Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Harbir Singh, The Mack Professor, Professor of Management; Vice Dean for Global Initiatives; Co-Director, Mack Center for Technological Innovation, The Wharton School, University of Pennsylvania.   

The Goal:

Determine what types of partnerships are the best match for your strategic goals, increasing your success in managing uncertainty, reducing risk, and driving growth.

Nano Tool:

All companies need growth strategies that minimize risk while enhancing their competitive positions. As the need to respond quickly to market opportunities accelerates, so does the difficulty and risk. And many companies don’t have the necessary resources and assets available for a rapid response. Partnerships can decrease costs and increase flexibility, thereby minimizing risk. But many organizations are all too familiar with the risks of partnerships themselves; and when they avoid those risks by opting out they lose the potential of some highly advantageous alliances.

Wharton management professor Harbir Singh has developed a way to mitigate those risks — and realize the full advantage of partnerships — by employing the right kind of partnering strategy. Singh has identified three distinct strategies for successful alliances, each with unique strategic objectives, key success factors, and potential problems. By clearly identifying what you want to achieve through the partnership, and choosing the appropriate strategy, you can stretch your innovation dollars, share in the costs of investments, better handle uncertainty, and access new resources, capabilities, and markets.

• A Window Strategy uses a partnership as a window onto new technologies or developments in your industry by providing access in real time to their progress. It’s appropriate when there is a high level of uncertainty because it helps you stay in the flow of new ideas, explore multiple paths, and reduce uncertainty about possible alternatives. It also lets you understand new ideas and technologies without over-investing, keeping you agile in a fast-changing marketplace. Successful Window Strategy partnerships are formed with companies that are making promising progress on one or more of your strategic objectives. Potential challenges include leakage of your firm’s technologies and managing a shifting web of partnerships.

• The role of an Options Strategypartnership is to create real strategic options for the firm and/or build a capability platform by creating a combination of people, routines, and assets that can be scaled up or down. It’s used when there is a moderate amount of uncertainty about which option(s) will ultimately succeed, because it lets you make a calculated bet without prematurely committing to just one option. For example, you can make moderate investments in companies with new technologies or services, with options to expand your involvement if the firm becomes a winner. The potential challenge of this strategy is that companies are often reluctant to shift quickly after investing.

• Positioning Strategy partnership is appropriate when there is a low level of uncertainty and you want to partner with another firm to create a best-in-class advantage. It can help you achieve scale- or scope-based advantages, optimize market segmentation, or acquire a new customer base. Successful Positioning Strategy partnerships are formed between firms with complementary capabilities who seek to create a combination with the best capabilities in the industry.

How Companies Use It:

• The Medicines for Malaria Venture (MMV) partners with dozens of pharmaceutical and biotech companies to manage a large and diverse portfolio of antimalarial drug projects. MMV’s partnerships are part of its Window Strategy,which aims to build a strong pipeline of molecules leading to new medicines needed to eradicate malaria. The strategy reduces the R&D timeline while increasing the number of potential effective medicines.

• French oil and gas company Total works with partners to improve the efficiency of alternative energy source Dimethyl ether, methoxymethane (DME)’s direct synthesis process. Total is experimenting with pre-commercial production of DME fuel from a pulp residue known as spent liquor as part of a European consortium led by Volvo. This partnership represents an Options Strategy, in which there is some uncertainty about both the energy source and the most effective, economical, method of production. By working with the consortium, Total has the opportunity to access future winning technologies while committing a limited amount of resources.

• Renault and Nissan began their highly successful partnership in 1999. The goal of their shared Positioning Strategy is to achieve ranking among the world’s top automakers in terms of quality and value, new technologies, and profit. In an industry that experiences relatively low levels of uncertainty, the two companies together create positional advantages that neither could achieve alone.

• See the Additional Resources links below for more examples and research findings.

Action Steps:

The following steps will help you determine which type of strategic partnership will help you best meet your needs and deal with current levels of uncertainty as they impact returns on the business. 

1. Identify the goal(s) that you want to achieve from the partnership: (A) Do you need to track technologies or developments in your industry, learn what they mean, and stay in the flow of ideas? or (B) Are you seeking to create new options for the firm and/or build a capability platform? or(C) Are you looking for scale-based advantages, market segmentation, or a new customer base?
2. As you look at the level of financial and managerial resources you plan to invest in a new venture, consider both the magnitude and the level of uncertainty about the expected returns. The role, scope, and nature of alliances will change depending upon the degree of uncertainty faced by the firm. Are you experiencing (A) high levels of uncertainty, with a wide range of risky options for growth; (B) moderate levels of uncertainty, under which you can make some strategic bets on a narrower range of growth options; or (C) relatively low levels of uncertainty, when growth is possible primarily by increasing scope and/or scale?
3. Identify your partnering strategy based on your answers to questions one and two. “A” answers would lead to a Window Strategy; “B” answers to an Options Strategy; and “C” answers to a Positioning Strategy. Once you’ve identified your approach and your goals, clarify your partnership strategy and objectives with your potential partners to ensure that it will be successful for all and ensure a sustainable long-term alliance.

Share Your Best Practices:

Do you have a best practice for making game-changing improvements in your customers’ experience? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• Wharton on Managing Emerging Technologies. George S. Day, Paul J. H. Schoemaker, Robert E. Gunther (Wiley, 2000). Includes a section on alliances that provides approaches for and examples of the three partnering strategies.

• The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability. Marco Iansiti and Roy Levien (Harvard Business Review Press, 2004). Argues that companies can protect and ensure their own success, or undermine it, depending on how they foster the combined health of the network they operate in. Bases insights on “keystone species” in biology that work to proactively maintain the healthy functioning of their entire ecosystem because their own survival depends on it.

• “When to Ally and When to Acquire,” Jeffrey H. Dyer, Prashant Kale, and Harbir Singh. Harvard Business Review, July-August, 2004, 108-115. Provides a framework to help organizations decide between acquisition and alliance by analyzing three sets of factors: the resources and synergies they desire, the marketplace they compete in, and their competencies at collaborating.

• Harbir Singh serves as Faculty Director of and teaches in Strategic Alliances: Creating Opportunities for Growth, and Global Strategic Leadership. He also teaches in the Executive Development Program, Mergers and Acquisitions, Strategic Thinking and Management for Competitive Advantage, and other Executive Education programs.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Joseph Ryan, Senior Fellow, Wharton Executive Education; Founder and President of True North Advisory Group.

The Goal:

Drive sustainable and repeatable success in managing strategic initiatives. Identify capability gaps that need to be addressed and accelerators that you can leverage for better results.

Nano Tool:

Strategy execution at all levels — corporate, business unit, key initiatives — requires clarity, discipline, honesty, and agility. While balanced scorecards are useful for providing discipline and clarity, they’re not sufficient because execution rarely goes exactly as planned. Leaders need real-time diagnostics (as opposed to slow and costly studies) to honestly assess what’s working and what’s not. Next, they need to identify solution levers, what we call accelerators, that let them manage the execution process more explicitly.

The Accelerator Checklist includes six success factors for effective strategy execution, translated into 12 straightforward diagnostic statements. Red flags in any of these areas can and ultimately will derail a strategy.

You can use this tool alone or in your strategy team to reveal the implementation gaps that need to be addressed, and the strengths that can act as accelerators, driving successful execution. In other words, by using the checklist you can learn where execution is stuck and identify the solutions to get unstuck — in real time.

How Companies Use It:

• Executives at an international bank that was performing well knew they had underlying issues that were preventing them from doing even better. A majority of the executives said that their value proposition, their aspirations, and their targets, were on track (a “green light”). More than half also indicated that their performance scorecards and systems were strengths, another green light. However, even with good performance, a majority believed that organizational issues were a serious concern. They saw themselves unable to drive and sustain high performance in their de-centralized, matrix structure. The strength of product lines and the autonomy of the local units often resulted in corporate strategic initiatives receiving less priority and attention. The executive team concluded they often left money on the table because these initiatives were not getting implemented. By working through the strategy accelerator checklist, they decided they needed to create a new position to address these problems. A COO would drive operations and resolve these red flag issues. Performing this diagnosis both identified (and solved) a problem and it uncovered three accelerators (aspiration, targets, performance information) they could better leverage in advancing their strategy and driving change.
• Leaders of a high-profile technology company in the smart phone market used the accelerator checklist and concluded that their macro-organizational processes were a “double red,” a clear and dangerous strategy derailer. Macro-organization processes include both the structure of the organization and mechanisms like talent and business reviews used to allocate resources (both dollars and people). Their decision cycles were too long, creating a huge barrier to developing and executing an agile business strategy. Additionally, their product development and apps development processes were not driven enough by their customers. In short, they were slow in a fast-moving world and were rapidly losing market share. The accelerator checklist helped them have an honest discussion of difficult and complex strategy issues and, importantly, it facilitated urgent action in pursuing an alliance partner and in re-structuring their organization.
• A global auto manufacturer’s senior executives used the accelerator tool to assess their effectiveness in the China market, where they had made large capital investments over a five-year period. In a work session in an executive education program, the leader of the China business was able to pinpoint gaps in their capabilities. In this case, the gaps were in how they worked with their joint venture partner. There was lack of clarity in roles and responsibilities and weak service-level agreements between the joint venture partner and the firm. This executive left the program with greater clarity and knew in concrete terms the short list of leadership actions that he and others on his team needed to work on.
• See the Additional Resources links below for more examples and research findings.

Action Steps:

For each item in the Accelerator Checklist, answer using the scale of Green (no problem), Yellow-Green (some problems, but moving in the right direction), Yellow-Red (moving in the wrong direction), and Red (serious problem). This thinking process and your judgment calls will give you a solid foundation for honest discussions about capabilities and the basis for developing resilient action plans. Consider how you might strengthen Accelerators determined to be Red and Yellow-Red and how to better leverage those ranked as Green or Yellow-Green.

The Six Accelerators:

Aspirations
1. We have a clear and concise view of the strategic direction of the business and the logic of the key initiatives.
2. Each organization (or division) can articulate the aspiration(s) and initiatives in terms specific to their business.
3. The aspirations create energy, a passion to win, in the organization.

Targets and goals (translating aspirations into calls to action)
4. There is a clear link between our targets and goals and our stated aspiration(s).
5. We have a robust process to allocate and re-allocate resources.

Organizational structure (macro)
6. Decisions are made quickly by a few responsible owners and not bogged down by hierarchy and structure.
7. Strategy and business reviews are action-driven processes used for both tracking progress and solving problems quickly.

Organization processes (micro)
8. The right people are in the right jobs (A-players in A-jobs).
9. Individual goals are clearly understood by owners, and have effective rewards and penalties.

Performance information
10. We have the necessary business information, performance scorecards, and metrics to execute our strategy and assess progress.
11. We do both internal and external benchmarking to avoid complacency.

Consequence management
12. We have a visible and quick process for identifying success or failure.

Share Your Best Practices:

Do you have a best practice for making game-changing improvements in your customers’ experience? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• “How to Have an Honest Conversation About Your Strategy,” Michael Beer and Russell Eisenstat. Harvard Business Review, Feb. 2004. Addresses organizational barriers that undermine the ability to develop clear and actionable strategies. Outlines processes and steps that can be used to design more effective strategy reviews.
• Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage. Scott Keller and Colin Price (Harvard Business Press, 2011). Summarizes key learnings from McKinsey’s work on transformational change and what they call “organizational health.”
• Fully Charged: How Great Leaders Boost Their Organization’s Energy and Ignite Higher Performance. Heike Bruch and Bernd Vogel (Harvard Business Press, 2011). Explains the “accelerator trap” organizations fall into when they have too many initiatives. Outlines perspectives and practices leaders can use to drive high performance. Includes excellent global case examples.

• Joe Ryan teaches in Making Strategy Work: Leading Effective Execution, The CFO: Becoming a Strategic Partner, and many custom programs.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Paul Schoemaker, author of Brilliant Mistakes (Wharton Digital Press, 2011); Marketing Professor and Research Director of the Mack Center for Technological Innovation at the Wharton School, University of Pennsylvania; Founder and Chairman of Decision Strategies International.

The Goal:

Discover breakthrough innovation, and accelerate organizational learning, by adopting a mindset and a process for deliberate mistake-making.

Nano Tool:

What if some of your most tried-and-true assumptions about the way you do business were wrong? What if, in fact, they were costing you market share, or preventing you from taking advantage of a new opportunity that could significantly increase your bottom line? Assumptions can be wrong for numerous reasons, ranging from changes in the world in which the assumptions were formed to lack of humility among those at the top. Testing assumptions — in effect, making deliberate mistakes — offers the possibility of more effective business practices, groundbreaking innovation, and even greater profits.

Brilliant mistakes have two prime ingredients. First, they require a significant challenge to the status quo. Second, that challenge allows for deep new insights to emerge whose benefits far exceed the cost of the original mistake. These deep insights, or accelerated learning, can be as important as the discovery of a breakthrough innovation.They can be “portals of discovery” that lead to even greater improvements in your future prospects. By purposefully making and learning from mistakes, you can realize significant benefits.

How Companies Use It:

It is important to keep in mind that no strategy will be successful indefinitely. Competitors catch up, markets change, and organizations can become lazy during upswings that inevitably come to an end. Instilling constant consumption chain enhancements into your overall strategic process can help you create growth opportunities continuously.

• A strategy consulting firm, Decision Strategies International (DSI, for which Schoemaker serves as Chair), determined that its policy of not responding to certain Requests for Proposals (RFPs) was worth testing. Ordinarily, DSI would not have responded to an RFP without knowing anyone in the organization, under the assumption that the prospective client was price shopping or had already determined its favorite candidate. The next such RFP it received, from a regional electric utility, was assigned to recent hires to create a proposal under senior supervision. To DSI’s pleasant surprise, the unknown client accepted the proposal, and also hired DSI for other projects, amounting to more than $1 million in consulting fees.
• Until 1984, U.S. telephone companies had to provide service to every household in their region, no matter the household’s credit history. The companies collected deposits from customers with the worst credit history, believing that they were most likely to damage equipment and/or not pay their bills. They tested this assumption by not charging the deposit for several months from these “bad” risks, and found that this customer segment had fewer delinquencies than some other customer segments, with less damage to equipment. The counterintuitive insight caused them to recalibrate their risk models and to charge deposits based on different criteria. The improved credit models added an average of $137 million to the bottom line every year for a decade.
• A pet food manufacturer monitored their sales chiefly through their main point of distribution, supermarkets. A newly hired VP argued that sales were in decline, even though recent data gathered through the supermarket channel clearly demonstrated a steady hold on market share. The VP recommended that the company start monitoring non-traditional channels, such as pet superstores and direct sales through veterinarians. Although a cost–benefit analysis suggested otherwise (the monitoring would add considerable cost and reduce profits), the pet food manufacturer invested in the new monitoring, and found that their overall market share was indeed in decline. Adhering to their tried-and-true method of relying on supermarket sales was placing the company at serious risk of obsolescence, missing the growth opportunities in alternative channels. Thanks to a brilliant mistake, expanding the company’s traditional monitoring efforts, senior management was able to get ahead of this unrecognized fall in market share, realign sales and distribution strategies, and monitor trends in customer behavior more carefully.
• See the Additional Resources links below for more examples and research findings.

Action Steps:

Making and learning from brilliant mistakes entails a disciplined process of deliberate mistake-making:

1. Identify assumptions. What are the key assumptions or accepted norms about the way you do business? They might include the best ways to obtain new business, spend marketing resources, give incentives, or define hiring criteria.
2. Select assumptions for testing. From your list, use two metrics to find the assumptions most likely to yield valuable results: first, how significant is the metric to how you run your business, and second, how confident are you in the accuracy or correctness of the assumption. Hone in on those assumptions that score high on importance and less high on certainty in their correctness.
3. Rank the assumptions. Ask a group a series of questions about this subset of assumptions to generate an overall score indicating the relative value of putting these assumptions to the test. How true are the following (1 = not true, 7 = very true): 1. The potential benefit of the experiment is significantly higher than its cost, 2. We make this decision repeatedly, 3. This is a complex problem to solve analytically, 4. Our experience base with this assumption is limited, 5. The business conditions surrounding this issue have changed. The assumption with the highest score should be the one you test.
4. Create strategies for making mistakes. If you always spend 70% of your marketing dollars on traditional media, consider spending a greater portion on social media. If you use interviews to identify appropriate job candidates, consider using a combination of testing and interviews. Think the way advertising legend David Ogilvy did; he ran a few ads that he thought would not work, just to test his thinking.
5. Execute the mistake efficiently. Ogilvy would just run a few of his “loser” ads, not many. The goal is to fail quickly and inexpensively.
6. Learn from the outcome using a forensic mindset. Note all unexpected outcomes of your test, even those that seem minor or peripheral. Then think deeply about what these deviations from expectation tell you — generate multiple hypotheses for each and run further tests to understand them. Be persistent the way scientists, journalists, and forensic specialists are.

Share Your Best Practices:

Do you have a best practice for challenging the status quo by making brilliant mistakes? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management. You may also share it at the Wharton Digital Press website for a chance to win two round-trip airline tickets, a Wharton Executive Education course, and more.

Additional Resources:

• Profiting from Uncertainty. Paul J. H. Schoemaker, with Robert E. Gunther (Free Press, 2002). Declares that uncertainty is not the enemy but rather where the greatest opportunities are. Presents a systematic approach that combines concepts such as scenario planning, flexible strategies, options portfolios, and dynamic monitoring to create novel strategies for profiting from ambiguity.
• Peripheral Vision: Detecting the Weak Signals that Will Make or Break Your Company. George Day and Paul J. H. Schoemaker (Harvard Business Press, 2006). Examines the common causes and frequent consequences of a “vigilance gap,” the inability of both individuals and organizations to recognize and then act upon “weak signals from the periphery” before it is too late. Day and Schoemaker recommend a series of seven steps to bridge this gap.
• Paul Schoemaker is the Learning Director of Wharton Executive Education’s Critical Thinking: Real-World, Real-Time Decisions program, and also teaches in the Global CEO Program: A Transformational Journey and the Advanced Management Program. 

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: James Quigley, Senior Partner, Deloitte U.S.; former CEO of Deloitte Touche Tohmatsu Limited;  co-author of As One: Individual Action, Collective Power (Portfolio / Penguin, 2011).

The Goal:

Build collective behavior to execute your company’s strategic priorities using a practical, data-driven approach.

Nano Tool:

Imagine if everyone in your organization, team, or division was focused on collaboratively achieving strategic goals. Imagine the innovation, the productivity, and the competitive advantages that would result. Getting people to work together effectively “As One” isn’t simple. In fact, it is a universal leadership challenge. But new work at Deloitte’s Center for Strategic Leadership reveals that generating As One behavior is within every organization’s reach.

The traditional model for motivating people to be “team players” — command and control — has been declared outdated and ineffective. But is a new, loosely defined “agile and adaptive” model the answer? As One reveals that collective leadership isn’t either/or. In fact, Deloitte’s research has identified at least eight distinct models, or “As One Archetypes,” that provide the template, the language, and the common understanding that can be used to turn individual action into collective power. You can assess whether your organization’s default archetype is best suited to achieve collective behavior, or whether a new archetype might be a better fit.

Knowing and understanding your current collective leadership archetype is important for two reasons. First, if the archetype is a good fit, it can be strengthened. Second, if it is not working well, another archetype should be considered.

How Companies Use It:

• Ratan Tata’s vision was to create “the Indian people’s car,” one that would cost Rs 1 lakh (about US$2500). But his company did not have the capabilities to manufacture the car alone. Tata appealed individually to 500 suppliers and vendors who had very different reasons for joining, but worked As One on the car. The process was arduous, but after five years and hundreds of millions of dollars in investment, the Tata Nano was introduced in 2009. In 2010, it was named Indian Car of the Year. Tata exemplifies the Architect and Builders archetype. Architects use their own passion, vision, and conviction to persuade an often diverse group of the best builders to join their project and then direct them toward a goal.
• Every day, FedEx Ground delivers more than 3.5 million packages to businesses in the U.S. and Canada with near-perfect reliability. The “orchestra” is comprised of 15,000 men and women who are committed to high standards of fast, safe, and reliable service. Through role and task clarity, FedEx Ground ensures that its drivers — who are all independent contractors and manage their own business and time — meet those high standards. FedEx Ground represents the Conductor and Orchestra archetype, which works best when there is little room for improvisation, creativity, or deviation. The “conductor” issues precise, highly scripted directions, and the orchestra’s goal is to follow them exactly.
• Cirque du Soleil, the French-Canadian performance group, draws on team members who complement, rather than replicate, one another. A “cookie cutter” approach would undermine the work product, which benefits from creative dissent from the norm and the freedom to express individuality. The central “producer” articulates the overall idea or objective, and the “team” brings it to life. Cirque du Soleil personifies the Producer and Creative Team archetype, which sits on the opposite end of the creativity spectrum. Independent-minded individuals within an open culture of collaboration form a team of innovative thinkers, and the “producer’s” role is to guide that thinking.
  See the Additional Resources links below for more examples and research findings.

Action Steps:

1. Identify the archetype that reflects your company’s — or your team’s — current, or default archetype using the As One classifier.
2. Consider whether this is the best style to accomplish your objectives, or whether another style might be more effective.
3. If you feel you need to make a change, consider what steps you can take to make that happen (As One offers many suggestions for leading the transition).
4. Although it’s often most effective to make changes in leadership style from the top, on an enterprise-wide basis, you can also adapt the archetype of your own team or in your own division and see significant results. A team that functions “As One” will be more energized, engaged, and productive.
5. Once you’ve achieved success within a team or division, consider how you might “lead up” to encourage changes more broadly across the organization.

Share Your Best Practices:

Do you have a best practice for encouraging collaboration and “As One” behavior in your organization?  If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• As One: Individual Action, Collective Power, Mehrdad Baghai and James Quigley (Portfolio / Penguin, 2011). Defines the eight archetypes of leaders and followers, and provides more than 60 cases of successful collaborative behavior from a wide range of situations. The authors identify key characteristics that define each model and show how you can apply them to your organization.
• www.asone.org website of the Deloitte Center for Strategic Leadership includes an archetype classifier to determine your archetype, case studies, additional research, and information about Deloitte’s diagnostic that measures an organization’s ability to work As One.
• As One iPhone App
• As One HD iPad App
• Jim Quigley leads a session on “As One” leadership in Wharton Executive Education’s Executive Development Program.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.


]]> http://whartonleadership.wordpress.com/2011/12/27/nano-tools-for-leaders-xv/feed/ 0 whartonleadership http://whartonleadership.wordpress.com/2011/10/21/nano-tools-for-leaders-xii-2/ http://whartonleadership.wordpress.com/2011/10/21/nano-tools-for-leaders-xii-2/#comments Fri, 21 Oct 2011 05:18:31 +0000 whartonleadership http://whartonleadership.wordpress.com/?p=290 ]]> Improve Your Customers’ Experience for Exceptional Business Growth

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Ian MacMillan, The Dhirubhai Ambani Professor of Innovation and Entrepreneurship; Professor of Management; Director, Sol C. Snider Entrepreneurial Research Center, The Wharton School, University of Pennsylvania

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The Goal:

Identify and take advantage of ways in which you can dramatically improve your customers’ experience to drive exceptional business growth.

Nano Tool:

In their book Marketbusters, Ian MacMillan and Rita McGrath describe five approaches for re-visioning growth strategiesin order to create new revenue streams and competitive advantages while working with known customers. The first approach involves examining your customers’ total experience with the goal of transforming it. MacMillan and McGrath suggest a tool which they call a consumption chain (see an example below) to identify every step in the consumer experience.

Once these steps are identified, the chain can be used to “prospect” for or identify potential changes you can make in specific customer experiences—ones that will create a surge in demand and result in substantial growth opportunities. 

How Companies Use It:

It is important to keep in mind that no strategy will be successful indefinitely. Competitors catch up, markets change, and organizations can become lazy during upswings that inevitably come to an end. Instilling constant consumption chain enhancements into your overall strategic process can help you create growth opportunities continuously.

• The entrepreneurs behind Coinstar, Inc. saw an opportunity in the consumption chain  having to do with loose change. Instead of sorting and rolling loose change and then taking it to the bank, the customer uses a machine in the grocery store that sorts and counts the change, then issues a coupon that can be used to buy groceries or redeemed for cash. In effect, they replaced an existing consumption chain with one that offers a dramatically different experience for the customer. The impact on the consumption chain is a major enhancement in convenience (eliminating sorting, rolling, transporting, and refunding)—one that customers were willing to pay over $276 million for in 2010.
• One of Amazon.com’s many seismic consumption chain innovations was digitizing an existing chain to combine or replace links. The mega-retailer provides a high level of personalization and ease to Internet shopping, creating aunique “storefront” for each returning customer that is based on previous purchases. It replaces travel to a bricksand-mortar store and random browsing with a page of suggested books, music, and other items linked to those already acquired. 
• Canadian company BioSpec Global Solutions, Inc. recognized the need for rapid monitoring of microbial contamination of drinking and recreational water, and developed technology to allow for on-site testing. Previously, samples had to be collected and sent to a lab where testing took days to complete. By introducing TOGS (Time of Growth Spectrophotometer) technology, it eliminated time delays in the links of the chain.  With over two billion water samples sent to labs around the globe for testing annually, and with concerns regarding the safety of water and food supplies growing,  BioSpec has identified a significant market and created a remarkable advantage by speeding up the testing process. 

• At the core of competition in the global business of maintaining elevators is early detection of potential problems. These problems represent triggers in the consumption chain—events that require an organization’s services. Companies such as Otis in the U.S. and Kone in Europe invested heavily in technologies to provide early detection of events that might require a maintenance call, therefore monopolizing a trigger event.  These companies can now either prevent the problem or arrive on-site quickly to fix it.

• See the Additional Resources links below for more examples and research findings.

Action Steps:

To “pull” for great performance:

1. Select a target segment (ideally basing your choice on customer behavior rather than demographics).
2. Identify people within your company who come into contact with members of that customer segment, and assemble them into a small task force or discussion group.
3. Ask the group to describe your customers’ experience, from the point of initial awareness of need to the point at which a product is exhausted or a relationship ends (or moves to the next stage).
4. Create a hypothetical consumption chain (see the model above), using various “scenes” from a customer’s experienceas the links, noting what transpires to move a customer from one scene to the next.
5. Critically assess how well you are improving that customer’s consumption experience. Are there links the customer would prefer doing without? Are there ways you could serve that segment better? Are there offerings that the customer doesn’t value?
6. Use the consumption chain to prospect for Marketbusters. How can you build on the insights of your analysis todramatically change something about the way the chain currently works and thereby create an advantage? What link in the chain represents the best opportunity for a change, and how can we make this link faster, better, cheaper, more convenient, or more user-friendly for the customer?

Share Your Best Practices:

Do you have a best practice for making game-changing improvements in your customers’ experience? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• Marketbusters: 40 Strategic Moves that Drive Exceptional Business Growth, Rita Gunther McGrath and Ian MacMillan (Harvard Business Press, 2005). Offers a series of actions a company can take to change the competitive game and bring markedly superior growth and profitability. Using tools, checklists, and examples, the authors present five core strategies for developing market busters, including transforming your customers’ experience, transforming your firm’s products and services, and exploiting shifts in your industry to maximize your advantage as opportunities emerge.
• Discovery-Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity, Rita Gunther McGrathand Ian MacMillan (Harvard Business Press, 2009). Explains how the practices and mindset that work in your core business can be lethal when your challenge is growth, and provides a tool-based system for managing strategic growth.
• “Discover Your Product’s Hidden Potential,” Rita Gunther McGrath and Ian MacMillan,  Harvard Business Review, May 1996. Reveals an analytic tool that helps managers track and evaluate the dynamic fit between the needs of their customer segments and the attributes of their products. It begins with a discovery-driven process for uncovering salient product attributes — those that will swing a purchase decision. Then those attributes are mapped onto an ACE Matrix (Attribute Categorization and Evaluation), a grid that highlights the competitive imperatives for each attribute. The matrix shows what action a company must take in response to each attribute.
• “Growth Outside the Core,” Chris Zook and James Allen, Harvard Business Review, December, 2003. Presents the results of a five-year study of corporate growth involving 1,850 companies that tracked specific growth moves and linked them back to individual company performance. It concluded that most sustained, profitable growth comes when a company pushes out the boundaries of its core business into an adjacent space. Six types of adjacencies are described.
• Ian MacMillan teaches in Wharton Executive Education’s Advanced Management Program and Strategic Thinking and Management for Competitive Advantage.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.


]]> http://whartonleadership.wordpress.com/2011/10/21/nano-tools-for-leaders-xii-2/feed/ 1 whartonleadership consumption-chain-1110 http://whartonleadership.wordpress.com/2011/09/12/nano-tools-for-leaders-xiii/ http://whartonleadership.wordpress.com/2011/09/12/nano-tools-for-leaders-xiii/#comments Tue, 13 Sep 2011 01:47:36 +0000 whartonleadership http://whartonleadership.wordpress.com/?p=269 ]]> Pull, Don’t Push: Designing Effective Feedback Systems

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Katherine Klein, Edward H. Bowman Professor of Management, The Wharton School, University of Pennsylvania

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The Goal:

Create feedback systems that improve, rather than diminish, performance.

Nano Tool:

It’s a commonly held belief, one that gets played out daily in organizations around the world: Employees who receive performance feedback are much more likely to improve their performance than those who don’t get feedback. But research tells us that it’s simply not true. Typically, performance after feedback improves only modestly—and over one third of the time, it actually gets worse. People who receive positive feedback often see no need for change, and those who receive negative feedback often react with skepticism, discouragement, and anger, dismissing the evaluation as inaccurate, unhelpful, or unfair.

But if feedback doesn’t always and easily improve performance, what should managers do? Research suggests that “pulling” is a better idea than “pushing.” Pulling entails teaching, coaching, and developing employees rather than pushing—or correcting—them. Pulling says, “Here’s how to get ahead in this company; we’ll provide you with guidelines and coaching to help you master these skills and behaviors.” Pushing says “You’re not doing very well.” In employees’ eyes, it’s likely to be the difference between a motivating challenge and a demoralizing reprimand.

To get favorable results from performance evaluations, evaluators must set positive expectations, showing that they believe improvements can be made, and that the feedback itself—even negative feedback—is an opportunity to learn rather than a punitive final word. They should also be willing to assist with concrete steps toward the suggested improvements, including coaching and goal-setting. Done correctly, performance feedback can lead to improvements—but don’t forget to “pull” for those improvements by making the desired skills and behaviors clear and helping people acquire them.

 

How Companies Use It:

• Ernst & Young’s “pull” culture is evident from the moment a new hire joins the firm. Formal mentors provide an immediate avenue for guidance, coaching, and career advice. Peer advisers provide support and quicker network building opportunities. Formal counselors serve as an individual’s career advocate, manager, mentor, and coach.  Feedback, coaching, and people development are one of the core pillars of performance that every EY employee is measured by. In addition to formal role assignments, the firm’s culture incentivizes and creates the environment for regular constructive feedback from all levels and across all reaches of the organization. This instills a “pull” not “push” model of performance management that is the foundation of EY’s differentiating people culture.
• Deloitte’s performance appraisal system incorporates coaching, defining and recording job performance, training, self-assessment, multi-point feedback, behaviorally based appraisal, two-way communication, and goal setting. Each practitioner has a counselor who is responsible for evaluation and coaching. Two expectations are outlined: performance at a client site, and organization citizenship behaviors (OCB), which involve internal initiatives to increase firm value. Counselors are trained to record performance “in the moment” to aid in providing meaningful examples. Additionally, they are trained to acknowledge that recent feedback is more relevant than historic performance.
• The U.S. Army’s Officer Corps experiences “pulling” at every level, as well as a feedback system that is direct, reinforcing, and indicative of clear ways for improvement. An “officer professional development” system and formal mentoring program help to develop necessary leadership skills, whether technical or tactical. In addition, annual feedback and ratings are supplemented with After Action Reviews (AARs) that critique every mission, indicate needed improvements, and fix any problems before the next mission to mitigate risk.

Action Steps:

To “pull” for great performance:

1. Clarify and specify the behaviors, skills, and accomplishments that employees at each level need to exhibit to do their jobs well and to progress to the next level: What are these factors and why are they important?
2. Use multiple approaches to teach employees what these factors are and how they link to the company’s strategy, values, and performance. Publicize them in training sessions, emails, or websites. Ask higher-level employees to meet with lower-level colleagues for a Q&A session on getting ahead. Offer mentoring, coaching, formal classes, and/or opportunities to shadow employees working in different units, roles, or higher-level positions.
3. Create an organizational climate that’s safe for asking questions, getting feedback, and learning new things. Let employees know that whenever they have questions they can and should reach out to their supervisors and others in higher-level positions.
4. Coach supervisors in how to give performance feedback to their direct reports that includes:
• delivering an honest message in a way that employees are likely to find both fair and constructive
• inviting employees to ask questions, provide input, and reflect on their own performance
  keeping the focus on the task and behavior, not the self and personal traits
• providing coaching to support employees in acquiring new and more effective skills, behaviors,and accomplishments
• setting goals for performance improvement
• emphasizing the learning opportunity and the fact that change is possible.
5. Be prepared when receiving feedback to ask the kinds of questions that will check defensiveness and enhance learning, such as: What do you think I’m already doing well? What are areas for improvement? Are there specific things I have done that I should definitely keep doing? What specific things have I done that have concerned you and why? Then paraphrase what you have heard (“So key areas for me to work on are….”), ask what resources exist for you to make improvements in these areas, and set a date to meet again to discuss your progress.

Share Your Best Practices:

Do you have a set of guiding principles that could constitute a leader’s checklist? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• “Conduct Performance Appraisals to Improve Individual and Firm Performance,” Maria Rotundo, in “Handbook of Principles of Organizational Behavior, Edwin Locke, ed. (Wiley, 2009). Outlines basic principles that can be followed to improve the effectiveness of performance appraisals, especially as it relates to improving future performance. Offers principles to follow when communicating the appraisal to the employee, as well as when gathering information about the employees’ performance.
• “Multisource Feedback: Lessons Learned and Implications for Practice,” Leanne E. Atwater, Joan F. Brett, and Atira Cherise Charles, Human Resource Management, Summer 2007, Vol. 46, No. 2, 285–307. Highlights issues for managers to consider both before starting a multisource feedback process and after the feedback is given. Potential outcomes of the process are also reviewed.
• “Does Performance Improve Following Multi-source Feedback? A Theoretical Model, Meta-Analysis, and Review of Empirical Findings,” James W. Smither, Manuel London, and Richard R. Reilly, Personnel Psychology 2005, Vol. 58, 33-66. Indicates the circumstances and feedback techniques that most likely result in improved employee performance. 

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.


]]> http://whartonleadership.wordpress.com/2011/09/12/nano-tools-for-leaders-xiii/feed/ 0 whartonleadership http://whartonleadership.wordpress.com/2011/08/07/nano-tools-for-leaders-xii/ http://whartonleadership.wordpress.com/2011/08/07/nano-tools-for-leaders-xii/#comments Mon, 08 Aug 2011 03:34:33 +0000 whartonleadership http://whartonleadership.wordpress.com/?p=261 ]]> Successful Strategy Execution Depends on Knowledge Sharing

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Larry Hrebiniak, Associate Professor of Management, the Wharton School, University of Pennsylvania; author, Making Strategy Work: Leading Effective Execution and Change.

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The Goal:

Increase your organization’s execution success rate by improving knowledge sharing.

Nano Tool:

It doesn’t matter how good your strategy is if it’s not implemented effectively. And yet many senior managers, even when faced with poor results, continue to address execution with the same ineffective methods. 

In surveys conducted by Wharton management professor Larry Hrebiniak, executives identified the greatest obstacles to execution. Not surprisingly, “poor or inaccurate information sharing” was near the top of the list. As strategic initiatives become more complex, involving greater numbers of people across functions, SBUs, or geographical locations, the need to coordinate and cooperate is imperative.

Hrebiniak notes that while most organizations use formal methods for fostering communication and coordination (such as IT systems, designated integrators, and formal databases), these methods, while necessary, often fall short. He identifies informal forces that play a powerful role in determining strategic outcomes. When you harness the power of these forces, implementation and performance will improve.

How Companies Use It:

• McKinsey & Company, the global management consulting firm, with offices around the world housing thousands of consultants and staff, lists the firm’s experts and areas of knowledge in its “Yellow Pages.” The directory, first known as the Knowledge Resource Directory or KRD, facilitates personal contact among consultants, leveraging learning and avoiding costly duplication in knowledge creation.
• ABB (Asea Brown Boveri) competes globally, with a need to integrate effectively across many regions or countries. To execute its coordinated global strategy, ABB has made investments in its IT system and in making a matrix structure work. But the company also relies on a cadre of global managers who troubleshoot and help solve strategic and operating problems across the globe. Emphasis here is clearly on informal contact and personal communication to achieve effective solutions.
• The positive effects of GE’s “Work Outs” by now are well known by many managers. The formal process and methods of bringing people together to solve big problems have been well documented. But additional benefits of bringing knowledgeable managers together are the informal contacts and bonds that are created, leading to increases in personal communication and informal problem solving. The personal contact and interaction also help facilitate the development of common, agreed-upon goals and performance metrics.
• See the Additional Resources links below for more examples and research findings.

Action Steps:

While not all steps are possible for all managers, taking action on even one of the following will improve knowledge sharing and, in turn, strategic and operating outcomes. The more steps you take, the greater the cooperation and coordination results will be.

1. Improve informal conduct. People need to talk with each other to get information and solve problems, but they may not know who has the knowledge they need. Make sure they know who to contact by creating a directory listing of key personnel in each functional area, division, geographic location, etc. The list can be developed by skill area (e.g., strategy implementation) as well as by personnel, allowing for a cross-listing of people and skills or content areas.
2. Avoid enforcing a hierarchical system of checks and balances that diminishes the power of informal contact. Allow people to solve problems without the need for a series of approvals that causes delays and often destroys or detracts from the speed and spontaneity of personal contacts.
3. Create a common language. Differences in perspectives, technical capabilities, definitions of key terms, goals, and cultural biases can detract from the ability of a diverse group of problem solvers to understand one another. It is essential when executing strategy that the strategy be clear, focused, and translated logically into short-term objectives that managers can buy into. These objectives must be defined consistently to avoid problems of different, competing views of execution outcomes. Creating superordinate goals — goals that all parties can agree with and support — is the critical task here.
4. Reconsider incentives. Tie incentives to strategic objectives to reinforce and reward them (e.g., reward cooperative achievements rather than individual performance). Hoping for coordination and cooperation while rewarding excessive and inappropriate competition hinders information sharing and, ultimately, execution efforts. Good incentives help create the shared vision that leads to improved formal and informal communication and cooperation.

Share Your Best Practices:

Do you have a best practice for information sharing? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• Making Strategy Work: Leading Effective Execution and Change. L. G. Hrebiniak (Wharton School Publishing, 2005). Offers a systematic roadmap for execution that encompasses every key success factor: organizational structure, coordination, information sharing, incentives, controls, change management, culture, and the role of power and influence.
• “Obstacles to Effective Strategy Implementation,” L. G. Hrebiniak, Organizational Dynamics, Vol.35, Issue 1, 12-31, Spring 2006. Examines the organizational and political obstacles that stand in the way of effective implementation, and why confronting them is more difficult than strategy making.
• Execution: The Discipline of Getting Things Done. Larry Bossidy and Ram Charan (Crown Business, 2002). Describes execution as “the missing link between aspirations and results,” and argues that it is the biggest obstacle to success. Emphasizes the fact that execution is a discipline to learn, not merely the tactical side of business.
• Larry Hrebiniak is the faculty director of, and teaches in, Wharton’s executive program Implementing Strategy: Leading Effective Execution. He also teaches execution methods in Strategic Thinking and Management for Competitive Advantage and other Wharton programs.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.


]]> http://whartonleadership.wordpress.com/2011/08/07/nano-tools-for-leaders-xii/feed/ 0 whartonleadership http://whartonleadership.wordpress.com/2011/06/27/nano-tools-for-leaders-xi/ http://whartonleadership.wordpress.com/2011/06/27/nano-tools-for-leaders-xi/#comments Tue, 28 Jun 2011 01:48:56 +0000 whartonleadership http://whartonleadership.wordpress.com/?p=239 ]]> The Leader’s Checklist: 15 Mission-Critical Principles

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Michael Useem, William and Jacalyn Egan Professor of Management and Director of the Wharton Center for Leadership and Change Management, The Wharton School, University of Pennsylvania; author, The Leader’s Checklist

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The Goal:

Create and apply a complete list of vital leadership actions.

Nano Tool:

The absence of an action checklist is one of most correctable lapses in leadership. Through the simple step of creating and consistently applying the equivalent of a pilot’s or surgeon’s checklist, a leader is readied for whatever may be in store.

Albert Einstein once described the calling of modern physics as an effort to make the physical universe as simple as possible — but not simpler. The leader’s checklist is likewise at its best when it is as bare-bones as possible — but not more so. Just 15 mission-critical principles can define its core for most leaders, and the principles vary surprisingly little among companies or countries.

How Companies Use It:

No two leadership positions are exactly the same, nor do any two sets of circumstances require the identical exercise of leadership. While the 15 principles constitute a kind of “true north” for every manager, each leader’s checklist must also be customized for one’s personal place:

• A checklist for a major professional services firm identified nearly a dozen special capacities that it held to be vital for its managers, including seeing the world through clients’ eyes, enthusiastically engaging with clients, and working with them to transcend conventional thinking.
• The leader’s principles for General Electric include making tough personnel decisions and continually innovating, while the principles for Google place special emphasis on pursuing creative sparks and guiding others.
• The New York Fire Department provides 13 checklists for officers responsible for major incidents, including a “Mayday Checklist” that requires ordering all unrelated two-way radio traffic to cease, establishing a staging area, and enlisting chaplains as needed.
• Two Microsoft sales managers created a pre-sales checklist, asking before a sales call that their representatives Google all who are expected at the meeting and submit their two-minute opening pitch to memory.

Action Steps:

A leader’s checklist is only as good as the materials and engineering that go into it. Drawing on an array of researchers, observers, and practitioners, and from witnessing a variety of leaders in action, here are 15 tried and tested principles for any leader’s checklist:

1. Articulate a Vision. Formulate a clear and persuasive vision and communicate it to all members of the enterprise.
2. Think and Act Strategically. Set forth a pragmatic strategy for achieving that vision both short- and long-term, and ensure that it is widely understood; consider all the players, and anticipate reactions and resistance before they are manifest.
3. Honor the Room. Frequently express your confidence in and support for those who work with and for you.
4. Take Charge. Embrace a bias for action, of taking responsibility even if it is not formally delegated, particularly if you are well positioned to make a difference.
5. Act Decisively. Make good and timely decisions, and ensure that they are executed.
6. Communicate Persuasively. Communicate in ways that people will not forget; simplicity and clarity of expression help.
7. Motivate the Troops. Appreciate the distinctive intentions that people bring, and then build on those diverse motives to draw the best from each.
8. Embrace the Front Lines. Delegate authority except for strategic decisions, and stay close to those most directly engaged with the work of the enterprise.
9. Build Leadership in Others. Develop leadership throughout the organization.
10. Manage Relations. Build enduring personal ties with those who look to you, and work to harness the feelings and passions of the workplace.
11. Identify Personal Implications. Help everybody appreciate the impact that the vision and strategy are likely to have on their own work and future with the firm.
12. Convey Your Character. Through gesture, commentary, and accounts, ensure that others appreciate that you are a person of integrity.
13. Dampen Over-Optimism. Counter the hubris of success, focus attention on latent threats and unresolved problems, and protect against the tendency for managers to engage in unwarranted risk.
14. Build a Diverse Top Team. Leaders need to take final responsibility, but leadership is also a team sport best played with an able roster of those collectively capable of resolving all the key challenges.
15. Place Common Interest First. In setting strategy, communicating vision, and reaching decisions, common purpose comes first, personal self-interest last.

Share Your Best Practices:

Do you have a set of guiding principles that could constitute a leader’s checklist? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• Atul Gawande, The Checklist Manifesto: How to Get Things Right, Holt, 2009. Examines checklists as used in various professions, observing that no matter how talented or successful an individual may be, a well-designed checklist will prevent errors and improve outcomes.
• Adam Bryant, The Corner Office: Indispensible and Unexpected Lessons from CEOs on How to Lead and Succeed, Times Books, 2011. Shares leadership insights and lessons from over 70 CEOs.
• Mukul Pandya, Robbie Shell, and Nightly Business Report, Lasting Leadership: What You Can Learn from the Top 25 Business People of Our Times, Wharton School Publishing and Pearson Education, 2004. Identifies eight attributes of leadership and explores the observations of some of the most successful leaders of the last 25 years.
• Michael Useem, The Leader’s Checklist: 15 Mission-Critical Principles (Wharton Digital Press, 2011). Helps leaders develop their ability to make good and timely decisions in unpredictable and stressful environments.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.


]]> http://whartonleadership.wordpress.com/2011/06/27/nano-tools-for-leaders-xi/feed/ 0 whartonleadership http://whartonleadership.wordpress.com/2011/05/26/nano-tools-for-leaders-x/ http://whartonleadership.wordpress.com/2011/05/26/nano-tools-for-leaders-x/#comments Thu, 26 May 2011 20:48:47 +0000 whartonleadership http://whartonleadership.wordpress.com/?p=217 ]]> Adaptive Experimentation

Nano Tools for Leaders® are fast, effective leadership tools that you can learn and start using in less than 15 minutes — with the potential to significantly impact your success as a leader and the engagement and productivity of the people you lead.

Contributor: Yoram (Jerry) Wind, The Lauder Professor, Professor of Marketing, The Wharton School, University of Pennsylvania

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The Goal:

Encourage innovation, find successful strategies, and create competitive advantages through continuous, adaptive experimentation.

Nano Tool:

Finding your next successful strategy in an environment of increasing uncertainty and complexity is daunting. The traditional approach involving the implementation of one strategy — unless you have uncanny insights into how it will work — won’t yield the answers you’re looking for. Even if perceived to be successful, what will it reveal about the next step? Adaptive Experimentation (AE) involves the creation and implementation of continuous experiments to improve your strategies over time. By pursuing several approaches, you will be able to better identify strategies for the next level of experimentation, yielding results that improve with each step.

Whether used to develop new products and services, target marketing programs, create better customer experiences, or redefine a brand positioning, the benefits of AE include identifying stimulating breakthrough ideas, creating an innovation culture, and developing strategy. Innovation is encouraged through experimentation. Measuring success or failure is embedded in the process, and because failure yields valuable information, permission to fail is an integral element. AE also creates a compelling competitive advantage: continuous experimentation means your competitors can’t discern your master experimental design.

How Companies Use It: 

• To learn how best to reach the consumer, direct mail pieces historically have been based on adaptive experimentation. Enormous differences in results were achieved, and easily measured, through changes in an advertisement’s layout, font sizes, or graphics. Experimentation captured the best iteration of every possible variable.
• Google’s use of experimentation in every activity, referred to as the “one percent rule,” is legendary. An integral part of the way they do business, the approach involves measuring results to reveal what is working and what needs further experimentation.
• To make supply chain improvements that add consumer value and competitive advantage (by reducing both inventory gluts and shortages), Procter & Gamble is investing in “sense and respond” capabilities. These improvements are part of a vision called the “consumer-driven supply network,” and are being identified at a variety of points within that network. They include inventory strategies such as continuous product replenishment (CPR), produce-to-demand manufacturing, and dynamic replenishment and distribution.
• Anheuser-Busch employed adaptive experimentation for all its advertising strategies for years and as a result has been the most profitable beer company.
• See the Additional Resources links below for more examples and research findings.

Action Steps:

Adaptive Experimentation is a continuous, rather than a linear, process. The learning that takes place in step 5 informs the refinement and determination of the next objectives in step 1, meaning that outcomes improve over time.

1. Determine your objectives: what achievement(s) is worth the time, effort, and resources needed to run an adaptive experiment?
2. Create a culture of innovation: involve your organization’s architectural processes and structures, including technology, reward systems, and incentives. To get a buy-in from everyone involved and encourage innovation, assure them that performance areas will not be penalized, and compensate as if the old strategy was being used.
3. Design the experiment: develop many full executions, including a selection of markets in which to implement them. Strategies should be innovative, involving significantly different alternative approaches that encompass radically different methods for resolving a challenge or taking advantage of an opportunity.
4. Implement in a controlled and regulated manner: an ongoing measurement system must be in place to evaluate your efforts as well as to monitor markets and control for external effects.
5. Analyze your results, and use lessons about what worked and what didn’t to develop your next series of experiments.

Share Your Best Practices:

Do you have a best practice for adaptive experimentation? If so, please share it here by commenting below. 

Additional Resources:

• “From Mental Models to Transformation: Overcoming Inhibitors to Change,”Yoram (Jerry) Wind and Colin Crook, Rotman Magazine (Rotman School of Management, University of Toronto), 62-68, Spring 2009. Examines strategies for challenging mental models and overcoming inhibitors to change.
• The Power of Impossible Thinking: Transform the Business of your Life and the Life of your Business. Yoram Wind, Colin Crook, with Robert E. Gunther (Wharton School Publishing, 2006). Explains why it’s so hard to change mental models and offers practical strategies for developing new ways of seeing, changing to a new model, swapping among a portfolio of models, and improving your models through constant experimentation.
• “Marketing by Experiment,”Yoram (Jerry) Wind, Marketing Research, 10-16, Spring 2007. Explores why researchers, in today’s swiftly changing business environment, must experiment with diverse strategies. “Adaptive experimentation” allows them to challenge their assumptions and devise fresh tactics. By becoming advocates of adaptive experimentation and faithfully implementing it, they can secure a seat at the table and influence critical business decisions.
• The Future of Advertising. This project of the Wharton SEI Center for Advanced Studies in Management looks at the future of advertising that is emerging from the interplay of emerging new media channels and a world in which consumers are in charge.
• Wharton Fellows at The Conference Board is a series of Master Classes for senior executives who are leading organizational transformation. The program focuses on two themes: the challenging of mental models, and the need for continuous experimentation.
• Yoram (Jerry) Wind, The Lauder Professor and Professor of Marketing, is academic director of, and teaches Adaptive Experimentation in, Wharton’s Global CEO Program and the Wharton Fellows Master Classes. He also teaches in the Advanced Management Program.

About Nano Tools:

Nano Tools for Leaders^® was conceived and developed by Deb Giffen, MCC, Director of Innovative Learning Solutions at Wharton Executive Education. It is jointly sponsored by Wharton Executive Education and Wharton’s Center for Leadership and Change Management, Wharton Professor of Management Michael Useem, Director. Nano Tools Academic Director, Professor Adam Grant.


]]> http://whartonleadership.wordpress.com/2011/05/26/nano-tools-for-leaders-x/feed/ 0 whartonleadership nano-charts_6-11 http://whartonleadership.wordpress.com/2011/04/25/student-reflections-usna-leadership-conference-part-3/ http://whartonleadership.wordpress.com/2011/04/25/student-reflections-usna-leadership-conference-part-3/#comments Mon, 25 Apr 2011 17:44:21 +0000 whartonleadership http://whartonleadership.wordpress.com/?p=209 ]]> The final post in a 3-part series, three undergraduate Wharton students reflect on their lessons from the U.S. Naval Academy’s Leadership Conference in February 2011.  Students from over 20 different schools, military and civilian, gathered in Annapolis, MD for three days of leadership development workshops and experiences.

Reflections from Colin Lee (W’11), Patrick Glover (W’11) and Christian Hoogerheyde (W’11) are featured.  This is the final part of a 3-part series.

Part 3: Christian Hoogerheyde, W’11
For as long as I could remember, I was consumed with an overwhelming sense of personal pride. My pride became impossible to ignore when I held student leadership positions in middle school and high school, for I succumbed to what I have termed the “When I’m Gone” syndrome: the desire to be “missed” when I had moved on from a position of leadership and the subconscious hope that others might grieve my departure and compare the accomplishments of my successors to my own.  I am ashamed to admit this, but I remember feeling that I wanted my successors to be good, but not too good, so that my achievements might still shine in comparison. 

It wasn’t until recently, however, that I became aware of how terribly detrimental this perspective (and pride as a whole) was for my ability to become a great leader.  Fortunately, my pursuit of genuine humility was re-ignited during the United States Naval Academy’s leadership conference.   One speech in particular really encouraged me to re-examine my pride and its consequences on my ability to truly lead.

This speech was given by Captain Robert E. Clark II, Commandant of Midshipmen at USNA, a man whose primary role is to oversee the training and development of the United States’ future naval officers at the academy.  Captain Clark spoke about a leader’s duty to the future of his organization and commitment to ensuring his organization could survive without his leadership, no matter the personal sacrifice.   A leader’s true responsibility, he stressed, was not to ensure the current success of his organization but rather to train and educate his reliefs so that they could achieve great (or rather, greater) things in the future.  Captain Clark then challenged us, asking “Are you working hard to ensure that your successors lead even better than you did, and that your organization becomes even better after you are gone?  Great leaders are great teachers, and they commit themselves to teaching their successors.”  In essence, Captain Clark was telling us that there was no place for the “When I’m Gone” syndrome in a leader, that there was no room for such vanity, ever.

Upon returning home from the conference I committed myself to the life-long pursuit of a humble spirit.   And already, after just a few weeks of intense self-examination, my heart is beginning to change and I am becoming increasingly aware of the many ways in which I have been blessed.    I am realizing that it is not important if my successors receive more praise and admiration than I did; in fact, if this happens, then we all have much to celebrate!  It is not a matter of swallowing my pride—which would imply I am only hiding it from the gaze of others—but rather a matter of shedding my pride, of ridding myself of it once and for all.  In the end, I am well aware that my search for humility will truly be a life-long pursuit and that I will never be able to say I have gone “far enough”.  But even at this early stage, I have a better understanding of the way in which pride undermines leadership.  With humility, and only with humility, can a leader be truly extraordinary.

Christian Hoogerheyde is a senior at Wharton concentrating in Business and Public Policy and OPIM, and is the outgoing WLV Advisory Board chair.  After Wharton, he will join IBM as a public sector consultant in Washington, D.C.  He plans on seeking genuine humility for the rest of his life.


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