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| Volume 7, Issue 2 |
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In This Issue:
Marketing vs. Selling - What’s the difference?
Guarantees deliver customers
How to use investment bankers
Global Warming: It just got hotter for U.S. companies
Made in China
Less Hulk, more Bruce Lee
How to deal with crises – and defend the brand
Gone Global
The benefits offered by Google may be grand, but they’re all business
Short circuited: Cutting jobs as a corporate strategy
Why you need a mentor
VCs aim to out-Angel the Angels
The richest zip codes – and how they got that way
Luxury: Life at the top
Greenspan talks, people pay
Improving quality of hire: A core competitive strategy
What makes employees loyal
Are you an A$&*@^?
How to hold a great meeting
Nine super-nutritious foods
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Marketing vs. Selling - What’s the difference?
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Creating anything new is exciting. The thought of what a new business might become is exhilarating. The pursuit of that dream is the passion that drives every entrepreneur.
However, this euphoria can quickly turn to chaos. Events can overwhelm the inexperienced start-up team. Many founders have watched as their great technology
slipped through their hands and was exploited by others who knew better how to manage, plan and execute a marketing strategy.The typical entrepreneur is the greatest salesman in the world. They are selling their solution. They are convinced
that there are an unlimited number of customers who need what they have created, and they are going to find them all and “sell” them on their solution. Steve Jobs
and his partner “Woz” were convinced thirty plus years ago that we all would need a personal computer. If you study Apple’s history you will see that their great idea
was duplicated and enhanced by others more adept at marketing, who at the time and during the growth phase of the PC into the laptop, usurped Apple’s initial
leadership position and even to this day dominate the market for PC’s and laptop’s.Steve has learned something about marketing over all these years as is
evidenced by the iPod, iPhone, iTunes and the sophisticated line of iMac lap tops...
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Guarantees Deliver Customers
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An “extraordinary guarantee”—a radical departure from a typical low-octane guarantee—has proven to be a powerful catalyst for galvanizing an organization to eliminate the causes of customer dissatisfaction in every part of its business.
Amazingly, every company that has successfully implemented an extraordinary guarantee has dominated its competitors and dramatically improved its financial
performance.Tom Jones, CEO of Epsilon, a database-marketing company since acquired by American Express, once wrote a check to a dissatisfied customer for $210,000—the
entire fee. How would you have felt? Upset? Sick to your stomach? Embarrassed? “Call me crazy,” said Jones, “but I was excited!” Why? Because the refund was the
first payout his company had made since implementing an extraordinary guarantee promising unconditional satisfaction—or a 100 percent refund. A marketing pitch was
the last thing Jones had in mind. “I wanted to ‘take away the safety nets,’” he said, referring to the idea Toyota made famous with Just-in-Time Inventory (JIT).
Epsilon’s extraordinary guarantee “turned up the pressure on the hose,” exposing leaks and galvanizing the organization to plug them. “There are few moments of
opportunity where a CEO can create major change through a single, symbolic act,” Jones stated emphatically. “This was one of them.” He arranged to personally
deliver the check to the customer’s president, who tried not to accept it, pointing out that Epsilon’s work wasn’t that bad. But Jones insisted. The story spread like
wildfire through Epsilon, creating urgency to find...
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How to Use Investment Bankers
Notwithstanding all talk about their gargantuan bonuses, investment bankers evince no chagrin about the fees they charge.
They unabashedly retort that they are paid only a small fraction of the value they add to transactions. It is this "value-added," they claim, that justifies their hefty emoluments, that when they raise billions of dollars in public offerings or
get a few dollars more per share in a corporate merger, shareholders reap enormous benefits. Investment bankers state that their fees are only a small fraction of
this incremental benefit.Does the economy need investment bankers? Do companies? Are financial intermediaries promoting their own profession over professional
service? What service can they provide, and how can senior executives use investment bankers to their firm's advantage? Though public policy debate will
continue, the task for CEOs and CFOs is to determine if, when and how to use their investment bankers. Investment bankers perform a real service for companies, but
knowing how to use these services will make the process more efficient in cost and more effective in results. I’ve been in this business for about thirty years, and
I’ve seen them all in action. Consider these tips for tangling with investment bankers....
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Global Warming: It Just Got Hotter for U.S. Companies
Global Greenspin How do we determine what to believe? Even if one accepts the consensus view on warming does it follow that the consensus solution is right?
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The Supreme Court today ruled that the Environmental Protection Agency needs to step up to regulate the carbon dioxide produced by automobiles.
This historic decision creates an immediate risk for public companies, and not just those based in Detroit. Add to this result some highly motivated and well-organized investors whose trillions of dollars in collective assets are being used to push
for better disclosure of corporate carbon footprints, and it’s clear that “climate-change risk” is about to be a featured player on many balance sheets. This
is all actually good news for companies that play it smart: As with most new challenges, climate change presents an opportunity for first-movers to execute
plans that distance them from the field. On the other hand, firms that play “wait-and-see” may see their reputations and stocks suffer. In Monday’s decision in
Commonwealth of Massachusetts vs. United States Environmental Protection Agency, the nation’s highest court dismissed the EPA’s position that Congress hadn’t meant
for the regulator to oversee carbon emissions from cars because lawmakers didn’t specifically cite such pollutants when they crafted the federal Clean Air Act.
(Disclosure: During my tenure as chief counsel for the EPA during the administration of President Clinton, I offered my opinion that in fact the
regulator did have authority to oversee auto emissions; that opinion was cited in yesterday’s ruling.) [The other factor pushing the greenhouse debate out of the
realm of the theoretical for companies is increased investor focus and sophistication around climate-risk issues. Climate concerns are no longer solely
the purview of a small group of “socially responsible” funds. The Carbon Disclosure Project, a coalition of institutional investors with $31 trillion under management,
has pushed hard for companies to...]
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Made in China
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Americans have become comfortable with the notion that our competitive advantage--innovative energy and smarts--can't be outsourced. But what if it isn't true?" |
General Motors' next LaCrosse sedan is being designed right now … in China. That says a lot about GM, a lot about China, and even more about the future of creativity.
Joe Qiu doesn't own a car. He doesn't even have a driver's license. His favorite vehicle, actually, is a go-kart with a top speed of 75 miles per hour. His distressed leather bomber jacket, which he rarely takes off, betrays his
fascination with airplanes and all things military. His jeans, the hems unfashionably turned up, and a brushlike crewcut are pure 21st-century China. His
TAG Heuer watch: a nod to the international uniform of designers. At 31, Qiu still lives with his parents. But he spends much of his time drinking in the vibes at the
expensive high-end clubs, over-the-top shopping malls, and elegant, luxurious hotels where Shanghai's burgeoning middle class gathers. "I'm just a piece of white
paper," he says, collecting insights into China's skyrocketing consumer culture. He has an uncanny knack for divining Chinese tastes and whims, what it is they'll
buy.Qiu is, in fact, a car designer. He works for the largest automaker in the world, General Motors (NYSE:GM), at its outpost in Shanghai's Pudong suburb. Two
years ago, he was part of a team that radically overhauled the Buick LaCrosse for the Chinese market. The original LaCrosse had a soft, rounded exterior and a
plain-vanilla interior, meant to appeal to the brand's aging U.S. consumers. But Qiu and his boss James Shyr, an intense, fast-talking Chinese-American who learned
his trade at Nissan (NASDAQ:NSANY) and Toyota (NYSE:TM), knew Chinese consumers would sneer at such frumpy wheels. "Our buyers are 36 and 37, half the age of
buyers in the U.S. and much more discerning," Shyr says.So Qiu and a team of Chinese designers rethought and reshaped every piece of sheet metal, turning the LaCrosse into a glamorous, elegant sedan that turns heads even in fashion-conscious
Shanghai. Their car features an oversized, chrome-laden front grill and large jewel-like, clear taillights to sate the bling-bling urges of China's
status-conscious young buyers. [The redesign was pitch perfect, so well targeted that the Chinese LaCrosse is on track to sell nearly 110,000 units in its second
year in production. (In the United States, the LaCrosse isn't expected to approach the 100,000-unit mark, ever.) Now, with that success still fresh, Qiu and the China
design team face a critical test. They will design the next Buick LaCrosse, due out at the end of the decade, for the entire world.]...
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Less Hulk, More Bruce Lee
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The JDK crew is a bizarro creative hit squad that helps clients zero in on their psychographic id. |
The striking power of Michael Jager.
It was David versus Goliath, with Attila the Hun thrown in to make it interesting. Microsoft had invited three brand designers to Redmond, Washington, in 2004 to present
a new identity for the upcoming Xbox 360. Landor, the incumbent, was an obvious choice as it had created the packaging for Windows and attained legendary marketing status
for transforming Federal Express into FedEx, including the slogan "The world on time" and the masterpiece logo. Turner Duckworth, out of London and San Francisco, authors
of the Amazon.com identity (with its "logo that smiles from A to Z") was also a contender. And then there was David: JDK Design. From … Vermont. Led by Xbox's global
brand director at the time, Don Hall, some 20 members of the gaming division gathered to hear the back-to-back-to-back presentations. First up was Michael Jager, JDK's
creative director. Standing before the tribunal, Jager (pronounced like the Rolling Stone) illustrated his vision through a combination of street theater, design
psychology, and cultural fluency. Comparing the original Xbox with the Incredible Hulk, Jager used a razor to slash an X in a sheet of paper and then thrust his head
through the hole. "X today is all AARGGHHH!" he bellowed. Pure aggressive power. He then withdrew his head, flipped the paper, and revealed how that X could become a
doorway, "an invitation to an experience." Jager acknowledged power as a critical component separating Xbox from its competitors but urged the company to see it--and
express it-- differently. "Our approach was to transition Xbox from this hulk of escaping power into this quiet power that is lurking, something still incredibly
dangerous but with more of an elegance and grace," he recalls. "The analogy we used was Bruce Lee." And thus were two firms felled by a single stone...
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How to Deal With Crisis—and Defend the Brand
How companies deal with negative experiences is just as important as creating positive experiences.
In light of the recent pet-food poisoning cases, several companies have taken the lead in reassuring pet owners that they are being proactive in responding to concerns. Brands like Eukanuba, Iams and retailers such as PETCO and PetSmart have
endeavored to be proactive in addressing the crisis by pulling product, providing notice information, and updating websites with information about the recall.
Reacting immediately and proactively is not an option: It's the right thing to do from both a humane perspective and from a brand-sustainability perspective. While
Canadian company Menu Foods may have the hardest time surviving the crisis, others may actually enhance customer loyalty based on how they reacted. By all reports,
national retailers immediately pulled any questionable Menu Foods products from their shelves and reported to the public that they had done so. P&G took out
full-page newspaper ads in 59 markets in order to bolster customers' confidence in its Iams and Eukanuba brands. With the advantage of a customer database, both
PetSmart and PETCO went one step further by sending out emails to all of their customers recapping the situation and reassuring customers. PETCO's email was
notable in that it wasn't simply a recap but also a personal and heartfelt letter from CEO Jim Myers, reassuring pet owners about pulling the products, contacting
anyone who may have purchased the products, and recommending safe products. Comparing the first few paragraphs in each of the retailers' emails (below)
provides tremendous insight into not only how each reacts in a crisis but also how they differentiate themselves as a brand...
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Gone Global
Why expanding overseas is your ticket to new markets, new ideas, and a world of adventure.
Foreign markets are like children's shoes: They offer plenty of room to grow. According to the Office of the United States Trade Representative, 95 percent of the world's consumers reside outside the United States. Some of those people have
holes in their lives the exact size and shape of your product. Entrepreneurs are getting the message. In a survey of 449 CEOs conducted by Inc. and Amar Bhidé, a
professor at Columbia University's Graduate School of Business, 58 percent of those doing business overseas reported that foreign demand for their product was growing.
Furthermore, just 12 percent of the stay-at-homes blamed their hesitation on a lack of demand. Anecdotally, a surprisingly large number of CEOs interviewed for this
package--selling everything from trash-compacting equipment to toothbrushes to public relations--have been making money overseas for a decade or more. Perhaps the
question facing businesses pondering globalization should not be "Why?" but rather "Why not?" Certainly our respondents offered plenty of reasonable why-nots:
language and cultural barriers, the complexity of running a global organization, difficulty finding the right partners, and--most commonly--an overfull plate at
home. But most of those are reasons why not now. By contrast, the reasons to at
least start sussing out a global strategy reflect long-term realities...
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Perk Place: The benefits offered by Google may be grand, but they’re all business
During a telephone interview, Gopi Kallayil, senior product marketing manager
for Google, lists which of the company's much-publicized employee benefits he takes advantage of.
"Let me pull this up because there are so many," he says. When his computer produces a list a moment later, Kallayil makes his way down the screen and
continues: "The free gourmet food, because that's a daily necessity. Breakfast, lunch and dinner I eat at Google. The next one is the fitness center, the 24-hour
gym with weights. And there are yoga classes." There is a pause before he adds that he also enjoys the speaker series, the in-house doctor, the nutritionist, the dry
cleaners and the massage service. He has not used the personal trainer, the swimming pool and the spa -- at least not yet, anyway. Nor has he commuted to and
from the office on the high-tech, wi-fi equipped, bio-diesel shuttle bus that Google provides for employees, but that is only because he lives nearby and can
drive without worrying about a long commute. Is Google's generosity purely altruistic? Of course not...
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Short-Circuited: Cutting Jobs as Corporate Strategy
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Whatever the term, getting rid of employees can be a necessary and beneficial strategic move for companies to make.
Layoffs can signal that a company is reorganizing and moving in a more profitable direction and, as a result, give Wall Street a reason to cheer and improve the morale of remaining employees. But unless job cuts are handled and explained
properly -- and are indeed necessary to achieve a thoughtful, overarching purpose -- the solution may cause as many headaches as the ailment it was meant to cure,
according to Wharton faculty members and an outplacement expert.Consider a recent move by Circuit City Stores, a big electronics retailer based in Richmond, Va. The
company announced on March 28 that it cut 3,400 jobs, or 7% of its workforce, effective that day, because the salespeople were paid "well above the market-based
salary range for their role." The company did not disclose specifics, but The Baltimore Sun reported that the laid-off workers, known as "associates," made 51
cents more per hour above what the company had set as market wages. Circuit City also announced that it had entered into an agreement with IBM to outsource its
technology infrastructure operations, which would eliminate the jobs of 130 employees. Fifty of these workers, however, were to be hired by IBM and remain
on-site to serve the Circuit City contract. These various moves, Circuit City said in a news release, were part of a "series of changes to improve financial
performance largely by realigning [the company's] cost and expense structure." The decision to terminate the 3,400 employees was disclosed in the fourth paragraph of
the release and described as a "wage management initiative" that led to the "separation" of the workers. The job cuts "focused on associates who were paid
well above the market-based salary range for their role," the news release added. "New associates will be hired for these positions and compensated at the current
market range for the job." The company said, however, that the people who lost their jobs received severance packages and could reapply for their old jobs, at
lower pay, but had to wait 10 weeks to do so. The March 28 move, coupled with a decision made in February to realign Circuit City's retail structure by reducing the number of operating regions from 10 to eight, would save $250 million over the
next two years, the company noted. Peter Cappelli, management professor and director of the Center for Human Resources at Wharton, says Circuit City may have
valid reasons for having to reduce costs, but the way it treated the 3,400 workers was highly unusual...
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Why You Need A Mentor
Plato had Socrates. Tom Peters had Peter Drucker. Luke Skywalker had Obi-Wan. Here's how to find yours.
Gary G. Hegna, CEO of AirWave Wireless in San Mateo, Calif., has told Tim Kruse that he needs to change his unrealistic revenue projections, rethink how he will bring his product to market, and adjust the timing of its launch. Kruse takes it all in stride. In fact, the 33-year-old keeps coming back for more. Although it's not always easy on his ego, Kruse, co-founder of Incendonet, an Encinitas (Calif.) developer of voice recognition hardware and software, knows he's lucky to have Hegna as his mentor. As Kruse says: "Don't just tell me I'm great. I can call my mom if I want that." Mentors aren't your parents, friends, or even your more generous investors. They are business veterans whose only role is to tell you what you really need to hear about your company. Mentors do plenty of cheerleading, of course, but their real value is in the objective, unvarnished advice they can provide. Having been there and done that, mentors can save you from falling into common traps and point out things you may be too busy to notice. [But while just about everyone can benefit from a mentor, at least theoretically, not everyone is ready to have the relationship.]...
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VCs Aim to Out-Angel the Angels
Responding to the emergence of a new breed of wealthy investor, venture capitalists are boosting their early-stage investments in startups.
In October, as startup Jaxtr hit up venture capital firms for its first round of funding, it landed an unusual arrangement. Instead of taking a few million in cash
from a firm that would hope to one day book a fat return, Jaxtr took a loan—just $1.5 million, from no less than four VC firms and three angel investors. None got
the usual perk of a seat on Jaxtr's board. The result is plenty of independence for Jaxtr, a maker of software that routes calls from blogs and MySpace profiles to
cell phones. "You're still basically on your own," says Jaxtr Chief Executive Konstantin Guericke, one of the co-founders of networking site LinkedIn. Jaxtr's
tale illustrates the new calculus governing high-tech venture capital...
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The Richest Zip Codes—and How They Got That Way
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As the ranks of the super-rich grow, they are increasingly grouping in tighter—and wealthier—communities. Find out where.
Search the Internet for luxury real estate across the U.S. and you might be surprised by the results. Just because a neighborhood has a rarefied Zip code, it's no guarantee that all the houses listed within it will be equally opulent. Some may
even be downright modest. Take, for example, Greenwich, Conn. There in 06831 is a house selling for just $575,000. For the Wall Street and hedge-fund crowd who have
flooded into town in recent years, a price that low is a rounding error. Far from a palace, it's a 672-square-foot cottage with two bedrooms and one bath, and it sits
on just a tenth of an acre. Why would anyone build such a dinky house in a place like Greenwich? Today, of course, no one would. The explanation is that the house was built way back in 1926, when Greenwich was a more or less normal country town
with a handful of large estates. And therein hangs a tale about the transformative power of money...
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Luxury: Life at the Top
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Aston Martin mints a new roadster V8 Vantage convertible can mix it up with the best of the competition, yet it stands apart as an authentic and bewitching sports car in a (high) class of its own. (more)
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Pimp my Jet: A mansion with wings Take one Middle Eastern dignitary - add an Airbus A380 and a $150 million interior design budget - and you get a magic carpet ride. Designer Edese Doret is charged with customizing the jet's 6,640 square-foot cabin, and gave us a glimpse inside his sketchbook. (more)
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Cartier CEO's style secrets Frederic de Narp is overseeing the renovation of Cartier's boutiques for a brighter, sleeker look. We persuaded the dashing exec to share his biggest style influences. (more)
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6 chic carry-ons As the weather heats up, so does the urge to slip out of the office early. Here are the bags that will start your weekend in style. (more)
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Greenspan talks, people pay
At $100,000 per, former Fed chairman reported getting more from two speeches than his 2005 salary at central bank.
Alan Greenspan is still commanding attention - and $100,000 per speech - a year after leaving his position as chairman of the Federal Reserve, according to a published report. Greenspan is commanding $100,000 for an hour-long speech, USA
Today reported, citing three unidentified people whose groups have hired the former Fed chairman. The paper said that he's averaging about one speech a week, meaning
that he likely earned more than $4 million in speaking fees last year after leaving office. In the past week Bernanke and Greenspan expressed differing opinions on the
outlook of the economy. Ali Velshi reports. Greenspan earned only $180,100 as Fed chairman in 2005, his last year in office. But he was hardly pressed for cash when
he left the job in January 2006. His 2005 disclosure filing showed him with assets of at least $4.2 million. And on
Sept. 17 he will have his memoir The Age of Turbulence: Adventures in a New World published by Penguin Press...
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Improving Quality of Hire: A Core Competitive Strategy
With markets growing more global every day and competition growing more intense, competing for top talent can be challenging. And it is about to get tougher.
Organizations everywhere face a looming scarcity of high-caliber talent as changes in demographic trends, lifestyles, skill shortages and other forces begin to shrink
workforce talent pools and, ultimately, affect corporate performance.
Remarkably, the Society for Human Resource Management's (SHRM) June 2006 "Workplace Forecast" finds 51 percent of midsize employers and 23 percent of large employers are just becoming aware of this critical issue. All, however, will need to compete more aggressively, not just in the products and services markets but in those for talent, as well. Designing and implementing competitive strategy is central to business leadership. Companies invest significant amounts of management time in crafting product, service, and growth strategies to help them succeed in the marketplace and reward shareholders. One of the most effective growth strategies practiced by the world's leading organizations is not simply their product or distribution strategy but their people strategy. Gartner calls this whole area "talent management," and it represents one of the areas of greatest return on time invested in all of business.The major differentiator of high-flying organizations from also-rans is the quality of the talent they bring into their organization. I recall in great detail a 3 3.5-hour job interview I experienced 20 years ago with Microsoft's Steve Ballmer (now CEO). I was a soon-to-be college graduate. He was working with his ex-college roommate Bill Gates to grow talent at his 200-person Bellevue, Wash.-based software company. The entire interview consisted of...
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What Makes Employees Loyal
There are lots of reasons why people end up quitting their jobs.
For some, the decision is the result of a bitter fight with a boss. Others win the lottery, get a better job offer or leave because a spouse is transferred to another city. But a recent review of 15 years of research on employee job satisfaction and voluntary job turnover shows that employers might be better at retaining workers if they focus less on what makes people quit and more on what makes them want to stay. Thomas Lee, professor of management at the University of Washington and president-elect of the Academy of Management at Pace University in New York, says leaders should realize people may be leaving their positions for reasons that have nothing to do with being unhappy. But focusing on building a social network that makes people feel like they fit in can prevent them from quitting and potentially save the company the expensive loss of institutional knowledge. "Most companies should very seriously think about the value of creating a community," says Lee, who, with UW professor Terrence Mitchell, conducted the review, the results of which appeared in the February issue of Current Directions in Psychological Science...
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Are You An A$&*@^?
There's usually one or two in every office. And the word "jerk" or "idiot" doesn't suffice. No, this type of person has a very specific attitude that evokes such dislike,
disdain and meanness that he or she brings the place down. This person is nasty and cruel in a way that jerk doesn't connote.
No, the word for them starts with an "a" and ends with, well, you know, and now someone with a Ph.D. has actually studied these folks in the workplace. Robert Sutton, a
professor at Stanford University and co-director of the Center for Work, Technology, and Organization there, looks at how to identify and cope with them in his new book The
No A------- Rule: Building a Civilized Workplace and Surviving One That Isn't.Sutton didn't intend to write the book. In fact, it was born from a wacky pitch to the Harvard
Business Review that he didn't think would get accepted. Not only was it accepted and published in 2003, Sutton received loads of e-mails from readers who agreed that
workplaces are crawling with a-------. He realized there was much more research to be done. He recently spoke with Forbes.com about how to identify them, deal with them and
perhaps even rid your office of them...
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How To Hold A Great Meeting
Ask most people to describe meetings at work, and the adjectives they might use include "boring," "long" and "worthless."
"Hardly anyone does them well, and nobody thinks about how to improve them," says Jennifer Goodrich, president of Benchmark Leadership Training, a management training
firm just outside of Chattanooga, Tenn. But becoming a meeting master isn't the equivalent of searching for the fountain of youth. Just remember a few guidelines...
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Nine Super-Nutritious Foods
You're in the grocery store shopping for a carton of orange juice for tomorrow's breakfast and you're faced with a decision--plain old juice or, for no extra cost, one fortified with bone-building calcium.
You're not alone. Promising better bang for the buck, products like these, called functional foods, are increasingly filling grocery store aisles--and our fridges. But
do we really need them? "There's a finite volume in the stomach and everybody is vying for that volume," says Fergus Clydesdale, distinguished professor and department head
at the University of Massachusetts, Amherst. "One way to try to get a part of the share of that volume is to offer something that has some health benefit."...
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