A New Customer Metric to Blow the Whistle on Bad Profits
By Fred Reichheld and Rob Markey

Too many companies can’t tell the difference between good profits and bad. The consequences are disastrous. Bad profits choke off a company’s best opportunities for true, lasting growth. They blacken its reputation and make it vulnerable to competitors.

By “bad profits,” we mean profits earned at the expense of customer relationships. Whenever a customer feels mistreated, those profits are bad. Bad profits come from unfair or misleading pricing, from saving money by delivering a poor customer experience and from extracting value from customers rather than creating value. At many firms, more than 30 percent of customers fall into this category.

Good profits are dramatically different. A company earns good profits when it so delights its customers that they willingly come back. Not only that. They tell others to do business with the company. Satisfied customers become, in effect, part of the company’s marketing department. They become promoters.

A simple technique can help you distinguish good profits from bad.

Ask your customers to answer what we call “the ultimate question”—How likely is it that you would recommend this company to a friend or a colleague?—on a scale from zero to 10.

The responses will help you tally a metric known as Net Promoter® Score. NPSSM has been shown to correlate well not only with customer referrals and repurchases but also with companies’ growth rates.

Customer responses cluster into three groups.

We call the first group that gives the company a rating of 9 or 10 “promoters.”
The second group, which rates the company 7 or 8, are called “passively satisfied.”
“Detractors,” with ratings from zero to 6, make up the third group.

A company’s NPS is simply the percentage of promoters minus the percentage of detractors. The consulting firm Bain & Company has found that companies with the leading NPS in an industry usually enjoy superior growth—typically, more than 2.5 times the average growth rate of the competition. How can a company raise its NPS?

First, it can do this by designing the right propositions for the right customers. A vital step toward clarifying your priorities is quantifying the average lifetime value of your company’s promoters and detractors, factoring in margins, annual spend, cost efficiency and referrals. But mapping your customers onto the grid illustrated below will also help you.

High-profit promoters, in the upper-right, love doing business with you. These customers should be your top long-term priority for strategic investment and innovation. Your entire organization should focus on delivering flawlessly to them. Too often, however, customers in this sector are taken for granted (no squeaky wheels here). Inadvertently, companies may be milking profitable promoters to fund solutions for less-profitable customers. In the 1980s, American Express took the healthy profits from its core travel-card business and financed an expansion into financial services. Within the card division, margins from high-volume customers subsidized the acquisition of new customers outside the core business. Predictably, American Express’s growth and profits tailed off—until it revitalized compelling propositions for core customers. For example, the company transformed its Membership Miles program into Membership Rewards, one of the industry’s most generous rewards programs, and created the Rewards Plus Gold card, now one of its most popular products.

High-profit detractors, in the upper-left corner, should be the second priority. They don’t like doing business with you and are telling others. They will likely defect at the first opportunity. A mobile-phone provider found that many accounts in this sector were locked into long-term contracts at fixed prices. When these prices became uncompetitive, the customers were furious. The fix was easy: offering more favorable terms in advance of renewal. That cost money, but holding angry customers hostage would have cost even more.

Moving more customers into the upper-right sector should be your third priority. Begin by looking for ways to encourage low-profit promoters to do more business with you—as Amazon.com did with personal recommendations and incentives like offering premium shipping. You’ll also have to figure out what would win over the passives and calculate whether such investments make sense or would merely “steal” resources away from your core. Leading companies like GE, Intuit and American Express are now deploying NPS and discovering how versatile it is. Like any good metric, NPS allows experimentation and accelerates learning. It helps you understand your core customers and design propositions that captivate them. It will enable you to discover opportunities to deliver a great customer experience at every touch-point. By producing NPS data regularly, you’ll institutionalize a cultural shift, making customer metrics every bit as auditable and practical as financial metrics like profit and return on equity. You’ll develop your capability to keep turning customers into advocates that lead your company to lasting growth. And it all starts by asking just one question.


About the Authors:
Fred Reichheld is a director emeritus at Bain & Company and a Bain Fellow. He is the author of The Ultimate Question: Driving Good Profits and True Growth (Harvard Business School Press).
Rob Markey is a partner at Bain & Company and the head of Bain’s Customer Strategy Practice. He is based in New York City.

New Rules of Leadership
By Lee Bolman and Terrence Deal

Most organizations prefer to believe the business world is based on reason and populated by a reasonably lucid, cognitive and caring citizenry. But no one lives in this utopia. Business practices are often messy and unpredictable. The fairy tale of order and logic leads to stagnant and unimaginative workplaces. This is not to say that parables hold no weight in the corporate world.

Our collective consciousness places great importance on the hero’s journey. Whether principles are expressed through the bedtime stories of the Brothers Grimm or the theatrical spectacle of Star Wars, people willingly lend their support to warriors and wizards. By replacing the practical and sterile mythos of business with these tried and true cultural archetypes, an organization can flourish into a far more productive and innovative corporate force.

Two decades of research trace a strong shift in leadership roles. Most leaders traditionally follow two very limited frames: the caregiver and the analyst. Analysts emphasize rationality and logic. Caregivers stress the importance of relationships. Both analyst and caregiver roles are necessary for organizations and societies. However, in limiting themselves to these two profiles, managers become myopic and constrained.

Ultimately, this stifles leadership and hobbles organizations. Resourceful managers need to employ the warrior and wizard attributes to boost a firm’s proficiency. By learning and honing the basic skill sets of each archetype, leaders enlarge their roles and assert their presence. They bring clout and hope to organizations that have become ineffectual.

Warriors
Warriors naturally thrive in a theater of conflict. They welcome competition and office politics rather than avoid them. Microsoft’s future would be radically different if not for the business pugilism of Bill Gates during the federal antitrust trials in the late ‘90s.

Warriors effectively align purpose with power through four basic skills:

1. Know the psyche. Professional success gets less complicated the more confidence and commitment is developed among colleagues. Masterful leaders must first be students of the psyche. Once the fears and aspirations of opponents and supporters are understood, a leader can begin to manage and engineer collective hopes to a company’s advantage. By tapping into the economic frustrations and wants of professional women, Mary Kay Ash built a cosmetics empire. Ever conscious of the competition, she was no stranger to a good fight. Her warrior traits led journalist Morley Safer once to describe her as a “pink panther whose instinct for doing business and making money is as finely tuned as a jungle cat going for the kill.”

2. Recruit allies. When entering combat, it’s always best to have a strong support system at the ready. To gain a vast and loyal group, a leader needs compelling arguments to boost support for an impending fight. While inherent charisma makes this task easier, those without the natural talent can hone their “horse-trading” skills. Regardless of his overall political principles, Tom DeLay is a master of recruitment. He plays close attention to every House member’s district, interests and family. By enlisting a strong group of allies through favor-trading and goodwill, Delay created monumental party support when ethics indictments threatened his stronghold in 2005.

3. Rally the troops. Without a well-honed, highly motivated team, victory is impossible. The warrior needs to maintain the fighting spirit amongst the ranks. A leader does so by creating an offer too attractive to refuse. A leader establishes an agenda that carries significance beyond personal gain but also encapsulates immediate, individual concerns. Every employee likes to belong to a “bigger picture” but also needs personal reassurance. The motivational efforts of George S. Patton, the legendary general, were Shakespearean in their magnitude. Uniquely gifted in profanity, Patton related to his men’s sensibilities and cultivated their heroic urges in order to accomplish the bigger objective: win the war. By using crass language and addressing the individual concerns of each soldier (i.e., fear and death), he rallied and united his forces to produce legendary results.

4. Negotiate for the win-win. Every negotiation has short- and long-term implications. A principled warrior creates win-win situations to reap immediate rewards while building solid business relationships. William Ury and Roger Fisher pioneered the theory of “mutual gain” while bargaining. Most managers allow room for only a few initial options before focusing on negotiations. A leader must keep options open, since an increase in options also increases the opportunity for better decisions. He or she worries as much about making the pie bigger as about getting the biggest piece.

Wizards
Wizards bring imagination, insight, creativity, vision, meaning and magic to their workplace. They are visionaries with a flair for drama and a yen for symbols. It is no mistake that thousands of employees and millions of customers reinforce the Starbucks patois every morning.

Wizards create excitement and commitment to a business’ culture through four methods:

1. Set values. Behind every high-performing company stands a core set of widely shared beliefs and conventions. When values are deeply engrained, a verbose mission statement isn’t necessary. People do great work because the company’s ethics are etched in their hearts and minds. Values are self-enforced by the individuals and their peer groups. Formal dictation of rules isn’t necessary. Google sets its culture with one simple sentence: “Don’t be evil.”

2. Be symbolic. People become emotionally attached to icons and emblems. During a seminar concerning culture in federal agencies, a GAO official discounted the effects of symbols. A participant from the U.S. Forest Service asked if that applied to Smokey the Bear. When the speaker said yes, the U.S. Forest Service official got mad enough to extend a familiar one-fingered symbol as his rebuttal. Leaders must learn to respect and revere the power of iconography. Once understanding and reverence are established, a wizard can create or build on the symbols that bolster a company’s spirit.

3. Celebrate your culture. Ceremony connects colleagues by building relationships, reaffirming values and deepening the collective identity of your team. One way that the founders of Home Depot, Bernie Marcus and Arthur Blank, built the culture was a taped television show for Home Depot’s employees. The playful and often humorous presentation connected the founders with their people. It also reinforced Home Depot’s core values and informed employees about important company news. Unique rituals such as the Bernie-and-Arthur show fostered dedication and solidarity at the workplace. A subsequent leadership change replaced the beloved wizards at Home Depot with a relentless warrior. Profits are up, but morale and customer satisfaction have deteriorated.

4. Tell a good story. Everyone loves a good story. We read novels, go to plays and rent movies to immerse ourselves in other lives and other worlds. Although fully aware of the fiction, we still invest in principal characters and plots. But underneath the intricacies and conventions lies a theme. Stories attach significance to mutual goals. All religions employ stories to increase belief in their practitioners: Christian and Sufi parables, the Jewish Haggadah, Taoist allegories, Zen koans, and Native American legends are a few categories. What works in churches and temples, can also be applied to the office. A solid anecdote boosts morale and reinforces lessons far better than a quarterly report. In exploring the oft-neglected wizard and warrior personas, leaders can expand insular organizational dynamics into an expanse of limitless potential. To be truly effective, each leader must embrace the skills of both warrior and wizard. Operating within this paradox is tricky, but vital to leading a firm through a constantly changing business environment
About the Authors:
Lee G. Bolman is a professor at the University of Missouri-Kansas City, and coauthor of The Wizard and the Warrior: Leading with Passion and Power (Jossey-Bass, March, 2006, $27.95).
Terrence E. Deal is retired from the professoriate and is a novice vintner, and coauthor of The Wizard and the Warrior: Leading with Passion and Power (Jossey-Bass, March, 2006, $27.95).

http://www.amanet.org/LeadersEdge/editorial.cfm?Ed=247&BNKNAVID=8&display=1&spMailingID=511676&spUserID=ODc3NjcwMjEyS0&spJobID=14773324&spReportId=MTQ3NzMzMjQS1

Ten trends to watch in 2006

Macroeconomic factors, environmental and social issues, and business and industry developments will all profoundly shape the corporate landscape in the coming years.

Ian Davis and Elizabeth Stephenson
Web exclusive, January 2006

Those who say that business success is all about execution are wrong. The right product markets, technology, and geography are critical components of long-term economic performance. Bad industries usually trump good management, however: in sectors such as banking, telecommunications, and technology, almost two-thirds of the organic growth of listed Western companies can be attributed to being in the right markets and geographies. Companies that ride the currents succeed; those that swim against them usually struggle. Identifying these currents and developing strategies to navigate them are vital to corporate success.
What are the currents that will make the world of 2015 a very different place to do business from the world of today? Predicting short-term changes or shocks is often a fool's errand. But forecasting long-term directional change is possible by identifying trends through an analysis of deep history rather than of the shallow past. Even the Internet took more than 30 years to become an overnight phenomenon.
Macroeconomic trends
We would highlight ten trends that will change the business landscape. First, we have identified three macroeconomic trends that will deeply transform the underlying global economy.
1. Centers of economic activity will shift profoundly, not just globally, but also regionally. As a consequence of economic liberalization, technological advances, capital market developments, and demographic shifts, the world has embarked on a massive realignment of economic activity. Although there will undoubtedly be shocks and setbacks, this realignment will persist. Today, Asia (excluding Japan) accounts for 13 percent of world GDP, while Western Europe accounts for more than 30 percent. Within the next 20 years the two will nearly converge. Some industries and functions—manufacturing and IT services, for example—will shift even more dramatically. The story is not simply the march to Asia. Shifts within regions are as significant as those occurring across regions. The United States will still account for the largest share of absolute economic growth in the next two decades.
Further reading:China and India: The race to growthMapping the global capital markets
2. Public-sector activities will balloon, making productivity gains essential. The unprecedented aging of populations across the developed world will call for new levels of efficiency and creativity from the public sector. Without clear productivity gains, the pension and health care burden will drive taxes to stifling proportions.
Nor is the problem confined to the developed economies. Many emerging-market governments will have to decide what level of social services to provide to citizens who increasingly demand state-provided protections such as health care and retirement security. The adoption of proven private-sector approaches will likely become pervasive in the provision of social services in both the developed and the developing worlds.
Further reading:The demographic deficit: How aging will reduce global wealth Boosting government productivity
3. The consumer landscape will change and expand significantly. Almost a billion new consumers will enter the global marketplace in the next decade as economic growth in emerging markets pushes them beyond the threshold level of $5,000 in annual household income—a point when people generally begin to spend on discretionary goods. From now to 2015, the consumer's spending power in emerging economies will increase from $4 trillion to more than $9 trillion—nearly the current spending power of Western Europe.
Shifts within consumer segments in developed economies will also be profound. Populations are not only aging, of course, but changing in other ways too: for example, by 2015 the Hispanic population in the United States will have spending power equivalent to that of 60 percent of all Chinese consumers. And consumers, wherever they live, will increasingly have information about and access to the same products and brands.
Further reading:Premium marketing to the masses: An interview with LG Electronics India's managing directorNew strategies for consumer goods
Social and environmental trends
Next, we have identified four social and environmental trends. Although they are less predictable and their impact on the business world is less certain, they will fundamentally change how we live and work.
4. Technological connectivity will transform the way people live and interact. The technology revolution has been just that. Yet we are at the early, not mature, stage of this revolution. Individuals, public sectors, and businesses are learning how to make the best use of IT in designing processes and in developing and accessing knowledge. New developments in fields such as biotechnology, laser technology, and nanotechnology are moving well beyond the realm of products and services.
More transformational than technology itself is the shift in behavior that it enables. We work not just globally but also instantaneously. We are forming communities and relationships in new ways (indeed, 12 percent of US newlyweds last year met online). More than two billion people now use cell phones. We send nine trillion e-mails a year. We do a billion Google searches a day, more than half in languages other than English. For perhaps the first time in history, geography is not the primary constraint on the limits of social and economic organization.
Further reading:The next revolution in interactionsThe McKinsey Global Survey of Business Executives, July 2005
5. The battlefield for talent will shift. Ongoing shifts in labor and talent will be far more profound than the widely observed migration of jobs to low-wage countries. The shift to knowledge-intensive industries highlights the importance and scarcity of well-trained talent. The increasing integration of global labor markets, however, is opening up vast new talent sources. The 33 million university-educated young professionals in developing countries is more than double the number in developed ones. For many companies and governments, global labor and talent strategies will become as important as global sourcing and manufacturing strategies.
Further reading:China's looming talent shortageSizing the emerging global labor market
6. The role and behavior of big business will come under increasingly sharp scrutiny. As businesses expand their global reach, and as the economic demands on the environment intensify, the level of societal suspicion about big business is likely to increase. The tenets of current global business ideology—for example, shareholder value, free trade, intellectual-property rights, and profit repatriation—are not understood, let alone accepted, in many parts of the world. Scandals and environmental mishaps seem as inevitable as the likelihood that these incidents will be subsequently blown out of proportion, thereby fueling resentment and creating a political and regulatory backlash. This trend is not just of the past 5 years but of the past 250 years. The increasing pace and extent of global business, and the emergence of truly giant global corporations, will exacerbate the pressures over the next 10 years.
Business, particularly big business, will never be loved. It can, however, be more appreciated. Business leaders need to argue and demonstrate more forcefully the intellectual, social, and economic case for business in society and the massive contributions business makes to social welfare.
Further reading:What is the business of business?The role of regulation in strategy
7. Demand for natural resources will grow, as will the strain on the environment. As economic growth accelerates—particularly in emerging markets—we are using natural resources at unprecedented rates. Oil demand is projected to grow by 50 percent in the next two decades, and without large new discoveries or radical innovations supply is unlikely to keep up. We are seeing similar surges in demand across a broad range of commodities. In China, for example, demand for copper, steel, and aluminum has nearly tripled in the past decade.
The world's resources are increasingly constrained. Water shortages will be the key constraint to growth in many countries. And one of our scarcest natural resources—the atmosphere—will require dramatic shifts in human behavior to keep it from being depleted further. Innovation in technology, regulation, and the use of resources will be central to creating a world that can both drive robust economic growth and sustain environmental demands.
Further reading:Preparing for a low-carbon futureWhat's next for Big Oil?
Business and industry trends
Finally, we have identified a third set of trends: business and industry trends, which are driving change at the company level.
8. New global industry structures are emerging. In response to changing market regulation and the advent of new technologies, nontraditional business models are flourishing, often coexisting in the same market and sector space.
In many industries, a barbell-like structure is appearing, with a few giants on top, a narrow middle, and then a flourish of smaller, fast-moving players on the bottom. Similarly, corporate borders are becoming blurrier as interlinked "ecosystems" of suppliers, producers, and customers emerge. Even basic structural assumptions are being upended: for example, the emergence of robust private equity financing is changing corporate ownership, life cycles, and performance expectations. Winning companies, using efficiencies gained by new structural possibilities, will capitalize on these transformations.
Further reading:Strategy in an era of global giantsLoosening up: How process networks unlock the power of specialization
9. Management will go from art to science. Bigger, more complex companies demand new tools to run and manage them. Indeed, improved technology and statistical-control tools have given rise to new management approaches that make even mega-institutions viable.
Long gone is the day of the "gut instinct" management style. Today's business leaders are adopting algorithmic decision-making techniques and using highly sophisticated software to run their organizations. Scientific management is moving from a skill that creates competitive advantage to an ante that gives companies the right to play the game.
Further reading:Do you know who your experts are?Matching people and jobs
10. Ubiquitous access to information is changing the economics of knowledge. Knowledge is increasingly available and, at the same time, increasingly specialized. The most obvious manifestation of this trend is the rise of search engines (such as Google), which make an almost infinite amount of information available instantaneously. Access to knowledge has become almost universal. Yet the transformation is much more profound than simply broad access.
New models of knowledge production, access, distribution, and ownership are emerging. We are seeing the rise of open-source approaches to knowledge development as communities, not individuals, become responsible for innovations. Knowledge production itself is growing: worldwide patent applications, for example, rose from 1990 to 2004 at a rate of 20 percent annually. Companies will need to learn how to leverage this new knowledge universe—or risk drowning in a flood of too much information.
Further reading:The 21st-century organizationMaking a market in knowledge
Companies need to understand the implications of these trends alongside customer needs and competitive developments. Executives who align their company's strategy with these factors will be the best placed to succeed. Reflecting on these trends will be time well spent.
About the Authors
Ian Davis is worldwide managing director of McKinsey & Company and Elizabeth Stephenson is a consultant in McKinsey's San Francisco office. A shorter version of this article was published in the Financial Times on January 13, 2006.
http://www.mckinseyquarterly.com/article_page.aspx?ar=1734&L2=18&L3=30

Become An “Architect of Change”
By Richard HaddenDecember 2005

While driving from my in-laws' home near Glasgow, Scotland, to their neighborhood supermarket, my attention was arrested by a large, bright red traffic sign that read, in bold white capital letters - CHANGED PRIORITIES AHEAD. Fortunately, my wife, a local, was able to translate the sign (priority = right of way) and help me through the altered traffic pattern of the construction zone at the next intersection.

Sometimes I think that bright red sign should be posted at the entrance to most places of business today, as fair warning to customers, employees, and suppliers that important things are changing - indeed they always have - and as a reminder that those who embrace the change, and adapt, reap the benefits, and avoid the pitfalls, that change always promises.

OK. Change is tough. Change is unfamiliar (that's why it's called "change"). But change is also a critical, vital, necessary part of the development of any healthy organization.

As philosopher Herbert Spencer observed, "A living thing is distinguished from a dead thing by the multiplicity of the changes at any moment taking place in it." Any organization that is alive - such as yours, I presume - will be characterized by the vitality of change that keeps it moving toward its goals.

And yet, as the writer James Baldwin said, "Most of us are about as eager to be changed as we were to be born, and go through our changes in a similar state of shock."

Sometimes change is driven by customers, or the market - hard to argue with that kind of change. Sometimes it's driven by government regulations - impossible to argue with that. And sometimes it's driven by our own success. And that's the best kind of change.

We all make choices about how we respond to change. And it is a choice. We choose from among these three options:

1. Resist. Despite the fact that there are few examples throughout history of successful resistance to change, we're all tempted to think our resistance might be an exception. America won its independence, women got the vote, and mp3's will soon overtake CD's as the standard for car audio, despite formidable resistance to each of these progressions.2. Relent. In some cases, we grudgingly resign ourselves to the change, and trudge toward the new status quo, lacking the energy, will, or power to put up much of a fight. Parents often make this choice when they discover that their once-needy child has developed into a capable and independent young adult. I guess this is an example of change driven by our own success.3. Rethink. This is what members of organizations are called to do when presented with the challenge of change. When this works, and there are lots of examples of when it does, it is because people have chosen to become the "architects" of the change that is inevitable in dynamic entities. These people reason, "The change is coming. Now...what can I do to capitalize on it...to 'design' the change so that I, and the rest of us, become the beneficiaries of the change, not the victims of it?"
What do Walgreen's, McDonald's, Continental Airlines, Dunkin Donuts, and Paul McCartney all have in common? All have nimbly and astutely redesigned - not reinvented - themselves to not only survive, but thrive in the midst of turbulent and unprecedented changes in their respective industries and markets.
Walgreen's has appealed to customers who crave convenience, by pioneering drive-thru prescriptions, and developing technology that allows customers to pick up prescriptions at Walgreen's stores all over the country, not just the one where the prescription was first filled.
McDonald's and Dunkin Donuts have expanded their menus drastically, each coming back from the brink in the face of low-fat and low-carb eating habits, and, in the case of Dunkin Donuts, to give Starbucks a run for its money.
Continental Airlines, having gone broke twice, is one of the nation's only full-service airlines not currently in Chapter 11. They've done it by courageously facing the new realities of the post-9/11 airline business.
And as for Sir Paul, his endurance is surpassed only by his adaptability - a quality that has made his star shine for more than 40 years as a member of two highly successful bands, a solo artist, performer, songwriter, businessperson, and now, knight.
The corporations mentioned above are nothing more than a collection of people. What has distinguished these organizations from their less successful competitors is that, by and large, they have been populated by people who were willing to be "architects of change" - people who design their response to change to work in their collective favor.
* They recognize that change means opportunity for some; problems for others. They choose to be on the "opportunity" side of the situation.* They don't wait to be shown the path. Once the destination is clear, they take responsibility to chart the path of change in the way that brings success.* Recognizing the challenges that come with change, they ask, "What can I control? What is beyond my control?" While others whine about how hard change is, these architects of change get busy controlling what they can. For that which is beyond their control, they ask, "What can I do to mitigate or lessen the impact of that challenge? And what can I do to capitalize on the change?"
As you look out on the horizon, and see the natural and healthy change of your industry, your market, and your organization, follow this acronym, and make change work for you.
Chart your path. How will you design your specific response to the change?Head confidently in the direction you've charted.Align your response with the organization's goals for successful change.Navigate carefully the uncertainties you encounter along the way.Generate creative ideas for capitalizing on the benefits of change.Evaluate the effectiveness of your response. Make necessary adjustments. Continue in the positive direction of change.
As we approach the changing of the year, we'd like to express our heartfelt thanks to every person who subscribes to Fresh Milk; has encouraged others to do the same; has bought our books; our CD, and our downloadable articles, article collection, and white paper; hired us to speak for their group, consult with their organization, conduct an employee survey; or interacted with us in any way. We appreciate your business, your encouragement, and your interest in improving your organization's results by having a focused, fired-up, and capably led workforce.
We wish you the very best in the coming year, and look forward to the opportunity to be of service to you.

Leadership Development Within Groups
Communicating Effectively
HE-499, September 1992

Communication might be thought of as an "idea transplant." We send 300 to 1,000 messages a day. We probably receive that many messages too.

Communication consists of two basic skills: listening and feedback. There are messages we intend to send, messages we actually send, messages the listener thinks he/she heard, responses from the listener due to what he/she heard, and our reaction to the exchange of messages. Is it any wonder things may get garbled along the way?

Good listening takes a lot of practice. It requires concentration. Our minds think four times faster than a person can speak so our minds tend to wander. As we listen we need to focus on a speaker's words, body language, intended message and even unintended message. We need to listen without judging what we hear. A leader learns to listen at least as much as he/she speaks.

When we speak, we give feedback that includes expressing feelings, sharing information and ideas, understanding others and making observations. There are many ways to give feedback. "I" messages are one type.

The art of conversation is as much the art of listening as it is the ability to express one's self.Bits & Pieces, October 1991

"I" Messages
An "I" message allows us to tell people what impact their behavior has on us without judging them. At the same time, it lets them decide whether or not to change that behavior. Using "I" messages, we describe our responses and do not evaluate behavior or suggest changes. We are not forcing them to accept our ideas.

An "I" message has three parts:
identify the specific behavior
describe the feeling we experience because of that behavior
tell the effect of the feeling.

"When I am interrupted, I feel upset because I lose my concentration."

"I am frustrated because not everyone in the group has had a chance to talk. We may be missing some great solutions to this problem."

Other Types of Feedback Include:
1. Active Listening This is feedback that lets the speaker know we are concentrating on her/his message.
"I see...Hmmm" (nodding)
2. Asking for More InformationThis enables others to expand on initial information.It tells the speaker we are interested in her/his thoughts
"That sounds interesting." "Tell us more."
3. ParaphrasingParaphrasing is saying what we think the speaker said. This gives the speaker a chance to confirm our interpretation or to clarify what was meant.
"Did I hear you say that although the plan isn't finished, we should start marketing the workshop while the committee works on the details?"
4. Sharing InformationEveryone's input is important. Group leaders need to be as open and honest as other members.
"I believe we need to move slowly and consider all possible options before we make a decision."
5. Checking FeelingsIt's best to check to see if the emotion we think we see is the correct interpretation.
"Are you are frustrated? Would you like to talk about it?"
6. Reporting FeelingsTell others what your emotional state is at a given time.
"It's been a long day. I'm not productive any more. Could we talk about this at the next meeting?"
7. Offering or Requesting More OptionsEven good ideas can be made better when more people are involved. Suggesting other options is helpful.
These are some great ideas here. Could we expand any of these ideas now?"
Leaders practice skills that enhance communication within a group. Effective communication helps a group function successfully and helps individuals develop, too. Positive communication helps members feel valuable and welcome to share their talents.
When all members practice effective communication, trust, cooperation and productivity in the group will be enhanced. The following hints ensure effective communication:
Group members listen and pay attention to one another
One topic is discussed at a time
Members work through conflict rather than
avoiding it
Everyone has a chance to state their views
Decisions are clearly stated so all members
understand
Regular feedback helps the group to stay focused on goals.
Body Language -- Check the Message
Nonverbal communication is called body language. Facial expressions, gestures, eye contact and body posture are parts of body language. Even when we are speaking, we need to observe body language. Body language can tell us if listeners are interested, bored, confused or disagreeing with us.
Don't jump to conclusions about what we think we see in body language. It is important to observe nonverbal communication and use it as a check point to see if we understand the message.
"I see some frowns. Does anyone have a concern about this option?" "There has been very little reaction to this proposal. How does the group feel right now?"
Our culture teaches us what is acceptable nonverbal communication. Some cultures find certain types of body language (Ex. eye contact, standing too close) inappropriate or even offensive. Effective communication includes being sensitive to those differences. Observe body language and then check the message.
It's all right to hold a conversation as long as you let go of it once in a while.Bits & Pieces, June 1991
Helping All Members Participate
A group is most effective when all members contribute. Some members may be very quiet during a meeting or a few members may dominate. Here are techniques that encourage and enable everyone to participate.
Round Robin
The round robin may be used at the beginning of a discussion if it's likely that everyone already has an opinion about a topic or at the end of a discussion when everyone has been informed about a subject. Then:
a. Ask the group one question.
"If we had unlimited funds, how would you solve this problem?" "What is your opinion about this proposal?"
b. Allow several minutes for members to think.
c. Ask each person to write his/her comments on paper.
d. Each person takes a turn telling the group her/his response. (Individuals have the option to PASS without commenting.)
e. Every person in the group must have the opportunity to share his/her response BEFORE any person can speak a second time.
Small Group Discussion
A small group discussion is helpful when a topic is complicated or there are many factors to consider. Some individuals are more comfortable speaking in a small group than among many people. Communication in small groups can be more direct and productive than in a larger group. To facilitate a small group discussion:
a. Ask a discussion question. Make sure everyone understands the question and purpose of the discussion.
b. Announce the amount of time groups will have to discuss the question. A minimum of seven minutes should be allowed.
c. Then divide membership into small groups. A group of 4 to 6 members is comfortable. Discussion becomes more difficult with more than 10 people.
Encourage new combinations of ideas by inviting members to vary the individuals they talk with in the group. Ways to divide members into small groups include:
-- Members select their own group"Find someone you haven't spoken with recently."-- Members with same birthday month become a group-- Groups form around a favorite color: blue, red, yellow-- Individuals with colored name tags meet together
d. Ask one person from each small group to record comments, summarize and report back to the large group. Reports may be written on newsprint and taped to a wall for the group to consider during discussion.
I'd rather know some of the questions than all of the answers.James Thurber
Brainstorming
Brainstorming is the process of collecting as many ideas as possible in a short time. People should be encouraged to list a quantity of ideas rather than sorting out the quality ideas. "Free wheeling" is encouraged. Ideas don't have to be practical. This can be done with a large group.
a. Ask for a volunteer to write all ideas on a blackboard or flip chart where members can see and hear ideas.
b. Review the rules of brainstorming with the group. They are:
-- List as many ideas as possible.-- Feel welcome to add ideas quickly.-- A key word from every idea will be noted.-- No judgment can be made about an idea.-- Wild ideas are welcome. Creativity is good.-- It's O.K. to expand an idea that's already been mentioned.-- Brainstorming will continue until no new ideas are added.
c. The leader's role is to help capture key words from every idea that is mentioned and invite comments from members who have not spoken.
d. When no more ideas are being added, the leader should stop the brainstorming session.
e. It is helpful to take a break after brainstorming to allow members to look at the list and discuss some of the ideas.
f. Then the group should establish criteria for selecting the best ideas. Narrow the list of ideas that meet criteria. The final solution may be a combination of ideas.
Nominal Group
This technique involves individual brainstorming and small group discussion. It provides the group with a priority list of ideas or solutions to consider. It can be done with a large or small group. If there are more than 8 people in the group, begin by dividing into small groups of four to six members each.
Distribute a notecard to each person.
State an open-ended question. EXAMPLE "What are some ways to encourage shopping on our main street?"
Ask everyone to spend several minutes writing down as many ideas as they can generate on their own notecard.
In small groups, ask each individual to share each item on his/her list to be written on a flip chart. Questions can be asked for clarification, but no judgment is made about an idea.
When all ideas have been listed, each individual selects five ideas from the total list and ranks the top five ideas on his/her notecard. (The highest ranking idea receives 5 points. The lowest ranking idea receives 1 point.)
Then each person identifies his/her five top ideas and reports the point ranking assigned to each. A facilitator places the number of points assigned to the ideas selected.
Add the points for each idea listed to identify which ideas rated highest among the group.
Parliamentary Procedure or Consensus?
Parliamentary procedure can be very helpful during meetings. It is the formal way to implement majority rule decision making in a group.
Majority rule decision making is not comfortable to all people, especially in some cultures. Consensus is another way to make group decisions that may be more comfortable.
Consensus occurs when everyone in the group chooses to agree without taking a vote.
The advantages to consensus are that it:
Encourages open communication
Requires members to identify the issue and understand it
Involves all members in a cooperative team effort
Allows people time to "buy into" a decision so everyone wins
Can set the stage for a clear action plan.
The disadvantages to consensus decision making are that it:
Takes time. The larger the group, the more time it takes.
May not work if members of the group do not trust one another enough to speak out.
Requires a leader to facilitate the discussion, time for input and encouragement for every person to speak.
Requires a to leader help keep the discussion focused.
Consensus decision making is similar to problem solving. The steps are:
1. Define the problem
2. Brainstorm all alternatives
3. Evaluate the alternatives
a. Explore as many views as possibleb. Give everyone a chance to be heardc. Listend. Disagreements should be viewed as ways to clarify ideas or as sources of new information
4. Select alternatives that will provide win/win solutions without deadlock for the group.
5. Implement the decision.
6. Evaluate what has been accomplished.

As a leader, you should have confidence in yourself, be flexible, and be able to listen to people. The reason you want to listen to people is so you can understand what they want. By finding out what they want, you can [help them] meet their needs.Don Alexander

Keep It Simple
Communication is most effective when it is simple. Most people can only absorb 80 percent of what they hear. Information should be offered to a group in small bits and pieces. More information can be provided as group members learn and understand a basic idea.

Group leaders know effective communication should:
Refresh people's memories periodically to help recall basic information
NOT offer more information than is needed
Be as creative and simple as possible
Offer a message in more than one method, such as verbal, written and demonstration.
Complex information should be:
Offered to the group in written form with a verbal report
Given in step-by-step, logical order
Checked for understand by asking, "Would someone please give the group their interpretation of this information."

If you don't understand a problem, then explain it to an audience and listen to yourself.Roger von Oech, President, Creative Think

I can...
Learning is more complete when you experience and apply information you have just thought about. Consider the following questions on your own or with a friend to learn more about communicating effectively within a group.

What are common communication problems you have observed in an organization or club?
How do you feel when you are asked to talk or you choose to talk in a group?
Are you confident? Nervous? Enthusiastic? Shy? Why do you feel that way? Which communication skills would you like to improve?
If one member of an organization tends
to dominate a meeting or discussion, what could you do to change that situation?
The next time you are in a group and members do not participate in a discussion, what could you suggest? Can you think of three different options?
Imagine a conversation with someone. Practice "I" messages:
When __________. (behavior)
I feel __________. (feeling experienced)
because ____________. (impact of the behavior)
Images
Stand up straight so they will see you. Speak loudly so they will hear you. And sit down quickly so they will like you.Galion
Fail to honor people, they fail to honor you,But of a good leader, who talks little,When his work is done, his aim fulfilled,They will say, `We did this ourselves.'Lao Tzu
We hear and apprehend only what we already know. Roger von Oech
Applause is the only appreciated interruption.Arnold Glasgow

Sources
Bateman, Arnold. (1990). Team building: Organizing a Team. Lincoln: University of Nebraska, Cooperative Extension.
Bits & Pieces. Fairfield, NJ: The Economics Press, Inc.
Family Community Leadership. Oregon Cooperative Extension.
Lesmeister, Marilyn. (1989). Up front with groups: Volunteer learning series. Madison: University of Wisconsin.
New Jersey Leadership Training and Development Committee. (1990). Be a better leader. New Jersey: Rutgers Cooperative Extension, New Jersey Agricultural Experiment Station.
Walters, Dottie. (Ed.). (1988). Leadership strategists. Glendora, CA: Royal.
Working with Our Publics. Module 5. Learners' Packet.


Prepared by:
Marilyn LesmeisterLeadership and Volunteer Development Specialist, NDSU Extension Service
In Cooperation with:Ron Anderson, Center for Rural RevitalizationPaige Baker, NDSU Extension Special ProgramsBecky Koch, NDSU Extension CommunicationsCarmen Richards, President, ND Extension Homemakers Council, Inc.Anita Rohde, NDSU Extension Home EconomistCarol Sellie, NDSU Extension Home Economist
HE-499, September 1992


NDSU Extension Service, North Dakota State University of Agriculture and Applied Science, and U.S. Department of Agriculture cooperating. Sharon D. Anderson, Director, Fargo, North Dakota. Distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. We offer our programs and facilities to all persons regardless of race, color, national origin, religion, sex, disability, age, Vietnam era veterans status, or sexual orientation; and are an equal opportunity employer.This publication will be made available in alternative formats for people with disabilities upon request 701/231-7881.

Five Ways Women Can RaiseTheir Professional Profile
By Karin Halperin

You might be doing an outstanding job, but if nobody notices, your efforts are likely to go unrewarded.

Most women who reach the upper echelons of management aren't shy about talking about their successes. But some observe that a reluctance to do so is one factor holding other women back in their careers. Whether you're seeking better pay in your current job, a promotion or looking to move on to a new employer, these tips can help to put women -- as well as men -- on the radar screen of decision-makers in your field.

1. Become an authority.
Developing an expertise helps you stand out, especially if it's territory no one else has yet staked. Shelley Harrison, chief executive officer of Launch Pad Inc., a San Francisco company that manages marketing for high-tech start-ups, says she learned this lesson as a product-marketing engineer in the 1980s at Hewlett-Packard Co., just as office automation was catching on.
"I developed this expertise of quickly and efficiently launching products and became known as a launch queen," says Ms. Harrison.
The skill, she says, won her recognition: HP made her its email product manager in its U.K. division and, on returning to the States, she was assigned to then-new CD-ROM technology. To help explain and promote it, Ms. Harrison created a cartoon-style booklet and commissioned photographs of kitschy sci-fi characters inspired by the New Wave band Devo to put on the discs, which were handed out at trade shows.
"Your expertise doesn't have to be something the company even knows they care about yet," says Ms. Harrison. "But you have to be an evangelist for why they should care."
She was recruited out of HP and went on to manage marketing for other high-tech companies before founding Launch Pad 11 years ago.

2. Polish your public speaking.
Libby Sartain, senior vice president of human resources and chief people officer at Yahoo Inc., attributes much of her advancement to speaking at industry conferences and forums. "That got me noticed, " says Ms. Sartain. She had developed an expertise in compensation and benefits and the drivers of health-care costs while at Southwest Airlines Inc., where she'd worked for 13 years, eventually becoming its "vice president of people" before joining Yahoo in 2001.
"Other people are at these conferences, noticing your talent," she says. That's been a hiring strategy for Yahoo, says Ms. Sartain, who's in charge of recruiting at the Internet company. "We send our recruiters to conferences to look at who's speaking and whether they're any good," she says. Women, she says, are often in the minority at technology meetings. "I think women often miss those opportunities," says Ms. Sartain.

3. Identify new ways to build business.
Lisa Sloan Walker, a business director at Campbell Soup Co., who runs its new-business development group, has drawn notice by finding new ways to showcase the company's products. As a junior marketer in the condensed-soup unit 10 years ago, she says, she spotted a fresh advertising tactic. She noticed that many shoppers purchased tomato soup for cooking casseroles and other dishes and proposed promoting the soup as an ingredient instead of as a meal in itself.
"It helped grow the business," Ms. Sloan Walker says. "In the whole scheme of things, it wasn't one of those things that most senior management was focused on, but I created a space for myself and was able to execute it." As a result, the Camden, N.J.-based company sent her to Tokyo for a stint, a rare opportunity for someone at her level then. "It helped me grow as a business leader," she says.
Back in the U.S., as a beverages brand manager, she helped revive the V8Splash business by linking it with USA Swimming, she says. The move gave her "great visibility. It was one of those things we hadn't done much as a company," she says. The company tapped her to lead its single-serve beverage group and later as marketing director for Campbell's beverage business, eventually putting her in charge of soup new-business development.
"I think a lot of women wait to be asked or expect they can work hard and good things will come to them," she says. "I go out there and find people who are willing to listen and help me sell my ideas."

4. Participate in an industry association.
Don't just join, volunteer, says David Perry, managing partner of Perry-Martel International Inc., an Ottawa recruiting firm. Leading a membership or fund-raising committee has particularly high visibility, says Mr. Perry. "If I'm looking for a VP of marketing or sales, that's where I'll look," he says. "The first thing I do is hit an association's Web site and see who's speaking at a conference. They get all the calls."
Writing articles about what you know also gives you exposure and enhances your credibility. "Whether it's letters to the editor or opinion pieces for industry journals or trade associations, white papers, or press releases, the idea is to be a source for people in your industry," says Mr. Perry, co-author of "Guerrilla Marketing for Job Hunters" (Wiley, 2005).
Volunteering for community-service organizations and company-sponsored activities also can raise your profile. But don't be too selfless about your philanthropy, says Mr. Perry. "Decide who you want to get noticed by," he says, "and go and find out what boards they're on, what charities they support, and go volunteer for those. It's the easiest way to get to your end goal."

5. Publicize your achievements.
Use your company's newsletter or Intranet site to highlight what you and your group have done. "On our site, we have a place where any employee can write in a story idea -- a product-improvement story, a community story," says Nancy Reardon, senior vice president and chief human resources officer at Campbell Soup Co. With company employees from the CEO on down visiting the site, she says, "it's a great way to get noticed. Employees world-wide email each other about these ideas, so you get noticed by both colleagues and people above you in the organization."
Don't be afraid to toot your own horn, says Ms. Reardon. "I do think women in general hang back," she says. "I think it's important for women to learn how to brag, but in a positive way...by not only showcasing what they've done but giving credit to the people around them."

-- Ms. Halperin is a free-lance writer in New York.

Email your comments to cjeditor@dowjones.com.

The Secret of How Microsoft Stays on Top
December 2, 2002

Critics say Microsoft's incredible two-decade run at the top of the computer industry has less to do with innovation than it does with bully tactics. But new research from Harvard Business School professors Marco Iansiti and Alan MacCormack suggest a different reason: the company's ability to spot technological trends and exploit key software technologies.
by Sean Silverthorne, Editor, HBS Working Knowledge


Perhaps no technology company outside of IBM has been able to keep on top of the industry as much as Microsoft. What's more, Bill Gates & Co. have achieved this success during times of incredible technological transformation, usually just the period when titans are vulnerable to being knocked off by disruptive technologies.

Critics often argue that Microsoft can't innovate its way out of a paper bag—instead it has used its monopoly position to stamp out competition and force an industry to bend to its standards. But now comes a serious and much-to-be discussed study of the inner workings of the company from Harvard Business School professors Marco Iansiti and Alan MacCormack. Their take: Microsoft wins through effective management of its intellectual property and an ability to spot and react to important trends before they take hold.

In this e-mail interview with HBS Working Knowledge editor, Sean Silverthorne, Iansiti and MacCormack discuss their findings.

Silverthorne: Although many large companies have been swamped by so-called disruptive technologies, Microsoft has remained at the top of its game for more than two decades—a time of tremendous technological innovation. What are the "dynamic capabilities" that contribute to its long lasting success?

Iansiti and MacCormack: The essence of our argument is that the key to Microsoft's success is the way it manages its intellectual property. By this we don't just mean patents, but the broad base of knowledge that the company has built over time, which is largely embedded in its software code libraries. This base is critical to internal innovation, as it makes product development more efficient and powerful. Additionally, it spawns external innovation, in Microsoft's large community of partners, which now numbers almost 40,000 firms.
To understand the way Microsoft manages IP, you have to go back to the roots of the company. Back in the late 1970s, its first products were aimed at helping other programmers develop applications for the computing hardware of the day. It focused on developing programming platforms, in contrast to most other firms who focused on stand-alone applications. It was an approach that permeated both their tools business—the software they provided to other programmers for developing applications; and the operating system business—the software upon which these applications would run.

Professor Alan D. MacCormack

It was during these early days that Microsoft began to invest in creating libraries of programming "components": building blocks of intellectual property that could be used to develop different software applications. The original impetus was the need to provide programmers with pre-defined interfaces through which they could access commonly used functions and features. Why reinvent the wheel if someone else had already worked out what it should look like? In essence, Microsoft began codifying knowledge and embedding it in a form that could be leveraged, both by itself and others. But it got to decide which components to "expose," and which to keep hidden, providing a mechanism through which its core intellectual property could be protected.

As the company expanded, Microsoft formalized this component framework and developed a "programming model" to go along with it—in essence, defining the way that applications should interact with its preexisting software components. It extended the model to its application business, sharing increasing amounts of code between products like Word and Excel. Over time, as more and more partners signed up to use the model, developing applications for Microsoft's operating systems and using Microsoft's tools in the process, the power of the platform became evident. It was a win-win relationship—the community of development partners received benefits in terms of enhanced productivity, while Microsoft's position was strengthened through the deployment of products that were complementary to its own. This made it tough for competitors. They were not just going head-to-head with Microsoft's products—they were also competing against the repository of knowledge accumulating in Microsoft's component libraries.
By now, you will see that Microsoft was building a rather unique resource. Its approach to software "componentization" allowed the firm to leverage intellectual property across multiple product lines. And it also made it attractive for third-party firms to leverage Microsoft's platform, as opposed to others. But how did this allow the firm to respond effectively to technological change? First, it had an established base of knowledge that could be brought to bear on newly emerging opportunities. Second, it had a well-defined process through which new intellectual property could be codified and integrated into this knowledge base in a way that ensured compatibility with its existing components. And third, it established processes to evolve this knowledge base to ensure it reflected changes in the broader technological context. For example, the programming model was updated in the early 1990s to reflect the increasing use of networks. Then later in the 1990s, Microsoft once again began "re-architecting" its component base to facilitate the delivery of "Web services," applications that can be activated remotely over the Internet.

Only once in fifteen years did Microsoft products fail to win more than 50 percent of these reviews.
—Marco Iansiti and Alan MacCormack

Putting this all together, we see that much of Microsoft's long-term success can be attributed to investments that have created "dynamic capabilities" for responding to technological change. These investments include: the process of software componentization through which it captures and embeds intellectual property in an accessible form; the component libraries that result from this process, which form a vast repository of knowledge that can be leveraged across its product lines; a programming model that allows developers, both inside and outside the firm, to access these components through well-defined interfaces; and the process through which both its software components and programming model are updated to reflect developments in the broader technological context.

Q: Microsoft has been criticized as a company that relies more on predatory tactics than great products and innovation to succeed. What can you say about Microsoft's product development performance over the years?

A: We analyzed the development performance of Microsoft products for the past fifteen years. Our aim was to come up with an objective measure of performance—one that was unrelated to arguments about market power, monopoly position, or predatory tactics. This meant we excluded any consideration of measures like market share or profitability, and focused instead on the ratings given to Microsoft products by independent reviewers. We found that Microsoft products were consistently rated highly when compared to competitive offerings, a result that held true across different product categories and over time. On average, Microsoft products "won" more than two-thirds of the competitive reviews we examined. Indeed, only once in fifteen years did Microsoft products fail to win more than 50% of these reviews. Given the number and diversity of competitors they faced in each different product category, this consistently high performance is striking.

When developers find attractive alternatives to Microsoft technologies as they did when the Internet first emerged—it's not long before the tools division starts to hear about it.
—Marco Iansiti and Alan MacCormack

We also evaluated Microsoft's response to a "technological transition"—a major change in the industry that required the firm to rethink its strategy. We chose to examine the rise of the World Wide Web, given that this transition brought about the rise of a new product category—the Web browser. Microsoft therefore needed to develop a product based on technologies with which it had little previous experience. Our analysis focused on Microsoft's first two internal browser development projects, comparing their performance to a sample of Internet software projects completed at the same time. We discovered that Microsoft's projects exhibited significantly higher productivity than the sample average. Furthermore, we found that the resulting products were rated as equal to or higher in quality than competitive offerings. These results often surprise people, given the perceived wisdom that incumbents have difficulty responding to major technological changes.

Q: Microsoft was originally late in its embrace of the Internet. Yet Bill Gates was able to quickly change strategy to allow the company to become a top competitor in selling Internet-related technologies and services. How did Microsoft accomplish this?

A: In any industry subject to rapid technological change, a firm faces two big challenges. The first is in recognizing the threats (and opportunities) presented by newly emerging technologies.

The second is in mounting an effective response to these threats. Microsoft appears to have solved these problems, giving it the ability to quickly adapt to changing circumstances. The way they have tackled each however, differs in nature.

In terms of recognizing potential threats, Microsoft has built-in "sensing" mechanisms to keep abreast of what is happening in the broader technological context. Much of this ability comes from their tools division, which tracks the needs of the many developers worldwide who write for Microsoft platforms. When these developers find attractive alternatives to Microsoft technologies—as they did when the Internet first emerged—it's not long before the tools division starts to hear about it. You also have to realize that Microsoft has several thousand developers inside the company who are constantly examining the potential of new technologies—"lead users" if you like. When all these sources start telling you the same thing, it's hard not to pay attention. Even if it takes a while to work out exactly what should be done.

In terms of responding to potential threats, Microsoft consistently plays to its strengths—its overall platform strategy, its existing knowledge base, and its process of componentization. For example, when developing the new Internet Explorer browser, the development team opted to leverage its existing programming model, despite the fact that this would initially slow the project down. From this point on, competitors in the browser space faced a formidable challenge—they were competing not only against the Explorer team, but also against the continual improvements made to Microsoft's underlying platform over its many years of existence.

Q: What should company leaders everywhere take away from your research in terms of how to compete in the middle of a technological revolution?
Our research highlights two major themes. The first is the importance of taking a proactive approach to managing the development of a firm's intellectual property. We're not talking about patenting strategies here, but rather the set of processes that contribute to building and evolving a firm's knowledge base. These processes fall into four categories: creation/codification; integration/assimilation; application/exploitation; and evolution/adaptation. Inside Microsoft and other successful firms we've studied, managers give careful consideration to how each of these activities is conducted. In doing so, they pay explicit attention to the way these activities interact with processes that leverage the resulting intellectual property assets (e.g., product development).

We're not talking about patenting strategies here, but rather the set of processes that contribute to building and evolving a firm's knowledge base.
—Marco Iansiti and Alan MacCormack

The second theme that emerges from our work is the importance of architecture. This theme emerges at multiple levels—in the design of Microsoft's products, its platforms, and its intellectual property. At the product and platform level, the key idea is that in today's networked economy, no firm can remain an island. Technological innovations are increasingly brought to the market by networks of firms, each focused on only specific pieces of the overall puzzle. Competition takes place both between competing platforms and between products that build on top of these platforms. Managers must therefore make explicit choices about the technology architectures they adopt, deciding what to "design/make" themselves, and what to rely upon others to provide.

With regard to developing intellectual property, our work demonstrates the need for an architectural framework that defines how the various building blocks of IP should fit together. Without such a framework, these efforts are likely to be fragmented and difficult to integrate. At Microsoft, this role is performed by its programming model, which describes the interfaces through which its software components can be accessed. Critically, this model is designed to be flexible enough to facilitate future evolutions in content, as required to reflect changes in the broader technological context.

Q: Gates has said, and history suggests, that Microsoft one day will fail. What will be the company's downfall?

A: If we knew the answer to this question, we'd be rich!
Slightly more seriously, the main threat probably comes from competing platforms—alternative systems that enable large numbers of developers to form competing innovation ecosystems. These other platforms, promoted by competitors such as Sun and IBM, are currently strong alternatives to Windows and the Microsoft Developer Network. One of the most interesting is the Linux/open source platform. This platform has recently become associated with IBM, which has invested resources in its development and extension, and used it to promote complementary hardware, software, and services. However, this is less a story of sudden dramatic failure and more a story of ongoing competition at the platform level. The presence of competing platforms like Linux requires that Microsoft continue to invest in its IP base and integrate new innovations into its own platform. If it fails to do this, it will be certain to lose out to alternatives.

Q: What is the next stage of your research?
A: We have two ongoing streams. The first is additional work with Microsoft and others in the software industry that have adopted similar approaches to managing intellectual property. The aim is to develop a blueprint for the most important processes (e.g., componentization) as well as to assess how we can measure the resources created and the changes subsequently made to these resources to reflect the broader technological context. Our hypothesis is that if we look at the evolution of Microsoft's component base, we'll see greater amounts of change around the time of major technological change, such as the rise of the Internet.
The second stream of research seeks to extend our work into non-software industries, to understand how the dynamics might differ. For example, how would Microsoft's approach translate to the semiconductor industry or the biotechnology industry? Both industries share similarities with software, in that firms codify their intellectual property into libraries that can be reused and extended over time. But do we observe the same dynamics in terms of firm performance? And can we identify similar processes and resources inside these firms? As you can see, we have a long way to go. But we believe that this stream of research has the potential to change the way we think about how firms develop capabilities for competing in environments of rapid technological change.

Siemens CEO Klaus Kleinfeld: "Nobody's Perfect, but a Team Can Be"

Corporate leaders must build international organizations to compete in today's economy and be prepared to defend globalization at home, according to Klaus Kleinfeld, chief executive of the
German electrical and engineering conglomerate Siemens AG.

Speaking at a recent Wharton Leadership Lecture, Kleinfeld said U.S. concerns about the sale of port assets to a Dubai-based firm, and French resistance to the sale of yogurt-maker Danone -- which French officials called a "national treasure" -- highlight growing fears that globalization comes at the cost of jobs in developed countries. Those fears could spark a backlash against globalism and limit future economic growth, he warned. "The common people -- the voters -- do not understand what's going on and see a threat," said Kleinfeld. "We, as leaders, need to be responsible for explaining the positives of globalization."

Siemens, with sales last year of $91.5 billion and locations in 190 countries, operates a range of businesses, including power, transportation, automation and controls, healthcare, lighting, and building technology. Germany, where Siemens operates out of joint headquarters in Munich and Berlin, has benefited as a net exporter in an increasingly global economy, Kleinfeld suggested. "But people do not connect the dots. Business needs to do the explaining more than ever before. If we don't, in a democracy things swing according to what the common man thinks -- and that's scary."

Siemens was a pioneer in extending the German workweek from 35 hours to 40, with no additional pay, in 2004. Unions grudgingly agreed after the company threatened to move plants to Hungary. This spring, unions have targeted Siemens and DaimlerChrysler AG for strikes this year by workers seeking a 5% pay increase.

At 48, Kleinfeld, is a marathon runner who is viewed as a youthful and outspoken business leader in Germany and a person who is in touch with American business culture after a three-year stint in Siemens' U.S. headquarters in New York.

During his Wharton lecture, Kleinfeld stressed his conviction that increased labor flexibility will ultimately benefit German workers. "If people want to compete, they have to adjust and understand what the world is like," he said. "I can only hope that more and more people understand that only if we are competitive will we have secure jobs and be able to offer new jobs."

With 460,000 employees worldwide, including 70,000 in the United States, the 159-year old company is the world's eighth largest private employer. Siemens' German operations employ 165,000 and are costly to run, Kleinfeld noted, but they are not a drag on the overall corporation. "The teams in Germany are among our most intelligent. They bring our products to world markets at a fast pace. You should never change a winning team." He said customers from all over the world come to Siemens facilities in remote parts of Germany to learn about cutting-edge products. "Whether I have additional costs, or not, doesn't matter as much as the speed to market and the quality of the design. We're not talking about a pure cost game."
Siemens is expanding rapidly in Asia, the Middle East and other parts of the globe, including the United States. In 1995, Germany represented 43% of sales, but that figure dropped to 21% by 2005, while the percentage of German employees declined from 57% to 36% in the same period.
The company's global expansion has raised concerns about "offshoring" in Germany. "Offshoring is a funny thing for an international company. Where is your shore?" asked Kleinfeld. "My shore is as much in India and China as it is in Germany or the U.S." Siemens will continue to migrate to developing regions where new sales are growing. "I really see more international businesses, or fragments, run out of those growth regions like India and China," he said.

The company "is going to invest in almost all of the opportunities we see that make sense for us," noted Kleinfeld, who added that Siemens is not limited in its expansion by finances. The biggest constraint is a lack of qualified people to lead businesses in these new markets. Indeed, his lecture was titled "Next Generation Talent Management."

"In today's world, knowledge travels faster than ever before, so if you are talking about a sustainable competitive advantage, probably the only one is the quality of the people you have and the way they interact as a team," he said, adding that leaders within Siemens are evaluated on general management abilities, such as analytic skills, and on personality traits, including self-discipline and the ability to speak out for what they believe in. In addition, Siemens looks for rising executives with a specialty, such as a background in math or engineering, a second language or industry expertise. "What I want to see is an individual who has the passion to do a deep drill to understand something to the very bottom."

Exporting German Engineering
Kleinfeld earned a PhD in strategic management from the German University of Wuerzburg in 1992 and a master's degree in business administration and economics from the University of Goettingen. He joined Siemens in 1987 in the company's corporate sales and marketing division. He later founded Siemens Management Consulting and was executive vice president of the company's medical engineering group in 2001, when he was appointed chief operating officer of the company's U.S. businesses in New York. A year later he was promoted to chief executive of U.S. operations. In 2004, he moved back to Germany and in early 2005 was appointed chief executive of the company. Within months, he sold off Siemen's troubled mobile handset business to BenQ of Taiwan.

Kleinfeld noted that the firm was founded by an entrepreneur, Werner von Siemens, and is rooted in electrical technology. "Electricity was so cool, and it still is today. It is really what led us into all the businesses we are in now." Within a few years of its founding, the company opened offices in London and began building a telegraph system for Russia. "We were formed as an international company, but around German engineering values, and we were able to export that" throughout the world, said Kleinfeld.

He acknowledged that the conglomerate structure has fallen in and out of vogue three times during his career, but said it works for Siemens. "To be successful as a conglomerate, you need to be successful in each of the single businesses, from medical to transportation to communication. You have different competitors in each business, but you need to be better than those competitors."

At the same time, the conglomerate structure provides synergies that can boost the performance of individual businesses. For example, following the September 11, 2001, terrorist attacks on the United States, Siemens researchers who were working on pattern recognition in the company's medical business saw opportunities for the same technology in the security sector. The company's building systems division is now developing pattern recognition products.
Another example of the benefits of a conglomerate, he said, is illustrated by Siemens' 2005 acquisition of the Flender Group, a German-based manufacturer of industrial drive systems. Demand for Flender products is up sharply because Siemens' sales force is now carrying the company's products in 190 countries instead of just 20 where Flender had distribution networks on its own.

The conglomerate works well when dealing with clients that have their own complex structure, he added. He points to airports as a growing business segment with complicated needs, from security systems to baggage handling, cooling and heating, and communications, all areas in which Siemens has expertise. Siemens has even built its own simulated airport near Nuremberg to develop and test airport products, including parking guidance, baggage transport and check-in systems. "We can help our customers understand where the path of technology is going," he said. "That increases value for the customer given the speed of change that's occurring" in that area.

"Control Freaks" Need Not Apply
Managers working in the global economy must always think internationally, but act locally, Kleinfeld stated, and he laid out some principles for successful leaders, although each came with a caveat. First, he said, leaders need to "raise the bar" and challenge themselves to deliver outstanding performance and mastery of details, but they must also delegate. "You cannot run the organization as a control freak."

He encouraged self-starters, but only if they also rely on senior managers to protect them from ill-advised schemes. "With entrepreneurial freedom comes the responsibility to think about what's the utmost negative consequence. If you dig a hole in the ship below the water line, you risk the entire ship sinking. That kind of entrepreneurial behavior is not a good idea."
Respect for colleagues and the ability to talk and listen to other members of a team is critical, especially in the age of e-mail. "You don't have the right not to respect the individual even if you are letting that individual go," said Kleinfeld. "There are people who get lust out of firing people. Those are sick individuals and I don't want them in our organization."

He urged executives to work hard and play hard because "they are two sides of the same coin." Kleinfeld also said strong leaders need to maintain their personal independence, but at the same time they must be team players, leveraging the team's resources and information. Finally, he recited what he called his leadership mantra: "Nobody's perfect, but a team can be."

Published: April 19, 2006
http://knowledge.wharton.upenn.edu/index.cfm?fa=viewArticle&id=1447

Greatness is not where we stand, but in what direction we are moving. We must sail sometimes with the wind and sometimes against it but sail we must, and not drift, nor lie at anchor.
Oliver Wendall Holmes

Why Your Employees Are Losing Motivation
April 10, 2006

Business literature is packed with advice about worker motivation—but sometimes managers are the problem, not the inspiration. Here are seven practices to fire up the troops. From Harvard Management Update.

by David Sirota, Louis A. Mischkind, and Michael Irwin Meltzer

Most companies have it all wrong. They don't have to motivate their employees. They have to stop demotivating them.

The great majority of employees are quite enthusiastic when they start a new job. But in about 85 percent of companies, our research finds, employees' morale sharply declines after their first six months—and continues to deteriorate for years afterward. That finding is based on surveys of about 1.2 million employees at 52 primarily Fortune 1000 companies from 2001 through 2004, conducted by Sirota Survey Intelligence (Purchase, New York).

The fault lies squarely at the feet of management—both the policies and procedures companies employ in managing their workforces and in the relationships that individual managers establish with their direct reports.

Our research shows how individual managers' behaviors and styles are contributing to the problem (see sidebar "How Management Demotivates")—and what they can do to turn this around.

Three key goals of people at work
To maintain the enthusiasm employees bring to their jobs initially, management must understand the three sets of goals that the great majority of workers seek from their work—and then satisfy those goals:

Equity: To be respected and to be treated fairly in areas such as pay, benefits, and job security.

Achievement: To be proud of one's job, accomplishments, and employer.

Camaraderie: To have good, productive relationships with fellow employees.

To maintain an enthusiastic workforce, management must meet all three goals. Indeed, employees who work for companies where just one of these factors is missing are three times less enthusiastic than workers at companies where all elements are present.
One goal cannot be substituted for another. Improved recognition cannot replace better pay, money cannot substitute for taking pride in a job well done, and pride alone will not pay the mortgage.

What individual managers can do
Satisfying the three goals depends both on organizational policies and on the everyday practices of individual managers. If the company has a solid approach to talent management, a bad manager can undermine it in his unit. On the flip side, smart and empathetic managers can overcome a great deal of corporate mismanagement while creating enthusiasm and commitment within their units. While individual managers can't control all leadership decisions, they can still have a profound influence on employee motivation.

The most important thing is to provide employees with a sense of security, one in which they do not fear that their jobs will be in jeopardy if their performance is not perfect and one in which layoffs are considered an extreme last resort, not just another option for dealing with hard times.

But security is just the beginning. When handled properly, each of the following eight practices will play a key role in supporting your employees' goals for achievement, equity, and camaraderie, and will enable them to retain the enthusiasm they brought to their roles in the first place.

Achievement related

1. Instill an inspiring purpose.
A critical condition for employee enthusiasm is a clear, credible, and inspiring organizational purpose: in effect, a "reason for being" that translates for workers into a "reason for being there" that goes above and beyond money.
Every manager should be able to expressly state a strong purpose for his unit. What follows is one purpose statement we especially admire. It was developed by a three-person benefits group in a midsize firm.
Benefits are about people. It's not whether you have the forms filled in or whether the checks are written. It's whether the people are cared for when they're sick, helped when they're in trouble.
This statement is particularly impressive because it was composed in a small company devoid of high-powered executive attention and professional wordsmiths. It was created in the type of department normally known for its fixation on bureaucratic rules and procedures. It is a statement truly from the heart, with the focus in the right place: on the ends—people—rather than the means—completing forms.
To maintain an enthusiastic workforce, management must meet all three goals.
Stating a mission is a powerful tool. But equally important is the manager's ability to explain and communicate to subordinates the reason behind the mission. Can the manager of stockroom workers do better than telling her staff that their mission is to keep the room stocked? Can she communicate the importance of the job, the people who are relying on the stockroom being properly maintained, both inside and outside the company? The importance for even goods that might be considered prosaic to be where they need to be when they need to be there? That manager will go a long way toward providing a sense of purpose.

2. Provide recognition.
Managers should be certain that all employee contributions, both large and small, are recognized. The motto of many managers seems to be, "Why would I need to thank someone for doing something he's paid to do?" Workers repeatedly tell us, and with great feeling, how much they appreciate a compliment. They also report how distressed they are when managers don't take the time to thank them for a job well done yet are quick to criticize them for making mistakes.
Receiving recognition for achievements is one of the most fundamental human needs. Rather than making employees complacent, recognition reinforces their accomplishments, helping ensure there will be more of them.
A pat on the back, simply saying "good going," a dinner for two, a note about their good work to senior executives, some schedule flexibility, a paid day off, or even a flower on a desk with a thank-you note are a few of the hundreds of ways managers can show their appreciation for good work. It works wonders if this is sincere, sensitively done, and undergirded by fair and competitive pay—and not considered a substitute for it.

3. Be an expediter for your employees.
Incorporating a command-and-control style is a sure-fire path to demotivation. Instead, redefine your primary role as serving as your employees' expediter: It is your job to facilitate getting their jobs done. Your reports are, in this sense, your "customers." Your role as an expediter involves a range of activities, including serving as a linchpin to other business units and managerial levels to represent their best interests and ensure your people get what they need to succeed.
How do you know, beyond what's obvious, what is most important to your employees for getting their jobs done? Ask them! "Lunch and schmooze" sessions with employees are particularly helpful for doing this. And if, for whatever reason, you can't immediately address a particular need or request, be open about it and then let your workers know how you're progressing at resolving their problems. This is a great way to build trust.

4. Coach your employees for improvement.
A major reason so many managers do not assist subordinates in improving their performance is, simply, that they don't know how to do this without irritating or discouraging them. A few basic principles will improve this substantially.

First and foremost, employees whose overall performance is satisfactory should be made aware of that. It is easier for employees to accept, and welcome, feedback for improvement if they know management is basically pleased with what they do and is helping them do it even better.
Space limitations prevent a full treatment of the subject of giving meaningful feedback, of which recognition is a central part, but these key points should be the basis of any feedback plan:

Performance feedback is not the same as an annual appraisal. Give actual performance feedback as close in time to the occurrence as possible. Use the formal annual appraisal to summarize the year, not surprise the worker with past wrongs.

Recognize that workers want to know when they have done poorly. Don't succumb to the fear of giving appropriate criticism; your workers need to know when they are not performing well. At the same time, don't forget to give positive feedback. It is, after all, your goal to create a team that warrants praise.

Comments concerning desired improvements should be specific, factual, unemotional, and directed at performance rather than at employees personally. Avoid making overall evaluative remarks (such as, "That work was shoddy") or comments about employees' personalities or motives (such as, "You've been careless"). Instead, provide specific, concrete details about what you feel needs to be improved and how.

Keep the feedback relevant to the employee's role. Don't let your comments wander to anything not directly tied to the tasks at hand.

Listen to employees for their views of problems. Employees' experience and observations often are helpful in determining how performance issues can be best dealt with, including how you can be most helpful.
Remember the reason you're giving feedback—you want to improve performance, not prove your superiority. So keep it real, and focus on what is actually doable without demanding the impossible.

Follow up and reinforce. Praise improvement or engage in course correction—while praising the effort—as quickly as possible.
Don't offer feedback about something you know nothing about. Get someone who knows the situation to look at it.

Equity related

5. Communicate fully.
One of the most counterproductive rules in business is to distribute information on the basis of "need to know." It is usually a way of severely, unnecessarily, and destructively restricting the flow of information in an organization.

A command-and-control style is a sure-fire path to demotivation.
Workers' frustration with an absence of adequate communication is one of the most negative findings we see expressed on employee attitude surveys. What employees need to do their jobs and what makes them feel respected and included dictate that very few restrictions be placed by managers on the flow of information. Hold nothing back of interest to employees except those very few items that are absolutely confidential.

Good communication requires managers to be attuned to what employees want and need to know; the best way to do this is to ask them! Most managers must discipline themselves to communicate regularly. Often it's not a natural instinct. Schedule regular employee meetings that have no purpose other than two-way communication. Meetings among management should conclude with a specific plan for communicating the results of the meetings to employees. And tell it like it is. Many employees are quite skeptical about management's motives and can quickly see through "spin." Get continual feedback on how well you and the company are communicating. One of the biggest communication problems is the assumption that a message has been understood. Follow-up often finds that messages are unclear or misunderstood.
Companies and managers that communicate in the ways we describe reap large gains in employee morale. Full and open communication not only helps employees do their jobs but also is a powerful sign of respect.

6. Face up to poor performance.
Identify and deal decisively with the 5 percent of your employees who don't want to work. Most people want to work and be proud of what they do (the achievement need). But there are employees who are, in effect, "allergic" to work—they'll do just about anything to avoid it. They are unmotivated, and a disciplinary approach—including dismissal—is about the only way they can be managed. It will raise the morale and performance of other team members to see an obstacle to their performance removed.

Camaraderie related

7. Promote teamwork.
Most work requires a team effort in order to be done effectively. Research shows repeatedly that the quality of a group's efforts in areas such as problem solving is usually superior to that of individuals working on their own. In addition, most workers get a motivation boost from working in teams.
Whenever possible, managers should organize employees into self-managed teams, with the teams having authority over matters such as quality control, scheduling, and many work methods. Such teams require less management and normally result in a healthy reduction in management layers and costs.
Creating teams has as much to do with camaraderie as core competences. A manager needs to carefully assess who works best with whom. At the same time, it is important to create the opportunity for cross-learning and diversity of ideas, methods, and approaches. Be clear with the new team about its role, how it will operate, and your expectations for its output.
Related to all three factors8. Listen and involve. Employees are a rich source of information about how to do a job and how to do it better. This principle has been demonstrated time and again with all kinds of employees—from hourly workers doing the most routine tasks to high-ranking professionals. Managers who operate with a participative style reap enormous rewards in efficiency and work quality.
Participative managers continually announce their interest in employees' ideas. They do not wait for these suggestions to materialize through formal upward communication or suggestion programs. They find opportunities to have direct conversations with individuals and groups about what can be done to improve effectiveness. They create an atmosphere where "the past is not good enough" and recognize employees for their innovativeness.
Participative managers, once they have defined task boundaries, give employees freedom to operate and make changes on their own commensurate with their knowledge and experience. Indeed, there may be no single motivational tactic more powerful than freeing competent people to do their jobs as they see fit.

Reprinted with permission from "Stop Demotivating Your Employees!" Harvard Management Update, Vol. 11, No. 1, January 2006. See the latest issue of Harvard Management Update.
David Sirota is chairman emeritus, Louis A. Mischkind is senior vice president, and Michael Irwin Meltzer is chief operating officer of Sirota Survey Intelligence. They are the authors of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want (Wharton School Publishing, 2005). They can be reached at MUOpinion@hbsp.harvard.edu.



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to grow, make someone accountable for growth BY DAVID MEER

Organic growth is critical, but it does not come easy - even in companies with powerful brands like Coke

Coca-Cola grabbed headlines recently when it named executive Mary Minnick to a new post overseeing three key growth functions: marketing, innovation and strategic growth. In essence, Coke created a "chief growth officer" position in all but name. But if the experiences of companies like Colgate- Palmolive, H.J. Heinz, Interpublic Group and Hain Celestial in establishing that role play out again, Ms. Minnick will have limited ability to reverse the beverage giant's falling market share. To prevent the job from losing its fizz, and Coke from losing even more share, Coke's new growth chief must be given the reins to three areas that most companies have been reluctant to cede: the way the company defines and funds new product development; the way it determines the level and mix of its marketing investments; and how it sets internal incentives to create a culture of creativity and risk-taking. Failure to hand over these reins will only result in a new but inconsequential box on the Coke organizational chart. We base these conclusions on our following of the chief growth officer trend and our research into the issue underlying it: the importance and difficulty of organic growth. A Marakon survey last year found that organic growth is the key issue for 59% of senior executives running U.S., European and Asian companies. Our studies of corporate performance indicate that organic growth is the single most important driver of long-term value in the capital markets. While organic growth is critical to capital markets success, it no longer comes easy in a highly competitive economy of fast-shifting consumer tastes - even in companies with powerful brands like Coke. For the job to have teeth, a chief growth officer must have the authority to shape the internal conditions that make companies with more robust organic growth distinct from the laggards. Three critical capabilities stand out:

The ability to penetrate the consciousness of customers in ways that traditional market research does not address. Though companies spend billions annually on marketing research, many have only a superficial understanding of customer behaviors, attitudes and economics. As a result, many companies fall prey to competitors that are better at discovering the true drivers of customer buying behavior. SABMiller PLC, the $8 billion brewer, for years was frustrated by its inability to gain share from U.S. market leader Anheuser- Busch. Costly studies on the attitudes of its core audience of young male adults produced advertising featuring such eye candy as mud-wrestling supermodels. The ads caught attention but didn't drive customers to the store. After conducting much deeper research on what actually drove purchasing behavior, the company climbed on the lowcarb diet craze. Sales of Miller Lite have rebounded from yearly declines to high single-digit increases.

The discipline to maintain growth investments through good and bad times. Pressure to cut marketing and R&D spending can be enormous. One recent study of U.S. chief financial officers found 80% would curb what they felt was "discretionary" spending (advertising, R&D, etc.) if quarterly numbers were in danger. Yet keeping the foot on the growth pedal is essential, our study last year found. Some 73% of the companies in the top quartile of revenue growth increased R&D spending while only 55% of the companies in the bottom quartile did so. One of the secrets to CEO Jim Kilts' turnaround of Gillette was refusing to give quarterly guidance to analysts. Kilts feared that doing so would force him to make his growth initiatives (new products, international expansion and brand building) run in fits and starts.

Creating a company culture that supports growth. Our research demonstrates that companies with better growth stories consistently do a better job of tying incentives to the growth agenda, removing penalties for failed growth initiatives and attracting and retaining creative people. At Google (and, long before Google, at 3M), scientific and engineering staff are encouraged to pursue their own research ideas 20 percent of the time. Knowing they can spend time on the projects that truly excite them keeps staff motivated and regularly rewards the company in terms of new and improved products.

Shouldn't CEOs play the role of chief growth officer as Kilts has done at Gillette? Ideally, yes, but given the demands today on CEOs (including Sarbanes-Oxley), it's getting harder for them to devote the time and energy required. To make growth a real priority, someone must be made accountable and granted broad powers that cut across traditional functional silos such as marketing, strategy, R&D and human resources. Thus we applaud companies like Coke that have carved out chief growth officer jobs. However, they need to give much more thought and vest much more authority in these positions if they want their companies back on the growth track.

David Meer