Harvard Business Review
November – December 2017
Annotated table of contents
Adi Ignatius, the editor in chief of HBR, draws attention to augmented reality, ‘the technology that superimposes digital images on the physical world’, the focus of the spotlight section in this issue.
Many companies now have experience with crowdsourcing and this has allowed researchers to investigate questions of design and effectiveness. In this study of 87 projects submitted by 18 companies during a 14-month period on the Atizo platform, the most popular ideas, those that had most ‘likes’, did not necessarily lead to successful product launches. Researchers have found that social ties among participants on the platform, their ability to ‘befriend’ each other influenced votes irrespective of the quality of the ideas. Companies have had more robust results when they put ideas suggested by the crowd through internal evaluation processes, involving experts and criteria of feasibility, in addition to popularity and originality.
Beard interviews Alex Krumer, a researcher at the University of St Gallen, who, with colleagues, analysed 8,200 games from Grand Slam tennis tournaments and found that women’s performance drops by less than that of men following a high stakes error, such as losing the server advantage at a decisive point in the first set. The explanation may be linked to the higher speed of hormonal reaction in men; both production of cortisol, following mistakes, and production of testosterone, following victory, are faster and accentuate initial negative or positive responses. However, actual blood tests will have to be carried out to test this hypothesis.
Kronos, a provider of workplace time management software and services, employing 5,000 people around the world, introduced an unlimited vacation policy in the US and Canada, at the beginning of 2016. Responding to recruitment challenges in the Massachusetts area, the policy also reflects a long-standing commitment to family values and work-life balance, trust in the dedication of employees and belief in the need for light-touch surveillance and for flexibility in how work gets done. Aaron Ain is especially frank here about types of vocal resistance to the policy from a minority of managers, the arguments that ultimately won the day and the surprising ways in which employees were able to use these changes to their advantage. On the whole, the introduction of the policy, has encouraged employees to take 2.6 more days off, on average, has contributed to higher financial returns, an increase in employee satisfaction and a reduction in voluntary turnover.
Spotlight: A manager’s guide to Augmented Reality
Porter and Happelmann argue here that Augmented Reality (AR) is the current frontier of technological and business development. The creation of a smooth interface between the digital and physical worlds, allowing for visualisation, instruction and interaction, by superimposing digital imagines on the physical world, can reduce our cognitive overload and make available to us in a simplified, useful form the actionable insight within large amounts of digital data. The article explains these advantages and spells out how AR could be used across the value chain, from product design to manufacturing, logistics, marketing and sales, after sales service, and human resources. Each company will need to make a complex assessment of how the challenges and opportunities presented by AR affect its own position and strategy. Porter and Happelmann suggest five questions to guide this process and offer advice about first steps in developing and deploying AR. All of these points are richly illustrated with examples from industry experience.
The digital image and the physical world are twined so that commands on the digital interface could affect the physical world. This is illustrated with the AR application which can activate content from this package with the use of a camera in a smartphone or tablet, and short videos embedded in the lead article on hbr.org.
This is a snapshot of current data on investment in AR by industry, enterprise role in the value chain, head set production and strategic goals as companies prepare to embrace this technology.
Guido Jouret, the Chief Digital Officer of Swiss industrial giant ABB, oversees the $34 billion technology strategy for the company. Interviewed here he speaks about current AR pilots at ABB including remote servicing of equipment in the pulp and paper business and the development of autonomous vessels in the maritime business. Jobs that are remote, dangerous and complex are the most likely to benefit from AR enhancement. Moreover, AR is likely to help complement AI by allowing the integration of machine computing and analysis with human capacity for judgement in context.
Head-mounted displays, in the form of smart glasses, are expected to disrupt the market for tablets and smartphones for the delivery of AR interfaces. It is a high-stakes field where early contenders, such as Google Glass and Microsoft’s HoloLens are joined by Apple offerings as well as dedicated and ambitious start-ups, including Magic Leap, Osterhout Design Group, Vuzix and Meta.
There are few surprises in this year’s ranking of CEOs, perhaps because the assessment methodology is the same as last year: three financial indicators (total shareholder return adjusted for country, industry, and market capitalisation, accounting for 80% of the final score) and two environmental evaluations. The first spot has gone to Pablo Isla, the Inditex CEO, whose financial performance was ranked 18, but the overall score was lifted by exceptional environmental performance. In a brief interview, Isla points out that 70% of Zara stores already meet the self-imposed standard of environmental self-sufficiency, with the rest to follow by 2020. In contrast, top financial performance by Amazon CEO Jeff Bezos, only places him in place 71 overall, an improvement from last year, but he is still held back by low environmental scores (he ranks 694 and 850 according to the two the sustainability measures, out of the 898 CEOs evaluated).
Anand and Barsoux draw on their four-year study of 62 corporate transformations to shed light on causes for the large number of failures and to suggest remedies. Misdiagnosis and poor execution are often to blame. More clarity in relation to the desired outcome and the catalyst for change – increased efficiency, cost cutting and identifying new sources for growth – are encouraged. The article offers a diagnostic tool to help companies identify their area of greatest weakness and the area where they need to concentrate their transformation efforts, in terms of global reach, customer orientation, nimbleness, innovation and sustainability. In addition, the success of a transformation often depends on careful preparation of leaders who can sustain and push through the new objectives. Engaging the organization in wide-ranging conversations structured around these tools can help them get started and avoid the main traps, as illustrated by a wide range of case studies and industry examples.
This article outlines the approach used at Egon Zehnder for identifying high potential managers and for fostering their development. This includes defining eight leadership competencies (results orientation, strategic orientation, collaboration and influence, team leadership, developing organizational capabilities, change leadership, market understanding and inclusiveness), each with seven levels of development. Competencies tend to be systematically linked to four traits: curiosity, insight, engagement and determination. Thus prospective leaders can be evaluated in terms of their current level of accomplishment and their potential, the latter given by the strengths of the four underlying traits, and by motivation. To help develop potential along the most promising and desirable competencies, pro-active and targeted leadership development is necessary, including stretch assignments and job rotation. The usefulness of the approach is illustrated in regards to choosing between contenders for a CEO position and the development of female leaders.
Blank, who holds associate positions at Stanford, University of California Berkeley and Columbia, and was a co-founder or early employee at 8 tech start-ups, draws up a nuanced, sociological picture of the shift in the power balance between founders and venture capitalists. He points to the Netscape initial public offering (IPO) in 1995 as a turning point. The expectation that before going public companies had to be solid organizations, professionally run and profitable was replaced by calculations about their future potential. A large number of VC funds have also become founder friendly as they hope to secure dominant positions in touted unicorns. Moreover, increasingly IPOs have been replaced by acquisitions as an exit strategy for start-up founders. Thus, founders have been able to use governance structures and lenient investment conditions to maintain control sometimes to the detriment of their companies – see the example of Uber and Theranos among others. Blank concludes with several recommendations to curb the bad behaviours of founders, including pairing them up with experienced COOs, more scrutiny from investors, stronger boards and shareholder activism.
Based on interviews, surveys and semi-structured informal conversations over dinner, this article offers a rich, timely view from the frontlines about the increased pressure to use boards effectively to navigate one of the largest challenges of our times: innovation in a rapidly changing business climate. Hill and Davis identify four common obstacles for increased board involvement in managing innovation: an innovation and risk agenda stuck in an incremental mode; insufficient time; lack of expertise; and rigid, status-bound interactions between board and management. At the same time, the authors have found examples of pro-actively addressing these issues and recommend several remedies: cultivating diversity and collective business literacy; fostering creative abrasion; redefining the partnership between boards and management towards collaborative search for solutions; and encouraging risk while tolerating failure.
Why does failure come as such a surprise for some companies, especially when they had been successful for a long time? Vermeulen and Sivanathan suggest that due to over commitment to their strategies many companies do not notice or assess accurately adverse developments. Doubling down on a failing strategy, or escalating commitment is due to a number of reinforcing, common biases: the difficulty of letting go of sunk costs, which would never be recovered; aversion of immediate losses, even with the promise of future gains; self-confidence built on previous success, whether earned or not; the desire to complete a project; taking lack of open criticism for the strategy as proof of others’ commitment to it; and personal identification. Certain deliberate procedures can however help organizations avoid the trap of escalating commitment, including: setting explicit criteria for taking decisions; counting votes according to how criteria are satisfied (rather than by voter); encouraging and protecting dissenters; considering alternatives; separating decision making from strategy advocacy; considering failure as a real possibility and exploring how it might occur.
Even though the adoption of social tools for internal communication is now widespread in companies, in many cases there is little awareness of how they can contribute to better performance. Leonardi and Neeley spell out here four common traps that can detract from the usefulness of social tools: Millennials associate social tools with their personal lives and have difficulty using them in a work context; informal communication may be felt as time-consuming or inappropriate, despite its usefulness for establishing trust; learning from exchanging and watching exchanges of information on social platforms is a slow process and its significance might be missed unless there is sufficient persistence; what is visibly exchanged may be treated as the most important type of information, when this may not be the case. However, these difficulties can be addressed in several ways: stating the objectives of introducing platforms; allowing employees to take the time to slowly accumulate awareness of others’ work and the overall business environment; spelling out rules of conduct to protect confidentially and sensitive commercial information; and modelling appropriate behaviour.
This is a compelling study of how IT systems may be properly integrated with organizational performance in health care. IT systems can sit at one remove from the structuring rules for the delivery of care, recording information for monitoring or billing purposes, or they can inform the evaluation and design of alternative, superior processes. The authors propose four major adjustments in the way IT systems are embedded in clinical practice: treat IT as a tool for achieving quality of care, rather than just monitoring and billing; make data collection truly passive and ongoing, through the use of sensors; centralize data and use analytics to translate it into actionable information to shape workflows; design new operating and business models. All of these measures have been tried in a variety of clinical settings and the article uses these examples to illustrate how they could be implemented more broadly.
Williams, Facebook’s global director for diversity, explores here the question of surfacing and measuring bias against minorities in the work place. Some of the bias is genuinely unconscious – it functions despite declared good intentions – and difficult to capture via surveys, focus groups or statistical analysis. She argues that a combination of research methods, qualitative and quantitative, is necessary to get to the often hidden reality of exclusion and discrimination, not least because minority employees may have internalized and come to expect negative evaluation from their peers and thus tend to undervalue themselves. The article is based both on Williams’s experience at Facebook and her research of diversity literature and practices at other companies.
Bussgang, who has worked and invested in numerous start-ups, argues that suitability for working in a start-up has to do with tolerance for uncertainty, a tendency to question situations and a willingness to take ownership for fixing problems. He then describes the choices one needs to make in search for a suitable start-up to work for – in terms of sector, location, stage of start-up development, and prospects for success – and explains how to find and sift through the necessary information to reach sound decisions. All that is left to secure the ideal start-up job is to arrange a warm introduction and articulate how you can contribute.
A writer and show runner for three successful television series needs to decide whether to continue in this role or to prioritize her own artistic needs and the development of a new project.
McGinn distils lessons from three books on responses to crises, whether they are immediate and urgent, or long-running. A range of suggestions is available, from having an action plan in place, a crisis-ready culture or the maturity to master emotions and take a long-term perspective.
Scott Kelly, a NASA astronaut who most recently spent a year on the International Space Station, shares his views of good management, living and working with colleagues of different nationalities at close quarters, and the future of space exploration.