No Shortcuts: The Road Map to Smarter Marketing

BCG Perspectives, Sep 2010

Companies invest staggering sums of money in marketing with surprisingly little rigor. Because it is notoriously difficult to measure and optimize the return on marketing investments (ROMI), marketing executives often rely on rules of thumb—such as spending as a percentage of revenues—to guide their decision-making. Our research and experience suggest that these shortcuts can be imprecise, unreliable, and just plain wrong. We recommend another approach—one that goes beyond marketing to encompass all commercial investments. It integrates a top-down strategic perspective and a rigorous bottom-up analysis.

More than $1 trillion a year is spent on marketing.

The figure is even higher if you include related commercial investments, such as trade spending, price promotion, and sales force incentives.

Many companies spend as much—or more—on advertising alone as they invest in capital expenditures.

As marketing budgets continue to escalate, managers are coming under increasing pressure to prove the value of their marketing investments over time.

At the same time, marketing is becoming much more complex as digital and viral marketing vehicles proliferate and market segments fragment.

Another complicating factor is that marketing performance depends heavily on elements that either are difficult to measure precisely—such as the content of an ad and its creative execution—or emerge over many months and years, such as the impact of marketing on brand perception.

In the face of such complexity, managers turn to rules of thumb, such as spending as a percentage of revenues, to guide their budget allocations for marketing.

To test some of the common rules of thumb used to set spending on marketing, The Boston Consulting Group and Marketing Analytics, a leader in market-response modeling, reviewed a data set of comparable marketing-mix models for 75 consumer brands.

In our joint research and analysis, we found a wide variance in marketing impact, efficiency, and return on investment—even across a relatively similar collection of brands.

We also found that five of the most commonly used rules of thumb for marketing investments had no clear, consistent relationship to marketing performance in the sample we reviewed.

Managers who rely on such rules, therefore, could be using the wrong approaches to allocate their marketing budgets across business portfolios and the marketing mix.

Rather than look for shortcuts, managers should embrace the complexity of optimizing returns on marketing. We recommend that they integrate a top-down strategic perspective on commercial investments with a rigorous bottom-up analysis.

Such a comprehensive approach would incorporate all the tactics that managers generally consider when they are optimizing ROMI, as well as those that fall under the broader banner of return on commercial investments (ROCI).

Managers could use this approach to evaluate commercial investments dispassionately, on the basis of their ability to drive incremental sales, influence consumers at every point in the purchase decision, and build brand equity for the long term. Consequently, companies would spend on the right things, spend in the right ways, and be able to measure and optimize that spending continuously.

To achieve these goals, corporate leadership must establish a sustainable capability to measure and optimize commercial investments. Only then will they begin to reclaim the 15 to 30 percent of spending that typically is wasted today.=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

Axa’s rebranding

Case study: Axa’s rebranding

Financial Times, 9 Mar 2011

In 2005, Axa, the France-based insurance provider, had just celebrated 20 years of growth and become a world market leader. Henri de Castries, chief executive, decided to launch an initiative aimed at becoming the first choice – for customers, commercial partners or employees – in its fields of insurance and asset management.

The challenge.

Axa had to differentiate itself from rivals. But the Axa brand attributes – including the brand slogan “Be Life Confident” – no longer seemed appropriate.

Opinions of executives, customers and employees were analysed in depth by a multidisciplinary Axa Brand Spirit taskforce, which was also responsible for proposing action. In early 2008, it concluded that Axa must win customers’ trust through the core attributes of being “available”, “attentive” and “reliable”.

Ramifications.

Axa had to prove it had the attributes identified by the taskforce. This was the thinking behind a new slogan “redefining / standards”, which was launched internally through an online forum in which 55,000 employees participated worldwide.

Further challenges.

In 2007, the Axa brand was perceived as cold and did not inspire trust among customers. Similarly, it had failed to resonate with employees, who did not know how to help customers be “life confident”.

The response.

The Brand Spirit taskforce was more than a marketing team. Importantly, for instance, it successfully encouraged the heads of different divisions – including senior human resources, marketing and communications executives – to collaborate with each other.

Such cross-fertilisation helped them move quickly from concepts to practical solutions. For instance, core attitudes were soon translated into customer-facing behaviours backed up by action plans and monitoring schemes. Employees were told what being available, attentive and reliable would actually mean in practice when dealing both with each other and with customers.

In addition, the Brand Spirit team suggested making the new brand flexible in order to make it adaptable to multiple business needs. For example, the “redefining / standards” motto could be tweaked easily into “redefining / healthcare”, “redefining / pensions” or “redefining / car insurance”, while having an overall theme.

What happened.

Axa Group’s own customer satisfaction index has improved each year since the rebranding was performed.

Although “redefining / standards” did not change Axa immediately into the “preferred company” it wants to become, Interbrand, the market research firm, for the first time ranked the brand first worldwide in insurance in both 2009 and 2010.

Key lessons.

First, rebranding is also about change management. It must create the right momentum among employees and include them.

Second, rebranding requires leadership. The attitudes Axa employees must adopt towards customers are the very ones they expect from their managers.

Third, a successful brand launch combines cognitive and emotional elements – the Axa brand must address the heart and the mind. While the research was very analytic, the final internal online forum of May 2008 was a highly energetic and sensitive experience for Axa. Employees were not only allowed but invited to share concerns and to provide new ideas and solutions.

Ultimately, a brand is less about a new design of marketing brochure than a mindset that is evident every time an employee deals with a customer.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

The ABCs of Pricing

The ABCs of Pricing

Inc,Feb 2011

Buyers are irrational. Predictably so. Here are three of the frameworks–anchors, bumps, and charms–they use to decide what they’ll pay for your product or services.

Pricing strategies and methodologies are a good bit of science coupled with an equal amount art. To make sure your price is right, you have to continually balance your own cost structure and profitability with customer perceptions of value and your competitors' tactics. The good thing when it comes to pricing is that a lot of the work is done for you if you know what to look for. When searching, however, you have to understand that the buying process isn't as rational as our old econ professors or common sense would have us believe. It's irrational—predictably so.

If you try to look at the market from a strictly rational point of view, you'll end up setting prices that make sense to you but not to your prospects. The far easier path is to have a pricing strategy that plays to your prospects' own irrational behaviors. I'll give three frameworks—anchors, bumps, and charms—that'll help you do so.

Anchors

Let's take a look at the world of personal electronics since it's something very familiar to most of us.

Apple recently developed an iPod Shuffle that sells for under $50 and AppleTV, which sells for under $100. Those price points aren't arbitrary. Many of us have the $50 and $100 price points anchored in our minds. In general, we are conditioned to accept them as reasonable for certain types of products and services. Were they to sell either product for $10 more, they'd get dramatically fewer sales, even though the relative cost hasn't changed much.

Every established industry already has anchors in play. The art of pricing, though, is determining how you'll use those anchors. Significant value-adds allow you to use those anchors as baselines rather than straightjackets. But you still need to recognize that established anchors have a very, very strong effect on your prospects' first reactions to the pricing of your product.

Bumps

If anchors set the baseline, bumps let people know what grade of product they're getting. Imagine that you're looking at a car in the $25,000 price range. Would you check to see if it had power locks, windows, and steering? Now, what if we were talking about a $15,000 car?

There's a pretty clear demarcation between entry-level cars and mid-grade cars. When a car crosses that $20,000 threshold, we start expecting the features and luxuries of a mid-grade car.

The thing to remember about bumps is that we're primed to make certain assumptions about the quality of the offer. When we go from that $25,000 car to one costing $35,000, we have even higher unconscious expectations.

What often gets people to buy a higher grade of product or services isn't the benefit or features, but rather, the way the prospects view themselves. Many people who buy Audis know there's mechanically little difference between them and Volkswagens, but they're buying the premium version because they view themselves as premium customers.

The other dynamic that increases purchases of higher-grade products is the fear of under-buying and having to buy either the higher grade or the same grade sooner. We see this play out in electronics and computers quite often—we know that the mid-grade desktop computer is going to be obsolete in a few years, but surmise that the high-end configuration may live long enough to be worth it. Many people will pay more to overbuy rather than have to replace something all over again in the near future.

When you're setting your prices, you have to make sure you haven't unintentionally set a bump that either blurs or mistakenly mismatches the grade of product or services. For instance, a $19.99 and $22.99 pricing methodology isn't nearly as clear as a $19.99 and $29.99 framework. In the latter example, it's pretty clear that there's a bump in grade rather than something relatively minor like a difference in the type of oil used.

At the same time, if your competitors have anchored the price of the basic oil change at $19.99 and yours costs $29.99, you can bet that you're going to have to position or bill that service as premium. That's what your prospects are going to expect.

Charms

A price that's a little less than the round number is called a charm price. I've already used one in this piece when I used $19.99 rather than $20. As annoying as we might find charm pricing, it's a market dynamic that affects buying decisions.

The rationale behind charm pricing is that it somehow gets us to perceive the value of the offer at the right amount while we at the same time view the cost as lower. When we see $19.99, we assess the value at $20 but the cost as the same as something that's in the $10 to $19 range.

Many people think that using charm pricing is somehow demeaning or tricky to prospects—or that playing such games diminishes the seller's credibility. Still others think that charm pricing doesn't work on savvy, smart buyers. While there may be grounds for some of the concern about manipulation, we have to return to our premise that the buying process is irrational, even for savvy, smart buyers. Rolex, Mercedes, Apple, and Louis Vuitton—all premium, sophisticated brands—use charm pricing and yet we don't feel tricked or that their offers are anything but premium. What makes your business better?

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

G.E. Goes With What It Knows

NY Times, 4 Dec 2010

Good leadership is in part knowing when to pull rank, says General Electric CEO Jeffrey Immelt. About four or five times a year it's important to exert your authority and force everyone back on track, he says. "If you do it 10 times, nobody wants to work for you. If you do it zero times, you have anarchy," Immelt says.

TO train its future leaders, General Electric has rising young stars study and visit an array of different organizations, from Google to West Point.

What can managers at the 132-year-old industrial giant learn from Google? A corporate mind-set that prizes “constant entrepreneurship,” says Jeffrey R. Immelt, G.E.’s chairman and chief executive, during an interview at his corporate headquarters in Fairfield, Conn.

And what wisdom is on tap at the United States Military Academy? “Adaptability” and “resiliency” amid uncertainty, says Mr. Immelt — skills as vital to surviving in business as they are on the battlefield.

Strategies are useful, he says, but only if they can quickly adjust to nasty real-world surprises. “In the words of the great philosopher Mike Tyson,” Mr. Immelt says, smiling, “everybody has a plan till they get punched in the mouth.”

“The underlying DNA of G.E., going back a century, has been to invest for growth in its technology base,” says Noel Tichy, a professor at the University of Michigan business school who once ran G.E.’s management school in Crotonville, N.Y. “So by increasing R.& D. spending and with investments in manufacturing, Jeff Immelt is going ‘back to the future’ at G.E.”

ABOUT 1,000 miles from corporate headquarters, inside a gleaming new plant that is the result of a $100 million, three-year investment, G.E.’s back-to-basics strategy is on display.

For each job at the factory, there are about 30 applicants. The payroll has more than doubled this year, to 220, and is on its way to 450 by 2012. Everyone dresses in blue short-sleeve shirts with a G.E. logo and dark pants. Production is organized around the concept of “high-performance work teams,” typically six to 12 workers.

It’s a bottom-up approach that shuns hierarchy, and places most of the responsibility for continuous improvement on the teams. An egalitarian ethos is reflected in the job titles. The boss, Jeanne Edwards, is the “plant leader.” Line workers are called “production associates.” There are no supervisors here, only “leaders” and “coaches.” There aren’t many of those anyway — all but 29 workers are hourly employees, and production associates start at about $35,000 a year.

The team approach seems to be working. Workers and coaches steadily look for ways to tweak the production process for greater efficiency. Since production began last year, the manufacturing “cycle time” — from cutting carbon-fiber fabric to shipping a finished part — has been reduced by 80 percent, says Antroine Townes, 27, an engineer who guides process-improvement efforts.

Immelt says his broadest responsibility at G.E. is to “drive change and develop people.” Any executive who wants to change things, he says, should be guided by “a point of view about what’s going on in the world, and you invest around that point of view.”

Mr. Immelt also sees himself as the champion of what he calls “large-scale entrepreneurship” at G.E. By that, he means identifying long-term market shifts — “what’s next,” he says — and then marshaling the company’s research, manufacturing and marketing resources to capitalize on the opportunity. He firmly believes that corporate size, when focused, can be a crucial advantage in the high-tech industrial markets where G.E. competes.

“It’s about using the scale of G.E., the majesty of the company, to drive growth and change,” he says.

Mr. Immelt’s leadership style, according to colleagues and advisers, is a blend of analysis, encouragement, cajoling and sometimes orders by decree.

Relaxed and affable, he is routinely described as “comfortable in his own skin.” In his autobiography, Mr. Welch wrote that he selected Mr. Immelt as his successor because “I felt Jeff had the perfect blend of intelligence and edge and epitomized the trait that’s so important to me — he was really comfortable in his own skin.”

To find new ideas, Mr. Immelt spends much of his time traveling and talking to customers, industry partners, government officials and analysts.

Leadership by fiat when done in moderation, Mr. Immelt says, can drive change and set a course. “I think that if you run a big company, you’ve got to four or five times a year, just say, ‘Hey team, look, here’s where we’re going,’ ” he says. “If you do it 10 times, nobody wants to work for you. If you do it zero times, you have anarchy.”

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

How to turn data into a strategic asset

Accenture Outlook, Jun 2010

Your company maybe sitting on data gold mines buried among its most basic operations that could help you out perform the competition.

Britain's Royal Shakespeare Company used an examination of seven years' worth of ticket sales data to sell more to existing customers and identify new audiences. Using analytics to look at names, addresses, performances attended and prices paid for tickets, the company developed a marketing program that increased the number of regular attendees at its showcase Stratford-upon-Avon location by more than 70 percent.

Other companies like Netflix, Capital One, Amazon.com, Tesco and Progressive Casualty Insurance Co. have gone even further. They have learned how to use data and sophisticated quantitative models as strategic tools in their efforts to achieve high performance.

But not every company has the ability or desire to put analytics at the heart of its strategy.

After more than a decade of research looking at hundreds of companies and talking with scores of executives, Accenture uses a five-step model called DELTA (data, enterprise, leadership, targets and analysts) that addresses the essential requirements for the successful use of analytics through a series of questions.

1. Data: What’s unique about my data? Few companies realize there is special value in the data they collect since it’s normally the by-product of efforts to reach another business goal. So recognize the uniqueness of your data and put it to work. Think creatively, which probably means capturing some new data and creating new performance metrics.

2. Enterprise: To take advantage of analytics, how much integration is needed throughout the enterprise? Though an enterprise wide focus is essential to the effective use of analytics the vast majority of organizations think of it as an exception rather than the rule. It’s a major challenge to integrate data, analyses and processes in a diverse and far-flung company, with different types of customers and products, operating in a variety of markets and a volatile economic environment. A company that is committed to helping its customers and suppliers make better decisions will share not only data, but also analytics and analytical expertise, to create an extended enterprise. But this is a sensitive issue and while integration is critical to the success of analytics, it has to be done for the right reasons, and with a healthy respect for its limitations.

3. Leadership: What does an "analytical leader" actually do? To compete effectively with analytics, senior leadership, especially the CEO, must be committed. Analytical leaders are well-rounded individuals with both analytical and people skills. Research by Accenture identifies a dozen specific characteristics that define that role. Analytical leaders:

· Develop their people skills.

· Push for more data and analysis

· Hire smart people, and give them credit for being smart.

· Set a hands-on example.

· Sign up for results.

· Teach

· Set strategy and performance expectations.

· Look for leverage.

· Demonstrate persistence over time.

· Build an analytical ecosystem.

· Work along multiple fronts.

· Know the limits of analytics.

4. Targets: How do I target my investment in analytics to achieve the biggest payoff?Companies constantly have to make choices about where to invest resources, and it’s no different with analytical initiative

5. Analysts: Who is an analyst? Executives leading analytical projects rely on analysts from many quarters. Accenture defines analysts as those who use statistics, quantitative or qualitative analysis, and information-modeling techniques to shape and make business decisions—a broad range of activity. But analysts vary widely in their characteristics and responsibilities. They’ve identified four general types of analytical talent: champions, professionals, semi-pros and amateurs.

· Analytical champions

· Analytical professionals

· Analytical semi-professionals.

· Analytical amateurs

The authors conclude that not every company is in a position to base its strategy on the use of analytics and sustain it over time. But putting the DELTA model—data, enterprise, leadership, targets, analysts—into practice can go a long way toward building an analytical capability.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

Three Ways to Spot Star Performers

TLNT, Sep 20, 2010

Creative thinking skills according to the author, help people solve important problems when the by-the-book way does not work.

She says that she made many hiring mistakes by looking for job skills — by keeping her interview only to the specifications of what needed to be done by the person in the next six to 12 months.

People who come in with very impressive experience and just the right skills to do the job that needed to be done right now tempt companies to hire them because they can see how they will immediately take some pain away. But once those conditions change around them , they are more often than not, stuck. They don’t adapt easily and need to find another job that matches their skills vs. being able to step up to do the new job that needs to be done.

The people who can do the job today as well as learn and adapt to changed conditions, are the most valuable hires.

A creative thinker who is a fast learner will turn out to be a star. To do that ask questions that get at how the person thinks and in the interview process try and assess how much potential the person has to learn, and judge how fast they will grow.

The author shares some of the approaches she has used from hiring summer interns to top executives.

1. Puzzles: Give someone a puzzle to solve and how they do it will tell you how they are thinking about approaching the problem. They will ask you more questions about it. Hire the person who is doing something with the problem.

2. Stories: Ask for stories about how the world was different when they first got into a job compared to how it is now. What did they think needed to be done? What new ideas did they come up with? What changes did they drive? If they just did the job as-is for a few years, and did not grow the responsibility or usefulness of their role, they are not a top hire.

3. Actual Problems: Tell them a situation that you are facing that needs a solution. Ask them to talk through how they would approach it. The ones that say, “I don’t know yet, I’d need to get into the job first,” are not your top people. The ones that ask a bunch more questions and say, “Of course I’d need to listen and learn more, but from what I know right now this is what I think”… and start offering insights, have stronger creative thinking skills.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

The surprising success of the green supply chain

Fortune, August 13, 2010

One year after Wal-Mart launched an ambitious plan to help its suppliers track their energy and materials use and carbon emissions, the effort has officially become a trend among corporate multinationals.

But these changes aren’t being brought in only for love of the environment, its being driven also by a slow- or no-growth economy, since lower energy and resource costs translate into higher profits.

The most recent entry among a handful of large companies starting programs to green its supply chain is Pacific Gas & Electric (PCG, Fortune 500), the California-based utility. PG&E recently bestowed its first "Green Supplier of the Year" award to Southwire Company, a wire manufacturer headquartered in Carollton, Georgia.

The award was won for converting almost one-third of its fleet to hybrid vehicles, reducing its landfill waste by 27% and eliminating almost all lead additives from its products.

PG&E is following Procter & Gamble, IBM and Wal-Mart by taking a more comprehensive approach that leaps beyond carbon foot printing into life-cycle analysis. The General Services Administration, the federal government's giant purchasing manager, has also recently asked its 600,000 suppliers to start providing greenhouse gas emission tallies.

Life-cycle analysis features a "cradle-to-grave" examination of how products and services impact the environment. And when it applies to supply-chain management, the savings from life-cycle analysis can be dramatic.

With sustainability and cost savings as tandem goals, many companies have aggressive targets in place.

Apart from multinationals every major company doing carbon and life-cycle analysis will need to examine all facets of its business in the post-BP, carbon-savvy climate.

Even though the Senate hasn’t passed an energy or climate change bill, companies will continue to seed green supply programs on their own as they are pressured by a need to cut costs in a slack economy and conform with tougher European standards.

Corporate environmentalism is still catching on -- even if Washington can't seem to provide fertilizer for this growing movement.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

===========INTRO SUBSCRIPTION========

Business Leaders Digest-Summaries from 100 resources

We are pleased to attach the latest issue of our publication Business Leaders Digest.The objective of BLD is to introduce you to global literature on strategic insights, how-to articles, thought leadership pieces and other information to help you and your colleagues become more effective at workplace.

Summaries of selected literature from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription. More information is given on last page.

Please circulate to your friends and colleagues.

Best Regards

S.Abidi

Mob: 9324053831

http://busleadersdigest.blogspot.com

Information You Can Use. Knowledge You Can Trust

Do good people make bad bosses?

Do good people make bad bosses?

Wall Street Journal, |2010/ 08/14

Research suggests that nice guys rise to the top, but once there they become disagreeable and authoritarian. Psychologists refer to this as the paradox of power. Instead of being polite, honest and outgoing, the traits which helped them to rise, they become impulsive, reckless and rude. One recent study found that overconfident CEOs were more likely to pursue innovation and take their companies in new technological directions. Unchecked, however, these instincts can lead to a big fall.

A few years ago, Dacher Keltner, a psychologist at the University of California, Berkeley, interviewed freshmen at a large dorm on the Berkeley campus and the survey results showed that the students at the top of the social hierarchy—they were the most "powerful" and respected—were also the most considerate and outgoing, and scored highest on measures of agreeableness and extroversion.

"People give authority to people that they genuinely like," says Mr. Keltner.

This contradicts Machiavelli that compassion got in the way of eminence.

Of course, these scientific findings contradict the cliché of power, which is that the only way to rise to the top is to engage in self-serving and morally dubious behavior. In "The Prince," a treatise on the art of politics, the 16th century Italian philosopher Niccolo Machiavelli insisted that compassion got in the way of eminence. If a leader has to choose between being feared or being loved, Machiavelli insisted that the leader should always go with fear.

Another study conducted by Mr. Keltner and Cameron Anderson, a professor at the Haas School of Business, measured "Machiavellian" tendencies, such as the willingness to spread malicious gossip, in a group of sorority sisters. But the Machiavellian sorority members were quickly identified by the group and isolated. Since they weren’t liked, they never became powerful.

This research is reassuring.

But the bad news is that once these nice guys reach the top they morph into a very different kind of beast.

According to psychologists, one of the main problems with authority is that it makes us less sympathetic to the concerns and emotions of others.Several studies have found that people in positions of authority are more likely to rely on stereotypes and generalizations when judging other people. They also spend much less time making eye contact, at least when a person without power is talking.

However, not all leaders become ruthless and immoral. It’s important to keep a balance between being tough and being compassionate and stay in command.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

===========INTRO SUBSCRIPTION========

Business Leaders Digest-Summaries from 100 resources

We are pleased to attach the latest issue of our publication Business Leaders Digest.The objective of BLD is to introduce you to global literature on strategic insights, how-to articles, thought leadership pieces and other information to help you and your colleagues become more effective at workplace.

Summaries of selected literature from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription. More information is given on last page.

Please circulate to your friends and colleagues.

Best Regards

S.Abidi

Mob: 9324053831

http://busleadersdigest.blogspot.com

Information You Can Use. Knowledge You Can Trust

Are You A collaborative Leader

Are You a Collaborative Leader?

HBR, Jul 2011

Social media and technologies have put connectivity on steroids and made collaboration more integral to business than ever. But without the right leadership, collaboration can go astray. Employees who try to collaborate on everything may wind up stuck in endless meetings, struggling to reach agreement. On the other side of the coin, executives who came of age during the heyday of “command and control” management can have trouble adjusting their style to fit the new realities.

In their research on top-performing CEOs, Insead professors Ibarra and Hansen have examined what it takes to be a collaborative leader. Our research shows that collaborative leaders who get results do four things well:

Make global connections that help them spot opportunities RATHER THAN focus on internal connections

Engage diverse talent from everywhere to produce results RATHER THAN rely on homogeneous teams for new ideas

Collaborate at the top to model expectations RATHER THAN serve corporate politics and parochial agendas

Show a strong hand to speed decisions and ensure agility RATHER THAN let groups get mired in conflict or attempts at consensus.

In this article, they describe tactics that executives from Akamai, GE, Reckitt Benckiser, and other firms use in those four areas and how they foster high-performance collaborative cultures in their organizations.

The good news is, our research also suggests that these skills can be learned—and can help executives generate exceptional long-term performance. Ask yourself:

Do you attend conferences outside your professional specialty?

Are you part of a global network like Young Presidents’ Organization?

Do you regularly blog or e-mail employees about trends, ideas, and people you encounter outside your organization?

How often do you meet with parties outside your company (competitors, consumers, government officials, university contacts, and so on) who are not directly relevant to your immediate job demands or current operations?

Are you on the board of any outside organizations?

Engage Talent at the Periphery

How diverse is your immediate team in terms of nationality? Gender? Age?

How much time do you spend outside your home country?

Have you visited your emerging markets this year?

Does your network include people in their twenties (who aren’t your kids)?

Collaborate at the Top First

Do members of your team have any joint responsibilities beyond their individual goals?

Does the compensation of your direct reports depend on any collective goals or reflect any collective responsibilities?

What specifically have you done to eradicate power struggles within your team?

Do your direct reports have both performance and learning goals?

Show a Strong Hand

Have you killed any collaboration projects in the past six months?

Do you manage dynamically—forming and disbanding teams quickly as opportunities arise?

Do the right people in your organization know they can “close” a discussion and make a decision?

Does your team debate ideas vigorously but then unite behind decisions made?

Leaders today must be able to harness ideas, people, and resources from across boundaries of all kinds. That requires reinventing their talent strategies and building strong connections both inside and outside their organizations. To get all the disparate players to work together effectively, they also need to know when to wield influence rather than authority to move things forward, and when to halt unproductive discussions, squash politicking, and make final calls.

Differences in convictions, cultural values, and operating norms inevitably add complexity to collaborative efforts. But they also make them richer, more innovative, and more valuable. Getting that value is the heart of collaborative leadership.

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

===========INTRO SUBSCRIPTION========

Business Leaders Digest-Summaries from 100 resources

We are pleased to attach the latest issue of our publication Business Leaders Digest.The objective of BLD is to introduce you to global literature on strategic insights, how-to articles, thought leadership pieces and other information to help you and your colleagues become more effective at workplace.

Summaries of selected literature from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription. More information is given on last page.

Please circulate to your friends and colleagues.

Best Regards

S.Abidi

Mob: 9324053831

http://busleadersdigest.blogspot.com

Information You Can Use. Knowledge You Can Trust

Who Moved My Cube

Who Moved My Cube?

HBR, Jul-Aug 2011

Managers once discouraged casual interaction among employees, viewing it as a distraction from “real work.” Today we know that chance encounters on the job promote cooperation and innovation, and companies craft their floor plans and cultures with this in mind. So why do their careful, well-intentioned efforts often go awry?

Work spaces inspire informal encounters only if they properly balance three factors that have both physical and social aspects:

Proximity. Spaces should naturally bring people together.

Privacy. People must be able to control access to their conversations and themselves.

Permission. The social purpose of the space needs to be evident, and the organizational culture should signal that nonwork interactions are not just sanctioned but encouraged.

Creating the right conditions is challenging enough in the physical world; doing it in a virtual environment is even harder. But asking employees to set Skype, IM, and other applications to indicate their availability can replicate a sense of proximity online. Setting clear policies governing access to electronic communications helps convey reassurance that privacy is protected. And leaving video links and virtual offices open promotes the feeling that geographically disparate groups are welcome to engage with one another casually, just as they might in a real-world common space.

There’s no simple formula for balancing proximity, privacy, and permission in either the physical or virtual spheres. Managers who grasp the fundamentals and design spaces with balance in mind, however, will be better equipped to understand and predict the effects of different spaces on interactions, and to learn from their successes and inevitable mistakes.

The concept of “affordances,” developed by the psychologist James Gibson, explains how an object or an environment communicates its purpose and offers possibilities for action. Handles afford grasping; doors afford entry and exit; paths afford locomotion. Gibson argues that when we look at an object or an environment, we perceive its affordances for action even before we notice qualities such as shape and color—although we might ignore or misinterpret the affordances or, when they are especially subtle, fail to see them at all until a change to the environment alters or eliminates them. In the context of our research, workspaces afford—or don’t afford—proximity, privacy, and permission.

Affordance theory helps us understand how the design of an object might affect the ways people use it. An object generally gets its intended use only when the design exposes its purpose. There are myriad examples of bad designs that obscure affordances, from door handles whose shape gives no indication whether they should be pushed or pulled to aesthetically impressive control panels consisting of identical knobs symmetrically arrayed, without any visual clues as to what the various knobs do. In such cases conscious thought, and sometimes even training, is needed before people can understand and make use of an object’s functions.

Putting Principles into Practice

Understanding the three P’s required for informal interaction is just the beginning. How do you actually design for them? Start by being attuned to the balance between them; having only one or two usually isn’t enough, and over- or under-emphasizing any of the three can backfire. Build flexibility into your design so that you can test permutations, and measure the design’s effects. In our experience, companies rarely do either. Be aware that seemingly small changes can have an outsize effect and that unintended consequences are common.

Although few managers would want their employees to loiter all afternoon in the coffee room, neither should they want them to cut casual conversations short. People need time to engage if a light conversation is to evolve into something more substantial. We often observed that conversations started next to the coffee machine continued in front of a cubicle or in an office doorway—“accidental alcoves” of the modern workplace. Too often proximity is the only design consideration for coffee rooms and other informal spaces. If you don’t also build in privacy (for example, by creating real alcoves) and convey adequate permission, you will probably end up with a space that triggers ephemeral interactions bearing little fruit.

Finally, it’s important to remember that permission can take many forms. Managers’ reactions to employee behavior, along with their own role modeling, can have a bigger impact than mere expressions of permission. We’ve found that many managers say they value informal interactions but in fact crush them by making negative comments when they witness them—in some cases conveying powerful disapproval through body language alone. To encourage the encounters that fuel collaboration, align what you say and do. (For guidance on how to balance the three P’s, see the sidebar “Designs That Inspire Interaction.”)

Promoting informal interactions in the physical world is challenging enough; nurturing them in virtual settings is harder still. We have decades of research on physical workspaces to draw on, but we’re just starting to understand the nature of informal interactions in virtual workspaces and how to design for them. Our research suggests that the three affordances are just as relevant online as off, but their virtual permutations are distinct from their real-world ones and can be more difficult to define and control. What does proximity mean in a virtual environment? How do you provide privacy in a teleconference? What constitutes permission on a company blog?

=======Business Leaders Digest======

Information You Can Use. Knowledge You Can Trust

This summary is taken from Business Leaders Digest monthly(www.busleadersdigest.com)

The objective of BLD is to offer strategic insights, how-to articles, thought leadership pieces and other information to help you become more effective at the workplace.

Summaries from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription of Rs1500 for corporates and Rs.900 for individuals in India or US$50 overseas. To subscribe or receive a sample issue, email at busleadersdigest@gmail.com

===========INTRO SUBSCRIPTION========

Business Leaders Digest-Summaries from 100 resources

We are pleased to attach the latest issue of our publication Business Leaders Digest.The objective of BLD is to introduce you to global literature on strategic insights, how-to articles, thought leadership pieces and other information to help you and your colleagues become more effective at workplace.

Summaries of selected literature from global top 100 business & management magazines, newspapers, websites & reports are published monthly in Business Leaders Digest which can be subscribed at a modest annual subscription. More information is given on last page.

Please circulate to your friends and colleagues.

Best Regards

S.Abidi

Mob: 9324053831

http://busleadersdigest.blogspot.com

Information You Can Use. Knowledge You Can Trust