Dan Erwin

Winston Churchill: “You can always count on Americans to do the right thing--after they’ve tried everything else.”

  

What’s the smartest foreign policy choice for the U.S. now? Remember that good strategy is inevitably about saying yes and no to the right issues. That being the case, how should U.S. politicians be answering this question? Richard Haass, the well-known diplomat, policy author and former President of the Council on Foreign Relations, flips the switch and pushes the reset button to answer this question in his latest book. In fact, he’s playing with heresy.

Set aside your doubts. Haass has not been inspired by Wile E. Coyote.

3 Rules for Mastering New Skills

How do you start something new? Whether it’s an exercise program, a simple task you’ve left on the back burner, or creating a new business from scratch—how do you get started? Doing so can be very intimidating. And it’s the lack of starting that kills most projects. In his now classic article, “Small Wins,” Karl Weick argues that when goals seem overwhelming, they sap our intrinsic motivation. Here are three timeless rules for starting something new.

1.    Start small. Weick finds that small wins are the key to motivation. So breaking skills down into chunks, small, modest steps that are achievable, reduces fear, clarifies direction and increases the probability we’ll succeed. Bob Sutton’s terrific book, Good Boss, Bad Boss, argues that “big, hairy, audacious goals” are not only unrealistic,

Big Data: The All-Important "Why" and "How"

Nearly 10,000 have visited my postings of two blogs on Big Data on a couple sites since January 17. There’s no question that big data is “hot” and that the business landscape is shaped by data more than ever before. Google’s Eric Schmidt tells us the world creates 5 exabytes of data every two days. That’s really big data. (FYI: Exabyte—Cisco says annual global IP traffic will reach two-thirds of a zettabyte or 667 exabytes in 2013).   But the real big data question is not how much, but so what?  

Recently, the Economist Intelligence Unit, with support from SAS Software, set out to answer that question.  They surveyed 752 senior executives from a broad range of sectors and countries. They also conducted in-depth interviews with 17 executives, consultants and specialists regarded as data pioneers. Fifty-seven percent (57%) of the respondents had been working with big data for at least three years, and nearly one-half of the respondents said that their companies are well ahead of their peer firms and have a defined data strategy.

What’s significant about the results is that they are reflective of a growing consensus in the field of big data. The consensus research also confirms my blogs on the big data IT fumble and the data scientist as “sexiest career.” The summary highlights of the research are as follows:

The link between effective use of big data and financial performance is strong. Top performing companies, the so-called strategy data managers, process data more rapidly, see the rewards across all business disciplines, place a higher premium on data than their peers, collect more data from everywhere and use data more broadly across the business.

The survey suggests that there is a correlation between big data and financial performance. But a chief problem with all survey research is the omission or de-emphasis of other factors. The firms surveyed tended to be successful firms prior to the use of big data. It’s probable that the big data leverages other success factors.

Still, it’s arguable that big data is a highly significant competitive advantage. At this point in its development, firms without that expertise are liable to be left behind.

Well-defined data strategy is always the top priority, not collecting and processing information. One of the intriguing research bits is that 46% of executives from companies that significantly outperform their peers financially have a “well-defined” data strategy. Inevitably and always, the strategy should be based on key business priorities. The role of the data strategy, then, is to identify the problems the firm wants to solve. But the data component serves those priorities and, therefore, is developed afterwards.

Strategy is key: big data merely supports strategy.

Talent matters as much as technology. Research finds that executives need to ensure that analytic thinking is not confined to the It department. Especially valuable is a sidebar, “What’s in an algorithm?” detailing training that works with employees with little or no knowledge of data science, showing employees how to create a data plan that results in a series of business recommendations.  Yet, a close reading of the language of the research conclusion indicates the need for still more clarity on this issue.

As I emphasized in my blog, Big data: the IT fumble, the uses of big data emphasize that IT and data science are very different animals. Any observant employee is aware that when it comes to data or even the use of the term, data, the ship is listing way over to the side of IT. The lack of professional data scientists for the discipline makes the problem even more serious. Data scientists will need to understand the business as well as cognitive and behavioral sciences. One principal at Deloitte Consulting recommends that companies may need to search academic departments or consider sharing a data scientist. So it can’t be emphasized enough that people are at the heart of the discipline, not data.

The biggest gains from big data impact are in customer-facing areas. The report recommends that social media and web-tracking technologies are especially useful for collecting customer data. Loyalty cards and user-generated web content have already led to significant changes in retail and entertainment. Of course, consumer products companies have long used customer data supplied by information and measurement companies like Nielson. Thus, marketing and sales groups have built-in experience and history of using customer generated data, making analogies to web-data an easier reach for those firms.

Evidence of the use and advance of data is everywhere. As the report indicates, an ecosystem of data-focused companies is springing up and creating new businesses. Still further, analysts at the McKinsey Global Institute estimate that just one sector—the US healthcare industry—could create US$300bn in value annually if it used big data to drive efficiency and quality.

The “why” of big data is fairly obvious. It’s the “how” that creates and will continue to create frustration, while at the same time creating significant business success. That’s typical of an evolving discipline.

Flickr photo: by Laura ATL

Where HR Goes Wrong--and What To Do About It

Recently I wrote a positive review of HR from the Outside In, by Dave Ulrich and colleagues. Upon serious reflection, I want to offer a caveat to that review. 

I began that blog by saying that this was the book I’d been dreaming about for years. Yes, it is an important book. But it doesn’t go far enough in highlighting the role of strategic business thinking as the core focus of company human resource management. Rather than framing the problem as six competency issues, the book would have generated a lot more insight about both the weakness and the solution to the typically secondary HR role in the contemporary corporation. Those of us who’ve consulted at numerous Fortune 100 and 500 companies are well aware that HR often, perhaps inrvitably, lacks significant political clout. That’s a terrible shame because the truth is that HR can make the difference between business success and failure for most any firm.  

The future impact
The authors clearly state, in the first page, that the purpose of their book is to support the alignment, integration and innovation of HR practices in individual and organizational performance. A couple paragraphs later they dissect their statement into three questions:

• What should HR professionals be, know, and do to be seen as personally effective?
• What should HR professionals be, know and do to improve business success?
• What should HR departments focus on to improve business performance?

They also make clear from the get-go that by business they refer to the company’s business, not merely the objectives of the HR department. They then proceed to examine six competencies to respond to those questions, emphasizing the role of “strategic positioner.” In that chapter they spend six pages discussing how to think and talk about the business’ strategic positioning. This is the richest part of the book, but there is much more to be learned about the strategic impact that HR can have upon the work force and the business.

What is to be done?
HR from the Outside In purports to be a cutting-edge, strategic book, but the description of the strategic focus, challenge and need is far more detailed than the brief chapter that addresses strategic positioning. This disconnect goes to the very core of why the discipline of HR exists in the first place. Until HR addresses that most basic issue in laser-like focus, attitude surveys, case studies, abstract conclusions and competency discussions will likely have marginal impact. 

Sure, strategy has become an over-used buzzword and gotten lost in the business jargon. Many of us know that IBM’s former CEO, Lou Gerstner, pooh-poohed strategy and went for tactics. Gerstner was talking out of both sides of his mouth, for strategically, he completely changed the business—and its customer, enhancing his firm’s long-term success and profitability. From the very outset, that was a strategic move. 

At bottom, the truth is that far too few understand strategy, and that’s a problem. Indeed, half-a-dozen years ago, Christian Mitreanu asked in an MIT Sloan Management Opinion whether it was a bad word? He didn’t get around to a rarified definition of strategy, but he made an important point: strategy must include an ongoing cultivation of understanding the business’ customer, which is at the heart of the matter. 

The ever-astute Roger Martin detailed this customer focus in a brilliant blog on strategy, entitled The execution trap. But at the least every HR manager and exec needs to put Michael Porter’s article, What is strategy? on the permanent front lobes and make certain that every HR move ties either directly or indirectly into the firm’s business. Porter argues that strategy rests on a unique set of activities that delivers a unique mix of value to the chosen customer niche. But you can memorize the rest of his seminal article. 

Now, why did I quickly summarize the meaning of strategy and point my readers to three articles? Very simple: over thirty years of consulting, I’ve become convinced that very few companies have a valued strategy—yeah, strategy is tough to create and execute—and it’s a rare bird in any company that really understands his firm’s customer and his firm’s business. 

What this means is that everybody in HR needs to be able to talk, create, think and execute HR tactics that tie directly into his firm’s strategy. That’ll mean that HR folk argue, fuss, disagree, collaborate and contribute magnificently to every single damn business discipline, beginning with their CEO.  So what Ulrich needs, desperately, is example after example after example where his readers are shown exactly how HR’s every move ties directly into the firm’s strategy. Ulrich and colleagues should know enough about adult learning to realize that two-or three examples ain’t enough—and that the strategic competency need to be drummed into every HR reader’s head. The other five competencies should all be subsumed under strategy. 

Until that happens, HR will continue to be a dead-end, talking about sets of HR competencies, and existing for its own sake, much like technology, glorying in its toys, existed for its own sake well into the ‘nineties. 

The good news is that if HR reframes the challenge, it becomes an opportunity. HR can help build institutions that enable more of us to achieve our potential, differentiating us from machines, providing us with more job challenges and harnessing the people-power to set very big things in motion. And, oh yeah, then we’ll sit at the right hand of the CEO.

Flickr photo: Knowledge Capital

"How to Be Irresistible to Women"

It's not coincidence. With Virginia Rometty as IBM's new CEO and Meg Whitman at Hewlett-Packard, my wife and daughters will be proud. So it's not surprising that the exceptionally knowledgeable Sylvia Ann Hewlett and Ripa Rashid have just published a book on why women are the solution to winning the war for talent.

In a blog published in strategy + business, Sally Helgesen set the book's context and printed an excerpt from the new book. Helgesen points out that though the first efforts to increase the number of women in the workforce were spurred by a compliance mind-set and given little support.

By the 1990s, companies realized that the resulting attrition was a waste of valuable resources. Furthermore, the war for talent heated up and companies began to become more strategic in their recruiting and retaining of women in the workforce.

In a very cool excerpt from the new book, the authors relate the strategy created by Infosys, the Bangalore based information technology giant. Here's the situation: Like every other company in the burgeoning field, it [Infosys] was engaged in a fierce war for the best and brightest university graduates. Unlike many of them, Infosys specifically targeted women as a solution — not only to expand the potential pool of top talent but also to tap in to a wider range of intellects.

So Infosys developed a strategy to achieve their objective.

The Infosys Women’s Inclusivity Network (IWIN) was launched in 2003, when 17 percent of the Infosys employees were women. Today, 34.1 percent of the workforce is female — in absolute numbers, more than thirty-six thousand women. Women make up 40.3 percent of entry-level workers, 24.2 percent of midlevel managers, 6.5 percent of senior managers, and 6.2 percent of top-tier leaders, nearly double the number of six years ago.

The key reason for those impressive figures is IWIN. The program has three aims: to persuade more high school girls to study engineering in college; to attract more female engineers to Infosys; and to make it easier for women to maintain their careers at the company after having children.

They were strategically smart.

They identified the stress-points for women and created policy to manage those very stresses. For example, expectant mothers asked for parenting workshops and health programs. Infosys provides daily Pregnacare yoga and fitness classes on the main campus. There’s an online referral service for hospitals, pediatricians, day care centers, nannies, and schools. Nursing stations supported by women lactation experts and a doctor on call are set up in all the offices. Similarly, all the offices have day care centers within four kilometers; most are equipped with Web cameras so that mothers can check in remotely throughout the day. Employees use office shuttle buses to drop their children at day care free of cost.

And the result of all that? Whereas prior to the program only 59% of women returned to work after maternity, over the past five years the figure has gone to 88%, and the total number of working mothers tripled during the same time period.

The company’s ultimate goal is to have women make up at least half of the workforce, if not more. By creating a work environment that both attracts and retains them, IWIN helps make Infosys a magnet for women.

This is a book not merely for men, but for corporate America.

Sylvia Ann Hewlett and Ripa Rashid, Winning the War for Talent: Why Women Are the Solution. (Harvard Business Review Press, 2011)

Half of American Businesses Still in Crisis Mode

Crisis mode still hangs on in half of American businesses according to a survey of CPAs.  The survey, reported in the Journal of Accountancy,responded to questions about their clients economic situation. Since accounting firms work more closely with with corporations and typically have a much broader and deeper understanding of firms than that made public, I suspect that this may well be a true picture of the economy.  

The larger accounting firms reported that their clients are showing signs of recovery, while smaller CPA firms said that their clients are still in crisis mode.  (I assume that larger CPA firms tend to work with larger businesses, while smaller CPA firms work with smaller business firms.  My experience has been that the differences are not only about expertise in larger vs. smaller firms, but also about cost to the client.) Less than 10% from both large and small CPA firms said that their clients were not affected at all.  The rates of crisis were slightly higher in the Midwest (the rust belt) and the West than in the Northeast and South.  Almost of 27% of CPA firms are in crisis mode themselves.  

Certainly recovery in this recession has been slower than any since the Great Depression.  Although some economists argue it's not structural, I disagree strongly.  By structural change I refer to long-term, widespread changes in business that impact more than one or two functions or disciplines.  The shift from uses of technology that were narrowly focused in a certain few disciplines to technology's constant application in all business divisions and professions is a structural change.  By now, most are aware that over the past five years technology has impacted every single business function.  Now these changes are flowering among all the service professions.  For example, professional service firms including consulting, accountancy, medicine, law, and architecture can no longer compete with larger firms unless they are able to afford very high cost technology support.  Over the past two-and-one-half years I consulted for one the largest law firms in the Upper Midwest and was shocked by the profound changes taking place even in that iherently conservative profession.  The firm, with more than 600 attorneys, has a technology support group of more than 150 people.  Such structural costs inevitably exclude smaller law firms from major opportunities, limiting their future.  If you're in need of a physician, you've learned just in the past 10 years that small clinics (under ten physicians) have gone the way of the Dodo bird. Technology and its attendant costs now impact every business function and every service corporation.  These structural changes impacting all of business also tend to slow the recovery. 

Should the US Be Worried About China?

China is not much of a threat, says Lee Kwan Yew, in a conversation with Charlie Rose.  According to Yew, the man who shaped Singapore during 31 years in power, the US is the only mover and shaker, the only real leader on the globe.  Yew dissects China's real agendas with a scalpel.  China is the second-largest economy, but she has no world-wide interests.  Because of its history, the Chinese culture is notoriously self-centered.  (We might be too, if we'd gone through all they've experienced.)  Her interest is in herself, and so she concentrates on those areas where she needs oil and other resources.  Yew believes that it will take China more than 20 years to become a technological power.

So what, according to Yew, do the Chinese need?

• China needs the US market.  It has a growing middle class, but the inequalities and poverty in China outside the coastal cities are profound.  The social disparities are so significant that the politicians always worry about civil disorder and severe discontent.
• China needs US technology.  To a high degree American technology grows out of its entrepreneurial culture.  It's well known that the Chinese culture is not entrepreneurial, but driven by state capitalism.  Not a formula for adventuresome technologists.
• China needs to have students go to the US.  Without a backlog of US trained grads China will be cut off from information and technology.

Perhaps the better question is what the US should do.  One thing for sure is that Washington should not cut off research support, one of the first moves of the new congress.  Somebody needs to challenge that political idiocy whenever there are attempts to limit student support, university and research funding. That's not an issue of can't support the institutions, it's an issue of gutlessness and lack of strategy.  I expect that of two-year wonders in the House of Representatives, but not of the Senate.

Many business leaders talk out of both sides of their mouth about taxes, but when it comes to supporting research most of them are not too upset over a shaking down.  After all, business gets more tax subsidies than the population.  I will never understand how the population stays so unaware of the tax advantages and subsidies government provides to business.  I believe that business tax advantages have gotten far too large.  The only remedy will be tax reform to remove the thousands of loopholes.  The business tax loopholes are a far larger piece of the deficit problem than taxpayers realize.

So should the US be worried about China?  Not especially.

Guess Who, What's Causing the Obesity Epidemic? Wal-Mart!

Research by scholars in New Jersey and North Carolina reports that one additional Wal-Mart Supercenter per 100,000 residents increases individual's probability of being obese by 2.3 percentage points.

Harvard Business Review blogs chose to highlight the report from the Journal of Urban Economics.  Interesting that a capitalist tool like HBR would document the report. 

The study implies that proliferation of food at highly discounted prices, explains 10.5% of the U.S. rise in obesity since the late 1980s. 

In looking at the research data I noticed a couple other intriguing conclusions.  The research found that the progress in retail logistics translated to substantial reductions in the prices of food and other consumer goods.  (I assume my readers are aware that Wal-Mart is the logistics god of the universe, and that the firm first developed logistics as a fundamental competitive advantage.)  The authors used data from the Centers for Disease Control (CDC) which tracked rates of obesity in various states.  They matched the data with Walmart Supercenter entry dates and locations, and examined the effect of Supercenters on body mass index (BMI). 

Another of the more intriguing conclusions is that the resulting increase in medical expenditures offsets only a small portion of consumers' savings from shopping at Supercenters.   

3 Rules to Keep Your Career Moving Forward

A summer vacation, no matter how brief is always a good to time for a bit of reflection.  Although I change my daily pattern very significantly when I'm up at the lake, a bit of rest always has me reflecting on my career, what I'm doing, how I'm using my time, and what might be more valuable long term.

One subject that always comes up after the first week is how do I keep my career moving forward.  I seem to be able to think big picture far more easily when I'm rested.  If you're like me, here are three suggestions.

1. Expand your options.  A major source of career power is the ability to create further options for yourself.  In a tough business climate like this one, that can be daunting.  But in the worst of situations there's always a light at the end of the tunnel.  Look for it and don't get caught up in the gloom and doom. 
2. Make yourself useful.  There's no reason whatsoever to be limited by your job definition.  That's a death sentence.  When you see something needing doing, especially when it looks interesting, take it on.  And oh god, get over the "asking-permission" business.  Just do it.  If someone of importance doesn't like it, you can always ask for forgiveness.  You'll learn rather quickly, however, that it's rare to have to ask for forgiveness.  Rewards come to the self-starters.
3. Create some personal boundaries.  Even in this economy, you don't have to accept every task that comes to you.  I've had clients wonder how they're ever going to get their work done what with all the extra tasks that come their way as a result of cutbacks.  That's usually a sign that they didn't manage their likes and dislikes with the boss, didn't get her to prioritize or have forgotten how to delegate.  When too many jobs come your way, as politely as possible, get creative and collaborative and get others to help explore how to finish the task without stretching yourself too thin.

Quotation of the Week: Yossi Klein Halevi

Israel and the rest of the world seem to be speaking dissonant moral languages.

--Yossi Klein Halevi, Fellow at hte Sahlom Hartman Institute, Jerusalem

This morning's Wall Street Journal has a strategic policy piece by Klein Halevi, explaining the boycott issues from an Israeli viewpoint.  The opinion piece is entitled appropriately, Israelis Wonder: Has the World Lost its Mind?  The author distinguishes the Israeli outcry, which cuts across political lines, from the outrage expressed abroad.  The appeal by anti-Israelis to the world's conscience forces Israel to choose between self-defense and acceptance by the nations.  Israelis of all political perspectives assume that Israel was right to stop the flotilla, and for that matter, to maintain its sieg on Hamas-led Gaza.

The Israeli concern is over tactics, not morality.  One Israeli liberal columnist wrote, "It's not enough to be right, one also needs to be smart."

For a background approach to the issue, David Makovsky  (see his blog post of June 3) of the Washington Institute for Near East Policy lays out the issues in the Christian Science Monitor. 

• In 2005 when Israel withdrew from Gaza, Israelis were told that if they stopped occupying foreign land, they would be more secure.
• Between 2005 and 2008, the Israelis absorbed 3,335 rockets aimed at their homes, and border towns became uninhabitable.
• There was never a single UN Security Council session to discuss those attacks.
• The blockade was necessary to curb the rocket attacks.
• Hamas has shown itself untrustworthy for lifting of blockade.
• The Financial Times reported a supply glut of goods smuggled through the tunnels, not catatastrophe.
• Egypt has become Israel's silent partner in supporting the blockade.  It refuses to open up its Rafah border crossing to Hamas.  The Arabs have no trust for Hamas or Hezbollah.

Makovsky concludes that while there is an argument to be made about the terms of the blockade, that shouldn't be confused with normalizing the role of Hamas itself.