Why CEOs Are More Vulnerable

Wall Street was shocked by the resignation of Citigroup’s Vikram Pandit after a long standing dispute with the board over a series of missteps and reverses. After five years since Pandit took control in April 2007, Citi’s share price melted from $510.50 to $37.25—a negative return of 89 percent. By contrast JPMorgan’s and HSBC’s share price has been relatively flat over the same period. The failure of the group to pass Federal Reserve bank stress tests earlier this year coupled with the announcement that third quarter profits would be sharply lower than last year, signaled for board members that it was time for him to go.

But even CEOs whose number have been less unkind than Citi’s have found themselves under fire. Activist investors have been, well, active, due in no small part by depressed valuations. Trian Fund Management, the activist fund run by Nelson Peltz, took a 7.1 percent stake in industrial conglomerate Ingersoll-Rand in May of this year.

Pershing Square, run by Bill Ackman, has installed a new slate of directors at Canadian Pacific Railway. And Elliot Management has been agitating for a sale of BMC Software, in which it has a 6.5 percent stake. Ackman, has also accumulated a $2 billion position in Procter & Gamble. Although he hasn’t declared it officially his intent, his actions suggest that he wants to try to oust P&G CEO Bob McDonald.

The consumer-goods giant has been struggling for some time now. Bob McDonald has been CEO of P&G for three years, and in the past two years, share prices have increased modestly. By contrast, the share prices of rivals Unilever and Colgate-Palmolive have soared 18% and 27%, respectively.

Ackman believes McDonald has mismanaged the company and missed opportunities. He is also insisting on further cost cuts. However, with a market capitalization of more than $179 billion, P&G is a whale that will be hard to land. Pershing Square’s $2 billion stake—about 1 percent—won’t yield the same leverage it would at a smaller company. But there is always the possibility of his attracting other activists or other Wall Street money to his cause.

When activists take investment positions in target companies, demands usually follow. Navistar International capitulated to investors led by Icahn Capital’s Carl Icahn and appointed to its board two of Icahn’s choices with a third to follow. Relational Investors, based in San Diego and run by Ralph Whitworth, has successfully agitated for changes at many major corporations, such as Genzyme and Home Depot. (At Home Depot, Whitworth called for the company to exit its commercial building supply business.)

Not all activists intend to start a bruising fight for board seats or change of management control. Barry Rosenstein’s hedge fund, Jana Partners LLC, which has $3.5 billion under management, and who took a position in Charles River Laboratories told the Wall Street Journal that he gets more from CEOs “by not embarrassing them publicly.” He contacted CRL CEO James Foster and urged him to drop a $1.6 billion acquisition. The conversation was the first of several discussions between the men about how to improve the drug research company and boost its stock. CRL decided to abandon the deal and announced a stock buyback. Its share price later improved.

So the moral of the story is to talk to your insurgent investors. Seven years ago Bill Johnson of H.J. Heinz had an initial encounter with Nelson Peltz of Trian Group that was anything but cordial. Peltz insisted on coming on the board bringing with him four other directors. "Yes, the initial encounter was anything but cordial, " Johnson told Chief Executive at the time. "But as he began to understand what we were doing, and I began to understand what he was doing, a grudging mutual respect emerged. "

Johnson went on to say, "You have two choices. You either recognize the changed circumstances and deal with it and move forward, or you try to live in the past. The market had spoken to us. " Johnson would put two of Peltz’s people on the Heinz board, but continues to lead the Pittsburgh-based food giant.

Fuente: ChiefExecutive.net

Organizations from Hell: When Leadership Fails

Is your boss Michael Scott from "The Office" or worse?

by Ronald E. Riggio, Ph.D.

Bad organizations very often have problems at the top. The leaders either are the cause of the problem, or they don't work to solve them (or are unaware of just how toxic their organizations have become). Here are some examples when leadership helps create an "organization from hell".

• "The Clueless Leader": The leaders in these organizations are simply out of touch with how bad things are. Like Michael Scott from the TV show "The Office," these leaders simply don't realize how bad thing are or simply don't care. I recall discussing with the president of one organization the possibility of an employee survey to try to get a handle on how disgruntled employees had become. "Why would we want to do that?" was the clueless response.
• ANTIDOTE: It is important for leaders to regularly "take the temperature" of their organization, encouraging the upward flow of communication about operations and what employees are thinking and feeling.

• "Letting the Rats Run the Ship": All too often, leaders delegate responsibility to either incompetent managers or allow certain "poisonous" individuals to have too much power in the organization, leading to rampant dysfunction. In one organization, the CEO, who was often absent, delegated all operations to a team of department heads - half of which were completely incompetent. With no one in charge, little was accomplished because the departments needed to work together to get things done. The finger pointing and passing the buck led to a completely dysfunctional organization. In another organization, two very pernicious and self-serving managers were able to stifle any sort of program or initiative that did not directly benefit them. A succession of leaders failed to deal with this diabolical duo, and the organization became stagnant (as well as a horrible place to work, particularly for the entrepreneurial and dedicated employees who were stymied at every turn).
• ANTIDOTE: Leadership is about effective delegation, empowering employees, but also monitoring their performance and progress. Leaders need to be careful about those they select for positions of power, and work to remove those who are not doing their jobs.

• "Incompetence at the Top": The Peter Principle is the notion that in traditional organizations people move up the chain of command until they reach their level of incompetence. Although research has not established the existence of the Peter Principle, in some organizations this does indeed happen. I recall one Chief Operating Officer who was convinced not only that he was always right, but that he had the support of the majority of his followers. After making one particularly bad and very unpopular decision, he stated, "I think I've built up enough "capital" around here that people will forgive me." Unfortunately, his "bank account" was already bankrupt from previous blunders.
• ANTIDOTE: If leaders select for both competence and high potential, and if leaders inspire, challenge, and develop managers, there won't be a Peter Principle in the organization.

• "When Bureaucracies Trump Leadership": When even good leaders become detached from what is going on in their companies, the creep of the bureaucracy can come into play and cause an organization to become quickly dysfunctional. Management guru, Peter Drucker, once said that it only takes about twenty minutes for a bureaucracy to take hold (Drucker said, "bureaucracies are about rules, not results."). As a result, organizations become stagnant as members are unwilling to innovate or be creative. Everyone follows "the rules," even when those rules make no business sense.
• ANTIDOTE: A good leader needs to encourage and stimulate creativity, innovation - empowering and challenging employees rather than stifling their initiative.

All of the antidotes are elements of transformational leadership.

Are you one?

Is your boss?

Fuente: Cutting-Edge Leadership

Las Claves de Warren Buffett para el Futuro

El Oráculo de Omaha dijo el pasado miércoles que la economía global se encuentra en desaceleración por los continuos problemas en Europa y el freno de Asia. De su país, dice que la recuperación viene dándose, aunque lentamente

El cuarto hombre más rico del mundo, Warren Buffett, dijo en una entrevista de 2 horas con CNBC que “la economía global se está ralentizando, principalmente por los problemas en Europa y la desaceleración de los países asiáticos” –fue desplazado del tercer puesto recientemente por el español Amancio Ortega, dueño de Zara y otras empresas. Respecto a Estados Unidos, sostiene que “la economía aún está recuperándose de manera modesta” y que “los negocios mejorarán sin importar quién gane las elecciones en noviembre”.

Hacía bastante que Warren Buffett no figuraba por declaraciones a los medios financieros, ya sea para hablar de incorporaciones nuevas a su cartera o para dar su opinión respecto a cuestiones macro.

Si bien Buffett es un reconocido simpatizante del actual Presidente de Estados Unidos, Barack Obama, sostiene que la economía mejorará incluso si triunfa en noviembre el candidato republicano, Mitt Romney.

Sumado a esto, agregó que “mientras la economía estadounidense está superando la performance de Europa y Asia, los negocios en Estados Unidos sólo mejorarán si los líderes políticos resuelven la problemática fiscal”.

Las conclusiones que obtuvo Buffett para hacer estas declaraciones provinieron de subsidiarias de su empresa Berkshire Hathaway, más precisamente BNSF Railroad, Clayton Homes y un bróker inmobiliario de gran envergadura.

Respecto al mercado del real estate estadounidense, una variable sumamente importante para medir la evolución de su economía, Buffett versó algunas cifras que dan para ilusionarse. El Mago sostiene que los precios del mercado inmobiliario están empezando a rebotar, aunque aún se encuentran lejos de sus picos. Dijo que Clayton está vendiendo entre un 10% y un 15% más de casas manufacturadas y que sus brokers inmobiliarios están teniendo un aumento de 15% en sus transacciones.

Hay que recordar que en tiempos que formación de la burbuja subprime los precios de las propiedades alcanzaron precios históricos debido a la gran cantidad de liquidez y de crédito en el sistema. Esto hizo que se generara una bola de nieve con una posterior burbuja de precios.

En relación a temas de política económica, Buffett dijo que apoya la gestión de Ben Bernanke, presidente de la Reserva Federal, y que lo respaldará si se postula para un tercer mandato al frente de la Fed.

Los planes del Oráculo

“En estos momentos estoy en busca de hacer alguna adquisición grande”, dijo Buffett en la entrevista. No obstante, ha tenido problemas para lograr este cometido ya que acusa a las firmas de inversión privadas de ofertar agresivamente a través de apalancamiento. “Berkshire no pide prestado para hacer adquisiciones, ya que tiene 40 mil millones de dólares de flujo de caja”.

Dijo que un contacto de él le acerco una propuesta de un proyecto de 6 mil millones de dólares pero que aún no vio los prospectos del mismo para analizarlo en profundidad.

Por el momento este año hizo algunos agregados en su participación en Wells Fargo e IBM, dos de los caballos de batalla de su cartera.

Con 82 años y en pleno tratamiento por un cáncer diagnosticado el año pasado, Buffett no se echa atrás. “Me siento perfecto”, respondió cuando le preguntaron por su enfermedad. Al parecer todavía queda mucho tiempo de recomendaciones para el amo del value investing.

Fuente: Inversor Global

Leadership Upside Down:

A review of "Turn the Ship Around"

by Dana Theus

Empowerment is bunk. Most people who’re serious about leadership know this, but it’s not because empowerment is a bad idea. It’s because most leaders don’t have the skill and courage to do it correctly. At its best, when we empower followers, we give them authoritative space to figure out for themselves that true leadership power comes from the inside, through a transformative and entirely personal process.

We provide guidance and allow them to take true responsibility and total ownership. We tolerate deviations from our style in pursuit of solutions we never dreamed were possible. We believe they can do it so they believe they can do it. This requires a lot of wisdom, discipline, patience and courage by the “leader” who creates this special space, within which the EMpowered follower transforms into an INpowered leader.

Empowering leadership is more art than science. By definition, we’re sending our troops inside their soul, where we have no control. The essence of empowerment is that you hand over control and see what they can do with it. When it works, they boost performance with creativity, drive and innovation. But of course, they sometimes don’t.

Leading this way is impossible for control freaks and nerve-wracking for everyone else, because we may end up presiding over a performance nosedive, lost profit or angry customers. True empowerment, that which leads to inpowered success, is not bunk, but it is a risk.

Can you imagine doing this in your company?

Now, imagine doing this on a nuclear submarine, where such a failed experiment could send hundreds of millions (billions?) of dollars of U.S. Navy property and priceless human lives to the bottom of the ocean. Would you take an empowerment risk if you were in charge of that ship? Capt. L. David Marquet did, and, 10 years later, when it became clear that his approach had lasting positive impacts, he wrote a book about it.

Marquet, a Navy-trained command-and-control leader, had this experiment practically thrust upon him when he was assigned to a ship he hadn’t expected to command, the USS Santa Fe, after training for 12 months to run the USS Olympia. Oops. Upon arrival, he was wise enough to realize that empowering the knowledgeable crew was the only way to go. It was an experiment that could have gone wrong, but because Marquet did the hard work to figure out how to implement empowerment correctly, his ship and crew transformed from the worst-rated sub into the first-rated sub — in a year.

“The Hunt for Red October” meets Harvard Business School

I’m not going to tell you more of Marquet’s story because I really want you to buy the book,“Turn The Ship Around” and read it. It’s a fast and powerful read you’ll want to explore more than once. Stephen Covey wrote the forward, and one of the reviewers describes it as, “the ‘Hunt for Red October’ meets Harvard Business School,” and he’s right.

You’ll enjoy the book, but here’s why it’s not just another book about leadership and empowerment. Marquet applies a military practitioner’s attention to detail and actually begins to decode the genome for the art of empowering leadership. He gives those brave leaders pursuing true empowerment some blueprints for helping empowered leaders discover their inner power to lead.

For example, many leadership gurus talk about how important it is for empowered employees to be given visionary direction. Marquet calls this effort “Clarity” and breaks it down into seven principles, including some we’ve heard before — striving for excellence, building trust and beginning with the end in mind. But he goes deeper and also identifies subtle but powerful distinctions between questioning and curiosity; he demonstrates what it looks like to use guiding principles in decision-making instead of slapping a vision on the wall and hoping people will figure it out.

A new chapter in the leadership guru book on empowerment

Despite these great insights, however, I believe that Marquet has added a new chapter to the guru book on empowering leadership by identifying a key reason so many empowerment efforts fail. Marquet exposes, through principle and anecdote, the critical dependency between giving up leadership control and investing in giving your newly empowered leaders control mechanisms and technical competence.

During an inspection where the Santa Fe received high marks, an inspector noted that the crew “tried to make as many mistakes” as other crews, but the control mechanisms they used to catch themselves and each other caught the foul-ups before they occurred. Similarly, through trial and error, Marquet discovered that giving people control without also giving them the necessary technical knowledge was a recipe for disaster. By dissecting the Sante Fe’s experience, he breaks out eight principles of empowering “Control” and five principles of “Competence.”

He also illuminates employees’ inherent desire to contribute to a successful organization when their own gifts and abilities are honored and trusted. My favorite anecdote from the book is the way that he outlawed the chasing down and reporting of crew members who made noises (e.g., dropping a wrench) that could expose the Santa Fe to enemy sonar. Instead, he asked crew members to self-report when they made noises; before he knew it, more noises were being reported than sonar could detect and the overall number of noise incidents decreased.

This might not have happened on another ship, but Marquet and the officers who conspired to revolutionize the command-and-control leadership model of the U.S. Navy did one very important thing; they did not reprimand noise-makers for self-reporting.

Remove the fear factor, reward responsibility and people will begin to see the benefits in accepting true ownership of their work.

The lesson here, which I believe is so important and which “Turn the Ship Around” makes clear, is that empowering leadership doesn’t work if you’re not willing to invest in your people and believe they can achieve greatness. Giving up control doesn’t mean giving up standards of excellence. In fact, the opposite is true. Standards of excellence become your primary control mechanism, and belief in your teams’ ability to accomplish them becomes your primary leadership power.

If your people don’t have the knowledge and belief in themselves necessary to achieve excellence, the experiment’s not going to work, and you can easily talk yourself back into the “Do I have to do everything around here?” mentality that limits so many organizations.

Join the movement?

Marquet has coined the term “leader-leader” to describe this approach to empowering leadership that helps develop and grow inpowered leaders. I was able to meet with him and see that he believes that any approach except leader-leader will fail to achieve excellence in our increasingly complex world. He also knows that it’s going to take a movement to keep practicing, exploring and propagating these principles. He’s started the movement to apply these principles in business, and I’m on board. How about you?

Fuente: Smart Brief

Leadership (Part 3):

10 things great bosses do

by Steve Tobak

If you ever find a company like that, keep it to yourself. Nobody will believe you.

It should come as no surprise that perfect companies are about as easy to find as perfect bosses and perfect spouses. It just doesn't happen. Come to think of it, if you look in the mirror and don't see plenty of flaws, you're delusional. And companies are entirely made up of imperfect people, just like you.

Even after 100,000 years of natural selection, the human race has evolved to the point where our organizations are nearly as effective as a colony of ants with defective antennas. That's right, we still have a long way to go. Sobering thought, I know.

And yet, for all the Yahoos, HPs, RIMs, Sprints, Sonys, Kodaks, Nokias, Bank of Americas, and all the executives that turned these once-great brands into laughing stocks, there's still the occasional Apple or IBM to give us hope.

It may be an imperfect world, but there are still managers who more or less know what they're doing -- after they've had their morning coffee. Here's my take on what high-performance managers do -- or are at least supposed to do -- to motivate their teams and deliver results:

1. Help the company achieve its strategic and operating goals by making smart business decisions and managing their team effectively.
2. Entrust their employees with as much responsibility as their capabilities will allow and hold them accountable for the same.
3. Behave like a mature adult -- genuine and empathetic -- even when their employees or their management are acting out like spoiled children.
4. Provide their employees with the tools, training, and support they need to effectively achieve challenging but reasonably attainable goals.
5. Promote a can-do, customer service attitude with customers and stakeholders by walking the talk and leading by example.
6. Promote their team's accomplishments and take the heat for their failures.
7. Provide genuine feedback, both good and bad, to their employees, peers, and management. Request the same from them.
8. Work their tail off and be hands-on when necessary. If they don't, they can't expect anybody else to do it either.
9. Don't compromise their ethical principles in the name of "the ends justify the means" or for any other reason.
10. Strike a balance between shielding their folks from the ripples of dysfunctional management and openly communicating events that may affect them.

Overall, the best managers create a work environment where people feel challenged, do their best, and are held accountable for meeting their commitments. But most importantly, they're key components in an organization that exists to serve its customers and shareholders. We're all happiest working for a successful company.

Fuente: CBS Money

Leadership (Part 2):

10 employee types that drive managers crazy

by Steve Tobak

Some employees are such royal pains in the you-know-what, such impediments to getting things done, that you really start to question why you hired them in the first place.

When one well-known high-tech CEO was fed up with one of his people, he'd picture the guy's compensation on his forehead and think, "is he worth it?" If the answer was "no," the guy was gone. Really.

Now, executives and managers can and will overlook all sorts of weird and quirky behavior as long as the job gets done. But certain types of employees can't seem to stop themselves from creating more problems than they solve. For them, the dollar amount on their foreheads just isn't worth it. 

I don't generally like stereotypes but I'm going to make an exception for these 10 behavioral types that drive bosses nuts because, well, they really do it to themselves:

1. I'm important. Takes himself too seriously. Anytime you need something, he has to check his schedule or who-knows-what and get back to you. Or he has all sorts of questions and concerns, every little bit of minutiae he can think of just to sound important. It's so annoying that, after a while, you just go somewhere else.
2. The persistent negatron. Some people are all about why things can't be done or shouldn't be done a certain way. They've always got reasons why something is wrong but never any good suggestions on how to do it differently or better. They're always trying to stir up trouble or a debate over nothing. Those people just suck the energy out of organizations.
3. Surprise! In preparation for an IPO due diligence meeting with all the bankers, I needed some critical revenue forecast data. I gave someone plenty of time -- two weeks -- to accomplish this important assignment. The day of the meeting, the pressure's on, and he sends me the data with a bunch of stuff missing. When I tracked him down, all he had were excuses. What a mess. I didn't fire him but I probably should have.
4. "Trust me." I don't know why, but when an employee I don't know well enough to actually trust says "trust me" it makes the hair on the back of my neck stand up. If I trust you, you don't have to say it. If I don't yet, you have to earn it. Saying it just makes me think of all the reasons why I don't or shouldn't.
5. Mr. Know-it-all. People who think they know it all are annoying to those of us who do. Old joke. But seriously, the most accomplished executives are always aware of how little they know; that asking questions is far more important than knowing answers. That just comes from experience. So when the "smartest guy in the room" acts like he has all the answers and we know he doesn't, he loses credibility. Not a good thing.
6. The brick wall. I don't know why, but some people are so stubborn, so inflexible, if they don't do things exactly a certain way -- their way -- you'd think the whole world is going to fall apart. It gets to the point where they're actually intimidating to work with, so you just give up. Maybe that's the point.
7. High maintenance, high anxiety. It's one thing when you're new to a job and need some handholding to get going. I'm actually a bit of a slow starter myself. But some employees stay that way. They have zero self-confidence, are full of angst, and need to be told exactly what to do and how to do it and confirm every little thing with you for fear they might actually get it wrong and be held accountable. It's sad, but it's also a real problem.
8. The filibusterer. It's easy to spot these people in meetings. They're the ones who always have to know why we have to do it this way or that way and why not the other way. They're really just wasting everyone's time to hear the sound of their own voice -- or so they don't have to actually do any work.
9. In everybody's business. Everywhere I've ever worked there's been an employee who's got to be involved in everything. Outwardly, they appear helpful and eager to assist. They want to help everybody do everything. Everything except actual work, that is. After a while you realize it's all just distraction, to feel important, or stay entertained while getting absolutely nothing done.
10. "It's the principle." Whenever someone says, "It's the principle" at work, I get nervous. I'm not talking about real ethical dilemmas or anything illegal. I'm talking about subjective stuff, like "I don't understand why John gets all the accolades and promotions instead of me. It wouldn't bother me, but it's the principle..." That's just code for someone who feels entitled to something they apparently didn't earn.

So, what type of coworker or employee drives you nuts?

Fuente: CBS Money

Leadership (Part 1):

7 Things Great Employees Do
by Steve Tobak

Look, you've got to understand the reality here. People will cite ridiculously esoteric research studies and pull all sorts of popular, feel-good stuff out of their utopian behinds -- whatever it takes to get you to click. That's great for feeding your ego and your addiction to distraction, but it doesn't do squat for your career.

This is different. It's not some kumbaya fluff that will get you a big pat on the back, a "Nice job, buddy" from the boss, or a gift certificate for a cheap dinner. This is what employees really do to distinguish themselves in the eyes of management. It's how up-and-comers become up-and-comers. It's how you get recognized and moving up the corporate ladder. It's what today's top executives did when they were in your shoes.

1. Take responsibility for hot projects with a fearless attitude. And get this. If it works out, you don't waste a lot of time basking in the glory, at least not at work. Maybe you go out and celebrate with the other team members. That aside, you're all about finding the next big challenge. You're hungry for more. And if it fails, you don't point fingers. You take full responsibility and learn from it. And you know what? That's when management will start to see you as one of them. That's big.
2. Demonstrate natural leadership. That means when you take charge of something, people naturally follow, even though you don't have the title or the authority. Never mind everything you read; that's what natural leadership is really all about. There are all sorts of different styles that work, but mostly it comes down to a fearless self-confidence and charisma that people find magnetic. That's like gold in the corporate world.
3. Say, "Sure, no problem, will do," and then do it. It's one thing to have a solid work ethic and get the job done. That certainly key in the real business world. But it's another thing entirely to always accept challenging assignments with open arms and a simple, "No problem, will do" acknowledgement. And the tougher it is, the more confident you sound and the harder you work to make it happen. That's the sign of an employee who needs a promotion or two. 
4. Roll with the punches without taking things personally. Sure, it's hard to keep your balance when the rug's just been pulled out from under you. But let's face it. The nature of contemporary business is one of constant change, reorganizations and layoffs. Programs come and go. Companies too. One day you're rolling in resources, the next day you need three signatures for a chair. That's the way business is. And if you're flexible, you're adaptable, you've got fortitude and you don't take things personally, that's big.
5. Think of the company's goals as your goals. I know, the jaded among you will say that blind loyalty to a company will enslave you and get you nowhere. Well, there's truth to that. After all, any employee can be fired or quit, and that's as it should be. This is about understanding how companies operate and making the company's or the department's priorities your own. When you start to identify with the goals of management -- live, eat and breathe them -- then you start to become management. Yes, that's a good thing.
6. Do whatever it takes to get the job done, even when you're not getting paid for it. Look, success in the real world doesn't work like tit for tat. First, you put yourself out there, take risks, do the work, and accomplish things. Then, and only then, do you get to put your hand out and say, "Give me some." Then, if your company doesn't take care of you, you learn a lesson, put your accomplishments on your resume, and move on to a better place that values overachievers like you.
7. Grow the business or improve the bottom line. Yeah, I know it's not popular, but that doesn't make it any less critical or true. These days, it's all about doing more with less. Being more efficient, effective, scrappy, innovative, motivational, engaging, and not only that, happy about it. Think of it as a problem-solving challenge where the problem is how to grow the business or cut spending while improving productivity. Like it or not, that is what it's all about.

Fuente: CBS Money

The Myths That Prevent Change

by Roberto Verganti 

You probably think that the barriers to innovation are negative elements of your organization — that is, the wrong people, behaviors, and processes. But the most subtle and pernicious barriers to innovation may be the seemingly positive myths about what has made your organization successful.

Every organization has myths about who are the great leaders, what are the behaviors to admire and imitate, what business you are in, what customers want, what are the best skills to run a process. Whenever someone proposes an idea, it is explicitly or implicitly screened with the myths. Unfortunately, the competitive landscape changes, but the myths don't.

Consider Bang & Olufsen, the Danish manufacturer of music players and speakers. Its people have believed that its success depended on achieving the ultimate pureness of sound, creating beautiful objects, delighting users through great physical product interfaces, and thinking of music as a home experience. As a result, it has viewed architects and industrial designers as the best interpreters of customers' aspirations.

These myths impeded Band & Olufsen from reacting to the rise of MP3 digital encoding. MP3 technology has radically changed the world of music by making music more accessible, shareable, and embedded in the net. But MP3 conflicted with B&O's beliefs because it downgraded the quality of sound, replaced nice speakers with small headphones and computers, made the digital sphere more relevant than the physical objects, and made listening to music a dynamic on-the-go experience rather than a static at-home experience.

As a result, B&O was slow in capturing the opportunity of this "outlandish" technology. Even when MP3 eventually became dominant, B&O's myths remained the same: Its people accepted MP3 as something they "had" to use, rather than something they "wanted" to use. Today the Danish company is still struggling to cope with the digital revolution.

Myths are pernicious barriers to innovation because they are so deeply and silently embedded in an organization that they almost hypnotize it. I've been recently inspired by I miti del nostro tempo (The Myths of Our Time), a book by the Italian philosopher Umberto Galimberti. He says that "myths are ideas that own and govern us by means that are not logical but psychological, and therefore are rooted in the depths of our soul. These are ideas that we have mythologized because they give no problems, they facilitate judgment; in a word, they reassure us."

Galimberti talks of individuals. But the same dynamics happen in organizations.

What's the remedy? Galimberti's advice is that because "myths prevent us from deeply understanding the world ... we must therefore put our myths under critical scrutiny..."

I couldn't agree more. You need to challenge the untouchable myths of your organization. The next time someone proposes an idea that looks wrong or outlandish, try the following:

Identify the myth to be challenged.

Myths are often connected to the parameters you use to judge an idea. So identify the parameter that makes this idea wrong. For example, imagine you are a leader in a corporation that produces industrial robots and someone proposes the bizarre idea of using robotic arms in amusement parks to swirl people around on scary rides. This idea conflicts with a major myth in your industry: Value comes from safety, which involves keeping robots and humans apart.

Now, instead of challenging the idea, try the opposite: Challenge the myth. For example, what if there is a value in industrial robots being dangerous? What if there is a value in bringing humans close to them?

Seek an outside perspective. 

Given that myths are deeply rooted into your organization, it's hard for you to criticize them. You need to look at the myth through third parties' eyes. So ask someone outside your company to answer the questions posed above. You might ask designers of amusement parks or experts on virtual games about the value of using robots in amusement-park rides. They will tell you that people in amusement parks value the feeling of defying scary machines and the unpredictable movements of robotic arms.

Reconsider the outlandish idea.

Be nice to your myths; the purpose of this exercise is not to destroy the myths but to reinterpret them. Leverage the idea of a robot being dangerous by creating a scary ride with fearsome sounds. But of course, make sure the ride is totally safe.

The outcome of this critical analysis of the myth may be surprising. Indeed, nowadays there are more than 250 "Robocoasters" in amusement parks around the world — to the delight of teenagers and the bewilderment of traditional robotic manufacturers who judged this idea as outlandish.

Fuente: Harvard Business Review

The Biggest Obstacle to Innovation?: You

by Leonard A. Schlesinger, Charles F. Kiefer, and Paul B. Brown

We aren't being critical with that headline.

But the problem really is you. More specifically, it's the way you were taught to think. However, don't feel bad. First, of all you are not alone. All of us have the same problem. Second, and much more important, there is a solution.

But first let's explain how the problem was created in the first place.

From even before kindergarten, we all were taught to reason in a way that works fantastically well in a predictable world: you establish a goal; you construct a number of plans to achieve that goal; you do tons of research to determine which is the best one; you gather the necessary resources to attain it; and you go out and execute on that superior plan.

We think of this as prediction reasoning, a way of thinking based on the assumption that the future is going to be pretty much like the past. And it is wonderful — in certain situations where we have tons of data and/or experience. Are you a supplier to restaurants and want to know how much your revenues are likely to fall if we go into a double dip recession? There are fairly easy way to find out. Want to know how a 1% increase in housing starts will affect refrigerator sales? That's predictable, too.

But when you are leading innovation, the world is anything but predictable. You are creating something that has never existed before and so you simply don't know how the world is going to react. By definition, innovation deals with the unknown.

And that's why you are the biggest problem when it comes to innovation. If you keep using prediction reasoning in situations that are simply not predictable, you're bound to be disappointed and frustrated.

You need a different way of thinking. 

Our suggestion is to begin thinking like the people who are best at innovating and dealing with the unknown — serial entrepreneurs. After all, there is nothing more uncertain than starting a new business from scratch. In the face of the unknown, serial entrepreneurs act. More specifically they:

1. Take a small (smart) step forward. In starting a new business, it might be asking potential customers what they think about the idea.
2. Pause to see what they learned by doing so. "Gee, the ground seems awfully squishy over there, I better step back and try a different direction." Or, "in talking to people about X they didn't seem all that interested, but they kept telling us over and over again if we tweaked it a bit and..."
3. Build that learning into what they do next. It might be presenting a sketch of the modified idea or showing a prototype.

This process is a far cry from the "plan, optimize, execute" of prediction reasoning. But it is precisely the kind of thinking that will let you get out of your own way when you're leading innovation.

Now, we aren't suggesting that you eliminate prediction reasoning. There are two reasons we're not. First, as we have seen, prediction works really well when the future can realistically be expected to be similar to the past and you never want to discard something that works well in a specific situation. The way of thinking we are advocating complements the way you were taught to reason; it doesn't replace it. Second, entrepreneurs continue to use prediction reasoning effectively in the situations where it works well, i.e., in the places where it is logical to assume that the future will be a lot like what has come before. ("What can we expect in incremental sales from an add-on product;" "How should we go about creating next year's budget, given this year's success?") You always want to use the right tool for the job.

But thinking differently is difficult, especially since prediction reasoning is so ingrained. Let us give you two questions you can ask when you find your way of thinking blocking innovation:

• Instead of thinking some more, is there an action I can take right away?
• Can I make whatever action I just imagined cheap enough so that it lies within my affordable loss?

You may or may not actually take the action, depending on your ultimate judgment. But asking the questions interrupts and sheds light on your thinking habits and it will open you up to different way to ways of solving whatever challenge you face. If you use prediction reasoning when it makes sense, but think like an entrepreneur when it doesn't, you'll find you will have eliminated the biggest problem to innovation: You.

Fuente: Harvard Business Review

What Innovators really want

by Andrea Ovans

What do your innovators want? What do they need from you? What can your organizations do to help you?

A spirited conversation followed, one whose very richness demonstrates just what a challenge fostering innovation really is.

Innovators are, almost by definition, a diverse lot, and our discussion made it clear that different people need different things to be innovative, some of which are organizational, others personal.

"I need to get out of my mind and put pen on paper," said one.

"I need to understand my limitations to innovate," said another, adding "Really believing I don't know works for me. I see new angles this way."

"Just doing it on the side and presenting a prototype/business case has worked well for me in the past," offered a third.

Many don't want — or don't expect — much from their organizations at all: "Just give me $$ and get out of my way," pretty much summed up the sentiments of this sizeable group. "Sometimes knowing who to leave out of the innovation [process] can help," said a similarly minded innovator, adding "Just stay below the radar!"

In fact, some (well, many, really) are, like the author of that last comment, highly cynical about their organizations' commitment to innovation, a point that's easy to see in their rapid-fire responses when they were asked "What are the biggest obstacles to innovation for you?"

• "Lack of vision" 
• "Lack of focus"
• "Bureaucracy" 
• "What's in it for me, approach" 
• "Fear of change"

and, perhaps most alarming,

• "Those with pre-set agendas (which they don't share)."

But not everyone agreed, as the most cogent of them put it: "Sometimes I wonder if fear of change is assumed to be more common than it is."

For this (also sizeable) group, their organizations' structure, resources, and community are essential to unleashing their creativity ("What do I need to innovate better? Deadlines!"). And they'd like more. "More coaches and less cheerleaders," requested one innovator, "especially when dealing with complex challenges." "We really need mentor-coaches for complex innovation," echoed another, "and to develop skills needed for global collaboration."

And they'd like to contribute more, too. So many of these people, it seems, are waiting to be invited to the innovation party but haven't gotten an invitation: "Managers often do not invite ALL employees to contribute ideas," as one person put it bluntly. In fact, it would appear some organizations, might be systematically, if unwittingly, discouraging large majorities of potential innovators from contributing:

"I was recently told that because I'm [only] 21, I have no business giving any kind of work advice," said another frankly.

"That's funny," was the immediate reply, "because once people get older, they feel they don't have a place to recommend anything cutting-edge."

These comments should trouble many organizations because if there's one thing pretty much everyone needed to be at their innovative best, it was emotional safety. "Show me an innovator. I'll show you a crazy person" — and that person needs to feel that it's okay to be a little bit crazy at work. "To be creative and innovative, employees need mental and emotional space — and freedom to voice personal perspectives." These were sentiments voiced more than once.

In the end, innovation in established companies is always something of a paradox. True iconoclasts and major-league risk takers tend to start their own businesses. Corporate innovators are something of a different breed: undoubtedly creative, definitely passionate, often very original, but also seekers of community (sometimes), organizational validation (almost always), structure (of various sorts), and the resources and security established companies could provide, if so moved.

What do your innovators ultimately want? Maybe it was this reply that best summed up the challenge, the paradox, and the insecurities facing your company's innovators: "Give me the freedom to work myself out of job, but then still have one".

Fuente: Harvard Business Review

 Building a Draft Strategic Plan: The George Washington University's Model

Dozens of concrete actions are on the University's radar for the next decade

Provost Steven Lerman on Tuesday released the first full draft of a strategic plan that leads George Washington University into the next decade.

Over the past year, members from all corners of the university during more than 70 events have had a hand in developing the plan, informed by four theme areas that draw from and build on the university’s strengths and potential: innovation through cross-disciplinary collaboration, globalization, citizenship and leadership, and governance and policy.

The result is several dozen concrete actions GW will take over the next 10 years, organized around the university’s three long-held missions of education, research and service to society.

“Great universities are stronger than the sum of their parts, and these initiatives are designed to ensure that this is true at GW,” Dr. Lerman said.

George Washington will invest at least $110 million over the next 10 years to implement the plan. “When one aspires to play in the big leagues, you have to put in the resources that make that possible.”

Education

Objectives in this area include: fostering a range of core competencies in the undergraduate experience; instilling leadership, citizenship and global and intercultural skills; enhancing post-graduation opportunities for undergraduates; and increasing the diversity of the graduate student body and of graduate program offerings.

To achieve these goals, GW plans to:

• admit students to the university as a whole—rather than to a specific school or program—but allow them to declare pre-majors in areas of interest;
• work with faculty to develop a common general curriculum for undergraduates;
• create minors in areas like poverty, immigration, AIDS and obesity that emphasize working across disciplines;
• increase the number of undergraduate students involved in research;
• enhance students’ internship experiences by clearly linking them to students’ academic experiences;
• improve coordination between study abroad and career centers to identify international job and internship opportunities;
• establish a scholarship fund for students in internships;
• develop extended study abroad programs where students can participate in research or service abroad;
• develop opportunities for pre-college international students to come to GW to practice English and prepare for college;
• increase international enrollment to 12 to 15 percent of the undergraduate population and 25 to 30 percent of the graduate population;
• increase the diversity of the overall student body;
• establish affinity-living groups;
• expand faculty-in-residence programs;
• create space in residence halls for community-based activities;
• create B.A./M.A. policy track programs across disciplines;
• develop four-year B.A./M.A. programs;
• create 10 to 15 new graduate doctoral packages for students who add to diversity in their chosen fields;
• create 30 to 50 additional fully-funded graduate aid packages;
• develop cross-disciplinary graduate housing; and
• develop more cross-disciplinary graduate programs such as the one recently launched by the School of Business and Law School on government contracting.

Research

Pure inquiry and discovery is a core component of GW’s mission, and objectives on the research front include: emphasizing research institutes, adding faculty and encouraging research that addresses significant societal problems.

To achieve these goals, GW plans to:

• support current research institutes for cancer, sustainability, computational biology, neuroscience and the global women’s initiative;
• add four to eight new cross-disciplinary and cross-school institutes;
• review current centers and eliminate those that don’t generate significant research activity;
• hire 50 to100 research-active faculty who have interests consistent with the plan;
• promote joint hires with government agencies and private entities such as think tanks;
• explore changes in GW’s policies to allow faculty to engage in classified research;
• assist researchers in finding funding opportunities and writing grants;
• fund research that involves principal investigators from more than one school;
• support research related to policymaking through faculty sabbaticals; and
• begin a “reverse sabbatical” program that allows those involved in policymaking to teach and research at GW.

Service to society

As a university built on service, objectives in this area include: publicizing research outside the academic community to affect policymaking; shaping the dialogue in arts, social sciences and natural sciences; and ensuring GW is a model institutional citizen in the D.C. area.

To achieve these goals, GW plans to:

• work with external relations to publicize key research to the general public and relevant decision-makers in the public and private sectors;
• encourage schools to “adopt” think tanks in humanities and social sciences;
• bring policymakers to campus as guest professors;
• attract leading creative artists to campus;
• post more lectures online for public access;
• continue to hire and retain a diverse workforce;
• design and construct sustainable buildings;
• encourage students and faculty to participate in research and activities that contribute to the local community; and
• develop partnerships with D.C. businesses, agencies, schools and nonprofits, particularly those that support minority or at-risk groups, and work with minority-owned vendors.

GEORGE WASHINGTON TODAY

Rice Hall
Division of External Relations
2121 Eye Street, NW
Washington, DC 20052
Phone: (202) 994-1000
gwtoday@gwu.edu