Harvard Business Review
July/August 2023
Annotated table of contents
Adi Ignatius, the editor in chief of HBR, charts his involvement with ChatGPT, from play, to challenge to practical use, and highlights the feature on generative AI and human creativity in this issue.
Idea watch
2. HBR Team, How to boost your sales reps’ performance
A new article from the Journal of Business Research, summarized here, reports findings from a study of factors driving sales success in the auto insurance industry. Junior and senior sales reps tend to treat the generation and conversation of leads differently and their performance varies across these phases of the sales process. While junior sales reps are enthusiastic about new prospects, they also tend to have greater difficulty converting them, while senior sales reps convert more from old and some new prospects. The research provides advice on how to develop an interest in prospecting for experienced reps and conversion skills in junior ones. Sales reps that have strong intrinsic motivation tend to be more successful across the board. Ad dollars benefit experienced reps more, and they can respond better to extrinsic incentives. An interview with Jason Vallejos of Syndicated Insurance draws out the importance of building on what is personally important to sellers to help them improve performance.
3. Walter Frick, The TV you watch when you’re young can make you more entrepreneurial
Frick interviews Michael Wyrwich of the University of Groningen on his research, with colleagues, on TV viewing habits of young people in divided Germany, before the fall of the Berlin Wall. They found that by 1993 – 2016, business creation was much stronger in parts of former East Germany that had access to West German TV, which provided a mixture of domestic and American programs showing economically active people in market systems. Other aspects of culture, the value given to self-starting in business, strong social trust and capacity for collaboration, and the availability of opportunities to make a living independently, can also contribute to variable levels of entrepreneurship even in regions with similar laws and policies.
4. Roman Rodomansky, a cofounder on Ralabs on leading a Ukrainian start-up through a year of war
Established in 2016, Ralabs had become a medium-size software engineering company by 2022, with annual revenue of $3.4 million and growing by 25% a year and employing 67 full-time staff mostly based in Lviv, Ukraine. In this article, Rodomansky, one of the founders, explains how the company navigated the threats to security, operations and markets brought by the Russian attack on his country. He distils leadership lessons around scenario planning, flexibility, decisiveness, and weathering uncertainty. The company has not only survived, but it has continued to invest in growth-sustaining activities, such as learning and development, a new marketing website and a switch to fully English-language operations, picking up new clients exiting Russia and Belarus.
Spotlight: The right way to cut costs
5. Ranjay Gulati, Investing in growth through uncertainty
Emerging from adversity even stronger remains elusive for most companies: less than 1 in 10 manage it. Gulati argues that this is partly the result of mindset limitations when executives give in to fight-flight responses and fall back on familiar cost cutting solutions. To counter this tendency, he proposes three mindsets that can open a more expansive perspective: sensemaking, a bootstrap ethic, and commitment to stakeholder balance. Focusing on making sense of changing circumstances, including investment in analysis and research capabilities, is a first step towards acting, thus avoiding panic. Bootstrapping entails making effectiveness the determining consideration in choosing funding priorities and processes. Moreover, all stakeholders should remain involved to strengthen the business for the long term. Examples of how this has been achieved include Alaska Airlines, Edward Jones, the financial services company, Firefly, a US digital media company, fast casual dining chain Panera Bread, and Levi Strauss.
6. Vinay Couto, Paul Leinwand, and Sundar Subramanian, Cost cutting that makes you stronger
Couto et al. propose a shift in thinking about costs to focus on one crucial question: to what extent can they be considered investments? The answer can reveal the strategic intent behind spending and help prioritise any cuts: only costs that are truly wasteful need to be eliminated, while costs that represent investments in future capability should be protected and even expanded. Researching companies that achieved a cost transformation, visible in growth through top-line improvements, the authors define several underlying principles: connect costs to outcomes; simplify radically; add automation to existing tools; rethink the division of labour within ecosystems; and create a cost-focused management system. Examples such as Danaher, IKEA, Philips, HP and others illustrate how to get started.
7. Emily Field, Bryan Hancock, and Bill Schaninger, Don’t eliminate your middle managers
McKinsey partners and authors of a forthcoming book Power to the Middle: Why Managers Hold the Key to the Future of Work, from which this article is adapted, Field et al. suggest that middle managers are so important that they may be considered a company’s minimum viable product. Their role is crucial in creating responses to automation, in attracting and developing talent, demonstrating the core values of the company, and making smart use of data. Senior leaders need to create the right conditions for middle managers to contribute at this level, however, and the article provides guidance on how to assess current practices and to move towards a more optimal model.
Features
Eapen et al. suggest that AI can solve some of the common difficulties of integrating new ideas, such as evaluation overload, inability to accept novel ideas, or to come up with feasible and comprehensive ones. For illustration, they provide responses generated by Midjourney, ChatGPT and Stable Diffusion software to prompts and challenges in these areas. They show that AI can make associations between remote concepts, supporting divergent thinking and challenging expertise bias. AI can resolve tasks related to idea evaluation, by assessing and raking different product features. And it can support idea refinement and collaboration among users.
9. Roy E. Bahat, Thomas A. Kochan, and Liba Wenig Rubenstein, The Labor-savvy leader
Labour unions have been in decline for several decades across the developed world. As the trend may now reverse under pressure from below, this article seeks to address the resulting skills gap. As experience in several developed economies, not least Germany, shows, unions can be effective partners in driving superior performance. Bahat et al. suggest that creating constructive engagement around the balance of power, getting to a contract, and ensuring a climate of transparency and trust in its implementation should be priorities for labour-savvy leaders. The article is especially detailed in regard to contract negotiations, building on good practice and insights about pitfalls: learn about the real concerns of the workforce; invest in developing the right skills; frame ground rules and set the right tone; and pursue the common good in carefully selected bargaining areas.
10. Robert G. Eccles and Alison Taylor, The evolving role of Chief Sustainability Officers
The role of the Chief Sustainability Officer is quickly gaining in prominence in many companies, as they recognise the financial impact of sustainability and engage actively with investors in response to criticism. Following interviews with tens of CSOs and investors, Eccles and Taylor spell out the main changes in the role and its gradual professionalisation. Increased expertise is necessary to provide strategic input and to examine options for value creation, selecting the material factors for superior performance. As investors become more interested in the field, and more critical, CSOs have also had to develop engagement expertise and collaborate with CFOs in making the argument for certain investments. Moreover, in many companies, the role is linked with responsibilities for overseeing innovation and technology. Examples from Philip Morris International, Nike, MFS Investment Management, Unilever, Autostrade and others illustrate.
11. Michael Segalla and Dominique Rouziès, The ethics of managing people’s data
HEC Paris Professors Segalla and Rouziès spell out some of the common lapses in the ethical management of data, which has been a legal requirement in the EU since the introduction of GDPR. They discuss common pitfalls in data gathering, alignment between customer consent and actual use of data, security of data storage, anonymisation for analysis and research, and the preparation for use. The use of AI can help to obscure some of the linkage between provenance, purpose, protection, privacy and preparation, generating risks for customers and companies. The authors provide examples of good and bad practice from a variety of jurisdictions and sectors, suggesting that the guidelines for the ethical use of research data used in academia are a good model to follow.
12. Adam Bryant, The leap to leader
In this preview of his new book of the same title, Bryant draws on hundreds of extensive interviews with CEOs to give us an intimate account of the mental shifts involved in gearing up to fulfil leadership roles. He identifies several critical areas and skills: clarity around values, a well-thought through decision-making process, ability to set standards, the art of compartmentalization and self-awareness, a coherent and persuasive personal narrative. These standards for internal functioning and relating to others are both practical and aspirational, tested in the experience of leaders and expressed in their own words: more than 25 CEOs are quoted directly for this piece.
13. Luisa Alemany and Freek Vermeulen, Disability as a source of comparative advantage
Paying attention to what disabled workers have to offer will likely uncover unexpected benefits. Alemany and Vermeulen show in detail that workers conventionally disabled in some areas may nonetheless have special abilities and superior capabilities in others, making an important contribution to productivity. Second, organisations that can accommodate disabled workers also tend to create a culture that is beneficial for all in terms of psychological safety and respect. Third, experiments have shown that customers are more inclined to establish a communal relationship and regard favourably companies known to employ disabled people. Finally, companies that employ disabled people are also more likely to benefit from better access to capital and talent. Examples from a variety of workplaces such as shopping malls, tech and creative consultancy companies, government departments, coffee chains and dairy farms illustrate.
14. Silvio Palumbo and David Edelman, What smart companies know about integrating AI
Palumbo and Edelman argue that the existence of open-source AI models now provides companies with a different path towards adopting this technology. They suggest that comparative advantage could come though personalisation of offerings, using unique data sets innovatively. This requires smart integration of AI, following four principles: clear use cases; data processing that is aligned to business objectives; a tech architecture that remains modularised and flexible; and a culture of experimentation that encourages employees to be creative and to contribute. Several detailed examples substantiate these points, including Starbucks and CVS Health.
15. Robert S. Kaplan, Karthik Ramanna, and Marc Roston, Accounting for carbon offsets
In this article Kaplan et al. build on their HBR article from 2021 on accounting for climate change, which defined a methodology for determining e-liabilities and e-assets that measure GHG emissions in company outputs. They explain how markets for carbon offsets operate today, with major weaknesses in terms of accuracy and accountability. In response, they propose five principles for offset marketplaces: ensure that only offsets that remove carbon are used to reduce reported emissions; require companies to account for their e-liabilities; use only offsets that are estimable and probable; E-assets should be considered net of E-liabilities only when GHG emissions have actually been removed from the atmosphere; the duration of the emissions sequestration should be taken into account. The authors define criteria for a robust market to mitigate climate change, including accounting and reporting, auditing criteria, offset portfolio management and governance.
Experience
16. Manfred F.R. Kets de Vries, Why it’s so hard to ask for help
Forms of excessive fear and pride can get in the way of asking for help when we need it. In this article, de Vries suggests that typically our reluctance to ask for help may be due to fear of being vulnerable, fear of losing control, or fear of rejection. Equally, the need and pride to feel independent, to be the one offering empathy, or, on the contrary, of having a legitimate reason to feel hard done by could also create patterns of avoidance. To be able to change this, and rewrite the inner script, the article recommends several steps, from seeking advice or even therapy, learning to reframe our definitions of situations and learning to ask for specific, measurable, achievable, relevant and time-bound assistance. Further, clearer communication and a degree of practice could help us build a healthy habit of asking for help, appropriately, when we need it
When market conditions make it harder to raise new capital, a successful tech start-up needs to consider measures to slow down spending and extend runway. Should it carry out a second round of layoffs? Should it find other ways to shrink head count? Could savings come from reduced office space?
18. Lucy Swedberg, The power of words
‘There is value in thinking deeply about each word we use’, says Swedberg in this review essay of four books that approach languages, multilingualism, communication, and silence (including in the dramatic form of STFU) from a variety of angles.
19. Alison Beard, Life’s work interview with Chita Rivera
Rivera broke out on Broadway through her role as the original Anita, in West Side Story, and had a comeback in Kiss of the Spider Woman, after a bad car accident. At 90, she is still working in musical theatre in New York, and here she speaks in praise of humility, learning from great and small talents, and loving the job of performing for an audience night after night.
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