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Philip Evans: How data will transform business

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What does the future of business look like? In an informative talk, Philip Evans gives a quick primer on two long-standing theories in strategy -- and explains why he thinks they are essentially invalid.

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Mod 8 - Quality Control and Corrective Action

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Mod 8 - Quality Control and Corrective Action

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Even as federal safety officials step up their investigation of the fatal crash of a driver operating a Tesla car with its Autopilot system engaged, the company continues to defend the self-driving technology as safe when properly used.

The National Highway Traffic Safety Administration on Tuesday released a detailed set of questions for the carmaker about its automated driving system, particularly the emergency braking function.

The Autopilot system has been the subject of a federal investigation since regulators revealed in late June that the driver of a Tesla Model S sedan, Joshua Brown, was killed on May 7 when his vehicle crashed into a tractor-trailer in Florida.

The Autopilot feature was engaged at the time, Tesla has said, but neither the automatic braking system nor Mr. Brown applied the brakes before the car hit the trailer at 65 miles an hour.

Despite that acknowledgment by the company, as the federal agency pushes for answers about the accident and whether the Autopilot system failed to work properly, Tesla officials continue to say that the technology is safe. They also say they have no plans to disable the feature, which is installed in about 70,000 Tesla cars on the road. Instead, they indicate that drivers may be to blame for misusing Autopilot.

In an interview, a Tesla executive said the company believed that the system was safe as designed, but that consumers needed to realize that misusing Autopilot "could mean the difference between life and death."

The executive, whom Tesla authorized to speak only if he was not named, said drivers needed to be aware of road conditions and be able to take control of the car at a moment's notice - even though he said Autopilot's self-steering and speed controls could operate for up to three minutes without any driver involvement.

"With any driver assistance system, a lack of customer education is a very real risk," the executive said.

Tesla has been widely criticized for introducing Autopilot in "beta" mode, which usually signifies a technology that is still under development and not completely tested. And some engineers researching self-driving cars have concluded that automated systems that rely on the driver's suddenly resuming command cannot be made fully safe.

But the Tesla executive said the Autopilot system had performed safely during tens of millions of miles of driving by consumers. "It's not like we are starting to test this using our customers as guinea pigs," he said.

Elon Musk, Tesla's chief executive, said in a Wall Street Journal interview published on Tuesday that the company planned a blog post to educate Tesla owners on how to use the system safely. "A lot of people don't understand what it is and how you turn it on," he said.

The questions raised by the N.H.T.S.A., in a nine-page letter that was dated July 8 but not made public until Tuesday, indicated the agency was investigating whether there are defects in the various crash-prevention systems related to Autopilot.

Those systems include automatic emergency braking, which is supposed to stop Tesla models from running into other vehicles detected by radar and a camera. Another is Autosteer, which uses radar and cameras to guide the vehicles on highways or in slow-moving traffic.

The attention generated by the fatal Tesla accident has stoked a public debate about the safety and wisdom of making "self-driving cars." But in reality - YouTube videos of daredevil Tesla drivers notwithstanding - the current generation of technology involves driver-assistance features mainly meant to make vehicles safer and help avoid accidents.

In the future, fully self-driving cars have a huge potential to save lives, but the current driver-assist cars can present major risks, said David Teater, a prominent traffic safety advocate. The problem, Mr. Teater said, is that the technology sends a mixed message to drivers, suggesting they can disengage but also requiring them to take over at a moment's notice.

It is not an issue unique to Tesla, but one that potentially pertains to any carmaker that is ''betting the farm on driver-assist technology that requires the driver to remain engaged," he said.

"Would you want your kid jumping into a Tesla and turning on driving assist after what's just happened?" Mr. Teater asked. Right now the technology, he said, "is more about marketing than safety."

Jeff Larason, the Massachusetts highway safety director, is among those in the auto safety community who argue that automated and self-driving technologies will ultimately greatly reduce the toll from driving. Human error accounts for more than 90 percent of all car crashes, he said.

Mr. Larason said the Tesla fatality, while a "horrible tragedy," should not undermine the good that accident-avoidance technology might achieve.

"When it happened," he said, referring to Florida fatality, "my response was, 'Here comes the I-told-you-so, knee-jerk reaction.'"

If autonomous driving technology hits a roadblock, he said, "it won't be because of technology, but because of legislation and because the public doesn't have the will to make it happen."

Image

Joshua Brown, shown with his Tesla Model S, had the Autopilot system engaged when he was killed in a crash in May. Credit Krista Kitchen/Krista Kitchen, via Associated Press

While Tesla has been the focus of the debate, many cars, including models from BMW, Mercedes-Benz and Volvo, have systems that use a combination of adaptive cruise control, lane-keeping and automatic braking.

While the systems enable drivers to briefly take their hands off the wheel, they are mainly designed to help drivers avoid accidents.

But the issues raised by the Tesla fatality, and the questions that the National Highway Traffic Safety Administration is asking, involve whether Autopilot's potential safety advantages offset the risks that such technology lulls drivers into a false sense of security.

Tesla remotely collects vast volumes of information about its cars as they are being driven. The federal safety agency apparently wants the company to thoroughly mine that data.

The agency's letter asks Tesla to provide a wide range of information, including a list of all vehicles sold in the United States that are equipped with the Autopilot system. It also asks how many miles have been driven with Autosteer activated, and how many times the automatic system warned drivers to put their hands back on the steering wheel.

The N.H.T.S.A. also wants to know, among other things, the number of incidents in which Tesla vehicles' automatic emergency braking was activated. The letter asks Tesla to turn over any information on consumer complaints or reports of crashes, or other incidents in which a vehicle's accident-prevention systems may not have worked properly.

The agency is also seeking detailed data about how Tesla's technology detects pedestrians, bicycles and other vehicles, including vehicles moving laterally across a road.

The tractor-trailer involved in the Florida crash made a left turn across the path of Mr. Brown's Tesla, which the accident investigation report indicated did not slow before hitting the trailer and then continuing under it at high speed before eventually running off the road and striking a utility pole that brought the car to a stop.

Tesla has said that in Mr. Brown's accident, the Autopilot system failed to see the white truck against a bright sky.

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Undeterred, Tesla Backs Self-Driving Technology. Order Reprints | Today's Paper | Subscribe

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As U.S. Investigates Fatal Tesla Crash, Company Defends Autopilot System

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Even as federal safety officials step up their investigation of the fatal crash of a driver operating a Tesla car with its Autopilot system engaged, the company continues to defend the self-driving technology as safe when properly used.

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Motivational dynamics have changed dramatically to reflect new work requirements and changed worker expectations. One of the biggest changes has been the rise in importance of psychic, or intrinsic rewards, and the decline of material or extrinsic rewards. This author draws upon recent research to explain the popularity of intrinsic rewards and how these rewards can be used to build a high-engagement culture.

I have been researching workplace motivation for about 30 years and I'm amazed at how much has changed recently. Automation and off-shoring have eliminated most of the highly repetitive jobs in the U.S., while global competition has produced flatter, more responsive organizations that require employees to use judgment and initiative to a much greater extent. Over this same 30-year period, the proportion of American workers who say that their work is meaningful, allows them discretion, and makes use of their abilities has more than doubled-from less than one third to about two thirds. ¹ In addition, younger workers now come to organizations with different expectations than their parents. Raised during an era of rapid technological change and instant access to data, they respond best to work that is more meaningful, allows them to learn cutting-edge skills, and lets them find their own ways of accomplishing tasks.

Most of the motivational models used today were developed in earlier eras, when work and workers were different. That is why my colleagues and I developed models and strategies of motivation that better reflect the changes in today's work dynamics. ² In doing so, we discovered that intrinsic rewards have become more important and more prevalent in the workplace today. This article will describe the reasons for this increase and why intrinsic rewards are so important today.

Extrinsic and intrinsic rewards

Extrinsic rewards-usually financial-are the tangible rewards given employees by managers, such as pay raises, bonuses, and benefits. They are called "extrinsic" because they are external to the work itself and other people control their size and whether or not they are granted. In contrast, intrinsic rewards are psychological rewards that employees get from doing meaningful work and performing it well.

Extrinsic rewards played a dominant role in earlier eras, when work was generally more routine and bureaucratic, and when complying with rules and procedures was paramount. This work offered workers few intrinsic rewards, so that extrinsic rewards were often the only motivational tools available to organizations.

Extrinsic rewards remain significant for workers, of course. Pay is an important consideration for most workers in accepting a job, and unfair pay can be a strong de-motivator. However, after people have taken a job and issues of unfairness have been settled, we find that extrinsic rewards are now less important, as day-to-day motivation is more strongly driven by intrinsic rewards.

The intrinsic rewards in today's work

To identify these intrinsic rewards, we began by analyzing the nature of today's work. Basically, most of today's workers are asked to self-manage to a significant degree-to use their intelligence and experience to direct their work activities to accomplish important organizational purposes. This is how today's employees add value-innovating, problem solving and improvising to meet the conditions they encounter to meet customers' needs.

In turn, we found that the self-management process involves four key steps: ³

1. Committing to a meaningful purpose

2. Choosing the best way of fulfilling that purpose

3. Making sure that one is performing work activities competently, and

4. Making sure that one is making progress to achieving the purpose.

Each of these steps requires workers to make a judgment-about the meaningfulness of their purpose, the degree of choice they have for doing things the right way, the competence of their performance, and the actual progress being made toward fulfilling the purpose. These four judgments are the key factors in workers' assessments of the value and effectiveness of their efforts-and the contribution they are making.

When positive, each of these judgments is accompanied by a positive emotional charge. These positive charges are the intrinsic rewards that employees get from work, ranging in size from quiet satisfaction to an exuberant "Yes!" They are the reinforcements that keep employees actively self-managing and engaged in their work.

The following are descriptions of the four intrinsic rewards and how workers view them: ⁴

Sense of meaningfulness. This reward involves the meaningfulness or importance of the purpose you are trying to fulfill. You feel that you have an opportunity to accomplish something of real value-something that matters in the larger scheme of things. You feel that you are on a path that is worth your time and energy, giving you a strong sense of purpose or direction.

Sense of choice. You feel free to choose how to accomplish your work-to use your best judgment to select those work activities that make the most sense to you and to perform them in ways that seem appropriate. You feel ownership of your work, believe in the approach you are taking, and feel responsible for making it work.

Sense of competence. You feel that you are handling your work activities well-that your performance of these activities meets or exceeds your personal standards, and that you are doing good, high-quality work. You feel a sense of satisfaction, pride, or even artistry in how well you handle these activities.

Sense of progress. You are encouraged that your efforts are really accomplishing something. You feel that your work is on track and moving in the right direction. You see convincing signs that things are working out, giving you confidence in the choices you have made and confidence in the future.

Levels of intrinsic rewards

Professor Walter Tymon (Villanova University) and I developed and refined a measure of the four intrinsic rewards, now available as the Work Engagement Profile. ⁵ Together with our colleagues, we have used it for research, training, and interventions in a number of organizations in the U.S., Canada, and India.

We found it useful to break down each reward into three levels-high (the top 25% of our norm sample), middle-range (middle 50%), and low (bottom 25%).

High-range scorers experience the four intrinsic rewards most intensely. These rewards are highly energizing and engaging.

Middle-range scorers experience these same rewards to a more moderate degree-as somewhat positive but limited. For example, their work may seem reasonably meaningful when they stop to think of it; they may have a fair amount of choice but have to live with some decisions that don't make sense to them; they may feel they do most things pretty well but not a few others; and they may feel they are making some progress but less than they would like. They experience these reward levels as moderately energizing and engaging-enough to put in a "fair day's work," but end up feeling less satisfied than they would like.

Low-range scorers are dissatisfied with many aspects of their work. They may feel their work is relatively meaningless or pointless, that they are unable to make or influence decisions about how to do their work, are unable to perform work activities very well, and are making little or no headway. Experiencing these feelings drains the workers of energy and they are likely to become cynical and resentful about their job over time.

Important benefits of the intrinsic rewards

Our research findings to date reveal the widespread benefits of the above intrinsic rewards for both organizations and employees. ⁶

From the organization's viewpoint, our data confirm the impact of the intrinsic rewards on employee self-management. For example, people with high reward levels show greater concentration and are rated as more effective by their bosses. But the benefits extend beyond self-management. The intrinsic rewards are strong predictors of retention. Note that this is the "right" kind of retention-keeping the people who are energized and self-managing rather than those who can't afford to leave. We find that employees with high levels of intrinsic rewards also become informal recruiters and marketers for their organization. They recommend the organization to friends as a place to work and recommend its products and services to potential customers.

The intrinsic rewards are also a relatively healthy and sustainable source of motivation for employees. There is little chance of burnout with this form of motivation. Workers with high reward levels experience more positive feelings and fewer negative ones on the job. Their job satisfaction is higher, they report fewer stress symptoms, and are more likely to feel that they are developing professionally. ⁷

Overall, the intrinsic rewards seem to create a strong, win/win form of motivation for both an organization and its employees-and one which suits the times. This type of motivation is focused on the shared desire that employees' work makes an effective contribution to meaningful purposes, so that it is performance-driven. It embodies the kind of self-management and professional development demanded by younger workers. It does not depend on large outlays of money to generate extra effort, so that it is feasible when funds are tight. Furthermore, intrinsic rewards do not require that a boss be present, as exemplified by the growth of the virtual work and telecommute environments...

Despite these benefits, however, a number of managers underestimate the importance of intrinsic rewards, and continue to treat financial rewards as the key factor in motivating others. While some of this bias may simply come from their use and familiarity with older models, there is another explanation. Research shows that, although people are quick to recognize the role of intrinsic rewards in their own behavior, there is a general tendency to assume that other people are motivated mostly by money and self-interest. ⁸ In our workshops, for example, managers are commonly surprised to learn that intrinsic rewards are valued as much by their employees as by themselves. So, it is important to educate the managers in your organization on this issue.

Building a high-engagement culture

In our work with managers, change agents and training specialists, we have developed seven guidelines for building a culture that supports high levels of engagement and intrinsic rewards: ⁹
1. Begin with a meaningful purpose.
Unlike financial rewards, you simply can't task the Human Resources Department with developing an "intrinsic reward system." Building intrinsic motivation is largely a line management responsibility, although HR can offer considerable help. That responsibility begins with spelling out a meaningful purpose for the organization. To be meaningful, this purpose usually needs to involve more than profit, tapping directly into the contribution that the organization's work makes to its customers-the contribution that allows it to earn a profit. Again, it is largely that sense of contribution to something of value that drives the entire self-management process.
2. Build intrinsic motivation and engagement into management training and executive coaching.
As mentioned earlier, managers tend to recognize the role of intrinsic rewards in their own motivation, but often underestimate their importance for other people. To build a culture of engagement it is important to incorporate training on intrinsic motivation and employee engagement into management development programs. We also find that managers are more credible and effective in promoting the value of engagement when they first learn how to better understand and manage their own intrinsic rewards. Training typically begins by getting managers in touch with their own intrinsic rewards and then shifts to learning how to support the intrinsic rewards of their direct reports. At executive levels, the four intrinsic rewards also provide a useful framework for executive coaching. For example, the New West Institute builds its coaching on executive transitions around the four rewards, identifying what would be most meaningful for the executives in their new position, what choices they have, the new competencies they need to build, and the ways they will identify progress. ¹⁰ Training and coaching, then, are an important part of embedding intrinsic motivation and engagement into the organization's culture.
3. Focus conversations on meaningfulness, choice, competence and progress.
Leaders from the top down need to convey the same message-that the organization stands for doing work that matters and doing it well. When approaching any work project, leaders can underline the importance of contribution by focusing discussions on the basic questions in the self-management process:

What can we do here that is meaningful?

What creative choices can we think of to accomplish this?

How can we make sure we're doing this work competently?

How can we make sure we're actually accomplishing the purpose?

These questions bring employee contributions to the foreground and highlight the intrinsic rewards.
4. Engage the "middle."
Pay special attention to building intrinsic motivation for people in the middle ranges-the large group that is only somewhat engaged. If you are able to move their intrinsic rewards to the high range, they will combine with the people who already highly engaged to form a large majority of highly engaged, energized people-the critical mass needed to support a culture of high engagement.
5. Measure intrinsic reward levels.
Without some way of assessing the state of intrinsic rewards in your organization, you will be flying blind. We use the Work Engagement Profile for systematic measurement, though with experience it is possible to get a rough sense of reward levels from everyday conversations with employees. ¹¹ Measuring the reward levels will show you the overall level of engagement in your organization and allow you to recognize improvement. It will also allow you to determine if any rewards are at lower levels than others. Because self-management requires all four reward levels, the lowest rewards will tend to act as a drag on overall engagement over time-so that they deserve special attention.
6. Provide missing building blocks for intrinsic rewards that you need to bolster.
Each reward has its own unique building blocks. Building a sense of competence involves actions that are different than those used in building a sense of choice, for example. The following is a list of key building blocks. ¹²

Sense of Meaningfulness:

Sense of Choice:

Sense of Competence:

Sense of Progress:

Notice that some of these building blocks involve relatively observable or "hard" elements, such as job designs, information systems, and formal authority. Others involve "softer" aspects of organizational culture and managerial style, such as a non-cynical climate, celebrations, trust, and skill recognition.
7. Adopt a change and implementation process that is itself engaging.
You could try to build intrinsic rewards using a centralized, top-down decision process. But we find that it makes more sense to use the change process itself as a means of fostering high levels of engagement. That was the genius of the Work Out process used by Jack Welch to help change the culture at GE. ¹³ Similar processes are now used for planning and change in a number of organizations. ¹⁴ In these applications, participatory processes allow teams of employees to identify meaningful work-related problems, recommend solutions that make sense, apply their diverse competencies, and experience a rapid sense of progress. When these processes address the building of intrinsic rewards and engagement, they not only yield workable solutions but also produce their own sense of excitement- which often serves as a significant turning point in the organization's culture. ¹⁵

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Notes and References

1. These data are from James O'Toole and Edward Lawler, III, The New American Workplace, Palgrave Macmillan, 2006.

2. This article is based on research findings and experience collected with the following colleagues: Walter Tymon, Jr., Villanova University; Erik Jansen, Naval Postgraduate School; Bruce Vincent and Steve deBree, New West Institute; and Betty Velthouse, University of Michigan, Flint.

3. The self-management process is described in more detail in Kenneth Thomas, Intrinsic Motivation at Work, Berrett-Koehler, 2009.

4. These descriptions are adapted from Kenneth Thomas and Walter Tymon, Jr., Work Engagement Profile, CPP, Inc., 2009.

5. The Work Engagement Profile, with interpretive materials, is available in print form through CPP, Inc., at www.cpp.com/WEP. An online version will be available in 2010. Information on the reliability and validity of the Profile is provided in the Work Engagement Profile Technical Brief, available online at www.cpp.com/WEPtechbrief.

6. These findings are summarized in the Work Engagement Profile Technical Brief.

7. These finding are also summarized in the Work Engagement Profile Technical Brief. I am particularly indebted to Professor Jacques Forest of the Universite du Quebec a Montreal for permission to summarize his work. See also the findings on professional development in the article by Walter Tymon, Jr., Stephen Stumpf and Jonathan Doh, "Exploring talent management in India: The neglected role of intrinsic rewards," Journal of World Business, 2010 in press.

8. This finding was reported by Chip Heath, "On the social psychology of agency relationships: Lay theories of motivation overemphasize extrinsic incentives," Organizational Behavior and Human Decision Processes, 1999, pp. 25-62.

9. I am particularly indebted to Bruce Vincent and Steve deBree of the New West Institute, an early adopter of the Work Engagement Profile and my book, Intrinsic Motivation at Work (Berrett-Koehler, 2000 and 2009). They have contributed a number of lessons learned from their applications to organizational change and executive transition coaching.

10. Information on New West's approach to executive transition coaching is available at www.newwestinstitute.com.

11. For more specific advice on recognizing and increasing intrinsic reward levels, see Intrinsic Motivation at Work, 2009.

12. This list is adapted from the Work Engagement Profile. A more detailed discussion of the building blocks and related management actions is contained in Intrinsic Motivation at Work.

13. The Work-Out process has been described in a number of books, including Jack: Straight From the Gut, by Jack Welch with John Byrne, Warner Business Books, 2001.

14. See for example the participative planning process described by Marvin Weisbord and Sandra Janoff in Future Search, Second Edition, Berrett-Koehler, 2000.

15. This observation is based on the change work of the New West Institute, which is built around the concepts in this article. Information on the New West Institute's participative approach to change is available at www.newwestinstitute.com.

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The Four Intrinsic Rewards that Drive Employee Engagement

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Motivational dynamics have changed dramatically to reflect new work requirements and changed worker expectations. One of the biggest changes has been the rise in importance of psychic, or intrinsic rewards, and the decline of material or extrinsic rewards.

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Case Study on Team Development. Always an important process to understand if you are assigning employees to work in groups.

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Lego hired foreign CEO for different style of leadership of company.

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COPENHAGEN (Reuters) - Danish toymaker Lego is to appoint its first foreign CEO and give its family owners a bigger role in developing the Lego brand under an organizational shake-up that will see incumbent Jorgen Vig Knudstorp step down by the end of the year.

Briton Bali Padda, currently chief operations officer, will replace Knudstorp, who was the first chief executive from outside the Kristiansen clan, Denmark's richest family. Knudstorp will now head up the Lego brand, the company said on Tuesday.

The change comes after more than a decade of impressive growth under Knudstorp, during which the company overtook My Little Pony producer Hasbro to become the world's second-largest toy maker and is now vying with Barbie doll maker Mattel to become the world's biggest.

The growth has come from rising demand in Asia and embracing the digital era. Even as the global toy market shrank after the 2008 financial crisis, Lego bucked the trend by tying up with global movie franchises like Star Wars, Harry Potter and Indiana Jones in deals that span Lego sets, video games, movie franchises and smartphone applications.

The owner family will now become active in brand-related activities, including the group's stake in Merlin Entertainments, operator of the six Legoland theme parks, and in Lego Education used in schools.

Knudstorp, after becoming CEO at the age of 35 in 2004, a year after Lego flirted with bankruptcy, set about reviving Lego's core business. That included firing consultants and hiring new designers to come up with higher-margin products that were up to date but still looked like Lego, an abbreviation of the Danish "leg godt", meaning "play well".

"Bali is good at setting a direction," Knudstorp told Reuters on Tuesday, predicting that Padda will do a better job executing ideas than he has done.

"I'm more of a reflective introvert type who spends a lot of time thinking about what we should do and try to inspire others to do it," he said.

"He has a more social and involving way of managing, and I think many in Lego look forward to that," Knudstorp said.

The change at Lego also reflects an attempt to keep the spirit of a family-owned business alive, after the company's staff increased to 18,500 from less than 5,000 in 2004, Knudstorp said.

Under his leadership, sales increased by more than 15 percent a year on average. Last year, revenue grew by 25 percent to 35.8 billion Danish crowns ($5.2 billion) with net profit of 9.2 billion crowns, making it the world's most profitable toymaker.

The Lego group was founded in 1932 by Ole Kirk Kristiansen and his grandchild Kjeld Kirk Kristiansen is now the family's main representative.

"The growth looks more subdued this year, which I actually think is a really good thing because we need time to consolidate," Kjeld Kirk Kristiansen told Reuters on Tuesday.

The company said its new brand group will help it reap "untapped potential in the LEGO brand."

"With our recent growth and globalisation come new and exciting opportunities for the brand, and we establish the LEGO Brand Group to look into these new opportunities," said Thomas Kirk Kristiansen, fourth generation co-owner of the LEGO Group.

Lego wants to intensify existing partnerships, including with Merlin Entertainment, the operator of the Legoland theme parks. Lego owns 36 percent of Merlin.

Lego's colorful plastic bricks will remain at the center of its product range, said Knudstorp, who on a previous occasion told Reuters he personally spends on average two hours a week playing with Lego.

The toymaker's future growth will include expanding its presence in countries like China and India, where Padda was born and lived until he was 12.

"It has to build on what we call the Lego idea, which is the idea of being a creative problem solver, and that you can use your imagination to make an indefinite number of different things," Knudstorp said.

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cyclical consumer goods and services (trbc)

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cyclical consumer goods and services (trbc)

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Lego replaces long-time CEO with first foreign boss in...

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Danish toymaker Lego is to appoint its first foreign CEO and give its family owners a bigger role in developing the Lego brand under an organizational shake-up that will see incumbent Jorgen Vig Knudstorp step down by the end of the year.

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Read the latest stories about Commentary on Fortune

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Technical skills are important, of course, and not easy to develop. Textbook problems are mighty hard to solve when you're first learning analytics methods. After graduation, though, additional complexities come into the mix, complexities that most graduates are not adequately prepared to handle.

Real-life analytics problems come buried within a mass of everyday business communication. Executives, customers and other non-analysts describe problems in terms that don't obviously connect to analytics. They don't clearly explain what they want from analytics, because they don't know. After all, that's not their area of expertise.

Interest in better communication for data analysts is rising. It's included in the cute Venn diagrams of skills that are popular in the data science community. It's the topic of an online class created by University of Washington. It's a hot topic in Harvard Business Review. In these, and most of the currently-circulating material on analytics communication, the emphasis is on sharing results. Words like "explaining," "visualization," and " storytelling " appear often. It's certainly true that a good data analyst must be able to clearly explain results. But why is so little attention paid to the even more important skill of listening?

The most valuable data analysts are not the most dazzling mathematicians, programmers or storytellers; they're the best listeners.

By "listeners," I don't mean people who believe everything that's said to them, or who do what's asked without question. I'm talking about critical thinking skills. Words are important, but words don't always match perfectly to meaning or action. Superior listeners gather more information than just the words that people say, and use all of that information to infer meaning.

Let me give a little example from everyday life. I recently attended a routine meeting with a group of business men. At the end, the leader asked some questions, including, "How do you like this location for the meeting?" Everybody else said the location was great. I said it was not great. He did one thing right, by asking why I didn't like it. The problem was, he didn't understand my concerns. I mentioned that I travel on public transit. He brushed off the response, naming the transit stops within a few blocks. I pointed out that the entrance to the building was awkward, and that it would be problematic during bad weather. He brushed that off, too.

He wasn't using nonverbal clues to meaning: my style of communication (less direct than his), my gender (I was the only woman in the room), the fact that I lived nearby (so I already knew the locations of transit stops). All of these things contributed to the real meaning of my words. If I had been truly direct, I would have said, "The entrance to this building is not a safe place, you @#$%^!&." But I don't talk like that, at least not during business meetings.

People say things in indirect ways. To interpret meaning, you have to use more than the words they say, and that's a fundamental issue for providing valuable analytics. You must develop keen listening skills in order to assess business problems and define analytics project plans that address underlying concerns. If you fail to draw out those concerns, the rest of your work won't matter.

It might seem that listening is a skill learned in classroom settings. After all, most of your time in the classroom is spent listening to the lecturer speaking, or students asking or answering questions. But classroom listening is not like business listening. Business talk is loaded with hidden agendas, conflicting interests and competing viewpoints that are not found in the classroom.

So how can data analysts refine listening skills? Here are a three simple ways to practice:

Scope real business problems.

Many analysts learn primarily by solving problems assigned by teachers, or defined by the analysts themselves in self-study. Even many professional analysts today have limited contact with their true constituents, the business managers and customers who experience a problem directly. Look for opportunities to speak directly to the people affected by a problem and hear what they have to say about it.

Attend meetings.

If you think meetings are a waste of time, you're doing meetings wrong. Listen carefully, and observe what's going on around you. You'll find that even the dullest meeting is a rich source of information that reveals details of what's going on within an organization. What are people saying? How do they say it? What's the body language? Who are the influencers and how are they influencing others? Are the actions you observe consistent with the words you hear?

Document.

Before you begin any analysis, document the problem. Write down what you know. Organize the important points into a single page document. Make it the clearest and best organized explanation you can, using full sentences and paragraphs. Then share it with your manager or client. Ask for feedback. Is your understanding of the problem correct? Have you missed or misunderstood any points? Should you research anything further?

A clear understanding of the business problem and related issues is absolutely basic to successful analytics. You have to fully understand a problem to develop a meaningful solution, and show that your results are truly relevant to the business. That's why every successful analytics project starts with patient, thoughtful listening.

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The Analytics Tool You Don't Learn At School: Listening

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Technical skills are important, of course, and not easy to develop. Textbook problems are mighty hard to solve when you're first learning analytics methods. After graduation, though, additional complexities come into the mix, complexities that most graduates are not adequately prepared to handle. Real-life analytics problems come buried within a mass of everyday business communication.

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How women leaders can be successful using emotional intelligence.

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As an FBI counterintelligence agent, I relied heavily upon emotional intelligence to be successful in identifying foreign spies and recruiting them to work for the U.S. government.

Emotional intelligence is your ability to 1) identify and manage your own emotions; 2) pick up on the emotions of others and manage them; and 3) in so doing, build trust and grow influence.

It is not necessarily a skill that people associate with FBI agents. Loud, boisterous, and pushy behavior may get attention, but it certainly does not get respect.

Meanwhile, a softer skill like emotional intelligence often goes unnoticed because it is not related to book smarts or a formula that includes aggressive behavior relying upon intimidation to be effective.

I have never had a loud voice, but I've always had a strong one.

There can be lots of bewilderment when either men or women get these two voices confused. Many leaders, entrepreneurs, and business owners have traditionally been men who followed a formula of aggression and intimidation to get to the top. Now many women are trying out that same formula to see where it can take them.

And here is how well it's working: women are dying of heart disease at the same rate as men and yet they still struggle not only rise to top level positions, but to stay there as well.

I had a choice in my law enforcement career-I could try to be someone I am not and swagger around the FBI hallways with a gun strapped to my hip, or I could be the best version of me by developing my natural skills and talents without worrying whether or not I fit in with others who relied upon intimidation.

Here are 4 reasons emotional intelligence can be a woman leader's secret weapon:
1 Women Have Permission To Be Emotionally Intelligent; Men, Not So Much
Women in the workforce need to grab success however they can, but too many of them are throwing away their advantages by trying to be like men.

Little girls are given permission by society to be empathetic, use language that expresses emotions, and place priorities on developing deep and meaningful relationships (starting with dolls).

While both girls and boys may develop mental toughness through sports activities, many boys tend to grow into men who rely on harder skills like aggression as their default reaction to stress rather than softer skills like empathy and self-awareness.

Conversely, women are encouraged to develop these softer skills, and the good news is that these essential skills can be learned as they climb up the career ladder.

I've known a few touchy-feely men, and they were incredibly successful FBI agents. But they ran against the grain of the macho stereotype that people have of the FBI, including most new agents who show up at Quantico.

TIP: As a parent, encourage your child to develop a good vocabulary to describe their emotional state of mind at any given time. As an adult, start exploring words to describe what you are feeling in times of stress, joy, and relaxation. You may find this hard at first because we are simply not groomed to be fluent in the language of emotions.
2 Women Executives Rank Highest In Emotional Intelligence
It is too simplistic to describe men or women as having innate advantages that will better equip them to move into top level positions. In today's competitive environment, leaders need to be seen as having the collaborative traits that are the by-product of emotional intelligence.

In an intriguing study by the Hay Group, it was found that high levels of emotional intelligence were found in work situations where women executives were required to lead by influence rather than direct authority.

In this study, emotional intelligence skills were more prevalent in executive-level women than their male counterparts. It is believed that women often face barriers throughout their careers that require them to develop emotional intelligence skills they need to advance in their organizations.

TIP: Scrappy women will develop the skills necessary to move into the executive suite-success in the future is going to depend a great deal upon a leader's ability to leverage a variety of skills and approaches in order to grow their business.
3 Women Are Not Naturally Better At Emotional Intelligence Than Men
Although there is not a lot of research or science to back up the common belief that women are naturally better at emotional intelligence than men, what does seem to matter is the level of motivation of both men and women.

For example, this same Hay Group study indicated that among women and men below the executive level, differences between men and women were less pronounced.

And when you look at the stars-leaders in the top ten percent of business performance-gender differences in emotional intelligence abilities wash out: The men are as good as the women, the women as good as the men, across the board.

TIP: If you have the mental toughness and grit to stick with it, you can acquire the emotional intelligence skills you need to be a top performer-male or female.
4 Women's Brains Are Different, Though
Women are considered to be more empathetic, however. According to neuroscientists, empathy is found in a region called the insula, which senses signals from our whole body. When we're empathizing with someone, our brain mimics what that person feels, and the insula reads that pattern and identifies the feeling.

This is where women are different from men. If the other person is upset, women's brains tend to stay with those feelings. Men's brains do something else; they sense the feelings for a moment, then tune out of the emotions and switch to other brain areas that try to solve the problem that's creating the disturbance.

So when a woman complains that a man has tuned out emotionally, it's most likely due to differences in how the brains are processing the information.

When men tune-out, it can insulate them from distress so they remain calm while others are in a state of high drama. They focus on finding a solution to the urgent problem.

Women's tendency to stay tuned-in helps them nurture and support others when emotions are running high.

TIP: It's important to remember that neither is better and both have advantages.

Women seeking top level executive positions need to improve their emotional competency because it enlarges their ability to: cope with pressure, build trust, negotiate, influence others, navigate workplace politics, and take smart risks.

And whether you are young or old, male or female, you can find ways to build your emotional intelligence.

LaRae Quy was an FBI undercover and counterintelligence agent for 24 years. LaRae is the author of " Secrets Of A Strong Mind" and " Mental Toughness for Women Leaders: 52 Tips To Recognize and Utilize Your Greatest Strengths." See her site and follow her on Twitter @LaRaeQuy.

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Using Emotional Intelligence Is A Woman Leader's Secret Weapon

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Emotional intelligence is your ability to 1) identify and manage your own emotions; 2) pick up on the emotions of others and manage them; and 3) in so doing, build trust and grow influence. Meanwhile, a softer skill like emotional intelligence often goes unnoticed because it is not related to book smarts or a formula that includes aggressive behavior relying upon intimidation to be effective.

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SAP stops using traditional performance appraisals, interesting concept.

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FRANKFURT (Reuters) - Germany's SAP, maker of software used to grade the performance of millions of employees worldwide, is ditching its own annual performance reviews as too expensive, time-consuming and often demotivating.

Once championed by business leaders as the key to better productivity, annual appraisals are falling out of fashion with companies including IBM, Gap and even General Electric, whose long-time Chief Executive Jack Welch is credited with popularising the system.

SAP, which for the last two years has had an American CEO and employs almost a third of its staff in the United States, is one of the first major European companies to join the trend that began across the Atlantic.

The ritual of the annual performance review is widely disliked by employees.

SAP's human resources head for Germany, Wolfgang Fassnacht, said Europe's biggest software maker had found the annual review process, with its focus on separating over- from under-performers, was often counter-productive to the goal of constructive dialogue.

"Grading workers did not work. People are open to feedback, also to harsh criticism, until the moment you start giving scores. Then the shutters go down," he told Reuters.

SAP is testing a new process, which includes more regular check-in talks, on about 8,000 of its workers and aims to implement it for all of its almost 80,000 workforce next year.

"The old system is too static," said Fassnacht. "It no longer reflects the dynamic circumstances we are operating in."

HOT TOPIC

SAP is a world leader in human-resources (HR) software and made a big bet on performance-management tools with the $3.4 billion acquisition of U.S. cloud-computing company successfactors.com in 2012.

It gets a lot of feedback from its customers, Fassnacht said, a factor that may have influenced its decision to ditch the dreaded annual review.

"I meet many HR managers at other companies. The topic is on everyone's mind at the moment," he said. "This is actually one of the hottest topics discussed in the HR area."

SAP is not putting itself out of business, however. It will continue to sell its performance assessment software and it announced in February it would also introduce software for continuous performance management of employees.

Although many companies are re-assessing the annual review, Sydney-based management consultancy Strategic Factors, a specialist in strategic planning and performance measurement, warned against ditching employee reviews wholesale.

"Regular check-ins are great, this ongoing conversation and coaching model, but we also need performance measurements. We need to be careful to not chuck out the baby with the bath water," said managing director Graham Kenny.

Audit and advisory firm PwC concluded in a report last year there was a general trend among companies of reforming performance reviews but that removing ratings was still perceived as a "more radical" change.

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apparel and accessories retailers (trbc)

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Europe's biggest software maker SAP ditches annual reviews

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FRANKFURT (Reuters) - Germany's SAP, maker of software used to grade the performance of millions of employees worldwide, is ditching its own annual performance reviews as too expensive, time-consuming and often demotivating.

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For a few, delegating comes easily, maybe too easy. For others who are perfectionists, letting go of even the most trivial task is almost impossible. If you are in this second category, you probably don't like the references behind your back that you are a "control freak" or a "micro-manager."

London business school professor John Hunt notes that only 30 percent of managers think they can delegate well, and of those, only one in three is considered a good delegator by his or her subordinates. This means only about one manager in ten really knows how to empower others.

The challenge is delegating the right things, and not delegating the wrong things. If you don't get it right, you are busy, but working on the wrong things. Almost every entrepreneur needs to improve their skills in this area, so I did some research on the basics. Jan Yager, in her book " Work Less, Do More," has outlined several key steps to effective delegation which I endorse:

Choose what tasks you are willing to delegate. You should be using your time on the most critical tasks for the business, and the tasks that only you can do. Delegate what you can't do, and what doesn't interest you. For example, non-computer types should consider delegating their social media, website, and SEO activities.

Pick the best person to delegate to. Listen and observe. Learn the traits, values, and characteristics of those who will perform well when you delegate to them. That means give the work to people who deliver, not the people who are the least busy. This requires hiring people with the right skills, not the least expensive or friends and family.

Trust those to whom you delegate. It always starts with trust. Along with trust, you also have to give the people to whom you delegate the chance to do a job their way. Of course the work must be done well, but your way or the highway is not the right way.

Give clear assignments and instructions. The key is striking the right balance between explaining so much detail that the listener is insulted, and not explaining enough for someone to grasp what is expected. Think back to when you were learning, when you were a neophyte.

Set a definite task completion date and a follow-up system. Establish a specific deadline at the beginning, with milestones. In this way you can check up on progress before the final deadline, without fuzzy questions like "How are you doing?"

Give public and written credit. This is the simplest step, but one of the hardest for many people to learn. It will inspire loyalty, provide real satisfaction for work done, and become the basis for mentoring and performance reviews.

Delegate responsibility and authority, not just the task. Managers who fail to delegate responsibility in addition to specific tasks eventually find themselves reporting to their subordinates and doing some of the work, rather than vice versa.

Avoid reverse delegation. Some team members try to give a task back to the manager, if they don't feel comfortable, or are attempting to dodge responsibility. Don't accept it except in extreme cases. In the long run, every team member needs to learn or leave.

Almost everyone who has grown their startup from a one-person entity to a going concern with many employees has struggled with letting go of any task. On the other hand, executives who come from a large company to a startup tend to delegate too much, resulting in high costs and lack of control.

Finally, every entrepreneur needs to set aside their fear of delegating. If you do it right, as outlined above, every task will likely be done better than you could do it. The only thing you can't delegate is "the buck stops here" role. That can only be done by the person in charge, and it better always be you.

I am the Founder and CEO of Startup Professionals, a company that provides services to startup founders around the world. My background includes a 30-year track record as an executive in general management, computer software development, product management, and marketing. ...

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How To Delegate More Effectively In Your Business

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English: London Business School facade (Photo credit: Wikipedia) For a few, delegating comes easily, maybe too easy. For others who are perfectionists, letting go of even the most trivial task is almost impossible. If you are in this second category, you probably don't like the references behind your back that you [...]

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Decentralizing management is a good way to spark innovation and train corporate leaders, according to William Weldon, CEO of Johnson & Johnson, maker of Band-Aids and Tylenol. Weldon made the comments at a Wharton School leadership conference and a video of his comments is available online.
J&J, with revenues of $61 billion, has 200 operating companies that produce consumer goods such as baby shampoo and medical products. "We have over 200 operating companies; we need 200 great leaders," Weldon said. "I think the challenge is always developing great leaders who can run the businesses."

A decentralized approach helps innnovation "in that it allows different people with different skills, different thoughts, to bring together different products and technologies to satisfy the unmet needs of patients or customers," he says. One example happened when J&J brought together individuals from its medical products with its drug business. "They came up with putting a drug on a stent ... for cardio-vascular disease, which was a huge breakthrough," he says.

J&J also uses "internal ventures" as a way to let employees come up with new ideas.

Decentralization also helps with overseas operations. In Japan, for instance, J&J has local management run companies. "They understand the consumer, they understand the people they are dealing with and they understand the government and the needs in the marketplace," he says, adding "It's very hard to run it from the U.S. and to think we would know enough to be able to do this."

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Johnson & Johnson CEO: Decentralization Works

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Decentralizing management is a good way to spark innovation and train corporate leaders, according to William Weldon, CEO of Johnson & Johnson, maker of Band-Aids and Tylenol. Weldon made the comments at a Wharton School leadership conference and a video of his comments is available online. J...

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Preet Bharara, the U.S. Attorney for the Southern District of New York, discusses the importance of having a corporate culture of integrity, in an interview with WSJ's Rebecca Blumenstein at WSJ's CEO Council. Photo: Paul Morse

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One of the biggest challenges a company can face is changing people's behavior - getting them to collaborate and be humble, for example, or put the company's long-term interests first. Most behavior-change initiatives accomplish little, at best.

So when we faced such a challenge at Lear Corporation, a Fortune 200 automotive supplier with 136,000 employees worldwide, we knew the odds were against us. We asked ourselves: What could we do differently?

Lear had gone into bankruptcy during the Great Recession. Getting the company back on its feet required a major boost in operating efficiency. We succeeded, but by 2013 we worried that we had taken our focus on results too far. In satisfying our demanding customers, were we pushing the organization to the breaking point?

In order to make our success sustainable, we decided to roll out a new "leadership model" for our middle- and upper-level managers. We've been in HR for a combined total of more than four decades, with multiple organizations, and we've been involved in a couple such rollouts. Our model at Lear - essentially a list of desirable behaviors - was pretty similar to what many other companies promote. We focused on the soft qualities that managers often overlook in their zeal for short-term results. "One Lear" was all about keeping the company's interests ahead of one's own division, function, or region. "Results the Right Way" emphasized collaboration and long-term perspective, while "Lead with Integrity" pushed for accountability and humility. We wanted strong but collegial leaders.

To make the implementation work, we took a four-phase approach, focusing on awareness, learning, practice, and accountability.

Awareness. We spent some money on publicity, including framed posters, mouse pads, and even a sculpture commissioned for the headquarters lobby. The leadership model and related descriptions went out in the 20 languages used by Lear managers around the world. But we knew all this was just a starting point. We couldn't sit back and just let the well-publicized model do its work. It wasn't enough to say, "The instructions are clear, we're all grownups, so people just need to follow through."

Learning. Too many companies skimp on this step. Any change in behavior that matters is going to be difficult. First of all, it's just hard to translate words on a page into specific behaviors, especially when the words are about sensitive subjects. What does it really mean to "get results the right way"? Were managers supposed to be more relaxed about expectations, more focused on the process, more forgiving when their subordinates missed deadlines? How do you show empathy without seeming weak, without losing your authority?

We ended up putting a lot more resources into this step than into awareness. People needed to see what success looked like, and they needed to get support along the way. To make the process manageable for HR, we divided our 250-plus middle and upper managers into cohorts of about 65 managers each, with each cohort getting intensive attention for a three-month period.

The work started with each manager getting an initial assessment, based on surveys of direct reports, on how he or she matched up to the model. We wanted managers to know the areas they needed to get better at, as well as the strengths they could build upon. The assessments were purely for self-improvement. They had no career consequences - no one outside of HR, not even managers' bosses, saw them.

Soon after receiving their assessments, each cohort attended a two-day retreat, with the first one in August 2014 near our Michigan headquarters. Our senior executives kicked off the retreat by talking about the key behaviors in detail. From there, we guided people through an online library of materials, centered on videos showing good and bad examples of each behavior. Then we put everyone into four-person peer-support groups, from different locations, so they could talk through the behavior in their own terms. We encouraged the groups to keep meeting throughout the process and beyond.

Practice. I'm proudest of this step, which I've never seen elsewhere. Real change is hard for anyone. If people are going to muster the energy and discipline to alter their habits, they need to start with self-confidence. We didn't want to castigate people - we wanted them to feel OK about themselves, while still understanding the need for change. In essence we said: "Before, the organization rewarded you only for short-term results; now we need you to get sustainable success. It's going to take real change for everyone."

Framing the situation that way made a big difference. People didn't feel blamed or put on the spot for their past actions. That made them much more receptive to the message. It helped that a lot of managers already knew that our current culture wasn't working so well - they just didn't know how to fix it. Because we cast the issue as an organizational challenge, not a problem for individual managers, people could talk about it and help each other much more.

We had a good message, but I couldn't send it, nor could HR as a whole. It had to come from the leadership, and it had to come with some humility. That's harder than you might think. It's rare for a C-suite executive to publicly admit to struggling with a corporate initiative. We put so much pressure on leaders nowadays, and they need so much ego in order to rise to the top, that it's genuinely difficult for them to show vulnerability.

Showing vulnerability, though, was key to getting people to take the change seriously. We weren't going to get anywhere if it looked as though the leadership model were only for "some" people. All the ambitious managers would figure a way to game the assessments and come out clean. We needed people to really embrace the change, starting at the top.

At those learning retreats, our executives made a point of saying everyone was in this boat together. I'll never forget our CEO, Matt Simoncini, getting up in front of dozens of managers and saying, in essence, "I've violated several of these model behaviors myself in the past. I've started to get better, but I still have a lot of work to do."

As for checking progress, fortunately we had overhauled our performance management system only a year earlier. As one of us (Tom) explained in a previous post, instead of a big annual evaluation tied to bonuses, we now had people meet their supervisors on a quarterly basis, with no connection to compensation decisions. The new leadership model fit easily into those conversations. With the money pressure off, managers could talk more freely about their struggles with the key behaviors. Instead of hearing only the bonus rating, they could actually listen for their bosses' feedback and advice. Managers got more-frequent, positive reinforcement, which is key to behavior change.

We wanted people to have a good deal of time to figure out and practice the new behaviors. We didn't expect them to get it right the first time. A lot of behavior change is about failing your way to success.

Still, we did have to let several managers go, including some vice presidents. These were known troublemakers, at the extreme end of the spectrum, whom we'd previously turned a blind eye to because their results were good. People had justified their rough leadership style by saying they had "passion," but over the years I've learned that's just an excuse for bad behavior. We couldn't have them around while we pursued the program, or we would have lost our credibility. We had many more, not-so-extreme managers I suspected wouldn't make it either, but we wanted to give them the benefit of the doubt - and some have changed.

Accountability. After six months of development, we assess each manager again, and this time the assessments have teeth. Managers' bosses see the assessments and start to factor them into promotion and other considerations. I remember one manager read his assessment and asked me, "Do I still have a job?" I reassured him that we were giving everyone one more chance at that point.

Our first cohort just had that assessment two months ago, and two other cohorts are still in the practice period. But already I'm seeing evidence of the change everywhere. People are more collegial and collaborative.

We've also been watching carefully to make sure we don't lose our edge as an organization. The leadership model can't become an excuse for slacking off. We still need strong operational results if we are going to stay competitive. Leaders still need to drive their teams hard, but I've seen them show more respect and better listening, with less micro-management.

With only a year and a half since the kickoff, it's too soon to assess the operational results of the campaign. But our margins have been increasing in recent quarters. Core operating earnings and shareholder returns are also rising, faster than our peers'.

With each phase, we've created more believers in the program and gradually built up a critical mass that can change the entire culture. That's the ultimate goal, since the new behaviors will stick only when they become unconscious norms. Better management will mean better results for the long term. We'll attract and retain more talented employees, and we'll see fewer managers derail because of bad behaviors. Better people will also bring long-lasting competitive advantage in our industry.

Like many companies, Lear is trying to move HR from a tactical department that manages transactions to a strategic function that develops people. Leadership models, when implemented in this gradual way, can do just that.

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Changing an Organization's Culture, Without Resistance or Blame

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One of the biggest challenges a company can face is changing people's behavior - getting them to collaborate and be humble, for example, or put the company's long-term interests first. Most behavior-change initiatives accomplish little, at best. So when we faced such a challenge at Lear Corporation, a Fortune 200 automotive supplier with 136,000 employees worldwide, we knew the odds were against us.

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Photographs by Brad Swonetz

A move to "self-management" has shaken the online shoe retailer. Can it regain its mojo?

It's just another Wednesday afternoon at Zappos headquarters-which is to say that it's unlike any other Wednesday afternoon anywhere else in corporate America. The company's "resident artist," who started as a Zappos call-center worker, is painting an enormous chrysanthemum on a canvas near the entrance. Red lanterns festoon the lobby of the semicircular 1970s edifice, which once housed the Las Vegas city government, in honor of Chinese New Year. A few hours later, all 1,500 employees of the online shoe and clothing retailer gather in the nearby MGM Grand theater, home to the Cirque du Soleil show Kà, for Zappos's quarterly All-Hands Meeting, an afternoon of progress reports, music, and fun.

The young, diverse staff, heavy on neon-tinted hair and nose rings, cheers when Tony Hsieh, the company's longtime CEO, announces that everyone will get a paid vacation day on Feb. 29 in honor of leap year. They give a standing ovation to a worker in shipping who raps passionately about the company, offer a rousing send-off to a longtime "Zapponian" who's leaving the company, and take in a surprise Cirque du Soleil performance, complete with a cameo appearance by Zappos's signature box.

This quirky mix of circus, therapy session, and revival meeting exemplifies what has made working at Zappos so special: an obsessive focus on creating a culture that embraces the idiosyncrasies of each individual. That, and top-of-the-line perks such as free health care. The emphasis on employees-to the near exclusion of the usual metrics used to evaluate business-has made Zappos, owned by Amazon since 2009, a stalwart on Fortune's annual list of the 100 Best Companies to Work For. It has been so celebrated for its 10 core values-which include "Create fun and a little weirdness" and "Build open and honest relationships with communication"-that the company has its own consulting unit to help others emulate the Zappos way.

But this year, nearing the third anniversary of a shift from a traditional management structure to "holacracy," a system that replaces hierarchies and bosses with "self-management," something is different. In between the rapping and the report on the company's "Pawlidayz" initiative to support pet adoptions, Hsieh, 42, takes to the stage to report disappointing news. He announces that scores on Fortune' s Best Companies to Work For survey have tumbled on 48 of 58 questions. Indeed, Zappos has fallen off the overall list for the first time in eight years. Two questions that generated particularly dismal results: Do employees think management has "a clear view of where the organization is going and how to get there"? And do managers "avoid playing favorites"?

Yet Hsieh didn't seem particularly rattled. Over the past few months he'd moved beyond holacracy to an even more abstract system he calls "teal." (We'll explain.) "It's just part of the journey," he tells the troops. "I don't think it's going to be all roses. But whatever the top-of-mind things are right now, history has shown that we will get through them."

Still, there's been a lot to get through lately. The shift to holacracy, combined with a wildly ambitious software project called Super Cloud-not to mention a reconceived business strategy-has left employees confused, demoralized, and whipsawed by the constant pace of change. Over the past year, in part owing to a buyout offer, 29% of the staff has turned over.

Holacracy is "a social experiment [that] created chaos and uncertainty," says one Zapponian who left last year. A current employee, who filled out a survey (provided to Fortune by the company) following the all-hands meeting, praised Hsieh for openness about the negative feedback but added in a burst of frustration: "I would have liked to hear some actions that may be taken to address how drastically approval of managers and legacy leadership has fallen, and how strongly more and more employees are feeling like favoritism [and management issues are] becoming a bigger problem ... They aren't remnants of legacy structure that have survived despite holacracy; they're things that have somehow found power in it and worsened in the current system."

Zappos has always been a risk-taking enterprise. It was born from an experiment in 1999 (sell shoes via the Internet!) and has, under the deceptively anodyne leadership of Hsieh, embarked on one mold-shattering change after another. He made Zappos the first website to offer free shipping both ways. He moved the company to the suburbs of Las Vegas to build a culture apart from Silicon Valley, then uprooted it again to a gritty area of downtown Vegas in hopes of creating a work-life paradise.

In his mind, the move to holacracy, in which teams are replaced by "circles," and managers by "lead links," is his attempt to avoid the eventual fate of most large companies: death. "The one thing I'm absolutely sure of," Hsieh says, "is that the future is about self-management."

The result has been an epic clash between a doctrinaire set of rules and a culture whose very essence has been a tolerance for the unruliness that comes with individual self-expression. Holacracy has empowered some people and hamstrung others. The company's most utopian dreams, which include banishing internal politics, have not yet been realized.

The remaining Zapponians insist the transition, painful as it has been, has turned the corner. They believe in the company, even as they wonder what it will stand for. But at times it feels as if Hsieh, to borrow an old phrase, may be destroying the village in order to save it.

Tony Hsieh has always cared deeply about the human side of work. He wrote a book called Delivering Happiness, which asserted that employee satisfaction is the key to business success. Indeed, in recent years workers seemed content, though sales growth had tapered. Turning the company upside down is the last thing most managers would have done. But Hsieh worried that Zappos was becoming more bureaucratic and losing some of its spark.

In 2012, at the Conscious Capitalism conference in Austin, he attended a speech by a software company CEO named Brian Robertson. Robertson argued that it was the messiness of human interactions-the emotional discord, the power struggles-that prevent businesses from achieving their potential. What if, he asked, there's another way to organize-one that doesn't rely on bosses, politics, and power?

Robertson found inspiration in sociocracy, a century-old concept that relies on a sort of Quaker meetinghouse decision-making system. He devised a rule book-an operating system, as he likes to call it-for a bossless organization.

The result was holacracy, in which traditional top-down reporting lines are replaced by work circles that operate next to, and on top of, each other. People don't have jobs; they have "roles." Lead links are the nominal managers-but they have little formal authority and can't force employees to do anything they don't want to do.

All this egalitarianism comes larded with strictures and meetings, particularly in the implementation phase. There are "tactical" meetings, focused on moving the workflow forward, and "governance" ones, which hash out processes and roadblocks. "Holacracy does add structure and rigor and discipline," Robertson says in an interview. "If you don't have parents, you need self-discipline."

Hsieh contacted Robertson-who offers a software system, GlassFrog, that aspiring holacrats may purchase-and signed on. In early 2013 the human resources department became the first group at the company to deploy holacracy. Employees were shocked and frustrated by the numerous mandates, the endless meetings, and the confusion about who did what. Says Christa Foley, an 11-year vet who was a senior HR manager and is now lead link for the Culture-Connecting the Dots circle and the Zappos Insights circle: "I hated all of it, in particular because it was off-the-shelf, so focused on the rules of the game, and it explicitly felt icky without a focus on the people." Foley says she has come to like the system.

Holacracy created new winners and losers-and it sparked fresh ideas. With experience and expertise de-emphasized, less "typical" and more junior types have been able to succeed. Introverts have benefited from the expectation that everybody speak in meetings. Says Danielle Kelly, 25, lead link of the State of Mind circle, the Teal Mappers circle, and the Teal Kit circle: "The structure of the meetings forces each person to ... say what they want. Before I might've thought something and wouldn't have jumped in. Now I have that time to myself."

Another beneficiary is Derek Noel, 30, a onetime customer-service employee. Noel had wanted to transfer to Zappos's culture team but found himself blocked by his manager. "As soon as I found out about how holacracy worked," he says, "I was like, 'Actually, my boss can't tell me that.' " Noel's ideas, which included weekday events where employees watch a movie in the auditorium while working on their laptops, gained traction. Now he works in the Fungineering circle, a kind of events-planning/pep squad. "My worst day at Zappos is still better than my best day anywhere else," he says. "I can't imagine going back to traditional hierarchy anymore."

The biggest shock for Hollie Delaney, previously the head of people experiences at Zappos and now the lead link of the People Ops circle, among others, was that as a career manager, she no longer had the muscle to force anything to happen. Her longtime career goal, to become the VP of human resources, was no longer achievable at Zappos.

As holacracy unfurled, Delaney realized her power was ebbing. "I said, 'I literally have no job.' I was freaking out. That got me to start thinking about why I didn't have other roles. Yeah, I had the big title and the quote unquote power. But was that really fulfilling? The answer was no." In the spirit of self-management, Delaney found "roles" that appealed to her. An avid runner, she became lead link of the Healthy, Happy Zapponians circle, which is starting a race series for employees. But is having an experienced HR executive spend much of her time on a road race really the best use of Delaney-for her and for Zappos?

To get a sense of how some of this works in person, Zappos-which is strikingly open-let me attend, via Skype, a regular meeting of the Pursue Growth and Learning circle. It's the rough equivalent of an employee-training department. There were 10 participants, including one lead link, Chris Peake. It was a hybrid of a governance and tactical meeting. (I agreed not to reveal the topics of discussion.)

The meeting began with "check-ins and checkouts," in which each participant (including me) was expected to speak about how they were feeling-about their work, their personal struggles. One woman talked about her love for her "annoying 13-year-old daughter." It was an acknowledgement that everybody has issues besides work that affect his or her state of mind.

After check-in, which took seven minutes, it was all business. A facilitator cut off digressions (known as "distractions"), and the pace accelerated. The agenda was "made up on the fly," according to Peake. "Agenda items are typically referred to as 'tensions.' A tension is simply the difference between 'what currently is and what it could potentially be.' " Tensions could be anything from practical obstacles to brainstorms, and they proliferated-but were mostly tabled for resolution at a later time.

For all the odd lingo ("I'm making myself an action to send you feedback on that"), it wasn't much different from a conventional meeting. The lead link did almost all the talking. He made requests rather than issued orders (though not without the occasional guilt trip) until someone agreed to take on a task. The meeting lasted over an hour and ended after everybody was asked to name their favorite current TV show.

Holacracy is supposed to slay the demons of politics. It hasn't yet. Some managers tried to consolidate their old power inside the new structure, says Nox Voortella, who came to Zappos in 2014 as a sales planner. "In the beginning I thought [holacracy] was great," she says. "Then I saw the old managers around me grow more and more insecure and try to see how they would restructure management. The people who should've stayed and were leaders and could have rallied people left. And the managers that stayed were just the ones who had nothing else to offer." She recently chose to depart for a more traditional company.

Holacracy also lacks some crucial elements, such as a compensation process. The system doesn't value seniority or the size of your budget. There are no formal performance evaluations. How, then, do you calculate how much to a pay a person, and for that matter, who makes the decision?

Zappos just launched its own method. It has nothing to do with achieving financial results; instead, people are paid according to skills they possess or earn, a system called "badging." Just like Girl Scouts, people can earn, say, a Java Coding badge or a Merchandise Planning badge by fulfilling certain requirements. Zappos says it will pay at the market rate for each skill, but every job comprises many skills. To stave off the anxiety of not knowing what you'll be paid, the company created a Grandfather badge that guaranteed pay wouldn't fall in 2016.

Another big issue is how to determine how much time one spends in the various circles and whether they add up to something approximating a full-time job. Every circle has a certain number of "people points" that together approximate the scope of work. Zappos workers have 100 points each and must distribute them among their circles. If they don't enjoy their circles or feel they aren't doing a good job-or if, as some employees report, lead links don't approve as many points as they need-they must find a new circle.

If they don't, they can end up on "the Beach," a kind of purgatory. "You just sat ... in a conference room and talked with the 'why' coaches about what your passions were," says Voortella, who says she nearly landed on the Beach after clashing with a lead link. Today the Beach has been renamed and the path split. You either enter "Hero's Journey," in which a team helps you find a new raison d'être. Or you enter "Transition Support" to help you join another circle. If that doesn't happen in two weeks, you transition out of Zappos entirely.

Meanwhile, holacracy hasn't been the only disruption. In 2014, Zappos reconceived its sales strategy, from one that emphasized volume to one that targets a smaller number of "best customers" who pay full price. Almost simultaneously, the company embarked on a giant software migration-moving its e-commerce system onto Amazon's-a still-ongoing project titled Super Cloud. One result: Zappos's website has barely changed for two years-a lifetime in the world of the Internet. "I wish we had waited until Super Cloud was done," says Manish Honnatti, who leads the Zappos Zero unit and has become an advocate for self-management.

That wasn't all. A year ago, as holacracy had finally become law throughout the company, Tony Hsieh issued another decree. It came in a 4,300-word memo entitled "Reinventing Zappos: The Road to Teal." Wrote Hsieh: "We are going to take a 'rip the Band-Aid' approach to accelerate progress towards becoming a Teal organization (as described in the book Reinventing Organizations)." Therefore, he explained, "as of 4/30/15, in order to eliminate the legacy management hierarchy, there will be effectively be no more people managers."

Hsieh was referring to a 2014 book by consultant Frederic Laloux, who argues that throughout history people have organized themselves in various ways. Laloux assigned a color to each type: orange for modern corporations such as Walmart, and green for what he views as more evolved operations, like Starbucks. Teal, he wrote, was the next stage of development, characterized by self-management, bringing one's "whole" self to work, and having a purpose beyond making money. "There is something broken about management, something exhausted," Laloux tells me over the phone.

For Hsieh, teal was the logical next step, the state that could be achieved only via a process like holacracy. "Teal is the goal; holacracy is the system," says John Bunch, a former professional poker player and Zappos developer whom Hsieh tapped to lead the move to holacracy in 2013.

Then the low-key CEO injected more drama. He asked everyone to commit to teal-or leave (with extremely generous severance). Hsieh knew he'd lose some good people, but he also thought the nonbelievers were impeding progress.

The logic made sense. Still, the emotional side of it was devastating. Many people who had helped create Zappos and had risen to become leaders were being told they were no longer wanted. It felt like a purge. What unfolded next amounted to a collective wail: We've only just started holacracy. What the heck is teal? And, by far, the most common reaction: Will all this ever end?

Hsieh says he didn't know how many people would accept the offer. "Whatever the number was was the right number," he says today. In the end, 18% of the 1,500 employees took buyouts, and another 11% left without a package.

Atomic liquors is a rare vestige of an older Las Vegas. With its mid-century signage and history as the place on whose roof locals stood to observe nuclear tests, it has the sort of retro cachet Hsieh loves.

Waiting for him are three glasses containing his regular beverages: from left, a Diet Coke, a shot of Fernet-Branca liqueur, and a White Russian. Hsieh has his eccentricities. He's worth around half a billion dollars but lives in an Airstream trailer with two pet alpacas on-site. Unmarried and apparently unattached, he sees his company as his family. I drink a shot of the NyQuil-like Fernet with him, then order a beer. (I can't abide White Russians.)

Hsieh turns serious when I ask what he didn't anticipate in the process of implementing holacracy. "I've been surprised," he says, "at how hard it is to let go of the psychological baggage." I ask if he regrets undertaking so much change at once. No, he says: "In retrospect, I would have probably ripped off the Band-Aid sooner."

For Hsieh, self-management is as much a societal strategy as a business one. Having spent much of the past few years building and personally funding-to the tune of $350 million-the Downtown Project, an attempt to build a work-life community in the heart of Las Vegas, Hsieh has ambitions beyond commerce. He likens self-management to the interactions that spring up organically in a city rather than the top-down bureaucracy of a typical company.

Hsieh is thoughtful-a seeker. Yet it's striking that neither he nor other Zapponians make more than perfunctory comments about the company's business. (He did say Zappos has achieved its highest operating profits ever.)

That's a crucial point. If Zappos continues to make money, Amazon will leave it alone. If it doesn't, Zappos could just as easily cease to exist. The company achieved its 2015 profit goals, but several employees say that it has lowered its 2016 targets. (Zappos declined to comment.) Whether that's due to holacracy, growing competition in the online shoe category, or something else is impossible to tell.

Holacracy's value remains far from proven. Its creator, Robertson, says the process takes five to 10 years to be fully integrated-an eon in business. He seems blasé when asked whether holacracy truly works. "Where I don't measure success is by looking at the actual end results," he says. "I don't put much stock in it, because who knows? For me it's about ease of use."

Some 300 companies use his system-Zappos is easily the largest-and there have been failures. In early March, content site Medium announced it was abandoning it. Bud Caddell, a consultant who has studied self-management systems, says his former firm, Undercurrent, tried it without success. "I found it extremely dogmatic and rigid and overly complex, and it took attention away from our customers," Caddell says. Even Hsieh's own Downtown Project tried holacracy but gave up on it in 2014. ("It was too early to adopt in Downtown Project's time line," says Hsieh.)

When asked for an example of something that couldn't have happened without holacracy, Jamie Naughton, Zappos's chief of staff, cited this: Dogs are now allowed in the office. If that had been proposed earlier, she says, anyone could have blocked it because of allergies, fear, etc.  But under holacracy, one of the threshold questions is "Is it safe enough to try?" Now, even though Hsieh was opposed, dogs are welcome, as long as they pass a behavioral assessment. People afflicted by dander have declared "allergy zones" that dogs may not enter. "Self-organization," she says, "allowed one employee to figure it out."

Last spring, while Zapponians were weighing whether to take the offer, one of them invited Caddell to share his own experiences with holacracy in an open forum. He interviewed 15 to 20 employees beforehand, then spoke to a group of about 150. "It felt like a wake," he says. "The people I did speak with expressed a general feeling of loss of control of their own working environment." When Caddell emailed Hsieh suggestions on how to improve morale, he says, he was shut down: "He said I used the word 'leadership' too much, and that I was a biased actor." (Hsieh says that's not the type of phrase he would use.)

For all the havoc, there are signs of optimism at Zappos. Some referred to a book called The Dip, by Seth Godin, which argues that in times of great transition, things always get worse before they get better. Now that the employee buyouts are completed, few apostates remain to slow things down.

"We grew up," says Tyler Williams, who leads the Brand Aura circle (a.k.a. marketing). "Now we are getting back to that place where we are being kind and forgiving to people, and people that used holacracy as a weapon are finding themselves getting smaller and smaller islands to work from. We're more policed now as a company based on peer pressure rather than on micromanagement."

Many are pushing to bring culture back to the forefront. One possibility: adding a Culture Check to the agenda at every governance meeting. A six-step conflict resolution process, developed in-house, may help soften holacracy's rigidity. And Zappos is altering its recruiting process to ensure that new hires are wired for self-management.

The day after the all-hands meeting, there were two parties going on at lunchtime: one for Chinese New Year, with women making dumplings, and a Valentine's Day blowout featuring a cruise-themed costume contest and a cookies-and-tattoos setup. Holacracy hasn't reduced the company's social activities. Says Naughton: "We didn't get ranked one of the best companies to work for in America this year, but we're still really a great company. This is my family, and I hope that's what people take away when they see Zappos." Fair enough. Yet that may be true in spite of holacracy rather than because of it.
A version of this article appears in the March 15, 2016 issue of Fortune with the headline "The Zappos Experiment."

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Photographs by Brad Swonetz It's just another Wednesday afternoon at Zappos headquarters-which is to say that it's unlike any other Wednesday afternoon anywhere else in corporate America. The company's "resident artist," who started as a Zappos call-center worker, is painting an enormous chrysanthemum on a canvas near the entrance.

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Zappos and the search for a better way to run a business

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The online retailer is adopting a management system that aims to circumvent bosses who are bottlenecks and eliminate long and painful meetings.

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Groupthink occurs when a team or organization becomes so similar in their outlook that they lose the ability to be creative in their decision making. The result is an environment where perspectives aren't challenged. Some employees may even feel uncomfortable offering thoughts outside "the norm," and over time, products or services may weaken with the narrowed thinking that groupthink creates.

What are the signs that this dynamic exists in your workplace and what can you do to avoid it? Below, 10 members of Forbes Coaches Council offer their expertise.
1. Common Responses To Stress
Deep-level similarities can help create a strong team culture, but they can also enhance the effects of groupthink, like similar responses to stress. For example, if everyone becomes more risk averse under pressure, your team may not seize certain opportunities. Establishing a clear decision-making process can short-circuit these tendencies and improve performance. - Ross Blankenship, PhD, Bespoke Partners / bp|leadership
2. Limits And Inclusion
Think you can be open-minded? We all have mental capacity limited by what we know and the language of our specialty. This paves the way to groupthink. It feels safe and natural to spend time with others who think the way we do, so we need to consciously choose devil's advocates or people with their own different language, mindset and point of view for our meetings. - Linda Watkins, Leadership for Today
3. Focusing Only On What Is Known
Too often, groups tend to focus on what is generally known rather than focus on critical information that has not been yet explored. Learn to appreciate the power of the question rather than the need to rush to answers. The next time you're in a group meeting, start with, "What problem are we trying to solve?" and keep testing with, "Are we answering the right question?" - Sheri Nasim, Center for Executive Excellence
4. The "Corporate Nod"
According Susan Scott, author of Fierce Conversations, groupthink leads to a culture of the 'corporate nod.' Transparent conversations are not always easy, and yet they are necessary for organizational/personal growth. Gaining and respecting diverse opinions is everyone's responsibility, whether in a leadership position or not. The 'corporate nod' is avoided with authentic and 'fierce' conversations. - Dr. Sarah Stebbins, Dr. Sarah Stebbins, C.P.C.
5. Extinction
One serious and cumulative effect of groupthink is extinction - extinction of a company, product or service that fails to adapt to changing market dynamics or consumer needs. One way of avoiding groupthink is to allow employees the freedom to air objections and doubts without fear of reprisal while engaging in constructive dialogue with outside experts. - Ken Docherty, Docherty Career Management, Inc.
6. Blind Commitments To "Best Practices"
Just because things have been done a certain way historically, doesn't mean that they should continue to be done this way - even when everyone seems to agree that things are "good" as is. Businesses can avoid making blind commitments to best practices by being open and adaptable to change, which provides safe haven for fresh perspectives to be to be introduced and embraced by the collective. - Karima Mariama-Arthur, Esq., WordSmithRapport
7. Lack Of Engagement
Avoiding groupthink can be as simple as constructing a cross-functional, cross-vertical "innovation" team. By tasking them with brainstorming, planning and implementing important projects related to your organization's strategic objectives, you will better engage team members from all staff levels. They will feel heard, a part of the organization's growth, and most importantly, feel appreciated. - Michael S. Seaver, Seaver Consulting, LLC
8. Disasters
The financial crisis is a great example of groupthink within an entire industry. While there are too many to list them all, an example is the blind trust in financial markets over economic fundamentals in decision-making. Businesses benchmarked themselves with each other and, like lemmings running off a cliff, found disaster. Diversity of thought and perspective are the panacea. - Larry Boyer, Success Rockets LLC
9. Drowned-Out Voices
One common area impacted negatively by the nuances of "groupthink" arise when brainstorming potential solutions for an initiative. The overly exuberant drown out those who are more thoughtful and deliberate in their contributions. A more innovative approach involves a technique called "brainwriting" that allows all ideas to be heard and considered. - Jackie Nagel, Synnovatia
10. Over Confidence In Your Decision
Everyone supports it, so it must be right, right? One major effect of groupthink is that it leaves a team deceived into thinking the right decision has been made. It may be the right decision, but it often isn't because real expression has not taken place. Team leaders can avoid this by spending more time in the question-asking phase, and not being in a hurry to make a decision. - Patrick Jinks, The Jinks Perspective

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10 Effects Of Groupthink And How To Avoid Them

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Groupthink occurs when a team or organization becomes so similar in their outlook that they lose the ability to be creative in their decision making. The result is an environment where perspectives aren't challenged. Some employees may even feel uncomfortable offering thoughts outside "the norm," and over time, products or services may weaken with the narrowed thinking that groupthink creates.

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Behavioral economists and psychologists have uncovered scores of biases that undermine good decision-making. And, along with management experts, they have provided helpful tips that decision-makers can use to try to correct for those biases. But a comprehensive framework for achieving quality decision-making throughout an organization is still rare - almost three-quarters of companies have no formal corporate-wide approach to making major, complex decisions.

Without a proven, organization-wide approach, there may be, at best, isolated pockets of high-quality decision-making where individual leaders have elected to take a rigorous, transparent approach. Otherwise, the organization is at the mercy of the biggest bias of all: the perception that it is good at making decisions.

With an organization-wide approach you can increase the odds of circumventing that bias. Further, an organization-wide common language speeds up the making and reviewing of decisions. Transparency in how decisions are reached replaces the blind faith that people must place in the judgment of their superiors. Most importantly, more high quality decisions, instead of merely "good enough" decisions, together can add up to billions of dollars in additional value.

The first step is to define what a good decision looks like. In the early 1990s, Chevron (where until recently one of us worked) began experimenting with Decision Quality (DQ), a process that defines a high-quality decision as the course of action that will capture the most value or get the most of what you are seeking, given the uncertainties and complexities of the real world.

Armed with that definition, Chevron has applied the tools of Decision Analysis (DA), to the choices it faces. DA rejects the all-too-common approach of deciding between the status quo and a single alternative course of action. Instead, DA involves considering a range of possible outcomes, their probability of occurring, and the results (financial or otherwise) of each. Decision-makers can then compare alternatives in terms of both upside opportunity and downside risk, and make decisions in light of their own appetite for risk and tolerance of uncertainty.

With these methods in mind, we can describe the six elements of DQ that characterize any high-quality decision:

An appropriate frame, including a clear understanding of the problem and what needs to be achieved.

Creative, doable alternatives from which to choose the one likely to achieve the most of what you want.

Meaningful information that is reliable, unbiased, and reflects all relevant uncertainties and intangibles.

Clarity about desired outcomes, including acceptable tradeoffs.

Solid reasoning and sound logic that includes considerations of uncertainty and insight at the appropriate level of complexity.

Commitment to action by all stakeholders necessary to achieve effective action.

DQ won a foothold in Chevron through some eye-catching early successes in some major capital decisions. For example, one of the company's refineries needed upgrading to remain competitive in the refining business. A first pass at the problem resulted in a proposal to install a unit called a flexi-coker - a major system capable of refining a range of crude oil types and minimizing the ultra-heavy coke residual.

During the installation, the refinery would have to be shut down, resulting in a significant loss of revenue. Flexi-cokers are expensive, and related improvements proposed for implementation during the shutdown would add to the project's cost. As details of the engineered design matured, the estimated cost escalated, nearly doubling to $2 billion. At that point, senior management asked for a more rigorous review to better understand the risks and risk/reward balance.

To revisit the issue, the team tasked with the review turned to DQ concepts. In the course of the DQ process, the frame was widened to include all improvements that could be made during shutdown of the facility, including those unrelated to the flexi-coker. Doable alternatives, excluding the flexi-coker, were explored. The team then analyzed what would happen if certain variables like feedstock crude oil price, wholesale gasoline prices, and project duration deviated more than had been expected originally. And they analyzed the probability of these specific deviations occurring. The team was then able to articulate the overall risk profile of the project: the potential costs for each deviation and the likelihood of each occurring. These methods revealed that the risk profile of the project as originally conceived was more than Chevron's management was willing to accept.

A set of acceptable cost/value trade-offs, and the likelihood of achieving them, was determined. Further analysis revealed that it was the proposed new flexi-coker itself that was contributing the bulk of the downside risk. At this point, Chevron's management publicly announced the shelving of the flexi-coker portion of the project.

Chevron estimates that revisiting the decision and the subsequent change in project scope captured more than 50% of the original projected value at 25% of the cost, regaining the competitive position of the refinery at a much lower level of deployed capital.

For the first 10 years, the use of these decision techniques by various groups in Chevron was voluntary, though there were a string of early successes. During that time, Chevron proceeded to build deep internal competence in the discipline - introducing thousands of decision-makers to DQ and DA and developing hundreds of internal decision support professionals who applied them to many major decisions.

When David O'Reilly became Chairman and CEO in 2000, he insisted that DQ become mandatory on all capital expenditures over $50 million. Decision executives were also required to become certified in the fundamentals of the approach. Decision professionals were embedded in the organization around the world, and became part of the Chevron capital stewardship process.

The impact of many thousands of people making even marginally better decisions was huge in a company Chevron's size. And in operations, where decisions are made almost daily, the result was, in effect, continuous improvement.

Achieving that level of decision quality throughout your organization takes some work, but you will quickly find that it has great appeal, apart from the value it captures through consistently higher-value decisions. Decision-makers and teams are energized by its capacity to get people to agree on a decision, though they may have begun with widely divergent views about the best course of action.

However, as anyone who has ever seen groupthink in action knows, any number of otherwise intelligent people can come to agree on nonsense. Conversely, autocratic leaders can simply impose their will. But by first defining what constitutes a high quality decision and the elements that go into it, DQ/DA erases lines drawn in the sand by intransigent team members.

Your teams are freed to focus on each element of this rational decision-making model and identify gaps in the quality of a decision. Instead of sticking to biases or getting mired in politics, people work to fill those gaps, with analytics providing a clear line of sight to the most value. Further, by satisfying all six elements of DQ, companies can recognize the quality of a decision as they make it, not just in hindsight. The result: far fewer failed strategies, far less wasted capital in investment decisions, and - to everyone's great relief - fewer blame games and witch hunts.

The hard truth is we all leave a lot of value on the table - value that we could seize with better decisions. Doing so requires an organization-wide framework for making them.

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An Organization-Wide Approach to Good Decision Making

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Behavioral economists and psychologists have uncovered scores of biases that undermine good decision-making. And, along with management experts, they have provided helpful tips that decision-makers can use to try to correct for those biases. But a comprehensive framework for achieving quality decision-making throughout an organization is still rare - almost three-quarters of companies have no formal corporate-wide approach to making major, complex decisions.

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A 2x2 Matrix Explains Good vs. Great Leadership

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The relationship between the two is not a continuum.

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Policies and Rules vs. Philosophy

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Customer service is not a department. It's a philosophy to be embraced by every member of an organization, from the CEO to the most recently hired employee.

This is one of the "mantras" that I preach to all of my clients. It doesn't matter what type of business you have, whether it's B2B or B2C. It doesn't matter what industry you are in: hospitality, financial, retail, manufacturing, service, etc. Customer service finds its way into marketing, sales, growth and revenue - every aspect of every business.

The best leaders in business know this and recognize that every department, and consequently every employee, has an impact on the customer. Every decision is made with the customer in mind. Every employee understands the role he or she plays in the customer experience (CX) and customer service strategy. The leadership understands that customer service is a not about policies, rules and procedures, although some of that plays a part in the overall strategy. They know and understand that customer service is a philosophy.

For this to work, the organization must move from being focused on operations to being focused on the customer. That means all decision-making is done with the customer in mind. By the way, that doesn't mean that we can't make decisions that the customer might not like (like raising prices or eliminating a product line). It means we consider what the customer's response will be, anticipate the outcome, good or bad, and move forward with that in mind.

For many companies, this way of thinking will require a cultural shift. Old school thinking is to establish policies, rules and regulations that are clear to employees.

A customer-focused culture allows some freedom to deviate from operational standards to get and keep a customer. And while there must be boundaries, focusing on the customer implies a degree of latitude. Companies take away the fallback of saying to a customer, "I'm sorry, I can't do that. It's against company policy." Instead, employees are empowered and encouraged to come up with solutions to help their customers. They are allowed to challenge the operational norm to give customers what they want and need.

For this to happen, employees have to be properly trained. They have to know where the "line in the sand" is, so they don't go too far.

Some might think this is hard to teach. Who ever said business was easy? While not necessarily easy to do, there is a fairly simple process.

1. The right leadership. The leadership team has to want to create the culture. They have to define what the culture will look like, and then "walk the walk." They must be the role models for their employees to look up to, and defend the culture when it goes out of alignment. (See my article on Six Steps to Creating a Customer Centric Culture.)

2. The right employees. It goes without saying that you must have the right employees. They must be on board and be in alignment with your customer-focused culture and philosophies.

3. The right foundation . Before you can empower people to do the right thing, they have to know what the right thing to do is. This requires some basic customer service training that is catered to their responsibilities and roles in the company. Customer service basics, like being nice, easy to work with, providing a timely response, etc., never go out of style.

4. Freedom to make their own (good) decisions. It's impossible to stay away from the word empowerment If you have people who understand the basics (as mentioned above) and they have been properly trained in the types of decisions you want them to make, then let them do what you expect them to do. Prove that employees don't have to go to a manager every time they need to make a customer-focused decision that is outside of the norm.

5. Teachable moments. When employees make decisions, good and bad, use them as teachable moments. Share stories about how others have made decisions in which philosophy trumped policy. Employees will learn where the aforementioned line in the sand must be drawn.

6. I once asked a CEO what his most important responsibility at the company was, and he said, "I defend the culture." In other words, he keeps everyone in alignment with the service vision and culture. Sustaining a customer-focused culture is not easy. It can't be changed overnight. And, once the culture is where you want it, you have to stay on top of it. It's so very easy to slip back.

In the end, culture is about philosophy, not policy. While these steps may seem like common sense to many of us, they are not necessarily easy to implement. Much, much more could be written about any one of the above. Think about each of these steps. Where do you excel? Where do you see opportunity? What will it take for you to move from an organization entrenched in policy to a customer-focused philosophy?

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Customer Service Is Much More Than Rules And Policies -- It's A Philosophy

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Customer service is not a department. It's a philosophy to be embraced by every member of an organization, from the CEO to the most recently hired employee. This is one of the "mantras" that I preach to all of my clients. It doesn't matter what type of business you have, whether it's B2B or B2C.

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Whether you feel the best boss is more of a facilitator among equals or a director who leads from the front, to succeed in international business you need the flexibility to adapt your style to your cultural context.
By Erin Meyer, INSEAD Affiliate Professor of Organisational Behaviour

This lesson was brought home to me when I taught a group of Heineken executives. Heineken, of course, is a Dutch brewing company. When you visit Heineken's headquarters in Amsterdam, you will find a lot of tall blond Dutch people and also a lot of Mexicans. In 2010, Heineken purchased a big operation in Monterrey, Mexico, and now a large number of head-office employees come from Northern Mexico.

Among them is Carlos Gomez, who described to my class his experiences since moving to Amsterdam a year earlier. "It is absolutely incredible to manage Dutch people and nothing like my experience leading Mexican teams," Gomez said, "because, from my experience, the Dutch do not care at all who is the boss in the room."

The amount of respect we show to authority is deeply rooted in the culture we are raised in. We begin, as young children, to learn how much deference should be shown to an older sibling, a parent, a teacher - and later, in business, these same ideas impact how we view the ideal relationship with our boss or subordinates.

For someone such as Gomez, who has learned to lead in a culture where deference to authority is relatively high, it is both confusing and challenging to lead a team where the boss is seen as just one of the guys. In this case, the challenge was particularly strong, as the Netherlands is one of the most egalitarian cultures in the world. Gomez explained:

I will schedule a meeting in order to roll out a new process, and during the meeting my team starts challenging the process, taking the meeting in various unexpected directions, ignoring my process altogether, and paying no attention to the fact that they work for me. Sometimes I just watch them astounded. But often I just feel like getting down on my knees and pleading with them, "Dear colleagues, in case you have forgotten I.....am......the boss."

Power distances

Geert Hofstede, one of the first researchers to look at the idea of what good leadership looks like in different countries, coined the term "power distance", which he defined as "the extent to which the less powerful members of organisations accept and expect that power is distributed unequally." As subsequent researchers continue to explore and research this topic we have been looking at questions such as:

How much respect or deference is shown to an authority figure?

If you want to communicate a message to someone two levels above or below you, should you go through the hierarchical chain?

When you are the boss, what gives you your aura of authority?

The answers to these questions vary dramatically depending on what country you come from. One of my INSEAD colleagues, Professor André Laurent polled hundreds of managers, asking: "Is it important for a manager to have at hand answers for most of the questions subordinates may raise about their work?" While 45 percent of the Japanese sample claimed it was important for the boss to have most of the answers, only 7 percent of Swedes thought the same way.

One Swedish manager commented, "Even if I know the answer, I probably won't give it to my staff... because I want them to figure it out for themselves!" Conversely, one Japanese executive said, "I would try not to ask my boss a question unless I was pretty sure he knew the answer."
How they follow the leader
Most East Asian countries are high-power-distance cultures. One of the many reasons for this is the strong impact of Confucianism. Confucius believed that mankind would be in harmony with the universe if everyone understood their role in society and behaved accordingly. He devised a system of interdependent relationships, in which the lower level gives obedience to the higher, while those who are higher protect and mentor the lower.

In order to understand many East Asian hierarchies, it is important to think not just about the lower level person's responsibility to follow, but also about the responsibility of the higher person - whether father, boss or elder - to protect and care for those lower down - whether sons, staff or youth. Although Confucius has been dead for centuries, anyone leading a team in China can benefit from understanding these principles.

During a research project I conducted with my colleague Elsie Shen, we interviewed Steve Henning, an Australian who had lived in China for many years. "In China, the boss is always right," Henning reflected, "and even when the boss is very wrong, he is still right." Gradually he had learned to understand and respect this system of reciprocal obligations. "Your team may follow your instructions to the letter, but in return, you must understand your role to coach and take care of them," he explained.

In a hierarchical culture, protect your subordinates, mentor them, always look out for their interests, and you may reap many rewards. As Henning put it: "There is great beauty in giving a clear instruction and watching your competent and enthusiastic team willingly attack the project without challenging you every step of the way."

In today's global business environment it is not enough to be either a low-power-distance leader or a high-power-distance leader. You may find yourself leading a team with both Dutch and Chinese employees (as well as Italians, Swedes and Mexicans). You need to develop the flexibility to manage up and down the cultural scale. Often this means going back to square one. It means watching what makes local leaders successful. It means explaining your own style frequently. It may even mean learning to laugh at yourself. But ultimately it means learning to lead in different ways in order to motivate and mobilise groups who follow in different ways from the folks back home.
This article was originally published at INSEAD Knowledge.

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Leadership Qualities: How To Lead Well Across Cultures

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Whether you feel the best boss is more of a facilitator among equals or a director who leads from the front, to succeed in international business you need the flexibility to adapt your style to your cultural context. By Erin Meyer, INSEAD Affiliate Professor of Organisational Behaviour This lesson was brought home [...]

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Our mission is to empower women to achieve their ambitions.

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Despite the widely accepted ideal of "shared value," research led by Harvard Business School's Kasturi Rangan suggests that this is not the norm-and that's OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic. To maximize their impact, companies must ensure that initiatives in the various theaters form a unified platform. Four steps can help them do so:

Pruning and aligning programs within theaters.

Companies must examine their existing programs in each theater, reducing or eliminating those that do not address an important social or environmental problem in keeping with the firm's business purpose and values.

Developing metrics to gauge performance.

Just as the goals of programs vary from theater to theater, so do the definitions of success.

Coordinating programs across theaters.

This does not mean that all initiatives necessarily address the same problem; it means that they are mutually reinforcing and form a cogent whole.

Developing an interdisciplinary CSR strategy.

The range of purposes underlying initiatives in different theaters and the variation in how those initiatives are managed pose major barriers for many firms. Strategy development can be top down or bottom up, but ongoing communication is key.

These practices have helped companies including PNC Bank, IKEA, and Ambuja Cements bring discipline and coherence to their CSR portfolios.

HBR Reprint R1501B

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Despite the widely accepted ideal of "shared value," research led by Harvard Business School's Kasturi Rangan suggests that this is not the norm-and that's OK. Most companies practice a multifaceted version of CSR that spans theaters ranging from pure philanthropy to environmental sustainability to the explicitly strategic.

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Here's What Makes Gen Z and Millennials Happiest in the Workplace

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A new workplace study shows that Generation Z employees prefer traditional offices more than millennials. Both want in-person communication.

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Kat Taylor sums up the focus of her philanthropic efforts in six words: Good food. Good money. Good energy. That's why over the last decade, she and her husband, Tom Steyer, have built a sustainable ranch, opened a bank that is mandated to contribute to social justice and the environment, and established an organization "to inspire U.S. politicians to achieve climate stability while restoring prosperity."

Steyer, the founder and senior managing member of Farallon Capital Management, retired at the end of 2012. He now spends his time as an energy advocate, focusing mostly on the "good energy" side of the equation. In 2013, he formed NextGen Climate, an organization that "acts politically to prevent climate disaster and promote prosperity for all Americans."

Taylor is co-CEO, and with her husband co-Chair, of Beneficial State Bank, which they founded together in 2007. She devotes most of her time to sustainable agriculture and responsible banking. "Finance matters more to society than society realizes," she says.

Taylor stood out recently as a panelist at a Finance & Society Conference in Washington, D.C., organized by Anat Admati, a Stanford GSB finance professor. Admati, an author and critic of ineffective banking regulations, says Taylor brings a more nuanced approach than do central bankers and macroeconomists, who often lump all "credit" together and don't make distinctions between the different kinds of loans that banks and other institutions make. "Kat brought a unique perspective to this panel because she is thoughtful about the broad context of the decisions that banks make and more aware of the full set of stakeholders involved," says Admati of the conference sponsored by The Institute for New Economic Thinking.

Stanford Business caught up with Taylor after the conference to discuss philanthropy, banking, and sustainable farming.

Multi-Pronged Approach

If Taylor's brand of philanthropy looks less like charity and more like commerce and politics, that's on purpose. Her charitable giving spans more than two decades; at first she concentrated on education and cultural causes, donating money directly to organizations. But philanthropy alone, she says, cannot put a dent in the world's problems unless it's somehow connected to business and the social compact - and to society's main institutions.

Over the last decade, she and Steyer, both MBAs from Stanford GSB, have picked three specific areas to focus on, climate, finance, food. And instead of just writing checks, they have created working entities within the three sectors, not only to bring change but to learn more by doing."We live in these terribly complex, interconnected times. There's not going to be a silver bullet or single-dimensional approach," Taylor says.

Banks as Crowdfunders

One of those entities - the bank they founded, which has offices in California, Oregon, and Washington - may seem inconsistent with charitable giving, especially considering the role big banks played in the 2008 financial crisis. But Taylor sees the leverage that the bank business model affords - when it's done right - as a way to help society. It's the ultimate form of "crowdfunding," she says, because depositors can vote with their money by deciding which banks to use.

Financial institutions, of course, cannot survey all of their borrowers to learn how they want their money invested, but depositors can have influence, she says, by directing their money to banks that align with their values.

Their bank services organizations and companies that are "creating the new economy - one that is fully inclusive, racially just, and environmentally sound." Any profit, when distributed, is funneled back to the bank's foundation, which is mandated to invest it in the community and environmental causes.

With just over $500 million in assets, Taylor jokes that the bank is a "gnat" compared with traditional banks, some of which measure their asset size beyond a trillion dollars. Community banks, she says, could benefit from more consolidation, noting that one way the 111 community banks in the United States might be able to make a dent in the profits of traditional banks is to hit them where it hurts - credit-card fees. That's why her bank offers a credit card associated with the likes of the Sierra Club and other causes to give card holders an alternative to credit cards that are aligned with for-profit businesses.

Why Finance Matters

Taylor is trying to address the wider systemic problems in the financial sector too. She argues that conventional banks are relying too heavily on tools like FICO scores, which divide borrowers into broad categories that are not particularly predictive of ability or willingness to repay.

Beneficial State Bank has not eliminated the use of FICO scores but it layers on what she says are more "effective and fair" algorithms. Taylor works with a company that uses detailed analytics to incentivize good borrower behavior and migrate pre-prime borrowers to even better rates and terms.

Once the bank issues them loans, the borrowers are given an opportunity to reduce their interest rates even further when they hit certain milestones, such as making payments on time or taking a class in financial literacy. "The payday model is profitable at the expense of borrowers," she says, referring to short-term, no-collateral loans that typically carry extremely high application fees and interest rates. "Our joint model is profitable because it creates value for all parties - greater financial health and choices for the customers and a new pool of customers for the bank."

Why Food?

Like banking, which impacts a large sector of society, food production is related to a wide and inter-related network of issues, such as energy, human health, and the environment. "Food is something that affects everyone, and we can address a lot of systemic problems through the food lens," Taylor says.

The 2,000-acre TomKat ranch in Pescadero, California, that she owns with Steyer is meant to be a living testing ground for sustainable ranching. The ranch uses sustainable management practices to raise fully grass-fed beef and pasture-raised eggs. The migration of the cattle and other domestic animals there is monitored to assure that the grasslands and coastal brush dominating the landscape of the ranch's hills and valleys are not depleted. Quite the opposite - through planned grazing, invasive plant species are reduced and the presence of perennial grasses that cut down on soil erosion, retain water, and improve the carbon content and fertility of the soil is increased.

The results are being tracked and evaluated in an effort to create a scientific database of proof that the methods work. Many of the practices are built on the intricate symbiotic partnership of the animals on the ranch, which range from cattle to crickets.

The quality of the soil has improved since the ranch reintroduced this form of animal agriculture in 2006, along with diversity of the plants and wildlife, Taylor says.

The more they work from this system-wide approach, the more they realize that it is the right approach to making change, Taylor says. "Both of us feel like our generation has enormous responsibility, just as we have benefited from prior generations."
Kat Taylor received her MBA from Stanford GSB in 1986 and Tom Steyer received his in 1983.
Listen to This Story

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Kat Taylor: Changing the Face of Philanthropy

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Kat Taylor sums up the focus of her philanthropic efforts in six words: Good food. Good money. Good energy. That's why over the last decade, she and her husband, Tom Steyer, have built a sustainable ranch, opened a bank that is mandated to contribute to social justice and the environment, and established an organization "to inspire U.S.

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What do employees, in the aggregate, think about the ethics of business leaders? As a former executive, I always felt, when I was in the corporate world, that this question was an intriguing one. A reasonably perceptive observer couldn't help but notice that while many leaders were exemplary role models that employees naturally wanted to follow, others took advantage of their positional power and seemed to be chronically above the rules they asked others to play by.

So I was pleased to recently come across a 2014 report examining just this issue: How do employees view leadership ethics? This is the focus of a survey, Ethical Leadership: Every leader sets a tone, from the Ethics Resource Center. The national survey involved responses from approximately 6,400 private sector workers. Following are some of its key findings.

Employee perceptions of leaders are shaped by three main factors - According to the report, these are: 1) The overall character of leaders as experienced through personal interactions. 2) How senior managers handle crises. 3) The policies adopted by leadership to manage the company.

"Employees want to know, for example," the report stated, "whether leaders treat lower level employees with dignity and respect, share credit when good things happen, and uphold standards even if it reduces revenue and profits. They watch to see whether leaders are steady in a crisis, hold themselves accountable or, alternatively, shift blame to others. Workers also look at day-to-day management decisions to gauge whether ethical behavior is recognized and rewarded, or whether praise and promotions go to workers who bend the rules." In short, when it comes to ethics, small things - like personal interactions - make a big difference. Not surprisingly, employees respect leaders who walk the talk, not talk the walk. The report commented:
"Leaders who demonstrate they are ethical people with strong character have a much greater impact on worker behavior than deliberate and visible efforts to promote ethics."
A second key conclusion - on the surface surprising, but probably less so for those who spend considerable time studying or thinking about the day-to-day fabric of management - is that:

Supervisors can impact ethics as much as CEOs - "We also found," the report stated, "that tone at the top doesn't just come from the C-suite. When it comes to modeling good behavior, keeping promises, or upholding company standards, direct supervisors may matter just as much or more than CEOs and other senior executives. In fact, two in five workers we surveyed pointed to their immediate supervisor when asked who they consider senior leadership."

I found this last point fascinating, an insight I'd never heard articulated this way, grassroots testimony to the influence of individual managers, no matter where they reside on the management food chain. (Old business saying: People leave managers, not companies.)

"However 'senior leadership' is defined," the report noted, "workplaces in which leaders display ethical leadership tend to have lower rates of misconduct, less pressure to break rules, and greater employee engagement." All solid, desirable business outcomes.

Overall, the survey was a thoughtful balanced examination of an important subject that tends not to receive much examination. It was less focused on finding, say, that a certain percentage of employees believe leaders to be unethical... than on determining the types of leadership behaviors that will elicit the most productive results.

The report concluded that ethics isn't something to trot out for an occasional employee campaign, but a 24/7 job: "In matters of ethics, leaders are always setting a tone." Nicely, concisely said.

* * *
Victor is author of The Type B Manager: Leading Successfully in a Type A World (Prentice Hall Press).

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Survey Examines, What Do Employees Think About Leadership Ethics?

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What do employees, in the aggregate, think about the ethics of business leaders? As a former executive, I always felt, when I was in the corporate world, that this question was an intriguing one.

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The Sarbanes-Oxley Act explained. Information, guidence and resources covering the legislation

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Since the scandals of WorldCom and Enron in the early 2000's, business schools across the country have worked to bring more awareness on ethics and leadership. Business schools implemented programs that infused some form of training on ethics into every class, or established a stand-alone class on ethics, or a instituted a combination of the two. Penn State's Smeal College of Business has now added another approach to demonstrate its commitment to fostering ethical behavior: creating a new position of Honor and Integrity Director.

Jennifer Eury was recently named Smeal's Honor and Integrity Director. Though an honor and integrity-related position existed before, the current position creates a hub for promoting initiatives across the Smeal community. "My role provides us with a meaningful forum to promote honor and integrity and nurture an ethical community that we want to flourish," Eury said. In her position she seeks to strengthen awareness, develop a commitment to ethics, and create engagement on the topic among students, faculty, staff, administrators, alumni and corporate recruiters. "With the start of each semester in the fall and spring," Eury said, "community members voluntarily participate in a ceremonial signing of our Honor code." That code is:

"We, the Smeal College of Business community, aspire to the highest ethical standards and will hold each other accountable to them. We will not engage in any action that is improper or that creates the appearance of impropriety in our academic lives, and we intend to hold to this standard in our future careers."

The signing takes place two to three weeks into each semester and is for all community members at Smeal. "The honor code started in 2006 with the support of our MBA students and was adopted by the larger community the following year," according to Eury.

Many business schools teach ethics through case studies based on real business issues. While they do the same at Smeal, Eury also told me that they try to make ethics a part of the student's life while in college. "Students, like business people, face ethical dilemmas," she said, "pressures associated with 'everyone is doing it' or 'we've always done it that way' are challenges students see day to day."

Smeal has also been proactive in bringing in speakers to talk to students. Through its G. Albert Shoemaker Program in Business Ethics, Smeal brings in professionals to share their experiences to better prepare tomorrow's students. "We have had HealthSouth's former CFO Aaron Beam in to speak to our students," Eury told me, "and the students really enjoy his talks." Beam was HealthSouth's first Chief Financial Officer and he pleaded guilty of manipulating the health provider's financial statements while working for CEO Richard Scrushy. Beam was sentenced to 3-months in federal prison, while Scrushy, whom Beam testified against, was acquitted at trial ... only to be busted in a bribery scam a few years later. While Scrushy is also on the speaking tour, I'm not thinking he'll be speaking at Smeal anytime soon on his topic of, "How does an innocent man survive five years in a federal prison?"

In her new role, Eury has also started to talk with alumni about their careers, their challenges and the rewards of sticking to an ethical path. "In addition to supporting our students, faculty, staff, and administrators, I also see our program here at Smeal as a way to keep our alumni engaged in our continued work," Eury said.

Eury also aims to bring more awareness of their programs to companies that recruit on campus. "We want to provide our students with the opportunities to meet with companies and to discuss ethical dilemmas in the workplace, so that our students are better prepared to deal with the challenges in business today," Eury told me. "We also encourage our students to learn about a company's culture during the interview and recruiting process."

When you read about some white-collar felon heading to prison, one thing the media is usually good at incorporating into the article is where the offender went to college. (Rajaratnam to Wharton, Rajat Gupta to Harvard, Winifred Jiau to Stanford, etc.). Smeal is taking another step to keep their alumni off of that role call.

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Penn State's Smeal College of Business Creates New Position For Ethics

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Since the scandals of WorldCom and Enron in the early 2000's, business schools across the country have worked to bring more awareness on ethics and leadership. Business schools implemented programs that infused some form of training on ethics into every class, or established a stand-alone class on ethics, or a instituted a combination of the two.

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Article about sustainability in the fashion industry.

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Fashion has a sustainability problem. Every year, the global apparel industry produces more than 400 billion square meters of fabric - nearly enough to cover California - and consumes nearly 130 million tons of coal, making it "a significant contributor to global greenhouse emissions," according to a report by the Materials Systems Laboratory at the Massachusetts Institute of Technology.

Apparel manufacturing also requires an incredible amount of water and uses some hazardous chemicals. Compounding this waste problem, Greenpeace reports, is the fact that of the 80 billion pieces of clothing produced annually, three out of four end up in landfills or are incinerated.

Entrepreneur Sadie Monroe has witnessed fashion's dirty secret from the inside.

"I saw the amount of pure waste and how disposable fashion had become," Monroe said of her time working in the industry and studying fashion design at Columbia College Chicago. "I learned about the time, craft, skill and how much human effort it takes to create something, and then you see it being dumped in a landfill. You see it being discounted a month after it came out."

In response, Monroe and her business partner, veteran nonprofit professional Steve Sullivan, created Fibre Athletics, a company that is as strict about its commitment to environmental sustainability as it is to chic design.

From large companies like Timberland and Patagonia to startups like Fibre Athletics, the activewear industry is going green.
Sustainability Efforts As Unique As The Brand
While most sustainable businesses pursue the concept of the triple bottom line - social impact, environmental friendliness and profit - each one approaches the challenge differently.

Fibre Athletics sources materials domestically as much as possible, working only with vendors that guarantee things such as organic cotton, recycled polyester, no toxic chemicals, low-impact dying techniques and fair labor standards.

Monroe also wants to combat the trend of fast fashion, in which apparel flies from the catwalk to stores to consumers to landfills at lightning speed, all to keep up with the latest trends. Though it seems counterintuitive for a business to do so, Fibre Athletics encourages consumers to buy fewer items of clothing.

"We want to reinstate the value of building a quality wardrobe over a big closet," Monroe said. "Part of that philosophy is having a few products at a time."

Fibre Athletics currently offers one style of T-shirt and a lightweight jacket for men and women. That's it. Monroe's focus when designing them was durability, comfort, beauty and performance so the pieces would be long-lasting and multifunctional, taking wearers from hiking to happy hour. When a shirt is high-quality and versatile, it can take the place of many shirts.

The company also gives 1 percent of profits to The Eden Projects, an organization that restores forests around the world, and The Cara Program, which supports job training and placement in and around Chicago.
Fashion's Different Shades Of Green
Many of the brands that value sustainability have found unique ways to make it part of their business models.

Patagonia battles fashion's transparency problem - the fact that consumers don't have access to information about where its clothes are made - with an interactive map to showcase its eco-friendly vendors worldwide and engages in environmental political action under the hashtag#VoteOurPlanet.

Timberland, along with its own transparency efforts, encourages employees to volunteer in communities around the world and tracks that social investment. Thus far, the company has tracked 1 million employee volunteer hours and says 78 percent of its employees are engaged in volunteering.

Smaller Arizona yoga-wear company ChewyLou Designs focuses on community and environmental concerns. Owner Alyssa Dinowitz divides her screen-printing production between two organizations in her community: Acme Screen Printing, which calls itself Arizona's greenest screen printer, and Arizona Centers for Comprehensive Education and Life Skills, a facility that teaches vocational skills to adults with special needs.

ChewyLou Designs also actively supports a range of nonprofits, including Chemo Companions, which Dinowitz founded.

"My mother's motto was, 'Leave it better than you found it,'" she said. "This is just how my mother would have run a business."
Facing Sustainability Challenges
Although more fashion companies are incorporating environmental and social standards into their business practices, Monroe said that doing so while turning a profit can be difficult.

"It takes more effort; it takes more time. It takes more negotiating with people," Monroe said. "You kind of have to see for yourself if it's worth it. We're still trying to figure that out."

Naturally, it's more expensive for vendors to produce things in an environmentally friendly way, as well as pay their workers a fair wage. This makes striking a profitable balance between costs and what consumers are willing to pay a challenge, particularly for startups like Fibre Athletics. When some vendors hear about a sustainable apparel company's aspirations - and price points - they just laugh, Monroe said.

However, with big names like Columbiaand Adidaspromoting sustainability, it may help establish precedents for newer companies looking for conscientious vendors. Small but long-standing sustainable activewear companies, such as 27-year-old climbing outfitter Black Diamondand 21-year-old Alternative Apparel, prove the formula can work on a smaller scale, too.

For ChewyLou Designs, which just celebrated its eighth birthday, the key to growing sustainably has been working with smaller vendors that share the company's environmental perspective. For the owner, Dinowitz, simply being conscientious has been a business builder in an indirect way.

"If you're kind, and your intentions are good, it just flows to you," she said. "Business and people and connections and networking - and it just happens. It just did for me, anyway."

Although fashion's carbon footprint may still loom large worldwide, the activewear corner of the industry is making noticeable strides toward a more sustainable future.
A former downtown development professional, Natalie Burg is a freelancer who writes about growth, entrepreneurialism and innovation. Visit In A Lifetime to read more stories of human achievement in sustainability and find out what the future holds. This article is not an endorsement of any particular product, service or organization; nor is it intended to provide financial advice. It is intended to promote awareness and is for educational purposes only.
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Green Is The New Black: Activewear Brands Stand Up For Sustainable Fashion

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Fashion has a sustainability problem. Every year, the global apparel industry produces more than 400 billion square meters of fabric - nearly enough to cover California - and consumes nearly 130 million tons of coal, making it "a significant contributor to global greenhouse emissions," according to a report by the Materials Systems Laboratory at the Massachusetts Institute of Technology.

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The Importance of Learning in Organizations

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David Garvin and Amy Edmondson, Harvard Business School professors, say that learning organizations generate and act on new knowledge to stay ahead of change and the competition.

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Interesting article about the power of middle managers.

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4 min read

Opinions expressed by Entrepreneur contributors are their own.

What comes to mind when you think of the term "middle manager?" Is it someone who has little power, spends a lot of time micro-managing people and whose career is in a rut?

We wouldn't blame you for thinking that. In popular culture, middle managers get a bad rap. From "Office Space" to "The Office," the middle manager is often hapless, mocked by his employees and bullied by executives.

There are close to 11 million people in the U.S. working in a non-executive "middle" management role, according to the Wall Street Journal (compared to about 238,000 executive leaders, according to the Department of Labor). All those mid-level leaders are extremely important because they are directly responsible for the success of employees doing everything from writing magazine articles to designing jetliners. They have real leverage when it comes to inspiring success.
Related: 4 Steps to a Better Management Technique
Over the past few years, we've noticed many middle-level leaders coming to TINYpulse seeking a way to improve the morale and engagement of their direct reports. In new research we just released, we sought to find if there was a larger trend at play. What we found highlights that middle-level managers are, particularly in terms of employee retention and professional growth, basically workplace superheroes -- a notion that would surely brighten Michael Scott's day.

The middle manager's role.

Our first task was to estimate how many middle-managers are leading employee engagement efforts. To create a benchmark, we looked at how many middle managers use TINYpulse. We found that middle managers own about 20 percent of accounts. This estimate excludes anyone working in HR or specific talent management roles.

We also commissioned an independent poll of 502 U.S. and found that 70 percent said that their direct manager had taken steps to implement an employee engagement strategy at work. Of the remaining 30 percent, a majority reported that they would prefer a manager handle employee engagement rather than someone in HR or at the executive level.
Related: If You Want to Lead, You Also Need to Manage
The employees in the "yes" group told us that the most common employee engagement tactics their manager uses are employee recognition, asking for feedback and career training. Of the 30 percent who answered "no," the biggest problems they have at work are pay and benefits, communication problems with their manager and low recognition.

How middle managers reduce attrition.

We also looked at employee responses to TINYpulse employee satisfaction surveys to see whether the middle managers who are leading employee engagement actually have a positive impact on their employees.

The biggest superpower we found: middle managers have a superhuman ability to shrink attrition. On the question, "How likely would you be to leave for a 10 percent raise?" employees whose direct managers are responsible for engagement were 20 percent less likely to quit for that much of a pay bump.

Other key indicators reported by employees whose managers lead employee engagement strategies include: they have higher levels of work-life balance, have a stronger perception of their ability to grow in their careers, and are more likely to say that their company takes their feedback seriously and responds with action.

Nevertheless, it's not just our research that demonstrates the importance of managers. In separate research, Limeade, a corporate wellness technology company, found that managerial support was more crucial than C-level support for employee well-being efforts.

The middle manager's future.

Managers already have considerable control over employee engagement efforts. We don't see any reason for this trend not to continue, especially with the number of middle managers working in the U.S. and around the world (The Economist reported in 2011 that Lloyd's Banking Group would layoff 15,000 middle managers -- which begs the question how many they had in total).
Related: 4 Ways to Make Middle Managers Better Leaders
Companies invested in employee engagement should, however, consider the role managers play. One issue that we've seen is managerial efforts colliding with company-wide initiatives. To avoid this, adopt "common language" across the company, which allows both managers and executives to be responsible for employee engagement under a company-wide umbrella.

While the impact of managers on employee engagement efforts merits further study, one thing is certain: Managers are surpassing stereotypes. They're involved in decision-making; they're deeply connected with their employees, and they're unsung superheroes in the workplace.

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Why Middle Managers Are Secretly the Superheroes of the Workplace

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4 min read Opinions expressed by Entrepreneur contributors are their own. What comes to mind when you think of the term "middle manager?" Is it someone who has little power, spends a lot of time micro-managing people and whose career is in a rut? We wouldn't blame you for thinking that.