As they deal with a business landscape that is evolving constantly, rapidly, and unpredictably, executives all over the world are full of questions about change: "How much?" "How fast?" "How sustainable?" And sometimes just "How?" They can't hope to answer those questions unless they understand their companies' capacity for change--but they've lacked good tools for measuring that. To address this problem, Michels and Murphy, partners at Bain, devised a way of systematically measuring what they call "change power." In this article they explain how they devised their system, describe the nine main factors that they believe determine a company's change power, and present data suggesting that companies that rank high on their Change Power Index tend to perform remarkably well financially and have more-satisfied employees. Most organizations have a change-power profile that corresponds to one of four archetypes. Using company examples, the authors suggest a specific approach to improvement for each one.
More and more manufacturing companies are talking about what's often called the circular economy--in which businesses can create supply chains that recover or recycle the resources used to create their products. Shrinking their environmental footprint, trimming operational waste, and using expensive resources more efficiently are certainly appealing to CEOs. But creating a circular business model is challenging--and taking the wrong approach can be expensive. The authors argue that success depends on many factors, but perhaps the most important is choosing a strategy that aligns with the company's capabilities and resources--and addresses the constraints on its operations. In this article they identify the three basic strategies to achieve circularity and offer a tool to help manufacturers identify which is most likely to be economically sustainable. Their recommendations draw on decades of research and consulting with dozens of manufacturers across the world.
Today it's not unusual for corporations that have dominated their markets for decades to be blindsided by upstarts with radical new business models. A lot of young ventures, on the other hand, raise vast sums of money and attract tens of millions of customers, only to collapse when they can't figure out how to fend off imitators. In these situations and many others, the underlying cause is often a failure to take a holistic approach to strategy. Strategy today demands more than classic competitive positioning. It requires making carefully coordinated choices about the opportunities to pursue; the business model with the highest potential to create value; how to capture as much of that value as possible; and the implementation processes that help a firm adapt activities and build capabilities that allow it to realize long-term value. Neglecting any of those imperatives can derail a strategy, but CEOs frequently zero in on just one. Entrepreneurs tend to focus on identifying a golden opportunity and don't think enough about how to monetize it; leaders of incumbents, on capturing value but not new ways to create it. By tackling all the elements of strategy and integrating them well, however, firms will greatly increase their odds of success.
Identifying the next big thing is often treated as an exercise in analyzing trends. But that's misleading. By the time a trend is established, any opportunities it presents have probably been captured by competitors. And although a company may need to reflect trends in its business plans, that may mean catching up with rivals rather than gaining a competitive edge. To take advantage of emerging trends, companies must identify them when they are embryonic--not purely speculative, but not yet named or widely known. At that stage the signs will be merely anomalies: weak signals that are in some way surprising but not entirely clear in scope or import. Most anomalies don't become meaningful trends, of course. But some do--and the businesses that identify and interpret them early will steal a march on the competition. The authors present a process for spotting anomalies that have the potential to drive a business, but the process isn't mechanical: Anomaly-driven strategy requires being open to unexpected ideas that may overturn long-held assumptions. Only if you are willing to look at your business from the outside in, question your existing models, and embrace ambiguity will you be able to identify the diamonds hiding in the data.
Special purpose acquisition companies, or SPACs, have been around in various forms for decades, but during the past two years they've taken off in the United States. In 2019, 59 were created, with $13 billion invested; in 2020, 247 were created, with $80 billion invested; and in the first quarter of 2021 alone, 295 were created, with $96 billion invested. In 2020, SPACs accounted for more than 50% of new publicly listed U.S. companies. SPACs are publicly traded corporations formed with the sole purpose of effecting a merger with a privately held business to enable it to go public. Compared with traditional IPOs, SPACs often offer targets higher valuations, greater speed to capital, lower fees, and fewer regulatory demands. Despite the investor euphoria, however, not all SPACs will find high-performing targets, and some will fail. Many investors will lose money. As an investment option they have improved dramatically, especially over the past year, but the market remains volatile. More changes are sure to come, which means that sponsors, investors, and targets must keep informed and vigilant. This article is not a blanket endorsement of SPACs. It is simply a guide for businesspeople considering a move into this rapidly evolving (and for many, unfamiliar) territory.
To create long-term value, corporate boards must focus on managing talent, strategy, and risk. But they also have to satisfy their shareholders, who often have competing demands. Activists, for example, might press for short-term profits, while index funds and other long-term shareholders are more concerned with the company's longevity. Drawing on years of work with boards, top executives, and the investment community and on interviews with the heads of public and private companies and investment firms, the authors offer a playbook for managing stakeholder relationships productively. They argue that regular, open communication is key; whether aligned with or hostile to the board's long-term objectives, investors often have valuable information about a company and its competitors and can be a source of fresh ideas. The authors provide guidance on how and when to meet with investors, how to get useful feedback, how to understand what each type of investor is looking for, and how to anticipate and ward off activist attacks. Although the advice is directed at board members, the insights will be valuable to CEOs, other members of the senior management team, and large shareholders as well.
Chicanery is common in the start-up world: With so much at stake, founders are apt to exaggerate, obfuscate, and otherwise stretch the truth when courting investors and other important stakeholders. Such deception locks up resources by prolonging the life of doomed ventures and makes it hard for VCs and employees to know where best to invest their money or labor. It also exacts a personal toll on founders themselves. The authors take a multidisciplinary approach to the problem. They argue that common justifications for such deception--the need to protect investors and employees, and the belief that all entrepreneurs engage in it--do not stand up to scrutiny. And they offer several pieces of advice to founders, drawn from moral philosophy: Dream big, but be forthcoming and honest about the evidence and assumptions underpinning your vision. And surround yourself with virtuous people who will help you be your best self.
The former Xerox CEO Ursula Burns, whose life journey began in a Manhattan tenement, is an outspoken champion of inclusive capitalism and racial equity--themes that animate her just-published memoir, "Where You Are Is Not Who You Are." In this conversation with HBR's editor in chief, she talks about good leadership in a multistakeholder world, income inequality, battling an activist investor, how being both Black and female affected her career trajectory, and more.
Brain scans are showing us in new detail exactly what entices readers. Scientists can see a group of midbrain neurons--the "reward circuit"--light up as people respond to everything from a simple metaphor to an unexpected story twist. The big takeaway? Whether you're crafting an email to a colleague or an important report for the board, you can write in a way that delights readers on a primal level, releasing pleasure chemicals in their brains. Bill Birchard is an author and writing coach who's worked with many successful businesspeople. He's drawn on that experience and his review of the scientific literature to identify eight features of satisfying writing: simplicity, specificity, surprise, stirring language, seductiveness, smart ideas, social content, and storytelling. In this article, he shares tips for using those eight S's to captivate readers and help your message stick.
Vanir, a young community bank dedicated to serving small-business owners, prides itself on the personalized service it delivers to customers. That approach has helped it grow quickly, but now competitors are circling. A new system that uses algorithms to speed up decision-making is ready to go live, but employees are worried that it will destroy the bank's special sauce. What should Vanir's CEO do? This fictional case study by Leonard A. Schlesinger features expert commentary by Bob Rivers and Chris Yeh.
Popular notions about founders are often wrong, as demonstrated by five new books: "Amazon Unbound," by Brad Stone; "The Cult of We," by Eliot Brown and Maureen Farrell; "Tencent," by Wu Xiaobo; "Super Founders," by Ali Tamaseb; and "The New Builders," by Seth Levine and Elizabeth MacBride.
The former top editor of the Boston Globe and the Washington Post talks about the Globe's investigation of the Catholic Church sex abuse scandal, attacks on the Post by President Trump, truth as a casualty of political polarization, and more.
Vanir, a young community bank dedicated to serving small-business owners, prides itself on the personalized service it delivers to customers. That approach has helped it grow quickly, but now competitors are circling. A new system that uses algorithms to speed up decision-making is ready to go live, but employees are worried that it will destroy the bank's special sauce. What should Vanir's CEO do? This fictional case study by Leonard A. Schlesinger features expert commentary by Bob Rivers and Chris Yeh.
Vanir, a young community bank dedicated to serving small-business owners, prides itself on the personalized service it delivers to customers. That approach has helped it grow quickly, but now competitors are circling. A new system that uses algorithms to speed up decision-making is ready to go live, but employees are worried that it will destroy the bank's special sauce. What should Vanir's CEO do? This fictional case study by Leonard A. Schlesinger features expert commentary by Bob Rivers and Chris Yeh.
In February 2017 the Team Project Manager and Flow Project Coordinator for Dell Technologies-Limerick (Ireland), is preparing for a review with Dell's Systems and Processes Improvement board, early in a transition from the use of one agile software development method (Scrum) to another (Flow, which applies lean manufacturing techniques to software engineering). The new manager has been on board less than six months. With ten years' prior software development experience in Brazil, he moved to Ireland when hired by Dell. Dell is midway through its attempts to transform from a manufacturing-heavy strategy to an IT-supported service-heavy strategy; its recent acquisition of EMC is an important step in that direction, and executives expect Flow will help globally-distributed software developers produce higher quality code, faster, in follow-the-sun mode. The Flow coordinator/champion recognizes Flow is a complex innovation; it will take time and focus for busy software developers (who only recently mastered Scrum techniques) to master new Flow techniques. The champion is also concerned that needed digital Kanban functionality (essential for supporting globally distributed teams using Flow) has not yet been approved or provided by the Dell IT organization in Texas; this and other obstacles are impeding the developers' transition to Flow. Keen to demonstrate his commitment to help Dell achieve these aims, he worries that some executives expect performance improvements sooner than teams can realistically deliver. He seeks to persuade executives to be both patient and helpful. As he plans his 20 minute presentation for the next day's meeting, he is told to keep his remarks to executives simple: highlight no more than three messages.
An analysis of 1,172 public companies over 19 years reveals that the more uncommon a leader's given name is, the more his or her strategy deviates from the industry norm.
In May of 2021, Kevin D. Johnson had just graduated from a rigorous Executive MBA program, and he quickly needed to decide on his next career move. Johnson was the founder and CEO of a successful media company, Johnson Media Inc., but his career goals had shifted while at business school. He wanted to use his talents to help other BIPOC entrepreneurs access capital and provide opportunities to create intergenerational wealth. Johnson evaluated his four options: work full-time at an online platform dedicated to connecting Black founders with funding; join a BIPOC-focused venture capital ("VC") firm; pursue a job at an established VC firm; or continue scaling his media company. Which option would Johnson choose?
Organizations can attempt to improve strategy implementation by developing strategy execution maps, which aim to translate strategic objectives into specific activities and provide sufficient clarity to inform employees' decisions and actions. However, managers often encounter pitfalls, both in framing the process and in developing maps. This article suggests how to overcome these pitfalls, describes several applications of causal maps to further enhance strategy execution, and illustrates strategy execution maps for organizations with distinctive strategies.
Arist was a Boston, Massachusetts-based startup with a text message learning platform. It was founded by three undergraduate students and raised more than $3.9 million in funding during its first three years. The inspiration for Arist was the lack of learning opportunities for young people in war-torn Yemen where schools were closed and access to high-speed internet was limited. After much research, testing, reflecting, and pivoting, the Arist team made an exciting discovery: Not only would a short-form SMS approach to teaching likely be desirable in regions such as Yemen, but this approach could also be valuable to well-funded Fortune 500 training and development organizations. According to research referenced in the case, more than 12 years after the introduction of the iPhone, not only had SMS sustained popularity, but businesses were increasing their SMS spending for marketing and other uses. Early clients included Dupont and the State of California. The founders recognized that a focus on the needs of large, for-profit companies in the United States would not directly address the learning needs in education-challenged regions such as Yemen. However, they hoped that by building a text-message-based learning business in the United States, they would one day be able to recruit professors to create courses for interested students worldwide, delivered through the Arist platform.