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HBR Nov-December 2018: The best performing CEOs

Harvard Business Review

Annotated Table of Contents, November-December 2018 issue

1. Adi Ignatius, Stability amid turmoil

Adi Ignatius, the editor in chief of HBR, introduces the spotlight feature in this issue about the 100 best CEOs in the world.

Idea watch

2. HBR Staff, Making process improvements stick

Researchers have investigated the long-term effectiveness of 204 lean projects launched at a large European Bank serving more than 16 million customers, with 2000 branches in 14 countries. They found large variability in the extent to which these projects continued to yield results one year after the launch, with only around a third of them holding on to gains after two years. The amount of overt and consistent support from the head office was a major determining factor. Three other aspects played a role: a clearly articulated link with the rationale of the organization, ability to address employee pain points and coaching provided by senior leaders. The excitement of achieving quick results tends to encourage jumping on improvement fads, but this can lead to initiative fatigue in the workforce and diminishing returns in the longer term. An interview with Helen Bevan substantiates some of these points in the case of reforms in the British National Health Service.

3. Alison Beard, A tattoo won’t hurt your job prospects

Beard interviews Professor Michael T. French who carried out research to address a gap in the literature about the impact of personal characteristics on job prospects and income by surveying people who have tattoos. In a sample drawn from paid volunteers recruited on the Mechanical Turk, he and his colleagues found that for both men and women in the US the presence of tattoos did not affect their labour market position. One reason may be that tattoos are now relatively common in the US population, making them less of a striking or problematic trait, for blue collar workers as well as professionals. Moreover, even when hostility to tattoos is declared by managers it is possible that hiring practices are in fact more responsive to merit than appearances. But the research did not control for the timing of acquiring a tattoo, before or after establishing a career, for instance, and it is unclear to what extent these findings hold outside the US.

4. Karan Bilimoria, Cobra’s Chairman on turning an Indian beer into a global brand

Bilimoria, an Indian British entrepreneur and member of the House of Lords, shares the main elements in his journey towards becoming a successful businessman and public figure. He describes his trajectory from Indian origins and formative educational experiences and relationships, to generating business ideas and implementation, especially the launch of a new beer brand, Cobra, which has gradually become a global contender. In the process, his company has weathered a number of crises, for instance when Cobra was temporarily boycotted by Indian restaurants in the UK, its main early market. At other points the company had to raise finance in a fraught environment and to buy out unexpectedly an important investor. Bilimoria credits three factors as fundamental to his success: clarity of vision, creativity and flexibility in achieving his ends, and integrity and loyalty in his core relationships.

Spotlight

5. HBR Staff, The best-performing CEOs in the world 2018

This is the seventh yearly ranking of global CEOs, the fifth according to the current methodology, and it is based on an average of three financial metrics (country- adjusted, and industry-adjusted total shareholder return and change in market capitalisation) and two sustainability indices. The ranking results from analysis of CEOs who have served at least two years at S&P Global 1200 companies. As well as presenting the 100 best-performing CEOs in the world, the article discusses the broader trends and findings that stand out against the consistency of the methodology over the last five years. Of potential interest for British readers, CEOs of companies based in the UK have lost a great deal of ground this year. The first of only three is included at 57, Erik Engstrom at Relx, followed by Gregory Case at Aon (66) and Simon Wolfson at Next (97).

Features

6. Gary Hamel and Michele Zanini, The end of bureaucracy

Hamel and Zanini argue that Haier might represent an ideal balance between organisational structure and employee freedom and entrepreneurship. Any employee or team can propose an innovative idea, create a business within the company, and succeed, provided that the effort is strong enough to survive internal scrutiny and competition. Haier itself is a conglomerate of microenterprises in which customer facing microenterprises, immediately responsive to the rigours of the market, are supported by ‘node’ microenterprises. The dynamism of the whole comes from several mechanisms: ambitious leading targets; competition and collaboration in internal contracting, product development and delivery; openness to involving outsiders, as providers or through crowdsourcing; market testing of ideas and co-ownership.

7. Bernard C. Kümmerli, Scott D. Anthony, and Markus Messerer, Unite your senior team

This article describes in detail an intervention at the board level to help leaders clarify their strategy for the future development of Swisscom, a $12 billion telecom company that in 2016 was facing flat-lining profits in a slow growing industry. The senior leadership team was deeply divided in regards to future priorities and open discussion was difficult. The intervention consisted of leadership dialogues, using data visualisation to dramatize the implications of the different options available and to expose conflicts and trade-offs, followed by structured physical exercises to catalyse decision making. The different stages – their rationale, implementation, results – are presented in detail giving insight into effective group dynamics and processes. The authors suggest that uncovering differences and conflicts is a necessary stage before arriving at a common position that everyone can embrace. They also offer a practical way to facilitate this transformation, building on the observation that thinking happens ‘when we crisscross the boundaries of brain, body and world.’

8. Paul Leonardi and Noshir Contractor, Better people analytics

Collecting and analysing trait and state data about employees in order to make better business decisions has become standard practice in many companies. In this article, Leonardi and Contractor argue that an even more effective type of analysis could focus on the relationships between employees. The digital exhaust of interactions within companies could be used to map networks and define their characteristics. Moreover, the research provides six tentative hypotheses that link the presence of certain structural patterns, or signatures, to particular outcomes in regard to ideation, influence, efficiency, innovation, silos and vulnerability. The authors also explore employee privacy issues and make the case for the superior quality and relevance of digital exhaust data for HR decisions.

9. Matthew Dixon, Reinventing customer service

This case study of customer service at T-Mobile distils several organisational innovations that have led to extraordinary success by virtually any measure. In terms of ownership, customer service teams at T-Mobile operate as profit and loss units and their members are taught to take responsibility for devising solutions for customers and to assess their impact on business performance indicators such as cost of service versus earnings and profits. At the same time, collaboration and alignment also result from a careful of division of labour, protocols for cooperation and a corresponding system of compensation. Dixon explains several other features of the new customer service at the company: the relationship between the service teams and the customer pool; the spatial organisation of the customer centre; training of new staff; the fit between the customer centre, the overall culture and the strategic priorities of the company; the business impact of these changes; and many examples of how the new approach has led to superior solutions for particular customer problems.

10. Thomas Steenburgh and Michael Ahearne, How to sell new products

Selling new products typically requires a different kind of sales process from that of established product lines, argue Steenburgh and Ahearne. The novelty itself configures differently the interest of the potential customers who might be initially curious to learn about new ideas but become reluctant to commit to a purchase later as the implications of the change might be complicated and difficult to evaluate. To commercialise new products successfully, therefore, puts pressure on companies to encourage and develop new skills sets in their sales forces: helping them to take the long view, exhibit more resolve, and embrace learning and adaptability. Thus, a culture that supports new product sales would assess skills systematically and offer training for knowledge and resilience. It would also make use of strategic account management to help mobilise resources for the commercialisation effort and build partnerships with clients.

11. Cyril Bouquet, Jean-Louis Barsoux, and Michael Wade, Bring your breakthrough ideas to life

Breakthrough ideas are rare, their emergence and success largely unpredictable, as the success rate of existing processes to facilitate innovation remains disappointing. Building on their long experience of research on creativity in companies and beyond, the authors distil five necessary elements that together are likely to counter biases and blocks and encourage the development of radically new products and services. They use a large variety of successful and unsuccessful cases to show how seeing with fresh eyes, taking perspective, trying out unexpected combinations, testing and paying attention to the commercialisation process early proved critical at particular junctures.

12. Acha Leke and Saf Yeboah-Amankwah, Africa: A crucible for creativity

The economic dynamism of Africa is one of the surprising and welcome good stories of recent years. In this article, Leke and Yeboah-Amankwah look at the sectors where innovation has been most prevalent, including financial services, infrastructure development, manufacturing, food production, consumer products and education. They show that thriving in Africa’s challenging environment has required creativity as well as commitment and describe many solutions that might serve as inspiration for others. Building resilience into the company has often depended on practices such as having backup power generation on site, owning a vehicle fleet for distribution, integrating supply chains vertically, controlling a source of clean water and providing financing to suppliers. Needless to say, addressing deprivation in Africa by fostering economic activity is urgent and the solutions devised here have the potential to inspire entrepreneurs confronted with similar issues in other parts of the world.

13. James R. Detert, Cultivating everyday courage

Knowing what to do when circumstances fall short of our ethical aspirations and to do it well requires no small amount of discrimination, courage and skill. We earn these over a lifetime of experimentation and effort, of course, but this article is especially good at helping us get a more thorough appreciation of our options and what is really involved in bringing about positive change. The advice appears straightforward: lay the groundwork, choose your battles, persuade in the moment, and follow up. Often however, executing these well entails beating the odds as we learn from the many examples that illustrate these points. More deeply, the article also facilitates a careful calibration of expectations about how much change can be achieved and what it takes.

Experience

14. Ayelet Fishbach, How to keep working when you’re just not feeling it

Fishbach identifies four strategies for tackling lack of motivation touching on particular aspects of goals, tasks, incentives, rewards. The first strategy emphasizes intrinsic motivation and the need to use imagination to frame tasks and goals in a way that connects them to genuine enjoyment and pleasure. This frees up a pool of energy, while other strategies, such as designing effective rewards, measuring progress, and using the influence of others can help sustain the effort. Among other things, Fishbach suggests that we don’t just watch and try to copy more successful or effective colleagues, as this can actually be misleading or demotivating. What helps to inspire more is to hear them explain why they do things in a certain way and why they would recommend it.

15. Francesca Gino, Case study: Can you fix a toxic culture without firing people?

This a case study of a CFO of a manufacturing division confronted with low morale after its financial situation was stabilised through personnel and other cuts, as she struggles to articulate her appropriate role in understanding and dealing with this problem.

16. Ania G. Wieckowski, Predicting the future

Wieckowski introduces four recent books that present strategies and tools for dealing with uncertainty and making and testing assumptions about the future. They emphasise variably shifts in perspective and motivation to allow us to imagine different scenarios as well as research and the use of new technological tools such as AI.

17. Alison Beard, Life’s work: An interview with John Kerry

John Kerry, the former US presidential candidate and secretary of state answers questions about his approach to solving problems and leading people. He is both a master at delivering on hugely complicated tasks and recovering after major personal setbacks.

Table of Contents

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