miércoles, 16 de mayo de 2012

Why Strategies Go off the Rails

Why Strategies Go off the Rails
12:03 PM Tuesday May 15, 2012

Have you ever been in a situation where everyone seemingly agrees on a particular strategy, but somehow it never happens?

See if you identify with this example: A technology firm — with a number of different product areas, geographic units, and service functions — was figuring out how to integrate services for their largest global customers. After extensive planning, the senior management team decided to assign experienced executives to a dozen of these customers, and give them the authority to manage the accounts end-to-end. What they failed to address was that many of the best sales executives couldn't be released to take on these roles; the financial systems couldn't provide the right information on a customer-by-customer basis; compensation plans didn't support integrated selling; and research programs remained geared towards new technologies instead of integrated solutions. So while everyone agreed that an integrated approach was needed, very little change actually occurred.

The fascinating thing about this case, and many others like it, is that nobody took accountability for the lack of strategic execution. In other words, everyone felt individually successful, even though the company experienced a collective failure.

I recently saw this dynamic play out at a meeting of a large consumer products firm, where the top 100 managers were anonymously surveyed with two questions: How aligned are you with the company's ambitious change strategy; and how aligned do you think your peers are with the strategy? Over 90% of the managers said that they, personally, were aligned with the strategy — but 50% felt that their peers had doubts. In other words they were saying, "I'm fully on board, but many of the other people here are not."

Obviously something about these answers does not make sense. So to understand them, let me suggest three underlying psychological factors that often cause strategies to derail:

Passive aggressive disagreement: It's unlikely that everyone in an organization will agree with all of the nuances of a major strategic shift. Disagreement can be based on logic, experience, or (perhaps unconsciously) discomfort with change or loss of power. In any case, if the culture of the company does not encourage dissent, the resistance will go underground. People will voice their support but not actively do anything to make it happen. For example in our technology case above, the newly appointed account executives found that the finance function, while not standing in the way of the integrated customer approach, also was not doing anything to help.

Fear of confrontation: In most nice organizations where teamwork is encouraged, managers hesitate to confront colleagues who are not fully engaging in the strategic shift. They may not want to make waves or fear harming the relationship. So instead they try to work around it and end up sub-optimizing the strategy. Again, in our case, the account executives and their sales leaders didn't want to push too hard on finance for fear that it could make things worse for them later by damaging relationships.

Lack of persistent top-down demands: If the successful implementation of a strategy requires change across a number of functions, then a senior leader needs to get everyone on board. Without this explicit expectation — reinforced again and again — people will avoid taking action even though they will continue to smile, nod, and profess support. Many senior leaders are hesitant to push too hard for fear that they will have to take drastic action, like firing someone. So instead they just assume that the pieces will fall into place.

Obviously it's not easy to change these dynamics, especially when they are often invisible and rooted in long-standing cultural patterns. A good place to start is to point them out and provoke some dialogue, which was the purpose of that survey used at the consumer products meeting. Most people do not want to be part of a collective failure — so holding up a mirror can be a powerful way of helping managers realize when they are headed in the wrong direction.


What's your experience with the challenges of strategy execution?

by Ron Ashkenas
HBR

jueves, 1 de marzo de 2012

Chinas Share of Reserves in U.S. Dollar Dives

BEIJING—China has made a sharp shift away from purchases of U.S. securities, slashing the dollar's share of the country's foreign reserves in what may signal a change in strategy for managing the massive cash pile, Dow Jones calculations indicate.


The portion of China's reserves parked in the U.S. appears to have sunk to a decade-low 54% as of end-June from 65% in 2010 and 74% in 2006, according to the Dow Jones calculations. The calculations are based on data on China's holdings of U.S. securities from an annual U.S. Treasury survey, and China's own data on the value of its foreign-exchange reserves.


Reuters
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Heard on the Street: China Shifts Out of Dollars, World Doesn't End
U.S. Treasurys Slip
The exact allocation of China's $3.2 trillion reserves—by far the world's biggest war chest—has always been a mystery. But the Treasury survey provides the best guide as to how much the State Administration of Foreign Exchange— the organization charged with managing those reserves—has invested in dollar assets.

Given the size of China's reserves, and the growing global importance of the world's second-biggest economy, Beijing's allocation of its reserves is both a key political issue and a potentially huge factor for foreign-exchange and sovereign-debt markets.

The U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June, but this equates to a much smaller share of the total, as China's reserves were growing rapidly during the period. The purchases of U.S. securities equaled just 15% of the growth in China's reserves, a substantial fall from 45% in 2010 and an average of 63% over the last five years.

Calculating the dollar's share in the allocation of flows into China's reserves is complicated by the impact of currency movements on the value of China's reserves. But even accounting for valuation effects, the downshift in dollar purchases appears pronounced.

The new numbers lend credibility to hints from Chinese and European government officials over the last two years that Beijing is ramping up its purchases of European sovereign debt. In February, speaking at the EU-China summit, Premier Wen Jiabao said, "Europe is a main investment destination for China to diversify its foreign-exchange reserves."

As the euro-zone crisis rumbles on, it suggests that funds from China's reserves could be a critical factor in keeping a lid on rising bond yields in the debt-ridden euro-zone periphery, and in funding Europe's bailout facilities.

Analysts caution that the U.S. data need to be taken with a grain of salt. The Treasury International Capital system collects data on millions of records to calculate foreign holdings of U.S. securities. But correcting for biases in the data, in particular correctly identifying country ownership of securities held in custody in third countries, is difficult. Typically the result of this bias is to underestimate China's holdings of Treasurys.

Corrections & Amplifications:
U.S. data show China's holdings of U.S securities edged up $115 billion on-year to $1.726 trillion at the end of June. An earlier version of this article incorrectly said China's holdings of U.S securities totaled $1.726 billion at the end of June.

By Tom Orlik. WSJ 1/03/12

sábado, 25 de febrero de 2012

Nine Things Successful People Do Differently

Why have you been so successful in reaching some of your goals, but not others? If you aren't sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail. The intuitive answer — that you are born predisposed to certain talents and lacking in others — is really just one small piece of the puzzle. In fact, decades of research on achievement suggests that successful people reach their goals not simply because of who they are, but more often because of what they do.

1. Get specific. When you set yourself a goal, try to be as specific as possible. "Lose 5 pounds" is a better goal than "lose some weight," because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you'll "eat less" or "sleep more" is too vague — be clear and precise. "I'll be in bed by 10pm on weeknights" leaves no room for doubt about what you need to do, and whether or not you've actually done it.

2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it's not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.

To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., "If it's Monday, Wednesday, or Friday, I'll work out for 30 minutes before work.") Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.

3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don't know how well you are doing, you can't adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.

4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don't underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.

5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won't improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.

Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.

6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, grit even predicts which round contestants will make it to at the Scripps National Spelling Bee.

The good news is, if you aren't particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don't have the innate abilities successful people have. If that describes your own thinking .... well, there's no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.

7. Build your willpower muscle. Your self-control "muscle" is just like the other muscles in your body — when it doesn't get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.

To build willpower, take on a challenge that requires you to do something you'd honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don't. Start with just one activity, and make a plan for how you will deal with troubles when they occur ("If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.") It will be hard in the beginning, but it will get easier, and that's the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.

8. Don't tempt fate. No matter how strong your willpower muscle becomes, it's important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don't try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don't put yourself in harm's way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.

9. Focus on what you will do, not what you won't do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., "Don't think about white bears!") has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.

If you want to change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like "If I am starting to feel angry, then I will take three deep breaths to calm down." By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.

It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don't need to become a different person to become a more successful one. It's never what you are, but what you do.

Heidi Grant Halvorson, Ph.D. is a motivational psychologist, and author of the new book Succeed: How We Can Reach Our Goals (Hudson Street Press, 2011). She is also an expert blogger on motivation and leadership for Fast Company and Psychology Today. Her personal blog, The Science of Success, can be found at www.heidigranthalvorson.com. Follow her on Twitter @hghalvorson

Why We Dont Always Tell the Truth

When I was growing up, one of the principles in our house was that we had to tell the truth, no matter how painful it might be. Lying, we were taught, wasn't something you could get away with. Like Pinocchio's nose, it would be apparent to others.

Children of course need clear rules to learn the difference between right and wrong. However as we get older, the truth becomes more nuanced — and there are times when a little white lie or the absence of some key facts might be appropriate. The problem is that all of us have different standards for when, why, and how we shade the truth. These divergent 'shades of gray' then cause miscommunication, breakdowns of trust, and other dysfunctional behaviors. That's why, despite the inclusion of "integrity" in almost every value statement, some form of lying is common in most companies.

From my experience, there are three fundamental concerns that cause people to shade the truth, either consciously or not. Being aware of these "lying triggers" can sometimes help to improve communication and reduce the feelings of mistrust.

Impact of the truth on yourself: It's human nature to want people to think well of us, particularly those who have influence over our lives and careers. At the same time we all make mistakes, so we create justifications and excuses — many of which are at best half-truths. I recall a manager whose key project was behind schedule, largely due to his lack of discipline and follow-up. Yet when asked why the project was lagging, he blamed a snowstorm (from six months previously) for slowing down the work.

Impact of the truth on others: One way to gain others' approval is to avoid pointing out things that may damage their self-image. As a result, many people withhold some or all of their true thoughts about others. For example, a senior executive complained to me recently that one of his managers never gave her people negative criticism during performance reviews. To justify that behavior, she said that it was better to reinforce positive behaviors rather than point out weaknesses — a strategy that also happened to make her popular with her team. The senior executive however was convinced that her drive to be well liked was doing the team a disservice, because they didn't know what they could do to improve.

Impact of the truth on business success: To be successful almost every organization needs to sell — be it a product, a service, a story, or a promise. But much of that selling is done without truthful disclosure of what it will take to fulfill the sale. That's why product salespeople will often take an order without revealing to the customer that there may be supply problems, or why a CEO will tout the benefits of an acquisition without mentioning the challenges of integration. Showing customers or partners what's truly behind the curtain could undermine credibility and threaten the deal. The wiser course in many cases is to limit the truth and figure out how to "deliver" later.

It's easy to be judgmental about all these situations and to insist on absolute truth at all times. But people don't work that way, and neither do organizations. As managers, the best we can do is to be more aware of why we avoid or shade the truth — and make sure that it's an appropriate time to do so.
By Ron Ashkenas. HBR.org

lunes, 21 de noviembre de 2011

Juarez vendio territorio nacional

Tomado de: 100 mitos de la historia de México.
Autor: Francisco Martín Moreno
Paginas: 73-79

El 14 de Diciembre de 1859 Melchor Ocampo y Robert McLane suscribieron el proyecto de un tratado diplomático entre México y los Estados Unidos. A primera vista, ninguno de los artículos del tratado favorecía a nuestro país. Benito Juarez, al parecer, había permitido que, a cambio de cuatro millones de dólares -dos de los cuales quedarían en las arcas estadounidenses para cubrir las injustas e interminables reclamaciones de guerra-, los gringos obtuvieran los derechos de paso por el Istmo de Tehuantepec y por Sonora -de Guaymas a Nogales-; asimismo, el documento abría la posibilidad para ambos países de auxiliarse militarmente, según determinadas circunstancias. Así pues, todo parece indicar que el tratado McLane-Ocampo entregaba la soberanía de una parte del territorio nacional a cambio de un par de millones de dólares.
  Juarez, entonces, se comporto igual que Antonio Lopez de Santa Anna, el mayor vende patrias de nuestra historia? Aunque la respuesta es un NO! rotundo, la iglesia católica y los conservadores han insistido en que Juarez traiciono Mexico al permitir que se suscribiera el Tratado McLane-Ocampo. Este mito debe ser aclarado, pues solo así podrán comprenderse los verdaderos fines que animaron a Juarez a suscribir ese documento.

  LAS MENTIRAS, LAS FALSAS IMPUTACIONES

Desde 1860 los profesores de las escuelas religiosas y los historiadores clericales han difundido la mentira de que Juarez traiciono a México con el Tratado McLane-Ocampo. Curiosamente, en cada una de sus palabras aun se percibe el eco del Manifiesto que Miguel Miramon publico el 1 de Enero de 1860. En la parte medular de este documento -cuyo original se encuentra en el Archivo General de la Nación- se lee lo siguiente:
 Por medio de su gobierno establecido en Veracruz, [los liberales] intentan vender la integridad, el honor y la seguridad de la patria, por un tratado infame que deja en la frente de las personas que lo firman, un sello indeleble de traición y de escandalo. [El tratado] se contrae a concesiones de territorio o de vías de transito para los ciudadanos y tropas de los Estados Unidos, que arruinarían nuestros puertos y nuestro comercio y que servirían a aquella república para irse extendiendo sobre nuestro país.

Sin embargo, lo que el general Miramon afirmaba en su Manifiesto era solo una cortina de humo que pretendía ocultar la verdad [Esto según Francisco Martín Moreno]

LA VERDAD SOBRE EL TRATADO MCLANE-OCAMPO

Cuando estallo la guerra de Reforma a causa del violentisimo rechazo de la iglesia católica y de los conservadores a la Constitución de 1857, los ejercitos liberales y los conservadores-eclesiásticos iniciaron una lucha feroz que ensangrento el suelo mexicano. Luego de dos a;os de batallas ninguno de los bandos se alza a con la victoria. Por ello, un ano antes de que se suscribiera el Tratado McLane-Ocampo los clericales y los archiconservadores decidieron buscar el apoyo de Francia y España para derrotar a sus enemigos y provocar el retroceso político, económico y cultural de nuestra patria. Los clérigos y los conservadores estaban dispuestos a conceder todo lo que fuera necesario y aun mas, por medio del Tratado Mon-Almonte -suscrito el 26 de Septiembre de 1859, es decir, tres meses antes que el de McLane-Ocampo-, el cual les proporcionaría los recursos y apoyos necesarios para enfrentar a los liberales, después de reconocer las deudas reales y ficticias que nuestro país tenia con España y Francia.
  Para los liberales esta situación era mucho mas que peligrosa: si Francia y España se sumaban a la iglesia y a los conservadores mediante el Tratado Mon-Almonte, el futuro de la República estaba perdido. Así, a finales de 1859, Benito Juarez se vio obligado a buscar una alianza con el gobierno estadounidense. La situación era difícil, ya que, como lo señala José Manuel Villalpando:

  [los] estadounidenses no darían su apoyo a cambio de nada, razón por la cual Juarez admitió, en Veracruz, las negociaciones con el enviado estadounidense, Robert McLane, a quien su gobierno dio instrucciones precisas de negociar un tratado ventajoso para ellos a cambio de la promesa de suministrar armas y dinero y, si se daba la ocasión, incluso de intervenir militarmente a favor de los liberales.

Juarez y Melchor Ocampo, que en aquellos momentos era el ministro de Relaciones Exteriores, tenían claro que las pretensiones estadounidenses eran desmesuradas -desde el inicio de las negociaciones los gringos insistían en comprar la península de Baja California-, pero también sabían que era fundamental detener el inminente ataque de las fuerzas clericales y conservadoras a Veracruz, donde se había refugiado el gobierno republicano, ya que Miramon -gracias al respaldo económico de la iglesia y de España- contaba con un poderoso ejercito y con el apoyo naval necesario para atacar a los liberales.
  El Benemérito sabia que no podía ceder ni un solo metro del territorio nacional -pues el, a diferencia de Santa Anna, tenia solidas convicciones patrióticas-, por lo tanto, durante las negociaciones con McLane se negó a ceder la península de Baja California, aunque otorgo el libre transito de las mercancías estadounidenses. El Tratado McLane-Ocampo no establecía obligaciones para México en el sentido de entregar ni un solo metro cuadrado del suelo Patrio! Por lo tanto, los conservadores y los historiadores oficiales registrados en las generosas nominas del clero mienten al acusar a Juarez de haber vendido a los extranjeros una parte del territorio nacional. Incluso, la insistencia de Juarez de que se ratificara el tratado tenia -además de las razones políticas que analizare mas adelante- un sentido estrictamente económico: el paso por el Istmo de Tehauntepec permitiría establecer polos de desarrollo marítimo, ferrocarriles, comercial e industrial en el trayecto de Coatzacoalcos a Salina Cruz, un hecho que, sin duda, garantizaría la prosperidad de una de las regiones mas pobres del país.
  Asimismo, con la firma del Tratado McLane-Ocampo el gobierno jurista logro un acuerdo fundamental: ambas naciones quedaron comprometidas a auxiliarse militarmente. La victoria era clara: se había conseguido la ayuda estadounidense para derrotar a la iglesia y a los conservadores, y como dijo Patricia Galeana en su conferencia "Las Leyes de Reforma y el Tratado McLane-Ocampo": "este acuerdo permitió el reconocimiento de Estados Unidos al gobierno liberal de Benito Juarez y, con ello, evito que el régimen republicano desapareciera"
  Sin embargo, no debe pensarse que la habilidad diplomática de Benito Juarez y Melchor Ocampo se limito a la obtención del reconocimiento del gobierno estadounidense a cambio del derecho de transito por algunas franjas del territorio mexicano. El acuerdo, para tener vigencia, debía ser ratificado por el congreso de ambas naciones, lo cual les dio a los liberales un buen tiempo para prepararse: con el país en guerra, el Congreso no podía sesionar, y cualquier acuerdo se pospondría hasta la victoria sobre la iglesia y los conservadores. Los hechos propiciaron que la ratificación de los acuerdos fuera innecesaria: el clero y los conservadores fueron derrotados y el Congreso estadounidense no ratifico el tratado, porque sus integrantes solo vieron en el nuevas anexiones territoriales que fortalecerían a los estados esclavistas que ya se preparaban para la guerra de secesión.
  Juarez tenia un as bajo la manga para ganar tiempo!, y el tratado nunca fue ratificado!, por lo cual, en términos estrictamente jurídicos, nunca existió! McLane suscribió la nada jurídica, mientras que Juarez y Ocampo le amarraron las manos a los norteamericanos , pues el tratado solo permitía la intervención militar si se obtenía el consentimiento del gobierno liberal, el cual jamas aceptaría una moción de esa naturaleza.
  Juarez, a diferencia de la iglesia y de los conservadores, no fue un vendepatrias, aunque a fuerza de mentiras sus eternos enemigos traten de utilizar el Tratado McLane-Ocampo para acusarlo. Juarez sabia que si vendía Baja California obtendría millones de dólares y que con tales recursos podría aplastar a los reaccionarios, pero ni así estuvo dispuesto a vender el territorio. Como acusarlo de traidor por entregar al país a los gringos a través del tratado cuando nunca vendió nada y si se preservo la soberanía? Si hubiera sido, un traidor habría repetido las acciones de Santa Anna, de Su alteza Serenísima, el peor enemigo en la historia patria, y habría tenido muchas oportunidades de echar mano de cualquier recurso para derrotar a los reaccionarios y hacerse del poder. Acaso Juarez no habría podido tener conversaciones secretas, como las tuvo Santa Anna, con el presidente Polk para vender parte del territorio y ganar dinero en lo personal, volviéndose, además, inamovible políticamente después de barrer a sus enemigos? Juarez no era un bandido ni un traidor como Su Bajeza. Su conducto es una evidencia de honestidad. El siguiente texto, redactado por el propio zapoteco, deja constancia de ello:
 
  La idea que tienen algunos [...] de que ofrezcamos parte del territorio nacional para obtener el auxilio indicado, es no solo antinacional sino perjudicial a nuestra causa [...] que el enemigo nos venza y nos robe, si tal es nuestro destino; pero nosotros no debemos legalizar ese atentado, entregando voluntariamente lo que nos exige por la fuerza. Si la Francia, los Estados Unidos o cualquiera otra nación se apoderara de algún punto de nuestro territorio y por nuestra debilidad no podemos arrojarlo de el, dejemos siquiera vivo nuestro derecho para que las generaciones que nos sucedan lo recobren.

Benito Juarez, le pese a quien le pese, no fue un traidor, y el Tratado McLane-Ocampo resulto una jugada política de grandes alcances que contribuyo a la derrota de la iglesia y de los archiconservadores.

jueves, 10 de noviembre de 2011

The Persistence of the Innovaror's Dilema

The Persistence of the Innovator's Dilemma
Scott Anthony
2011-11-10T17:13:17Z
In 1995, a young Harvard Business School Professor co-authored an article in Harvard Business Review, "Disruptive Technology: Catching the Wave." He and his co-author proposed a new causal mechanism that explained the surprising failure of highly-regarded companies. The most punishing innovations, they argued, were the ones that were easy to dismiss at first blush — simple, affordable solutions that took root outside the mainstream market. The authors called these "disruptive" solutions and provided a straightforward prescription for leaders looking to turn disruption into an opportunity. They suggested that companies should find a customer who loved the disruptive solution despite its limitations and create a separate organization to commercialize it.

Of course, that young HBS professor was Innosight co-founder Clayton Christensen. Since then, he has written over a half-dozen books and many more Harvard Business Review articles, almost all of which touch on disruption in some way. Academic journals have dissected the disruptive innovation theory and hundreds of thousands of students around the world have seen Christensen's famous model.

Yet, the innovator's dilemma persists. Just ask executives at Blockbuster Video, Sony, Nokia, Microsoft, Hertz, Kodak, Delta, and nearly all newspaper companies. That's not to say that there haven't been success stories. But they're notable because they are exceptions.

So, why has this dilemma persisted?

Capital markets is one explanation. As this argument holds, the short-term pressure of the capital markets, coupled with management incentives tied tightly to stock prices, make it hard for companies to investment in new growth businesses. Even if companies know what they need to do, their investors won't let them. Investors aren't necessarily irrational, since they could presumably back up-and-coming disruptors themselves. There is at least one strike against this argument. In markets such as India, Korea, Japan, and China, companies that have different corporate governance models seem equally likely to suffer from the innovator's dilemma.

Perhaps the root problem is leadership limitations. Leaders in established companies seeking to drive disruptive growth have to meet the challenge laid down in 1935 by F. Scott Fitzgerald: "The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time and still retain the ability to function." Yet, in Chapter 9 of The Silver Lining, I described a stream of research suggesting that only about 5% of leaders have the ability to pass Fitzgerald's test. Every once and a while a Steve Jobs, a Jeff Bezos, or an A.G. Lafley appears, but perhaps their rarity leads to the dilemma's persistence.

Maybe the real challenge lies within. Over the past few decades there has been a fascinating set of research into cognitive biases that lead smart people to make bad decisions.* These biases are particularly acute for companies trying to drive disruptive innovation. Consider the "halo effect," which holds that people who are demonstrably good at one thing are perceived to be good at non-related tasks. The halo effect leads companies to assuming their best operators can seamlessly shift into innovation work. Some can, but many cannot. Confirmation bias, disaster neglect, the fundamental attribution error and many others make it easy to simultaneously discount the need to respond to disruptive threats and overestimate the organization's ability to step into new markets.

There are surely other explanations — for instance, people don't always have high levels of interest in transforming a system that confers certain powers on them — but my own view is that the dangerous combination of leadership limitations and cognitive biases makes the innovator's dilemma an intensely difficult problem to solve.

Perhaps further clarity in the root cause of the persistence of the innovator's dilemma can help increase the number of success stories. Any other ideas?

* Dan Ariely, Michael Mauboussin, Nobel Laureate Daniel Kahneman, and Duncan Watts all write accessibly on the topic.

miércoles, 9 de noviembre de 2011

The Weakest Link in the U.S.

The Weakest Link in The U.S. Economy
Ndubuisi Ekekwe
2011-11-09T17:08:39Z
Apple used 49,400 employees to generate revenues of $65 billion in 2010. Its outsourcing partner, Chinese Foxconn, employed nearly a million people for $59 billion in the same year. In the U.S., Apple focuses on creating high-paying jobs while it outsources the low-paying ones to Asia. For companies from Dell to HP to Intel, outsourcing provides competitiveness. It makes the shareholders happy and helps produce good earnings. Every global company has the right to pursue opportunities to remain competitive. But the state of events happening in the U.S. economy right now calls for solutions which these very companies could provide.

The U.S. economic crisis could be traced to the structural economic changes which globalization facilitated. American companies are out-innovating most of their citizens. All across the nation, there are still community colleges and trade schools where students graduate and quickly join the unemployment pool, because the jobs for which they have been trained are not available — they weren't available even when they were enrolling. And those jobs may never be back — they are in Asia now. Still, no one is asking to shut down — or even change — these schools.

As the nation goes through this generational transformation, we must understand that the solution to the problem isn't far-fetched. The U.S. economy is innovating at the top, but is failing badly at the bottom. That a U.S. engineer with a Ph.D. in some high tech company creates up to ten jobs in Asia means that ten Americans are displaced from work. Some like this new model, where few are paid very well, and many are left unemployed. But, no one will like a neighborhood where for every mogul, there are ten homeless families. Yet that is what the system is setting up today.

Breaking the Cycle With a New Model

The U.S. will remain the epicenter of global innovation with its good universities and top-focused innovative companies. But for it to break this cycle of boom and bust, it needs a new model. America needs a system that works for the citizens, companies and the nation. That a Chinese company hires more people than the top ten U.S. high tech companies combined, despite getting the bulk of its business from them, shows that there is a weak link in the economy. And when families are broken with no jobs, it's difficult for a nation to hold up.

America's solutions may not necessarily come from Washington, but from the compassionate patriotism of American companies. Can the shareholders demand less and reduce the pressure to outsource? Can the citizens pay a little more to keep those making products in U.S. competitive? It is possible that what has worked for the U.S. in the last few decades may not be attainable in the new global arena?

This is not about building fences to protect against globalization; it is about developing a roadmap for U.S. companies. One lesson learned from the last recession is that every company needs a healthy economy in order to function. When the meltdown began, practically every company suffered. As the crusade for environmental sustainability wages on, now is the time for U.S. companies to begin a discussion on business sustainability at home. If they fail to do that, it is very possible that they may not have the right economic climate in which to do business.

The temptation to think that because revenue is coming in from overseas, and that what happens in China may not affect us, is erroneous. Even if China will eventually lead the world, it is decades away from that, politically and economically. A broken U.S. economy poses severe dangers because across most nations, opportunities will dry up. A sustainable U.S. economy that provides opportunities at the bottom is not just a problem for the president, but for every American employer. It is time to fix this link and rediscover innovation at the bottom.

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