Category Archives: *Harvard Business Review
Keeping Your Business Model Afloat Before It Goes Under Water
At some point in our lives we’ve all had that nagging worry of being replaced or displaced by someone younger, smarter, better looking, or more talented. Well, navigating the business world is much the same. You’ve got to be vigilant and constantly on the lookout for new products or services that come to market and threaten to steal your client base.
The best way to protect your organization from a typhoon that could be heading your way is to accurately assess the current state of your business environment, and compare the pros and cons of the goods or services you provide against those of potential threats or “disruptions” to your business. Disruptive innovations are those products that possess technological or business model advantages over their competitors. These advantages enable them to gain traction and maintain their industry status as they become more advanced and continue to gain market share.
Wessel and Christensen provide a basic framework through which you can accurately evaluate whether a threat is looming on your horizon, and if so, plan a strategic response accordingly. First off, identify the strengths of your disruptors’ business model, or their “extendable core.” What are your competitors doing really well that is allowing them to expand their market share and gain traction? Next, identify what your organization’s strengths or areas of competitive advantage are, and why consumers turn to your company to meet their needs. What aspects of your competitors’ “extendable core” may enable them to develop better products or offer better services, but in what strategic spheres might you still have a clear advantage? Finally, look to the future. What conditions could enable a looming disruptor to subsume your business and what circumstances might thwart or hinder its hostile takeover within your domain?
Consider online grocers, for example. Consumers love that they no longer have to drive to the store, search for their items, stand on long lines and drive all the way back home again. With one click of a button you can have everything you need brought straight to your door. At the same time though, your local supermarket or grocery store serves its purpose for last minutes runs to pick up ingredients for dinner. Also, there’s something about being able to squeeze your tomatoes before you buy them that online grocers will never be able to compete with. Online grocers certainly have a clear advantage when it comes to nonperishable, staple items that people stock up on. However, the necessary changes to their business model that would allow them to meet consumers’ last minute shopping needs would destroy their competitive advantage.
Good Stats Make Us Uncomfortable (IO Psychology)
Topic: Organizational Performance, Statistics, Strategic HR
Publication: Harvard Business Review (OCT 2012)
Article: The True Measures of Success
Authors: M. J. Mauboussin
Reviewed By: Megan Leasher
In striving for profitability, companies often rely on key indicators of organizational performance. Common indicators like sales growth, customer loyalty, and earnings per share often guide strategy decisions and resource allocation. But sometimes key indicators may not be that “key” after all. They may have little or no true connection to profitability.
Organizations might not be aware of this and continue to rely on these same measures because they feel as though they matter. Their intuition overrides everything else and as a result they don’t do the due diligence to determine what actually leads to profit. They become overconfident, grab onto any numbers that are easily available, and rely on things they have always looked at in the past. They choose what they like and what feels comfortable. But they don’t actually analyze. So how can we know if something truly predicts value? We cannot leverage something we don’t know.
This article focuses on identifying indicators that serve as true statistical predictors of value. The author emphasizes that for an indicator to be truly connected to value it must be both predictive and persistent. Indicators that are predictive demonstrate a statistical link to value; a link strong enough that we feel confident saying there is a connection that has meaning and is not due to chance. Indicators that are persistent stand the test of time; they reliably show that that an outcome is controlled by applying skill or knowledge, and is not random.
The author advocates several steps in selecting the best indicators of organizational performance. These steps include defining a clear business objective, developing theories to determine what measures might link to the objective, and statistically testing the relationship between the measures and the objective.
As I read these steps they made complete sense to me, but my data-happy left brain went nuts, thinking about others questions that should be considered. Like: “What else do we already measure?…Could it matter?” and “What else can we measure?…What else should we measure?” and “What other viewpoints are we not taking into account?” and “What curveballs could come our way?”
Sometimes a meaningful statistic can push us out of our comfort zone. Actually, sometimes a meaningful statistic should push us out of our comfort zone. It might not make automatic, inherent sense to us, especially at first. If all statistics made complete, gut-happy sense to us we wouldn’t need them. We could always rely on our intuition because it would always be correct. But statistics are useful because they not only tell us how meaningful things might be related; they can surprise us with the sheer fact of what things might be related.
If a predictor of success isn’t pointing in the direction of success, it’s not a predictor. It’s simply a number. And a useless one at that.
Mauboussin, M. J. (October 2012). The true measures of success. Harvard Business Review, 46-56.
human resource management, organizational industrial psychology, organizational management
source for picture: http://www.freedigitalphotos.net/images/Charts_and_Graphs_g197-Down_3D_In_Prospettiva_p13892.html
Give ‘em the One-Two Punch!
Topic: Business Strategy, Change Management
Publication: Harvard Business Review (DEC 2012)
Article: Two Routes to Resilience
Authors: Clark Gilbert, Matthew Eyring and Richard N. Foster
Reviewed By: Susan Rosengarten
Strategists at every organization worry about keeping their companies’ products and services relevant for the twenty first century. With new electronics brought to market before you can say the word “i-phone,” its no wonder companies are finding it harder to compete and maintain market share, yet alone dominate their industries. What’s the secret to not just staying afloat, but flourishing in this economy? Well, Gilbert, Eyring and Foster have the answer for you in their article “Two Routes to Resilience.”
You’ve got to take a dual-transformation approach and come at your competitors from both sides. Give them the “one-two punch,” if you will. “Transformation A” should focus on your presently existing core business, and strategies that allow you to adjust your current business model to accommodate shifting markets, technological advancements and an ever-changing business environment. “Transformation B” on the other hand should create a separate business that feeds and thrives off of “disruptions” in your environment. The trick to creating synergy and a competitive advantage for both businesses is a “capabilities exchange” through which the parallel businesses share resources without infringing upon the mission or operations of either company.
Take the chain bookstore Barnes & Noble for example, which saw a dramatic drop in sales with the rising popularity of the virtual mega-bookstore Amazon. Barnes & Noble responded by redesigning their business model and concentrating less on lower-margin high-selling books and more on higher margin children’s books and gifts. Stores were no longer merely places that sold books, but they now sold an experience; they became a place where parents could spend time with their children and customers could peruse through gifts for their loved ones (Transformation A). Barnes & Noble also became relevant for the 21st century with its release of the ‘Nook,’ which had an advantage over Amazon’s ‘Kindle’ because consumers could touch it in their hands and try it out before buying it (Transformation B). These transformations benefited from a number of shared resources including common branding and publishing relationships.
Now’s your chance! Take the next step in transforming your business and competing with the best of what’s out there. Best of luck! Knock ‘em dead!
human resource management, organizational industrial psychology, organizational management
source for picture: http://www.freedigitalphotos.net/images/Business_People_g201-Businessman_Wearing_Boxing_Gloves_p98605.html
Take the Lead!
Topic: Business Strategy, Change Management, Leadership
Publication: Harvard Business Review (JAN/FEB 2013)
Article: Strategic Leadership: The Essential Skills
Authors: Paul J. H. Schoemaker, Steve Krupp, and Samantha Howland
Reviewed By: Susan Rosengarten
Whether you set your sites on becoming CEO or simply want to take your lemonade stand to the next level, there are a couple of essential skills you’ll need to have. According to Schoemaker, Krupp and Howland, mastery of these six skills will help you navigate the murky waters of the 21st century and become a strategic leader in your own right.
1) Anticipate- Don’t get stuck on the present; conduct a SWOT analysis of your surroundings and consider how economic and market changes may effect your business model. Anticipate and plan for potential opportunities and threats, and gain insight into what makes your competitors successful.
2) Challenge- Never be complacent! Challenge the status quo and think outside the box. Promote a collaborative culture within your organization that encourages diversity of thoughts and ideas. Argue your point from different angles and multiple perspectives and see where it takes you.
3) Interpret- Take a closer look at relevant feedback and how it relates to the current state of your organization. Are there any readily emergent trends? Put your critical thinking skills to use by analyzing the situation and forming patterns and connections. What is your information telling you?
4) Decide- Come to educated conclusions based on a thorough consideration of the issues and all of your options. Play devils advocate and argue the problem from all angles. Once you’ve come to your conclusions, muster the strength and courage to begin executing on your plans.
5) Align – Make sure all your stakeholders are on the same page. Communicate the plan and bring everyone onboard. Consider whether your suggestions run counter to some of your stakeholders’ agendas or interests, and how you might go about dealing with resistance to change.
6) Learn- Set the example for your team and show your coworkers that it’s okay to take risks and make mistakes. Learn from your failures and come out stronger for them. Promote a “culture of inquiry,” and take advantage of every opportunity to learn and grow.
Want to put the pedal to the metal and see which of these six areas you can work on to hone your strategic leadership abilities and reign supreme? Take this Strategic Aptitude Assessment and find out: Hbrsurvey.decisionstrat.com
human resource management, organizational industrial psychology, organizational management
source for picture: http://www.freedigitalphotos.net/images/Business_People_g201-Smiling_Manager_Pointing_Back_p91399.html
Job Redesign: Don’t Sweat the Small Stuff (IO Psychology)
Topic: Talent Management
Publication: Harvard Business Review (JAN/FEB 2013)
Article: Redesigning Knowledge Work
Authors: Martin Dewhurst, Bryan Hancock and Diana Ellsworth
Reviewed By: Susan Rosengarten
More and more organizations are finding ways to outsource busy work, enabling employees to focus their time on tasks that require specialized knowledge and expertise. Skilled laborers like engineers, scientists and salespeople are harder to find these days, and according to research by the McKinsey Global Institute, a talent shortage in these areas is going to get worse in the coming years. Therefore, organizations are redesigning high-value knowledge job roles and contracting external firms to take care of routine operations so employees can focus their attention and efforts on work only they can perform. This not only helps to address talent shortages but according to Dewhurst, Hancock, and Ellsworth it also lowers costs and increases job satisfaction. So how do you go about maximizing your human capital and making the most of your organization’s talent? Well the authors recommend a couple of easy steps any HR practitioner can follow.
Step One: Perform a gap analysis. Identify talent with ‘must have skills’ your organization presently has and consider how your workforce and your organization’s needs will change over the next five years.
Step Two: Refine job descriptions where talent is scarce to best leverage your resources. Identify the essential functions your employees are hired to perform, and cut out responsibilities that can be delegated elsewhere.
Step Three: Develop ways to fill the skills gaps. Outsource work to contractors that do not require your employees’ specialized expertise or in-person interaction.
Step Four: Rewire the process for knowledge and talent management. Change your organizational culture to support these operational changes and learn how to integrate these contractors into your organization. Identify top performing remote hires and further develop and utilize their skills. Find ways to capture keen insights these hires have and facilitate knowledge transfer within your organization to employees who could benefit from this information.
human resource management, organizational industrial psychology, organizational management
source for picture: http://www.freedigitalphotos.net/images/Younger_Men_g118-Handsome_Business_Man_With_His_Hands_Folded_p38978.html
Managing Change for the Twenty-First Century
Topic: Business Strategy, Change Management
Publication: Harvard Business Review (NOV 2012)
Article: Accelerate!
Author: John P. Kotter
Reviewed By: Susan Rosengarten
Organizations are finding it increasingly difficult to keep up with the rapid pace of consumer, industry and worldwide change. Technological advancements as well as cross-cultural integrations have allowed for tremendous economic opportunities. At the same time though, the stakes are much higher, and the threats more real. Today’s leaders feel progressively more pressure to carefully consider how their investments in new ventures and R&D to remain competitive in changing markets will impact stakeholders’ perceptions and affect their bottom line.
While the conventional operating systems of the past, composed of traditional hierarchies and managerial processes, have been sufficient to run day-to-day activities, they are not enough to enable organizations to develop and implement strategic initiatives and react to unexpected impediments to organizational goals.
John Kotter, Professor Emeritus at Harvard Business School and a pioneer in the field of change leadership suggests a new approach to dealing with this ever-pressing problem; create a dual operating system. Maintain current organizational hierarchy systems to sustain daily operations, and in addition, create a concurrent “network-like structure” to carry out strategy. This new network or “volunteer army,” composed of employees at all level of the organization serves as a “guiding coalition” to swiftly address inadequacies and manage change.
Kotter outlines eight “accelerators” imperative for the strategy network to operate effectively:
1) Create a sense of urgency around a single big opportunity.
2) Build and maintain a guiding coalition.
3) Formulate a strategic vision and develop change initiatives designed to capitalize on the big opportunity.
4) Communicate the vision and the strategy to create buy-in ad attract a growing volunteer army.
5) Accelerate movement toward the vision and the opportunity by ensuring that the network removes barriers.
6) Celebrate visible, significant short-term wins.
7) Never let up. Keep learning from experience. Don’t declare victory too soon.
8) Institutionalize strategic changes in the culture.
So go ahead- transform your organization! Do you dare?
Kotter, J. P. (2012). Accelerate! Harvard Business Review, 90(11) 43-58.
human resource management, organizational industrial psychology, organizational management
Inviting the Inquiry of Science into Strategic Planning (IO Psychology)
Topic: Business Strategy, Creativity, Strategic HR
Publication: Harvard Business Review (SEPT 2012)
Article: Bringing Science to the Art of Strategy
Authors: A. G. Lafley, R. L. Martin, J. W. Rivkin, and N. Siggelkow
Reviewed By: Megan Leasher
Strategic planners sit down once a year. They pride themselves on their scientific rigor in how they analyze and shoot down every idea they generate. They then proceed with a less-than-stellar, not-so-innovative idea, and they wonder why the organization doesn’t swoon with delight? Lafley and colleagues (2012) assert that a key component of science is missing in these proceedings: the inquiry. They argue that the scientific method must first begin with the brainstorming of novel hypotheses, then proceed into the design and testing of these hypotheses. The authors detail a series of steps that incorporate the inquiry of science into strategic planning to achieve a more creative, successful, and efficient direction.
The first step is the key differentiator of the entire process. This step entails identifying at least two mutual exclusive options to resolving the issue at hand. All options must be framed as pure possibilities, devout of criticism, skepticism, and analysis. This is where the invention and inquiry of science comes into play. This is where we all get to be creative designers and dream into the realm of pure possibilities. The authors describe possibility as any “happy story that describes how a firm might succeed” (p. 59).
Then the list of possibilities is broadened and time is taken to identify what conditions must hold true in order for each possibility to succeed. Conditions may include things like customer support, market sustainability, or feasibility of supply. All conditions must be framed positively, so that everyone feels confident in success if all conditions were to hold true. Judgment, skepticism, and analysis are not yet allowed, so that all possibilities continue to be framed as positive. After this, barriers that would prevent each condition to hold true are identified and ranked. We now allow judgment and skepticism through the door, but analysis must still wait outside.
The next step is where experiments are designed to test the barriers to each condition. We must ask: What are the right questions that will lead us to answers that we can have faith in? As the authors mention, tests can be as simple as talking to a supplier, or as complicated as surveying thousands of customers.
We then conduct the tests and allow the scientific analysis to begin. It’s time to put on our goggles, get data happy, and crunch the numbers. The authors assert that the first test should always be of the condition that the group feels will least likely hold true. If the test fails and the barrier is confirmed true, no further testing is needed and the possibility is rejected. If the condition passes the test, move on to the next condition unlikely to hold true, and so on. Tests for a possibility should only be conducted sequentially, never in parallel, to conserve effort and resources.
Lastly, the final possibility is selected. After reviewing the results of all tests of the barriers, the group simply picks the solution with the fewest serious barriers left standing. It is a relavitvely simple, anticlimactic step; all of the hard work has already been completed and we are left with practically a simple tally count. It is important to call out that testing barriers to conditions provides evidence, not proof. Evidence still requires human judgment that is fully aware that risk is always present.
I feel this framework has such potential and would love to see its value play out first hand. But controlling the judgment and skepticism early on is a monumental challenge; this process requires a shift in mindset and determined, focused group leaders who can direct participants to frame all choices as possibilities for success. Plus, a geek like me wants to jump right into the test design and analysis. But to be “scientific,” we must inquire. Science isn’t just analysis; it’s play, and brainstorming, and invention beyond your brain’s current capacity.
human resource management, organizational industrial psychology, organizational management
Using data to make smart decisions: 1 + 1 = It’s Not That Simple
Topic: Business Strategy, Decision Making, Evidence Based Management, Statistics
Publication: Harvard Business Review (APR 2012)
Article: Good Data Won’t Guarantee Good Decisions
Authors: S. Shah, A. Horne, and J. Capellá
Reviewed By: Megan Leasher
When we were in grade school, we learned that 1 + 1 = 2. We quickly realized and celebrated the immediate success in figuring out what came after the equal sign. This celebration built faith; blind faith that we should always believe in the result of an analysis.
But in business, it’s not quite so simple. We should not automatically rejoice in what we see after an equal sign, because we need to judge what went into the numbers in the first place. This concept is the focus of a study conducted by the Corporate Executive Board, which classified 5,000 employees at 22 global companies into one of three categories: Those who always trust analysis over judgment, those who always rely on their gut, and those who balance analysis and judgment together. The Board advocates the latter “balanced” group, as their research found that this group demonstrated higher productivity, effectiveness, market-share growth, and engagement than those in the other two groups. However, the Board also found that only 38% of employees and 50% of senior executives fell into this “balanced” group. Taken together, their findings advocate cultivating both analysis and judgment in decision-making at all levels of organizations.
The authors present several ideas as to how organizations can begin to make a shift toward a culture of applying appropriate insight and judgment to their data analysis. First and foremost, they argue that data must be made accessible and presented in usable formats that enable analysis. A dual-focus must be placed on the both the data and the judgment; increase data literacy and statistical expertise while simultaneously training employees how to correctly use the data, encouraging both dialogue and dissent throughout the interpretation.
But this is easier said than done. You have to know what to trust and distrust in data. You have to learn if and how metrics support the strategy and growth of an organization. You have to learn what types of caveats and error can be found within the data. You have to learn how the data was collected, what might be wrong with the collection process, and what important information might have been ignored. You have to know how to interpret and proceed when you find that multiple metrics of performance are giving you competing answers; not all data play nice with each other. You have to know what data is worth analyzing and what data should be abandoned altogether. Sometimes running away screaming is the appropriate response.
Analysis isn’t just about writing a formula and clicking “run” or “execute” to crunch the numbers. After all, data without method is just numbers in columns and rows. It’s about a series of critical, incremental, and ethical judgment calls before and after each iteration within an analysis. Some of the judgment calls come from understanding the content and context of the data, some come from a grounding in organizational and industry knowledge, and some come from an understanding of the past, present, and future strategy of the organization. And yes, some judgment calls come from pure statistical knowledge. The true expertise comes from a constant interplay and interdependence of all of these factors.
Regardless of the challenges presented, the authors are clear that decisions should never be made by data or one’s gut alone; analysis is critical, but so is applying corresponding judgment.
human resource management, organizational industrial psychology, organizational management
Making an A-Team? (Human Resource Management)
Topic: Selection, Talent Management
Publication: Harvard Business Review (JAN 2012)
Article: Gilt Groupe’s CEO on Building a Team of A Players
Author: Kevin Ryan
Reviewed by: Liz Brashier
In a recent article by the CEO of the flash sales company the Gilt Groupe, Ryan (2012) discusses what makes a company truly successful. (Hint: it’s something we focus on the most!) According to Ryan, a business idea is worth next to nothing – without the right people to implement it. While most companies claim to put people first, Ryan asks a compelling question: “do most CEOs spend more time on recruiting and managing people than any other activity?” The answer is more often than not a “no,” and for this CEO, that’s a big problem. He also challenges CEOs to consider their relationship with the head of HR in their own companies, and to make sure that this person has a real seat at the executive table. The most important thing a CEO can do is build and maintain a top caliber “A-Team” of employees.
Ryan offers other key suggestions for building a high caliber team:
1) Add by subtracting: if employees are no longer productively contributing, then it’s time to let them go and bring new talent in. There is no where to put a stellar new hire if all the desks are occupied – not being utilized productively.
2) Check those references! According to Ryan, most hiring managers value the resume over the reference check, while checking a reference can often provide the most valuable insight into what this candidate’s work is like.
3) Make sure you understand why people choose to leave. Often, it’s because of a manager. If talented employees are choosing to leave, make sure that their manager understands an evaluation for him or her is up next.
The clear message from this article? Put your people first, especially when in the role of CEO. Obsessing over talent while serving as CEO could provide the greatest returns for the company.
human resource management, organizational industrial psychology, organizational management
Creating Happiness at Work! (IO Psychology)
Topic: Culture, Employee Satisfaction
Title: The Science Behind the Smile
Publication: Harvard Business Review (FEB 2012)
Author: Gardiner Morse
Reviewed by: Liz Brashier
In a recent interview with psychologist Daniel Gilbert, Morse (2012) examines new research into an investigation of happiness from a scientific perspective. Happiness, long considered to be a topic better suited for philosophers or writers, is now moving into the realm of data analysis and scientific query, and Gilbert fills us in on what this new work might mean for our understanding of happiness.
You might be wondering if it’s even possible to measure something as personal and subjective as happiness. Gilbert gives us a resounding “yes” before delving into various methodologies for assessment. Across the various academic disciplines researching happiness, including neuroscience and psychology, important findings appear to be emerging. On the whole, we don’t seem to be that good at predicting what will make us happy over time. As studies reveal, we tend to overestimate the value of “happy” events in making us happy while we overestimate the value of “unhappy” events in making us sad. A break-up, the start of an exciting job, or a failing grade on exam don’t make us anywhere near as happy or unhappy as we predict. So why is that? According to Gilbert, we are excellent at finding good in any situation – we are naturals at wanting to feel happy despite our circumstances. On the flip side, when great things happen, we’re good at “snapping back to reality” quickly, and we enjoy the moment while staying realistic.
Gilbert calls this concept of finding the best in bad situations a form of “synthetic happiness.” It’s what we create for ourselves when bad things happen; real, or natural happiness, is what we experience when good things happen. So what does all of this mean for an organization? Employees function best when they are challenged, which creates a sense of natural happiness and fulfillment. Reward and respect – not punishment – is best for producing happy employees. Also, the frequency, rather than the intensity, of our happy experiences is much more meaningful in creating happiness – focus on a constant stream of good experiences for employees instead of one big reward every so often.
So go to work with a smile, challenge and reward employees, and remember that the “bad” things we experience on the job will have much less of an effect on your happiness than you think!
Morse, G. (2012). The science behind the smile. Harvard Business Review, 90, 84-90.
human resource management, organizational industrial psychology, organizational management
