Showing papers in "Harvard Business Review in 2015"

The Truth about CSR

Abstract: The article discusses corporate social responsibility (CSR) programs. In the authors' view many of these programs consist of disparate, uncoordinated initiatives that fail to maximize their impact. They recommend a more coherent strategy that divides CSR efforts into three categories including those related to philanthropy, operational effectiveness, and shaping the firm's business model to better create shared value. Consideration is also given to developing metrics for assessing CSR performance

Reinventing performance management

Abstract: Like many other companies, Deloitte realized that its system for evaluating the work of employees—and then training them, promoting them, and paying them accordingly—was increasingly out of step with its objectives. It searched for something nimbler, real-time, and more individualized—something squarely focused on fueling performance in the future rather than assessing it in the past. The new system will have no cascading objectives, no once-a-year reviews, and no 360-degree-feedback tools. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, all underpinned by a new way of collecting reliable performance data. To arrive at this design, Deloitte drew on three pieces of evidence: a simple counting of hours, a review of research in the science of ratings, and a carefully controlled study of its own organization. It discovered that the organization was spending close to 2 million hours a year on performance management, and that “idiosyncratic rater effects” led to ratings that revealed more about team leaders than about the people they were rating. From an empirical study of its own high-performing teams, the company learned that three items correlated best with high performance for a team: “My coworkers are committed to doing quality work,” “The mission of our company inspires me,” and “I have the chance to use my strengths every day.” Of these, the third was the most powerful across the organization. With all this evidence in hand, the company set about designing a radical new performance management system, which the authors describe in this article. INSETS: Idea in Brief.;How Deloitte Built a Radically Simple Performance Measure

Why strategy execution unravels— and what to do about it

Abstract: The article discusses how firms can improve their strategy execution by considering several myths about execution as revealed by a multi-year study involving over 250 companies. The authors observe that managers often believe they need to better align strategy with activities, whereas research indicates most firms have no problems with alignment. Other mistakes companies make include strict adherence to plans and budgets when events suggest deviation would be appropriate, and a failure to adequately communicate the firm's strategy to top managers

The Authenticity Paradox

Abstract: The article looks at complications related to viewing authenticity as a value or criterion of positive. It says that leadership typically requires learning and adapting to new roles and challenges through the adoption of new behaviors which may feel inauthentic, at least at first. It offers recommendations for addressing this dilemma, including having a diverse group of leadership role models, having goals for learning as well as for performance, and accepting the need for changes in one's personal narrative. INSET: The Cultural Factor.

How smart, connected products are transforming competition

Abstract: A summary is presented of the article "How Smart, Connected Products Are Transforming Competition" by Michael E. Porter and James E. Heppelmann from the November 2014 issue, along with several letters from readers responding to that article

How to launch your digital platform

Abstract: The ubiquity of internet access has caused a sharp rise in the number of businesses offering platforms that connect users for communication or commerce. Entrepreneurs are particularly drawn to these platforms because they create significant value and have modest operating costs, and network effects protect their position once established—users rarely leave a vibrant platform. But these businesses also raise significant start-up challenges. Every platform starts out empty. Platforms need to immediately attract not only many users but multiple types of users. For example, it’s not enough that many customers want to book taxis by smartphone. Drivers must also be willing to accept smartphone bookings. Harvard Business School professor Ben Edelman has been studying the dynamics of platform businesses and strategies for launching them for 10 years. In this article he draws on research on dozens of platform sites and products to offer a framework for building a successful platform business. It involves asking five basic questions: • Can I attract a large group of users at once? • Can I offer stand-alone value to users? • How can I build credibility with customers? • How should I charge users? • Should my platform be compatible with legacy systems? INSET: Idea in Brief.

Why your customers' social identities matter

Abstract: The article looks at the role of consumers' social identities in their purchasing decisions, and hence in the creation of effective marketing strategies. It says that people generally belong to multiple social groups, any one of which may have the most salience for them in a given situation. It reports on social psychology research on how a person's connection with a particular social identity can be triggered and discusses the idea in the context of marketing products including the Toyota Prius hybrid-electric automobile, Nescafe instant coffee, and the Jeep all-terrain vehicle. INSET: Lessons of the Stanford Prison Experiment.

Corporate Governance 2.0

Abstract: The article cites several examples of questionable corporate governance including those involving retailer J. C. Penney, bank J. P. Morgan Chase & Co., and drug company Allergan, and discusses principles the author believes would lead to better governance. He maintains corporate boards should focus on long-term results, and to that end should no longer offer quarterly earnings guidance. He also considers how firms can improve the quality of board directors and provide shareholders with an outlet for expressing their views in an orderly manner

Making the consensus sale

Abstract: The article notes that sales personnel must often obtain approval from multiple parties at a client firm before closing a sale, and discusses how suppliers can facilitate this group decision-making process. Research by advisory firm CEB Marketing has identified three strategies for creating consensus within buying groups. The authors describe the value of instilling a common perspective among buyers about problems and solutions, motivating key personnel to advocate for a purchase, and offering support to them

Reaching the rich world’s poorest consumers

Abstract: The article discusses how several companies have worked with the French non-profit organization Action Tank to develop social businesses aimed at serving the needs of poor people. Eye care firm Essilor established a company called Optique Solidaire that provides high-quality eyeglasses to poor pensioners at a dramatically reduced cost. Other participants include car maker Renault and construction firm Bouygues. The authors describe elements of the business model employed, how companies benefit from it, and what distinguishes social businesses from low-cost businesses.

Where boards fall short

Abstract: The article looks at the role and performance of corporate boards of directors. It presents information from surveys of corporate directors and high-level executives on questions including how well directors understand the firm's strategy and whether directors or managers are more responsible for the emphasis on short-term financial results versus long-term performance. It offers recommendations for strengthening boards in areas including the selection of directors, relationships with institutional investors, and directors' compensation

Time to kill forced rankings

Abstract: An introduction is presented in which the editor discusses two items in the issue, an article on how professional services firm Deloitte has made significant changes in its employee evaluation and performance management approach and an announcement of the winners of its award for the best articles appearing in it in 2014

Leadership lessons from great family businesses

Abstract: According to the Family Business Institute, only 30% of family businesses last into the second generation, 12% remain viable into the third, and 3% operate into the fourth generation or beyond. Those that do continue often see their value decline significantly as a result of mismanaged succession. The authors, all associates of the global executive search firm Egon Zehnder, partnered with Family Business Network International to analyze 50 leading family firms. Through interviews with both family and nonfamily executives, they discovered that the most successful of these companies do four things well: (1) They establish good governance practices that separate the family and the business and ensure oversight from a professional board. (2) They are careful not to lose what makes them special—a quality the authors call “family gravity.” (3) They assess future leaders on alignment with company values as well as on competencies. (4) They follow a disciplined selection process when considering candidates for the top post, and take care to provide meaningful support during the integration process. INSETS: Idea in Brief.;About the Research.

How to really motivate salespeople

Abstract: Much of what we believe about the best ways to compensate and motivate the sales force is based on theory and lab experiments. But in the past decade, researchers have been moving out of the lab and into the field, analyzing companies’ sales and pay data, and conducting experiments involving actual salespeople. The findings from this new wave of research support some current compensation practices but call others into question. For example, studies clearly show that caps on commissions hurt sales. If managers must retain a cap, they should set it as high as possible to avoid reducing reps’ incentives. Although overly complicated compensation systems have their downsides, research has found that a system needs to include enough elements (such as quarterly performance and overachievement bonuses) to keep high performers, low performers, and average performers engaged throughout the year. Managers should be careful in setting and adjusting quotas. For instance, studies show that ratcheting (raising a salesperson’s annual quota if he or she exceeded it the previous year) dampens motivation. The research also suggests that it’s important to pay attention to the timing of bonuses: A reward given at the end of a period is more motivating than one given at the beginning.

Get the boss to buy in

Abstract: The article looks at the frequent need for middle managers to bring particular issues to the attention of higher-level executives or to convince them to adopt a certain changes. The authors outline obstacles mid-level managers often face and offer recommendations based on their research for communicating effectively in such situations, which they refer to as issue-selling. Topics include the decision over when to propose an idea, managing the emotions of both oneself and one's audience, and framing the issue in a way that matches the goals and perspectives of the executives making the ultimate decision.

The Employer-Led Health Care Revolution.

Abstract: To tame its soaring health care costs, intel tried many popular approaches: "consumer-driven health care" offerings such as high-deductible/low-premium plans, on-site clinics and employee wellness programs. But by 2009 intel realized that those programs alone would not enable the company to solve the problem, because they didn't affect its root cause: the steadily rising cost of the care employees and their families were receiving. Intel projected that its health care expenditures would hit a whopping $1 billion by 2012. So the company decided to try a novel approach. As a large purchaser of health services and with expertise in quality improvement and supplier management, intel was uniquely positioned to drive transformation in its local health care market. The company decided that it would manage the quality and cost of its health care suppliers with the same rigor it applied to its equipment suppliers by monitoring quality and cost. It spearheaded a collaborative effort in Portland, Oregon, that included two health systems, a plan administrator, and a major government employer. So far the Portland collaborative has reduced treatment costs for certain medical conditions by 24% to 49%, improved patient satisfaction, and eliminated over 10,000 hours worth of waste in the two health systems' business processes.

Managing your mission-critical knowledge

Abstract: The article looks at management of the knowledge resources of corporations. It notes that while much attention is currently paid to big data, it is only one of the many strategically important knowledge assets a company typically possesses, and suggests that companies can benefit from systematically inventorying all of such assets, including intellectual property and employee talent and expertise. It offers an approach to mapping knowledge assets along two dimensions--tacit versus explicit and proprietary versus widespread--to facilitate determining how to maximize their value. The use of the approach at aerospace company Boeing and at the European Organization for Nuclear Research (CERN).

Who’s your most valuable salesperson?

Abstract: U.S. businesses spend $800 billion annually on sales force compensation and another $15 billion on sales training. Yet the backward-looking metrics they rely on (such as revenue generated) to gauge the impact of this spending provide limited insight into how a salesperson will do going forward and what types of training and incentives will be most effective. As a result, many companies misallocate sales force investments. The authors worked with data from a Fortune 500 B2B software, hardware, and services firm to develop a method for measuring reps’ future profitability. The metric, salesperson future value (SFV), is the net present value of future cash flows from a salesperson’s existing and prospective customers minus the costs of developing, motivating, and retaining the rep. The SFV analysis revealed that the firm had been overvaluing poor performers and undervaluing stars. Using the SFV calculations and data on each rep’s prior training and incentives, the authors segmented reps according to whether they were motivated more by training or by various incentives. The firm then increased training for some reps and increased incentives for others, thus achieving an 8% increase in SFV across the sales force. The firm also increased its investments in high-SFV reps and reduced investments in low-SFV reps—a reallocation of resources that increased the firm’s revenue by 4%. INSETS: Idea in Brief.;THREE STEPS TO BOOST YOUR REPS' FUTURE VALUE

The right way to use compensation

Abstract: When Mark Roberge joined HubSpot as its fourth employee, he had no sales experience but still was charged with building the sales team. His background proved to be an advantage, however: With his engineering training, Roberge brought an analytic rigor to the task. And he quickly realized that the sales compensation plan could motivate salespeople not only to sell more but also to behave in ways that advanced the start-up’s evolving strategy. Each time the firm entered a new stage of growth, Roberge revised the comp plan to support its changing priorities: Customer acquisition. Early on, HubSpot needed to bring in lots of customers and see how well its offer was working. So it rewarded salespeople for customers who stayed at least four months, and soon grew to 1,000 customers. Customer success and retention. In the second phase, HubSpot focused on ensuring that its product fit the market. Realizing that many customers were jumping ship because they’d been given the wrong expectations, Roberge began tying commission rates to the rate of customer retention. Sustainable growth. After it fixed retention, HubSpot saw that its service worked best for customers who made a commitment to it. So the firm’s third plan rewarded salespeople for customers who signed up for a full year at a time. The continual adaptation paid off: In seven years HubSpot hit $100 million in sales. INSETS: Idea in Brief.;Boosting Performance with Sales Contests

The rise (and likely fall) of the talent economy

Abstract: A summary is presented of the article "The Rise (and Likely Fall) of the Talent Economy by Roger L. Martin from the October 2014 issue, along with a letter from a reader responding to that article.

The Art of Giving and Receiving Advice

Abstract: The article looks at giving and receiving advice as an element of organizational leadership and managerial ability. It suggests that the skills related to these actions, such as self-awareness and diplomacy, are not innate talents but can be learned. They list problems that research has shown often occur in the process of seeking or giving advice, including being over-confident about one's own perspective, failing to seek advice from those with different perspectives, and not defining the problem at hand in a clear manner. It offers recommendations for both those seeking and giving advice to make the process as effective as possible

When senior managers won’t collaborate

Abstract: The article discusses the increasingly specialized nature of professional services firms due to the increasingly complex regulatory, economic, and technological environments they function in, and the necessity this creates for specialists within firms to collaborate with each other. Commentary is presented on how firms and employees benefit from collaboration, rivalry, compensation systems, and other aspects of corporate culture that impede collaboration, and strategies that can promote collaboration by helping professionals experience its benefits sooner.