Clayton Christensen on “The Discipline of Managing Disruption”

To Harvard professor Clayton Christensen, coauthor of How Will You Measure Your Life?, a primary task of leadership is asking questions that anticipate great challenges. Here is a brief excerpt from an interview conducted by Art Kleiner for strategy+business magazine, published by Bain & Company. To read the complete interview, check out other resources, learn more about the firm, obtain subscription information, and register for email alerts, please click here.

Photograph by Evgenia Eliseeva

* * *

This is the second interview we’ve published with Harvard Business School professor and author Clayton Christensen. The first appeared back in 2001. Four years before, Christensen had published The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997). When his keenly original theory of disruption first appeared, it seemed like an audacious and counterintuitive view of organizational change. But it soon evolved into conventional business wisdom. And now he is applying it to a deeper question: “What is life for?”

In The Innovator’s Dilemma, Christensen argued that as companies focus their attention on their best and most reliable customers, they can all too easily overlook the threat of disruption from young upstart competitors. Those competitors, exercising their creativity, develop innovative capabilities and reach customers that the incumbents ignore. Sooner or later, the upstarts steal the market with their better, less-expensive new ways of solving customers’ problems.

Christensen has always had an entrepreneurial bent, and this clearly colors his approach. Before arriving at Harvard Business School, he founded the CPS Technologies Corporation, a manufacturer of thermal management materials (originally called the Ceramics Process Systems Corporation), and he is a cofounder of a small Boston-based consulting firm called Innosight. His ideas are particularly valuable for established industries that seek to respond effectively to the disruption coming seemingly out of nowhere.

In recent years, he has applied this approach to healthcare (The Innovator’s Prescription: A Disruptive Solution for Health Care, with Jerome H. Grossman and Jason Hwang, McGraw-Hill, 2008), education (Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns, with Michael Horn and Curtis W. Johnson, McGraw-Hill, 2008), and, most recently, the personal side of leadership.

Written as a reflection on the fulfillment of life’s purpose after a series of severe medical problems (including cancer and a stroke), Christensen’s most recent book, How Will You Measure Your Life? (coauthored with James Allworth and Karen Dillon, HarperBusiness, 2012), has struck a chord with many business leaders. It links the discipline of managing disruption to the kind of long-term thinking that is necessary if one is to step past today’s pressures and build a strong personal and professional legacy. In late 2012, Christensen spoke with strategy+business by phone from his home outside Boston.

* * *

S+B: How did you develop the concept of measuring your life?

Christensen: I had always aspired as a researcher to develop models that were robust enough to relate to any level in a hierarchy, from a national economy to an industry to a corporation to a business unit to a team. A good theory is really a fundamental statement of causality, and it ought to be as applicable to a business unit as it is to a nation, or vice versa.

In all my work, I’ve looked for universal principles—starting with my doctoral thesis in the early 1990s, which was the original study of disruption in the disk drive industry [which I wrote about in The Innovator’s Dilemma]. I was trying to explain why it was so hard for successful disk drive companies to sustain their success, generation after generation. I’d concluded that the success of their past practices made it difficult to react effectively to new disruptive competitors.

At first, when I finished, I thought I had a model that applied only to the disk drive industry. Then I remembered that during the Cuban missile crisis, which had happened when I was a boy in 1962, my neighbors hired a steam shovel to dig a bomb shelter in their basement. The steam shovel was manufactured by Northwest Engineering, a company that died in the early 1980s because its products were made obsolete by hydraulic excavators. So, later, when I knew someone who worked for an excavating company, I went over to see him one night and described what I’d found in the disk drive industry, and he said the same thing had happened with big digging machines. “There must be something to this,” I thought, “if it explains hydraulic excavators and disk drives.”

* * *

To read the complete interview, please click here.

Cynthia A. Montgomery : An interview by Bob Morris

Cynthia A. Montgomery is the Timken Professor of Business Administration and immediate past chair of the Strategy Unit at Harvard Business School, where she’s been on the faculty for 20 years. 
One of her recent assignments has been working with owner managers in the School’s flagship Owner/President Management program, an experience that changed her view of strategy, and the distinctive role leaders play in the process. Her latest book, The Strategist: Be the Leader Your Business Needs, grew out of that experience and was published by HarperBusiness (May, 2012).

Montgomery’s work has appeared in nearly a dozen top-tier managerial and academic outlets, including Harvard Business Review, Financial Times, American Economic Review, Rand Journal of Economics, Strategic Management Journal, Management Science, and others. She is the co-author of Corporate Strategy: Resources and the Scope of the Firm (with David J. Collis), the editor of Resource-Based and Evolutionary Theories of the Firm, and the co-editor of Strategy: Seeking and Securing Competitive Advantage (with Michael E. Porter).

Montgomery has served on the boards of two Fortune 500 companies, a number of mutual funds managed by BlackRock, Inc., and several non-profits.

Here is an excerpt from my interview of her. To read the complete interview, please click here.

* * *

Morris: Before discussing The Strategist, a few general questions. Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Montgomery: When I finished my early education, I did a big round of interviews for a wide variety of jobs ranging from marketing tires to writing communications pieces for a liquid metal fast breeder reactor business. They all had their merits but when all the hoopla was over, I asked myself: Do I want to spend the majority of my waking hours doing this, even for a few years? Ultimately, I decided “no” and went with my gut. I went to graduate school, got a PhD, and became a researcher and educator. It has suited me well. I’m glad I had the courage to walk away from attractive jobs that “weren’t me.”

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Montgomery: I did my graduate work at Purdue University, where they had state-of-the-art courses in empirical methods that are vital to strategy research. It was a very challenging program—not a lot of fun, especially for someone who had been a philosophy major as an undergraduate—but the run room from that investment set up the rest of my career.

Morris: What do you know now about business world that you wish you knew when you went to work full-time for the first time?

Montgomery: I wish I’d known more – not about the ideas side of business — but about the human side: What’s involved in building a reputation, inspiring people, and working effectively in organizations. I learned that incrementally over many years.

Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.

Montgomery: 

One of my favorite books is The Remains of the Day by Kazuo Ishiguro. It’s about a butler and the choices he makes about who he is and what matters to him. It’s also about how the goodness of the people/organizations we work for inevitably impacts the meaning of our own contributions. I read it years ago, but it still haunts me.

Morris: Tell me about the owner-manager program you’ve been teaching in.

Montgomery: 

The participants come from all over the world and from almost every industry — aerospace, refuse collection, health and beauty, financial services, education, fashion, biotech—everything. So, there’s enormous variety in the program; at the same time, what everyone has in common is that they’re leading an organization wherein they have a significant ownership stake. It gave me a great opportunity to think about the distinctive contributions leaders can make to a business –one of those, the one I’ve thought about most is the opportunity to define what a business will be and why it will matter. It’s the most fundamental question facing a business, the one from which everything else begins.

* * *

To read the complete interview, please click here.

Cynthia cordially invites you to visit this website

http://cynthiamontgomery.com/books/the-strategist/overview/

where you can download an excerpt from her book, The Strategist: Be the Leader your Business Needs.

Simple Rules for a Complex World

Here is an excerpt from an article written by Donald Sull and Kathleen M. Eisenhardt for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

Artwork: Nuala O’Donovan/Photography: Sylvain Deleu

*     *     *

A decade ago, in the course of studying why certain high-tech companies thrived during the internet boom, we discovered something that surprised us: To shape their high-level strategies, companies like Intel and Cisco relied not on complicated frameworks but on simple rules of thumb. This was true even though they were in extraordinarily complex, challenging, and fast-moving industries. The rules were not only simple, we found, but quite specific. Typically, managers had identified one critical process—making acquisitions, for example, or allocating capital—where a bottleneck impeded growth, and then crafted a handful of guidelines to manage that process. This approach helped companies to bridge the gap between strategy and execution—to make on-the-spot decisions and adapt to rapidly changing circumstances, while keeping the big picture in mind.

We reported our findings in HBR (“Strategy as Simple Rules,” January 2001). At the time, we knew that simple rules worked in practice, but now—as a result of subsequent research that we and others have done—we have a much richer understanding of why they are effective and how to construct them.

Simple Rules in Action

The story of América Latina Logística (ALL) illustrates how simple rules can help companies shape strategy in an uncertain environment. It also demonstrates that this approach can be useful in a setting beyond the technology sector—such as a dilapidated freight railway in southern Brazil.

In the late 1990s the government of Brazil privatized the country’s freight lines. After decades of neglect, the nation’s freight-rail infrastructure was run-down: Half the bridges needed repair; a fifth were on the verge of collapse. Twenty steam locomotives that were decades out-of-date were still in use. Rail accounted for only 20% of long-haul shipments in Brazil, compared with 80% in most countries.ALL was spun off from the Brazilian railway authority in 1997 to manage one of the country’s eight freight lines. Its new management team took over an organization that was bureaucratic, overstaffed, and bleeding cash. Transport on the line was so unreliable that crops in the areas it served were routinely left to rot in the fields during the harvest season. Middle managers were confused about what to do, and many pushed their local agendas at the expense of the company’s overall best interests.

The team decided to adopt a simple-rules approach to the work ahead. Let’s look at how that approach helped ALL’s executives achieve alignment, adapt to local circumstances, foster coordination across units, and make better decisions.

*     *     *

To read the complete article and watch a brief 3-minute video during which Donald Sull explains how to simplify your strategy, please click here.

 

Donald Sull is a professor of management practice at the London Business School and a global expert on managing in turbulent markets. His latest book is The Upside of Turbulence: Seizing Opportunity in an Uncertain World, published by HarperBusiness. Kathleen M. Eisenhardt is the Stanford W. Ascherman M.D. Professor at Stanford University and a codirector of the Stanford Technology Ventures Program.

How strategists lead

Cynthia Montgomery

Here is an excerpt from an article written by Cynthia A. Montgomery, a Harvard Business School professor, who reflects on what she has learned from senior executives about the unique value that strategic leaders can bring to their companies. It is featured by The McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out the wealth of free resources, and register to receive email alerts, please click here

*     *     *

Seven years ago, I changed the focus of my strategy teaching at the Harvard Business School. After instructing MBAs for most of the previous quarter-century, I began teaching the accomplished executives and entrepreneurs who participate in Harvard’s flagship programs for business owners and leaders

Shifting the center of my teaching to executive education changed the way I teach and write about strategy. I’ve been struck by how often executives, even experienced ones, get tripped up: they become so interested in the potential of new ventures, for example, that they underestimate harsh competitive realities or overlook how interrelated strategy and execution are. I’ve also learned, in conversations between class sessions (as well as in my work as a board director and corporate adviser) about the limits of analysis, the importance of being ready to reinvent a business, and the ongoing responsibility of leading strategy.

All of this learning speaks to the role of the strategist—as a meaning maker for companies, as a voice of reason, and as an operator. The richness of these roles, and their deep interconnections, underscore the fact that strategy is much more than a detached analytical exercise. Analysis has merit, to be sure, but it will never make strategy the vibrant core that animates everything a company is and does.

The strategist as meaning maker

I’ve taken to asking executives to list three words that come to mind when they hear the word strategy. Collectively, they have produced 109 words, frequently giving top billing to plan, direction, and competitive advantage. In more than 2,000 responses, only 2 had anything to do with people: one said leadership, another visionary. No one has ever mentioned strategist.

Downplaying the link between a leader and a strategy, or failing to recognize it at all, is a dangerous oversight that I tried to start remedying in a Harvard Business Review article four years ago and in my new book, The Strategist, whose thinking this article extends.1 After all, defining what an organization will be, and why and to whom that will matter, is at the heart of a leader’s role. Those who hope to sustain a strategic perspective must be ready to confront this basic challenge. It is perhaps easiest to see in single-business companies serving well-defined markets and building business models suited to particular competitive contexts. I know from experience, though, that the challenge is equally relevant at the top of diversified multinationals.

What is it, after all, that makes the whole of a company greater than the sum of its parts—and how do its systems and processes add value to the businesses within the fold? Nobel laureate Ronald Coase posed the problem this way: “The question which arises is whether it is possible to study the forces which determine the size of the firm. Why does the entrepreneur not organize one less transaction or one more?”2 These are largely the same questions: are the extra layers what justifies the existence of this complex firm? If so, why can’t the market take care of such transactions on its own? If there’s more to a company’s story, what is it, really?

In the last three decades, as strategy has moved to become a science, we have allowed these fundamental questions to slip away. We need to bring them back. It is the leader—the strategist as meaning maker—who must make the vital choices that determine a company’s very identity, who says, “This is our purpose, not that. This is who we will be. This is why our customers and clients will prefer a world with us rather than without us.” Others, inside and outside a company, will contribute in meaningful ways, but in the end it is the leader who bears responsibility for the choices that are made and indeed for the fact that choices are made at all.

*     *     *

To read the complete article, please click here.

Cynthia A. Montgomery is the Timken Professor of Business Administration and immediate past chair of the Strategy Unit at Harvard Business School, where she’s been on the faculty for 20 years.  Her latest book is The Strategist:  Be the Leader Your Business Needs, published by HarperBusiness (May 8, 2012)

 

Tribal Leadership: A book review by Bob Morris

Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization
Dave Logan, John King & Halee Fischer-Wright
HarperBusiness (2008)

How and why “workplace tribes” in almost any organization can develop the leaders needed at all levels and in all areas

When I first saw the title of this book before reading it, I immediately recalled great leaders throughout ancient history, including those whom Homer discusses in his two epic poems, the Iliad and the Odyssey as well as those featured in plays written by Aeschylus, Sophocles, and Euripides. More than 2,000 years later, the tribal leaders that Dave Logan, John King, and Halee Fischer-Wright discuss in this book are “natural leaders,” as were Achilles, Odysseus, Orestes, and Oedipus. However, they lead fellow workers rather than warriors to “victory” in the business world rather than on a battlefield. Moreover, what the co-authors mean by a “tribe” is a naturally occurring group of 20-150 people. Viewed this way, an organization becomes an interconnected series of these tribes. The key to changing an organization is to upgrade its tribes, one member at a time, through one stage at a time.

As I shall soon discuss in more detail, their view of stages is the key to getting an organization at least to the fourth of five stages of development. Their view is very practical: how to transform an organization. What they propose is based on a ten-year set of research studies that involved 24,000 people in two dozen organizations, with their members located around the world. The co-authors share what they learned from their research in this book.

For example, how to build and then sustain strong relationships between and among an organization’s tribal members. As they explain, “Every tribe has a dominant culture, which we can peg on a one-to-five scale, with Stage Five being most desirable. All things being equal, a Five culture will always outperform a Four culture, which will outperform a Three culture, and so on.” Paradoxically, the leadership challenge is to strengthen a tribe until it becomes a Four or Five culture while allowing it to function collaboratively within a federation with other tribes. In essence, the strength of a tribe is determined by the health of its culture.

In Chapter 3, Logan, King, and Fischer-Wright introduce and explain what they characterize as “the tribal leadership navigation system.” Its purpose is help leaders in the 75% of companies whose workplace tribes have a cultural Stage Three or below to locate the leverage points by which to nudge their company forward (i.e. higher) faster while emerging as a tribal leader. The co-authors suggest how to determine the current culture stage and then explain what is needed to reach the next stage.

One key point is that advancing a tribe is most efficiently achieved one member at a time. Aspiring leaders, therefore, must keep in mind that they have two eyes, two ears, but only one mouth. Therefore, they should spend at least 80% of their time observing what is (and isn’t) happening and listening to what is (and isn’t) said. Those whom Logan, King, and Fischer-Wright cite as effective tribal leaders (e.g. Griffin Hospital’s David Charmel, the U.S. Olympic hockey team’s Mike Eruzione, IDEO’s David Kelley, and the Moore Foundation’s Frank Jordan) have highly developed skills for “reading” a person’s tone of voice and body language.

Personal note: My own experience while working closely with several hundred companies is that one of the most revealing indicators is workers’ use of pronouns. Those who are actively and productively engaged use first-person plural pronouns almost exclusively. Those who are passively engaged or actively disengaged (i.e. dysfunctional) seldom do.

Credit Logan, King, and Fischer-Wright with making especially effective use of various reader-friendly devices. For example, Technical Notes, Key [Chapter] Points, Coaching Tips, Summaries, Leverage Points for a Person (per Stage), and Success Indicators. These devices facilitate, indeed expedite frequent review later.

Here in a single volume is about as much information, insights, and advice as a business leader needs to help her or his “tribe” (be it a department, division, or company) to develop and then sustain at least a Four culture. The success of those efforts, however, must be collaborative in nature and continuous at all levels and in all areas of the given enterprise.

The Upside of Turbulence: A book review by Bob Morris

The Upside of Turbulence: Seizing Opportunities in an Uncertain World
Donald Sull
HarperBusiness (2009)

How and why “agile absorption” is essential when seizing the upside of turbulence in the global marketplace

Donald Sull provides a brilliant analysis of a process that continues throughout the world as I now compose and then you read this brief commentary: “To succeed, managers must commit to a specific mental map of the world, and reinforce it with processes, resources, external relationships, and a culture that supports their world view.” However, over time, commitments harden and then (more often than not) become obsolete and counter-productive. Hostage to what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom,” managers respond to turbulence “by accelerating activities that worked in the past, a dynamic I have termed active inertia.”

I agree with Sull that the three factors that drive turbulence (i.e. dynamism, complexity, and competition) are likely to amplify volatility in the future. “Turbulence did not begin with the current downturn, nor are we likely to return to a predictable world after the [current] recession ends.” Sull’s own research (including research on others’ research) suggests that there will be both “bad news” and “good news” in months and years to come. Many (most?) companies will be devastated by their active inertia (i.e. digging an organizational “hole” even deeper while struggling to climb out of it) whereas other companies will take full advantage of new opportunities in three distinct ways, each of which Sull rigorously examines: opportunities from new ingredients, opportunities from a novel combination of resources, and opportunities from shifting taste.

Readers will appreciate the skill with which Sull organizes and presents his material. His focus is how HOW business leaders can help their organizations to develop what he characterizes as “agile absorption” so they can take full advantage of opportunities generated within an uncertain world that is certain to become even more turbulent. With regard to agile absorption, he devotes all of Chapter 11 to discussing what it is, how it functions, why it’s important, and how to develop it.  There are several structural factors:

o More “good fats” (e.g. cash reserves), few “bad fats” (e.g. lower fixed costs)
o Actively manage trade-offs (e.g. Toyota traded higher fixed costs for more flexible work rules)
o Build an agile culture on an absorptive asset base

Re the last point, Sull observes, “When the context shifts – and turbulence ensures that it will – the bloated organization lumbers through the ring like a punch-drunk heavyweight, absorbing blows it can no longer dodge and missing opportunities it is too slow to seize.” He concludes the chapter – and the book — with a “Going the Distance Survey” that will help the reader to determine her or his organization’s capacities for agility and absorption.

So, what to make of this book that develops in somewhat greater depth with somewhat wider application material he introduced in previously published book, Revival of the Fittest: Why Good Companies Go Bad and How Great Managers Remake Them? Here’s my take. First, it is obviously much easier and far better to avoid agile inertia than it is to recover from it. Sull explains how. Also, all companies are vulnerable to the perils of turbulence caused by dynamism, complexity, and intense competition. Sull explains how and why agile absorption can help them avoid or overcome those perils. Finally, business leaders can take specific and practical steps to seize “the upside of turbulence.” Sull explains what that requires, not only of the leaders but of everyone else involved in the given enterprise.

 

Common, potentially valuable anomalies that most executives don’t recognize

Donald Sull

I agree with Donald Sull that most executives either do not recognize or ignore anomalies and even when they’re pointed out, the same executives underestimate their potential importance. True, they are easy to miss. Sull suggests that “the human mind is hardwired to reinforce existing maps [documentation of what is already known], even in the face of disconfiguring evidence.” So despite various obstacles to spotting anomalies, are there any steps to be taken to notice gaps they’re not looking for, even when the clues are subtle and the mind resistant”? Yes. Sull identifies 11 recurrent anomalies:

1. This shouldn’t sell…but it does.
2. There should be a product here…but there isn’t.
3. This shouldn’t be so bad, expensive, time-consuming, or annoying…but it is.
4. This resource shouldn’t be so cheap…but it is.
5. This must be good for something…but we’re not using it.
6. This should be everywhere…but it isn’t.
7. Customers should use our product this way…but they do.
8. Customers shouldn’t care out this…but they do.
9. This could work in our industry…but we don’t do it.
10. We should have this at home…but we don’t.
11. They shouldn’t be making so much money…but they are.

When concluding her latest book, Willful Blindness: Why We Ignore the Obvious at Our Peril, Margaret Heffernan observes, “As all wisdom does, seeing starts with simple questions: What could I know, what should I know, that I don’t know? Just what am I missing there?”

We are also well-advised to keep in mind what Isaac Asimov observed years ago: “The most exciting phrase to hear in science, the one that heralds new discoveries, is not ‘Eureka!’ (I found it!) but ‘That’s funny….’”

You can check out Sull’s brilliant analysis of anomalies and their potential value in his latest book, The Upside of Turbulence: Seizing Opportunity in an Uncertain World, published by HarperBusiness (2009).

The early-warning signals of active inertia

In one of the most valuable business books written in recent years, The Upside of Turbulence: Seizing Opportunity in an Uncertain World published by HarperBusiness, Donald Sull describes what he characterizes as active inertia: “the tendency of well-established organizations to respond to changes by accelerating activities that succeeded in the past. As turbulent markets throw out new opportunities and threats, organizations trapped in active inertia do more of what worked in the past – a little faster, perhaps, or tweaked at the margin, but the same old same old.”

He identifies seven early-warning signs of active inertia

1. Cover curse: The CEO appears on the cover of a major business magazine.

2. Guru jinx: Management gurus single out your company for lavish praise.

3. CEO writes a book: Executives write a book (or have a book ghostwritten) that associates them and the company with what succeeded in the past.

4. Edifice complex: Building a grand corporate headquarters with lavish accommodations to indicate that executives have declared victory and now celebrate their triumph.

Note: Percy Bysshe Shelley wrote this brief poem, Ozmandias, published in 1818:

“I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
‘My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.”

5. Name a stadium: Rather than build new monuments, some companies purchase the rights (for millions of dollars each year) to have their name on professional sports venues.

6. Competitors share the same zip code: Entire communities of similar companies can also fall prey to active inertia (e.g. Akron’s tire companies) and tend to reinforce shared commitments to what have become obsolete assumptions.

7. Top executives look like clones: A gradual but relentless process of “homogenization” can eventually include everyone throughout the given enterprise.

Sull then observes, “Shifts in the market can devalue once valuable resources [as well as business models, priorities, and strategies] and leave them hanging like millstones around a firm’s neck.”

What Executives Really Need to Know about Employee Engagement

In their employee engagement study, Elizabeth Craig of the Accenture Institute for High Performance and Lauren DeSimone of the International Consortium for Executive Development Research, explore this topic in depth. Based on research, they identify the key drivers of engagement, revealing how companies can create it in their organizations and, more importantly, sustain high levels of engagement over time.

The research surveyed 1,367 employees in large US companies across a range of industries. It helps companies understand what employee engagement is, and identifying the catalysts of high employee engagement. Among the most important are:

• Jobs that are varied and provide motivation.
• A compelling future.
• A safe environment.
• Dependable colleagues.
• Sane expectations.

The stakes are high: a workforce that is highly engaged is the engine driving the gains in profitability and productivity that are critical to business success in a competitive global environment.

To download a PDF of the report, please click here:

RECOMMENDED READINGS:

The 2020 Workplace: How Innovative Companies Attract, Develop, and Keep Tomorrow’s Employees Today
Jeanne C. Meister and Karie Willyerd
HarperBusiness (2010)

The Great Workplace: How to Build It, How to Keep It, and Why It Matters
Michael Burchell and Jennifer Robin
Jossey-Bass (2011)

The Enemy of Engagement: Put an End to Workplace Frustration – and Get the Most from Your Employees
Mark Royal and Tom Agnew
AMACOM (2012)

The Thank You Economy: A book review by Bob Morris

The Thank You Economy
Gary Vaynerchuk
HarperBusiness (2011)

Business begins with making people feel appreciated…and goes nowhere unless they do

In recent years, an avalanche of research data generated from marketplaces throughout the world reveals that when asked to identify what is most important to them, workers and customers identify “feeling appreciated” as being either #1 or #2.

Re-read that sentence and you will understand what Gary Vaynerchuk has in mind when observing “we have entered a new era in which developing strong consumer relationships is pivotal to a brand or company’s success.” The challenge is to create at points of contact with each consumer “an emotionally charged interaction” because the cultural changes social media have ushered in “are already having a big impact on marketing strategies, but eventually, companies that want to compete are going to have to change their approach to everything, from their hiring practices to their customer service to their budgets. Not all at once, mind you. But it will have to happen, because there is no slowing down the torpedo-like speed with which technology is propelling us into the Thank You Economy.”

Long ago, Southwest Airlines’ then chairman and CEO, Herb Kelleher, explained his company’s sustained success this way: “We take good care of our people, they take good care of our customers, and then our customers take good care of our shareholders.” In the “Thank You Economy,” appreciation is the coin of the realm. The aforementioned “emotionally charged interaction” involves two components: an employee who appreciates a customer or (yes) another employee and the person who feels appreciated.

Throughout his lively and eloquent narrative, Vaynerchuk inserts a number of insights that caught my eye. Here is a representative selection:

On his use of exaggeration: “I’d rather shock you into paying attention, and admit later that business rarely requires an all-or-nothing approach, than take the chance that you won’t take the situation seriously enough.” (Page 7)

“Right now, I’d say that social media is a bit like a kidney – you can survive with only one, but your chances of making it to old age are a lot better with two. Eventually, though, I think social media will be as important to a business as a strong heart.” (80)

“Creating a Thank You Economy culture will become easier and easier as you begin hiring people who share your commitment to caring. It will be easy to spot the people already on your staff who can’t adapt or just don’t get the concept, and as they leave you will replace them with those who share your DNA.” (102)

“Developing a powerful emotional connection could be all it takes to convince [consumers] to consolidate their spending with you. Plus, now that purchasing decisions are directly affected by consumers’ relationships to the people they communicate with on their social networking sites, staying aware of who your consumers know and who they talk to regularly [i.e. those by whom their preferences and purchase decisions are most influenced] will become increasingly important.” (196)

“Care – about your customers, about your employees, about your brand – with everything you’ve got.” (233)

I selected the title for this review (“Business begins with making people feel appreciated…and goes nowhere unless they do”) because I realized decades ago that I could not accomplish much of anything in my life unless I cared, really cared, about what I wanted to do and really cared about those on whom I depended for help to achieve my objectives. I also realized something else that proved to be even more important: Really caring about helping others to achieve their own objectives. It is easy enough to incorporate a company and obtain a license to do business. What happens next depends almost entirely on how much you care about who you are, how much you care about what you want to do, and how much you care about those with whom you will be associated. If you care enough about all three, you’ve got a shot. Otherwise, don’t bother.

In the Thank You Economy, the “winners” will be those who care the most…and are cared about the most. If you are determined to be among the “winners,” this is a must-read. In fact, it is a must re-read.

Think about it: If you don’t care, why should anyone else?