ITBusiness

Technology v. Politics

Thu, 01 Oct 2015 21:02:23 +0000

Two interesting stories at the intersection of technology and politics. First is this Medium article by veteran tech journalist Steven…

Design Disruptors

Wed, 30 Sep 2015 19:53:52 +0000

This is a trailer for “Design Disruptors: How Design Became the New Language of Business,” a new documentary about the…

Design Tools News No. 7

Wed, 30 Sep 2015 15:54:39 +0000

Here is the latest installment in my ongoing series about what’s new in design tools. This week’s items include continued…

InkCase for iPhone

Tue, 29 Sep 2015 21:16:21 +0000

What I’ve learned about pre-ordering new gadgets that offer incredible innovations is: just say no. More often than not, I’ve…

Hitchcock/Truffaut

Mon, 28 Sep 2015 20:16:54 +0000

Coming this December: a documentary of the legendary, highly influential meeting between film directors Alfred Hitchcock and François Truffaut that…

Helping an Employee Overcome Their Self-Doubt

Tara Sophia Mohr — Thu, 01 Oct 2015 17:00:18 +0000

You want to give a member of your team a stretch assignment, but she tells you she’s just “not ready yet” — she’d like to get more experience before taking it on.

You offer to make a valuable introduction for someone you mentor. He seemed excited about it at first, but doesn’t follow up. Later, you discover that he felt intimidated, like he’d have nothing to say.

As managers and mentors, we frequently encounter situations like these, when we come up against the limiting voices of self-doubt in the people we support.

The negative impact of that voice is tremendous. If someone on your team is hampered by a harsh inner critic, they’re likely to talk themselves out of sharing their ideas and insights. Held back by self-doubt, some of your most talented people will shy away from leading projects or teams, or put off going for the big opportunities – new clients, new business lines, innovative moves – that could help your business grow.

As a manager or mentor, one of the most powerful ways you can unlock your people’s potential is to give them a toolkit for managing self-doubt.

The Manager’s Common Mistake

Typically, managers and mentors make a mistake. They think their job is to encourage, compliment, or cheerlead when their people are struggling with self-doubt. They say things like, “You really can do this!” Or “I have complete confidence in you. I wouldn’t have given you this role if I didn’t think you had the capability to do it.”

In the coaching field, this is known as “arguing with the inner critic.” It’s the dialogue between someone’s voice of self-doubt (“I can’t do that, I don’t have what it takes,” etc.) and the affirming words of a supportive person who has a different perspective (“Yes you can! You are great!”).

Coaches-in-training are taught, “Never, never argue with the client’s inner critic.” It’s understood that such arguments are usually a waste of everyone’s time, for two reasons.

First, such reassurance rarely is convincing. The inner critic’s view is not based in data, but in instinctual, over-reactive fears of vulnerability and failure. Hearing another individual say something along the lines of “No, you’re great at that!” often doesn’t speak to those underlying fears. In fact, it can add to the stressful feelings of being an imposter, as in, “No one around me realizes that I really don’t know what I’m doing, and they are all counting on me, thinking I can pull this off – but I can’t!”

Second, if you help team members and mentees through their self-doubt through compliments or reassurances, the solution requires you or someone like you. You’re giving them a fish, but you aren’t teaching your people how to fish. You haven’t given them tools to navigate self-doubt on their own. That’s what they really need, because they will make most of their inner-critic driven decisions quickly, in their own heads, without talking to anyone.

An Alternative Approach

The alternative is to take the conversation up a level. Instead of arguing with your team members’ inner critics, you can introduce a conversation about self-doubt – what it is, why it shows up for each of us, and how it can impact what you achieve as a team. You can start to do this with a couple steps.

1. Introduce the idea of the “inner critic.” You might choose to call it imposter syndrome, the voice of self-doubt, monkey mind, or another term you feel is appropriate for your work context.

What’s key is to introduce the concept of a voice in all of our heads that does not reflect realistic thinking, and that anxiously and irrationally underestimates our own capabilities. Use this list of common qualities of the inner critic’s voice to help your people identify their critics. You can also use the chart below to talk about the difference between the inner critic and more realistic thinking.

2. Ask your team members to start developing the skill of managing their inner critics. Clarify that you understand that fears and self-doubts will naturally come up when your team members or mentees grow into new roles, take on greater responsibility, or speak up. The goal you want to them to work toward is not unfailing confidence, but rather, more skillful management of their own limiting beliefs and self-doubts.

In doing this, you are introducing a powerful new idea: that readiness for advancement and leadership does not depend on an innate quality of confidence, but rather, on building the skill of managing one’s own self-doubts.

To do this, they should practice noticing when they’re hearing their critic, and to name the critic thoughts as such when they occur. That’s as simple as noting to oneself, “I’m hearing my inner critic’s worries about this again.”

Typically, once someone understands the fear-based roots of the critic’s voice and is conscious of when it’s speaking up, they can choose to not take direction from it, and to take direction from more resourceful and rational parts of themselves instead.

One woman in my course, a manager at a telecommunications company, brought a small group of her colleagues together for this conversation. One colleague told her afterward, “I knew I had a little, mean, nagging voice inside my head, but until now I hadn’t really appreciated how much impact it had on the choices I make.” Another realized she was not applying for an available promotion largely because of inner critic. After the discussion, she applied for the job – and got it.

Grace, an executive at a professional services firm, worked with a manager who was dealing with major changes in the scope of her role, activating the manager’s inner critic. “In addition to encouraging her,” Grace said, “we spent time digging through how the changes had triggered her inner critic. We made a clear plan for what she needed to accomplish. Many milestones were reached (and celebrated) but when things didn’t go to plan, we explored whether/how the manager’s inner critic was factoring in. As time went on, the manager learned to better predict when her inner critic might kick in, and how it could be quieted. She gained a tool she can rely upon, and navigated challenging times of change with flying colors.

You want your people to do all that they are capable of, to keep saying “yes” to being on their growing edge. That means they’ll frequently feel self-doubt. You can empower them by addressing the inner critic head-on, and you can give them tools to become skillful responders to their own self-doubt.

The Costs of Racial Disparities in Health Care

John Z. Ayanian, MD — Thu, 01 Oct 2015 16:00:52 +0000

Racial disparities in life expectancy are a key indicator of inequity in health outcomes. Although the United States has made progress in narrowing the gap in life expectancy between blacks and whites, from 7.6 years in 1970 to 3.8 years in 2010, a disparity remains — largely from blacks’ higher death rates at younger ages from heart disease, diabetes, and cancer, as well as higher risks for HIV infection, homicide, and infant mortality.

Leaders in government, business, and health care must address these persistent disparities at the national, state, and local levels, as both an ethical and an economic imperative. In fact, eliminating racial disparities in health care is vital to pushing the entire health care system toward improving quality while containing costs — so-called value-based care. In its 2001 “Crossing the Quality Chasm” report, the Institute of Medicine identified equitable care as one of six core aims of high-value health care systems. And since 2003, Congress has mandated that the federal government produce the annual National Healthcare Disparities Report as part of the effort to monitor national progress in this domain.

In 2011, Richard Allen Williams and I outlined five principles for eliminating racial disparities as part of health care reform:

Provide insurance coverage and access to high-quality care for all Americans.
Promote a diverse health care workforce.
Deliver patient-centered care.
Maintain accurate, complete race and ethnicity data to monitor disparities in care.
Set measurable goals for improving quality of care, and ensure that goals are achieved equitably for all racial and ethnic groups.

Racial health disparities are associated with substantial annual economic losses nationally, including an estimated $35 billion in excess health care expenditures, $10 billion in illness-related lost productivity, and nearly $200 billion in premature deaths. Concerted efforts to reduce health disparities could thus have immense economic and social value.

Employers and health plans have an important stake in these efforts. For example, reducing disparities in effective asthma treatment by 10% for African American workers could save more than $1,600 per person annually in medical expenses and costs of missed work. Similarly, eliminating racial and ethnic disparities in access to outpatient mental health treatment could reduce costs, particularly for people on Medicare or Medicaid, by limiting emergency room visits and hospitalizations for mental illness and other medical conditions such as diabetes and heart disease.

Insight Center

Much of what we know about reducing racial disparities has come from organized systems of care, such as health maintenance organizations (HMOs), as they have advanced information systems for collecting data on health care quality and are often subject to public reporting. For example, to guide quality-improvement efforts, the state of Massachusetts required hospitals beginning in 2007, and health plans in 2009, to collect information on the race, ethnicity, and language of their patients. In 2009 the Institute of Medicine called on all health systems to collect these data to help monitor and remedy disparities in care. Recent efforts to achieve racial equity in health care have focused on measuring and reporting disparities in health care quality and outcomes, followed by interventions aimed at reducing those disparities — interventions which are then themselves measured and evaluated.

Such interventions can have a major impact. As colleagues and I reported in 2005, Medicare HMOs had reduced racial disparities in basic processes of care, such as testing cholesterol and blood sugar levels in older adults with heart disease or diabetes. However, substantial racial disparities persisted in how well those parameters were controlled in this population, thereby contributing to greater risks of heart disease, kidney failure, and stroke among the black community. Nearly a decade later, we found that racial disparities have been eliminated in control of high blood pressure, blood sugar, and cholesterol within Medicare HMOs in the western United States, where quality of care is highest. In contrast, these clinical outcomes remain substantially worse for blacks than whites in the Northeast, Midwest, and South, despite evidence that treating high blood pressure is highly cost-effective.

Optimal control of high blood pressure, blood sugar, obesity, and smoking could further improve life expectancy by 5 to 7 years for African American adults by preventing or postponing deaths from cardiovascular disease, diabetes, and cancer, particularly for those with low incomes in the rural South. Unfortunately, most blacks in the South live in states that have opted not to expand Medicaid under the Affordable Care Act, so those with the lowest incomes will continue to experience disparities that could be prevented by better access to effective health care.

In addition, racial disparities in death rates from colorectal cancer have widened as screening rates for blacks nationally have not kept pace with those of whites. Encouraging evidence from New York City has shown the benefits of coordinated public and private efforts to promote colorectal cancer screening. As rates of screening colonoscopy rose from 42% of eligible adults in 2003 to 62% in 2007, large disparities in this service were eliminated for black and Hispanic adults. The costs of screening more middle-aged adults can be largely offset by long-term Medicare savings in preventing colorectal cancer, which is expensive to treat.

Efforts to eliminate racial disparities in health care are important, but they alone will not erase the racial disparity in life expectancy in the United States. The efforts must be coupled with broader policies and partnerships to promote community health through racial equity in education, employment, housing, and the judicial system. Better integration of these approaches to reduce racial disparities in health care and community health will sustain and accelerate progress in narrowing the racial gap in life expectancy, and it will enhance the economic value that comes with better health and longevity. Until then, efforts to combat racial inequality will remain as important in health care as they are in many other facets of American society.

How Gratitude Can Help Your Career

Peter Bregman — Thu, 01 Oct 2015 15:00:45 +0000

I was opening the mail (the real mail, the one delivered by an actual, live person) and between the bills and solicitations, was a single letter, addressed to me, in sloppy — but recognizable — handwriting.

Recognizable because the handwriting was mine.

At first, I didn’t recall sending myself any mail. I opened the letter and began to read. And then I remembered. This was a letter from past Peter to future Peter. At the Bregman Leadership Intensive, participants write a letter to themselves that we send to them months later. This time, I had participated and written one to myself.

My letter included reflection, assessment, and new commitments. What am I grateful for? Where can I improve?

As I read through it, I couldn’t help but laugh. It all sounded so familiar. Not just because I had written it, but because I had written it so many times before. I found my file of previous letters, some years apart, and read through them. They were all, essentially, the same.

Which, for the things I am grateful for, is fine. But what about my new commitments? Why can’t I get real traction on them?

As I reflected on this question, and sat with all my letters, I began to see something that had eluded me before, a relationship between what I’m grateful for and what I want to change that represented a way out of my fruitless cycle of failed self-improvement.

When I ask myself “where can I improve?” my list usually comes from my shortcomings, things I don’t like about myself. For example, I can talk too much, waste time, move too fast (sometimes even multitasking … I know, I know), and focus on low priority things.

So, when I think about what I can improve, I just reverse that list: I should talk less, be more productive, move slower, focus on high priority things.

Trying to fix my shortcomings is familiar. And, with concerted effort, it usually works … for a day or two. But, very quickly, I revert to old behaviors.

We almost always revert to old behaviors.

Which got me thinking. What if reverting to old behaviors is the goal? I know I can achieve that — it’s what I do anyway.

The key is being deliberate about which old behaviors to revert to. That’s where the question, “What am I grateful for?” comes in.

The things I am grateful for are, by definition, already a part of my life. I am grateful for the undistracted time I spend with my family. For the sense of presence and focus I feel when I am writing. For the times when I really sink in to listen to another, without any need to fix them or the situation they’re in. For the clarity I have come to in the past year about what’s important to me and to my business — and the time I spend in those areas of focus.

In other words, those things I want to improve on? I’m already doing them. Those are, actually, old behaviors. Habits, even.

When I really sink in to listen to another, without any need to fix them or the situation they’re in, I am talking less. When I am present and focused while writing, I am moving more slowly, more deliberately. When I experience undistracted time with my family,

I don’t feel like I am wasting a minute. When I spend time on my areas of focus, I am settling into my highest priority items.

In this context, the path to improvement may not be effortless, but it should be familiar. And just knowing that can make a difference.

Consider the ways in which you want to improve. How do they relate to the things for which you feel grateful? I am willing to bet that, at least in some areas, the things for which you are grateful mirror the things you want to improve.

Which means that your path to improvement is hidden in your pleasure, not your discontent.

You are most probably already living your life in a way that you aspire to. Not all the time, but some of the time. You are not moving from nothing to something, you are moving from something to something more. The improvement gap is about consistency more than anything else.

Who are you in those moments when you are grateful? How do you show up? What are you doing? How are you behaving with yourself and others? Go back to those moments of gratitude and bring them into your present.

Reminding yourself of what you have already done in the past is a much more reliable way of shifting your behavior — much more believable, reasonable, doable, repeatable, sustainable — than starting a whole new behavior in the future.

You’re remembering, not inventing. You are already the person you aspire to be.

3 Ways to Incorporate Sustainability into Everyday Work

Michael W. Lamach — Thu, 01 Oct 2015 14:00:35 +0000

NICHOLAS BLECHMAN FOR HBR

A look at global trends such as energy demand should remind leaders of businesses small and large that what we do every day matters. The key to solving the world’s pressing energy and environmental challenges is for organizations with the right expertise — like the one I lead, Ingersoll Rand — to implement measurable climate-change initiatives and take a vocal role within their industries.

Last year during Climate Week, my company took the opportunity to publicly announce a commitment to increase the energy efficiency and reduce the environmental impact of our operations and product portfolio. Our “Climate Commitment” is a pledge to achieve: a 50% reduction in the greenhouse gas emissions related to the refrigerant in our products by 2020, a $500 million investment in product-related research and development over the next five years to fund the long-term reduction of greenhouse-gas emissions, and 35% reduction in the greenhouse-gas footprint of our own operations by 2020.

In Year One, we have avoided 1.5 million metric tons of “carbon dioxide equivalent” gases (CO2e) globally, which is the equivalent of nearly 540,000 tons of waste sent to the landfill. By 2030, we expect to reduce our carbon-footprint equivalent to the energy used by 4.6 million homes.

We were able to reduce the GHG footprint of our products and create more sustainable product choices with the launch of our EcoWise portfolio of products designed to lower environmental impact without performance tradeoffs.

With the end of Climate Week 2015 and to encourage other companies to make similar bold commitments, allow me to share what we’ve learned.

It starts with leadership support. Embedding the values of your commitment into every aspect of your organization requires strong leadership to uphold these values. Asking our best thinkers to determine how we declare an environmental commitment for our company and customers was invigorating but still required a culture change. Our board of directors, enterprise leadership team, and internal and external advisory councils all have responsibility for sustainability governance and participated in setting the direction of our Climate Commitment.

From there, the commitment was elevated to one of our company’s annual strategic priorities and cascaded throughout the organization, using our goal-deployment process. This ensured all employees had a direct line of sight as to how their work supported the overall commitment of the company. One result: Our team of global operations leaders seized the opportunity to retrofit facilities with new equipment and processes that are energy and operationally efficient. They also placed a focus on emissions such as the reduction of the use of high-global-warming-potential (GWP) foam-blowing agents.

Embrace your ecosystem. Being one of the first to pioneer a commitment can be overwhelming. Taking that leap, though, has opened doors for us to create a path for customer conversations around solving business issues and accelerating the pace of product innovation. We’re working closely with refrigerant manufacturers, academic institutions and customers to develop, test, apply, and educate users about adoption of next-generation refrigerant options. To ensure our efforts are working in parallel with industry initiatives, our teams are engaging with policymakers, non-government organizations, media, and other influencers in Brazil, Canada, China, India, Europe, Japan, the United Arab Emirates, and the United States to discuss the adoption of next-generation technology.

Engage your employees. Paramount to achieving success is inspiring employees and providing a variety of avenues to help them incorporate sustainable thinking into their everyday work lives. We found this to be true through the successes of our Green Teams, a global employee network that works internally and partners with community groups. From Charlotte, North Carolina, to Wujiang, China, employees come together on activities, including riding bicycles to work instead of driving, or recycling and reusing materials versus creating unnecessary waste. Everyone is encouraged to make a difference. Last year, our employee-sustainability initiatives saved an estimated 4.7 billion BTUs of energy.

We also made sustainability training meaningful to employees. One example is our Design for Sustainability program for product managers and design engineers, which we developed with Underwriters Laboratories Environment. It helps employees incorporate sustainability-related attributes into product design and use assessment tools to identify sustainable product strategies in response to market needs.

Our experience is that when you encourage employees to form a personal connection to sustainable thinking, they are more eager to get involved in sustainable actions within your company and offering opportunities for sustainable education helps broaden the impact of those actions.

What’s next? Significant global changes will take place over the next 20 years that impact our daily lives. The growing population is projected to increase world energy demand by 37% in 2035 from current levels. These issues require immediate attention.

At Ingersoll Rand, we are looking ahead to the achievement of our 2020 sustainability targets, which keep us focused on continuous improvement in the areas of environmental impact and social responsibility, and have the added benefit of improving customer relationships and productivity. In 2016, we will introduce new products and services with improved energy performance and lower use of GWP agents that are cost effective and exceed customer expectations. We will convene third parties and industry players. And we will diligently continue to measure and reduce the carbon footprint of our own facilities and fleet.

The route to transformation is pursuing an all-inclusive approach, involving action from government, business, research institutions and academia, and the public at large to do their parts. The key is to act now to create the culture change needed to impact climate change. By taking a public stance and working with others, companies can create a path to a better world.

Do You Have a Manager’s Mindset?

Katy Tynan — Thu, 01 Oct 2015 13:00:03 +0000

Julie Long, a senior developer at a software company, was identified by her manager as a high performer. When she was asked to coordinate a team of three junior developers on a project, Julie was excited about the opportunity to finally move into a management role. However she quickly became frustrated. Things that were simple and easy for her were not getting done in a timely way by her team. After just a few weeks in her new role, as she reviewed the code her team members had written, she found herself seriously considering scrapping their contributions and writing it all herself. She knew that if she worked a few extra hours, she could likely match the output of all three of her direct reports.

This scenario is all too common when an individual is asked to make the leap from expert to manager. It’s especially common when someone is asked to lead a team of their recent peers. But jumping into the weeds and trying to do everything, even if it works initially, is not a sustainable strategy. Ultimately a manager needs to focus on becoming a successful teacher and mentor in order to help their people develop and grow, and to increase the overall capacity of the team.

But this requires a dramatic change in mindset, and it’s this process that is so difficult for many of the recently promoted. Because coaching and coordinating others is not how you spent your days as an individual contributor, it can be hard to discard old habits. Start by tracking the improvement of your direct reports from where they are rather than comparing their output and capabilities to your own. If you assess people individually, their talents will emerge—and their progress will become a measure of your own success.

Here are some other things to keep in mind as you work on shifting your mind-set. Some of these suggestions may seem obvious, but the fundamentals have a way of flying out the window when new responsibilities pile up and the pressure’s on.

Take the Long View

While individual contributors keep their heads down and focus on getting work done, managers needs to be looking further ahead. Good managers spend much of their time anticipating challenges, negotiating political situations, and creating a road map that pulls together what each team member is working on independently. You also need to think beyond what will happen in the ideal scenario and plan for contingencies.

Seeing the bigger picture involves doing two things well. First, you should have a solid understanding of the needs and goals of your department, as well as the entire organization. This clarity about the ecosystem in which your team operates will help you anticipate your manager’s expectations. Second, you need to understand the capabilities of the individuals on your team. Recognizing your team’s capacity will give you the ability to better forecast when your team will be stretched or when it will experience bottlenecks, and to set expectations accordingly.

Ask More Questions

When one of your team members is struggling, it can be tempting to just hand out answers (or do the work yourself, like Julie). After all, you probably know what needs to be done, and quickly providing the solution will get you back to your own work faster. But if you get into the habit of being the answer dispenser, you don’t give people the chance to figure it out for themselves.

Asking questions can be a great way to help a team member work through a problem. Have them describe what’s frustrating – put it up on a whiteboard if you can – and then talk through all the angles. In many cases a solution will become obvious just through the act of describing the problem. But if it doesn’t, your questions can be instrumental in helping your employee look at the obstacle in a new way or uncover alternative possibilities.

Focus on What and When

As an individual contributor, you were rewarded for perfecting the “how” of getting your work done. You might have great ideas about what makes you more productive and allows you to do your best work. But what works for you might not work for others, and further, others might come up with new ideas or techniques that you haven’t considered. It’s always best when setting goals with your team to focus on what the deliverables are, and when they need to be complete, but to leave the details of how that gets done up to each person.

The exception, of course, is when someone asks for help, or if you observe a team member struggling. At that point you can look at how they are going about the task. But even in these cases you should approach the situation with an open mind, and not simply dictate what should be done.

Another reason to focus on the goals and not the process is to avoid micromanaging. No one enjoys having their manager hang over their shoulder and tell them how to do their job. It’s a quick way to frustrate your team, and it won’t make the work go any faster.

Trust Your Gut

Stepping into a new role can throw you off balance. You are working hard to learn new ways of thinking and behaving and it can make you feel like you’re wrong a lot of the time. But your instincts are still valuable. If you feel like a project is going off the rails, don’t wait until it’s too late to respond. You may be figuring out how to be a good leader, but your sense of whether the work is being done and done right is likely on target—especially if it’s work that you’ve done yourself in the past.

Many new managers delay confronting a team member who is missing deadlines or struggling in some way because they doubt their instincts or aren’t sure how to address the problem productively. But rather than waiting until the situation grows worse, sit down and have a conversation. Make sure you’re aware of how people are doing, and check in with them regularly. When you feel like something is off, it probably is.

Be Patient

Shifting your mind-set from the day-to-day responsibilities of an individual contributor to the broader view of a manager and leader takes time. Don’t expect these skills to evolve overnight, and don’t be discouraged if you have some setbacks as you try to strike a balance between getting things done and coaching your team. Most of us aren’t natural-born managers. The mind-set of a manager can be learned and honed with practice.

When times get tough (as they’re bound to do) or you’re feeling overwhelmed by your new role, pause and ask yourself:

Am I seeing my direct reports’ strengths and weaknesses clearly, or comparing them to mine?
Am I taking the long view, anticipating capabilities, challenges, and expectations?
Am I asking questions more often than dispensing answers?
Am I setting clear deadlines and deliverables, but leaving the “how” up to my team?
Am I second-guessing my instincts? (Don’t.)
Am I being patient with my own development as a manager?

What Generous People’s Brains Do Differently

Nicole Torres — Thu, 01 Oct 2015 12:05:51 +0000

Some people make giving look effortless. They’re the kind of people who bring donuts on Friday mornings and don’t think twice before helping overwhelmed colleagues, even if it means they end up working late (again). For these “givers,” taking one for the team comes too easily, and their needs often end up by the wayside. Meanwhile, others face more of a struggle when it comes to putting the group first.

So how do the givers do it? What’s the difference?

New research from the emerging field of neuroeconomics suggests that being generous is not as tough as some people think. But even so, it is pretty rare.

To figure out why giving feels harder for some than for others, scientists at CalTech and Harvard studied what actually happens in the brain when people make an altruistic choice—one that benefits another at a cost to themselves. They found that the decision to give or take simply comes down to how much importance you attach to your interests versus someone else’s. So if you’re the type of person who considers other people’s needs as much as your own, self-sacrificing tends to be automatic, as our more munificent colleagues have shown. If you typically place more value on yourself, then giving feels more onerous.

It’s still debatable how the brain processes different choices and actually decides whether one is good or bad. Neurons fire noisily. Neuroeconomics attempts to cut through this noise by using elegant mathematical models to represent how the brain makes simple choices. “Adapting these models to predict altruistic choice turned out to be really simple,” said Cendri Hutcherson, who led the work (recently published in the journal Neuron) and is the director of the Toronto Decision Neuroscience Laboratory. “For one individual subject, we can fit a model to some of their choices and then predict with a pretty high degree of accuracy the other choices that they make.”

Hutcherson, along with coauthors Benjamin Bushong and Antonio Rangel, first created a model to predict whether someone, when given the choice, would give money to a stranger or take it for himself. Then they ran an experiment on 51 men.

They had each participant lie supine in a body scanner (the same used for medical MRIs) and play a version of the Dictator Game (used in economics to test the assumption that people always act out of self-interest). He would make choices about how much money he and a real-but-anonymous partner would get after the study. In each trial, he could either opt for the default amount (both of them get $50), or take a proposal that required making a generous or selfish decision. Whatever he decided to pay himself affected how much his partner would get. He’d see various scenarios on the screen (for example, you can get $75 and your partner gets $0, or you get $10 and your partner gets $100, or you get $49 and your partner gets $100, and so on) where he’d have to decide how much to give up in order to help the other person.

The researchers found that the brain calculates two values—how much this benefits me, and how much this benefits you—separately. In other words, different parts of the brain light up when you think about yourself and when you think about someone else. The fMRI data showed that weighing one’s own payout activated areas like ventral striatum, which processes reward, while considering the other person’s payout fired up the temporoparietal junction, a region that has been associated (but never before as precisely, the researchers said) with empathy and thinking of others.

But a third area of the brain, the ventromedial prefrontal cortex, lit up for both quantities, suggesting that this is where the overall value (what I get plus what you get) is calculated and weighed against the default total amount of $100. “There are these regions that calculate pieces of the puzzle, and then the ventromedial prefrontal cortex puts it all together and allows you to choose one way or another in the end,” Hutcherson said.

Subjects generally chose selfishly, the researchers found, caring about their own outcomes roughly five times as much as their partners’. This was, after all, a total stranger whom they would never meet. However, people did act generously 21% of the time, on average, though this ranged quite a bit. Some people basically never gave up money to let their partners collect more, while others helped their partners out about two-thirds of the time.

“We didn’t classify people as either selfish or generous, but it did look like there were two groups of subjects: one group that hovered closer to the selfish end of the scale, who occasionally chose generously but only gave up very small amounts, like a dollar here or there; and then a second, smaller group that was sometimes giving up in the $15-to-$20 range,” Hutcherson said.

There were a few times when even those with the most selfish tendencies chose to be altruistic…but these were most likely mistakes, when the subject gave more than he intended to. “There are areas of the brain that are consistently associated with the reward value of an outcome,” Hutcherson explained. “We predicted that if people were being generous by mistake, there should be higher activation in reward-outcome areas. In other words, the person would be happier or relieved when that mistake was reversed. This is exactly what we observed.”

Participants varied a lot in how much importance they attached to themselves and their partners, but the researchers weren’t able to say where this disposition comes from—whether it’s education and upbringing, or how our brains are wired. “My guess is that it’s pretty modifiable,” Hutcherson said. “So the question we want to answer is how do we tap into those mechanisms to make people just a little bit more willing to give?”

People have been debating where generosity comes from for centuries—with one side saying it’s not in our nature (i.e., survival of the fittest), and the other arguing that because we’ve always worked in groups, it must be. And each camp makes a good case: different studies have connected altruism with areas of the brain associated with self-control (which suggests it takes more effort to think about others) and with reward (which suggests you’re only being “generous” to make yourself feel good). This research shows that it isn’t quite so cut and dried. Hutcherson explained that while you might see the reward center of the brain light up when someone makes a generous choice, it might be because the brain has to do more computation to make that decision, not because it feels rewarding per se.

This experiment suggests that making giving easier could be as simple as stopping to focus on how someone else might feel. It also shows that we occasionally do things we don’t intend to do—and our neurons are (partly) to blame. “We can be quick to draw conclusions about people based on a single choice,” Hutcherson said. “The brain just isn’t perfect.”

What to Do When You Don’t Trust Your Team

Wanda T. Wallace — Wed, 30 Sep 2015 17:00:03 +0000

HBR STAFF

Do you trust the people on your team? It’s an uncomfortable question to ask, because as good leaders, we work hard to create a supportive environment and earn the trust of the people who report to us. But what if you don’t trust them? Again, as a good leader, you’d have to be able to have an open and honest conversation with that direct report, with plenty of constructive feedback, to try to get that person to change their behavior, right? No, not always. The problem could be more about you.

In our executive coaching work, we’ve discovered some patterns when it comes to this problem– and almost always these patterns have more to do with the leader’s own perceptions of what’s going on than with the team’s actual behaviors. Here are the most common triggers of distrust, and what you can do to work through these issues on your team.

Mismatched Signals

One reason why might you feel uncomfortable, at a gut level, with one of your employees is because of mismatched signals. That gut feeling is driven by various factors and how each of us reacts to those. For example, when someone makes a warm personal disclosure, it often increases the feeling of trust—at least for some people. There are many, many such indicators; here’s a list of some of the most common:

• Personal disclosure. A warm sharing of personal feelings and experiences.
• Vulnerability. A willingness to share mistakes, doubts, fears.
• Loyalty. Demonstrating commitment to the organization and individual people.
• Inclusive. Including others for input or decision-making.
• Appreciative. Willing to acknowledge and praise other’s contributions.
• Open. Easily exploring new ideas and new approaches.
• Affinity. Having a good bit in common with someone else, sharing similar experiences and interests.

The problem is that the indicators that matter to one person may not matter to someone else. If one of your direct reports shows vulnerability in an attempt to built your trust it might work or it might leave you wondering why they have so many doubts and fears. They are trying to build trust but achieving the opposite. Equally, being inclusive by soliciting opinions can be seen by some as building trust, but for others it signals a lack of ideas or a lack of confidence.

It becomes hard to trust your team when the signals being sent are not the ones that matter to you. And of course the reverse holds—you will have a hard time getting the team to trust you if you send the wrong signals for them.

Crossed signals are a barrier and as a leader you can break down that barrier by learning to frame your team members’ actions in terms of what they intend, not your gut reaction to what they do. If you are not particularly comfortable with personal disclosures from your staff, step back and recognize, “This person is trying to build a closer relationship; it’s not my style but I respect what they are trying to do.”

Another way to get past mismatched signals is to be more transparent with your team. One new leader explained to his team that he did not share a lot of personal information—so they should know that if they asked him personal questions, he would probably just avoid answering them. His disclosure helped the team. While they still prefer to use personal information to build trust, at least they were not interpreting his lack of disclosure as a signal that he disliked them.

Mismatched working styles

Mismatched working style is another reason you may not trust your team. Suppose that as a leader you are more comfortable with the detail—you draw conclusions based on the detail, and you like to question the detail. People who have a similar style will have more affinity with you—they will be easier for you to trust. Now, suppose one of your team prefers to engage with you conceptually about a project that’s been entrusted to them. They’ll talk in terms of broad concepts and general principles. You need the details of what is going on. They are trying to show that they know what they are doing. Instead they are just being annoying.

For this kind of mismatch, reframing the person’s action in terms of good intention won’t help much. Again, transparency can help. Explain your preference, help the person understand what you want and why. If they know you want details not the overview (or vice versa) they are more likely to do what they need to earn your trust.

Unfortunately, it’s quite common for managers to work hard at dropping all kinds of hints about what is annoying them only to find that the person blithely carries on with no change. The trouble is that the hints, code words, and vague suggestions are just not understood. When you say, “You tend to be too conceptual in your presentations” it is not entirely clear to them what that means; they might not even clue into the fact that you are making a serious criticism. Even if they do clue in, they may have no idea what to do differently.

Here’s the solution. Feedback needs to be very specific and very behavioral if you want it to work. For example, instead of saying “You focus too much on the big picture” say “I want you to know the key numbers off the top of your head” or “I don’t want you telling me only the conclusion of your analysis, I want you to walk me through the spreadsheet line by line.” Instead of saying “You need to work on engaging stakeholders” say “I recommend you to fly to New York and take him to lunch.”

Critical Tasks

Another reason you may not trust one of your team members is because the work really matters to you, you are an expert, and you are just not sure anyone else can do it properly. You know you can do the work faster and more accurately. You may trust the team in some ways, just not their capability to do the work adequately.

The other end of this expertise spectrum is when the work really matters but you don’t have experience in the area and are anxious that you can’t assess their work. Their assurances that “everything’s on track” or “don’t worry, this kind of problem always happen” aren’t enough for you to trust the end result will be good enough.

How do you handle this lingering doubt that your people will deliver without making a futile attempt to micromanage every project? The key is to explicitly identify the factors and metrics that will tell you if the project is on track. For example, is the project hitting its milestones? If yes and you feel the milestones are well planned, then you can trust the team to continue. Or, does what your team tell you about the project jive with what other people in the organization are telling you? The metrics to track vary by project.

There is one additional tip for learning to trust that your team is on track. Sit in on one of your direct report’s team meetings. Is there a two-way discussion or does your employee’s team sit silently through a lecture? Good open communication is a powerful signal that the work is likely to be on track; lack of communication is a warning that your lack of trust may be well founded.

Most of us think about trust as a black and white decision. We trust you or we don’t. In business relationships, trust is rarely so clear cut. I may trust your expertise on a particular topic but not your judgment on hiring or communicating a message to my stakeholders. Rather than black or white, a better approach is to think of trust more like a barometer. Trust goes up and down depending on the circumstances, the task at hand, the political landscape, your sense of security on the issue, and the nature of the relationship. In this way, you think of how to increase trust not necessarily getting to 100% trust. Our natural tendency is to base trust on gut reactions and that’s not good enough to be an effective manager. It’s not that gut reactions don’t matter, but leaders need to be a lot more analytical in how they learn to trust their team. You can’t get rid of all the people whom you don’t fully trust, so you need to get better at identifying and fixing the things that stand in the way of trust.

Digital Transformation Doesn’t Have to Leave Employees Behind

Charles-Edouard Bouée — Wed, 30 Sep 2015 16:00:56 +0000

When we try to define what a “digital organization” is, what first comes to mind are technological devices: employees toting laptops, permanently connected to a shared, real-time flow of information on virtual platforms, constantly communicating with customers or suppliers – people working from anywhere, with others they have never met in person.

But digitization is more than just a change of tools. Daily practices, workplace structures, reporting relationships, information sharing, customer interaction, and even competition are also thereby transformed. Becoming a true digital organization is not just about becoming tech-savvy. It means embracing a new culture and mindset, where hierarchy fades and innovation happens through networks.

At the company level, it is quite clear that digital maturity is synonymous with stronger economic growth and a higher level of well-being for employees. In a study conducted with Google Europe, Roland Berger assessed the digital maturity of French companies, looking into three distinct dimensions: equipment, practices and uses, and organization and skills. We found that the more digitally mature companies grew revenue at six times the rate of their less mature counterparts. Beyond this financial impact, employees in the digitally advanced companies also reported a 50% higher index of well-being at work. Mature digital organizations are characterized by a flexible, less hierarchical culture where employees enjoy a real autonomy and the possibility to express their creativity. No wonder employees like them.

At a more macro level, the possibilities opened up by connected, more efficient production and new business models are also highly promising. A study conducted by Roland Berger with the Bundesverband der Deutschen Industrie (Federation of German Industries, or BDI) found that, if Europe harnessed digitization, by 2025, the continent could see its manufacturing industry add gross value of 1.25 trillion euros. The risks of failing to digitize are equally dramatic: from missing out on digital transformation, European industries could suffer potential losses of up to 605 billion euros in the same period.

Nevertheless, we should be careful not to overestimate the boon of digital transformation. For example, we are only beginning to understand digitization’s effects on unemployment. In 2013 Carl Benedikt Frey and Michael A. Osborne from Oxford University calculated that about 47% of American jobs could disappear by 2020 due to digitization. Roland Berger applied its methodology to the French labor market and estimated that 42% of French jobs could be at risk. Not surprisingly, low-skilled jobs are most threatened, but even intermediate jobs could also be affected. These include administrative or middle management functions, which have historically provided jobs for the middle class.

Management’s challenge is to figure out how to capture the benefits of digitization, while minimizing the costs – and making sure those costs are shared and not borne disproportionately by one group.

This places additional responsibility on managers, in terms of anticipating changes in skills, adapting our training policies, and empowering our staff – in other words, ensuring that digitization makes, within our companies, more winners than losers. While the goal is ambitious, there are many things managers can do to evolve their conventional organization into a digital one while ensuring that employees are keeping pace.

The first step managers need to take is to assess their organization’s purpose and vision. What are the organization’s goals? Why does it need digital transformation to achieve them? This in turn gives rise to more tough questions: Which jobs will be crucial to the company in the next years? Which jobs will be less crucial? How many employees are potentially affected? How should we adapt our training and recruitment policies?

The second step towards digital transformation is to acknowledge that technical devices are not the main issue. Instead of designing tools and implementing them in a top-down approach, managers should rely on their staff’s digital maturity, which is often higher than they might assume. For instance, in our study on the digital maturity of French companies, we saw that while nearly six in 10 French people shopped online in 2013, only one in 10 French companies sold online that same year. This gap means that, in most organizations, the employees’ digital maturity offers significant untapped potential. Managers should encourage their staff to suggest and experiment with digital solutions, and allow them to adapt these into their work practices.

The third step is about developing an organization that will foster digital practices. It means changing, step by step, from a traditional functional, siloed organization into a modular one with a loose alliance of autonomous and multidisciplinary teams. Research shows that modular organizations reach digital maturity with greater ease. They want to encourage distributed decision-making and empower middle management. This change is happening more commonly than we think. After all, when HR people routinely talk to finance staff, they are effectively working as members of a cross-functional team. Recognize these teams formally and empower them with digital tools, so that they can reach a higher degree of autonomy. While these teams will not replace the traditional organization, they will work from within to reform it.

Managers and employees will need to navigate the digital frontier together, and this requires a new set of leadership skills. Ultimately, success in the digital age lies not in the efficiency of technology, but in the dexterity and adaptability of the people who wield it.

This post is one in a series of perspectives by presenters and participants in the 7th Global Drucker Forum, taking place November 5-6, 2015 in Vienna. The theme: Claiming Our Humanity — Managing in the Digital Age.

Why Health Care Mergers Can Be Good for Patients

John D. Birkmeyer, MD — Wed, 30 Sep 2015 15:00:10 +0000

Hospitals and physician groups are merging into large health systems at unprecedented rates, fueled in part by the Affordable Care Act. Provider consolidation takes many forms, but the general trend can make it easier to share electronic records systems, coordinate care of patients, and eliminate redundant costs. Another potential benefit of integrated health systems is in addressing the persistent problem of variation in health care practice and outcomes, particularly in surgery.

Decades of scientific research confirm the obvious: Patients who undergo complicated operations fare worse when their hospitals or surgeons rarely perform them. (In the medical community, we classify these surgeons and hospitals as “low-volume.”) The problem has long been known, and the purchaser coalition called Leapfrog Group has tried to curb it. However, recent analyses confirm that thousands of Americans whose surgeries are performed by low-volume surgeons and hospitals die unnecessarily every year.

The Dartmouth-Hitchcock Health System (where I do surgery), Johns Hopkins, and the University of Michigan have recently taken a “volume pledge” — the first public commitment to manage the low-volume surgery problem. The three institutions have identified 10 complex operations (mainly cancer, cardiovascular, and orthopedic procedures) for which scientific evidence shows that surgical volume matters, and they have set minimum standards for all surgeons and hospitals in their systems. The volume bars, established by consensus among surgeons in each specialty, are set high enough to reduce risk meaningfully for patients, but not so high as to be impractical or impede access to care. Reasonable exceptions are made for surgeons just out of training, surgeons coming back from sabbatical or medical leave, and emergency clinical situations.

Insight Center

Dartmouth-Hitchcock, as part of its One DH effort, is also working to implement standardized care protocols across its affiliate network for common conditions and procedures — based on evidence where possible, clinician consensus where not. For example, for total knee replacement, a patient will soon be able to expect not only a high-volume surgeon but also a consistent clinical experience, regardless of which DH practice or affiliated hospital provides the care. That experience will include shared decision making, to ensure that both scientific evidence and patient preferences influence decisions about surgery. Standardized perioperative care pathways will also guide consistent, evidence-based prophylaxis against infection, blood clots, and other complications. Orthopedic surgeons across the system will even agree to use the same types of joint prostheses — a big stride in collaboration within this specialty.

Geisenger’s ProvenCare model for cardiac surgery is another example of how standardization in an integrated health system can improve quality and reduce costs within hospitals. Regional health systems that comprise many affiliated hospitals have an opportunity to apply such a model on a much larger scale and in heterogeneous care environments, where limiting variation in quality is most important.

How to move forward

Even within most committed, mission-driven health systems, standardizing care and reducing variation in quality is difficult. Given our early experience, I believe that two cultural shifts are key:

Physician leaders must be willing to push through unpopular changes. When we announced the surgical volume pledge at Dartmouth-Hitchcock, most physicians, including surgeons, were strongly supportive. But a small but vocal subgroup accused us of “Big Brother” tactics, asking questions like “Who are you to tell me what procedures I can and can’t do?” We offered to help low-volume surgeons better their skills in doing specific procedures, differentiate their practices, and clear the new volume bars. We would not bend the policy itself, however, and told a couple of recalcitrant surgeons, “Dartmouth-Hitchcock may not be the best fit for you.” That kind of firmness is essential.
Organizational structure must also be changed. Like many regional health systems, Dartmouth-Hitchcock has grown incrementally, one community group practice and one affiliated hospital at a time. Until recently, clinical practice issues were left entirely to local leaders and governance. Our move this year to a specialty-specific “service line” model is greatly accelerating our efforts to reduce variation in care. In that structure, one physician in each specialty has authority and accountability for managing care across all practice sites in the system. For the musculoskeletal disease service line, for example, one orthopedist is responsible for “clinical programming” (which procedures are done where and by whom), for optimizing the size of the clinical workforce to match population demands, and for aligning physician compensation with clinical performance. That same service-line leader is also charged with implementing consistent standards and care pathways for the most common orthopedic conditions and procedures.

Clearing the hurdles

Despite early progress in reducing variation, practical obstacles remain. Although Dartmouth-Hitchcock can establish clinical policies centrally as a health system, a lot of the “teeth” in implementation and enforcement resides within individual hospitals. For practical reasons, we have elected not to undertake the laborious process of changing credentialing standards and bylaws at each hospital. Instead, we are implementing the volume requirements as a clinical safety standard, just as we require checklists to be completed before any surgery. Any breach in the surgery-volume standard would be addressed by detailed review and remediation, in line with expectations for staff accountability established by the Joint Commission.

Standardizing care also often requires persuasion and peer pressure rather than brute enforcement. For example, although we have little direct leverage over the subset of surgeons at our affiliate hospitals who are not employed by Dartmouth-Hitchcock, we can discourage our primary care physicians from referring patients to any surgeon who does not adhere to safe practices, including our volume requirements.

Rapidly expanding health systems, like ours, are learning as they go and will inevitably take different paths toward reducing variation in practice. Regardless of how they get there, patients will benefit.

4 Tips for Launching Minimum Viable Products Inside Big Companies

Debbie Madden — Wed, 30 Sep 2015 14:00:35 +0000

“We have to disrupt ourselves before the market does.” It’s not an uncommon mandate today. Established enterprises need to innovate to keep pace with the more nimble, smaller startups. Perhaps no approach has captured the imagination of big companies yearning to get more nimble than the lean startup method: quickly building and launching minimum viable products — MVPs — and then iterating and pivoting based on market feedback.

Take the example of Beth, Director of e-Commerce & Digital Innovation at a company I’ll refer to as Acme, a 20-year-old, global enterprise. Beth manages a team that’s considered a “startup within the enterprise.” Acme expects Beth’s team to create $50 million in incremental revenue over the next 3 years by following lean startup principles.

But Acme isn’t a startup. It’s a large, established global firm. Like most big companies, it relies on efficiencies of scale for competitive advantage. Innovation by definition is inefficient.

However, there are in fact a few tricks of the trade that, if done well, can make an impact for large companies trying to act more like startups.

1. Make true failure a real option. A colleague said to me the other day: “I figured out what bothers me so much about my job. I’m working on a startup team that has no real threat of failure. It should have failed months ago but hasn’t.”

This often happens inside enterprise companies. At Acme, Beth should have a threat of real failure — a salary cut, getting fired, stopping the project, having to fire or reallocate her team. On the flip side, if she wins, she should have skin in the game. If she’s tasked with building $50 million in new revenue, she should be rewarded for success — a raise, equity in the startup part of the business, a promotion.

The point is, the team building the MVP inside an enterprise should truly act like a startup. They should have funding to pay for salaries for the team as well as for any and all expenses, and that funding should come with expectations around performance. If those goals are not met, the funding should run out. If funding runs out, the team no longer has those jobs. I know it’s harsh, but without these consequences, too many skunkworks teams go on and on, and on and on, and on and on…..

2. Get the right people on the bus. Jim Collins, in the classic bestseller Good to Great, famously wrote: “The executives who ignited the transformations from good to great did not first figure out where to drive the bus and then get someone to take it there. No, they first got the right people on the bus (and the wrong people off the bus) and then figured out where to drive it.”

Enterprise companies can fool themselves into thinking, “Mary in product will be a great fit for digital product.” Wrong. Mary has spent the last 20 years outfitting brick and mortar stores with physical product. She is not an automatic fit for the digital innovation side of the business.

Real startups are forced to seek new team members from outside their organization. In a “lean” team inside a large company, it’s wise to go through a true hiring strategy exercise. Take the time to get the right people on the bus. Even if it takes longer. Even if it means having to hire people from outside the firm.

3. Get out of the building. Again, take a lesson from actual startups. Startups find it easy to get out of the building, often because they don’t have an office building to begin with. Even as they grow and get their first office space, they aren’t bogged down with executive team meetings and processes, so they have more freedom to get out of the building.

Take the time to identify what hypothesis your MVP is aiming to confirm or disconfirm, and get yourself out of the building, talking to actual users and potential users, and work like mad to confirm or deny this hypothesis.

Note: Technology is not required to do this step. Sure, we could design prototypes, wireframes, scope documents, write code. But none of this is required to get out of the building. All that’s required is understanding who your target market is, figuring out where they hang out, and going there.

4. Create a realistic, disciplined MVP. It didn’t take long for the concept of an MVP to mean different things to different people. Stick to the basics. It’s just meant to be a very simple product that will let you test out the concept. What are the core features you really need? What’s the minimum you can do to deploy the project?

Building MVPs is fun. When done well, it can be the catalyst that enables enterprise to innovate and keep pace with the smaller more nimble competitors. What doesn’t work is acceding to political requests from different departments who’re all trying to staple their pet project onto your MVP.

Using lean startup principles inside large companies is not impossible – as long as your innovation team acts as like a real startup.

New Managers Don’t Have to Have All the Answers

Steven D'Souza — Wed, 30 Sep 2015 13:00:42 +0000

If you are a newly promoted manager who feels the pressure to have all the answers expected of you from day one, don’t despair. You are not alone.

A new role comes with a whole new set of expectations. There is an implicit — and perhaps explicit — social contract with your team to show the way, prove you care, and ensure stability and clarity. Almost all organizations put a premium on competence and expertise. As you are trying to orient yourself to your new role and responsibilities, you might be feeling the pressure to mask those awkward (even if unfounded) feelings of incompetence or inadequacy; to pretend you have the answers, even when you don’t.

In the research for our book, Not Knowing: The Art of Turning Uncertainty into Opportunity, we spoke to many managers who struggled with feelings of incompetence as they faced challenges associated with their new role. They feared looking foolish; losing their authority; letting people down; even being fired.

In a complex world, no one person can possibly have all the answers. You will inevitably face challenges that are hard to define, let alone to solve – even after years of management experience.

And yet we’re wired to feel uncomfortable with uncertainty. Neuroscience research has shown that threats to our certainty can result in neurological pain that’s similar to a physical attack. Even when we are not feeling threatened by uncertainty, researchers at Dartmouth have found that a neural network in the left hemisphere of our brain is “always looking for order and reason, even when they don’t exist.”

But it is possible to hold doubt and competence in balance. The leaders we interviewed often cited four key behaviors:

1. Become more aware of your relationship to knowledge. Work on increasing your awareness of your relationship with knowledge and identify your blind spots around confidence and certainty. Ask yourself these questions:

How important is it for you to be seen as competent in everything you do? How realistic is it that you’ll know everything?
What expertise do you already have? Does it help or hinder you as a new manager?
What are your default behaviors when you come to the edge of your skills? How do you recognize the limitations of your expertise?

As you mull over these questions, reflect on the tension you feel between the expectations placed on you and the desire to be seen as capable and successful in a new role.

2. Exploit your freshness as an advantage. Being a beginner can be an advantage. In our book we call it “emptying your cup,” coined after the famous phrase by the Zen monk and teacher, Shunryu Suzuki : “In the beginner’s mind there are many possibilities; in the expert’s mind there are few.” As a beginner, you can allow a fresh perspective to emerge. This is particularly useful when you need to make sense of a challenging situation, tackle a complex problem, or come up with new solutions or innovations.

Christian Busch PhD, Associate Director at the London School of Economics Innovation Lab, has studied modern micro-credit, mobile banking, and micro-saving — all intriguing innovations. He points out that these have all come out of contexts where there was no previous infrastructure or conception of how things should be done. These examples illustrate how a “don’t know” mind-set can trigger innovation without historical baggage or existing path dependencies.

3. Say “I don’t know” more often. While expectations on managers do vary globally by culture, role, and industry, different strategies can be deployed that allow you to admit ignorance, uncertainty, or ambivalence and not lose credibility.

Start by opening up a conversation with your team to set their expectations. Discuss the benefits and challenges associated with being forthright about what knowledge you lack individually and as a team. This gives you the opportunity to renegotiate people’s expectations that you should have all the answers. Allowing room for doubt opens up space for learning, growth, and creativity.

In our book, we tell the story of a new manager who found himself leading a new team after a restructuring. Feeling out of his depth and anxious about his new responsibilities, he took the risk of sharing his feelings of insecurity. He confided in his team that he did not know how to deal with every facet of the situation and had more questions than answers.

“The message was: I trust you, I respect you — and they got it,” he says. “Sharing how I felt opened up enough space for them to share their own ideas. Everyone had the same reaction to the changes: insecurity, self-doubt … it was a shared experience that galvanized the team.”

To become more comfortable with saying “I don’t know,” consider some low-risk situations where you can practice saying it. How do you manage the expectations of your manager and reports? How can you create a safer space for your team to admit that they don’t have all the answers, either?

4. Stay with questions longer. In most organizations, it’s uncomfortable to keeping asking questions rather than settling on the first answer.

The higher the confusion and uncertainty, the more attractive quick and easy answers become. Staying with questions develops our tolerance and increases our capacity to engage with the unknown. It also provides us with more information about what is going on and what our options may be.

The poet Rainer Maria Rilke encourages us to: “Live the questions now. Perhaps then, someday far in the future, you will gradually, without even noticing it, live your way into the answer.” Focus on developing a culture of ongoing inquiry within your team by rewarding curiosity and questioning. That way, it’s not threatening or exposing when someone doesn’t have the answer – even when that person is you.

How Women Can Show Passion at Work Without Seeming “Emotional”

Kathryn Heath — Wed, 30 Sep 2015 12:05:09 +0000

One of our coaching clients, a VP at a consumer products company, was abruptly silenced when she tried to make a point at a recent executive committee meeting. The problem? She was passionate — and it didn’t go over well.

Sales at the organization had plummeted, and the group was discussing the efficacy of its newest product. Our executive, Claudia, was convinced that the sales team needed to be examined instead. So she spoke up: “Our reps are apathetic and underperforming. They don’t have what they need to close deals. We should make some major changes right now, or we’ll lose the year.…” She found herself speaking loudly and gesturing with her hands for effect. But when she stopped to take a breath, she looked around the table and saw mostly blank stares. As she geared up to elaborate, a male colleague sitting across from her waved his hand across his throat, gesturing like a movie director cutting a scene. He shut her down and redirected the conversation back to the product.

Claudia was furious. After the meeting, she confronted her colleague. He apologized for cutting her off but told her she had “reacted with too much emotion.” He said, “You were off-point, and your tone seemed excited and inappropriate.” That’s not the way Claudia saw the situation. She walked away wondering, Where is the line between appropriate passion and too much emotion?

It’s a recurring theme in our coaching sessions with women. Although passion has a legitimate place in business, it can be misinterpreted — especially when women are doing the communicating and male colleagues are on the receiving end. That’s what we’ve found in our review of more than 1,000 360-degree feedback reports on female executives. When women fervently sell an idea or argue against the consensus, for example, we’ve seen that male colleagues or managers say things like, “She was too hyped up” and “She was emotional,” whereas the women themselves say they are simply advancing their cause or expressing an opinion, albeit passionately.

This lines up with what we’ve found in our qualitative research. In interviews on how women can find their voice in meetings, female executives told us they worry that their comments during heated discussions are misinterpreted as emotional. One of their pain points is that they are perceived as “overly direct,” and they often “have to reword or reposition” what they say. One executive reported that her passion was met “with great silence,” and she asked, “Is that my gender or my communication style?”

The answer is both, of course, because her style — passionate expression — is viewed differently by men and women. Overall, male executives shared “an ongoing perception that women are more emotional than men,” and they largely felt that women “need to be aware of it and remain composed.” We also heard from men that unchecked emotion by women makes their ideas less convincing and compromises their credibility, because it focuses attention on style rather than content.

That’s not to say that women are in the wrong. It’s a “lost in translation” issue, with repercussions for men and women alike. If male managers don’t check their biases, and those of their colleagues — and adjust how they receive and filter information from women — they will miss crucial input, and their decision quality may suffer.

For women, matters of perception are tricky, but here are some things you can do to minimize miscommunication and put your passion to work for you.

Be intentional. If you use your passion to make a point, do so deliberately as opposed to in-the-moment. How? Plan your argument in advance, and generate support before meetings so your passion won’t take others by surprise. We also tell women to use language that is passionate but a tone that’s moderate. In other words, remain in control so that people focus on the content of your argument and take it seriously.

Know your audience. Claudia’s executive committee was stacked with number crunchers and business analysts. She acknowledges, in retrospect, that they are swayed more readily by figures than by pure debate. She might have held the floor longer if she had begun her remarks with quantitative facts. For instance: “The sales numbers are down 6% this quarter; so let’s start by examining the sales strategy. Here’s what I have in mind…”

Use other tools of influence. Combining passion with logic, specificity, creativity, and experience can be more effective than relying on passion alone. If some colleagues, male or female, don’t respond to passionate appeals, they may respond more favorably to a different tactic. In addition, the versatility signals that you are in control of your emotions and able to switch gears in order to effectively make a point.

Support what your gut is telling you. If you feel passionate about something, say it proudly and then proceed to back up your feelings with facts. The people around you are more likely to be swayed by your open declaration if it’s clear that you have reason and logic on your side. They might even find your passion contagious.

When the Competition Is Trying to Poach Your Top Employee

Rebecca Knight — Tue, 29 Sep 2015 17:00:05 +0000

If you’ve got smart, talented people on your team, chances are they’ll get calls from recruiters. How should you respond when a competitor is wooing one of your employees? How do you know if your team member is really considering the offer or bluffing? Should you make a counteroffer? And what can you do to prevent your people from jumping ship?

What the Experts Say
No leader wants to see a top employee snapped up by a rival. “One, you have to replace the talent, and in a time of tight labor markets, that’s a very hard—and very expensive—endeavor,” explains John Sullivan, an HR expert, professor of management at San Francisco State University, and author of 1000 Ways to Recruit Top Talent. “And two, the talent is taking ideas with them to a competitor.” Unfortunately, says Claudio Fernández-Aráoz, a senior adviser at global executive search firm Egon Zehnder and author of It’s Not the How or the What but the Who: Succeed by Surrounding Yourself with the Best, managers are likely to be dealing with situations like these more and more, due to the globalization of business, demographic trends, and poor leadership development practices within firms. “The war for talent is going to intensify and it will get tougher” for managers to keep good people, he says. When you fear that one of your employees is about to be poached—or already has an offer in hand—there are steps you can take to avoid or minimize the loss.

Consider, but don’t rely on, non-competes
Organizations have long used non-compete agreements and non-solicitation contracts as standard tools to keep both employees from leaving and poachers at bay. “But while legal contracts “are essential in many cases, they are never enough,” says Fernández-Aráoz. Besides, he notes, times are changing. Not only is legislation going against non-competes but a growing body of research shows they stifle performance. “Employees are not owned, so acting like you own them and then purposely restricting their ability to make a living in the future will crush your brand as an employer,” says Sullivan. So, even if your organization allows you to use these contracts, you shouldn’t rely on them. Instead, focus on being an employer that people don’t want to leave.

Watch for signals
Research suggests that employees are more receptive to recruiters—and therefore more likely to quit—around their work anniversary dates. (Annual reviews, which can often coincide with these dates, are typically a time of reflection.) Be mindful of those cycles, but be on the lookout for other kinds of signals, too. “There’s usually a trigger event,” such as getting turned down for a promotion or having a project postponed, that makes other options suddenly more attractive. Another sign is when “an employee suddenly starts requesting to go to conferences so he can be more visible,” says Sullivan. Pay attention to office gossip as well. “Chances are they’ve already told someone at work that they’re entertaining other offers.”

Take action
If you learn that one of your most valuable employees is considering leaving, you need to be “proactive in trying to prevent it from happening,” Sullivan says. “Have a frank conversation. Say, ‘I’m not going to get mad, I want to fix it.’” Find out if there are simple ways you can improve the employee’s work life. “Ask: ‘What are the factors that are most frustrating you? Are there any that I can take away that would cause you to reconsider?’” If the employee is seeking new challenges, look into options that you could provide internally, says Fernández-Aráoz. Place the employee on a strategic task force, offer her a new territory to cover, or help her find opportunities to join an external board. “If you can find an alternative, it’s a win-win,” he says.

Don’t jump to a counteroffer
On the surface, presenting your employee with a counteroffer seems like an obvious, easy way to make them stay. But, warns Sullivan, counteroffers are often counterproductive. “If someone has made the decision to quit, they’re unhappy. By giving a counteroffer, you’re paying to keep an unhappy worker.” And boosting one employee’s salary might create problems for you with the rest of your team, says Fernández-Aráoz, “Compensation is confidential for about 11 seconds,” he says. “Everyone finds out as soon as the person walks out of the boss’s office wearing a big smile.” And if you suspect your employee may be bluffing about his offer just to pad his paycheck, “let the person go,” he says. “I would hate to think I have someone on my team who would lie to me. In today’s workplace, it’s all about trust.”

Batten down your hatches
When a team member leaves for a competitor, an immediate concern is whether he’ll “bring other colleagues along with him,” says Fernández-Aráoz. “You wonder: how many others are going to go too?” You’re not being paranoid, says Sullivan. “When someone’s been poached by a competitor he will probably try to take people with him,” he says. “It’s pretty easy to identify who they are.” (Hint: it’s often employee’s team members and friends.) In the aftermath of the departure, “you need to work on those people,” Sullivan says. Find out what they need to stay—be it Fridays off or a meaty new assignment—then do your best to deliver. Make sure they know how much you value their contributions. “Tell them: you make a difference here.”

Be attentive to your best people
“You need to continually treat desirable employees like they’re going to leave,” says Sullivan. He suggests identifying the people whom you cannot afford to lose and then conducting a “stay interview”—a play on the HR black hole of information otherwise known as the exit interview. “Ask them: ‘why do you stay here? If you’re ever frustrated, what are the reasons? What would keep you from leaving?’” Then use that feedback to “reinforce the reasons” that they’re happy where they are, and create “personalized retention plans” to address the reasons why they’re not, he says. Perhaps allowing the employee to work a flexible schedule, work on different projects, or work more from home is enough to retain them. “You should do this for your top performers who are in critical jobs and are hard to replace,” he says. Ideally, your “employees stay with you not because they have to but because they would not possibly consider going anywhere else.”

Keep it in perspective
Managers tend to judge themselves on their ability to inspire loyalty in their team members and so the resignation of a star employee can feel like the ultimate insult. But “you mustn’t let one departure get to you,” says Fernández-Aráoz. “Don’t overreact. And don’t badmouth the person who is leaving — it will reduce your credibility.” Remember: “a certain degree of turnover is inevitable.” Sullivan agrees. In some cases, “there’s nothing you can do,” he says. The employee just needs to go someplace new or try his hand at a start-up. “You can’t keep everyone.” But you can retain your relationship with the person who’s been poached. “Sometimes the best strategy is to let them go and hope that they miss you and want to come back in the future.”

Principles to Remember

Pay attention to signals that one of your team members may be entertaining offers and ask if there’s anything you can do to fix things
Check in with your team periodically to make sure employees feel challenged and engaged
Identify the employees you cannot afford to lose and devise personalized retention plans for each

Don’t

Jump to a counteroffer; it doesn’t make sense to pay up to keep an unhappy worker
Discount perks like flex-time as a key retention tool; eliminating frustrations can go a long way toward keeping your best people happy
Overreact; some degree of turnover is a natural and necessary part of business

Case Study #1: Stay in touch with employees who leave
Garrett Harker, a Boston-based restaurateur, is philosophical when it comes to poaching. “I have come to understand that there’s give-and-take in the restaurant industry,” he says. “This business has a lot of fluidity.”

Of course, that doesn’t make it any easier to lose bright young talent. Several years ago, Jillian, a rising star at one of Garrett’s top properties, Eastern Standard, came to him with a request: she wanted to be a general manager. “She was talented and had come up through the ranks and put herself through a rigorous wine training,” Garrett recalls. “The problem was I didn’t have anything for her at the time.”

And so, Jillian left for a competitor. “She had an opportunity to open a new restaurant,” says Garrett. Some colleagues at Eastern Standard were frustrated, recalls Garrett. “They felt hurt—people had invested a lot in her,” he explains. “But I didn’t feel that way. I put myself in her shoes and I understood why she left. She wanted a new experience, and she wanted to expose herself to new things. I gave her a hug and told her she’d be great.”

But he made sure to keep in touch with Jillian through email, phone calls, and visits to her new restaurant. “When she had a challenge in her new job, she’d call and we’d talk about it,” he explains. And when Garrett opened a new oyster restaurant in Boston’s Seaport in 2013, Jillian agreed to be its general manager. “She came back to us,” he says. “And to our benefit, she had learned a lot and is a more fully formed individual.”

Garrett says he took two lessons away from the experience: First, “never dissuade someone who’s been presented with an opportunity to ascend and to learn a new skill set.” Second, “It’s so important not to lose contact with your people even when they leave.”

Case Study #2: Cultivate a positive work environment
Jeff Francis, the COO of Copper Mobile, a Dallas-based mobile app development firm, says that poaching is “pretty common” in his business. “Our product is our people, and we have really good ones [so] there is usually a good chance the client will try to recruit them.”

As a result, he sees non-compete and non-solicitation agreements as a necessary tool. “We don’t want to appear hostile to our employees or clients, but we also have to do what’s best for our company,” he explains.

Several years ago, one of his local clients needed a topnotch iOS developer and so Jeff put one of his best guys—we’ll call him Sam—on the job. “Once the customer realized how good Sam was at his job, he came to us and said he wanted to hire him” even though language in the contract between the two companies prohibited it, Jeff recalls.

They tried to negotiate a deal whereby the client would pay Copper Mobile a “placement fee,” but couldn’t come to terms, and the client hired Sam anyway. Disappointed, Jeff reluctantly pursued legal action and won. “I said I would never want to prevent an employee from making the right move for his career or for his family but I was upfront about what was going to happen,” he explains.

Jeff still believes that non-competes are important “preventative measures” against poaching but, following this incident, he is also much more proactive about making Copper Mobile “the type of organization that employees don’t want to leave.”

“Really good developers want to enjoy their work environment, be challenged, feel appreciated, understand how their performance is measured, and be rewarded for great performance,” he says, noting that Copper Mobile hasn’t had any problems with employees being poached in a long time.

How to Teach People About Health Care Pricing

Jeffrey T. Kullgren, MD — Tue, 29 Sep 2015 16:00:52 +0000

Health plans, employers, and state governments increasingly expect Americans to use information about pricing when making health care decisions. After all, the more consumers know about pricing, the better they can budget for out-of-pocket expenses and for routine costs related to chronic conditions, the more intelligently they can choose among providers, and the more easily they can bring pricing information directly into conversations with those providers. Those conversations can lead to more sensible decision making about care, avoiding costly tests and procedures that are unlikely to improve health outcomes. Consumers who are especially knowledgeable and motivated can even negotiate what they will pay for services at their preferred health care facilities, as some anecdotal evidence has shown.

The reality, however, is that most health care consumers are not using pricing information consistently. That’s not as much because the information isn’t available (though it can be tough to obtain) as it is because consumers don’t know precisely how to use it. Educating consumers in how to find and evaluate health care pricing information is essential for capitalizing on its availability.

How consumers use price information now

In an April 2015 Kaiser Health tracking poll, fewer than 1 in 10 Americans reported that in the past year they had seen information comparing prices of hospitals or doctors. And fewer than half of that subgroup said they actually used the information when making health care decisions. A 2014 survey conducted by Public Agenda suggested broader engagement, finding that 56% of Americans had tried to determine the price they or their insurer would face for a service before getting care, not including any copayment. Yet those searches were often limited: Fewer than half of price-seekers compared prices from multiple providers.

Insight Center

Furthermore, there appears to be a gap between the types of information that are and those that are not being reported to consumers. For example, in a study I recently conducted with colleagues at the University of Pennsylvania, we found that 81% of the prices publicly reported on state websites were for billed charges, which often bear little relationship to the payments that providers actually expect from health plans and patients. For services whose quality can vary substantially (such as outpatient surgeries), data on health care quality were reported alongside prices only 13% of the time. Incomplete information prevents consumers from being able to consult a single source to determine what they will get for their money at a given facility.

Price transparency tools have quickly emerged in response to the notion that consumers now have a stake in the cost of health services (because they often pay out of pocket for them) and to the promise of big data, crowdsourcing, and web and mobile technologies. However, the enthusiasm and capacity for reporting prices has outpaced consumers’ readiness to routinely use that information (when they can obtain it) in making health care decisions.

An educational proposal

I am optimistic that we can help more consumers use price information routinely and effectively. Here are three steps that health plans, health care systems, employers, and government agencies can take to make this happen:

1. Supply the right kind of price information. Too many price-reporting initiatives take a kitchen sink approach, listing prices for all possible services, even urgent services that the most stalwart proponents of price transparency would not suggest shopping for. Instead, these initiatives should focus on services that are typically not urgent and are subject to deductibles, reflecting what consumers are actually expected to pay for their care from start to finish. For example, services like radiology tests or other outpatient procedures often include a facility fee and a separate professional fee. Published prices should reflect the sum of all fees that a consumer would face for a service, rather than just one part.

2. Teach consumers how to act like consumers when it comes to health care. Consumers must first understand that prices for health services often vary greatly, even when they should be standardized, and that specifically for non-urgent services, having price information up front can save them money. That advance knowledge makes it easier to budget for use of services, shop around for better prices, and negotiate on price. But such behaviors don’t come naturally to most consumers, at least not in a health care context.

To help people transfer their habits in other consumer domains to health care, ensure that price information is made available and is accompanied by clear, consumer-oriented tips such as these:

Budgeting: Ask your provider to forecast what health care services you will need in the next year. Then, use price information to estimate the costs of these services so that you can save money to pay for them.
Shopping: When your provider orders a service, check whether this service is offered at other nearby facilities at a lower cost for someone with your insurance. Compare prices among facilities by using online tools or by contacting facilities directly.
Talking with providers: Make sure your provider knows if you have a deductible for your care, and keep track of whether you have met the deductible. That’s how you help your provider consider cost when making decisions with you about your health care.
Negotiating: When facilities quote a price for a service, ask if they would accept a lower amount. You might be pleasantly surprised, particularly if you can justify your lower offer with a quote from another facility nearby.

3. Get health care systems and providers on board. For each consumer who reports using price information to save money, many more describe how tough it can be to get price information from health systems. Therefore, health systems need clear, efficient processes to accommodate consumer inquiries about prices. In the near term, facilities should have dedicated staff who provide price estimates to patients on request — and should ensure that providers know how to connect patients with that staff. Eventually, health systems should make plan-specific negotiated payments available at the point of care, such as through electronic health records, thereby helping providers incorporate relevant price information into clinical decisions.

Furthermore, providers should be aware that many patients today have high-deductible health plans and, therefore, face the full price of recommended care. Just as important, providers should help their patients understand what health services they should and should not be spending money on, and assist them in getting the best care at the lowest price. In effect, clinical decisions should account for the potential health effects of services and their costs. For example, one patient might derive value from a $100 blood test, because knowledge of the results will help the patient and provider modify a treatment plan; for another patient, that same $100 blood test might not yield information the patient and provider can act on. In both scenarios, the provider should be firmly at the center of a conversation about the overall value of the test.

Efforts to change the mindset and behaviors of consumers, providers, and health care systems will necessarily be gradual. To facilitate the transition, health plans, health care systems, employers, and government must move from merely calling for more transparency in health care prices to taking practical steps to help consumers capitalize on that transparency and get the most health for their money.

Most On-Demand Businesses Aren’t Actually Disruptive

Shiv Sachdev — Tue, 29 Sep 2015 15:00:32 +0000

Pull your phone out of your pocket, press a button, and almost any wish can be granted.

Call it what you want: an iPhone, a Samsung Galaxy, a Nexus… when you boil it down to its core, it’s a genie in a little aluminum and glass bottle. That phone can make anything you want appear “on-demand.”

The importance of this change is lost on no one. Last year’s WEF Summit on the Global Agenda saw multinational CEOs, academics, and consultants alike preaching the need for business to adapt to the on-demand economy. But for entrepreneurs, investors, and corporate innovators clamoring to build these businesses, it’s important to recognize that not all opportunities in this market are created equal. Namely, more and more of the on-demand businesses we see on a daily basis are being founded atop increasingly weaker value propositions; convenience without any sort of sustainable cost advantage.

When Uber and Airbnb burst on the scene, they were tackling major inefficiencies in the markets for transportation and housing. Uber was not only giving you an excellent on-demand transportation experience, but it was also deploying drivers who would be otherwise sitting idle in their black cars waiting for pre-arranged pickups. An hour of extra drive time cost those chauffeurs nearly nothing and netted them a pretty penny. Given how bad public transit and taxi service both are in plenty of major cities, there was huge appetite for their offering.

Airbnb did the same. After realizing the sheer number of homeowners willing to rent a spare room or empty weekend cottage to a visitor, Brian, Joe, and Nathan built a business to put that unused capacity to work. And like transit, when it came to those extra rooms – renting an extra night created some meaningful revenue and cost the homeowners very little. By letting their valuable room-nights expire, willing homeowners were throwing dollars to the wind.

As Harvard Business School Professor Ben Edelman has long professed, “waste makes for opportunity.” When a company fights this same type of market inefficiency, it can create a sizable business.

But “on-demand” is not synonymous with waste arbitrage or business model innovation. Many of the services being invested in today simply deliver convenience at a premium price – delivering users a sustaining innovation, as opposed to one similar to Uber or Airbnb’s disruptive model. If customers aren’t willing to spend more for what they’re already buying, it’s unlikely that new entrants delivering convenience alone will be able to grow the market itself, making it harder to grow a big business. Markets grow when products become cheaper and more accessible, not more expensive.

So for executives and entrepreneurs looking to ride this trend and start delivering services that fully leverage the promise of on-demand, the question is “How do you tell the difference?” At Sapphire, we’ve developed a framework that helps us evaluate opportunities. Namely, we ask ourselves four questions that help us determine whether on-demand companies are downright disrupters, efficiency engineers, process engineers, or just plain old sustainers.

To find out where a business sits, we ask:

Are you delivering a product or service that would otherwise expire? It’s a simple question. With black cars and rooms for rent, you’ll never get back that unused hour. Once it passes, it’s gone forever. In many industries, there is fixed investment going to waste every day. If you’d determined a way to make use of an expiring asset, you’re likely in a strong position.

If so, how much vanishing value can be saved? To fully determine how much expiring value is available to you, you have to go one step further and ask yourself how much it costs to put that asset to work. If Airbnb caused its affiliated homeowners meaningful property damage, they’d probably be unable to make the economics of the business work – the expiring value would be less than the incremental price required by owners to justify the emotional and physical damage.

Will the business fundamentally change the production process? Some companies in today’s on-demand economy are playing a mindshare game, hoping that if they get enough app-installs or users they’ll be able to figure out a better model at scale. But the key question to expose whether there is substance behind the business is whether the company has fundamentally changed its production process relative to legacy vendors in the market. If they’re not actually doing anything differently, why would they be more profitable?

If so, will the production minimize costs to the business? Delivering products on-demand isn’t cheap. For companies re-inventing the production process, they can often claw back that cost if they have a sustainable cost advantage intrinsic to the model. Maybe they’ve limited the options the customer can choose from, or found a cheaper spot for their warehouses.

Whatever it is, without such a cost saving change in the production process, the model skews towards the realm of sustaining innovation.

Whether you’re Whole Foods, Home Depot, or Amazon, on-demand business models are going to impact the way you satisfy customers. But not every on-demand idea is positioned to upend your operations. Because not all on-demand businesses are created equal. Before you set out to create the next big business, it’s importance to judge the difference.

What Younger Managers Should Know About How They’re Perceived

Jack Zenger — Tue, 29 Sep 2015 14:00:55 +0000

As new managers fill vacancies created by retiring Boomers, how do their skills compare with the seasoned older managers they replace?

Naturally, our assumption was that veteran managers would be more effective on almost every front. To test this out, we explored the data we’ve accumulated on more than 65,000 leaders. We focused on managers 30 years of age and younger (455 leaders) and compared them to leaders over 45 years of age (4,298) to determine the distinguishing characteristics of each group.

Forty percent of the younger group were female compared to 38.5% of the older leaders. This partly satisfied our desire for similarity between the groups. Yet the very fact that the younger managers were promoted to managerial positions at a relatively young age indicated that they were primarily high potential individuals. To be elevated into management at an early age is not common. So already, these individuals stood out. Of the younger group, 44% ranked in the top quartile for overall leadership effectiveness when compared to all leaders in our database. In contrast, the older group had only 20% in the top quartile. This finding sends an interesting message about senior managers.

The 360-degree feedback instrument we use collects data on 49 leadership behaviors. When we matched the scores of the two groups on these 49 characteristics, the younger group ranked more positively on every trait. This is excellent news, indicating there are talented younger leaders in our organizations who will be capable of stepping into key roles.

You and Your Team

However, we also identified a group of behaviors and perceptions that challenge the younger leaders we studied. The following themes emerged:

1. Not fully trusted. Teammates did not always trust the ideas and opinions of younger, less experienced leaders. Their judgment was more frequently questioned. At the interpersonal level, there were issues of trust among the younger managers, direct reports, and peers.

This is a frequent issue we face in coaching young leaders. Older team members are often uncomfortable reporting to a young whippersnapper, making it difficult for young leaders to build positive relationships with their older colleagues.

2. Lacking experience and deep knowledge. Even though younger managers typically have more current knowledge and training, their lack of experience leads others to question their technical expertise and professional skills. Because of their shorter tenure, they also lack in-depth knowledge that others in the organization possess.

3. Not perceived as a role model. Peers and direct reports struggle to see the younger managers as role models. They frequently observe that younger leaders do not walk their talk. Younger managers are more prone to make promises they can’t keep, not because they intentionally mislead others, but because others control outcomes. For younger leaders, the path to success has often come quickly, making it more difficult for them to identify with the struggles of others.

4. Insensitive to others’ needs. Because they have faced fewer life challenges in their careers, younger leaders struggle to balance the need for results with appropriate concern for the needs of others. They are not fazed by the need to work 80-hour weeks and cannot understand why others complain. This is not because they are incapable of caring, but they tend to look past these issues instead of pausing to reflect and respond to the anxieties of others.

5. Not capable of representing the organization. When an organization chooses someone to represent them to a major customer or in a critical meeting, they want someone who looks and feels like the organizational brand and who can answer the difficult questions. Younger leaders are less apt to be viewed as able to fill that role.

6. Lacking strategic perspective. Strategic perspective tends to align with experience in an industry. The ability to look far forward is strengthened by perspective that comes from the past. Younger leaders are perceived as more short-sighted and less strategic than their veteran counterparts. They focus more on day-to-day decisions and put less emphasis on the long-term view.

However, we also found several dimensions in which younger leaders have a significant advantage. Here is where the younger leaders excelled:

1. Welcoming change. The younger leaders embraced change and exhibited great skills at marketing their new ideas. They have the courage to make difficult changes, possibly because their lack of experience causes them to be more optimistic about their proposals for change. They are more willing than their elders to be the champions of change.

2. Inspiring. Younger leaders know how to get others energized and excited about accomplishing objectives. They are able to inspire others to high levels of effort and production to an even greater degree than their more experienced counterparts. Their older colleagues tend to lead by “pushing” while younger managers lead by “pulling.”

3. Receptive to feedback. They are extremely open to feedback. They ask for feedback about their performance more often and seek ways to digest and implement the feedback. Older leaders, in contrast, tend to be less willing to ask for and respond to feedback from colleagues.

4. Dedicated to continuous improvement. This may be the result of having less invested in the past, but younger leaders are more willing to challenge the status quo. They are constantly looking for innovative ways to accomplish work more efficiently and with higher quality.

5. Focused intently on results. They have a high need for achievement and put every ounce of energy into achieving their goals. In contrast, when someone has been in an organization for a long period of time, it is easy to become complacent and to see the status quo as sufficient.

6. Good at setting stretch goals. The younger leaders were more willing to set stretch goals. Some older leaders have learned to sandbag a goal so they don’t have to work so hard or run the risk of falling short. Younger leaders are more likely to set stretch goals and to inspire their team to achieve difficult tasks.

Virtually all organizations will need to appoint younger managers to fill vacancies left by the retirement of long-term predecessors. Understanding the strengths of this younger group is extremely helpful. The ability to leverage these strengths presents a big opportunity for higher productivity.

But awareness of younger leaders’ weaknesses is helpful as well. Some will only be rectified by the passage of time. Others can be mitigated by coaching and careful selection of assignments that give younger managers the experiences required for development. But new managers and the leaders who support them should start soon – the earlier we can address the challenges and shore up the strengths, the more young managers and their organizations will benefit. Too many companies wait years to train their new managers. Don’t be one of them.

When Public Opinion Shifts, How Should Your Company Respond?

Pino G. Audia — Tue, 29 Sep 2015 13:00:20 +0000

In an era when corporate apologies are commonplace, CEO resignations no longer surprise us, and frontline employees are held accountable for their personal social media postings, it’s clear that public opinion matters to business today perhaps more than it ever has. Research has shown that even appointed-for-life Supreme Court justices are not immune to worrying about what others think. In such a heightened environment, how can business leaders know whether they’re responding appropriately to public pressure, or being too reactive? How do we decide when to hold the line and when to shift it?

I became interested in public opinion when I began studying how the social context influences organizational leaders. In one research paper, I suggested that feeling accountable to an audience impacts how decision-makers assess the performance of their organizations. Building on that research, I studied public opinion as a source of accountability pressures. By examining Pentagon press briefings from 2003-2006, I found that as public support of the Iraq War dwindled, the briefings talked less about things such as combat, reconstruction, and rebuilding government—key war performance indicators. Public opposition prompted Pentagon leaders to divert attention to other topics such as the war in Afghanistan and the war on terror and thus be less transparent.

Business leaders face similar pressures—often their response is based on intuition and is subconscious. A conformity process takes hold that is analogous to what we often see when individuals are exposed to peer pressure. Just as asserting your independence from your peers can sometimes turn you into an outcast, businesses that go against prevailing views may see their reputation take a hit. The challenge for executives is to overcome the tendency to focus too narrowly on the competitive environment, so they can tune to other external forces weighing on that environment.

I suggest three tips for tackling this challenge:

Enhance your sensitivity to the world at large. Debates and events regarding social issues that may at first sight appear to be peripheral to the nature of your business may take on much greater significance than one might expect. Being able to identify in a timely manner significant public reactions often requires monitoring hotly debated issues on traditional media as well as trending topics on social media. When the Charleston church shooting occurred, most people expected it to fuel public rage around the issues of gun control and racial tensions. But in the space of hours a less predictable issue came up. An article in The Atlantic calling for the removal of the confederate flag from government buildings was shared more than 500,000 times on Facebook and the hashtag #takedowntheflag was used in hundreds of thousands of tweets. Having monitored this tsunami of public reactions, Wal-Mart, Sears, and Ebay, were able to demonstrate sensitivity to public opposition to the flag by quickly banning the sales of merchandise bearing it.

You don’t have to be the first to respond to shifts in public opinion, but you can’t be the last. The first company to take actions that reflect shifts in public views rarely finds that doing so provides a competitive advantage, but being the last company to make a popular change—or, even worse, being the company that goes against public opinion—can be incredibly costly. In response to shifts in public opinion, for example, major corporations have announced unprecedented increases in minimum wages. Small businesses are now facing the decision of whether to conform or to oppose this movement. My research suggests that doing nothing while arguing that an increase in the minimum wage threatens the survival of a small business and hurts the community is a risky approach. But small businesses like Comix Experience, a San Francisco comic book and graphic novel store, that are increasing the minimum wage while seeking ways to deal with the additional costs are putting themselves in a much safer position than those that continue to resist public opinion.

Watch out for conflicts between public opinion and your company’s values. Deeply ingrained company values, norms, or beliefs can make an organization reluctant to acknowledge societal change. Research suggests that decision makers who’ve publicly committed to certain values are more likely to disregard people who disagree, even when those dissenters are key stakeholders. For example, businesses that incorporate religious beliefs in their identity are more likely to oppose new policies regarding same-sex marriage. Consider the case of senior executives at the food chain Chick-Fil-A who justified their opposition to same-sex marriage by evoking strongly held religious values that were key to the company culture. Negative and costly public reactions followed: mayors prevented the company from coming to their cities; suppliers pulled out of deals; and customers in urban areas boycotted the business.

Organizational values that clash with public opinion are particularly risky because they can strain your company culture—your best bet is to recognize such conflicts early and acknowledge them openly with all your key stakeholders, particularly your employees. Simply acknowledging shifts in public sentiment can be a powerful catalyst for change. As mentioned above, the propensity to conform is a universal human tendency, so explaining why a company is at risk of becoming a social outlier can help promote the need for change.

Is VW’s Fraud the End of Large-Scale Corporate Deception?

Michael Schrage — Tue, 29 Sep 2015 12:05:02 +0000

Volkswagen’s brazen and bizarre “Diesel-gate” deception beggars belief. This sustained and sophisticated software scam suggests truly pathological levels of managerial desperation and contempt: desperation around a failed promise of clean diesel technology and unsubtle contempt for unsuspecting regulators and customers alike. Precisely how gullible did these wizards of Wolfsburg think people would be?

That’s why the real story here revolves less around the deceit than its discovery. An eco-NGO, the International Council on Clean Transportation — not formal regulatory review — effectively uncovered the con. A $50,000 emissions test was run by a West Virginia University lab and its researchers have told reporters they “kind of opened the can of worms” on Volkswagen’s cheating. The discrepancies measured proved neither minor nor marginal; they grotesquely exceeded what the law allowed by 10 times to 30 times. Follow-up tests erased any reasonable, or benefit of the, doubt. Data-driven analysis drove the German giant to confess tampering with 11 million cars.

Little imagination is needed to conjure up alternate scenarios for how this breach could have come to light: surfacing the fraud could have come from, say, environmentally-savvy NGOs offering mobile “pollution/performance” apps for downloading to new-car-buying volunteers. Register the app, get your cheap, easy-to-install biodegradable tailpipe sensor in the mail, drive around for a few days and upload the outcomes. Citizen science at its best.

Or launch Kickstarter-type campaigns to fund serious and statistically significant testing when suspect car models suspiciously and unacceptably underperform. What was unthinkable — let alone impractical — a decade ago is conventional wisdom today. We have Waze for traffic navigation and congestion; why not a Waze for automotive emissions and pollution?

Consider “digital due diligence” emerging as a new normal for the sharing economy. “Analytic activism” and “computational consumerism” become a swipe away.

In fact, all the technical, social, and economic incentives and ingredients exist to cost-effectively deter, dissuade, and detect dishonest behavior by auto manufacturers worldwide. What’s missing is the attitude necessary to become better digital watchdogs. We certainly can’t trust automakers to jump into this role. As Dan Neil, The Wall Street Journal’s excellent automobile reviewer says: “Trust no one.”

Regulators and litigators, take note: Your roles will increasingly involve inviting, inspecting, and adjudicating performance analytics submitted by networked citizen scientists and activists. As social media, disposable sensors, smarter phones, machine learning platforms, savvy consumer activists, self-quantification and the “internet of things” accelerate into the economic mainstream, betting billions on the stupidity of one’s customers becomes a fool’s errand.

Consequently, I believe Volkswagen’s debacle signals the likely end of an era of deliberate corporate malfeasance at scale. Yes, a Fortune 500 company could still deliberately choose to run a multi-billion dollar global fraud. But that wouldn’t be an accident or mistake; it would be a criminal enterprise (although the scope of the criminal charges VW will face remains to be seen.)

This structural power shift is not unique to expensive automobiles; it holds for any and every industry where consumers, customers, and clients demonstrably care about getting their money’s worth. In health care and medicine, where self-quantification and sophisticated diagnostics technologies abound, the future will be filled with reports of unexpected side-effects and serendipity. In food, as well as finance, activists will have to marry meaningful analytics to ideology to spark interest and wield influence. If 500,000 dietary self-quantifiers discover their premium health food offers 10 times to 30 times more empty calories than promised nutritional benefits, then look out.

Crowdsourcing innovations will dominate consumerism and corporate social responsibility initiatives alike. Data-driven critics will need to be at least as transparent as their targets. You can bet that tomorrow’s Amazons, Googles and Facebooks will be alerting — or warning? — their users to potential problems with the products and services they consume. We’ll see predictive analytics suggesting that this pharma company, that lender, or these telecom providers are likeliest to cut corners or cheat on quality and delivery.

In other words, consumers and regulators alike will increasingly get sophisticated information and advice about who might be the next Volkswagen.

Today’s Volkswagen likely deserves every bad thing it has coming its way for any deliberately bad choices and behaviors. But the more important revelation for C-suites worldwide is that your best customers increasingly have the ability and incentive to become your worst enemies, should you deceive them. The ongoing marriage and mash-up of qualitative and quantitative review — how the Googles, Twitters, Amazons, Yelps, Carfaxes, Edmunds, etc. of tomorrow will aggregate, synthesize, and analyze user data — should make perpetrating Volkswagen-esque frauds remarkably more difficult. And that’s good news for all of us.

Editor’s note: This post has been updated from its original version.

Why Apple’s New iPhone Upgrade Plan Is Driving Growth

Rafi Mohammed — Mon, 28 Sep 2015 17:15:42 +0000

HBR STAFF

You have to hand it to Apple. What other company incites such a frenzy when it releases an updated version of its product? The recent iPhone 6S release went as expected: winding lines of eager consumers at Apple stores and fevered media coverage. Apple announced over 13 million units were sold during that first weekend. While strong reviews fueled consumer interest, credit should also be given to Apple’s new iPhone Upgrade Purchase Plan. This pricing plan provided another purchase option to consumers and, just as importantly, made Apple more of a rival to the cellular carriers that sell its smartphones.

Apple’s iPhone Upgrade Purchase Plan combines the retail prices of both a selected iPhone 6S and its AppleCare+ enhanced warranty – then divides this total amount into 24 equal monthly payments, with no interest added on. After the 24 payment commitment is fulfilled, the purchaser owns the phone. However, after 12 months of payments, the buyer has the option to upgrade to a new phone. Doing so resets the agreement clock, meaning the buyer is on the hook for 24 more payments. Plus, the phone is unlocked, meaning purchasers can select whichever cellular carrier is the cheapest and switch at any time.

Why did Apple offer this new pricing plan? The multinational technology company suffers from what I call a “curse of awesomeness” – it’s under tremendous pressure to continue breaking sales figures. For the first few iPhone generations, first weekend sales of 1 million units were the norm. These closely watched “opening weekend” sales jumped to 4 million in 2011 and climbed to 10 million last year. If this weekend’s sales hadn’t handily beat last year’s 10 million marker, the new iPhone would have likely been deemed a failure. Apple understands new pricing plans can generate growth – in this case, by promoting more frequent upgrades. (And just for the record, I do own some Apple stock.)

There’s a strategy here that other companies can learn from. Every manager needs to realize their company’s “pricing strategy” is composed of two key components: the actual price and how customers pay. First is the decision around the price tag: Should it be $74.99 or $80? But just as important are the types of pricing plans or how customers pay. A new pricing plan can activate dormant customers – those who are interested in purchasing but haven’t because the way to pay isn’t attractive to them.

For example, a colleague recently was choosing between two dentists to perform expensive dental work. She went with the one that offered a payment plan. In a similar vein, a friend takes his family to all-inclusive resorts because, as he tells me, “Rafi, it’d kill me to see my kids drinking $5 sodas on the beach all day.” In both instances, price wasn’t the key issue; instead the plan – how customers pay – is what made the sale.

The iPhone Upgrade Purchase Plan provides a seamless opportunity to frequently upgrade. Intrigued by the latest model? Pick it up at the Apple Store and the monthly payment – which is already incorporated into your budget – doesn’t change. It’s like getting the latest technology for “free.” Leasing has transformed the luxury automobile market in a similar way, by making high-end cars more affordable for a wider swath of consumers, and the shift to a lease-like pricing plan for Apple’s smart phones is already having a dramatic effect.

It’s fair to ask, since many cellphone carriers also offer plans that encourage upgrades, why does Apple need its own plan?

Better monetizes customers. As the number one most respected and admired company in the world, many customers prefer dealing directly with and shopping at Apple. Strengthening customer relationships provides opportunities to promote other products. In addition, the simplicity of Apple’s upgrade plan is attractive. AT&T, for example, has four different early upgrade options. Bundling AppleCare into the plan also boosts sales of this extended warranty product.

Boxes in wireless carriers. Apple desperately needs cellular providers to encourage frequent iPhone upgrades. By rolling out its own upgrade plan, Apple is putting carriers on notice that if they don’t continue offering similar plans, they’ll lose customers.

Promotes competition amongst wireless carriers. By providing a new buying alternative to customers, wireless companies were strong-armed to provide attractive iPhone deals. Last week, for instance, Verizon – which hadn’t offered an early upgrade option – announced a new plan that allows customers to upgrade iPhones annually. Feeling the heat, T-Mobile and Sprint dueled with discounts, touting opportunities to lease a new iPhone for as low as $5 and $1 per month respectively. Increased sales brought about from this intense competition alone makes the Upgrade Purchase Plan a big success.

Every company isn’t like Apple. But every manager can learn from Apple’s success. Pricing is far more creative than a rudimentary two lever “up or down” strategy. As Apple has shown, new pricing plans can generate substantial growth.

What to Do When Your Personal Growth Stalls

Whitney Johnson — Mon, 28 Sep 2015 16:00:25 +0000

We’ve all hit a wall at some point. You may run up against a competitor you cannot beat. You might lose your job despite your best efforts. You could be doing everything you can – but still not getting that promotion. But whatever the cause, what feels like a roadblock could be your first step on a new growth journey – as long as that step is backwards.

When you can’t go forward, the only way to keep moving at all is to take a step back. As entrepreneur Barbara Corcoran shared on the TV show Shark Tank when talking about starting Corcoran Real Estate, the tony residential brokerage firm in Manhattan, “By anyone’s standard I was a success. But I knew I was going bankrupt. And you know what I did – I went out and took a full-time job while I worked my business. There is nothing wrong with stepping back before you go forward.” As we see from Corcoran’s experience, sideways or backwards sometimes turns into a slingshot.

We see this all the time in the corporate strategy world – companies that have hit a wall take a step back, reassess, and then move forward. Consider Tractor Supply, founded in 1938 to sell tractor parts to the six million farms in the United States. Growing steadily, the company went public in the 1950s. But by the late 1960s, due to more reliable tractors needing fewer replacement parts and the decline in farms from 6 million to 3 million, Tractor Supply was struggling. Over the next twelve years, Tractor Supply was acquired twice, and had five different presidents. After seeing a significant number of store closings and a revenue decline to $100 million, several key executives participated in a leveraged buyout in the early ’80s.

The new owners plowed into the data and discovered that, while the number of commercial farmers was decreasing, hobby farming was on the rise. This suggested a strategic pivot away from supplying tractor parts, and toward general farm and ranch supplies. Says former CEO Joe Scarlett, “One of our key goals was to become the pet supply store for people who own horses.” Today, Tractor Supply has grown to 1,400 stores, three times more than its next five competitors combined, with revenue north of $5 billion, and is a successful chain of stores for home improvement, agriculture, lawn, and garden care.

Of course, Tractor Supply is not alone – they were doing what so many startups do. According to Tufts’ University professor Amar Bhide, 70% of all successful new businesses end up with a strategy different than the one they originally pursued. The sequence of events for these companies is almost always the same: step back, reassess, and then pivot or jump to a new strategy.

So when you feel like you’ve gotten stuck in your own personal growth journey, take a page from their playbook. Ask yourself: why have I stopped growing? What does the data tell me? And what adjacent areas might let me grow again? Then take a deep breath – and a step back.

When we’ve gotten too close to a wall, it completely fills our line of sight, preventing us from getting an accurate view of our surroundings. It’s like the mobile game Close Up. First you see an extreme close-up of an object, but then the frame slowly pans out, revealing what the object really is. Until the camera pulls back, it is nearly impossible to identify what you’re looking at.

Many people struggle with stepping back because of the psychological ramifications. For some, stepping back is tantamount to admitting they’ve failed. Others may believe they are tougher than the wall and can simply smash their way through. Still others just want to ignore the reality of their situation, continuing to spin their wheels until they run out of gas. How many of us have said to a recruiter, “I can’t take a lower salary” or “Any move has to be a step up”?

This type of rigidity can be disastrous, while flexibility and a willingness to pivot can greatly enhance your chances for success.

Profit Is Less About Good Management than You Think

José Antonio Marco-Izquierdo — Mon, 28 Sep 2015 15:00:39 +0000

STEVEN MOORE FOR HBR

Benjamin Graham, the father of value investing, seldom met the managers of the companies he invested in because he felt they would tell him only what they wished him to hear and because he didn’t want to be influenced by impressions of personality. His talented student, the legendary Warren Buffet, thought the same: “when management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.”

Value investors like Graham and Buffett believe that the sources of sustainable returns on capital are not a company’s human assets but their so-called “economic moats,” structural, durable competitive advantages around revenues or costs. Revenue moats are usually linked to intangible assets (including brands and patents), high switching costs, and network economies. Cost moats are linked to the ownership of cheaper or faster processes, favorable locations, unique assets, or firm size. In some cases, companies’ moats have enabled them to survive multiple technology disruptions and industry shifts over time, making their founders some of richest people in the world: think Bill Gates, Carlos Slim, Amancio Ortega, and Larry Ellison.

There’s an interesting fact about companies with these kinds of moats or competitive advantages that often gets overlooked: the turnover rate of CEOs among the S&P as a whole is between ten and twenty times higher than in the big entrepreneurial successes of the past few decades. A case in point is Inditex, founded in 1963 and now the biggest fashion group in the world, which has only had two CEOs succeed founder Amancio Ortega. By contrast, Germany’s Deutsche Bank, which has suffered from years of poor performance, has had three CEOs in the last five years, none of whom has done much to improve performance despite their glittering CVs in the sector.

This raises a basic question: can a CEO with the best track record imaginable turn around a poorly performing company? According to MIT economist Antoinette Schoar the answer is yes roughly 60% of the time, which is not that much better than the odds of getting heads on a coin toss.

Chicago’s Steve Kaplan’s findings on the difference that managers can make are even more sobering. He studied the relative importance of management teams in 106 venture capital-financed firms from early business plan to IPO. He found that although 50% of venture capital investors described the management team as the most important factor at the business plan stage, this emphasis had dropped markedly by the IPO stage. He concluded that non-human assets — i.e., their moats — were ultimately more important to firms than human assets, with their relative importance increasing over time. The implications are clear: first choose the right industry and company, then pick the right management. If the managers don’t perform, they can be swapped out much more easily than the basic business idea or industry.

Of course, in a highly competitive world, even a slim advantage is better than a coin-toss. So is there something different about the managers who do succeed? Let’s go back to Steve Kaplan, who has also studied how and why CEOs matter, relating their features to hiring and firm performance.

His detailed assessments of over 300 CEO candidates in private equity-funded companies suggest that CEOs with execution strengths (“efficiency”, organization and planning”, “attention to detail”, “persistence”, “proactive”, “sets high standards”, etc.) perform better than CEOs whose softer skills such as team building or listening dominate. This finding is a ringing modern confirmation of what Peter Drucker was telling us in 1967 about what makes executives effective.

If all this is true, then the high CEO turnover you see at many public companies is not a symptom of poor management. It suggests a deeper problem, which is that the companies in question simply don’t have a competitive advantage and are simply engaged in a lottery, hoping to find a CEO who can find one. The odds aren’t favorable.

Understanding Health Care’s Short-Termism Problem

Amitabh Chandra — Mon, 28 Sep 2015 14:00:37 +0000

“Paying for value” is one of the most overused tropes in health care today. It is also the least well understood, because its meaning is manipulated by each stakeholder. To those who pay the bills — employers, health plans, and even the government — value often means paying as little as possible for services. To patients, many of whom do not pay the full price of the care that they receive, value often means better outcomes regardless of cost.

The right way to think about value in health care delivery is a stream of benefits accrued over a lifetime that is attractive relative to the price paid to acquire them. It is equivalent to the financial sector’s definition of a “value stock”: one with solid fundamentals, priced below its peers, and hence a good investment. But while this notion is uncontroversial in finance, it is disruptive in health care (and education) where we tend to exaggerate the importance of immediate costs and take a myopic view of benefits.

Take for example the case of schizophrenia, a rare but serious mental disorder (as anyone who has read Sylvia Nasar’s touching biography of economist John Nash can attest). Unfortunately, not everyone afflicted with schizophrenia is a future Nobel laureate. Many are poor and disenfranchised, and often on public insurance programs. The social costs are high: Mentally-ill people are more likely to be arrested when stopped by the police, and more likely to be convicted and incarcerated.

Insight Center

Historically, schizophrenia was treated with severe methods, including electroconvulsive therapy — which, while effective in the short run, showed little long-term benefit. In the 1990s, a new class of atypical antipsychotic drugs were introduced into therapy. They quickly became a preferred mode of treatment but at high cost: atypicals now account for almost 15% of Medicaid spending.

This has made atypicals a ripe target for budget cuts by U.S. states. Many Medicaid programs have implemented limits on use — for example, by requiring prior authorization, limiting the quantity dispensed, or by requiring step therapy so patients must start on one particular brand. These approaches unambiguously reduce short-run spending.

The problem is that schizophrenia is an idiosyncratic disease, and without access to atypical antipsychotics, patients are at greater risk of uncontrolled symptoms. Research shows that states with more restrictive policies towards atypicals end up discouraging treatment (and encouraging spending on other health care services) and have higher rates of mental illness in their prisons. The bottom line is that myopic policies designed to reduce spending on schizophrenia lower costs in the short run but increase costs in the long run.

The fragmented nature of U.S. health care means that most payers responsible for pharmacy care aren’t thinking about the protective benefits of atypicals on the prison system. But a focus on value — with appropriate measurement of the long-term return — would result in better coverage policies for atypicals and better outcomes for society.

This issue has salience in other areas, including hepatitis C virus. Much has been made of the costs of these drugs. However, these drugs eliminate the virus with up to 99% effectiveness in some genotypes and few, if any, side effects. Very few drugs have this level of cure. Since patients cured of Hep C are unable to transmit the disease, this means that for each patient cured through these drugs, several more will be saved from ever contracting the disease in the first place. We can realistically talk about eliminating hepatitis C in the United States. The value of doing so will run into the hundreds of billions of dollars, suggesting there must be some way to appropriately reward the innovators while ensuring access for everyone.

A value-driven health care system would deploy immense energy to solving this problem, including allowing states to borrow money from the Federal government (since the virus easily crosses states boundaries) to pay for these treatments. It would recognize the value of the treatment, instead of focusing on the price of drug and pursuing strategies that reduce access because the disease is prevalent and the treatment is expensive.

Short-termism is not restricted to drugs; it pervades all of health care. Consider the case of robot-assisted surgery. For hospitals, the acquisition and maintenance of a robot requires a significant investment, but hospitals that deliver better patient outcomes are not paid more. This is the opposite of value-driven healthcare.

Kidney cancer provides a useful case study. These cancers are typically best treated through partial or full removal of a kidney, with evidence favoring the former. It turns out that robot-assisted surgery increases access to partial nephrectomy and that partial nephrectomy reduced mortality and renal failure. The benefits, appropriately quantified, outweigh the gains by a ratio of five to one, with no increase in inappropriate surgical choices. Yet hospitals are not paid more for these long-term outcomes, and hence there is no incentive to use these technologies.

A value-driven payment strategy would not pay hospitals more for using robotic surgery but would certainly pay hospitals than produced better outcomes more. Often this strategy would involve not paying for expensive treatments that increase survival by a day or two, or incrementally, but have no long-term benefit. This would encourage adoption of technologies that work and penalize those that don’t work but whose generous reimbursement makes them highly profitable.

The lessons of value-driven health care are not limited to payers. Even patients — who perhaps have the most to gain by taking a long-term view — are notoriously responsive to short-term incentives and often ignore the future benefits of therapies. Getting people to take drugs that work, even patients who have just survived a heart attack, poses a challenge for behavioral economists and physicians.

We know, for example, that raising the copayment for high-blood-pressure medication by only $10 per month will reduce adherence of people with hypertension by as much as 25%. One study found that when insurers responsible for drug benefits in Medicare (which insures the disabled and Americans over age 65) increased cost sharing by $5 to $10, patients with chronic diseases cut back on their drugs, and some ended up in the hospital. Unfortunately, when Medicare patients are in the hospital, the government ends up paying the cost rather than the private insurer in charge of the patient’s drug benefits.

A value-based design would avoid a blunt approach to drug coverage. Instead of fixed copayments for all drugs, it would allow copayments to vary with clinical need. Drugs with little demonstrated efficacy would cost more. But, unlike antihistamines, it’s hard to overuse diabetes drugs or beta-blockers. These medications keep patients out of the hospital, and society has an interest in charging nothing for them. In some cases, it may even make sense to have negative copayments — that is, pay patients to take their drugs.

Similar incentive problems are likely to arise when different insurers are responsible for an individual’s medical costs at different ages. Insurers responsible for our care when we are in our in 40s and 50s are unlikely to make investments in prevention that accrue to Medicare. This may be why the treatment of those afflicted with hepatitis C, which sometimes takes a decade to develop symptoms, poses such a vexing challenge.

It is also why single-payer plans, which internalize the long-term benefits for a single insurer are better than our fragmented system at measuring total costs and total benefits — such as offsetting rates of criminal recidivism as a result of using antipsychotics, or benefits over the life cycle of a patient’s illness as opposed to until age 65. Therefore the challenge is to figure out how to create develop policies — and markets — to reward long-term benefits appropriately.

How Meetings Differ, from Stockholm to New Delhi

Erin Meyer — Mon, 28 Sep 2015 13:00:20 +0000

It was a cold December morning in Stockholm and I stomped my feet briskly while waiting for the bus. When the bus pulled up the woman closest to the door hurried on and I stepped forward happy to follow her. Although I had been oblivious to the loose queue my fellow passengers had formed, I could scarcely miss the angry coughs they directed my way when I boarded before them. Cutting in line — even inadvertently — is a cultural crime in Sweden.

In linear-time cultures like Sweden (or Germany, the US, Japan, or the UK) the emphasis is on doing one thing at a time, in proper order, including mundane but important activities like attending a meeting. Most people share the assumption that a meeting should look like a Swedish line. An agenda is sent out in advance with start time, end time, items to discuss in order and sometimes even for how long. If an attendee tries to “hijack” the meeting by bringing up something not on the agenda, someone is likely to say, “This isn’t scheduled, so let’s take it offline” or “People! A little discipline, please! ” In these meetings you shouldn’t talk to your neighbor at the same time someone else is talking, take cell phone calls on the sidelines or leave the room. As items come up requiring action — as in Sven needs to contact Lotte to get prices from three suppliers — those items get noted down and sent out in a meeting recap so that Sven can make that call and the choice of supplier can be discussed at an “appropriate” pre-scheduled time.

A few weeks after my chilly trip to Stockholm I found myself in New Delhi for a series of meetings about a new training program. India is a highly flexible-time country (as are Saudi Arabia, Brazil, and Nigeria, for example). Our first meeting was properly scheduled. But, about ten minutes in, people in the room seemed to be breaking into sub groups and talking about other important topics that had unexpectedly arisen. Three attendees were huddled together discussing how we could record sections of the new program. Sapna and Rakesh left the room in an animated debate about the seating plan, only to return five minutes later with Varun, who had important technical information to contribute. The main discussion continued simultaneously and action items arose — such as Nitin needs to contact Rishi to assure the date is now 100% finalized. But to my great surprise Nitin picked up the phone right there and then and made the call while the rest of us continued the meeting.

At first I was frustrated. Why weren’t we following a line? Was anything getting accomplished? Why was everyone wasting everyone else’s time? But after a while, I began to see the beauty in the process. At the end of the morning we didn’t need a list of who needed to do what because Nitin had already contacted Rishi, Sapna and Rakesh had already settled the question of seating, and we didn’t need to find out if Varun was available next Tuesday at 3pm, as we had already tracked him down and settled everything then and there. Not everything on the agenda had been handled and some things spilled over to the next meeting, but other unexpected items had been taken care of on the spot in what was now clear to be a completely non-linear yet highly efficient manner.

That evening I had dinner with Rakesh and mentioned my Swedish line analogy for meetings. Rakesh explained, “We are more flexible in India. Perhaps it’s because we grew up in a society where the currency wasn’t stable and governments could change regulations on a whim. But Europeans and Americans are more rigid. Such as your idea that it is important to close one box before opening the next.”

It’s not just India. Most emerging and recently emerged markets value flexibility over linear planning. And that makes perfect sense: when things are changing rapidly, the most successful business people are those who are just as adaptable as the environment around them.

Later, over coffee, I remembered what an Indian student had told me about the “evergreen tree process” of queuing back home. When it is necessary for a line to form some eager individuals will form the initial trunk of a tree. Then, when the trunk begins to look too long, a few newcomers will create their own lines by standing next to, say, the fifth person in the trunk and implicitly suggesting that others line up behind them to form multiple branches. This process continues until you have a human evergreen tree, a single-file trunk of people waiting with enthusiastic branches sprouting and growing on both sides. Perhaps my “queue analogy” for meetings works in India after all.

For the international business person there’s no use in stating which type of culture you prefer or in getting frustrated about other ways of doing things. Of course it’s natural for us to experience our own culture’s style as normal. But, on reflection, we can see that each culture’s approach has advantages and also disadvantages. The great beauty of working across the world is to see the rich and totally different ways that people choose to get things done.

The Best Managers Are Boring Managers

Tomas Chamorro-Premuzic — Mon, 28 Sep 2015 12:05:43 +0000

What would the perfect robot manager be like? Looks aside, it would arguably be objective, transparent, unselfish, and apolitical. Because of this, it would assign the right task to every person and reward unselfish team behaviors, creating a culture of trust and keeping morale high. It would monitor individual and team performance with the precision of the best quantified-self app, and provide real-time feedback to boost everybody’s productivity. Undoubtedly, it would operate according to data rather than intuition and make only evidence-based recommendations. In short, the perfect robot manager would be utterly predictable – and completely boring.

And yet dullness is not how most organizations choose managers today. Instead, they look for flash and vision, and bold displays of confidence – whether or not that translates into actual competence. Indeed, despite the vast body of knowledge – including independent scientific evidence – on what makes a good manager, too many people get promoted to management positions based on past technical expertise or their previous individual job performance, so they end up, in effect, transitioning from skilled labor to unskilled management.

This problem can be mitigated if we are able to assess managerial potential more effectively. And the barriers to achieving this have less to do with finding the right tools to assess managerial talent than our inability to understand what we should be looking for. You can have the best tools in the world but if you are really good at measuring the wrong thing then your problems won’t go away.

So, what does a boring – and very good – manager look like?

First, let me explain in more detail what I mean by “boring.” In psychology, the technical – and less socially loaded – term is emotional maturity. It is mainly a function of being emotionally stable, agreeable, and conscientious. Unsurprisingly, we all become more “mature” (boring) as we age. In any culture people are more volatile and antisocial during their teens, and they become more conforming, conservative and rule-abiding as they grow older. Although this tends to have a negative connotation in much of the Western world – which avowedly values creativity, disruption, and individuality – it is clearly an asset when it comes to managerial potential.

In the most compelling and comprehensive synthesis of independent scientific studies about managerial competence, Tim Judge reports that effective managers tend to be highly adjusted, sociable, friendly, flexible, and prudent. They are, in fact, the reverse of the famous self-made billionaires and tycoon entrepreneurs we often use as examples of great leaders. Imagine working directly for Steve Jobs, Jeff Bezos, or David Rockefeller; it may sound great, but most people are happiest working for people who are the exact opposite. As Michael Maccoby pointed out in an influential HBR essay, these entrepreneurial leaders “tend to be poor listeners who are sensitive to criticism and demonstrate low levels of emotional intelligence.” In addition, it should be noted that people who are as ruthless, impatient, demanding, and excitable as Jobs and Bezos usually lack the genius to get away with it, so they are much more likely to derail than to invent the next Apple or Amazon.

Second, as you transition from individual contributor to manager, you shift your focus from solving technical problems to solving people problems. To achieve this, you need to be able to delegate in order to concentrate on your team members. This makes emotional labor a key quality in managers. Much as in the service industry the best performers can connect emotionally with the customers, when you are a manager you need to be able to connect emotionally with your subordinates. As an employee, you labor to manage your own emotions; as a manager you also labor to manage other people’s emotions. This depends on having quality interactions with your team, and you can only do this if you are calm and cool-headed, if you are able to display strategic emotions – which involves a fair amount of faking it – and if you are capable of understanding that it’s not really about you.

Again, when we think of classic charismatic or colorful leaders, you get a very different type of profile. To have emotional intelligence is not to be overwhelmed by emotions and unwillingly leak non-verbal communicational cues; it is about having low emotional reactivity and being as phlegmatic as the Queen of England. As psychological studies have indicated: “The most effective leaders are found to be those who operate from a stable center, who are personally grounded, other-directed and create the kinds of secure and supportive environments where creativity and productivity thrive.”

Third, what people value most in a manager is integrity, which is best conceptualized as an attribution and assessed via others rather than self-ratings. The best way to predict counterproductive or unethical work behaviors is by asking subordinates to report on the probability that their manager will, in not-so-subtle language, screw them over. And once again, it is boring managers who take the prize: the fewer dysfunctional dispositions or dark side personality traits they display, and the more predictable, reliable, and, yes, boring, they are, the higher they’re rated on integrity, and the more morally they behave. This issue reminds us of the many famous case studies of leaders who are clearly brilliant from an expertise or competence standpoint, but morally feeble: Sepp Blatter, Bernie Madoff, and Pablo Escobar come to mind.

In brief, it is time for organizations to understand that their best potential managers are not the people who stand out; they are not the people who self-promote and take credit for others’ achievements, or have mastered the art of politics and upward career management. They may lack charisma and have no remarkable vision for the future, yet they are probably the best people to help execute the company vision and ensure that staff stays engaged and productive.

A First-Time Manager’s Guide to Leading Virtual Teams

Mark Mortensen — Fri, 25 Sep 2015 16:00:22 +0000

In the past, new managers often had the luxury of cutting their teeth on traditional collocated teams: groups of people, sitting down the hall from one another, who met up in conference rooms to hash out what they were trying to achieve and how to get there. Unfortunately, today’s increasingly global work environment does not always afford that luxury. Many first-time managers find themselves assigned to a team of subordinates scattered far and wide.

Managing a distributed team can feel overwhelming as it requires you to navigate many different types of distance: geographic, temporal, cultural, linguistic, and configurational (the relative number of members in each location). Every one of these dimensions affects team dynamics and, therefore, has an impact on effectiveness and performance as well. Daunting as that may seem, there is good news in the form of a large and ever-increasing body of research and best practices on how to increase your odds of success. But first, it’s important to understand which aspects of team dynamics are, and are not, affected by distance.

The effects of distance

While all of the different types of distance listed above affect us, they do so primarily through two core mechanisms: shared identity and shared context. Understanding these will help you develop a much more targeted plan of attack for managing from afar.

First, distance affects how you feel about people. Dealing with the types of distance listed above (often grouped together and labeled “locational”) triggers a sense of “social distance” – an unshared sense of identity, or a feeling of “us vs. them.” A lack of a shared identity has a far stronger impact on team dynamics than any of the types of distance individually. In an experimental field study I conducted with Michael O’Leary, for example, we showed that unshared identity arising from social distance increased coordination problems and reduced group cognition in the form of transactive memory. When teams function with high levels of transactive memory, they know where different knowledge is held in the team and how to access it. For instance, if everyone knows that Hector is a talented forecaster, the team will save time by assuming that Hector is responsible for any new information regarding forecasting. When transactive memory is impaired, however, the efficiency of the group suffers.

Similarly, a study conducted with Pamela Hind found that this sense of us-vs.-them significantly increased levels of conflict within the global R&D teams of a Fortune 500 petroleum firm (in fact, a top five Fortune 500 company).

Second, distance affects what you know about people. Catherine Cramton refers to this concept as “the mutual knowledge problem,” but put simply, it means that you don’t know what they know – and vice versa. Why does this matter? Because a shared sense of context, a shared understanding of not only what you do but how you do it and why, is a key driver of your ability to coordinate and collaborate. Teams with a shared understanding are more efficient. They don’t waste time ensuring everyone is on the same page and they have fewer issues with miscommunication. In the R&D team study mentioned above, we found that unshared context was a particularly strong driver of task-based conflict, or disagreements over the work being done.

Taken together, this means that when assessing the effects of distance on your team, you need to keep in mind both how you feel, and what you know, about your distant colleagues.

Though it may come as a bit of a surprise, distance doesn’t change the fundamental rules of the game. A global virtual team is first and foremost a team — just because yours is distributed doesn’t mean you should discard the prevailing wisdom about how the most effective teams operate. You need to arm yourself with a good model of team effectiveness and use it to assess and improve team dynamics and processes. A model provides structure and will help you organize your efforts as you tackle management for the first time. This is especially important for those who are dealing with the added complexities of distance.

Managing the effects of distance

First things first: don’t panic. Remember that global, virtual, distributed teams are composed of people just like any other team. The more you and your team members can keep this in mind, the better your results will be. As the manager, encourage everyone to engage in some perspective taking: think about how you would behave if your roles were reversed. This is a small way of reminding your team that collaboration isn’t magic, but it does take some effort.

Second, remember the basics. Arm yourself with a well-tested model of team effectiveness and use it to help structure your thinking. There are, of course, many models out there. For me, J. Richard Hackman’s Team Effectiveness Model is an excellent starting point. It’s based on a massive amount of rigorous research across a wide range of teams. This model stresses the importance of the team goal. Building on Hackman’s work, my own research (paired with evidence collected in executive classrooms) shows that if you do only one thing, ensuring that the team’s goal is clear, challenging, consequential, and commonly-held yields the biggest benefit. This holds true whether your subordinates are down the hall or around the globe.

In the end, being mindful about your team process is more important than which particular model you choose. Take that model and use it to assess how you’ve done, where you stand, and where you are going.

Third, think (and talk) about how to overcome the negative effects that a lack of shared identity and shared context can have.

To help your team combat us-vs.-them thinking, reinforce what is shared: the team’s purpose. All teams are designed to achieve something and if the team is designed well, team members depend on one another to accomplish their goal. Remind your team that you are all working to the same end and that you need each other to get there. Doing so at the outset and intermittently throughout the project will help you build a strong sense of shared identity.

A shared understanding comes from sharing information. Team members working at a distance need to make an effort to understand what is happening in each person’s local context. Importantly, that includes information not only about the work being done but also about the environment in which people are working (ex. structural changes, office politics, even personal life events). All of these affect the psychology of your dispersed colleagues and, therefore, how they react to you and the rest of the team.

One last note — it’s easy to get fixated on either information or interpersonal dynamics to the exclusion of the other but that paints an incomplete picture. You need to consider the effects of both and how they reinforce one another. I always encourage team managers to have regularly scheduled check-ins not just to measure progress towards the team’s goal but to discuss both its context (what it knows) and identity (who it is).

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