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2018-01-18T17:56:48.649Z
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AI is coming. That is what we heard throughout 2017 and will likely continue to hear throughout this year. For established businesses that are not Google or Facebook, a natural question to ask is: What have we got that is going to allow us to survive this transition?

In our experience, when business leaders ask this with respect to AI, the answer they are given is “data.” This view is confirmed by the business press. There are hundreds of articles claiming that “data is the new oil” — by which they mean it is a fuel that will drive the AI economy.

If that is the case, then your company can consider itself lucky. You collected all this data, and then it turned out you were sitting on an oil reserve when AI happened to show up. But when you have that sort of luck, it is probably a good idea to ask “Are we really that lucky?”

The “data is oil” analogy does have some truth to it. Like internal combustion engines with oil, AI needs data to run. AI takes in raw data and converts it into something useful for decision making. Want to know the weather tomorrow? Let’s use data on past weather. Want to know yogurt sales next...

When we talk about the importance of building strong relationships with employees, there’s a growing contingent that we often neglect: those who don’t work in the main office. This means not just the 31% of Americans who work remotely four or five days a week but also the people in satellite locations, where workers can easily feel forgotten. I’ve experienced this problem both as a manager and as an employee. For instance, when I ran a startup in San Francisco that was acquired by a company based in Toronto, I went from overseeing on-site and off-site employees to leading an entirely off-site branch of a faraway business. Being a remote employee myself, and having my entire team also fall into that category, forced me to think differently about how to build team culture and keep everyone engaged and motivated.

I traveled to headquarters to meet the team, figure out the culture there, and get a clear sense of who controls what. But even in my time spent at the main office, I couldn’t possibly learn all the dynamics of the company. And we weren’t able to have the entire staff of our newly acquired startup make that kind of a trip. So in addition to overseeing our portion of the operation, I...

Jagdip Singh, a professor of marketing at the Weatherhead School of Management at Case Western Reserve University, explains his research team’s new findings about customer satisfaction. He says apologizing is often counterproductive and that offering customers different possible solutions is usually more effective. He discusses what companies can do to help service representatives lead interactions that leave a customer satisfied—whether or not the problem has been solved. Singh’s research is featured in the article “‘Sorry’ Is Not Enough” in the January–February 2018 issue of Harvard Business Review.

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Good customer service seems like common sense for businesses. But how valuable is it really?

Until now, this has not been rigorously quantified across different companies. Businesses are understandably reluctant to share their CRM and sales data, and most research in this field has been based on surveys. But as more Americans seek customer service online, social media offers a better platform for analyzing interactions between service reps and customers.

Using data from Twitter (where one of us works), we designed an experiment to study customer service interactions in two industries that generate a significant number of customer service complaints: airlines and wireless carriers. We found that prompt and personal customer service does indeed pay off —  customers remember good and bad customer service experiences, and they’re willing to reward companies that treat them well.

We identified more than 400,000 customer service-related tweets sent to the top five major airlines (American, Delta, JetBlue, Southwest, and United) and top four wireless carriers (AT&T, Sprint, T-Mobile, Verizon) in the U.S. from March 2015 to April 2016. Our sample of tweets was comprehensive, including complaints, questions, and comments. Since all tweets are public, we could review the entire conversation between the customer and the customer service agent (except direct messages) and code...

On January 6, 2017, JANA Partners, a New York–based activist hedge fund, and the California State Teachers’ Retirement System (CalSTRS) sent a letter to Apple’s board of directors that may change the future of activist investing. Citing a substantial body of expert research, the letter stated, “We believe there is a clear need for Apple to offer parents more choices and tools to help them ensure that young consumers are using your products in an optimal manner.” Overuse of iPhones by children and teenagers, the letter pointed out, has been linked to lack of attention in the classroom, difficulty in empathizing with others, depression, sleep deprivation, and a higher risk of suicide.

Jana and CalSTRS together own $2 billion in Apple stock, so it’s no surprise that the letter received worldwide attention after it was publicized by the Wall Street Journal. What was surprising, however, was the unlikely partnership between JANA and CalSTRS. The term “activist hedge fund” connotes to many a “corporate raider” who creates short-term profits at the expense of other stakeholders and long-term investors. But CalSTRS is one of the world’s leading asset owners on the importance of integrating environmental, social, and governance (ESG) issues into investment decisions — investing as a way of maximizing returns while...

Last week, Facebook CEO Mark Zuckerberg announced that his platform needs to change. Community feedback has shown that public content has been “crowding out the personal moments that lead us to connect more with each other,” according to Zuckerberg. As a result, the company says it will be focusing more on promoting posts from friends rather than from media outlets, thereby leading to more-meaningful social interactions.

While the long-term consequences for users, journalists, media, friendships, Facebook itself, and the future of democracy (see: fake news) are uncertain and hard to judge, there are some lessons we can draw from the announcement.

Corporate Purpose Requires a Credible Commitment

There is a lot of talk about purpose in business. Purpose-driven companies have been shown to outperform their peers over the long term. They can reap benefits because of higher employee productivity and customer loyalty and satisfaction. But purpose-driven companies are also hard to come by. Why is that? Because purpose is costly. At the very least, it requires a credible commitment to that purpose. And credible commitments are those that come at a cost; in the absence of a cost, all companies can claim that they are purpose-driven, and as a result the commitment stops being credible.

The stock market reacted negatively to the announcement...

As AI continues to develop, a major test of its potential will be whether it can replace human judgment in individualized, complex ways. At Georgia State University, we investigated a test case where AI assisted high school students in their transition to college, helping them to navigate the many twists and turns along the way.

From the perspective of an AI system, the college transition provides intriguing challenges and opportunities. A successful system must cope with individual idiosyncrasies and varied needs. For instance, after acceptance into college, students must navigate a host of well-defined but challenging tasks: completing financial aid applications, submitting a final high school transcript, obtaining immunizations, accepting student loans, and paying tuition, among others. Fail to support students on some of these tasks and many of them — particularly those from low-income backgrounds or those who would be the first in their families to attend college — may succumb to summer melt, the phenomenon where students who intend to go to college fail to matriculate. At the same time, providing generic outreach to all students — including those who have already completed these tasks or feel confident that they know what they need to do — risks alienating a subset of students. In addition, outreach to...

The restaurant industry is notorious for being competitive, risky, and low-margin. This is no less true for the world’s most acclaimed high-end restaurants. Despite being able to charge hundreds of dollars for a meal and being fully booked months in advance, top restaurants often still have a hard time turning a profit. And they face an even greater challenge: maintaining flawless consistency, while simultaneously being innovative and cutting-edge.

While cooking is seen as creative, high-end cooking is mainly about constant, rigorous repetition, in a highly controlled and hierarchical environment. To receive three Michelin stars – the highest rating given by the prestigious Michelin Guide – restaurants must deliver a consistently flawless experience over many visits. This means achieving precise standardization and strong quality control.

For example, at The Fat Duck in the UK (which has had three Michelin stars since 2004, except in 2016 when it closed for refurbishment, and where I worked on the innovation side), cooking temperatures are systematically controlled to 0.1°C, and most recipes are specified with up to 40 steps for a single component on a plate. Each cook is highly trained and selectively recruited, yet he or she will only be tasked with producing a few components, and will practice hundreds of times under direct supervision before achieving...

Have you ever been on an executive team where things just clicked? You had a common goal, communication flowed easily, and everyone was willing to put in the long hours for a final push. Looking back, you wish you could replicate and carry forward that same secret sauce on every team, especially the teams that you struggle with. You know the ones. The groups where everything is harder, where you revisit decisions, move slowly, are confused about the direction, and dread the politics.

While many factors contribute to the best and worst teams, one practice has consistently helped my clients: having an agreed-upon set of group norms and, more importantly, a set of practical steps to follow those norms.

Group norms are a set of agreements about how members will work with each other and how the group will work overall. These agreed-upon behaviors allow the team to increase its collective performance through healthy debate and clarity of purpose and roles.

You and Your Team Series Building Good Habits Break Bad Habits with a Simple Checklist Sabina Nawaz Make Learning a Lifelong Habit John Coleman Why New Personal Productivity...

Not a day goes by without the announcement of the appointment of a new VP of Artificial Intelligence (AI), a Chief Data Scientist, or a Director of AI Research. While the enthusiasm is undeniable, the reality is that AI remains an early-stage technology application. The potential is vast, but how managers cut through the AI hyperbole to use its power to deliver growth?

In our consulting work, we often encounter managers who struggle to convert AI experiments into strategic programs which can then be implemented. Michael Stern (not his real name), for instance, is the Head of Digital for a German Mittelstand office equipment company. Michael is used to starting new projects in emerging areas, but feels unable to fully understand what can AI can do for his business. He started a few experiments using IBM Watson, and these produced some clear, small tactical gains. Now Michael is stuck on how to proceed further. How can he create cross-functional teams where data experts work with product teams? And how will they pick project ideas that produce real ROI? Michael wonders if his firm even knows what new business models can be explored with their existing datasets — let alone which new ones might be made possible by AI.

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Revise budget numbers. Parent/teacher conference Wednesday. Edit the marketing overview document. Finish summer camp applications. Give candidate interview feedback to HR. Grocery run — we’re out of everything. Start drafting quarterly forecast. Call the roofer for the estimate. Organize team strategy session. Schedule kids’ flu shots. Get back to Jayesh and Liu on IT plan. Get Tommy ready for math test tomorrow…

If you’re a working parent, chances are excellent that at any given time, your to-do list looks like the one above — and that it stretches on, and on, and on — an endless, and eternally growing, list of deliverables. Is it any wonder that research shows that most working parents feel stressed, tired, and rushed? Or that when you look ahead, you feel more than a little overwhelmed?

As a responsible person and a hard worker, you know how to dig in and get things done. And since becoming a parent, you’ve tried various strategies to keep the ever-more-intense pace: moving paper to-do lists onto your iPhone, reorganizing your Outlook “Tasks” section, spending more and more time logged into work each evening, cleaning up the endless queue of unread emails, sleeping progressively less each night.

Yet you’re still haunted by the nagging sense of not getting enough done, of falling down in some way,...

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Does a robot manage your money?  For many of us, the answer is yes. Online and algorithmic investment and financial advice is easy to come by these days, usually under the moniker of “robo-advisor.” Startups such as Wealthfront, Personal Capital, and Betterment launched robo-advisors as industry disruptors, and incumbents, such as Schwab’s (Intelligent Advisor), Vanguard (Personal Advisor Services), Morgan Stanley and BlackRock have joined the fray with their own hybrid machine/advisor solutions. It’s clear that robo-advisors and AI play an important and growing role in the financial services industry, but a question remains.  Will robo-advisors disrupt corporate capital allocation the same way they have personal capital allocation? And, will they shake up the trillion-dollar corporate consulting and advisory industry?

Robo-advisors, which were introduced in 2008, are steadily eating up market share from their human counterparts much the way that Amazon and Netflix have taken share from Walmart and Regal Cinemas.

A study by Deloitte estimated that “assets under automated management” (including hybrid offerings) in the U.S. will grow to U.S. $5 trillion to U.S. $7 trillion by the year 2025 from about U.S.$300 billion today. This would represent between 10% and 15% of total retail financial assets under management. At the end of 2016, Fitch Ratings estimated that all...

The best performing companies are often the best aligned. But who in your company is paying attention to how well aligned your strategy is with your organization’s purpose and capabilities? In my research and consultancy with companies, I observe that, oftentimes, no individual or group is functionally responsible for overseeing the arrangement of their company from end to end. Multiple different individuals and groups are responsible for different components of the value chain that makes up their company’s design, and they are often not as joined up as they should be. All too often, individual leaders seek — indeed are incentivized — to protect and optimize their own domains, and find themselves locked in energy-sapping internal turf wars, rather than working with peers to align and improve across the entire enterprise.

So, who should be responsible for ensuring your company is as strategically aligned as it can be? The answer should not be “the CEO” or “the Chairman” or the equivalent. The job of aligning the modern corporation is too complex to be added on to the slate of someone whose job it is to consider hundreds of other things, no matter how talented or powerful they are. Consider for your own company:

Practically, who at the enterprise level in your...

Vincent Siciliano, CEO of California-based New Resource Bank, was brought in to turn things around and restore the bank’s founding mission, which is to “serve values-driven businesses and nonprofits that are building a more sustainable world.” Within a few years, Vince had the bank back on track, but not everything was going as well as it seemed.

After the successful transition, the leadership team decided to take the pulse of the organization, and discovered low levels of engagement and displeasure with senior leaders. Vince was surprised, but he assumed the discord was left over from the many changes the organization had gone through, so he chose not to take action — time would heal all.

A year later, the bank sent out another employee survey. This time, the results were more specific: Morale was a significant issue, and the majority of people, including members of the senior leadership team, identified Vince as the root cause.

Vince was crushed, and oscillated between anger, indignation, defensiveness, and blame. He wondered, “How could they say these things about me? Don’t they understand how far we’ve come under my leadership?”

He could have stayed in this negative mindset, wallowing in self-pity and searching for excuses. Instead, after being a successful high-achiever throughout his career, he decided to...

People don’t quit a job, the saying goes — they quit a boss. We’ve heard it so many times that when we started tracking why employees leave Facebook, all bets were on managers. But our engagement survey results told a different story: When we wanted to keep people and they left anyway, it wasn’t because of their manager…at least not in the way we expected.

Of course, people are more likely to jump ship when they have a horrible boss. But we’ve spent years working to select and develop great managers at Facebook, and most of our respondents said they were happy with theirs. The decision to exit was because of the work. They left when their job wasn’t enjoyable, their strengths weren’t being used, and they weren’t growing in their careers.

At Facebook, people don’t quit a boss — they quit a job. And who’s responsible for what that job is like? Managers.

If you want to keep your people — especially your stars — it’s time to pay more attention to how you design their work. Most companies design jobs and then slot people into them. Our best managers sometimes do the opposite: When they find talented people, they’re open to creating jobs around them.

Working with our People Analytics team, we...

The vast majority of humans throughout history worked because they had to. Many found comfort, value, and meaning in their efforts, but some defined work as a necessity to be avoided if possible. For centuries, elites in societies from Europe to Asia aspired to absolution from gainful employment. Aristotle defined a “man in freedom” as the pinnacle of human existence, an individual freed of any concern for the necessities of life and with nearly complete personal agency. (Tellingly, he did not define wealthy merchants as free to the extent that their minds were pre-occupied with acquisition.)

The promise of AI and automation raises new questions about the role of work in our lives. Most of us will remain focused for decades to come on activities of physical or financial production, but as technology provides services and goods at ever-lower cost, human beings will be compelled to discover new roles — roles that aren’t necessarily tied to how we conceive of work today.

Part of the challenge, as economist Brian Arthur recently proposed, “will not be an economic one but a political one.” How are the spoils of technology to be distributed? Arthur points to today’s political turmoil in the U.S. and Europe as partly a result of the chasms between...

Walmart announced today that it is raising its starting wages in the United States from $9 per hour to $11, giving employees one-time cash bonuses of as much as $1,000, and expanding maternity and parental leave benefits as a result of the recently enacted tax reform. It is part of Walmart’s broader effort to create a better experience for its employees and customers. The new tax law creates a major business opportunity for other retailers as well — if their leaders are wise enough to take advantage of it.

The U.S. corporate tax rate is dropping from 35% to 21%. Retailers, many of whom have been paying the full tax rate, are going to benefit substantially. Take a retailer that makes 15% pretax income. Assuming its effective tax rate goes from 35% to 21%, it could save the equivalent of 2.3% of sales. Specialty retailers with higher pretax income will save even more.

Retail executives have a choice in how they use these savings. I believe the smartest choice — one that will help them compete against online retailers like Amazon — is to create a better experience for customers and to achieve operational excellence in stores. For most retailers, doing both requires more investment in store employees — starting with higher wages and more-predictable work schedules.

It was Monday morning, and Lee opened his inbox to find an email from his manager: “Lee, I’ve decided to have Carlos present to the governing board, instead of you. I’m sure you’re good with this.”

Lee had spent the entire weekend preparing for the presentation. Not only did he know the numbers inside and out, he was also excited to get some face time with the board. Performing well would be a good move for his career. So, no, Lee wasn’t really “good with this.” He was crushed, defeated, and felt betrayed. But could he really say that in an email? And if he did, would anything change?

We’ve all had surprises like this show up in our email. I call them “email landmines.” Hidden among most of the safe emails we receive each day are a handful of digital doozies that quickly turn conversation into conflict.

Below are six categories of email landmines you’ve likely seen before. These seemingly innocent communications signal that an otherwise routine exchange is about to escalate.

  • Drive by: When someone uses email to make a demand or announce a controversial decision and hopes nobody responds. While it may be an honest mistake when there is ambiguity over who owns decision rights, it feels like the sender is intruding on your...

Organizations are rushing to implement open office spaces in hopes of retaining talent, encouraging cross-functional collaboration, enhancing exposure to different kinds of expertise, and accelerating creativity and innovation. Sometimes this works, but often it doesn’t. In our research, we discovered that success with open offices may have as much to do with how people feel about the space — something called place identity — as with the space itself.  When place identity is higher, employees report more engagement in their work, more communication with their peers, and a stronger connection to the company. Our study uncovers three things that leaders can do to increase place identity when moving to open office spaces.

Organizations such as Google, Facebook, Genentech, IBM, and Microsoft have devoted millions of dollars to the redesign of their workspaces, replacing cubicles and traditional private offices with large open spaces, smaller team spaces for collaborative work, and pods for private conversations. Furniture is adjustable so that it can be moved and modified to meet an employee’s needs and adapt to rapidly changing work demands. The hope is that these spaces will enhance the sharing of ideas, expedite decision making, and engage employees, ultimately driving more-innovative products and services. As Facebook’s Chief People Officer said about...

The modern workplace is awash in meetings, many of which are terrible. As a result, people mostly hate going to meetings. The problem is this: The whole point of meetings is to have discussions that you can’t have any other way. And yet most meetings are devoid of real debate.

To improve the meetings you run, and save the meetings you’re invited to, focus on making the discussion more robust.

When teams have a good fight during meetings, team members debate the issues, consider alternatives, challenge one another, listen to minority views, and scrutinize assumptions. Every participant can speak up without fear of retribution. However, many people shy away from such conflict, conflating disagreement and debate with personal attacks. In reality, this sort of friction produces the best decisions. In my recent study of 5,000 managers and employees, published in my recent book, I found that the best performers are really good at generating rigorous discussions in team meetings. (The sample includes senior and junior managers and individual contributors from a range of industries in corporate America; my aim was to statistically identify work habits that correlate with higher performance.)

So how do you lead a good fight in meetings? Here are six practical tips:

Start by asking a question, not uttering your opinion. In...