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A New Model?

The authors and readers of The Think Bucket appreciate new ideas and unique perspectives. The recent blog post on HBR authored by former Merck CEO Raymond Gilmartin is exactly the type of thinking that we love.

The premise of Gilmartin’s article is to question the role of the modern CEO , which he notes is based on a shareholder-centric, short-term model. I have long thought that this model is too simplistic and often misleading, but this specific post offers a new set of guiding principles for CEOs that I find interesting.

Perhaps the most interesting idea contained in the post is the concept of “Stakeholder Capitalism”. For an overview of what that term means, see the following abstract from a Wharton white paper.

“We consider the advantages and disadvantages of stakeholder-oriented firms that are concerned with employees and suppliers in addition to shareholders compared to pure shareholder-oriented firms. Societies with stakeholder-oriented firms have higher prices,lower output, and can have greater firm value than shareholder-oriented societies.”

 

Please read the post and let us know what you think. Does this represent a realistic vision? Or does it reflect an idealistic perspective that will be nearly impossible to implement?

 

Author:  Jeff Jones

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RAH! RAH! RAH! Gooooo Company!

On this team, we fight for that inch.  On this team, we tear ourselves, and everyone around us to pieces for that inch.  We CLAW with our finger nails for that inch.  Cause we know when we add up all those inches that’s going to make the ****ing difference between WINNING and LOSING between LIVING and DYING.”   – Al Pacino’s Inch By Inch speech from “Any Given Sunday”

Pacino’s capstone chalk-talk as coach of the fictitious Sharks, among many other sports movies and real life sports stories, often gets some motivational play at sales and staff meetings in corporate America.  The thought of rallying the troops to achieve greatness resonates with sports fans in managerial capacities.  As well, especially in our Internet info-tainment world, we look to athletes, coaches, GMs, coordinators, specialists, etc., as we develop our business strategies.  Who wouldn’t want to develop a game plan, have employees execute it to perfection, take advantage of a competitor’s weaknesses and know at the end of the day “who won?” just by looking at the scoreboard?

Unfortunately, the parallels between the real world of business run closer to “The Office” than to what we see on our TVs on any given Sunday.  As such, the sports mentality can be a very counterproductive approach to solving business challenges, no matter how appealing they appear on the surface.  I’ve been much more likely to have to drive results from team of people who’s greatest daily concerns revolve around what time they need to pick up their kids or what’s for lunch.  Compared to a multi-millionaire, soon to be free-agent, partaking in an often violent job choice, the similarities aren’t particularly strong.

Developing meaningful and effective business plans has as much to do with knowing your environment and your people’s environment as it does with developing and rallying around strong ideas.  Time horizons, employee motivators, company policies and politics, and other highly variable considerations often make for difficult planning.  Having a high degree of “people acumen,” then, is key. And being a hands-on business leaders goes beyond looking to others to execute what we plan. When such separation from those executing our game plans occurs, as it might in a sporting contest, the risks in executing a plan increase.

The parts of the sports world that do translate to success that could be modeled in the business world aren’t glorified enough to capture our attention.  But the best of the best, whether athlete or coach, are the ones who invest themselves prior to the performance.  Preparation, repetition, research.  Undoubtedly, some of the best coaches and GMs take their cues from highly successful business people instead of the other way around.

 

Author:  Darren Hunter

Faith

I have been thinking a lot lately about faith.  Not faith specifically as it manifests itself in religious belief.  But faith more generally as it relates to confidence or trust in a person or thing.  The wild gyrations of the stock market over the last week are evidence that faith in both U.S. and global economies is in short supply.  The inability of U.S. political leaders to find a way to work together to address our current debt problems, accompanied by non-stop caustic rhetoric, is a clear indication that there is little faith across party lines.  And do I even need to mention U.S. citizens’ level of faith in Congress given their current 14% approval rating, the lowest rating ever for Congress in a CNN poll?

Yet despite – or maybe because of – these glaring examples of the absence of faith today, I find myself optimistic about the role renewed faith can play in moving our country forward.  In many ways the United States is no different than the companies for which we all work.  Our connection to a larger purpose and willingness to be active participants in change, even when it may cause us some short-term pain, is positively correlated with the faith we have in the individuals around us.  Do we trust that they have our best interests in mind?  Are we confident that they are willing to place the collective good ahead of their personal desires?  Do we believe that their foundational morals and values are aligned with our own, even though we may disagree on specific issues or strategies?  Think back on the most successful teams, organizations and companies throughout your life.  Could you answer yes to these three questions?  Did you have faith in those around you?

As leaders in our varied organizations, and hopefully examples for our electorate, here are a few ideas on how each of us can increase the level of faith within our own spheres of influence:

  • Look someone in the eyes today.  For all the positives associated with today’s many different communication channels, one major drawback is that we are not forced to be physically present with others when building relationships.  Standing in front of someone and looking them directly in the eyes has a profound positive impact on the depth of your relationship with that other person.  Creating more opportunities to get out from behind technology and interact in person with others will have a significant impact on the foundation required to build a trusting relationship.
  • Do something to build a shared community today.  During the debt ceiling showdown I heard an interesting hypothesis related to why our members of Congress cannot seem to find a way to work together.  It was quite simple, actually.  They go back to their home districts on the weekends.  The conjecture was that given members of Congress do not make Washington their home during their term – including moving their families to the same city, becoming part of the same local churches and synagogues, having their kids attend the same schools – they are not forced to become part of a shared community with their colleagues from across the aisle.  Without connection to a shared community, it’s extremely easy to focus on that which divides us rather than that which unites us.  Everything you do to continuously enrich the shared community within your organization, regardless of how small or inconsequential the individual acts may seem, will serve to create an environment where faith in others can flourish.
  • Speak only in truths today.  For a 24-hour period, make a commitment to only deal in confirmed truths.  No rumors.  No conjecture.  No hearsay.  A recent story on Marketplace from American Public Media highlights the specific impact that social media has on speeding up market rumors.  As discussed by hedge fund manager Paul Kedrosky, a Twitter rumor can get enough traction to move markets before the truth comes out.  “Where if something gets repeated often enough, even if it’s not true, then you do have people change behavior.”  Like these Twitter rumors, our willingness to treat unconfirmed rumors as if they were validated truths can unjustifiably damage trust and confidence in others.  So take 24-hours, focus on how often you treat rumors and truth as the same, and only form your opinions on that which you can personally confirm as true.  I’ll bet your faith in others – and their faith in you – increases.

So maybe George Michael had it right when he proclaimed that we “gotta have faith.”  What ways have you successfully built faith in your organization?  What has been the impact?

 

Author:  Mark Fitzgerald

Burritos and Expectations

I love Chipotle. The restaurant was born in 1993 and I’ve been a customer since the very beginning at the first location in Denver. In fact, over the years I have developed what some might consider an unhealthy addiction to the green tomatillo salsa.

The massive success of the burrito chain is due to a variety of factors, including consistent quality, an open kitchen design, the use of natural ingredients, good timing, luck and the unique style of the restaurants. However, there is one part of the product offering that is critical yet often overlooked. In fact, this one quality may be the most important reason why I’m a loyal Chipotle customer.

They effectively manage my expectations.

Chipotle has simplified the customer interaction so that I know exactly what I’m getting and exactly how to get it. I want a burrito with only the stuff I like, and I want it quickly. This sounds so basic, but all of us know that it is supremely difficult in all businesses to manage the expectations of your customers.

If you haven’t been to a Chipotle (oh, the horror!), let me describe the experience. As you enter the store, the layout funnels you to an ordering line. A single employee greets you when you get to the front of the line and is ready to capture the first part of your order, where you make the crucial decisions of type and container. Perhaps a Chicken Burrito? Maybe a Steak Bowl? How about mixing it up with a Barbacoa Salad? There are less than 20 basic combinations available and that is all you need to choose at this station.

Next, you shuffle to your left and another employee is ready to personalize your order with salsa, guacamole, cheese, lettuce and sour cream. Pick your poison, mix and match. They don’t care, but “the guac is extra” as they never fail to warn you.

Last, you slide another step to the left to the pay station and complete your order, perhaps adding chips and green tomatillo salsa and a beverage. You quickly pay and exit to pick up forks, napkins and fill your cup with a fountain drink. Whether you dine in or carry out, the process is exactly the same. The equation can be expressed as:

Simplicity + Efficiency * Quality = Loyalty.

Chipotle is not a five-star dining experience and doesn’t claim to be. It is a simple, efficient dining experience and that is exactly what it claims to be. How many other companies can make that same claim? Can yours?

Author:  Jeff Jones

Do You Have Klout?

Online Tool Measures Communication Influence

Once upon a time, only experts, politicians and celebrities could share their thoughts with the world. It took money to reach a broad audience, and only a few had access to mass communication tools.

Social media has changed all that. Today, just about anyone can connect with an ever-growing network of people and share whatever information they choose. Mass communication is more abundant and democratic than at any point in history.

But how is influence measured in this new world? Are those with the largest audiences and the most posts the new royalty?

Maybe not, say the brains behind the San Francisco-based start-up Klout.com. The firm has developed a numeric measure of online influence, which Klout defines as “the ability to drive people to action.” Klout assigns people a score of 1 to 100 based on:

  • True Reach—The number of people in your social media networks who have read your content or engaged with you in some way.
  • Amplification Probability—The likelihood that your content will be acted upon or shared. This measure also assesses the speed with which your content is likely to spread based on your past performance.
  • Network Influence—The online influence of those within your networks.

Klout gauges only online influence, but the score offers an interesting perspective on the subject in general. Klout bases its influence rating less on the amount of content shared than on the result of the sharing, which is to say whether anyone reacted to the information. If you rarely post information, then interest in your content will likely fall over time. Daily posts about whether you ate a ham or chicken sandwich for lunch won’t generally send you rocketing up the influence scale, however.

What Klout scores suggest is that old-world communication rules apply in the new world, too. Know your audience. Respect their time by communicating in a way that is relevant to them. Listen to their thoughts as well as sharing your own, and offer clear ways for them to engage with you.

According to Klout, influence isn’t based solely on the size of your “likers” list. Being relevant and building interactive relationships count for more.

 

Author:  Jennifer Watson

I Quit

Dear friends, family, colleagues, and distant LinkedIn connections that I may not even know –

Please accept this blog post as official notice that I quit!  What am I quitting?  I’m not quite sure yet.  But based upon some recent research that validates that our parents and little league coaches may have been wrong when they convincingly told us that “Quitters never win!”, I now believe that this decision will serve me well.  Want to quit with me?

Need more convincing?  Check out the recent story – When it’s good to quit – from American Public Media’s Marketplace.  In this piece, Freakonomics author Stephen Dubner argues that because of the general view of society that quitting is akin to failure, we often hold on too long to lost causes.  Stated more eloquently by Dubner, “Here’s the problem: we human beings are pretty good at deluding ourselves about the chances that something good will happen to us.  And too often, that translates into making a bad decision about when to quit something.”  Ever experience this for yourself?  Stick with a new product or service, despite severe lack of customer interest, solely because you poured significant dollars into building the infrastructure required to support the offering?  Hang on to an employee who was obviously not a good fit for your company because of the recruiting fee you paid to secure him or her?  Continue dating someone who you knew wasn’t right for you just because you had so much time invested in the relationship?

When you think about it, it’s quite amazing how often we are unwilling to just quit.  What prevents us from truly knowing when to quit and how can we learn to quit earlier?  According to Dubner, “It all boils down to two pretty simple economic concepts: one is sunk cost, and the other is opportunity cost.”  It’s incredibly hard to go through life without making investments of our time, energy, and money.  And, more importantly, when we make these investments consciously, it becomes even more difficult not to become emotionally connected to the investment.  And who wants to quit something that we are emotionally connected to, right?  Again from Dubner, “As a society, we see quitting as a failure.  But I’d like to challenge that a little bit.  Sunk costs are just that – they’re sunk.  So instead of dwelling on them, you should forget about them.”

Intuitively, Dubner’s statement that we should just forget about sunk costs makes a lot of sense.  The money has been spent, energy expended, or time utilized.  It’s gone.  But, it is still quite challenging for most people and organizations to just walk away, not look back, and move on to the next thing.  This is where we must continuously remind ourselves of Dubner’s second economic principle – opportunity cost.  For every amount of time we devote, money we spend, and energy we exhaust, we are making the decision (consciously or unconsciously) to not invest these precious resources in something else.  For each incremental investment we make in a failing endeavor, there is a direct opportunity cost – with real economic consequences – of not applying these resources to something with a higher probability of generating positive returns.

Having had the opportunity to consult with different organizations across various industries, the following examples of the inability to quit, despite real opportunity costs, appear to wide spread:

  • RESOURCE REALLOCATION: Lack of willingness of leaders to direct their organizations to stop performing historical, lower-value tasks in order to ensure bandwidth and resources required to successfully start doing something new and of higher-value.
  • SHIFTING FROM TALKING TO DOING: Apprehension of organizations to shift from planning to execution without first having all risks mitigated and everyone onboard.
  • ROLE TRANSITION: Desire of individuals to maintain the same level of comprehensive knowledge and to remain intimately involved in detailed decision-making despite a promotion to a new role which requires higher-level focus and a shift from doing to enabling others to do.

To avoid the negative impacts of quitting something too late, or not quitting a lost cause at all, consider creating a new role within your on-going business review and planning activities focused on keeping your team honest as to when you are over-valuing sunk costs and under-valuing opportunity costs.  If utilized well, the individual who contributes the most to your future success could end up being a quitter!

Author:  Mark Fitzgerald

Reinvention

Every June, links to various commencement addresses are posted to the internet. Some are great, some are terrible, but most are littered with generalized clichés and are basically forgettable. This year, someone posted a link to Dartmouth’s 2011 Commencement Address given by Conan O’Brien. The video runs over 20 minutes, but I recommend watching it for two different reasons.

First, as a long time comedian and writer, there are obviously some funny moments. He busts on the state of New Hampshire, takes a shot at Leno as an “aging Baby Boomer” that wouldn’t leave his job and jabs the Dartmouth president (who seemed to genuinely enjoy it). It was light hearted and entertaining, but was fluffy and not very impactful. Kind of like a Justin Bieber song.

However, at about the 16 minute mark, Conan becomes introspective when discussing his own professional failures as the Tonight Show host. His honesty is refreshing and he made two points that resonated with me.

Dreams Change

Conan states that your path at age 22 will not necessarily be the same at 32 or 42. I’ll extend that to say that the path absolutely cannot be the same if you are an evolving, emerging human being. No offense to any young Think Bucket readers out there, but most 22-year-olds haven’t seen or done enough to even know what’s available. For instance, my dream at 22 was to work less and ski more often. OK, bad example – that is really similar to my modern dream.

Failure Inspires “Profound Reinvention”

Conan points out the famous saying “that which does not kill you makes you stronger”, then says we conveniently forget that IT ALMOST KILLS US! With the benefit of hindsight, he concludes that “few things more liberating than having your worst fear realized”. He lists many of the new exciting, innovative and challenging things he has done in the last year that were direct results of him not getting what he thought he wanted.

Not to get too philosophical, but this reminds me of the classic film Better Off Dead.  Lane Meyer initially wants Beth more than anything else in the world, but he is your classic loser and fails miserably. Through a series of highly predictable 80’s-movie plot twists, he eventually reinvents himself. He ends the film conquering the perilous K-12 on one ski while avoiding the insane paperboy, driving a ridiculous ‘67 Camaro and winning the heart of the French exchange student. The path was not clear to him initially, but he responded to events and reinvented himself.

Reinvention obviously pertains to both personal and professional situations. In either case, we all learn that failure at some point can be a catalyst for profound change.

Author:  Jeff Jones