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Capitalizing on Our Intellectual Capital
What if the United States set out to be the world's leading exporter of education? Direct revenue from tuition would be only one of the benefits, because when foreign students return home to become entrepreneurs, they rely on the networks and tools they acquired in the U.S.--and they expand their home economies, creating demand for U.S. exports. -
What Makes a Great Tweet
Three researchers set up a website to get ratings of almost 44,000 tweets. What they learned can help you make your messages on Twitter more useful and more appealing. -
Under Armour's Founder on Learning to Leverage Celebrity Endorsements
Plank's $1 billion company probably started on a college football field, where his sweat-soaked T-shirts drove the future CEO crazy. After graduation he found a fabric that would wick away moisture and stay light, so he produced a bunch of prototypes. Beginning with an impressive network of former teammates who had gone on to the pros, Plank gradually spread the word about his product. Soon he was outfitting entire teams. But within a couple of years, star players were asking to be paid to wear Under Armour. That meant Plank had to make some tough decisions. Only a few athletes are instantly recognizable--could the right personality make up for that? Was a number-one draft pick worth millions of dollars before he'd even dribbled a ball in the NBA? What's more, star athletes have everybody in the world coming after them. Could Plank break through the crowd and demonstrate that his company was a good fit? He managed to win endorsements from Barry Bonds, Tom Brady, Brandon Jennings, and many others. -
The Rise of the Supertemp
Full-time, permanent jobs with large organizations are quite possibly an artifact of a particular moment in economic history--about 60 or 70 years ago. For elite executives and professionals, such jobs are now in many cases far less attractive than independent, project-based work, say the authors, who are "supertemps" themselves. Independent professionals are making inroads in law, consulting, and even management roles, sometimes earning more than they did in their previous positions while escaping 80-hour weeks, endless internal meetings, and corporate politics. And they're achieving a gratifying work/life balance. Corporations are learning how best to tap the supertemps' skills; organizations may soon come to look less like pyramids and more like jigsaw puzzles. Intermediary firms that broker independent talent are growing rapidly. But social biases against temporary work persist. And--especially in the U.S.--the health care and tax systems are unfriendly to project workers. Rising numbers of highly paid independents will be motivated to overcome those obstacles: Health coverage could become portable; tax rules could be rewritten. The result would be not just more-rewarding careers but a more innovative economy. -
Managing Your Innovation Portfolio
For many companies, innovation is a sprawling collection of initiatives, energetic but uncoordinated, and managed with vacillating strategies. For steady, above-average returns, firms need a balanced innovation portfolio and the ability to approach it as an integrated whole. Having studied companies in the industrial, technology, and consumer goods sectors, the authors found a striking pattern: Outperforming firms typically allocate about 70% of their innovation resources to core offerings, 20% to adjacent efforts, and 10% to transformational initiatives. As it happens, returns from innovation investments tend to follow an inverse ratio, with 70% coming from the transformational realm. The ideal balance will differ from industry to industry and company to company, but one thing is constant: Companies must execute at all three levels of ambition and manage total innovation deliberately and closely. In particular, they must develop the unique capacities needed for transformational innovation. This means finding the talent required for breakthrough efforts and ensuring enough separation from the core business; creating an appropriate (and often very different) funding structure; departing from a pipeline management approach; and using noneconomic and internal metrics to assess early efforts. Companies that learn how to manage for total innovation can fully harness innovation's energy and make it a reliable driver of growth. -
The Trillion-Dollar R&D Fix
How does a company know what kind of return it's getting from R&D? Is it better at R&D than the competition? How much should it be spending and what can it do to improve the effectiveness of those investments? Existing measures of R&D effectiveness don't answer any of those questions. In this article Anne Marie Knott, a professor at Washington University's Olin School of Management, presents a new metric for R&D productivity: RQ, short for research quotient. It allows managers not only to estimate the effectiveness of R&D investment relative to the competition but also to see how changes in R&D expenditure affect the bottom line and, most important, a company's market value. According to her research, if the top 20 firms traded on U.S. exchanges had increased their 2010 R&D investment using the RQ method, the collective increase in market cap would have been a whopping $1 trillion. The longer-run benefits are potentially even greater because the measure allows companies to more closely link changes in R&D strategy, practices, and processes to profitability and value. This is a story that has played out before: Thirty years ago, W. Edwards Deming's quality metrics inspired the TQM movement, which revolutionized the way companies manufacture. RQ can do the same for R&D, the author believes--and the payoff will be even greater. -
Six Myths of Product Development
Many companies approach product development as if it were manufacturing, trying to control costs and improve quality by applying zero-defect, efficiency-focused techniques. While this tactic can boost the performance of factories, it generally backfires with product development. The process of designing products is profoundly different from the process of making them, and the failure of executives to appreciate the differences leads to several fallacies that actually hurt product-development efforts. In this article, the authors, an HBS professor and a consultant, expose these misperceptions and others. They look at six dangerous myths: 1) High utilization of resources will make the department more efficient; 2) Processing work in large batches will be more economical; 3) Teams need to faithfully follow their development plan, minimizing any deviations from it; 4) The sooner a project is started, the sooner it will be finished; 5) The more features a product has, the better customers will like it; and 6) Projects will be more successful if teams "get them right the first time." The authors explain the negative effects these "principles" have when applied to product development, offer practical guidelines on overcoming them, and walk readers through a visual tool that will help them keep projects on track. -
Creating an Organic Growth Machine
Many CEOs don't seem to care about organic growth. They either give up on it, in the belief that their companies will inevitably become low growth, or they cede responsibility for it to the operating units. Those are big mistakes. In an uncertain business environment, all corporate leaders need to be actively engaged in organic growth. Four rules can help them support the operating units in the quest for the best opportunities: 1) Keep an eye on the big picture by setting standards and assembling data that steer the company toward promising areas, nurturing an enterprisewide organic growth capability, and looking across markets and businesses for small opportunities that can be bundled. 2) Fight the short-term pressures of the business cycle by earmarking local cost savings for local investment and demonstrating, through a special corporate fund, that good ideas can always attract resources. 3) Resist typecasting some units as "growth engines" and others as "cash cows." Those labels shape beliefs about growth and affect the operating units' behavior. 4) Create a language for organic growth that helps the company clarify its priorities and develop a coherent, high-performing pipeline of opportunities. -
To Keep Your Customers, Keep It Simple
Marketers see today's consumers as web-savvy, mobile-enabled data sifters who pounce on whichever brand or store offers the best deal. In response, they've ramped up their interactions with customers. But for many consumers, the rising volume of marketing messages isn't empowering--it's overwhelming. Rather than pulling customers into the fold, marketers are pushing them away with relentless and ill-conceived efforts to engage. What do consumers want from marketers? Simplicity. After surveying thousands of consumers and interviewing hundreds of marketers and other executives, the authors find that the single biggest driver of customer "stickiness" is the ease with which consumers can gather information about a product and confidently and efficiently sort through their available choices. They offer three tactics marketers can use to simplify consumers' decision making and help them navigate the purchase journey. Companies should minimize the number of information sources consumers must touch as they move confidently toward a purchase. They should provide trustworthy sources of product information and recommendations. And they should offer tools that will help consumers weigh their options by identifying the product features that are most relevant to them. Companies that avoid bombarding customers and instead focus on simplifying consumers' decision making will rise above the din, and their customers will stick by them as a result. -
Global Business Speaks English
Like it or not, English is the global language of business. Today 1.75 billion people speak English at a useful level--that's one in four of us. Multinational companies such as Airbus, Daimler-Chrysler, SAP, Nokia, Alcatel-Lucent, and Microsoft in Beijing have mandated English as the corporate language. And any company with a global presence or global aspirations would be wise to do the same, says HBS professor Tsedal Neeley, to ensure good communication and collaboration with customers, suppliers, business partners, and other stakeholders. But while moving toward a single language at work is necessary and inevitable, Neeley's research shows that implementing such a policy is fraught with complications. English-only policies can create job insecurity and dissatisfaction and generate strife between native and nonnative English speakers in cross-national teams. Companies can anticipate and plan for inevitable challenges and resistance when adopting an English-only policy. Using Japanese internet services firm Rakuten as a case example, this article outlines guidelines for proper implementation. -
How to Win in Emerging Markets: Lessons from Japan
In the 20th century, Japanese multinationals established themselves as powerhouse exporters in developed markets. Names like Sony, Toyota, and Honda became commonplace. But in this century, growth in developed markets has slowed: Goldman Sachs forecasts that these markets will grow at an average annual rate of 2% until 2020, whereas the BRIC economies are expected to grow at an average annual rate of nearly 7%. To prosper now, Japanese companies must win in developing markets--which they're failing to do. They face four key challenges: distaste for the middle and low-end segments of the market; aversion to mergers and acquisitions; reluctance to commit--financially and organizationally--in emerging markets; and a failure to properly allocate talent. Two Japanese multinationals stand out for their success in overcoming the challenges: Unicharm, a manufacturer of personal-care products, and Daikin, one of the world's largest air-conditioning manufacturers. This article explains what they've done. -
Make Your Enemies Your Allies
Rivalries in the workplace can be destructive to both personal career growth and group success. Many attempts to reverse rivalries fail because of the complex way emotion and reason operate in the building of trust. Using a method called the 3Rs, an effective leader can turn a rival into a collaborator, setting the stage for a healthy work life while driving fresh thinking within an organization. Step 1 of the method is redirection, shifting a rival's negative emotions away from the adversarial relationship. This creates an opening for Step 2, reciprocity, through which a relationship can be established. Here, the essential principle is to give before you ask--offering a rival something of clear benefit and "priming the pump" for a future return that requires little effort on the rival's part. Step 3, rationality, sets expectations of the new relationship so that efforts made using the previous steps don't come off as disingenuous. A rival is encouraged to see collaborative opportunities from a reasoned standpoint. A key advantage of the 3Rs is that the method can work to reverse all kinds of rivalries, including those with subordinates, peers, and superiors. -
Life's Work: Christiane Amanpour
Award-winning foreign correspondent Christiane Amanpour shares her insights on leadership, ambition, and the female advantage. -
Willful Blindness: When a Leader Turns a Blind Eye
From the financial crisis to recent environmental disasters, willful blindness is a widespread problem with systemic and cultural causes. In charting the phenomenon, this article begins by examining power. Leaders often inhabit a “bubble” of power and, when confronted by risky situations, think in abstract terms and demonstrate a level of self-certainty that is removed from reality. Money exacerbates power and leads to decisions that are concerned only with profit, which can lead to reckless outsourcing and lack of accountability. Employees would often rather be wrong than alone, and they fear retribution if they articulate problems to their leaders. Many employees, in fact, do not believe executives who claim that they want to hear the bad news along with the good. As this article reveals, groupthink can be a barrier to progress and the greatest single cause of willful blindness may be the most basic — to build a sense of self-worth, leaders are often surrounded by people and data that confirm their beliefs. -
Tsingtao's Chairman on Jump-Starting a Sluggish Company
In 1995 Jin Zhiguo was put in charge of the Hans Brewery, a fresh Tsingtao acquisition. On his first day there, he found a financial statement on his desk that said, "Daily production: 1,000." Not bad, he thought. But then he learned that the number referred to bottles, not cases--and this at a company employing more than 1,000 people. Although it was a moment of "great disbelief," Jin says that such underperformance wasn't unusual then for Chinese businesses: The government determined production plans, and few managers paid attention to customer needs or traditional marketing. He set out to revolutionize the brewery's culture over the next five years, partly in response to aggressive market competition from Western brands. One of the first things he did was to start sitting in restaurants and talking with customers about beer. What he learned led to a more popular product and better distribution, and within a year production had risen to 790,000 bottles a day. The company had gone from annual losses of 25 million yuan to revenues of 10 million yuan. By 1999, annual revenues had reached 50 million yuan, and Hans had become Tsingtao's best-performing brewery. Jin assumed the presidency of Tsingtao in 2001 and helped the company adapt to being market driven. Among his many leadership imperatives was a continuing emphasis on employees' spending time listening to customers. -
Saving the Planet: A Tale of Two Strategies
Business is the engine of the developed economies that devour a disproportionate share of the world's nonrenewable resources and produce a disproportionate share of its emissions. We see it, therefore, as both a cause of and a solution to environmental degradation. But how, exactly, can business contribute? To answer this question, the authors explore two schools of thought. According to one, consumers and companies should do more with the resources they consume, become savvier about recycling and processing their waste, and dampen their appetite for consumption in general. This worldview achieved perhaps its clearest expression in the works of the 19th-century economist Thomas Malthus. Although the Malthusian view exercises a powerful influence, it is by no means uncontested. An alternative philosophy, which flows from the work of the 20th-century economist and Nobel Prize winner Robert Solow, appeals to our natural optimism by arguing that environmental and other problems can always be resolved through the exercise of human ingenuity. It's not hard to see that these two philosophies make uneasy bedfellows. The Malthusian view encourages a tendency toward regulation and restraint, while the Solovian view underlies much of the advocacy for deregulation and the promotion of growth. But if we are to make real progress in solving the world's environmental problems, the authors write, we will have to apply both philosophies. -
The New Science of Building Great Teams
Why do some teams consistently deliver high performance while other, seemingly identical teams struggle? Led by Sandy Pentland, researchers at MIT's Human Dynamics Laboratory set out to solve that puzzle. Hoping to decode the "It factor" that made groups click, they equipped teams from a broad variety of projects and industries (comprising 2,500 individuals in total) with wearable electronic sensors that collected data on their social behavior for weeks at a time. With remarkable consistency, the data showed that the most important predictor of a team's success was its communication patterns. Those patterns were as significant as all other factors-intelligence, personality, talent-combined. In fact, the researchers could foretell which teams would outperform simply by looking at the data on their communication, without even meeting their members. In this article Pentland shares the secrets of his findings and shows how anyone can engineer a great team. He has identified three key communication dynamics that affect performance: energy, engagement, and exploration. Drawing from the data, he has precisely quantified the ideal team patterns for each. Even more significant, he has seen that when teams map their own communication behavior over time and then make adjustments that move it closer to the ideal, they can dramatically improve their performance. -
Teamwork on the Fly
In a fast-paced and ever-changing business environment, traditional teams aren't always practical. Instead, companies increasingly employ teaming: gathering experts in temporary groups to solve problems they may be encountering for the first and only time. This flexible approach was essential to the completion of the Water Cube, the building that hosted swimming and diving events during the Beijing 2008 Olympic Games, and to the 2010 rescue of 33 Chilean miners. More and more people in nearly every industry now work on teams that vary in duration and have constantly shifting membership. Teaming presents technical and interpersonal challenges: People must get up to speed quickly on new topics and learn to work with others from different functions, divisions, and cultures. Several project management principles-scoping out the challenge, structuring the boundaries, and sorting tasks for execution-help leaders facilitate effective teaming. Leaders can also foster cross-boundary collaboration by emphasizing purpose, building psychological safety, and embracing failure and conflict. Individuals who learn to team well acquire knowledge, skills, and networks. Organizations learn to solve complex, cross-disciplinary problems, build stronger and more unified cultures, deliver a wide variety of products and services, and anticipate and manage unexpected events. Teaming helps companies and individuals execute and learn at the same time. -
Coming Through When It Matters Most
All teams would like to think they do their best work when the stakes are highest-when the company's future or their own rests on the outcome of their projects. But too often something else happens. In extensive studies of teams at professional service firms, Harvard Business School's Gardner has seen the same pattern emerge over and over: Teams become increasingly concerned with the risks of failure rather than the requirements of excellence. As a result, they revert to safe, standard approaches instead of delivering original solutions tailored to clients' needs. Gardner has a name for this phenomenon: the performance pressure paradox. Here's how it develops: As pressure mounts, team members start driving toward consensus in ways that shut out vital information. Without even realizing it, they give more weight to shared knowledge and dismiss specialized expertise, such as insights into the client's technologies, culture, and aspirations. The more generically inclined the team becomes, the more concerned the client grows, which turns up the pressure and pushes the team even further down the generic road. But forewarned is forearmed. By measuring each person's contribution deliberately, ruthlessly insisting that no one's contribution be marginalized, and framing new information within familiar contexts, teams can escape the performance pressure paradox and keep doing their best work when it matters most. -
The Real Leadership Lessons of Steve Jobs
The author, whose biography of Steve Jobs was an instant best seller after the Apple CEO's death in October 2011, sets out here to correct what he perceives as an undue fixation by many commentators on the rough edges of Jobs's personality. That personality was integral to his way of doing business, Isaacson writes, but the real lessons from Steve Jobs come from what he actually accomplished: He built the world's most valuable company, and along the way he helped to transform a number of industries: personal computing, animated movies, music, phones, tablet computing, retail stores, and digital publishing. In this essay Isaacson describes the fourteen imperatives behind Jobs's approach: focus; simplify; take responsibility end to end; when behind, leapfrog; put products before profits; don't be a slave to focus groups; bend reality; impute; push for perfection; know both the big picture and the details; tolerate only "A" players; engage face-to-face; combine the humanities with the sciences; and "stay hungry, stay foolish."