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HBR Jan-February 2019: Rethinking efficiency

Harvard Business Review, January/February 2019
Annotated table of contents

1. Adi Ignatius, The price of “success”

Adi Ignatius, the editor-in-chief of HBR, introduces the spotlight section on the dangers of focusing on efficiency at the expense of resilience.

Idea watch

2. HBR Team, Giving after disasters

Research shows that although corporate aid has increased significantly in recent decades, its impact depends on who gives and how. Companies already present in a country hit by a natural disaster are more likely to provide timely and effective aid, contributing to faster recovery. For companies in good standing, it is an advantage to be the first to give or to match the size of the gift of the company that gave first. However, for companies that are not in good standing, being seen to want to lead in the helping effort could be counterproductive. An interview with Edward Martinez, the head of the UPS Foundation and their chief diversity and inclusion officer, brings out just how much companies could gain from strategic philanthropy. They can help restore economic activities and create new solutions, learning more deeply about new cultures and markets and motivating their own work force for a higher purpose.

3. Scott Berinato, Mindfulness is demotivating

New research by Andrew Hafenback, interviewed here by Berinato, shows that after a meditation session, having calmed down and taken the long view, subjects tend to be less motivated to carry out a task. However, they are more likely than subjects in the control group, who had not meditated, to carry out the task well, presumably because their minds had cleared and they can concentrate better. These results complicate our understanding of the pathways to increased wellbeing and productivity resulting from mindfulness practices.

4. Zander Lurie, CEO of Survey Monkey on creating a culture of curiosity

Zander Lurie describes the emergence of a culture of curiosity at Survey Monkey after the sudden death of its long-time owner Dave Goldberg in May 2015. For a company set up to empower social research, especially through surveys, using its own tools to determine employee values and to design appropriate work practices to sustain them came naturally. The same ethos of inviting questions and diverse perspectives was at play in the process of taking the company public and finding the right investors.

Spotlight: Rethinking efficiency

5. Roger L. Martin, The high price of efficiency

Martin argues that markets with imperfect competition are best described by Pareto (rather than Gauss, bell-shaped) distribution. In other words, winners tend to take almost all. He describes the process by which innovations in efficiency lead to consolidation and concentration across industries and sectors, as efficient players grow faster and absorb or otherwise eliminate others. This leads to greater systemic risk and vulnerability, whereby unexpected events could destroy the current dominant model. Moreover, the power of the larger players can go unchecked, leading to runaway inequality. To counter these tendencies in markets, Martin advocates greater emphasis on resilience via five mechanisms: limit scale through anti-trust state intervention; introduce friction through barriers to trade and capital movements; promote patient capital by linking voting rights to length of tenure of shares; create good jobs where employees are properly remunerated and developed over the long term; shift the hierarchy of values in management education in favour of resilience.

6. Jacob Greenspon and Darren Karn, Success breeds inequality

Greenspon and Karn present long term data documenting the increase in inequality between families and companies, the tax system bias in favour of the rich and the differential recovery in house and stock practices, after the 2008 crisis, as they affect negatively the less well-off in the US.

7. Jim Hackett, CEO of Ford Motor Company interview “The costs of complexity are hard to see”

Hackett became the CEO of Ford in May 2017, after leading Steelcase for twenty years. In his new role, as in the old, he is applying a philosophy of corporate fitness, combining efficiency and long term resilience. He explains his priorities and answers questions about trends and pressures in the car industry.

Features

8. Gary P. Pisano, The hard truth about innovative cultures

Pisano, a professor at Harvard Business School, draws on a variety of case studies he has researched and written about to argue that to achieve business success the desirable features of an innovative culture, such as curiosity, creativity, honest feed-back, tolerance for failure, need to be accompanied by harder edge values and norms. He describes what a happy balance might look like between tolerance for failure and no tolerance for incompetence; willingness to experiment and discipline; psychological safety and candour; collaboration and individual accountability; flat organisational structures and strong leadership.

9. Marshall Fisher, Santiago Gallino, and Serguei Netessine, Retailers are squandering their most potent weapons

Fisher, Gallino and Netessine offer practical tools that could help retailers to find the sweet spot between levels of staffing and training and revenue maximization. They advise retailers, step-by-step, how to create an objective analysis for every store linking variations in staffing levels and revenue changes to determine where they need to deploy more staff, let some go or leave as they are. Once these measures are implemented, regular reassessments should keep positive trends on track. Similarly, they find that training sales assistants both in terms of store processes and product knowledge (often financed by the brands themselves), could lead to significant improvements in their performance. Focusing on making the most of the sales forces could allow brick and mortar retailers to hold their own against the pressure of online retailers.

10. Stephen A. Greyser and Mats Urde, What does your corporate brand stand for?

Greyser and Urde present a brand matrix which can serve as a tool to strengthen a parent brand, support business development or change a brand’s image. The matrix is organised in nine fields, grouped in three rows: internal, external and bridging elements between inside and outside. It also checks for consistency along four other dimensions: strategy, communications, interaction and competition. This instrument contains diagnostic questions and rules for sequencing the analysis to solve concrete problems, presented in detail and illustrated with examples including the Nobel Prize, Johnson and Johnson, Nike, Patagonia, Cargotec, Bona, Intrum, and Trelleborg among others.

11. Clayton Christiansen, Efosa Ojomo, and Karen Dillon, Cracking frontier markets

Christiansen, Ojomo and Dillon present an important new concept to define a particular type of innovation that can tap into huge economic development potential: market-creating innovation. Three examples are illustrated in great detail: Nollywood, the Nigerian Hollywood, MicroEnsure an insurance provider via phone usage in Africa, and Galanz a producer of microwaves for low income customers in China. Such innovations tackle local problems with local solutions, improvising and circumventing constraints such as lack of infrastructure and institutions. They identify large pools of non-consumption and create offerings that are profitable enough to fund growth, generate durable local jobs, and scale up quickly. Often, they are able to pull in the necessary resources, either by generating them directly or by creating incentives for others – governments, companies, NGOs - to step in.

12. Chris Addy, Maya Chorengel, Mariah Collins, and Michael Etzel, Calculating the value of impact investing

This article offers a clearly defined tool for calculating the value of impact investing. It consists of six steps: assess relevance and scale; identify target social or environmental outcomes; estimate the economic value of these outcomes; adjust for risks; estimate terminal value, beyond the duration of the project; calculate social return per dollar investment. While by no means either easy or absolutely precise, this process offers a transparent and reliable path towards putting a figure on the likely value of impact investments. Its deployment might even help orient more capital towards such uses.

13. Nathan Furr, Jeffrey H. Dyer, and Kyle Nel, When your moon shots don’t take off

Furr, Dyer and Nel offer several ways to expand your toolbox for troubleshooting blocks in the creative, innovative process. Asking science fiction writers to use elements of the current situation to configure alternative futures can help leaders visualise possible paths for breakthrough growth. Equally, using analogies, questioning the logic of the dominant first principles in a field, and exploring adjacencies by deploying adaptive solutions to completely new contexts can also help unlock extraordinary potential. Sidestepping cognitive habits that keep us stuck is by no means easy; in fact, as these techniques show, without a genuine shake-up in our perspective the radically new might well remain out of sight and well-nigh impossible.

14. Feng Zhu and Marco Iansiti, Why some platforms thrive… and others don’t

Despite the seeming ubiquity of some of the successful platforms, such as Facebook or Uber, platforms in general remain deeply vulnerable to competition and can indeed disappear virtually overnight. In this article, Zhu and Iansiti propose that five characteristics can help determine how robust platforms really are: the strength of their network effects; patterns of clustering in the network; risk of disintermediation; the availability and attractiveness of multiple platforms serving the same customers; and the skill in bridging different networks.

15. Scott Berinato, Data science and the art of persuasion

Despite the hype and seeming universal recognition of its importance to businesses today, data science is rarely used to its full potential. Berinato offers a diagnosis for why the communication of insights derived from data fails and proposes several guidelines for building a better data science operation. These include clear definitions of the talents and skills involved; criteria for hiring to create a portfolio of talents; optimisation of mutual understanding between different kinds of talent; and articulation of linkages between projects and talents.

Experience

16. Steven G. Rogelberg, Why your meetings stink – and what to do about it

Rogelberg addresses some of the common difficulties managers have in using meetings to run their teams effectively, such as getting people to attend and contribute consistently, determining and implementing further actions, opening space for creativity and constructive criticism. Self-reflection is crucial in all the steps involved in improving the ability to run meetings well: assessing the current situation, as experienced by the managers and her reports; thoughtful preparation of meetings; facilitation; and finally reassessment.

17. Boris Groysberg and Katherine Connolly Baden, Bad blood in the senior team

This case study looks at a second generation, family-owned company where the CFO and the head of sales have an entrenched, adversarial relationship. Despite the fact that the company is doing well, deep underlying conflicts in the senior team can create vulnerabilities and risks for the future and need to be addressed.

18. Alison Beard, Ideal worker or perfect mom?

Four books on women who juggle paid employment and child care draw on a diversity of experiences and types of data, qualitative and quantitative in different countries. Setting the right expectations about the limits of the possible can make a great difference and in this case this perhaps means accepting that ‘you can’t be both’ ideal worker and perfect mom.

19. Alison Beard, Life’s work interview: Michael Ovitz

Ovitz, now an adviser in Silicon Valley, founded and led for many years a cut-throat talent agency in Hollywood, CAA, which revolutionised how deals were done in the industry, exploiting the power to tie talent and specific projects, as well as the power of collaboration through management by consensus.

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