Harvard business review USA september 2015

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SEPTEMBER 2015 44 The Big Idea The Organizational “I’m Sorry” Maurice E Schweitzer et al 86 Risk Management Cybersecurity: Lessons from the Pentagon James A “Sandy” Winnefeld Jr et al 108 Managing Yourself How to Embrace Complex Change Linda Brimm THE EVOLUTION OF DESIGN THINKING IT’S NO LONGER JUST FOR PRODUCTS EXECUTIVES ARE USING THIS APPROACH TO DEVISE STRATEGY AND MANAGE CHANGE PAGE 55 1-800-441-4488 Hermes.com FLÂNEUR FOREVER HBR.ORG Features September 2015 THE BIG IDEA The Organizational Apology A step-by-step guide for determining whether a mistake merits a corporate apology and, when it does, for crafting and delivering an effective message Maurice E Schweitzer, Alison Wood Brooks, and Adam D Galinsky 6 Harvard Business Review September 2015 86 RISK MANAGEMENT Cybersecurity’s Human Factor: Lessons from the Pentagon Human error lets in the overwhelming majority of successful cyberattacks The U.S military has learned to bar their way by applying the zero-defect protocols. James A “Sandy” Winnefeld Jr., Christopher Kirchhoff, and David M Upton 96 MARKETING How Certainty Transforms Persuasion The more certain people are of their opinions, the more likely they are to act. Zakary L Tormala and Derek D Rucker MICHAEL BYERS 44 Ambition knows no time zone UPS for imports and exports You’re not about to let a little geography get in the way of growing your business Neither are we We’ll help you with everything from choosing the right services to filling out the international forms you need With a powerful network of nearly 80,000 employees outside the US and serving more than 220 countries and territories, a world of opportunity awaits From figuring it out to getting it done, we’re here to help ups.com/solvers ups united problem solvers™ Copyrigh Copy righ ghtt © ©2 2015 Unit nited ed Parce Parce arcell Servic Servic rvice rv e of Ame America rica,, Inc Inc learn more at microsoftcloud.com SPECIAL SPONSORED SECTION AIR TRAVEL FOR ALL YOUR BUSINESS NEEDS T: +55 631 796 /+55 631 109 With more than 30 years of experience keeping you safe in the air DQGLQDELOLW\WRH[SORUHDQGH[SORLWQHZ areas thought to be rich in oil and gas reserves That being said, Senator Penĥ chyna is quick to remind investors that ³0H[LFRLVULFKLQHQHUJ\UHVRXUFHVĦQRW just in hydrocarbons Mexico has natuĥ UDOJDVFDUERQJUHDWVRODUHQHUJ\SRWHQĥ tial, and two extremely large coastlines, ZKLFKFRQWULEXWHWRLWVKXJHZLQGSRZHU SRWHQWLDO´ :KLOH QHLWKHU 3(0(; QRU WKH&)(KDGWKHWHFKQLFDODQGHFRQRPLF FDSDELOLWLHVWRWDNHIXOODGYDQWDJHRILWV UHVRXUFHVLQWKHSDVWLWLVFOHDUWKDWWKH energy reform, its subsequent rounds of DXFWLRQVDQGH[SHFWHGLQFUHDVHLQ)', ZLOO QRZ JLYH 0H[LFR WKH SRZHU WR EHĥ FRPHDZRUOGĥFODVVFRPSHWLWRULQDOODUĥ eas of the energy sector The price of oil will eventually rise–it cannot stay so low forever Therefore, I believe that investment will not stop in Mexico T: +55 631 796 / +55 631 109 www.transportes-pegaso.com Our attitude makes the difference Distributing some of Mexico’s most exclusive brands, ProOil is Mexico’s undisputed automation and industrial services leader specifically organized to meet its clients’ needs through its world-class technical support ADRIANA MACOUZET President & General Manager, PPG TURBINE SPECIALTIES 100% Mexican Founded in 2002, this Nuevo GQPDCUGFEQORCP[KUVJGƒTUV and only company in Mexico dedicated to the creation and engineering of turbine blades and gas turbine parts www.turbine.com.mx A: 18 De Marzo No 1108-2, Coatzacoalcos, Veracruz 96410 México T: +521 921 215 0195 www.prooil.com.mx Technology, Integration, Oil and Gas www.slb.com One company showing great promise following implementation of the Mexican energy reform bill is Schlumberger, the leading international provider of oil and gas industry services Schlumberger’s presence in Mexico dates back to the 1930s, when the world’s first well logging company introduced its services to the Mexican market The first electric log was run in a well in the giant Poza Rica field, and as the company’s international services began to grow, so did its offerings available in Mexico Now, with more than 5,000 employees in Mexico, Schlumberger’s contribution to the exploration and development of Mexican oil and gas fields is unparalleled Through experience, a passion for excellence, technological prowess, and world-class infrastructure, Schlumberger has established itself as the premiere oil and gas services provider in Mexico With 14 different product lines related to the oilfield services industry, Schlumberger’s President of Mexico and Central America, Arindam Bhattacharya, affirms that the company has the capacity to plan and execute oil and gas projects “from A to Z.” This integrated approach to providing services is one of Schlumberger’s four key performance drivers: excellence in technology, reliability, efficiency, and integration Schlumberger also has a long history of business growth through mergers and acquisitions, such as its 2010 merger with another leading provider of oilfield services, Smith International This strategy helps Schlumberger continue to provide the highest quality and widest scope of service integration that deploys the most advanced technology in the industry While the Mexican national oil company, Pemex, is one of Schlumberger’s largest customers on a worldwide level, Mexico’s energy reforms bring exciting prospects for working with new customers interested in participating in the attractive Mexican oil and gas industry Tel: +52 0181 8376 9032 / Fax: +52 0181 8352 3133 Email: turbines@att.net.mx www.winne.com WE CONNECT BUSINESS PEOPLE SPECIAL SPONSORED SECTION A win-win for all players involved Mexican energy subsectors prepare for life after the reform How they react and adapt to the new market landscape will greatly predict their continued success BHP Billiton and Exxon Mobil, comĥ SDQLHV SUHYLRXVO\ QRW SHUPLWWHG LQ WKH 0H[LFDQ PDUNHW DUH VXUH WR DGG VSHFLDO diversity to the country’s energy sector 7KHUHDUHKRZHYHUDQXPEHURISUHH[LVWĥ LQJRXWO\LQJSOD\HUVUDQJLQJIURP2LODQG *DVSURGXFWGLVWULEXWRUVWRFRQVWUXFWLRQ FRPSDQLHV VHW WR H[SHULHQFH SURIRXQG transformations as the shock wave of the UHIRUP¿QDOO\UHDFKHVWKHLUJUDVS 1HZEXVLQHVVRSSRUWXQLWLHVDUHDEXQĥ 2016 International gasoline vendors permitted in Mexican market WE CONNECT BUSINESS PEOPLE GDQWIRUDQXPEHURIFRPSDQLHVGHGLFDWĥ HGWRSURYLGLQJRɱVKRUHĥUHODWHGVHUYLFHV 7UDQVSRUWHV$pUHRV3HJDVRWKHFRXQWU\¶V OHDGLQJ DLU WUDQVSRUWDWLRQ FRPSDQ\ DQG ORQJĥWLPHFOLHQWRI3(0(;LVFXUUHQWO\ LQWKHSURFHVVRIUHHYDOXDWLQJLWVEXVLQHVV SODQ³:HDUHSUHSDUHGWRRɱHURQVKRUH DQGRɱVKRUHORDGĥEHDULQJDQGHYHQSHUĥ VRQDO WUDQVSRUWDWLRQ VHUYLFHV´ DɷUPV (QULTXH =HSHGD &(2 RI 3HJDVR 6LPLĥ ODUO\ WKH RɱVKRUH ORJLVWLFV DQG JHQHUDO QDYDO VHUYLFHV SURYLGHU 0DUtWLPD ,QWHUĥ QDWLRQDOLVSUHSDUHGWRFRQWLQXHKHOSLQJ RLOFRPSDQLHVPHHWWKHLUVSHFL¿FORJLVWLF QHHGV LQ WKH PDUNHW ³:KHQ ZH LQWURĥ GXFHRXUVHOYHVWRRLOFRPSDQLHV´DɷUPV 0DUtWLPD¶V 3UHVLGHQW 5REHUWR 0DXU\ “they often breath a sigh of relief They WUXO\ DSSUHFLDWH RXU LQWHJUDWHG VHUYLFHV 2017-2018 End of fixed liquid petroleum gas, petroleum, and diesel prices 2025 Production of petroleum to reach 3.5 million barrels of oil www.winne.com SPECIAL SPONSORED SECTION CCIPSA a Construction-oriented Consortium on the Rise The energy reform bill will surely benefit those companies who are able to form strategic partnerships to provide the best services and manage the most demanding projects in their associated sectors When it comes to the construction sector, no one does this better than CCIPSA, a company dedicated to general civil engineering and construction projects As its CEO, Mr Cetino Grepo, affirms, “We are not merely a construction company; but rather, we are a consortium offering a wide portfolio of business divisions, which are fully-integrated through their focus on tourism, the individual services available to our clients, and the engineering and construction of specialized projects.” CCIPSA already has experience aligning itself with such international players as the Sacyr Group, which has both financially and logistically aided them in the development of several large maritime projects in Oaxaca as awarded by PEMEX and the Secretary of Energy What’s more, this company has been charged with heading a number of exciting projects throughout the country They are building the new Hilton Garden Inn in Coatzalcoalcos, and they have already begun constructing the Nanchital Industrial Park in Veracruz This park is the result of an integration of 80 companies and will be dedicated to producing polyethylene-derived finished products WKDW KHOS UHOLHYH WKH VWUHVV DVVRFLDWHG ZLWKWKHLUGD\ĥWRĥGD\RSHUDWLRQV´ ,WLVQRWMXVWFRPSDQLHVZLWKDIRRWLQ WKH RɱVKRUH PDUNHW WKDW DUH EHJLQQLQJ WRVHHWKHHɱHFWVRIWKHUHIRUP2QHRI Mexico’s most noteworthy construction FRPSDQLHV(PSUHVDV,&$KDVPXFKH[ĥ SHULHQFHWUDQVIRUPLQJWRPHHWWKHQHHGV RI WKH HYHUĥHYROYLQJ PDUNHWV LW VHUYHV $FFRUGLQJWRLWV&(2$ORQVR4XLQWDQD RYHUWLPHWKHFRPSDQ\³KDVWUDQVIRUPHG LQWR D VROXWLRQV SURYLGHU ZKLFK PHDQV GLYLQJ GHHSHU LQWR WKH HQJLQHHULQJ SDUW RI WKHVH VRUWV RI SURGXFWV´ 4XLQWDQD LV FRQ¿GHQWWKHFRPSDQ\¶V\HDUVRIH[ĥ SHULHQFHZLWKVRPHRIWKHFRXQWU\¶VPRVW FRPSOH[ DQG LQQRYDWLYH SURMHFWV ZLOO SD\ Rɱ DV QHZ FRQVWUXFWLRQ FRQWUDFWV HPHUJH ³:H DUH QRW PHUHO\ EXLOGHUV´ KH GHFODUHV ³«ZH DUH SURMHFW PDQDJHUV ZLWK LPPHQVH HQJLQHHULQJ DQG ¿QDQFLDO FDSDELOLWLHV´ &RPSDQLHV OLNH ,&$ ZKR QRW RQO\ UHO\ RQ SDVW H[SHULHQFH EXW DOVR DGDSW WR PDUNHW ÀXFWXDWLRQV DUH FHUWDLQO\ WKH ones who will faire the best when all is VDLG DQG GRQH ,Q IDFW PDQ\ VXFK FRPĥ SDQLHV DUH QRZ FRQVLGHULQJ VWUDWHJLFDOO\ aligning themselves with outside comĥ SDQLHV DV D PHDQV RI DGDSWDWLRQ -RVp &HGDQR*HQHUDO0DQDJHURI3UR2LODQ 2LODQG*DVSURGXFWGLVWULEXWRUDɷUPV ³8QWLOQRZ&)(DQG3(0(;KDYHEHHQ RXUSULPDU\FOLHQWVKRZHYHUZHKRSHWR DOVRZRUNZLWKFRPSDQLHVFRPLQJKHUHDV a result of the reform.” (VWDEOLVKLQJ QHZ SDUWQHUVKLSV PD\ seem like a mere survival technique emĥ SOR\HGE\ORFDOFRPSDQLHVKRZHYHUVXFK LQWHUQDWLRQDO UHODWLRQVKLSV FDQ EHVW EH GHVFULEHG DV PXWXDOO\ EHQH¿FLDO :LWKĥ RXW D GRXEW 0H[LFDQĥEDVHG FRPSDĥ nies can learn from those coming from DEURDG EXW LW LV LPSRUWDQW WR QRWH WKDW IRUHLJQ FRPSDQLHV KDYH PXFK WR JDLQ from learning the ins and outs of the country’s unique market structure from those already immersed in the market $ SULPH H[DPSOH RI D FRPSDQ\ DOĥ UHDG\ PDNLQJ VXFK SDUWQHUVKLSV LV 7XUĥ ELQH6SHFLDOWLHVDWXUELQHEODGHGLVWULEXĥ tor, that has recently aligned itself with a 86ĥEDVHGFRPSDQ\LQDQHɱRUWWREHWWHU RɱHUWXUELQHPDLQWHQDQFHVHUYLFHV7KLV DFFRUGLQJWR-RVp1~xH]WKHFRPSDQ\¶V founder and General Manager, will betĥ WHUSUHSDUHWKHPIRUIXWXUHSURMHFWVZLWK &)(DQG3(0(; 7ZR PRUH FRPSDQLHV ZKR FOHDUO\ XQGHUVWDQG WKH PXWXDO EHQH¿WV EHKLQG knowledge and resource collaboration DUHWKH2LO*DVH[SHUWV6FKOXPEHUJHU DQG'7.*URXS Ideally, [we] will be working sideby-side with the new companies entering Mexico, as well as continuing to build our portfolio with Pemex ARINDAM BHATTACHARYA President, Schlumberger Mexico %RWK FRPSDQLHV KDYH ORQJ LOOXVWULĥ ous histories in Mexico and a breadth of knowledge in the energy sector They are FRQ¿GHQWWKLVZLOOEHPRUHWKDQHQRXJK WRVZD\XQGHFLGHGFRPSDQLHVWRWHDPXS with them in the coming years of the reĥ IRUP$FFRUGLQJWR'7.*URXS¶V3UHVLĥ dent in Mexico, John Lawrence, DTK *URXS³KDVWKHFDSDELOLW\WRSURYLGHDOO LQGXVWU\VHUYLFHVWRLWVFOLHQWVKRZHYHU ĬWKH FRPSDQ\ĭ DOVR GHSHQGV RQ LWV NH\ SDUWQHUV LQ RUGHU WR SURYLGH LWV FOLHQWV ZLWK WKH KLJKHVW TXDOLW\ SURGXFW SRVĥ sible.” $V LQYHVWRUV FRQWLQXH WR SRXU LQ WR take advantage of the reform, one thing LVFOHDUIRUWKHFRPSDQLHVDɱHFWHGE\WKH UHIRUP FKDQJH LV ZHOFRPH DQG DGDSWDĥ tion is necessary Such extensive experience working as a consortium leaves little room for doubt that CCIPSA will continue to thrive under the new and dynamic economic climate now experienced in Mexico This Promotional Case Study was produced by World Investment News for September 2015 edition of HBR Publisher: pascalbelda; Executive Director: Manuel Sáinz; Project Director: Sara Tendero; Project Developers: Marina García, Jose Ignacio Bernad; Editor-in-Chief & Project Developer: Aaron Scherer; Creative Director: Luisa Tronea; Special thanks to: Dr César Camacho, Senator David Penchyna (President of the Energy Commission), Mr Ángel Junquera (www.junquerayforcada.com.mx), Mr Juan Acra (Comisión Energía at Coparmex Nacional), Mr Raymundo Platas (LAOGA), Hotel Holiday Inn Express (Veracruz & Villahermosa), Holiday Inn Ciudad del Carmen and Hotel Quinta Inn & Suites (Monterrey) / in World Investment News worldinvestmentnews winnenews Direct Q&A +34 608 69 41 94 WE CONNECT BUSINESS PEOPLE www.winne.com EXPERIENCE HBR.ORG Case Study Can You Win Back Online Shoppers? that what you has consequences This real-live shopping experience you’re having here at Benjy’s is helping you decide which TV to buy And if you order from Amazon, you’re basically cheating us.” She knew she sounded shrill The couple looked as if they expected her next words to be “I’ll get you, my pretties, and your little dog too!” Caught in the Middle Bertice wasn’t accustomed to playing the Wicked Witch Although she prided herself on her financial toughness, she was a natural mediator Her even temper and evenhandedness had helped her succeed in her mostly male undergrad finance and MBA programs and then at a top-tier accounting firm, where A brick-and-mortar retailer searches for a response to “showrooming.” by Thales S Teixeira and Sunil Gupta she had become the sole African American partner Bertice would soon be mediating among the board members of Benjy’s B ertice Jenson couldn’t believe figure out which TV you want to buy, as they discussed what she had just how shameless they were Right you’re going to order it from Amazon.” seen in Oklahoma: “showrooming.” in front of her in the Benjy’s MATTIAS MACKLER Thales S Teixeira is an associate professor at Harvard Business School Sunil Gupta is the Edward W Carter Professor of Business Administration and the chair of the General Management Program at Harvard Business School superstore in Oklahoma City, a young “Probably,” the young man said Customers like the couple with the “But this isn’t Amazon’s showroom,” dog weren’t unusual More and more couple pointed a smartphone at a said Bertice “Benjy’s doesn’t display people were coming to Benjy’s to Samsung 50-inch Ultra HD TV and these products and staff these stores look at products but then buying then used an app to find an online for the benefit of Amazon We want them from online competitors whose price for it They did the same for a you to buy from us.” lack of a brick-and-mortar presence Sony and an LG LED model, as the They looked at her blankly “Oh, Munchkins from The Wizard of Oz you work here?” the woman asked danced across all three screens “Excuse me,” Bertice said “I see Bertice wasn’t dressed like the sales staff, and the couple had no enabled them to offer discount prices Research showed that 83% of people shopping for electronics and appliances were now practicing showroom- what you’re doing Don’t you think way of knowing that her father had ing The chain’s sales had nose-dived that’s kind of…unfair?” founded Benjy’s and that she chaired as a result; the most recent quarterly the board of the $40 billion electron- loss was nearly $700 million The two shoppers looked at each other as though this hadn’t ics and appliance retailer occurred to them “We’re only She was now making a the company’s CEO, Stanley Farber, comparing prices,” the young routine drop-in visit to one knew that something had to be done, Bertice’s father, Ben Jenson, and woman said, stroking of the chain’s 2,000- but they didn’t agree on what Ben the terrier she was odd stores But favored a two-pronged approach that cradling that wasn’t worth was already under way in a few stores: “But the app— explaining make showrooming as difficult as it’s Amazon’s, “Never mind,” possible for customers, but if they did right?” Bertice Bertice said find a lower price online, then match asked “Once you “Just be aware it, in keeping with the company’s September 2015 Harvard Business Review 117 EXPERIENCE Case Study Teaching Notes traditional low-cost, high-volume ethos The CEO wanted to pursue a different strategy: He thought Benjy’s should set itself apart from the competition by emphasizing a curated product mix, knowledgeable employees, and follow-up services After her visit to Oklahoma, Sunil Gupta and Thales S Teixeira teach cases about showrooming in their digital strategy and executive education classes Here Gupta shares some thoughts WHAT DREW YOU TO THIS STORY? I teach a case on Amazon and showrooming, but I realized we should cover the topic from the perspective of the brick-and-mortar retailer too If technology is disrupting your business, what should you do? respect, I think we should scrap the defense and focus on a stronger offense We need to be looking at what more we can for our customers— provide better service, knowledgeable salespeople, exclusive products, and after-purchase support.” Ben broke in: “But now you’re Bertice flew to Atlanta, where the WHAT SUGGESTIONS DO STUDENTS MAKE? talking premium Customers don’t company had its headquarters, for a Match prices, use anti-showrooming tactics, improve customer service, ask manufacturers to create exclusive SKUs, focus on installation and repairs, emphasize instant gratification But there are problems with those approaches; this case highlights a few want that from us Our priority is regular board meeting The first item on the agenda was how to address showrooming, and she jumped right in: “This is a serious problem for most retailers, but particularly those of us in electronics Amazon keeps making it easier for shoppers to search for, find, and order a product online We need to decide on a counterstrategy.” Farb, as everyone called the CEO, had prepared a presentation But the projector was balky, and Ben took WHAT LESSONS DO YOU HOPE TO TEACH? When the market changes, companies must reconsider how they create and capture value Would consumers miss Best Buy if it disappeared? Yes, because many like to see and touch products Would manufacturers miss it? Those that don’t have stores would So Best Buy is creating value How you capture it? Ask the manufacturers to pay a fee for showcasing advantage of the pause to share his the biggest range of products at the lowest prices That’s the Benjy’s promise How can we make money by increasing our cost structure?” “Maybe it’s time to change our promise,” Farb said He paged quickly through the deck until he got to a slide titled “The New Benjy’s.” Bertice was slightly miffed; Farb hadn’t warned her about this But as ever, she kept her expression neutral “I’ll skip over some of the lead-in, but here’s a short report I had my team prepare,” Farb own views “It’s obvious that we need off the products There are consul- said “As I see it, we can’t beat Amazon to play both offense and defense tants that specialize in this The costs on range, and when we try to match Offense should include providing are relatively minor and well worth it prices that are, on average, 8% lower more-aggressive discounts through I think this tactic is a no-brainer.” the Benjy’s app and matching online Farb caught Bertice’s eye and prices We also need to get more sup- signaled that the projector was now pliers to impose minimum advertised working Realizing that prices on their online retailers so that she’d allowed her father to there’s a price floor for every product, dominate the conversation, online or off she turned the floor over to “As you all know,” Farb Some of the basic tactics, such as said, “I spent my early career altering our bar codes, are now moot, because the newest price-comparison software That means shoppers don’t even have to upload bar codes All they have to is point a smartphone at a product.” There was murmuring around the table Apparently this was news to some of the directors “But there are ways to thwart object-recognition software,” Ben continued “We’ve begun creating display structures within the stores that confuse the apps while still showing from big-box retail to a more boutique the CEO “As for defense, it will be a process apps incorporate object-recognition than ours, we’re in the red on most sales But what if we shifted away HBR’s fictionalized case studies present dilemmas faced by leaders in real companies and offer solutions from experts This one is based on the HBS Case Study “Showrooming at Best Buy” (case no 9-515-019), by Thales Teixeira and Elizabeth Anne Watkins, which is available at HBR.org 118 Harvard Business Review September 2015 in the hospitality industry, and one of experience? Fewer and smaller stores the reasons you hired me five years with fewer but better-motivated ago was to improve our customer ser- and better-trained employees—the vice That starts with respecting our baristas of electronics retail.” guests and how they like to shop.” “The way they shop is killing us,” Ben interjected Farb hesitated but continued: “We have to acknowledge that the world has changed Showrooming is Ben sputtered: “We’re not running cafés, Farb!” Bertice spoke up: “Let’s hear him out, Dad.” Farb gave her a grateful look “TVs and laptops may seem like commodi- a fact of modern life, and if shoppers ties that people will buy only at the sense that we’re trying to stop them lowest prices, but so did coffee before from doing it, they won’t even walk Howard Schultz made Starbucks a through our doors So with all due destination Why shouldn’t Benjy’s HBR.ORG the same—sell only the highest-value it would also be useful to have more but people say they don’t want to go products and educate customers detail on those countermeasures you through the hassle Seems they just want to hear our spiel, try out the about them, instead of letting them mentioned So let’s table this discus- get overwhelmed in an uncurated sion for now and get through the products, and go online And often retail landscape?” other items on our agenda Farb can not to the Benjy’s site.” “You’re naive, Farb,” Ben said “People will still showroom if they find better deals online.” “We could still match prices,” the CEO said “How could we afford that?” Bertice asked, keen to break up the send around his deck, with plenty of supporting data, and we can all take some time to review the information He paged ahead to a different slide “You’ll see we’ve done some modeling “Lately we’ve gotten a lot of train- If everyone is amenable, I’d like to ing, so we can tell you everything arrange a conference call next week you ever wanted to know about the to discuss only this and decide on a sound system in the Sony Bravia TV, course of action.” for instance We’re full of information back-and-forth between the two men “I’m glad you asked,” Farb said That was extremely discouraging “What spiel?” Bertice asked People tap into that, get educated— New Ways to Make Money The next day, Bertice was in Huntsville, Alabama, to join in the and then go buy from Amazon.” “But I can’t imagine everyone does the showrooming thing,” Bertice Of course, fewer and smaller ribbon cutting for a redevelopment stores would cost less to staff project Several big-box super- really appreciate your knowledge and and maintain But I’d like us stores—including a Benjy’s—had purchase from us as a result?” to think more creatively too been closed and replaced by a Before I was in hospitality, I worked for a supermarket chain Do you know how those companies make money while cutting prices? By capitalizing mixed-use residential-retail community Benjy’s still had a presence there, but a much smaller one “Welcome to Benjy’s,” a store The employee laughed nervously “Honestly? I think service scares longtime Benjy’s customers,” she said “Scares them?” Bertice asked They charge their suppliers fees for in “Did you come here today looking higher prices It’s not true, but I’ve promotions and access to prime shelf for something specific?” seen people turn around and walk out That was a nice touch—probably Farb’s doing He was no doubt and you’ll find vulnerabilities For piloting his ideas about more helpful “They assume good service equals and attentive employees here in this being chased away by excellent service All this put her in mind of Oz platform If we curate the best and let evening she had gone over his and again This time she didn’t feel like the customers experience the products, her father’s proposals, analyzing the Wicked Witch; she felt like Dorothy, why shouldn’t suppliers support us?” business cases Ben’s plan seemed a thrown into an unfamiliar world But “There’s no precedent for that in short-term but low-cost and poten- no ruby slippers were going to help electronics retail,” Ben countered tially effective solution Farb’s was her get back to the old predictability “It’s a nonstarter You’ll ruin relation- more costly and risky but possibly of retail She would have to figure out much better in the long run herself how to move forward “Make Customers Want to Buy Offline” Sohrab Vossoughi HBR.org June 23, 2014 “Brick-andMortars (Still) Can’t Beat the Web on Price” Rafi Mohammed HBR.org June 3, 2013 Tell us what you’d Go to HBR.org Instead of responding to the business-model changes that, even young woman’s question, Bertice if we wanted to make them, would explained that she was in corpo- take months—maybe years!—to rate management at Benjy’s Then implement We need a solution now!” she asked about the showrooming in agreement Bertice could sense the Harvard Business Review July–August 2013 So customers weren’t respond- smaller-store format The previous Several board members nodded “How Pinterest Puts People in Stores” David Sevitt and Alexandra Samuel ing to price matching, and they were platform Benjy’s is a great marketing ing And you’re talking about huge Mint, June 10, 2015 when we try to engage them.” one thing, it’s a pretty poor marketing ships that we’ve spent decades build- “Facing Digital Disruption” Sunil Gupta people—especially people who are employee said when Bertice walked powerful, but look behind the curtain Learn more about showrooming said “Don’t some of your customers on their position as sales platforms space Everyone thinks Amazon is all- FURTHER READING phenomenon The woman’s cheery expres- tension building between Farb and sion faded “Oh, yeah That’s a big her father “Farb, you’re proposing a problem We’ve changed the displays pretty radical change, and it’s a lot for to make showrooming harder And us to digest,” she said quickly “Dad, we’ve tried matching online prices, Should Benjy’s fight the showroomers or welcome them? See the commentaries on the next page September 2015 Harvard Business Review 119 EXPERIENCE The Experts Respond Roberto Leao is a finance executive for a global retail organization BASED ON the environment outlined in the case study, one can see why Ben Jenson wants to shore up the company’s defenses Without a strategy, he’s probably concerned that showrooming may hurt profits And some of Farb’s ideas for going on the offense, such as having suppliers provide Benjy’s with exclusive products, seem useful You have to that the right way, though For a “unique to Benjy’s” initiative to be effective, the products would have to be well differentiated from anything that could be found online Adding a few bells and whistles wouldn’t be enough Benjy’s must also keep in mind that many retailers already offer exclusive products—it’s not a novel idea One relevant piece that the company is missing is direct feedback from existing and potential customers 120 Harvard Business Review September 2015 One relevant piece that the company is missing is direct feedback from existing and potential customers as to why some visit stores while others shop online and why some of them showroom while others don’t Ben seems to assume that price is the main factor driving customers to online competitors But perhaps it’s something else Maybe availability is the problem; a few ill-timed outof-stock situations can have a big impact Or maybe it’s the product assortment or some other aspect of the shopping experience The answers could help Benjy’s figure out how to win over showroomers and how to better cater to people who like shopping in physical stores Those answers, too, could highlight avenues of opportunity, backed by customer research rather than just Farb’s intuition Perhaps Benjy’s could indeed build competitive advantage by focusing more on the curation function and increasing its emphasis on service Consumers appreciate interacting with informed sales reps, trying out products firsthand, and getting items immediately: You see something, you like it, and you take it home That said, all those in-store initiatives would need to be seamlessly integrated with an online strategy so that each experience complements the other Customers shouldn’t think “Benjy’s online” or “Benjy’s brick-and-mortar,” but just “Benjy’s.” The company should use its website to expand on the in-store assortment and help customers find the best product and the best quality without having to a lot of independent research That’s where the opportunity lies Comments from the HBR.org community Keep the Customer Happy People are willing to pay for service Recently I bought a new laptop at Best Buy I suppose I could have found it online for a lower price, but then I would have lost all the support I’d get in case there was a problem—which there was Josef Rosenfeld president, Health Flavors Share Showroom Costs Providing a showroom is an expensive added-value service that is benefiting the manufacturer of the product Providing this service to customers is not sustainable unless the manufacturer pays for it Martin Rapaport chairman, Rapaport Group Engage in Multiple Ways Customers are looking for an ideal omnichannel experience Benjy’s should offer an easy-to-use free mobile app, digital kiosks that showcase the inventory, and events such as movie nights that attract people to the store even when no purchase is planned Lata Hariharan CEO, Resource Leaders HBR.ORG Steve Conine is the cofounder and chief technology officer of Wayfair, an online retailer of home furnishings and housewares I LIKE Farb’s idea of transforming the Benjy’s stores into paid showrooms for manufacturers I don’t know whether the concept could work financially, but at least he’s thinking outside the box The CEO is right when he says that the world of retail has dramatically changed And like other physical stores that sell branded products, Benjy’s may need to rethink its traditional business model if it wants to survive I help lead a company that facilitates online sales of furniture and furnishings—items that many people would have once said they’d never buy online Who could commit to a multi-thousand-dollar purchase of a sofa, say, without sitting on it and feeling the fabric? Low awareness of manufacturers’ brands is another factor stacked against our business: Few people are going to hunt online for a particular sofa maker’s products the way they’d hunt for a Samsung phone or a Stephen King novel It’s true that the vast majority of furniture sales still happen off-line, and Wayfair even experiences a good deal of reverse showrooming, with consumers coming to our site to research products and then going to physical stores (not ours, since we don’t have any) to buy items similar to those they’ve seen online Yet more and more people buy sofas—and every other kind of product—online That’s because we and other online retailers are improving the shopping experience, the prices are compelling, and digital customers don’t have to spend their weekends driving around and visiting showrooms If I were an executive of any business stuck in the brick-andmortar world, I’d be really worried I wouldn’t be spending my time thinking about how to better defend my rapidly shrinking physical territory, as Ben is You can go only so far to obfuscate the specific isn’t impossible Wayfair has gotten pretty skilled at online selling— we our own inspirational photography of our products—as well as fielding unfocused inquiries Benjy’s could also explore becoming a resource site for knowledge about electronics or appliances or other items it sells That’s what Wayfair did: We made ourselves, in effect, the Wikipedia of furniture, so thousands of visitors come to us for information That’s fine—over time, by providing ever-better consumer education and third-party reviews, we’ve encouraged people to shop our site as well as learn from it And if you have a huge number of page views, your conversion rate doesn’t have to be very high You can still make money if even a modest percentage of visitors actually buy If I were an executive of any business stuck in the brick-and-mortar world, I’d be really worried brands and models you’re selling and thwart the price-comparison apps So instead I’d be trying to create an exciting online business that would meet my customers’ needs and capture their imagination An online Benjy’s might not be able to compete with Amazon on certain parameters, such as price and assortment, but it might be able to carve out an advantage by learning to things differently— for example, by providing a better interface Most online retailers are good at showing you what they’ve got and filling your orders, but they’re not as good at selling or responding to vague queries; Benjy’s could try to fill those gaps Doing so The past couple of decades have demonstrated that the macro trend is going against the retail chains that depend on physical stores Those of us in e-commerce, even though we face numerous obstacles, tend to feel that we’re headed in the right direction—that the wind is at our backs The leaders of Benjy’s can save themselves a lot of wasted energy by turning around and making use of that wind to get out ahead of their competition.  HBR Reprint R1509K Reprint Case only R1509X Reprint Commentary only R1509Z September 2015 Harvard Business Review 121 EXPERIENCE Synthesis Collaborate for Real because its competing divisions couldn’t agree on products, platforms, or strategy; how UBS, the venerable Swiss bank, lost billions through lack of coordination between its New York and London credit derivative desks and its three risk departments (credit, by Alison Beard market, and operational), which left everyone clueless about the enterpursue a common goal But how prisewide threat; and how tribalism laborate” and its derivatives we turn the ever-present lingo into among the world’s leading econo- are surely modern favorites Applying for a job? Emphasize your everyday reality? Four new books mists blinded them to the causes offer advice of the most recent global financial collaboration skills Courting custom- You’ll find the most interesting ers? Promise a collaborative relation- case studies—of organizations getting how Facebook uses a hierarchy-free ship Wooing new hires or investors? collaboration right and of those felled orientation program, frequent job ro- crisis On the flip side, Tett explains by the lack of it—in The Silo Effect, by tations, and regular “hackathons” to Academics, practitioners, and Gillian Tett, an editor at the Financial encourage cooperation among project especially consultants seem to be Times (where—full disclosure—I once groups; how the Cleveland Clinic re- obsessed by these terms—and rightly worked) Drawing on her background organized its medical staff into teams so Any business works better when in anthropology and decades as a that focus on ailments rather than its employees, teams, divisions, and reporter, Tett shows us how Sony their own skills to improve patient leaders share ideas and resources to missed the digital music revolution outcomes; and how data crunchers Talk up your collaborative culture 122 Harvard Business Review September 2015 TOM FROESE A s business buzzwords go, “col- HBR.ORG WHITNEY JOHNSON: WHAT I’M READING Ashley’s War: The Untold Story of a Team of Women Soldiers on the Special Ops Battlefield, by Gayle Tzemach Lemmon (Harper, 2015) “Exasperated and exhausted by stalemate in Afghanistan in 2010, the U.S military was forced to end its no-women-in-combat policy and send one of the first all-female special ops teams into battle there The author deftly tells the riveting story of these remarkable soldiers.” Whitney Johnson is a managing director of Springboard Fund and the author of Disrupt Yourself (Bibliomotion, 2015) infiltrated bureaucratic police depart- skill building They encourage leaders ments to reduce crime rates in New to understand their own and others’ tad contrived “mind patterns” (six in all, based on York and Chicago “heart, head, hands” construct feels a More important, I think Tett has one’s preference for visual, auditory, a better handle on the real problem those stories before, but the detail or kinesthetic information processing) Companies don’t fail at collabora- is impressive And the lessons Tett and “thinking talents” (35, ranging tion because not enough people will offers at the end of the book are spot from “adapting” to “wanting to win”) cooperate with one another They Many readers will have heard on: Keep organizational boundaries flexible and fluid; use technology to The Silo Effect Gillian Tett disrupt them; share data and let dif- Simon & Schuster, 2015 The authors then describe how to use fail when people work too closely in inquiry and mindset shifts to ensure certain teams, functions, or depart- that everyone is contributing to a suc- ments without any regard for the ferent interpretations of it be heard; cessful shared future The book is clut- rest of the organization Coaching for tie compensation to collaboration; tered with assessments, charts, and reimagine corporate taxonomies and “breakthrough practices” (exercises) experiment with new ones These are to convey what is, in the end, a fairly high-level, top-down recommenda- simple message: Appreciate the value tions But she also has a few tips for in intellectual diversity, and approach any manager eager to fight silos from every work partnership wondering, “What can we make possible together?” the bottom up: Think like an anthro- Do intelligent people need 345 pages pologist—with curiosity, healthy cynicism, and an appreciation for how things relate to one another so that you’re able to recognize when systems no longer make sense Also, consider Friend & Foe Adam Galinsky and Maurice Schweitzer Crown Business, 2015 “The first step to mastering our silos is the most basic one of all: to notice that they exist.” Gillian Tett, The Silo Effect to learn this? Probably not Longtime management writer collaborative thinking and behavior might help them break and consultant Ken Blanchard also believes that Collaboration Begins through those boundaries But with You That’s the title of his policy changes—such as the incen- divide yourself once in a while latest business fable, a story about tives and restructuring put in place at More advice for individuals Dave Oakton, the leader of a cross- the Cleveland Clinic or the nudging departmental project—Primo—that mechanisms seen in Facebook’s jumping across a corporate or social comes from three other recent books about collaboration In Friend & Foe, fails because the units involved are orientations, rotations, and use of its Wharton professors Adam Galinsky too competitive with one another own social network to forge surprising and Maurice Schweitzer (see “The The solution, he learns from his visit- connections—are much more effective Organizational Apology,” page 44 ing sister-in-law, is to shift his and oth- Surely Sony and UBS employed collab- ers’ hearts (intent), heads (thought), orative people—even leaders But that and hands (action) toward collabora- didn’t stop them from succumbing to of this issue) present reams of cool research showing why, although humans are inherently social animals, Collaborative Intelligence Dawna Markova and Angie McArthur tion He comes to see that leaders silos, and those silos from destroying must build on differences; nurture value As Galinsky and Schweitzer another when resources are scarce safety and trust; craft a clear purpose, note, the more cohesive and success- and conditions are dynamic or uncer- values, and goals; talk openly about ful teams become, the less likely they tain The most pertinent lesson for collaboration; and empower them- are to cooperate with other teams, would-be collaborators: Build trust selves and others to spread it And, of even within their own companies by showing warmth and competence, course, there’s a happy ending: After appreciating others’ perspectives, and sharing these epiphanies with his we’re also wired to vie with one Spiegel & Grau, 2015 So, yes, let’s encourage people to get better at collaboration, even revealing vulnerability (Quick tip de- boss, he not only leads a successful train them in it But let’s also design rived from one experiment: If you Primo II but also gets promoted to organizations that make it energizing well in a job interview, make sure to chief operating officer! Blanchard’s principles—helpfully also spill coffee; people will rate you even higher than candidates who did just as well but weren’t as clumsy.) In Collaborative Intelligence, consultants Dawna Markova and Angie McArthur drill down into personal Collaboration Begins with You Ken Blanchard, Jane Ripley, and Eunice Parisi-Carew Berrett-Koehler, 2015 and fun, not forced As Tett points out, even the companies that excel at summarized in an appendix for read- collaboration today can’t afford to rest ers who prefer their self-help straight, on their laurels Organizational silo not fictionialized—are sound But, busting requires constant vigilance like Markova and McArthur’s mind patterns and thinking talents, his Alison Beard is a senior editor at Harvard Business Review September 2015 Harvard Business Review 123 SPECIAL SPONSORED SECTION BANADECSA Europe’s top banana exporter, BANADECSA, is gearing up for what looks to be another exciting and productive year The European Union and the Russian Federation are its two main markets, and Russia, with its notorious banana sweet tooth, has been their most trusted buyer to date According to the company’s CEO, Mr Eduardo Palacios, “not even one week has gone by in the last 20 years when we have not made significant exports to this country.” While the economy of Ecuador is stable and the company has continued to see steady growth in the past decade, the amount of growth has slowed considerably in the last few years The red tape behind many of the European Union’s agriculture policies has amounted to a number of roadblocks for the company That being said, Mr Palacios says this is nothing to worry about We are currently in the process of finalizing trade agreements with the EU in order to allow us to return to past years of growth and success in the region Mr Palacios believes in the power of hard work and its capacity for leading to ultimate success In this spirit, he has taken steps to partner with China and strengthen its ties with the country in an effort to further expand BANADECSA’s international presence Until now, the company has been run without any outside aide of any kind, but Mr Palacios notes that “partnership and collaboration lead to improvements within companies, and with this philosophy in mind, we now welcome all sorts of business alliances.” Ecuador QUI TO COUNTRY ON THE RISE While many have come to know Ecuador for its natural beauty, unique ecosystem, and sublime weather, the ZRUOG LV ¿QDOO\ WDNLQJ QRWLFH RI WKLV FRXQWU\ EORVVRPLQJ HFRQRPLF SRWHQĥ tial Businessmen and women are now ORRNLQJWR(FXDGRUIRULQYHVWPHQWRSĥ SRUWXQLWLHV LQ WKH WUDGLWLRQDOO\ VWURQJ DJULFXOWXUH WRXULVP DQG ¿VKLQJ VHFĥ WRUV7KDWEHLQJVDLGWKHWHOHFRPPXQLĥ cations, automotive, and construction sectors must not be overlooked, as they are also on the rise )RUWKRVHORRNLQJWRGREXVLQHVVLQ WKH &DSLWDO FLW\ RI 4XLWR WKH 'DQQ &DUOWRQ +RWHO SULGHV LWVHOI RQ SURYLGĥ LQJOX[XULRXVDPHQLWLHVDQGVHUYLFHVWR WUDYHOOHUV FRPLQJ WR WKH FLW\ IRU ERWK EXVLQHVV DQG SOHDVXUH 6LPLODUO\ WKRVH ORRNLQJ WR GR EXVLQHVV LQ WKH QDWLRQ¶V industrial city of Guayaquil should be VXUH WR VWD\ LQ WKH FHQWUDOO\ĥORFDWHG 8QLSDUN +RWHO ,WV QHZO\ UHVWRUHG URRPV DQG WRSĥRIĥWKHĥOLQH UHVWDXUDQWV ZLOOJLYHWUDYHOOHUVRIDQ\VRUWRQHPRUH reason to fall in love with Ecuador Freshfish A Company with a Clear Vision Leaders in both fresh and frozen fish processing in Ecuador and with a vision of reaching worldwide recognition, Freshfish is dedicated to providing the highest quality fish products to serve all their client’s needs www.freshfishecuador.com.ec A: Kilómetro 4½ vía Manta San Mateo, Manabí, Manta, Ecuador T: +593 3701 210 This Promotional Case Study was produced by World INvestment NEws Publisher: Pascal Belda pascalbelda; General Manager: Carolina Mateo; Executive Director: Valerie Janczewski; Project Director: Sara Tendero; Project Developer & Editor in Chief: Aaron Scherer; Creative Director: Luisa Tronea For more information please visit us at www.winne.com WINNENews WE CONNECT BUSINESS PEOPLE HBR.ORG EXECUTIVE SUMMARIES SEPTEMBER 2015 SPOTLIGHT ON THE EVOLUTION OF DESIGN THINKING HBR.ORG SPOTLIGHT 56 72 66 80 Design for Action by Tim Brown and Roger Martin Design Thinking Comes of Age by Jon Kolko How Samsung Became a Design Powerhouse by Youngjin Yoo and Kyungmook Kim How Indra Nooyi Turned Design Thinking Into Strategy An interview with Adi Ignatius Design thinking isn’t just for product developers anymore The approach is being used to support change management, strategic reinvention, and complex problem solving at the highest levels The Evolution of Design Thinking Once confined to product development, design thinking has become central to strategy, innovation, and organizational culture ARTWORK The Office for Creative Research (Jer Thorp) Lightning Strike Visualization September 2015 Harvard Business Review 55 CHANGE MANAGEMENT ORGANIZATIONAL CULTURE INNOVATION STRATEGY Design for Action Design Thinking Comes of Age How Samsung Became a Design Powerhouse Jon Kolko | page 66 Youngjin Yoo and Kyungmook Kim page 72 How Indra Nooyi Turned Design Thinking Into Strategy Tim Brown and Roger Martin page 56 Ever since it became clear that smart design led to the success of many products, companies have been employing it in other areas, from customer experiences, to strategy, to business ecosystems But as design is used in increasingly complex contexts, a new hurdle has emerged: gaining acceptance of the “designed artifact” into the status quo In fact, the more innovative a new design is, the more resistance it’s likely to meet The solution, say the CEO of IDEO and the Rotman School’s former dean, is to also apply design thinking to the introduction of the innovation itself This process, intervention design, grew organically out of the iterative prototyping that designers did to help understand customers’ reactions to new products Not only did iterative prototyping create better offerings, but it was a great way to get organizational funding and commitment, because it improved the chances of success and reduced fear of the unknown Intervention design uses iterative prototyping to get buy-in too, but extends it to interactions with all the principal stakeholders—not just customers When Intercorp Group devised a revolutionary concept for Peru’s schools, it needed to win acceptance for corporate-run education and for a very different role for teachers Thanks to intervention design, it now has 29 schools in operation and is rapidly HBR Reprint R1509C growing In large organizations, design is moving closer to the center of the enterprise This shift isn’t about aesthetics and product development, however It’s about imparting the principles of design—collectively known as design thinking—throughout the organization The approach is in large part a response to the complexity of many products, services, and processes People need help—they need their interactions with technologies and other complicated systems to be intuitive and pleasurable Design thinking is an essential tool for simplifying and humanizing The principles include a focus on users’ experiences, especially their emotional ones; the creation of physical models, such as diagrams and sketches, to explore problems; the use of prototypes to experiment with solutions; a tolerance for failure; and thoughtful restraint in product features so that even a complex piece of technology can be easy to use Creating a design-centric culture requires understanding that the returns on an investment in design are difficult to quantify, allowing people to take chances, and appreciating what design can and cannot achieve Design helps people and organizations cut through complexity and imagine the future, but it doesn’t solve all HBR Reprint R1509D problems Until 20 years ago, South Korea’s Samsung Electronics manufactured inexpensive, imitative electronics for other companies Its leaders valued speed, scale, and reliability above all The few designers working for the company were dispersed in engineering and new-product units, and they had little status in an organization that emphasized efficiency and engineering rigor Then, in 1996, Lee Kun-Hee, the chair of Samsung Group, grew frustrated by the company’s lack of innovation and concluded that in order to become a top brand, Samsung needed expertise in design, which he believed would become “the ultimate battleground for global competition in the 21st century.” He set out to create a design-focused culture that would support world-class innovation But shifting to an innovationfocused culture without losing an engineering edge is not a simple matter It involves managing a number of very real tensions Samsung’s success in making this shift stems from a single early decision—to build design competency in-house rather than import it The authors describe how the company created a committed, resourceful corps of designers who overcame internal resistance by deploying the same tools they use in pursuing innovation: empathy, visualization, and experimentation in the marketplace HBR Reprint R1509E An interview with Adi Ignatius page 80 CEO Indra Nooyi believes that each PepsiCo product must engage customers so directly and personally that they fall in love with it So in 2012 she hired renowned designer Mauro Porcini as PepsiCo’s first chief design officer Nooyi says that design thinking now informs nearly everything the company does, from product creation, to the look on the shelf, to how consumers interact with a product after they buy it Design thinking is apparent, for instance, in Pepsi Spire, the company’s touchscreen fountain machine that gives consumers the visual experience of watching flavors get added to a beverage before the finished product is dispensed And design thinking is an integral part of what Nooyi says makes women embrace Mountain Dew Kickstart—with its slim can, higher juice content, and lower calorie burden—as a product they can “walk around with.” But design is not all about the way a product looks, according to Nooyi She says that PepsiCo has delivered “great shareholder value” on her watch because the company also offers consumers true choices, as evident in its “good for you” and “fun for you” categories of products—and because she has led her workforce to adapt strategically to consumers’ constantly evolving aspirations HBR Reprint R1509F September 2015 Harvard Business Review 125 EXECUTIVE SUMMARIES The Big Idea Features MANAGING ORGANIZATIONS RISK MANAGEMENT MARKETING The Organizational Apology Cybersecurity’s Human Factor: Lessons from the Pentagon How Certainty Transforms Persuasion James A “Sandy” Winnefeld Jr., Christopher Kirchhoff, and David M Upton | page 86 Zakary L Tormala and Derek D Rucker page 96 Maurice E Schweitzer, Alison Wood Brooks, and Adam D Galinsky | page 44 THE BIG IDEA The Organizational Apology I’m sorry A step-by-step guide by Maurice E Schweitzer, Alison Wood Brooks, and Adam D Galinsky Sorry! We by Zakary L Tormala and Derek D Rucker most sincerely We’re very sorry if anyone was offended Sorry! At some point, every company makes a mistake that requires an apology—to an individual; a group of customers, employees, or business partners; or the public at large And more often than not, companies and their leaders fail to apologize effectively, if at all, which can severely damage their reputations and their relationships with stakeholders Companies need clearer guidelines for determining whether a mistake merits an apology and, when it does, for crafting and delivering an effective message In this article, the authors present their framework—the apology formula— to help companies navigate the tricky terrain Leaders should ask themselves four questions: • Was there a violation? • Was it core to our promise or mission? • How will the public react? • Are we committed to change? As a general rule, the more central to the mission of the company the violation is and the more people it affects, the more important it is that the apology be pitch-perfect Once a company decides that an apology is necessary, it needs to carefully consider the who, what, where, when, and how of executing it For core violations, the “who” has to be senior leaders, the “what” has to show a tremendous commitment to change, the “where” has to be high profile, the “when” has to be fast, and the “how” must be deeply sincere and demonstrate empathy HBR Reprint R1509B 126 Harvard Business Review September 2015 The vast majority of companies are more exposed to cyberattacks than they have to be To close the gaps in their security, CEOs can take a cue from the U.S military Once a vulnerable IT colossus, it is becoming an adroit operator of well-defended networks Today the military can detect and remedy In nearly all network penetrations, people have been the weak link People matter as much as, if not more than, technology With cyberattacks soaring, corporations must step up efforts to protect their IT networks Most firms could learn from the U.S military, which has been tightening its cyberdefenses for the past six years In the past year alone, it adroitly repelled more than 30 million intrusions A focus on reducing human error is core to the military’s heightened security As is true in the private sector, mistakes by administrators and users open the door to the vast majority of successful attacks To address this, the Defense Department has been borrowing from the “high reliability” practices of the U.S Navy’s nuclear program, which hasn’t had a single accident in its six decades of existence In this article the former vice chairman of the Joint Chiefs of Staff, a special assistant to the Joint Chiefs’ chairman, and a management professor describe the military’s approach and how business leaders can apply it in their firms It involves six cultural principles: • integrity, which leads people to adhere fully to protocol and own up immediately to mistakes; • depth of knowledge, which is ensured by rigorous and continual training and testing; • procedural compliance, which is enforced by extensive inspections; • forceful backup, to prevent problems that could be introduced by workers acting alone; • a questioning attitude, which induces people to investigate anomalies quickly; and • formality, which prevents miscommunication By taking charge, making everyone accountable, and instituting tough standards for IT training and operation, CEOs can embed these principles in their organizations and close critical gaps in security HBR Reprint R1509G Certainty profoundly shapes our behavior The more certain we are of a belief—regardless of its objective correctness—the more durable it will be and the greater its influence on what we Across dozens of studies spanning more Certainty profoundly shapes our behavior The more certain we are of a belief—regardless of its objective correctness—the greater its influence will be on what we People who are certain of their opinions are more likely to buy, buy sooner, and spend more; more willing to recommend products; and more apt to resist challenges to their beliefs Certainty is the catalyst that turns attitudes into action Imagine that two customers flying Virgin America give the carrier the same high rating— a out of 10—on a satisfaction survey Most marketers, seeing that the customers are both highly satisfied, assume they’ll behave similarly— that they’re equally likely to fly Virgin America again, recommend it to friends, and so on But their behavior depends less on their stated opinion than on how firmly they hold it Suppose that one of the Virgin customers is a frequent flier and has had reliably good experiences She is likely to be very certain of her favorable attitude and to remain a loyal customer The other may have flown just once on the carrier She’s probably less certain of her opinion—wondering whether future experiences would be different—and therefore less likely than the frequent flier to choose Virgin again They may hold the same view, but if one of them is more certain of that view than the other, she’ll be the better customer Despite the voluminous body of research on the influence of certainty on behavior, it is poorly understood in business and rarely measured or put to use As a result, organizations overlook one of the most potent tools of persuasion at their disposal In this article, the authors identify four levers for systematically increasing certainty: consensus (people become more certain of their opinions when they perceive that others share them); repetition (expressing a position many times increases certainty); ease (the more readily an idea comes to mind, the more certain we are of it); and defense (standing up for your beliefs increases your conviction about them) HBR Reprint R1509H HBR.ORG How We Did It Managing Yourself LEADERSHIP The President of SRI Ventures on Bringing Siri to Life How to Embrace Complex Change Linda Brimm | page 108 Norman Winarsky | page 39 The market vision that led to Siri, the virtual personal assistant that’s now an integral part of Apple’s iPhone, can be traced back to 2003, when a mobile phone’s primary applications were still limited to ringtones and messaging The author and his colleagues at SRI International recognized that the phone’s growing capabilities would eventually put a communicating supercomputer in everyone’s pocket They believed that their company was well suited to be a leader in the inevitable technology and market revolution—as it had been in every previous computing revolution They didn’t originally plan to create a stand-alone venture They talked to dozens of telecom carriers and handset providers, with the aim of jointly starting a project that would license the technology But because the few resulting commercial projects implemented only small parts of its original vision, the founding team decided to drop that idea and create and build its own venture Speechto-text was the easy part: SRI had launched Nuance, a world leader in speech solutions The hard part was analyzing words so as to understand the user’s intent and then reason about and answer the request The runaway success of Siri demonstrates how well the team met that challenge HBR Reprint R1509A HOW WE DID IT… THE PRESIDENT OF SRI VENTURES ON BRINGING SIRI TO LIFE by Norman Winarsky The Idea Before it could become part of every iPhone, the “virtual personal assistant” had to cross innovation’s valley of death Managing Yourself How to Embrace Complex Change A framework for navigating big career transitions by Linda Brimm D For ambitious executives working in dynamic global businesses, big career transitions—to new roles, organizations, industries, or geographic locations—are a fact of life So is the need to constantly adapt to new technologies, work groups, strategies, and ways of thinking and behaving And yet even seasoned professionals find this sort of change difficult Management researchers have a lot to say about the best way to approach organizational change, but when it comes to personal transitions, there is no blueprint for success Over years working with MBA students and executives, the author has developed a framework to help in thinking about change It involves navigating the Seven C’s: complexity (considering all the issues in a particular change effort); clarity (understanding and prioritizing those issues); confidence (believing that one can be successful in making the change); creativity (brainstorming innovative solutions to problems that arise); commitment (beginning to implement the change); consolidation (leaving behind the previous identity to adopt the new one); and change (living into the change and its consequences) HBR Reprint R1509J Learn how to use the element of surprise to your advantage 10 page abstracts that can be read in minutes or less POSTMASTER Send domestic address changes, orders, and inquiries to: Harvard Business Review, Subscription Service, P.O Box 62270, Tampa, FL 33662 GST Registration No 1247384345 Periodical postage paid at Boston, Massachusetts, and additional mailing offices Printed in the U.S.A Harvard Business Review (ISSN 0017-8012; USPS 0236-520), published monthly with combined issues in January–February and July–August for professional managers, is an education program of Harvard Business School, Harvard University; Nitin Nohria, dean Published by Harvard Business School Publishing Corporation, 60 Harvard Way, Boston, MA 02163 Surprising ourselves every day is a vital part of living a happy life Download this summary for FREE: www.getabstract.com/hbr EXPERIENCE HBR.ORG Life’s Work be able to read all the ones that just go it It doesn’t matter exist already So, if you want whether you’re feeling good to add a book to that moun- that day I don’t think writers tain, it had better be necessary or artists can afford to have a Otherwise, save the trees wait for inspiration to descend You have to simply sit there and make yourself it Once your mind understands that it has no excuses, it’s remarkable how it begins to play along How can you tell you’re ready to start a new book? Usually because an idea is nagging at me If it sticks around, still interests me, crops up every morning when I wake—that tells me I need to pay attention 128 Harvard Business Review September 2015 How did the fatwa affect your work? Immediately after, I didn’t have much time or headspace to think about work; the world was shouting in my ears But I didn’t want to be derailed as an artist So I told myself quite firmly, “Just go on being the writer you’ve always been.” You’re very active on Twitter What’s the appeal? Just immediacy—being able to say what you have to say right away, unmediated I resisted in the beginning, but a friend twisted And how you know when you’re finished? Exhaustion my arm, so I tried it, and I’m It’s not that I’m physically tired, at a million followers It puts a but my imagination is There’s megaphone in your hand, and a point at which you’re not mak- when there’s something to ing it better; you’re just making shout about, it’s useful to have it different You have to be good a megaphone at recognizing that point Hear the complete interview at HBR.org piece every day, you’d never to treat it like a 9-to-5 job You “creative temperament” or to Salman Rushdie is best known for his fifth book, The Satanic Verses, which prompted a fatwa against him in 1989 But over the past 40 years he has published 16 others, including Midnight’s Children—the winner of three Booker awards—and his latest novel, Two Years Eight Months and Twenty-Eight Nights A disciplined worker by day and a socializer by night, he says he strives for writing that “stands the test of time.” Interviewed by Alison Beard even if you read a great master- Do you solicit feedback? I don’t Why should businesspeople read fiction? Nonfiction sells share work in progress, because better than fiction these days I find it’s too fragile If I’m writ- But one thing you learn as a ing a funny scene, and I show history major is how contested it to you and you don’t laugh, events are Facts are slippery I feel sad, lose confidence The truth is imperfect Fiction So I bring it as far as I can before recognizes that There’s also I show it to anyone But then I another kind of truth—the truth become very interested in what of how we human beings relate publishers and friends have to one another, to place, to ideas to say It’s not so much about and belief systems—and you needing them to like it, al- find that in a novel As people though that’s always nice What have access to better translations, I really want is for them to tell they can use literature to me where the problems are You understand other parts of the need nonsycophantic people world If you see Afghanistan who will tell you the truth on the news, it’s explosions Your first book was panned Why did you keep at it? Writing really is a calling It’s necessary for the person doing it The world is drowning in books; and people shouting But if you read, say, The Kite Runner, you begin to understand the lived experience of an Afghan HBR Reprint R1509L NADAV KANDER HBR: How you work? Rushdie: I’ve always told myself ... the authors’ and not necessarily those of Harvard Business Review, Harvard Business School, or Harvard University Authors may have consulting or other business relationships with the companies... www.hbradsales.com Copyright 2015 Harvard Business School Publishing Corporation All rights reserved SUBSCRIPTION SERVICES UNITED STATES AND CANADA A NOTE TO READERS 800-274-3214 Harvard Business Review, P.O... online access to current and back issues of Harvard Business Review through EBSCO host databases ARTICLE REPRINTS To purchase reprints of Harvard Business Review articles, go to HBR.org rotman.utoronto.ca/events
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