To improve management, build a decision factory

strategy+business, June 21, 2022

by Theodore Kinni


Illustration by Lava4images

Decision Leadership: Empowering Others to Make Better Choices

by Don A. Moore and Max H. Bazerman, Yale University Press, 2022

“We think of organizations as decision factories,” write professors Don A. Moore and Max H. Bazerman in their new book, Decision Leadership. It’s an apt simile. Knowledge workers, whose output is typically decision-driven, now number more than 1 billion worldwide. Moreover, as the number of rote tasks that are automated increases, many more employees are being freed for higher-level work that entails decision-making.

Given this reality, it’s no surprise that boosting the decision intelligence of the workforce is moving up the leadership agenda. But Moore and Bazerman, holders of endowed chairs at the University of California, Berkeley’s Haas School of Business and Harvard Business School, respectively, take an even more expansive position on decision leadership—a stance that sets up a formidable ambition for this relatively short book.

“We aim to define leadership in a new way, one grounded in the belief that leaders’ success depends not only on their ability to make good decisions but also on their ability to help others make wise decisions,” they write. “In our view, great leaders create the norms, structures, incentives, and systems that allow their direct reports, the broader organization, consumers, investors, and other stakeholders to make decisions that maximize collective benefit through value creation.” To support their new definition of leadership, Moore and Bazerman seek to weave together the various threads of behavioral economics that pertain to decision-making and then translate them into practical advice for leaders who want to both improve the quality of their own decisions and bolster the decision prowess of their companies. Read the rest here.

A kinder, gentler deal

strategy+business, June 2, 2022

by Theodore Kinni


Photograph by Say-Cheese

Split the Pie: A Radical New Way to Negotiate 

by Barry Nalebuff, Harper Business, 2022

Anyone who has been the underdog in a negotiation is going to eat up Barry Nalebuff’s new book, Split the Pie. The Milton Steinbach Professor at the Yale School of Management, who cofounded Honest Tea as a side gig, combines logic and empathy in a strategy that undercuts power-driven negotiating tactics.

The simple principle that drives Nalebuff’s approach is this: the negotiation pie—that is, the value produced by the deal, over and above the value that the parties to the deal can create on their own—should be equally spilt. It doesn’t matter who has the most power or who needs the deal the most—what matters is the value stemming from the deal and the inability of either party to achieve it without the other. In this sense, all the parties to the deal have a legitimate claim to an equal share of the negotiation pie.

Nalebuff illustrates this concept with an easily followed example: a pizzeria will give Alice and Bob a 12-slice pizza if they can agree how to split it. If they can’t, it will give them half a pie, but unequally divided: four slices to Alice and two slices to Bob. These no-deal slices comprise what Roger Fisher and William Ury called the BATNA (best alternative to a negotiated agreement) in their best-selling negotiation book, Getting to Yes.

Nalebuff’s solution is to focus on the additional slices that Alice and Bob get if they make a deal. He splits the six additional slices in half. This gives Alice a total of seven slices (her BATNA of four slices plus her half of the six slices in the negotiation pie) and Bob gets five slices (his BATNA of two slices plus his half of six slices in the negotiation pie). Voilà.

“The pie framework will change the way you approach negotiations in business and life,” writes Nalebuff, who has been teaching this approach to MBA students and executives at Yale for the past 15 years, as well as online at Coursera. “It will allow you to see the negotiation more clearly and more logically. It will lead you to an agreement where the principle applied doesn’t depend on the specifics of your situation. It will help you make arguments that persuade others by identifying inconsistencies in their approach.” Read the rest here.

Persuasion, Hollywood style

strategy+business, May 23, 2022

by Theodore Kinni


Photograph by Archive Holdings Inc.

I usually associate pitching with characters like the late inventor and pitchman Ron Popeil, who earned a spot in America’s cultural history—and a small fortune—hawking products such as the Chop-O-Matic, the Pocket Fisherman, spray-on hair, and the Showtime Rotisserie and BBQ oven on late night TV. (“Set it, and forget it!”) But that’s a reductionist view, at best. Pitching is a form of interactive selling that business leaders at all levels need to master.

“We define a pitch as a scheduled meeting for the specific intention of trying to promote an idea, business project, or script,” write Peter Desberg and Jeffrey Davis in their new book, Pitch Like Hollywood. As the title suggests, Desberg, a clinical psychologist and a professor emeritus at California State University, Dominguez Hills, and Davis, a screenwriter and professor at Loyola Marymount University School of Film and Television, look to the film industry for lessons in pitching. And rightly so. Movies and TV shows are typically sold on the strength of a pitch to studio executives that can take anywhere from an hour to several days, depending on the size of the project.

Though CEOs tend to be polished presenters, pitching a new strategy to the board or an acquisition offer to the founders of a promising startup is not the same thing as making a presentation. “The biggest difference is the interactivity. Pitching is not a one-way presentation—it’s not, ‘I’m gonna tell you, and you’re gonna sit and listen to me,’” Davis told me during a video interview with the two authors. “A pitch is less controlled. If your pitch is good, you’re involving the people you’re pitching. You are trying to get their opinions, to get to what’s important to them, and to get them to help you shape your pitch to really make it work.”

This interactivity gets to the root cause of many failed pitches—mishandling criticism. “If a catcher asks a pitcher a hostile question or points out a flaw, and the pitcher gets defensive or counterattacks, the conversation dies,” said Desberg.

For their pitch to avoid this fate, leaders should take a lesson from a story the authors relate about a creative director at an ad agency who pitched six potential campaigns to a tire company executive. When he’d finished, the exec looked at him and said, “I hate everything you’ve shown me.” Unflustered, the creative director asked, “Which one do you hate the least?” That question led to a conversation that ended in a successful campaign.

Like the creative director, good pitchers see criticism as a green light. “They’re thinking, ‘This person is trying to enter a creative collaboration with me. I’ve got to nurture the heck out of that,’” said Davis. “Show business, like all business, is more collaborative than ever. If you’re not a collaborator, you have no future in business.” Read the rest here

It’s not enough for CEOs to empathize with employees

strategy+business, April 19, 2022

by Theodore Kinni


Illustration by Klaus Vedfelt

In the novel City of God, E.L. Doctorow wrote, “You find invariably among CEOs that life is business. There is an operative cruelty which is seen as an entitlement.” The three-time winner of the National Book Critics Circle Award for Fiction delivers this judgment as an aside, but it is a particularly disturbing indictment of business leaders.

I asked Rasmus Hougaard, founder and CEO of the leadership training consultancy Potential Project, what he thought of Doctorow’s observation during a recent video interview. He immediately pointed to J. Willard Marriott, founder of Marriott International, as a notable exception. Marriott reputedly lived the hotel business sans cruelty, and his famous dictate “Take care of associates and they will take care of the customers” remains a mainstay of the company’s culture after nearly 100 years.

And yet, admitted Hougaard, “there are a lot of CEOs in other companies [about whom] you could say the absolute opposite. It is almost as if they think, ‘Now that I’m a senior executive, I don’t have to be nice anymore.’” It is those CEOs who might find his new book, Compassionate Leadership: How to Do Hard Things in a Human Way, most valuable.

Hougaard and coauthor Jacqueline Carter, director of Potential Project North America, argue that the hard-nosed people management once espoused by CEOs like “Chainsaw Al” Dunlap and “Neutron Jack” Welch is a loser’s game. “It’s clear that entitlement is dying and for good reason,” Hougaard told me. “Anybody who says, ‘I can be mean, because now I have the power,’ gets punished, because people won’t work with them.” CEOs who live up to Doctorow’s caricature by shutting down their emotions and coldly making decisions that harm people also incur a personal cost. Hougaard adds: “You turn into someone who you probably won’t like.”

Often, empathy is touted as the antidote to mean business. But Hougaard thinks that an approach to leadership based solely on empathy has its own adverse side effects. Read the rest here.

Think Globally, Innovate Locally

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, February 23, 2022

by Satish Nambisan and Yadong Luo


Michael Glenwood Gibbs/theispot.com

Digitization and globalization are converging to transform innovation in multinationals across industries. Companies such as Bayer Crop Science, John Deere, Johnson Controls, Philips, and Unilever are pursuing the promise of what we call digital globalization. They are finding that digitally infused innovation assets, such as data, content, product components, tools, and processes, are not only readily portable across national borders but also amenable to mixing and matching. This digitally enabled innovation generates new offerings, business models, and operations to suit specific country markets — at a faster pace and lower cost than previously.

Fashion brand Tommy Hilfiger has deployed a fully digital design workflow across all of its global apparel design teams. Designers catering to the demands of different markets around the world can create, store, share, and reuse digital design assets. Transforming traditional design and sample production steps into such digital-infused processes enables the label to not only accelerate its innovation but also diversify its offerings.

As promising as digital globalization sounds, however, it is facing headwinds that are driving deglobalization (or localization), including trade restrictions and uncertainties fueled by geopolitical tensions and nationalism. China, for instance, recently passed a host of protectionist laws and regulations aimed at controlling the internet and cross-border data flows. As companies such as Apple, Morgan Stanley, and Oracle have discovered, there is ambiguity around what constitutes personal data and what should be localized in China. This is significantly limiting the portability of multinational companies’ digital innovation assets and raising the level of innovation uncertainty and risk. Geopolitical tensions can also result in more closed and less trusting stances when companies pursue collaborative innovation ventures.

Thus, for multinationals, the coexistence of globalization and localization creates a challenging context for innovation. How, then, can they pursue innovation to take advantage of the forces driving digital globalization while also adapting to the forces driving localization? Read the read here.

Pay attention to your attention

strategy+business, February 10, 2022

by Theodore Kinni


Illustration by Sean Gladwell

Once upon a time, the Segway was going to revolutionize the transportation industry. Steve Jobs reportedly said that Dean Kamen’s invention had the transformative potential of the personal computer, and venture capitalist John Doerr predicted that Kamen’s startup would reach US$1 billion in sales—a lot of money in 2001, when nobody but tweens believed in unicorns—at record speed. Instead, sightseeing tours and mall cop beats were nearly the only things the two-wheeled, self-balancing personal transporter transformed.

There are many reasons why the Segway never achieved its purported promise, but a lot of them track back to the misplaced focus of Dean Kamen. He didn’t see the forest for the trees. He was so intently focused on one narrow aspect of the Segway—the innovative technology that enabled its intuitive, automatic balance and operation—that he and his early boosters were unaware that its markets were extremely limited. Where in a nation of cities and towns that considered skateboards too dangerous for the sidewalks would hundreds of thousands of Segway riders be allowed to zip around? And short of that, who was going to pay $5,000 to take a Segway for a spin in the driveway?

An overly intense focus on a goal can lead to what cognitive psychologists call goal neglect. That may seem counterintuitive to the average goal-oriented MBA or entrepreneur, but take, for example, the dynamic at work in micromanagement. Often, when leaders micromanage employees, an intense focus on task performance distracts those leaders from the larger goals of the company. They obsess over the trees and neglect the forest—and drive employees crazy while they’re at it.

Where you direct your focus is a function of the brain’s attention system. This system has three subsystems, which Amishi Jha, a professor and the director of contemplative neuroscience for the Mindfulness Research and Practice Initiative at the University of Miami, describes as the flashlight (or orienting system), which enables you to selectively direct and concentrate your attention; the floodlight (or alerting system), which enables you to take in the larger picture; and the juggler (or executive function), which enables you to align your actions to your aims. “What happens with goal neglect is that the flashlight is pointed very intently, but the floodlight is not quite working,” she told me in a recent Zoom interview.

There is nothing inherently wrong with using the flashlight or the floodlight—leaders need both. In both cases, writes Jha in her new book, Peak Mind: Find Your Focus, Own Your Attention, Invest 12 Minutes a Day, “we are paying attention. But our attention is too narrow or too wide, too stable or too unstable. You’re paying attention in some way successfully—but it’s not appropriate for the moment.”

This cognitive error arises from using the flashlight or the floodlight in an unconscious way. An Australian helicopter rappeller gave Jha a dramatic example of this when he told her about fighting one section of bush fire with such intensive focus that he lost track of the rest of the fire until he heard the air being sucked up behind him. The fire had nearly engulfed him. “There is a very enticing emotional quality to dominating something in that way, and so, it pulls you in,” said Jha. “It’s even hard to pull yourself back.”

The feeling of intense focus—of being fully and productively engrossed in a task—is a good indicator that it is time to take a step back and assess if your attention is properly directed. Even better, and more proactively, according to Jha’s research, you can hone your meta-awareness. Read the rest here.

A leader’s handbook for managing culture

strategy+business, January 21, 2022

by Theodore Kinni


Photography by Paul Bradbury

Win from Within: Build Organizational Culture for Competitive Advantage
by James Heskett, Columbia Business School Publishing, 2022

One of the first business books I reviewed, back in 1992, was Corporate Culture and Performance, by Harvard Business School professors James Heskett and John Kotter. A few books explored organizational culture before it, most notably In Search of Excellence, by Tom Peters and the late Robert Waterman, but Corporate Culture and Performance was the first to try to quantify the economic returns of culture in a rigorous way. Thirty years later, Heskett, now 88 and professor emeritus, is still making the business case for corporate culture.

His new book, Win from Within, is a master class in building culture. It’s the kind of book that you can read in a few hours and then apply throughout your leadership career—which gets to Heskett’s thesis: most leaders don’t devote nearly enough time to managing the culture of their companies, and the time that they do spend on it is often wasted.

Heskett pins both problems to a flawed understanding of culture. “Strategy is hard; culture is soft,” he writes, beginning a list of common misconceptions. “The impact of a strategy on growth and profit can be measured, but that of a culture cannot. If you get the core values shared by everyone right, the rest will take care of itself. A strong culture helps assure good performance. To change an organization’s culture requires a long time. All of these assertions have been passed around in management circles over the years. And all of them are essentially wrong.” Read the rest here.

Best Business Books 2021: Taming collaborative dysfunction

strategy+business, November 8, 2021

by Theodore Kinni


Illustration by Serge Bloch


In the 1920s, Mary Parker Follett put forth the heretical idea that managers should pursue power with—not power over—employees. “It is possible to develop the conception of power-with, a jointly developed power, a co-active, not a coercive power,” argued Follett, whom Peter Drucker dubbed “the prophet of management.”

A century later, Follett’s vision is a reality. “Today, practically everything you do at work is a collaboration,” writes Rob Cross, the Edward A. Madden Professor of Global Leadership at Babson College, in Beyond Collaboration Overload, this year’s best business book on the topic of management. “When you attend your morning meeting, when you confer with a direct report, when you help the new person figure out the right expert to speak with about a project, when you page through your emails, when you pause to chat with a colleague, when you move from one webinar to the next while simultaneously addressing instant messages that seem to have urgent time frames—again and again, you’re collaborating.”

If that description seems to be taking on a manic tinge, welcome to the manager’s world. “The collaborative intensity of work has exploded over the past few decades,” writes Cross. Drawing on a series of studies conducted under the aegis of Connected Commons, a consortium of more than 100 large employers, where Cross serves as chief research scientist, he finds that 85% or more of employee time is devoted to collaborative activities. And yet companies have “no idea what impact this time has on corporate performance, individual productivity, or—perhaps most disturbing—employee well-being.”

But Cross has an idea of the impact. Organizational network analysis, performance metrics, and extended structured interviews reveal that many managers collaborate too much—becoming obstacles to organizational performance and their own well-being in the process.

Take Scott, a manager of 5,000 people working in three business units of a large company. In just one of those units, which employed 1,800 people, a staggering 118 people on an average day were going to Scott with requests. Worse, more than 65% of them—78 people—said they couldn’t hit their business goals without more of his time. “This is another obscene number,” writes Cross. “When we see that figure edge up past 25% of a leader’s immediate network, we know we’ve got trouble. Although the leader doesn’t feel it while racing from meeting to meeting, he or she is slowing things down significantly.” The results are burnout, attrition, and lower engagement scores because people can’t get their work done. Indeed, Cross learned that Scott, whom many people in the company considered the leading candidate to succeed the CEO, was about to get fired.

If you’re lucky, your level of collaboration overload is nowhere near Scott’s level. But if you are feeling hard-pressed to keep up with the collaborative demands on your time, and those demands are taking a toll on your performance and well-being, Cross offers succor: he says he can show you (or someone with whom you work or live) how to “reclaim 18 to 24% of your collaborative time”—about one day per week. Read the rest here.

Leading under pressure

strategy+business, September 14, 2021

by Theodore Kinni


Photograph by Marco VDM

Pressure is a goad. Whether it arrives in the guise of a burning platform or a project deadline, a strategic goal or a performance target, a high-stakes deal or an aggressive competitor, pressure can help leaders attain new heights of performance and achievement. You know the adage: no pressure, no diamonds.

The problem with this pithy observation, attributed to 19th-century Scottish essayist Thomas Carlyle, is that it is both true and false. Though pressure can drive outsized results, it can also become an insurmountable obstacle to performance and achievement. It can overwhelm a leader and result in missteps that torpedo companies and careers.

The powerful effects—and vagaries—of pressure were dramatically illustrated during the Tokyo Olympics when gymnast Simone Biles unexpectedly withdrew from the women’s team finals. The extraordinarily talented and seemingly unshakable Biles, who was considered a shoo-in to repeat her 2016 gold medal win in the all-around gymnastics event, cited her mental health. Later, she said that she had been suffering from the “twisties,” a condition that leaves gymnasts disoriented midair and can lead to serious injury. The twisties are thought to be caused by performance pressure and stress, both of which were surely running higher than usual in an Olympics held during a pandemic.

When I mentioned Biles to Dane Jensen, CEO of performance consulting firm Third Factor and author of the new book The Power of Pressure, he suggested that she may have fallen prey to an imbalance in what he calls the pressure equation. Jensen finds that pressure grows more intense across three elements, as the levels of importance (how much something matters), uncertainty (how unclear the outcome is), and volume (how many other demands there are on your time) rise. Read the rest here.

Why you want what you want

strategy+business, August 12, 2021

by Theodore Kinni



Photograph by Catherine Falls Commercial

In the new book Wanting, Luke Burgis, entrepreneur-in-residence and director of programs at the Catholic University of America’s Busch School of Business, takes readers down the rabbit hole of mimetic theory. Developed by French social scientist and philosopher René Girard in the 1960s and 1970s, mimetic theory seeks to explain human relations and culture in terms of desire. Girard’s theory and Burgis’s book are worthy of executive attention because they offer leaders insights into their own behavior and careers, as well as the behavior of the many stakeholders they are charged with understanding and influencing.

Our desires—above and beyond our innate human needs—are the driving force of mimetic theory. Girard’s analysis starts out, innocently enough, by suggesting that desire, which shapes every aspect of our lives, stems from observing other people and adopting them as models in an often-unconscious manner.

In short, what we want is what someone else has. The 1957 film Will Success Spoil Rock Hunter? offers a satirical example that may hit uncomfortably close to home for some leaders. Tony Randall plays a lowly ad man who desires an executive’s salary and prestige. But when he hits upon a scheme to promote a client’s lipstick using Jayne Mansfield’s lips and then rockets to the top spot in his Madison Avenue agency, he wonders why he wanted to get there in the first place. He leaves to raise chickens.

Girard’s theory isn’t as humorous. He argued that mimetic desires spawn rivalries as people vie to realize their ambitions. Sometimes, when the resources desired are limited, the competition intensifies into conflict. And because most people don’t understand or admit the true nature of the resulting conflicts, they scapegoat others. Girard believed these innocents are unjustly sacrificed in a kind of relief valve for societal pressure. Witness the Holocaust and Nazi Germany’s demonization of Jews.

Girard went on to identify Judeo-Christianity as a historical aberration that subverted the scapegoat process. With the crucifixion of Jesus, the sacrifice of scapegoats was revealed as an unjust mechanism, writes Burgis, and “a veil was lifted on the recurring cycle of violence in human history.” (Unfortunately, lifting the veil has eliminated neither the scapegoating nor the violence.)

Like Girard, Burgis sees mimetic desire everywhere, and he interprets all sorts of events through its prism, including his own entrepreneurial ambitions. 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

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.

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...

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.

The Transformational Power of Recommendation

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, November 24, 2020

by Michael Schrage




Image courtesy of Paul Giovanopoulos/theispot.com

Wikipedia defines recommendation engines (and platforms and systems) as “a subclass of information filtering system that seeks to predict the ‘rating’ or ‘preference’ a user would give to an item.” But as a tool, technology, and digital platform, recommendation engines are far more intriguing and important than this definition suggests.

In data-driven markets, the most effective competitors reliably offer the most effective advice. When predictive analytics are repackaged and repurposed as recommendations, they transform how people perceive, experience, and exercise choice. The most powerful — and empowering — engines of commerce are recommendation engines.

Recommendation engines have been essential to the success of digital platforms Alibaba, Amazon, Netflix, and Spotify, according to their founders and CEOs. For companies such as these, recommendation engines aren’t merely marketing or sales tools but drivers of insight, innovation, and engagement. Superior recommendations measurably build superior loyalty and growth; they amplify customer lifetime value. Computing compelling recommendations profitably reshapes human behavior.

The influence and purpose of recommendation engines are not limited to customers or consumption. Large employers, most notably Google, have adopted and adapted recommendation engines as internal productivity platforms to nudge workers to their best decision options. Indeed, in late 2016, Laszlo Bock, the senior vice president of people operations at Google, left the company to launch Humu, a recommendation-engine startup for advising workforce behavior change.

While data remains the essential advisory ingredient, the global recommendations revolution reflects profound and ongoing algorithmic innovation, enabling machine learning and AI to power improvements in deep learning and generative adversarial networks. Successful recommendation engines learn how to learn. The more people use them, the smarter they become; the smarter they become, the more people use them. Done right, recommendation engines enable virtuous cycles of value creation.

The networked nudges and prompts of recommendation engines increasingly influence people’s choices in clothing, entertainment, food, and medicine; they also influence the texts we send, which friends we contact, the customers and prospects we prioritize, the experts we seek, the job candidates we hire, the investments we choose, the memos we edit, and the schedules we follow.

But prompts and nudges shouldn’t obscure the subtle but vital design principle that makes the recommendation-engine value cycle more virtuous: Recommendation is about ensuring better options and choices, not obedience or compliance. Recommendation engines don’t seek to impose optimal, best, or right answers on their users. To the contrary, their point and purpose are greater empowerment and agency. Influence, not control, is the algorithmic aspiration. In this, successful recommendation-engine design depends more on how recommenders seek to influence than on how much they know.

Recommendation engines transform human choice. Much as the steam engine energetically launched an industrial revolution, recommendation engines redefine insight and influence in an algorithmic age. Wherever choice matters, recommenders flourish, and this profound digital transformation of choice will only become more pervasive as recommenders become smarter. Better recommenders invariably mean better choices. Read the rest here.

What people like you like

strategy+business, November 11, 2020

by Theodore Kinni




Photograph by Paper Boat Creative

I don’t set much store in the endless stream of recommendations offered by Amazon, Netflix, Spotify, and most other online businesses. Occasionally, a book, flick, or song pops up that delights me, but most of the suggestions I get either miss the mark or appear suspiciously advantageous to recommendation engine operators and their advertisers.

Michael Schrage, visiting fellow at the MIT Sloan School of Management’s Initiative on the Digital Economy and s+b contributor, awakens us to the potential of delightful discovery in his latest book, Recommendation Engines. “Recommendation inspires innovation: that serendipitous suggestion—that surprise—not only changes how you see the world, it transforms how you see—and understand—yourself. Successful recommenders promote discovery of the world and one’s self,” Schrage writes in its introduction. “Recommenders aren’t just about what we might want to buy; they’re about who we might want to become.”

If this smacks of techno-utopianism, well, there is a strong strain of that ideology running through Recommendation Engines. For the most part, however, Schrage grounds this rosy view in the powerful effects that recommenders are already producing and balances it with acknowledgment of these systems’ potential for abuse. He also provides a short history of recommendations and a suitably technical description of how recommendation engines work and are built.

To date, the powerful effects of recommenders have manifested themselves mostly in commerce. Schrage cites a variety of facts in this regard: a survey that found recommendations account for approximately 30 percent of global e-commerce revenues; another that found online shoppers are 4.5 times more likely to buy after clicking on a recommendation; and research that “strongly suggests” recommendations drive roughly a third of Amazon’s sales. Read the rest here.

Best Business Books 2020: Management

strategy+business, November 9, 2020

by Theodore Kinni



Illustration by Martin O’Neill; icon by Harry Campbell

This year, COVID-19 upended management-as-usual. Sure, managing is still a matter of getting things done in organizations — divvying up objectives into tasks, ensuring employees have the resources and skills to complete the tasks, overseeing their progress, and helping them when they get bogged down. But where and how people work has changed — radically and overnight in many companies and, in some, maybe permanently.

None of this year’s best business books on management were written for managers per se. But each focuses on capabilities that can help managers identify and cope with pandemic-related challenges.These developments have given rise to new needs and stresses that affect the people you are responsible for managing — needs such as going to work (or going back to work) safely, and stresses such as working while surrounded by kids instead of colleagues — and thus, they’ve also affected your performance as a manager.

In the year’s best business book on management, Tiny Habits, Stanford University professor B.J. Fogg shows how to change your behavior and help others change theirs, too — an essential skill at a time when we are all being called upon to develop new habits. In Acting with Power, Deborah Gruenfeld, also at Stanford, explains how an unconventional view of power can enable you to support people in ways that far exceed the limits of your positional authority. And in You’re Not Listening, journalist Kate Murphy offers an uncommonly insightful exploration of how to actually meet the dictates of an exhortation we’ve all heard before: “Listen!” Read the rest here.

Uncertainty on the menu

strategy+business, October 16, 2020

by Theodore Kinni




Photograph by Yagi Studio


If you’re a foodie, the research that Vaughn Tan undertook to write The Uncertainty Mindset will strike you as a dream gig. The assistant professor of strategy and entrepreneurship at University College London’s School of Management spent much of the past decade studying — and embedded within — the culinary R&D teams associated with a handful of the world’s top purveyors of high-end cuisine, including José Andrés’s ThinkFoodGroup, Nathan Myhrvold’s Modernist Cuisine, Heston Blumenthal’s The Fat Duck, René Redzepi’s Noma, and “Amaja” (a pseudonym Tan uses for a restaurant that sounds a lot like Poul Andrias Ziska’s Koks). Aside from the good eats, Tan came away from his research with unconventional ideas for structuring and stimulating innovation teams.

The innovation challenge facing these rarefied culinary organizations is daunting; the customer expectations of an Apple or a Tesla pale by comparison. Imagine trying to satisfy a discerning gourmand who has waited a year for a reservation and then traveled from Singapore to the Faroe Islands solely for an 18-course meal. It is expected to be one of the best meals in the world. Each course features unusual ingredients prepared in unique ways that not only engage the senses but also impart the identity of the chef and the restaurant, so much so that it couldn’t have come from any other kitchen. Tan calls this elusive quality familiar novelty. “Novelty combined with distinctive familiarity makes for loyal customers — and is nearly impossible to copy,” he writes.

Outside London, at The Fat Duck Experimental Kitchen (FDEK), Tan observes pastry chef Isabel Rodriguez as she creates a dessert that will anchor an entirely new menu. “The team had decided that it would have to convey the feeling, as Rodriguez said, of being ‘dreamy, comforting, surreal. Like how you feel when you are about to fall asleep when you’re small. You’ve been bathed, and you’re feeling clean and tired, and everything smells like baby powder,’” writes Tan. Before the work is done, the dish, which the team calls Counting Sheep, will evolve into two dishes served in quick succession. Among its many fine details is the design and fabrication of a spoon with a fuzzy handle that will be dusted lightly with, yes, baby powder.

At Amaja, the R&D team spends three months figuring out how to cook 200-year-old mahogany clams — an ingredient never before used in high cuisine. In ThinkFoodGroup’s first Las Vegas venture, the company takes on the high-pressure work of launching three restaurants — serving tapas, Chinese–Mexican food, and a tasting menu — on the opening night of a newly constructed gaming resort.

In observing how culinary R&D team members work individually and together on such projects, Tan uncovers six “innovation insights” that serve as the core findings of his book. Two of the insights are particularly intriguing. Read the rest here.

What if every job seeker got a living-wage job?

strategy+business, August 19, 2020

by Theodore Kinni



Photograph by Katja Kircher

It’s usually eye-opening when the economic assumptions that underlie a society are questioned. In The Case for a Job Guarantee, by Pavlina R. Tcherneva, an associate professor of economics at Bard College and a research scholar at the Levy Economics Institute, that assumption is embedded in the concept known as the non-accelerating inflation rate of unemployment (NAIRU).

NAIRU assumes that when the unemployment rate gets too low, it will force companies to raise wages and then prices, causing inflation. This leads economists to try to suss out the optimal rate of unemployment, and the Federal Reserve to try to slow investment and hiring whenever the ranks of the unemployed grow too thin — cold comfort when you are in those ranks.

“The idea that involuntary unemployment is an unfortunate but unavoidable occurrence, and that there is an appropriate level of unemployment necessary for the smooth functioning of the economy, is among the great, unexamined myths of our time,” declares Tcherneva in this concise polemic. “It is also bad economics.”

The actual nature of the relationship between unemployment and inflation is an unsolved mystery, according to Tcherneva. Moreover, the Fed has no “reliable” theory of inflation — even though the Fed began to claim, starting in 2014, that the U.S. economy was at full employment. (Never mind the 3 to 4 million people who were unemployed and seeking work.)

The assumption that there is an optimal level of unemployment comes with harsh ramifications. Unemployed people are less healthy and suffer higher rates of suicide and mortality. Their lifetime earnings shrink, and they often must be supported by social welfare programs as they try to find to work. Chronic unemployment causes communities to decline and collapse. In macroeconomic terms, unemployment depresses GDP growth — Tcherneva cites an analysis by Australian economist Bill Mitchell, who calculated a decline of nearly US$10 billion in output per day caused by unemployment during the Great Recession in the U.S. (versus output if the “full” employment rate at 2.8 percent per annum average GDP growth of 2003–07 had held).

“What if we changed all that,” asks Tcherneva, “and made it a social and economic objective that no job seeker would be left without (at a minimum) decent living-wage work?” The solution she strongly advocates is a job guarantee: a commitment by the government to provide everyone who wants to work with a job. If a job is not available in the private sector, it will be provided in the public sector...read the rest here