Don’t Confuse Ambition With Effective Leadership

Insights by Stanford Business, January 15, 2025

by Theodore Kinni



There’s an old saw — cribbed from Plato and popularized by Douglas Adams — that those people who are most interested in leading others are least suited to the task. That’s not entirely accurate, yet new research has found a grain of truth in this idea: Many leaders have plenty of ambition to lead, but that’s no guarantee others think they’re effective.

“Our society assumes that there is a link between leadership ambition and leadership aptitude,” explains Francis Flynn, a professor of organizational behavior at Stanford Graduate School of Business. People seeking power and success step up to take leadership roles, and how we select leaders rewards that ambitiousness. “We largely rely on opt-in mechanisms to populate our pools of potential leaders — the people who apply to business schools like Stanford or seek a promotion to the next level in their organizations,” Flynn says. “That assumes implicitly that those people who want to lead are the ones who should lead. But is that assumption valid?”

Though it is clear that ambition plays a significant role in who becomes a leader, its link to leadership effectiveness has not been extensively studied. So Flynn, with Shilaan Alzahawi and Emily S. Reit, PhD ’22, undertook the first systematic study of that relationship. Read the rest here.

Exposure to Other Religions Could Help Stem Science Denial

Insights by Stanford Business, September 5, 2024

by Theodore Kinni


Researchers and educators should think about how scientific information will be perceived by people of different religions, says Yu Ding. | iStock/Aleksei Morozov/JakeOlimb/Rinat Khairitdinov

When someone rejects scientific findings that collide with their religion, it may be seen as a sign of their strongly held beliefs. Yet religiosity alone does not explain why some believers are skeptical of science. A multifaceted new study by Yu Ding, an assistant professor of marketing at Stanford Graduate School of Business, finds that there is another strong predictor of science denial: how much exposure religious people have to members of other faiths.

As Ding reviewed studies of religious intensity and science denial, he found several unanswered questions. For instance, why don’t all religious people find their faith incompatible with science? Quakers and Jews often have strong religious convictions yet are well represented in the STEM disciplines. Likewise, why does individual religious intensity not account for geographic variations in levels of science denial? A Pew Research Center study found that 42% of Muslim respondents in Tunisia believe there is a “general conflict” between religion and science versus 16% of Muslim respondents in Morocco.

This led Ding, along with professors Gita Johar and Michael Morris of Columbia Business School, to examine a lack of religious diversity as a pathway to science denial. The trio hypothesized that science denial may arise from religious intolerance — an unwillingness to accept any view that contradicts the accepted dogma — and that intolerance may be the result of a lack of religious diversity within a particular area. Read the rest here.

 

What People Really Think About Search Engine Ads. (You Might Be Surprised.)

Insights by Stanford Business, March 7, 2024

by Theodore Kinni


iStock/Nuthawut Somsuk

Revenues from search ads are expected to exceed $300 billion in 2024 — making search the world’s largest advertising channel online or off. The ads are essential to search companies, but their value to users, who collectively make more than 1.2 trillion queries per year on Google alone, has always been something of a mystery.

Some experts argue that search ads are intrusive and even scammy — a distraction users must tolerate in exchange for free access to search engines. Others see the ads as a convenience, enhancing the search experience by offering users additional information and easy access to products and services related to their interests. “The utility of search advertising has been a controversial question and people have written positive and negative points of view on it in the media for a long time,” says Navdeep Sahni, an associate professor of marketing at Stanford Graduate School of Business. “But it is a question that needs to be answered with data.”

Sahni now has that data. Sahni and Charles Zhang, PhD ’22, then a GSB graduate student focused on quantitative marketing, got it from real users and real ads in a large-scale field experiment on a widely used U.S. search engine. While there has been copious research on the efficacy of search advertising for ad buyers, this experiment was unique for its scale and empirical focus on the value of ads to search users.

Collected over a period of five months in 2017, the data reports on queries submitted to the search engine by nearly 3 million unique users. For two months in the middle of the experiment, half of the users saw search results that included the usual number of ads that appear among the top results and in the middle of the page, known as mainline ads. “Whenever there’s a search query,” Sahni explains, “search engines use a proprietary algorithm that scores every ad that could appear with the results. Only those ads whose quality exceeds a certain preset threshold get placed in the mainline positions.” These ads are the most visible on the page and have the most effective positioning.

During the same two-month period, the search engine tweaked its ad-scoring algorithm so that the other half of the user group saw fewer mainline ads with their results. “The experiment increased the threshold cutoff of that algorithm just enough so that 17% of the ads that would have received mainline positions got pushed to less visible positions on the side of the page,” Sahni explains. Read the rest here.

The Hidden Costs of Clicking the “Buy Now, Pay Later” Button

Insights by Stanford Business, Feb. 2, 2024

by Theodore Kinni


Cory Hall

In the past couple of years, a new payment option has become almost ubiquitous on online retailers’ checkout screens: Buy Now, Pay Later.

This fintech innovation offers consumers instant financing for large and small purchases on a transactional basis. In a typical purchase, a shopper might pay 25% down for that new sofa or this week’s groceries and pay off the remaining 75% in three equal installments — one every two weeks. If they make the payments on time via a bank account or credit card, the loan is interest-free.

Over the past decade, fintech companies such as Klarna, Affirm, and Afterpay have taken Buy Now, Pay Later from a niche alternative to a mainstream choice by signing up tens of thousands of retailers. The retailers offer BNPL as a payment option at the point of sale and pay a small merchant fee, as with credit cards.

Unlike plastic, however, BNPL does not require a rigorous credit check. That’s made it a hit with consumers, especially younger adults without well-established credit. Total loan volume among the largest BNPL providers grew from $8.3 billion in 2020 to $24.2 billion in 2021, according to the Consumer Financial Protection Bureau. During the 2023 holiday season alone, shoppers availed themselves of $16.6 billion in BNPL loans. Estimates for near-term growth range widely, though it’s been estimated that global loan volume could reach $1 trillion by 2025.

“BNPL is a pretty slick innovation. It is convenient and it’s basically free credit if you pay it off on time,” says Ed deHaan, a professor of accounting at Stanford Graduate School of Business.

However, it also has the potential for misuse and abuse. Read the rest here.

When It Comes to Half-Truths, No News Is Bad News

Insights by Stanford Business, March 15, 2023

by Theodore Kinni


 iStock/PeopleImages

Voluntary disclosures, like those issued by managers in quarterly earnings calls, inform investment decisions across financial markets. They can buoy — or puncture — corporate valuations and stock prices. But it isn’t always clear what effects result from the policies governing these disclosures, especially when it comes to rules about half-truths and the duty to update.

In a new article in Management Science, Anne Beyer, a professor of accounting at Stanford Graduate School of Business, and Ronald Dye of Northwestern’s Kellogg School of Management, use static and dynamic models to understand the effects of regulation on both voluntary corporate disclosure policies and the investors who depend on them.

Half-truths are disclosures that are true in and of themselves but misleading in light of other information managers know but choose to withhold. For example, if a company announces that it will be losing one of its major customers but doesn’t mention that it’s also aware that another major customer is likely to leave, that would be a half-truth. These kinds of omissions are illegal under federal securities law, but their definition is not universally agreed upon. This creates loopholes that can make it difficult to hold managers legally accountable for skirting the whole truth.

Legality aside, whether permitting half-truths in disclosures is preferable to prohibiting them is an open question. Many disclosure regulations aim at providing transparency for investors and other stakeholders. However, it is not self-evident whether barring managers from issuing half-truths leads them to disclose more information.

On the one hand, if a prohibition of half-truths is enforced, then a firm that wants to make a disclosure must disclose the entire truth and cannot selectively withhold part of the relevant information. This may cause the firm to not make any disclosure. On the other hand, if half-truths are allowed, a firm may be willing to share some information on a topic that it would be unwilling to share if full disclosure was required. Read the rest here.

How “Corporate Explorers” Are Disrupting Big Companies From the Inside

Insights by Stanford Business, August 24, 2022

by Theodore Kinni


|iStock/Alexey Yaremenko

The conventional wisdom holds that disruptive innovation is beyond the ken of large, incumbent companies. But then there are companies like Microsoft, which transformed its ubiquitous Office software suite into the Office 365 subscription service. “If Microsoft had done that as a startup, it would be a multi-unicorn,” says Andrew Binns, a founder and director of the strategic innovation consultancy Change Logic. “Office 365 is a whole new business model, but nobody talks about it as disruptive innovation.”

Binns, along with Charles O’Reilly, a professor of organizational behavior at Stanford Graduate School of Business, and Michael Tushman of Harvard Business School, finds that more and more established companies are overcoming the obstacles to innovation with the help of what they call corporate explorers. Corporate explorers are managers who build new and disruptive businesses inside their companies. Sometimes with a formal mandate, sometimes not, they use corporate assets to support and accelerate the development of these new ventures.

Binns, O’Reilly, and Tushman studied a number of these entrepreneurial insiders and report their findings in The Corporate Explorer: How Corporations Beat Startups at the Innovation Game. The book builds on the trio’s continuing research into ambidextrous organizations — companies that succeed over the long haul by simultaneously exploiting their existing businesses and building new ones that drive future growth.

In a recent interview, O’Reilly and Binns described the traits of corporate explorers and the conditions they need to thrive. 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 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 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...

What Elite Donors Want

Insights by Stanford Business, October 14, 2020

by Theodore Kinni

REUTERS/Joshua Roberts

In November 2012, newly elected Democratic members of the United States Congress got about a week to savor their victories. Then, the Democratic Congressional Campaign Committee advised them to start hitting the phones for 3-4 hours per day. Who were they supposed to be calling? Mainly, elite donors — the fewer than 1% of Americans who give candidates more than $200 in any given election cycle.

It isn’t news that politicians court elite donors or that elite donors have greater political access and influence than the typical voter. But, as Stanford Graduate School of Business political economist Neil Malhotra points out in an article recently published in Public Opinion Quarterly, “we know remarkably little about what they actually want from government.”

This is a particularly relevant issue during the current, seemingly endless, election cycle, in which the battle for control of the executive and legislative branches of the federal government is unusually contentious and fraught with implications for the future of the nation.

Malhotra and his coauthor David Broockman, a former Stanford GSB professor who recently moved to the University of California, Berkeley, based their findings on a survey they conducted of 1,152 elite donors, who collectively contributed more than $17.2 million to election campaigns since 2008. That survey was performed for an earlier study aimed at understanding the political anatomy of tech entrepreneurs in Silicon Valley, whom they labeled “liberaltarians.” Read the rest here.

Joel Peterson: How Entrepreneurs Should Lead in Times of Crisis

Insights by Stanford Business, April 14, 2020

by Theodore Kinni


 iStock/DrAfter123

One Saturday afternoon in 2016, Diana Peterson left home for a 4-mile hike in Millcreek Canyon, just outside Salt Lake City, and disappeared. As darkness fell, her husband, Joel, began calling family members to see if anyone had heard from her. A short time later, Diana’s car was located at a trailhead and a search-and-rescue mission was launched.

As morning broke, cadaver dogs were called in and Joel Peterson drove home to find some of his wife’s clothing so the dogs could track her scent. Morbidly, he found himself composing her obituary. Happily, he didn’t need to finish it. As he arrived back at the canyon, Diana reappeared. She had a shattered wrist and was exhausted, but she was alive.

It’s an odd story to find in a book on leadership, but Peterson — a long-time Stanford Graduate School of Business adjunct professor and the chairman of JetBlue — eventually came to see the harrowing incident as a metaphor.

“Just as Diana knew all about flashlights, trail mix, water bottles, walkie-talkies, the importance of hydration, of staying on trails, and of not hiking on trails after dark or alone, in theory our students know about the perils of entrepreneurship and the requisite principles of effective leadership,” he writes in the introduction to his new book, Entrepreneurial Leadership: The Art of Launching New Ventures, Inspiring Others, and Running Stuff. “They are well-prepared in theory, but not in practice.”

The book is Peterson’s way of addressing this gap between leadership theory and practice. In it, he offers the same practical framework — the “set of principles, mind-sets, and self-talk” — that he has used to good effect in his life and career. Here, based on excerpts from a recent interview and the book itself, Peterson offers four key pieces of advice for leaders facing crises — such as the current COVID-19 pandemic and the economic chaos it has spawned. Read the rest here.

“A Blinding Flash of the Obvious”

Insights by Stanford Business, September 28, 2018

by Theodore Kinni



Tom Peters earned his MBA and PhD at Stanford Graduate School of Business in the 1970s, under the unconventional tutelage of organizational psychologists Eugene Webb and James March. But he pegs the beginning of his management studies to 1966 and his two tours of duty as a young naval officer and combat engineer with the Seabees in Vietnam during the war.

“That left an indelible impression,” Peters says of his first leadership role. “Cut the BS. Can the excuses. Forget the fancy reports. Get moving now. Get the job done. On this score nothing has changed in 50 years, including the maddening fact that all too often a business strategy is inspiring, but the execution mania is largely AWOL.”

A lot of other things have changed in the past half-century, but a lot of what Peters learned about management — in the Navy, at Stanford, while researching and writing In Search of Excellence with Bob Waterman at McKinsey in the early ’80s, and in the decades after — remains as relevant today as it was then. All of it and more is collected in Peters’ new book, The Excellence Dividend.

The fat, red exclamation mark that Peters chose as his logo a quarter-century ago is an apt symbol for The Excellence Dividend, which Financial Times management editor Andrew Hill called “shouty.” It’s a sobriquet that Peters embraces. “I give speeches that are noisy and I write like I speak,” he laughs.

Management Isn’t Complicated

Noisy helps when you’re saying things that most leaders already know, but that far too few act upon in a consistent way. In The Excellence Dividend, Peters pinpoints the most common infractions...read the rest here

Bringing Mindfulness to Your Career

Insights by Stanford Business, March 19, 2018

by Theodore Kinni

 

A thousand years ago, there was a cobbler who hated his work, but could not escape it. One day, heartsick, he met a monk, who suggested that he practice his craft as a meditation — by reframing the attention, intention, and emotion with which he approached his work. He followed the monk’s advice. Today, he is remembered as the Divine Cobbler, one of India’s 84 mahasiddhas, gurus who reached enlightenment through mindfulness.

Stanford Graduate School of Business lecturer Leah Weiss, principal teacher and trainer in Stanford’s Compassion Cultivation Program, opens her new book, How We Work: Live Your Purpose, Reclaim Your Sanity, and Embrace the Daily Grind, with the cobbler’s story. It still strikes a chord today, she says, because “nothing provides more opportunities than the workplace for us to feel discouraged, disappointed, bored, overwhelmed, envious, embarrassed, anxious, irritated, outraged, and afraid to say what we really feel.”

Of course, most people today are not as trapped in their jobs as the cobbler. But leaving a job we don’t like may not alleviate the suffering. “It’s like breaking up with one person after another and another in romantic relationships. There’s a common denominator in what’s not working,” says Weiss.

Here she discusses why the grind makes us better leaders and how to practice mindfulness to reconnect to your purpose. Read the rest here.

The Power of a Free Popsicle

Insights by Stanford Business, Feb 19, 2018

by Theodore Kinni

Los Angeles boasts plenty of terrific hotels. At this writing, the top three on TripAdvisor are the Beverly Hills Hotel, Hotel Bel-Air, and the Peninsula Beverly Hills. If you can get a room at any of them for under $700 per night, TripAdvisor says you’re getting a “great value.”

The fourth name on the list is the Magic Castle Hotel. You can snag a room there for $199, but TripAdvisor doesn’t call that out as a great rate. The Magic Castle Hotel, as Chip Heath, the Thrive Foundation for Youth Professor of Organizational Behavior at Stanford Graduate School of Business, describes it, “is actually a converted two-story apartment complex from the 1950s, painted canary yellow … [with] a pool that might qualify as Olympic size, if the Olympics were being held in your backyard.”

How does the Magic Castle Hotel maintain such an enviable TripAdvisor ranking among the 355 hostelries it lists in LA? In their new book, The Power of Moments, Heath and his brother, Dan Heath, a senior fellow at Duke University’s CASE Center, trace it to the hotel’s ability to create “defining moments.” These moments, they say, are ones that bring meaning to our lives and provide fond memories.

One of those defining moments is the Popsicle Hotline. Visitors at the hotel’s pool can pick up a red phone on a poolside wall to hear, “Hello, Popsicle Hotline.” They request an ice-pop in their favorite flavor, and a few minutes later, an employee wearing white gloves delivers it on a silver platter, no charge. It’s a small defining moment that doesn’t cost much to produce, but has paid off for the Magic Castle Hotel.

In The Power of Moments, the Heath brothers identify four metatypical defining moments. Elevation moments transcend ordinary experience, like the arrival of an ice-pop on a silver platter. Insight moments rewire our understanding of the world, like George de Mestral pulling burrs from his clothes after a hike and getting the idea for a new kind of fastener that he named Velcro. Moments of pride accompany achievement, which is why employee recognition is such a powerful tool. And moments of connection — like weddings, graduations, and retirements — strengthen relationships. Read the rest here.

Four Ways Nonprofits Can Increase Their Impact

Insights by Stanford Business, November 1, 2017

by Theodore Kinni

Only a mere 50 years ago were philanthropic and charitable organizations in the U.S. defined as an independent sector distinct from government and business. Since then, the economic impact of the nonprofit sector in the U.S. has grown to $1.7 trillion.

The sector’s sheer heft — it’s larger than the banking and retailing industries — is one reason that Stanford GSB alumni and lecturers Bill Meehan and Kim Starkey Jonker wrote Engine of Impact: Essentials of Strategic Leadership in the Nonprofit Sector, which came out this November. Another is their conviction that the sector has entered a new era, which they’ve named the “Impact Era.”

The good news of the Impact Era is that, by 2025, philanthropists will likely contribute a record $500 billion to $600 billion annually to nonprofits, well above the $373 billion recorded in 2015. The bad news is the nonprofits will still come up short by $100 billion to $300 billion in the funding they require. “In brief, [nonprofits] will need more money, and lots of it,” according to Meehan and Jonker in the introduction to Engine of Impact.

Here, Meehan and Jonker discuss how nonprofits can make up the shortfall and meet the challenges of the Impact Era. Read the rest here.

Is Capitalism Killing America?

Insights by Stanford Business, September 18, 2017

by Theodore Kinni


On August 2, 2017, the Dow Jones Industrial Average hit a record-breaking 22,000 — its fourth 1,000-point advance in less than a year. That same day, I read the first sentence in Peter Georgescu's new book, Capitalists Arise! End Economic Inequality, Grow the Middle Class, Heal the Nation (Berrett-Koehler, 2017): “For the past four decades, capitalism has been slowly committing suicide.”

How does Georgescu, the chairman emeritus of Young & Rubicam (Y&R) and a 1963 graduate of Stanford Graduate School of Business, reconcile the Dow’s ascent with his gloomy assertion?

“The stock market has nothing to do with the economy per se,” he says. “It has everything to do with only one thing: how much profit companies can squeeze out of the current crop of flowers in the garden. Pardon the metaphor. But that’s what corporations do — they squeeze out profits.”

In the latter half of the 1990s, Georgescu shepherded Y&R through a global expansion and an IPO. He has served on the boards of eight public companies, including Levi Strauss, Toys “R” Us, and International Flavors & Fragrances. He also is the author of two previous books, The Constant Choice: An Everyday Journey from Evil Toward Good (Greenleaf, 2013) and The Source of Success (Jossey-Bass, 2005). An Advertising Hall of Fame inductee, the 78-year-old adman is still pitching corporate leaders. Now, however, he is trying to convince them to fundamentally rethink how — and for whom — they run their companies. Read the rest here.

Sheryl Sandberg: Develop Your Voice, Not Your Brand

Insights by Stanford Business, July 18, 2017

by Theodore Kinni


Today Sheryl Sandberg is known as a leading Silicon Valley executive and a champion of working women. But when she arrived in California in 2001, after a five-year stint at the U.S. Treasury, she wasn’t exactly welcomed with open arms.

“All the exciting stuff was happening out here, so I wanted to work in Silicon Valley,” recalls Sandberg. “Lots of people said ‘I would never hire anyone like you’ to my face. The first tech bubble had just burst. It was actually hard to get a job.”

But Sandberg did get a job — and an impressive one. She served as Google’s vice president of global online sales and operations until 2008, when Facebook founder Mark Zuckerberg convinced her to join the social networking site as its COO.

In 2013, Sandberg became a best-selling author with the publication of Lean In: Women, Work, and the Will to Lead. Since then, its readers have founded 33,000 Lean In peer support circles in 150 countries.

Sandberg’s life seemed charmed until May 2015, when her husband and the father of her two children, Dave Goldberg, died suddenly. “When Dave died, I didn’t think I was capable of anything. I could barely go to work and not cry. I was parenting two grieving children,” she says.

Sandberg channeled her own grief into a second book, Option B: Facing Adversity, Building Resilience, and Finding Joy. Co-authored with Wharton School professor Adam Grant, it, too, has found a global readership and, with the support of the Sheryl Sandberg & Dave Goldberg Family Foundation, has already attracted a community of 350,000 people.

On May 25, Sandberg described her journey and the lessons she has learned along the way to Stanford Graduate School of Business students at the final View From The Top event of the 2016-17 academic year. Read the rest here.

An Antidote for Health Care Reform Failure

Insights by Stanford Business, May 16, 2017

by Theodore Kinni

Want real health care reform? Focus on fixing health care delivery, says one Stanford lecturer. | Reuters/Nicky Loh

Health care reform has been the bane of U.S. presidential politics for over a century. Teddy Roosevelt included universal coverage in his run for president in 1912 and lost. Since then, almost every U.S. president has been stymied by health care reform in one way or another.

It’s no different this time around. This past March, President Trump and the Republican-led Congress couldn’t muster the votes for their own American Health Care Act, and discussions to reprise it have fallen flat.

Robert Pearl, a doctor and the CEO of the $11 billion Permanente Medical Group and a strategy lecturer at Stanford Graduate School of Business, says that might not be much of a loss. In Pearl’s opinion, neither President Obama’s Affordable Care Act nor President Trump’s AHCA adequately addresses the essential conundrum of American health care — the fact that the U.S. as a whole spends 50% more on health care that any other nation, yet ranks 70th globally in health and wellness.

Pearl, whose new book, Mistreated: Why We Think We’re Getting Good Health Care — and Why We’re Usually Wrong, hits shelves this month, shares his vision of a better health system...read the rest here

How Smart Leaders Build Trust

Insights by Stanford Business, June 13, 2016

by Theodore Kinni

Joel Peterson could have written his first book on any number of topics. As treasurer, CFO, and then CEO of Trammell Crow Co., the world’s largest private real estate development firm, he helped craft countless deals. As the founder of Peterson Partners — a private equity group with $1 billion in investments — and JCP Capital, he has become a savvy judge of companies and entrepreneurs. And as chairman of the board of JetBlue and a director at dozens of other companies over the past 35 years, he is an expert on corporate management and governance.

Yet Peterson, the Robert L. Joss Consulting professor of Management at Stanford Graduate School of Business, chose to write about trust.

“I believe that trust is more powerful than power itself,” explains Peterson. “It supports innovation and flexibility, and it makes life more enjoyable and more productive. People who live in high-trust environments thrive.”

Peterson defines trust as a giving up of control, at some level, to another person. His book, The 10 Laws of Trust, which he wrote with David Kaplan, explores the mechanisms of trust creation in organizations. “You have to be intentional about building a high-trust environment. It doesn’t just happen,” he says. “It’s just like diet or exercise.”

Peterson provides three tests for deciding who to trust. The first is character. “We can’t trust a leader without integrity, who we can’t count on to do what he or she says,” he explains. Next is competence. You trust your mom, for example, but would you trust her to fly a 747 to London? The third, he says, is authority to deliver. There’s no point in trusting a pilot to fly to London if she doesn’t have permission to take off.

“It’s folly to trust anybody if all three aren’t present,” Peterson says. Read the rest here

The Secrets to Corporate Longevity

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How do some companies grow from producing fire hoses to building products for the aerospace industry? They have an ability to exploit their markets while exploring new ones. | Reuters/Christian Charisius

by Theodore Kinni

Insights by Stanford Business, June 9, 2016

It’s been nearly 20 years since Clayton Christensen explained why so many industry-leading companies miss the potential of new technologies and are supplanted by competitors that seemingly emerge from nowhere. Since then, corporate strategists have realized that avoiding what Christensen called the innovator’s dilemma requires that companies simultaneously compete in their mature businesses and pursue the opportunities that arise from new technologies and business models. Of course, that’s easier said than done.

“The main obstacle is something we call the success syndrome,” explains Charles O’Reilly, the Frank E. Buck Professor of Management at Stanford Graduate School of Business and author, with Michael Tushman of Harvard Business School, of a new book titled Lead and Disrupt. “There’s lots of high-quality research that shows once companies have the right strategy, the more they can align their organization with it; that is, the more they’ve got the right people, structure, metrics, and culture in place, the better they can exploit that strategy.” The problem is that the alignment supporting exploitation is very different from the alignment that supports the exploration of new technologies and business models. “Exploitation, which is where companies typically make money, tends to drive out exploration,” he says.

To find out how companies navigate this conundrum, O’Reilly and Tushman searched out corporations that, over many decades, had been able to transform themselves even as their markets and technologies were fundamentally disrupted. The authors list 27 of these companies in the book; their average age is 130 years.

They all had one thing in common. “What is true of all of these companies is that they’re in different businesses today, even when they are in the same industry,” O’Reilly says. “They’re all alive today only because they’ve been able to take their assets and capabilities and move into new businesses.”

Goodrich, for example, started out making rubber conveyor belts and fire hoses in 1870. When the automobile and airplane appeared, it used its expertise to make tires. Then, during World War II, when the supply of natural rubber dried up, it developed synthetic rubber, which allowed it to make products for the defense and aerospace industries.

How did Goodrich, which was acquired by United Technologies Corp. in 2012, do it? “Part of what we were arguing in the book is that it is a leadership issue, not a technology issue. There have to be senior leaders who are willing to fund exploratory projects, to scale them if they’re successful and to kill them if they’re not,” says O’Reilly. “If you look at companies that have failed, most of the time you find that they didn’t miss the technology. They had it. Smith Corona was the world’s biggest typewriter company for 50 years. They had one of the first word processors. But its leaders made decisions not to fund it.”

By way of contrast, O’Reilly points to Fujifilm. “In 2000, just as global film sales hit their peak, CEO Shigetaka Komori says, ‘What assets and capabilities do we have that would allow us to move into new areas?’ And over the next five to 10 years, as film sales fall off a cliff, he helps leverage those assets and capabilities into things like regenerative medicine, cosmetics, pharmaceuticals, and liquid crystal display films,” he says. Juxtapose that with Kodak, which had the same technologies but continued to focus on film. “Today, Fujifilm is a $23 billion company with an annual growth rate of more than 10% over the past 15 years. Kodak goes bankrupt in 2012.”

O’Reilly describes Komori as ambidextrous. Ambidextrous leaders are great at running big, mature, exploitative businesses, while simultaneously leveraging corporate assets and capabilities to explore new areas.

There have to be senior leaders who are willing to fund exploratory projects, to scale them if they’re successful and to kill them if they’re not.

Charles O’Reilly

It’s not easy to be an ambidextrous leader. “First of all, these leaders have to be able to sanction ‘explore’ and ‘exploit’ operations. That typically requires that there is some compelling strategic intent,” says O’Reilly. Beyond that, he notes, the leaders need to run very different businesses in a way that makes them feel united, with a common identity, yet still recognize that these different organizations require different metrics, incentives, and cultures. They also have to make sure their senior team is aligned. Resistance from the senior team slows things down and leads to failure, O’Reilly says.

As if this isn’t challenging enough, there is also the question of how to handle the process of exploration and exploitation when the ambidextrous leader moves on. “We spent a number of years working with IBM,” O’Reilly says. “For reasons I don’t fully understand, the company was ambidextrous under Lou Gerstner and Sam Palmisano. But it’s much less ambidextrous today. I think it really does have to do with a leader — that’s who makes the ultimate decision about allocation of resources and people.”

Should every company leader seek to exploit and explore? “That depends largely on the extent to which a firm is likely to be disrupted,” says O’Reilly. “If I’m leading Exxon, yeah, I probably should be investing in alternative technologies. But fundamentally, at least up until now, that industry has not moved very rapidly. How worried should I be? How much effort should I be putting into exploratory ventures? Probably not a lot.

“If I’m running General Motors, well, cars have been cars for a long time. But 10 years from today? Car buying habits are clearly shifting with the millennials, and there’s likely to be some form of self-driving cars.” Adds O’Reilly, “In fact, GM seems to have bought into this idea of ambidexterity. And they’ve got [President] Dan Ammann and [Vice President of Strategy] Mike Abelson, who are running all their experiments.”

The lesson for leaders: Be aware of the potential disruptive threats to your company. The more immediate they are, the more likely it is that you should be leading with both hands.