Rethinking Industry’s Role in a National Emergency

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, May 27, 2021

by ManMohan S. Sodhi and Christopher S. Tang

Image courtesy of Michael Austin/theispot.com

Photographs of doctors and nurses wearing garbage bags to protect themselves from infection are among the most indelible images of the COVID-19 pandemic. They also testify to the limitations of the U.S. Strategic National Stockpile (SNS). By the end of March 2020, as the first surge of COVID-19 exceeded 20,000 new cases detected per day, it was woefully clear that the United States’ emergency stockpile of essential medical supplies could not meet the demand for personal protective equipment (PPE), ventilators, and other materials urgently needed to battle the pandemic and save lives.

Since then, there has been plenty of finger-pointing regarding the inability of the SNS to live up to its mandate. But none of that acknowledges the reality that, because of the scale and rarity of pandemic-level public health crises, no national reserve can reliably provide the materials needed from inventory alone.

In the decade before COVID-19, flu-related hospitalizations in the U.S. averaged 440,000 annually, but in 2020 alone, COVID-19-associated hospitalizations reached 4.1 million. This is a huge spike in need that is nearly 10 times the flu hospitalization annual mean. Moreover, public health emergencies of COVID-19’s magnitude are highly unusual in the U.S. or anywhere else, normally occurring decades apart, which makes the demand spike massive but rare.

After all, the demand challenge for the SNS is to be able to handle the following:

• More severe flus occurring every two to three years, with demand for medical products and equipment being, say, twice the average annual flu hospitalization mean.
• Epidemics and minor pandemics that may occur, say, once every five to 10 years, with demand being as much as three to four times the mean, although the spike may be regional rather than nationwide.
• Severe pandemics occurring once every 20 to 40 years, with demand as high as 10 times the annual mean occurring nationwide.

No manufacturer launching a product could handle such a distribution of demand by simply having a huge pile of just-in-case inventory, and neither can the SNS. Instead, it needs a strategically balanced approach to meeting future calls for help, keeping in mind that the outcome is counted in human lives. Read the rest here.

Moonshot management

strategy+business, May 25, 2021

by Theodore Kinni


Photograph by Jeremy Horner

NASA has set its sights on Mars. In April, the space agency flew a solar-powered drone on the red planet — the first powered flight on another world. A month earlier, it successfully fired up the four engines of its most powerful rocket since the Apollo era. If the funding and political will can be sustained, this will be the rocket that lifts humans to Mars. James Edwin Webb would surely be delighted.

Webb was NASA’s second administrator, appointed by President John F. Kennedy in January 1961. He led the agency through the early manned flights of the Mercury and Gemini programs and set the course for the Apollo lunar missions. Webb resigned in October 1968, 18 months after three astronauts died in a cabin fire during a launch rehearsal for the first mission of the Apollo program. His resignation came just a few days before the program successfully resumed with Apollo 7, and less than a year before Neil Armstrong stepped onto the moon.

Kennedy chose Webb because, as Tom Wolfe wrote in The Right Stuff, “he was known as a man who could make bureaucracies run.” Webb’s CV included private- and public-sector leadership. He had advanced from personnel director to treasurer to vice president at the Sperry Gyroscope Company, as it grew from 800 to 33,000 employees, and served as president of the Republic Supply Company, a troubled business that its parent, Kerr-McGee Oil Industries, sold at a profit thanks to his leadership. In the public sector, President Harry S. Truman appointed Webb director of the Bureau of the Budget, and then, undersecretary of state to Dean Acheson. “I do not know any man in the entire United States, in the government or out of the government, who has a greater genius for organization, a genius for understanding how to take a great mass of people and bring them together,” said Acheson of Webb.

In January 1961, when the call came to lead NASA, Webb tried to avoid it. He refused meetings with Kennedy’s science advisor and turned down a direct job offer from Vice President Lyndon B. Johnson. But when Webb found himself face-to-face with Kennedy, he was unable to refuse the insistent president. As if to eliminate any chance that Webb might yet escape, Kennedy promptly marched his new administrator from the Oval Office to the White House press office, where the appointment was announced to the media. The keystone of NASA’s executive team, a man whom the New York Times would call an “extraordinary manager,” was in place.

Webb and his achievements at NASA are not as well-known as they should be. The intense interest in the astronauts and their exploits, the Apollo 1 tragedy, and the passage of time have obscured his role in the first era of the space age. But there are useful lessons in it for today’s leaders. Read the rest here.

How noisy is your company?

strategy+business, May 19, 2021

by Theodore Kinni



Illustration by SI photography

Companies live and die by the ability of the people who work within them to make sound judgments. Their judgments determine what strategy to follow, where to invest R&D funds, how to set prices, who to hire and promote, and a myriad of other decisions. Some of the decisions are one-offs; others are made repeatedly. There’s just one problem, assert Daniel Kahneman, Olivier Sibony, and Cass Sunstein: “Wherever there is judgment, there is noise — and more of it than we think.”

Noise is the major source of variability in judgment and, thus, a major cause of decisions that miss their mark, according to the professorial supergroup (henceforth, KSS). Kahneman was awarded a Nobel Prize for his work as a behavioral economist; Sibony is an expert on decision-making who teaches at HEC Paris and Oxford’s Saïd Business School; and Sunstein is the Harvard prof whose work on nudges has been influential in public policy.

Noise is also the title of the trio’s new book, a 400-page tome that should leave executives who take the time to wade through it more than a little unsettled. Their uneasiness should stem from the likelihood that they have been underestimating the negative effects of noise on decision-making in their organizations. When KSS asked 828 senior executives in a variety of industries how much variation they expected to find in expert judgments, their median answer was 10 percent.

In reality, the variation in expert judgments can be four to five times that. When two members of KSS ran a noise audit for an insurance company, they discovered that the median difference in the pricing determined by its underwriters for identical policies was 55 percent, and the median difference in the payouts determined by its claims adjusters for identical claims was 43 percent. “One senior executive estimated that the company’s annual cost of noise in underwriting — counting both the loss of business from excessive quotes and the losses incurred on underpriced contracts — was in the hundreds of millions of dollars,” they write. Read the rest here.

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.