Harvard Business Review
November/December 2023
Annotated table of contents
Adi Ignatius, the editor in chief of HBR, highlights the lead article in this issue, on how to fashion effective stories: paint a vivid picture of what the future holds.
Idea watch
2. HBR Team, Reimagine your managerial pipeline
New research shows how promotions to managerial posts could ensure a better match between the aspirations of prospective candidates and the requirements of the job. Thus, the selection process can start with self-nominations followed by a rigorous application process around desirable leadership attributes such as empathy, adaptability, and authenticity. Further training should focus less on the mechanics of various tasks and more on the nuances of making tough, ethical decisions. Upon discovering the actual expectations, some candidates might want to opt out. Moira Klos, the chief people officer of WPS Health Solutions, an insurance company with 2500 employees, explains how this process has contributed to a robust managerial pipeline for them.
3. Eben Harrell, Unexpected interruptions can boost creativity
Harrell interviews Tim Schweisfurth on research looking at how after a four-day shutdown caused by fire at a European factory, workers’ online submissions of ideas for improving processes increased by more than 50% in the following three weeks. Thus, our brains may retain some, residual behind the scenes focus on the original task when we are interrupted suddenly and could go on to produce novel ideas. It is also important whether these ideas are captured and implemented, whether interruptions are (too) emotionally charged and whether they occur unexpectedly.
4. Shantanu Narayen, Adobe’s CEO, on making big bets on innovation
Narayen was the CEO of a start-up that Adobe had considered acquiring before it joined the company in 1998. Milestone moments in his career followed quickly, from leading the launch of InDesign in 1999 to leading all product in 2001, becoming COO in 2005 and CEO in 2007. Narayen was responsible for major strategic decisions, using the restructuring following the economic and financial crisis of 2008 to refocus on core values, innovation, and people. He expanded the Adobe offering from content creation to the whole marketing supply chain, including content management, measurement, and monetisation. He explains how Adobe made the shift to the creative cloud, adopting a subscription model which allows for continual, seamless updating, and it is currently navigating the changed landscape of AI, developing its own generative offering, Firefly.
Spotlight: AI and Machine Learning
5. Andrew McAfee, Daniel Rock, and Erik Brynjolfsson, How to capitalize on generative AI
Unlike the general purpose-technologies of the past, such as electricity, the steam engine or the internet, generative AI does not require additional complementary physical infrastructure. According to McAfee et al., this means that generative AI is likely to be widely adopted throughout the economy in years, not decades. In combination with a machine learning system and applied to the tasks with the largest cost-benefit ratio, generative AI has the potential to show significant benefits immediately in most companies. The use of machine learning can help remedy the confabulation problem of generative AI – the tendency to generate plausible sounding but false answers. Data access restrictions protocols could help address problems such as invasion of privacy, IP theft and bias.
6. Paul Leopardi, Helping employees succeed with generative AI
Leopardi proposes a framework for ensuring that employees use generative AI safely and productively. It consists of four interrelated activities: segmentation, transition, education, and performance (STEP). Segmentation requires assessing tasks according to three categories – those that can’t or shouldn’t be done by AI, tasks that can be augmented by AI and tasks that can be automated. Implementing AI for the last two categories will free up time and employees could transition their work roles by deepening or upgrading them. Training and education in the use of AI and new methodologies for assessing performance are then required. Leopardi illustrates through examples from three companies, in health, marketing, and metropolitan planning.
7. Iavor Bojinov, Keep your AI projects on track
Bojinov provides a framework for assessing AI projects that can help beat the current odds of 80% failure. He explains how typical steps in the management of projects, such as selection, development, evaluation, adoption, and management need to be rigorously carried out. For instance, before adopting an AI project, several criteria need to be met: strategic alignment; measurable impact; determination of the role of AI, whether to augment or replace current workers; defining the nature of the problem; ensuring data availability, technological capability and skills; and resolving ethical considerations. Equally it is important to establish whether an AI project can bring benefits at scale and can overcome barriers to adoption, including distrust of the algorithm, the developer, and the process.
Features
8. Frances X. Frei and Anne Morriss, Storytelling that drives bold change
Frei and Morriss argue that an effective story demonstrates deep understanding by using simple language, presents a coherent relationship with the past, honouring the positive and reckoning with the negative, and formulates clearly why change is necessary. In addition, it must also articulate a clear path to success. How the story draws on emotions is also critical: the authors review ten underrated emotions that can energise a story, including frustration, regret, enthusiasm, joy, and grace. Examples include the turnarounds achieved by John Legere at T-Mobile, Dara Khosrowshani at Uber, Patrick Doyle at Domino, Henrik Poulson at Ørsted, Ursula Burns at Xerox, Jan Scarlson at Scandinavian Airlines and Alan Mulally at Ford.
9. Matthew Dixon, Ted McKenna, Rory Channer, and Karen Freeman, What today’s rainmakers do differently
Dixon et al. find that professional services firms can no longer count on renewed business from loyal clients, as the practice of buying again from partners and firms becomes less prevalent. According to their research, of the five distinctive profiles of partners at these firms, only one, the activator, delivers above expectations, while the others, including the realist, debater, confident and expert correlate negatively with sales performance. The article goes on to describe three powerful activator behaviours: embracing business development as a crucial part of the job; using networks of contacts across organisations to surface business opportunities; and creating additional value for existing clients by roping in diverse experts from within the organisation. These can be learned through training and coaching, promoted through hiring and partner selection, and supported by deploying technology and by structuring incentives and rewards appropriately.
10. Thomas S. Robertson, The resale revolution
Robertson spots a trend: the emergence of a resale market, which in the US has already reached a respectable size, at around $175 billion. It is fuelled by consumer interest in recycling reusable goods and the interest of young buyers to mix and match old and new products. The article draws on examples of companies that have already entered the resale market, including Patagonia, Ferragamo and Apple, to provide useful guidance: make sure your processes are friction-less; take advantage of third-party platforms that can handle some of the operations; target the Gen-Z consumer; link resale opportunities to loyalty programs; and integrate returns into resale programs.
11. Marshall Fisher, Santiago Gallino, Jun Li, A step-by-step guide to real-time pricing
Fisher et al. suggest that competing in online retailing now depends on assistance from AI models. Usually these are structured around simple comparison of prices, supposing that a cheaper offering will be preferred. However, there is scope for building more complex models that can analyse historical data and broader patterns, taking account of product availability and the customers’ sensitivity to price changes. The article sets out a seven-step process for constructing such a pricing model: choosing to focus on key products; constructing a sophisticated model for how customers make purchasing decisions; experiments and tests to determine how customers respond to changes in prices (price elasticity); analysis of historical data to surface relevant purchasing patterns; decisions on maximizing profit and/or revenue; testing and implementation; re-iteration of the first 6 steps for continuous improvement. Each step is illustrated through discussion of examples of retailers who have implemented this methodology and their results.
12. Andrew Winston, Paul Polman, and Jeff Seabright, Middle management is the key to sustainability
According to Winston et al., a company may be in one of four stages in the adoption of the sustainability agenda: lagging and sceptical; building a base; accelerating; and leading. To be effective promoters of sustainability in their company, middle managers need to appreciate the constraints and opportunities of the stage they are at and focus on specific actions. For instance, for a lagging and sceptical company, coming to terms with the basic requirements of reporting and identifying which parts of the sustainability agenda already have a degree of acceptance would represent worthwhile advancements. For companies that are in a reactive mode, building a base, and unsure about the best ways to pursue sustainability, middle managers need to focus on developing capability.
13. Bill McEvily and Anne ter Wal, Harness your network to unlock innovation
Generating good ideas may be crucial to innovation, but securing a fair hearing for them is far harder. In this article, McEvily and ter Wal focus on the ability of innovators to anticipate and overcome objections by drawing on resources from their own networks outside and inside the organisation. Outsiders can help by playing the role of innovation catalysts, facilitating exposure to unusual ideas and scenarios. They could also be sparring partners, acting as sounding boards and voicing objections that could be important for developing an idea and overcoming opposition. Equally, innovators need to show savvy in the way they sequence the involvement of their networks within the organisation, moving from a trusted inner circle to larger, sceptical ones in a continuous process of testing and improving ideas by considering feed-back and criticism. Three cases – the setting up of the UK’s first cloud-based AI radiology service, the development of drugs for menopausal symptom relief, and the creation of sugar-cane-based polymers – serve to illustrate these points.
14. Jack Fuchs, Scott Sandell, and Vikram Shanker, It’s time to define your company’s principles
While mission, vision and values have long been the focus of attention in companies, Fuchs et al. argue that principles, which provide succinct decision rules, are even more consequential. Well-defined principles are distinctive, debatable, transferable across types of decisions, integral to an organization’s work, and defining. When they work well, principles support rapid and clear communication and could structure relations with stakeholders, facilitate coordination across the organization, and shape culture. To create and instil principles, the article suggests an organization-wide process of self-reflection on distinguishing characteristics and inflection points; inclusion in induction processes and performance measurement; and continuous reference when making and communicating decisions.
15. Ted Bililies, Private equity needs a new talent strategy
Accustomed to win big through financial engineering, Bililies argues, the private equity industry has not historically invested in leadership development as a lever for success. This complacency is now difficult to justify, as the industry confronts increased pressure from higher prices for assets, rising interest rates, the need to integrate several smaller companies to achieve scale for deals and longer holding periods. Moreover, executives need to deliver under heavy time pressure and contend with different visions of success in the absence of management infrastructure and against competing interests from owners and operators. Bililies suggests actions for leadership development, at the level of the PE firm (employ a human capital partner), portfolio companies (define a playbook and agenda for leadership), and in the context of a specific deal (include leadership in all the stages of a deal and give due attention to leadership in the critical few months after the acquisition).
Experience
16. Herminia Ibarra, Why career transition is so hard
Longer working lives entail multiple periods of transition which usually lack institutional support and come with an emotionally charged loss of professional identity. Drawing on decades of research on professional transitions, Ibarra suggests that rather than waiting to discern what we really want, in the abstract, it is more productive to get started and learn along the way, iterating a variety of options. This requires patience with and tolerance of a state of liminality, where the course to follow might not be clear for periods of time, with delays and unexpected side-steps. Thus, openness to exploration, while bridging and bonding as opportunities arise could lead to re-creating professional coherence, discovering a new plot despite precariousness and uncertainty.
17. Khrishna G. Palepu, Case study: How should we diversify our supply chain?
Post-pandemic, a global manufacturer that has used multiple supply chain partners in China and Asia investigates new partners in Mexico. The executive team visit several manufacturing sites and meet with the finance minister assessing the pros and cons regarding risk, time, expense, and environmental impact.
18. Ania G. Wieckowski, The perils of an achievement culture
Wieckowski reviews three books that explore the dangers of perfectionism and striving for ever higher professional recognition and rewards, bringing together the perspectives of a reformed survivor in finance, a journalist, and a university professor. Recognising the costs of workaholism to personal health and wellbeing could help sufferers self-regulate and prevent its worst excesses.
19. Laila Worrell, Life’s work: An interview with Viola Davis
Four-time Oscar nominated actress Viola Davis is also an activist and the author of a memoir, Finding Me. She overcame extreme poverty and racism to achieve professional success and to thrive, not least with moral and emotional support from the women in her family. She has come to value “the beauty, the skill, the artistry” in the journey more than outward signs of success, appreciating the power of art to sustain passion and resilience and stories that open up possibilities.
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