All the Feels: Why It Pays to Notice Emotions in the Workplace

Insights by Stanford Business, May 13, 2012

by Theodore Kinni


iStock/shapecharge

Alisa Yu first became intrigued with emotional acknowledgment while interviewing nurses working in the Pediatric Intensive Care Unit at Lucile Packard Children’s Hospital at Stanford. The nurses told her that verbally acknowledging their young patients’ fears and stress created trust, which enabled them to do their jobs more effectively. “From then on, I began to see emotional acknowledgment everywhere,” recalls Yu, a PhD candidate in organizational behavior at Stanford Graduate School of Business.

This realization prompted Yu to team up with Justin Berg, an assistant professor of organizational behavior at Stanford GSB, and Julian Zlatev, an assistant professor of business administration at Harvard Business School, to conduct a series of studies exploring the effects of emotional acknowledgment in the workplace. Their findings, published in May in Organizational Behavior and Human Decision Processes, illuminate a straightforward yet powerful technique leaders can use to build trust with their employees.

Emotional acknowledgment is the simple act of noticing a nonverbal emotional cue — like a frown or grin — and mentioning it. This mention can be a question or a statement such as “You look upset,” or “You seem excited.”

The authors borrow from costly signaling theory, a concept proposed by evolutionary biologist Amotz Zahavi in the 1970s, to suggest that this small act can have a powerful effect because it is read as a sign of genuine intentions. As an example, Zahavi argued that when peacocks fan out their tails to attract mates, it is an “honest signal” of their reproductive fitness. That’s because the colorful display also attracts predators, a potentially fatal risk for weaker peacocks.

Similarly, Yu and her coauthors argue that in a work environment, a supervisor who shows concern for others’ emotional state is signaling a willingness to get involved in a potentially messy situation. “A leader could very easily see someone in distress and choose to ignore it,” Yu says. “But only a leader who truly is benevolent and cares about employees would risk getting involved by voluntarily acknowledging the distressed employee. Thus, employees might take this as a signal that this leader is someone who can be trusted with their well-being.” Read the rest here.

The Insights-to-Action journey

Learned a lot lending an editorial hand here:

Deloitte, May 2021

by Marc Solow, Christina Brodzik, and Dan Roddy

Analytics promise to help companies make better, more data-driven decisions about work, workplaces, and the workforce. But, so far, this promise is unfulfilled: In our 2021 Global Human Capital Trends survey, a mere 3% of the 6,300+ executive respondents said they have the information needed to make sound people decisions. This is a prescription for frustration—and failure—in today’s disruptive environment. 

Leaders need analytics, but only to the extent that analytics provide insights that enable their organizations to act successfully in a reliable, adaptable, and human-centric manner. We call this “Insights-to-Action.” Organizations need to be able to use analytics to sense, analyze, and act—the three legs of the Insights-to-Action journey—in response to the myriad of disruptions affecting work, workplaces, and the workforce.

We know this firsthand because Deloitte uses analytics to fuel its own Insights-to-Action journeys. One example, which illustrates how analytics support our workforce efforts, is Deloitte’s ongoing quest to bolster diversity, equity, and inclusion (DEI) throughout the organization. Read the rest here.

Retirement in America

Learned a lot lending an editorial hand here

PwC, May 6, 2021


A range of factors have put intensifying pressures on the US retirement system in recent years, leaving the industry facing a decelerating revenue growth outlook. A number of these challenges, such as fee pressure, underfunded retirement plans and an aging population, are structural and unlikely to ease. 

Many retirement players have been unable to outrun even one of these factors: fee pressure. Rising industry-wide fee pressure is placing constraints on the profitability of US retirement firms, with average 401(k) expense ratios falling by a third over the last ten years. The fee pressure phenomenon is not limited to asset managers: According to PwC analysis, recordkeeping fees are also on a downward trajectory, declining by 8% between 2015 and 2019 alone.

While these pressures have forced some retirement firms to consolidate or exit, there’s an opportunity hiding in plain sight. Firms that focus on the evolving needs of participants by addressing individual challenges with new benefit offerings and holistic advice can increase participation. Access to retirement programs can also improve through lower cost turnkey programs specifically designed for small business, which, in total, we estimate can unlock an additional $5 trillion in retirement assets.

The call to action is now. There are too many signs suggesting the population is unprepared. A quarter of US adults have no retirement savings and only 36% feel their retirement planning is on track. Even for those who are saving, many will likely come up short. We estimate the median retirement savings account of $120,000 for those approaching retirement (age cohort 55 to 64) will likely provide less than $1,000 per month over a 15-year retirement span. That’s hardly enough, even without factoring in rising life expectancies and increasing healthcare costs. Read the rest here.

Reinventing the Gulf region

Learned a lot about the challenges facing GCC governments and how to address them lending an editorial hand here:

Strategy& Middle East Ideation Center, April 2021





The COVID-19 pandemic has accelerated and amplified the economic, social, and environmental challenges facing the Gulf Cooperation Council (GCC) countries. Pre-pandemic, these countries had initiated significant reforms that allowed them to respond in a more resilient, dynamic, and digital manner. Now, the GCC governments have an opportunity to elevate their economic, institutional, and societal goals and accelerate the speed and scale of regional transformation.

These aspirations will require understanding and resolving five growing tensions and their underlying trends. The tensions — economic and social asymmetry, technological disruption, the impact of aging populations, the polarization of the global order, and the changing nature of institutional trust — are wide-ranging and interconnected.

To mitigate the challenges and achieve an aspirational vision for the region’s future, GCC countries would need to adopt a holistic and integrated transformation agenda. This agenda introduces new economic growth models that put local first. It encompasses a human-centric approach to well-being that puts citizens first. Moreover, it seeks to bolster institutional agility and accountability to put innovation first. Download and read the report here.

Leader, know thyself

strategy+business, April 22, 2021

by Theodore Kinni


Photograph by Thomas Barwick

Twenty-five hundred years ago, someone inscribed Know thyself on a column at the Temple of Apollo in Delphi, where the Pythian priestesses famously uttered their prophecies. Socrates, whom one priestess pegged as the wisest man in the ancient world, discussed the maxim with his pupils Xenophon and Plato, creating the foundation for its modern meaning as an exhortation to be self-aware (versus an admonition to subordinate ourselves to the gods). And today, self-awareness — or metacognition, as psychologists and neuroscientists call it — is just as relevant, especially for leaders.

Metacognition, explains Stephen M. Fleming, principal investigator at the Wellcome Centre for Human Neuroimaging, University College London, and author of Know Thyself: The Science of Self-Awareness, is “our mind’s ability to reflect on, think about, and know things about itself, including how it remembers, perceives, decides, thinks, and feels.” Literally, it is your ability to think about your own thinking.

This ability is built into the circuitry of our brains and based on two processes — one that is often unconscious and estimates uncertainty and another that is usually conscious and monitors our internal state and actions. Fleming likens the way this implicit and explicit metacognition work together to the interaction of the autopilot system and the pilot on a plane. The autopilot monitors and adjusts the actions of the plane, and the pilot monitors and adjusts the actions of the autopilot, he explains, “except now the interaction is all taking place within a single brain.”

Oddly, although our brains are equipped for metacognition, we are not particularly good at being self-aware. “There are three Things extremely hard, Steel, a Diamond, and to know one’s self,” wrote Benjamin Franklin in the 1750 edition of Poor Richard’s Almanack. If it were easier, the Wikipedia page that lists nearly 200 cognitive biases might be considerably shorter, and Nobel Prize winner Daniel Kahneman might not have needed to issue this warning in his book Thinking, Fast and Slow: “Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.” Read the rest here.

Expansionists, brokers, and conveners

strategy+business, March 31, 2021

by Theodore Kinni


Photograph by John M Lund Photography Inc.

When David Rockefeller, grandson of oil magnate John D. Rockefeller and CEO of Chase Manhattan Bank in the 1970s, liked something, he really liked it. He liked collecting beetles, and left a horde of 150,000 specimens to Harvard on his death. He also liked collecting people. His Rolodex (remember those?) contained more than 100,000 contacts; laid out end to end, its cards would have stretched 16 miles.

In the terminology of personal networks, Rockefeller’s custom-made Rolodex is a good example of an “expansionist network,” according to Marissa King, a professor of organizational behavior at Yale School of Management. In her book Social Chemistry, a wide-ranging but rather unconnected exploration of how we connect with other people, King explains that expansionists “have extraordinarily large networks, are well-known, and have an uncanny ability to work a room.” Expansionists create value by connecting contacts to each other. They are collectors and manipulators of what sociologist Mark Granovetter identified as “weak ties.”

But size doesn’t really matter when it comes to networks, says King. Rockefeller, for example, had to overcome the inherent difficulties of maintaining and leveraging an expansionist network by recording detailed information about his contacts on his Rolodex cards. When the Wall Street Journal got a peek after Rockefeller died at age 101 in 2017, it reported that there were 35 cards documenting his meetings with Henry Kissinger dating back to 1955. What really matters is the quality of your contacts and the structure of your network...read the rest here

The Overlooked Partners That Can Build Your Talent Pipeline

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 29, 2021

by Nichola J. Lowe

Image courtesy of Stephanie Dalton Cowan/theispot.com

America has a skill problem. It’s not the result of inadequate educational systems letting down younger workers or a lack of aptitude among older workers, as some claim. The problem is the widespread failure of American companies to share responsibility for skill development. Many employers are simply unwilling — or unable — to invest sufficient resources, time, and energy into work-based learning and the creation of skill-rewarding career pathways that extend economic opportunity to workers on the lowest rungs of the labor market ladder.

This national skills crisis becomes clearest whenever unemployment rates are low. As late as February 2020, most industries in the U.S. showed persistent signs of skills shortages. In manufacturing, for instance, there were 522,000 unfilled job openings in late 2019. There were similar long-standing job vacancies in many other critical industries, including financial and business services, health care, and telecommunications, with executives noting increased skills gaps in data analytics, information technology, and web design, among other areas.

The skills shortage was less obvious during the COVID-19 pandemic, as companies shed millions of jobs, but it persists despite that temporary softening of the labor market. And as hiring picks up along with the economy, employers may increasingly develop workforce strategies that are based not only on skills requirements but on increased commitments to boosting diversity and inclusion.

A better and more enduring skills strategy must begin with the recognition that our national skills crisis rests on a deeply rooted but flawed assumption: namely, that skills are individually held. This view overlooks the collective and context-specific nature of skills — that is, the ways in which they are shared, reinforced, and reproduced through group interactions at work. It also creates a false justification for the bias and hoarding that often accompany employers’ approaches to talent management. That results in more educated workers benefiting from corporate investments in retention, leaving those workers with less formal education underserved and undervalued — a phenomenon that labor scholars call the “great training paradox.” Moreover, it leads to the mistaken categorization of entry-level workers as “unskilled.” This positions them as irrelevant and easy to replace, ignoring the fact that this segment of the workforce — so often women and people of color —not only executes strategy but also has the grounded insights needed to improve organizational processes and practices.

The core assumption that skill is individually held results in supply-side approaches that place the primary burden for skill development on educational institutions and on students within them. These approaches have not and cannot, in isolation, do the trick. Skill shortages are a problem of employment, not education...read the rest here

Seeing, doing, and imagining

strategy+business, March 16, 2021

by Theodore Kinni


Photograph by Laurence Dutton

My vote for the foggiest assertion of the pandemic to date is that the U.S. has an abysmally high number of COVID-19 cases — more than 29 million as of March 8, 2021 — because of testing. “If you don’t test, you don’t have any cases,” former President Donald Trump said during a televised White House roundtable on June 15, 2020. “If we stopped testing right now, we’d have very few cases, if any.” I wonder how many people who heard that had the same first thought as I did: Correlation is not causation.

Though associations gleaned from big data drive recommendation engines and bolster corporate revenues, they have their limitations. Imagine trying to control a viral pandemic by refusing to test people for the virus.This isn’t to say that correlation — the idea that two or more things are associated in some way — isn’t valuable. Indeed, there is big money in correlation. In order to peddle subscriptions, Pandora doesn’t need to know what causes people who listen to The Grateful Dead to also listen to Phish. To bulk up its sales, Amazon doesn’t need to know what causes people who buy a Paleo diet book to also buy beef jerky.

The passive observation of data has limited value, because, as Judea Pearl reminds readers several times in The Book of Why: The New Science of Cause and Effect, data is profoundly dumb. “Data can tell you that the people who took a medicine recovered faster than those who did not take it, but they can’t tell you why,” writes the director of UCLA’s Cognitive Systems Lab. “Maybe those who took the medicine did so because they could afford it and would have recovered just as fast without it.”

Association, which Pearl, a Turing Award winner, identifies as the first of three steps on his ladder of causation, won’t help executives answer many of the questions they need to ask when formulating corporate strategy, making investment decisions, or setting prices. To answer questions such as, “What will raising prices by 10 percent do to revenues?” you need to start climbing Pearl’s ladder. Read the rest here.

The Positive Side of Negative Emotions

Insights by Stanford Business, March 12, 2021

by Theodore Kinni


iStock/Deagreez

The benefits of “cognitive reappraisal” — the widely used self-help strategy of reframing distressing situations to move past the negative emotions they engender — are well established.

Studies have shown that when employees use reappraisal techniques, they are more satisfied with their jobs and are less susceptible to stress and burnout. The research also links reappraisal to higher employee performance.

Given these findings, it’s not surprising that many companies are teaching and encouraging employees to embrace the strategy. Google’s “Search Inside Yourself” training program is a notable example. The program, which includes reappraisal among other practical techniques for mindfulness, self-awareness, and self-management, was created by Chade-Meng Tan, one of the company’s engineers, in 2007. Demand for the program prompted Tan and others to found a nonprofit that went on to teach the techniques to employees in companies ranging from American Express to Volkswagen.

But what if the outcomes of cognitive reappraisal aren’t entirely beneficial? One team of researchers — Matthew Feinberg and Brett Ford at the University of Toronto, along with Francis J. Flynn at Stanford Graduate School of Business — suspected that might be the case.

“Cognitive reappraisal lessens negative emotions by reframing situations in positive terms, but negative emotions serve important social functions,” explains Feinberg, formerly a postdoctoral fellow at Stanford GSB and Stanford Medicine’s Center for Compassion and Altruism Research and Education. “They help ensure that individuals behave in socially acceptable ways and encourage adherence to group norms.” Read the rest here.

How Healthy Is Your Business Ecosystem?

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 9, 2021

by Ulrich Pidun, Martin Reeves, and Edzard Wesselink


Image courtesy of Harry Campbell/theispot.com

Companies that start or join successful business ecosystems — dynamic groups of largely independent economic players that work together to create and deliver coherent solutions to customers — can reap tremendous benefits. In the startup phase, ecosystems can provide fast access to external capabilities that may be too expensive or time-consuming to build within a single company. Once launched, ecosystems can scale quickly because their modular structure makes it easy to add partners. Moreover, ecosystems are very flexible and resilient — the model enables high variety, as well as a high capacity to evolve. There is, however, a hidden and inconvenient truth about business ecosystems: Our past research found that less than 15% are sustainable in the long run.

The seeds of ecosystem failure are planted early. Our new analysis of more than 100 failed ecosystems found that strategic blunders in their design accounted for 6 out of 7 failures. But we also found that it can take years before these design failures become apparent — with all the cumulative investment losses in time, effort, and money that failure implies.

Witness Google, which made several unsuccessful attempts to establish social networks. It invested eight years in Google+ before shutting down the service in 2019. One reason for the Google+ failure was its asymmetric follow model, similar to Twitter’s, in which users can unilaterally follow others. This created strong initial growth but did not build relationships, which might have fostered greater engagement on the platform. The downfall of another Google social network, Orkut, was built into its unusually open design, which let users know when their profiles were accessed by others. It turned out that users were uncomfortable with this lack of privacy, and the network went offline in 2014, 10 years after its launch.

Typically, ecosystems are assessed using two kinds of metrics: conventional financial metrics, such as revenue, cash burn rate, profitability, and return on investment; and vanity metrics, such as market size and ecosystem activity (number of subscribers, clicks, or social media mentions). The former are not very useful for assessing the prospects of ecosystems because they are backward-looking. The latter can be misleading because they are not necessarily linked to value creation or extraction. They indicate the current interest in the ecosystem, and presumably its potential, but may also reflect an ecosystem’s ability to spend investors’ money on marketing and other growth tactics more than its ability to generate value.

To improve the odds of success and mitigate the high costs of failure, leaders must be able to assess the health of a business ecosystem throughout its life cycle. They need metrics that indicate performance and potential at the system level and at the level of the individual companies or partners participating in the ecosystem, as well as the ecosystem leader or orchestrator. They need to be able to gauge growth in terms of scale not only in ecosystem participation but also in the underlying operating model. And most critically, they need metrics that reflect the success factors unique to each of the distinct phases of ecosystem development.

This article lays out a set of metrics and early warning indicators that can help you determine whether your ecosystem is on track for success and worthy of continued investment in each development phase. They can also help you identify emerging issues and decide if and when you may need to cut your losses in an ecosystem and/or reorient it. Read the rest here.

Platform Scaling, Fast and Slow

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 9, 2021

by Pinar Ozcan and Max Büge


Image courtesy of Michael Glenwood Gibbs/theispot.com

Shortly after its 2009 founding in San Francisco, Uber executed a simple strategy that rapidly led to its expansion on a global scale. To achieve network effects by connecting as many drivers and passengers as quickly as possible, the company prioritized launches in new cities. It hired core teams of general managers, operations managers, and community managers in multiple cities at once. In each city, these teams attracted drivers by offering existing black-car services an app — and sometimes a free smartphone — to monetize their idle time. To attract riders, the teams offered subsidized fares to attendees of large conferences and other high-profile events, signing them up and then gaining thousands more riders through word of mouth.

Rapid scaling, as exemplified by Uber, is a core element of platform strategy, with speed considered the decisive factor in the race to succeed in winner-takes-all and winner-takes-most markets. But we’ve found that rapid scaling may not be the best strategy for all platforms. In some cases, a more careful, incremental, and thus slower approach to scaling is more beneficial.

In studying platform businesses, including Airbnb, Amazon, Apple, Expedia, Facebook (particularly its e-payment project, Libra), Google, Grindr, LinkedIn, Netflix, PayPal, and Uber, we found that regulatory complexity and regulatory risk are two significant but often neglected factors in platform scaling decisions. Moreover, they are likely to become increasingly important in the years ahead as efforts to regulate tech companies gain momentum and as more companies in a greater variety of sectors and markets seek to capture the benefits of platforms. Read the rest here.

Does Your C-Suite Have Enough Digital Smarts?

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 3, 2021

by Peter Weill, Stephanie L. Woerner, and Aman M. Shah


Image courtesy of Anna & Elena Balbusso/theispot.com

There’s little doubt that the future of business is digital. Companies that are in the lead implementing digital technologies have radically improved their operational efficiency and their customers’ experiences. And, even more important, the new capabilities unlocked by digital technologies have allowed them to reimagine their purposes and their business models.

Having a digitally savvy top leadership team — that is, a team in which more than half of the executive members are digitally savvy — makes a huge difference. Our latest research shows that large enterprises with digitally savvy executive teams outperformed comparable companies without such teams by more than 48% based on revenue growth and valuation.

Digital savviness is an understanding, developed through experience and education, of the impact that emerging technologies will have on a business’s success over the next decade. Sharing this understanding across the top management team is a key ingredient in the success of corporate transformation. As Jean-Pascal Tricoire, chairman and CEO of energy management company Schneider Electric, told us, “When every business becomes a digital business, every executive needs to take digital transformation personally. The last thing you want in your team is the belief that digital is somebody else’s problem.”

Unfortunately, the demand for digital savviness in the upper echelons of leadership has grown far more quickly than the supply. In 2019, when we studied the boards of directors in 3,228 large U.S.-listed companies with more than $1 billion in annual revenues, we discovered that only 24% of boards were digitally savvy. In 2020, we extended our research to encompass top management teams — C-level executives and leaders of functions and geographic territories — in 1,984 large companies globally. Our new findings indicate that only 7% of companies have digitally savvy executive teams.

In this article, we report the findings of our research into the level of digital savviness among top management teams, the business value it delivers, and the actions that companies can take to increase the digital savviness of their senior executives. Read the rest here.

Arguing your way to better strategy

strategy+business, March 2, 2021

by Theodore Kinni



Illustration by johnwoodcock

There is no shortage of theories regarding the proper basis for a winning corporate strategy. You can set sail on blue oceans with W. Chan Kim and Renée Mauborgne, hone core competences with C.K. Prahalad and Gary Hamel, and get competitive with Michael Porter, to call out just a few of the fashionable options. But how do you transform the theories into a unique strategy capable of driving your company’s long-term success?

This is the question Stanford business school professors Jesper Sørensen and Glenn Carroll address in Making Great Strategy. It’s a book about strategic due diligence. And it fills an important gap in the literature by caring not a whit about a company’s strategy per se, but rather focusing entirely on how rigorously that strategy has been formulated and how thoroughly it has been vetted.

Toward this end, Sørensen and Carroll define strategy as a logical argument that coherently articulates “how the firm’s resources and activities combine with external conditions to allow it to create and capture value.” They further assert that “the development, communication, and maintenance of a strategy argument is best achieved through an open process of actually arguing within the organization, engaging in productive debate.”

Sørensen and Carroll find that in many companies this process of argumentation is either altogether missing or poorly conducted. Instead of using logical argument, decisions about strategy are often dictated by the most powerful people in the room. Or, when they are made more democratically, they are chosen in a rigged or otherwise flawed manner. The authors’ insights help explain the findings of a 2019 survey by Strategy&, PwC’s strategy consulting group, in which only 37 percent of 6,000 executive respondents said that their company had a well-defined strategy, and only 35 percent believed their company’s strategy would lead to success. Read the rest here.

Why So Many Data Science Projects Fail to Deliver

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 2, 2021

by Mayur P. Joshi, Ning Su, Robert D. Austin, and Anand K. Sundaram

Image courtesy of Jean Francois Podevin/theispot.com

More and more companies are embracing data science as a function and a capability. But many of them have not been able to consistently derive business value from their investments in big data, artificial intelligence, and machine learning. Moreover, evidence suggests that the gap is widening between organizations successfully gaining value from data science and those struggling to do so.

To better understand the mistakes that companies make when implementing profitable data science projects, and discover how to avoid them, we conducted in-depth studies of the data science activities in three of India’s top 10 private-sector banks with well-established analytics departments. We identified five common mistakes, as exemplified by the following cases we encountered, and below we suggest corresponding solutions to address them. Read the rest here...

Supporting employees working from home

strategy+business, January 29, 2021

by Theodore Kinni


Photograph by Kathrin Ziegler

In mid-December, a light appeared at the end of a long, dark tunnel when the U.S. Food and Drug Administration issued emergency authorizations for the Pfizer-BioNTech and Moderna COVID-19 vaccines. A month later, that light wavered as the death toll in the U.S. reached 400,000 — having reached 300,000 just five weeks earlier — and the outgoing director of the Centers for Disease Control and Prevention warned that the worst of the pandemic was yet to come. As Yogi Berra once said, “It ain’t over till it’s over.”

Even as millions of people are getting vaccinated, many employees won’t be returning to the workplace for months to come. Instead, they will continue to work from home with all the distractions, stresses, and fears that they have experienced over the past year. This is not an insignificant problem: 25 percent of respondents to a PwC Workforce Pulse Survey conducted between January 11 and 13, 2021, said their physical and mental well-being deteriorated during the pandemic; more than 20 percent said their ability to disconnect, their work–life balance, and their workloads worsened. These results could be magnified in the weeks and months ahead by spikes in COVID case rates and deaths and continuing economic uncertainties, especially with regards to job security.

This makes one of the WFH (working from home) challenges that leaders face even more acute: How do you assess employee wellness when your only point of contact is a phone call or a computer screen? For answers, I talked to two experts... read the rest here.

How to Pressure Test Your Strategic Vision

Insights by Stanford Business, January 15, 2021

by Theodore Kinni

iStock/BeholdingEye

There is no shortage of advice regarding the art and craft of business strategy. Yet, in 2019, when the consulting firm Strategy& surveyed 6,000 executives, only 37% said their companies had well-defined strategies and only 35% believed that their strategies would lead to success.

Stanford Graduate School of Business professors Jesper Sørensen and Glenn Carroll peg this lack of confidence in the ability to make sound strategy to a dearth of critical analytical thinking. They find that the strategies that have driven the long-term success of companies such as Apple, Disney, Honda, Southwest Airlines, and Walmart are typically — and insufficiently — attributed to either an innovative vision or the fortuitous discovery of emerging opportunities. In their new book, Making Great Strategy: Arguing for Organizational Advantage, they assert that neither explanation tells the whole story.

“To put it bluntly: Without reasoned analysis, neither vision nor discovery will lead to strategic success,” Sørensen and Carroll write. In their book, which grew out of developing and teaching strategy and organizational design courses at Stanford GSB, Sørensen and Carroll apply the logician’s tools to the creation of successful corporate strategy.
The Importance of Rigorous Logic

Executives need the tools of logic to construct a coherent and valid strategy argument, which Sørensen and Carroll identify as the common core in all successful strategies. They define a strategy argument as “an articulation of how a firm’s resources and activities combine with external conditions to allow it to create and capture value.”

“We tend to venerate and celebrate strategic intuition, but intuition can always be wrong,” explains Sørensen. “Leaders need to buffer themselves against that possibility by being rigorously logical, too. Logic also is easier to communicate accurately than vision. If I articulate a grand vision for the future, you may be inspired by it, but how will you act on it?”

“There’s a distinction between talent and a skill,” adds Carroll. “Steve Jobs had a talent for envisioning the future that can’t be taught. But the skills needed to develop a logical argument that will reveal if the strategy being envisioned has holes in it or is missing things that you haven’t thought about — those skills can be taught.” Read the rest here...

Strategic Incentives: Cash Performance Awards for the Digital Economy

Learned a lot about how private companies can best use long-term cash incentive plans lending an editorial hand here: https://lnkd.in/e9Mpyjk

Do you really want a CEO to be a role model?

strategy+business, January 12, 2021

by Theodore Kinni



Photograph by RgStudio

When Fortune magazine named Elon Musk as the 2020 Businessperson of the Year, its CEO, Alan Murray, announced the news with palpable distaste: “I have never been a Musk fanboy; he is a mix of some of the worst characteristics of today’s leaders — more messianic than Adam Neumann, as allergic to rules and governance as Travis Kalanick, nearly as narcissistic as Donald Trump.” So why honor Musk? He has been extraordinarily successful at turning bold visions into successful companies. As a result, Tesla’s stock is up more than 1,000 percent since the summer of 2019, making its CEO and largest shareholder, with a nearly 20 percent stake, the second richest person in the world.

Musk is the latest in a long line of celebrated leaders who aren’t exactly paragons of good behavior. Steve Jobs was another notable example. In his acclaimed biography of Jobs, Walter Isaacson documented his subject’s famously petulant and abusive interpersonal conduct. But then Isaacson spun it to support his conclusion that Apple’s cofounder and, later, savior was the “the greatest business executive of our era.”

Murray’s ambivalence to Musk and Isaacson’s efforts to excuse Jobs got me thinking about the role that CEOs and other senior leaders inhabit as behavioral exemplars. Programs for corporate or cultural transformation invariably require that senior executives model the behaviors they are trying to encourage in managers and workers. When Jon Katzenbach and his colleagues at the Katzenbach Center (PwC Strategy&’s global institute on organizational culture and leadership) formulated their 10 principles of organizational culture, they specifically called that dictate out. “The people at the top have to demonstrate the change they want to see,” they declared... read the rest here

Four Questions for Appraising Your Alliances

MIT Sloan Management Review, December 22, 2020

by Theodore Kinni



Over the past four years, many of the United States’ geopolitical alliances have been remade with bewildering speed. It’s no surprise that many of those changes created an uproar — some of these relationships dated back a century or more and seemed sacrosanct, until they weren’t. It also prompted Stephen Walt, the Robert and Renée Belfer Professor of International Relations at Harvard University, to cut through the noise with an article in Foreign Policy titled “How to Tell if You’re in a Good Alliance,” which is instructive for business leaders as well as diplomats.

Walt is a pragmatist, so the first thing he points out is the unspoken assumption behind the uproar: that each of a nation’s existing political alliances is actually worth maintaining. “Surely this is not the case, for all allies are not created equal, and the value of any commitment is likely to wax and wane over time,” he writes. “Wise countries choose their allies carefully and do not treat any of them as sacred and inviolable.”

This is as true in business as it is in international relations. Corporate alliances are a means to an end, and they involve costs and obligations. Accordingly, corporate leaders, like the heads of nations, should never take the value of their partnerships for granted. Toward that end, you can conduct a fast review of the value of your company’s alliances by asking the following four questions, derived from the short list of attributes of a good ally that Walt offers in his article.

Does your partner make a meaningful contribution to the alliance? This is a key question when reviewing a partnership. It’s also one that torpedoed the 2009 alliance between Suzuki Motor Corp. and Volkswagen. Volkswagen wanted to gain greater access to the fast-growing Indian market through Suzuki, and Suzuki wanted access to Volkswagen’s hybrid and diesel technologies. The problem, claimed Suzuki chairman Osamu Suzuki less than two years after the companies bought stakes in each other, was that the technology Suzuki sought wasn’t forthcoming. Suzuki didn’t need the technology that VW was willing to provide, and VW wouldn’t provide access to the technology that it did need. If your partner hasn’t made the contributions it promised, you don’t have a good ally. Read the rest here.

Is the gig up?

strategy+business, December 17, 2020

by Theodore Kinni



Photograph by Brothers91

A decade ago, advocates touted the sharing economy as an alternative to corporate capitalism. Digital technology was opening vast, new peer-to-peer marketplaces: TaskRabbit and Airbnb were founded in 2008, Uber in 2009, RelayRides (now Turo) in 2010, Postmates in 2011, Lyft in 2012. These platforms promised that people would be able to make a good living while working when and how they wanted — selling their time and skills, and renting out their cars, spare bedrooms, and that dusty camping gear in the attic.

“You will know by now that things haven’t turned out exactly as expected,” Juliet Schor wryly notes in her new book, After the Gig. Schor, a sociology professor at Boston College, and her team at the Connected Consumption project, funded by the MacArthur Foundation, studied gig workers and platforms of the sharing economy from 2011 to 2017. The result is a more nuanced view than has been offered by previous books on this topic, which typically focus on either how companies can build their own platforms or how platform companies prosper by evading regulation and exploiting workers.

Among the insights: The less you actually need a gig job, the more likely it is that a gig job will work for you. “Workers’ experiences are not uniform, with variation in pay rates, job satisfaction, and how they do the work,” Schor explains. “As we saw these differences playing out at individual companies, we realized that they are explained by how dependent the worker is on income from the platform to pay basic living expenses.” Schor’s team found that supplemental workers — that is, workers who are not financially dependent on their platforms — make more money, have more autonomy, and are more satisfied with their gigs than platform-dependent workers. Moreover, the former group comprises 34 percent of the workers in the sample the team studied; the latter was only 22.5 percent. (The rest, nearly half of platform workers, fall between the two extremes.)

This finding partly contradicts the headlines of worker abuse that have generated a lot of political Sturm und Drang lately. At the same time, it is clear that the gig economy can’t really substitute for a full-time job. As Schor concludes: “With some exceptions, our data suggest that being dependent on a platform is not a viable way to make a living.” Read the rest here.