When the author became executive director of the United Nations Office for Project Services, in 2014, she faced a big challenge: moving the operational arm of the UN further along on the path toward behaving like a for-profit business--a journey begun by her predecessor eight years earlier. Faremo has accomplished this by creating a culture of discipline and a measured approach to risk-taking. Her experience includes a decade of development work, five years as Microsoft's director of legal and corporate affairs in Western Europe, and 10 years in the Norwegian government, during which she led four ministries. These roles helped prepare her for the daunting task of revamping how UNOPS prices jobs, increasing the percentage of business that comes from non-UN sources, and, recently, partnering with the private sector in a wind farm in Mexico--a move beyond simply performing services to investing assets in socially beneficial ways.
Thanks to technologies that enable constant, customized interactions, businesses are building deeper ties with their customers. Firms can now address customer needs the moment they arise--and sometimes even earlier. By employing "connected strategies," companies are dramatically improving their customers' experiences, boosting their own operational efficiencies, and gaining competitive advantage. In their research the authors have identified four effective connected strategies: "Respond to desire," which entails filling customers' requests quickly and seamlessly; "curated offering," or presenting personally tailored recommendations; "coach behavior," or reminding people of needs and goals and nudging them to act; and "automatic execution," or anticipating what people want and delivering it without even being asked. To get the most out of these strategies, firms must understand customers' privacy preferences, build new capabilities, and use the learning from repeated interactions to shape future ones.
For decades, Western executives of multinational brands seeking to expand globally have operated under a simple premise: Marketing content and channel selection should be customized to local markets, but Western marketing principles are universal. Firms are particularly quick to export media and ad strategies to developing markets, where advertising and media are more recent developments. Meanwhile, Chinese marketers have developed a unique approach tailored to China's mobile-first consumer. It relies on the creation of shareable, viral content and the presence of dominant, channel-straddling media giants. It is faster and cheaper and often more effective than the Western marketing paradigm. It also is more embracing of risk. For companies that hope to enter China or grow existing operations there, understanding the Chinese marketing mindset will be essential to achieving success. This article examines the adjustments Western companies must make to succeed in China--and around the world.
Many companies are protecting themselves against "climate risk"--the damage they might suffer from heat waves, flooding, and other effects of global climate change. But the smartest companies are also paying attention to "carbon risk"--the costs they will have to bear as governmental policies extract a growing price for CO2 emissions. These firms are setting "internal carbon prices" (ICPs), putting a monetary value on their own emissions to better prepare for success in a lower-carbon world. This article explains the process firms go through: measuring their direct and indirect emissions, ascertaining current external carbon prices (both explicit and implicit), predicting future ones, deciding what time horizons their ICPs should cover, and considering emissions-reduction goals. The authors then discuss how internal carbon pricing is helping companies make decisions about new investments, manage financial and regulatory risks, and develop long-term strategy.
According to an analysis led by Ranjay Gulati, during the recessions of 1980, 1990, and 2000, 17% of the 4,700 public companies studied fared very badly: They went bankrupt, went private, or were acquired. But just as striking, 9% of the companies flourished, outperforming competitors by at least 10% in sales and profits growth. A more recent analysis by Bain using data from the Great Recession reinforced that finding, showing that the top 10% of companies studied didn't merely survive; their earnings climbed steadily throughout the downturn and continued to rise afterward. Among the companies that stagnated in the aftermath of the Great Recession, few had made contingency plans, according to the Bain report. "When the downturn hit, they switched to survival mode, making deep cuts and reacting defensively." How should firms prepare for a recession, and what should they do when one hits? This research roundup examines advice in four areas: debt, decision making, workforce management, and digital transformation.
Environmental, social, and governance (ESG) issues have traditionally been of secondary concern to investors. But in recent years, institutional investors and pension funds have grown too large to diversify away from systemic risks, forcing them to consider the environmental and social impact of their portfolios. Analysis of interviews with 70 executives in 43 global institutional investing firms suggests that ESG is now top of mind for these leaders and that corporations will soon be held accountable by shareholders for their ESG performance. To respond to this shift in focus, companies must publish a statement of purpose, provide investors with integrated financial and ESG reports, increase the involvement of middle managers in ESG issues, invest in robust IT systems, and improve internal systems for measuring and reporting ESG and impact performance information.
In 2018, the Project on Managing the Future of Work at HBS teamed up with the BCG Henderson Institute to survey 6,500 business leaders and 11,000 workers about the various forces reshaping the nature of work. The responses revealed a surprising gap: While the executives were pessimistic about their employees' ability to acquire the capabilities needed to thrive in an era of rapid change, the employees were not. The employees were actually focused on the benefits change would bring and far more eager to learn new skills than their leaders gave them credit for. This gap highlights a vast reserve of talent and energy firms can tap into: their own workers. How can a company do that? By creating a learning culture; engaging employees in the transition instead of shepherding them through it; developing an internal talent pipeline for the entire workforce; and collaborating with outside partners to build the right skills in the labor pools it hires from.
Today the most promising innovation and business opportunities require collaboration among functions, offices, and organizations. To realize them, companies must break down silos and get people working together across boundaries. But that's a challenge for many leaders. Employees naturally default to focusing on vertical relationships, and formal restructuring is costly, confusing, and slow. What, then, is the solution? Engaging in four activities that promote horizontal teamwork: (1) developing cultural brokers, or employees who excel at connecting across divides; (2) encouraging people to ask questions in an open-ended, unbiased way that genuinely explores others' thinking; (3) getting people to actively take other points of view; and (4) broadening employees' vision to include more-distant networks. By supporting these activities, leaders can help employees connect with new pools of expertise and learn from and relate to people who think very differently from them. And when that happens, interface collaboration will become second nature.
From Volkswagen's emissions fiasco to Wells Fargo's deceptive sales practices to Uber's privacy intrusions, corporate scandals are a recurring reality in global business. Compliance programs increasingly take a legalistic approach to ethics that focuses on individual accountability. Yet behavioral science suggests that people are ethically malleable, so creating an ethical culture means thinking about ethics not simply as a "belief" problem but also as a "design" problem. The authors suggest four ways to make being good as easy as possible: Connect ethical principles to strategies and policies, keep ethics top of mind, reward ethical behavior through a variety of incentives, and encourage ethical norms in day-to-day practices.
A decade of research into top executives shows that expertise can actually severely impede performance, in two important ways. The first is overconfidence: believing that brilliance in one area leads to competence in another. The second is when deep knowledge and experience leave leaders incurious, blinkered, and vulnerable--even in their own fields. The solution is clear: Rededicate yourself to learning and growth, and rediscover just a bit of what the Buddhists call "beginner's mind." Strategies that the most successful executives use to do so fall into three buckets: challenging their own expertise, seeking out fresh ideas, and embracing experimentalism.
After a salesman jokingly asks a female colleague if her appearance is the reason for her inclusion in a leadership program, his friend, the only other person present, reports the incident to HR. Then the female colleague must decide, in view of her company's zero-tolerance policy, whether or not to pursue a complaint. This fictional case study by J. Neil Bearden features expert commentary by Maria Galindo and Sarah Beaulieu.
After a salesman jokingly asks a female colleague if her appearance is the reason for her inclusion in a leadership program, his friend, the only other person present, reports the incident to HR. Then the female colleague must decide, in view of her company's zero-tolerance policy, whether or not to pursue a complaint. This fictional case study by J. Neil Bearden features expert commentary by Maria Galindo and Sarah Beaulieu.
After a salesman jokingly asks a female colleague if her appearance is the reason for her inclusion in a leadership program, his friend, the only other person present, reports the incident to HR. Then the female colleague must decide, in view of her company's zero-tolerance policy, whether or not to pursue a complaint. This fictional case study by J. Neil Bearden features expert commentary by Maria Galindo and Sarah Beaulieu.
The case can be used in a session on entrepreneurship, disruptive technology innovation, or focus as an aspect of strategy. The case profiles Mettl Inc., an Indian online assessment startup, as it lays the groundwork for becoming one of India's first software as a service (SAAS) companies to breach the USD 100 million threshold. Solving for flexibility, system resilience, dispersed geographical spread of candidates and test integrity, Mettl was looking to develop a viable alternative to traditional assessment methods. The case provides an outline of the assessment industry and the factors that influence Mettl's market strategy. Using the personal journeys of Mettl's founders Ketan Kapoor and Tonmoy Shingal as a narrative hook to play itself out, the case traces the conception of their initial vision and examines the market forces that led them to pivot and build a technology platform that delivered assessments. It goes on to chronicle Mettl's journey from the garage to a dedicated office in the Indian National Capital Region (NCR). Successes, setbacks and the factors on which they are predicated are discussed in detail. The case also chronicles various rounds of funding and provides critical insights into the thinking of India's pre-eminent early stage venture capitalists. It then ventures to put this initial success in perspective and asks the hard question about the future of the enterprise: How would Kapoor and Shingal traverse the road to 100 million?
An uneasy ceasefire has held in Western Sahara since 1991, largely preventing a resumption of armed conflict. Yet a final status agreement to sustainably resolve the conflict has proved elusive. This case describes the strategy and tactics employed by former U.S. Secretary of State James Baker to mediate an end to the Western Sahara territorial dispute from 1997 to his resignation as UN Secretary-General Kofi Annan's Personal Envoy in 2004. A highly skilled and accomplished international diplomat, Baker's attempts to resolve the Western Sahara conflict were ultimately unsuccessful. The case maps out a complex web of relationships between Morocco, Algeria, Mauritania, the US, France, UK, Spain and the "Frente Polisario" movement in Western Sahara. Every time the negotiations appeared to take a step forward, the process was put two steps back a matter of weeks or months later. Little changed on the ground in Western Sahara. The obstacles to determining the final status of the disputed territory had only grown increasingly entrenched during Baker's fruitless efforts to negotiate a solution. Through the late 2010s, Western Sahara continues to be an important, if relatively neglected, conflict in the Middle East and North Africa region.
As the Age of Disruption heats up, corporate boards can expect to face ever-increasing pressure to become more strategic. The problem remains that boards have neither a template nor a common vocabulary for assessing a proposed transformation strategy. The authors’ research—based on a four-year study of 62 corporate transformations—provides boards with a tool to diagnose gaps or misalignments in strategy. The authors identified a three-layered architecture that characterizes winning transformation efforts, consisting of two imperatives and a choice. Using a sandwich as a metaphor, the choice is like the sandwich filling that provides the special flavour or focus of the transformation effort. The two imperatives are the outer layers of the sandwich. The first imperative states that the pursuit of value is the trigger for any transformation, while the second imperative states that the pursuit of leadership development is what makes the change stick. The choice dictates that the compelling journey is at the heart of any corporate transformation. Ongoing transformation efforts are either derivatives or combinations of quests for the following five qualities: global presence, customer focus, nimbleness, co-innovation, and sustainability. Board members can verify that the executive team has properly debated its priorities by asking three questions: 1) Which of the five themes are you pursuing? 2) Can you explain what drives value? 3) How are you retooling people to support the transformation?
Although evolutionary notions about business often lack direct grounding in Darwin’s work, evolutionary theory can still help us understand how organizations, institutions, and markets change. Unfortunately, when used to illuminate business strategy, many evolutionary concepts are misapplied. This paper strives to address the garbled strategic advice created by misinterpretations of evolutionary theory, which have led to incorrect assessments of markets and market participants. We examine three widely held beliefs that are based on misapplications of evolutionary theory: 1) profit-maximization strategies inevitably lead to the best outcomes, 2) business is survival of the fittest, and 3) specialization makes you stronger. Applying four standard games (Prisoners’ Dilemma, Chicken, Battle of the Sexes, and the Stag Hunt) to the business world, we created models of competition to track interactions between market entities and demonstrate why many business ideas are based on garbled interpretations of the evolutionary concepts of selection, frequency dependence, and adaptation. The key takeaways from our research are: 1) selection on outcomes does not dictate that aiming for profit maximization will always lead to the best outcomes, 2) frequency dependence means there can be no unidimensional fitness to aspire towards, and 3) it is not survival of the fittest, but best fitted for any particular contest. Simply put, adaptation (both proactive and reactive), not specialization, is the key to success. Recognizing this requires a fundamental shift, inverting the normal strategy sequence by suggesting firms change themselves, rather than seeking to change their world.
As bank executives for over 30 years, Kevin Clark and Troy Wright witnessed countless opportunities to support small businesses being missed. That is what attracted them to the fintech revolution now transforming banking and financial services around the world. In this Ivey Business Journal interview, Ivey Professor Michael King sat down with Clark to discuss his transformation from old-school banker to fintech entrepreneur, not to mention his company’s evolution from industry disruptor to industry partner. Clark considers his firm, Lendified, to be a lending technology company that is taking the pain points out of borrowing for small businesses. Lendified provides a frictionless customer experience through the online application process, the speed of making decisions, and rapid access to capital. Lendified, he says, has effectively built two operating companies, but it did not start that way. Clark and Wright thought they were creating a highly effective lending business, but the credit technology turned out to be a successful software-as-a-service (SaaS) business unto itself. Furthermore, they thought their product would be sold on the basis of its efficiency, and yet what has sold the software is the customer experience.
Canada’s SNC-Lavalin affair has been compared to the U.S. Nixon Administration’s Watergate scandal, but the comparison is misguided. This article seeks to separate fact from misinformation in order to enable more constructive public discourse about the scandal. The second goal is to make the case for embracing negotiated settlements as a legitimate corruption-fighting tool based on the author’s experience as a financial-sector whistleblower during the dotcom era (which led to a long career as an investigative journalist covering white-collar crime). Finally, this article identifies key takeaways for managers and directors who are expected to drive growth and profit without breaking the law. In the SNC-Lavalin affair, an opportunity to improve how Canada fights corporate corruption appears to have been lost in the commotion. When fighting corruption, it is important to remember that organizations like SNC-Lavalin can also be victims, and that corporations do not decide to be corrupt—people do. Many corporate boards still rely heavily on senior management to report cultural issues, which is ridiculous, and not just because unethical executives rarely rat themselves out. It is time for more boards to proactively investigate the health of the corporate cultures they govern and doing this requires direct contact with lower-level employees, especially ones in specialist functions such as internal audit, compliance, and risk management.