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.

Becoming a leader of conscience

strategy+business, August 2, 2021

by Theodore Kinni



Photograph by phototechno

Say what you will about economist Milton Friedman’s position on the responsibility of business, the idea that increasing profit within the rules of the game was the sole and righteous goal of executives clearly simplified leadership values and ethics. I suspect that is one less-recognized reason that so many CEOs avidly embraced Friedman’s monolithic view for so long. But now as more and more leaders are expanding the scope of their responsibilities and companies are adopting—and compensating leaders on—ESG (environmental, social, and governance) metrics, an increasing number of thorny ethical dilemmas are sure to come along with it.

G. Richard Shell, chair of Wharton School’s Legal Studies and Business Ethics department, pointed out during a recent interview for this column two generic types of ethical problems that leaders face. One type involves a personal problem in which the leader is aware of an ethical lapse—perhaps a colleague’s conflict of interest or behavior that puts the company at risk. “Class one ethical dilemmas are ones in which executives feel the burden of their own conscience,” explains Shell. “These problems have an emotional quality to them. You feel the tug of conflicting loyalties, or you feel guilty if you don’t do something.”

The second type of dilemma is organizational in nature. “Class two involves values that relate to the firm and its relationship to society,” Shell says. “They more often have to do with your responsibilities to the firm, its brand and stakeholders, and its code of conduct in terms of the firm’s social role. They are more cognitive than emotional because you have to process costs and benefits.” Coca-Cola’s response to Georgia’s voting rights bill is an example of this kind of dilemma.

Although the two kinds of ethical dilemmas have different dimensions, they can be assessed using the same framework, according to Shell. He calls the framework CLIP—consequences, loyalties, identity, and principles—and describes it in his new book, The Conscience Code: Lead with Your Values, Advance Your Career. Read the rest here.

Tips for leading people at a distance

strategy+business, June 23, 2021

by Theodore Kinni


Photograph by Urbancow

It seems less and less likely that the pandemic will be the impetus for a permanent, wholesale shift to remote work. Sure, employee sentiment polls find that most people like working from home, and anecdotal evidence suggests a few of them will refuse to return to the office if and when their leaders summon them. But the US Bureau of Labor Statistics reports that only 16.6% of employed persons teleworked or worked at home because of the coronavirus in May 2021, down from 18.3% in April. Moreover, few CEOs of major companies are wholeheartedly embracing remote work: some, like Jamie Dimon of JPMorgan, are rejecting it altogether, and many, including Tim Cook of Apple, are offering some form of hybrid work instead.

This suggests that the title of Harvard Business School professor Tsedal Neeley’s new book, Remote Work Revolution, is something of an overstatement. Indeed, in the book’s introduction, Neeley reports that JPMorgan “is considering a permanently remote workforce”—which isn’t happening. But that doesn’t mean leaders shouldn’t read the book. It is, after all, more and more likely that leaders will be called upon to manage people who are working remotely some of the time. That is, if they aren’t already responsible for distributed teams, salespeople, and other employees whose work takes them on the road, or mixed teams of full-time employees and external contractors. And they will need to be prepared.

“For workers and leaders around the world,” explains Neeley, “untrained remote work isn’t a panacea. In fact, you may have experienced some or all of the many challenges that are inherent in virtual arrangements.” The challenges for leaders include keeping people connected when they aren’t in the same place, building trust and alignment without in-person contact, avoiding Zoom fatigue and other technological pitfalls, creating viable boundaries between work and private lives, and transferring highly coordinated work to distributed settings. Read the rest here.

Why Good Arguments Make Better Strategy

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, June 3, 2021

by Jesper B. Sørensen and Glenn R. Carroll

Image courtesy of Phil Wrigglesworth/theispot.com

Strategy is hard — really hard — to do well. Many leaders will admit this privately: In an anonymous 2019 survey conducted by Strategy&, 37% of 6,000 executive respondents said that their company had a well-defined strategy, and 35% believed that their company’s strategy would lead to success.

Great leaders create ways of engaging their teams that can cut through this strategic fog. They may adopt frameworks to guide their analysis, but they expect participants in strategy discussions to contribute coherent reasoning and defensible ideas. Amazon is well known for its requirement that major initiatives be proposed in the form of a six-page memo. The virtue of the memo — versus a slide deck — is that writing in full sentences and paragraphs forces leaders to clarify how their ideas connect to each other. Similarly, Netflix has driven stunning transformations in the media landscape in part through its success at encouraging its leaders to debate ideas frankly and its willingness to empower them to take risks without waiting for an annual strategy planning process. It is no surprise that CEO Reed Hastings views working from home as “a pure negative” for the company, in part because “debating ideas is harder now.”

The emphasis on vigorous debate at Netflix and Amazon clarifies a truth that many approaches to strategy obscure: At their core, all great strategies are arguments. Sure, companies can and do get lucky; sellers of hand sanitizer, for instance, have done very well during the pandemic. But sustainable success happens only for a set of logically interconnected reasons — that is, because there is a coherent logic underlying how a company’s resources and activities consistently enable it to create and capture value. The role of leaders is to formulate, discover, and revise the logic of success, making what we call strategy arguments.

Many leaders would agree with this claim but struggle with how to translate the insight into practice. What does it mean to construct a strategy argument? How does one evaluate such an argument? Read the rest here.

Rethinking Industry’s Role in a National Emergency

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, May 27, 2021

by ManMohan S. Sodhi and Christopher S. Tang

Image courtesy of Michael Austin/theispot.com

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

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

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

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

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

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

Moonshot management

strategy+business, May 25, 2021

by Theodore Kinni


Photograph by Jeremy Horner

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

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

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

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

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

How noisy is your company?

strategy+business, May 19, 2021

by Theodore Kinni



Illustration by SI photography

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

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

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

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

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

Insights by Stanford Business, May 13, 2012

by Theodore Kinni


iStock/shapecharge

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

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

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

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

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

The Insights-to-Action journey

Learned a lot lending an editorial hand here:

Deloitte, May 2021

by Marc Solow, Christina Brodzik, and Dan Roddy

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

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

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

Retirement in America

Learned a lot lending an editorial hand here

PwC, May 6, 2021


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

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

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

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

Reinventing the Gulf region

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

Strategy& Middle East Ideation Center, April 2021





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

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

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

Leader, know thyself

strategy+business, April 22, 2021

by Theodore Kinni


Photograph by Thomas Barwick

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

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

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

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

Expansionists, brokers, and conveners

strategy+business, March 31, 2021

by Theodore Kinni


Photograph by John M Lund Photography Inc.

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

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

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

The Overlooked Partners That Can Build Your Talent Pipeline

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 29, 2021

by Nichola J. Lowe

Image courtesy of Stephanie Dalton Cowan/theispot.com

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

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

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

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

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

Seeing, doing, and imagining

strategy+business, March 16, 2021

by Theodore Kinni


Photograph by Laurence Dutton

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

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

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

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

The Positive Side of Negative Emotions

Insights by Stanford Business, March 12, 2021

by Theodore Kinni


iStock/Deagreez

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

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

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

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

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

How Healthy Is Your Business Ecosystem?

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 9, 2021

by Ulrich Pidun, Martin Reeves, and Edzard Wesselink


Image courtesy of Harry Campbell/theispot.com

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

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

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

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

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

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

Platform Scaling, Fast and Slow

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 9, 2021

by Pinar Ozcan and Max Büge


Image courtesy of Michael Glenwood Gibbs/theispot.com

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

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

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

Does Your C-Suite Have Enough Digital Smarts?

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 3, 2021

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


Image courtesy of Anna & Elena Balbusso/theispot.com

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

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

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

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

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

Arguing your way to better strategy

strategy+business, March 2, 2021

by Theodore Kinni



Illustration by johnwoodcock

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

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

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

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