Harvard Business Review
March-April 2018
Annotated table of contents
1. Adi Ignatius, How tech is transforming HR
Adi Ignatius, the editor in chief of HBR, introduces the spotlight section on agile HR.
Idea watch
2. HBR Team: Why you should rotate office seating assignments?
Ideally, the effects of social interventions are best determined by comparing the before and after values of certain key variables. Such data is difficult to come by, but this analysis of the effect of changing seating arrangements is based on just such rare measurements. Sunkee Lee, a professor at Carnegie Mellon University, was able to analyse more than 38,000 deals, some executed before, some after a seating reassignment at a South Korean e-commerce company. He found a marked increase in the quality of people’s work and in the number of deals, due to new opportunities to learn, by observation, in the proximity of more experienced colleagues. Innovation and greater productivity resulted from the opportunity to assimilate new knowledge and adopt new practices, quietly.
3. Alison Beard: Cold showers lead to fewer sick days
Geert A. Buijze asked 3,000 volunteers in The Netherlands to take 30-, 60-, or 90-second cold showers for 30 consecutive days. As a result of this routine, participants were less inclined to take sick days off even when they were feeling ill. Thus, cold showers made people feel more energetic and willing to work through common ailments, but the nature and the robustness of the mechanism involved are unclear. Was this a placebo effect resulting from proven resilience in the face of a challenge? Was the increase in energy due to the activation of bodily responses such as burning brown fat to increase temperature and counteract the cold? Would the effect last, if the practice continued for a longer period of time? Further research is necessary to settle such questions.
4. Arthur C. Brooks, AEI’s President on measuring the impact of ideas
Established in 1938, the conservative American Enterprise Institute has held an influential position in the microcosm of think tanks and policy institutes in Washington for some decades. Nonetheless, relying on philantropic contributions after the 2008 crisis was especially challenging and as a new president, Arthur C. Brooks, a former academic, set out to quantify the influence of the Institute and articulate stronger arguments to persuade donors. He shifted the focus from counting outputs and inputs to estimating impact, which required him to define more clearly how and where AEI was making a contribution to policy, for instance in the number of congressional testimonies and op-eds in influential newspapers. Collecting data and measuring performance over time has helped AEI to focus its efforts where it matters, leading to superior performance, compared to competitors.
Spotlight: The new rules of talent management
5. Peter Cappelli and Anna Tavis, HR goes agile
Agile may not have penetrated all areas of organisational life, but Cappelli and Tavis argue that many HR activities are amenable to more flexibility. They illustrate this in relation to performance appraisals, coaching, teams, compensation, learning and development, and recruitment. Challenges to scaling agile practices remain, from cultural resistance to lack of experience with methods, lack of management support and champions for change. More internal agile coaches would be needed, as well as executive sponsorship, and consistency of process, practices and tools. Natural limits to this expansion of agile methods may also exist as some types of departments and activities require stability and traditional approaches.
Diane Gherson describes the experience at IBM where the use of internal AI and machine learning capability Watson is shaping many of the services provided by the HR department. It has surveyed a large number of employees regarding policy changes in the on-boarding process; it has individualised offerings and assessments on the learning and development platform, affecting the evaluation of courses as well as skill development. Ideas for performance management were road tested in a similar way and Watson can carry out sentiment analysis of blogs and comments to spot emerging issues.
7. Dominic Barton, Dennis Carey, and Ram Charan, One bank’s agile team experiment
Taking the customer engagement practices of platforms such as Facebook and Netflix as the gold standard to emulate, the Dutch bank ING sought to re-focus activities to deliver the same level of experience. It organised its domains in tribes, composed of cross-disciplinary flexible squads of nine or fewer people responsible for improving an aspect of customer experience. Members of a given discipline are organised in chapters and their role is to maintain consistency and standards across squads and tribes. Having largely eliminated the need for customers to engage via branch visits and call centres, ING now aims to unify its appearance and apps across its 13 retail markets so that ‘any customer, anywhere will encounter the same ING.’
Features
8. Hal Gregersen, Better brainstorming
Gregersen argues that focusing brainstorming sessions on questions rather than answers is likely to be more productive. Questions often contain unexamined assumptions and articulating new questions can surface new ways to frame issues and lead to breakthroughs. However, brainstorming questions is a highly disciplined process and Gregersen explains his rules for setting the stage, for brainstorming the question and for choosing a quest to follow systematically. He recommends at least three rounds of brainstorming for each issue as well as sustained effort to turn the approach into a habit.
9. Eric Almquist, Jamie Cleghorn, and Lori Sherer The B2B elements of value
Research at Bain and Company has found that not only consumer products but also B2B products and services can be usually evaluated in terms of a pyramid of elements of value, 40 in all. At the base of the pyramid, there is the table stakes, including meeting specifications, acceptable price, regulatory compliance and ethical standards without which a company would not be in business. Layers further up cover functional value, ease of doing business, and individual and inspirational value. To make these insights into a tool for maximizing marketing and sales, the authors recommend focused research to establish which elements matter most for a particular product or service and ensure excellence in those.
Kenneth Frazier, the CEO of Merck discusses here his public position taking against right wing supremacists after the August 2017 incidents in Charlottesville, Virginia, and his professional journey as an African American man raised by a single father in inner city Philadelphia to the heights of corporate leadership. He reflects on the business pressures in the pharmaceutical industry, where long, expensive research and development cycles for new drugs and the interests of patients have to be balanced with the often short-term interests of shareholders and the changing trends in the health-care system. Frazier has been a supporter of a research-led strategy at Merck and has invested in developing a new generation of leaders and the ability of employees to embrace change.
11. Jesse M. Fried and Charles C.Y. Wang, Are buybacks really shortchanging investment?
S&P 500 companies have used large sums to buy back shares and this has been seen as detrimental to investment in long-term development. The ratio of shareholder pay-outs, including buybacks and dividends, to net income during 2007 – 2016 has been very high at 96%. However, in this measure, R&D spending and capital investment figures have been deducted from revenue to arrive at net income. A different measure, which looks at R&D and capital investment figures as a percentage of revenue, a R&D adjusted net income, reveals a different story. Net shareholder pay-outs represent, by this calculation, only 50%. Moreover, corporations have large amounts of cash holdings, representing as much as 30% of total assets. Friend and Wang also argue that even pay-outs to shareholders can be considered a form of indirect investment as shareholders in S&P 500 companies are often reinvesting their earnings into smaller companies, providing much needed capital in the economy as a whole.
12. Stanislav Shekshnia, How to be a good board chair
Shekshnia describes some of the pitfalls that come with the role of board chair, especially the temptation to think of the role as an executive one, similar to the CEO. He recommends eight principles to guard against such dangers. These include, for instance to ‘be the guide on the side’, ‘practice teaming – not team building’, ‘own the prep work’, ‘take committees seriously’, ‘measure the inputs, not the outputs’, and ‘be a representative with shareholders, not a player’. They are illustrated in detail with real-life examples from interviews with long-serving board chairs, offering valuable tips for a variety of situations.
13. David Wessel, Is lack of competition strangling the U.S. economy?
Measuring the level of competition in the economy is not an exact science, but Wessel argues that in many industries, higher concentration, rising profits, weak investment and low business dynamism represent worrying signs. For instance, the digital companies that have come to dominate the tech sector, such as Facebook or Google, or health care conglomerates, have moved to acquire and integrate new comers proposing new solutions before they could become actual competitors. While this allows for fast scaling up of technological innovation, it also contributes to high levels of concentration. To counteract these trends, Wessel suggests that the antitrust framework is due for an overhaul and renewed scrutiny of competition regulation across the economy is necessary.
14. Hui Chen and Eugene Soltes, Why compliance programs fail
Under the current legal framework corporations can limit their legal liability for wrongdoing by pointing to their compliance programs whereby employees have been informed and taken note of regulations and obligations. Chen and Soltes find however that often these exercises remain superficial. Compliance training can be easily ticked off without participants actually having to engage actively with the content or indeed feeling obliged to abide by it. To create a more robust measure of the actual impact of compliance programs, they suggest that companies should report actual instances when wrongdoing occurred and was either disciplined or corrected. Companies should also seek to test the extent to which employees pay heed to regulation and legal obligations in their day-to-day decisions and actions.
15. Laura Morgan Roberts, Anthony Mayo, Robin Ely, and David Thomas, Beating the odds
This article reports on in-depth research and interviews with 67 female African-American alumni of the Harvard Business School who reached executive, C-level positions in a corporation or professional services firm. These women have had to navigate the dilemmas created by their simultaneous visibility in corporate environments, they stand out, as they are so rare, and the reality of often being unappreciated, treated as irrelevant and thus invisible. In general they identify three keys to their resilience and ultimate success: the emotional intelligence to side-step and not take personally setbacks and slights; authenticity, aligning their racial heritage with corporate roles; and agility, the ability to confront and re-frame obstacles into opportunities. In addition, they have benefited from nurturing relationships with mentors who were able to advocate for their merits and help sustain their self-confidence.
16. Katherine W. Phillips, Tracy L. Dumas, and Nancy P. Rothbard, Diversity and authenticity
Revealing one’s true self in a work environment can be difficult and especially so for members of minorities who might feel that their actions are perceived and assessed against particular, often negative, stereotypes. However, establishing authenticity through socialising with peers is an important factor in career development and this article provides some tips and advice for both companies and employees. For instance, providing structure for social events can create a level playing field and lower the stakes; adopting a learning orientation can also frame exchange of information as non-judgemental; and mentors can provide useful buffers to absorb and dissolve momentary misunderstandings.
Experience
17. Gianpiero Petriglieri, Susan Ashford, and Amy Wrzesniewski, Thriving in the gig economy
The stakes of survival through independent work are high not only financially but also existentially, and the freelancers interviewed for this article emphasise the importance of productivity both as ‘self-expression and an antidote to precariousness.’ Success depends on nurturing four types of connections – place, routine, purpose and people – that serve to mitigate the effect of uncertainty. For them, the usual markers of success, security and equanimity, are replaced by a different definition of success, based on balancing predictability and possibility, viability and vitality.
18. Chekitan S. Dev, Case study: Prune the brand portfolio?
This case study investigates the pros and cons of duplication and differentiation of holdings within a global hotel company following a merger.
19. J M Olejarz, Our brains on drugs
What do psychoactive drugs do to our brains? Three new books investigate the history of psychiatric drugs, the growing use of ‘smart drugs’ to enhance performance in schools and the workplace, and the personal search to find, through microdosing LSD, an effective way to combat a mood disorder.
20. Gabriel Joseph-Dezaize: Life’s work interview with Jane Fonda
Jane Fonda, the daughter of Henry Fonda and a mother who committed suicide, confronted early the effects of fame and tragedy. She has built a life and a succession of careers with many forms of success, as an actress, fitness guru, and activist. Here she shares her thinking about resilience, the movie industry, supporting young people and plans for the future.
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