HBR’s 10 Must Reads 2018

HBR.pngA pleasure to read as usual!  The collection typically includes articles, which I do not find attractive based on the topic or an industry and would not read otherwise.  However, these are often the articles with the most insight and the most unexpected perspective of the business in general.

A couple of most unexpected discoveries are below.

Customer Loyalty is Overrated

The problem: Product innovations often flame out on launch, despite tremendous efforts to make them attractive, relevant, and up-to-date.

Why It Happens: Customers don’t want to spend the mental energy needed to choose between products.

The Solution: To strengthen customers’ habits, innovations should represent a progression of the brand rather than a break with the past.

…you should find ways to make products fit in people’s environment to encourage use.  when P&G introducced Febreze, consumers liked the way it worked but did not use it often.  Part of the problem, it turned out, was that the container was shaped like a glass-cleaner bottle, signaling that it should be kept under the sink.  The bottle was ultimately redesigned to be kept on a counter or in a more visible cabinet, and use after purchase increased.

Tide: The new products all preserved the look of Tide’s traditional pasckaging – the brilliant orange and the bull’s-eye logo.  The few times in Tide history when that look was altered – such as with blue packaging for the Tide Coldwater launch – the effect on consumers was significanlty negative, and the change was quickly rerersed.

Visualizations That Really Work

Context: Knowledge workers need greater visual literacy than they used to, because so much data – and so many ideas – a not presented graphically.  But few of us have been taught data-visualization skills.

Tools are fine…   Inexpensive tools allow anyone to perform simple tasks such as importing spreadsheet data into a bar chart.  But that means it’s easy to create terrible charts.  Visualization can be so much more: it’s an agile, powerful way to explore ideas and communicate information.

…. But strategy is key:  Don’t jump straight to execution.  Instead, first think about what you’re representing – ideas or data?  Then consider your purpose: Do you want to inform, persuade, or explore?  The answers will suggest what tools and resources you need.

The Performance Management Evolution

The Problem: By emphasizing individual accountability for past results, traditional appraisals give short shrift to improving current performance and developing talent for the future.  That can hinder long-term competitiveness.

The solution: To better support employee development, many organizations are dropping or radically changing their annual review system in favor of giving people less formal, more frequent feedback that follows the natural cycle of work.

The Outlook: This shift isn’t just a fad – real business needs are driving it.  Support at the top is critical, though.  Some firms that have struggled to go entirely without ratings are trying a “third way”: assigning multiple ratings several times a year to encourage employees’ growth.

At GE a new business strategy based on innovation was the biggest reason the company recently began eliminating individual ratings and annual reviews.  …Supervisors will have an end-of-year summary discussion with subordinates, but the goal is to push frequent conversations with employees (GE calls them “touchpoings”) and keep revisiting two basic questions: What am I doing that I should keep doing?  And What am I doing that I should change?  

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Book – Skin in the Game

book.pngThis is one of the books, which helps to think about life in general, history, and the future of the society and, at the same time, explains a few simple practical concepts.

The book is fantastic, as the other books of Nassim Nicholas Taleb I was fortunate to enjoy.

A couple of concepts in the book, I think, particularly useful and not always noted in reviews: minority rule and companies person.

Minority rule explains an imposition of a certain preference or taste of a minority to a larger population.  If some of the consumers prefer “non-GMO” food, and the cost of “non-GMO” food is not prohibitively high, producers are more likely to assure that all their products meet the requirement.  As people who do not have a strong preference would buy “non-GMO” food, but people with the preference for “non-GMO” would not buy products without a specific label, the minority inadvertently imposes its preferences to the larger population.

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In promoting genetically modified food via all manner of lobbying, purchasing of congressmen, and overt scientific propaganda (with smear campaigns against such persons as yours truly), the big agricultural companies foolishly believed that all they needed was to win the majority. No, you idiots. As I said, your snap “scientific” judgment is too naive in these type of decisions. Consider that transgenic-GMO eaters will eat nonGMOs, but not the reverse. So it may suffice to have a tiny, say no more than five percent of evenly spatially distributed population of non-genetically modified eaters for the entire population to have to eat non-GMO food. How? Say you have a corporate event, a wedding, or a lavish party to celebrate the fall of the Saudi Arabian regime, the bankruptcy of the rent-seeking investment bank Goldman Sachs, or the public reviling of Ray Kotcher, chairman of Ketchum the public relation firm that smears scientists and scientific whistleblowers on behalf of big corporations. Do you need to send a questionnaire asking people if they eat or don’t eat transgenic GMOs and reserve special meals accordingly? No. You just select everything non-GMO, provided the price difference is not consequential. And the price difference appears to be small enough to be negligible as (perishable) food costs in America are largely, about up to eighty or ninety percent, determined by distribution and storage, not the cost at the agricultural level. And as organic food (and designations such as “natural”) is in higher demand, from the minority rule, distribution costs decrease and the minority rule ends up accelerating in its effect.

Another interesting concept is a “companies person.”

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A company man is someone who feels that he has something huge to lose if he doesn’t behave as a company man –that is, he has skin in the game

If the company man is, sort of, gone, he has been replaced by the companies person, thanks to both an expansion of the gender and a generalization of the function. For the person is no longer owned by a company but by something worse: the idea that he needs to be employable.

A companies person is someone who feels that he has something huge to lose if he loses his employability –that is, he or she have skin in the game

The employable person is embedded in an industry, with fear of upsetting not just their employer, but other potential employers.

As I thought this approach was “smarter” than a “company man,” who often could not find another job after a layoff, the true picture is quite different: we, companies people, have more “masters” to please.  But, as marketers, we can appeal to this need and create “products” to reduce this fear…  🙂

Book – Great At Work

great-at-work-book.pngThe book is interesting not only from the individual perspective but also from an organizational one.  If an individual is more likely to be effective using one approach rather than the other, an organization would be wise to encourage the right approach through its structure and culture.

The research behind the recommendations suggests that many of our typical assumptions are wrong.  Though some of these inconsistencies have been highlighted before (in my observation), some are new and eye-opening.

Very often, if something is not quite “right” at work, our typical answer is to invest more resources – time, from the individual perspective.  The research suggests it is not the answer.  Based on the analysis of successful employees, the author identified seven principles of “working smarter,” which would be helpful for both employees and organizations.

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1. Do less, than obsess

A focus in general has been encouraged by the industry for a long time.  Now, we have data.  The interesting part is that the focus itself is just part of the answer – investing enough energy into the few selected priorities is needed to succeed.

Interesting: the myth of long hours – research also shows that work beyond 50 hours a week does not make economic sense – productivity decreases.  One more data point in the long line of calls for considering human nature (as the fact that multitasking is not theoretically possible 🙂 ).  The book was encouraging overly enthusiastic employees to cut their work to 50 hours a week…  we would be better of (and more productive) if it would be closer to 40 😉

This approach also helps with managing work-life balance and improves overall well-being.

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2.  Redesign your work

What can an individual do to bring more value to the organization in his current role?  A person can identify and emphasize more valuable activities and automate or minimize less valuable ones.  The individual can also tailor the role to his strengths and interests to feel happier at work, what will encourage engagement.

3. Don’t just learn, loop

My guess, this principle can apply to any form of focussed learning suitable for a position.  Following the industry news or learning new technical aspects of the job could be very helpful.  However, the author concentrates on the behaviors rather than technical skills.

To start improving a skill, effective learners in the workplace break it into manageable chunks, what I call micro-behaviors. A micro-behavior is a small, concrete action you take on a daily basis to improve a skill.  The action shouldn’t take more than 15 minutes to perform and review, and it should have a clear impact on skill development.

An interesting example was the journey of a new manager of the food service in a hospital.  The manager worked with a coach to learn how to encourage her team to bring up new ideas.  Though first attempts were not as productive as desired, in time, the manager was able to encourage her team to bring up dozens of suggestions and make a significant impact to the business by implementing many of them.

4. Passion and purpose

The author is one of few brave and confident voices who suggest not to “follow your passion” blindly, which can lead to financial ruins (excellent examples in the book!), but to find a passion in a current or adjacent area of work.

A great example is a story of a sales executive, tired from his role in a large company, but not quite willing to take a risk of leaving a respected and well-compensated position.  After a year or reflection, the executive proposed to take his company in a new market.  This move created a “startup” within an established business and was highly beneficial both for the employee and the organization.

Interesting, this approach has a negative effect on work-life balance, as the person is willing (often happily) to spend more energy on work projects and continues thinking about them during his personal time.

5. Forceful champions

Top performers master working with others in three discrete areas: advocacy, teamwork, and collaboration.

Finding supporters of your ideas within the organization is very helpful.

6. Fight and unite

This recommendation might be more useful on an organizational level rather than an individual one.  However, it is possible to implement in a team setting.

The meetings should allow and encourage “fighting” over the topic – lively debate with controversial suggestions and immediate criticism of proposed approaches.  This type of discussion encourages innovative solutions to appear and evolve through the discussion.  However, when the decision is made, the entire team should unite behind it and implement agreed-upon solution without “re-negotiation” attempts.

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7. The two sins of collaboration

This principle was the most surprising for me.  Th author clearly showed that the collaboration might not be always effective.  In some cases, it may not increase the success of an effort but just increase time.  In other cases, the collaborative project may not have enough of “unifying goal” and resources to be successful and doomed to fail.  The author suggests selecting carefully when to get involved in collaborative projects and when do not.

An interesting example: a firm drastically encouraged collaboration.  Some teams benefited (based on the number of successful deals) and some did not.  The reason was unexpected: less experienced teams benefited from a more experienced advice, though experienced teams did not, and just wasted time on soliciting less knowledgeable opinions.

This is an interesting topic: collaboration might be beneficial for company’s less experienced members, but not as much for more experienced ones.  From the perspective of the individuals who would less likely benefit from the effort – the participation in a collaborative project might encroach on “do less, then obsess” principle. 🙂   How to encourage the right type of collaboration on the organizational level?  We will probably see an interesting debate in the industry for years to come 🙂

Book – The Startup Way

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I enjoyed the previous Eric Ries book, Lean Startup (listened to it at least twice), though I waited a couple of years to start.  The book was recommended a few times based on my reading interests, but I did not think it was relevant to me.  At that time I typically worked for large sleepy companies.  I thought my “skunk works” navigation of political and operational networks within a large organization was dramatically different from a startup approach.  “Startup” concept felt frightening.  When I finally picked up the book, it felt very relevant and had a following within slowly moving enterprises on high levels.  Though…  nothing seemed to happen.

The Startup Way is the inspiration (and an instruction) to everybody on the inside of an average enterprise.  This volume explains how to take the ideas of Lean Startup and make them work within a large company.   The approach makes sense even it the company has been organized in the most inhospitable way for anybody with a slightest entrepreneurial thought.

But – times are changing, and changing fast.  Companies need to innovate their way to a continuous existence and find a reliable methodology to do it consistently.

I guess the most challenging task in a multi-billion established business, sometimes, is to actually articulate (or understand?) basic concepts from these books.  You might hear an MVP term, while people who discuss their “MVP” might have an idea of what it means (though rarely read the book), and an entire project team happily describes a “Phase 1” of a defined and impossible to change multi-million project as an “MVP.”

The Startup Way has many interesting examples showing how internal teams avoided similar misunderstanding.

Visualization

One of the critical approaches is metered funding.  The idea should not receive an additional funding unless it has not proven itself in customer tests.

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A concise summary of the book is available at Your Exec.  This resource also has interesting examples of PPT templates.

Interesting book!

Book – Team of Teams

team.pngThe book is an excellent explanation of changes in our environment and why organizations will be more successful with a new approach to management.

The most interesting point is the parallel between business and military organizations.  The current change is not limited to a specific industry or military branch; it is a societal change every organization will face.  We have to choose between efficiency and adaptability.  Adaptability we need to succeed in our complex environment reduces efficiency, what is difficult to accept.

“High-level success depends on low-level inefficiency.”

Silo-based organizations with internal competition have been successful in the past.  However, as our environment shifted to the high level of complexity (and high level of unpredictability), silos-based efficiency is insufficient.  This type of organizations have limited access to information and internal resources to solve problems spanning across different work groups.

Example: GMs separate ignition and airbag teams could not solve an ignition issue affecting airbags for several years.  Nobody in the organization had access to all needed information and incentive to take any actions interfering with the organizational objective of cost reduction.

To become more effective (at the expense of efficiency), the organization need to encourage the free flow of information and introduce “system thinking” across levels and departments.   “A person can not understand a part of the system without an at least rudimentary understanding of the whole.”

The solution is to share the information and empower people on all levels to make decisions based on this information.  In complex and unpredictable environments leadership role changes from “chess” to “gardening.” Instead of attempting to orchestrate and control every organizational move, the leader needs to concentrate on the high-level picture and provide an environment for fast decision making across the organization in the context or each situation.

However, information without empowerment would be frustrating, and empowerment without information would not generate success – both components need to be present in the organization to generate results.

To prevent natural mistrust beyond members of an immediate team, a military organization started to “embed” representatives of other functions into the team’s environment.  Team members learned to trust a person representing different function and become more open to cooperation with the same function in the future.  This approach created a “team of teams” ready to work together on overarching organizational goals.

Book – The Ultimate Question 2.0

question.PNGI thought I knew what NPS was.  A few years ago I worked for a company, which had a survey with one NPS question on its website.  Other companies discussed NPS, and I also read an extensive article criticizing the approach for generating the score, but not explaining the “why” behind it.  In the reality, I had no idea what NPS was, how it should be used, and why it makes business sense.  Most likely, I was not alone 🙂

The general calculation of NPS is simple to understand and it is a well-known concept.

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The rest of the book became a wonderful discovery for me.

Interestingly, the specific question was selected based on rigorous research, and it was not the question researchers themselves expected to “win.”  This was the question, which correlated the most with business success of the company.

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“In certain business-to-business settings, a question such as “How likely is it that you will continue to purchase products or services from Company X?” or “How likely is it that you would recommend that we do more of our business with Company X?” may work better.”

Calculating NPS (% of promoters – % of detractors) rather than just concentrating on the % of promoters “… worth the trouble, because it ensures that a company will pay attention to both groups and because NPS correlates with growth rates more closely than does the number of promoters alone.” 

The question generating the score should be “called penultimate question since it always needs to be followed up by one additional question: why?”

Companies with higher scores enjoy clear business benefits compared to their counterparts in the same market.  Interesting: average scores in different markets can vary widely; it is important for the company to become a loyalty leader in its particular industry and geographical location rather than reach a particular score.

Multinational businesses with multiple product lines won’t be able to compare their absolute scores across the company.  “To manage their business portfolios, these companies allocate resources toward growth opportunities in business units that enjoy NPS leadership [in their markets], and then to unit managers who develop compelling business cases that should enable them to drive NPS past the current leaders [in their markets].”

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Concepts and points from the book:

  • “NPS merely measures the quality of a company’s relationships with its current customers, and high-quality relationships are a necessary but not a sufficient condition for profitable growth.”
  • Does it make sense to worry about NPS in regulated monopoly markets?  “…No monopoly lasts forever.  New technologies emerge.  Regulations change.  Building good customer relationships prepares a company for the possibility of increased competition.  What’s more, superior NPS boosts a company’s growth potential by enabling it to expand into adjacent service areas.
  • An inability of the accounting system to distinguish between “good profits” based on the creation of value for customers and “bad profits” can be overcome by NPS.  “Did that $10 million in incremental profits come from new hidden surcharges, or did it come from loyal customers’ repeat purchases?”
  • Should companies measure NPS in all customer segments and categories?  This question can be addressed by “…two distinct processes that are best managed separately.  Companies that must serve a wide variety of customers in addition to their targeted core – retailers, banks, airlines, and so on – need to minimize detractors among noncore customers, since these customers’ negative word of mouth is just as destructive as anybody’s.  But investing to delight customers other than those in the core may yield little economic return.”
  • NPS-1.pngOverall: “The more metrics you track, the less relevant each one becomes.  Each manager will choose to focus on the number that makes his decision look good.”
  • Additional potential question: “What is the most important improvement that would make you more likely to recommend us?”
  • Product management team at Logitech is expected to project the release date, the retail price, and the target NPS for every new product they propose.
  • TurboTax ads another question based on the initial NPS answer.  Detractors are asked for the reasons for their score, passives are asked what would take for them to rate TurboTax a ten, promoters are asked what, specifically, they would tell someone to get them to try TurboTax.  Promoters responses could be incorporated into future marketing messages. “One final benefit of asking promoters to express what they would tell a friend is that once they articulate the answer, they are more likely to relay it to a friend just because it’s on the tip of their tongue and the top of their mind.”
  • The amount of work, planning, and follow-up required to achieve the full benefits of NPS came as a surprise to many of the companies.”
  • The authors encourage companies implementing NPS to be careful about linking the score to compensation.
    • It creates the focus on the score itself, rather than an improvement of customer satisfaction
    • It creates pressure on the team responsible for the measurement process
    • It encourages gaming and manipulation
  • A lesson from companies who implemented NPS: “I wish we had known to budget more support from our IT department up front.”

Another interesting aspect of Net Promoter System is a measurement of employee advocacy and the emphasis on employee satisfaction as a starting point for the creation of happy customers.

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  • The question: “On a scale of zero to ten, how likely is it you would recommend this company as a place to work?”
  • “With anonymous employee surveys, it makes sense to gather a little more information about possible root causes on the survey itself.”
  • “Apple Retail began its Net Promoter for People process using quarterly surveys.  But it found that store teams didn’t have sufficient time to diagnose root causes, implement solutions, and achieve measurable improvements before the subsequent survey.  So Apple shifter to a four-month cycle.”

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Book – Experiences: The 7th Era of Marketing

experiences.pngExcellent book!  The authors suggest a somewhat different view on content marketing – an experience-based approach.  A concentration on the experience itself as the “product” is the 7th era of marketing.  The content marketing in this era should become an additional experience for the customer, independent from the product or service the company provides.

As experiences, in general, become more and more important for new generations, entrepreneurs take notice.  An interesting example of a pure “experiences” business: https://www.ifonly.com/

The business “sells” experiences and generates donations to different causes at the same time.  The business is a typical platform, which connects “experience producers” with “experience consumers” and does not own any “experiences inventory” itself.

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The future: share of voice and share of wallet will change to the “share of experience.”

Brands can pay for rising above the noise, but they can not pay for showing experiential value for the customer – this value needs to be carefully designed.

Instead of four Ps of marketing, the authors suggest a new approach: SAVE

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  • There is no correlation between a number of interactions a brand has with the customer and depth of relationships.
  • IT systems: consider them systems of engagement rather than systems of record. If a business can invest into systems of engagement, IT becomes a point of differentiation in the marketplace.
  • Practical approach to creation of experiences in the organization; ask for forgiveness rather than permission 😉
    • Content marketing center of excellence success: “it was important for us to position our content center of excellence and our team as nearly an extension of processes we already had in place”
    • “…they did not go to management to organize the group – they created a function and went to management to formalize it.”
    • Skunks Works issue – the team might fight for their project’s survival, which might be difficult to incorporate the project into the overall business.
  • Important – evaluate experiences instead of teams; encourage cooperation in the organization and inclusiveness.

How to allocate investment into content? 

  • content.PNGExpensive – low-risk content; inexpensive – high-risk content
  • Coca-Cola uses 70-20-10 approach:
    • 70% of efforts are allocated to the content, which has to be produced
    • 20% – slightly “out of the box”
    • 10% – high-risk creative content (this part is not as expensive as marketers think, but it takes more creative time to come up with the content)

Story mapping:

  • why.PNGWhy (content mission) – value we deliver to the audience; who will receive the value and why would they care; how this initiative aligns with the larger story of the brand; how this experience will be different from what is available in the marketplace of ideas
  • What (what does the success look like and when is it going to be achieved) – differentiate the success of the initiative and the mission of the business – how the initiative will integrate with other parts of the business
  • How (proposed map) – how do we approach the initiative over time

Interesting CMO requirement to achieve alignment: when pitching an idea, the team is required to explain how the initiative will be cross-functional.  This requirement assures cross-functional buy-in in advance.

Four layers of customer experience focus:

  1. Awareness and introduction – lightweight tech, almost disposable – marketers will need to move fast and CIO should care less about this layer. (Flexible, portable, and disposable).
  2. Engagement and relationships  – as visitors become leads and opportunities, more data is needed to provide delightful experiences down the road.  Unified customer experience management solution is critical. (Engagement management – needs to interface with everything above and below)
  3. Intelligence and insight – after leads become customers, it is important to understand how needs of customers evolve.  The ultimate goal is to create brand evangelists.  Integration is the key.  CIO must work with CMO to understand which data is needed.  (Core data management – closely adheres to standards).
  4. Shared values and exceeded expectations

New marketing technology is “built to change.” 

Analytics: marketers often use metrics unrelated to business objectives.

  • More traffic – great!  …even if it happened because a negative comment went viral?
  • More time on site – great!  …even if a prospect cannot find the next step and conversions are down?
  • More likes on Facebook – great!  …even if liking the page is needed before customers can post comments how much they hate the company?

Analytics layers:

  • Primary indicators, goals (Example: increase MQLs by 10% in 6 months with only 5% budget increase – includes Objective > Timeframe > Constraint)
  • Secondary indicators – KPIs – progress toward primary goal – what helps us to improve the possibility of achieving goals (Example: unqualified leads, cost per lead, downloads, seminar attendees, etc.)
  • User indicators – data points we collect on daily basis, which help us to improve secondary indicators (Twitter followers, page views, etc.)

This approach does not require reporting secondary indicators; this can allow teams to concentrate on reaching goals through initiatives, which might reduce site traffic, for example.

An important objective is to de-silo the measurement so different groups do not compete with one another for audience attention.  Example: an insurance company team launched a blog and asked a website team to place a prominent button on the home page of the company site.  Website team said “no” as blog traffic won’t be counted as site traffic, and web team was measured on site activity.  The blog team asked social media team to promote the blog; the social team also said “no.”  Social media team was measured on engagement, and cute pictures of cats were receiving over 1,000 likes, while insurance articles could generate less than 10.

  • A “channel” team should be responsible for an “audience development” instead of a channel.
  • Content-driven experiences are not measured separately – they are part of marketing strategy.
  • You don’t measure channel – you don’t measure how many leads telephone produced…  it is just a part of the whole program called “sales.”  Content is the part of the entire program.  But – you should examine content contribution.”
  • “The objective of a blog can be the traffic to website – everything does not have to produce sales directly.”

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3 skill sets are common in companies succeeding in content marketing:

  • orchestrating events, not guiding journeys
  • meaning-driven, not data-driven
  • organizing for agility, not speed