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HBR May-June 2018: Strategy for entrepreneurs

Annotated table of contents, Harvard Business Review, May/June HBR: Do entrepreneurs need a strategy?

1. Adi Ignatius, The new world of risk

Adi Ignatius, the editor in chief of HBR, introduces the article by Condoleezza Rice and Amy Zegart outlining political risks for companies.

Idea watch

2. HBR Team, Managers can’t be great coaches all by themselves

New research shows that managerial coaching styles fall into four categories: teacher, always-on, connector and cheerleader. Importantly, the length of time spent coaching is less important that the quality of the attention, with connectors demonstrating that the best type of support combines overall direction with use of specialists to provide guidance in the acquisition of particular skills. Moreover, always-on managers seem to create resistance in their direct reports: their coaching can be experienced as biased and intrusive.

3. Alison Beard, Drunk people are better at creative problem solving

Beard interviews Professor Andrew Jarosz of Mississippi State University about his experiments testing the capacity for creative problem solving while inebriated. Young men were brought to a level of intoxication below the legal limit and then asked 15 questions from a creative problem-solving assessment that requires making connections between three words. The inebriated subjects were able to find connections faster and more often than the sober subjects in the control group, showing that the loss of focus and control induced by alcohol can stimulate more unusual associations with positive effect on creativity.

4. Katrina Lake, Stitch Fix’s CEO, on selling personal style to the mass market

Stitch Fix is a start-up that has put data science at the core of its identity and operations. Lake, the founder and CEO, tells the story of her career development, the origins of the idea for Stitch Fix and the guiding principles that have allowed the company to solve a seemingly impossible problem: getting customers to buy garments chosen for them unseen and sent by post. Based on answers to a detailed questionnaire, when a customer signs up, the history of responses to the selections sent by Stitch Fix and other data on trends, demographics, and tastes the company’s proprietary algorithms generate recommendations that are then scrutinised and modified by stylists. Lake credits three factors in particular for the success of Stitch Fix: data science reports directly to the CEO; data science drives innovation across the business; people are ultimately the decision makers.

Spotlight: Do entrepreneurs need a strategy?

5. Joshua Gans, Erin L. Scott, and Scott Stern, Strategy for start-ups

The opening shot in the debate hosted in this spotlight section is a resounding ‘yes’ to the question whether entrepreneurs need a strategy. Gans, Scott and Stern propose a space of strategic options structured around two axes: collaboration versus competition with incumbents, on the one hand, and ‘build a moat’ (protect intellectual rights closely) versus ‘storm a hill’ (focus on bringing the product to market and speedy execution), on the other. They then define four strategies that combine these possibilities in particular ways: intellectual property (ex. Dolby), architectural (OpenTable), value chain (Peapod) and disruption (Rent the Runway). Further, the authors explain how a particular start-up, RapidSOS, which wanted to bring 911 calls into the smartphone age, might shape its strategy in each of these four spaces. By generating such a wide range of options, entrepreneurs have a good chance to create a realistic understanding of their position, identifying stumbling blocks as well as specific strengths and opportunities.

6. Carl Schramm, It’s not about the framework

In the opposing camp, Schramm portrays the need for a business plan as arising from business school influence and fashion rather than real experience or need. He emphasizes the process of improvisation as entrepreneurs explore, formulate an idea and start to implement, responding creatively to opportunities as they arise. Entrepreneurs rely on practical understanding that may not be explicitly formulated at the outset. Talent and hard work are rewarded directly in the market, without the need for a systematic process of evaluating options, which could in fact delay, sometimes fatally, the successful launch and development of a business.

7. Daniel McGinn and Walter Frick in conversation with Niraj Shah, Bijan Sabet, and Jennifer Lum, “Create something and start selling it”

Shah, Sabet and Lum share insights from their experiences as entrepreneurs regarding early strategy and pivots, the importance of IP, VC pressure and fads, including the talk of disruption, and the need to learn from experience despite the costs. “Maybe put 1% into strategy and 99% into execution”, says Shah. Lum recommends anticipating the future state of the market and customer needs, while Sabet suggests asking why as well as how: ‘A start-up has some tough days ahead, so it’s useful to do some soul-searching, think about purpose, and reflect on why you want to do this.’

Features

8. Alison Wood Brooks, Leslie K. John, The surprising power of questions

Asking enough questions and asking the right ones can be a powerful managerial tool, but in this article, Wood Brooks and John do not just argue for the power of questions. They provide useful insight into how to go about it: favour follow-up questions, keep them open-ended, and think about the right sequence and the right tone. Equally, we need to take account of whether we ask or answer a question and whether we are in a competitive or collaborative setting. Finally, they address the need for awareness of group dynamics and for actively choosing what to share and what to keep private.

9. Ranjay Gulati, Structure that’s not stifling

How to design guidelines that empower frontline employees to take creative decisions, while at the same time ensuring overall operational discipline? All companies wrestle with this question, but the answer cannot be one size fits all. In his article, Gulati draws on several in-depth studies of companies that have experimented with different frameworks and learned from their own experience, and mistakes, over time, including Netflix, Alaska airlines and Nokia. Articulating purpose, establishing priorities, defining simple principles are all vital, and remain open to challenge from unexpected events and crises. However, companies have no choice but to monitor the effectiveness of their frameworks and to respond to ‘signs of declining agency’ on the part of the workforce by looking again for the more appropriate balance between employee empowerment and operational discipline.

10. Niraj Dawar, Marketing in the age of Alexa

Dawar and Bendle open their article with a stylised, futuristic scenario in which Lori, an American executive returning home from work reviews the logistics of her life: most, if not all decisions are now handled in interaction with her AI assistant, Eve, who has considerable autonomy to optimise decisions within agreed parameters. The article then goes on to explore the implications of this new market place dominated by platforms. What options do companies have when it comes to acquiring, satisfying and retaining customers? How should they think strategically about positioning their brands on particular platforms? And what are the imperatives for platforms, in terms of accuracy, alignment of consumer and business interests, and privacy? Whether this proposed scenario feels futuristic or just around the corner, Dawar and Bendle offer us a stimulating challenge to think through the implications of some of the technological solutions that are beginning to shape the way we live our lives.

11. Darrell K. Rigby, Jeff Sutherland, Andy Noble, Agile at scale

There is now significant experience with agile teams and the benefits agile methods bring to team productivity and morale, quality of work, time to market, and risk. This article suggests that agile methods could work to similar effect at the enterprise level and define a scaling up process that not only implements agile methods but is itself consistent with the agile ethos. Drawing on the experience of companies such as Bosch, USAA, ING Netherlands and SAP, they advise deployment of agile teams on a rolling basis, where advance gather data which is then used to shape the next wave. The taxonomy of teams and the sequence of transition would similarly have to respond to concrete circumstances and real-time performance data. They close with a check list of criteria describing what a good agile enterprise would look like in terms of values and principles, operating architectures, talent acquisition and motivation, and annual planning and budgeting cycles.

12. Rodney Zemmel, Matt Cuddihy, Dennis Carey, How successful CEOs manage their middle act

A CEO’s tenure can go through distinct phases, defined by specific priorities and objectives, whether this is explicitly recognised at the outset or not. The CEOs or former CEOs interviewed for this article concur that having established themselves, in the middle section of their terms in the role the focus of attention needs to change to tackle new challenges. It becomes important to find ways to keep raising the level of ambition, to tackle deeper company problems, such as silos and broken processes, to re-recruit for the leadership team with a view to sustain these changed priorities, to find mechanisms to prevent ruts and stifling routines, and to devise and implement bold long-term moves that will define their legacy. Ultimately, the success of a CEO’s tenure will depend on such ability to recognise subtle changes of emphasis and to respond creatively.

13. Jennifer Petriglieri, Talent management and the dual-career couple

Dual-career couples have become a more significant part of the job market and they have specific needs that often go unrecognised by the more conventional assumptions that still guide talent development at many companies. It is generally expected that commitment to a company is best expressed through willingness to accept assignments in different locales, often at short notice, and that family commitments could be easily subsumed to the interests of the enterprise. However, companies have also had to recognise that the career concerns of a spouse need to be given adequate consideration. When not met with understanding and more creative ways of testing loyalty and developing talent, employees can decide to leave the company rather than put their relationship at risk. This article shares best practice in terms of developing personnel policies that accommodate the needs of the dual-career couple, by downplaying the importance of location changes while emphasising the content and skill set necessary for the work, and challenging cultural obstacles to flexibility.

14. Catherine H. Tinsley, Robin J. Ely, What most people get wrong about men and women

This article contributes to the conversation about the treatment of women in the workplace by pointing out that stereotypes about the typical behaviour of men and women are socially constructed. In fact, research shows that behaviours can vary widely among both men and women. Thus, rather than explaining particular instances of behaviour by falling back on comfortable stereotypes, and myths, such as women being less inclined to negotiate, or lacking appetite for risk, the authors recommend that we enquire into the particular circumstances that might encourage or inhibit particular behaviours. They point out the mechanisms that make recourse to the sex-difference narrative so persistent – our tendency to fall back on intrinsic personality traits explanations, to take familiar, often repeated statements at face value, and to look for confirmation of our biases – and articulate a different approach. This consists in questioning the narrative, generating and testing alternative explanations in different contexts and promoting continual learning.

15. Sandra J. Sucher, Shalene Gupta, Layoffs that don’t break your company

This article questions the usefulness of episodic restructuring and routine layoffs, the conventional responses to automation and intense global competition. Layoffs seem to hold great short-term appeal for companies and have become even more common in recent years as a ways of cutting costs quickly. However, the long-term costs of layoffs have also become apparent, impacting the quality and safety of workforces with knock-on effects not only on careers but also the economy as a whole. A shift in focus would require a different philosophy, valuing the contribution of the workforce and taking responsibility for long-term impacts, and a method for continuous workforce change in response to changing market conditions. A more effective workforce change strategy would anticipate three scenarios: a healthy present, short-term volatility and an uncertain future. How this can be done is shown through case studies such as Michelin and Nokia.

16. Condoleeza Rice, Amy Zegart, Managing 21st-Century political risk

Rice and Zegart propose an analysis based on ten types of political risk, from geopolitics to cyberthreats, and including supply chains and technology. In this framework, effective risk management requires the development of four capabilities: to understand, analyse, mitigate and respond to shocks, each addressing particular sets of questions. Without attempting to foresee how history will unfold, the authors argue that the management of political risk can nonetheless be effective if underlying capabilities are well-developed and companies are ready to engage with the unexpected when it happens.

Experience

17. Heidi Grant, How to get the help you need

Balancing cooperation and competition remains one of the core challenges and concerns of working life. Here, Grant explores the implications of asking and receiving help both in terms of ensuring effective cooperation and safeguarding one’s credibility and competence. There are three underlying conditions that make asking for help feel more natural and less risky: sharing in-group solidarity, allowing givers to own their positive identity explicitly and making visible the impact of helping. Grant is also clear about the needs of helpers, in terms of awareness that you need and want help, of feeling that they personally are being asked to help, and finally having the capacity to provide the help.

18. Jeffrey T. Pozler, Case study: Should an algorithm tell you who to promote?

Pozler describes a promotion process in which detailed, direct knowledge of a candidate, a mentee, is set against the outcomes of an analysis of best match for the job carried out by the HR department with the help of an algorithm, which favours a different candidate. The algorithm has not been extensively tested and the manager in question has to find fair criteria of evaluation that would allow her to choose the best candidate for the job.

19. Walter Frick, The conundrum of corporate power

What is the proper relationship between business and political power and when does economic power translate too easily in the ability to shape the rules and regulations that should protect us all? Frick reviews here three books and a podcast that discuss the role of big business in society.

20. Alison Beard, Life’s work interview, Deepak Chopra

Deepak Chopra is a health guru who encourages people to reflect deeply on important questions about their lives, character and choices, believing that daily meditation and deep reflection are fundamental to wellbeing and success. Here he shares his thinking about his career, work schedule, fame.

Table of Contents

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