Harvard Business Review
September 2016
Annotated table of contents
1. Adi Ignatius, Thriving in a volatile global landscape
Adi Ignatius, the editor in chief of HBR, highlights the Big Idea article in the issue, by John Chipman, arguing that companies need to have a foreign policy of their own to cope with global uncertainties.
Idea Watch
2. HBR Team, Why people quit their jobs
New digital tracking methods can provide data that allows us to identify when employees start thinking about getting another job. Work anniversaries, birthdays, large social gatherings of peers are associated with stock taking and increased exploration of job opportunities. Since pre-emptive intervention is often cheaper for companies, these kinds of data are now actively used to initiate conversations about job satisfaction, with a view to retain employees, and especially knowledge workers who are expensive to replace.
3. Alison Beard, Making a backup plan undermines performance
Alison Beard interviews Jihae Shin of Wisconsin School of Business who, together with her co-author Katherine Milkman of Wharton, has researched the impact of making backup plans on achieving current goals. There is evidence that creating a backup can detract from the desire and commitment to pursue a goal and make its fulfilment less likely. The interview discusses the experiments that led to this finding, possible interpretations of the data obtained and further tests for the idea.
How I Did It
4. Connie Duckworth, ARZU’s founder on shaping culture through social enterprise
ARZU, established in 2003, produces high quality rugs in Afghanistan and sells them in the US. Although it is not yet making a profit and has relied on charity donations to tie it over cash flow gaps, it has tested the viability and success of its business model and expects to achieve commercial success too. Bridging the worlds of women workers in the Afghan economy and discerning, demanding US consumers has not been easy. To make production reliable has required tackling the conventional supply chain issues of patterns, colours, dyes, the finishing, and the wool. But to ensure both social impact and a reliable labour force, ARZU recruiters devised complex contracts for their women workers. The offer good pay and security reassurances, and in addition, they extract recognition for the women’s right to work, to education and medical care (especially for pregnant women) from village and tribal elders.
Big Idea
5. John Chipman, Why your company needs a foreign policy
In Chipman’s assessment, companies face increased risks and uncertainties today due to several factors: decline in US intervention, an increase in economic sanctions and greater trade flows between developing countries, which create stiffer competition for Western multinationals. Companies that develop a foreign policy of their own have a better chance to protect their position, to spot and exploit opportunities in this new environment. This foreign policy would consist of new principles of geopolitical due diligence, assessing risks at all levels, in-country, regional, transnational, as well as home and near-abroad, and orienting behaviour along new principles of corporate diplomacy. Clearly, there are reputational risks deriving from too close association with certain countries or political elites just at insensitivity to political concerns might jeopardise important relationships. Chipman offers insightful illustration of these points as he discusses a wide range of examples.
Spotlight: Customer insight
6. Eric Almquist, John Senior, and Nicolas Bloch, The elements of value
This article distils Bain and Company research on product attributes most valued by customers. Over 10,000 customers were surveyed about their perceptions of nearly 50 U.S.-based companies and asked to rank 30 product attributes from the point of view of their relevance for the attractiveness of the company. A New Promoter Index (NPS) was calculated for each company and analysed in relation to recent revenue performance. Almquist, Senior and Bloch then tease out answers to a number of questions: How is performance on various elements of value linked to customer loyalty? Does it matter on how many attributes a certain company does well? Are some elements of value important across categories of products? Do rankings of important attributes vary across product category and industry? How could this analysis be used for product development?
Christensen and his colleagues offer here a qualitative discussion of what makes innovation successful, by focusing on hitting the sweet spot, delivering exactly on the ‘job to be done’ expected of particular products. They draw on deeply researched, ethnographic examples of successful innovation for complex products such as bungalows or online university degrees, and also more everyday consumer products, including Tidy Cats LightWeight Litter, Hershey’s peanut butter cup and American Girl dolls. The authors provide a definition of what it means for a product to get the job done, suggestions for a number of guiding questions for research, and advice on aligning internal business processes to ensure consistency of delivery and sustainability over the long run.
8. Frank van den Driest, Stan Sthanunathan, and Keith Weed, Building an insights engine
Unilever is known to many of us as a leading global consumer products company. This article shows in detail how star commercial performance and ambitious environmental sustainability objectives can be achieved together, by systematically making the most of what the company knows about its customers. Written by two Unilever executives (Sthanunathan and Weed) together with one of their leading marketing consultants, the article offers rare insight into long-established and emerging practices at the company. Ten characteristics describe what amounts to an ‘insights engine’ and might provide inspiration to others. Seven characteristics are operational, including data synthesis, independence, integrated planning, collaboration, experimentation, forward-looking orientation and affinity for action. The other three are related to people: the cultivation of a whole-brain mind-set, business focus, and storytelling.
Features
9. Max H. Bazerman and Daniel Kahneman, How to make the other side play fair
Bazerman and Kahneman repurpose here an arbitration technique usually employed in labour negotiations. In their formula, a negotiator who has put forward from the start a reasonable offer, is sure of its fairness, wants to avoid expensive litigation and neither party can easily walk away, could challenge their opponent to accept a final offer arbitration challenge. The arbitrator would be asked to choose one or the other offer, rather than split the difference. Based on their experience at AIG, the leading US insurer, Bazerman and Kahneman predict that faced with the possibility of a large loss, the other party, less reasonable initially, will be motivated to make a more acceptable offer. They warn that adopting and implementing this technique successfully might require additional training and a change in attitude, but advocate for its benefits in material terms and in terms of reputation for fairness.
10. Mohanbir Sawhney, Putting products into services
Sawhney illustrates here how professional firms, especially consultants and law firms might want to take advantage of the possibilities opened up by automation. When their current portfolio of services includes large volumes of repetitive, low-skill tasks, it may be possible to devise a delivery method based on algorithms and transform the service into a product. Pricing would change from a ‘time and materials’ model to payment by transaction or outcome, at lower cost for the customer but with greatly improved productivity and volume for the provider. Examples considered in some detail include EXL’s examination of expenses coding in medical insurance claims, Deloitte’s analysis of documents for auditing purposes and Littler services for HR departments with large litigation portfolios.
11. Boris Groysberg, Eric Lin, George Serafeim, and Robin Abrahams, The scandal effect
To research this article, Groysberg and his colleagues have looked at career trajectories of employees in the data base of a global executive placement firm, including 2034 job moves. They find that having worked at a company that was identified by the Securities and Exchange Commission in the US as having misstated earnings, even a decade or so before a scandal broke out, could still affect employability and compensation levels. The authors explain this process in terms of stigma that can attach to companies when they are seen to have failed moral norms. The individual impact may nonetheless vary according to circumstances. The high visibility of the kind of financial information captured by the SEC and their decisions in the US, for instance, is likely to accentuate the effect, while employees at very early or very late stages of their careers tend to be less affected by such negative contagion, especially if they were not directly involved in the scandal. In any case, the article offers advice on strategies to recover, suggesting that the effects of a scandal cannot be avoided but they can be endured.
Experience
12. Joseph L. Badaracco, How to tackle your toughest decisions
Badaracco, a professor of ethics at Harvard Business School, distils here age-old wisdom about careful consideration of possibilities and judgement. What is the work of a manager if not creating, rather than finding solutions, especially when difficult, grey area situations occur? Badaracco offers five questions to guide the process of thinking through possibilities and making choices, three to do with data gathering and objective assessment of reality and two dealing with values and subjective choices. He then illustrates the process with the case of a manager who needs to convey to one of her reports that he is not performing well, and there might be penalties, despite the fact that he has friends, and protection, in the higher echelons of management at the company.
13. J. Neil Bearden, Case study: An office romance gone wrong
Break-ups in romantic relationships tend to be difficult, but in this case study of an office romance the problem is compounded by power dynamics within the organisation. As her former C-suite boyfriend quickly transitions to a new relationship and finally marriage with a younger colleague, our heroine has to ask: What should she do? Stay in the job or move on?
14. David Champion, Is Project Europe doomed?
Champion, a senior editor at HBR, based in Paris, reviews three books about the EU, all focusing on the common currency, the euro. Always a risky enterprise, the euro has now, through the 2008 crisis, exposed tensions at the core of the EU that may well threaten its survival. The jury is out, and expert opinions presented in the books reviewed diverge widely. Could the euro recover?
15. Daniel McGinn, Life’s work: Interview with Jimmie Johnson
NASCAR driver Jimmie Johnson, 40, has, since 2002, won six championships in the elite Spring Cup Series, just one short of the sport’s record so far. Here he explains how he approaches his work, team dynamics and plans for retirement from racing. His competitive spirit will stay with him forever, he says.
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