The authors of this piece, both professors at Stanford University, devoted eight years to learning about how leaders serve as trustees of others' time-how they prevent and remove the organizational obstacles that undermine the zeal, damage the health, and throttle the creativity and productivity of good people. Along the way, they learned that there is both bad and good organizational "friction." In this article they focus on addition sickness: the unnecessary rules, procedures, communications, tools, and roles that seem to inexorably grow, stifling productivity and creativity. They show why companies are prone to this affliction and describe how leaders can treat it. The first step is to conduct a good-riddance review to identify obstacles that can and should be removed. The next is to employ subtraction tools-they list several-to eliminate those obstacles or make it difficult for people to add them in the first place. The authors show how people and organizations have used these steps to great effect: AstraZeneca, for instance, saved 2 million hours in less than two years by implementing an array of simplification efforts.
The debate about the best way to lead has been raging for years: Should you empower your people and get out of their way, or take charge and push them to do great work? The answer, say the authors, is to do both. Their research shows that effective leaders routinely shift between these two seemingly opposing modes-and build teams whose members are good at switching back and forth too. Sometimes teams need diverÂgent thinking (during idea generation, for instance); at others, they need convergent thinking (to, say, make a decision and map out next steps). Leaders must be crystal clear about which mode is appropriate when. They have to make it psychologically safe for people to speak up, contribute, and argue, and when it's time to end the discussion and act, signal that they're taking charge again. There are four ways to increase the ability to shift modes: Question your assumptions about power and fixed hierarchies. Study your habits and your team's to see if you're stuck in one mode or the other. Set clear expectations with meeting agendas and rituals that mark transitions. And reinforce shifts with your own words, deeds, and body language.
After a delayed shipment of flooring materials impeded Jeff Booth's ability to complete a construction project on schedule, he, along with cofounder Robert Banks, was determined to solve the inefficiency of the heavyweight building supply industry. They founded BuildDirect, an e-commerce company based on a sophisticated technology platform that optimized the shipment of home improvement products. Since its founding in 1999, BuildDirect faced several near-death strategic and economic challenges, including the fallout of 9/11 and the 2008 housing crisis. In spite of these challenges, Booth and Banks never wavered in prioritizing corporate culture over bottom line results. To guide effective employee actions and behaviors, three core values of honesty, integrity, and respect for others had been engrained into the company's DNA. Rituals such as daily "huddles" strengthened employee morale, increased emotional intelligence, and enhanced customer service. Company culture was a major competitive advantage; employees felt empowered to view the home improvement purchase process as an enriching experience, rather than as a mere transaction. In 2014, prospects looked promising. BuildDirect had raised CAD $30 million in Series B funding in a round led by Mohr Davidow Ventures. Headcount doubled in 2013, and was projected to double again in 2014. Customers enjoyed savings of up to 80% of retail prices. Booth and Banks were concerned, however, that continued rapid growth would threaten the culture that was so critical to their success. The cofounders needed to determine how to maintain this winning culture. What aspects of the company's daily operations needed to be changed, and which ones safeguarded at all costs?
An education-gaming firm that has relied largely on volunteer developers has to rethink this strategy as it prepares to pitch investors for a new round of funding. Expert commentary comes from Noam Bardin, CEO of the crowdsourced-mapping company Waze, and Verena Delius, cofounder and managing partner of Fox & Sheep, a company that develops apps for kids.
An education-gaming firm that has relied largely on volunteer developers has to rethink this strategy as it prepares to pitch investors for a new round of funding. Expert commentary comes from Noam Bardin, CEO of the crowdsourced-mapping company Waze, and Verena Delius, cofounder and managing partner of Fox & Sheep, a company that develops apps for kids.
An education-gaming firm that has relied largely on volunteer developers has to rethink this strategy as it prepares to pitch investors for a new round of funding. Expert commentary comes from Noam Bardin, CEO of the crowdsourced-mapping company Waze, and Verena Delius, cofounder and managing partner of Fox & Sheep, a company that develops apps for kids.
HBR asked top management thinkers to share what they were resolved to accomplish in 2011. Here are their answers: Joseph E. Stiglitz will be crafting a new postcrisis paradigm for macroeconomics whereby rational individuals interact with imperfect and asymmetric information. Herminia Ibarra will be looking for hard evidence of how "soft" leadership creates value. Eric Schmidt will be planning to scale mobile technology by developing fast networks and providing low-cost smartphones in the poorest parts of the world. Michael Porter will be using modern cost accounting to uncover-and lower-the real costs of health care. Vijay Govindarajan will be trying to prototype a $300 house to replace the world's poorest slums, provide healthy living, and foster education. Dan Ariely will be investigating consumers' distaste for genetically modified salmon, synthetic pharmaceuticals, and other products that aren't "natural." Laura D. Tyson will be promoting the establishment of a national infrastructure investment bank. Esther Duflo will be striving to increase full immunization in poor areas of India. Clay Shirky will be studying how to design internet platforms that foster civility. Klaus Schwab will be undertaking to create a Risk Response Network through which decision makers around the world can pool knowledge about the risks they face. Jack Ma will be working to instill a strong set of values in his 19,000 young employees and to help clean up China's environment. Thomas H. Davenport will be researching big judgment calls that turned out well and how organizations arrived at them. A.G. Lafley will be proselytizing to make company boards take leadership succession seriously. Eleven additional contributors to the Agenda, along with special audio and video features, can be found at hbr.org/2011-agenda.
As employees strive to do their jobs, they face threats to productivity from all quarters-disruptive technology, meddlesome superiors, senseless organizational practices, and abusive clients and customers. Sutton, of Stanford University, reminds us that the best bosses identify and slay those dragons, thereby protecting the time and the dignity of their people and enabling them to focus on real work. Self-awareness is the key to defending employees effectively. Good leaders resist their own tendency to exercise power: They keep meetings short, listen to their followers, and make it safe to disagree with the boss. They also work to reduce outside distractions by, for example, championing mornings free of e-mail or streamlining performance review processes. When their own bosses are the problem, they occasionally defy orders. Once in a while, they encourage their people to overtly comply with misguided demands from on high without actually buying in to them. Good bosses fight enemies. They take the heat for their teams. They have their employees' backs. Stepping on to this battlefield requires humility, intelligence, and bravery. In leading the charge to make the workplace safe and productive, however, you may risk martyrdom. Don't lose sight of the need to retain your own political power as you defend against the institutional forces that threaten your employees. And remember that preserving your own well-being will ensure that you have the energy to fight the good fight.
Mozilla launched its Firefox web browser in November 2004, when Microsoft's Internet Explorer had a market share of over 90 percent, and was giving its browser away. Five years later, Firefox had a 25 percent share, and more than 300 million people were using the browser. Firefox, and other Mozilla products, were open source programs. A small Mozilla staff worked with tens of thousands of volunteers to develop, test, debug, and promote its software. This case study discusses ways that Mozilla developed and cultivated its community of volunteers, motivated them, and channeled their passion.
In 2007, Wyeth Pharmaceuticals' manufacturing organization faced a number of challenges, requiring that it revolutionize the way its 17,000 people operated. The case describes alternative methods of systemic change considered by Wyeth, the approach they implemented, and how they rolled out the changes across more than 25 sites worldwide. The transformation of one plant is described in some detail. The case also describes setting of objectives and expectations, engagement of leaders and staff, and the use of outside advisors.
Even in times of economic growth, it's challenging to be a good boss. Research shows that people placed in positions of authority often become less mindful of others' feelings and needs. Meanwhile, those in subordinate roles devote immense energy to watching and interpreting the actions of leaders. These tendencies make for a toxic tandem, which is only exacerbated during a crisis. Sutton, a Stanford professor, provides a useful framework to get bosses focused on what their people need from them most. In a situation where people feel threatened, a good boss finds ways to provide more predictability, understanding, control, and compassion. Predictability. Give people as much information as you can about what will happen to them and when. Preparation will reduce their suffering, and they can relax in the meantime - as Londoners during the blitz were able to do when the air-raid sirens were silent. Understanding. Accompany any major change with an explanation of why it's necessary and how it will affect routines. Internal communication should be simple, concrete, and repetitive. Control. Don't frame an obstacle as too big, too complex, or too difficult to overcome; people will be overwhelmed and freeze in their tracks. When it's broken down into less-daunting components, they can tackle it with confidence. Compassion. Tend to the emotional needs of people who are let go, and help them preserve their dignity. This is essential both for them and for their colleagues who survive the cuts. Demeaning those who have left will demoralize those who remain and may drive the best of them to jump ship. A manager who provides all four remedies will be perceived as "having people's backs" and will reap the rewards of employees' deep loyalty for years to come.
Astrigo is in trouble. The home improvement chain has missed its earnings forecast badly and sales are falling. A 10% reduction in staff looks like the only choice. Layoffs, however, would undermine the retailer's longtime commitment to employees and the ability to provide its famed customer service. But tapping cash reserved for strategic acquisitions goes against the firm's values, too. What should the CEO do? Four experts comment on this fictional case study in R0903A and R0903Z. Board advisers Laurence J. Stybel and Maryanne Peabody, of Stybel Peabody Lincolnshire, suggest that the company borrow a page from McDonald's and declare Astrigo's intention to focus on the interests of long-term shareholders. This move would establish a framework that would help management make tactical decisions with more clarity and flexibility. The company could then use its cash to buy a little time to study the options. If Astrigo can't avoid layoffs, a last-in, first-out approach would be the least costly. Former CEO Jurgen Dormann understands the challenge Astrigo faces. When he took over ABB, the company was in deep distress. After shaking up his executive committee, Dormann personally reached out to all 180,000 employees to enlist their help. They came back with ideas that saved $1.6 billion - and rescued the company. Management professor Robert I. Sutton thinks too many executives assume that layoffs are the best way to reduce costs. They don't factor in how long it takes to realize the savings from job cuts, the costs to hire and train people once business picks up, or the damage to morale and productivity. Astrigo's executives should consider alternatives such as pay cuts, reduced benefits, unpaid time off, and incentives for departure. If layoffs are in-evitable, Astrigo should do them quickly, and firing the bottom 10% of employees would be the worst approach.
Astrigo is in trouble. The home improvement chain has missed its earnings forecast badly and sales are falling. A 10% reduction in staff looks like the only choice. Layoffs, however, would undermine the retailer's longtime commitment to employees and the ability to provide its famed customer service. But tapping cash reserved for strategic acquisitions goes against the firm's values, too. What should the CEO do? Four experts comment on this fictional case study in R0903A and R0903Z. Board advisers Laurence J. Stybel and Maryanne Peabody, of Stybel Peabody Lincolnshire, suggest that the company borrow a page from McDonald's and declare Astrigo's intention to focus on the interests of long-term shareholders. This move would establish a framework that would help management make tactical decisions with more clarity and flexibility. The company could then use its cash to buy a little time to study the options. If Astrigo can't avoid layoffs, a last-in, first-out approach would be the least costly. Former CEO Jurgen Dormann understands the challenge Astrigo faces. When he took over ABB, the company was in deep distress. After shaking up his executive committee, Dormann personally reached out to all 180,000 employees to enlist their help. They came back with ideas that saved $1.6 billion - and rescued the company. Management professor Robert I. Sutton thinks too many executives assume that layoffs are the best way to reduce costs. They don't factor in how long it takes to realize the savings from job cuts, the costs to hire and train people once business picks up, or the damage to morale and productivity. Astrigo's executives should consider alternatives such as pay cuts, reduced benefits, unpaid time off, and incentives for departure. If layoffs are in-evitable, Astrigo should do them quickly, and firing the bottom 10% of employees would be the worst approach.
The quest for information and research-based insight is an obsession in the capital markets. There is a veritable industry of analysts, investment bankers, portfolio managers, and investors who seek any informational advantage, which is one reason that academics who study finance have been recruited to work on Wall Street and with money managers. Yet, the potential payoff for using valid evidence is even greater when it comes to managing organizations. At the same time, however, imitation is much slower and less effective in the world of management practices, in part because such practices depend on tacit knowledge and implementation skill, on knowing not just what to do but how to do it. In addition, management practices and logic resist copying because of the power of precedent and ideology. Most managers actually try to act on the best evidence. They follow the business press, buy business books, hire consultants, and attend seminars featuring business experts. Although companies sometimes benefit from these efforts, there is surprisingly little rigorous use or serious appreciation of evidence-based management. Explores these obstacles and offers guidelines to enable managers to practice evidence-based management better.
For the most part, managers looking to cure their organizational ills rely on obsolete knowledge they picked up in school, long-standing but never proven traditions, patterns gleaned from experience, methods they happen to be skilled in applying, and information from vendors. They could learn a thing or two from practitioners of evidence-based medicine, a movement that has taken the medical establishment by storm over the past decade. A growing number of physicians are eschewing the usual, flawed resources and are instead identifying, disseminating, and applying research that is soundly conducted and clinically relevant. It's time for managers to do the same. The challenge is, quite simply, to ground decisions in the latest and best knowledge of what actually works. In some ways, that's more difficult to do in business than in medicine. The evidence is weaker in business; almost anyone can (and many people do) claim to be a management expert; and a motley crew of sources--Shakespeare, Billy Graham, Jack Welch, Attila the Hun--are used to generate management advice. Still, it makes sense that when managers act on better logic and strong evidence, their companies will beat the competition. Like medicine, management is learned through practice and experience. Yet managers (like doctors) can practice their craft more effectively if they relentlessly seek new knowledge and insight, from both inside and outside their companies, so they can keep updating their assumptions, skills, and knowledge.
HBR's editors searched for the best new ideas related to the practice of management and came up with a collection that is as diverse as it is provocative. The 2004 HBR List includes emergent concepts from biology, network science, management theory, and more. A few highlights: Richard Florida wonders why U.S. society doesn't seem to be thinking about the flow of people as the key to America's advantage in the "creative age." Diane L. Coutu describes how the revolution in neurosciences will have a major impact on business. Clayton M. Christensen explains the law of conservation of attractive profits: When attractive profits disappear at one stage in the value chain because a product becomes commoditized, the opportunity to earn attractive profits with proprietary products usually emerges at an adjacent stage. Daniel H. Pink explains why the master of fine arts is the new MBA. Herminia Ibarra describes how companies can get the most out of managers returning from leadership-development programs. Iqbal Quadir suggests a radical fix for the third world's trade problems: Get the World Bank to lend to rich countries so that there are resources for retraining workers in dying industries.
This is an MIT Sloan Management Review article. Managers don't have to be told that to innovate they need to embrace drastically different practices from the ones they use for routine work. So why don't they do it? According to Robert I. Sutton, co-director of Stanford University's Center for Work, Technology and Innovation, when business leaders see what innovation actually requires, they often recoil. The right practices seem strange, even wrongheaded. Understandably, it's hard for any executive to take action that will lose money today in order to test ideas that might never make money -- in hopes one idea will make money tomorrow. Nevertheless, Sutton contends, that is just what cutting-edge companies do, bravely tackling ideas that at first blush seemed weird. From his research on such organizations, Sutton has developed eight techniques to move teams and companies from working by rote to innovating. The first two techniques are designed to provoke emotions that interrupt mindless action (provoke unpleasant emotions in others; make yourself uncomfortable). The second two are for smashing mindsets (treat everything like a temporary condition; ignore the experts). The third two help people identify and reject their dearest beliefs (plan to do something ridiculous; hold a sacred cow workshop). The last two are for exploding the composition of organizations and teams (bring in some slow learners; keep changing the composition of teams). Sutton cautions, however, that the exact methods a company uses to spark novel ideas and actions should differ depending on the situation. He recommends giving people freedom to play around with a wide variety of offbeat notions until bringing in new knowledge and helping people see old things in new ways finally enables the company to break from the past.
For at least the past decade, the holy grail for companies has been innovation. Managers have gone after it with all the zeal their training has instilled in them, using a full complement of tried and true management techniques. The problem is that none of these practices, well suited for cashing in on old, proven products and business models, works very well when it comes to innovation. Instead, managers should take most of what they know about management and stand it on its head. In this article, Robert Sutton outlines several ideas for managing creativity that are clearly odd but clearly effective: Place bets on ideas without much heed to their projected returns. Ignore what has worked before. Goad perfectly happy people into fights among themselves. Good creativity management means hiring the candidate you have a gut feeling against. And as for the people who stick their fingers in their ears and chant, "I'm not listening, I'm not listening" when customers make suggestions--praise and promote them. Using vivid examples from more than a decade of academic research to illustrate his points, the author discusses new approaches to hiring, managing creative people, and dealing with risk and randomness in innovation. His conclusions? The practices in this article succeed because they increase the range of a company's knowledge, allow people to see old problems in new ways, and help companies break from the past.
New ideas are the precious currency of the new economy, but generating them doesn't have to be a mysterious process. The image of the lone genius inventing from scratch is a romantic fiction. Businesses that constantly innovate have systematized the production and testing of new ideas, and the system can be replicated by practically any organization. The best innovators use old ideas as the raw materials for new ideas, a strategy the authors call knowledge brokering. The system for sustaining innovation is the knowledge brokering cycle, and the authors discuss its four parts. The first is capturing good ideas from a wide variety of sources. The second is keeping those ideas alive by playing with them, discussing them, and using them. Imagining new uses for old ideas is the third part--some knowledge brokers encourage cross-pollination by creating physical layouts that allow, or even force, people to interact with one another. The fourth is turning promising concepts into real services, products, processes, or business models. Companies can use all or part of the cycle. Large companies in particular desperately need to move ideas from one place to another. Some will want to build full-fledged consulting groups dedicated to internal knowledge brokering. Others can hire people who have faced problems similar to the companies' current problems. The most important lesson is that business leaders must change how they think about innovation, and they must change how their company cultures reflect that thinking.
In today's business world, there's no shortage of know-how. When companies get into trouble, their executives have vast resources at their disposal: their own experiences, colleagues' ideas, reams of computer-generated data, thousands of publications, and consultants armed with the latest managerial concepts and tools. But all too often, even with all that knowledge floating around, companies are plagued with an inertia that comes from knowing too much and doing too little--a phenomenon the authors call the knowing-doing gap. The gap often can be traced to a basic human propensity: the willingness to let talk substitute for action. When confronted with a problem, people act as though discussing it, formulating decisions, and hashing out plans for action are the same as actually fixing it. And after researching organizations of all shapes and sizes, the authors concluded that a particular kind of talk is an especially insidious inhibitor of action: "smart talk." People who can engage in such talk generally sound confident and articulate; they can spout facts and may even have interesting ideas. But such people often exhibit the less benign aspects of smart talk as well: They focus on the negative, and they favor unnecessarily complex or abstract language. The former lapses into criticism for criticism's sake; the latter confuses people. Both tendencies can stop action in its tracks. How can you shut the smart-talk trap and close the knowing-doing gap? The authors lay out five methods that successful companies employ in order to translate the right kind of talk into intelligent action.