Wednesday, November 25, 2015

A Good Barrel for Bad Apples in Business

by Theodore Kinni
strategy+business, November 25, 2015

The business news headlines in the early fall of 2015 read like a scandal sheet. In September, the former owner of Peanut Corporation of America was sentenced to 28 years in prison for knowingly selling contaminated peanut butter that killed nine people and sickened hundreds more. Turing Pharmaceuticals, launched earlier this year by a hedge fund manager, purchased a 62-year-old drug that treats a parasitic infection called toxoplasmosis — the only drug of its kind — and bumped the price from $13.50 per tablet to $750. Volkswagen was coping with the fallout from revelations that engineers may have equipped diesel-powered cars with software aimed at deceiving emissions tests.

We tend to think of the people at companies who engage in such behavior as outliers, the few bad apples that spoil the barrel. But in their new book, Phishing for Phools: The Economics of Manipulation and Deception (Princeton, 2015), George A. Akerlof, Koshland Professor of Economics at University of California, Berkeley, and Robert J. Shiller, Sterling Professor of Economics at Yale University, argue that we should direct our attention to the barrel instead. The barrel is free markets, which, according to tenets that go back to Adam Smith, are guided by an invisible hand that ensures the individual pursuit of profit is transformed into common good. Unfortunately, that’s not the whole story.

“Free markets do not just deliver this cornucopia that people want. They also create an economic equilibrium that is highly suitable for economic enterprises that manipulate and distort our judgment, using business practices that are analogous to biological cancers that make their home in the normal equilibrium of the human body,” Akerlof and Shiller write. “Insofar as we have any weakness in knowing what we really want, and also insofar as such a weakness can be profitably generated and primed, markets will seize the opportunity to take us in on those weaknesses. They will zoom in and take advantage of us. They will phish us for phools.”

Phishing for Phools is an extension of the authors’ work on how psychological forces can warp markets, as described in their previous book, Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (Princeton, 2009). The two Nobel Prize–winning economists — Akerlof in 2001 for his work on the market effects of asymmetric information, Shiller in 2013 for his contributions to economic forecasting — define phishing in a broader way than usual. They say it is any activity that entices us to do something that is not in our own interests, but rather in the interest of the “phisherman” (as opposed to the rational behavior assumed in conventional economic theory). They see two kinds of phishing going on in free markets. The first includes emotional and cognitive glitches. A gambling addict who feeds the paycheck needed to feed his family into a slot machine has been legally phished by a casino. The second includes misleading information that is purposely created by the “phishermen.” Investors who received doctored account statements from Bernie Madoff’s firm were illegally phished in this manner.

Whether the phishing is legal or illegal, ethical or unethical, Akerlof and Shiller see it as being driven by the natural operation of free markets: “The free-market equilibrium generates a supply of phishes for any human weakness.” The two authors endeavor to prove this by describing an ongoing epidemic in phishing in a dismayingly wide variety of market contexts: in marketing and advertising; in industries where high-pressure sales tactics are common, such as auto sales, real estate, and credit cards; politics (the market for candidates); food and pharmaceuticals; innovation; tobacco and alcohol; and finance.

You’ll likely be familiar with many of the examples in the book, which are drawn mainly from contemporary inductees into capitalism’s hall of shame: Big Tobacco and its decades-long battle to discredit the link between smoking and cancer, the S&L crisis, the junk bond crisis, the subprime loan crisis. But they are worth rereading in order to understand what they have in common — that is, how and why they are all examples of phishing.

Happily, Akerlof and Shiller identify four obstacles to free-market phishing. There are “standards bearers,” who measure and enforce quality, such as the testing and certification of electronic appliances provided by Underwriters Laboratories. There are “business heroes,” such as Better Business Bureaus (and, presumably, rating sites, like Yelp and TripAdvisor). There are “government heroes” and their legal checks, such as the Uniform Commercial Code, and also “regulator heroes” like the Food and Drug Administration.

Unhappily, however, phishing continues, and the power of those who resist it is constantly being undermined by phishermen in search of larger hauls. As a case in point, the authors offer up the sad tale of the bond ratings agencies, whose cooptation by bond issuers resulted in reckless and inflated estimates that supported and intensified the explosion of subprime mortgages during the housing boom of the 2000s.

Phishing for Phools doesn’t offer much in the way of solutions. “The free market may be humans’ most powerful tool. But, like all very powerful tools, it is also a two-edged sword,” Akerlof and Shiller write. “That means that we need protection against the problems.” However, the only protection they prescribe is a greater recognition among economists of free-market phishing — a recognition that “it is inherent in the workings of competitive markets.” That would be a good a thing, I guess. But economists could debate the merits of this thesis until the end of time, and the rest of us would still be taken for phools.

Wednesday, November 11, 2015

Have you been called?

by Theodore Kinni
strategy+business, November 11, 2015
When I was a kid, I really wanted to win the recently established millionaire drawing in the New Jersey lottery. (I remember thinking that I would never need to work after pulling down the princely annual sum of $50,000 for 20 years.) Other than that, I’ve never had what I would call a calling. And it turns out I’m in good company: 60 to 70 percent of people don’t feel like they have a calling, either, according to studies cited by Martin Seligman in his introduction to Being Called: Scientific, Secular, and Sacred Perspectives (Praeger, 2015).
The genesis of Being Called was a meeting at Canterbury Cathedral in 2013, initiated by Seligman and his research team. Seligman, a professor at the University of Pennsylvania, is a pioneer in the field of positive psychology, the study of strengths that enable people to thrive. The purpose of the gathering was to bring together an unusually diverse and distinguished group of secular and religious figures — social scientists, like Seligman; religious leaders, including Jonathan Sacks, then chief rabbi of the U.K.; and political and business leaders, such as Australian Prime Minister Kevin Rudd — to explore the idea of “being called into the future.” The event inspired this academic collection of essays that attempt to define the nebulous subject of callings, and to establish some boundary lines (as loose and permeable as they may be) around it.

All three of the book’s editors — David Bryce YadenTheo D. McCall, and J. Harold Ellens — attended the Canterbury conclave. They also describe experiencing callings in their essays. Yaden, a psychologist who serves as the lead editor, awoke in his college dorm to a feeling of warmth in his chest that spread throughout his body and became an “experience of boundless unity” — an overwhelming sense of oneness with the world. As he thought about that experience in the weeks that followed, an inner voice directed him to become a “scriptor” — a Latin word meaning author or scribe, which he had to look up. McCall says that his vocation as an Anglican priest seemed obvious to people around him and inevitable as early as his mid-teens. Ellens reports a half-dozen numinous experiences that contributed to a “sense of destiny” and led him to the ministry.

But the essays in this accessible collection don’t just focus on the pulpit. Finding your calling — and following its dictates in order to live an authentic life — has become a popular work-life topic in recent years the rest here

Monday, November 2, 2015

Best Business Books 2015: Managerial Self-Improvement

What a Character!

by Theodore Kinni

strategy+business, November 2, 2015

Illustration by Gérard DuBois

David Brooks, The Road to Character (Random House, 2015)

Fred Kiel, Return on Character: The Real Reason Leaders and Their Companies Win (Harvard Business Review Press, 2015)

Jeffrey Pfeffer, Leadership BS: Fixing Workplaces and Careers One Truth at a Time(HarperBusiness, 2015)

In 1859, as Great Britain’s Victorian era steamed into its third decade, a Scotsman named Samuel Smiles published a book titled Self-Help; with Illustrations of Character and Conduct. In it, Smiles preached “the practice of the virtues of industry, frugality, temperance, and honesty,” copiously illustrating its transformative power with “the instances of men, in this and other countries, who, by dint of persevering application and energy, have raised themselves from the humblest ranks of industry to eminent positions of usefulness and influence in society.”

Self-Help was a hit in England and farther afield; the aspiring entrepreneurs of the Meiji Restoration made it a bestseller in Japan. The book catapulted 47-year-old Smiles to gurudom, and, as is the wont of gurus, he wrote several volumes that capitalized on the popularity of his boot-strapping thesis over the next four decades. Thus, Smiles played an instrumental role in launching the broad category of business books under consideration here: self-improvement books for managers.

In addition to the literary impetus Smiles provided to would-be gurus, he anticipated this year’s most notable managerial self-improvement theme by about a century and a half. In his book Character (1871), he wrote, “In the affairs of life or of business, it is not intellect that tells so much as character — not brains so much as heart — not genius so much as self-control, patience, and discipline, regulated by judgment.” Character building and its rewards are the principal focus of two of this year’s three best business books on the theme of self-improvement for managers. The third — the best of the bunch — reminds us to take the first two with a grain of the rest of the essay here

Friday, October 23, 2015

One Algorithm to Rule Them All

As a student in a 1970s high school computer lab, I used a teletypewriter to punch holes in a paper tape, dialed a phone number and jammed the handset into two rubber cups. Somehow, an unseen computer on the other end was told to do something. I didn’t see the point.
     In the 1980s, as a newly minted account executive at a consulting firm, I assured a colleague I’d be dead long before any work I might do would require learning to use a computer. (I also was sure that I wouldn’t ever need to type — that’s what the secretaries outside my office did on electric typewriters, which corrected typos at the touch of key!)
     Thirty years on, the opportunities that I’ve missed in computer science — a set of disciplines that is arguably the most influential and powerful in the world — are obvious. To avoid further embarrassment, I took up Pedro Domingos’s new book, The Master Algorithm: How the Quest for Machine Learning Will Remake our World (Basic Books, 2015). 
     Unlike me, Domingos did not miss the import of computer science. While I was ignoring the computers popping up on every desktop, he was earning alicenciatura in electrical engineering and computer science from Instituto Superior Técnico at University of Lisbon. After reading about machine learning in a book on artificial intelligence, he skipped an MBA and, instead, earned a Ph.D. in information and computer science from the University of California at Irvine. Now a professor at the University of Washington, Domingos is a leading expert in the fields of machine learning and data mining. His Tolkienesque quest — and the book’s subject — is the most powerful algorithm of all.  
     This master algorithm, which many experts, whose views Domingos gives a hearing, think is a Computer Age chimera, would allow machines to learn without human assistance. “Every algorithm has an input and an output: the data goes into the computer, the algorithm does what it will with it, and out comes the result,” Domingos explains. “Machine learning turns this around: in goes the data and the desired result and out comes the algorithm that turns one into the other.”
     Learning algorithms are already commonplace. Netflix uses them to pick movies for us; Amazon to recommend books; Google to search out Web pages. But Domingos is pursuing something much more far-reaching. “In fact, the Master Algorithm is the last thing we’ll ever have to invent because, once we let it loose, it will go on to invent everything that can be invented,” he writes. “All we need to do is provide it with enough of the right kind of data, and it will discover the corresponding knowledge.”
     The corresponding knowledge includes a cure — or, more accurately, myriad cures — for cancer. In theory, Domingos argues, the master algorithm could create a program capable of spitting out the exact formula for a therapy designed to kill a specific patient’s cancer — based on a tumor’s genome, the patient’s medical history and profile, and a “vast database of molecular biology.” Unfortunately, little of the data necessary to fuel such a program exists as yet. But then neither does the master algorithm... read the rest here

Roger Martin’s Required Reading

by Theodore Kinni

strategy+business, October 7, 2015

Prosperity is a theme that runs through Roger Martin’s work in a continuous and unwavering line. Ranked third on the Thinkers50 biannual ranking of the most influential global business thinkers, Martin has served as a director and cohead of Monitor Company, dean and Premier’s Research Chair in Productivity and Competitiveness at University of Toronto’s Rotman School of Management, and, starting in 2013, institute director of the Martin Prosperity Institute. Throughout, he has sought to illuminate the ways and means of economic success for individuals, corporations, and nations.

A prolific writer, Martin has authored numerous books and articles detailing his findings. In The Opposable Mind: How Successful Leaders Win through Integrative Thinking,(Harvard Business Review Press, 2007), he explains how the ability to hold two conflicting ideas in constructive tension can enable leaders to make better decisions and produce superior ideas. In The Design of Business: Why Design Thinking Is the Next Competitive Advantage (Harvard Business Review Press, 2009) and Playing to Win: How Strategy Really Works (with A.G. Lafley; Harvard Business Review Press, 2013), Martin explains how to enhance corporate success through innovation and strategic thinking.

Finally, in Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL (Harvard Business Review Press, 2011) and, most recently, Getting Beyond Better: How Social Entrepreneurship Works (with Sally R. Osberg; Harvard Business Review Press, 2015), he examines the flaws that are undermining democratic capitalism and the potential of socially responsible business to heal and reinvigorate the system. 

Curious about the underpinnings of his own success, I asked Martin about the books that most influenced him in his professional journey. He offered up the following three titles... read the rest here.

Wednesday, September 16, 2015

Daniel Pink's Required Reading

by Theodore Kinni
strategy+business, Sept 16, 2015
For the better part of two decades, Daniel Pink has been skewering conventional business wisdom and transforming complex ideas into practical approaches that his readers can put to work immediately. A best-selling author, popular speaker, and one of the world’s leading management thinkers, Pink is a practitioner of what has become — in no small part through the skill with which he plies his trade — a familiar format on the business bookshelf: the application of behavioral research to the world of work.

Pink applied this formula to employee incentivization in Drive: The Surprising Truth About What Motivates Us (Riverhead Books, 2009), which described the largely untapped power of intrinsic motivators, such as autonomy, mastery, and purpose, in the workplace. He took on thinking skills in A Whole New Mind: Why Right-Brainers Will Rule the Future (Riverhead Books, 2005), which tracked the rising need for cognitive traits, such as inventiveness, empathy, and meaning-making, in business. And he extended his reach into sales in To Sell Is Human: The Surprising Truth About Moving Others(Riverhead Books, 2012), which described a simple and powerful “ABC” for sales success (attunement, buoyancy, and clarity). In 2014, Pink began broadcasting his behavioral insights to broader audience as host and co-executive producer of “Crowd Control,” a 12-episode series airing on the National Geographic Channel.
Given the influential reach of his work (more than 2 million copies of his books have been sold), I asked Pink to name several books that had made a lasting impression on him. He called out four titles... read the rest here

Sunday, September 6, 2015

Leadership à la Douglas MacArthur

Good to see my book, No Substitute for Victory: Lessons in Strategy and Leadership from General Douglas MacArthur (FT Press, 2005), pop up in IBD

Douglas MacArthur, A Triumphant Warrior And Statesman

Gen. Douglas MacArthur signs Japan's surrender on the battleship Missouri in Tokyo Bay on Sept. 2, 1945.
Gen. Douglas MacArthur signs Japan's surrender on the battleship Missouri in Tokyo Bay on Sept. 2, 1945.  
Douglas MacArthur produced victories in war and peace. He held the rare U.S. Army rank of five-star general — and the only one to receive the Medal of Honor.
British Prime Minister Winston Churchill called him the best American commander of World War II — and with good reason.
MacArthur (1880-1964) led the battering of Japanese forces in the South Pacific during World War II, culminating in the liberation of the Philippines.
After the U.S. dropped atomic bombs on Hiroshima and Nagasaki, prompting Japan to give up the fight in August 1945, President Truman empowered MacArthur to arrange and accept the Land of the Rising Sun's formal surrender.
That end of WWII came during MacArthur's choreographed ceremony 70 years ago this Sept. 2 on the battleship Missouri in Tokyo Bay.
"I received no instructions as to what to say or what to do," MacArthur wrote in "Reminiscences." "I was on my own, (with) only God and my conscience to guide me." the rest here

Wednesday, September 2, 2015

Just say no

My latest post on s+b Blogs:

I was one of those toddlers whose first word — if you choose to believe my mother — was an emphatic “No,” so I’ve always found it hard to believe that people need disobedience instruction. Then I read the stories in Ira Chaleff’s new book, Intelligent Disobedience: Doing Right When What You’re Told to Do Is Wrong (Berrett-Koehler, 2015).

The story I found most shocking took place in a McDonald’s in a small town in Kentucky in 2004. The restaurant’s 51-year-old manager received a phone call from a man claiming to be a police officer; he told her that an 18-year-old female employee had been accused of stealing a customer’s purse. Rather than subject the young woman to arrest and a search at police headquarters, the officer suggested that it might be less distressful if the manager herself searched the woman for evidence of the crime.

The manager agreed and, following the officer’s directions over the phone, stripped the crying woman and searched her clothing in a locked storeroom. When the manager told the officer that she had to go back to work, the officer asked if she could call her husband to watch the woman until the police arrived. Instead, the unmarried manager called her boyfriend, who proceeded to follow the officer’s increasingly sexually abusive instructions (with the manager checking in on occasion). Four hours after the call began, the officer told the manager to bring another man into the room, and she found a handyman who was in the restaurant. The handyman refused to participate, at which point the manager began to act on her own misgivings and eventually allowed the woman to dress and leave the restaurant.

It was, of course, a sadistic hoax. The caller, an off-duty prison guard in Florida, had been making similar calls to fast-food restaurants throughout the U.S. Incredibly, he had been able to convince the managers of nearly 70 other restaurants in 30 states to illegally detain and search employees — and the employees themselves had obeyed their managers’ outrageous instructions.

If you are familiar with the experiments of Stanley Milgram and Philip Zimbardo, who wrote the foreword to Intelligent Disobedience, you already know that most people have been conditioned to obey orders given by authority figures, including orders that violate moral, ethical, and legal norms. “It is part of the socialization process in any human culture to teach our young to obey,” writes Chaleff. But he goes on to argue that teaching employees to disobey orders is an essential organizational safeguard — that nurses are protecting patients and their employers by questioning doctors’ orders that fly in the face of their training, and that accountants can prevent massive frauds by refusing to execute orders that violate their professional standards.

The problem, Chaleff points out, is that we receive little or no counter-conditioning to our obedience-focused upbringing. Unless you are a natural-born naysayer, it is likely that you find it difficult to stand up to authority. And even if you are, like me, one of those pains in the organizational neck, you probably don’t know how to disobey in constructive and effective ways.

Chaleff found the solution to this human problem in canines. Service dogs, like those that guide people with sight impairments, are taught “intelligent disobedience.” They learn how to identify and disobey orders that might cause harm to their charges. A service dog that is ordered forward will use its body to stop its owner from stepping off a curb if there is a potential danger, such as a quiet electric car; it will turn right or left to protect its owner from a low-hanging tree limb on a walk in the woods. “We can use the guide dog,” writes Chaleff, “as a memorable symbol for the capacity to which we aspire: to do the right thing when what we are told to do is wrong.”

Typically, humans want dogs to act more like people. (Sit! Stay!) Chaleff effectively suggests that people act more like these dogs. But the training required to do so doesn’t involve biscuits or rolled-up newspapers that can be wielded as rewards and punishment. Rather, we can short-circuit the ingrained habit of employees to automatically obey orders by teaching them to follow a formula that Chaleff distills as so... read the rest here

Thursday, August 27, 2015

The professor of power talks books

My latest book post on the strategy+business blogs:

In a time when ideology often trumps reality, Jeffery Pfeffer is an unrepentant Machiavellian. Like Niccolò Machiavelli, Pfeffer, who is the Thomas D. Dee II Professor of Organizational Behavior at Stanford University’s Graduate School of Business, studies and teaches the ways and means of power. And he, too, is convinced that a clear-eyed understanding of the world and how it works is an essential prerequisite of leadership effectiveness.

Most of Pfeffer’s 14 books are devoted to bolstering this effectiveness. In Hard Facts, Dangerous Half-Truths, and Total Nonsense: Profiting from Evidence-Based Management (Harvard Business Review Press, 2006), Pfeffer and coauthor Robert Suttonshowed that conventional management wisdom was rife with fallacies and argued for a more scientific approach that presaged the current interest in data science. In Power: Why Some People Have It — and Others Don’t (Harper Business, 2010), which stemmed from his popular course at Stanford, “The Paths to Power,” Pfeffer argued that the ability to attain and wield power was an indispensable trait of leadership success.

In his latest book, Leadership BS: Fixing Workplaces and Careers One Truth at a Time (Harper Business, 2015), Pfeffer delivers a powerful indictment of the leadership industry, whose teachings, he says, undermine the overall state of leadership because they are “based more on hope than reality, on wishes rather than data, on beliefs instead of science.” Curious to learn where we might go for better information, I asked him what books he would recommend for aspiring and existing leaders.

Influence: Science and Practice, 5th Edition, by Robert B. Cialdini (Pearson, 2008). “Influence is both well-written and profoundly insightful about human behavior. It demonstrates that business books can be rigorous and accessible at the same time. If you want to understand the use of power, you need to begin with Bob Cialdini’s seven principles of influence.”

Moneyball: The Art of Winning an Unfair Game, by Michael Lewis (W.W. Norton, 2003). “The thing that attracts me to Moneyball and why it such a wonderful book, aside from Lewis’s engaging and inspirational writing, is that it did a better job of explaining evidence-based management than Bob Sutton and I did in our book. It is a book that speaks to the power of analysis and critical thinking — of asking tough questions and using data to answer those questions, and how that can improve decision making and business performance. Moneyball shows why CEOs cannot push off data science to the IT department.”

The Power Broker: Robert Moses and the Fall of New York, by Robert A. Caro (Knopf, 1974). “This Pulitzer Prize–winner is a brilliant biography of a transformative figure of the 20th century that does not mythologize or sugarcoat who and what Robert Moses was. It’s also a history of New York and the policies of urban renewal that exist to this day, as well as a tremendous study of power and power dynamics. Caro’s ambivalence about power is reflective of what I see in students and other people. On the one hand, we admire power for its capacity to get things done (Moses basically reconstructed New York City) — and on the other, we are horrified by the tactics and the strategies needed to actually make big things happen. In a very explicit way,The Power Broker examines the tradeoff between means and ends.”

The Reckoning, by David Halberstam (William Morrow, 1986). “When I first read The Reckoning, I thought it was going to be about the fall of the U.S. auto industry, which of course it is. It also turned out to be a fabulous study of business cultures and management told through the story of Robert McNamara and the so-called Whiz Kids. Halberstam tracks the rise of the modern management ethos in the U.S. — which focuses on numbers and returning money to shareholders, and which claims that a good leader can run anything from General Motors to the Department of Defense — versus the very different ethos we see in countries such as Japan and Germany. The Reckoning is an important book because it speaks to the implicit and sometimes explicit assumptions we have about what leaders and managers do and how they ought to think about their jobs. These are issues that we are still struggling with today.”

Wednesday, August 19, 2015

The Audacity of Holacracy

My latest book post on the strategy+business blogs:

These days, utopianism is rife in the business world. Perhaps it presages an evolutionary leap to a brave new paradigm. Perhaps the proliferation of pie-in-the-sky thinking is a reaction to the unsettled times, driven by environmental threats, shifts in the global power structure, technological disruption, and economic disparity. Perhaps it’s a cyclical outbreak — an overly exuberant bubble of dissatisfaction with business as usual that will naturally deflate over time. In any case, there seems to be a notable increase in proposals aimed at transforming business from a heartless profit mechanism into a force for good that empowers people and enriches lives.
One of the most radical of these proposals has been put forth by Brian J. Robertson, computer programmer, entrepreneur, and, most recently, management messiah. In Holacracy: The New Management System for a Rapidly Changing World (Henry Holt, 2015), Robertson, without a shadow of doubt and with little due diligence, calls for a fundamental revamping of how businesses are run.
You’ve probably heard of holacracy by now. The controversial management concept has received a lot of media attention because Tony Hsieh has been adopting it at Zappos for the past couple of years. Back in April, almost 15 percent of the online shoe-retailing company’s then-1,500 employees took a live-it-or-leave-it buyout offer rather than stay the course and commit to holacracy. That’s a pretty notable number because Zappos is known for its culture of empowerment and its highly engaged employees.
However, most of the Zappos coverage doesn’t really get to the radical and utopian nature of holacracy. For that, you need Robertson’s book.
It’s a sneaky read. One minute, you’re immersed in the minutia of vocabulary and etiquette that governs this alternative “social technology.” The next, you realize that Robertson’s rules of order are intended to do nothing less than completely replace the hierarchy of managerial power and authority on which all large companies are the rest here

Wednesday, July 29, 2015

Kellogg strategy prof recommends 3 books for aspiring leaders

Harry Kraemer’s Required Reading

by Theodore Kinni
One of my favorite lines from a business book was written by Harry Kraemer: “Throughout my career, up to and including when I was CEO, I benefited from the fact that I worked with a number of amazing people who were willing to prevent me from doing things that did not make sense.” Oh, the humility!

Since stepping down as chairman and CEO of Baxter International in 2004, Kraemer has been a leading advocate of values-based leadership, which he says is supported by four principles: self-reflection, balance, true self-confidence, and genuine humility. He has written books exploring those principles, including Values to Action: The Four Principles of Values-Based Leadership (Jossey-Bass, 2011), which includes that favorite line. Currently, Kraemer serves as a clinical professor of strategy at Northwestern University's Kellogg School of Management, where he was named Professor of the Year in 2008, and as an executive partner at Madison Dearborn Partners, a private equity firm.

Other people’s books have played an important role in Kraemer’s career. “Values-based leadership starts within, developing the self-awareness and self-knowledge that allows you to become your best self. As your best self, you are better able to relate to and influence others, which is the essence of leadership,” he explained to me. “Although the process is highly personal, I have always found insight and inspiration in the thoughts and experiences of others.” Kraemer called out the following three books as especially notable for having “helped me look more deeply at my own actions and behaviors, and how I can become my best self.”
Mere Christianity, by C.S. Lewis (HarperCollins, 1952)
“A classic of philosophical and religious thought, this book presents a compelling argument for the existence of moral law that governs the behaviors of all people. I read it for the first time many years ago when I attended my first silent retreat at the invitation of my future father-in-law. I was immediately taken by Lewis’s conversion from nonbeliever to believer, because he kept an open mind as he explored the beliefs and opinions of others. In addition to guiding my spiritual journey, Mere Christianity influenced my leadership by providing examples of values-based leadership principles, especially balance (listening to a variety of opinions to gain a broad perspective) and genuine humility (knowing that everyone is important and no one has all the answers).”

The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change, by Stephen R. Covey (Simon & Schuster, 1989)
“One of the quintessential books on leadership, 7 Habits never ceases to inspire me with its depth and simplicity. Covey’s habits, including being proactive as opposed to reactive, beginning with the end in mind, and win/win thinking, are straightforward leadership lessons that can be applied at every career level. For me, these powerful practices serve as affirmations on the path of values-based leadership.”

Team of Rivals: The Political Genius of Abraham Lincoln, by Doris Kearns Goodwin (Simon & Schuster, 2005)
“Abraham Lincoln was one of the greatest leaders in history, and Goodwin’s book offers deep insights into his leadership approach. Lincoln knew that he needed to bring together a team of the absolutely best people after he was elected president in 1860, and as he led the nation through the Civil War and the abolition of slavery. And he did exactly that — no matter that those people held very different views or even that they disliked him personally and had opposed his presidency. (Three of Lincoln’s cabinet members had run against him in the 1860 election, including Secretary of State William Seward.) I can’t think of a more powerful role model for bridging differences of opinion and using diversity of perspectives to lead more effectively.”

p.s. Harry Kramer's new book, Becoming the Best: Build a World-Class Organization Through Values-Based Leadership (Wiley, 2015), is also well worth a read.

Sunday, July 19, 2015

The top executive coach calls out 4 must-read books

Marshall Goldsmith’s Required Reading

by Theodore Kinni

The other day I was reading about a CEO who had a near-fatal skiing accident, which caused him to embrace a more humanist approach to leadership that is now transforming his company. Marshall Goldsmith would call the accident a trigger, which he defines as “any major or minor stimulus that reshapes our thoughts and actions.” In his new book, Triggers: Creating Behavior That Lasts — Becoming the Person You Want to Be (Crown, 2015), he explores the role that such stimuli play in behavior change.

Helping leaders achieve positive, lasting behavior change has been Goldsmith’s life work. A top-rated executive coach, he has worked with more than 150 CEOs of major companies and their management teams. Among many recognitions and awards he has received, Goldsmith has been ranked among the 15 most influential business thinkers in the world in the biannual Thinker50 list since 2009. He teaches executive education at Dartmouth’s Tuck School and has been a volunteer teacher for U.S. Army generals, Navy admirals, Girl Scout executives, and International and American Red Cross leaders.

Goldsmith has written more than 30 books, including What Got You Here Won’t Get You There: How Successful People Become Even More Successful (Hachette, 2007) and MOJO: How to Get It, How to Keep It, How to Get It Back If You Lose It (Hachette, 2010), winner of the Harold Longman Award for Business Book of the Year. When I asked him to name a few books that could serve as triggers for leaders who are intent on enhancing their performance, he recommended the following titles.

Hesselbein on Leadership, by Frances Hesselbein (Jossey-Bass, 2013)
“Of all of the great leaders that I have had the honor to coach, Frances Hesselbein, the former CEO of the Girl Scouts of America and a winner of the Presidential Medal of Freedom, the highest civilian award in the U.S., stands out as one of the few from whom I learned far more than I taught. Peter Drucker said that she was the most effective executive that he had ever met, and after having served on the Drucker Foundation Advisory Board for 10 years, I can assure you that he was no easy grader! In Hesselbein on Leadership, Frances shares her philosophy on leadership and life. If you take nothing else away from it except the importance of leading by example, reading it will be time well spent.”

The Leadership Challenge: How to Make Extraordinary Things Happen in Organizations, by James Kouzes and Barry Posner (5th ed., Jossey-Bass, 2012)
“This book, first published more than 25 years ago, in 1987, is still the gold standard on leadership. The five leadership practices that it details are based on extensive research, and they add up to the most comprehensive and thoughtful analysis of what it takes to be a great leader that I have ever seen. And I love the stories and examples because they are immediately applicable by leaders at all levels — not just CEOs.”

Management of Organizational Behavior: Leading Human Resources, by Paul Hersey, Kenneth Blanchard, and Dewey Johnson (10th ed., Prentice Hall, 2013)
“The development of the situational leadership theory by Paul and Ken in the 1970s gave us the first practical model for analyzing situations and determining which leadership style work best in each. Since then, I have taught this model to thousands of leaders. The ideas in this textbook can seem like common sense, but they are far from common practice.”

The Miracle of Mindfulness: A Manual on Meditation, by Thich Nhat Hanh (Beacon Press, 1999)
“I have been a philosophical Buddhist for many years and have read more than 400 books on Buddhism, but no other Buddhist author has influenced my thinking as much as Thich Nhat Hanh. His work is simple and profound at the same time. What, for instance, could be more powerful a leadership mind-set than to approach every task as an opportunity to enhance your awareness of the world? Many of the elements of my coaching process, such as feedforward, have been derived from this Vietnamese monk’s work.” 

Tuesday, June 23, 2015

Write your own story

What’s Your (Leadership) Story?

Posted by & filed under Business, leadership, management, managing yourself.

By Theodore Kinni

Theodore Kinni has written, ghosted, or edited more than 20 business books. He was book review editor for strategy+business for 7 years.

There’s been a lot written about the power of storytelling in business. In fact, the concept has become mainstream enough that one company recently hired a bestselling novelist as its chief storytelling officer.

Stories can be used for lots of purposes in business. Annette Simmons calls out six of them in Whoever Tells the Best Story Wins: How to Use Your Own Stories to Communicate with Power and Impact : “who am I” stories; “why I’m here” stories; “vision” stories; “values in action” stories; “teaching” stories; and “I know what you’re thinking” stories.

As a leader, you can pick and choose among these different types of stories, but in Your Leadership Story: Use Your Story to Energize, Inspire, and Motivate, Timothy J. Tobin, Marriott International’s vice president of global learning and leadership development, makes a pretty compelling argument that you should always start with a story that is about yourself. Crafting such a story is as much about clarifying how you view your self and your situation as it is about communicating who you are to others.

Tobin sees your own story as an amalgam of several of Simmons’ story types, including who am I, why I’m here, and vision and values stories. “Your leadership story communicates the message of identity: who you are as a leader, what you believe in, what drives you and defines you as a leader, and how you act,” writes Tobin.

Why do you need to tell this story about yourself? “If you do not take primary authorship of your story, it will be crafted exclusively through the perceptions of others,” explains Tobin. “And… others’ interpretations may not be accurate. Or worse, their motivations may not support your story.”

Crafting your leadership story is a lot like writing a novel: It includes plot, characters, conflict, theme, and setting. the rest here

Monday, June 22, 2015

The vagaries of innovation

My new book post on s+b Blogs

The Wright Stuff

What if you demonstrated a world-changing invention and nobody noticed? For years, that was the fate of the two self-taught men who pioneered a quantum leap in human transportation.

On December 17, 1903, on the windy Outer Banks of North Carolina, Wilbur and Orville Wright made four short flights in a crude flying machine that they had built in their bicycle shop back in Dayton, Ohio. Totaling less than 1,500 feet and witnessed by only five men (three of them from a nearby life-saving station in Kitty Hawk), the flights were a signal achievement in human history. “Their flights that morning were the first ever in which a piloted machine took off under its own power into the air in full flight, sailed forward with no loss of speed, and landed at a point as high as that from which it started,” writes David McCullough in his new biography The Wright Brothers (Simon & Schuster, 2015).

The story of how the Wright Brothers mastered the challenge of powered flight is a fascinating one, and as you might expect from a writer and historian of McCullough’s stature, it is told well and in detail. McCullough, the dean of popular historians and the author of landmark books on engineering feats such as the Brooklyn Bridge and the Panama Canal, describes how the brothers constructed their planes by trial and error — hand-shaping the propellers and the wings, and, with the help of Charlie Taylor, their sole employee at the bicycle shop, machining a simple gas engine from a block purchased from the Aluminum Company of America (now Alcoa). They then taught themselves to fly. They never flew together, lest they both die in a crash and fail in their quest.

It’s a story of human ingenuity that I remember reading as a boy, and it is no less inspiring decades later. But, as McCullough pointed out in a talk he gave in Kitty Hawk last fall, the really odd thing about it is that for years after those first flights in 1903, no one appeared to notice or care that two bicycle mechanics had actually achieved the age-old dream of flight (and on a shoestring budget of less than US$1,000). Certainly aviation was newsworthy: from 1898 to 1903, the Smithsonian Institution and the U.S. Department of War had sunk $50,000 into a failed effort at powered flight, and several European governments were also pursuing aviation projects. But even though the newspapers picked up the story (from a telegram the brothers sent home to their father and sister), the world did not beat a path to their door.

Instead, the brothers returned to Dayton virtually unheralded. They continued to build and sell bicycles, and invested their profits in the ongoing development of their Wright Flyer. To save money, they stopped traveling to the Outer Banks for test flights and began using a cow pasture outside Dayton, which they rented from a local banker who thought them “fools.”

In January 1905, with more than 105 flights under their belts, the brothers sent a letter offering their invention to the U.S. Department of War. They promptly received a standard letter of rejection. In October 1905, by which time they were routinely making flights of 25 miles and more, they again offered the Flyer to the War Department. Again, their offer was rejected.

It wasn’t until the end of 1905 — two years after their first powered flights — that the Wright Brothers were finally able to make a deal for their invention. A representative of a syndicate of French businessmen traveled to Dayton and agreed to purchase a Flyer as gift to the French government. “According to the agreement,” McCullough writes, “the brothers were to receive one million francs, or $200,000, for one machine, on the condition that they provided demonstration flights, during which the machine fulfilled certain requirements in altitude, distance, and speed.”

Even then, it took the Wright Brothers another two-and-a-half years to win widespread recognition for their feat. In the summer of 1908, Wilbur flew at Le Mans in order to fulfill the terms of the French contract. Suddenly, the entire world recognized the brothers’ achievement. Almost five years after their first flights, the two became celebrities overnight.

Unfortunately for aspiring entrepreneurs seeking insights on how to commercialize technological breakthroughs, that’s pretty much the end of the story for McCullough — he sums up most of the rest of the brothers’ lives in an epilogue. In 1909, they formed the Wright Company, but ended up devoting most of their energies to filing and fighting patent suits. Wilbur died of typhoid fever in 1912 at age 45, leaving an estate of approximately $300,000. Orville sold the company in 1918, just a few years after airplanes were first used by military forces in World War I. When he died in 1948, his estate was valued at just over $1 million.

“On July 20, 1969,” concludes McCullough, “when Neil Armstrong, another American born and raised in southwestern Ohio, stepped onto the moon, he carried with him, in tribute to the Wright brothers, a small swatch of the muslin from the wing of their 1903 Flyer.” That’s a nice bit of recognition. But it seems short shrift for ushering in a technological revolution that changed the world and spawned an industry that will generate about $240 billion in sales in the U.S. alone this year.

Monday, June 1, 2015

Lessons from yesterday's titans

The Selfie Strategy

The photograph of the three tuxedo-clad titans of industry on the cover of Strategy Rules: Five Timeless Lessons from Bill Gates, Andy Grove, and Steve Jobs (HarperBusiness, 2015) could have just as easily been taken in 1898 as 1998. In the only picture of the three CEOs together, Gates, Grove, and Jobs smile out at us as if from the pantheon of business. As long as you remember names like Rockefeller, Edison, and Ford, they seem to be thinking, you will remember us, too.

Rightly so. When the photo was taken, Andy Grove had just been named “Man of the Year” by Time magazine. He was getting ready to step down as the CEO of Intel, where, à la Ford, he had dominated his industry by continuously bringing cheaper, more powerful microprocessors to market. Bill Gates — the Rockefeller of his era — was the head of the world’s most powerful software company, an accused monopolist, and already the richest person on earth. Steve Jobs had returned Apple to profitability after a decade in exile, and was just beginning a run of disruptive innovation that would have made Edison envious.

Given the shelves of books that have already been written about the three CEOs who were most instrumental in shaping the personal computer era, it’s hard to imagine the need for yet another book about any of them. But the authors of this first comparative study of the three men, b-school profs David Yoffie and Michael Cusumano, are convinced otherwise: “We concluded that their approaches could help managers and entrepreneurs think more systematically about strategy, as well as execution, because they tackled key problems in similar ways.” And they know whereof they speak: Yoffie teaches international business administration at Harvard Business School and Cusumano is a management professor at MIT’s Sloan School of Management.

For the most part, the strategic similarities of the CEOs are unsurprising. Yoffie and Cusumano tell us that each had a long-term vision for his company, but then took the essential second step of connecting vision to action. They made big, bold bets, but stopped short of all-or-nothing wagers that risked the survival of enterprises. They developed platforms and ecosystems rather than just products and services. They deployed the considerable leverage and power at their disposal to create competitive advantage (perhaps overly so, given that each of these companies attracted the unwelcome attentions of antitrust regulators).

The final similarity shared by Gates, Grove, and Jobs, however, is one that comes with warnings. The authors call it a personal anchor: “the leader’s unique skills and business insights.” For Gates, it was programming chops and a deep understanding of software. For Grove, it was engineering excellence and discipline. And for Jobs, it was an obsessive focus on design and user experience.
Although their personal anchors were very different, each CEO used them in the same ways, according to Yoffie and Cusumano. “The anchors drove their day-to-day focus as CEOs and guided strategic thinking as well as helped them make decisions ranging from who to recruit and how to delegate authority,” they write. The values and priorities they embodied became elevated into organizational routines and competencies that remain in place even today at Microsoft, Intel, and Apple.” In other words, these three leaders built their companies in their own images — and built them to last far beyond their tenures at the helm.

Despite the profitable persistence of these three companies, I couldn’t help but be troubled by this argument. The idea that you — or any leader — should “shape the organization around your personal anchor” is a dangerous one. The authors admit that it is a double-edged sword: “We can trace many of the limitations that Microsoft, Intel, and Apple have displayed in recent years to the decisions that Gates, Grove, and Jobs made as well as to the cultures and business models that they established.” Microsoft’s focus on programming and software, for example, is one reason its forays into other markets — like search, smartphones, and social networking — have been “slow and awkward.” Intel is still tied to Moore’s Law and the PC market even as the demand for microprocessors has expanded into mobile devices and the Internet of Things. And like its founder, Apple — now the world’s largest company by market capitalization and its most valuable brand — seems unable to move beyond serial innovation and the risks that entails.

In fact, much of the discussion in the book around utilizing your personal anchor is focused on how to temper its effects. Anchors provide much-needed ballast and stability. But they also limit movement, and if they become too large, or are moved too swiftly, they can cause the ship to capsize. Just so, you need to become aware of how your personal anchor can drag you and your company down, the authors warn. You need to build a leadership team that balances its weaknesses and distributes executive power. You need to cast a wide net for information and continually test the logic behind your decisions.

Gates, Grove, and Jobs certainly possessed weighty personal anchors, and they happened to appear in the right place and time to put them to profitable use. But you should think twice before you tie your personal anchor to your company and chuck it overboard.

Wednesday, May 27, 2015

Are you fit to lead?

Phys Ed for Managers

Posted by
& filed under Business, careers, health, leadership, management, managing yourself, Personal Development.
By Theodore Kinni
Theodore Kinni has written, ghosted, or edited more than 20 business books. He was book review editor for strategy+business for 7 years.
“In order for man to succeed in life, God provided him with two means, education and physical activity. Not separately, one for the soul and the other for the body, but for the two together.” Plato wrote that about 400 years before the birth of Christ. I have no idea if the Greek philosopher pursued physical fitness, but it’s said that  he died peacefully in his bed at the age of 81—which I assume was considered a ripe old age in those days.

It’s not a bad life span these days either. After all, the average life expectancy in the U.S. is just under 79 years. The only problem, according the founder of The Leadership Academy of Barcelona, executive coach, and b-school professor Steven P. MacGregor, is that a career in business is not exactly conducive to a long life. “As we advance through a career, we tend to increasingly live our lives on a purely mental level, with all of our emails and strategies and meetings and metrics, forgetting we have a body until something goes wrong with it!” he explains in the opening chapter of his book, Sustaining Executive Performance: How the New Self-Management Drives Innovation, Leadership, and a More Resilient World (Pearson FT Press, 2014).
Happily, MacGregor has a solution—a program designed specifically to help business people become physically as well as mentally fit. Its five elements are Move, Recover, Focus, Fuel, and the rest here

Tuesday, May 19, 2015

How companies kill innovation

My new book post on Safari is up:

Why So Few Innovation Efforts Pay Off and What You Can Do About It

By Theodore Kinni
Theodore Kinni has written, ghosted, or edited more than 20 business books. He was book review editor for strategy+business for 7 years.
Companies spend a lot of money on innovation. According to an annual study by PwC Strategy&, the top 1000 corporate R&D spenders invested $647 billion in their quest for innovation in 2014. That’s more than the individual GDPs of all but the 30 most prosperous countries in the world.
Given this level of spending, I assumed that these companies—the so-called Global Innovation
1000—were getting a pretty hefty return on their investment. But I was wrong about that: Year after year, Strategy& reports that there is “no statistically significant relationship between sustained financial performance and R&D spending” among these enterprises.

That didn’t make a lot of sense to me, until I realized that the lack of correlation probably wasn’t between innovation spending and corporate success as much as it was between innovation spending and innovation success. Unless your R&D spending actually generates some kind of commercially viable innovation, it’s not going to translate into financial performance, is it?

To see why companies might not be getting much of a bang for the big bucks that they spend pursuing innovation, it’s well worth taking a look at Creative People Must Be Stopped: 6 Ways We Kill Innovation (Without Even Trying) (Jossey-Bass, 2012), by David A. Owens. In the book, Owens, a professor at Vanderbilt University’s Owen Graduate School of Management and consultant, points out that corporations often provide surprisingly unfertile fields for innovation because of six different and increasingly challenging kinds of constraints: individual, group, organizational, industry, societal, and technological. (As if the six constraints aren’t enough, there are multiple pitfalls within each category.)

Any one of the six constraints can kill innovation efforts dead, so you should get to know all of them (and you can take this survey to find out which ones you or your company might be particularly vulnerable to). But the first two—individual and group—are particularly relevant for frontline and middle managers who are trying improve the innovation results of their the rest here

Wednesday, May 13, 2015

The Jeff Bezos way

Leadership Lessons from Jeff Bezos and Amazon
Posted May 12, 2015 by & filed under Amazon, Business, Content - Highlights and Reviews, culture, leadership, management, strategy.
By Theodore Kinni
Theodore Kinni has written, ghosted, or edited more than 20 business books. He was book review editor for strategy+business for 7 years.
I’ve been waiting for Amazon—with its annual sales of almost $90 billion in 2014—to crash and burn for a long time. There was no way that a public company could continue to operate almost entirely without profit year after year—Amazon lost $241 million in 2014. I was positive that a reckoning was just around the corner. Now, 20 years down the road, and before Jeff Bezos dispatches a fleet of delivery drones to bombard me with the company’s ubiquitous shipping cartons, I hereby publicly and unconditionally surrender. Never again will I mutter—even under my breath—about the company’s prospects.

No matter what you think of Amazon, it is clear that it is a juggernaut of a company—and that its leaders play a big role in its ability to generate topline growth. That’s why it’s worth reading The Amazon Way: 14 Leadership Principles Behind the World’s Most Disruptive Company by John Rossman. Rossman, who was formerly Amazon’s director of enterprise services and now serves as managing director of professional services firm Alvarez & Marsal, says that the principles he describes in the book were embedded in the corporate culture by founder Bezos and remain the “core tenets on which company leaders are rigorously rated during their annual performance reviews and self-evaluations.” Here are a few that are especially notable—not so much for their commonsensical nature, but for the diligence with which the company pursues them:
Obsess Over the Customer: Not surprisingly from a company that rewrote the book on retailing (driving myriad competitors in segments such as books and music out of business altogether), Amazon’s first leadership tenet dictates an intense focus on the customer. Rossman writes that Bezos has always maintained that the “best customer service is no customer service.” This koan-like statement means that Amazon seeks to always give its customers exactly what they want the first time around, which eliminates a whole bunch of problems—and costs—from the get go. That’s why the company instituted policies like the then-innovative free shipping on orders over $100 program, “Look Inside the Book” previews, and Amazon Prime, which has become a major revenue generator in its own the rest here