. He just wants to get into the race, and it feels a bit like we’re trying to make more money off of his dedication to MMC.

Why shouldn’t we, when we’re giving him what he wants? Don’t forget, he’s Toby, 11. 11! Do you really think he’ll abandon us now? 

Question: Should they move forward with Mendoza Access or go back to the drawing board?

If you’d like your comment to be considered for publication in a forthcoming issue of HBR, please remember to include your full name, company or university affiliation, and e-mail address.

Why Apple’s New HQ Is Nothing Like the Rest of Silicon Valley

Harvard Business Review -

“I think we have a shot at building the best office building in the world” were the words Steve Jobs used to describe Apple’s new headquarters in 2011. The grand vision at the heart of his last project is now being unveiled as Apple finalizes construction on Apple Park. Wired called the facility “insanely great (or just insane),” and in many ways it is exactly that.

The sheer magnitude of Apple’s new headquarters sets it apart from any other technology workspace on the West Coast. Instead of many buildings spread across a campus, the site features one master circular structure (2.8 million square feet) called the Ring, designed to house 12,000 employees. (To get a sense of its scale, the Ring’s internal courtyard is wider than St. Peter’s Square in Rome. Its external wall would surround the Pentagon.) The four-story glass building designed by Norman Foster seamlessly integrates a long and diverse list of technical achievements — from the enormous solar panel array on the roof to hidden cable management mechanisms at the workstations — all according to Jobs’s uncompromising design standards.

Yet one of Jobs’s most significant directives was that 80% of the nearly 200-acre site would be devoted to parkland. In fact, blurring the boundary between architecture and nature became the defining idea for the project. Old concrete parking lots gave way to new green landscapes and a wooded preserve populated with 9,000 indigenous California trees, including ornamental and fruit trees, selected to resist drought and the threat of future climate change.

While many have awaited the opening of Apple Park with great anticipation, a project of this scope and ambition inevitably isn’t without its critics. In that same Wired piece:

…what began with aesthetic judgments of the digital renderings—the Los Angeles Times’ architecture critic called the Ring a “retrograde cocoon”—has lately turned to social and cultural critiques. That the campus is a snobby isolated preserve, at odds with the trendy urbanist school of corporate headquarters. (Amazon, Twitter, and Airbnb are all part of a movement that hopes to integrate tech employees into cities as opposed to having them commute via fuel-gobbling cars or numbing Wi-Fi-equipped buses.) That the layout of the Ring is too rigid, and that unlike Google’s planned Mountain View headquarters (which that company has described as having “lightweight blocklike structures, which can be moved around easily as we invest in new product areas”), Apple Park is not prepared to adapt to potential changes in how, where, and why people work. That there is no childcare center.

Certainly some of those critiques may prove to be warranted, and others raise valid points. Overall, it’s probably fair to say that a project of this complexity and scale can only be truly evaluated post-occupancy and over time.

As someone who studies the design of high-tech workspaces, I am drawn to ask a more fundamental question: Why is Apple heading in such a different direction than most of its Valley peers? In other words, what is this project really about?

The answer starts, as in all things Apple, with Steve Jobs.

How We Got Here

To set this in context, it’s important to first understand the fundamental challenge of building contemporary (and future) workspaces, especially for technology companies: Software and buildings operate on entirely different timescales. Software, like information technology in general, is optimized for speed and upgrades — constant, sometimes radical change. Buildings, on the other hand, are change averse, optimized to stand for decades. But despite the different timescale, the challenge for real estate executives is not unlike the one facing CIOs: to make sure a new investment will not quickly become obsolete.

Silicon Valley has dealt with this challenge for decades, but the unique culture of the region gives its companies a competitive advantage. Throughout the 20th century, the Valley’s ascent can be traced to close geographical proximity and deep collaboration between tech companies, academia, and government agencies — a formula that produced some of the most significant technology ventures in modern American history.

Influenced by this collaborative context, Valley founders prized proximity to one another; face-to-face interactions; informal deal making; and changeable, impermanent team and org structures. These values are reflected in their buildings, which adopted design strategies to make workspace configurations adaptable, or somewhat less permanent. The aim was to get the physical workspace to perform at the speed of software — or at least get a little closer to it.

This led to open floor plans, rich amenities and services, informal attire, a collegial atmosphere, and very distinct work cultures. The more successful interior spaces foster “collisions” and spontaneous interactions among employees through a variety of space typologies. Those collisions, as research (mine and others’) shows, increase learning, collaboration, and ultimately innovation.

In the last decade, however, the timescale gap between workspaces, buildings, and technology has widened even more rapidly, as mobile phones, social media, and other new technology have allowed companies to quickly reach massive scale. New young tech companies — Airbnb, Twitter, Instagram, Snap, and WeWork, among others — operate differently than Silicon Valley giants. They acquire huge customer bases and receive staggering market valuations while employing a relatively small number of people. Their business models are fluid. Their speed and disruptive scale inevitably force them to choose workspaces that emphasize extreme flexibility, impermanence, and the ability to be reconfigured to accommodate rapid growth.

For this new tech workforce, work is less a “place” built through furniture, and more a digital collaboration space built by networks. Having grown up communicating and working through mobile devices and social networks, younger workers and founders see themselves and their work as “mobile” by default. Not surprisingly, this shapes their expectations of a workspace.

The model emerging to support them is a network of corporate offices distributed among the commercial shops and public spaces of a neighborhood community. Workers move freely through these different spatial contexts, bumping into colleagues, collaborators, potential partners, and other urbanites. Work happens anywhere and anytime within this urban fabric. It mirrors the nature of online interactions, where personal, social, and professional lives interconnect naturally at all hours.

These responses to the rapid change of technology seem reasonable when one thinks about how most companies measure their real estate investments. Mostly, the focus is on efficiency: cost and profitability per square foot, vacancy rates, maintenance overhead.

When it comes to Apple Park, however, the metrics used to measure the reported $5 billion investment appear more complex and nuanced. They belong to an entirely different domain, and perhaps a different category of buildings altogether.

Enduring Value Beyond Efficiency

This brings us back to Steve Jobs, who didn’t think about corporate real estate only in terms of efficiency, amortization, and physical adaptability. His final interviews leave us with a clear sense that this project was intended to carry great symbolic value: “My passion has been to build an enduring company where people were motivated to make great products. Everything else was secondary. I want to leave a signature campus that expresses the values of the company for generations.”

He probably knew the Churchillian adage that we shape our buildings, and then they shape us. In fact, his raw instinct for manipulating space to influence behavior was well known since the days of designing the Pixar campus in 1998.

A decade later, the design concept for Apple Park expanded his approach and legendary attention to (some say obsession with) functional detail to a higher level of sophistication. Today the almost finished project conveys Jobs’s aspirations through significant breakthroughs in the building systems of our time:

Innovation in exterior building systems. The ring is a curved glass façade. Not a single flat sheet of exterior glass was used, and the company made a manufacturing modification so that the hue of the glass would not be green. The main café is fronted by the single largest sheet of curved glass in the world. This design maximizes the connection between the worker and nature just outside the windows.

Photo courtesy of Apple

Innovation in structural systems. To achieve the curvature of a perfect circle while minimizing landfill use, the project developed its own concrete plant. Ninety-five percent of all the concrete from the old HP campus — buildings, parking lots, sidewalks — was ground and recycled on-site to build the concrete frame of the new building.

Innovation in mechanical and electrical systems. The building counts one of the largest solar panel arrays in the world, with the aim of powering the entire campus with electricity generated on-site. The mechanical air conditioning system is designed to make this the largest naturally ventilated building in the world. A former director of the U.S. Environmental Protection Agency leads the project’s environmental aspects.

Innovation in workplace systems. Not an open plan. The overall strategy for the workspace is based on modular “pods” dedicated to either teamwork, focused work, or socialization. The rhythm of the pods “permits serendipitous and fluid meeting spaces” along the circumference of the Ring, connecting interior high-tech environments for productivity to panoramic views of the exterior landscape, orchards, and sunlight.

It’s not just these large-scale design moves that convey the building’s aspirations. Doorknobs, glass doors, desks, even faucets are formed to fit and contribute to the overall experience of the space. No detail rushed, no off-the-shelf solution used. Every touchpoint seems to present an opportunity for timeless design. Arguably, like in an iPhone. Or, in the world of buildings, a cathedral.

Apple Park may actually have more in common with that category of architectural project than with other corporate workspace ventures. Cathedrals carry symbolic value, aspirational visions that go far beyond their function. In fact, the very great ones in Europe required significant innovations in the architectural technology of their time in order to achieve their vision — think Brunelleschi’s Dome in Florence, the flying buttresses in Chartres, the vaulted roof in the Duomo of Milan. As with those types of buildings, technology breakthroughs were necessary for Apple Park’s vision to exist; extraordinary details and craftsmanship were necessary for it to inspire.

Closer to home, a more practical analogue is this. In the world of technology workspaces, we haven’t seen this sense of timelessness and the deliberate intent to build far into the future in over half a century, when the same long-view ethos produced the Sandia National Laboratories, NASA Johnson Space Center, Fermilab, or the Manhattan Project. These 20th-century projects were symbols that inspired many generations of workers to see their work as part of something bigger, to employ their talents in advancing new frontiers of science and technology innovation for all.

Beyond its function as a workspace, Apple Park may ultimately aspire to a 21st-century version of this ethos. This project is about a legacy, timeless design, and the belief that the design of a headquarters can shape a company’s trajectory and inspire generations of future workers and leaders for years to come.

Contrarian and Obsolete?

To many critics, Jobs’s vision doesn’t make a lot of sense. From the Wired article:

“It’s an obsolete model that doesn’t address the work conditions of the future,” says Louise Mozingo, an urban design professor at UC Berkeley.

“It’s a spectacular piece of formal design, but it’s contrarian to what’s going on in corporate headquarters across the tech industry,” says Scott Wyatt, an architect at NBBJ, a prominent international firm that has designed buildings for Google, Amazon, and Tencent.

There’s no doubt that Apple Park stands in stark contrast to the flexibility and speed of successful contemporary workspaces for Silicon Valley and the tech startup set. But it seems inaccurate to state that Jobs’s vision wasn’t taking the future into account.

At a time when the future of work itself demands closer contact with machines, Apple Park deliberately sets human workers in closer contact with nature. Jobs’s vision wasn’t concerned with whether future employees will rely on AI interfaces, telepresence robots for collaboration, or augmented reality for prototyping. He envisioned an enduring building that would be relevant 100 years from now, like a cathedral or national lab.

Most technology companies want to build workspaces that can adapt over time. Understandably, they want to hedge against unpredictability and rapid change. Apple instead is building a campus that aims to inspire and stand the test of time. It is not a hedge. Little that Steve Jobs did was.

The Benefits of Taking a Slower Approach to Innovation

Harvard Business Review -

Paul Garbett for HBR

In our experience, managers tend to focus their innovation efforts on processes that are either large in scale (new products and business models ) or swift in development (hackathons, rapid prototyping, or emerging platforms). There’s nothing wrong with this, per se, as both approaches can pay huge dividends. But there’s also another type of innovation that is more gradual and smaller in scale.

We call it slow innovation.

Slow innovation projects can be just as impactful in the long-term. However, they are difficult for organizations to propose, prioritize, and fund. Their scope and pace often run counter to the rhythms of company goals. Their extended timelines struggle to weather leadership change. And, for those managing such projects, it can be difficult to sustainably guide them through circuitous organizational terrain.

Having managed a department at Univision’s Fusion Media Group meant to champion such approaches — which showed promise but failed to have the staying power necessary to have true organizational impact — we want to share some lessons we learned along the way.

Several people have toyed with the phrase “slow innovation” over the years. In our use, though, we mean to evoke the work of cultural anthropologist Grant McCracken in books such as Chief Culture Officer, where he distinguishes between “fast culture” and “slow culture.”

Fast culture is the realm of trendspotters/coolhunters, who monitor social data to find hourly trends and the new lingo of the month. Fast culture is often about rapid response to a new blip on the radar, leading to a win for companies who can mobilize and capitalize quickly. Fast culture drove not just the meteoric rise of Buzzfeed but its continuous remodeling process. It’s the realm of fashion houses that know to make fewer chokers and invest in more crop tops. It’s recognizing the word of the year and using it in your ads way before Oxford Dictionaries confirms it as such.

Slow culture — or, in this case, slow innovation — is the realm of pattern recognition: searching for emerging developments outside the organization’s immediate line-of-sight or that may be happening steadily, but not rapidly. Slow innovation focuses on changes that you see coming but that may not be ready to transform your business immediately. It’s understanding, for example, how automation and self-driving cars will slowly but radically transform job markets and proactively building new strategies to address those changes.

The major benefit of slow innovation is prescience; if you’re patient and committed, slow-innovation projects could alert you to an idea, trend, or gap in the market that would have otherwise appeared to “happen overnight.”

A decision like World Wrestling Entertainment’s move to launch its own digital subscription service in 2014 and cannibalize their profitable pay-per-view television business might be seen as a quick reaction to market forces. But the continued success of such a seemingly risky move shows that the WWE Network was backed by two decades of watching their audience do things like trade tapes of old matches (and, later, posting video online). The company began experimenting with various models for engaging those particularly dedicated fans. So a move that looked like hopping on a trend bandwagon was actually the result of a slower process of observation and innovation.

The nature of slow innovation poses challenges, however. While slow innovation processes might lead to transformative business endeavors, they are not widely detected from outsiders. And, when the transformation eventually happens, the “slow innovation” work over the many years prior often gets written out of the popular understanding of what happened. That only furthers the gap in investment between innovation that is fast and big, and projects that start small and build slowly.

Further, since slow-innovation projects are often tackling issues that are “#6 on the list of priorities,” they aren’t likely to impact business this quarter or even this year (if at all) — making it hard to get buy-in from management.

And it can especially be difficult if you need to convince others that current ways of thinking may not hold as true as they thought for much longer — because problems with current approaches might barely be perceptible in current month-by-month, or week-by-week, trends.

The biggest challenge of all may be inspiring colleagues throughout the company to find the time, amidst their travel and deadlines and calendar appointments, to consider themselves a co-conspirator in slow innovation work. If managers are going to be successful in creating a culture of slow innovation, they have to be catalysts of the process, not owners.

We experienced the benefits and challenges of running a “slow innovation” group first hand when we were hired by Univision to head their Center for Innovation and Engagement in 2015. In the 20 months that followed, our mission was to focus on questions related to the company’s long-term reputation, focus, and business model — no matter how it was measuring success that quarter.

In the process, we learned some lessons that will help those interested in fostering a deeper commitment to slow innovation:

Set internal expectations carefully. Most importantly, do all you can to make sure all your key internal stakeholders understand what you do, and why you’re doing it. Slow innovation is harder to conceptualize than projects aimed at responding to fast culture. If you don’t manage it carefully, other leaders in your business may have mismatched expectations for what KPIs should be assigned to your work. And this is why slow innovation work might be especially vulnerable when it is time for cuts, as ours was.

Claim your wins. The downside of running a department aimed at creating wins for internal clients is that it’s easy to find yourself unintentionally stripped out of the narrative when word spreads about the project, internally and externally. Let other teams feel the ownership of this work. But make sure you get proper internal attribution for your part in it.

Invest in relationship building internally. Finding important slow culture patterns and translating those discoveries to your teams only works if teams know you, trust you, and can see the patterns you’re describing. Running an innovation center like this is only viable if and when people are motivated to call on you and work with you.

Know that the best “slow innovation” work will happen outside your walls. You can’t have delusions of grandeur in this work. For us, it was especially important to acknowledge that the best work on finding these cultural patterns was going to come from people at a vantage point better suited to wholly focus on slow culture than we were, whose view was less obstructed by shifting corporate priorities or this month’s performance goals. Our primary role was often not being the discoverers of a new cultural pattern but rather the translators of those discoveries to our teams. This meant following the work of academic groups, non-profits, startups, and other partners.

Keep budgets lean. This work needs not be expensive on its own. You’re there to be a catalyst. Start small. Try to encourage experiments that other teams see enough value in to fund within their budget. If you incubate an interesting function that starts to grow, move it somewhere else in the operational infrastructure. Invest your long-term budgets in a strong core team, in opportunities for education and inspiration, and in strategic external partnerships.

Don’t forget that seeing isn’t observing, and hearing isn’t listening. To detect projects worthy of slow innovation, it requires not just recording that some noises were heard but actively listening to what those noises seem to mean in their cultural context. Above all else, it means developing an active process of filtering, synthesizing information, and trying to detect patterns that might emerge.

Be rigorous about fostering serendipity. You’re not going to discover interesting paths by only asking the questions you already know how to pose. Time, and energy, has to be dedicated to finding the unexpected. For us, that meant connecting the dots across internal teams doing work that they didn’t initially see as related. It meant bringing internal teams together with external thinkers/projects. And it meant moving teams out of their comfort zones and into unexpected spaces and conversations (at universities, at conferences, and on other such field trips.)

At Univision, we weren’t able to embed ourselves deeply enough in the culture, nor translate our value strongly enough, for the department to be seen as indispensable in the time we had. That means we only came away with glimpses of the potential long-term impact a slow innovation investment can have. But those glimpses strengthened our belief in the potential and our resolve for encouraging more investment in slow innovation.

Why You Should Tell Your Team to Take a Break and Go Outside

Harvard Business Review -

Wellness programs are becoming an integral priority for most human resource managers. After all, research shows that a happier workplace is more productive. To this end, workplaces are adding health-related perks from exercise rooms to yoga classes. Leaders participate in mindfulness and compassion trainings and are coached to learn emotional intelligence. However, there is one important wellness factor that many are forgetting even though it may be the most potent of all: access to green spaces.

Greenery isn’t just an air-freshener that’s pleasant to look at, it can actually significantly boost employee well-being, reduce stress, enhance innovative potential, and boost a sense of connection. Yet most of us don’t spend much time in nature. Richard Louv, author of the Nature Principal, argues that we’re collectively suffering from “nature-deficit disorder,” which hurts us mentally, physically, and even spiritually. Adding a little wilderness to your corporate offices may just be the smartest move you can do this year.

For one, exposure to green spaces profoundly enhances physical and mental well-being which is why corporations like Google prioritize biophilia as a core design principle. Studies are showing these interventions can reduce not just everyday stress but also boost general health. Taking walks in nature lowers anxiety and depression while boosting mood and well-being, a large-scale study showed. Exposure to more light can boost Vitamin D levels that are known to increase mood, especially in colder months.

Scientists are also exploring how exposure to nature might result in lower risk of depression, obesity, diabetes, and cancer. The immune system certainly receives a boost from stress-reduction, and even just the sounds of nature trigger a relaxation response in the brain. Exposure to natural environments lowers stress, including its physiological correlates the “stress hormone” cortisol, heart rate, and blood pressure. By boosting mood, natural environments may also decrease inflammation at the cellular level.

In short, even a small green intervention like having more plants in the office could significantly boost employee happiness, and we know that happiness is a powerful predictor of an organization’s success. Corporations can significantly reduce organizational health costs by introducing more green spaces and plants into an office space. As Florence Williams has exhaustively reviewed in her recent book The Nature Fix, “forest bathing” have become popular practices in many East Asian countries because the impact of even a few minutes of immersion in nature has measurable benefits not just for our psychological well-being but also our physical health.

Greener office environments can boost employee performance and decision-making. One study found that exposure to greenery through office plants boosted not just employee well-being but also productivity  - by 15%! Lead researcher Marlon Nieuwenhuis concludes: “Our research suggests that investing in landscaping the office with plants will pay off through an increase in office workers’ quality of life and productivity.” For one, plants, natural environments and greener offices offer superior air quality which in turn strengthens employee cognitive function – allowing them to perform at their best.

Here’s why this may be the case: Neurosciencist and founder of My Brain Solutions Dr Evian Gordon proposes that “the brain’s attunement to nature has a seminal evolutionary origin, beginning with the earliest species sensing and responding to their environment. Our ancestral hominids (australopithecus, homo habilis, and homo erectus) evolved in response to short-term survival pressures within the rhythms of nature.” Dr Gordon who has published more then 300 scientific papers draws upon insights from the world’s largest standardized brain function database, that shows the immediate and significant extent to which any sensory input creates changes in the brain and body. Stress impacts the heart’s rhythms, for example. Unnatural environments are a subtle form of distraction and stress to optimal brain processing. Natural environments have the opposite effect.

Moreover, research shows that exposure to a natural environment helps people be less impulsive (while urban settings do the opposite). In this particular study, participants were asked if they’d prefer to make $100 immediately or $150 in 90 days. Those who had either been in a natural environment (or simply looked at photos of a natural environment) were more likely to make the more rational and beneficial decision: wait for the $150. Such was not the case for those exposed to cityscapes. Exposure to nature may therefore foster boost superior decision-making which includes better foresight. Exposure to natural environments also strengthens attention and may even help strengthen memory.

Finally, we know that the #1 trait leaders look for in incoming employees is creativity, and exposure to natural environments dramatically improves our ability to think expansively and make superior decisions. Being in nature is a core element of New York designer Joanne DePalma’s work, inspiring her most iconic designs, including the flagship store for Tiffany in Paris, and leading her to creative breakthroughs, including creating one of the world’s most sustainable carpets with Bently Prince Street. “Nature inspires my design and restores me,” she shares. “Whether I’m feeling stuck or exhausted during a long and grueling project, or just need some new ideas, a visit to the waterfront or Central Park gets me back to the source of my creativity. I find so many complex design solutions are hidden in nature.”

Nature can have a positive influence on workplace culture by strengthening employees’ values and leading to greater harmony and connection. Exposure to nature doesn’t just make you feel and think better, it also makes you behave better. People who’ve just walked out of a park or other natural environment are more likely to notice when others need help – and to provide that help. In line with these findings, researchers at the University of Rochester found that exposure to nature resulted in participants valuing community and connectedness over more superficial concerns like personal gain and fame. Participants also became more generous and willing to share with others.

As the lead author Netta Weinstein observes, “we are influenced by our environment in ways we are not aware of….to the extent that our links with nature are disrupted, we may also lose some connection with each other.” Given that there are fewer and fewer “human moments” in the workplace yet that employee well-being is in large part due to positive social connections with other people, embracing greener environments could be tremendously beneficial for a workplace. Other studies have confirmed that exposure to nature leads to less antisocial behavior and more social connection and harmony.

Even a very small exposure to nature – as little as five minutes – can produce dramatic benefits, especially when coupled with exercise like walking or running. In many of the studies mentioned above, the effect was observed after participants simply looked at pictures of nature (vs urban environments) for a few minutes or worked in an office with (or without) plants — easy touches to add to a work setting.

While creating a “green office” may seem daunting, it really isn’t. Here are some easy ways you can make your officer greener

  • Encourage your staff to have “walking meetings” outside.
  • Encourage your staff to sit outside or in naturally lit areas on breaks or during lunch.
  • Provide outdoor walking, meeting, and sitting spaces.
  • If outdoor spaces are not available or you are in an urban environment, create an indoor garden in an atrium or, if space is at a premium, a vertical “green wall.”
  • Light rooms with natural sunlight as much as possible. Open blinds and, if possible, windows to let in outside air and natural sounds.
  • Display nature photography or artwork.
  • Play nature videos or nature slides on your television or display screens.
  • Place as many plants as you can prominently around the office (making sure a designated person takes good care of them).
  • Move your office closer to a park or natural environment.

An increasing interest at Google and similar companies is to make green spaces that are also respectful of the natural environment as a habitat for local animals and plants. Not only are these companies promoting employee well-being, but also reducing their ecological footprint.

Even if your company’s management is unwilling or unable to do these things, you can try a few out yourself: a walking meeting with a colleague, taping a photo of your favorite nature scene to your cubicle, or listening to ambient nature sounds on your headphones. Remember the words of German poet Rainer Marie Rilke: “If we surrendered / to earth’s intelligence / we could rise up rooted, like trees.”

Training customers

Seth Godin's Blog -

If you frequently run last-minute sales, don't be surprised if your customers stop buying things in advance. You're training them to wait.

If you announce things six or seven times, getting louder each time, don't be surprised if your customers ignore the first few announcements. You've trained them to expect you'll yell if it's important.

If you don't offer someone a raise until they find a new job and quit, don't be surprised if your employees start looking for new jobs.

The way you engage with your customers (students/bosses/peers) trains them on what to expect from interactions with you.

Drip, drip, drip.

       

You are more powerful than you think

Seth Godin's Blog -

Highlights from an annotated list of 17 rules for the new world of work:

You are more powerful than you think
It’s bigger than you
Leaders are made, not born
Leveling up is a choice
They say you can’t, we know you can
Dance with fear
See, assert, change
Overwhelmed is temporary
Out loud, in public
Hard work is far better than busy work
The crowd is wrong. The critics are wrong. Useful feedback is precious...
Management matters. So does leadership...
“Here, I made this.” Or possibly, “Here, we made this.”
See the end before you begin the journey
Culture defeats everything
It’s personal

Applications are now open for the next two sessions of the proven altMBA workshop. It's time to level up.

       

Why Startups Like Uber Stumble Over Problems They Could Have Avoided

Harvard Business Review -

News this week that Uber’s CEO was stepping down likely was not a surprise to those who have been following the company in the headlines.

In our work over many years, we have learned enough to know that you have to be on the inside of any company to have the full picture of what went wrong and how. But we do know from our research that rapidly growing companies — especially unicorns like Uber — face a high risk of stumbling.

As a business term, “unicorn” was coined to describe a rarity: In 2011 there were just 28 early-stage companies, still privately owned, with investment valuations of $1 billion or more. Today there are more than 200 unicorns, with a total value estimated by CB Insights at almost $700 billion. Uber is one of them: Its valuation rose to a record-setting $68 billion just seven years after its founding, despite reporting losses of more than $700 million in the first quarter of this year.

But when we tracked those 28 unicorns (along with 11 similar companies with valuations of $600 million or more) over the period from 2011 to the present, we found that 33% failed to grow at all and another 28% grew less than expected. Nearly two in three died or stumbled. Unicorns and near-unicorns actually are much more prone to self-induced internal breakdowns than they are vulnerable to adverse events in the marketplace.

And they’re not alone. One of the hardest acts in business is scaling a business rapidly and profitably. Bain’s research concludes that of all new businesses registered in the U.S., only about one in 500 will reach a size of $100 million — and a mere one in 17,000 will attain $500 million in size and also sustain a decade of profitable growth.

More often, they trip over themselves. Research for our book The Founder’s Mentality found that 85% of the time, the barriers to growth cited by executives at rapidly growing companies are internal — as opposed to, say, external threats such as unreceptive customers, a misread business opportunity or the moves of a dangerous competitor.

The title of our book celebrates the internal energy and sense of insurgency that propels rapidly growing companies, but the book also warns of four predictable internal growth barriers that all too often trip up these companies during their pursuit of scale.

One of these is what we called the unscalable founder. We believe the founder’s mentality is a strategic asset. Nurtured correctly, it can help a company achieve scale insurgency — a company with the benefits of both size and agility. But many individual founders aren’t scalable. Individual founders can become a barrier to growth if they are unable to let go of the details and micromanage, or fail to build a cohesive team around them, or allow hubris to get in their way. We found 37% of executives at growing companies described the unscalable founder as a major barrier to their success.

Scaling a business requires enormous determination — it’s like catching lightning in a bottle.

Typically, founders discover a repeatable model of success that is extraordinary and are rewarded for ignoring distractions and focusing ruthlessly on that single insurgent mission and the repeatable model that delivers it. But over time the market changes and the company needs to change its model. The same founder who was rewarded for ignoring distractions previously is often the last person to adapt.

The skills that help founders get their company to take off also are the opposite of those needed to sustain new growth. Founders focus on speed, ignore good process, and relish breaking the rules of the industry they are trying to disrupt. They cut corners, ignore detractors, and avoid naysayers. Their Herculean efforts are responsible for the firm’s creation, but also its chaos. Once the company reaches cruising altitude, its leaders need to listen more to competing voices and invest more time in emerging stakeholders.

Founders also often are responsible for driving their teams to stretch and accomplish far more than ever seemed possible, often at enormous personal sacrifice. Yet this can make it impossible for them to replace or supplement these foundational team members with new professionals who can take the organization to the next level. The founder remains too loyal to the original team.

Founders who both create and successfully scale their company are like lightning striking twice — the miracle of creation and the miracle of sustainable growth in the same person. That is rare.

The other three barriers described in our book underscore the challenge. Some 55% of executives cite the problem of revenue growing faster than talent: The company grows so quickly that it has trouble attracting the quality and amount of talent that it needs. And as growth creates complexity, complexity becomes a silent killer of growth: 22% of executives cite a lack of accountability as the company expands and the rules become unclear. At its worst, this can breed a toxic culture. Perhaps most perplexing, 25% of executives cite loss of the voices at the front line as the growing company becomes preoccupied with internal matters, numbing it to customer feedback that can improve the business model or to the concerns of frontline employees.

In our study of unicorns, we took a closer look at 10 that stumbled the hardest, companies like Groupon, Zenefits, Jawbone, GoPro, and Zynga — a group that experienced a peak-to-trough valuation decline of about 75% on average. We concluded that about half encountered major external market challenges that clearly contributed to the decline; we found that these external factors always impeded the progress of the company in combination with a well-documented internal breakdown.

For instance, GoPro discovered that to really fulfill its growth potential it was going to have to not just become a manufacturer of small camera devices — a difficult business to defend against the large consumer electronics companies like Sony — but also create an ecosystem of services (uploading to the cloud) and products (drones with cameras) that would differentiate it in the future. This is what founder Nick Woodman described as becoming a sort of “mini Apple,” a much harder strategy to successfully execute. That challenge was reflected in a near 50% revenue shortfall in 2016 from what analysts had expected, ultimately triggering a decline in the company’s valuation down to $1 billion from its onetime high of $12 billion.

In contrast to the moderate frequency of external breakdowns, literally every one of the fallen unicorns we studied encountered well-documented internal issues that contributed to or actually caused the stumble. Consider Zenefits, a provider of efficient online employee benefits services for small and medium-size companies. In early 2015 Zenefits announced that its revenues were going to increase by a factor of 10 that year, to $100 million, causing investors to flood it with money at a valuation of over $4 billion. The core idea for the company had been well proven, the market was certainly large and untapped, and Zenefits was clearly in the lead. Yet according to the company itself, Zenefits stumbled because it wasn’t prepared internally for scaling up. When its valuation collapsed by 55%, and its CEO-founder was replaced, the new CEO wrote an email to staff noting, “It is no secret that Zenefits grew too fast, stretching both our culture and our controls.’’ For instance, the company’s “frat-like” culture became too dysfunctional to run a tight operation in a highly regulated industry, and some of the measures taken to certify new employees in health insurance law became severely compromised.

If these are the rock stars of business — surrounded by the best investors, boards, and advisers — what about the rest? To dig deeper into the challenges facing high-growth companies, we held more than 25 workshops across the world, assembling a group we called the Founder’s Mentality 100. These are companies that attained early success and scale, and showed further promise and desire to grow by five or even 10 times over the coming years. When we surveyed executives in these private discussion sessions, we found a consistent story: Only 15% of the time did these leaders feel that the primary threat to achieving their plans was external (a superior competitor, a new business model, government regulation, market shifts or saturation). The majority were internal factors — factors they should be able to control.

When monitoring our health, doctors use a set of proven questions and tests. With so many company growth stories coming undone because of internal causes that their leaders could have controlled, what is the equivalent protocol to diagnose growing companies? We suggest asking these five questions to assess the general health of a business and its ability to grow to large scale:

  • Is your founder scaling the team at a pace to address the opportunities and challenges of a scale insurgent?
  • Do we have a talent plan to match our growth plan? If not, how do we close the gap?
  • Is the voice of the customer and the front line as strong as it used to be? How do we know?
  • Is our insurgent mission, so inspirational in the early days, still strong, or is it getting diluted?
  • Do people still feel an owner’s mindset that drives accountability and immediate problem solving?

If you are part of an organization with bold growth ambitions, make sure you are asking these five questions early and often.

How to Integrate Data and Analytics into Every Part of Your Organization

Harvard Business Review -

Many conversations about data and analytics (D&A) start by focusing on technology. Having the right tools is critically important, but too often executives overlook or underestimate the significance of the people and organizational components required to build a successful D&A function.

When that happens, D&A initiatives can falter — not delivering the insights needed to drive the organization forward or inspiring confidence in the actions required to do so. The stakes are high, with International Data Corporation estimating that global business investments in D&A will surpass $200 billion a year by 2020.

A robust, successful D&A function encompasses more than a stack of technologies, or a few people isolated on one floor of the building. D&A should be the pulse of the organization, incorporated into all key decisions across sales, marketing, supply chain, customer experience, and other core functions.

What’s the best way to build effective D&A capabilities? Start by developing a strategy across the entire enterprise that includes a clear understanding of what you hope to accomplish and how success will be measured.

Insight Center

One of the major American sports leagues is a good example of an organization that is making the most of its D&A function, applying it in scheduling to reduce expenses, for example, reducing the need for teams to fly from city to city for games on back-to-back nights. For the 2016–2017 season, thousands of constraints needed to be taken into account related to travel, player fatigue, ticket revenue, arena availability, and three major television networks. With 30 teams and 1,230 games in a regular season stretching from October into April, trillions of scheduling options were possible.

The league used D&A to arrive at a schedule that:

  • reduced the number of games teams played on consecutive nights by 8.4%
  • reduced instances of teams playing four games in five days by 26%
  • reduced instances of teams playing five games in seven days by 19%
  • increased the number of consecutive games teams played without traveling by 23%
  • allowed each team to appear on one of the league’s premier TV networks at least once, a success that had not been achieved in the league in any prior year

Technology aside, keys to success included a clear strategy for building the new scheduling system and a commitment across the organization to seeing it through with an unwavering eye on improving the experiences for everyone involved — including players, fans, referees, and TV networks.

Companies can follow the league’s lead by first understanding that successful D&A starts at the top. Make sure leadership teams are fully immersed in defining and setting expectations across the entire organization. Avoid allowing strategy setting and decision making to occur in organizational silos, which can produce shadow technologies, competing versions of the truth, and data analysis paralysis. Before starting any new data analysis initiative, ask: Is the goal to help improve business performance? Jumpstart process and cost efficiency? Drive strategy and accelerate change? Increase market share? Innovate more effectively? All of the above?

When answering these questions, it’s important to understand that D&A teams are not data warehouses that perform back-office functions. Your D&A function should be a key contributor to the development and execution of the business strategy by supplying insights into key areas, such as employees and customers, unmet market opportunities, emerging trends in the external environment, and more.

Leadership teams must recognize that being successful will take courage, because once they embark on the journey, the insights from data analytics will often point to the need for decisions that could require a course correction. Leaders need to be honest with themselves about their willingness to incorporate the insights into their decision making, and hold themselves and their teams accountable for doing so.

Cultural resistance can also become a bigger obstacle than anticipated. But it’s underscored by the findings of two recent studies showing that just 51% of C-suite executives fully support their organization’s D&A strategy. Gartner estimates D&A projects falter 60% of the time. Why? We’ve observed that it’s often because they are not supported by the right organizational structure and talent and are not aligned with the business strategy.

Some organizations have D&A capabilities spread across functions, or rely on a few data scientists to provide insights. Some are too reliant on technology tool kits and rigid architectures, and not enough on creating the right environment to effectively leverage people with the right expertise to drive D&A projects forward. These sorts of models usually are not capable of achieving truly transformative D&A.

Consider the case of a large global life sciences company that spent a significant sum of money building an advanced analytics platform without first determining what it was supposed to do. Executives allowed their technology team to acquire a lot of products, but no one understood what the advanced tools were supposed to accomplish or how to use them. Fortunately, executives recognized the problem before it was too late, conducting an enterprise-wide needs assessment and rebuilding the platform in a way that inspired confidence in its ability to drive efficiency and support business transformation.

In another case, a major financial services organization built a robust technology platform based on stakeholder needs. But after building it, executives soon discovered they lacked the organizational structure and people to use the platform successfully. Once they addressed those needs, the company was able to use the great platform to achieve significant savings in operating costs.

According to KPMG’s 2016 CIO Survey, data analytics is the most in-demand technology skill for the second year running, but nearly 40% of IT leaders say they suffer from shortfalls in skills in this critical area. What’s more, less than 25% of organizations feel that their data and analytics maturity has reached a level where it has actually optimized business outcomes, according to International Data Corporation.

Formally structured systems, processes, and people devoted to D&A can be a competitive advantage, but clearly many organizations are missing this big opportunity. In our experience, companies that build a D&A capability meeting their business needs have teams of data and software engineers who are skilled in the use of big data and data scientists who are wholly focused on a D&A initiative.

While structures vary, the team should be seamlessly integrated with the company’s existing providers and consumers of D&A, operating in cohesion with non-D&A colleagues — people who really understand both the business challenges and how the business works — to set and work toward realistic and relevant strategic goals. The teams should also have the complete support of executive leadership, and their goals should be fully aligned with the business strategy.

In an age where data is created on a scale far beyond the human mind’s ability to process it, business leaders need D&A they can trust to inform their most important decisions — not just to reduce costs but also to achieve growth. And the best will use D&A to anticipate what their customers will want or need before they even know they want or need it.

Can Insurance Companies Incentivize Their Customers to Be Healthier?

Harvard Business Review -

Behavioral economists know well the power of instant gratification and overoptimism that too often lead to poor decisions — like reaching for an extra slice of cake or putting off the dreaded morning run. The behavioral biases play out in a simple paradox: People overconsume health care but underconsume prevention, and insurers or taxpayers are left with the bill. The same plays out with many lines of insurance, where the immediate benefits of poor choices outweigh the often hidden cost of dealing with their consequences, such as reckless driving or failing to flood-proof infrastructure in highly exposed communities.

Of all industries, insurance has a unique opportunity to align its commercial interests with preventive behaviors. Insurers, along with public services, can directly “monetize” better individual behavior as healthier or safer individual outcomes, lower claims costs, and improve risk pools, which can be translated into lower-priced premiums and a competitive advantage in the marketplace. Insurance is therefore a natural shared value industry — one that can employ the idea proposed by Harvard Business School professor Michael Porter and Mark Kramer of FSG in 2011. This new research report highlights how insurers are applying the model.

What makes prevention today different from past efforts (e.g., fire prevention dating back centuries) is how it can be done. First, a wide range of new technologies and data analytics allow tracking who and what is changing, making it possible to establish individualized targets, remedies, and incentives. Second, a systems approach helps companies go beyond single interventions to engage the entire insurance value chain — including local businesses, communities, and government — in the pursuit of these prevention gains. Third, with measurement linking risk-reduction milestones to improved business results, customers can be rewarded dynamically, with behavior-based pricing that encourages positive behaviors and leads to a virtuous shared-value cycle between risk reduction and profit.

Consider the Vitality program developed by the South African insurance company Discovery over 25 years ago. Vitality provides people with incentives to improve their health through gym memberships, discounts on healthy foods, and other awards based on the achievement of personal health goals, and then rewards members dynamically through lowered annual premiums, free travel, and perks.

The result is a structural transformation of insurance. Additional economic value is unlocked, creating benefits for the member (more years of healthy life), the insurer (reduced claims over time), and society (healthier, more productive citizens). Vitality members generate up to 30% lower hospitalization costs and live from 13 to 21 years longer than the rest of the insured population (up to 41 years longer than comparable uninsured populations).

In addition to using this shared-value approach in its wholly owned South African and UK businesses, Discovery has established a global network of insurance partners that employ it, including John Hancock Financial (U.S.), Manulife (Canada), Generali (Europe), AIA (Asia Pacific), and Ping An (China). Altogether, the model is employed in 15 markets, impacting over 5.5 million people.

Other companies are applying similar models to other types of insurance. One example is IAG’s comprehensive program in Australia to prevent car accidents. It is working with car manufacturers to improve vehicle security and safety standards and is offering customers reduced premiums for selecting safety features such as automatic emergency braking. IAG also uses its extensive geomapped motor vehicle claims data to identify dangerous crash zones, alerts customers when they are near these dangerous zones, and engages local governments to fix related infrastructure deficits. Pilot projects show that a single improved highway ramp can save lives and save IAG approximately $600,000 (AUD) per year.

Another example is Redwoods Group’s program in the United States to help its 400 youth-serving customers protect children. It invests $3 million per year in consulting services that reduced drowning deaths and reported instances of child abuse by 85% and 65%, respectively, in less than 10 years. The reduction in drowning deaths alone saves the company $6 million in insurance claims per year. Redwoods underwrites $43 million in premiums per year in a market previously considered uninsurable and enjoys a 95% customer retention rate.

Such examples are featured in FSG’s new research on shared value in the insurance sector, along with efforts by sector leaders to reach more underserved customers with insurance and better leverage their asset management side to create the context for prevention. Insurers that incorporate society’s needs into their strategies, building on existing and new capabilities, are finding lasting competitive advantage. Both today and in the future, creating shared value is an imperative for insurers that aim to grow profitably and sincerely want to provide risk protection and prevention to customers.

6 Reasons Salespeople Win or Lose a Sale

Harvard Business Review -

Steven Moore for HBR

Why does a salesperson lose a sale?

It’s a question I’ve studied for years, as part of the win-loss analysis research I conduct.

There’s a tendency to assume that the salesperson lost because their product was inferior in some way. However, in the majority of interviews buyers rank all the feature sets of the competing products as being roughly equal. This suggests that other factors separate the winner from the losers.

In order to identify these hidden decision-making factors, more than 230 buyers completed a 76-part survey. The research project goals were to understand how customers perceive the salespeople they meet with, explore the circumstances that determine which vendor is selected, and learn how different company departments and vertical industries make buying decisions. We had six key research findings:

#1: Some Customers Want to be Challenged

What selling style do prospective buyers prefer? The survey shows 40% of study participants prefer a salesperson who listens, understands, and then matches their solution to solve a specific problem. Another 30% prefer a salesperson who earns their trust by making them feel comfortable, because they will take care of the customer’s long-term needs. Another 30% want a salesperson who challenges their thoughts and perceptions and then prescribes a solution that they may not have known about.

From a departmental perspective, under 20% of accounting and IT staffers want to be challenged, while 43% of the engineering department does. Over 50% of marketing and IT prefer a salesperson who will listen and match a solution to solve their specific needs. The sales department equally preferred having a salesperson listen and solve their needs and being challenged; HR was equally split across all three selling styles.

There’s an interesting explanation for selling styles preferences, which is based on whether the buyer is comfortable with conflict. Seventy-eight percent of participants who preferred a salesperson who would listen and solve their specific needs agreed with the statement: “I try to avoid conflict as much as I can.” Conversely, 64% of participants who preferred a salesperson who challenges their thoughts disagreed with the statement and are comfortable with conflict.

#2: It’s Really a Committee of One

Whenever a company makes a purchase decision that involves a team of people, factors including self-interests, politics, and group dynamics will influence the final decision. Tension, drama, and conflict are normal parts of group dynamics, because purchase decisions typically are not made unanimously.

One critical research finding is that 90% of study participants confirmed that there is always or usually one member of the evaluation committee who tries to influence and bully the decision their way. Moreover, this person is successful in getting the vendor they want selected 89% of the time. In practicality, it can be said that a salesperson doesn’t have to win over the entire selection committee, only the individual who dominates it.

#3: Market Leaders Have an Edge

In most industries a single company controls the market. Compared with their competitors, they have a much larger market share, top-of-the-line products, greater marketing budget and reach, and more company cachet. For salespeople who have to compete against these industry giants, life can be very intimidating indeed.

However, the study results provide some good news in this regard. Buyers aren’t necessarily fixated on the market leader and are more than willing to select second-tier competitors than one might expect. In fact, only 33% of participants indicated they prefer the most prestigious, best-known brand with the highest functionality and cost. Conversely, 63% said they would select a fairly well-known brand with 85% of the functionality at 80% of the cost. However, only 5% would select a relatively unknown brand with 75% of the functionality at 60% of the cost of the best-known brand.

Not surprisingly, the answer to this question differed by industry. The fashion and finance verticals had the highest propensity to select the best-known, top-of-the-line product, while manufacturing and health care had the lowest.

#4: Some Buyers Are “Price Immune”

Price plays an important role in every sales cycle. Since it is a frequent topic during buyer conversations, salespeople can become fixated on the price of their product and believe they have to be lowest. However, decision makers have different propensities to buy, and the importance of price falls into three categories. For “price conscious” buyers, product price is a top decision-making factor. For “price sensitive” buyers, product price is secondary to other decision-making factors such as functionality and vendor capability. For “price immune” buyers, price becomes an issue only when the solution they want is priced far more than the others being considered.

Study participants were asked to respond to different pricing scenarios, and their responses were analyzed to categorize their pricing tendency. From a departmental perspective, engineering would be classified as price immune; marketing and sales as price sensitive; and manufacturing, information technology, human resources, and accounting as price conscious. From an industry perspective, only the government sector would be classified as price immune. Banking, technology, and consulting would be price sensitive, while manufacturing, health care, real estate, and fashion are price conscious.

#5: It’s Possible to Cut Through Bureaucracy

The most feared enemy of salespeople today isn’t solely their archrivals; it’s buyers’ failure to make any decision. This is because every initiative and its associated expenditure is competing against all the other projects that are requesting funds. Do the departments have different abilities to push through their purchases and defeat their company’s bureaucratic tendency not to buy?

The answer is yes. Based on the research results, sales, IT, and engineering have more internal clout to push through their projects as opposed to accounting, human resources, and marketing. Therefore they’re better departments to sell into from the salesperson’s perspective.

#6: Charisma Sells in Certain Industries

Imagine three salespeople who’ve pitched products that are very similar in functionality and price. Which would you rather do business with:

  • A) A professional salesperson who knows their product inside and out but is not necessarily someone you would consider befriending
  • B) A friendly salesperson who is likable and proficient in explaining their product
  • C) A charismatic salesperson who you truly enjoyed being with but is not the most knowledgeable about their product

While top selection in every industry was the friendly salesperson, the media and fashion industries selected “charismatic salesperson” more than most, and the manufacturing and health care industries had the highest percentage of “professional salesperson” responses.

Many salespeople behave as if buyers are rational decision makers. In reality, human nature is complicated, and a mix of factors — some rational, some not — determine how buyers evaluate sales reps and who they select. Ultimately, it is the mastery of the intangible, intuitive human element of the sales process that separates the winner from losers.

When Health Care Providers Look at Problems from Multiple Perspectives, Patients Benefit

Harvard Business Review -

Mr. Smith was ready to be discharged home after his laryngectomy, an extensive operation that removes a patient’s throat due to cancer. In the opinion of Dr. Lu-Myers, he was a capable man who had passed his physical and occupational therapy evaluations with flying colors. Mr. Smith had fulfilled the doctor’s list of clinical discharge criteria, and she was eager to send him home. She planned to entrust him and his family to manage his dressing changes, as well as his tracheostomy and drain care, with the support of frequent outpatient nursing visits — all very routine protocol, especially for someone who seemed alert and capable.

The day before Mr. Smith was to be discharged, Dolores, his nurse, approached Dr. Lu-Myers with some concerns: “Mr. Smith seems depressed to me, and you know, his wife has never come by to visit. I’m worried about us discharging him.” Dolores explained that Mr. Smith was undergoing a divorce, his children were not around, and he would likely be living alone. With the responsibility for his care now a concern, it was unsafe to discharge him. The care team ultimately found him a temporary rehabilitation facility where he recovered for two weeks until he was ready to go home.

This fictionalized vignette highlights an important aspect of health care: Providers often have vastly different ways of seeing and treating patients, as differences in profession, specialty, experience, or background lead them to pay attention to particular signals or cues and influence how they approach problems. For instance, one person might assess a patient through a clinical lens, focusing on whether the patient meets clinical criteria for discharge, while another might see the patient through a personal or social lens, considering the patient’s broader support system at home.

How these lenses are brought together to inform decision making can have profound implications for patients. While diverse perspectives and approaches to care are important, if they are not managed appropriately, they can cause misunderstandings, bias decision making, and get in the way of the best care. For instance, had the providers in Mr. Smith’s case not communicated effectively, he may have been sent home too soon, which could have led to complications or readmission.

Unfortunately, this collaboration tends to be the exception rather than the norm in many health care organizations. Communication failures are a common cause of patient harm. They are often due to a culture that does not promote the systematic sharing of differing perspectives, instead supporting a hierarchy of power and one-way transmissions of information — both of which hinder effective communication.

Differences in the lenses providers use to see and make sense of patients’ needs extend beyond physicians and nurses. For instance, when emergency department physicians handed off patients to hospital wards, they agreed with hospital physicians about the patient’s primary problem in fewer than 50% of handoffs. This is closely linked with ineffective communication and frequently leads to increases in medical errors and malpractice claims.

Insight Center

Even within the same specialty, providers can have varying perspectives and approaches to care, due to their different backgrounds and experiences. Female physicians, for example, are more likely than male physicians to follow evidence-based practice and to engage in more preventive services (e.g., cancer screening) and communication (e.g., information giving, partnership building). Research has also demonstrated that male cardiologists are more likely to conduct invasive cardiac procedures on the average patient than their female counterparts are (which may be warranted for some patients but less so for others). Similarly, other health care professionals, such as system administrators and managers, also bring varying perspectives to their work that can influence the care patients receive, as highlighted in research by one of us (Jemima) on the racial backgrounds of opioid treatment program managers.

Each way of seeing a particular issue has its pros and cons; what matters is that providers learn to consider each other’s perspectives and communicate effectively when working together. This is the only way teams can reach a shared understanding of a patient’s diagnosis, identify and resolve any blind spots around an issue, and develop more-robust, well-rounded treatment approaches.

Similarly, individuals must learn to appreciate the limits of their own perspective and seek to adopt other lenses when complex problems demand it. We all adopt a default way of seeing any given issue, which can bias our choices and cause us to overlook other important details. This has been demonstrated in the classic “invisible gorilla” experiment, where participants were so focused on counting basketball passes in a video that they failed to notice someone in a gorilla suit walk by. And this tendency has been shown to impact health care providers as well. For example, in one study (inspired by the gorilla experiment), researchers asked radiologists to examine a set of CT scans of lungs for anomalous nodules. What the researchers didn’t disclose was that they had placed an image of a gorilla (larger than the average nodule) on one set of the lung images. The result: 83% of the radiologists missed the gorilla.

In our work to promote more-effective decision making and evidence-based practice, we have come across at least two ways that health professionals can get better at communicating with each other and adopting multiple lenses themselves.

Create an environment that supports perspective sharing and effective communication among team membersThe multidisciplinary care team model, championed in modern health care, brings together different providers (e.g., physicians, nurses, social workers, and other specialists) to treat patients. This works best when teams communicate effectively and integrate their diverse perspectives.

Our colleagues at the Johns Hopkins Armstrong Institute for Patient Safety and Quality have shown how utilizing multidisciplinary teams in emergency departments can decrease the risk of misdiagnosis — a costly error that can result in patients being undertreated or overtreated. For instance, many patients come to the ER complaining of dizziness, a symptom that can indicate a variety of possible diagnoses. They found that including a physical therapist in the emergency department care team helped them more accurately diagnose causes of dizziness among ER patients, resulting in better treatment, better patient satisfaction, and faster discharge. This is because the physical therapist had specialized knowledge of a vestibular assessment technique that can help diagnose cause of dizziness.

But in order to leverage the benefits of others’ expertise, teams need to prioritize open communication. This requires a strong cultural shift toward voicing opinions and concerns and away from the often siloed, hierarchical, and blaming culture that can predominate in health care settings. Building this culture requires both top-down and bottom-up efforts, but leaders can set the tone through their actions and the behavior they reward among care team members.

One way to create this culture is to have teams practice sharing and adopting different lenses using simulations. We have begun implementing a case-based teaching exercise among surgeons, anesthesiologists, nurses, and technicians who work together to deliver surgical care to patients at Johns Hopkins. The goal is to help them recognize, surface, and integrate different lenses. In our simulation they must decide how to deal with a problematic surgeon who is receiving many complaints from coworkers. The exercise reveals team members’ different default ways of seeing the situation and allows them to practice adopting different lenses and combining each other’s different perspectives. In doing so, they can hone the effective communication needed to make better decisions during patient care.

Importantly, improving patient care doesn’t always mean bringing in different specialties, but it does involve team members being willing to acknowledge different perspectives and learn from one another. Sharing lenses with other people in one’s field — such as male and female surgeons sharing how they’d approach a particular patient — can give providers a more comprehensive view of a patient and a more robust plan for action. This is critical for improving care.

Build individual providers’ capacity to adopt multiple perspectives. Not all patient care decisions are made in a team setting, so individuals must also practice applying different lenses to overcome the limitations of their default lens and improve their decision making. For example, they can ask, “If I was viewing this as my colleague would, would I see something else?”

Leaders in health care organizations can help by creating more opportunities for different professions to “shadow” one another. For instance, having a physician spend a few days working closely with and observing a nurse in a hospital might help them better understand how nurses respond to patient requests or challenges. Likewise, physicians, nurses, and others who work in one particular specialty might gain new lenses by rotating through a different specialty. While this rotation is common in clinicians’ early careers (e.g., during residency), ongoing exposure throughout their careers may help broaden their expertise and improve their problem solving. For instance, surgeon Atul Gawande recently wrote about his own transformative experience visiting primary care headache clinics and learning from their unique approach to diagnosing and treating patients.

Research by one of us (Kathleen) has demonstrated how individuals with experiences in different work domains, called having “intrapersonal functional diversity,” can improve team performance by promoting greater sharing of information among team members. This boosts performance more than simply bringing together different subject matter experts.

Building this intrapersonal diversity requires not only exposing providers to different experiences but also continually creating opportunities for them to apply what they learn so that they develop a habit of viewing challenging decisions through multiple lenses. For example, hospitals can create simulation, reflection, and mentoring programs to encourage clinicians to review and learn from their experiences.

Transformations in the U.S. health care system, along with the complex needs of patients, demand more-effective communication and collaboration among the various members of care teams. Understanding how to leverage and coordinate different perspectives will help to cut down on miscommunications and improve patient care. Errors can be avoided — and lives saved — by reducing the common tendency to view complex clinical issues through just one lens. Using perspective-expanding approaches to care, at both the team and individual level, will go a long way toward improving patient care and health outcomes.

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