The art of the turnaround—circa 27 BC

strategy+business, July 31, 2023

by Theodore Kinni

Photograph by Viacheslav Peretiatko

The ranks of companies that have faced existential crises and succumbed are legion. When industries disappear and markets dry up, turnaround leaders who are charged with picking up the pieces and transforming for the future might find some perspective and inspiration in Virgil’s Aeneid.

“The song of the Aeneid is meant for moments when people desperately need to wrap their heads around an after that is shockingly different from the before they’d always known,” writes Andrea Marcolongo, an Italian journalist and former speechwriter for Prime Minister Matteo Renzi, in her book about the 2,000-year-old epic poem, Starting from Scratch: The Life-Changing Lessons of Aeneas (translated by Will Schutt). “In the parlance of forecasters: The Aeneid is warmly recommended reading for days when you’re in the eye of the storm without an umbrella.”

The Roman emperor Octavian commissioned Virgil to write the Aeneid at just such an unsettling moment. The Roman Republic had disintegrated into a series of civil wars, which eventually resulted in Octavian establishing himself as its first emperor in 27 BC. He wanted Virgil to create a piece of work that reinforced his claim to power and reassured the empire’s subjects about their prospects under his rule. Virgil did this by linking Octavian’s divine authority to the origin story of Rome.

The reluctant hero of this tale is Aeneas, the son of a prince and the goddess Venus, a character Virgil borrowed from Homer. In Homer’s Iliad, Aeneas fights in the Trojan War against the Greeks. In the Aeneid, Troy has fallen after a long siege (that darn horse).

As Aeneas surveys the wreckage, he steels himself for a fight to the death. At this moment, Venus appears and tells him to face reality. The gods have abandoned Troy, she says, Aeneas should salvage what he can and save his family and companions. Her son is still reluctant to give up on Troy, until the ghost of his dead wife prophesizes that in doing so, he will eventually “come to Hesperia’s land, where Lydian Tiber flows in gentle course among the farmers’ rich fields. There, happiness, kingship and a royal wife will be yours.” Finally, Aeneas gets the message. He gathers his compatriots (the Aeneads); they build a fleet of boats and set sail. Therein lies the first lesson for turnaround leaders: when your industry or the markets your company depends upon are in ruins, don’t double down. Move on. Read the rest here.

GCC governments focus on service fee reform

Learned a lot lending an editorial hand here:

Trends: The International Media on Arab Affairs, July 18, 2023

by Paolo Pigorini and Talal Salman

WAM File

DUBAI, UAE — As GCC governments have sought to fund a plethora of services over decades, fees for hotel stays, roads, medical licenses, and other things have proliferated into a tangle that does not serve governments, businesses, or residents well. In many cases, fees have unintentionally become a long-term tax on GCC businesses and residents. Sometimes, the fees have undermined their intended purpose as a cost recovery tool for the provision of a service. For instance, toll roads have become a hidden tax as the tolls collected exceed the cost of the road’s construction and maintenance.

Moreover, different ministries and agencies impose and set fees — hampering attempts to rationalize them and avoid unintended consequences. For example, imposing and raising fees on family members who accompany migrant workers to the GCC can raise revenues. Yet these fees can cause migrant workers to keep their families in their home countries, thereby depriving GCC economies of wages and consumption that instead leave the region as remittances.

GCC governments have become increasingly aware of the problems associated with service fees as part of fiscal reforms. Leaders noted when the IMF recommended phasing out burdensome and regressive fees, and exploring alternative revenue models more conducive to small- and medium-sized enterprise development. GCC governments have seen how Hong Kong, New Zealand, and Singapore are reviewing their fees constantly and systematically to ensure that they are business-friendly, not unduly burdensome, and connected to policy objectives. At least for the past decade, Singapore has been introducing initiatives to reform its fees in terms of types and levels, with mechanisms to set, review, and update them. The result: lower business costs, enhanced fee transparency, and a reduced administrative burden on the government. (Read the rest here.)

Risk Intelligence and the Resilient Company

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, June 13, 2023

by Ananya Sheth and Joseph V. Sinfield

Simon Prades

Building the resilience of large, complex enterprises is critical in today’s uncertain and interconnected world. At a time when a container ship grounded in the Suez Canal can bottle up 12% of the world’s trade, or a virus can disrupt the global flow of commodities, components, and talent, a corporation’s ability to quickly adapt in the face of unfolding events is essential to its survival and prosperity.

Business resilience is a dynamic property that is retrospectively measured by the stability and longevity of corporate value across changing contexts. In real time, it manifests in an enterprise’s timely adaptation to both immediate and gradual changes in the business environment.

Our work, which employs a complex adaptive systems view of businesses, shows that resilience derives from three fundamental adaptive capacities: sensing and monitoring, to recognize emerging changes in the business environment; business model portfolio development, to build and test capabilities across operating contexts; and fundamental capability development, to drive growth with longevity and avoid corporate stall. Moreover, each of these capacities hinges on the development of a capability for risk intelligence.

We define risk intelligence as the honed ability to rigorously interpret risks and the consequences or opportunities they pose for a company. It allows leaders to see through environmental complexity and systematically identify, categorize, and interpret risks. This enables them to look beyond known risk factors and intentionally explore yet-to-be-known risks, thereby embracing rather than avoiding uncertainty. Importantly, risk intelligence brings recognition that individual risks or the forms in which they manifest matter far less than the often-shared consequences they have on a company’s value exchange system — that is, the manner in which it manages, identifies, creates, conveys, delivers, captures, protects, and sustains value. And finally, it provides leaders with a network view of risks that enables more effective allocation of risk mitigation resources by illuminating not just the direct consequences of risks but the manner in which they could cascade across the company’s value exchange system. In this article, we break down risk intelligence into actionable elements that leaders can pursue to help toughen their organizations for the long term. Read the rest here.

How to move the needle on innovation

strategy+business, June 5, 2023

by Theodore Kinni


Illustration by Luis Alvarez

As CEOs continue to call employees back to the office, their rationales often include remote work’s deleterious effects on innovation. There is some basis for these claims: a recent study found that the number of email exchanges between research units at MIT dropped by 38% during the pandemic lockdown. Its authors equated email volume with the weak ties that are crucial to the diffusion of information and ideas in networks, and thus concluded from the drop in traffic that remote work hinders innovation. But no matter how much weight you assign this finding, it’s a stretch to peg the success—or failure—of a company’s innovation efforts to the number of rears in seats.

The truth is innovation in large companies is a perennial challenge for leaders, no matter where employees are working. The late Clayton Christensen and other researchers detailed the obstacles to innovation that arise when industry-leading companies confront disruptive technologies. Large companies also struggle to transform innovation investments into financial results: in 2018, consultants from Strategy&, PwC’s global consulting business, examined 15 years of data drawn from the firm’s Global Innovation 1000 research—an annual analysis of the 1,000 publicly held companies that spend the most on R&D—and concluded, “There is no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance.”

So how can leaders move the innovation needle in big companies? I turned to Lorraine Marchand for answers. Marchand served in a variety of executive and board positions, including a former stint as general manager of the life sciences division of IBM’s Watson Health (now Merative), before writing The Innovation Mindset: Eight Essential Steps to Transform Any Industry — a practical guide to building innovation prowess across an organization — and founding her own innovation consultancy.

Here is her list of ways to make your company more innovative. Read the rest here.

The Missing Discipline Behind Failure to Scale

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, April 12, 2023

by Andy Binns and Christine Griffin


Dan Page/theispot.com

In 2018, Best Buy announced that it would enter the health market. It was an unexpected move for a consumer electronics retailer, but it was consistent with then-CEO Hubert Joly’s passionate advocacy for making Best Buy a company with a deep sense of purpose. Starting with a focus on helping the elderly to age safely at home, the company broadened the strategy to make Best Buy Health a provider that “enables care at home for everyone.” It was also a lucrative opportunity: Home health is forecast to be a $265 billion market by 2025.

Over the next few years, Best Buy Health tested its key assumptions about the opportunity, seeking out the sweet spot that would allow it to build a new business to sit alongside the company’s existing retail franchise. By 2022, it was a $525 million business, projected to grow at a 35% to 45% compound annual growth rate through 2027. The initiative created a new growth vector for its parent company and gave it a measure of resilience in the turbulent consumer retail sector.

Best Buy succeeded where many companies fail. It moved through the three innovation disciplines required to build new businesses: ideation, incubation, and scaling. It came up with a new idea for solving the customer problem of aging safely at home, incubated it by running in-market experiments to test value propositions, and then scaled it to a revenue-generating business unit. This is a relatively rare accomplishment. Our research finds that while 80% of companies claim to ideate and incubate new ventures, only 16% of companies successfully scale them.

A key contributor to this problem is the almost exclusive focus that companies place on the first two innovation disciplines. The ways and means of ideation and incubation — embodied in methodologies such as design thinking and lean startup, and disseminated by an army of trainers and consultants — are well known and readily available. However, when it comes to scaling, there are few methodologies to guide corporate decision-making.

Scaling is the missing innovation discipline. Indeed, when we assessed the innovation frameworks used by 15 large corporate incubation units, we found that only four mentioned scaling. For example, one large IT company’s incubation unit has a highly evolved process for ideation, validation, and incubation, but its framework stops at scaling. Scaling is considered outside the remit of such units: It becomes the kind of blind spot that author Douglas Adams characterized as “somebody else’s problem.” This leaves a critical gap in the ability of companies to build new businesses. After all, ideation and incubation generate value only when scaling succeeds.

To learn how to bridge this gap, we studied Best Buy and 30 other successful and unsuccessful corporate ventures. We found that most of the successful companies followed a similar approach to scaling new ventures that we call a scaling path. It requires a clarity of ambition; an understanding of the assets needed to access the customers, capabilities, and capacity required by the new business; and a willingness to use a variety of techniques to assemble those assets into a coherent strategy for attaining scale. Best Buy, for example, leveraged its existing assets — its stores, customers, and Geek Squad technical assistance team — and combined them with a $2.2 billion investment in acquisitions to scale its health business.

In this article, we offer five key lessons for building a scaling path that are drawn from both successful and unsuccessful corporate ventures. Read the rest here.

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

Insights by Stanford Business, March 15, 2023

by Theodore Kinni


 iStock/PeopleImages

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

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

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

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

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

Profiles in burnout

strategy+business, March 14, 2023

by Theodore Kinni

Photograph by PeopleImages

After New Zealand Prime Minister Jacinda Ardern unexpectedly announced her resignation on January 19, the lead on CNN’s analysis read, “Burnout is real—and it’s nothing be ashamed of.” Indeed.

It would have been more surprising if the PM had, as she described it, “a full tank, plus a bit in reserve for those unplanned and unexpected challenges that inevitably come along.” After all, she led New Zealand through a series of major crises, including the covid-19 pandemic and the Christchurch mosque shootings, which were the worst terrorist attacks in the country’s history. She endured extreme abuse online and received an unprecedented number of personal threats—so many that she may be the first ex-PM in New Zealand to require high levels of security. And she became a parent while PM, giving birth to a daughter, now four years old.

Going by The Burnout Challenge, by Christina Maslach and Michael Leiter, Ardern’s five-year-plus run as PM was a perfect storm for burnout. The authors should know. Maslach, who is professor of psychology emerita at University of California–Berkeley, created the Maslach Burnout Inventory, the first and leading burnout assessment, in 1981. Leiter, who was a professor of organizational psychology at Australia’s Deakin University and held the Canada Research Chair in Occupational Health at Acadia University, has been researching burnout—and collaborating with Maslach—for almost as long. Read the rest here.

Beware the Pitfalls of Agility

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, March 3, 2023

by Bernadine J. Dykes, Kalin D. Kolev, Walter J. Ferrier, and Margaret Hughes-Morgan

Given the panoply of recent disruptions — including COVID-19, inflation, Russia’s invasion of Ukraine — it’s no surprise that many leaders are striving to quickly dial up the agility level of their companies. Indeed, the ability to rapidly adapt to changing conditions can be a shield against disruption and a healing prescription for crisis. But organizational agility is not a panacea. There are pitfalls in the pursuit of agility that can and do produce unintended consequences.

Agility is a multidimensional concept that comprises three sequential and interrelated processes: alertness to the need for change, the decision to make the change, and the mobilization of the organizational resources required to execute the change. Our agility research and observations regarding the behavior of companies, especially during the pandemic, revealed that each process contains a pitfall that can subvert its outcomes: Alertness harbors the pitfall of hubris, decision-making harbors the pitfall of impulsiveness, and mobilization harbors the pitfall of resource fatigue. Read the rest here.

Why Digital Ability Trumps IQ

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, February 24, 2023

by Kimberly A. Whitler and F.D. Wilder

In 2013, as fast-emerging digital technologies and channels were creating a sea change in consumer product marketing, A.G. Lafley, then CEO of Procter & Gamble, acted to ensure that the consumer packaged goods giant would not be left behind. He appointed F.D. Wilder, one of this article’s coauthors, as global head of e-business and tasked him with driving digital transformation across P&G’s many brands. The goal of this initiative was to develop and integrate P&G’s digital marketing abilities, e-commerce channels, and IT platforms — driving up sales, profit margins, and cash flow in the process.

As the e-business team considered this challenging mandate, it focused on the digital marketing ability of P&G’s brand and business managers as a key enabler of the transformation. Unfortunately, the team found that the literature regarding digital transformation tends to give short shrift to the capability of leaders: It focuses mainly on raising the “digital IQ” of the workforce — that is, the measurement of how much an organization can profit from digital and technological solutions.

Digital IQ has its limitations as an effective measure of ability, not the least of which is its strong emphasis on teaching and testing for generic vocabulary and knowledge. Yet digital and other transformational efforts nearly always require employees to work in new and unfamiliar ways. To ensure that they can do this new work, leaders must be able to assess employee ability by connecting it not only to knowledge and skills but also to targeted actions and performance outcomes. Only then can they identify and activate pockets of strength in the digital ability of employees and isolate and remediate pockets of weakness. Read the rest here...

A goal isn’t a mission

strategy+business, January 30, 2023

by Theodore Kinni

Illustration by VectorInspiration

There are missions, and then there are missions. One type of mission is an achievable task with a fixed goal that is often tactical and short-term in nature. The other mission is a high-level aspiration that provides direction and motivation to an organization over a long period of time. Leaders who mix up the two can put the future of their companies at risk.

The distinction between the two types of missions is dramatically illustrated in the recording of a White House meeting held on 21 November 1962. During the meeting, President John F. Kennedy and NASA’s chief administrator, James Webb, whom Kennedy appointed, had a heated argument about NASA’s proper mission.

It had been 18 months since Kennedy had called out a piloted moon landing as one of his top priorities in a special address to Congress, declaring, “First, I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” Now, Kennedy was considering whether he could move the target date for the first lunar landing from 1967 to 1966, and he was grilling NASA’s leaders about the feasibility and costs of doing so.

As they wrangled over the size of the special appropriation that would be needed to fund an accelerated schedule, Kennedy suddenly tacked. “Do you think this program is the top-priority program of the agency?” he asked Webb.

“No, sir, I do not,” answered Webb. “I think it is one of the top-priority programs….” With that, an argument began that revealed the chasm between Kennedy’s view of NASA’s mission and Webb’s view. Read the rest here

Rethinking Hierarchy

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, January 25, 2023

by Nicolai J. Foss and Peter G. Klein

Chris Gash/theispot.com

For all the hype and promise swirling around the idea of eliminating management to create agile, flat organizations, bosses and corporate hierarchies have remained extremely resilient. As we argued in the pages of MIT Sloan Management Review in 2014, under the right conditions, having such hierarchies in place is the best way to handle the coordination and cooperation problems that beset human interactions. They allow human intelligence and creativity to flourish on a larger scale. They provide a larger structure, with predictability and accountability, for specialists to do their work.

But that doesn’t mean traditional, command-and-control organizations are right for today’s environment. We see a confluence of business and social trends influencing the development of new kinds of hierarchies. Rapid technological progress, instant communication, value creation based on knowledge rather than physical resources, globalization, and a more educated workforce require us to rethink how we wield managerial authority. Meanwhile, individual views on politics, religion, and culture also inform our attitudes toward hierarchies — such as whether we value autonomy or admire authoritarian figures. All of these factors point to a new, different role for hierarchy to play in meeting the challenges of the 21st century.

The key challenge for designing and operating hierarchies today and tomorrow is to balance two opposing forces. The first is the desire, common to us all, for empowerment and autonomy, which helps companies mobilize employees’ creativity and exploit their unique knowledge and capabilities. The other is the need — particularly in environments characterized by rapid change and interdependent activities across the enterprise — to exercise managerial authority on a large scale.

Companies need clear, fairly enforced policies and procedures that achieve coordination and cooperation while respecting employee desires for empowerment and relative autonomy. Managers have to figure out when to intervene and when to let employees handle problems themselves.

These are tough issues without easy solutions. Which decisions should be decentralized (or delegated)? How much discretion should employees have over the decision areas delegated to them? How are these employees incentivized and evaluated? How do executives make sure that all these decentralized decisions mesh together? A central lesson of theories and evidence on organizational structure is that there are no universally “best” answers to these questions, only trade-offs that depend on the contingencies facing the company. Identifying and acting on those trade-offs — not decentralizing everything, everywhere — is the key to successful leadership. Read the rest here.

Can bossless management work?

strategy+business, January 10, 2023

by Theodore Kinni

Photograph by Tom Werner

If you’ve been feeling like your leadership contributions are underappreciated, add a copy of Why Managers Matter to your reading list. In it, Nicolai Foss, a strategy professor at the Copenhagen Business School, and Peter Klein, the W.W. Caruth Chair and professor of entrepreneurship at the Hankamer School of Business, Baylor University, examine the various iterations of manager-free organizations that have been proposed—and occasionally adopted—over the past 50 years or so. Their conclusion: nonsense!

Foss and Klein lump the ideas of management thinkers, such as Gary Hamel, Michele Zanini, and Frederic Laloux, and approaches to decentralized management, such as holacracy and agile, into what they call the bossless company narrative. “The basic thrust of the genre is that while bosses are still around, the less control they exercise the better,” they write. “What the Harvard historian Alfred D. Chandler Jr. called the ‘visible hand’ of management should give way to worker autonomy, self-organizing teams, outsourcing, and an egalitarian office culture.”

Then the duo bales the entire genre into something resembling a straw man and puts a match to it. “The near-bossless companies—and there aren’t many of them—with their self-managing teams, empowered knowledge workers, and ultra-flat organizations are not generally or demonstrably better than traditionally organized ones,” declare Foss and Klein. “Bosses matter, not just as figureheads but as designers, organizers, encouragers, and enforcers.”

Foss and Klein make a detailed and extended case against the bossless company narrative with which it is hard to take issue, especially in the realm of large enterprises. Schemes like holacracy, in which decisions are made by teams, may work for small companies with distributed ownership, such as boutique consultancies and other kinds of partnerships, but they haven’t worked in large companies like Zappos, which have many more employees and require far more coordination. Agility, too, tends to work better for running projects than for running whole companies. In short, hierarchical management structures are, as the authors put it, “the worst form of organization—except for all the others.” Read the rest here.

Bad Apples or Bad Leaders?

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, January 3, 2023

by Charn P. McAllister, Jeremy D. Mackey, B. Parker Ellen III, and Katherine C. Alexander

Leaders typically take responsibility when employees perform poorly but not when employees behave badly. It’s like there’s an unwritten rule that protects leaders when employees engage in deviant workplace behavior. Perhaps this protection stems from the notion that it isn’t fair to hold leaders accountable for the actions of a few bad apples.

Our research suggests that surprisingly often, this view of workplace deviance is misguided. We’ve found that leaders have a strong effect on whether employees engage in deviant behaviors. Thus, when employees act badly, their leaders would be wise to take a step back and consider whether and how they may be complicit in that behavior.

Workplace deviance includes employee behaviors that violate organizational norms in ways that threaten the well-being of companies and their employees. Sometimes these behaviors are directed toward individuals, such as when an employee physically or verbally lashes out at a colleague or gossips with coworkers. Other times, deviant behaviors are directed toward an organization, such as when an employee steals workplace property or leaks confidential company information. The consequences of workplace deviance include productivity and inventory losses, as well as a host of other expenses that ultimately cost organizations billions of dollars annually.

Some leaders dismiss workplace deviance as an unavoidable side effect of apathetic or rebellious employees who either don’t care for or actively dislike their colleagues or employers. These bad apples do exist. Research shows that employees low in the personality traits of conscientiousness and agreeableness are more prone to workplace deviance. So are employees who exhibit socially malevolent personality markers referred to as the dark triad: Machiavellianism, narcissism, and psychopathy.

Given these findings, it’s easy to conclude that the “bad apple” argument makes sense. The problem is, research into the role of personality in workplace deviance does not consider the role that leaders play in employee behavior. Read the rest here.

The Transparency Problem in Corporate Philanthropy

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, December 19, 2022

by Patricia A. Banks

Despite increasing demands by employees, investors, and communities for environmental, social, and governance transparency, philanthropy remains an often overlooked and almost entirely opaque sphere of corporate activity. This is no small issue: In 2021, corporate giving in the U.S. alone is estimated to have exceeded $21 billion.

To explore the dimensions of this problem and understand the use of disclosures in corporate philanthropy more broadly, I studied transparency in the philanthropic foundations of Fortune 100 companies. These foundations are only the tip of the iceberg in corporate giving, but they are indicative of the state of philanthropic transparency across the business world. The research revealed the difficulties that leaders and stakeholders face in trying to gauge the efficacy of giving, ensure accountability for it, and capture the full value it may offer to both the givers and recipients of corporate largesse.

Sixty-seven Fortune 100 companies operate active private foundations. In 2019, their combined grants approached $2.3 billion, which was directed to a variety of causes, including health and social services, community and economic development, education, civic and public affairs, arts and culture, the environment, and disaster relief.

There is no comprehensive set of disclosure protocols for company-sponsored foundations in any of the major international standards, such as the Global Reporting Initiative’s sustainability reporting framework. However, there is an extensive set of disclosure protocols for foundations in the nonprofit sector, including having a searchable grants database, sharing a categorized grant list, and providing online access to the 990-PF tax forms they file, which list grant amounts and the names of their recipients.

My analysis of the foundation and corporate websites of the Fortune 100, as well as their foundation and corporate social responsibility (CSR) reports, revealed that the vast majority of the companies do not follow any of the three protocols (a searchable database, a categorized grant list, or online 990-PFs). Only 4.5% of the companies provide a searchable grant database, only 7.5% offer a categorized grants list, and just 7.5% provide online access to their 990-PF filings. Read the rest here.

Employee resource groups are more than “food, fun, and flags”

strategy+business, December 13, 2022

by Theodore Kinni

Photograph by MoMo Productions

In 1964, in the aftermath of race riots in Rochester, New York, Joseph Wilson, the CEO who transformed the Haloid Photographic Company into Xerox, invited Black employees to come together to address and remedy racial discrimination within the company. This group evolved into the National Black Employees Caucus, the first employee resource group (ERG). A half-century later, ERGs are a ubiquitous feature of the corporate landscape.

“ERGs have formed within the workplace to support and represent people with identities and demographics related to gender, race, sexual orientation, ability/disability, caregiver roles, military status, religious affiliation, generation, geographic area, job function, and more,” writes diversity, equity, and inclusion consultant and coach Farzana Nayani in The Power of Employee Resource Groups. In this handbook, Nayani offers practical advice to leaders of companies and ERGs who want to ensure that the time and resources they invest in their own groups are well spent.

“There is much debate as to whether affinity groups and ERGs are simply there to celebrate ‘food, fun, and flags,’” writes Nayani. But that’s a reductionist view, she says, one that ignores a host of potential benefits ERGs can provide to employees, companies, and communities. Nayani ticks them off: support, opportunities, and a voice for marginalized employees; enhanced leadership development and innovation pipelines; better employee engagement; increased reputational capital for the company; and more inclusive and socially responsible corporate behaviors that can deliver dividends to the communities in which businesses operate.

The key to achieving these benefits, says Nayani, is forging an explicit connection between a company’s ERGs and its organizational goals in five areas: workforce, workplace, marketplace, community, and suppliers. “Each of these five pillars is an area of focus where employee resource groups can offer contributions and also receive the benefits of efforts focused on the key themes,” she adds. Read the rest here.

It’s Time to Take Another Look at Blockchain

MIT Sloan Management Review, December 8, 2022

Ravi Sarathy, interviewed by Theodore Kinni



It wasn’t long after the developers of bitcoin first used a distributed ledger to record transactions in 2008 that the blockchain revolution was announced with all the fanfare that usually accompanies promising new technologies. Then, as often happens with emerging technologies, blockchain’s promise collided with developmental realities.

Now, a decade and a half down the road, that early promise is becoming manifest. In his new book, Enterprise Strategy for Blockchain: Lessons in Disruption From Fintech, Supply Chains, and Consumer Industries, Ravi Sarathy, professor of strategy and international business at the D’Amore-McKim School of Business at Northeastern University, argues that distributed ledger technology has matured to the point of enabling a host of applications that could disrupt industries as diverse as manufacturing, medicine, and media.

Sarathy spoke with Ted Kinni, senior contributing editor of MIT Sloan Management Review, about the state of blockchain, the applications that are most relevant now for large companies, and how their leaders can harness the technology before established and new competitors use it against them.

MIT Sloan Management Review: Blockchain has been slow to gain traction in many large companies. What’s holding it back?

Sarathy: Blockchain is a complex technology. It is often secured by an elaborate mathematical puzzle that is energy intensive and requires large investments in high-powered computing. This also limits the volume of transactions that can be processed easily, making it hard to use blockchain in a setting like credit card processing, which involves thousands of transactions a second. Interoperability is another technological challenge. You’ve got a lot of different protocols for running blockchains, so if you need to communicate with other blockchains, it creates points of weakness that can be hacked or otherwise fail.

Aside from the technological challenges, there is the issue of cost and benefit. Blockchain is not free, and it’s not an easy sell. It requires significant financial and human resources, and that’s a problem because it’s hard to convince CFOs and other top managers to give you a few million dollars and a few years to develop a blockchain application when they do not have clear estimates of expected returns or benefits.

Lastly, there are organizational challenges. A blockchain is intended to be a transparent, decentralized network in which everyone talks to each other without any intermediaries organized in a world of hierarchies. Making that transition can require a long philosophical and cultural leap for traditional companies used to a chain of command. Trust, too, becomes a huge issue, particularly when you start adding independent firms to a blockchain. Read the rest here.

Preparing Your Company for the Next Recession

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, December 6, 2022

by Donald Sull and Charles Sull

Winter is coming: Inverted yield curves, rising interest rates, and a rash of layoff announcements have convinced many economists that the global economy is headed for a downturn. Recessions are bad for business, but downturns are not destiny.

The worst of times for the economy as a whole can be the best of times for individual companies to improve their fortunes. One study found that lagging companies are twice as likely to overtake industry leaders during a recession, relative to nonrecessionary periods. Another study, of nearly 4,000 global companies before, during, and after the Great Recession, found that the top decile of companies grew earnings by 17% per year during the downturn, while the laggards saw profits stagnate or decline. The difference between the companies in the two groups translated into $6 billion in enterprise value on average.

How can the same recession cause some corporate empires to rise and others to fall? The short answer is that uncertainty surges dramatically during recessions — increasing roughly threefold at the company level compared with the relative calm before or after a downturn.

“Chaos isn’t a pit,” explains Petyr “Littlefinger” Baelish in Game of Thrones. “Chaos is a ladder.” The chaos of a recession, however, is both a pit and a ladder. In the face of uncertainty, some companies retrench. They abandon attractive customers and promising markets, offload valuable assets at fire sales, cut prices, and seek new partners to bolster cash flow. Others start climbing. They seize opportunities and improve their fortunes.

Our research has identified three fundamental ways to manage uncertainty: resilience, local agility, and portfolio agility. Leaders can take a series of steps, such as building a strong balance sheet or diversifying cash flows, to boost an organization’s resilience and ability to withstand environmental shocks. Local agility is the ability of individual business units, functions, product teams, and geographies to respond quickly and effectively to changes in their specific circumstances.

Portfolio agility is an organization’s capability to quickly and effectively shift resources across different parts of the business. While local agility enables individual teams to spot and seize opportunities, portfolio agility enables the company as a whole to double down on its most promising investments. Portfolio agility is, by some estimates, the largest single driver of revenue growth and total shareholder returns for large companies. Quickly and effectively reallocating resources is valuable at any point in the business cycle, but it’s decisive during downturns, when internal cash flows dwindle and access to external funding dries up.

Resilience and agility are effective in isolation, but in combination, their impact is turbocharged. In the midst of a downturn, resilient companies can weather the storm to wait for opportunities to arise. Having a high level of resilience — by building a war chest of cash or obtaining secure access to funding — provides an organization with the wherewithal to fund emerging opportunities, but only if it is agile enough to seize those opportunities. Resilience without agility may ensure survival but will not position a company for future growth. Agile companies without resilience, in contrast, often lack the resources to exploit the opportunities they spot. Read the rest here.

Three Ways Companies Are Getting Ethics Wrong

Learned a lot lending an editorial hand here:

MIT Sloan Management Review, November 29, 2022

by David Weitzner



Making business decisions that are both ethically and strategically sound has always been incredibly tricky. Leaders are called upon to act in a manner that is consistent with their personal values, builds solidarity and trust among diverse stakeholders, enhances their company’s reputation, and prevents scandals, while also being mindful of the bottom line.

This leadership challenge is getting ever more complex. Investors are measuring companies against environmental, social, and corporate governance (ESG) indexes. Employees are demanding extensive diversity, equity, and inclusion (DEI) commitments. And customers want to buy brands that are tied to strong corporate social performance (CSP).

As counterintuitive as it might seem in the burgeoning ethical complexity of ESG, DEI, and CSP, a few companies have found that when it comes to ethics, simpler is better. They meet the demands listed above by rejecting the notion that ethics are necessarily complex. They refuse to abdicate their ethical responsibilities; they craft value propositions that do not lean on social value initiatives to obscure or distract from how the company creates financial value; and they are transparent about how they do business with all stakeholders. Read the rest here.

In search of clarity

strategy+business, November 15, 2022

by Theodore Kinni

Photograph by Klaus Vedfelt

I’ve never envied CEOs for the hard decisions they must make. There are the career choices that threaten their work­–life balance and families, and the strategic decisions that put companies and employees at risk. And increasingly, there are a broad range of ethical conundrums related to social justice and equity, political ideology and conflict, and environmental sustainability. 

For lucky leaders, these decisions arise infrequently. But when they do, they often require introspection as much as—or more than—algorithmic analysis. After all, how much can AI-powered analytics tell a leader about how to frame a personal and organizational response to the war in Ukraine, Florida’s Parental Rights in Education Act, or the Black Lives Matter movement?

The inherent difficulty of crafting responses to such events is compounded by a couple of conditions. There’s the mantle of power and authority that can make some top leaders reluctant to reach out for help for fear of revealing their vulnerability or appearing indecisive or uninformed. There is the issue of trust, too: even in the most collaborative corporate cultures, senior management team members and other executives have their own agendas and ambitions that can skew their advice to the CEO.

Clearness committees offer leaders a way around these obstacles and through their most difficult decisions. The concept is rooted in the values of the Quakers, the Protestant sect that emerged in England in the 17th century. It has been adapted for a more secular context in the past half-century or so, a process in which Parker J. Palmer, cofounder and senior partner emeritus of the South Carolina–based Center for Courage & Renewal, was instrumental. Read the rest here.

Environmental Risks Go Far Beyond Climate Change

Learned a lot lending an editorial hand here:

Boston Consulting Group, November 9, 2022

by James Tilbury, Adrien Portafaix, Rebecca Russell, and Fabien Hassan

Just as investors and other stakeholders now expect companies to reduce greenhouse gas emissions, soon companies will be expected to report and act on a much broader range of nature-related risks. These risks encompass a host of environmental and ecological impacts connected to $44 trillion in economic value generation, or nearly half of the total global GDP, according to the World Economic Forum. Nature-related emergencies—from natural disasters to the extinction of a growing number of plant and animal species—will be business emergencies, too. That is why companies must plan for the coming nature transition now.

What Are Nature-Related Risks?

Managing and mitigating nature-related risks will require a much wider lens than most companies have adopted to date. There are nine planetary boundaries that span our world—the land, sea, and atmosphere—and the life that it supports. Planetary boundaries are the boundaries that humans must stay within to maintain a stable environment and decrease the risk of irreversible environmental change.

The planetary boundary that many are familiar with is climate change, but it is important to note that climate change is one of nine, with the others being biosphere integrity, land-system change, novel entities (such as toxic substances), freshwater change, stratospheric ozone depletion, atmospheric aerosol loading, ocean acidification, and biochemical flows. 

It is only when all nine planet boundaries are taken together, that companies can begin to evaluate their exposure to nature-related risks. To do that effectively, business leaders will need to adopt a mindset of “double materiality”—that is, they will need to think through how business activities may impact each of the boundaries and, as crucially, how each of the boundaries may impact business performance.

Although some companies have greater exposure to environmental and ecological degradation and collapse than others, the leaders of all companies need to adopt a more comprehensive approach to nature-related risks. As with climate change, customers, employees, and governments will demand it. In addition, investors will require it, especially large investors with diverse portfolios that are particularly vulnerable to the systemic threats arising from natural disasters and ecosystem collapse. Read the rest here.