In the spirit of reverse innovation, and reverse mentoring, I submit to you that the next trend to watch out for in leadership is, you guessed it — reverse leadership.

You've likely seen reverse leadership in action. It happens when someone not in a formal leadership role demonstrates great leadership ability: when a field service agent steps up with a solution to a persistent problem, for example; when a customer service rep inspires her colleagues through her exemplary customer-centric behavior. When someone on an account team improves dramatically after being constructively coached by a fellow team member.

Reverse leadership doesn't replace regular leadership. Nor is it a sign that the official leaders in an organization are doing a bad job. Quite the contrary. Rarely does strong leadership ability show up at lower levels in the hierarchy if senior leaders aren't very effective in their roles.

Some reverse leaders are people quite content to remain individual contributors, like the scientist who has no interest in managing a team but cares deeply about the company's mission. Others are young employees just approaching or on the first rungs of the formal leadership track. Still others have some leadership abilities but lack some vital element of leadership, like the sales professional who excels in creating strategy but doesn't yet have the skills needed to manage a sales team.

In my work with focus groups, interviews with leaders, and reviews of frontline employees' performance appraisals, I'm seeing more and more of these reverse leaders. But I'm not seeing many organizations able to recognize them — or cultivate their talents to gain a competitive advantage. What are the characteristics you should be looking for to spot your reverse leaders?

1. They're the ones with strong interpersonal skills born of self-awareness. Reverse leaders lead through influence, not authority, and they gain that influence by making strong interpersonal connections. To do that they must be self-aware enough to understand the effect their words and actions have on other people. As more and more knowledge work requires people to work effectively with peers, the example of the way these people treat their team members becomes increasingly important to organizational effectiveness for all leaders, formal and informal.
2. They focus more on results than on process. Anyone can follow the process, as the old saying goes, but it takes leadership to know when to break from it. Reverse leaders don't break rules simply to be rebellious. They break them because they're focused on the outcomes rather than the process for producing outcomes. In this regard, reverse leaders can be particularly helpful to savvy leaders in formal positions who are wise enough to encourage their reverse leaders to point out when means are being prioritized over ends — and then to listen to them when they suggest ways to address the issue.
3. They exhibit particularly high degrees of integrity. To lead by example requires integrity of character. People who have a choice would rather follow those who say the same thing up the chain as they do with their peers, those who are consistent in their approach in dealing with problems in different circumstances. While this is essential to reverse leaders, it's an important model for all leaders, regardless of where their authority comes from.
4. They have deep professional expertise in at least one discipline vital to the organization. Whether that deep knowledge is in sales, products, finance, technology, or some area that creates important value for the organization, reverse leaders need to have a specialty. This expertise serves as a source for their authority, giving them the credibility to be taken seriously when they highlight unrecognized problems or propose unanticipated solutions.
5. They maintain an unswerving customer focus. Maintaining a focus on the customer is one way to lead by positive example, and an advantage reverse leaders may have over formal leaders, since they tend to be found further down the organization and by extension closer to the customer. Reverse leaders can be the exemplars of customer-focused behaviors in ways that leaders in formal roles — with their broader responsibilities — can't. And such focus can have tremendous value to any organization, if properly recognized and encouraged.

Some of these reverse leaders will move up the ladder and progress, as we would expect. Others will need to wait until they develop additional skills. And others will be content to contribute right where they are. But organizations that can recognize them, cultivate them, and learn from their example will be a step ahead of those competitors that don't and instead squander the services of the unrecognized talent in their midst.

If you're wondering what to do next in your career, you're hardly alone. The debate about where and how we may best feed our hunger for mastery, service, prestige, approval, safety, achievement — whatever we're after — is fiercer than ever.

Do you go after, or hold on to, a corporate job or strike out on your own? Daniel Gulati and Lucy Kellaway recently offered contrasting views. There is less need to join prominent institutions today to demonstrate our worth, argued Gulati, an entrepreneur, here on HBR. Social networks offer more accurate ways to signal our ability and potential to add value.

That is a crazy thought, rebutted Kellaway from her column in the Financial Times, where she has worked for a quarter of a century. How can a Twitter stream trump a business card with the logo of a venerable institution emblazoned above your name, especially when such institutions are so hard to get into and stay at?

The two perspectives make for an informative debate on the changing sources of prestige, and on the best strategy for the ambitious to gain recognition in this day and age — be it from employers, local and virtual communities, or inner critics. They are also the latest installment of an ongoing generational controversy.

Take these two New York Times essays, arguing that young Americans are too complacent to hit the road to find work, and have the passionless and eager-to-please attitude of salespeople. Then read these responses, on HBR and Techcrunch, articulating the widespread disillusionment with all establishments and the sense of unfairness and betrayal that are fueling a groundswell of entrepreneurship.

Such things have long sparked heated discussion. Each time a new generation stakes claim to culture and power, previous ones respond with disconcert and skepticism of the new group's motives, aspirations, and habits.

But something feels different this time around.

Members of generations whose defining experiences were of commitment and rebellion struggle to make sense of a generation whose members' defining experiences are of uncertainty and flux. In the past, talented new people were keen to wrestle institutional conductors for the wheel of the bus. These days, many cannot wait to get off the bus. They are not just looking for a change of direction. They are aiming to invent new institutions and new ways of working to bring us all forward. This generational transition could be less of a handover or a takeover, and more of a walkout. But this is not, ultimately, about generations.

It is a clash of workplace civilizations.

This clash is between collectively prescribed and individually crafted paths to success and fulfillment. Advocates of both sides exist among all age groups. It is a clash happening between us, and let's face it, within us — as we ponder the best way to craft our work lives in uncertain times, as we look for ways to assuage our concerns, pursue our aspirations and keep our hopes alive.

When I started teaching MBAs, for example, my students used to queue at consulting firms, investment banks and elite corporations' doors for internships and jobs. They still do. Equally cool these days, however, is working on a start-up.

I asked two fledging entrepreneurs how their MBA classmates viewed their choice of spending the summer on their venture — and giving up the potential experience, connections (and salary) of a posh corporate internship. "We hardly hear that's foolish. Most people tell us, 'I wish I was doing that.'" They harbored no illusion that their choice was safe. But corporate life seemed to offer neither more safety nor more status among their peers. Therefore, the choice was easier.

This what makes the clash more intense than ever and brings it out in the open. Established institutions are still powerful but have proven less reliable. Entrepreneurial ventures are still risky but they are increasingly seen as the best way to tackle economic and social problems. Neither option is safe. Both involve uncertainty and signal prestige.

Hence many are taking either route, for different reasons — to follow their passion, to prove themselves, to serve others, to gain recognition. Not everyone is a conformist who joins a big firm. Not all Zuckerberg wannabes are following their bliss. It's not the choice of workplace that matters most. It's why we make it, and what we do with it.

Here is my view. Let us welcome the clash of workplace civilizations. It has potential to be good for us. We need talented stewards to reinvent our ailing institutions as much as we need gifted entrepreneurs to build new ones. Let each of us take both sides.

Whether you're betting on the staying power of established institutions or in the promise of start-ups, you must keep the clash alive within yourself. Being successful and fulfilled in a large organization, in the long run, will require carving your space, innovating, making your mark. In a new venture, it will require staying connected to, influencing, and maybe one day becoming, the mainstream.

Individuals and societies are full of tensions. We are living contradictions. What will we need to do for this one to fuel creative breakthroughs rather than bitter conflicts? I'd love to hear your views.

This post is the second in a three-part series.

In his provocative book The Paradox of Choice, Barry Schwartz's warns that giving consumers more product choices actually lowers their purchase satisfaction. Schwartz reasons that having too many options makes us fear missing out, which causes anxiety, analysis paralysis and regret.

But many marketers have dismissed Schwartz's warning, arguing that today's consumers expect a wide range of options and have learned to filter greater amounts of information. Marketers' own research usually backs this up. When asked, consumers in these studies almost always say they want more choice. And, in fact, one of the top reasons shoppers give for not making a purchase is "couldn't find the right option." Understandably, therefore, marketers are reluctant to cut back on SKUs for fear of disappointing consumers and losing sales. Instead, companies continue to develop a growing array of niche products to fit every imagined need and aggressively promote them.

At the Corporate Executive Board, we've been exploring purchase behaviors in this world of infinite options. Our survey of over 7,000 consumers worldwide sheds new light on how consumers really feel about all this choice. (To download industry cuts of our survey findings, visit CEB's Decision Simplicity resource center)

On the one hand, the majority of consumers in our study report that they have "just the right amount of information" and "just the right amount of choice." Clearly, they don't see a problem. Yet when we looked at what consumers actually do, rather than what they say, we get a different picture. Consumers spend far longer researching products today than they did in the past, and yet 70 percent don't make a decision one way or another about which brand to buy until the point of purchase. Even after making a purchase, one fifth of consumers continue to research the product to check if they made the right choice. Forty percent, meanwhile, admit to feeling anxious about the purchase decision they made. All this suggests that consumers are actually overwhelmed, unable to effectively process the flood of product information and choices.

These are not the behaviors of well-adapted shoppers who have learned to navigate huge volumes of information effectively. These are the behaviors of overwhelmed shoppers who struggle to process information and unnecessarily agonize over otherwise trivial purchases. The problem is cognitive overload — the result of excess demands on our cognitive powers that lead to poor decision-making.

And this isn't just a problem for consumers. Cognitive overload is bad for brands too. The harder consumers find it to make purchase decisions, the more likely they are to overthink the decision and repeatedly change their minds or give up on the purchase altogether. In fact, regression analysis points to decision complexity and resulting cognitive overload as the single biggest barrier to purchase.

How can brands reconcile this reality with consumers' supposed desire for options? Smart brands reduce the effort of making choices without reducing the appearance of choice. Cutting back on less popular SKUs, for example, can actually increase consumers' perception of choice, while making it easier for them to choose by helping them spot the right brand for them. Some progressive brands simplify product choice without reducing choice by helping consumers navigate and trust product information and weigh their options.

The antidote for overloaded consumers isn't more options at the store shelf, it's decision simplicity. For more on how to make purchase decisions simpler for consumers, see our article in the May issue of Harvard Business Review.

People often ask me why it's so hard for big companies to be innovative. My answer is "corporate antibodies" — the people and processes that extinguish a new idea as soon as it begins to course through the organization.

Corporate antibodies are not just naysayers; they are necessary to protect the company from risk. When they attack an idea, it's because they perceive that idea to be a foreign object trying to harm the stability of the organization. But that doesn't mean innovation can't happen, even in the biggest, most entrenched firm. It simply means that senior leaders need to prepare their antibody system not only to identify ideas that are too risky but to recognize the ones that will strengthen and grow the company.

Easy to say, of course.

At PwC, we learned a powerful lesson in how to engage our corporate antibodies. We learned it through our experience with an internal contest — "PowerPitch" — in which we challenged everyone in the firm to submit a business brief proposing our next $100 million opportunity. It was fun to bring our finalists to New York as if they were American Idol contestants ready for their close-ups. In the end though, the competition wasn't about the flash and dazzle. It was a lesson in how to prime the organization to become an optimal environment for innovation to thrive — an effort that started a full year before the competition was held.

How did we do it? We began by lining up the biggest sponsor to champion the project, identifying the most powerful naysayers to help us mitigate the risks we were about to introduce, and then systematically recruiting our general management structure to do the real legwork.

Getting the Big Gun on Board
We started at the top — by convincing PwC chairman Bob Moritz that he needed to lead the charge in a high-profile way. He manifested his support with two of the most potent weapons a chief executive has — empowerment and sponsorship.

By establishing the Innovation Office, and empowering me with resources to run it, he sent a crucial signal to the organization that innovation is on top of his agenda. By explicitly sponsoring the contest, he put his weight behind the initiative. He launched the contest through a companywide Webcast and reinforced the importance of innovation to the future of the organization through a series of e-mail communications. He was relying, he said, on absolutely every single person to participate. That got people going.

Getting the Naysayers to Join Us
It wasn't hard to identify the most powerful corporate antibodies. They were the people whose job it is to worry about risks to the on-going organization — legal, risk management, finance, IT, and the brand team. To make them into allies, we held a series of highly personalized meetings in which we asked each person to use his or her core area of expertise to help us plan out the details of our PowerPitch initiative. For example, we sought the Office of General Counsel's help in developing terms and conditions for the contest. We collaborated with our CFO to think through the budget and prize strategy. We engaged our brand team to help us increase the impact of the project through our newly launched visual identity.

Getting the General Managers on Board
Third, we had to prepare the middle layer of our organization. For this we enlisted the help of the most relevant guardian of our on-going business — the vice chairman in charge of the markets. He introduced me and the PowerPitch idea to his group of 20 geographic market leaders and laid the foundation that enabled me to seek their support by emphasizing that the new ideas PowerPitch would generate would not be so distracting as to become a hit to their P&Ls.

I talked to the managing partner in charge of each market individually, and asked him or her to appoint a local champion to own the PowerPitch program and do what was best for each location. It actually was not a hard sell.The highly visible support from Bob Moritz, coupled with individual ownership of the program within each market, made our practice partners not only receptive to the initiative but eager to go out of their way to mentor teams and help develop new ideas.This broad support in turn inspired everyone in the firm, from first-year associates to senior directors, to take a chance with their imagination.

Before we knew it, people were not only talking about PowerPitch and sharing ideas but also volunteering to run teams; soliciting team members; planning events like lunch-and-learns and brainstorming happy hours; and lining up internal and external guest speakers to stimulate their thinking. And they were doing it all on their own time, of their own volition. Once people started campaigning for their ideas, communities that had not previously existed started to emerge.

Senior Leadership Follows Through
After a receptive environment for generating ideas had been established, it fell to the senior leadership to follow through with substantial development resources. Upon announcing the grand prize winner ($100,000 cash prize), our chairman surprised us with an additional $25,000 prize for each of the five finalists and another $5,000 for every semifinalist. He also committed to developing all of the semifinalists' submissions.

In the Innovation Office, we assembled resources for nurturing and implementing the ideas, which we dubbed our "Idea Accelerators." These are on-demand collaboration units comprising subject matter specialists from the relevant business units and members of the Innovation Office, who take an idea with a validated value proposition through the process of development, risk mitigation, and prototyping to deliver a market-ready offering. We are now running the top 25 winning ideas through this framework to ensure proper implementation.

For innovation to survive and even flourish in a big company, you must first decide that everyone in your organization is capable of offering a new idea and commit to engaging them all. Then you must prepare the entire management structure to accept the fruits of that effort. It's not easy, but it can be done. And once you do, the real challenge begins: Doing it again. Because as we all know, doing one new, healthy thing for our bodies is a difficult step. But making it a habit and truly changing our lifestyles — that's what really makes a lasting difference.

 

MORE ON KNOCKING DOWN BARRIERS TO INNOVATION

The Biggest Obstacle to Innovation? You.

Why We Can't See What's Right in Front of Us

The Biggest Obstacle to Innovation? You.

To Innovate, Turn Your Pecking Order Upside Down

 

I am not pessimistic about Facebook's future. I have used the social network for eight years and continue to be impressed with Mark Zuckerberg's focus on product and his vision for the internet. When I logged into the site for the first time in the spring of 2004, I was prepared to hate the service. It was just weeks until Zuckerberg's addictive platform won me over. And that was a far inferior Facebook: a sophomoric site where Zuck's own silhouette still hovered in the top left corner of every page. Today, I still use the site. I find frivolous but satisfying content every day in the newsfeed. And the open graph has made countless websites and internet services immensely more valuable for me.

If I am at all indicative of the population, Facebook will be around and culturally significant for a while. But equity investing and product use are very different things. And despite all of Facebook's user support, investors should be skeptical of the company's pricey IPO.

Three factors could impede Facebook's growth:

1. Increasing Shift to Mobile Utilization will Continue to Hurt Advertising

   Through its website, Facebook has built a massive advertising business. By dedicating a small amount of space on every page viewed and allowing companies to display ads, the social networking giant has developed a multi-billion dollar advertising business. According to ComScore, at the end of 2011 Facebook accounted for a shocking 28% of U.S. display advertisements online.

   However, the advertising business is dependent on visits to Facebook's website. As of yet, the company has not built out a compelling mobile advertising platform. And unfortunately for the Facebook investor, mobile internet is becoming increasingly important. Facebook even amended its S-1 to acknowledge the risks to its advertising business from increasing adoption of the mobile format.

   While this is a surmountable problem, it puts the media company in a very different position than that of Google in 2004 — the company that Facebook is most often compared against. When Google IPO'd in 2004, the company's advertising business had tailwinds; internet penetration was only at around 68% in the U.S. (let alone the rest of the world) and amount of use per user was also on the rise. Growth in revenues for Google was inevitable. Facebook's ability to achieve enormous advertising growth, on the other hand, is far less certain.



2. The Open Graph's Value Sits Outside Facebook's Walled Garden

   Most people don't realize just how integral Facebook is to today's internet. Facebook's addition to most consumer websites is far greater than the "Connect with Facebook" button you see at login screens. Companies using the Facebook API gain access to social network information. Web developers can personalize recommendation engines, allow users to see their friends' purchase history, and draw on detailed demographic data available through the Facebook network.

   Over the past couple of years, I've become close with a handful of web product managers. Each of them confirms that what Facebook provides is incredibly valuable in building websites. They believe that the API improves user experience and makes product development both quicker and simpler. But while access to Facebook's API is valuable, much of the value lies outside of Facebook's walled garden, Facebook.com. The business of augmenting sites like Kickstarter and Washington Post, while immensely important, likely isn't destined to yield enormous cash flows; since it's difficult to quantify on an external site Facebook exact benefit.

   What's worse, Facebook's efforts to bring transactions inside the walled garden — through Facebook Storefronts — seem to be decreasingly important to large e-commerce players as they discover the high costs and low returns of doing business on the site.



3. Private Market Valuations aren't Great Indicators of Public Returns

   The final reason for trepidation is probably the most important. There is a lot of emotion behind the Facebook IPO. Main Street investors are not only likely to be users of the product, but they are also likely to be well aware of the company's meteoric rise.

Less than three years ago, Facebook was valued at just 10B by Yuri Milner's Digital Sky Technologies. Since his fund's investment, a series of very well publicized auctions on secondary markets have driven Facebook's private market valuation to over 85B. Anyone who's noted the 750% return in just over two years is likely enthusiastic about Facebook's potential. It's feels like catching a rocket right at lift-off.

The problem for most Main Street investors is that they don't necessarily appreciate the dynamics of the private markets. Venture investors look for home runs. They invest millions in the hopes of achieving billions in returns. For every 10 investments, a good firm may have one defining investment, returning hundreds of percent in IRR. Whether Facebook IPOs for 80B or 100B, the venture funds that invested prior to 2011 will have plenty of capital to return to their limited partners. However, the public market investor is looking for very different opportunities. Because most are searching for predictable growth over the next five to 10 years (while VCs were looking for explosive growth over the last seven years), the potential of a 20% swing in valuation is enormous. VCs who bought at valuations around the 10B mark are going to do just fine regardless.

Facebook is not Groupon. I don't mean to suggest it will fall 70% in value after its IPO pop. But it's also not yet clear that Facebook is the next Google; it doesn't have massive tailwinds propelling its business model. It's certainly not clear that the firm will deliver returns similar to Apple over the last decade; if you expected Facebook to be the next Apple, it would have to be worth well over four trillion dollars ten years from now. For what it is — an uncertain bet — Facebook is going to be expensive. To offer a benchmark, at IPO Facebook will trade at a market value near that of Amazon — a company that has built an international distribution network, a media empire, and an unparalleled web services business. That may be sensible, but it's certainly not obvious.

The higher up in the organization you get, the less likely you'll receive constructive feedback on your ideas, performance, or strategy. No one wants to offend the boss, right? But without input, your development will suffer, you may become isolated, and you're likely to miss out on hearing some great ideas. So, what can you do to get people to tell you what you may not want to hear?

What the Experts Say
Most people have good reasons for keeping their opinions from higher ups. "People with formal power can affect our fate in many ways — they can withhold critical resources, they can give us negative evaluations and hold us back from promotions, and they can even potentially fire us or have us fired," says James Detert, associate professor at the Cornell Johnson Graduate School of Management and author of the Harvard Business Review articles "Debunking Four Myths About Employee Silence" and "Why Employees Are Afraid to Speak". The more senior you become, the more likely you are to trigger this fear. "The major reason people don't give the boss feedback is they're worried that the boss will retaliate because they know that most of us have trouble accepting negative feedback," says Linda Hill, the Wallace Brett Donham Professor of Business Administration at Harvard Business School and coauthor of Being the Boss: The 3 Imperatives for Becoming a Great Leader. While you may be tempted to enjoy this deference, the silence will not help you, your organization or your career.

Acknowledge the fear
As the boss, you have to set the stage so people feel comfortable, says Hill. You need to break through their fear. Detert suggests being explicit. Tell them that you know everyone makes mistakes, including you, and that they should call out those errors without feeling embarrassed or threatened. Explain that you need their feedback to learn.

At the same time, you should recognize how hard it might be to hear this tough feedback. "It's human to feel bad when people criticize and no matter how senior you become, you're still human," Hill says. Still, you can't let that anxiety hold you back.

Ask for it, constantly
Ask for feedback on a regular basis, not just at review time. "You need to be the one who is actively collecting and soliciting information all the time," says Hill. You can say something like, "I know that these are the goals that we set together. What can I do to help you achieve those goals?" You shouldn't assume your team members will be upfront the first time you ask. "You have to do it for awhile and then the information will flow and you can ask more pointed questions," says Hill.

Request examples
In the same way that you want to give concrete examples when giving feedback, you should also request them when you are receiving it. When someone tells you, "You run our team meetings really well," or "You don't delegate enough," follow up by asking for an example. This allows you to better understand the feedback and ensures that what you're hearing is true. "I tend to think the more people can back up their assertions and input with concrete examples or numbers, the more it's probably honest," says Detert.

Read between the lines
Of course, you may not get honest feedback all the time. But it's your job to figure out what problems people are trying to help you identify. You may need to triangulate between several points of feedback. Hill suggests, for example, that you ask five or six people the same question. "You're trying to collect the data so you can you go back and put the story together about the impact you're having," she says. Detert agrees about casting a wide net: "If nothing else, it'll help you figure out whether there are gaps and inconsistencies in what you're hearing, and what you might need to do about it."

Act on it
If someone is brave enough to give you input, recognize it. "People hate feeling that speaking up was a complete waste of time," says Detert. "You have to actually thank people for doing it, and other employees have to see those people get promoted rather than fired or shunned." Show everyone that you receive feedback well and can change your behavior as a result. These examples will turn into "urban legends," encouraging more people to give you constructive feedback.

Find a few trusted people
If you suspect that most people in your organization aren't going to be honest with you, or feedback is just not part of the culture, Detert suggests finding one or two people you trust to tell you the truth. It could be someone on your team, a peer, a mentor, or a coach. Whoever it is, be sure he or she has access to the right data and is able to talk to the people who interact with you on a daily basis. Don't just turn to confidants who will tell you what you want to hear.

Start anonymously
It can be hard to get people to open up. One way to get around this is by doing a 360-degree review or using a coach to gather feedback anonymously. But then you should respond to it. According to Hill, if you talk openly about what you've learned it sends a signal that you're open to hearing criticism. "Once you've done that, people are more comfortable telling you to your face," says Hill. She shares the example of Vineet Nayar, the CEO of HCL Technologies, who posted his own 360-degree feedback on the company intranet and encouraged his senior team to do the same. It was a bold move, says Hill, but the result was that people felt much more comfortable giving Nayar feedback directly when they knew he took it seriously.

Principles to Remember

Do:

• Always say thank you and explain how you'll respond to the feedback you've heard
• Turn to a few people you trust who can tell you what others really think about your performance and ideas
• If you think people won't open up, start by gathering feedback anonymously to show them you're receptive

Don't:

• Wait for review time to ask for input
• Assume you are going to get 100% honest feedback, especially at first
• Rely on one source for feedback — triangulate between several points of data

Case Study #1: Find a champion on your staff
Michael Green, the founder and executive director of the Center for Environmental Health, knows that it's tough for his team — 23 full-time employees and another handful of interns — to give him candid feedback. "When I founded the organization 16 years ago, one of my board members told me that I needed to be aware of my privilege and position of power," he says. Since he knows that people take a risk whenever they do give him input, he is sure to respond appropriately. "Whenever possible, you have to do what they ask to prove that you're listening. You need to develop relationships with people so they know they can tell you the truth without getting anyone in trouble," he says.

He also takes every opportunity he can to tell his staff that he's open to feedback. In meetings, he regularly says, "If there's anyone who wants to talk with me about this offline, please do. You can also talk to Charlie about it." Michael relies on Charlie, the organization's associate director, to be candid with him and to serve as a sounding board for the staff. Michael knows that wouldn't work if employees perceived Charlie as "Michael's guy." Rather, the team sees him as an impartial leader who will give Michael their feedback, without naming names, and keep things to himself when it's appropriate. "They trust his judgment to know what to tell me. And I'm sure he doesn't tell me everything," Michael says.

He also says he encourages feedback by giving it. "There's nobody you can't find praise for, even an underperformer," he says. "When they get regular, positive feedback they feel like they are part of a team and they are willing to tell you more."

Case Study #2: Make feedback fun
Sunita Malhotra, the managing director of People Insights, a coaching and consulting firm based in Belgium, has earned the nickname "feedback monster." Thanks to a formative experience in her teens (a friend told her that her tone of voice was too sharp), she now goes out of her way to solicit opinions from colleagues and subordinates. "If someone doesn't tell you, you don't know," she explains. At first, she thought it would be easy. "I just thought people would walk into my office and tell me what they thought," she says. But she discovered that, as a boss seeking feedback, she needed to be quite deliberate. As head of human resources for the European division of a global company overseeing 7,500 people, she made three promises to anyone who joined her team:

1. She would always give positive and constructive feedback.
2. She always wanted feedback.
3. They would all try to have fun.

Sunita also solicited feedback in all her meetings. Whether they were one-on-ones with her 20 direct reports, larger staff meetings, or sessions with internal customers, there were always five minutes set aside on the agenda to gather input. "My aim was to create a feedback culture," she says. And it worked. Eventually, people stopped waiting for the designated time in the meetings and gave her input in real time. For those who were more hesitant, she used humor. Each person on her team was given a set of green, yellow and red cards — to reward or penalize behavior as a referee would in a soccer match. For example, if someone was listening well in a team meeting, a colleague lays a green card on the table and explains why. Similarly, if someone interrupted a co-worker, a third person would call out the behavior with a red card. Sunita made it clear she expected to get as many yellow and red cards as she deserved.

This week marks the release of Clayton Christensen's highly-anticipated book, How Will You Measure Your Life (with co-authors James Allworth and Karen Dillon). The book expands on Christensen's McKinsey-award-winning HBR article, drawing life lessons from the models that form the basis of his business-oriented writing.

I first heard the germs of those ideas in late 2000. At the time I was one of Christensen's students at HBS. Like all professors, Christensen used his final class lecture to share broader observations and reflections. The speech resonated with me, so while serving as his lead researcher in 2001 and 2002, I returned to his classroom to hear it again.

Ahead of the book launch, I had a long discussion with a reporter about Christensen. The reporter's question was basically: Why him? He's smart, but so are many other people. He's a great storyteller, but there are lots of great storytellers in the world.

My own view is that there are three secrets to Christensen's success:

1. An eternal quest for truth. Christensen's mission is to help leaders make decisions using robust, well-grounded theories. His basic two litmus tests for a good business theory are something that explains the different circumstances facing managers and the causal connection between an action and a result. His disruptive innovation theory, for example, says that incumbents that listen to their best customers — when their offering has already overshot the mainstream — leave themselves susceptible to attack from companies armed with simpler, more affordable solutions. Past experience as a consultant and practicing manager ensure Christensen focuses on high-impact issues, and his work manages to be both robust and usable.

2. The belief in basic goodness. One of Christensen's core beliefs is that people are generally well-intentioned and smart. So he often frames questions like this: "Why is it that a smart person did something that was so obviously wrong in hindsight?" While people will never use these precise words, a more typical framing is this: "Why are people so dumb that they miss things that are obvious to people with much higher intelligence." That belief in basic goodness helps to identify hidden root causes, and makes Christensen and his ideas appealing and approachable.

3. Persistence. When I first met Christensen he was certainly well known due to the 1997 publication of The Innovator's Dilemma, which won the Global Best Business Book award. Christensen could have stopped there and had a nice decade-long run repeating the messages from that book. But since then he has written seven mass-market books, some aimed at general audiences and some targeting specific industries such as health care and education. He penned an additional 13 Harvard Business Review articles, including three that won McKinsey awards (giving him a lifetime total of four award-winners among his 15 articles). And he's given countless speeches. As a glowing profile in The New Yorker noted, he is so dedicated to his mission of bringing his ideas to as many people as possible that he pours himself into stories he has told thousands of times. This persistence — coupled with his famously strong faith — has helped him in his remarkable recovery from a series of illnesses (well documented by Forbes last year).

From working with Christensen for more than a decade, I am happy to report that the press reports about his kindness and generosity match up with reality. He is a wonderful human being who has brought great clarity to many of the mysteries of growth and innovation. Twelve years after first hearing the message, I agree with Forbes' description that How Will You Measure Your Life is "one of the more surprisingly powerful books of personal philosophy of the 21st century." Recommend the book to friends and family who have no connection to the business world. They will thank you for it.

Institutional banking businesses — including trading operations — typically don't have high barriers to entry. There are few copyrights or patents. Both the talent and customers are extremely mobile. It does require capital to get in, but new capital has historically flowed into the system. When a U.S. financial institution has pulled back or failed, there has almost always been a European bank or a Japanese bank or some other player willing to take over its trading operations or enter the market in its place.

Because the barriers to entry are low, there's usually no good reason why returns in an institutional banking business should stay very high for an extended period. Competition should drive those returns down. As a result, sustained high returns on equity — especially higher returns than competitors are earning — can be a sign of impending trouble. They might mean a business is taking outsized risks, or misunderstanding the risks it is taking, or is skirting too close to the regulations. Not all high-return businesses crash, but variations on the comment "In hindsight, the returns were probably too good and too steady" are all too common in the financial sector.

Consider the headline-making $2 billion loss disclosed last week by JPMorgan Chase. It will almost certainly turn out to have multiple causes, and surely offers multiple lessons. But, from newspaper reports, it appears to be another high-return financial business gone bad. The bank's chief investment office, where the losses occurred, was charged with protecting JP Morgan from financial market volatility by trying to hedge bets made by other parts of the bank. It performed well during the financial crisis, and continued to deliver big returns in subsequent years. Then its increasingly bold methods stopped working earlier this year — and it seems to have taken the bank's top management (a group rightly viewed as absolutely top-notch) weeks to work through the problems. Newspaper reports indicate that the business was allowed to grow and increase its risk profile because the returns were so strong.

Can anything be done to prevent such reversals? In my upcoming piece in June's HBR, I look at several actions that bank boards of directors can take to improve bank governance and mitigate risk. One of them is to allocate their time differently. Because of the time constraints they face, boards can only focus on a limited number of issues. Corporate governance has to be one of them, and, in banking, regulation falls not far behind. After that, bank boards tend to spend their time on the problem children, the businesses that aren't doing well. These days there's an enormous amount of time being spent on the mortgage businesses, and now at JPMorgan likely countless hours to come to understand what went wrong at the chief investment office.

Yet this focus on problem children ignores that it's the good kids of today who in banking so often turn into the bad kids of tomorrow. The businesses that typically trip up are the ones that appeared to be great businesses, with much better than middle-of-the-road returns. While it's a fight against human nature, bank boards should allocate some of the time they spend on today's problem children to digging in to understand how the businesses with the highest returns on equity are sustaining them in businesses with low barriers to entry.

In these discussions, boards should ask things like, Why are the returns so good? What are we doing that's different? Why are the returns on this better than our competitors'? Why do we think this is sustainable? Spending that time may feel like a luxury given all the have-to-dos that bank boards have. But if you step back in history, it's clear that having done this could have averted any number of debacles.

(Editor's note: We'll link to Krawcheck's article in the June HBR as soon as it's available online.)

An interview with Daniel Gross, columnist and economics editor for Yahoo! Finance and author of Better, Stronger, Faster: The Myth of American Decline . . . and the Rise of a New Economy.

Download this podcast

A written transcript will be available by May 17.

Pinterest surged into the spotlight earlier this year when it was revealed that it drives more web traffic than YouTube, Google+ and LinkedIn combined. What's so compelling about a website that lets you make virtual bulletin boards of "pinned" images, observers wondered, and does this service now belong in the pantheon of must-use social tools like Facebook and Twitter? Perhaps most important, marketers are asking, is this something that will drive revenue?

Not long after the Pinterest spike, my employer, Emily Carr University, and research firm Vision Critical recruited 500 Pinterest users from the U.S., Canada, U.K., and Australia, to talk about their pinning habits.

The results: Pinterest users reported a surprisingly high correlation between pinning and subsequent purchasing: more than 1 in 5 Pinterest users has pinned an item that they later purchased. In the social world, this is a high conversion rate.

Surprisingly, the correlation between pinning and offline purchasing (16%) was stronger than the correlation between pinning and online purchasing (12%). (The overall number of people who have pinned and then purchased comes to 21%, because some purchased both ways.)

The people who are purchasing pin three times as many items (59) each month as non-purchasers (19). No wonder: the purchasers visit Pinterest almost three times as often, 27 times a month, compared to an average 10 for non-purchasers.

More than 60% of these purchasers joined Pinterest before January 2012, in other words, before the hype. This could be because they are more loyal early adopters or because those who've joined since haven't had as much time to convert their activity to buying. Probably, it's some combination of both. Click the image below for an infographic representation of the survey results.

View infographic

It's hard to assess any causal relationship between pinning and purchasing. Are people buying because they pin, or pinning what they always intended to buy? Still, the implications for marketers are clear: Pinning, especially among loyal, active Pinterest users, is intimately intertwined with buying. Pinning is a signal that says, "I'm thinking of purchasing your product".

If you're already running a social media customer relations team, you're well positioned to respond. At a minimum, your team should be monitoring the Pinterest page that shows every item pinned from your site(s): http://pinterest.com/source/yoursite.com. Take a peek at what that page looks like for brand like Adidas or Michael's and you get an instant snapshot of the opportunities for moving customers from pinning to purchase.

Pinboard names also offer clues about how seriously your customers are considering a purchase: in general, anything with "lust" or "inspiration" in the title implies fantasy rather than purchase intent, while lists named for specific product categories ("red shoes") usually read like pre-purchase shortlists. Work from these clues to reach out to customers with product information or discounts and promotions. But, take care to avoid being intrusive or creepy: if Sarah posts your product to her "Birthday Wishlist" pinboard, it's not your job to look at her Facebook profile, find the name of her boyfriend, and let him know you're happy to help him get that perfect gift.

At a higher level, our research on Pinterest speaks to the necessity of asking some tough questions about any new social media platform, and taking a data-driven approach to finding the answers.

After all, there has been a Pinterest every year for the past decade. If you cringe like I do at the memory of joining Second Life, you know how hard it is to resist the siren song of the Cool New Social Web Thing. Investing some personal time in CNSWTs can help you get inside the heads of the customers who are spending time there, and to understanding the social media zeitgeist, but taking the leap from personal interest to brand investment requires a much higher threshold of confidence. To justify a real resource commitment (dollars, technology, time) a new platform has to demonstrate that it's moving the dial on one of your key metrics, whether it's your total revenue, your average cost of sale or production, or simply the number of applications you get in response to each job ad.

Knowing the relationship between platform and metrics isn't just a matter of proving ROI, but rather, crucial to aligning your strategy for a new social media platform with the strategy for that part of your business it can reasonably be expected to enhance. To achieve that kind of alignment, you have to go beyond the aggregated stats on visits and users that any trending platform produces to dazzle its potential business audience. You have to hear about the platform's impact from the users themselves.

In his wonderful book Expert Political Judgment, psychologist Philip Tetlock (following the lead of Isaiah Berlin), divided the world of political forecasters into hedgehogs and foxes:
The intellectually aggressive hedgehogs knew one big thing and sought, under the banner of parsimony, to expand the explanatory power of that big thing to "cover" new cases; the more eclectic foxes knew many little things and were content to improvise ad hoc solutions to keep pace with a rapidly changing world.

These hedgehogs are of course the people more likely to be asked onto cable TV news shows to comment on world affairs. They're more likely to be famous, as measured by Google mentions. They are also much more likely, Tetlock found, to be wrong. Foxes see the world more clearly than hedgehogs.

By Tetlock and Berlin's taxonomy (not to mention by surname), I am a fox. So last year, when Tetlock and several other scholars announced that they were looking for participants in a forecasting tournament sponsored by the Intelligence Advanced Research Projects Activity (IARPA, or "Like DARPA, But for Spies" as Wired put it a few years ago), I signed right up. I read through all the lessons meant to make me a better, less cognitively biased forecaster, and started placing bets (using play money) on whether, say Muqtada al-Sadr would formally withdraw support for the current Iraqi government of Nouri al-Maliki by 30 September 2011.

I paid pretty close attention in the first few months, and did okay. That is, I got the overwhelming majority of the answers right, but I didn't place big enough bets to keep up with the leaders. I also ended up losing out on a few questions that I had tried to game. When IARPA asked about something that could happen at any time before a particular date (example: Will the Tunisian Ennahda party officially announce the formation of an interim coalition government by 15 November 2011?) I automatically picked yes, with plans to revisit closer to the deadline. But sometimes I forgot about the deadline.

As of January 19, I was ranked 123rd of 207 forecasters in my group. After that, though, things only got worse. I just didn't care enough to check the news and update my forecasts every day, or even every week. There wasn't a significant monetary reward, I was pretty busy with other stuff, and I clearly wasn't going to win. I ended up in 199th place out of 203 (there were dropouts).

Overall, Tetlock has reported that my group "collectively blew the lid off the performance expectations that IARPA had for the first year." Tetlock and crew are now rounding up the best forecasters to create teams of "super forecasters," with the aim of learning more about what makes someone good at predicting the future, and are looking to recruit new forecasters to replace losers like me. His provisional view, as expressed in an e-mail to economist/blogger Tyler Cowen, is that the best forecasters:
are distinguished by three characteristics: (1) an intense curiosity about the workings of the political-economic world; (2) an intense curiosity about the workings of the human mind; (3) cognitive crunching power ("fluid intelligence" and a capacity for "timely self correction").

So what distinguishes a bad forecaster? In my case, two things: (1) a discomfort with expressing my level of confidence with the size of my bets — this is a real flaw, perhaps traceable to the fact that I had never played a game of poker until two weeks ago; and (2) an almost complete lack of interest in the events being forecast. I think I'm pretty curious about the workings of the political-economic world. I just wasn't interested in whether the IMF would officially announce before 1 April 2012 that an agreement had been reached to lend Hungary an additional 15+ Billion Euros.

I'm not convinced that my lack of interest in such petty predictions (well, not petty for Hungarians. But I'm not Hungarian) is really a bad thing. In 2007, futurist Paul Saffo wrote in HBR that:
Prediction is concerned with future certainty; forecasting looks at how hidden currents in the present signal possible changes in direction for companies, societies, or the world at large. Thus, the primary goal of forecasting is to identify the full range of possibilities, not a limited set of illusory certainties.

Yeah, take that, you "super forecasters"! This can of course be a self-serving argument: When Saffo says to judge him not on whether his forecasts come true but on his logic, he's effectively removing a hard performance metric and replacing it with a soft one. But he's right that for many purposes in business and other fields, having a sense of the range of possibilities is more valuable than an explicit prediction.

Still, I don't think I cared about even the range of possible outcomes in the IMF's negotiations with Hungary. Which raises an important point. Hedgehogs who are obsessively focused on a particular theory of how the world works aren't very good at forecasting. But foxes who don't care aren't very good at it either. The best forecasters would appear to be foxes who really really want to win the game of forecasting. To quote Saffo again, the key is to "hold strong opinions weakly." Don't be stuck in your views; be willing to revise them quickly when new information comes in. But have bold views, or don't bother trying to make forecasts.

Cathy Davidson, Duke University professor and HASTAC cofounder, shares new ways to collaborate, share, and learn, which make teams more productive.

If you've spent any amount of time in executive retreats or leadership off-sites, you've probably been asked to participate in a familiar evaluation of your career and impact. "Take twenty minutes," a facilitator will say, "and write your professional obituary. What legacy did you leave? What contribution did you make? What might colleagues remember about you?"

At one level, it's a strange (and slightly morbid) exercise. At another level, it serves a worthwhile purpose — encouraging leaders to see themselves the way their colleagues see them, to evaluate their long-term impact from the perspective of people who feel that impact. One of the most revealing ways to reflect on how you're living your professional life is to reckon honestly with how you might be remembered when you're gone.

Well, what goes for individuals goes for organizations, too. That's why I've begun to encourage senior leaders of companies, executives who run business units or departments, even mid-level managers who are responsible for a specific brand, to step back and take time (probably much longer than twenty minutes) and write their organization's obituary. What legacy did your company leave in its industry? What contributions did your business unit make to your company? How did your brand move the needle in a market category? To clarify your company's future, it helps to step back and imagine a world in which it does not exist.

This simple exercise grows out of a powerful question I heard years ago from advertising legend Roy Spence, who says he got it from Jim Collins of Good to Great fame. Whatever the original source, it's worth taking seriously as a guide to what matters in terms of success. When Spence visits a client, he says, he makes it a point to ask them: "If your company went out of business tomorrow, who would miss you and why?"

That's an urgent question for companies in every industry, because every industry has customers with an unprecedented array of products, brands, and options from which to choose. In a world defined by unlimited choice and unrelenting sensory overload, if you have customers who can live without you, eventually they will. In order to increase the odds of your company having a long and prosperous life, it pays to write an unblinking "obituary" and wrestle with its messages and implications.

Think about it for a moment. Why might a company be missed?

First, because it's providing a product or service so unique that it can't be provided nearly as well by the five or six other companies that are its main rivals. BMW falls into this camp, maybe Ritz-Carlton and Emirates Airlines. But really...How many products or services do you know for which this is true? Your car? Your dishwasher? Your mutual funds? Your credit cards? In all of these categories, aren't there plenty of pretty-good alternatives to whatever choice you're making today?

Second, because a company or a business unit has created a workplace so dynamic and energetic that most employees would be hard-pressed to find a similar environment somewhere else. To be sure, in this slow-growth economy, having any job beats the specter of being jobless. But still...How many places have you worked in, or how many workplaces do you know of, where folks are so fired up to report for duty on Monday morning that if they had to go find a new job on Tuesday morning they'd miss their old surroundings? These days, the only thing lower than customer satisfaction is employee satisfaction — and that's saying something.

Finally, a product or service might be missed because it has forged a uniquely emotional connection with customers that other offerings simply can't replicate. That is, a relationship based not just on the economic value it has to offer, but the values with which it conducts itself. Apple is an obvious passion brand in the performance-obsessed technology world — maybe the greatest passion brand in the world. HBO comes to mind as a passion brand in the notoriously fickle media market, a network that doesn't just have viewers but devoted followers. But ultimately...in a world of non-stop competition and endless choices, how many products and brands do you know that have achieved the status that Kevin Roberts, of Saatchi & Saatchi, calls a lovemark — in his words, a product, service or entity that inspires "loyalty beyond reason."

That's why it's not enough to satisfy customers rationally. You have to engage them emotionally, to conduct yourself as a company and as a leader in ways that are unusual and unforgettable. Harvard Business School Professor Youngme Moon, author of the must-read marketing treatise Different, likes to say that for companies, products, and brands, breakaway success requires "a commitment to the unprecedented."

At Umpqua Bank, Ray Davis and his colleagues have devised a retail experience that appeals to all five human senses. Their goal: "We don't want the experience of banking here to feel like banking anywhere else." At Life Time Fitness, a "healthy way of life" company that has reimagined how the health-club business works, leaders say their goal is "operating to artistry" — devising a blend of well-chosen offerings, high-energy spaces, and thoroughly engaged staffers that leads to a deeply felt level of engagement with customers.

The real message: If your customers can live without you, eventually they will.

The big challenge: If you do business the way everyone else does business, you'll never do any better.

The urgent question: If your company went out of business would anyone notice?

Good luck as you work on your answers. Feel free to share your company's "obituary" in the comments section.

The other day, I finally tackled a long-overdue task: reviewing a stack of VHS tapes to see what was on them and whether it was worth digitizing. Amidst the usual detritus (Patriots games and Saturday Night Live episodes of yore), I found an unexpected discovery: a tape of the 1993 lesbian and gay march on Washington. Replaying those clips, I realized the difference two decades has wrought — not just in the acceptance of gays and lesbians in the workplace, but even more so in our ability to create and access information that matters, and the responsibility that entails for every business leader.

I remember the April day of the march, though I couldn't attend. I was a teenager living in a small town in North Carolina where I didn't know any other gay people, so I spent the entire day inside watching the march on C-SPAN. When they announced a band or speaker I liked, I'd run up to the VCR and hit "record." (We didn't have a remote.) Information in those days was scarce — and ephemeral. Sans YouTube, it was obvious I had to be inside watching the proceedings, or I'd never have another chance.

Back then, when I felt alone, I would pull out and watch the tape to see hundreds of thousands of people like me — though they weren't exactly accessible. (No listservs and chat rooms and blogs, where we could build actual relationships with actual people.) Back then, in taping the march, I positioned myself close to the TV — ready to spring at a moment's notice — because there was no good way to edit the video down once it was recorded. (Alas, no iMovie.) Back then, like the Indigo Girls and Melissa Etheridge, I too played the guitar and wrote songs — and dreamed of recording an album. My parents kindly ponied up for studio time, but once my collection of songs was recorded, there was no way to distribute it beyond friends I could dub a copy for. (No Facebook, no iTunes, no "share this" button.)

In some ways, this democratization has cheapened information. I don't have to record TV programs anymore, because I'm certain I can find them on YouTube or Hulu or Netflix streaming. I don't have to carefully pick my mixtape of the day to tote around because I can rest assured I have my entire collection in my phone. There's no need to treasure or obsess over a song or video because it's always accessible: the cloud has you covered.

But this proliferation has also added a new urgency — a new requirement — to what it means to be a business professional and a leader. Twenty years ago, it seemed like speaking up only made sense if you were a celebrity. If you were a CEO, or an elected official, or a well-known entertainer, the media would cover your remarks, print your op-ed, or put you on TV. For the rest of us, there was almost no point: who wants to spend their time creating something no one will see? Staying silent — not just about social issues, but about our perspective in general — was often the default, because there was simply no means of distribution.

Today, all that has changed. You can edit videos on your laptop with tools only George Lucas had 20 years ago. You can publish your ideas worldwide for free, instantly, and interact with your readers. And you can be sure there's a point to creating it because, thanks to the Long Tail of the Internet, someone (and maybe a lot of people) will see it and, hopefully, find it meaningful. You can create a legacy that will be archived forever — something only the most exalted among us could ever hope for in 1993.

The tools of today have created a new responsibility. Not just in terms of job descriptions (though plenty of executives grouse about social media expectations). It's a responsibility to yourself, your company — and your legacy. As a teenager, I would have relished finding a chronicle of others' experiences; when you feel alone, a little wisdom and perspective can go a long way. Today, as a business consultant, my concerns are different — I'm writing about strategy and marketing and branding. But I'm doing it in a spirit that I think my 14-year-old self would have appreciated. Because for all us, no matter our backgrounds, we have to consider: what value can we add? How can we help others by sharing ourselves? What do we want our impact to be in the world?

So take up that microphone. Start writing that blog. Go live with that Twitter feed. And ask yourself: what are you doing to leave a mark that matters?

To stay competitive, organizations need to continually find opportunities for innovation in key processes such as customer service and product development, and adoption of a new process almost always requires the implementation of new information technology. In his 1990 classic HBR article "Reengineering Work: Don't Automate, Obliterate," Michael Hammer argued that IT must drive radical process innovation.

Unfortunately, this creates two problems. First, as Hammer argued, these large investments in new IT systems tend to deliver disappointing results, largely because companies tend to use technology to mechanize old ways of doing business. That is, they leave the existing processes intact and use computers simply to speed them up, rather than redesign them from scratch.

Second, they don't take enough advantage of the innovative abilities of their people themselves. Employees often feel victimized rather than energized by the changes. They're subjected to retraining, and they have to radically alter their routines, often in ways that they don't think will work as well. Hammer nonetheless argued for using the power of information technology to redesign a cross-functional process, then deal with the people issues. Though many workers will resist a new process imposed on them, competitive demands need to override resistance. I heard him say, "We will carry the wounded but shoot the stragglers."

Hammer's thinking was very powerful, but I'd challenge that last point. The best way to solve both of these problems — and make innovation efforts stick — is not to impose a new process or technology system, but rather have front-line employees drive the change. You'll get fewer stragglers, and end up with better ideas — ideas that come from the people who do the work every day and see the most glaring problems. Avoiding a new technology may not be an option, but it shouldn't come first.

Look at ING, a leading bank in the Netherlands, which sets about process improvement by first getting its employees to recommend changes, ideally in short iterations and with frequent feedback loops, to avoid depleting people's energy and to decrease the likelihood of going too far down the wrong path.

David Bogaerts and Jael Schuyer are process improvement experts in ING's IT and operations group. They say their projects are more successful when they follow the sequence of people, then process, then technology. "If you automate too quickly, you don't find out what the front-line people need," they explained to me recently. "We stay with manual workflows longer than others. Until you have a clear idea of what people need, you may automate workarounds and waste. For example, we worked with people in our Automating Department to improve their processes (using "Lean" and "Agile" methods), and we are now looking at technology to further improve the processes in ways that will revolutionize them."

ING acknowledges that it has occasionally neglected to engage workers adequately, with disappointing results. "In the case of a workflow management software project, we bought the tool and told people to use it," Bogaerts and Schuyer said. "It was technology first, then process, then people, and it didn't work very well."

No doubt new technology systems can help bring about dramatic process improvements, no matter how much employees howl about the change. Yet organizations that implement an enterprise system (ERP, CRM, SCM, etc.) frequently underestimate the costs of front-line resistance. The systems force people to change the way they work, and while they eventually adapt, most implementations are delayed, operations suffer temporarily, and revenue can take a hit, as at Hershey Foods and Lumber Liquidators.

Why not tap into their expertise instead of dragging them along? Your investments will be better spent, and your workforce is much more likely to buy into the whole thing. As Bogaerts and Schuyer said to me, when workers identify improvements in their jobs, a new computer system appears as an opportunity to eliminate waste and better serve customers, not as a threat.

Engaging workers as drivers of process changes may seem like it's slowing things down, particularly in implementing a revolutionary enterprise system. But what's your alternative? You either pay upfront and get worker ownership and sustainability of changes, or you pay later to get buy-in and overcome resistance. The ride is much smoother when you can have your workers be drivers, not passengers.

Questions: How have you seen organizations use IT to drive process innovation? Were front-line people the drivers or the victims?

 

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Have you ever been in a situation where everyone seemingly agrees on a particular strategy, but somehow it never happens?

See if you identify with this example: A technology firm — with a number of different product areas, geographic units, and service functions — was figuring out how to integrate services for their largest global customers. After extensive planning, the senior management team decided to assign experienced executives to a dozen of these customers, and give them the authority to manage the accounts end-to-end. What they failed to address was that many of the best sales executives couldn't be released to take on these roles; the financial systems couldn't provide the right information on a customer-by-customer basis; compensation plans didn't support integrated selling; and research programs remained geared towards new technologies instead of integrated solutions. So while everyone agreed that an integrated approach was needed, very little change actually occurred.

The fascinating thing about this case, and many others like it, is that nobody took accountability for the lack of strategic execution. In other words, everyone felt individually successful, even though the company experienced a collective failure.

I recently saw this dynamic play out at a meeting of a large consumer products firm, where the top 100 managers were anonymously surveyed with two questions: How aligned are you with the company's ambitious change strategy; and how aligned do you think your peers are with the strategy? Over 90% of the managers said that they, personally, were aligned with the strategy — but 50% felt that their peers had doubts. In other words they were saying, "I'm fully on board, but many of the other people here are not."

Obviously something about these answers does not make sense. So to understand them, let me suggest three underlying psychological factors that often cause strategies to derail:

Passive aggressive disagreement: It's unlikely that everyone in an organization will agree with all of the nuances of a major strategic shift. Disagreement can be based on logic, experience, or (perhaps unconsciously) discomfort with change or loss of power. In any case, if the culture of the company does not encourage dissent, the resistance will go underground. People will voice their support but not actively do anything to make it happen. For example in our technology case above, the newly appointed account executives found that the finance function, while not standing in the way of the integrated customer approach, also was not doing anything to help.

Fear of confrontation: In most nice organizations where teamwork is encouraged, managers hesitate to confront colleagues who are not fully engaging in the strategic shift. They may not want to make waves or fear harming the relationship. So instead they try to work around it and end up sub-optimizing the strategy. Again, in our case, the account executives and their sales leaders didn't want to push too hard on finance for fear that it could make things worse for them later by damaging relationships.

Lack of persistent top-down demands: If the successful implementation of a strategy requires change across a number of functions, then a senior leader needs to get everyone on board. Without this explicit expectation — reinforced again and again — people will avoid taking action even though they will continue to smile, nod, and profess support. Many senior leaders are hesitant to push too hard for fear that they will have to take drastic action, like firing someone. So instead they just assume that the pieces will fall into place.

Obviously it's not easy to change these dynamics, especially when they are often invisible and rooted in long-standing cultural patterns. A good place to start is to point them out and provoke some dialogue, which was the purpose of that survey used at the consumer products meeting. Most people do not want to be part of a collective failure — so holding up a mirror can be a powerful way of helping managers realize when they are headed in the wrong direction.

What's your experience with the challenges of strategy execution?

These probably aren't words that you were expecting to see in the same sentence — Harvard Business School and empathy. But as I reflect back on my time as a student there, I've begun to realize that more than anything else, this is one of the the most valuable things that the school teaches.

It starts on day one. You're put into a "section" with 90 incredibly smart folks, people with whom you quickly become good friends. Then the moment arrives when you step into class, prepared for a case discussion with what you're sure is the right answer — but just before you're able to stick your hand up and get in on the discussion, a good friend — someone who you deeply respect and admire — jumps in to the conversation with an opinion that's exactly the opposite of yours. And it begins to dawn on you...that what they've expressed is right.

It's a humbling moment. It's valuable not just in reminding you that you're not always right (though that's always valuable), but also in teaching you to step out of your own shoes, and to put yourself into those of someone else.

It's a trait that is sorely lacking at the moment. There's a case to be made that the American political system is suffering at present because empathy has been almost entirely exorcised from within its walls. Politicians are being elected on the back of their ability to vilify those with whom they don't agree. These are not people who come to office with questions, or who seek to understand; instead, many are dogmatists, able to see the world through their own eyes. Their interest in conversation runs only one way — many seem capable of only talking at, not with, those with a different point of view on the world. The jettisoning of compromise is a direct result of this state of affairs; why would you give an inch of your position to someone whose perspective you can't even bring yourself to entertain?

The place for me, however, where an appreciation of empathy is most undervalued, is in business. The potential upside for those in business who are able to be empathetic is huge, and is eloquently described in Professor Clay Christensen's jobs-to-be-done theory. Understanding that people don't buy things because of their demographics — nobody buys something because they're a 25-30 year old white male with a college degree — but rather, because they go about living their life and some situation arises in which they need to solve a problem... and so they "hire" a product to do the job. This is a big "ah ha" to many folks when they first hear it; but when you really boil it down, the true power of this is in giving people in business a frame with which to exercise empathy. In fact, both Akio Morita of Sony and Steve Jobs were famous for never commissioning market research — instead, they'd just walk around the world watching what people did. They'd put themselves in the shoes of their customers.

And for those businesses whose executives are incapable of it? Well, they are subject to the ultimate stick — disruption. No better example of this exists than the story of Blockbuster and its competitive tangle with Netflix.

Blockbuster saw the rise of Netflix in the very early 2000s, and chose not to do anything about it. Why? Well, its management couldn't see the world from any perspective other than from the vantage point from which they sat: atop a $6 billion business with 60% margins, tens of thousands of employees and stores all across the country. Blockbuster's management couldn't bring itself to see Netflix's perspective: that while Netflix was only achieving 30% margins, Netflix wasn't comparing its 30% to Blockbuster's 60%. Netflix was comparing it to no profit at all. And Blockbuster's management certainly couldn't see the world from their customers' perspective: that late fees were driving folks up the wall, and that their range of movies eschewed anything that wasn't a new release. While Blockbuster knew it could invest to create a Netflix competitor, that would be an expensive proposition, it might not work, and even if it did, it would probably cannibalize its existing business. With that being their perspective, they saw two choices: creating a disruptive entrant with all the pitfalls of cost, and risk; or just continuing with the existing business. Thinking those were their options, continuing with the existing business looked like a pretty obvious choice.

The mildest application of a different perspective — stopping and considering what the world looked like to Netflix, or even what the world looked like to Blockbuster's customers — would have revealed that this was not the choice they faced at all. Their options, in reality, were to start the disruptive competitor — or go bankrupt. In fact, this story seems to repeat itself over and over for disrupted companies: they go out of business wanting to sell to customers what they want to sell to customers, rather than what customers want to buy.

It sounds obvious, but it's not.

Serious people will regularly dismiss empathy for the more concrete and defensible virtues of rational analysis. You'll get no argument from me that this absolutely has its place. However, depending on it alone to form your opinion can cause you to miss six billion other very valuable sources of insight.

This piece was co-authored with Whitney Hess, founder and principal of Vicarious Partners, a leading user experience consultancy based in NYC.

I confess — I have a somewhat clunky phone manner. I tend to dispense with small talk, go straight to the business at hand, and when the business is done I'm ready to hang up. I'm so abrupt, once my business partner asked me, "What is UP with you and the phone?" And it's not just business calls: my husband and children lodge similar complaints. I'm not much for small talk on social media either — perhaps that's why I like Twitter. There's a staccato effect to the interaction that I enjoy. I suppose I think of myself as less-than-smooth when it comes to my personal interface.

It's no surprise then that I also struggle with my digital interface. In an attempt to buff out my real-life rough edges I tend to over-compensate by trying to add excess functionality to my website. My steady and patient graphic designer Brandon Jameson has reminded me on many occasions, "Don't get lost in the sophistry of gimmicks." In other words, get rid of the fluff and make sure that every aspect of my user interface fulfills the purpose for which it was included. Last week, as I prepared to launch my book, that purpose was to make the online experience of Whitney Johnson smooth, enjoyable, and informative. Well, my website continues to be a work in progress, but the process makes me think about how we present our real and virtual faces to the world.

In this modular era for workers, some principles of user design can be applied not only to building websites, but to each of us as managers, free agent workers, and freelancers. As we think about how we present ourselves to our employees and employers, clients, coworkers and the world, we should ask ourselves: How's my user interface?

According to user experience consultant, Whitney Hess, five of the most crucial overarching principles to consider when designing a website are: 1) Make a good first impression, 2) Provide feedback, 3) Be consistent, 4) Make actions reversible, and 5) Be credible and trustworthy. These principles also apply as we contemplate our personal user interfaces. Hess explains her design principles and how they apply both in human-computer interaction and human-human interaction:

1. Make an accurate first impression. The first thing visitors do when encountering your website for the first time is scan the page to ensure that the information presented is relevant to their current goal. Ensure your layout is easy to digest and accurately conveys your purpose. Ideally the site is also attractive and appealing, strong and sensible.

Establishing a set of rules for conduct in real life is similar to designing a digital experience. Sure, you want to make people feel comfortable when they first meet (or speak) to you. But you also want to set clear expectations about what you can and can't offer. If your working style is fast-paced, for example, but in person you seem to have a leisurely style, give a glimpse of your pace upfront. Better said, abide by the WYSIWYG motto: ensure that what people see of you is actually what they get.

2. Provide feedback. Long lines with no announcements are irritating, and so are delays in an interface. Whether submitting a form, clicking to load a video, or trying to go to the next page in an article, a person's action should be immediately followed by the system's reaction — a clear notification that a trigger occurred. Design is not a monologue; it's a conversation.

It's equally important to respond to people's requests quickly or you may give the impression that you aren't really listening. And if you really need people to wait, tell them why. Tell them that you're working. Tell them you heard them and offer a next step. As with the virtual interface, be quick to respond, to explain, to engage in a dialogue.

3. Be consistent. The navigational mechanisms and organizational structure that are used throughout the design of a website must be predictable and reliable. Navigation bars should be in a fixed location on all pages; links should always look and act the same way; terminology shouldn't be used interchangeably. When things don't match up from one area to the next, the experience can feel disjointed, confusing and uncomfortable.

While I am consistently clunky on the phone, I am not yet consistent in providing feedback. In fact, because I often respond to e-mails too quickly (e.g. unsustainably fast), when I don't, people wonder what's wrong. Consistency implies stability, and people always want to feel like they're in good hands online and off.

4. Make actions reversible. There is no such thing as a perfect design. No one and nothing can prevent all errors, so you're going to need a contingency plan. Ensure that if people make mistakes (either because they misunderstood the directions, mistyped, or were misled by you), they are able to easily fix them. Have clearly marked emergency exists for leaving an unwanted state without hassle. Offer constructive suggestions for recovering from any system errors. Allow edits and deletions to be reverted by providing the option to undo and redo.

In our personal interface, "Undo" is probably the most powerful control you can give a person. There's a flexibility of mind, a humility I proffer when I allow for an "Undo," a clear message that our interaction is more than a transaction.

5. Be credible and trustworthy. It's hard to tell who you can trust these days, so the only way to gain the confidence of your site visitors is to earn it. Your content must be accurate and up-to-date, your aesthetic modern and fresh. Dial down the hard sell, encourage and revel in visitor engagement.

In other words, do what you say you're going to do, don't over-promise and under-deliver. If you set people's expectations appropriately and follow through in a timely matter, you will gain their trust. Trust is the foundation for a smooth user interface — both virtual and interpersonal.

As vexing as it has been at times, I realize there are critical lessons to be learned from the experience of creating a virtual homestead. My personal interface needs to be just as smooth and error-free as the online version of Whitney Johnson if I'm going to be effective in our increasingly free-agent world. Certainly I can't be perfect. Which is ok — we will make mistakes and it's important to focus on connection, not perfection. But in the mod-mod-mod-ular world of free agents, low friction is key, and an employer needs to know "How's your user interface?" Because when everything spent on you is ultimately a variable cost, your ability (or not) to plug in and immediately play goes straight to the bottom line.

Planes are now held together by tape, not bolts. It's really, really strong tape, but still. Who knew the maker of Post-It Notes could help keep aircraft aloft?

This somewhat frightening factoid is just one of the fascinating things I learned in a recent visit to the St. Paul, MN, headquarters of the perennial innovation leader, 3M. During my daylong visit, I observed a quiet, longtime sustainability leader plugging away, creating new products that will help the world save energy, water, waste...and lots of money.

For good reason, the $30-billion company has long been held up as a role model of how to manage innovation. In the sustainability realm, 3M pioneered what now seems like an obvious idea: avoiding pollution before having to clean it up. The company's simply named Pollution Prevention Pays (3P) program has saved many billions of dollars over 36 years.

The environmental results of its near obsession with eco-efficiency are frankly astonishing. In the last two decades, 3M has slashed toxic releases by 99% and greenhouse gas emissions by 72%. It's the only company that has won the EPA's Energy Star Award every year the honor has been bestowed.

3M's sustainability leadership has come mainly from its eco-efficiency success, but these practices are increasingly the norm in business. So I was happy to observe abundant evidence of the company pivoting to make sustainability a driver of business growth as well.

Before my presentation at an employee event, I listened as CEO Inge Thulin and senior execs from each of the major divisions laid out their strategies. Thulin spoke about sustainability being "embedded...in our new vision" of growth and innovation. Other execs bragged about the high percentage of their division's sales coming from sustainability and "energy preservation."

But most importantly, I heard about some great new products and technologies. When you're describing a company that launches an average of 20 new products every week, it's hard to pick favorites. But here are a few examples of what sustainability innovation looks like:

• The world's highest reflectivity mirror film, which can take sunlight from a roof and carry it deep into a building — the length of a football field, in fact — all while losing less than half of the light. I saw this technology paired seamlessly with some regular fluorescent lighting and working well in an interior conference room. As one exec said, somewhat heretically, "Why build solar panels to convert sun to electricity to then turn on lights if you can do this?" (Note: I'd do both!)

• Pipe linings: Every year, due in large part to 250,000 water main breaks, our cities lose 1.7 trillion gallons of treated water (equal to the total water use of the 10 largest cities). To help solve this problem, 3M launched a product that sends a machine down into pipes to apply a fast-setting lining which structurally reinforces them, without having to go to the significant expense of digging them up first.

• An industrial paint application product/service that reduces toxic solvent use by 70% and is saving customers, mostly auto repair shops, $2 billion from simpler paint operations and reduced waste. It's also a sizable business for 3M.

• 3M's Novec Fluids, which provide cleaning, coating, cooling, and fire suppression for the electronics industry (chip manufacturing, datacenters, and so on) in a non-flammable, non-ozone-depleting way. It's also remarkably safe for users and technology — you can safely dip an iPhone in the stuff.

3M is a refreshingly humble company: every estimate or "boast" is carefully and conservatively calculated to not overstate the case. For 36 years, the company has used only first-year savings to tally the benefits of pollution prevention projects — that's an effective discount rate of, well, infinity. And with the water-pipe-lining technology, the payback calculation for customers includes only labor savings and overall construction efficiency. A more thorough accounting would add in the significant water and energy savings, as well as reduced impacts on local economies (traffic and business disruption).

But there are signs of a feistier attitude brewing. The new CEO is making sustainability, growth, and innovation a powerful trifecta. With Novec Fluids, the team is not only working with key customers and early adopters, but it's also pushing the market toward greener options by advocating for tougher government standards and regulations. This kind of pro-environment lobbying is an advanced sustainability strategy that only real leaders can pull off.

Finally, I toured the company's relatively new innovation demonstration center. It's a customers-only, hands-on science museum that proudly demonstrates all that 3M can do through cool combinations of its 46 base technologies.

Bottom line: sustainability is deeply integrated in 3M's innovation pipeline, which is the engine of the company. The company's core new product development process includes key sustainability questions and criteria for designers to address.

Many companies start talking about sustainability efforts before they've really made significant changes to the company or its products. Although 3M may have the opposite problem — getting too little brand and marketing value out of its efforts — it is usually smarter to execute first, and then tell your story. In 3M's case, it's nice to see the engineers at this quiet company just out there doing it.

The innovator's quest has been to find the win-win proposition: a great new product that can create differentiated value for consumers while supporting differentiated profits for the producer.

But the focus on win-win can blind us to the needs of critical partners. When success depends on others — suppliers, complementors, distributors, retailers — satisfying end consumers is not enough. The innovator's job is now to create wins across the board. Win-lose-win is a recipe for failure.

Nokia's transformation from undisputed leader in mobile telephony to struggling me-too player offers a sad but instructive lesson in the new dynamics of collaborative innovation.

Through the first half of the last decade, a foundation of Nokia's competitive advantage was its unmatched ability to customize a wide variety of phones for operators. Mixing and matching features, components, and sizes enabled the Finnish telecommunications giant to offer a vast array of choices to win over operators and, through them, consumers.

A crucial element of its strategy to win over consumers to its advanced smartphones was to persuade third-party developers to create a vast array of apps for its phones. It helped to establish the Symbian operating system in 1998 and spent a fortune trying to attract developers to the platform.

But its strategy of customizing hardware for telcos had the unintended effect of imposing high customization costs on would-be developers (i.e., they had to develop different versions of the same app for the customized versions of Nokia phones). It was a win-lose-win situation, and Nokia's effort floundered.

Apple learned from Nokia's mistake. In sharp contrast to Nokia's approach, Apple offered developers a uniform development environment and a direct path to market. By shifting the "smart" in smartphone from the handset hardware to the software apps, Apple upended the customization game. Customization was no longer tied to hardware and supply chains; it became the purview of users and developers. Apple crafted a win-win-win.

As the Nokia vs. Apple story illustrates, succeeding in a world of interdependence entails looking beyond your core competences, competitors, and end customers to your whole ecosystem and carefully considering how you will proactively manage it. This involves the following:

Crafting a proposition that appeals to each of your key partners.
Focus on your adoption chain as actively as you focus on your end customers. The design of your offer must secure the buy-in of critical partners (like Nokia's developers) if it is to have a chance with end customers. Sometimes this may entail shifting value from consumers to partners (as Amazon did by launching the Kindle e-reader as an extremely closed device, reducing value for end users but safeguarding the participation of publishers, whose fear of the threat of piracy was the deal breaker in every prior e-reader effort).

Ensuring your collaborators are ready before you launch your product.
Beyond overcoming your own innovation challenge, you must manage your co-innovation risk: the extent to which the successful commercialization of your innovation depends on the successful commercialization of other innovations. Rushing your innovation to market before your co-innovators are ready can result in a costly delay at the starting line. (Think about early HDTV manufacturers that launched their products before HDTV programming arrived).

Revisiting the way in which you bring partners on board.
Taking the lead in driving collaboration means convincing partners to take a followership role. Absent a convincing answer to why they should give up the rewards of leadership (e.g., Microsoft's subsidies and Apple's tightly controlled customer base), partners will head in separate directions and undermine the coherence of the value proposition. Therefore, in selecting partners you must consider not only their capabilities but also how to sustain their cooperation over time.

When innovation depends on collaboration, pursuing strategies that play to your strengths but undermine your partners is a recipe for failure. Doing a great job on your piece of the puzzle won't matter unless and until the other pieces come together, too.

 

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