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: Jonah Berger, PhD, James G. Campbell Assistant Professor of Marketing, The Wharton School, University of Pennsylvania, and author of Contagious: Why Things Catch On.

The Goal:

Make your message go viral by following six key principles.

Nano Tool:

Word of Mouth is the primary factor behind 20–50 percent of all purchasing decisions, and it’s ten times more effective than traditional advertising, according to a 2010 white paper published in the McKinsey Quarterly. The study predicts that word-of-mouth marketing will be a $5.6 billion industry by 2015.

But to get people talking about your product or idea, you need to understand why they talk and why some things get talked about and shared more often than others. Based on analyzing thousands of contagious messages, products, and ideas, there are six key principles (STEPPS) that can help get your idea or product talked about, shared, and imitated.

1. Social Currency: Status-by-association. Just as people use money to buy a product, they use social currency to create positive impressions of themselves. Talking about certain products or ideas makes people look good — and it increases awareness of the products or ideas. When organizations build social currency into their product or service, people will talk.
2. Triggers: People talk about what’s top of mind. To get word-of-mouth, you need to remind people — many times — about what you want them to share by linking it to a trigger that they naturally see or experience frequently.
3. Emotion: Information alone doesn’t get people to act. We share when we care, and it’s “high-arousal” feelings that make us want to tell others and take action. Messages linked with awe, excitement, and amusement, or with anger or anxiety, get people talking.
4. Public: Social influence has a big effect on behavior: People tend to conform to what they see others doing. Visibility therefore has a huge impact on whether products and ideas catch on. The more people see others using your product in public, the more they will talk about it.
5. Practical Value: People like to help others by sharing information with practical value, such as how to save money, lose weight, or plan a vacation.
6. Stories: Telling a story, rather than telling it straight, makes information catchier and easier to remember. Tell a great story, and people will share it — and your message will travel under the guise of idle chatter.

How Companies Use It

• When McDonald’s introduced the McRib in 1981, sales were weak. After a few years of trying promotions and features, it dropped the sandwich from its menu. But in 2005 the company reintroduced the McRib, using the social currency principle by creating scarcity and exclusivity, offering it for a limited time, and only at certain locations. It now has a cult following, with online “McRib locators” to help fans find the sandwich.
• Hershey used a trigger to revive its Kit Kat brand in 2007. A new ad campaign paired the candy with coffee, describing Kit Kat as “a break’s best friend.” While “Kit Kat and cantaloupe” sounds about as good as “Kit Kat and coffee,” coffee is a frequent stimulus in the environment. Every time someone drinks coffee, which is often multiple times each day, they might think of having a Kit Kat. According to Colleen Chorak, marketing director at Hershey, the trigger helped grow the brand from $300 to $500 million.
• It might be a stretch to think there’s an emotional hook in something as banal as an online search engine. But Google’s “Parisian Love” campaign, which follows a young man’s online searches over time, from “study abroad Paris France” to “impress a French girl” to job hunting and “Paris churches” (as church bells ring in the background), was romantic, joyous, and inspiring. The emotions it aroused turned a normal ad into a viral hit.
• When Apple first introduced the iPod, it had a lot of competition in the digital music player space. And it had millions of potential customers who weren’t sure whether to give up their portable CD players for the expensive new device, or which player to buy if they were ready to try one. Apple distinguished itself by including white (rather than the more common black) headphones, providing visible public proof that the iPod was being used and enjoyed by others.
• Vanguard’s monthly newsletter, MoneyWhys, shares tips of practical value about investing, taxes, insurance, and other common financial concerns. Subscribers are prompted to forward articles (and to learn more about Vanguard products), through links on each page.
• Subway used the real-life story of Jared Fogle, who lost 245 pounds eating a Subway sandwich every day for lunch and dinner, in an ad campaign. The narrative is so entertaining that it gets repeated even when people aren’t talking about weight loss, and even when they’re not trying to promote the fast-food chain. But Subway benefits because its name and product are an integral part of the story.
• See the Additional Resources links below for more examples and research findings.

Action Steps:

1. Here are some ideas for using the STEPPS principles to make anything go viral:
   1. Social Currency: One way to build social currency is to use scarcity and exclusivity to make people feel like insiders. Both help products catch on by making them seem more desirable — if something is hard to obtain, people assume it must be worth the effort.
   2. Triggers: Pick a positive trigger — a word, event or situation — that happens frequently where you want word of mouth. Then create strong links between the trigger and your product or service by repeating the connection frequently.
   3. Emotion: Choose a “high arousal” emotion to link to your product or service, such as awe, excitement, amusement, anger, or anxiety. Show how your offering gets people more of the positive emotions or less of the negative ones.
   4. Public: Look for ways to make your service or product more visible, especially when people are using it. Be creative. Even seemingly invisible products like Intel can become visible to the public through tactics like “Intel Inside.”
   5. Practical Value: To get a product or idea to go viral, give people a chance to share a great discount with their friends. Use the Rule of 100: for items priced below $100, discount using a percentage. For items priced above $100, discount using a dollar amount.
   6. Stories: Create a catchy or compelling narrative in which your product or idea plays an integral part. People especially enjoy sharing these stories when they contain helpful information. As the story gets repeated, some of the details will inevitably get left out, so make sure your message is vital enough to withstand repeated tellings.

Share Your Best Practices:

Do you have a best practice for making products, services, or ideas contagious? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• Contagious: Why Things Catch On. Jonah Berger (Simon & Schuster, 2013). Describes the research-based STEPPS for generating word-of-mouth, making ideas and products contagious. The Face-to-Face Book: Why Real Relationships Rule in a Digital Marketplace. Ed Keller and Brad Fay (Free Press, 2012). Presents the results of a six-year study of consumer conversations, with insights, examples, and recommendations for businesses to use the information.
  
• “Networks, Influence, and Public Opinion Formation,” Duncan J. Watts and Peter S. Dodds. Journal of Consumer Research, Vol. 34, No. 4: 441-445. Examines the “influentials hypothesis,” finding that large cascades of influence are driven not by influentials but by a critical mass of easily influenced individuals.
• Jonah Berger teaches in Wharton Fellows: Master Classes and Networking for Senior Executives as well as 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: Daniel Pink is the author of five books on the changing world of work, including the New York Times bestsellers A Whole New Mind, Drive, and To Sell Is Human. His books have been translated into 34 languages.

The Goal:

Increase your ability to influence and move others to action by attuning to their perspectives.

Nano Tool:

Research confirms that the ability to influence people — to engage and move them to action — is based on a complex set of skills related to attunement.  Attunement involves understanding other people’s perspectives, getting into their heads, and seeing the world through their eyes. But it is more than merely understanding what others are thinking; it also includes how they are socially connected to others.

As you gather intelligence by watching and listening, a critical step is to pay attention to “social cartography,” the map of the personal and professional relationships that are important to the person you’re seeking to influence.  When you understand the social landscape, you can better interpret group dynamics, including identifying the decision maker, and adjust your style accordingly.

By starting with the intent to gather information about those you want to influence, by focusing on their networks, you can gain additional tools to expand your influence and sell your ideas.

How Companies Use It

• For one of the simplest and most cost effective examples of attunement, look to Amazon.com founder Jeff Bezos. At key meetings, Bezos assembles his team — software engineers, marketers, operations people — but also includes at the table an empty chair. That chair reminds attendees to take the perspective of the most important, if invisible, person in the room: the customer. When people at the meeting discuss strategy or pricing or marketing, that vacant chair encourages them to imagine what the customer would think of what they’re discussing. This focus on attunement works. Amazon.com consistently places in the Top 10 on the University of Michigan’s annual customer-satisfaction index for the largest American companies, and has led the online retailing category for years.  
• Dan Shimmerman, founder of Toronto-based Varicent Software (recently acquired by IBM), says in every sales situation he tried to understand the biases and preferences of every key player. “The mental map gives a complete picture, and allows you to properly allocate time, energy, and effort to the right relationships.” Shimmerman then relies on and refines this mental map in subsequent encounters with his prospect to ensure he’s reaching the people who matter. His skill at “social cartography” ensures that he doesn’t miss a critical player in the process. “It would stink to spend a year trying to sell to Mary only to learn that Dave was the decision maker.”
• See the Additional Resources links below for more examples and research findings.

Action Steps:

1. Keep Your Power In Check.  The next time you’re in a situation where you want to gather intelligence, try putting yourself in the position of lesser power.  Ask yourself, what I can do to sit in “the small chair” so the other can sit in “the big chair?”  Notice how the other person responds.  Was it easier to learn more about their thoughts and feelings? Were you able to gather the insights that you wanted and needed?
2. Be Curious about Their Social Cartography.  Find out more about the relationships of the person or groups that you want to influence.  Who influences them?  Whose approval or support do they need?  Who do they turn to for advice?  If you can understand more about their social and professional networks, you can extend your conversations to others who can help improve your influence.
3. Create Attunement Maps.  Take social cartography a step further by creating attunement maps.  Just as a geographical map gives you a view of physical terrain, an Attunement Map can offer you a glimpse into the social and emotional landscape you’re in. Because your ability to move others requires different approaches when your counterpart is positive or negative, it’s important to be able to attune yourself to mood. Think of the Attunement Map as an emotional weather map to help you figure out how to approach a person or situation to achieve maximum advantage.

Here are two ways you can practice your attunement skills so you are ready to instantly assess the moods of your counterparts when you are in the midst of selling your ideas:

Attunement Map 1 In your next important conversation at work, note your counterpart’s emotional tone, or mood, at the beginning of the encounter. On a scale of 1 (negative and resistant) to 10 (positive and open), what’s his or her temperature? Do the same at what you think is the middle of the conversation. Has it changed? Do it again when the conversation ends. Afterward, reflect on the factors that might have changed the mood for better or worse.

Attunement Map 2 In your next meeting,* rate the collective mood on that same 1 to 10 scale at the beginning, middle, and end. Reflect on the factors that might have changed the mood — including your role in bringing it up or down.

*This can be any meeting — in person, online, or via phone — as long as it’s a typical meeting that involves more than two people.

Share Your Best Practices:

Do you have a best practice for becoming better attuned to those you’re trying to influence? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• To Sell Is Human: The Surprising Truth About Moving Others. Daniel Pink (Riverhead Books, 2012). Argues that “we’re all in sales now,” and offers a new definition of selling with guidelines for improving your skills.
• “Why It Pays to Get Inside the Head of Your Opponent: The Differential Effects of Perspective Taking and Empathy in Negotiations,”  Adam D. Galinsky, William W. Maddux, Debra Gilin, and Judith B. White, Psychological Science, Vol. 19, No. 4 (April 2008): 378-84. Concludes, based on three studies, that perspective taking increases an individual’s ability to discover hidden agreements and to both create and claim resources at the bargaining table.
• Daniel Pink teaches in Wharton’s Advanced Management Program, and is the author of five books on the modern workplace, including Drive: The Surprising Truth about What Motivates Us (Riverhead Books, 2011).

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: Greg Shea, Adjunct Professor of Management, Faculty Associate, Center for Leadership and Change Management, The Wharton School; and Cassie Solomon, President and Founder, The New Group Consulting, Inc.

The Goal:

Ensure your next change initiative is a success by envisioning the behaviors needed to implement it.

Nano Tool:

Leading successful change initiatives is an essential skill in today’s “perpetual whitewater” business environment. Yet nine studies done between 1994 and 2010 report that 50 to 75 percent of all change initiatives fail. Behind such failures you’ll often find a missing ingredient — one that may seem obvious in retrospect, but that many change leaders overlook — a clear, specific vision of the desired end-state.

What does success look like? And even more important, what are your people doing to create and sustain it? The odds of success decline if you don’t have a clear picture. Imagine a team of rowers without a clear goal on the horizon. You can encourage them to row, and they may even row with vigor, but if they are confused about where they are heading their efforts will likely produce only exhaustion and disillusionment.

To avoid this trap, you can become a “script writer” for change. The scripting process is similar to writing a movie script. You describe a scene that clearly depicts the ideal future of your organization, including the specific behaviors of the people involved in the new scenario. This scene forms the blueprint for building the new work environment, and provides a map that can guide others in implementing the organizational change. The scripting approach has been used successfully for over two decades in a range of industries — from manufacturing to telecom, financial services to government. As you adapt it to your change initiative, there are two principles to bear in mind. First, your scene should be far enough into the future to decouple yourself from the major constraints of the moment. For executives, that usually means five to ten years; for managers, two to four years. Second, assume the world you desire has already arrived. Starting at a specific successful moment in the future and working back to the present produces more creative and more specific thinking than does starting with the present and trying to envision forward. Working backwards allows people to think, even dream, more freely and to make the as yet unrealized more concrete.

How Companies Use It

• Disney uses storyboards to create scenes that depict the ideal customer experience and the behaviors necessary to achieve it. Each scene maps the customer experience from a guest’s perspective and provides insights on how to improve processes and troubleshoot proposed changes. Scenes are scripted using a carefully selected vocabulary in which employees are “cast members,” customers are “guests,” and rides are “attractions.” 
• As the emergency room (ER) of a large U.S. hospital experienced rapid growth, the staff faced a complex challenge: how to more quickly evaluate and transfer critically ill patients to the intensive care unit (ICU). The problem involved cultural as well as capacity issues; those who work in the ER versus the ICU have very different processes for making decisions and communicating. 

  A multi-disciplinary team envisioned the goal of dramatically decreasing the time it took to move all critically ill patients to the ICU. “We see a team of people working together down in the ER, nurses from the ICU and from the Emergency Department working side by side. They are talking about a critically ill patient and discussing his care. They clearly know one another well and are working well together. A physician’s assistant (PA) calls upstairs to make sure that a bed is available, and gives instructions about transferring another patient out who no longer needs intensive care. The process happens very quickly and calmly. As the patient leaves with the ICU clinicians, they turn back and say to their ER colleagues, ‘Thanks, we’ll be right back down to help with that patient in Core C.’ And everyone smiles.”Once implemented, the change — involving cooperation between the ER and ICU staff — accomplished the original goal of dramatically cutting the time critically ill patients spent in the ER. It also vastly improved relations between clinicians.

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

Action Steps:

The following steps, as illustrated in the two business examples described above, will help you and your team envision your desired future and identify the behaviors that define it.

Articulate the what, why, and who of the change. Boldly imagine your organization, and those who work in it, after you’ve achieved the change you want to create. Why is it important? If you can’t state an end purpose in a simple sentence or two, then you’re not ready to imagine what it could look like when it’s achieved.

1. Become the screenwriter. Imagine a scene involving key roles. Lay out all of the details as if they have already occurred and you are merely recording the actions. What does it look like? How are people acting? What has been accomplished? Who is contributing the most to the new outcome? Think ground level. Think work flow. Think actual, living, functioning reality. Formal titles and job descriptions do not matter as much as function and behavior do. Make the scene come alive by paying close attention to:Person. Think about a particular person in a particular role in your organization. How will the change affect that person’s day-to-day job or even just a set of activities? What will they actually be doing and saying?

   Flow chart. Create a step-by-step chart that helps you tell the story of the imagined change. What happens first? What happens next? Who takes what actions? Who says what when?

   Story. A well-told story connects us more deeply to human reality and experience. That connection gives stories emotional power that we can see and feel. Think of the scene as a story told from the perspective of one of the key players, and consider relating the story in the first person.

   Props. If a key report or event doesn’t currently exist, make it up. Mock up a sample of a report or dashboard, or fabricate a meeting agenda — the specificity serves to illustrate and to focus discussion.

2. Repeat. Focus on other key roles and do the same. Perhaps one scene involves a proactive middle management group fashioning the best approach to handling account receivables, another delineates an idealized performance review session for vice presidents, and still another describes a consideration of capital allocation or the desired approach to determining space needs.
3. Stay with It. Have you depicted the right 20 percent of the change? Enough to make you confident that with that 20 percent in place, then the other 80 percent will follow? If yes, then move on. If not, then develop the scenes further or construct new ones. Aim for critical mass, for enough key scenes to define the trajectory of the change and to clearly identify the new behaviors.
4. Use the scenes diagnostically. How should the work environment change to drive the scenes? Are the required changes consistent, even complementary? If so, then concentrate on identifying the necessary changes in the work environment. If not, then perhaps you have unearthed inconsistencies in your desired outcome that need addressing. Adjust the scenes or your vision accordingly.

Share Your Best Practices:

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

Additional Resources:

• Leading Successful Change: 8 Keys to Making Change Work, Gregory P. Shea and Cassie A. Solomon (Wharton Digital Press, 2013). This book — the source of this Nano Tool — presents a thorough guide to making change work using a tested method developed over a combined 50 years of helping organizations achieve their change initiatives.

• Your Job Survival Guide: A Manual for Thriving in Change, Gregory P. Shea and Robert Gunther (FT Press, 2009). Provides a mindset and the skills necessary to thrive in an environment of non-stop change. Topics include pacing yourself; failing gracefully and recovering quickly; retaining optimism, resilience, and playfulness; protecting your career; and setting your own course.

• Greg Shea teaches in Wharton Executive Education’s High-Potential Leaders: Accelerating Your Impact, The Leadership Journey: Creating and Developing Your Leadership, and Leading Organizational Change.

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: Ethan Mollick, PhD, The Edward B. and Shirley R. Shils Assistant Professor of Management, The Wharton School, University of Pennsylvania

The Goal:

Harness key sources of innovation outside your company.

Nano Tool:

Joy’s Law, named after Sun Microsystem’s founder Bill Joy, states that “No matter who you are, most of the smartest people work for somebody else.” Research on the sources of innovation has proven Joy’s Law correct. Many of the ideas and innovations that lead to breakthrough products and services start outside of companies, among users of products and informal communities of amateurs. In fields ranging from scientific instruments to commercial banking, from semiconductor manufacturing processes to plastic extrusion, researchers have found that key innovations were developed by users, not manufacturers.

There are a number of reasons why this is the case. The people who feel problems most acutely tend to be the ones who solve them (necessity is the mother of invention, after all). It is far more likely that users — whether they are surgeons performing novel procedures or long distance bikers looking to maintain an edge — are going to be more motivated to solve problems than researchers in an R&D department. This is compounded by the fact that, in an era of easy communication across the globe, Joy’s Law is more important than ever. Billions of people are online, sharing information and ideas, and the companies that figure out how to harness this amazing resource will have the key to the future of innovation.

How companies choose to tap into communities will depend on their goals and methods. But for every product and service category, they can find users and communities modifying, discussing, and innovating on existing projects.

How Companies Use It:

• Apple’s App Store, and the dominance of the iPhone, is built on the community of app developers who create new uses and products for iOS. In the first year the iPhone was on the market, there was no App Store, but enterprising users found ways to create semi-legal free apps that could run on the iPhone. Rather than aggressively prosecuting these users, Apple built its early lead by allowing these hackers to sell products through the App Store, turning its user community into entrepreneurs who helped increase the value of Apple’s products.
• One of 3M’s medical products, the surgical drapes used to keep operating areas clean of infection, was making the company $100M a year, but sales were stagnating due to the price of the products and a shortage of compelling innovations. 3M decided to reach out to users to try to jump-start the stalling business. They gathered together doctors from third world countries (where being cash-starved means devising innovative ways of dealing with infection), veterinarians, and even a Hollywood makeup artist (experienced in developing non-irritating masks and powders), and together created novel ideas for low-cost infection-fighting products that had far more market potential than any internally-generated ideas.
• Innocentive, a spin-off from Eli Lilly, uses a network of over 270,000 scientists to solve complex problems. Companies seeking innovative solutions post challenges for the community to solve, with a cash prize going to the best answer. Over 1,500 problems have been solved, often by unexpected people, and an audit of a sample of these found that companies seeking solutions from the community had an ROI of 2,175% on their prize investments.
• See the Additional Resources links below for more examples and research findings. 

Action Steps:

1. Explore. Examine the user community around your products or services. Who is modifying or building on to your product or service? What unmet needs are prompting users to develop their own solutions? What customer segments find existing solutions or products unsatisfactory, and what are they doing to solve their problems on their own?
2. Integrate. Which parts of your organization are responsible for channeling user innovations into your company? Do sales and marketing personnel bring innovative customer solutions back into your organization when they find them in the field? Is customer service reporting on how users solve their own problems? Consider how to get these important conduits of user information to feed ideas back to the organization. Also examine more formal approaches to inviting user innovators into your process, such as Lead User Design, in the Additional Resources links below.
3. Harness Communities. Assist communities of users around your project in better serving their own needs, and gain their help in the process. First, examine the communities of users around your product or service and ensure that they are in appropriate contact with company representatives (ideally those with training in community relations, or even better, those who were originally users themselves). Second, honestly engage the community to help guide it in directions of interest to you, while respecting the needs of users. Finally, consider reaching out directly to communities to find out if you can help motivate them to solve problems of interest or otherwise assist your company.
4. Open Up. Consider ways of allowing users to create their own solutions using your product or service. What tools can you provide users with to help them adapt your products or services in new ways? What elements of the product development process can you allow users to control or customize? 

Share Your Best Practices:

Do you have a best practice for tapping into the innovative power of outside communities? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• “Tapping Into the Underground,” Ethan Mollick, Sloan Management Review, July 15, 2005. Offers advice on how to guide and harness user communities. 
• Democratizing Innovation. Eric von Hippel (MIT Press, 2005), available free online. Provides an overview of user innovation techniques, and guidance on lead user design.
• Changing the Game: How Video Games are Transforming the Future of Business. Ethan Mollick and David Edery (FT Press, 2008). Chapter on User Innovation Communities provides ways of using games and other motivating approaches to take advantage of communities. 
• “How to Manage Outside Innovation,” Karim R. Lakhani, and Kevin J. Boudreau, MIT Sloan Management Review, Vol. 50, No. 4 (Summer 2009). Explains when to use communities and when to use contests to fully take advantage of user innovation.
• Ethan Mollick teaches innovation and entrepreneurship in Wharton’s The Leadership Edge: Strategies for the New Leader, a program for new leaders held at Wharton’s San Francisco campus, as well as other Executive Education programs on innovation.

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: Charles E. Dwyer, PhD, Associate Professor, Educational Leadership Division, Graduate School of Education, University of Pennsylvania

The Goal:

Replace beliefs, behaviors, and emotions that are holding you back with ones that will better help you achieve your goals.

Nano Tool:

A leader’s effectiveness is a direct function of his or her behavior as interpreted by others. While it might be tempting to blame those you lead for their unwillingness to follow, it is your behavior that builds trust, motivation, and influence — or it creates suspicion, apprehension, and discouragement.

Becoming a more powerful and influential leader, then, means replacing less effective behaviors with more effective ones. But trying to change through cognition alone (“mind over matter”) doesn’t work. It takes a blend of cognition and emotion working together.

The Self-Design method was created to help replace thoughts, behaviors, and emotions that aren’t achieving desired outcomes. It is based on 35 years of longitudinal studies, and has been used by organizations, teams, and individuals for decades — with compelling results.

How Companies Use It

• A highly successful salesperson at a large pharmaceutical company was a major irritant to everyone in his division, but no one wanted to confront him because of the income he brought to the company. Rather than trying to change the salesman’s behavior (which could have resulted in undesired consequences), the team used Self-Design to avoid being irritated by him They individually created new sets of beliefs (e.g., “I decide how I feel and his behavior does not require that I feel irritated”), new emotional responses (e.g., calmness and even compassion), and new behavior patterns (e.g., “I will make a note of my newfound calmness in my calendar”). They then imaginatively rehearsed the new three-part program several times a day for the next three weeks until it became their automatic response. The head of HR reported that this change improved the morale and overall effectiveness of the division.
• At a large branch of a national bank, tellers and their supervisors were having trouble dealing with customer behavior. Angered over ATM malfunctions or stressed over money issues, customers often took out their frustrations on tellers, who in turn became upset and stressed themselves. Their negativity was then expressed to subsequent customers. To break the cycle, the tellers created a mental picture of a disgruntled customer, a new set of beliefs about the customer and the situation (“He must be having a bad day”), a new emotional response (e.g., calmness or even compassion), and a new image of themselves exhibiting the behavior that better suited them as professionals (e.g., courteous, efficient, and cheerful). Through the Self-Design method, they achieved ultimate empowerment: deciding how to feel regardless of external circumstances.
• See the Additional Resources links below for more examples and research findings.

Action Steps:

Step 1: Identify the old program (the belief, behavior, or emotion you want to change). Think of a situation you encounter regularly that makes you angry, upset, fearful, or uncomfortable. Write a one- or two-sentence summary of the belief or the circumstances that trigger the discomfort. Assess your old program by asking the following questions:

1. Is my behavior/belief based on fact?
2. Does my behavior /belief help me protect my life and health?
3. Does my behavior/belief help me achieve my goals now and in the future?
4. Does my behavior/belief help me avoid unwanted conflict with others?
5. Does my behavior/belief help me feel the way I want to?

(Most of our mental functioning takes place below consciousness and we tend to rationalize and justify negative thoughts, feelings, and actions. These questions bring the negative programs up to consciousness so that we can override them and become more of the person we consciously choose to be.)

Step 2: Design the new program. Identify a new belief, emotion, and action pattern that supports your best interests, and summarize the new program in a few short phrases or sentences. Use the five questions above to assess the value of your new program. Any beliefs/behaviors in the new program can only be maintained if you can answer yes to at least three of the five questions for both the behaviors and beliefs.

Step 3: Fill out a Self-Design Worksheet. [see below]. Use these definitions to help you complete it:

• Activating Event: The situation that triggers your discomfort
• Current Sincere Beliefs: What you believe about the situation now
• Current Emotions: Any emotions the situation triggers in you
• Current Behaviors: How you respond to the situation now
• The Camera Check: A revised description of the Activating Event that is purely factual, without any “emotional charge”
• Rational Beliefs: The new beliefs that you would like to hold
• Preferred Emotions: How you would like to feel
• Preferred Behaviors: How you would like to respond

Step 4: Install the new program. For three weeks, repeat a mental (imaginative) rehearsal twice a day for 5-10 minutes. The more relaxed you are during the rehearsal, the more effective it will be. (Note that this replaces the common rehearsal of negative emotions we all perform several times a day (e.g., “he makes me angry”).

• Picture the camera-checked activating event
• Rehearse the rational beliefs while picturing the activating event
• Rehearse your preferred emotions. Go into your memory and find a situation in which you experienced that emotion strongly, bring that memory forward, and attach it to the new program.
• Picture yourself engaging in the preferred behaviors

Share Your Best Practices:

Do you have a best practice for  replacing undesirable beliefs or actions with ones that better serve you? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• Change Your Brain, Change Your Life. Daniel G. Amen (Three Rivers Press, 1999). Offers “brain prescriptions,” including cognitive exercises and nutritional advice, to address anxiety, depression, impulsiveness, excessive anger or worry, and obsessive behavior.
• Authentic Happiness. Martin Seligman (Free Press, 2003). Uses practical exercises and tests to show that happiness comes from a focus on personal strengths rather than only on weaknesses, and on using those strengths to improve all aspects of one’s life.
• Rational Behavior Therapy. Maxie C. Maultsby, Jr., MD (Seaton Foundation, 1990). Presents scientific yet practical techniques for quickly discovering and dealing with problem-creating mental, emotional, and physical behaviors.
• Charles Dwyer teaches self-design in Wharton Executive Education’s Leading and Managing People and Building Relationships That Work.

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: George Day, PhD, The Geoffrey T. Boisi Professor, Professor of Marketing; Co-Director, Mack Center for Technological Innovation; Director, Emerging Technologies Management Research Program, The Wharton School, University of Pennsylvania

The Goal:

Find the right balance between central and local control to gain the best of both for your global brand.

Nano Tool:

One of the most hotly debated issues companies face as they build a global presence or enter a new market is ‘Who gets control of the brand?’ Are the key decisions made centrally by corporate headquarters, or does each local market get to chart their own course for marketing, advertising, pricing, positioning, and perhaps even decisions about naming and branding their own products or services?

Some companies go with a centrally-controlled Global Brand Strategy, using a consistent brand name, targeting similar customers, and employing the same marketing strategy in all regions (think IBM or Coca-Cola). At the other end of the spectrum are companies who employ a Local Brand Strategy. They use dozens, or even hundreds, of brand names, targeted specifically to local populations, with locally-controlled marketing strategies that are as unique as the regions themselves (think Unilever or Procter & Gamble). Most companies, however, employ a Hybrid Brand Strategy that uses elements of both Global and Local.

How Companies Use It

• American Eagle Outfitters discovered that customers of their stores in Western Florida have similar preferences and price elasticities to customers in communities in California and Texas. The company then offered these “clusters” of like-minded shoppers the same mix of products.
• Smirnoff, a leading brand of vodka, developed the theme of a new ad campaign, “Pure Thrill,” and then allowed local managers to develop their own ads around that theme to catch the interest of their local customers.
• P&G picked up its highly successful Pantene slogan, “hair so healthy it shines,” from a Taiwanese subsidiary. The ads, showing women with long, shiny hair helped turn Pantene into one of P&G’s early global megabrands, topping $1 billion in sales.
• Walmart uses the same positioning — a hypermarket with national brands and low prices — and a common brand around the world, but allows local stores to adapt their inventory to better match the markets they are serving.
• Starbucks developed training, operations, and product standards to ensure that contract vendors, such as Host Marriot, were offering the same high-quality cup of coffee at the airport stores they operated for Starbucks as would be offered in a Starbucks-operated store.

Action Steps:

Use the October Nano Tool for Leaders (Going Global? Know Your Customers) to determine whether a global or local strategy makes the most sense for your customers. Then use one or more of the approaches below to leverage the best of Global and Local for your brand.

1. Identify “clusters of similarity” across your customer groups to drive down costs. By clustering your like-minded customers, you can remain sensitive to local markets while retaining the advantages of scaling. Suppliers and buyers can then direct the most effective mix of products or services to groups that share similar characteristics. The result is a lower investment of revenue and time, and customers who are more responsive to your product or service mix.
2. Leverage local insights on pricing, distribution, and non-product marketing decisions. Instead of dismissing local market insights in favor of central control, allow local managers to adapt some decisions in a controlled way. Local managers might adjust promotional activities within a set of guidelines set by the firm, giving you both consistency and productive adaptation.
3. Access global managers’ knowledge. Success comes when managers openly share best practices and insights throughout the entire company, so find ways to use or develop a knowledge management system to facilitate regular communication around the work. This shared knowledge will maximize the value of insights gained from local and corporate offices.
4. Adapt in the areas that are most important to local customers. You can retain a common brand and consistent positioning, and still allow local enterprises to make adaptations meet the needs of local consumers more effectively.
5. Balance market access with attention to ensuring quality and building trust. Look to independent sales forces, suppliers, manufacturers, and vendors to capitalize on existing relationships and provide the kinds of access your company cannot gain on its own. But control and regulate those partnerships so you can maintain consistency.

Share Your Best Practices:

Do you have a best practice for balancing global reach and local presence? If so, please share it on our blog at Wharton’s Center for Leadership and Change Management.

Additional Resources:

• The Global Brand: How to Create and Develop Lasting Brand Value in the World. Nigel Hollis (Macmillan, 2010). Offers a formula for determining brand strength based on familiarity) and marketing appeal to illustrate the market value and performance of brands. Analyzes five steps of customer commitment to a strong brand and the future of brand-building as a profitable investment.

• “In Search of Balance: Local Knowledge Within Global Organizations.” Somya Joshi, Michael Barrett, Geoff Walsham, and Sam Cappleman. Judge Business School. University of Cambridge Working Paper Series, Sept. 2006. Provides research-based insights into why global organizations are challenged by global-local tensions within their knowledge communities and suggests what may be done to overcome them.

• Strategy from the Outside In: Profiting from Customer Value. George Day and Christine Moorman (McGraw-Hill, 2010). Winner of the American Marketing Association Foundation’s Berry-AMA 2011 Book Prize for the best book in marketing, demonstrates that only those companies that operate with an outside-in view from the C-suite to the front lines can expect to maximize and profit from customer value. A discussion of leveraging brands in global markets is found in Chapter 11.
• George Day teaches marketing, organic growth strategies, strategic planning, organizational change, and competitive strategies in global markets in Wharton’s Growing the Top Line: Full Spectrum Innovation Strategies and Competitive Marketing Strategy

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: Adam Grant, PhD, management professor, The Wharton School, University of Pennsylvania

The Goal:

Capture powerful negotiation advantages by knowing whether to make the first offer.

Nano Tool:

Most people believe that you gain a strong advantage in negotiations by letting the other party put an offer on the table first. By waiting for an offer, you receive valuable information about the other side’s bargaining position. But the overwhelming evidence actually favors the opposite strategy: there is usually much more to gain by making the first move yourself.

Here are three reasons why. First, the initial offer is a better predictor of the final price than any other offer. It acts as an “anchor” that creates a strong pull throughout the negotiation, influencing your counterpart’s judgment even if he or she tries to discount it. Second, by making the first move you set the tone, establishing yourself as confident and well-prepared — giving you a strong bargaining position. And third, by making a first offer that’s favorable to you, you give yourself room for flexibility to make strategic concessions and still retain an advantage. Your counterpart is also likely to be more satisfied with the outcome because you’ve made concessions.

People who habitually wait to make the first offer miss out on these advantages. Of course, there are three circumstances in which it’s risky to make the first move: (1) if your counterpart is more knowledgeable about the issues being negotiated; (2) if you can’t estimate your counterpart’s alternatives or bottom line; or (3) if your long-term relationship with your counterpart is important. Still, research shows that on average, if you’re a seller, every $1.00 higher in the first offer translates to a final sales price that’s $0.50 higher. The same pattern holds true if you’re a buyer: every $1.00 lower in the first offer translates to a final purchase price that’s $0.50 lower.

How Companies Use It:

• Reality TV show Million Dollar Listing Los Angeles provides weekly examples of the power of the anchoring effect in real estate. When meeting with the seller, the real estate agent begins not by revealing the final negotiated price, but the first offer, which is always lower than what the seller finds acceptable. The price serves as an anchor when the final offer is disclosed, making that price — and the agent’s negotiating skills — far more appealing than they would be if revealed initially.
• IBM, a world leader in patent generation, maximizes the return on the investment required to generate that intellectual property through  licensing and other joint development activity. Although no two negotiations are the same, the licensing process starts with a thorough analysis of the value of the intellectual property to be licensed (IBM’s view of value). An opening offer is generated based on that analysis and presented to the potential licensee as a starting point for the negotiation.
• See the Additional  Resources links below for more examples and research findings.

Action Steps:

1. Prepare — Know your own bottom line, which sets the standard for what you will consider and what you will walk away from. Gather as much information as possible about your counterpart’s position and the value of the issues being negotiated. Set your target: what is your goal in an ideal, but still realistic, world?
2. Determine a first offer that’s close to your target, but still reasonable. Develop strong supporting arguments to justify the offer, and
   consider some concessions that, if made, keep the outcome well above your bottom line.The higher you can go while still offering sound reasoning, the better your final outcome is likely to be.
3. Don’t rush the first stage of negotiating, in which you exchange information. Ask questions that can help you add to the knowledge you gathered during your preparations. Explore shared interests, and evaluate the importance of an agreement to your counterpart.
4. Make your offer and explain why it’s reasonable. If it’s rejected, don’t make concessions immediately. By asking for clarification, you can continue the conversation while maintaining that your offer is justified and worthy of consideration. Try to determine which part(s) of the offer is unacceptable so, if and when appropriate, you can make an advantageous but targeted counteroffer. If your first offer is accepted, or the counteroffer is close to your target, research shows that your counterpart will be more satisfied with the final outcome if you ask for concessions. Their satisfaction is particularly relevant if your relationship, and not just the negotiation, is important.

Share Your Best Practices:

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

Additional Resources:

• “Should You Make the First Offer?” Adam D. Galinsky, Negotiation, July 2004: 3-5. Summarizes the evidence on the anchoring effect, and the advantages of making the first offer.
• Bargaining for Advantage: Negotiation Strategies for Reasonable People. G. Richard Shell (Penguin Books, 2006). Provides a systematic, research-based approach and includes a “Negotiation I.Q.” test that reveals unique strengths and weaknesses.
• “The Effective Negotiator — Part I: The Behaviour of Successful Negotiators,” Neil Rackham and John Carlisle, Journal of European Industrial Training, Vol. 2, No. 6, pp. 6–11. Also, “The Effective Negotiator — Part 2: Planning for Negotiations,” Vol. 2, No. 7, pp. 2–5. Reveals research findings regarding preparation and communication strategies of successful negotiators.
• Aspirations, Anchoring, and Negotiation Result,” Charles B. Craver, The Negotiator Magazine, October 2005. Argues for the establishment of high but rationally defensible goals and for capturing the advantages of anchoring.
• Adam Grant teaches in Wharton’s Executive Negotiation Workshop, Advanced Management Program, Executive Development Program, and Making Strategy Work: Leading Effective Execution. He also serves as faculty director of and teaches in Leading Organizational Change.

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: Marilee Adams, PhD; President and founder of the Inquiry Institute; Adjunct Professor at American University, School of Public Affairs, in the Key Executive Leadership Program; and author of Change Your Questions, Change Your Life: 10 Powerful Tools for Life and Work.

The Goal:

Quickly change the mindset of your team — or yourself — from being “stuck” to finding possibilities and solutions.

Nano Tool:

Our mindsets are determined by the questions we ask. Some questions have the potential to catalyze breakthroughs and inspire transformations. Others lead to stagnation and demoralization. The difference lies in whether you ask Learner Questions or Judger Questions.

“Learner Questions” are open-minded, curious, and creative. They promote progress and possibilities, and typically lead to discoveries, understanding, and solutions. By contrast, “Judger Questions” are more closed-minded, certain, and critical. They focus on problems rather than solutions and often lead to defensive reactions, negativity, and inertia. Learner Questions facilitate progress by expanding options; Judger Questions impede progress by limiting perspectives.

It’s natural for individuals and teams to ask both Learner and Judger Questions, but without Learner Questions, results suffer. Leaders who can effectively distinguish between the two, cultivating a Learner mindset, can improve the performance, productivity, and morale of their teams and their organizations — as well as heighten their own success as a leader. Studies by Peter Heslin, Gary Latham, and Don VandeWalle demonstrate that when managers shift to a learning mindset, they’re more likely to recognize changes in employee performance and spend greater time coaching, mentoring, and developing their employees.

Typical questions in the Learner and Judger mindsets often look like this:

Stanford professors Jeffrey Pfeffer and Robert Sutton argue that there’s often a gap between what we know and what we do in organizations, and this applies to mindsets. People intuitively recognize the value of a Learner mindset, but often find it difficult to enact.

However, research also shows that it’s worth the effort. Teams that operate with a Learner mindset are more productive, motivated, and engaged; and research by Stuart Bunderson and Kathleen Sutcliffe show that learning orientation can enable business units to achieve higher profitability.

How Companies Use It:

By changing the questions they ask, companies can shift mindsets and behavior to produce remarkably more positive results.

• Senior Director of Organizational Effectiveness at Flextronics, Carmella Granado, coached a poorly performing manufacturing/repair operations site in the principles of Learner/Judger. For two years the site’s Key Performance Indicators (including revenue, operating profit, value added margin, ROIC, inventory turns, quality, on-time delivery, customer satisfaction, etc.) were the lowest scores compared to 14 other sites in the division. Carmella began applying the Learner/Judger principles in March 2010, holding meetings with the team leaders to explain the concept, giving them reading assignments in Change Your Questions, Change Your Life, and providing weekly group coaching sessions that guided the leaders through the process of using Learner Questions to brainstorm solutions to current challenges. They no longer shot down new ideas based on old assumptions. Instead, they used Learner Questions (instead of Judger statements) to explore potential ways to increase revenue and margins. They asked their customers Learner Questions, and used the insights to create profitable updates to products and services. They asked line managers Learner Questions — and listened with less judgment — which led to the design and implementation of new business processes that improved quality and customer satisfaction. There was also a trickle-down effect as the leaders coached their direct reports in how to approach situations with a Learner mindset, creating a learning culture throughout the site. Within three months, the new approach had brought about a turnaround. The site moved to the #1 position in the division (based on the KPI’s) and it consistently remains in the top 3 sites out of 21 sites today.

• A senior executive at a major training and consulting firm faced the challenge of building the business unit executives into a cohesive decision-making team. The executives felt constrained and threatened by impending changes in the company, and most of their interactions were from a Judger mindset. The senior executive coached the team members one-on-one and in meetings, challenging them to ask more Learner Questions and to stop themselves whenever they fell back into making judgmental comments. Later, he commented, “The transformation of the group dynamics was so striking that others in the company, including the CEO, commented on the positive change. Meetings were more productive, the work environment was more collegial, and business results were improving. People saw real behavioral change at the leadership level.”

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

Action Steps:

1. Work on your own mindset first. Notice whether you are asking yourself Learner or Judger Questions, and the effect they have on your mood, engagement, and productivity. Then create Learner Questions that are focused on achieving your goals in specific areas. Is there an issue that you’ve been struggling with lately? Check to see if most of your focus has been on Judger Questions. If so, how can you switch to a Learner mindset? (See the Top 12 Questions for Success.
2. Elevate the quality of meetings. Before any meeting you lead or attend, write down possible questions you could ask with a Learner focus, such as: What will it take to move this forward? Who has a possible solution for this? What is the best way to allocate our resources? You’ll get the best solutions, and the fastest results, by asking the right questions.
3. Boost your team’s energy, engagement, and productivity. Notice the questions your team members typically ask, and the impact on morale, collaboration, problem solving, and results. Explain the Learner-Judger mindsets to your team, then encourage them to focus more on Learner questions. Be sure you consistently model the Learner behaviors yourself and acknowledge your team as they begin to make the shift. Then watch for ways that this increases their productivity, engagement, and results.

Share Your Best Practices:

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

Additional Resources:

• Change Your Questions, Change Your Life: 10 Powerful Tools for Life and Work. Marilee Adams (Berrett-Koehler Publishers, 2009; second edition). Includes a chapter on The Inquiring Leader and ten practical tools to help leaders choose and use the Inquiring Mindset.
• Mindset: The New Psychology of Success. Carol Dweck (Ballantine Books, 2007). Reviews evidence on how shifting to a learning mindset can increase performance.
• The Skilled Facilitator: A Comprehensive Resource for Consultants, Facilitators, Managers, Trainers, and Coaches. Roger Schwarz (Jossey-Bass, 2002). Examines best practices for enabling groups to develop a learning mindset and achieve greater effectiveness.
• “The Spirit and Discipline of Organizational Inquiry,” Marilee Goldberg Adams, The Manchester Review, Vol. 3, No. 3, 1998. Suggests a unifying concept focused on question-asking processes that can strengthen the power of organizational inquiry in creating competitive advantage.
• Leading with Questions: How Leaders Find the Right Solutions by Knowing What to Ask. Michael Marquardt (Jossey Bass, 2005). Shows how to ask questions that generate short-term results and long-term learning and success.
• The Fifth Discipline: The Art & Practice of The Learning Organization. Peter Senge (Crown Business; revised edition, 2006).
  Ground-breaking book originally published in 1990 documenting the importance of a learning mindset, showing that in the long run, a major source of sustainable competitive advantage is your organization’s ability to learn faster than the competition.
• www.InquiryInstitute.com. Offers many additional resources including articles, the Top 12 Questions for Success, and the Choice Map™ (download PDF) — an illustration of Learner and Judger Questions.

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

The Goal:

Build ongoing competitive advantage by knowing what your customers care about most.

Nano Tool:

An Attribute Map is a highly effective tool for assessing your customers’ real needs and desires. It simplifies the complexity of your customers’ reactions to your product or service and your position with respect to competitors. Attribute maps let you clearly see where additional resources could have the greatest impact and give you objective information about the likely consequences of a move.

Part 1 of this Nano Tool offered steps for creating an Attribute Map. Here, we explore three specific ways to mine your attribute map for a “marketbuster” — an exceptional opportunity for growth.

How Companies Use It:

The following examples illustrate how organizations, through careful analysis of a customer segment, added differentiators and empathy, and eliminated complexity, to better meet those customer’s needs and desires.

• Enterprise Rent-a-Car started as an executive leasing company, primarily targeting the B2B segment. In an industry dominated by the airport-based, short-term rental model, Enterprise identified an untapped market: “home city” rather than business or leisure rentals. In particular, it focused on insurance companies needing replacement cars for customers whose cars had been damaged or stolen. Although Hertz and National tried the “home city” model, neither found success with it. Enterprise is now the largest rental car company in the world, with revenues of over $14 billion.
• Trendy clothing company Hot Topic received persistent requests from its target segment for clothing in larger sizes. Overweight women, ages 15-29, felt ignored by existing providers and wanted to wear styles similar to their slimmer peers. Hot Topic responded by creating its Torrid line, offering apparel, shoes, and accessories for plus-sized women.
• Organizations from diverse industries have felt the pressure to simplify. The International Air Transport Association (IATA), an international trade body representing 240 airlines (84 percent of total air traffic), has launched a Simplifying the Business program to streamline service for customers and lower costs for the industry. UK insurance company Friends Life is developing a simple term insurance product to be sold directly, rather than through representatives.

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

Action Steps:

1. Dramatically improve positives. Adding powerful new differentiators or exciters — in other words, better serving, pleasing, and appealing to your customers — can create competitive advantages. Your competitors may be reluctant to follow or adopt them quickly as they may simply raise the cost of doing business. To improve positives, consider: why do customers in your targeted segment buy from you and not the competition? What do you offer that they not only like but are prepared to pay a premium for? What does your offering do better than anyone else’s? How close is the competition to matching you on these features? Are you progressively reducing the cost of providing these features?
2. Infuse the offering with empathy. Offerings that are kinder or more meaningful, while not costing less or performing better, often succeed to the surprise of data-reliant analysts. They gain popularity by enhancing the customer experience, either adding kinder attributes or removing attributes that are hostile and unfriendly. To add empathy, consider: Can you redesign the
   offering at any link to make the customer experience more enjoyable? Can you make the customer more satisfied, safer, more confident, less frustrated, more secure, or more amused? Are the attributes you offer a good fit for the target segment’s behavior? Have you taken these customers’ financial, social, and attitudinal perspectives into account when designing the offering?
3. Eliminate complexity. Continuing to add features, options, and functionality over time can cause customers to be less satisfied. Rediscover exactly what customers want and will pay for and then ruthlessly eliminate everything that doesn’t meet those two criteria. When the time is right for someone in your industry to do radical surgery of the offering, you act as the surgeon. To eliminate complexity, consider: Are there attributes you could eliminate, reducing your cost and potentially the price to the consumer? Are customers complaining about the complexity of your products or services? Can you readily identify features that many of your target segments don’t care about?

Share Your Best Practices:

Do you have a best practice for identifying ways in which you can maximize value as perceived by your customers? 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 marketbusters.

• “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.

• 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.

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

The Goal:

Build ongoing competitive advantage by knowing what your customers care about most.

Nano Tool:

Creating value for customers is dynamic: yesterday’s differentiators become tomorrow’s taken-for-granted norms. To stay competitive, you need a simple way to assess what matters most to each of your customer segments. Armed with this knowledge, you can optimize your innovation investments by focusing on the areas with the highest perceived value for your customers.

“Attribute Maps” are a highly effective tool for assessing your customers’ real needs and desires. They simplify the complexity of your customers’ reactions to your product or service and your position with respect to competitors. Attribute maps let  you clearly see where additional resources could have the greatest impact and give you objective information about the likely consequences of a move.

In this Nano Tool, Part 1, we’ll explore how to create an attribute map. Next month, in Part 2, we’ll show how to mine your attribute map for a “marketbuster”— an exceptional opportunity for growth.

How Companies Use It:

• Swedish-based food packaging and processing company Tetra Pac uses attribute mapping to identify product development needs and Unique Selling Points (USPs) of its Tetra Recart recyclable carton packaging. The USPs, including “easy to open” and “environmental image” are either differentiators or exciters, positive attributes that most clearly distinguish the product from that of its competitors. Once identified, the USPs are used in communications with customers and end users in order to convince them to purchase products in Tetra Pac containers.
• For Southwest Airlines, number ten on Forbes’  list of the world’s Most Admired Companies, an attribute map indicates that the company is best at what matters most to customers, and worst at what matters least — a winning combination. This means they can invest their resources where they have the greatest impact, creating what to some are differentiators and to others exciters: exceptional customer service and low prices. Acknowledging that customers are less interested in on-board amenities and ideally-located airports means those attributes can suffer without a negative impact to the business.
• See the Additional  Resources links below for more examples and research findings.

Action Steps:

1. Determine the specific customer segment(s) you want to target.
2. To create the map, make three rows that represent the reactions of your target customer segment to the features in your product or service. The top row shows those features and attributes that customers regard as Positive; they might prompt them to buy and stay loyal to your products or service. In the middle row are Negatives: things that customers dislike and would rather do without. In the third row are Neutral attributes that customers either don’t care about or don’t even know about.
3. To complete the Positive row, consider that Basic Features (the first column) are those that the targeted segment expects to receive. They’re non-negotiable. You must have this feature, but since the customer takes it for granted, it doesn’t make sense to spend most of your investment on it. Positive Discriminators, in the middle column, help you differentiate. They give you a favorable competitive position, and can form the basis for competitively differentiated pricing and positioning. In the Energizers column are the most positive attributes. They distinguish you from your competitors and give customers a highly motivating reason to buy and use your offering. Consider simple changes that add to the customers’ convenience or ease-of-use.
4. To complete the Negative row, recognize that Tolerables, in the first column, are expected by your customer and won’t affect whether they buy from you or a competitor. Note that if you or a competitor eliminates a tolerable, a significant competitive advantage could be created. Negative Energizers, in the third column, inspire a range of negative emotions. They emerge as a result of misjudgment, such as a launch of a product or service perceived as unacceptable (e.g., Monsanto’s launch of genetically modified agricultural products in Europe). It is critical to eliminate these quickly.
5. To complete the Neutral row, consider your customer segment carefully; what is neutral to some customers can be considered basic or differentiating to others. In general, neutrals add cost without enhancing value; eliminating them can drive down both cost and price.
6. Once your attribute map is complete, you can begin to think about changes you might make to your offerings for the targeted set of customers. Consider: how can we deliver positive attributes faster, better, cheaper, and more conveniently than we do now? How might we reduce or remove negative and neutral attributes? How can we meet new needs that customers may be developing? What might customers find attractive if we alone could give it to them?

Share Your Best Practices:

Do you have a best practice for identifying ways in which you can maximize value as perceived by your customers? 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 marketbusters.

• “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.

• 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.