Inside Amazon's Idea Machine: how Founder & CEO Jeff Bezos decodes the Customer

A few months ago Amazon reached what its founder and CEO Jeff Bezos demurely tells me was “an interesting milestone.” The retailing giant, so ubiquitously associated with books, then music and video, now has tens of millions of products in stock—and a majority are nonmedia goods: drills, dress shoes, tennis rackets and almost anything else that a human can ship. Adults may still mentally link Amazon with Barnes & Noble, but to teenage customers, Amazon is now synonymous with store.

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That turning point might be Bezos’ greatest accomplishment. In officially transforming Amazon from an online bookstore that sells other stuff to a retailer—and business ser­vices provider—that once sold mostly books, he has taken one of the original Internet bonanzas and created a success story all over again. Its stock is up 397% in the last five years.

With a net worth of some $19 billion, the 48-year-old is one of the 30 richest men in the world. Yet he still dashes around Amazon with the intensity of a startup boss trying to make his first payroll, as well as the glee of a teenager discovering all the fun you can have at overnight camp. “I’m a legitimately happy person,” Bezos explains on a recent, rainy Friday morning at Amazon’s Seattle headquarters. “My wife says: ‘If Jeff is unhappy, just wait five minutes.’”

What’s not to be happy about? He’s the number one CEO in America. The passing of Steve Jobs has left him, without question, as the corporate chief that others most want to meet, emulate and deify. And his primacy can be proven with numbers: FORBES’ ranking of top CEOs—using a bang-for-the-buck methodology that factors in sustained performance, modest compensation and the ability to pull ahead of one’s peers—has Bezos comfortably in the top spot. Indeed, he’s in the highest 5% in every single metric.

Across numerous e-mail back-and-forths and face-to-face questions with Bezos, I’ve come to understand why. More than a century ago another legendary retailer, Chicago’s Marshall Field, championed the fatalist’s slogan: “The customer is always right.” Bezos, perhaps more than anyone, has taken that mantra into the digital era, incrementally cracking one of the business’s great mysteries: figuring what customers want before the cash register rings and then making those insights pay off. In an era when high-flying tech companies outdo each other with worker perks, no-frills Bezos is proving the potency of another model: coddling his 164 million customers, not his 56,000 employees.

Jeff Bezos’ managers at Amazon find him formidable enough. But the figure that overwhelms their lives goes by the internal nickname “the empty chair.” Bezos periodically leaves one seat open at a conference table and informs all attendees that they should consider that seat occupied by their customer, “the most important person in the room.”

If the empty chair is the ultimate boss at Amazon, then Bezos is its billionaire enforcer, the guardian of what he calls the “culture of metrics” that tries to give that inanimate object a loud, clear voice. Amazon tracks its performance against about 500 measurable goals. Nearly 80% relate to customer objectives. Some Amazonians try to reduce out-of-stock merchandise. Others race to build a bigger library of downloadable movies. Intricate algorithms turn one group of shoppers’ past habits into custom recommendations for new customers. Hourly bestseller lists identify what’s hot. Weekly reviews keep track of who is on course—and where corrective attention is needed.

Amazon is so confident of its ability to personalize the site for each user that the company hardly ever creates classic customer-segment personas, such as “soccer moms” or “gearheads.” Such marketing standbys are too imprecise for Team Bezos.

Feisty debates over what metrics to watch are Amazon’s way of life. “There’s an incredible amount of challenging the other person,” says Manfred Bluemel, a former senior market researcher at Amazon. “You want to have absolute certainty about what you are saying. If you can stand a barrage of questions, then you have picked the right metric. But you had better have your stuff together. The best number wins.”

Bezos is even stricter about what customers don’t want. They hate delays, defects and out-of-stock products, so the metrics patrol at Amazon constantly tracks such numbers, looking to make them as rare as possible. Even the tiniest delay in loading a Web page isn’t trivial. Amazon has metrics showing that a 0.1 second delay in page rendering can translate into a 1% drop in customer activity.

Former executives all have stories about Bezos’ obsessive focus on the customer. Simon Murdoch, the former head of Amazon’s British operations, remembers offering customers in the U.K. next-day delivery if their order was in by 4 p.m.; Bezos personally hammered him to extend that delivery window to 6 p.m., 7 p.m. and later, even if it meant radical changes in warehouse hours. (Today Amazon offers same-day delivery for much of Britain and ten U.S. cities if the order gets in that morning.) Another one-time insider remembers a relentless push for sturdier-than-usual cardboard so customers could reuse its boxes for other shipments or presents, creating goodwill and putting Amazon’s name in front of a second set of potential customers.

Tina Patterson, a senior Amazon brand manager from 2007 to 2011, recalls tense moments previewing television ads for the soon-to-launch Kindle. Early versions included a whimsical snippet where a Kindle-carrying reader transformed into a brave matador, tossed into the air by a charging bull. Everyone giggled—except Bezos. He hit the rewind button and silently replayed the matador scene. Then he turned to the group and adopted a grade-school teacher’s somber voice: “I know it’s cute, and lots of people will think the bull is funny. But the customer right there is getting his ass kicked. We can’t let him get hurt.”

Bezos’ zealous protection has paid off. Each year the University of Michigan calculates a customer-satisfaction index for 225 of America’s largest companies. Amazon has led the online retailing category for years and has repeatedly placed in the top 10 among all companies. Currently only Heinz, Clorox, Apple and three car brands topped Amazon.

But great customer service doesn’t fully explain Amazon’s extraordinary success. Other high-touch online retailers can’t match the $48 billion in sales Amazon did last year. Meanwhile, traditional retailers like Target and Costco play up customer service too—yet their combined market capitalization trails Amazon’s $98 billion.

For Bezos a data-driven customer focus lets him take risks to innovate, secure in the belief that he’s doing the right thing. “We are comfortable planting seeds and waiting for them to grow into trees,” says Bezos. “We don’t focus on the optics of the next quarter; we focus on what is going to be good for customers. I think this aspect of our culture is rare.”

Amazon’s Kindle, for example, came into being because Bezos, internalizing hundreds of data points, believed millions of people would want a crisp e-book reader that could download any book in 60 seconds or less. He set that delivery target without getting pinned down by technical issues about the right compression ratios or transmission speeds for book files. Engineers were free to solve technical challenges as they saw fit. They just needed to make it right for consumers. It took years for Amazon to master the hardware necessary to build such devices, but Bezos didn’t blink. When one finance executive asked how much he was prepared to spend on the project, the CEO shot back: “How much do we have?”

That kind of thinking has transformed Amazon. After wild swings associated with the dot-com boom and crash, Amazon’s performance was essentially flat between mid-2003 and early 2007, in lockstep with the industries it was associated with: books, music and the like. Then Amazon took off afresh, as investors realized that Bezos had been quietly building a multitude of new growth engines inside his company. All were rooted in the same theory: If Amazon lets customers set the specs, it could conquer any number of consumer products and services. Bezos also decided to court business customers (and freak out his own engineers) by turning Amazon’s internal software architecture inside out and selling access to it. The boss’ new diktat upended Amazon’s approach to tasks ranging from quality assurance to interteam communication.

In 2006 he launched Amazon Web Services as a standalone business. It rang up an estimated $1 billion in revenue last year, with $2 billion in its sights, thanks to an even faster growth rate than Amazon’s main storefront. It serves customers ranging from NASA to Netflix with dozens of cheap, on-demand computer services via the “cloud.” During the Cassini space probe’s exploration of Saturn, raw data for 180,000 photos were processed on Amazon’s computers within five hours, at a cost of less than $200, says Tomas Soderstrom of NASA’s Jet Propulsion Lab. Doing the job in-house could have taken 15 days, he says.

Last October’s launch of the Kindle Fire, a computing tablet that can play music and videos, has again hurt short-term profitability. Amazon’s selling price of $199 doesn’t appear to cover costs. Bezos isn’t perturbed. He calls the Fire “the most successful product we’ve ever launched.” To him the bullish case for the Fire is obvious. If it induces owners to buy more from Amazon, the costs of spreading these tablets globally will be well worth it.

This renewed Amazon is basically a personal manifestation of Bezos, who is equal parts quant and dreamer. Growing up in Houston and Miami, Bezos never paused for a traditional retailer’s apprenticeship—i.e., selling things. Rather, he crunched numbers, once proudly telling his grandmother that he had calculated how much her cigarette habit was shortening her life. He went to Princeton to study physics and ended up in computer science, which led to a brief, lucrative career on Wall Street.

The dreamer side of Bezos wants to be at the frontier. His teenage hope was to become an astronaut, and he pushed himself to be high-school valedictorian to improve his chances. He spent summers as a teenager on his grandfather’s 25,000-acre ranch in Texas, fixing machines, working with cattle and learning about self-reliance.

The respect for that ethic explains why Amazon screens its job candidates for a strong bias to action and an ability to work through ambiguity. Both help identify people who can innovate fast and do right by the customer. One popular interviewing tack: asking candidates to create an action plan as brand managers in an area where they lack any direct knowledge—and then being told they have no budget.

Stumped candidates will find their path into Amazon slipping away. Those who cobble together guerrilla answers—informal polls through free online tools such as SurveyMonkey—tend to thrive at Amazon. They are the same people who might have challenged Bezos in math class and also succeeded on Grandpa’s ranch.

Efficiency—cheapness, in the eyes of Amazon’s detractors—is as much a part of the Amazon culture as the empty chair. In fact, Bezos links the two. In his 2009 letter to shareholders, Bezos declared that Amazon had begun waging war on muda, the Japanese word for waste. The more he could get rid of needless costs, the easier it would be to deliver rock-bottom prices to customers. This crusade, he wrote, was “incredibly energizing.”

During interviews for this story Bezos cited Amazon’s recent success in improving its warehouse usage 23%, “recapturing 6 million square feet of underutilized space.” He also takes pride in Amazon’s work to presort packages for carriers such as FedEx, so shipments aren’t delayed by the carriers’ need to carry out further “sortation.”

Sortation? “We use that word so frequently that it rolls off our tongues,” Bezos says with a smile. “But it’s not a common word, is it?”

The company’s executives feel the pinch. Bezos keeps an eerily tight rein on expenses, eschewing color printers in favor of trusty old black-and-white models. No one flies first class (though Bezos sometimes rents private jets at his own expense). Experiments are hatched and managed by the smallest teams possible; if it takes more than two pizzas to feed a work group, Bezos once observed, then the team is too big. Offices still get cheap desks made of particleboard door blanks, a 1990s holdover that Bezos refuses to change.

Managers may grumble, but they learn to bring sandpaper to work so their merino sweaters don’t get shredded by splinters. None of the company’s five top officers earns more than $175,000 in cash a year. Bezos last year took $81,840 in salary and hasn’t had a raise since 1998. He has raised at least $750 million since 2010 by selling Amazon shares, but that’s how you make your money at his company. Stock and options are the big honeypots; many on the leadership team have $20 million or more in unvested shares.

This mind-set is an outlier in an industry that views talent as a delicate asset in need of constant pampering; in Silicon Valley perks like free on-site massages are as rote as a pot of coffee in the kitchen area. At Glassdoor.com, where current and former employees rate their companies as a place to work, Amazon generates a middling 3.1 out of 5, putting it somewhere between Delta Airlines (3.2) and Burger King (3.0).

Steve Yegge, a Google employee and former Amazon engineer, chronicled his frustrations last October in a 4,500-word Internet posting that has attracted more than 100,000 readers. He complained about the decor at Amazon, the hiring policies, the pay and the need to do grungy tasks at times. He portrayed his former boss as Dread Pirate Bezos, who issues mandates that cause people to “scramble like ants being pounded with a rubber mallet.”

Yet Yegge also saluted Bezos’ ability to push massive changes through the organization, in particular the initiatives that led to Amazon Web Services. Those small two-pizza-or-less innovation teams are nimble, and because they’re cost-effective, Bezos can deploy dozens. Even Google hasn’t been able to react so quickly with its own Web services, Yegge added. That comparison alarmed him, because Yegge had quit lean-and-mean Amazon years earlier in favor of opulent Google, where free shuttle buses with Wi-Fi whisk employees to their jobs.

Amazon, started in a garage and nurtured in a rundown stretch of Seattle waterfront, is now settling into its fifth headquarters, in Seattle’s elegantly rehabbed South Lake Union district. The company’s new campus consists of nearly a dozen shiny glass and steel buildings, complete with courtyards, cafes, restaurants and a little bit of public artwork on display.

Jeff Bezos should be there a long time. He just turned 48 in January and could easily run Amazon another two decades. That’s good for stability. It could be a challenge in terms of retaining other executives with aspirations of becoming a CEO. Bezos says he knows when to avoid meddling so that his project leaders can find their own paths. Yet it’s congenitally hard for founders to be hands-off for long—an effort to bring in a chief operating officer to work directly under Bezos didn’t work out a decade ago.

How much power can Bezos share when the customer, as channeled by Amazon’s founder, calls all the shots? Rather than kibbitz with a number two, Bezos actually reads over-the-transom e-mail, which most CEOs regard as unbearable clutter. He scanned customer notes avidly when Amazon was tiny, and he hasn’t shaken the habit. Dozens of times a year, unsolicited suggestions turn into feature improvements. Even angry e-mails are “fantastic if you want customers to be honest,” Bezos says.

Then there’s the fan mail. Asked about customer e-mails that have become his favorites, Bezos forwarded to FORBES a note from a woman recounting how Amazon has touched her life over the past 12 years. First she bought books and compact discs when she was in her late 20s. Then she spent $79 a year to qualify for free shipping as part of the Amazon Prime program for heavy users.

Now, she writes, Amazon is “helping me choose a mattress and a crib for my son.” Instead of being overwhelmed by all the shopping associated with pregnancy and the arrival of a child, she feels in control. She concludes by writing: “Thank you so much for making my life simpler and easier. … They say it takes a village, but, in this case, all a mom needs is Amazon, her Amex and an iPhone.”

That last need, ironically, seems to be Amazon’s next target: smartphones. Lab 126, Amazon’s Silicon Valley unit where the Kindle was developed, has been hiring flurries of mobile-technology engineers the past two years. Amazon hasn’t confirmed anything, but it hasn’t made much of an ­effort to swat down speculation. If Amazon does storm the lush smartphone market, it will do so with valuable strengths such as customers’ physical addresses, purchasing histories across a broad array of categories and credit card data. Even Apple can’t claim all of those.

In the short term Bezos will continue to attack muda. Last month Amazon bought Kiva Systems, a maker of small robots that whiz goods to the right spots within a warehouse, for $775 million. Kiva “could speed the cycle time inside our fulfillment centers,” Bezos says. Owning Kiva gives Amazon first crack at its technology, which means “getting products to customers even more quickly.”

In some ways this is the area Bezos least needs to worry about: Last December he was “very proud” that Amazon was able to make good 99.99% of the time on its promises to get packages to customers before Christmas. No small feat (just ask Best Buy). To Bezos, though, this also means they came up short one time in 10,000. “We’re not satisfied until it’s 100%.”

Fuente: Forbes

Is Carnaval Over?

Are we facing the end of the Brazilian miracle?

When she strides into the White House on Monday, Brazilian President Dilma Rousseff will carry with her one thing sure to draw the envy of her American counterpart Barack Obama -- a whopping 77 percent approval rating. Sitting pretty as a BRIC, at the top of the world, the darling of international investors, preparing to host the 2014 World Cup and the 2016 Olympic Games, Brazil is caught up in a national adrenaline rush comparable -- stereotypically, perhaps -- to what Carnaval dancers feel when they march amid the cheers into Rio de Janeiro's Sambadrome.

The euphoria was evident at most recent edition of the World Economic Forum's confab in Davos, where Brazilian taxpayers bankrolled the official Saturday night soirée. Davos often features country-specific sessions, and Brazil got one again this year. The chief conclusion seemed to be that officials should not let the economy overheat. Emerging from the panel, a veteran foreign correspondent remarked, "The Brazilians are so self-congratulatory. It seems as if they have solved everything." There was more than a tinge of irony in his voice, perhaps because he had covered the "Brazilian miracle" of the late 1960s and 1970s. Featuring double-digit average annual growth for one five-year stretch, the "miracle" sparked over-borrowing and devolved into a "lost decade" of hyperinflation and stagnation following the 1982 Latin American debt crisis.

Applying consistently sensible macroeconomic fiscal and social welfare policies since it beat hyperinflation in the mid-1990s, Brazil has grown steadily, if not spectacularly. It has successfully weathered the current global downturn, and finally started to reduce its legendary poverty gap, engendering a relevant middle class for the first time in history: standing at 95 million, the middle class finally represents over half the population. Maybe it really is time to bury the old joke: "Brazil is the country of the future - and always will be." Perhaps it is time for the Austrian writer Stefan Zweig, best known in Brazil as the author of a 1941 book Brazil: A Land of the Future, to finally receive kudos as a prophet.

So Brazilians are pleased with themselves. And they are not alone. Gringos are flocking to Brazil like '49ers to California. The number of foreign residents jumped by more than 50 percent last year, from just under a million to about 1.5 million, according to a report in the Washington Post. "Now people sell Brazil to us," the first president of the Brazilian Securities and Exchange Commission, Roberto Teixeira da Costa, told me during a recent conversation. Now a member of the board of several leading Brazilian corporations, Teixeira da Costa summed it up like this: "Since the rest of the world is so messed up, people think that Brazil is the savior. We used to be the problem. Now we are the solution."

Along with fellow BRICs China and India, Brazil is expected to help keep the global economy afloat until everyone else gets their act together. Banco Santander, the biggest lender among Spanish banks, makes more money today in Brazil than in any of the other three dozen countries in which it operates: one-quarter of its earnings come from the Latin American giant. General Electric recently projected revenue increases of 25 percent all told in Latin America through 2016, expecting the region to outperform Asia; executives predicted that Brazil, Mexico, and Peru would lead the way. Foreign direct investment (FDI) in Brazil set a record for the second straight year, hitting $66.7 billion, up from $48.5 billion the year before.

Yet this gold-rush mentality seems to be blinding policymakers and investors alike. Some astute Brazilians characterize their country's national psyche as bipolar. Everyone knows about the upside of Carnaval, samba, soccer, and the beaches. But few understand the downside. Brazilians claim to have their own special kind of melancholy, defined by a word, "saudades," that they say is untranslatable. Brazil's most venerated composer, the late Bossa Nova icon Tom Jobim, and his partner Vinicius de Moraes once wrote a song entitled Happiness with a refrain that notes, "Sadness never ends/Happiness does." As does Carnaval, quoting the song's lyrics, "it all ends on (Ash) Wednesday." With the Brazilian economy, a Wednesday morning wake up call may have been sounded by the recently announced 2.7 percent growth figure for 2011, sharply down from 7.5 percent in 2010 and lagging well behind most other emerging markets. Indeed, Santander blamed lower than expected profits during the last quarter of 2011 on troubles in Britain and Brazil.

Nouriel Roubini, the economist who famously predicted the collapse of the U.S. housing market and the ensuing 2008 global recession, visited Brazil in February, precisely during the jubilant Carnaval period. He came away anything but euphoric: "A sober reality check suggests that Brazil could disappoint in many ways in the next few years unless significant structural reforms are undertaken." Predicting a muted future, he added that "this low potential growth leaves Brazil vulnerable to a boom and bust cycle as it quickly reaches its speed limit."

While other factors like the growing middle class clearly play a role, Brazil's recent growth has come largely thanks to its ability to pump minerals and agricultural products into China. Between 2000 and 2010, China's take of Brazilian exports jumped from 3 percent to 16 percent. The cash that floods back, along with FDI and portfolio capital, has put pressure on Brazil's currency, the real. Brazilian interest rates, held high to combat inflation in lieu of more politically complicated tax and public administration reforms, attract foreign investors even in the face of capital controls. Near-zero interest rates in the United States and troubles in the eurozone exacerbate this by as cash abandons low-return regions in search of better opportunities.

As a result, the real is overvalued by 35 percent as compared to the U.S. dollar, according to theEconomist's Big Mac index. Brazil could already be suffering from the so-called Dutch disease as its overvalued currency makes the country's exports more expensive abroad and imports relatively cheaper for Brazilian consumers. This may be leading to nascent deindustrialization: domestic consumer goods manufacturing fell by almost 2 percent in 2011 even as retail sales boomed because of growing demand.

The Brazilian government blames the overvalued real on what Finance Minister Guido Mantega calls a "currency war" -- an influx of speculative capital searching for returns in Brazil. Officials have applied piecemeal measures to curb the flow, such as tweaking a tax on overseas loans in March -- extending the application of a 6 percent tax to maturities of up to three years instead of the previous two years.

In response to cries from local industry, officials have gradually applied a series of protectionist measures that have ruffled feathers from Japan to Mexico. "Brazil continues to improvise in its industrial and trade policies," complained economic columnist Míriam Letão in the Rio de Janeiro daily newspaper O Globo. "Attempting to find a way out of the slight drop into the red in the trade balance, and for the lean numbers for industrial output in 2011, all the government could do was to repeat a kneejerk reaction: protectionism and favors for lobbies and special interests."

As in Luis Buñuel's film The Exterminating Angel, where dinner guests inexplicably fail to leave as the night wears on despite the lack of physical barriers, the solutions to Brazil's problems seem obvious but remain unimplemented. Most economists blame the country's problems on what they call the "Brazil Cost," a hodgepodge of problems that make it more expensive to do business in Brazil than most anywhere else. Brazil rings in at 126th (of 183) on the World Bank's index on the ease of doing business, coming in right behind Bangladesh, Uganda, Swaziland, and Bosnia and Herzegovina.

Their prescription for change generally calls for the following: simplifying the tax structure, reforming public administration and social security to improve efficiency and reduce outlays, overhauling labor regulations to make it cheaper to employ workers, and investing in infrastructure. In addition, fiscal reform would give policymakers an extra anti-inflation tool, perhaps allowing them to more quickly lower interest rates, stimulating the economy while helping stem the tide of speculative capital.

The agenda for lowering the Brazil Cost is admittedly ambitious, but the country has made little if any progress on any front. Infrastructure would seem vital in preparation for 2014 World Cup and 2016 Olympics, but investments have lagged enough to have engendered a diplomatic snafu. An official from the international soccer federation FIFA recently suggested that organizers needed "a kick up the backside" because they were behind on preparations. The otherwise euphoric Brazilians were not amused.

Perhaps Brazil is living in its own little vacuum. This certainly could be said of its economic policies. Though he was wildly popular, Rousseff's predecessor Luiz Inácio Lula da Silva's greatest contribution to economic policy was to follow the physician's adage to "first do no harm." As O Globo put it in a wrap-up special as he left office, "President Lula ends his eight year mandate with popularity never before obtained by a president of this country despite a contradictory legacy. We did not have advances or improvements in education, health, public security, basic sanitation, infrastructure and reforms." According to Rutgers sociologist Ted Goertzel, author of biographies of both Lula and his predecessor Fernando Henrique Cardoso, "Lula chose to go into retirement with popularity ratings in the 80s rather than use his popularity to pressure for controversial reforms."

Lula's greatest achievement was probably his Reaganesque ability to make Brazilians feel good about themselves and their country and, one-upping Reagan, convincing foreigners as well: hence the World Cup and the Olympics. But that confidence has led to the kind of self-congratulatory smugness that rubbed the greybeard correspondent wrong in Davos, blinding leaders to the need to tackle the Brazil Cost. While campaigning for office in September 2010, Rousseff chided a Reuters reporter when he suggested in an interview that it might not be possible to maintain 7 percent growth without reforms. "Is Brazil growing (that quickly) now?" she asked him sharply. Since it was, the journalist had to agree. "Well, then, it's possible."

Clearly, at 2.7 percent, it's not happening now. And if Rousseff wants to regain the growth of the Lula years, she'll have to grapple with the chosen political allies of her own Workers Party (PT) -- a pork-barrel party called the PMDB with no identifiable political ideology. The PMDB technically gives the president a majority in Congress, but its members tend to drag their feet on legislation unless and until their personal backs are scratched.

That anybody cares what happens to the Brazilian economy shows how far the country has come since it tackled hyperinflation nearly two decades ago. But economic history shows that everything runs in cycles. The question is: Will Brazil's next downturn be deep and prolonged, like the "lost decade" that followed the "miracle" of the 1970s, or short and relatively painless, as in 2009 when it bounced back quickly from the global shock in 2008? Without reforms, the former option looks more likely.

Like Americans, Brazilians possess a New World optimism, remaining upbeat even through periods of mediocre growth. However, muddling through is not enough for a savior or even a new pillar of the global economy. Ash Wednesday could come sooner than expected.

Fuente: FOREIGN POLICY, A DIVISION OF THE WASHINGTON POST COMPANY 

George Washington University School of Business Students Partner with District on Economic Plan

Consortium of local institutions will help mayor’s office develop five-year economic development strategy

D.C. Mayor Vincent Gray, Deputy Mayor Victor Hoskins and GW School of Business Dean Doug Guthrie spoke about the economic development partnership

George Washington University School of Business students will participate in a new partnership with the District of Columbia government, other local business schools and public and private entities to develop a five-year economic development strategy for the district. D.C. Mayor Vincent Gray, B.A. ’64, kicked off the partnership at an event June 6 at the district’s Carnegie Library building in Mount Vernon Square.

“In my State of the District address this year, I laid out my vision for a new economy in the District of Columbia that is diversified and that prepares our residents to compete in the global marketplace,” Mr. Gray said. “This collaborative effort with the private sector and the academic community will create a road map for getting there.”

MBA students from GW, American University, Georgetown University and Howard University will work collaboratively for several months to interview leaders from sectors including hospitality, health care, construction and technology; district government officials; and representatives from public organizations like the Workforce Investment Council and the Department of Housing and Community Development. Then the students will analyze the information and will produce a report of recommendations and steps the district can take to implement an economic development plan, including a cost/benefit analysis. The entire process should be completed by September, the mayor said.

“The planning period will be short—we want this plan to be done by fall,” Mr. Gray said, emphasizing that the district needs actionable plans to help continue the growth it has experienced in the past several years.

GW School of Business Dean Doug Guthrie spoke at the kick-off event, thanking his fellow deans from American, Georgetown and Howard and highlighting the behind-the-scenes work the students and their business community partners have already done. The MBA students spent the months of April and May in a series of seminars in which they learned the qualitative interview techniques they’ll use during the next stage of the project, as well as how to translate the data they gather into specific actions.

"I know I speak on behalf of the four other business school deans that it is an honor to contribute to the work of Mayor Gray's administration and assist in the district's economic development strategy,” he said. “In today's business climate, we pride ourselves at being at the intersection of business and society and the intersection of business and policy. Working on this project really brings this mission to light for our students.”

GW second-year MBA student Kevin Curley, who is part of the GW team, said the project appealed to him because of the potential positive consequences for the city.

“I wanted to be involved in a project with long-lasting results,” he said. “It’s very interesting to see how the different sectors interact, to take the qualitative information we’ll get from the interviews, and identify strategies to get rid of obstacles and create jobs and revenue.”

Dr. Guthrie said the partnership represents a promising model of how academic institutions can work with municipalities.

“This is just the start of a new model…we believe there are so many ways our institutions can help the city in as big as a way as possible. We want to thank [the mayor’s office] for making us a part of this process,” he said.

Mr. Curley said he was excited to get the project underway.

“We want to create a road map that the city can use, not something that will sit in someone’s desk somewhere,” he said.

GEORGE WASHINGTON TODAY

Division of External Relations
2121 Eye Street, NW
Washington, DC 20052
Phone: (202) 994-1000

THE GEORGE WASHINGTON UNIVERSITY

El negocio del Deporte Olímpico:

Oportunidad de Expansión para LatAm?

El inicio de las Olimpiadas de Londres 2012 deja entrever el gran negocio de las transmisiones deportivas y de los patrocinadores corporativos. Con vistas a Brasil 2014 y Río de Janeiro 2016, América Latina se presenta como un mercado en expansión para la industria deportiva

A un mes del inicio de Londres 2012 es difícil establecer qué país espera con más ansiedad el inicio de las transmisiones. ¿Será la Gran Bretaña de David Cameron que, en los diarios, aclara que las Olimpiadas salvarán al país de la recesión? ¿O tal vez sea Francia que, aliviada de no haber sido elegida como anfitriona, mira el espectáculo con alegría? China quiere sobrepasar su record olímpico obtenido en Beijing; eso dependerá de sus atletas. Pero de todos los países es Brasil el que mejor está pasando estos días de excitación pre-olímpica.

No tiene nada que ver con las medallas que pueda conseguir en las competencias de este verano nórdico sino con lo que viene, en términos deportivos y económicos, para el gigante del sur. En 2014 la Fifa llevará a cabo su mundial de fútbol en el país carioca y dos años después las Olimpiadas tendrán lugar en Río de Janeiro. Haber asegurado los dos eventos deportivos más importantes del mundo de manera consecutiva pone a Brasil al frente de la industria deportiva global.

Es una ocasión para celebrar con caipirinhas especialmente si se tienen en cuenta las cifras del negocio de transmisión y del auspicio corporativo. Las empresas están interesadas más que nunca en mercados emergentes y Brasil –Latinoamérica en general- es el más dinámico de todos, con consultores pronosticando crecimientos récord en los próximos tres años. Inclusive en épocas de vacas flacas la industria deportiva es una de las pocas en constante crecimiento. Para 2015 PricewaterhouseCoopers (PwC) estima que el crecimiento anual será de 3,7%.

En el centro del negocio están los derechos de transmisión y el auspicio corporativo. El valor cada vez más alto de los deportes de elite se ha vuelto una commodity. Las audiencias buscan la adrenalina de mirar estos deportes en vivo y las corporaciones se han vuelto sensibles a estos intereses, tratando de auspiciar cada vez más equipos y atletas.

En ese sentido las Olimpiadas se llevan la medalla dorada: en esta ocasión los auspicios serán por US$ 1000 millones. El año pasado Comcast NBC Universal se hizo con los derechos de los Juegos para Estados Unidos hasta 2020 por US$ 4.400 millones.

De alguna manera Internet ha aumentado la demanda de las transmisiones en vivo, lo que representa una verdadera oportunidad para quienes son dueños de los derechos. Aunque esa oportunidad viene con desventajas: Internet ha aumentado la capacidad de llegar a una audiencia más extensa, pero también ha vulnerado los derechos de transmisión. La corrupción es una de las razones por las que la regulación se hace cada vez más necesaria. La Comisión Olímpica Internacional ha tomado un rol más activo en este sentido.

Lamentablemente para los equipos, la regulación también será de sus finanzas, particularmente en el caso del fútbol. Esperan que esto genere un modelo de negocios atractivo en el que, paulatinamente, más empresarios quieran participar. Esto es podría ser importante en los mercados emergentes, en donde la regulación hoy es escasa.

Mientras tanto la audiencia, las empresas y los grandes medios de comunicación se preparan para ver el gran espectáculo deportivo que son las Olimpiadas de verano. Para Brasil 2016 faltan otros cuatro años.

Fuente: Mercado

Is Your Company Bleeding Talent?
How to become a true "Employer of Choice"

By Curt Coffman- The Gallup Management Journal

What does the phrase "becoming an employer of choice" mean? For many organizations, it refers to their strategies to attract talented employees. And once an organization has done the hard work of recruiting top performers, the next step is to figure out how to keep them.

A few years ago, The Gallup Organization decided to initiate a multi-year research project to try and define a great workplace. First, we needed to define what "great" was. We decided that a great workplace was one where employees were satisfied with their jobs. However, it couldn't really be considered "great" if it didn't produce positive business outcomes.

Using a technique called meta-analysis, we sifted through data from approximately 200,000 employees in 36 organizations and across 21 different industries to find links to five business outcomes: retention, productivity, profitability, customer loyalty and safety. We identified 12 questions that most effectively measured the links (the Gallup Q12). The results of our research are summarized in the table below.

Let's focus on the issue of retention. Our analysis found that retention is strongly related to six of the Q12 items.

Know what is expected of me at work

First, do your employees know exactly what is expected of them? When they walk in the door everyday, can they measure their progress against well-defined goals? If they can't, they may never have a sense of achievement in their role. If expectations are unclear, employees will inevitably face frustration, and will be open for other opportunities where they do know what's expected of them, and where their contributions are measured and recognized.

Materials and equipment

Do you supply the right tools to support the skills, experience and talents of your employees? Even Tiger Woods would find it difficult to get the ball close to the green with a sand wedge from 270 yards. He obviously has the talent, but he would not have the right tools. Similarly, your employees need the right tools and equipment to perform their jobs at an optimum level.

Do what I do best every day

Are your employees cast in the right roles? Just because an individual is gifted in a particular area, it does not mean he has a full array of talents for any and every role. Big talent sometimes is very specialized and narrow, and knowing each employee's boundaries and limitations is key to avoiding burnout. For example, if an individual is an excellent speaker, do you also assume she is a great teacher? Some individuals do combine both these abilities, but the performance demands for these roles are very different. Knowing the critical demands for every role is a key to ensuring that talents fit those demands.

Supervisor/Someone at work cares

Do your valued employees know that someone at work cares about them -- preferably their manager or supervisor? If they don't, your company will find it difficult to retain them. Your employees' relationship with their manager or supervisor is critical in turning talent into lasting performance and excellence. In addition, is there an ongoing dialogue and solid communication with your best employees? Do your managers spend most of their time with their most productive talent? Many managers give their greatest degree of attention to employees who are falling behind. Talented, productive people crave time and attention from their managers, and will leave your company if they have a weak relationship (or no relationship) with their manager or supervisor.

Co-workers committed to quality

Do you surround your stars with other individuals who are constantly driving standards of quality to a higher level? Many companies arbitrarily put teams together without considering that employees only psychologically commit to teams if they perceive their team members will support their high level of commitment and performance. Talented employees set high standards and depend upon those around them to support their growth toward excellence.

Opportunities to learn and grow

Does your company create an environment that encourages employees to drive towards innovation or to create better systems for more productive results? Talented employees need to be "stretched" in just the right ways to fully engage them. We all need to look back and see that we are truly progressing and learning, and that we're achieving new levels of personal and professional growth. Great managers always ask what skills and knowledge need to accompany talent to result in the greatest outcome for each person.

According to our research, there is nothing very complicated about retaining great talent -- these six elements are the keys. If you want to keep the talented employees you recruit, your company must:

• Be clear about what you expect from your employees
• Provide employees with the materials and equipment they need to perform their jobs
• Give employees opportunities to do what they do best, every day
• Ensure that your employees have a manager or supervisor who cares about them
• Surround talented employees with co-workers who have a similar drive for quality
• Provide opportunities for employees to learn and grow

Companies who can do these things will be successful in keeping their most talented employees. Those who cannot will continue to bleed talent, and their quest to become an "employer of choice" will continue to be hazardous to their health. 

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Curt Coffman is Global Practice Leader for Q¹² workplace consulting with The Gallup Organization and is co-author of Gallup’s best-selling book on great managers, First, Break All the Rules: What the World's Greatest Managers Do Differently (Simon and Schuster, 1999). Coffman’s latest book is Follow This Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential (Warner Books, 2002)

The Hard Science of Teamwork

Like many people, I've encountered teams that are "clicking." I've experienced the "buzz" of a group that's blazing away with new ideas in a way that makes it seem they can read each others' minds. We think of building teams that operate on this plane as an art, or even magic. It's not something you can plan; it's lightning-in-a-bottle stuff that you just embrace when you're lucky enough to come across it.

But to me, the buzz was so palpable, I decided that it must be a real, observable and measurable thing. I was motivated to find a way to document that buzz, and understand good teamwork as a hard science.

The team I lead at MIT's Human Dynamics Laboratory has done just that. Using wearable electronic sensors called sociometric badges, we capture how people communicate in real time, and not only can we determine the characteristics that make up great teams, but we can also describe those characteristics mathematically. What's more, we've discovered that some things matter much less than you may suspect when building a great team. Getting the smartest people, for example.

My feature article in HBR's April Spotlight on teams describes in detail the new science of building great teams. We can summarize those points here. Our data show that great teams:

1. Communicate frequently. In a typical project team a dozen or so communication exchanges per working hour may turn out to be optimum; but more or less than that and team performance can decline.
2. Talk and listen in equal measure, equally among members. Lower performing teams have dominant members, teams within teams, and members who talk or listen but don't do both.
3. Engage in frequent informal communication. The best teams spend about half their time communicating outside of formal meetings or as "asides" during team meetings, and increasing opportunities for informal communication tends to increase team performance.
4. Explore for ideas and information outside the group. The best teams periodically connect with many different outside sources and bring what they learn back to the team.

You'll notice that none of the factors outlined above concern the substance of a team's communication. As I said, our badges only capture how people communicate — tone of voice, gesticulation, how one faces others in the group, and how much people talk and listen. They do not capture what people communicate.

This is purposeful. From the beginning, I suspected that the ineffable buzz of high-performing teams wasn't more about the how of communication than the what. My hypothesis was that the ancient biological patterns of signaling that humans developed in the millennia before we developed language — which is a relatively recent development — still dominate our communication. I was buoyed in this idea by research on just how sophisticated non-verbal communication can be across the animal kingdom. Bees, for example, use a marvelous system of dancing competitions to decide where to get their pollen.

According to our data, it's as true for humans as for bees: How we communicate turns out to be the most important predictor of team success, and as important as all other factors combined, including intelligence, personality, skill, and content of discussions. The old adage that it's not what you say, but how you say it, turns out to be mathematically correct.

Just how powerful these patterns of communication are can be surprising. For example, we can predict with eerie precision whether a team will perform well or not, and we can predict with a high rate of success whether or not team members will report they've had a "productive" or "creative" day based solely on the data from the sociometric badges. If this seems like a statistical parlor trick, it's not. By adjusting group behavior based on this data, we've documented improved teamwork.

Many people are uncomfortable with this. It suggests that a kind of biological determinism, that people who naturally display the good communication patterns will "win" and anyone not blessed with this innate talent will drag a team down. In fact, that's not the case at all. In our work we've found that these patterns of communication are highly trainable, and that personality traits we usually chalk up to the "it" factor — personal charisma, for example — are actually teachable skills. Data is an amazingly powerful tool for objectifying what would normally seem subjective. Time and again I've seen data become an incontrovertible ally to team members who may otherwise be afraid to voice their feelings about the team dynamics. They can finally say "I'm not being heard" and they have the data to back them up.

People should feel empowered by the idea of a science of team building, The idea that we can transmute the guess work of putting a team together into a rigorous methodology, and then continuously improve teams is exciting. Nothing will be more powerful, I believe, in eventually changing how organizations work.

By Alex "Sandy" Pentland, director of MIT's Human Dynamics Laboratory and the MIT Media Lab Entrepreneurship Program.

Global Team Leaders Must Deliberately Create "Moments"

Global teams face the challenge of having to operate with limited face-to-face contact and across vast distances, time zones, language backgrounds, and contexts, as well as cultural differences. In turn, these differences generate disruptions to team cohesion and top performance outcomes.

To counter those cohesion and performance risks, managing such a globally-dispersed team requires deliberate planning that helps bridge those boundaries. In my work centered on coordination of work across national boundaries — including the implementation of a standard language — I have learned that the most powerful way to overcome these differences is for global managers to create "moments," sometimes difficult moments. Four types of moments make material difference:

1. Structuring "unstructured" time.

Information flows much better with social comfort among team members. But the water cooler talk that builds familiarity among local teams never happens naturally in global teams. It's the leader's job to deliberately create opportunities to chat. It starts with modeling informal conversations about non-work matters. You might just say something about taking your car to the garage that morning, for instance, and finding out that you didn't need just an oil change but your brakes were failing or you need new tires. You're no mechanic, so how do you know if that's right? Or that your computer crashed that morning. People will start to join in with their own stories, and they relax and start to see one another as fellow humans.

This is counterintuitive to most professionals today who are stretched for time and attention, but part of your agenda-setting with your global team must include "unstructured" time.

2. Forcing disagreements.

Whether it is because of the very nature of telephone conference calls or the cultural backgrounds of some global team members, or the fact that it may be tiring to wait for that perfect opening, global team members don't always speak up when it matters. Creating moments for disagreements can help generate varied viewpoints on a given task or even the way to accomplish that task. It's the leader's job to pose questions that force members to discuss alternative viewpoints: "Gabriel, is this the only way to approach this? Lawrence, what would be a different point of view from your experience? Can we think about a different way to write this code?" You will soon learn that silence means that members are suppressing ideas that could enhance your tasks and processes. Actively creating these disagreements will also shape an environment where people feel comfortable with alternative approaches, one of the assets of global teams.

3. Stressing differences.

Typically people talk about the importance of stressing commonalities and similarities in the context of diversity of any sort. The problem with global teams is that they are prone to viewing distant members as a homogenous group and even falling prey to social categorization or the "us" versus "them" dynamic. Creating moments around differences or what I call "good differences" — in expertise, mindset, training, and the like — individualizes people and counters stereotyping risks. The way to stress good differences may be by talking about the four years that a team member has been in a relevant job role, or the deep knowledge some members have on the best way to penetrate a particular market. Leaders need to think about the valuable differences among their team members that they should actively invoke to increase everyone's productivity.

4. Creating "awareness" moments.

One of the greatest problems with global teams is that they don't share the same context in their everyday work. Members have no idea about the work environment, pace, scale or scope of their counterparts worldwide. The lack of a shared context leads people to make misattribution errors (he's stupid), generates conflict (it's their fault if something goes wrong), and a whole host of other disruptive behaviors.

My colleague, Mark Mortensen, and I have identified two types of knowledge — direct and reflected — that help fill those awareness contextual gaps. Direct knowledge involves norms, rules, and context about the personal characteristics, relationships, and behaviors of other collaborators. You build it ideally through short site visits, but you can also build it through extended online interactions. Working side-by-side for a time allows people to observe, for instance, who works well under pressure, how people allocate their time, and how the social networks play out on a day-to-day basis. Such insights give teammates a better understanding of their colleagues' attitudes, behaviors, and motivations, fostering the development of trust. Site visits aren't always practical, of course, and extended online interactions can be a reasonable proxy.

Reflected knowledge has to do with learning how others see and hear you. As an example, one team we studied sent a French engineer to the company's California office. While there, she realized that the common practice among her French colleagues of responding to emails from California in the afternoons — which allowed them uninterrupted stretches of work — added an overnight delay to correspondence. The visit allowed her to link the time delay with a new perception of how the two offices interact.

It's hard enough to get people who are co-located onto the same page. Add to that the complexity of multiple regions, languages, cultures and interactions that are often mediated through technology, and you can be sure that cohesion will never come without a deliberate push from the leader. In short, it requires a conscious and consistent effort on the part of the leader to create moments that build and reinforce mutual understanding and trust.

Have you worked on or led a global team, where working across vast boundaries resulted in confusion, conflict, or inefficiencies? Have you experimented with creating "moments" that can help bridge the disconnect?

By Tsedal Neeley, Assistant Professor in the Organizational Behavior area at Harvard Business School.