AI May Soon Replace Even the Most Elite Consultants
Amazon’s Alexa just got a new job. In addition to her other 15,000 skills like playing music and telling knock-knock jokes, she can now also answer economic questions for clients of the Swiss global financial services company, UBS Group AG.
According to the Wall Street Journal (WSJ), a new partnership between UBS Wealth Management and Amazon allows some of UBS’s European wealth-management clients to ask Alexa certain financial and economic questions. Alexa will then answer their queries with the information provided by UBS’s chief investment office without even having to pick up the phone or visit a website. And this is likely just Alexa’s first step into offering business services. Soon she will probably be booking appointments, analyzing markets, maybe even buying and selling stocks. While the financia....
What Spinning Off a GE Business Taught Me About Managing Ultra-Fast Change
Change management can be a test for any organization. Several studies by Towers Watson show that just 25% of change management initiatives are successful over the long term. I wouldn’t be surprised if the statistics are worse in my industry, financial services, where so many companies are large, global, regulated, and structurally complex.
So four years ago, when I was CEO of GE Capital Retail Finance and tapped to lead a mega change initiative — splitting off our unit into a new, publicly traded company, Synchrony Financial — I’ll admit I viewed it as a huge challenge. Major organizational changes, covering everything from recruiting and branding to regulatory approvals and marketing, happened in rapid succession, with a hard deadline of 12 months to get it all done for the IPO — and 18 months from the IPO ....
Australia’s Experiment in Restraining Executive Bonuses
Dave Wheeler for HBR
The idea of incentivizing CEOs and senior executives seems reasonable to most people. Yet the large executive bonus is a relatively recent phenomenon. Executive pay grew more slowly than the average worker’s income during the 50s, 60s and part of the 70s. It was in the 1980s that the ratio of CEO to average-worker pay grew dramatically. It “exploded” in the 1990s. The astronomical rates of CEO fixed pay and bonuses that we are so familiar with today are only about 20 years old.
Some researchers have argued that they’re a failed experiment. At the organizational level, they can decrease morale and fuel cynicism, especially if CEO pay climbs while average wages stall or grow more slowly, as they have in countries like the U.S., UK, and Australia. Growing inequality has contributed to t....
How People with Different Conflict Styles Can Work Together
When it comes to conflict, most of us have a default approach: we either tend to avoid it or seek it out. The avoiders among us shy away from disagreements, value harmony and positive relationships, and will often try to placate people or even change the topic. Avoiders don’t want to hurt anyone’s feelings or disrupt team dynamics. Seekers (and I’m one of them!) seem eager to engage in disagreements. They tend to care about directness and honesty, lose their patience when others aren’t being equally direct, and don’t mind ruffling feathers.
Neither style is better or worse, and your default style is probably due to several factors: your past experiences with conflict, the conventions of the culture you’re from or work in, the organizational context, and even gender norms. And while each of us generally....
How to Become a More Well-Rounded Leader
For years, when I spoke with CEOs or senior leaders, it was because they were interested in how my consulting firm could help their employees become more engaged, or innovative, or sustainably high-performing. During the past year – and especially the past six months – I’ve been hearing a different and much more personal initial question: “Can you help me better manage my own life?”
Consider the challenges that modern corporate leaders — and especially CEOs — now face, in addition to running their companies every day:
A high likelihood that the company they run has a business model that is being seriously disrupted, most often as a result of technology.
A far more vocal and influential group of stakeholders, including employees, customers, and the public at large, all emboldened by their access ....
How Royal DSM Is Improving Its Geographic and Gender Diversity
Jennifer Maravillas for HBR
With the recent spate of firms in the news over sexual harassment allegations and charges of gender bias, it is obvious that an issue many in business had thought was “done” is instead far from finished. Fostering corporate cultures which make half your employees feel somewhere between unengaged and unsafe is becoming risky and unsustainable. A lot of companies are doubling down on efforts to finally “crack” the gender issue.
Most companies now have more gender-balanced talent pools, especially at the early-to-mid-career levels, and are looking for ways to make sure progress continues at the mid-to-upper levels. But the ones who really understand the issue see gender balance as not just a numbers game but part of a broader, more strategic cultural shift that includes developing lea....
4 Mistakes That Kill Crowdsourcing Efforts
Back in 2011, crowdsourcing was fueling an explosion in open innovation. At that time, most Fortune 500 firms had launched crowdsourcing initiatives or partnered with startups in order to access outside innovators or co-create with customers. The providers of crowdsource solutions had their heyday. Kaggle had raised $11M from Koshla Ventures. InnoCentive raised $7M and bought OmniCompete. TopCoder stepped from strength to strength, raising $11M in 2010. Quirky raised two rounds totaling $21M. But the glory didn’t last. Within six years, Kaggle had been acqui-hired by Google; a struggling TopCoder sold itself to Appirio; InnoCentive has been shrinking for years according to LinkedIn data; and Quirky has declared bankruptcy.
What happened? Many struggling or failed crowdsourcing firms ran into trouble because they didn’t unders....
How Retail Can Thrive in a World Without Stores
Kenneth Andersson for HBR
Historically, shopping has been a sensory experience. Store associates served as personal shoppers, helping customers pick out items. Shoppers gauged quality by the look and feel of a product. They asked for sales associates’ opinions when they tried on clothes. It was as much an emotional experience as it was a physical, tactile one.
That traditional “personal touch” shopping experience is hard to replicate online. As more companies struggle to find their niche with the modern consumer, they’re turning to new technologies to recreate this sensory experience. What’s emerging is what I call the “StoreHouse” — a hybrid model that merges the physical benefits of a real-world store with the convenience of home. To embrace this market shift, retailers wil....
A Study of the Champagne Industry Shows That Women Have Stronger Networks, and Profit from Them
Female executives are a distinct minority, and they can be particularly rare in certain industries like mining, crude oil production, and agriculture. In such environments, they often face daunting obstacles, but could there also be unexpected advantages to being in a minority group? And, if so, what?
To investigate that question, we conducted extensive field research studying grape growers in Champagne, France, a region famous for its sparkling wines. It’s a centuries-old business, in which growers (that is, farmers) sell grapes directly to their buyers (winemakers like Bollinger and Moet & Chandon). In that market, women growers are very much a minority (just 14% of all grape sellers in our sample), and discrimination against them by the majority of male growers is a significant factor. According to one woman in our study, ....
How Adobe Structures Feedback Conversations
Providing employees feedback on their performance and opportunities to develop is one of a manager’s most important tasks. As important as it is, however, it can often get pushed down pretty far on the to-do list. Many leaders face a swarm of pressing deadlines; moreover, feedback conversations can be awkward. Even the preparation for such conversations can make managers feel stressed. It’s easy to fall back on the annual performance review to make sure at least one conversation happens. It’s no wonder many employees report getting no other feedback throughout the year.
But giving regular feedback on performance doesn’t have to be difficult. In fact, there are a few relatively simple formats or templates to help guide the conversation and ensure the discussion is meaningful (and hopefully more frequent than once a....
Embracing Digital Change Requires a Clear Strategic Focus - SPONSOR CONTENT FROM DXC TECHNOLOGY
At a time when many established companies are struggling to remain competitive, it’s clear that fundamental change is in order. Some established companies have found a path that works — they are surviving, thriving, and going head-to-head with an onslaught of fast-moving startups that seem to multiply overnight. What lessons have these companies learned that others need to embrace?
Digital transformation requires a new approach to strategy.
A key tenet of digital transformation is the understanding that digital strategy no longer plays a supporting role for business strategy. It is given first consideration, which determines other elements of the broader business plan. Without building on the basis of a digital operating model, there is no way to ensure alignment among a company’s digital initiatives. This is why so man....
How AI Is Already Changing Business
Erik Brynjolfsson, MIT Sloan School professor, explains how rapid advances in machine learning are presenting new opportunities for businesses. He breaks down how the technology works and what it can and can’t do (yet). He also discusses the potential impact of AI on the economy, how workforces will interact with it in the future, and suggests managers start experimenting now. Brynjolfsson is the co-author, with Andrew McAfee, of the HBR Big Idea article, “The Business of Artificial Intelligence.” They’re also the co-authors of the new book, Machine, Platform, Crowd: Harnessing Our Digital Future.
Download this podcast
Research: Moral Appeals Can Help Reduce Tax Evasion
Tax evasion is a key societal challenge and causes considerable losses in government revenue. In the U.S., these losses are estimated to be about $500 billion, roughly the size of the federal government’s annual deficit.
How can we ensure that people report their income correctly? The classic approach to reducing tax evasion is to increase the probability of being detected and to increase penalties. However, if people are motivated by a desire to do the right thing, moral appeals could also contribute to increased tax compliance. In a new study, we show that moral motivation is important for tax compliance, and that a moral appeal in a letter from the tax authorities substantially reduces tax evasion.
To study the effect of moral appeals, we conducted a field experiment with the Norwegian Tax Administration on more than 15,000....
Digital Transformation Is Racing Ahead and No Industry Is Immune - SPONSOR CONTENT FROM DXC TECHNOLOGY
Dealing with today’s digital disruption begins by understanding how it differs from past industry changes. After all, stories of the end of our industry as we know it have been a trade press staple for decades. A few key elements distinguish this era of change from the past.
Disruption has accelerated dramatically, and the numbers prove it.
A 2014 study from Constellation Research quantified the accelerating rate of change in the enterprise by examining a simple benchmark — the entry and exit of U.S. corporations in the S&P 500 index.
In 1958, corporations listed in the S&P 500 had an average stay of 61 years. By 1980, numbers from research firm Innosight reveal that the average stay had declined sharply to 25 years. In 2011, the average tenure dropped to 18 years. At the present rate of churn, Innosight’s resea....
Innovation Is as Much About Finding Partners as Building Products
Have you ever stopped to ponder the true complexities involved with trying to create a viable, safe, autonomous vehicle? The innovation alone is a herculean task, but imagine being that upstart pioneer trying to develop the technology, while at the same time going up against entrenched, powerful competitors with deep industry knowledge, assets, and channels who’ve been around for a hundred years or more.
This is the challenge for all kinds of disruptors, whether in the auto industry, pharmaceuticals, service industries, or healthcare. The fact is, going it alone, we believe, is simply not the way to go at all. Collaboration is the essential new secret sauce for startups and industry leaders alike. For true disruption to take hold, old and new must work together, playing to each other’s strengths.
This is an incredible moment ....
When to Solve Your Team’s Problems, and When to Let Them Sort It Out
After careful review of her harried work life, Charla, an IT manager, discovered that 20% of her time over the previous two months was spent managing escalations. It seemed that each interaction with her team ended with her feeling a need to exercise her authority to rescue them from a crisis. For example:
Sarah complains that Ken — a peer — repeatedly fails to include her on group emails.
Geri can’t get the data he needs from another department.
An internal customer is two months late with requirements but is pressing Pat not to push back his delivery date.
A VP is bypassing the approval process and directly cajoling Brittney to add functionality.
Sunil is distracted from his commitments by another team’s periodic informal requests for his help.
Charla routinely ended her day having accomplished almost none of ....
How to Deal with a Boss Who Stresses You Out
Discussions of leadership tend to focus on its positive outcomes, such as innovation, employee engagement or organizational performance. However, for the majority of employees, the leaders in their organizations are a source of stress rather than inspiration. Indeed, for every transformational leader and emotionally intelligent manager out there, there are dozens of toxic bosses, and they come in many different forms. Barbara Kellerman at Harvard University has devoted a great deal of her career to studying problematic leaders. She identified seven major types: (1) incompetent, (2) rigid, (3) intemperate, (4) callous, (5) corrupt, (6) insular, and (7) evil. What all these types have in common is their ability to induce stress in others, particularly their subordinates. Unsurprisingly, research shows that the experience of having a bad bo....
Stop Using the Excuse “Organizational Change Is Hard”
During nearly every discussion about organizational change, someone makes the obvious assertion that “change is hard.” On the surface, this is true: change requires effort. But the problem with this attitude, which permeates all levels of our organizations, is that it equates “hard” with “failure,” and, by doing so, it hobbles our change initiatives, which have higher success rates than we lead ourselves to believe.
Our biases toward failure is wired into our brains. In a recently published series of studies, University of Chicago researchers Ed O’Brien and Nadav Klein found that we assume that failure is a more likely outcome than success, and, as a result, we wrongly treat successful outcomes as flukes and bad results as irrefutable proof that change is difficult.
Sometimes “Small Data” Is Enough to Create Smart Products
When thinking about practical applications for artificial intelligence in your business, it’s easy to assume that you need vast amounts of data to get started. AI is fueled by data, and so it only makes sense that the more data you have, the smarter your AI gets, right? Not exactly.
When it comes to extracting intelligence by applying AI to data, context matters. In other words, you can build the biggest data lake imaginable, but if you don’t know what you’re trying to find and you don’t have the right data to do it, then you’re not going to get where you want to go.
That’s because AI is not some magical black box that can ingest mountains of data and then just spit out results. AI is a huge set of technologies, each with a specific, fine-tuned purpose. Companies that can zero-in on the impact they wan....
How to Make Agile Work for the C-Suite
Many companies are attempting a radical — and often rapid — shift from hierarchical structures to more agile environments, in order to operate at the speed required by today’s competitive marketplace. Companies like ANZ, the Australian-based banking giant, have made explicit commitments to adopt agile principles, while others like Zappos, are on the bleeding edge of organizational transformation. Many stopping points exist along the continuum from hierarchy to holacracy. To successfully transform to a more agile enterprise, companies must make conscious choices about where and how to become agile. They have to decide where to adopt agile principles and mindsets, where to use agile problem-solving methodologies to dynamically address strategic and organizational challenges, and where to more formally deploy the full agil....
To Understand Whether Your Company Is Inclusive, Map How Your Employees Interact
Marion Barraud for HBR
To gauge the impact of diversity and inclusion efforts, companies typically track metrics on the hiring, attrition, promotion, and composition of the current workforce. While such statistics are useful, they don’t provide a fully accurate picture. In reality, diversity and inclusion are not merely the number of nonwhite male employees you have. Rather, a truly inclusive organization contains a diverse cross-section of employees who actually interact with one another. So how do you measure this? A venerable management tool — organizational network analysis (ONA) — can result in powerful visual representations of the way inclusion actually plays out in your organization.
Recently, a large U.S.-based professional services firm we worked with unexpectedly learned the power of such pictures t....
How GE Appliances Built an Innovation Lab to Rapidly Prototype Products
Many large companies yearn to rekindle the innovative magic of entrepreneurship, but very few actually succeed. The reasons have been well documented and include:
Large, established companies answer to investors who value predictable, consistent financial results, and so are intolerant of the risks inherent in bold innovation.
Career advancement in mature companies usually demands avoiding conspicuous failures, while entrepreneurs must fail repeatedly to get ahead.
Large companies serve mainstream customers, while innovative entrepreneurs first serve early adopters.
For these reasons and more, it is generally futile for large companies to ask: “How can we act like a fast, lean, risk-taking startup?” You can’t. Which means that it’s time for a new approach. Large traditional organizations now struggling to adapt ....
Is the U.S. Ready for a Single-Payer Health Care System?
Ironically, as congressional Republicans have been trying to replace the Affordable Care Act, the ACA’s popularity is at an all-time high, and the majority of Americans now believe that it is the federal government’s responsibility to provide health care for all Americans. This shift in sentiment suggests that a single-payer system — a “Medicare for all” — may soon be a politically viable solution to America’s health care woes.
This system has long been an aspiration of the far left, yet even the right now seems to acknowledge its growing likelihood. Following his decision not to support the Better Care Reconciliation Act (BCRA), the Senate Republican leadership’s latest attempt to replace the ACA, Senator Jerry Moran, Republican of Kansas, warned in ....
The Answer to Short-Termism Isn’t Asking Investors to Be Patient
Tim Evans for HBR
Short-term corporate behavior is a major problem in the 21st century firm. Too many companies prioritize quarterly earnings over long-term innovation, human capital investment, and brand development, and many people believe short-term shareholders are to blame. The popular argument goes as follows: Short-term investors – those who hold onto a stock for less than, say, a year – aren’t interested in the company’s prospects beyond that year. So, if the company misses its quarterly earnings target, they sell their shares. The fear of such selling forces the firm to fixate on meeting the target, cutting investment to do so. Moreover, since shareholders can sell at the drop of a hat, the firm has no stable source of long-term capital, and so cannot make long-term plans.
These arguments have proven....
How to Handle Work When Your Child Is Sick
“Mommy/Daddy, I don’t feel so good.”
It’s a phrase that, along with its nonverbal equivalent – that glazed, pale, listless look that your kids get when they’re coming down with something — that you’ve learned to dread. Because whatever the ailment, be it flu, stomach bug, sprain, or other, two things are now certain:
1) You’re going to spend the next 24 hours, and likely more, worrying about and helping your child to get better, wishing you could magically take their discomfort away; and
2) You’re simultaneously going to spend all of that time in a frantic, improvisational rush trying to cover responsibilities at work while taking care of business at home — which won’t, to put it mildly, be easy.
Working parenthood in and of itself presents a massive logistical and e....