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| Volume 8, Issue 7 |
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In This Issue:
 The customer is the company
 Why does talent walk?
 The best managers are the best listeners
 The world's most reputable companies
[CEOs] 'get time to bounce Back'
How CEOs stay on top of their [travel] game
 CEO of the year: The X[erox] factor
Service as competitive differentiator
Acing the wine list
 Spending on happiness
 [20,000]Wealthy Americans under scrutiny in UBS case
 Motivation mockery and the power business ballads
 Six free BlackBerry downloads you don't want to miss
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The customer is the company
Top of the Class
Jake Nickell (left) and Jeffrey Kalmikoff, both college dropouts, are now in demand at the nation's top business schools.
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Jake Nickell stepped to the front of a small classroom on the MIT campus in Cambridge, Massachusetts, and looked around.
It was an autumn morning in 2005, and before him sat a dozen executives from some of the country's largest companies -- General Mills, Pitney Bowes, Clorox, and Google (NASDAQ:GOOG) -- and a contingent of innovation researchers from MIT's Sloan School of
Management and other business schools. The meeting had been organized by Eric von Hippel, an MIT bigwig and the foremost authority on something called user innovation. Von Hippel had heard about Nickell from a graduate student and had invited him to
Cambridge to share his story with the group. Nickell was somewhat befuddled by all the attention. He was not familiar with the term user innovation -- or, for that matter, the term Eric von Hippel. Business at Nickell's company, Threadless, had been growing
quickly -- annual sales were on track to hit $5 million, and he had lately started getting curious calls from venture capitalists and large retailers. But Threadless didn't quite seem like MIT material. At 25, Nickell hadn't even graduated from
college. Von Hippel, a Harvard graduate, entrepreneur, and former McKinsey consultant who was 40 years Nickell's senior, called the room to attention and began lavishing praise on Threadless; he called the company a "perfect example" of a new way of
thinking about innovation. Von Hippel's theory, which he had introduced in the late 1970s, was that most product innovations do not come out of corporate research and development labs but from the people who use the products. Nickell shot a confused
glance at Jeffrey Kalmikoff, Threadless's chief creative officer, and Jacob DeHart, his chief technology officer. The meeting had barely begun, and they had already learned something. Nickell started talking about his company. Threadless, he
explained, ran design competitions on an online social network. Members of the network submitted their ideas for T-shirts -- hundreds each week -- and then voted on which ones they liked best. Hundreds of thousands of people were using the site as a kind of
community center, where they blogged, chatted about designs, socialized with their fellow enthusiasts -- and bought a ton of shirts at $15 each. Revenue was growing 500 percent a year, despite the fact that the company had never advertised, employed no
professional designers, used no modeling agency or fashion photographers, had no sales force, and enjoyed no retail distribution. As result, costs were low, margins were above 30 percent, and -- because community members told them precisely which shirts to
make -- every product eventually sold out. Nickell's company had never produced a flop. The audience members listened, rapt. For years they had suspected that this kind of business model was possible -- even inevitable. They had seen the beginnings of it
in the open-source-software movement, and they had been trying to make it happen in small ways within their own companies. But somehow, this T-shirt guy had gone whole
hog. He had built an entire business around the idea that an online community could drive innovation. "We were blown away," says von Hippel...
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Why does talent walk?
Myra White teaches managing workplace performance and organizational behavior at Harvard University and is a clinical instructor at Harvard Medical School. She is the author of "Follow the Yellow Brick Road: A Harvard Psychologist's
Guide to Becoming a Superstar", a book based on her research into how over 60 well-known people became superstars.
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Retaining talent is a serious concern for organizations. Each time a talented knowledge worker walks out the door, they take valuable expertise and organizational knowledge with them.
In the past this wasn't a concern. People were considered replaceable. Organizational assets consisted of tangible things like the property and equipment that an organization owned. Not any more. Now people, particularly talented ones, are often an
organization's most valuable present and future assets. So why are organizations having so much trouble hanging onto talent? Why do talent become so disillusioned and leave? At the core of the problem is the fact that...
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The best managers are the best listeners
5 bad habits to guard against
To be an effective listener, you must pay keen attention to the speaker. Seems like common sense but, too often, we don’t walk the talk. As managers, it’s important to model this behavior for employees
and teach by example. To check your own effectiveness, take the following listening quiz to make sure you’re not guilty of these bad habits...
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Managers spend a good part of their workday listening to other people. But bear in mind, there’s a big difference between “passive” and “active” listening.
In many cases, managers are too busy thinking about their response rather than listening to the employee’s full statement. In a business setting, this lack of attention can result in costly mistakes, wasted time, poor service and management
failure. By listening fully and in a way that shows understanding and respect for the speaker, you develop a rapport and build trust. That’s the true foundation from which you can manage and influence others. Effective listeners use a four-step process to
ensure understanding: Managers spend much of their workday listening. But too many focus not on what employees are saying, but on what they are going to say in response. That's bad for business. Share this “Memos to Managers” article with your supervisors.
They'll learn four strategies for making sure they really hear what employees say...
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The world's most reputable companies
If there was a clear link between savvy business and popularity, Toyota would be this spring's prom queen.
In the latest study from the Reputation Institute, a private, New York City-based research and consulting firm, the Japanese automaker is ranked No. 1 on a list of the
600 largest companies in the world for having the best reputation. Toyota was ranked No. 6 last year and in 2006. [There's a notable newcomer in the second spot, one that may not come as a shock. Introducing...]
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[CEOs] 'get time to bounce Back'
According to the latest annual survey of global CEO turnover from management consulting firm Booz & Company, there's "minimal correlation" between poor short-term stock performance and CEO dismissals over a 10-year period.
Gary Neilson, senior vice president of Booz & Company, said the notion of boards dismissing CEOs after two or three disappointing years is a myth."The good news is that boards are providing ample time for CEOs to develop and execute on their
strategies," Neilson said. Still, nearly one of every three departing CEOs was forced to resign due to either "poor performance, an ethical lapse or disagreements with the board."The study is titled "CEO Succession 2007: The Performance Paradox" and will be
published in Booz & Company's quarterly magazine, available June 10.To collect the data, the firm identified all of the companies among the world's largest 2,500 publicly traded corporations by market capitalization that experienced a CEO change in 2007...
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How CEOs stay on top of their [travel] game
Susan Hogg, co-founder and managing partner of the Richmond, Va.-based strategic branding and design firm Circle S Studio, recently spent three days at the Kingsmill Resort & Spa, where most guests golf, enjoy spa treatments and fish.
Only she wasn't relaxing--she was working. Along with 80 other CEOs of small- to mid-size businesses, Hogg was attending an executive retreat sponsored by...
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CEO of the year: The X[erox] factor
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The choice for the 2008 Chief Executive of the Year marks several firsts.
By her own admission Anne Mulcahy did not set out to become a chief executive. Nor was she groomed to become one. Neither did she bargain to face what some have called the turnaround of the century when her predecessor, Paul Allaire, called her into his
office one day in 2001 to say that the top job was hers. Allaire himself returned to the company at the request of the board when Xerox dumped Allaire’s chosen successor Rick Thoman. Fortune dubbed her “The Accidental CEO.” One might add “Improbable
Turnaround CEO,” since everyone knows turnaround bosses tend to come from the outside. (Former Lee Iacocca point man “Steve” Miller is the archetype.) Mulcahy had worked for Xerox for 24 years at the time of her appointment; she spent 16 of those years in
sales and the rest heading HR. The company was so much in her blood she bled copier toner. Oh yes, Mulcahy is also the first woman CEO to be chosen by her peers for the honor of Chief Executive of the Year. As it happens, her choice for successor as CEO
of Xerox is another highly capable alpha woman, Ursula Burns, the company’s president and Mulcahy’s operating partner in the company turnaround. Firsts for Anne Mulcahy seem to be the gift that keeps on giving.A few members of this year’s selection
committee had orchestra seats during Mulcahy’s nail-biting turnaround performance. Office Depot CEO Steve Odland remembers being inspired by a bravura “customer-oriented leader.” Thomson Corp. CEO Richard Harrington, who also serves on Xerox’s board,
reckons Mulcahy rescued a com pany “on the verge of bankruptcy and transformed it into a strategically sound company with a future.” New York Life CEO Sy Sternberg says, “we have a vibrant Xerox today due to her efforts.” Jeffrey Sonnenfeld, CEO of the Chief
Executive Institute at Yale, thinks of her as a model turnaround leader. “She’s ‘tough’ as in visionary and persuasive, not ‘tough’ as in abusive and meanspirited.” Outgoing 2007 Chief Executive of the Year Bob Ulrich of Target points to the degree of
difficulty she faced and what he calls the essential element for any leader: courage. “She had the guts to stick with her plan of investing in R&D when everyone was baying for her to give it up,” he says. [“She thoroughly reviews the top 30 executive
positions and ensures that at least two candidates for each position within the com pany have been identified,” says the CEO of Citizens Communications. “I was so impressed that we have adopted the same systems at Citizens.”...]
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Service as competitive differentiator
Bob Livingston formerly head of sales at Unilever’s The Lipton Company, is the founder and CEO of REL Communications, a consulting firm that moderates
the Client Service Advisory boards. He also leads service-based cultural transformations within the companies with which he consults.
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We are a service economy.
Close to 80% of our GDP is service based. In a marketplace wrought with problems and concerns over the economic downturn, one must wonder how we will pull ourselves out of this fiscal malaise, when our primary source of business results from how we service
what others manufacture. Never will service be a more considered factor in securing and maintaining business relationships. In these troubling times relationships will be tested, and I predict only those who have served customers and clients well, will
survive well. With ferocious competition for limited client attention and business, how we serve will become a means to compare and judge. Competitive differentiation, which is lasting and enduring, will prevail in these turbulent times. We are seeing
it already. Retailers and suppliers who have treated their customers and clients badly are feeling the pressure now. Business is falling off, and trying to change in the midst of an economic crisis may be a daunting challenge. People are being let go,
locations closing and these two factors, connection and convenience, are at the center of any service strategy. Those who have been paying attention to how they serve their customers and clients all along will get through these difficult times hurt, but
perhaps not crippled. [Let’s focus on three companies who are benchmarks in Service Excellence in their competitive set and are recognized as such by those they serve...]
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Acing the wine list
Wine knowledge isn’t just a social skill any more. It’s a powerful tool for today’s CEOs, providing leverage in business entertaining. The Wall Street Journal observed that "Wine at business meals is a skirmish in a boardroom war, played out
on a linen table cloth. Your handling of wine, whether ordering it or just drinking it, matters more than you think to most clients. Sometimes people even see your comfort or expertise with wine not as a comment on your knowledge, but on your character."
This is a bit strong, but clearly a minimal knowledge of wine is becoming as critical as knowing what fork to use....
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Spending on happiness
Can money buy you happiness? Yes—so long as you spend the money on someone else.
According to new research, giving other people even as little as $5 can lead to increased well-being for the giver. That's the insight into the secret of happiness by HBS professor Michael Norton and two colleagues from the University of British
Columbia, Elizabeth Dunn and Lara Aknin. Their article, "Spending Money on Others Promotes Happiness. [Intentional activities—practices in which people actively and effortfully choose to engage—may represent a promising route to lasting happiness.
Supporting this premise, our work demonstrates that how people choose to spend their money is at least as important as how much money they make," the researchers explain."Our findings suggest that very minor alterations in spending allocations—as
little as $5 in our final study—may be sufficient to produce non-trivial gains in happiness on a given day." Norton and colleagues found these results to hold in three different studies. "One of the most puzzling paradoxes in social science is that
though people spend so much of their time trying to make more money, having more money doesn't seem to make them that much happier. My colleagues Liz Dunn and Lara Aknin—both at the University of British Columbia—and I wondered if the issue was not
that money couldn't buy happiness but that people simply weren't spending it in the right way to make themselves happier."...]
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[20,000]Wealthy Americans under scrutiny in UBS case
One afternoon in April, six dozen wealthy Americans were entertained at a luncheon party in Midtown Manhattan, along with a special guest from Paris: Henri Loyrette, the director of the Louvre.
The host of the exclusive gathering was the Swiss bank UBS, whose elite private bankers built a lucrative business in recent years by discreetly tending the fortunes of American millionaires and billionaires. As the wine flowed and Mr. Loyrette spoke
of the glories of France, UBS bankers courted their affluent guests. But now, as the federal authorities intensify an investigation into offshore bank accounts, the secrets of this rarefied world are being dragged into the open — and UBS’s privileged
clients are running scared. Under pressure from the authorities, UBS is considering whether to divulge the names of up to 20,000 of its well-heeled American clients, according to people close to the inquiry, a step that would have once been unthinkable
to Swiss bankers, whose traditions of secrecy date to the Middle Ages. Federal investigators believe some of the clients may have used offshore accounts at UBS to hide as much as $20 billion in assets from the Internal Revenue Service. Doing so may
have enabled these people to dodge at least $300 million in federal taxes on income from those assets, according to a government official connected with the investigation. One prominent UBS client, a wealthy property developer in California...
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Motivation Mockery and the Power Business Ballad
As far back as 1915, businesses used corporate songs as team-building and motivational tools.
Today, the tradition continues, sometimes spontaneous and on the cheap, but sometimes in team-building events supported by musician-motivators who—for fees of up to $100,000—will coach workers to write and perform songs extolling everything from a
product launch to a company’s core principles. In the age of YouTube and MP3 trading, however, there’s always the possibility that what seemed like harmless fun at last month’s management retreat will become tomorrow’s Internet ignominy. More than a year
after the video was uploaded to YouTube, it is still drawing viewers. In the clip, an audience of Bank of America credit card division managers listen as a bank employee, clad in a crisp white shirt and tie, strums the familiar chords of U2’s "One" on an
acoustic guitar. Meanwhile, his partner, clad in similarly businesslike attire, grabs the mike stand and belts out a revised set of lyrics, which convert the original’s tortured lament into a celebration of the bank’s acquisition of former rival MBNA...
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Six free BlackBerry downloads you don't want to miss
Get the most out of your RIM BlackBerry smartphone without ever opening your wallet. Check out the following six free downloads.
One of the best things about Research In Motion (RIM) BlackBerry smartphones is their ability to download and install external applications. Every download adds a new level of value and customization to the devices, and BlackBerry users who don't take advantage
of this functionality simply aren't getting the most out of their smartphones. But like most things in life, the best BlackBerry downloads don't come free--with the exception of the following six applications. They include...
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