Ignorance may be bliss for some, but ask anyone in commerce or finance, and they will make it abundantly clear: Ignorance is risk. For that reason, U.S. markets embrace reasonable regulation to ensure transparency and fairness. Stocks are regulated by the Securities and Exchange Commission (SEC), commodities by the Commodity Futures Trading Commission (CFTC), and government currency by the Department of the Treasury and the Federal Reserve. But an emergent fourth asset class, cryptocurrencies, has no single regulator, and that is leading to uncertainty and confusion.
In early June the SEC announced the appointment of one of the agency’s veteran attorneys, Valerie Szczepanik, as associate director of the Division of Corporation Finance and senior adviser for Digital Assets and Innovation. This is a welcome development. As “crypto czar,” her job will be to rationalize the application of U.S. securities laws to cryptocurrencies and work with other agencies to coordinate regulatory oversight.
That will be easier said than done. But it is vitally important.
Without clear regulations, cryptocurrency innovation in the United States is being stifled. Entrepreneurs sit on the sidelines for fear of innocently running afoul of the law. Investors, meanwhile, hang back because of uncertainty regarding valuations. And the commonweal suffers, as other countries lure innovators away from...
Michael Porter and Jim Heppelman explain how augmented reality will change how we work.
During Jeff Immelt’s tenure as CEO of General Electric, from 2001 until 2017, the company’s stock price fell by over 30%, a decline of roughly $150 billion in shareholder value. Since Immelt’s departure, GE’s stock is down another 30%, as its new CEO, John Flannery, has struggled to cope with the cash flow drain from years of problematic acquisitions, divestitures, and buybacks. Because of these dubious decisions, GE’s ratio of debt to earnings has soared from 1.5 in 2013 to 3.7 in early 2018, according to Moody’s.
So, during GE’s long and steep decline, where was the company’s board of directors? Composed almost entirely of independent directors, it was a distinguished and diversified group of former top executives and other leaders with relevant experience. In my view, however, the structure and processes of the GE board were poorly designed for effectively overseeing Immelt and his management team. There were three problems in particular:The Board Was Too Big
During most of Immelt’s tenure, the GE board was much too large, with 18 directors. The average size of U.S. public company boards is 11 members, with most boards having between eight and 14. Smaller boards are significantly correlated with better stock performance — 8% to 10% higher, according to a...
Today’s young professionals grew up in an age of mind-boggling technological change, seeing the growth of the internet, the invention of the smartphone, and the development of machine-learning systems. These advances all point toward the total automation of our lives, including the way we work and do business. It’s no wonder, then, that young people are anxious about their ability to compete in the job market. As executives who have spent our lives assessing and implementing digital technology in every type of organization, we often get asked by them: “What should I learn today so that I’ll have a job in the future?” In what follows we’ll share seven skills that can not only make you unable to be automated, but will make you employable no matter what the future holds.
Communication. In a world where U.S. adults’ total media usage is nearly 12 hours a day, on average, communication skills are essential for getting people’s attention and moving them to action. The most basic form of communication is constructing a compelling story. The good news, from a competitive standpoint, is that most people have turned their brain over to bad software, resulting in the all-too-familiar “death by PowerPoint.” Instead of just listing facts, compelling storytellers use both soft and hard data....
Rivalry is everywhere. We see rivalries in sports, business, school, and basically any arena where there is competition. Whether it is rivalry between people (Bill Gates versus Steve Jobs; Roger Federer versus Rafael Nadal), between organizations (e.g., Ford versus GM), or between nations (e.g., should U.S. soccer fans have rooted for rival Mexico in the World Cup?), there is something uniquely powerful about rivalry that differentiates it from others forms of competition and relationships.
There are many stories highlighting the benefits of rivalry, from how it makes competitors more motivated to how it helps them perform better. For example, the rivalry between the Beatles and the Beach Boys is thought to have pushed both groups to greater levels of creativity and performance in their song-writing. Similarly, the rivalry between Intel and AMD is thought to have helped advance computer chip technology.
Yet despite the wealth of anecdotal evidence, scientific research into such rivalry relationships is scarce. We’ve spent the last few years studying what makes rivalry unique, how it affects our behavior, and how it impacts organizations.
Our past findings support the idea that rivalry can motivate competitors to perform at higher levels, and they reveal that rivalry is sparked by experiences of similarity, repeated competition, and closely-decided...
When I speak to large groups about leadership, one question I often ask is, “How many of you have ever received a compliment from your boss that actually offended you?” Without exception, more than two-thirds of the people in the room raise their hands. When I probe further on what people found offensive about their boss’s praise, the most common responses I hear are “It wasn’t sincere” and “They didn’t know what they were talking about.”
When leaders look like they are just applying some “motivational technique” they read about, people see right through the superficial, obligatory effort. It looks like they are checking off the “I motivated someone today” box. Motivation is not something you do to people. People ultimately choose to be motivated — when to give their best, go the extra mile, and offer radical ideas. The only thing leaders can do is shape the conditions under which others do, or don’t, choose to be motivated. But the final choice is theirs.
Unfortunately, too few managers understand this, and so there is a gap between managers’ efforts and the results they’re getting. A 10-year study of more than 200,000 employees shows that 79% of employees who quit their jobs cite a lack of appreciation as a key...
Here’s a work scenario many of us know too well: You are in a meeting and your manager brings up a project that needs to be assigned. It’s not particularly challenging work, but it’s time consuming, unlikely to drive revenue, and probably won’t be recognized or included in your performance evaluation. As your manager describes the project and asks for a volunteer, you and your colleagues become silent and uneasy, everyone hoping that someone else will raise their hand. The wait becomes increasingly uncomfortable. Then, finally, someone speaks up, “Okay, I’ll do it.”
Our research suggests that this reluctant volunteer is more likely to be female than male. Across field and laboratory studies, we found that women volunteer for these “non-promotable” tasks more than men; that women are more frequently asked to take such tasks on; and that when asked, they are more likely to say yes.
This can have serious consequences for women. If they are disproportionately saddled with work that has little visibility or impact, it will take them much longer to advance in their careers. Our work helps explain why these gender differences occur, and what managers can do to distribute this work more equitably.What are non-promotable tasks?
Non-promotable tasks are those that benefit the organization but likely...
I remember the first time I felt old as a manager — more than 10 years ago now. It was at a lunch with my new team, when I mentioned the first “45” I bought with my own money as a kid. One of my direct reports, who was 10 years younger than me, looked at me blank faced and asked, “What is a 45?” She had never seen the single-song vinyl record format. We came from different worlds. On the same team, I had another direct report who was 30 years older than me. She was quick to answer my question about her first 45, but I had never even heard of the song or the artist. Over the next couple of years, I had what I perceived as serious “generational issues” on my team. I learned a few lessons about managing across the generational divide.
The most important lesson I learned in managing people from different generations is to see past the stereotypes. Generational differences are real, but we tend to make too much of them. Some of the behaviors or attitudes you might attribute to a generational difference are simply the product of an employee being at a different age and stage than you. The 23-year-old employee might...
With the announced nomination of Judge Brett Kavanaugh to fill the vacancy created by the retirement of Justice Anthony Kennedy, President Donald Trump has the privilege of nominating a second Supreme Court justice in his first term. But it’s an opportunity that could become rare moving forward given that justices, like the rest of the population, are living longer.
The fact that people who make it to their senior years can expect to live beyond the age of 80 means the average Supreme Court justice’s tenure also will be longer. As a result, significantly fewer Supreme Court justices will be appointed over the next century than were appointed in the last. Justice Neil Gorsuch, whom Trump appointed at the relatively tender age of 49, could conceivably remain on the court through nine more presidential terms, given that he can expect to live another 36 years, our actuarial analysis shows.
And it’s not just Justice Gorsuch. The average tenure of justices is likely to increase to 35 years on the bench over the next century, compared with 17 years over the previous 100 years, based on the justices from Kennedy back to those on the bench in 1917. That means there likely will be only another 25 appointees over the next 100 years, starting with the Trump presidency and including Justice Gorsuch and the replacement for Justice...
Brad was leading a difficult turnaround of his company and had decided to fire his head of sales, who was a nice guy but wasn’t performing.
Three months later, he still hadn’t fired him.
I asked him why. His answer? “I’m a wimp!”
Brad (not his real name — I’ve changed some details to protect people’s privacy) is the CEO of a financial services firm and is most definitely not a wimp. He’s a normal human, just like you and me. And he’s struggling to follow through on an important, strategic decision. Just like, at times, you and I do.
No matter your age, your role, your position, your title, your profession, or your status, to get your most important work done, you have to have hard conversations, create accountability, and inspire action.
In order to do that, you need to show up powerfully and magnetically in a way that attracts people to trust you, follow you, and commit to putting 100% of their effort into a larger purpose, something bigger than all of you. You need to care about others and connect with them in such a way that they feel your care. You need to speak persuasively — in a way that’s clear, direct, and honest and that reflects your care — while listening with...
After a month with no new cases, the Ebola outbreak in the Democratic Republic of Congo (DRC) appears to be under control and weeks away from officially ending. Less than three months since it was declared, and after only about 50 cases, this outbreak’s efficient containment is a remarkable achievement that stands in stark contrast to the West African epidemic that spiraled into a two-year global crisis with over 28,000 cases.
This time around, several factors have made it possible to rapidly control the spread of the disease. While the West African epidemic took place in areas with mobile populations and capital cities where Ebola was not expected, the current outbreak is happening in a relatively remote region of the DRC, the country where the virus was first discovered and where seven previous outbreaks have occurred. Global agencies, on high alert after the West African epidemic, leveraged lessons learned and efforts made since then to respond differently in several important ways.
Strong and clear leadership. In the West African epidemic, the initial response from the World Health Organization (WHO) was lethargic, and the lack of direction led to confusion and delays on the ground. In this outbreak the WHO immediately and unambiguously asserted leadership at the global level, deploying...
Sex-based harassment is pervasive in the workplace, and it’s disproportionately experienced by women. It can include sexual harassment but is more broadly defined, including any behavior that derogates, demeans, or otherwise humiliates someone on the basis of their sex. One study of women in the military and law found that nine out of 10 had experienced gender-based harassment in their careers.
Most victims stay silent about their experiences. Studies suggest that victims stay silent because they fear consequences at work or feel that nothing will happen as a result of speaking up. What has been studied less is how this silencing occurs.
In 2016 we set out to learn about how female victims are silenced — who influences them and what exactly happens when they try to speak up. We interviewed 31 early and mid-career academics employed in business schools at nine research-intensive universities in the UK. We asked women whether they or others they knew had experienced insulting, hostile, and degrading attitudes that made them feel bullied, excluded, or both due to their gender. We encouraged them to describe events as vividly as possible and to reflect on how they and others they knew felt at each moment.
Our interviewees described a plethora of incidents that they or others they knew...
What’s the best way to boost creativity on your team? There’s really no simple answer. Even the research is split on the best approach to take.
One view is that the key to creative breakthroughs is being able to combine or leverage different areas of expertise. After all, every innovation somehow recombines or reimagines things that already exist.
Many studies have found that the best ideas emerge from combining insights from fields that don’t seem connected. For example, Charles Babbage’s invention of computational machines powered by punch cards, the foundation of modern computers, was inspired by Babbage’s knowledge of the silk-weaving industry, which used cards with holes to create patterns in the silk fabric. Similarly, Henry Ford’s revolutionary idea of the car manufacturing assembly line was inspired by Singer sawing machines and meatpacking plants.
Based on this thinking, you might try to make your team more creative by encouraging employees to explore new fields or by hiring more generalists, people who have a variety of experience and expertise. They can connect dots where others don’t see a link.
But other studies have found that there are costs to generalizing. As the saying goes, jacks of all trades are masters of none. This line of research argues that specialists, with...
Are you struggling with the complications of working in a family business? In this episode of HBR’s advice podcast, Dear HBR:, cohosts Alison Beard and Dan McGinn answer your questions with the help of Ted Clark, who runs the Center for Family Business at Northeastern University. They talk through advancing when you’re not a member of the family, managing up when your parents are your bosses, and whether it’s better to work for a family enterprise or a big corporation.
From Alison and Dan’s reading list for this episode:
HBR: Surviving in a Family Business When You’re Not Part of the Family by Josh Baron and Rob Lachenauer — “Successful non-family leaders stick to the ‘management room.’ They understand that when it comes to the ‘family room,’ the family has all the power; it’s never going to be a fair fight. Blood is usually thicker than water. Yet family squabbles do spill over into the management room, and non-family executives must be able to isolate the business from the family when family members can’t see past their own internal squabbling.”
HBR: Avoid the Traps That Can Destroy Family Businesses by George Stalk, Jr. and Henry Foley — “An underappreciated problem is that families often grow...
Technology is disrupting every industry and area of life, and work is no exception. One of the main career implications of the digital revolution is a shift in demand for human expertise. For instance, LinkedIn’s talent research shows that half of today’s most in-demand skills weren’t even on the list three years ago.
As a result, there is now a premium on intellectual curiosity and learnability, the desire and ability to quickly grow and adapt one’s skill set to remain employable. What you know is less relevant than what you may learn, and knowing the answer to questions is less critical than having the ability to ask the right questions in the first place. Unsurprisingly, employers such as Google, American Express, and Bridgewater Associates make learning an integral part of their talent management systems. As a Bersin report pointed out: “The single biggest driver of business impact is the strength of an organization’s learning culture.”
Cost-plus pricing is a lot like the romance novel genre in that it’s widely ridiculed yet tremendously popular. Almost every manager I know will claim they hate pricing based only on costs. Yet, cost-plus pricing remains the most widespread pricing method, used to price everything from a bottle of beer in a bar to multi-billion-dollar infrastructure projects.
The idea behind cost-plus pricing is straightforward. The seller calculates all costs, fixed and variable, that have been or will be incurred in manufacturing the product, then applies a markup percentage to these costs to estimate the asking price. The markup is stipulated by the buyer, as is often the case with government contracts, or it can be chosen by the manager. (I have seen companies use markups ranging from 5% to 800%.)
Cost-plus pricing has justifiable drawbacks
Among pricing experts, cost-plus pricing is reviled for some legitimate reasons. For standalone projects, in particular, cost-plus pricing discourages efficiency and cost containment. When lower costs are quoted, the company earns lower revenue and total profit. A bloated cost structure, on the other hand, will raise prices and boost profit.
A second important deficiency arises from the fallacy that a cost-plus price is guaranteed to cover costs. This notion can make managers falsely complacent. In reality,...
As a startup founder, I’m constantly struggling to recruit top talent without breaking the bank. We can’t always match market salaries, but we need exceptional (read: expensive) talent in order to build from scratch. How do you recruit a developer making well into six figures, or an experienced salesperson with four kids in private school? At our company, Hatch Apps, we’ve learned to get creative.
Here are some of the strategies that we’ve used, which are hopefully helpful for your business whether it’s an early-stage startup with limited funding or a more mature organization that has a restricted budget. Many of the tips below aren’t free, but they’ll help you squeeze more value out of each dollar you spend on compensation, and minimize the cash at risk if your hires don’t quite work out.
Pay for performance. When we’re hiring someone who has a hard-to-match base salary at their current employer, we cushion our offer with a lucrative bonus structure, commission pay, or other performance incentives. That way, they get paid for the value they add, up to or beyond their current base salary. And it shrinks the gap between cash going out and coming in for the company since you’re often not paying out the money until the additional...
There’s a fundamental contradiction when organizations ask employees to maintain a fast pace of work and be creative. What often happens in hectic workplaces is that employees resort to autopilot or habitual ways of working. When they don’t have the time or space to incubate novel and clever ideas, they may miss out on opportunities to reframe a problem and see new possibilities for potential solutions.
How do you help your team develop their creativity? Research has found that a short period of mindfulness training can have a positive impact on creative output. To explore this idea further, we conducted a study with a midsize U.S.-based real estate firm to examine whether a mindfulness training program could influence a team’s creativity.
In our study, we split up a team of 10 people into a meditating group and a control group. To start, we gave all 10 people a creative task: to brainstorm as many unusual uses for a brick as they could think of. Then we administered a 10-minute mindfulness exercise and afterward asked them to continue brainstorming the creative task. We found that seven out of 10 people increased the number of creative ideas they had in only 10 minutes. This experiment corroborates previous studies and went a step further to see...
Late last month, California passed a sweeping consumer privacy law that might force significant changes on companies that deal in personal data — and especially those operating in the digital space. The law’s passage comes on the heels of a few days of intense negotiation among privacy advocates, technology startups, network providers, Silicon Valley internet companies, and others. Those discussions have resulted in what many are describing as a landmark policy constituting the most stringent data protection regime in the United States.
Much of the political impetus behind the law’s passage came from some major privacy scandals that have come to light in recent months, including the Cambridge Analytica incident involving Facebook user data. This and other news drove public support for a privacy ballot initiative that would have instituted an even stricter data protection regime on companies that deal in consumer data if the state’s residents voted to pass it in November. But after intense negotiation, especially from leading internet companies and internet service providers, the backers of the ballot initiative agreed to drop the initiative and instead support the passage of the law.
In a famous scene in the 1967 movie The Graduate, a family friend takes aside Dustin Hoffman’s character, Benjamin Braddock, and whispers in a conspiratorial tone, “Plastics… There’s a great future in plastics.” It’s seems quaint today, but back then plastics really were new and exciting.
If the movie had been set in another age, the advice to young Braddock would have been different. He might have been counseled to go into railroads or electronics or simply to “Go West, young man!” Every age has things that seem novel and wonderful at the time, but tepid and banal to future generations.
Today digital technology is all the rage because after decades of development it has become incredibly useful. Still, if you look closely, you can already see the contours of its inevitable descent into the mundane. We need to start preparing for a new era of innovation in which different technologies, such as genomics, materials science, and robotics, rise to the fore.
To understand what’s happening, it helps to look at earlier technologies. The rise of electricity, for example, began in the early 1830s, when Michael Faraday invented the electric dynamo and motor. Still, it wasn’t until 50 years later that Edison opened his first power plant, and then 40 years after that,...