Saturday, October 2, 2010
Brand Is Culture, Culture Is Brand
Brand Is Culture, Culture Is Brand
8:33 AM Monday September 27, 2010
Two weeks ago, I spoke to a conference of marketing executives organized by the American Bankers Association. The talk among these bank marketers — a young, energetic, change-minded bunch — ranged from the needs and interests of Generation Y to the power of social media to the design of new products for new times.
My message to the group was much simpler than all that, almost a throwback. You can't really think about your bank's customers, I argued, unless you also think about your bank's people. Even the most creative business leaders I know recognize that success is not just about marketing differently from other companies: more daring ads, more new products, more aggressive use of Twitter and Facebook. It is also, and perhaps more important, about caring more than other companies — about customers, about colleagues, about how the organization conducts itself in a world with endless opportunities to cut corners and compromise on values.
That's what helps you stand out among your customers, and stand out from the crowd in a hyper-competitive marketplace. The new "power couple" inside the best companies, I concluded, was an iron-clad partnership between marketing leadership and HR leadership. Your brand is your culture, your culture is your brand.
So imagine my surprise when right after my talk, a banker by the name of Jana Dobbs, an executive with Corner Bank, a 138-year-old outfit based in Winfield, Kansas, shook my hand and handed me her business card. "Take a look at my title," she said with a Cheshire-cat grin. Jana's title, it turns out, is senior vice president of human resources and marketing. Forget a "partnership" between HR and marketing. At Corner Bank, the two functions report to the same executive. It's a title I'd never seen before, and I asked Jana how her fellow bankers tended to react to it. "They're usually kind of shocked," she admitted, "because at most companies the head of marketing and the head of HR have very different personalities."
Corner Bank has a great brand position in the Kansas cities and towns in which it operates — as an advocate for the little guy in an industry dominated by giants. That means the day-to-day interactions between customers and front-line employees are a huge part of the bank's brand identity. "Our people are our best marketing tool," Jana explained. "Advertising is important, the design of the website is important, but if customers have a positive experience every time they come into the bank, that's what builds our reputation. We've got mobile apps, we've got Internet banking, but what we rely on is a hometown feeling. When you walk into our bank, we know your name."
That's certainly a winning value proposition for a small, family-owned financial institution. But it works for major organizations too. One big company that embraces the connection between brand and culture is USAA, the insurance and financial-services juggernaut based in San Antonio, Texas. It's a huge, successful operation with 7.4 million members, 21,000 employees, and annual revenues of $18 billion. What most distinguishes USAA, though, is that it only does business with active or retired members of the U.S. military and their families. That's the customer base it serves — and it serves those customers fabulously well. Its customer-loyalty rankings are off the charts and it has become a legendary brand, both in terms of technology innovation and service.
One reason for its strong performance as a brand is the strong sense of identification between its front-line employees and its customers. USAA does business almost exclusively over the phone and the Internet, and it has more than 13,000 customers-service reps. The company has a much-admired training program in which employees learn the myriad technical skills they need to work efficiently. But what they really learn is to empathize with and see the world through the eyes of a soldier on active duty in Afghanistan who needs to wire money to a sick parent, the wife of a soldier in Iraq who needs to finance a car, and all of the other unique pressures and demands on its 7.4 million members.
How do employees develop that sense of empathy? A BusinessWeek feature tells the story well. When they are about to start their training, employees review "deployment letters" that real soldiers get: "Report to the personnel processing-facility" tomorrow, the letter reads, and get your affairs in order beforehand. They eat MREs (meals ready to eat) on many occasions during their training, to get a "taste" for the life of a soldier. They walk around in 65-pound backpacks. They read actual letters from soldiers in the field to their families back home. USAA calls it "Surround Sound" — immerse employees in the real life and emotional needs of customers. "There is nobody on this earth who understands their customer better than USAA," one consultant has said.
That kind of personal identification between employees and customers is what gives USAA the drive to not just provide great service but to unleash big innovations. For example, it was the first financial-services company to allow customers to deposit checks by iPhone. You get a paper check, you take a photo with your iPhone, and email it to the bank. It was the first financial-services company to allow you to check deposit balances via text message. You text your account number and get a return text with the relevant information. USAA has proven itself to be a technology leader — not because the company is obsessed with technology, but because it is obsessed with customers.
The simple lesson behind the success of both small-fry Corner Bank and big-boy USAA: You can't be special, distinctive, and compelling in the marketplace unless you create something special, distinctive, and compelling in the workplace. How does your brand shape your culture? How does your culture bring your brand to life?
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Friday, October 1, 2010
Win-Loss Studies and Four Sequential Steps to Synchronize Sales & Marketing
http://blogs.hbr.org/cs/2010/09/why_sales_and_marketing_are_at.html
Struggling companies all share something in common. Their sales and marketing efforts are at odds. Sometimes, they are even at war. The marketing team lectures the sales department, saying that if only the salespeople would follow their advice, their problems would be solved. Meanwhile, the sales department always says it needs something else from marketing. The salespeople are clamoring for the silver bullet that will convince the most ardent skeptic to buy.
The root cause of this situation is that sales and marketing have different views of the world. To the marketing department, selling is a series of steps that you guide a prospect through. These steps are based on the logic of purchasing the product, and the marketing team's job is to provide the tools to move the prospect to the next step.
Meanwhile, salespeople must work with the unpredictable part of the process: people. Their job is to formulate an account strategy based upon the people to whom they are trying to sell. They need intuition about what to do and say in a particular competitive situation.
As a result, friction between the two areas develops. Salespeople feel they must translate what they see as marketing's theoretical arguments into a practical message, while the marketing team often believes the salespeople themselves are the problem because they are not following their product positioning. Having analyzed hundreds of sales cycles and conducted thousands of interviews as part of the win-loss studies I have performed on behalf of my Fortune 1000 clients, here are four sequential steps to define the intuition that sales needs so sales and marketing are synchronized.
Step 1: Identify Customer Decision-Making Politics
The premise of most marketing departments is that the customer is purely a rational decision maker. Therefore, the best product should naturally win and they believe their product is always the best. However, prospective customers have personal biases and are influenced by organizational politics and the personalities involved in group decision making.
The first step is to understand the people involved in the sale. Analyze at least thirty recent key sales cycles (consisting of an equal number of won and lost accounts) and map out all of the people who were involved. List their titles and roles in the organization, and hypothesize about the selfish interests that motivate them to buy.
Step 2: Determine Sales Cycle Turning Points
Every deal has a critical moment or turning point that determines the winner and the losers. In some cases, the turning point is easy to spot. For example, while a salesperson is presenting his solution, he encounters a deal-breaking objection that he is unable to overcome. Even though the customer remains cordial for the rest of the meeting, a turning point has occurred and the deal is lost. Recognizing when and why you lost momentum during the sales process is necessary to keep it from happening again in the next account. List the turning points for each of the sales cycles analyzed in the first step.
Step 3: Conduct a True Win-Loss Analysis
Win-loss analysis is very important, but unfortunately, it's a lost art. True win-loss analysis based upon extensive customer interviewing is the best way to understand customer behavior during the selection process. The goal is to have customers comment on the company, selection process, competition and give their perceptions of the sales cycle experience and product opinions. They should also be solicited for their advice and recommendations.
Step 4: Perform a Marketing Tools Audit
The final step is to amalgamate the data from the steps above in order to perform a marketing tools audit. Summarize important qualitative information about the political, organizational, and technical aspects of customer decision making into common themes. Then make a comparison to find where gaps exist between the tools marketing provides (customer success stories, product demonstrations, competitive comparisons, analyst reports, etc.) and the materials needed to counteract business or technical objections and overcome key deal-stopping turning points. After the audit is completed, sales and marketing leadership should then define the nature of their relationship and how they will interact in the future (see this excellent HBR article for more insight on this).
Closing Thoughts
The ongoing conflict between sales and marketing is the "elephant" in the room at many companies. No one wants to talk about the problem until it becomes so disruptive that it must be dealt with. By following these four steps, the divergent viewpoints between sales and marketing can finally be aligned.
Steve W. Martin teaches sales strategy at the USC Marshall School of Business. His latest book on sales neurolinguistics, Heavy Hitter Sales Psychology, is based on his successful 20-year sales career.
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Monday, September 27, 2010
GreenBiz.com - A New Life for Plastics: End-of-life Solutions in the Age of Greener Materials
https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=245220&sessionid=1&key=F08533090C40503C83A210E84A5E635A&sourcepage=register&utm_source=GreenBuzz&utm_campaign=93241c3dce-GreenBuzz-2010-09-27&utm_medium=email
A New Life for Plastics: End-of-life Solutions in the Age of Greener Materials
October 5, 2010, 8:30 AM PDT / 11:30 AM EDT
Plastics in the waste stream have long been a concern, and companies have been finding new ways to address this challenge. After all, why must a polymer that has the potential to last thousands of years in the environment be used in single-use packaging applications? Many companies are now turning to biopolymers instead of traditional petrochemical-based plastics to address waste management challenges and create localized energy.
Biobased plastics can degrade in two ways: in oxygen-laden environments, and in environments that lack oxygen. Certain biopolymers have been shown to have characteristics that allow them to degrade in an industrial composting setting.
This free, one-hour webcast will shine a light on how global biotechnology and chemical firms are driving innovation to help find a solution to plastics in the waste stream. Join us as we explore recent trends in the plastics industry, including:
* Use and inclusion of biopolymers
* Innovative technologies linking plastics to energy generation
* End-of-life considerations from the design phase
* Standards development
You will learn:
* the benefits of using biopolymers over traditional plastics
* the differences among commonly-used biopolymers and their end-of-life solutions
* challenges faced by the plastic manufacturing, waste management and packaging industries
* how degradation of biopolymers can help reduce our dependence on fossil fuels
Join Joel Makower, Executive Editor of GreenBiz.com, in conversation with Robert Whitehouse, Director of Applications Development for Metabolix, Inc., a leading bioplastics company; Kelly Lehrmann, consultant with the German bioplastics firm FKuR; and William Hoffman, environmental scientist in green chemistry at UL Environment.
Panelists include:
Robert Whitehouse, Director of Applications Development for Metabolix, Inc.
Dr. Robert S. Whitehouse has been involved with the plastics industry for over 40 years with a number of organizations. He obtained his PhD in Polymer Chemistry – Heterogeneity in Adhesive Films at Wolverhampton University and has authored many publications, book chapters and over 50 patents in the polymer, surface chemistry and recycling fields. In 1999 Bob became involved with Metabolix Inc in the development of polyhydroxyalkanoate polymers for a range of applications. At this time he became involved in understanding the role of microbial organisms in controlling the biodegradation of plastics materials as an end of life scenario. He has taken an active role in ASTM D20-96 committee in the development of new biodegradable test specifications include ASTM D6400 and D7081 and more recently in new applications such as ambient soil degradation, Home Composting and anaerobic degradation.
Kelly Lehrmann, consultant with the German bioplastics firm FKuR
Kelly became interested in the biodegradable industry after working as a consultant for a landfill corporation and realizing the potential value of the industry. She attended UW-Eau Claire and Mankato State University to obtain a B.S. in Finance. Kelly has 21 years of sales, marketing and management experience with 14 years of that holding management and executive positions. Throughout her career she spent 7 years in retail management where she received hands on experience with inventory control, distribution channel management, purchasing, sales management, market research and public relations. She has been a part of FKuR’s family of companies since 2007 first as the agent for North America and now as a consultant for FKuR Plastics Corporation in the United States.
William Hoffman, environmental scientist in green chemistry at UL Environment
Bill is currently working on the development of standards and guidance for standards within UL Environment including the green chemistry and sustainable chemistry aspects of product environmental performance, validation of claims and product certification. The goal of this work is to provide a strong technical basis to product environmental performance by using a deep scientific analysis of the environmental impact of a product while also assuring companies producing the product are using environmentally progressive manufacturing methods.
Moderator:
Joel Makower, Executive Editor, GreenBiz.com
Joel is Executive Editor of GreenBiz.com and author of "Strategies for the Green Economy," among other books. For more than 20 years, he has been a well-respected voice on business, the environment, and the bottom line. The Associated Press has called Joel "the guru of green business practices."
Sponsored By:
UL Environment
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Thursday, August 12, 2010
Green Notes
Rule of Thumb: Criteria for Consideration
- The Market Need
- The Mission
- Knowledge to Start
- Capital Required
- Timing to Start
- Special Challenges
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Fueling Green Energy
(1) Fuel Cell Backup Power
- Provide fuel cells for backup power, emergency power, and mobile power
- Business to sell and/or distribute
- Capital - $$
- Timing to start - months to years
- Find a product to sell and/or distribute, and target the right market
Additional notes:
ABI Research, Power Air Corp (Zinc Oxide) - zero/low emissions, US Fuel Cell Council, ufcc.com, Wintergreen Research - Stationary Fuel Cell Market Opportunities, Strategies, and Forecasts, 2006 - 2012, wintergreenresearch.com
- Developing new technologies
- Distributing new fuel cells being produced
- Licensing technology to sell and adjust to new uses, targeting a specific market niche, such as fuel cells for office use, cabins, etc.
- Leasing of fuel cells and renting them on short-term basis as mobile power for special events.
- Marketing in urban areas worldwide where electrical power is uncertain.
- Suppling backup power to crucial computing and communication systems.
- Providing power for emergency response.
- Setting up cogeneration for fuel cells that produce significant heat, capturing both heat and power to increase efficiency.
(2) Solar
- Mobile power, freeing people from power grid
- Build solar into ubiquitous mobile power source
- Knowledge to Start: Solar, electrical, design, engineering
- Capital - $$
- Months to years
- Finding a specific need and designing the right product for the market
Additional notes:
Sierra Solar Systems (solar charger), iSun (iPod charger), Solio (Berkeley CA), Powerfilm (Ames, Iowa)
- Developing solar bags, briefcases, etc.
- Integrating laptop solar chargers with high-efficiency laptops
- Using small solar panels in electronics and small appliances
- Retailing solar gadgets
(3) Seeding Entrepreneurial Green Careers
- Reduction of a company's carbon footprint
- Businesses to outline their business risks related to environmental impacts and climate change (Ref: Sarbanes-Oxley Act 2002): how do these business risks affect the rules of financial disclosure. Biz are required to describe their climate/carbon fooprint, what programs are in place to offset that footprint.
Additional Notes:
Google's Bill Weihl, Climate Savers Computing Initiative, Jason Kovak
- Minimize Environmental Risks
- Compliance
- Green business opportunities
(4) Green Philanthropy Management
- Greatest environmental impact per dollar invested
- Non-traditional accounting system to measure value to society
Additional Notes:
New Philanthropy Capital (London), The Centre for Effective Philanthropy in Massachusetts, effectivephilanthropy.org , GiveWell, givewell.net, Holden Karnofsky, Elie Hassenfeld
Natural Resources Defense Council (NRDC), Karen Wayland, Environmental Entrepreneurs (E2), Roger Ballantine
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(5) *Green Technology Transfer
Additional Notes:
Aurora Biofuels, Matt Caspari, algae-derived biofuels, UC Tech Transfer, ucop.edu/ott,
The FLC Technology Transfer Desk Reference from the Federal Labouratory Consortium for Technology Transfer, May 2006, [ federallabs.org/pdf/T2_Desk_Reference.pdf ]
* Impt to form a consolidated database of green patents
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(6) Green Lawyers
Additional Notes: Bill Sloan, Morrison & Foerster (Cleantech Legal Practice), mofo.com, Wendel, Rosen, Black & Dean, wendel.com
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(7) Building Green Buildings and Businesses
Additional Notes: architecture2030.org, cool roofs, Berkeley National Laboratory, reflective coatings (little or no VOCs), Endurance Building Systems (Houston, Texas), Carlisle Syntec, waterproofing & heatproofing membranes, Dinyari Inc., dinyari.com, Bill Shevlin, infrared pigments in green paints, Oak Ridge National Laboratory, Bill Miller, Jan Kosny
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~ Work-in-progress ~
Tuesday, August 10, 2010
CHINA Huaneng Group's Investment in Biomass Cogen Energy
Construction of clean coal/biomass plant on Jurong Island begins
China Huaneng plant to draw new petrochemical investors
EDB says some have reserved land at Tembusu, but not started on projects
Ronnie Lim Business Times 12 Nov 09;
CHINA Huaneng Group's latest $2 billion clean coal/biomass cogeneration investment on Jurong Island - which is expected to shave 10 per cent off customers' utilities bills - will be a catalyst in helping to draw new petrochemical investors at the greenfield Tembusu sector.
The project will contribute significantly to the petrochemical island's integration strategy, 'especially as competitive utilities options are particularly critical to the energy and chemical industry, which is a large consumer of steam and power', said Economic Development Board (EDB) chairman Leo Yip at its groundbreaking yesterday.
While he did not specifically say so, the project should encourage chemical companies, which Mr Yip said, 'despite adopting a cautious approach during the recession, are continuing their project studies on new investments, in readiness for the upturn'.
A number of petrochemical investors have already reserved land at Tembusu, but have not started building their projects yet, according to Julian Ho, who heads a multiple portfolio including chemicals at the EDB, but he declined to name them.
Germany's Lanxess is, for instance, expected to start building its 400 million euro (S$832 million) synthetic rubber plant at Tembusu around mid-2011. Others in the wings include the Jurong Aromatics Corporation US$2 billion project and possibly Mitsui Chemicals.
Despite still-shaky economies, Cao Peixi, China Huaneng president and chairman of Huaneng Power International - which bought Tuas Power for $4.2 billion - said that the group was confident enough about the Singapore market to give the go-ahead to its Tembusu Multi-Utilities Complex (TMUC).
'Investing in Singapore is an important part of Huaneng's global strategy,' he said.
'We will leverage on our expertise and resources to support Tuas Power's growth and maintain its competitive advantage in the Singapore energy market . . . at the same time, we also hope that we will be able to contribute to Singapore's energy diversity and security.'
The TMUC project - which will use low-sulphur coal (80 per cent of the fuel mix) and palm shell kernels and wood waste (20 per cent) - will provide 160MW of electricity and about 1,000 tonnes of steam per hour when completed. It will also provide chilled water and treat industrial waste.
Because of the use of biomass, the plant's advanced technology such as special circulating fluidised boilers, and careful handling of the coal and coal ash, TMUC's emission levels will even be lower than some oil-fired power plants.
Furthermore, as each unit of electricity is produced at a lower cost, it will translate to cost savings of about 10 per cent of a customer's utilities bill compared with energy generated by a gas-fired plant, the company said.
Lim Kong Puay, Tuas Power president and CEO, said that while the original plan was to build the entire project at one go, it will now do so in tandem with customer demand. This will see the project being done in two phases, with part of the clean coal/biomass cogeneration plant ready by 2012, and the rest by 2014.
Financing for the $2 billion project will come from equity from the parent company, as well as from bank financing.
While the 2,670MW Tuas Power currently has a 24-25 per cent share of Singapore's electricity market, Mr Lim declined to give a figure on what its targeted share of the utilities market on Jurong Island will be, come 2014. 'The Jurong Island market is big enough for a new player,' he would only say.
'We see the standalone TMUC project as a long-term investment commitment, and as is (with China Huaneng's go-ahead), we are already seeing renewed interest coming from potential customers there.'
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Construction of S$2b multi-utilities plant begins on Jurong Island
Ryan Huang, Channel NewsAsia 11 Nov 09;
SINGAPORE: Construction works have begun on the Tembusu Multi-Utilities Complex - a S$2 billion facility on Jurong Island for generating steam, chilled water, electricity and treating industrial waste.
The multi-utilities plant is expected to help develop Singapore's petrochemical sector, as well as bolster the country's energy security.
"As a utilities provider, it is important to put in the necessary infrastructure in place, and this will provide the impetus for new investors to invest in Jurong Island," said Lim Kong Puay, president & CEO, Tuas Power.
The move is in line with the nation's plans to develop the Tembusu area of Jurong Island as a new petrochemical sector over the next five years.
The new plant is expected to be about 10 per cent more cost-efficient than conventional ones due to synergies from producing the various utilities. One example is the simultaneous production of steam and electricity.
The facility will be completed in two phases, and will be partially ready by 2012. The rest of the complex will be ready by 2014.
The facility will be run by Tuas Power, which is a member of China Huaneng Group. It represents one of the most significant Chinese investments in Singapore and is expected to further enhance the island's position as a platform for firms to go international.
Leo Yip, chairman, Singapore Economic Development Board, said: "We welcome the opening of Tuas Power's Tembusu Multi-Utilities Complex to enhance the range of third party utilities options as well as competitiveness on Jurong Island.
"With Asia becoming an increasingly important consumer of energy and chemical products, Singapore is well positioned to be a strategic base for Chinese energy and chemical companies seeking to internationalise and access new markets to drive business opportunities."
- CNA/sc
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Cheaper power for petrochem firms
Jonathan Kwok, Straits Times 11 Nov 09;
PETROCHEMICAL companies looking to set up processing plants at the Tembusu area of Jurong island can look forward to around 10 per cent of savings on their utility bills, with the construction of Tuas Power's $2 billion multi-utilities plant there.
The plant, with an initial opening planned for 2012, will supply steam, chilled water and electricity, which when co-produced, will lead to higher efficiency.
These cost savings will be passed on to customers through more competitive rates, which will be around 10 per cent lower when compared to energy from gas-fired plants, said Mr Lim Kong Puay, president and chief executive of Tuas Power, at the plant's official ground-breaking ceremony on Wednesday.
Tembusu is an as-yet-undeveloped area in the northwest of Jurong island that the Economic Development Board has earmarked for growing the petrolchemicals industry.
With a US$3 billion (S$4.17 billion) petrochemical cracker complex by Shell to be completed on Pulau Bukom by the first quarter of next year, Mr Julian Ho, executive director of energy, chemicals and engineering services at EDB, expects interest from downstream companies to set up processing facilities at Tembusu.
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Monday, August 9, 2010
15 Steps for Successful Strategic Alliances
1. Be open to romance, but court carefully. At the beginning of new relationships, selective perceptions reinforce dreams, not dangers. Potential partners see in the other what they want to see, believing what they want to believe. Hopes, dreams, and visions should be balanced by reality checks.
2. Know yourself. Build your strengths. An organization seeking partners should identify assets that have value to partners and strengthen them. Networks of the weak do not survive. The best alliances join strength to strength.
3. Seek compatibility in values. In rapidly changing environments, compatibility in values, philosophy and goals is more important than specific features of an immediate business deal. The basis for collaboration must be more enduring, and there must be a foundation for mutual trust to help weather inevitable changes or problems.
4. Treat the 'extended family' respectfully. Include other partners and stakeholders. Rapport between leaders of partner organizations is not enough. Other people and organizations who are the 'relatives' in each organizations' extended family must also be won over.
5. Put the lawyers in their place. Leader-to-leader relationships are important. Partnerships and network formation shouldn't be turned over to third-party professionals, such as staff analysts, lawyers, consultants, or deal-brokers.
6. Vow to work together until business conditions do us part. Commit to a first project, to exploring growth in the relationship, to monitor change, and to remain friends if changing conditions require a graceful exit.
7. But don't count on the contract. Formal agreements can't anticipate everything, and interpretations of the agreement vary — even within the same organization.
8. So keep communicating, face-to-face. Matters are more easily sorted out when partners' leaders keep talking long after their initial deal-making and dedicate people to watch over the relationship — a partner or alliance 'ambassador' (the equivalent of key account managers).
9. Spread involvement. Create more ties for more people. Alliances begin with a few direct connections among top leaders. As projects unfold, more people at more levels must get involved, and they need to feel connected, too — that they know their counterparts in their partner organization. The more people feel included, the more they have a chance to see the others face-to-face and come to know them, the easier it will be to implement partnership activities.
10. Build organizational bridges — formal structures. Active collaboration occurs when organizations develop structures, processes, and skills for bridging organizational and interpersonal differences and getting value from the relationship. Bridges include formal governance (a partnership board), joint project teams, and alliance ambassadors.
11. Respect differences. Alliances, partnerships, and networks are most helpful when they involve differences — when partners give each other something they do not already have. But differences in "specialty" desired by partners are accompanied by more "inconvenient" differences in behavioral style, motives and goals, operating methods, or cultural assumptions. Respect is essential. Time must be invested in understanding differences and transcending them.
12. Teach partners. Learn from partners. People from across the partnership network must become teachers as well as learners. Often the ultimate value of a partnership is the new knowledge and skill it brings. Organizations that derive greater value from their alliances tend to have greater communication internally, share more information, and promote an atmosphere of learning.
13. Be prepared to change yourself. Partners must be willing to be influenced by one another. To make linkages possible requires operating compatibilities, project by project and sometimes even in a larger sense. This can mean learning the other's language and style or inventing a new one; changing to the other's system or creating a joint one.
14. Help everyone win. Mutuality is the hallmark of organizational collaboration. Balancing benefits so that each partner gets something of equivalent value can be hard to do in the short run, but it is essential in the long run. The best alliances try to maximize the value of the whole relationship, which then makes it more valuable to each partner.
15. Get closer, change course, or exit gracefully. Like living systems, relationships evolve. Change should be expected. But the best guarantee that organizations will be closer in the future is success in what they try to achieve today. Success strengthens relationships.
To ensure that your partnerships are effective, apply these principles at every stage of the relationship.
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Rosabeth Moss Kanter is a professor at Harvard Business School and the author of Confidence and SuperCorp.
Connect with her on Facebook or at Twitter.com/RosabethKanter.
Wednesday, June 2, 2010
The Impact of the Irrelevant on Decision-Making
Economic View
The Impact of the Irrelevant on Decision-Making
Published: May 28, 2010
By ROBERT H. FRANK
Even so, when people confront opportunities to improve their position, they’re generally quick to seize them. When energy prices rise sharply, for instance, consumers are quick to adjust their thermostats. So most economists are content with a slightly weaker assumption: that people respond in approximately rational ways to the information available to them.
But behavioral research now challenges even that more limited claim. For example, even patently false or irrelevant information often affects choices in significant ways.
Consider the people who set their watches a few minutes ahead, to prod themselves to arrive at appointments on time. When asked what time it is, they effortlessly perform the required subtraction before answering. So, in one sense, the false image on the watch face doesn’t fool them at all.
But that same image is fed into their brains through multiple neural pathways. Some lead to the circuits that do the subtraction. But others lead directly to emotional circuits, which react to the image at face value. The resulting anxiety is why the practice works.
An intriguing example of transparently irrelevant information that affects behavior comes from a 1974 report on an experiment by the psychologists Daniel Kahneman and Amos Tversky. In the experiment, subjects first spun a wheel that supposedly would stop at random on any number between 1 and 100. Then they were asked what percentage of African countries belongs to the United Nations. For one group of subjects, the wheel was rigged to stop on 10; for a second group, on 65. On average, the first group guessed that 25 percent belong to the United Nations, but the second group guessed 45 percent.
All subjects would have insisted, correctly, that the number on the wheel bore no relation to the correct answer to the question. Yet, obviously, the number profoundly influenced their responses.
In short, even demonstrably false or irrelevant information can influence judgments, which in turn influence decisions. In such cases, Professors Tversky and Kahneman wrote in 1981, “the adoption of a decision frame is an ethically significant act.”
Policy makers have long recognized the potential danger of false statements by advertisers. But in the belief that most adults are suitably skeptical about promotional puffery, Congress has tried to prohibit only the most blatantly false or explicitly misleading claims.
But what about merely irrelevant statements, or only implicitly misleading ones? Standard economic models say such claims are, well, irrelevant, so there should be no need to regulate them. But according to recent behavioral research, it’s a distinction without a difference.
Although cigarette advertisements, for example, typically portray smokers as young, healthy and attractive, smoking can make people look older and less healthy. Such ads make no explicitly false claims, but that doesn’t make them less misleading, even for informed consumers.
More troubling are instances in which politicians employ patently false statements to shift the terms of important public debates. Decades before President George W. Bush tried to privatize Social Security, for example, Democratic presidential candidates regularly frightened Florida seniors with groundless accusations that their opponents would gut the program.
Of course, politicians of both parties have long taken liberties with the truth. But as even conservative political commentators have begun to point out, Republicans have lately been far more aggressive in stretching traditional boundaries. When Sarah Palin said that if health care reform legislation were adopted, her parents and her child with Down syndrome “will have to stand in front of Obama’s ‘death panel’ so his bureaucrats can decide, based on a subjective judgment of their ‘level of productivity in society,’ whether they are worthy of health care,” most people probably realized the president had made no such proposal. Her statement nonetheless shifted the terms of the debate, making it harder for legislators to focus on genuinely relevant issues.
CAN anything be done? For a variety of practical reasons, legal sanctions promise little protection against blatantly false statements. It is helpful, to be sure, when journalists call out politicians who stray too far from the truth. But merely knowing that a statement is false doesn’t nullify its impact. To be effective, a remedy must act prospectively. It must discourage people from making false statements in the first place.
Economists have long recognized that social sanctions are often an effective alternative to legal and regulatory remedies. As Adam Smith argued, moral sentiments are extremely powerful drivers of human behavior. People who know they’ll be ridiculed for telling untruths are more likely to show restraint.
Some social sanctions are less effective than others. In recent years, the most conspicuous public falsehoods have been ridiculed by independent bloggers and Comedy Central’s faux news hosts. But television and Internet audiences are highly segmented. Many of Jon Stewart’s targets may never hear his riffs about them, or may even view them as badges of honor.
That’s why it’s important for the circle of critics to widen — and why we need to remember that framing a discussion appropriately is “an ethically significant act.”
Robert H. Frank is an economics professor at the Johnson Graduate School of Management at Cornell University.
