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HBR .ORG
JUNE 2010
~ 40 The Big Idea Start an Entrepreneurial Revolut ion
•
Daniel J . Isenberg 94 Sust ainability
Strategies for Gree n Product Development Gregory Unruh a nd Richard Etten son
•
114 Managing Yourself
Turn the Job You Have Into t he Job You Want Amy Wrzesniewski, Ju stin M. Berg, a nd Jane E. Dutton
, I
il l
ANAGING CHANGE HOW TO DO IT WHEN TO DO IT PAGE 53
Smarter business for a Smarter Planet:
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www.WorldMags.net & www.Journal-Plaza.net
(1M, the (1M ~, tJ'no:rn. ~ FInl iI'Il the pInllX1+EN TO 00 IT
•
Aboutthe spotl1lht Artkt Over the past 25years. Antony Gormley has revitalized the human image in sculptu re through a radical investigation of the body asa place of memory and transformation, using his OWll body as subject.
tool. and material. Since 1990 he has expan ded his concern with the human condition to explore the collective body a nd t he relationship between self
and other in large-scale installations. His work has been exh ibited throughout the UKand internationally. Gormley was awarded t he Turner Prize in 1994 and the South Bank Prize for Visual Art in 1999. .~~
Antony Gormle y.
Doma in 'I~l d, 4.76 mm square st ainlO'SS steel bars
I
Varioos siles' 287 eleme nts, derived from molds of loca l inhabitants of Newcas tle · Gatl/'Sr>ead. ux. aged 2.5-84 years Installation vjew-. BALTIC centre for Contemporary Art, Gateshead Commio;sion for BALTIC centre for Contemporary An, Gateshead
54 The Decision-Driven Organization Most CEOs t hink fi nancial performance is tied to company structure, so ifyou want to increase value, you have to reorganize, But in t rut h, most reorgs fall flat , The ones that work best a re built around decisions: Firms that make them faster and better than riva ls get ahead. Marcia W. Blenko, Michael C. Mankins, and Paul Rogers
64 The productivity Paradox: How sony pictures Gets More Out of people by Demanding Less Companies often burn employees out by expect ing them to run like machines- always on and at full t hrottle. Sony Pictures , however, has found that allowing staffers to take t ime out to renew th eir energy boosts t heir perfor mance-and generates impressive fi nancial resu lts. Tony Schwartz 70 Change for Change's Sake Just as seemingly fit people can have high choleste rol, well-pe rforming companies can suffer from a buildup of inflexible networks, unquestioned routines, and overly powe rful units. A corporate "cholesterol test " can reveal how much and what kind of cha nge to consider. Freek Vermeulen, Phanish Puranam, and Ranjay Gulati
HBR.ORG Ma RE aN STRATEGIES FOR A CHANGI NG WORLO
Practical advice to hel p you energize your company, your team. and yourself. hbr.
org/strategies· cha nging·world
June 2010 Harvard Business Review 7 www.WorldMags.net & www.Journal-Plaza.net
HBR.ORG
Feat ures June 2010 THE BIG IDEA
How to Start an Entrepreneurial Revolution As the leaders of Rwanda, Israel, and Chile have seen, entrepreneurship can transform an economy. But creating a breeding -. ground for new ventures isn't simple; you need to get many elements right. Here's what we know works. Daniel J. Isenberg
.
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Are You a High Potential?
78
High-pot ent ia l managers have distinguishing characteristics and behaviors that companies rout ine ly recognize. l earn what those qualities are- and what you can do to exhibit them-so that you make the list. Douglas A. Ready, Jay A. Conger, and
•
Linda A. Hill
86
The Coherence Premium Rarely is a com pany disci plined enough to focus on "what we do better t han anyone" in making every decision across all its businesses. Rarer still is the company that has aligned its different iating inte rnal capabilities with the right external market posit ion . The firms that do are "coherent," and they reap a reward . Paul Leinwand and Cesare Mainardi
'-..//4
ey respondents top teams ss than 10% of me developing -potent ial leaders.
Growing Green: Three
Smart Paths to Developing Sustainable Products Most executives believe that sustainability is a revenue driver, but t hey're not sure how to make it work for the m. Here are three broad strategies for aligning companies' gree n prod uct goals with thei r capabilities. Gregol}' Unruh and Richard Ettenson
VINEET NAYAR
On inverting the leadership pyramid blogs. hbr.org/nayar
103 THE GLOBE
94
The China Rules A practical guide t o leadi ng a company in the world's t hird-largest economy. Lynn S. Paine 110 HOW I DID IT
A Maverick CED Explains How He Persuaded His Team
to Leap into the Future The CEO of HCl recnnctcgree wanted to tu rn the organizat ion ups ide down -so he put his employees before his customers. Vineet Nay ar
June 2010 www.WorldMags.net & www.Journal-Plaza.net
Most of what expat CEDs learn inChina hasn't made its way into management books or classrooms.
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Reacting to the stock market is just investing. Taking stock in the long term is Vanquardinq.
••
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Vanguard provides services to the Vanguard funds at-cost. For more information about Vanguard funds, including at-cost services, visit www.vanguard.com/different. or call BOO-505-7182, to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. All investments are subject to risk. 2010 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, DIstributor. www.WorldMags.net & www.Journal-Plaza.net
Why try to predict the market when it can't be predicted? Why pay low-cost when you can pay at-cost? Why let profits go to outside interests when they can go back into your funds? At Vanguard we've asked these questions for decades. We realized that buying the market. paying only what it costs us to run the funds. and sticking to a long term plan can be a strategy for success. Vanguard is not different to be different. It's different to be better.
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HB R.ORG
Departments June 2010 IMAGINING THI FUTURI OF LIADIRSHIP
14 18
From the Ed it or Int eracti on
People may want you, but that doesn't mean they like you.
Idea Watch
page 32
FUIANCEI THI WAY FORWARD
23 FIRST
34 VISION STATEMENT
Why Dinosaurs Will Keep Ruling the Auto Industry
Six Ways to Find Value in Twitter's Noise
Incumbents are best equipped to handle cars' design complexity. PLUS piggybacked IT service, silent employees, social investors, off-ramping women, and more
Ma rket ers, take note. COLUMNS 36 C.K. PRAHALAD
When success factors t urn into orthodoxies 32 DEFEND YOUR RESEARCH
The More People Want Something. the Less They'll Like It Why marketing strategies based on product scarcity often backfire
Craft your job to s uit you page "4
38 DAN ARIELY
The unint ended consequences of measuring performance
Tackling the obvious page]6
Mi ne a stream of co nsum er data in nea r-real ti me page 34
ll4 ~:E.~Y:'~~Fnce Turn the Job You Have into the Job You Want
Feeling stuck in your job? 'Job crafting" can help you redefine and reenergize your work life by organizing tas ks in ways tha t play to your passions and strengt hs. Amy Wrz esniewski, J ustin M. Berg, and Jane E. Dutton
leadership as we know it is over. So. what's next? blogs.hbr. org/ imaginingt he-fut ure-ofleadership
118 CASE STUDY
When the CEO's Personal Crusa de Drives Decisions Should th e HR director step in? Randle D. Raggio 126 RECOMMENDED Review s 128 LIFE'S WORK
Joe Girardi The manager of the New York Yankees on using information to im prove instincts
12 Harllard Business Review June 2010 www.WorldMags.net & www.Journal-Plaza.net
Can we reinvt! nt the financial system? Should we? Join the debate. blogs. hbr.org/ fmancet he-wa.y-forward BEST PRACTICES
HOW to have a disagreement with a coworker blogs.hbr.org/ best-practices .IDI GIRARDI
An extended interlliew with the Yankees' manager on mentoring his successor, confronting his boss. and never missing date night hbr.org/ girardi
L
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HBR.ORG
From the Editor "Modesty, Humility, and Humanity" he world ofstrategy t hinking has lost a giant. On April 16, C.K. Prahalad died in San Diego after a sho rt illness, He had just turned in his column for this issue, proud that he was apparently the fi rst aut hor in our history to write a piece from t he lCU. We fully expected him to recover and were shoc ked-as were his ma ny friends and admirers- that he passed away at age 68, still in his prime and full of plans for big new projects, I first met C.K. in July 2008 in New York, where, as the deputy man aging editor of Time, I had organized a debate on "creative capitalism"- BillGates's idea for sp reading the benefits ofcapitalism to the billions who have been left out. It's litt le wonder that C.K. was
T C.K. Prah alad 1941-2010
Illustrating this mon th's Spotlight package is Antony Gormley, the British artist whose powerful installations and rooftop sculptures have been t he talk of Manhat tan this spring.
the fi rst person Gates named when I asked him who should be on the panel. C.K. had created a remarkable body of work that included his celeb rated 1990 HBRarticle (with Gary Hamel), which coined the term "core competence;' and his groundbreaking 2004 boo k,
ABOVE Event Horizon, 20 07 27 fiberglass and 4 cast-iron figures 1S9 x53 x 29cm A Hayward Gallery commission, presented by Mad ison Square Park COnservancy, New vcrk, 2010
The Fortune at the Bottom of the Pyramid, which explained how the world's poor could be a valuable market, He could be counted on in any discussion to provide wise, assured, and often blunt insight. During the creative capitalism debate he said, "This movement will not go forward if the media...does not play its part.... The stories from the poor countries need not be only stories ofpoverty and corruption:' We took this as a worthy challenge,
14 Harvard Business Review June 2010 www.WorldMags.net & www.Journal-Plaza.net
Several months later, when I was interviewing for t he posit ion ofHBR editor in chief, C.K. was one of the fi rst people I called . He was generous wit h his time and straigh tfo rward with his views, praising t he magazine where praise was due and pointing out what he saw as its shortcomings, He urged me to compete for the job, adding that he would be a willing sounding board if I landed it. I'm sorry that l-- Hke so many others- have lost the benefit of his wisdom. We chose C,K, as our inaugu ral columnist for the relaunched HBR this past January. No one, we thought, better combined gravi tas with a willingness to pursu e new ideas. His debut column, outlining the duties ofthe "responsible manager," was drawn from a lect ure he first delivered to his students in 1977, It becam e his concluding lecture in every academic year since. "Leadership," he wrote, "is about sel f- awareness, recognizing your failings, and developing modesty, humility, and humanity." These were t he values th at C.K, Prahalad lived by. We at HBR feel very lucky t hat we crossed paths with him so many times during his ext raordi nary journey.
Adi Ignatius, Editor in Chief
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d_S\
experience the stock-out. Oddly,when we aske d the people who'd been denied the glasses which watch they'd like to rece ive, they chose the Guess watches more often than the Calvin Klei n ones. HBR: They bad -mouthed a product because it was th e same brand as t he glasses th ey didn't get , but th en they wanted it more? That does n't make se nse. It doesn't ma ke sense if you assume that people want and like the same things. That's why we did the study-to challenge this deep-seate d assumption that these two emotions are inextricably linked. They're not. Desire and liking are independent from each other and also inte ract in strange ways . The more we want
32 Harvard Business Review June 2010 www.WorldMags.net & www.Journal-Plaza.net
something, the less we'll actually like it. It's a lusting/loathing thing. Like when a big sports event turns out to be just anot her ga me an d leaves you feeling unsatisfied? Abig sports event is about hype. In our case the desire is increased not through hype but through being denied access. It's more like not getting into an exclusive nightclub . Whe n people can't get access, it becomes especially attractive. They'll work hard to get past the velvet rope. But once they're in, they often say, "This is it?" Maybe t hese effects are short-lived, a nd if I have to wait a few months for a hot video ga me, well, Iget over it after a day? I think it's the op posite. Weactually found it hard to create strong desire in a short experiment. I'd suspect that the longer you desire something and are denied it, the stronger the effect will be. Think about products like the iPad, which you may wait months for and then still face an empty shelfin the store. But the longerterm effect needs to be studied. Whe n the iPad Launched, it wasn't painLess to get your hands on one yet I don't see people revolting against AppLe. But who have we heard from? Reviews are often from people who have n't been jilted. If anything, they make the jilting worse, with the reviewer telling those
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HBR .ORG
HARVARD BUS I N E S S SCHOOL EXE C UT I VE E D U C AT I O N
who can't ge t the product, "I have it a nd
you don't and it's great."On the other hand, App le may be an outl ier. The effect m ay not be as bad with products that are exceptionally good or hard to replace.Sunglasses a nd video games can be replaced with
other brands that perform about the same. With iPads, substitu tion may not be as easy. Marketers use scarcity as a way t o create b uzz a nd d emand. Is t hat a bad idea? Our results make it clear that marketers
should be cautious about using a strategicshortage to generate demand. It will increase demand right now but can have other costs. It will have implications for other products in your brand, repeat purchases, and loyalty. It comes down to what the goal ofthe company is. Ifit's to make quarterly numbers, denyingaccess may be a useful tool. It could be that marketers know what they're doing and want those short-term gains. But most companies, I think, would rather have a healthy longterm strategy. But what if a compa ny has a real s hortage? What can it do to mitigate the fallout?
Itprobably should focus a little more on customer satisfaction. Itshould increase customer serviceand make public announcements about the situation. This isn't as simple as it sounds. It's easy to get carried awaywhen your product's in high
demand. You feel pretty good and stop worryingabout satisfaction. You assume demand means people must really like you. In fact. they may want you. but that doesn't mean they like you. Where, in a physiological se nse , does t his lust/ loat hing thi ng come fro m?
We've started to look at that. Ab Litt, my research partner, is examining the neurological aspects. Are desire and satisfaction governed differently in the brain? We found, for example. an odd correlation:The lusting/loathing effects were more intense with people who were less emotional, as measured on standard scales. "Emotional" people did not show the effect as strongly. Where eLse are you t a king the researc h?
We're looking at what happens with substitute purchases after stock-cuts. For example. when people can't get the model of camera they want, are they more likely to trade up and buy a camera from the same brand, or to go for an equal-value substitute? It's early, but so fa r we see similar perverse effects . The people who trade up are least satisfied. Maybe this effect explains the co mplexit ies of dat ing, too?
Yes! Your friends always want to go back to the wrong person, the one who dumped them. And how often does that HBR Rep rint Fl 006E work out? I::'
,
People will work hard to get past a nightclub's velvet rope. But once they're in, they often say, "This is it?" www.WorldMags.net & www.Journal-Plaza.net
Learn more at
www.exed.hbs.edu /pgm/hbr/
IDEA WATCH
Vision Statement Six Ways to Find Value in Twitter's Noise Text by Scott Berinato; data and visualization by Jeff Clark
I
learn about the competitive landscape. Tweets about your product th at include the names of rival brands can reveal a lot about market positioning. Most of the KINDLE tweets didn't focus on t he iPad's bei ng a Kindle killer (or, for that matter, a laptop killer). Instead , they hailed the a rrival ofthe Kindle a pp for t he iPad -alerting Apple that its own book s app will fa ce se rious com petition.
It's easy to dismiss Twitter as jabber, but smart marketers will recognize it as a stream of free consumer data to be mined in near-real time. Online visualizat ion tools can help pinpoint what consumers are reading and sharing, elucidate memes in the chatter. and unearth trends, To show marketers how they can gain insight from Twitter, we captured more than a half million tweets containing the word "iPad" that were broadcast during th e product's launch weekend in April. We then mapped key word s that appeared in th ose tweets on the gra ph below, HBR Reprint f1006Z
The iPad Launch by the Numbers
4 TOTAL TWEETS USING
I:l'!{' TWEETS FLAGG ED AS SPAM (CONTAINING "WI N" OR " FREE;
"I PAD"~I NG
PRODUCT'S LAUNCH WEEKEND
18%
8%
PREDO MINANTLY POSITIVE TWEETS
PR EDOMINANTLY NEGATIVE TWEETS
SATURDAY 12 A.M. PROOUClLAUNCH
34 Harvard Business Review June 2.010 www.WorldMags.net & www.Journal-Plaza.net
@j" sfo nl in: 11IeKlndle app makesthe .iPad a lot mo re Interesting to me. @Tom]i,hman: RT @'
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