Harvard Business Review
September/October 2020
Annotated table of contents
1. Adi Ignatius, New urgencies and an old question
Adi Ignatius, the editor-in-chief of HBR, highlights the articles in this issue that address our triple emergency – health, recession, race – and the need for businesses to think beyond turning a profit and obeying local laws.
Idea watch
2. HBR Staff, Boost your resistance to phishing attacks
As many as 90% of data breaches are the result of phishing, putting a high price on the ability of employees to detect and stop such attacks. Research suggests that computer security training can be improved by adding a mindfulness component, which counteracts some of the weaknesses of rules-based training, especially the susceptibility to inattentive slippages. Team dynamics could also alter the likelihood that any one member of staff will respond to phishing attacks; gaming and competition could motivate all team members to pay close attention to the security implications of their communications. Christopher Porter, security officer at Fannie Mae, offers additional practical suggestions for improving the effectiveness of security training, including specific content and regular iteration.
3. Thomas Stackpole, We actively avoid information that can help us
Professor Emily Ho of Northwestern University shares findings from her research, with colleagues, on information seeking in different contexts. Several experiments indicate that up to half of respondents actually refuse exposure to health, financial and interpersonal information that could potentially be useful to them. The effect is stronger for information that is perceived as more difficult to action, such as life expectancy, a health diagnosis, knowing your colleagues’ salaries or their opinions of you. By recognising the prevalence of ignorance wilfulness, managers could think more deeply about how they communicate feed-back.
4. Anne Wojcicki, CEO of 23AndMe, on the struggle to get over regulatory hurdles
Wojcicki recounts the professional trajectory that led her to found, with Linda Avey and Paul Cusenza, 23AndMe, a company providing genetic testing and health-risk reports to individuals, in 2007. Six years later, the Food and Drug Administration argued that by providing health risk assessments the test could be considered a medical device and had to meet a higher regulatory standard. Addressing this issue required a cultural shift at 23AndMe. To convince the FDA that the test was safe for consumers, the company had to demonstrate through research that individuals were able to understand the health implications of their reports. Gradually, the Administration came to define the reliability of different types of genetic information and cleared 23AndMe to provide reports on carrier status, health-risks and pharmacogenetics.
Spotlight: Making sustainability count
5. George Serafeim, Social-impact efforts that create real value
Many of the obvious operational improvements in environmental, social and governance performance have become common practices for companies in the last few years. Drawing on 30 field studies, Serafeim articulates the rationale for increased focus on strategic ESG practices that target material factors in various industries. Raising the game in this area would require the creation of accountability mechanisms flowing down from the CEO and the board and bottom-up approaches ensuring that employees have a clear sense of purpose and perceive the broader meaning and impact of their work. In addition, operational changes would embed ESG objectives by allowing unit heads and middle management to determine local implementation within systems and processes. With a strong and clear ESG commitment, companies could then prioritise relations with appropriate, selective investors.
Boards are for the most part still committed to short-term gains, according to recent surveys of members. However, it is possible to inject a sense of corporate purpose around sustainability and long-term concerns, as shown by the Enacting Purpose Initiative. This alliance of academic and practice leaders in the US and Europe proposes a framework for linking purpose and strategy, SCORE: simplify objectives, connect them to capital allocation, own the agenda, reward and exemplify.
7. Simon MacMahon, The challenge of rating ESG performance
MacMahon describes his journey at Sustainalytics, since 2008, marking the major steps in the development of metrics and ratings for ESG performance.
Features
8. Peter Cappelli, Stop overengineering people management
Economic downturns and technological advances tend to encourage a drive towards optimizing the labour force, a tightening of direct control and performance measurement. Historically, waves of optimization have usually been followed by countervailing pressures towards empowerment, recognising the role of employee discretion in fostering engagement and innovation. Analysing our current moment, Cappelli identifies three areas where this push and pull between optimisation and empowerment are played out: the availability and extensive use of temporary and gig workers alongside more established employees; the use of differentiated, uneven starting salaries for the same job; and the role played by algorithms in decision-making and surveillance. Learning from experience, Cappelli suggests that companies refrain from pushing the optimising trend too far and show due regard for employees and their needs.
9. Robert Livingston, How to promote racial equity in the workplace
Livingston defines a five-step approach to dealing with racial discrimination in the workplace. To start, the problem itself needs to be surfaced, as awareness of it is not a given. Next, it is important to determine root causes, recognising how systemic biases combine with psychological sources and individual choices to maintain the status quo. Further, developing empathy can foster a desire to take action. This should be guided by an effective strategy, addressing personal attitudes, informal cultural norms and formal institutional policies. The willingness to implement such a strategy is closely linked to the willingness to bear the cost of losing or sacrificing some of the existing privileges. As Livingston argues, some of these costs may loom large in the imagination but experience shows that they can be managed in practice, especially when organizations focus on equity rather than equality.
10. Michael G. Jacobides and Martin Reeves, Adapt your business to the new reality
Jacobides and Reeves suggest that businesses should assess the growth opportunities created by the pandemic by considering how habits have changed and how these trends interact with previous behaviours. Are the new behaviours continuing an existing trend? Do they represent a complete shift or a temporary one? A close look at the data and attention to what competitors are doing could help provide answers. Building on these, companies need to determine how it may be beneficial to reconfigure their business models, for instance by expanding online and drawing in new customers. Finally, despite uncertainty, companies need to break with inertia and allocate capital to these new priorities. Research and data from previous crises, as well as the current one, and examples of strategies pursued by companies that thrived post-recession in the past back up these suggestions.
11. Willy C. Shih, Global supply chains in a post-pandemic world
To assess the opportunities created by the pandemic, companies may want to uncover and address hidden risks, make vulnerabilities clear, diversify the supply base, and hold a certain amount of safety stock. Beyond this, as some of the old solutions become impracticable, it could be useful to look for unforeseen opportunities for process innovations. These may include new automation, adoption of superior processing technologies, the development of more flexible manufacturing platforms, the integration of additive manufacturing (3-D printing). Clearly, for many companies, the pandemic has created a new vantage point for considering the trade-off between product variety and capacity flexibility, recognising that less choice might be better. This article builds on a body of scholarship on supply chains, by Shih and others, offering a window into a rich array of research and analysis in the field.
12. Max H. Bazerman, A new model for ethical leadership
Our rationality and our ability to behave in an ethical manner are both bounded by biases and other cognitive limitations. Bazerman argues that we are more likely to overcome motivated blindness to the ethical implications of our actions when we side with our slow thinking processes and consider trade-offs between choices. Putting aside temporarily our regard for how decisions affect us personally we may also become able to forge trade-offs that achieve better outcomes for more, or all, participants. Equally, in deciding how to allocate our time and resources, we might want to consider where we could make the most difference. Especially leaders have a responsibility to take account of how they set an example and create the environment and expectations for ethical behaviour in an organization.
13. Rory McDonald and Robert Bremner, When it’s time to pivot, what’s your story?
With a relatively short track record and relying to a large extent on the charisma of their founders, start-ups are vulnerable to sudden, negative reversals in investor sentiment. Introducing major changes in particular could make them appear unreliable. Drawing on hundreds of interviews with founders as well as public data about start-ups, McDonald and Bremner have distilled a sequence of stratagems that could help entrepreneurs maintain credibility and support as they pivot their companies. Importantly, founders need to be able to tell their story as one of continuity at a deep level, and to justify any shifts from their initial positions.
14. Douglas Holt, Cultural innovation
Winning on functionality, convenience, reliability, price, or user experience often amounts to travelling the beaten track, building better mousetraps through incremental innovation, as Holt puts it. In contrast, a more radical model of innovation would shift the terrain of competition by redefining a certain product or service category. Starting from a detailed discussion of Ford’s reinvention of the family car, the luxuriously equipped four-door SUV Explorer, Holt proposes a process for determining when such cultural innovation might take hold. This includes an analysis of a category’s culture, with the view to identify its weaknesses; scoping existing subcultures that might have formulated alternative values or propositions; creating a new vision or ideology; and finding powerful cultural symbols to sustain the new offerings. This process is further illustrated with the case of Blue Buffalo dog food and the failure of incumbents Iams, Purina and Mars to stop its rise.
15. James Bamford, Gerard Baynham and David Ernst, Joint ventures and partnerships in a downturn
Joint ventures and partnerships are complex, structured relationships that represent innovative solutions to a whole host of business needs, financial as well as operational. In this article, Bamford et al. review a range of possibilities for mining the resources that often remain implicit in JVs and partnerships, such as raising capital in unconventional ways, reducing costs through synergies and new operational models, regearing financial ratios and assisting owners through buyouts and other means. At this time of increased pressure on companies, designing new JVs and partnerships could also improve the chances for survival and even prosperity. These may take the form of consolidations, partial sales or partnerships for capital-light growth. All of these types of collaborative ventures are illustrated with examples from a variety of industries.
16. Ajay Agrawal, Joshua Gans and Avi Goldfarb, How to win with machine learning
Machine learning transforms data inputs into predictions, an activity that has led to extraordinary value creation for high-tech companies such as Amazon, Apple, Facebook and Google. This article explains how data is transformed in predictions that have economic value and offers several criteria for assessing comparative advantage in this area, from the availability of training data, to the speed of feed-back loops and accuracy of predictions. For companies trying to enter the field now, the authors suggest two strategies for catching up: access to alternative data sources and differentiated predictions.
Experience
17. Bruce Tulgan, Learn when to say no…
Managing the inflow of requests may well be not only an important part of our working day but also a crucial determinant for career success or failure. In this article, Tulgan presents a detailed process for assessing a request to arrive either at a well-reasoned no or an effective yes. This combines due regard for a variety of factors, to do with timing, substance, power dynamics and priorities, as well as astute strategies for weighing them up.
18. Cody Evans and Chris Mahowald, Case study: Pull the plug on a project with an uncertain future?
This is a case study of a real-estate development project in an emerging market affected by pandemic-related lockdowns. When a local joint venture partner withdraws, the development lead needs to decide whether to sell or continue the project. Experts in the field help assess the pros and cons of these options.
19. Jeff Kehoe, Presidential obsession
The literature on USA presidents is vast, to say the least. In this review Kehoe focuses on recent books that probe the relationship between leaders, the media and the decisive role of the citizenry.
20. Curt Nickisch, Life’s work interview with Janelle Monáe
Monáe, 34, is a successful actress and singer-songwriter. She has established her own label, Wondaland Records and in this interview she talks about her work ethic, the struggles to articulate her own voice as a black, queer woman in the USA, her views on collaboration and the causes she cares about.
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