Harvard Business Review
July/August 2021
Annotated table of contents
1. Adi Ignatius, Softening capitalism’s downsides
Adi Ignatius, editor-in-chief of Harvard Business Review, reflects on the values that drive CEOs and suggests that the current focus on serving a broad range of stakeholders might signal the coming reordering of capitalism as we know it.
Idea watch
2. HBR Team, The problem with innovation contests
An analysis of participants’ responses in public innovation contests shows that the information available about the solutions proposed by others does influence creativity. In general, contestants want to differentiate their solution, rather than integrate elements from others. As a result, the more they know about competing solutions, the less confident they become in their own offerings, and the less inclined they are to go the extra mile. To encourage more daring and useful solutions, competition organisers should share anonymised information about a limited number of good quality proposals.
3. Amy Meeker interviews David Zhu, CEOs with unusual names pursue unusual strategies
To test the link between unusual first names and CEO behaviour, Zhu and his colleagues identified rare given names in the United States and analysed the performance of CEOs at 1,172 companies over 19 years. They also evaluated strategy distinctiveness in terms of allocation of resources for advertising, inventory, purchase of new plant and equipment, R&D intensity, nonproduction overhead and financial leverage, calculating individual indexes for companies, compared to the industry average. The research showed that CEOs with distinctive first names were more likely to pursue unusual strategies. This effect was moderated by levels of CEO confidence, the industry context, and the CEO’s institutional power.
4. Ryan Smith, the founder of Qualtrics, on reinventing an already successful business
Founded in 2002, in Utah, Qualtrics was acquired by SAP for 8 billion USD in 2019 and was taken public in January 2021. In this article, Smith, a co-founder, explains the journey from a single, specialist research product for the niche academic market to a large experience management platform serving hundreds of thousands of enterprises and other organisations in a variety of industries. He identifies the crucial junctures where the company took irreversible decisions: to reject an early acquisition offer; to expand the product line through profound restructuring and technological re-invention; to create the experience management platform; and ultimately to sell to SAP.
Spotlight: AI-powered marketing
5. Thomas H. Davenport, Abhijit Guha, and Dhruv Grewal, How to design an AI marketing strategy
The use of AI for marketing has become more common in the last decade and many of the common marketing tasks can be implemented with the help of AI applications. However, individual companies may have limited experience with marketing AI and this article offers a framework for moving from the adoption of relatively simple, stand-alone applications for task automation to applications that use machine learning and are integrated across tasks. Importantly, the adoption of marketing AI has profound implications for privacy and security and companies should establish ethics and privacy review boards to oversee this process.
Effective use of data to solve business questions is currently hampered by the poor communication between marketers and data scientists who are used to ask questions and tackle problems from different points of view. To help develop shared expertise, this article explains the relevance of three common types of business-relevant analytical errors. Thus, marketers may focus on questions that are not directly relevant for the business problem; they may fail to direct the analysis effectively when they do not specify the impacts that are most relevant for the business; and they may not appreciate the capabilities of AI to improve the granularity and speed of data analysis and thus decision-making. To avoid such errors, the authors recommend three steps for AI and data analysis.
7. Carl F. Mela and Brian Cooper, Don’t buy the wrong marketing tech
Mela and Cooper seek to guide the acquisition of martech, applications for marketing, to avoid the collection of irrelevant data and arbitrary, and ultimately useless, spur-of-the-moment purchases. They propose the creation of an integrated matrix for martech which deconstructs the different stages of the customer journey, decomposes the marketing tactics needed for each and designs the integration of individual marketing technologies to ensure compatibility and integration. Such a martech matrix can then be used to identify any gaps in current provision and guide purchases. A case study of Oracle shows how this process led to improved performance for the marketing function while ensuring that applications were appropriately deployed and supported by skilled teams.
Features
8. David Michels and Kevin Murphy, How good is your company at change?
Michels and Murphy identify nine core dimensions that help predict a company’s capacity to lead, accelerate, and organise change. They propose that there are four major patterns, or archetypes in the distribution of strengths and weaknesses across these dimensions. These are: in search of focus; stuck and sceptical; aligned but constrained; and struggling to keep up. Each is described succinctly and illustrated with a concrete example, including companies such as Delta Airlines, Assurant, Worley and one of the world’s largest transportation and logistics companies. Thus, the article offers a framework for understanding change power and a diagnostic tool that can identify areas where intervention is needed.
9. Atalay Atasu, Céline Dumas, and Luk N. Van Wassenhove, The circular business model
There are three main circular business models in manufacturing: retaining product ownership, through leasing and servicing contracts (RPO); extending the life of the product (PLE); and designing for recycling (DFR). Taking account of how easy it is to get back the product and recover its remaining value, the authors describe four different configurations of constraints and advantages that will influence the choice of circularity model: hard to access and hard to process (products destroyed by wear and tear, tires, wind turbines); easy to access but hard to process (carpets, mattresses, athletic footwear, smartphones); hard to access but easy to process (takeout food packaging, heavy equipment, photocopiers); and easy to access and easy to process (commodity raw materials such as paper and aluminium, high-value brands).
10. David J. Collis, Why do so many strategies fail?
Collis argues that continued success depends on the ability to take account consistently of all the elements of the complete strategy landscape: understanding the opportunity set; articulating a distinct business model with high value creation potential; developing a strategy for capturing value, which depends on industry attractiveness; positioning and interactions with competitors; demonstrating capacity for implementation and delivering outcomes. While entrepreneurs focus on business model innovations, established businesses put their faith in value capture and consistent delivery. But none of these strengths are sufficient on their own and, irrespective of their starting point, leaders need to see the whole picture, articulate answers, and execute across the board.
11. Martin Reeves, Bob Goodson, and Kevin Whitaker, The power of anomaly
Anomalies are weak, potentially confusing signals that may nonetheless presage great economic potential. To tap into such potential, leaders need to be able to step outside their current biases by taking an outside perspective, challenging reigning assumptions and models and valuing ambiguity. The article proposes a process for spotting and assessing anomalies that starts with the analysis of granular, unstructured data to extract unusual or unexpected information. Sifting through these early suggestions, analysists should look for anomalies that have momentum, robustness, and impact. Unexpected though they are, high-potential anomalies can usually be integrated in a narrative that explains their potential. If they survive further testing, it is worthwhile for companies to follow up with significant investment to exploit them. This process is illustrated with the example of Brooks Automation, a U.S. semiconductor equipment manufacturer, who discovered the potential to develop medical applications for freezing human tissues through an analysis of its patent citations.
12. Max H Bazerman and Paresh Patel, SPACs: What you need to know
Special Purpose Acquisition Companies may well represent the next big thing in terms of financial innovation. They have seen spectacular growth in the last few years and have already undergone the first wave of hype, followed by backlash, followed by stronger regulatory oversight. The calculations of self-interest are clear and well-rehearsed for all involved: sponsors, founders, investors. Clearly, as Bazerman and Patel suggest, this is an instrument that may prove attractive to start-ups in late-stage funding rounds seeking a faster route to an initial public offering and to sophisticated investors. This article offers both orientation for the merely curious and candid reflection on the state of play that will be useful to those already operating in this market.
13. Bill McNabb, Ram Charan, and Dennis Carey, Engaging with your investors
Diverse shareholders and stakeholders raise the stakes for companies and boards as the pressure to balance short and long-term interests intensifies. McNabb et al., seasoned executives and consultants, suggest that open and structured exchanges of information can help align all investor groups and build constituencies around important objectives. In general, to prepare for such interactions, members of the board need to make sure that they anticipate concerns around potentially difficult areas such as succession, operations, executive compensation, and social impact among others. Regular meetings are key for creating and sustaining relationships and these should be taken ideally by members of the talent, compensation, and executive committee, which would include the chair of the strategy and risk committee. Board members should be transparent and honour their commitments, avoid or limit earnings guidance, and keep an open mind, even when confronted with hostile activist investors.
14. Kyle Jensen, Tom Byers, Laura Dunham, and Jon Fjeld, Entrepreneurs and the truth
If all moral transgressions are to a certain extent opportunistic, in the case of entrepreneurs, who control a great deal of information about their projects, the suspicion is always that, of course, they overindulge in bombast and exaggeration if not outright lying. As this article argues, there are plenty of justifications on offer, from ‘everybody does it’ to ‘I am protecting my people’. Moreover, ‘fake it till you make it’ is now more or less expected. However, in the long run, processes of scrutiny and transparency can help entrepreneurs, investors, and employees to avoid mistakes, and put resources to more productive use. Offering truthful information about assumptions and evidence can elicit useful feed-back and drawing on a circle of cofounders, board members, investors and co-workers can help entrepreneurs become their best selves.
15. Adi Ignatius interviews Ursula Burns, “I am here because I’m as good as you”
A former CEO of Xerox and Veon, Ursula Burns has recently published a memoir, Where you are is not who you are, which recounts her journey as an African American girl growing up in a Manhattan tenement, learning the ways of the world and standing her ground in some of America’s most competitive corporate environments. In this conversation with Adi Ignatius, she reflects on the changing pressures on CEOs, as they are increasingly expected to communicate widely and take account of broader interests, executive compensation and inequality, prejudice in professional and unprofessional life, and the determination to keep pushing and thinking in ordinary human terms.
Experience
16. Bill Birchard, The science of strong business writing
In this captivating, and brief, essay, Birchard highlights features of effective writing confirmed by latest research in neuroscience. Words and sentences have the potential to activate regions of the brain that signal interest and pleasure and work best when they facilitate fast and easy assimilation. Thus, simple, specific, surprising, stirring, seductive, smart, and socially savvy writing that makes use of stories has the best chance to capture our attention and communicate effectively. Each of these features is explained and illustrated with examples, providing invaluable reminders to writers and editors alike.
17. Leonard A. Schlesinger, Case study: Will a bank’s new technology help or hurt morale?
A new bank has grown rapidly by offering personalised service to underserved small and medium enterprises, and it now grapples with the need to introduce more automation to satisfy increasing numbers of customers and ease the work burden for its staff. How can it find the right balance between technology and the human touch, so important for both its employees and customers?
18. Thomas Stackpole, What’s so special about founders?
Founders come in all sorts of shapes and sizes, of course, but four out of the five books reviewed in this essay focus on the tech and the new economy, Silicon Valley and China, including Amazon, WeWork, Tencent and other unicorns. The fifth book highlights the role of small and medium enterprises, with deep connections in their communities, who in turn require better financial and legislative support.
19. Adi Ignatius, Life’s work interview with Martin Baron
Martin Baron, a former editor at Boston Globe and executive editor of the Washington Post, reflects on his 45-year career at the top of the journalism profession in the USA, weighing the costs and responsibilities of supporting institutions and the public trust by speaking truth to power.
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