HBR Jan/Feb 2018: Leading culture

Harvard Business Review

January – February 2018
Annotated table of contents

1. Adi Ignatius, CEOs step into the fray

Adi Ignatius, editor in chief of HBR, highlights instances of CEO activism: do they signal a change in expectations about the role of business leaders in society?

Idea watch

2. HBR Team, “Sorry” is not enough

Detailed analysis of videos of over a hundred encounters between dissatisfied customers and staff dealing with their concerns sheds new light on perceptions of appropriate and effective service. While empathetic apology might be a useful acknowledgement of the problem, if brief, customers appreciate more the fast offering and exploration of options and solutions. Working to sift through these possibilities and to find an acceptable result is even more important than the complete satisfaction of the initial request. This is further illustrated by lab research and interviews and has consequences for the training of customer reps.

3. Scott Berinato, Negative feedback rarely leads to improvement

Berinato interviews Paul Geen, a graduate student at Harvard Business School about his research on responses to feed-back. In a lab study subjects who were given negative comments on their performance, responded by seeking more sympathetic partners. This raises questions about the effectiveness of negative feed-back as a path to improvement. It is suggested that in order to work feedback needs to communicate both that the employee is valuable and that s/he needs to improve. This also implies that current practice, in which positive and negative comments are given together, may be counterproductive if it threatens the employee’s self-worth.

4. Masaaki Kanai, the Chairman of Ryohin Keikaku on charting Muji’s global expansion

Brand identity, culture and commercial prudence have been at the core of Muji’s global expansion. Masaaki Kanai explains in some detail the steps taken by Muji over time to make its products available outside Japan, starting in London in the early 1990s and reaching 403 stores in 27 countries in Europe, North America, Australasia, and the Middle East today. Consistency with the Muji ethos, of simple, solidly designed, distinctive products at a reasonable price has guided the choice of collaborations and ultimately the decision to set-up branded shops with similar look and approach across locations. This has enabled Muji to provide a ‘counterpoint against commercialism’, seeking to live ‘as part of a community, simply, conscientiously, and in harmony.’ Respecting Muji norms of patience and prudence, new shops open only when existing ones become profitable.

Spotlight: Leading culture

5. Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng, The leader’s guide to corporate culture

Groysberg et al. propose that two fundamental axes shape culture: flexibility/inflexibility in regards to response to change and independence/interdependence in regards to the intensity of people interactions. Further, they describe and place in the field defined by these axes eight defining values: caring, purpose, learning, enjoyment, results, authority, safety and order. In any given organizational culture a few of these values will shape behaviours and practices most strongly for members and will be reflected in leader statements. Cultural choices are consistently linked to outcomes and paying greater attention to the particularities of a culture and how culture interacts with strategy can have important consequences for an organization’s survival and prosperity. Finally, the article suggests a four-step path for evolving a culture: articulate the aspiration; align leaders with the desired culture; filter cultural change through the organization; and change organizational design to reinforce the values of the new culture.

6. Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng, What’s your organization’s cultural profile?

To determine an organization’s cultural profile, start by filling in a questionnaire gauging the relative importance of the eight values; then discuss results among peers, especially taking account of the most common reasons for success and failure within the organization.

7. Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng, How to shape your culture

The representation of values in the space defined by the flexibility/inflexibility and independence/interdependence axes may be used as a starting point in thinking about cultural change. The proximity or distance between the values that characterise a culture could indicate their consistency or tension and the most sustainable paths to change.

8. Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng, Convergence matters

Members of an organization can have different perceptions of their culture. The authors propose that the extent to which such perceptions overlap is important for judging the strength of a culture. Where high convergence is present, the culture might be harder to change but greater employee engagement is likely.

9. Boris Groysberg, Jeremiah Lee, Jesse Price, and J. Yo-Jud Cheng, Context, conditions and culture

Groysberg et al. test their framework further by showing how the prevalence of the eight values tends to vary depending on region, industry, strategy, leadership and organizational design. While all companies tend to prioritize results and caring for their employees, other values can vary significantly.


10. Leslie K. John, Tami Kim, and Kate Barasz, Ads that don’t overstep

The benefits of digital marketing are now widely accepted but some pitfalls are also becoming apparent. Just as customers might embrace the ease of doing business online, they could also have an adverse reaction to ads that feel intrusive. Based on several experiments, the authors argue that by and large the rules of appropriate conduct we use off line are relevant online too. Essentially, information we tend to consider sensitive, such as data on sex, health, finances should be treated with discretion in both spheres. Customers prefer first-person sharing and may object when their information is passed along via third parties. Openly inferring information about someone could also be taboo. Gauging the likely response remains difficult, but the article suggests that trust, a sense of control and receiving justification for being presented with an ad can mitigate backlash and offers several guidelines for effective ad design.

11. Monika Hamori, Can MOOCs solve your training problem?

Even though many employees are actively engaged in professional development, including through Massive Open Online Courses (MOOCs), their efforts are rarely encouraged by their companies. Hamori argues that there are many benefits to an open environment around professional development and, based on current experience, suggests several practices for making the use of MOOCs more useful for employees and companies. For instance, managers could become surrogate instructors providing guidance on how to select the MOOC content; members of a team could sample different offerings to enable others to make an informed choice; and managers can help their reports sustain interest in their training by tracking completion.

12. Aaron K. Chatterji and Michael W. Toffel, The new CEO activists

CEO open activism is a comparatively new phenomenon in the US. Chatterji and Toffel, who have researched this topic for the last three years, offer a comparison between old and new forms of CEO influence, and review CEO tactics in terms of raising awareness and leveraging economic power. Research on the risks and potential rewards indicates that the outcomes of activism are difficult to predict. However, the authors articulate several guidelines in regards to the choice of issues, when and how to weigh in, anticipating reactions within and outside the organization, and gauging the results.

13. Patty McCord, How to hire

McCord was chief talent officer at Netflix from 1998 to 2012 and has consulted in the field since then. Here, she distils her experience of hiring and offers five suggestions for ensuring that new hires truly serve the business: probe beneath the surface; engage managers fully as team builders; treat recruiters as business partners; always be recruiting; and set compensation that makes sense for the business at this moment. The article is rich in examples and brings out some of the more counterintuitive and daring aspects of hiring wisely that contributed to Netflix’s success during a period of great expansion.

14. Larry Downes and Paul Nunes, Finding your company’s second act

Connectivity, not least via platforms, has transformed market places and one consequence is that new product adoption now reveals a new pattern. No longer accurately described by a Bell curve of innovators, early adopters, early majority, late majority and laggards, the life span of new technological offerings has tended to contract, with trial users quickly followed by everybody else. These shorter time-scales have wrong-footed many companies who have concentrated on making a success of their product and are little prepared for a repeat performance when the initial gains peter out faster than expected. In this article Downes and Nunes diagnose the seven habits that can make technological companies highly vulnerable, from being too lean, to anticipating customers that do not exist. They also show how companies might avoid these pitfalls and put in place the conditions for a successful double act.

15. Thomas H. Davenport and Rajeev Ronanki, Artificial intelligence for the real world

Artificial intelligence can come in different shapes and sizes, such as process automation, cognitive insight, and cognitive engagement. Davenpot and Ronanki describe these different kinds of AI and provide guidance for their adoption. This process would require understanding the technologies, creating a portfolio of projects, launching pilots and scaling up. For the most part, the managers interviewed for this research see AI as a way to augment human capabilities rather than replacing jobs. Even when tasks can be automated, the freed labour may be more usefully redeployed to higher order tasks. By starting from where they are and incorporating AI gradually and thoughtfully, organizations could also redesign processes to take full advantage of technology and their human talent.

16. Dennis Campbell, John Case, and Bill Fotsch, More than a paycheck

The good blue collar jobs traditionally to be found in manufacturing are declining as services come to play a greater structural role in the knowledge economy. However, service jobs can be transformed into good jobs through a shift in mind-set and approach. Rather than being cogs in a machine, workers can develop an ownership frame of mind. This can start with actually participating in employee stock ownership plans but needs to be complemented with specific behaviours and practices that allow them to develop their business acumen, from tracking key economic performance data to working out ways to improve performance for their own benefit and that of the enterprise.

17. Robert S. Kaplan, George Serafeim, and Eduardo Tugendhat, Inclusive growth: profitable strategies for tackling poverty and inequality

Tackling large problems, such as poverty and inequality, requires a broad effort involving a variety of interested parties: companies, governments, non-governmental civil society organizations and households. In this article, Kaplan et al. provide support for an eco-system approach to economic problem solving, which brings together the different views, interests and resources of different kinds of organizations, drawing on 15 years of experience in 25 countries, at the global consultancy Palladium. Typically, a neutral actor is initially in the lead raising seed funding and creating proof of concept that could then be scaled up by powerful corporate actors. Aligning the eco-system participants around a common strategy is a crucial factor for success to ensure effective cooperation as well as sustainable principles for sharing value in the long term.

18. Shawn Burton, The case for plain-language contracts

Burton who became general counsel of GE Aviation’s digital services in 2013 has been responsible for redesigning the contracts with clients and suppliers, reducing substantially the time spent on negotiation without losing robust legal protections or increasing litigation. Here he describes the process for drawing up plain-language contracts that could be read and understood by a high-school leaver. He removes the mystique that is often associated with obscure, legal phrases and formulations while highlighting the careful, painstaking stages he and his team went through in order to arrive at effective plain-language contracts. Understanding the details of services and products, vetting and amending the drafts with a variety of specialists and partners and finally implementing the contracts can be a long process, but it creates the basis for swifter and smoother collaboration for the future.


19. Sydney Finkelstein, The best leaders are great teachers

Finkelstein draws on a variety of examples from interviews to show how managing and teaching could go hand in hand. Managers who take an active interest in the development of their people may share advice on points of craft, professionalism as well as life lessons. They may impart their expertise on the job or on special occasions, but they customise what they say and how they say it, they ask questions and they model good behaviour and practice at all times.

20. Sunanda Nayak and Jyotsna Bhatnagar, Are our customer liaisons helping or hurting?

This is a case study of an Indian hospital who introduced patient care executives to liaise between doctors and their patients. In practice, issues arose when doctors came to feel undermined rather than helped by the close emotional alliance between some patient care executives and their patients to the point of compromising clinical care.

21. Jeff Kehoe, The triumph of spin over substance

Kehoe reviews three books about the relationship between fact and fiction in public life, and methods to investigate and measure social and political phenomena and to achieve popularity and success. ‘It’s up to each of us to step back, check the source and think critically about our belief systems’, he argues.

22. Alison Beard, Life’s work: An interview with John Adams

John Adams is one of the leading US composers of classical music, some of his works, such as his opera Nixon in China, have revitalised whole traditional genres. At 70, he shares his understanding of his own creative processes, the pressures of switching between solitary composition and performance in front of large audiences, as an orchestra conductor, his decades-long collaboration with Peter Sellers, music education and the role of management in the arts.