Apple Practices Deliberate Intention to Out Compete

 

No decision is too small to sweat for Apple. We see that in the design of their products and in the design of their retail stores. From this Wall Street Journal article, we learn how deliberate Apple is in making decisions that impact their retail stores. (The WSJ article is behind a pay wall, but this one isn’t.)

Apple’s attention to the smallest of details is similar to Disney’s attention to small details in all its theme parks. Which is interesting because in this article we learn, “… more people now visit Apple’s 326 stores in a single quarter than the 60 million who visited Walt Disney Co.’s four biggest theme parks last year”

Some might even say Apple is too maniacal and far too controlling when it comes to the operational details of their retail stores.

For example, Apple instructs its store employees exactly what to say to customers with product issues. They are told to limit their responses and respond with reassuring phrases like, “I understand.” They are also told to be positive in tone and never utter the negative sounding word, “unfortunately.”

Employees can be fired if they arrive minutes late to their shift more than three times in a six-month period. Employees are also STRICTLY forbidden from discussing new product rumors and from prematurely mentioning when widespread issues are happening with products.

When shipments of new products arrive in boxes, they are stored in the back-of-house area in clear view of security cameras so as to prevent employees from knowing too much too soon.

Apple also makes deliberate decisions in the layout of their retail stores. They create special places for children to play while their parents play with iPads and such.

Apple deliberately chooses which photos and music are preloaded onto demo computers, iPods, iPhones, and iPads. New products are positioned front and center upon entering. The Genius Bar is located in the back of stores to encourage more browsing from customers.

All this attention to detail benefits Apple from a sales perspective. According to the article, Apple’s generates $4,406 per square foot. That’s more than Tiffany’s ($3,070), Coach ($1,776), and Best Buy ($880.)

Apple also benefits from its attention to detail by being so talkable. Keller Fay’s Talk Track® study reveals Apple is the most talked about technology brand in America and is the seventh most talked about brand in America regardless of category.

As I’ve recently ranted… The best word of mouth isn’t a marketing tactic. It isn’t a tweet, a status update, a viral video, or anything else you can find or do on a social media website. The best word of mouth isn’t a publicity stunt or anything done to get some buzz for a day. The best word of mouth is how a business does business not just one day, but every day it is in business.

Clearly, Apple’s maniacal focus on the smallest of every day details is benefiting them as a bankable and talkable brand. Perhaps you and your business should also sweat the small stuff to become more bankable and talkable. via brandautopsy.com

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Jim is an expert on leadership, competitive strategy, and organizational issues. Some of his work has focused on how organizations attain superior performance, and how they constantly reinvent advantages to propel growth in times of stress.   

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Creative Direction - 8 Ideas for When Creativity Is Too Easy or Hard - Mike Brown

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There’s a story I saw once (which, if you’ll notice, is how most apocryphal stories start) about Salvador Dali where an art patron inquired it were difficult for the famed surrealist painter to paint a picture. Salvador Dali answered, “No, it’s either easy or impossible.”

You can’t deny that it’s a great creativity quote.
Unfortunately, it’s a worthless perspective when you’re on the hook to deliver personal creativity on a consistent basis in a work or organizational situation. Suppose your work-oriented creative effort seems easy to you. If it does, it’s likely the creativity you are producing is ho-hum, at least to you. To the contrary, when your creative effort seems to be an insurmountable challenge to complete, you’re faced with the realization that it’s touch to get any credit for stunning creative thinking that can’t be brought to creative reality.

If the two creative extremes Salvador Dali offered aren’t very good answers, what can you do to move your creative reality somewhere in between? You want to have  strategies to turn both creative extremes into challenging, workable creative successes. Here are four strategies for each creative extreme.

Four Creative Direction Ideas When Creativity Seems Easy

1. Critique Your Creative Successes

Rather than resting on your creative laurels, push yourself to be dramatically stronger creatively. Use what seemed creatively strong from the past, look for small imperfections others would never see, and make creative masterpieces of them! Better integrate them with your strategy, discover more elegant creative simplicity, or find a way to express your extreme creativity in new ways. Pushing yourself to the heights of extreme creativity more than you ever have may be a creative challenge, but will yield creative dividends.

2. Put Yourself on the Extreme Creativity Hook Publicly

You (and by “you,” I probably mean “I”) could be prone to creative sandbagging through deliberately setting expectations at a relatively low, comfortable level you can easily meet without pushing yourself too hard creatively. Forget about taking the path of least creative resistance by sharing an extreme creativity goal – sort of your very own JFK and “Put a man on the moon.”  Sharing an extreme creativity goal with people who will hold you accountable to it clearly puts you on the creative hook. This will demand you embrace extreme creativity as a step toward creative success.

3. Put More Creative Risk into the Mix

 Suppose you have all the resources and know everything that’s required to make your creative objective a reality. Decide to deliver your own creative stumbling block by forsaking a major chunk of your creative resources. Slash the time for your creative project by beginning later than expected or agreeing to finish it earlier. If you are part of a creative team working on a project, release one team member to work on another project, pushing the other team members to new extreme creative heights. Driving your effort to the creative extreme will make you develop alternative creative muscles to realize your creative objective.

4. Significantly Modify Your Creative Direction

Bruce Springsteen is a great example of this idea. Although successful with the E Street Band, he altered his  creative direction musically several times – an acoustic, home-recorded solo record, other “solo” records with different supporting musicians, and a completely new band to chronicle songs by Pete Seeger, a legendary folk musician. With every new creative direction, Bruce Springsteen continually avoided “easy” creativity in favor of using unfamiliarity to spur new creative directions.

Four Creative Direction Ideas When Creativity Seems Impossible

1. Lower Your Expectations

If your overall creative task seems daunting, lower your expectations. Look for what smaller parts of the project seems possible amid a total effort which seems impossible. Consider what is the real downside if the entire effort didn’t come to fruition. After identifying workarounds for whatever might be impossible on your project, go all out achieving what is achievable creatively.

2. Put a Creative Project on Hold

Being pressured to be immediately creative can stifle creative abilities. Instead of being pressured to advance directly to implementation, take a time out and actually THINK. Strategize. Brainstorm. Find someone who will add to the creative thinking you’ve done. Take some time to consider something entirely different. Take advantage of a creative pause to let your mind wander where it will, making unconscious creative connections to instigate a fresh creative strategy.

3. Find Implementation Assistance

Maybe your perception of creative impossibility arises  from weaknesses in your personal capabilities. If that’s the case, launch your creative effort by seeking out talents you need to turn the impossible into the possible. Put together the best team to start, generate, and bring what would have been previously daunting creativity to life.

4. Modify Your Creative Game

If the creative task you are facing seems impossible, go ahead and redefine it. Instead of thinking about what the creative activity is, look at what type of goal you’re trying to accomplish instead. Next, look at the whole variety of ways you can accomplish your objective in some other way. Redefining the creative game is often just what’s needed to get into another game you’re much more likely to win creatively.
Use these eight strategies as needed so you can depend on producing outstanding creativity on a daily basis! - Mike Brown via brainzooming.com

 

Creating a Top-Performing Team: Leadership Development for Tomorrow’s Corporations - Marcus Buckingham

Corporate America is in crisis. Consumer confidence is plummeting. Leaders are failing. In fact, more than 40 percent of new leaders fail within their first 18 months. Many companies, however, are also failing their leaders as they continue to invest in a broken leadership development model.

Billions of dollars are spent annually on leadership development programs – $171.5 billion by U.S. businesses in 2010, the most recent year for which data is available, according to the American Society for Training and Development. That’s an average of $1,228 per employee, but virtually all of this investment is spent on the same formulaic training model and black-and-white metrics. With their focus almost exclusively on classroom learning and lockstep generic curriculums, these dinosaurs of training simply don’t have what it takes to develop the next generation of leaders, managers and employees.

Globalization means the entire world is a competitor. The fast pace of technological change decrees organizations must keep innovating and learning, or they will die. These are not radical insights — but their effect is both radical and disruptive. Almost by definition, innovation is unique, particular and localized. Yet, a company must learn to scale innovation in order to thrive.

How can innovation be spread within your organization? The key is a new leadership development model. One that is scalable, but accommodates the uniqueness of each leader’s techniques; one that is stable enough to permit the training of hundreds at once, but dynamic enough to incorporate and distribute new practices and other innovations in real time. Is it possible? Yes.

Today’s Leadership Development: Google It

Steve Jobs rejected focus groups because he believed “people don’t know what they want until you show it to them.” In contrast, other leaders rely on input from the regular world. Sam Walton of Walmart, for example, used to visit his stores every Friday to see what customers were doing and what they wanted. He called it quick market intelligence. The takeaway? A technique that works for one person does not necessarily work for another.

It’s simple enough: people’s approach to work is as diverse as people themselves. We all know this. It’s the most cutting-edge companies that are embracing this diversity in the way they interact with their customers.

Google, for example, is formalizing and intensifying learning in a completely new way with GoogleEDU, its two-year-old, in-house leadership development and education program. While classroom-based, the sessions center on topics such as exerting influence in a company that prioritizes ideas over titles. The goal is targeted learning, from which its employees can identify more actionable goals. It’s individualized and customized.

Hampton-ality

Not all formalized leadership development takes place in classes. Facebook, Netflix and Amazon filter countless content options to fit individual tastes – and then deliver them via technology in real time. Service-focused hospitality giant Hilton takes a similar approach. Over the last several years, Hilton executive Phil Cordell has worked to embed and apply an algorithmic model of leadership development, propelling personalized learning throughout his organization.

Cordell and his team started by administering a situational judgment test — StandOut — to a select group from among the top 10 percent of Hilton’s general managers. Analysis of the results helped Cordell and his team learn about individual leadership techniques that fueled their success.

The techniques are as diverse as the leaders themselves. One uses a mascot to symbolize best practice behavior and attitudes among staff; another rewards employees with a bimonthly “paycheck lunch” during which she encourages team members to share stories and details of what they appreciate about one another. These techniques work spectacularly well for them — even though the same techniques wouldn’t work nearly as well for managers with different strengths. There are, however, some managers who could benefit from using some of these techniques, or who might be inspired to create another variation.

This is where the StandOut algorithm comes in: helping to target techniques to the right people. For Cordell and Hilton, the specially designed algorithm draws on a constantly growing database of concepts, innovations and practices associated with specific leadership styles, and pushes them out to managers of the same leadership style as a series of techniques they might try.

A cloud-based mobile application helps reinforce the knowledge and sustain learning throughout Hilton’s Hampton brand of 1,850 hotels. Twice a week, the tool delivers new techniques and tips from top performing general managers and other leaders.

To be effective, the leadership advice must be:

· Short – because the brain is built to pay more attention to short, frequent stimuli;

· Personalized – the algorithm ensures that most techniques a user receives come from leaders whose strengths match his, but occasionally the app delivers techniques from different strengths, adding an element of surprise;

· Interactive – with the option to “bank” select techniques, the managers can build their own vault of knowledge for later reference and use, adding detail to their leadership profiles.

The algorithmic approach to leadership development capitalizes on individual strengths and crowd-sourced advice available anywhere, anytime. And for a new generation of leaders raised on Google search-style personalization, it’s more critical than ever for organizations to up their ante and invest in development that is ongoing, always available, and geared to the strengths of each leader.

Marcus Buckingham is founder of The Marcus Buckingham Company, creator of the StandOutM tool, and the author of seven bestselling books, including his latest book “StandOut”. He is an expert in strengths-based leadership. via chiefexecutive.net

Since 1987 we've helped organizations create competitive advantage to bring about fundamental change, put their competitors into a reactive position, cause their partners and suppliers to make adjustments, and deliver so much value to their customers that their market share grows larger still.  See how.

Escaping The Commoditization of Innovation: Why I Like IKEA The Un-Company

To call IKEA a furniture store is insulting. 

I happen to be one of the few men who actually enjoy shopping. That I adore IKEA above all other stores as a haven for all things innovation should come as no surprise. IKEA doesn't imitate. Where even innovation, believe it not, has become commoditized IKEA elevates the game continually. 

IKEA doesn't mind re-imagining because it is in their DNA to do so. How can a school, government, non profit or business make innovation work by attracting hordes of rabid customers and employees insanely driven to their product and service? Expect to stand decidedly apart through innovating and competitive advantage. IKEA understands that the world of business is hyper competitive. 

Not great companies, but insanely great companies in turbulent times implicitly decide to act as rebels of their industries by pushing the bar of excellence. Even the word excellence has been used to ad nuaseam. A rebellious, stand on edge of excitement, doing something big is expected attitude pervades companies who want to be and remain phenomenal companies. They behave not as victims of geo-politics, regulations and the economy, but eager participants in their own present and future. 

Cities uncomfortable in being a great city for example, will continually raise the bar until innovation excellence becomes the action not the process that attracts high paying customers anxious for your next big idea. They want to be involved in the discovery.  

 Processes aren't the answer. Nor is innovating. There is an experience of rediscovery where every activity implores, "Why do we do this? Does it exceed unmet needs? Does it raise the bar? Does this product or service give our competition cause to moan on Monday morning?" Jim  

 

 

Why are Chinese consumers crazy for Apple?

 Chinese consumers are hungry for foreign brands but for Apple products, in particular, the demand is insatiable. What explains China’s love affair with Apple?

On January 13, Apple launched its latest smartphone—the iPhone 4S—in China. Hundreds of customers had queued overnight outside Apple's flagship store in Sanlitun in Beijing. That morning, the store failed to open on schedule, and soon after, Apple officially announced that the company would suspend all iPhone 4S sales at its Beijing and Shanghai retail stores. The crowd exploded. Some even threw eggs at the store’s exterior.

Apple defended its actions saying they wanted to protect the safety of consumers and employees. Among the hundreds gathered outside were gangs of scalpers (resellers of products at a price higher than the established value) that had hired a large number of workers and students to stand in line for them. For scalpers, the immense popularity of the iPhone in China means profits of around 500 yuan [approx. US$80] for each resold new phone. They were well-organised: One gang had red ribbon wrapped around their arms; another wore yellow hats. Conflict between different gangs of scalpers erupted and the police were forced to intervene. To ensure safety and to control the situation, Apple decided to suspend all sales of the new iPhone.

What explains this Chinese craze for Apple? Some go so far as to describe Chinese consumers as disciples of an “Apple Cult” and the late Steve Jobs as its leader. While this analogy is not very appropriate, it does figuratively highlight the irrationality of Chinese consumer attitudes towards Apple products. Apple has consistently managed to create a frenzy in China each time it launches a new product, unmatched elsewhere in the world. In fact, many buyers lining up at Apple stores around the world are from China itself—they just couldn’t wait for the new product to be launched later at home.

Some of the extreme demand may be attributed to Apple’s successful marketing strategy that intentionally caps supply thereby creating a thirst for the product. But this isn’t unlike Apple’s marketing strategy in other parts of the world. So what really differentiates the Chinese consumer? The fact that there is a large group of scalpers specialising in and profiting from Apple products, and that Chinese consumers are more than willing to pay a premium, begs the question.

What I see in China is a large group of consumers increasingly indulging in their thirst for and worship of luxury goods. It’s as if they’ve been brainwashed. Chinese consumers have become the world’s most ardent worshipers of luxury brands such as Louis Vuitton, Bentley, Cartier and Hermès. They are willing to queue up around the world not only for Apple products but also for these other luxury products. In 2009, for instance, Chinese customers snapped up nearly a third of the luxury goods sold in the United Kingdom and 60 percent of luxury products sold in France.

As for Apple, a large number of ordinary Chinese consumers obviously consider the iPhone a luxury item although whether a price tag of about 5000 yuan [approx. US$800] is steep enough to be considered a luxury item is debatable. This mindset among the average Chinese consumer is understandable when you consider that an iPhone is the least expensive purchase that can bring them closer to experiencing high society, and is also most cost-effective in terms of satisfying vanity.

There will always be young people that advocate vanity and that are obsessed with fashion in every society, in every country, and across every generation. It’s not that big of a deal that China has the largest group of Apple fans or “fetishists” in the world. In any case, an Apple fetish is no less holy than the worship of God or other idols if we ignore concepts such as hedonism or distorted social values. The “fetishism” could be merely reflecting a reality: people are collectively turning themselves into Apple believers in a society where faith has been largely absent. The article was first published at Harvard Business Review China in January 2012 and translated from Chinese by Aileen Huang. 

via knowledge.insead.edu

 

Using your sales force to jump-start growth: Innovation

There’s a reason it’s called a sales force. Here are four innovative ways companies can use their sales reps to drive growth.

 

• 
  

There’s no escaping the impact of the sales force on your company’s growth trajectory. This is the frontline group best placed to gain an intimate understanding of existing customers, to observe the forces at work in an industry, and to identify potential new business. During the past year, we interviewed about 100 sales executives around the world, across a range of industries, to identify the critical elements that distinguish true sales leaders from also-rans. This article highlights four intriguing ideas the executives described for leveraging the sales force to jump-start growth. Together, these suggestions offer practical insights for sales groups, as well as a starting point for discussions among CEOs and other senior managers hoping to get more from sales and marketing investments.

Look over the horizon

The sudden arrival of a truly disruptive technology—one that upends markets in ways few anticipate—presents obvious challenges to industry incumbents. Yet it’s also a huge growth opportunity. One supplier of parts to high-tech manufacturers has created a team of “speculative market analysts” to better identify the emergence of disruptive technologies and to predict their business implications. The team helps the company to position itself as a supplier that’s ahead of the curve and to enjoy superior sales growth while competitors scramble to catch up.

The full-time team cuts across all business units and draws on a variety of internal and external sources: the sales force provides insights into the technology initiatives of the company’s customers while continually pressing them for feedback about its shortcomings and the efforts of competitors. In addition, the team closely scrutinizes all reports from competitors and customers—easier said than done, given the sheer volume of market information emanating from countries such as China. It even fosters close ties with venture capital firms and provides up-and-coming companies with funding and “sweat equity” to convert innovative concepts into realities. Together, these efforts have helped the company’s sales force to get ahead of recent major disruptive trends, including the boom in tablet devices and e-readers, as well as the growing fields of LED lighting and solar technology. What’s more, the team’s efforts are generating an estimated annual return on investment that exceeds 12 percent.

Hunt and farm

It’s easy for organizations to fall into the habit of seeking sales growth only through existing customers. Even though the sales force is typically best placed to find and approach potential clients, individual reps may shun the uncomfortable task of cold-calling in favor of selling to customers they know well. Yet there’s only so much each customer can buy, so finding new business is critical for growth.

One large distributor of auto parts tried tackling this problem by separating these activities. Its sales leader designated some reps as “hunters,” who focused exclusively on finding new prospects, while “farmer” reps concentrated on existing customers. The model succeeded initially but later foundered as hunters became discouraged by the time and effort required for their relatively scant wins, as well as the perception that they were second-class citizens compared with farmers.

As attrition rates among hunter reps grew, the sales leader changed tack. To demonstrate the importance of finding new customers, he designated one day a month as a “hunting day,” whenall reps would exclusively chase new prospects. The rest of the time, they could focus largely on existing customers. The result was astounding: in a single day, the company signed up as many new customers as it normally did in two months. Setting aside one day a month for hunting new business is now an ingrained part of the company’s sales practices.

Motivate with more than money

The basic remuneration model for sales reps is simple: a base salary offers security; commissions and bonuses provide incentives to perform. Most companies work endlessly to optimize the balance. Yet what if money isn’t the thing that actually matters most? One financial-services company tried all manner of compensation plans before determining that while carrots and sticks did influence the sales performance of its financial advisers and sales managers, the results were short-lived.

As the company explored alternatives, its sales leader observed something important: the most successful advisers often spoke passionately about the sense of fulfillment that came from helping clients realize their dreams. Fundamentally, that was why these men and women had become financial advisers. The realization that money was just one of the factors driving performance prompted the sales leader to work with managers and individual advisers to develop specific goals that would help the advisers feel they had genuinely helped customers. Maybe it was prioritizing quality over quantity by working more intensely with fewer clients. Perhaps advisers needed a wider range of financial products to ensure that they had all possible options to meet their clients’ investment goals. At the same time, the company identified and laid out steps for overcoming potential bottlenecks, such as a lack of coaching, training, financial-management tools, or appropriate products.

The company knows that money remains critical to its sales team but now recognizes the benefits of identifying other, deeper motivations. The attrition rate among financial advisers has fallen sharply, and they not only have become more successful at winning business but also have found that clients are entrusting more of their wealth with the company. These goals have been met with no increase in the compensation of advisers.

Boost sales without slashing prices

Companies experiencing flat or declining sales often elect to cut prices to spur demand. Yet sometimes, averages lie: a decline across a market doesn’t mean that all market segments are weakening. A North American logistics company learned this lesson the hard way when it empowered sales reps to lower prices to meet management’s goal of boosting volumes. Because the price guidelines were set without taking into account the competitive dynamics of each specific market segment, only some reps recouped the cost of the price cuts with higher volumes. The company’s overall competitive position deteriorated.

Top management decided to recalibrate its approach. The characteristics of each of the company’s various market segments varied wildly. Some were growing fast in the wake of continuing property construction, population influxes, and investment; others were flat-lining. The sales reps got new price and volume targets based on each segment’s characteristics. These targets incorporated metrics such as the economic growth rate in geographies where particular industries were heavy users of the company’s services, the strength of the company’s operational assets relative to those of its competitors, and whether the company was losing or gaining customers at accelerating or decelerating rates.

This granular view of each sales territory led to new sales approaches. In higher-growth markets with limited competition, sales reps aggressively sought new business and raised prices where possible. In declining markets with stiffer competition, reps were authorized to cut prices to prevent customers from defecting. This market-by-market roadmap allowed the company not only to reverse several years of declining market share but also to secure an overall average price increase of 3 percent. via Mckinsey Quarterly

About the Authors

Maryanne Hancock is a principal in McKinsey’s Atlanta office, Homayoun Hatami is a principal in the Paris office, and Sunil Rayan is an associate principal in the New York office.

 

 

How To Avoid A Nightmare: Public Speaking

If you've got something to say, ideas to share, people to influence, or a customer base to attract, public speaking is an opportunity ripe for the taking. You might have the best products or services and a terrific track record, but if you don't or can't communicate about it with your target audiences, you're limiting your effectiveness. All too often, the very best stories in organizations and companies go untold because of people's reluctance to take the stage.

Speaking in public ranks high on the list of people's fears, and that leads to a lot of missed opportunities. Anyone who has ever been in the audience when a good speaker took the stage knows what power lies in this skill. It can change minds, inspire action, and launch and cement relationships in a way that no other form of communication can.

An audience can reach a new understanding and be motivated to follow a call to action—and to follow a person. Executives with the ability to hold the attention of others through the power of the spoken word find themselves rewarded, and their abilities and ideas acknowledged.

Time to Testify

Yet for all its power, the "public" part of public speaking gives many people pause. Even a friendly, interested audience can be a frightening prospect to some executives, who would rather let great opportunities pass them by than be judged by an audience. But every time we speak—whether to an audience of one or 100—we run the risk of being judged on whether we've got something to say worth listening to.

That's not a reason to avoid opportunity—it's the very reason to embrace it. If you believe in something and are actually behind your product or service, you should let no opportunity pass to get up and tell others about your conviction. Here's another way to look at it: Instead of thinking about the risk of being judged by 100 people (or however large your audience is), think about the chance you have to influence them.

Of all the marketing techniques your organization can invest in, speaking directly to audiences is one of the best ways to "build brand" for companies and ideas while enhancing the standing of the speaker.

Getting Started

Remember that even the best orators needed practice and training. Public speaking is a learned skill, and you will improve with time if you take the initiative. With preparation and practice, you can learn to carry an audience, strengthen relationships, and reach people you otherwise couldn't have.

Here are some tips to help get reluctant executives started on embracing business' unsung tool: public speaking.

Aileen Pincus writes the "Speaking of Business" column for BusinessWeek.com's Managing channel. She is president of The Pincus Group Inc., an executive firm coaching firm that offers training in presentation, speech, media, and crisis communications.

via businessweek.com

 

Unlock Your Passwords by Just Standing Next to Your Computer

Ogilvy Paris has developed a new app inspired by Ford’s key-free technology for unlocking and locking cars.

KeyFree Login logs you in to all of your Internet accounts (Facebook, Twitter, email, etc.) by unlocking your passwords when your mobile device is close to your computer. When you move away, it locks them again by logging you out.

The hands-free technology works on MacOS computers with Google Chrome and Bluetooth mobile devices. KeyFree Login launched on the Ford France website and is due to go global shortly. Check out the video below to learn more about the app:

 

via mashable.com

 

Why Education Without Creativity Isn't Enough: Anya Kamenetz

Phaneesh Murthy, CEO of Indian outsourcing company iGate Patni. | Photo by Ritam Banerjee

Last April, (2011) when sharing a stage at Facebook with CEO Mark Zuckerberg, President Obama summed up the conventional wisdom on what's needed to shape American minds for the global marketplace. "We've got to do such a better job when it comes to STEM education," he said. "That's how we're going to stay competitive for the future." If we could just tighten standards and lean harder on the STEM disciplines--science, technology, engineering, mathematics--we'd better our rigorous rivals in India and China, and get our economy firing on all cylinders. As with much conventional wisdom, this is conventional in the worst sense of that word.

If you want the truth, talk to the competition. Phaneesh Murthy is CEO of iGate Patni, a top-10 Indian outsourcing company. Murthy oversees 26,000 employees--not the ones snapping SIM chips into cell phones or nagging you about your unpaid AmEx bill, but the ones writing iPhone apps, processing mortgage applications, and redesigning supply chains--in jobs that would be handled in the U.S. by highly paid, college-educated workers. In other words, you. Yet Murthy, a regular bogeyman of outsourcing, believes American education is by far the best in the world. "The U.S. education system is much more geared to innovation and practical application," says Murthy. "It's really good from high school onward." To compete long term, we need more brainstorming, not memorization; more individuality, not standardization.

"In India, it takes engineers two to three years to recover from the damage of the education system."

Murthy will tell you that the outsourcing industry is not some unstoppable force: It's hitting real limits. Indian engineers are not nearly as cheap or plentiful as they used to be. "Labor costs were so cheap you could always throw more people at a problem," he says. "But wages are up 14% to 15% each year for the last 20 years." A software engineer who would have earned $700 a year in the late '80s now gets roughly $12,000 a year--still a huge discount compared to the U.S., but not peanuts. Despite the lure of these higher wages, India's schools can't keep up with demand. In the late '80s, Indian software companies hired about 100 graduates a year; 25 years later, they need about 200,000 every spring, an astronomical increase in demand. And yet the supply of engineering grads has merely doubled, making it harder than ever for Murthy to compete for talent.

As a short-term solution, iGate Patni is hiring grads who majored in other disciplines, including math and physics. The company is also spending more on training, which is both a necessity and a virtue. "We've developed much stronger training programs in-house," Murthy says. "Four months of training in engineering fundamentals, and then for eight months the new hires are paired with a senior person for mentoring." This commitment to ongoing education is something U.S. companies would be smart to adopt, says Vivek Wadhwa, an entrepreneur and tech-industry scholar with appointments at the University of California, Berkeley; Duke; and Harvard Law School. "These companies have perfected the art of workforce development. At Infosys, it's four months of intensive training and an additional week of training each year. At IBM in the U.S., new hires get a day and a half of orientation and they're lucky to get a week of vacation." Wadhwa argues that such training justifies India's enormous annual wage leaps, in that workers are becoming more valuable and productive each year.

Yet this kind of corporate training can only move the needle so far. A few times during our interview, Murthy repeats, "Overall, in iGate Patni, we want to re-create the McDonald's model." This means, he explains, that the company will set forth standard routines for as much of its business as possible, to provide "a consistent level of service." This McDonald's-ization of the company would allow it to spend less on training; as creative achievements are translated into checklists and routines, the high-quality, high-pay jobs of today become the high-turnover, low-wage jobs of the future. Pity the Indian software engineer!

The Center Cannot Hold

In today's job market, midlevel jobs are being eliminated, moving workers to either high- or low-end employment. (Women have made the most of this shift.) The U.S. university system does a good job of prepping people for the high end.

Or don't. This is simply the natural progress of economies, says David Autor, an MIT economist who has drawn the clearest picture anywhere of the impact of technology and globalization on labor markets. He describes the pattern as "labor-market polarization." At the bottom of the market, there's a growing number of service-sector jobs that require hands-on interaction in unpredictable environments--driving a bus, cooking food, caring for children or the elderly. These are impossible to outsource or replace with technology (at least until the robot revolution takes off). In the middle are jobs requiring routine information processing: accounting, typing, filing, approving a mortgage application or an insurance claim. These were once well-paid jobs held by relatively educated Americans; now they tend to be done by iGate Patni's employees, and in the future, says Autor, they are likely to be performed by a computer.

At the top of the market are the jobs everyone wants. And guess what? These are the jobs that many graduates of the American education system are well prepared for. These jobs require creativity, problem solving, decision making, persuasive arguing, and management skills. In this echelon, a worker's skills are unique, not interchangeable. "These jobs deal with a tremendous amount of information, but the added value of the worker is in doing the non-routine parts," says Autor. Technology and outsourcing routine tasks make these top workers even more powerful and productive, giving them even more data and tools with which to innovate.

"The U.S. system is more geared to innovation and practical application," says Murthy. "It's really good from high school onward."

So with all due respect to Bill Gates, Zuckerberg, and President Obama: Science, technology, engineering, and math are not the future. Or more precisely, they're not enough. Workers at every level benefit from an education that emphasizes creative thinking, communication, and teamwork--the very kind of excellence already offered at top American colleges. Once in the workforce, the U.S. should take a leaf from the Indians, and steadily train and update practical and technical skills. Indian workers, meanwhile, could stand to take a few lessons from the U.S. "The irony is that in India it takes engineers two to three years to recover from the damage of the education system," says Wadhwa, who believes that engineers require real-world experience and training before they can excel at complex work such as R&D. "They're used to rote memorization."

Our education system has plenty of critics; I've been one of them. But when facing the mercurial demands of today's job market, it seems there's still a profound need for the social, discursive, American liberal-arts model at its best. Which may explain why 100,000 Indians are currently studying in the U.S. One of them is Murthy's elder son, who just started his freshman year at UC Berkeley.

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A version of this article appears in the October 2011 issue of Fast Company.

via fastcompany.com

 

Small Business Drives Growth and Hope: Putting Poverty On Hold

Small businesses drive growth, even at the bottom of the pyramid.

Noodle shops around the outskirts of Iloilo City in the Philippines’ Western Visayas region do brisk business as new housing subdivisions, financed by remittances from tens of thousands of overseas contract workers, mushroom across the landscape. It’s the perfect site, says Celmar Palao, for a burger joint.

Palao, a shy, domestic worker with a talent for cooking, left her rural home outside Iloilo for a job in Singapore 12 years ago. She planned little more than earning enough to support her young daughter and aging parents. Now, after completing a two-year programme at aidha, an award-winning, Singapore-based, micro-business school, she thinks long-term.

“There are plenty of local food places in Iloilo’s outskirts,” she explains. “To start a successful business you need to do something different. Burgers are something I can make easily and sell fresh.”

With a business plan in place, a shop lined up to rent and her daughter and niece ready to work, Palao, is preparing to open her own restaurant.

Building capacity

Aidha has helped some 500 domestic workers like Palao launch their own business and provided thousands more with the financial education to take control over their lives.

“I think it’s well known that really every successful economy in the world is based on small business and that’s what aidha’s all about,” the school’s founder and director, Harvard-trained academic Sarah Mavrinac told Knowledge on the sidelines of an INSEAD panel discussion on “Growing the Private Sector” in Abu Dhabi recently. “We’re about building the small business capacity that will power the economy, not just of the family or the local community but of the country itself.”

Despite referring to itself as a micro-business school, Mavrinac says aidha strives for more. “To my mind, micro-enterprise is about putting poverty on hold, putting food on the table. Aidha is about moving up the ladder from micro-enterprise to the sustainable small-business level, where a business looks to employ others, and grow - a level that really makes a difference.”

Taking the programme to the world

Initially aimed at educating Singapore’s female, migrant domestic workers, aidha – Sanskrit for ‘that to which we aspire’ - has aspirations of its own. Launched in Singapore in 2006, it’s recently received initial approval to open in Dubai, and hopes to have the first class running there by the end of June. From Dubai, it plans to expand across the U.A.E., the Middle East and through the North African region. Opportunities are also seen in Hong Kong, China and the U.S.A., serving the Latino migrants around Los Angeles. “We have a programme now which does some tremendous work and I think it’s ready to take out to the rest of the world,” Mavrinac says.

In the U.A.E. it plans to extend its services to the massive population of male migrant workers while in the North African countries, the curriculum will have to be adjusted to suit the huge number of unemployed youth. “What makes the programme work very well in Singapore is the fact that individuals are employed and are able to save significant sums so they can invest in their own organisation and business launch with sums far greater than they could realise from a micro-enterprise loan. In North Africa, we are going to have to see how things work when we serve people who do not have a steady income. But all the research we’ve done so far suggests that this will fly.”

It all starts with savings

Saving is a strong part of the school’s curriculum. Students meet each month with their bank passbooks to show how much they have saved. Before joining aidha, Palao had been working in Singapore for eight years and saved nothing. Now she has bought a piece of land near her family village outside Iloilo, a small house on the outskirts of the city and has the capital to open her own small business.
The programme, which also offers modules in leadership, computer technology and business studies, costs students US$S350 a year. “It is a lot for them,” Mavrinac concedes. “But there is something very important about buying a service. And we need to survive. We’re a social enterprise and we want to ensure we are building a sustainable programme that means we cannot rely exclusively on donations.”

Volunteers

Aidha relies on volunteers to act as tutors and mentors, with many former students, like Palao returning to help with administrative duties.

“I owe so much to aidha,” says Palao. “When I first came to Singapore I didn’t have any dreams or think about doing anything with my money except to send it home to my family. While studying at aidha I realised I had talents. Now I’m going to open a burger cafe and one day … a bigger restaurant.” By Jane Williams via knowledge.insead.edu

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Why Engagement Isn’t Enough: How Managers Drive Results

As leaders, we often miss critical indicators that can improve the likelihood of organizational and personal success. Consider the ubiquitous employee satisfaction survey, which is usually administered once a year and, as long as the scores are respectable, crossed off the corporate must-do list. Typically, these surveys measure employee engagement levels. But as Adrian Gostick and Chester Elton explain in the excerpt below, that’s not enough. They rightly contend that employee energy and enablement are as essential to high levels of performance as engagement.

As I think back on projects that I have been associated with, it is clear that every success and failure was due not only to the level of engagement among team members but also to their energy level and the degree to which they felt enabled (or empowered) to achieve their goals. At a time when leaders everywhere are spending an inordinate amount of time identifying “A” players and getting them on the bus, it is also clear that the three Es — engagement, energy, and enablement — are the key to realizing the full potential of employees.

— Ann Rhoades

 

An excerpt from Chapter 3 of All In: How the Best Managers Create a Culture of Belief and Drive Big Results

 

On a thundery morning in Fort Lauderdale, only a few miles from where U2 played a few nights before, a crowded indoor atrium begins to take on the feel of a rock concert. Businesspeople are hanging over six floors of balconies looking down at a collection of dancers on the main floor. Then, at the urging of the lead performer, just about everyone in the building suddenly starts moving to the pulsing strains of a recording by Lady Gaga, throwing their fists in the air and shouting, “Just dance!”

When the music ends the crowd roars. The lead dancer, a middle-aged woman in a business suit, waves up at the gathering. Hundreds of people are laughing and cheering another performance by Doria Camaraza and her leadership team.

Doria who?

This mild-mannered, bespectacled woman is the senior vice president and general manager of this American Express World Service Center, located in two nondescript buildings in an industrial park in southern Florida. This is a 3,000-person call center, and the work is not easy. Customers call when they need help with a lost card or want to make an address change. Others want to dispute charges or can’t find their bill. And some are upset; perhaps they don’t qualify for a credit increase. Yet despite the often demanding atmosphere, Camaraza and her fellow senior managers have found a way to get just about all of these people to believe in what they are trying to accomplish. In fact, we might argue that she and her team are the best bunch of leaders of believers you’ve never heard of — bad dancing and all.

Here’s some proof: Around the United States, employee turnover in call centers averages about 50 percent annually. That means if you answer phones for a living, about half your coworkers will leave before another year passes. Not here. Turnover is Fort Lauderdale is in the single digits annually. Let us pause for a moment to let that sink in: Turnover is less than one-fifth the national average.

But there’s more: Productivity measures are tops in the call center industry.

Six years ago, when Camaraza took over, the call center was good. Today it’s great — helping American Express earn an unprecedented five consecutive years of J.D. Power & Associates awards for highest customer satisfaction among credit card companies. Very impressive.

But boogying in front of your employees? This is, after all, American Express — one of the world’s most prestigious business brands, and you might argue one of the most serious. Not here, says Camaraza. She calls this American Express facility a “community of caring,” and the leadership team dances every month in the atrium to get attention before the real business of this meeting, called “Tribute” — spotlighting employees who’ve gone above and beyond and those who are celebrating long-tenure service awards. As soon as the music ends, Camaraza retires to what she calls her “Oprah chairs,” two beige loungers, where she interviews a series of employees who are being spotlighted publicly for living the American Express values. via strategy-business.com

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We provide broad ranging advice covering innovation, commoditization, competitive advantage, business policy and strategy, as well as global strategy and implementation. 

 

Why Race Still Matters in the Workplace - David Rock and Dan Radecki

"Collective fear stimulates herd instinct, and tends to produce ferocity toward those who are not regarded as members of the herd."
— Bertrand Russell, Nobel laureate

In the weeks since the death of Florida teen Trayvon Martin, the national uproar at the circumstances around the event has been profound. While the facts are still emerging, it seems clear that a heightened sense of threat and fear on the part of shooter George Zimmerman played a significant role in the tragedy. All this more than 60 years after the lynching of 14 yr old Emmitt Till led to the growth of the American civil rights movement. Can the workings of the human brain help us understand and perhaps thwart this conundrum?

A good place to start may be the sensitive neural circuitry dedicated to detecting and reacting to threat. One of these regions, the orbital frontal cortex (OFC), is responsible for integrating information from various brain areas, including visceral emotions, in an attempt to facilitate decision making. Current neuroimaging evidence suggests that the OFC is involved in analyzing our available options to a stimulus, and communicates its decisions by creating emotions that are supposed to help you make decisions.

Through the course of evolution, it's probably the case that these error detection centers have developed to become acutely sensitive to possible threats in the environment....so much so that if in doubt, our brain will err on the side of caution. After all, it would have been safer for our ancestors to assume that the rustling in the bushes was a sabre-toothed tiger and react accordingly, as opposed to assuming it was a gust of wind, only to become a midday snack. The problem is that our society and lifestyles have evolved at a much faster pace than our brain. We still have that old evolutionary bias generating an intense fear of uncertainty, and react in a fight/flight response. While this may still be adaptive for us as a species, the strength of that response isn't as critical in today's society (sans the sabre-toothed tiger).

A study by Xu et al at MIT demonstrated the importance of perceived group affiliation on how we respond to others. Subjects had their brain imaged in an fMRI machine while viewing photos of people receiving either a painful stimuli (a pinprick on their face) or a neutral stimuli (cotton swap on the face). A consistent area of the brain, the anterior cingulate cortex (ACC), was activated when subjects viewed another person in pain, which was not surprising, since this area is thought to contribute to feelings of empathy.

However, the interesting finding in this study was that activation of the ACC was significantly decreased if the person in pain was a different race than the subject. In essence, they demonstrated evidence of an empathic bias toward racial in-group members, at the neuronal level. Now these weren't radical, racist subjects in the fMRI machine; these subjects were educated, seemingly normal college students of various backgrounds. So if I perceive you as similar to me simply based on race, then my brain will react with more empathy or compassion than if you were of a different race, and this occurs without our even realizing it.

This bias may increase our error detection circuitry so that we react quicker and stronger to a possible threat, in this case a member of another racial group. Could this have contributed to the events that unfolded in the Florida tragedy, where error detection and threat responses were undoubtedly on high alert in George Zimmerman?

Race matters more than just in regard to empathy and threats. A number of other studies have come out in the last few years highlighting how differently we process information coming from someone we perceive as simply different from us, compared to someone we perceive as similar. A study out of UCLA in March illustrated this nicely by demonstrating that the brain processes empathy towards friends who are experiencing social pain differently compared to strangers enduring the same social pain. In short, we process information from out-group members scantily, and make a lot of errors as a result. Information from in-group members is processed using totally different and more robust circuits. This all happens beneath conscious awareness.

These findings have implications beyond the courtroom. This is something that leaders and managers in any diverse organization need to understand. If you want people from different cultures to collaborate at their best, creating a common "in group" is critical. This happens through focusing on shared experiences or shared goals, which help offset our default, non-conscious "foe" response to those a little different from us.

Collaboration is on the rise in organizations right at the time that we're becoming more diverse, often involving teams drawn from various countries, who may never get to meet. As the pace of change increases, strong emotions can increase for many stakeholders. Put all this together and the potential for unhelpful knee-jerk reactions is all too high. While hopefully we won't have a corporate Martin case, many small injustices are no doubt served every day that needn't happen.

The bad news is that race does matter, no matter how civilized we want to think we are. The good news is that the effect of race can be mitigated with increased awareness. Right now many experiments are being done to test out exactly how to mitigate this effect, a number of which will be presented at this fall's NeuroLeadership summit in NYC. via blogs.hbr.org

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The secret to competitiveness—competition

A study by the McKinsey Global Institute¹ recently examined labor productivity in Germany, Japan, and the United States in nine representative manufacturing industries: autos, auto parts, metalworking, steel, computers, consumer electronics, processed food, beer, and soap and detergent. Adjusted both for differences in product quality and for fluctuations in the business cycle, the results are illuminating—not only for the facts they debunk or establish, but for the explanations that lie beneath them. The inescapable conclusion: global competitiveness is a bit like tennis—you improve by playing against people who are better than you.

Several key findings emerged from our research:

• Japan leads in five industries: autos, auto parts, consumer electronics, metalworking, and steel.
• The US leads in four—computers, processed food, soap and detergent, and beer—and has closed much of the gap in autos.
• Remarkably, Germany leads in none and is a distant third in six—including autos and auto parts, where it is often cited as exemplary.
• Because more Japanese are employed in producing food than in steel, autos, auto parts, and metalworking combined, the weighted average of Japanese worker productivity across these nine case studies is actually lower than that in the US and only a little higher than Germany’s. With US worker productivity used as an index of 100, Japan measured 83; Germany, 79.

Exhibit 1 presents an overview of these comparisons. Additional detail is provided in the nine individual industry summaries (see pp. 32–40).

Large gaps

Some of the individual industry productivity gaps are surprisingly large. Japan still leads the world in steel productivity, by almost 50 percent. Productivity in the US food industry tops Japan’s by nearly 70 percent. And the German beer industry, even adjusted for differences in quality, trails that of the United States by more than 50 percent.

Such disparities are worth noting. With technological knowhow and capital freely mobile between Germany, Japan, and the US, and with their workers enjoying similar levels of educational attainment and health, it would seem reasonable to expect that by 1990—45 years after the end of World War II—productivity in industries in these three countries would be close. To understand why that is not the case—and to discover whether the large productivity gaps offer any opportunities for the laggards to catch up—we investigated the causes of the productivity differences within each of our nine industries.

Conventional explanations, such as different manufacturing technologies and economies of scale, do play some role in explaining the gaps in metalworking, steel, food processing, and beer. But elsewhere these factors do not go far in accounting for the gaps. Nor can the differences be attributed to the education and skill of front-line workers, which are more or less equal across the three market economies. Nor does the cost of raw materials—which varies little from one country to another—have much effect. High productivity, it seems, flows chiefly from the ability of managers to invent new and ever more efficient ways of making products and from engineers’ proficiency in designing products that are easy to make (see Exhibit 2).

Whether in the food industry in the US or the auto industry in Japan, managers and engineers do not arrive at these innovations because they are smarter, work harder, or have a better education than their peers. Rather, they do so because they must. They are subjected to intense global competition, where constantly pushing the boundaries of productivity is the price of entry—and of survival.

The converse is equally true. Most of the lower-productivity industries have been protected by governments from the rigors of global competition. The nine industries in the survey speak with one voice: global competition breeds high productivity; protection breeds stagnation (see Exhibit 3 and Exhibit 4).

The degree of "global exposure" depends on the laws and regulations governing trade and investment, and on the structure of the market for corporate control. Of the three countries, the US was the most exposed to trade, transplants (foreign direct investment), and foreign mergers and acquisitions. Although the Japanese heavy manufacturing and consumer electronics industries are not significantly exposed at home through trade or the capital markets, they are substantially exposed in other markets through trade and foreign direct investment.

The low-productivity Japanese manufacturing industries, by contrast, have virtually no exposure to global competition. The same is true of Germany, for whose manufacturers competition is largely confined to Europe. The European Community’s voluntary restraint agreements with Japan provide substantial protection for the automotive and metalworking industries, for example. In addition, procedural barriers make transplants difficult to establish in traditional industries in Germany. And finally, the shareholdings and voting-right proxies of the main banks in Germany result in a capital market that is virtually closed to foreign mergers and acquisitions. As a result, German manufacturers primarily compete regionally, not globally. The pressure to innovate is low.

Innovations

Foreign direct investments, not trade, play the pivotal role in moving innovations around the world and boosting productivity

What of the innovations themselves? The mechanism for transferring productivity improvements from company to company and nation to nation is significant. Foreign direct investments—transplant factories—play the pivotal role in moving innovations around the world. In fact, foreign direct investment has been far more powerful than trade as a force for improving productivity, especially in Germany and the US.

Transplants from leading-edge producers have several important influences. They:

• directly contribute to higher levels of domestic productivity;
• prove that leading-edge productivity can be achieved with local labor and many local inputs;
• put competitive pressure on other domestic producers; and
• transfer knowledge of best practices to other domestic producers through the natural movement of personnel.

Exhibit 5 compares the impact on productivity of transplants and trade. Another characteristic of foreign direct investment is that it has provoked less political opposition than trade because it creates jobs instead of destroying them. This makes it likely to grow faster than trade in years to come.

Japanese automobile assembly transplants in the US have been important in stimulating US producers, especially Ford, to improve their productivity. Computer transplants from the US have had a similar impact in parts of Europe. With their substantial production presence established right from the beginnings of the industry and building up to a production share as high as 56 percent in 1990, they are largely responsible for the fact that Germany’s productivity in computers is nearly equal to that of the US and Japan. Furthermore, multinational soap and detergent companies, including Colgate-Palmolive, Procter & Gamble, and Unilever, have substantial production facilities in almost all markets, rendering national boundaries virtually irrelevant.

Competitive threat

Big differences in productivity in international industries mean big opportunities for those companies that can achieve high productivity levels

While productivity gaps point to real opportunities for trailing industries to learn and adopt best practices, they also point to a profound competitive challenge. Big differences in productivity in international industries mean big opportunities for those companies that can achieve high productivity levels. Using foreign direct investment, such leading-edge global producers could not only take huge market share and profits from local industries, but actually raise standards of living in the host countries. Their higher productivity eventually translates into higher wages, better jobs, and increased job security for workers in the transplant factories and the surrounding areas.

Government protection, and even local consumer loyalty, are not durable foundations for long-term economic health or the survival of unproductive regional companies. Eventually the battle will be won by the most productive.

About the Authors

Bill Lewis is Director of the McKinsey Global Institute and Hans Gersbach, Tom Jansen, and Koji Sakate are consultants in the Washington, DC office. This is an edited version of an article that first appeared in the Wall Street Journal on October 22, 1993.

via mckinseyquarterly.com

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If you're not irate in the first 10 minutes of reading, if I don’t provoke you to revolutionize your management and leadership from think to execute, if you aren’t teetering on the brink of reaching for the Maalox, if you don’t innovate like a banshee, then I have failed you. 

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