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24 июля, 15:00

AI May Soon Replace Even the Most Elite Consultants

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Amazon’s Alexa just got a new job. In addition to her other 15,000 skills like playing music and telling knock-knock jokes, she can now also answer economic questions for clients of the Swiss global financial services company, UBS Group AG. According to the Wall Street Journal (WSJ), a new partnership between UBS Wealth Management and Amazon allows some of UBS’s European wealth-management clients to ask Alexa certain financial and economic questions. Alexa will then answer their queries with the information provided by UBS’s chief investment office without even having to pick up the phone or visit a website. And this is likely just Alexa’s first step into offering business services. Soon she will probably be booking appointments, analyzing markets, maybe even buying and selling stocks. While the financial services industry has already begun the shift from active management to passive management, artificial intelligence will move the market even further, to management by smart machines, as in the case of Blackrock, which is rolling computer-driven algorithms and models into more traditional actively-managed funds. Insight Center Crossing the Digital Divide Sponsored by DXC Technology How the best companies get up to speed. But the financial services industry is just the beginning. Over the next few years, artificial intelligence may exponentially change the way we all gather information, make decisions, and connect with stakeholders. Hopefully this will be for the better and we will all benefit from timely, comprehensive, and bias-free insights (given research that human beings are prone to a variety of cognitive biases). It will be particularly interesting to see how artificial intelligence affects the decisions of corporate leaders — men and women who make the many decisions that affect our everyday lives as customers, employees, partners, and investors. Already, leaders are starting to use artificial intelligence to automate mundane tasks such as calendar maintenance and making phone calls. But AI can also help support more complex decisions in key areas such as human resources, budgeting, marketing, capital allocation and even corporate strategy — long the bastion of bespoke consulting firms such as McKinsey, Bain, and BCG, and the major marketing agencies. The shift to AI solutions will be a tough pill to swallow for the corporate consulting industry. According to recent research, the U.S. market for corporate advice alone is nearly $60 billion.  Almost all that advice is high cost and human-based. One might argue that corporate clients prefer speaking to their strategy consultants to get high priced, custom-tailored advice that is based on small teams doing expensive and time-consuming work. And we agree that consultants provide insightful advice and guidance. However, a great deal of what is paid for with consulting services is data analysis and presentation. Consultants gather, clean, process, and interpret data from disparate parts of organizations. They are very good at this, but AI is even better. For example, the processing power of four smart consultants with excel spreadsheets is miniscule in comparison to a single smart computer using AI running for an hour, based on continuous, non-stop machine learning. In today’s big data world, AI and machine learning applications already analyze massive amounts of structured and unstructured data and produce insights in a fraction of the time and at a fraction of the cost of consultants in the financial markets. Moreover, machine learning algorithms are capable of building computer models that make sense of complex phenomena by detecting patterns and inferring rules from data — a process that is very difficult for even the largest and smartest consulting teams. Perhaps sooner than we think, CEOs could be asking, “Alexa, what is my product line profitability?” or “Which customers should I target, and how?” rather than calling on elite consultants. Another area in which leaders will soon be relying on AI is in managing their human capital. Despite the best efforts of many, mentorship, promotion, and compensation decisions are undeniably political. Study after study has shown that deep biases affect how groups like women and minorities are managed. For example, women in business are described in less positive terms than men  and receive less helpful feedback. Minorities are less likely to be hired and are more likely to face bias from their managers. These inaccuracies and imbalances in the system only hurt organizations as leaders are less able to nurture the talent of their entire workforce and to appropriately recognize and reward performance. Artificial intelligence can help bring impartiality to these difficult decisions. For example, AI could determine if one group of employees is assessed, managed, or compensated differently.  Just imagine: “Alexa, does my organization have a gender pay gap?” (Of course, AI can only be as unbiased as the data provided to the system.) In addition, AI is already helping in the customer engagement and marketing arena. It’s clear and well documented by the AI patent activities of the big five platforms — Apple, Alphabet, Amazon, Facebook and Microsoft — that they are using it to market and sell goods and services to us. But they are not alone. Recently, HBR documented how Harley-Davidson was using AI to determine what was working and what wasn’t working across various marketing channels. They used this new skill to make resource allocation decisions to different marketing choices, thereby “eliminating guesswork.”  It is only a matter of time until they and others ask, “Alexa, where should I spend my marketing budget?’’ to avoid the age-old adage, “I know that half my marketing budget is effective, my only question is — which half?” AI can also bring value to the budgeting and yearly capital allocation process. Even though markets change dramatically every year, products become obsolete and technology advances, and most businesses allocate their capital the same way year after year. Whether that’s due to inertia, unconscious bias, or error, some business units rake in investments while others starve.  Even when the management team has committed to a new digital initiative, it usually ends up with the scraps after the declining cash cows are “fed.” Artificial intelligence can help break through this budgeting black hole by tracking the return on investments by business unit, or by measuring how much is allocated to growing versus declining product lines. Business leaders may soon be asking, “Alexa, what percentage of my budget is allocated differently from last year?” and more complex questions. Although many strategic leaders tout their keen intuition, hard work, and years of industry experience, much of this intuition is simply a deeper understanding of data that was historically difficult to gather and expensive to process. Not any longer. Artificial intelligence is rapidly closing this gap, and will soon be able to help human beings push past our processing capabilities and biases. These developments will change many jobs, for example, those of consultants, lawyers, and accountants, whose roles will evolve from analysis to judgement. Arguably, tomorrow’s elite consultants already sit on your wrist (Siri), on your kitchen counter (Alexa), or in your living room (Google Home). The bottom line: corporate leaders, knowingly or not, are on the cusp of a major disruption in their sources of advice and information. “Quant Consultants” and “Robo Advisers” will offer faster, better, and more profound insights at a fraction of the cost and time of today’s consulting firms and other specialized workers. It is likely only a matter of time until all leaders and management teams can ask Alexa things like, “Who is the biggest risk to me in our key market?”, “How should we allocate our capital to compete with Amazon?” or “How should I restructure my board?”

24 июля, 14:35

Australia’s Experiment in Restraining Executive Bonuses

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Dave Wheeler for HBR The idea of incentivizing CEOs and senior executives seems reasonable to most people. Yet the large executive bonus is a relatively recent phenomenon. Executive pay grew more slowly than the average worker’s income during the 50s, 60s and part of the 70s. It was in the 1980s that the ratio of CEO to average-worker pay grew dramatically. It “exploded” in the 1990s. The astronomical rates of CEO fixed pay and bonuses that we are so familiar with today are only about 20 years old. Some researchers have argued that they’re a failed experiment. At the organizational level, they can decrease morale and fuel cynicism, especially if CEO pay climbs while average wages stall or grow more slowly, as they have in countries like the U.S., UK, and Australia. Growing inequality has contributed to the decline in several social phenomena, including mental health, and has been cited as a threat to democracy itself. Is it now time to redesign the experiment? If so, how? One approach can be seen playing out in Australia. On July 1, 2011, the Australian Government amended the Corporations Act introducing the “two-strikes” rule. It works like this: If 25% or more of shareholders vote “no” in approving a company’s remuneration report at two consecutive annual general meetings, then the second meeting will determine if all directors need to stand for re-election. If this occurs then all directors (except the managing director) must stand for re-election within 90 days. This has given shareholders muscle and has changed the corporate environment around CEO bonuses. Further, it has provided boards with a rationale to act and the courage to do so. And is it working? Yes, so far. The country has witnessed numerous first strikes with boards quickly backtracking to save their skin. Among the crowd are some of the nation’s largest companies – CSL, Woodside Petroleum, AGL Energy, Boral, and Goodman Group. The mere threat of a first strike has had boards treading carefully. It’s clear that boards are starting to get the message from the national government, shareholders, the public, and the media that excessive executive packages are unacceptable. More than that, smart businesses are stepping forward to proactively embrace the changing culture. One business which typifies the change is Wesfarmers. The company is Australia’s eighth largest by market capitalization and an opinion leader in business circles. Highly diversified across food retailing, hardware, office supplies, department stores and industrial products, its current CEO, Richard Goyder, is stepping down to be replaced by an internal appointee, Rob Scott. Scott will earn up to $4 million less than his predecessor agreeing to a $1 million cut to fixed pay and a $3 million cut to bonuses. This shift is clearly coming from societal pressure. As Wesfarmers chairman, Michael Chaney, told the Australian Financial Review (AFR) “We recognize changes in the market that have seen downward pressure on fixed pay levels for CEOs and reductions in overall reward opportunities…[We] believe that this package and those of other senior executives in the Group are appropriate and in line with contemporary market practice of peers.” And the pressure continues. The current Australian Government, importantly from a different party to that which introduced the “two strikes” legislation, has gone in hard on Australia’s “big four” banks. In its May 2017 Budget, the government proposed a bank tax, like that in the U.K., and has clamped down on CEO pay. The banks, which enjoy a government-guaranteed status and owe much to the government for their security and profitability, have come up short in responding to a variety of customer issues. With the full backing of the public, the government announced a clampdown on how bonuses are paid and greater scrutiny of bank executives. Even the Prime Minister, Malcolm Turnbull, has waded into the issue. He was quoted in the AFR calling it “almost a cult of excessive executive CEO remuneration.” It’s also important to note that the mood in Australia is not exactly “anti-wealth.” No one is arguing that CEOs and entrepreneurs don’t deserve to be highly paid – provided they pay their fair share of taxes. These individuals have often taken huge risks, and very few succeed. Moreover, their wealth is often derived from the ownership of shares in the enterprise they founded. If someone wants to literally bet their house on the success of their business and ends up a billionaire, then most Australians would say good luck to them. The public’s concern is with professional managers who have risked little, but who think they have a right to earn Bill Gates money. That sentiment seems to be rising in other countries, too. Regulators and policy-makers in those countries can look to the Australian model for one example of how CEO pay might be reined in without heavy-handed regulation, and smart boards can get out ahead of the curve to satisfy shareholders, improve internal morale, and win the trust of the public.

24 июля, 14:30

What Spinning Off a GE Business Taught Me About Managing Ultra-Fast Change

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Change management can be a test for any organization. Several studies by Towers Watson show that just 25% of change management initiatives are successful over the long term. I wouldn’t be surprised if the statistics are worse in my industry, financial services, where so many companies are large, global, regulated, and structurally complex. So four years ago, when I was CEO of GE Capital Retail Finance and tapped to lead a mega change initiative — splitting off our unit into a new, publicly traded company, Synchrony Financial — I’ll admit I viewed it as a huge challenge. Major organizational changes, covering everything from recruiting and branding to regulatory approvals and marketing, happened in rapid succession, with a hard deadline of 12 months to get it all done for the IPO — and 18 months from the IPO until our full separation from GE. While every CEO is forced to work through organizational change, many will tell you that of all their duties, change management scares them the most, because nearly every aspect of a company and its leadership is tested. Change management certainly tested us. We went from being part of a company with over 300,000 employees, at GE, to being a company of 10,000, at Synchrony Financial, seemingly overnight. We hired roughly 1,000 new employees in approximately 15 months to build our operations, human resources, compliance, and technology teams. (We have hired more than 5,000 new employees since beginning the effort in late 2013.) During this time, we had to cut the cord from the distinct, 100-year-old culture at GE and create something that was uniquely our own. This is what I learned: Ask, listen, and be transparent with employees. When the separation plans were announced, I knew our employees would be anxious. I just didn’t know in what ways. What I did know was that I, and our leadership team, needed to solicit feedback — a lot of it. The first thing we did was engage in ongoing listening sessions. We sat down with small groups of employees across functions and talked about everything — including leadership, operations, compensation, benefits, and staffing. We also talked about how we would run the business and serve our clients while we set out to separate. We couldn’t hit the pause button while we figured out what to do. We asked about employees’ hopes and concerns. We held monthly town hall meetings where we could discuss these issues in large groups, and we created an anonymous “Ask Margaret” question box that gave every employee a direct line to me. Very quickly, common concerns bubbled up. We found that while people understood our vision, they worried about their careers and what would happen to their long-term health and investment programs. I was initially surprised at how direct and personal some of these questions were, yet they made so much sense in terms of the massive change we were introducing: Would paychecks be delivered on the same day they had been previously? Would employees have the same number of vacation days? Would our health insurance programs include their doctors and hospitals? People wanted detailed answers — and they wanted them fast. And when we were too slow, they were not afraid to tell us. When we spotted these issues, we did our best to fix them, whether it meant hiring new people, changing policies, or reorganizing. As we did this, we went on a roadshow, with the senior leadership team holding face-to-face meetings with employees around the globe. We have more than 1,000 employees co-located at a number of different partner sites, so we needed to make sure each employee heard the same message directly from us, not only through email. And we didn’t say it just once. We continually explained what we were doing and why we were doing it so that there was no room for misunderstanding or rumors. We aimed for constant transparency, even before everything was final. Create (or revise) a defined mission and values. As my leadership team and I fielded questions about our company’s purpose, I knew the answers couldn’t come just from the top. Often I received this question from our employees: “How can we preserve our GE heritage while embracing our new future as a stand-alone company?” To get to the answer, I asked them the same questions I had asked our senior leaders. We talked about their emotions: What inspired them to come to work each day? What words evoked the passion they felt about the organization? What values drove them? What made them proud? In all, we engaged more than 500 employees from around the world for feedback on our culture through focus groups, interviews, workshops and anonymous ideation sessions. We quickly realized that the key to building our own distinct culture was to capture the ambition that already existed — and the opportunity that attracted people to the company in the first place. We transformed those feelings into a simple sentence: “We pioneer the future of financing, improving the success of every business we serve and the quality of each life we touch.” This ended up being the “true north” our employees rallied around. Be open to creating new work policies and benefits. “What makes sense across a 300,000-person conglomerate like GE won’t necessarily make sense for a 10,000-person organization.” This comment came up in one of our feedback sessions, and it stuck with me. Once we knew what we stood for, we had to turn those words into actions. We also had to analyze the needs of different groups — not just at headquarters but at every location and every level. We moved away from the one-size-fits-all model. One big lesson I learned was not to assume that you know what people value. A CEO is far removed from the day-to-day concerns of most workers. A program or benefit may sound good, but if it isn’t improving employees’ lives, then we need to find something else that will. During our feedback discussions, for example, many associates brought up their desire for more flexibility. Individuals trying to manage children’s school events, dentist appointments, or home services, for example, needed more control over work schedules. What did we do? We created a policy that allows them to take time off in one-hour increments (versus the minimum of four hours required in our previous company). It was a highly valued change. As we further studied the employee feedback, as well as the composition of our workforce that was very different from GE’s, we made many changes. We developed a four-year transition plan to move from a defined benefit pension to an enhanced 401(k) plan; we changed our philosophy and approach to bonus plans; and we even changed compensation levels and job titles to be better aligned with our industry. We were completely transparent about all of these changes and took employee feedback into account as much as we could. One idea we retained from GE was to celebrate diversity. At the same time, we needed to do it in our own way. We kept diversity networks that represent women, African American, Asian, Hispanic, LGBT, veteran, and disability groups. We also added a diversity symposium that brings members of these groups together annually to share their unique perspectives — perspectives that can lead to great ideas and help us better serve our diverse customer base. Find ways to have fun. As we made strides on the separation plan, one of my senior leaders asked: “With everyone working so hard, how do we find time to celebrate?” I believe celebrating success is critical, but it’s important to make it personal and authentic. This is one area where consistency is not necessarily a virtue. You need to allow each leader to create their own idea of fun, as long as it ladders up to a larger theme. There’s always a danger in trying to overengineer culture. During a time of transition, it’s easy to focus on the work. Yet this is exactly when focusing on people is more critical than ever. At a time when we could have taken a pause on all training, diversity, and culture initiatives, we doubled down on them. This has paid off dramatically. Rapid change doesn’t have to be a recipe for confusion. You can bring employee engagement and productivity to new levels when organizations and leadership are transparent, take everyone’s opinions seriously, and offer an authentic shared vision. At Synchrony, we had to evolve quickly and rip off the Band-Aid when we spotted issues. The build ended up looking much different than I or anyone else expected. Of course, the journey isn’t over. We separated, went public, and created a name and a brand. While we now have a unique Synchrony culture, it doesn’t end there. There simply is no finish line for culture. But I’m thrilled with where we landed, and even more so with where we’re headed.

24 июля, 12:05

How People with Different Conflict Styles Can Work Together

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When it comes to conflict, most of us have a default approach: we either tend to avoid it or seek it out. The avoiders among us shy away from disagreements, value harmony and positive relationships, and will often try to placate people or even change the topic. Avoiders don’t want to hurt anyone’s feelings or disrupt team dynamics. Seekers (and I’m one of them!) seem eager to engage in disagreements. They tend to care about directness and honesty, lose their patience when others aren’t being equally direct, and don’t mind ruffling feathers. Neither style is better or worse, and your default style is probably due to several factors: your past experiences with conflict, the conventions of the culture you’re from or work in, the organizational context, and even gender norms. And while each of us generally has a preferred approach, it’s rare for a person to avoid or seek out conflict all the time. More likely, you adjust your style based on the context, with whom you’re having the conflict, and other things going on in your office. For example, you might be a seeker with your mom and an avoider with your boss. Still, it’s useful to know what your natural tendency is and, when you get into a conflict with someone else, to put some thought into the other person’s style. If you’re a seeker and the other person is an avoider, how should you handle the situation? And is all hope of reaching a resolution lost if you’re both avoiders? You and Your Team Series Conflict How to Have Difficult Conversations When You Don’t Like Conflict Joel Garfinkle How Self-Managed Teams Can Resolve Conflict Amit Maimon Even Experienced Executives Avoid Conflict Ron Ashkenas Knowing how the other person typically reacts in a tense situation is useful information. So assess your coworker’s style, if you’re not already familiar with it. Consider whom you’re dealing with. How does he typically communicate and how does he prefer to be communicated with? Is she more of a straight shooter who tells it like it is, or does she tend to beat around the bush? If you frequently work with the person you’re having the conflict with, you may already be familiar with their style. If you rarely interact with the person, you’ll have to do some digging. It may be that you’re fighting with an overseas colleague whom you see in person only at annual meetings, or your conflict may be with a manager in a different department who sits in another building. It’s best to know something about the person rather than fighting in a vacuum. Here are a few ways to assess the other person’s style: Look for patterns. Whether or not you know your counterpart well, play the role of observer. Ho do they handle a tense discussion in a meeting? What’s the look on their face when other people are disagreeing? Do they like people to cut to the chase and lay out just the facts or do they want the complete picture with every gory detail? What have you observed about their communication style? Get input from others. You might ask a colleague or two for input into your coworker’s personality. Don’t go around grilling others about them, but ask people to confirm or deny your own observations. Say something like, “I noticed Jim flew off the handle in that meeting. Is that typical?” or “I saw Katerina avoid engaging with Tomas when he questioned whether her figures were right. Did you see the same thing?” Obviously, you have to trust the person you’re asking — you don’t want your colleague to find out you’re snooping on them. Ask directly. It’s not always advisable to come out and ask: “How do you like to address conflict?” That can be awkward — and few people will be prepared to answer the question. Instead, share your own preferences as a way to start the conversation: “You might have noticed that I don’t shy away from arguments, and don’t like to beat around the bush.” You could also share tactful observations about what you’ve noticed about your counterpart. “Based on how you responded to Corinne’s questioning in this morning’s meeting, it seems as if you prefer to steer away from conflict. Is that right?” Once you have a good sense of their style, you can make a more informed choice about how to handle the disagreement. You’ll want to consider how your styles interact. If you’re both seekers, can you expect an all-out brawl? If you’re both avoiders, should you forget the idea of directly addressing the conflict? Let’s go through each of the possible pairings and look at what typically happens and how you can best approach the situation: You’re both avoiders What typically happens: Both of you lean toward doing nothing. You may tamp down feelings that could explode later on. What to do: One of you needs to take the lead. Say directly, “I know neither of us likes conflict, but instead of ignoring the problem, what can we do about it?” Do your best to draw the other person out in a sensitive, thoughtful way. If things get tough, don’t shy away. You’ll need to fight your natural instinct in this case. You’re both seekers What typically happens: Neither of you is afraid to say what’s on your mind. The discussion can easily turn contentious. In the heat of the moment, you might end up saying things you don’t actually believe. You both feel disrespected. What to do: Since you’ll both be eager to address the situation, take extra time to prepare for the conversation. Know that you’re likely to feel impatient, and schedule your discussion in a way that allows you both to take breaks. Be ready — things may get heated. Suggest a coffee break or a walk or a change of scenery to help even out emotions. You’re a seeker and your counterpart is an avoider What typically happens: You tend to bulldoze your counterpart into agreeing with you. Your counterpart may act passive aggressively to get their point across. What to do: Ask the person to participate actively in the conversation — not hide their opinions. Don’t be a bully. Be patient with the pace of the conversation. You’re an avoider and they’re a seeker What typically happens: You might be tempted to play the role of “good guy” and go along with what your counterpart wants. You might get trampled by your counterpart’s requests. What to do: Explicitly ask for what you need: “To have a productive conversation, I need you to be patient with me and watch the tone and volume of your voice.” Earn the seeker’s respect by being direct and to the point. Don’t signal disrespect, which is likely to set off the seeker. Whatever your situation, remember that your goal is to ultimately solve the conflict, not judge someone’s style. Avoid saying something like, “We’ve got a problem here because it seems as if you don’t know how to discuss difficult issues.” Instead, have compassion for the other person — and yourself — and take into account what you know about both of your tendencies to navigate the situation thoughtfully and carefully.

21 июля, 15:00

How to Become a More Well-Rounded Leader

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For years, when I spoke with CEOs or senior leaders, it was because they were interested in how my consulting firm could help their employees become more engaged, or innovative, or sustainably high-performing. During the past year – and especially the past six months – I’ve been hearing a different and much more personal initial question: “Can you help me better manage my own life?” Consider the challenges that modern corporate leaders — and especially CEOs — now face, in addition to running their companies every day: A high likelihood that the company they run has a business model that is being seriously disrupted, most often as a result of technology. A far more vocal and influential group of stakeholders, including employees, customers, and the public at large, all emboldened by their access to social media and by the speed at which their opinions can go viral. A highly volatile political climate that has prompted fear and uncertainty both inside and outside companies. Ambivalence about how to best attract, manage, and retain Millennials, who now represent the largest generation in the workforce, expect more flexibility in the way they work, and prefer to work for employers with a mission that goes beyond maximizing profit. How can leaders balance these complex and often competing demands? The core challenge for modern leaders, I believe, is to become more wholly human – to actively develop a wider range of capabilities and to more deeply understand themselves. Consider the following qualities: Self-control Tenacity Boldness Honesty Focus on results Confidence Pragmatism Decisiveness Is there any doubt these are desirable strengths for any leader? Most of us think in binary terms.  What’s good is absolutely good, and the alternative is bad.  Given a choice between an employee with the profile on the left, and the one on the right, it’s a no-brainer, isn’t it? strength Self-control Tenacity Boldness Honesty Focus on results Confidence Pragmatism Decisiveness negative opposite Impulsivity Laziness Hesitancy Deceitfulness Aimlessness Insecurity Impracticality Wishy-washiness Common as it is to see the world through an either-or lens, it’s more limiting than we recognize. And relying on one set of relatively fixed strengths turns out to be insufficient to manage the complex environment leaders must now navigate. Here’s what happens, for example, when we overuse or rely too exclusively on the strengths on the left. strength Self-control Tenacity Courage Honesty Focus on results Confidence Pragmatism decisiveness strength overused Rigidity Ruthlessness Recklessness Cruelty Narrowness Arrogance Unimaginativeness Dogmatism Think for a moment about one of your own strengths – a quality that has served you well at work and has been admired by others. Now try to recall a situation in which you have overused or over-relied on this quality.  Are there occasions when your strength became a liability, causing more harm than good and even leading to the opposite of what you intended? We most often overuse our strengths under stress.  When we’re not getting what we want, our instinct is to double-down on whatever has worked best in the past. It’s the same sort of impulse that prompts an addict to increase the dose when the drug of choice no longer produces the same high it originally did. I recognize this inclination in myself.  When I think of qualities that have served me well at work, drive and perseverance are high up on my list.  But during the past year, as we introduced a new business model, I felt compelled to push harder and exercise more control than I had in the past. It was a rocky road.  At times, I know my colleagues felt intimidated and discounted, rather than inspired and empowered. Simply noticing this inclination has reminded me of the choices I can make  every day at work. But that’s not enough.  It is also important to build complementary strengths or “positive opposites.”  Consider the qualities in the right-hand column below: strength Self-control Tenacity Discernment Honesty Focus on results Confidence Pragmatism Decisiveness positive opposite Spontaneity Patience Acceptance Compassion Reflectiveness Humility Imaginativeness Open-mindedness In Good to Great, Jim Collins wrote that the best leaders were characterized by a blend of “humility and fierce resolve.” In my experience, it’s rare to find leaders who equally value the qualities on both the left and the right. Our tendency is to favor one, rather than recognizing the ways that each can serve as a balancing function for the other. A leader who values directness is more likely to give feedback that others can hear and apply if she balances her honesty with care and compassion. The opposite is also true. A compassionate leader who avoids difficult conversations for fear of hurting people ends up impeding their growth. The first step is simply deepening self-awareness.  We can’t change what we don’t notice. What are your signal strengths?  What does it look like when you overuse them?  What potentially balancing qualities have you undervalued? The goal is not to find a perfect balance, but to build a complementary set of strengths, so that we can move gracefully along a spectrum of leadership qualities. Embracing our own complexity makes us more wholly human and gives us additional resources to manage ourselves and others in an increasingly complex world.

21 июля, 14:00

How Royal DSM Is Improving Its Geographic and Gender Diversity

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Jennifer Maravillas for HBR With the recent spate of firms in the news over sexual harassment allegations and charges of gender bias, it is obvious that an issue many in business had thought was “done” is instead far from finished. Fostering corporate cultures which make half your employees feel somewhere between unengaged and unsafe is becoming risky and unsustainable. A lot of companies are doubling down on efforts to finally “crack” the gender issue. Most companies now have more gender-balanced talent pools, especially at the early-to-mid-career levels, and are looking for ways to make sure progress continues at the mid-to-upper levels. But the ones who really understand the issue see gender balance as not just a numbers game but part of a broader, more strategic cultural shift that includes developing leadership teams representing geographically diffuse markets. These leaders are recognizing that this balance drives the innovation and market understanding they need for other key business transformations. Without balance, they simply won’t understand the world that’s emerging. Dutch-based Royal DSM is a case study of multiple parallel transformations – in their business and in their leadership balance. The CEO is convinced that the one feeds the other. “I’m absolutely convinced that the evolving balance of the top management team is a key factor in our success and our ability to change,” Feike Sijbesma, the 57-year-old CEO of Royal DSM, the $8 billion, global company active in health, nutrition and materials science, told me. I reached out to him because I was impressed with how he steered DSM from its chemicals company past to its broad, science-based innovator present; from a Dutch company to a global player; and from a completely male-run organization to a more gender balanced leadership team. How did he do it? Sijbesma credits three steps: Setting a vision that connects the goal to business success Engaging men of the company’s dominant nationality Building skill in working across nationality and gender differences (including with your suppliers and search firms) Setting a vision that connects the goal to business success Most companies have a very broad definition of “diversity,” which can make implementing change and measuring progress a challenge. What will success look like? What indicators will you track? Where is the business imperative? They tend to frame gender as one diversity dimension among many. This makes it near-impossible to invest the time and management focus needed to effectively adapt to a gender balanced workforce and customer base. (And research has shown that different approaches are often needed to foster gender balance, as opposed to other diversity dimensions.) DSM prioritized two diversity dimensions, transparently and strategically: the nationality and gender balance of their management. “We looked at all the research,” Sijbesma explains, “and it was clear that these were the two factors that had, by far, the biggest impact on the bottom line.” DSM moved through three phases. First, they were an entirely Dutch and male company. The senior leadership team of 35 was dominated by Dutch men. They started by relocating some key positions around the world, staffed by other nationalities. The second phase was to attract and develop more local and international people. “Now,” says Sijbesma, “we are in the third phase, where we are moving international people across geographies for their development and the company’s benefit.” The top team of 35 is now 60% non-Dutch and includes 7 women. “Not good enough,” he admits, “but incredibly different. And totally transformational.” To support the balancing of nationalities in leadership, DSM moved away from having a single global headquarters in Heerlen, and based different functions in each region (Singapore, Shanghai, New Jersey, and Basel). “This means that instead of having all the top 50 executives in the Netherlands (which isn’t very attractive to top talent from China, the U.S., or Brazil), we have global hubs that offer interesting jobs in a variety of locations.” Engage men of the company’s dominant nationality Many companies, especially in America, are well-meaningly focused on empowering “out-of-power” or under-represented groups. This has led to the spread of affinity groups, or employee resource groups (ERGs). These have the unintended consequence of minimizing these groups’ overall significance, separating them from each other, and keeping them away from real networks of influence. Companies then wonder why they aren’t making more progress on their diversity KPIs despite lots of noise and activity devoted to the challenge. Related Video How Different Countries Expect Women to Show Authority In some cultures, there's a big gap between male and female leaders. Save Share See More Videos > See More Videos > An approach that often yields better results, in my experience, is helping today’s in-group members become ready and accountable for hiring and promoting people who may not look like them, but who do look like the company’s customers. It’s good for the business, but it’s not easy. CEOs need to be ready to explain the necessity of the shift. That’s what Sijbesma tried to do. In the year 2000, DSM’s top 350 executives were 75% Dutch and more than 99% male. Today, it’s 40% Dutch and 83% male (it’s not uncommon for companies to make faster progress on nationality than gender). Sijbesma aims to bring the male ratio down by 2% per year and down below 75% by 2025. He is prioritizing sustainability and credibility more than speed. He admits it has not always been an easy ride. “The reaction of some of the Dutch guys is to loudly claim that if you are male and Dutch you no longer have a future at DSM. I remind them that I am male and Dutch, and that we share an obligation to change the profile of our management to guarantee our company’s continued success in the future. I ask them to help me build that group of people, because it’s better for the business.” Build skill in working across nationality and gender differences (including with your suppliers and search firms) Companies are starting to acknowledge the pervasiveness of bias, as the proliferation of unconscious bias training for middle managers demonstrates. While these are laudable efforts, the research shows they can backfire. People are tired of what they see as “identity politics” and most don’t appreciate being called biased. Moreover, emphasizing that “everyone is a little bit biased,” as trainings often do, can make bias seem understandable and acceptable, and inadvertently reinforce negative stereotypes. A subtle but impactful alternative is to make “managing across differences” a vaunted leadership skill. If you visibly promote and reward those who do it well, actions speak louder than unmet gender targets. For Sijbesma, the crucial issue is to build awareness of dominance – and its impact – among the dominant group. “You have no idea of the culture you have built in your organization until you listen to the people who are not a natural part of it.” The company mainstreamed both gender and culture training into all its leadership development programs. “There is no way for companies to become truly global players if their leaders haven’t learned the 21st century leadership skill of inclusion. If we want to draw on the world’s best talent, and connect deeply with customers across hugely disparate cultures, we need to teach them.” The same education may be necessary outside the company, with suppliers and search firms. DSM found it had to lean very hard on search firms used to find fresh blood for its top team. “Search firms want to close the deal as fast as they can, so they propose all the usual candidates that they have in their networks. I had to really insist that I was looking for other nationalities and women. Some of those searches, like the one, three years ago, for our CFO, took twice as long as normal. I was absolutely determined. I took a lot of heat, both from the search firms and my own colleagues. But you need to know what you want, and what the priorities really are – and then accept some short-term discomfort. Our CFO is now a great asset to the company, in many aspects.” The pieces all fit together: a compelling vision helps get your core constituency on board, and training them in inclusion skills helps them execute on it. “People are not discriminatory,” says Sijbesma, “sometimes they are simply unaware and unskilled.” He has learned that the “myopia of dominant groups to see their standards as normal” is a key obstacle. Building awareness, engagement and skills has allowed him to build balance, fuel innovation and stimulate growth. He’s celebrating, and DSM is flourishing. In 115 years of existence, its profits have never been so high, nor its share price so strong.

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21 июля, 13:00

4 Mistakes That Kill Crowdsourcing Efforts

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Back in 2011, crowdsourcing was fueling an explosion in open innovation. At that time, most Fortune 500 firms had launched crowdsourcing initiatives or partnered with startups in order to access outside innovators or co-create with customers. The providers of crowdsource solutions had their heyday. Kaggle had raised $11M from Koshla Ventures. InnoCentive raised $7M and bought OmniCompete. TopCoder stepped from strength to strength, raising $11M in 2010. Quirky raised two rounds totaling $21M. But the glory didn’t last. Within six years, Kaggle had been acqui-hired by Google; a struggling TopCoder sold itself to Appirio; InnoCentive has been shrinking for years according to LinkedIn data; and Quirky has declared bankruptcy. What happened? Many struggling or failed crowdsourcing firms ran into trouble because they didn’t understand key principles of successful platform design. As a result, they made mistakes that ultimately undermined them. Here are their top four: They allowed messy, unfocused core interactions. Good platform design starts with a core interaction between producers on one side and consumers on the other that is clean, simple, and scales. Uber connects drivers with riders. Airbnb connects room owners with room renters. By contrast, each new request to connect with problem solvers on Quirky, Topcoder, and InnoCentive differs from the last one. The criteria for excellence differ from project to project. Expert solvers, who are indispensable, are not interchangeable. The model of “renting a general crowd of solvers” is too ad hoc. By contrast, one provider can substitute for another on Uber and Airbnb. In fact, riders can become drivers and guests can become hosts. Their interactions are so clean and simple that almost anyone can provide them. They had too much vertical integration and too little orchestration. The original crowdsourcing companies had service models that overcomplicated their core processes. InnoCentive and NineSigma began each innovation contest with a design phase that lasted from two weeks to two months. PhDs and expensive consultants on the payrolls of InnoCentive and NineSigma even got involved. Likewise, Quirky tried to manufacture the  products its community conceived  rather than find expert low cost producers. These crowdsourcing 1.0 firms became asset heavy, while good platforms are asset light. Firms launching new products today use Alibaba, an effective platform, to find low cost manufacturers with competitive bids. Alibaba makes none of these new products but instead facilitates the match. They produce too much social waste. Although innovation contests give solution seekers great variety and options, they waste the time of problem solvers who don’t win. Over the past 10 years, InnoCentive attracted 380,000 solvers and hosted 2,000 competitions but that means 99.4% of people never won. Threadless, which runs crowdsource contests to produce some of the world’s most interesting t-shirt designs, receives over 800 submissions a week from which it chooses only seven winners. Each winner receives just $2,500. One author of the Harvard Business School Case Study on Threadless observes that, based on numbers of applications, the odds of winning admission to Harvard are higher than the chance of winning a Threadless contest. Winning six times, which is the number you’d need to match a minimum wage job, is less likely than being struck by lightning. Threadless and others should offer more graduated prizes, share more risk, and share more wealth. Social waste in competitive challenges undermines a community’s participation over time. If members never win, their willingness to participate drops. Today, only about 6,000 InnoCentive solvers have visible active user profiles, suggesting a 98.4% fall off.  By contrast, well-designed platforms provide both sides, producers and consumers, enough value from interactions that they increase engagement over time. No one, not even top coders or designers, can eat prestige. They fail to leverage network effects. Many crowdsource 1.0 firms never attracted large enough communities to generate sufficient value for participants. Good platforms understand the importance of network effects – wherein the more participants interact on a platform, the more value they generate for all. Precisely because they are unique, one Quirky product rarely improves another Quirky product, whereas one Uber ride helps benchmark the price and quality of another Uber ride and each Google search helps improve results of another Google search. Henry Chesbrough, one of the top thinkers in open innovation, notes that InnoCentive’s hub and spoke model prevents one solver from interacting with another directly rather than through the hub. This puts friction on knowledge sharing. Similarly, NineSigma’s intellectual property (IP) licensing restrictions discourage “permissionless innovation” where third parties are free to explore new technologies or businesses without seeking prior approval. By contrast, the most successful platforms offer web or application programming interfaces (APIs) to their  IP and services so anyone can use them in new ways. Thousands of firms have repurposed Amazon’s web services to create new merchant interactions. Millions more have used Google mapping software to help consumers locate their stores. These third parties generate more than enough data to help Amazon and Google drive their own selling and advertising services to yet more consumers. Good platforms help users repurpose platform resources in new ways. The crowdsource 1.0 firms that lock their IP and services down rarely achieve network effects that lift their platforms up. So who will succeed with crowdsourcing 2.0? The future belongs to true platforms that know the design rules. Success will follow the Airbnbs that start with clean interactions, the Alibabas that place orchestration over integration, and the Autodesks whose reusable Building Information Objects create an expansive and collaborative work platform in the construction industry.

21 июля, 12:05

How Retail Can Thrive in a World Without Stores

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Kenneth Andersson for HBR Historically, shopping has been a sensory experience. Store associates served as personal shoppers, helping customers pick out items. Shoppers gauged quality by the look and feel of a product. They asked for sales associates’ opinions when they tried on clothes. It was as much an emotional experience as it was a physical, tactile one. That traditional “personal touch” shopping experience is hard to replicate online. As more companies struggle to find their niche with the modern consumer, they’re turning to new technologies to recreate this sensory experience. What’s emerging is what I call the “StoreHouse” — a hybrid model that merges the physical benefits of a real-world store with the convenience of home. To embrace this market shift, retailers will need to experiment with a range of technologies and strategies across marketing, supply chain, and merchandising. Here’s how some brands are already doing this: Making the bedroom the new fitting room When eyeglass maker Warby Parker launched in 2010, its founders had $2,500 seed funding and impressive business school pedigrees. Thanks to a well-timed Vogue feature and a refreshing concept — try on affordable glasses virtually or at home, with free shipping and returns — the company scooped up its Series A through D funding rounds and earned a $1.2 billion valuation within five years. Insight Center Crossing the Digital Divide Sponsored by DXC Technology How the best companies get up to speed. Others have latched onto customers’ desire for choice. Rent the Runway lets women browse dresses online and then borrow one style for a few days, including a free second size. Amazon recently announced a new service, Prime Wardrobe, that allows customers to select 3-15 items and try the clothes for up to seven days, with free shipping and returns for the items they choose not to keep. Brands like these know that savvy consumers want both the convenience of online shopping and the experimentation they get in an offline store. I call this trend “bracketing” — buying multiple versions of an item to see which they prefer, intending to return the rest — essentially turning the bedroom into the fitting room. In the future, more brands will follow Amazon, Warby Parker, and Rent the Runway’s examples and embrace bracketing as an opportunity to build trust by ensuring that customers find the right products. Shopping virtually with augmented reality Unlike eyeglasses and clothes, some goods are difficult to try and then return. In categories like furniture and beauty, retailers are experimenting with other ways to offer sensory experiences. IKEA just launched an AR-powered app that lets consumers visualize virtual furniture placed in their homes. Sephora, a 50-year-old industry veteran, makes it easy for customers to shop from anywhere with its popular Virtual Artist app. With the app, you can try out more than 1,000 cheek colors using uploaded photos, augmented reality, and artificial intelligence. If a customer can buy furniture without leaving her home, or test out blush without staining her cheeks, imagine what else is possible. What if you could shop for an engagement ring by uploading a photo of your partner’s hand, or measure and place artwork in your living room using your smartphone? There’s huge potential to replicate important real world shopping experiences using augmented reality. Improving customer experiences with logistics Discovering and trying on products is only part of the retail experience; retailers need to offer delivery options that fit into consumers’ lives. Customers want the dining set they picked using IKEA’S AR app to arrive home without extra hassle, as convenient as a ordering an Uber. They want options, too. If Rent the Runway can’t deliver your dress in time for your friend’s wedding, can you pick it up locally instead? The complexity that comes with this new retail paradigm, in which every home is a storefront, requires an increased level of sophistication in backend operations. Brands that don’t think strategically about shipping and last-mile delivery will pay the price — literally. It’s estimated that shipping a container of Tide Pods laundry detergent from Atlanta to Oklahoma City costs companies approximately $11.44 — more than the cleaner itself. In the future, smart inventory management and supply chain analytics can fix this. Say a furniture store wants to ship a dresser from Chicago to Los Angeles, which requires five days at a $50 shipping cost. Supply chain visibility may reveal that a Santa Monica store just received that dresser and can deliver it today for $25 instead. An efficient, communicative delivery model creates the same effect a smiling store associate does when preparing a customer’s package — a pleasant experience that drives loyalty. In the last twenty years, the internet has become the front door to every retail store. Now, that entry point is briskly shifting to mobile devices, and even further with voice-activated personal assistants and other connected devices. New technologies are helping innovative brands to ease the transition as consumers forgo the shopping mall in favor of bringing the store experience into their homes. Retailers that don’t find a way to create a happy marriage between the showroom experience you’d expect in a store and the convenience of personal shopping at home will be left behind.

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20 июля, 21:58

How AI Is Already Changing Business

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Erik Brynjolfsson, MIT Sloan School professor, explains how rapid advances in machine learning are presenting new opportunities for businesses. He breaks down how the technology works and what it can and can’t do (yet). He also discusses the potential impact of AI on the economy, how workforces will interact with it in the future, and suggests managers start experimenting now. Brynjolfsson is the co-author, with Andrew McAfee, of the HBR Big Idea article, “The Business of Artificial Intelligence.” They’re also the co-authors of the new book, Machine, Platform, Crowd: Harnessing Our Digital Future. Download this podcast

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20 июля, 16:00

A Study of the Champagne Industry Shows That Women Have Stronger Networks, and Profit from Them

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Female executives are a distinct minority, and they can be particularly rare in certain industries like mining, crude oil production, and agriculture. In such environments, they often face daunting obstacles, but could there also be unexpected advantages to being in a minority group? And, if so, what? To investigate that question, we conducted extensive field research studying grape growers in Champagne, France, a region famous for its sparkling wines. It’s a centuries-old business, in which growers (that is, farmers) sell grapes directly to their buyers (winemakers like Bollinger and Moet & Chandon). In that market, women growers are very much a minority (just 14% of all grape sellers in our sample), and discrimination against them by the majority of male growers is a significant factor. According to one woman in our study, “Among grape growers, you lose a lot of credibility when you’re a woman.” In our study, we focused on this type of seller-side discrimination. One woman described the environment in this way: “Men, especially in farming communities, seem to think that expertise can only come from or be used by men.” Or, as another female grower put it, “Men have always had a monopoly…. They have their technical conversations; there were no women involved.” Past research investigating a variety of markets has focused instead on buyer-side discrimination; it notably shows that minority sellers often receive lower prices for the same good. For example, minorities (women, non-whites and older people) are paid less than their majority counterparts when selling cards in baseball card shows, and African Americans are offered lower prices than whites for the same products on eBay. For our study, we wanted to minimize any buyer-side factors in order to isolate and study mechanisms on the seller side. In that respect, the Champagne grape market provided a good environment because of two characteristics. First, grape quality there is recorded by an official scale that was established in the early 1900s and is observable by all market participants. Second, the market is relatively price inelastic because of a limited supply coupled with a booming demand. Together, the two characteristics – quality transparency and price inelasticity – would tend to make it difficult for buyers to discriminate on price against minority growers. To uncover any gender-based differences in prices, we conducted a detailed quantitative analysis of more than 5,700 individual sales transactions over a 17-year period. The results were surprising. We found that female growers were able to charge systematically higher prices than male growers for grapes of the same quality. The difference might seem small (a premium of just 1% to 2%), but for an average grape seller that would translate to more than 2,500 euros annually. Moreover, most Champagne growers are relatively small operations employing an average of about three employees. Thus an additional 2,500 euros is not trivial. To investigate the reasons for the difference, we interviewed 67 people: 37 grape growers (22 men and 15 women), 14 CEOs of Champagne houses, and 16 industry experts. From that qualitative research, we found that an underlying reason for the price difference was the relationships developed and maintained by the women growers. Often, minorities who are excluded from the majority will seek solidarity with one another, and this was certainly the case for the female growers, who tended to interact for social support. These informal relationships frequently led to the women exchanging useful knowledge and market information that the men tended to keep secret. Those conversations might include information about who does business with whom, to what extent, for what grapes, and at what price. We should emphasize that we did not observe any price collusion – that is, instances of the women explicitly coordinating their pricing with one another. Instead, their informal relationships helped facilitate the benevolent and legitimate exchange of different types of information, which might include professional advice and information about the prices they were charging buyers. Moreover, because the women tended to socialize more with each other, their trust in the accuracy of the information obtained through those interactions was relatively high. In contrast, men tended to be more skeptical of what they heard from other male growers, assuming, for example, that competitors were prone to boastfully exaggerate a price that was paid for a certain crop. And that’s only in the rare instances when men would even talk about prices. As one male grower in our study noted, “Price is not something people talk about in Champagne. It’s a private matter. For some reason, it makes people feel uncomfortable.” Consequently, because the female growers were able to obtain more accurate market information, they were able to price their own products more aggressively than the male growers. Combined with past studies, our research has implications for female leaders and minorities in other industries. When an organization contains just a few “token” minorities, those individuals will tend to compete with one other to distinguish themselves. But when a minority group is somewhat larger, people in that group will be more likely to identify with one another and develop supportive relationships. And, as the female grape growers in Champagne have shown, a network of such relationships can result in tangible benefits, including not just social support but also the sharing of valuable business information such as the prices being charged in a market. From a broader context, our work highlights an unexpected consequence of discrimination. Specifically, when minority members are slighted by the majority, they might tend to turn to one another for social support, resulting in a network of informal relations that may (ironically) enable them to achieve better outcomes. For example, observers have noted that women are slowly making inroads in male-dominated markets such as technology entrepreneurship and private equity. But some evidence suggests that, as a group, their contributions are undervalued in these settings. As such, it’s possible that the dynamics we document in the Champagne grape market might also be at play in these industries. Note that such dynamics are especially likely when there’s a certain amount of “information friction” in the market, such as incomplete or asymmetric information between exchange partners, and when deviations from established norms of behavior remain relatively discreet. Interestingly, the male growers in our study were largely unaware that they might be at a price disadvantage. According to one man in our study, “I don’t see any reason why men and women would obtain systematically different prices. I really don’t.” Or, as another man noted, “I would be very surprised to find out women are getting higher prices.” As such, it appears that the male grape growers in Champagne, France have much to learn from their female counterparts about the importance of social networks to increase the competitiveness of their businesses.

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20 июля, 15:00

How Adobe Structures Feedback Conversations

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Providing employees feedback on their performance and opportunities to develop is one of a manager’s most important tasks. As important as it is, however, it can often get pushed down pretty far on the to-do list. Many leaders face a swarm of pressing deadlines; moreover, feedback conversations can be awkward. Even the preparation for such conversations can make managers feel stressed. It’s easy to fall back on the annual performance review to make sure at least one conversation happens. It’s no wonder many employees report getting no other feedback throughout the year. But giving regular feedback on performance doesn’t have to be difficult. In fact, there are a few relatively simple formats or templates to help guide the conversation and ensure the discussion is meaningful (and hopefully more frequent than once a year). One of the best examples I’ve noticed is at Adobe, a company that became notable recently  for ditching their performance appraisals and replacing them with informal “check-in” conversations. But, as we’ll see, their framework for a check-in conversation works well for any situation where relevant and valuable feedback is the goal. For Adobe, a good check-in centers around three elements of discussion: expectations, feedback, and growth and development. When each of these areas have been discussed, then managers and subordinates know they’ve had a meaningful conversation. Expectations refer to the setting, tracking, and reviewing of clear objectives. In addition, expectations also mean that both parties agree on roles and responsibilities for the objective, and also are aligned in how success will be defined. For Adobe, employees were expected to begin the year with a simple, one-page document outlining the year’s objectives in writing. Regular check-ins became opportunities to monitor progress toward those goals and well as review how relevant they might still be in light of recent events. Regardless of what your own team may start the year understanding, taking the time to regularly review what the goals are, how close individuals are to achieving them, and whether or not those goals need to be changed is a vital step in making sure you arrive at the end of the year (or whatever cycle goals are measured by) with everyone in agreement about how successful a period it has been. Feedback refers to ongoing, reciprocal coaching on a regular basis. Feedback is the logical next step from a discussion about expectations. Once the goals are clear, and how close to meeting them is established, feedback is how employees learn to improve performance and more quickly achieve their goals. For Adobe, it was important to emphasis the reciprocal nature of feedback. Managers were providing performance feedback but also needed to be open to receiving feedback themselves. Specifically, feedback conversations provided answers to two questions: 1) “What does this person do well that makes them effective?” and 2) “What is one thing, looking forward, they could change or do more of that would make them more effective?” Growth and Development, the final element, refers to the growth in knowledge, skills, and abilities that would help employees perform better in their current role, but also to making sure that managers understood each of their employees’ long-term goals or career growth and worked to align those goals with current objectives and opportunities. Instead of a simple “year in review” approach, inclusion of growth and development as one element of a “Check-In” ensures that the conversation is centered on future development of employees … not just arriving at a score for the previous period. A vital part of making check-ins successful was not just the forward-looking nature, but also the frequency. If you’re checking-in regularly than it’s much easier for both managers and employees so see progress. And that final piece might be the key to why check-ins work so well. Researchers Teresa Amabile of Harvard Business School and Steve Kramer conducted a multi-year tracking study in which hundreds of knowledge workers were asked to keep a daily diary of activities, emotions, and motivation levels. When they analyzed the results, the pair found that progress was the most important motivator across the board. “On days when workers have the sense they’re making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive and their drive to succeed is at its peak,” they wrote of their findings. “On days when they feel they are spinning their wheels or encountering roadblocks to meaningful accomplishment, their moods and motivation are lowest.” Surprisingly, however, in a separate study of 600 managers, Amabile and Kramer found that managers tended to assume progress was the least potent motivator — citing things like recognition and incentives as stronger motivators. Looking at the three-elements of a meaningful check-in, it’s easy to see why the system would be more motivating and performance enhancing than the norm. While most performance appraisal systems are backward looking, assigning what is essentially a grade to past performance and spending only minimal time focused on the future, this format centers around highlighting the progress made and the skills and abilities needed to make further progress. Both are mechanisms to provide feedback, but one appears far more motivating. Perhaps most importantly, the beauty of a check-in conversation is that it doesn’t automatically mean abandoning all of the other mechanisms required by your organization. Well-intentioned managers can start holding check-ins with or without an overhaul to the performance management system being used. At its core, it’s a helpful tool for having a more meaningful conversation… and using it regularly might even make the annual performance review discussion more meaningful as well. If you’re looking for a way to provide more meaningful feedback and better develop the people on your team, talking about these three things (expectations, feedback, growth and development) is a great start.

20 июля, 14:00

Research: Moral Appeals Can Help Reduce Tax Evasion

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Tax evasion is a key societal challenge and causes considerable losses in government revenue. In the U.S., these losses are estimated to be about $500 billion, roughly the size of the federal government’s annual deficit. How can we ensure that people report their income correctly? The classic approach to reducing tax evasion is to increase the probability of being detected and to increase penalties. However, if people are motivated by a desire to do the right thing, moral appeals could also contribute to increased tax compliance. In a new study, we show that moral motivation is important for tax compliance, and that a moral appeal in a letter from the tax authorities substantially reduces tax evasion. To study the effect of moral appeals, we conducted a field experiment with the Norwegian Tax Administration on more than 15,000 taxpayers. The tax administration knew that these taxpayers were likely to have underreported foreign income in the previous tax year. These taxpayers were randomly assigned to either a control group that did not receive any letter or to different treatment groups that received some letter from the tax administration just before they were to self-report their foreign income. Some taxpayers received a “base letter” that only contained information about why and how to report foreign income, while others received a “moral letter” or a “detection letter.” We studied two different moral arguments for why people with foreign income should report their income correctly: a fairness argument and a societal benefit argument. We developed two kinds of moral letters out of these ideas. The  fairness argument stated that the large majority of taxpayers report their Norwegian incomes correctly and that it is therefore fair that taxpayers with foreign income do the same. The societal argument highlighted the fact that tax revenues finance important public goods. The detection letter did not include any moral appeal, but rather a sentence that emphasized the possibility of being audited. We found that the base letter itself increased self-reported foreign income, which suggests that some of the initial underreporting was related to lack of information and knowledge about how to properly report. Strikingly, however, the average amount of self-reported foreign income by the taxpayers who received one of the moral letters was almost double the amount self-reported by those who received the base letter. Taxpayers who receive the moral letters on average self-report $1,300 more in foreign income than taxpayers who received the base letter. We did not find any statistically significant difference between the amount of self-reported foreign income between those who received the letter with the fairness argument or the letter with the societal argument. Interestingly, we find that the moral letters had about the same effect on the average as the detection letter. However, the effect of the moral letters comes from a smaller group of taxpayers than the effect of the detection letter. Whereas the detection letter worked by substantially increasing the share of taxpayers reporting a positive amount of foreign income, the moral letters worked by increasing the self-reporting behavior of a smaller number of taxpayers, but by a larger amount. We also considered the long-term effects of the letters, in terms of how much the taxpayers self-reported one year later. We found that only the detection letter had lasting impact on taxpayer behavior. A large literature in psychology and behavioral economics have shown that people are willing to trade off between self-interest and moral considerations in laboratory situations with small stakes. Our study shows that moral motives also matter in natural settings with large stakes. This insight is important both for policymakers thinking about tax avoidance but also more broadly. Our research suggests that moral appeals should be part of the toolkit for any organization in which compliance is an important challenge. Moral appeals can often be cost effective, but our evidence suggests they must be applied carefully. They seem to work best in the moment, without longer-lasting effects. And they may not be universal in reach. They may matter only for morally-motivated individuals. However, for those individuals they can be quite effective. By coupling moral appeals with other measures like the threat of detection, decision-makers can better ensure compliance, including limiting tax evasion.