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Early-stage research on decision-making styles | McKinsey & Company

13 04 25

Early-stage research on decision-making styles

People make decisions—often in very different ways. Learn more about five distinct styles and the preferences that shape them.

April 2013 | byDan Lovallo and Olivier Sibony

To develop a language for improved business decision making, we created a survey with questions that cover five classes of decision-making biases, which we summarized in earlier work: action-oriented, interest, pattern-recognition, social, and stability biases.1 The questions drew out preferences by asking people to choose between two neutral, equally defensible statements. Responses fell along a range from a strong preference for intuitive decision making to a strong preference for making decisions after exhaustive deliberation.

We received nearly 5,000 responses to the survey from McKinsey Quarterly andHarvard Business Review readers, and we conducted detailed analysis of 1,021 respondents, whose demographics and response characteristics were statistically indistinguishable from the full sample’s.2 We used these responses and factor analysis to identify six objective dimensions of the respondents’ preferences, which roughly correspond to common steps in the decision-making process. Cluster analysis then yielded five groups of decision-making preferences. This research is still in its early stages; presented here are the five decision-making styles, including the percentage of respondents who fell into each group.

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Early-stage research on decision-making styles

People make decisions—often in very different ways. Learn more about five distinct styles and the preferences that shape them.

The percentages in particular are preliminary, since the self-selected nature of the respondent pool could have introduced sample bias. Also, the number of questions tested and the sample size are far below those of a standard psychometric tool such as Myers–Briggs. That said, we believe the current survey has within it the core of a tool to help individuals reflect upon the trade-offs they make as decision makers.

For more on how to improve decision-making effectiveness, see our interview with Stanford’s Chip Heath and McKinsey’s Olivier Sibony, “Making great decisions.”

About the authors

Dan Lovallo is a professor of business strategy at the University of Sydney Business School, a visiting professor at Johns Hopkins University’s Carey Business School, and an adviser to McKinsey. Olivier Sibony is a director in McKinsey’s Paris office.

Early-stage research on decision-making styles | McKinsey & Company.

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14 Revealing Interview Questions – How to get to know job applicants

13 03 08
| 

Mar 4, 2013

14 Revealing Interview Questions

Smart entrepreneurs from a variety of industries share the interview questions that tell them everything they need to know about a candidate.

Interview questions: Everyone has them.

And everyone wishes they had better ones.

So I asked smart people from a variety of fields for their favorite interview question and, more importantly, why it’s their favorite and what it tells them about the candidate.

1. If we’re sitting here a year from now celebrating what a great year it’s been for you in this role, what did we achieve together?

“For me, the most important thing about interviews is that the interviewee interviewsus. I need to know they’ve done their homework, truly understand our company and the role… and really want it.

“The candidate should have enough strategic vision to not only talk about how good the year has been but to answer with an eye towards that bigger-picture understanding of the company–and why they want to be here.”

Randy Garutti, Shake Shack CEO

2. When have you been most satisfied in your life?

“Except with entry-level candidates, I presume reasonable job skill and intellect.  Plus I believe smart people with relevant experience adapt quickly and excel in new environments where the culture fits and inspires them.

“So, I concentrate on character and how well theirs matches that of my organization.

“This question opens the door for a different kind of conversation where I push to see the match between life in my company and what this person needs to be their best and better in my company than he or she could be anywhere else.”

Dick Cross, Cross Partnership founder and CEO

3. If you got hired, loved everything about this job, and are paid the salary you asked for, what kind of offer from another company would you consider?

“I like to find out how much the candidate is driven by money versus working at a place they love.

“Can they be bought?

“You’d be surprised by some of the answers.”

Ilya Pozin, Ciplex founder

4. Who is your role model, and why?

“The question can reveal how introspective the candidate is about their own personal and professional development, which is a quality I have found to be highly correlated with success and ambition.

“Plus it can show what attributes and behaviors the candidate aspires to.”

Clara Shih, Hearsay Social co-founder and CEO

5. What things do you not like to do?

“We tend to assume people who have held a role enjoy all aspects of that role, but I’ve found that is seldom the case.

“Getting an honest answer to the question requires persistence, though. I usually have to ask it a few times in different ways, but the answers are always worth the effort. For instance, I interviewed a sales candidate who said she didn’t enjoy meeting new people.

“My favorite was the finance candidate who told me he hated dealing with mundane details and checking his work. Next!”

Art Papas, Bullhorn founder and CEO

6. Tell me about a project or accomplishment that you consider to be the most significant in your career.

“I find that this question opens the door to further questions and enables someone to highlight themselves in a specific, non-generic way.

“Plus additional questions can easily follow: What position did you hold when you achieved this accomplishment? How did it impact your growth at the company? Who else was involved and how did the accomplishment impact your team?

“Discussing a single accomplishment is an easy way to open doors to additional information and insight about the person, their work habits, and how they work with others.”

Deborah Sweeney, MyCorporation owner and CEO

7. Tell me how…

“I don’t have one favorite question because I believe a great interview takes on a life of its own, becoming more of a conversation than a formal process.

“Ultimately we’re looking for people who are motivated, disciplined, good spirited, possessing skills and passion, so I ask indirect questions about the creative process, about articulating and demystifying the process of creating great food and great service.

“Then I trust my instincts. Reading the eyes of the candidate is a final test I’ve come to rely on–because the eyes never lie.”

Eric Ripert, Le Bernardin chef and co-owner

8. What’s your superpower, or what’s your spirit animal?

“During her interview I asked my current executive assistant what was her favorite animal. She told me it was a duck, because ducks are calm on the surface and hustling like crazy getting things done under the surface.

“I think this was an amazing response and a perfect description for the role of an EA. For the record, she’s been working with us for over a year now and is amazing at her job.”

Ryan Holmes, HootSuite CEO

9. Why have you had x amount of jobs in y years?

“This question helps me get a full picture of the candidate’s work history. What keeps them motivated? Why, if they have, did they jump from job to job? And what is the key factor when they leave?

“The answer shows me their loyalty and their reasoning process. Do they believe someone always keeps them down (managers, bosses, etc.)? Do they get bored easily?

“There is nothing inherently wrong with moving from job to job–the reasons why are what matters.”

Shama Kabani, The Marketing Zen Group founder and CEO

10. We’re constantly making things better, faster, smarter or less expensive. We leverage technology or improve processes. In other words, we strive to do more–with less. Tell me about a recent project or problem that you made better, faster, smarter, more efficient, or less expensive.

“Good candidates will have lots of answers to this question. Great candidates will get excited as they share their answers.

“In 13 years we’ve only passed along one price increase to our customers. That’s not because our costs have decreased–quite the contrary. We’ve been able to maintain our prices because we’ve gotten better at what we do. Our team, at every level, has their ears to the ground looking for problems to solve.

“Every new employee needs to do that, too.”

Edward Wimmer, RoadID co-founder and co-owner

11. Discuss a specific accomplishment you’ve achieved in a previous position that indicates you will thrive in this position.

“Past performance is usually the best indicator of future success.

“If the candidate can’t point to a prior accomplishment, they are unlikely to be able to accomplish much at our organization–or yours.”

Dave Lavinsky, Growthink co-founder and president

12. So, (insert name), what’s your story?

“This inane question immediately puts an interviewee on the defensive because there is no right answer or wrong answer. But there is an answer.

“It’s a question that asks for a creative response. It’s an invitation to the candidate to play the game and see where it goes without worrying about the right answer. By playing along, it tells me a lot about the character, imagination, and inventiveness of the person.

“The question, as obtuse as it might sound to the interviewee, is the beginning of a story and in today’s world of selling oneself, or one’s company, it’s the ability to tell a story and create a feeling that sells the brand–whether it’s a product or a person.

“The way they look at me when the question is asked also tells me something about their likeability. If they act defensive, look uncomfortable, and pause longer than a few seconds, it tells me they probably take things too literally and are not broad thinkers. In our business we need broad thinkers.”

Richard Funess, Finn Partners managing partner

13. What questions do you have for me?

“I love asking this question really early in the interview–it shows me whether the candidate can think quickly on their feet, and also reveals their level of preparation and strategic thinking.

“I often find you can learn more about a person based on the questions they ask versus the answers they give.”

Scott Dorsey, ExactTarget co-founder and CEO

14. Tell us about a time when things didn’t go the way you wanted– like a promotion you wanted and didn’t get, or a project that didn’t turn out how you had hoped.

“It’s a simple question that says so much. Candidates may say they understand the importance of working as a team but that doesn’t mean they actually know how to work as a team. We need self-starters that will view their position as a partnership.

“Answers tend to fall into three basic categories: 1) blame 2) self-deprecation, or 3) opportunity for growth.

“Our company requires focused employees willing to wear many hats and sometimes go above and beyond the job description, so I want team players with the right attitude and approach. If the candidate points fingers, blames, goes negative on former employers, communicates with a sense of entitlement, or speaks in terms of their role as an individual as opposed to their position as a partnership, he or she won’t do well here.

“But if they take responsibility and are eager to put what they have learned to work, they will thrive in our meritocracy.”

Tony Knopp, Spotlight Ticket Management co-founder and CEO

Jeff Haden learned much of what he knows about business and technology as he worked his way up in the manufacturing industry. Everything else he picks up fromghostwriting books for some of the smartest leaders he knows in business. @jeff_haden

 

 

14 Revealing Interview Questions | Inc.com.

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Millennials Come of Age as Americas Most Stressed Generation – Will you survive?

13 02 22

Millennials Come of Age as America’s Most Stressed Generation

February 19, 2013

First came the “Baby Boomers,” then came “Generation X.” The branding of the subsequent generation, the one that came of age during the 2000s, was less definitive, ping-ponging between “Generation Y” and “The Millennials.” I’d like to add a third name: “Generation Stress.” According to Stress in America, a study commissioned by the American Psychological Association, Millennials are the most stressed demographic. And from what we heard out of Washington last week, the conditions creating that stress aren’t going away anytime soon. But there’s still cause for hope.

The study asked participants to rank their stress level on a scale of 1 (“little or no stress”) to 10 (“a great deal of stress”). Millennials led the stress parade, with a 5.4 average. Boomers registered 4.7, and the group the study labeled the “Matures” gave themselves a 3.7.

The findings were consistent across almost every question. Nearly 40 percent of Millennials said their stress had increased last year, compared to 33 percent for Boomers and 29 percent for Matures. Over half of Milliennials said that stress had kept them awake at night during the last month, compared to 37 percent for Boomers and 25 percent for Matures. And only 29 percent of Millennials say they’re getting enough sleep, compared to 46 percent of Matures.

These levels of stress are taking their toll. Irritability and anger from stress were reported by 44 percent of Millennials, 36 percent of Boomers and 15 percent of Matures. And 19 percent of Milliennials have been told they’re suffering from depression, compared to 12 percent of Boomers and 11 percent of Matures. “Stress is a risk factor for both depression and anxiety,”says Norman Anderson, psychologist and CEO of the APA. “We don’t have data on the specific causes of depression and anxiety in this sample, but it does make sense scientifically that the Millennials who report higher levels of stress in their lives are also reporting higher levels of depression and anxiety.”

In fact, it’s reasonable to assume that higher levels of stress put the Millennials at higher risk for all sorts of destructive downstream consequences of stress. “Stress is a huge factor when we look at medical problems such as obesity, hypertension, diabetes, cardiac disease,”says Dr. Nancy Snyderman, NBC’s chief medical editor.

Over 25 million Americans already suffer from diabetes, and almost 70 million have high blood pressure, making them four times as likely to die from strokes and three times as likely to contract heart disease. And yet only 17 percent of Millennials believe their health care providers give them “a lot or a great deal” of support in managing their stress.

Not surprisingly, work is one of the biggest causes of stress, with 76 percent of Millennialsreporting it as a significant stressor, compared to 62 percent of Boomers and 39 percent of Matures. “Many of these young people have come out of college or graduate school with horrendous student debt into a job market where there are not very many jobs,” said Katherine Nordal of the APA. “This has put their life plans, probably, on hiatus.”

The job numbers are indeed grim. According to Generation Opportunity, the unemployment rate for Millennials rose to 13.1 percent in January, up nearly 2 points from December. Among young African-Americans, it’s a whopping 22.1 percent. And if you count those 18-29 year-olds who have given up and dropped out of the labor force, the overall youth unemployment rate stands at 16.2 percent.

And even for the lucky ones who are working, the picture remains bleak. According to the Economic Policy Institute, between 2000 and 2011 wages adjusted for inflation fell by over 11 percent for young high school grads and by 5.4 percent for young college grads. It doesn’t help that, as a study by the Center for College Affordability found, 48 percent of working college grads are in jobs that don’t require a college degree and 38 percent are in jobs that don’t require a high school diploma. The report concluded that from 2010 to 2020, while 19 million college grads will be hitting the job market, the economy will add fewer than 7 million jobs requiring a college degree. That’s a pretty serious — and stress-producing — gap.

Those numbers add context to President Obama’s push for colleges and universities to increase enrollment and the number of degrees they grant. That’s a great goal, but it highlights the fact that, to the extent that we even talk about jobs in our political conversation, we tend to talk about them without mentioning what kind of jobs. Nearly all the conversation on the first Friday of each month when the previous month’s jobs numbers come out is about whether the number went up or down. But when there’s an uptick — and don’t get me wrong, an uptick is much better than a downtick — nobody talks about the context and conditions that have far more impact on people’s actual lives, such as the fact that putting heavily indebted young adults to work at half the salary they had four years ago isn’t exactly a way to win the future.

And any of those heavily indebted, heavily stressed-out Millennials listening to President Obama’s State of the Union speech would not have gotten much stress relief. He did acknowledge the increasingly untenable cost of higher education — “Today, skyrocketing costs price too many young people out of a higher education, or saddle them with unsustainable debt” — and declared that he would “ask Congress to change the Higher Education Act so that affordability and value are included in determining which colleges receive certain types of federal aid.” That sounds promising. If it ever happens. But it’s hard to imagine Washington wielding that stick strongly enough to truly make quality higher education affordable. Even if college tuition stopped increasing right now and just stayed exactly where it is for the next decade — which we all know is not going to happen — it’s still a huge problem.

A more promising approach would be to take strong action on student debt, which last year hit a record $1 trillion. The disastrous 2005 bankruptcy “reform” bill, which excluded student debt from being discharged in a bankruptcy, has created a new form of indentured servitude, in which tens of thousands of college grads live their entire lives with a crushing debt burden. Consumer Financial Protection Bureau head Richard Cordray seems open to reform, but actually doing it will take a sense of urgency. “It would be prudent to consider whether they [Congress] wish to modify the code,” he told The Huffington Post in July.

Color me skeptical that, in the absence of being pushed, John Boehner is going to wake up one day with a burning urge to modify student debt regulations. It would be great to hear the president say something along the lines of: “If Congress won’t act soon to protect future generations, I will.” That’s what he said about climate change during the State of the Union. That’s certainly a vital issue, and so is “protecting future generations” from crushing student debt.

As for the perspective from the other side of the aisle? “Today, many graduates face massive student debt,” acknowledged Senator Marco Rubio in his response to the State of the Union. So what’s Rubio’s solution to this massive student debt? “We must give students more information on the costs and benefits of the student loans they’re taking out.” Ah, yes, more information! Not exactly problem solved! All the more reason to include student debt in the president’s “Things I Will Take Executive Action On” folder.

Even those lucky Millennials who land a decent job often face a workplace rife with destructive definitions of success. And, given how few jobs there are for them, it’s the Millennials who have the least amount of leverage to push back. This is still a world in which, according to Tony Schwartz, author and CEO of The Energy Project, the prevailing work ethic is one in which “downtime is typically viewed as time wasted,” and “rewards still accrue to those who push the hardest and most continuously over time.” But, he adds, “that doesn’t mean they’re the most productive.”

As Schwartz points out, more than one-third of American workers regularly eat lunch at their desks, and a recent study showed that an average of 9.2 vacation days were skipped last year. All this overwork inevitably leads to sleep deprivation, which costs American businesses over $63 billion a year — even though studies show that for each 10 hours of additional time off, productivity increased by 8 percent. “Strategic renewal,” Schwartz writes, “including daytime workouts, short afternoon naps, longer sleep hours, more time away from the office and longer, more frequent vacations, boosts productivity, job performance and, of course, health.”

But given the harsh job market they’re entering, Millennials are incentivized to ignore the path to strategic renewal. Even so, we know they are looking for ways to lower their stress level. The APA study found that 62 percent of Millennials had tried to reduce their stress in the last five years. But only 29 percent of them, compared to 38 percent of Boomers and 50 percent of Matures, reported that they were doing a good or excellent job of it.

Amidst all this gloom, there is a sliver of sunshine: a recent Gallup poll that found that, even given the battered economy they’re entering, 80 percent of Millennials were optimistic about their standard of living getting better.

Yes, as the cliché goes, the next generation is the future, etc. etc. etc. And, without fail, at some point, the future will be theirs. So here’s hoping that as they advance through the ranks of the workplace, Millennials will channel that optimism to do themselves — and the generation after them (Generation Z?) — a favor by redefining success. Perhaps the mountain of stress they are currently scaling will give them the perspective to change what my generation has handed off to them.

Photo: Mikael Damkier/Shutterstock

Millennials Come of Age as Americas Most Stressed Generation | LinkedIn.

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Competing in a digital world – McKinsey Quarterly

13 02 11

Competing in a digital world: Four lessons from the software industry

Software is becoming critical for almost every company’s performance. Executives should ask what they can learn from business models employed by software providers themselves—and consider the implications for their IT function.

FEBRUARY 2013 • Hugo Sarrazin and Johnson Sikes

Source: Business Technology Office

four lessons from the software industry article, what executives can learn from the software industry, Business Technology

In This Article

About 20 years ago, software’s use within organizations was largely confined to big transactional systems in the data center. Now, it underpins nearly every function in every industry. Software spending has grown accordingly, jumping from 32 percent of total corporate IT investment in 1990 to almost 60 percent in 2011.1

The allure is plain. On the front end, software-enhanced products and services can lead to entirely new offerings—for example, turning an ordinary running shoe into one that also tracks your mileage. And as the surge in social technologies shows, software permits a host of new marketing and communications channels that consumers have been quick to embrace. The back-end benefits are equally compelling. Greater automation, integration, and standardization can lower cost and boost performance significantly, while social enterprise tools can facilitate collaboration and provide greater agility.

The strategic as well as operational challenge is that software is not static. Many have come to think of it like electricity—something that can be wired in and mostly forgotten about.2 But software and the processes and applications it touches are, in fact, constantly changing.

That reality introduces new competitive dynamics. Managers have to worry about competitors leapfrogging them with ever-faster cycle times, courtesy of such software-enabled techniques as rapid prototyping and real-time testing. They must also be mindful of network effects, since customers can become accustomed to working with a certain platform and be slow to switch. That can be good news for incumbents but a major barrier for those trying to break into a certain category. Another challenge is that an organization may be swimming in data but exploiting only a fraction of available information.

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The right role for IT

To effectively respond to these new dynamics, companies must begin thinking about ways to broaden their ecosystems and revenue streams while becoming more responsive and agile. These are issues that software providers have been addressing for a number of years. Given the increasing importance of software for almost every company’s performance, executives in all industries should consider how software may fundamentally change their businesses. Managers would do well to study leading software-industry players and discuss a set of questions to understand whether and how they can learn from the business and operating models that these companies employ. The answers will vary for different industries and companies, but we believe the exercise is a useful step toward making the most of large and rising software investments. (For more on a new management model already being adopted by executives, see sidebar “The right role for IT.”)

1. Moving from products to platforms

Success in the software industry has long been influenced, and often driven, by the ecosystem of developers, plug-ins, software-development kits and application-programming interfaces (APIs),3and add-ons that drive added value and increase stickiness for products. Similarly, companies in other industries need to think expansively and include upstream suppliers as well as downstream vendors or consumers, and focus on how each part of the value chain integrates into the new platform. Many companies still stick to the business models of the past, where product development is almost exclusively an in-house activity and kept under strict control. But some, like consumer-goods giant P&G, have flung their doors open to include a wide range of partners in developing and tailoring the next big thing. Instead of “not invented here,” the mind-set is shifting to “proudly found elsewhere.” P&G, for instance, launched a “connect and develop” platform that has secured more than 1,000 partner agreements on innovation.

By opening innovation processes to outside voices, organizations not only gain a broader range of perspectives to enrich the innovation gene pool, they also gain valuable scale—more resources at a fraction of the price. And it’s not just the front end that stands to gain: greater connectivity with suppliers and buyers can be a win-win situation when it comes to managing inventory, budgeting and forecasting, allowing organizations to access better—and more— real-time data, and refining production and supply-chain processes on the spot. In a McKinsey Quarterly interview,4 Bob McDonald, P&G’s CEO, said his organization looks to increase integration with retail partners because “getting the data becomes part of the currency of the relationship.” In some cases, P&G is even using its scale “to bring state-of-the-art technology to retailers that otherwise can’t afford it.”

Question: What new opportunities are unlocked if we move from products to platforms?

  • What is our industry equivalent of an API that will encourage involvement and increased interaction across the ecosystem (including suppliers, partners, vendors, and users)?
  • How can we align the different parts of the ecosystem to adopt more points of integration?
  • Of the new value that is created with this integration, how are the gains shared across members of the ecosystem? What are the critical control points that we must own to protect our position and maximize rents?
  • How can we create a cadre of evangelists (internally and externally) to encourage the adoption of our platform?
2. Accelerating revenue by creating new business models

Software and Internet companies have developed multiple avenues to generate revenue, going beyond a simple licensing model. Companies like LinkedIn and Skype have thrived using the “freemium” model. Both cultivated a large base of users with their basic, no-cost platform, and then introduced several paid-for options, ranging from recruiting services and tiered access and networking privileges in the case of LinkedIn and landline calling in the case of Skype. They were able to tap an audience that was loyal to their brand to boost revenues. Other revenue models include using as-a-service and consumption-based pricing5 and creating new integrated services.

Innovative companies in other industries are experimenting with ways to combine products, services, and data to create entirely new businesses—often with software playing a critical role in knitting together or enabling these new models. Industries from manufacturing to consumer goods have stitched information assets into their traditional product offerings and have come away redefining the category and raising the bar for competitors. Nike took this approach with one of its shoe lines. It created Nike+, a sensor compatible with Apple iOS devices (for instance, the iPod or iPhone), to be used with its running shoes. The sensor allows the wearer to track mileage and running habits and upload data onto a Web site to manage workouts, connect with fellow runners, and share routes. The line not only launched a profitable new revenue stream but also helped boost Nike’s market share and created a community of highly engaged users.

In addition to creating new revenue streams by amping up traditional product and service offerings, organizations have been mining “exhaust data”—information that is a by-product of normal business operations—for use in developing new products. Such by-products, for instance, allow credit-card companies to monetize transactional data from cardholders by analyzing and selling these data to merchants. Similarly, Intuit is beginning to use data amassed from its QuickBooks software to provide new benchmarking and reporting services for small businesses.

Question: What business model could we borrow from the software industry to accelerate adoption?

  • How do we trade off one-time revenues (for example, a license fee or outright sale) to capture recurring subscription revenues?
  • What is the real lifetime value of our customers, and how does this change our approach to setting prices?
  • Are our internal systems able to handle these shifts? Are incentives in our organization (especially in the sales force and channels) in place to make the right trade-off?
  • What are the ancillary assets our company has (for example, brands or data), and how could we deploy them without harming our core business?
3. Accelerating cycle time and cocreating with customers

Empowered by constant connectivity, the rise of social networks, and an increasing amount of software in products, companies are seeing new options in the way they interact with customers and develop and release products. They are speeding up cycle times and shortening learning curves by testing new products or ideas with consumers using mockups, computer-generated virtual products, and simulations.

The software world was one of the first to roll out new products before all the planned features and capabilities were built. It started with a basic model, or minimum viable product,6 that customers could upgrade over the life of the product with just a few clicks. New features were introduced when ready rather than stalling the base product launch. This allowed companies to get to market faster, enable new features (or fix bugs), and improve their ability to respond to competitors’ changes. Apple launched its first iPhone, for instance, without an app store or the ability to add new applications. It added those features in a software update one year later.

Other industries are learning from this example. Many digital cameras, for instance, can receive firmware upgrades to fix bugs or enable new capabilities. But this is not just a phenomenon for digital gadgets. In early 2012, Ford released an upgrade for its Sync communications and entertainment system7 by mailing USB keys to customers eligible for an upgrade. No dealer visit is required.

Crowdsourcing is an example of cocreation: companies use social tools to engage customers or partners in solving problems, which reinforces engagement and a sense of community in the process. For instance, Coca-Cola used crowdsourcing to develop new designs for bottle crates in Germany and marketing ideas for Coke Zero in Singapore. GE has crowdsourced green business ideas under its “eco-magination” challenge. This engagement model has even been flipped, with companies like Kickstarter providing a platform for entrepreneurs to presell product ideas as a way to solicit funding based on early prototypes or ideas.

Question: What is the right way for us to engage with and learn from our customers?

  • How can we embed test-and-learn and rapid-iteration principles in our product-development process? Where else can these principles be used in our company?
  • Should we establish a beta program with consumers? How else can we collaborate with them?
  • What is too soon to ship? And how tolerant of potentially incomplete or buggy products will our customers be?
  • What cultural changes are needed in our organization to encourage it not only to listen to customers but also to give them control?
  • How much product control are we willing to give up?
4. Creating an agile organization

The three lessons above involve accelerating the clock speed of the enterprise and thinking differently about the structures across the business or boundaries with customers or users. Adopting these behaviors will require a more agile and flexible organization.

Software creation is inherently team based; as a result, the vast majority of software companies have built teamwork into their ethos. Teams assemble and reassemble based on specific projects, often resulting in flatter organizations than may be seen in other industries. To the uninitiated (and sometimes even to those in the industry), this way of working feels like barely controlled chaos. Companies that do this well depend on core organizational elements, including increased transparency, a laser-like focus on aligning culture and mind-set, and clearly defined, common goals.

In the past decade, many software organizations have built on these elements and further increased their productivity by using agile programming techniques—where teams run in sprints of two to three weeks to develop a workable prototype or new functionality. It is very different from the traditional planning and budgeting model used by many organizations. IT shops are beginning to employ agile methodologies, but often their counterparts across the business still operate with traditional models. This causes friction and slows down the process. In the future, though, it’s clear that accelerated cycles, increased transparency, and teaming outside the typical organizational boundaries (both within and outside the company) will have great impact on how executives organize and manage their teams. There are already tools ready for this challenge. Rypple, for example, is a software platform that allows companies to take a new approach to HR management and performance evaluations by using ongoing feedback, more public recognition, and social goals such as more dynamic team or individual objectives that change or evolve organically rather than through an annual top-down process.

IT and business have tended to operate as separate functions in many organizations, making it harder for those groomed in one discipline to cross over to the other. The software shift described in this article has the potential to force greater fusion in executive capabilities. In more traditional companies, IT employees will need to become business managers, while product-development and business unit leaders will need to become software savvy. A base level of software fluency will be a requirement for all levels, including upper management, in order to understand not only the core technologies but also the dynamics of working in a quick-turn, massively more connected, and digitized marketplace, in which economic value is driven increasingly by information-based services.

Question: What new organization models can we adopt from software to support a more agile, flexible business?

  • How do we create flatter and more fluid organizations?
  • How must we change our organizational processes to account for increased collaboration, transparency, and new behaviors within teams?
  • Organizationally, how should we prepare for more porous company boundaries and increased partnering or sourcing across the value chain from R&D to delivery?
  • What is the best way to incorporate new behaviors (like an increased tolerance for failure) into our corporate culture?

Almost every company is becoming a software company. By considering business and operating models pioneered by the software industry and tailoring them to their own needs, organizations can lower their costs, boost performance, and turn software into a competitive advantage.

For additional thinking, please see the following articles:

David Kirkpatrick, “Now every company is a software company,” forbes.com, November 30, 2011.

Marc Andreessen, “Why software is eating the world,” Wall Street Journal, August 20, 2011.

About the Authors

Hugo Sarrazin is a director in McKinsey’s Silicon Valley office and Johnson Sikes is a consultant in the New York office.

Notes

1 “Private fixed investment in equipment and software by type,” Concepts and Methods of the US National Income and Product Accounts, US Bureau of Economic Analysis, November 2011, table group 5.5.5.

2 In fact, this is no longer true, even for electricity, as developments in smart grids and smart metering infrastructures are changing the power industry.

3 Software companies often provide software-development kits to external programmers to help better integrate systems and functionality. Application-programming interfaces are structured or prebuilt interfaces to help applications interact with one another (for example, allowing a dynamic map of local stores to be embedded on a Web site).

4 Michael Chui and Tom Fleming, “Inside P&G’s digital revolution,” mckinseyquarterly .com, November 2011.

5 As-a-service and consumption-based pricing leverages cloud computing to unbundle computing products and software so that users can economically purchase a subscription to online software (for example, e-mail services, customer-relationship-management systems, or productivity suites) rather than buying and operating the separate hardware and software components. This also allows these services to be “turned off” on demand and often shifts them from capital to operating expenses.

6 Eric Ries, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, first edition, New York, NY: Crown Business, 2011.

7 “Ford Sync software upgrade adds new features to MyFord Touch,” media.ford.com, January 2011.

 

Competing in a digital world – McKinsey Quarterly – Business Technology – Organization.

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Small Business Ontario / It’s Your Time To Shine

13 02 03

Small Business is Big Business

Industry Canada released important stats in 2012 that support the small business growth. (Industry Canada - Key Small Business Stats)

SME (<250 employees) – 85% survive one year / 70% survive two years / 51% survive five years

BANKRUPTCIES down 56% to only 3,600 in 2011

26% owned outright or in partnership by women

Represented 86% of exporters and $77 billion or 25% of Canada’s exports

Account for 98% of goods-producing and 98% of service-producing businesses

Employed 15.4% of total employment (2,622,000) / 65% men and 35% women

In Ontario, 97.8% of businesses have less than 100 employees. In fact, 55.5% have less than 4. Yet, they are able to contribute 25% of Canada’s GDP.

NOW!!! The most important stat.
I have found, most business owners do not utilize peer knowledge to help resolve issues or guide in decisions.

The economy is expected to grow marginally over the coming year. There will be numerous businesses exceeding expectation and beating all the stats noted.

Are you doing everything possible to achieve success?

Have you tapped into your peers?

Take the first step – call one and share a coffee.

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Dreams Do Come True!

13 01 16

Check out my upcoming article in Simply London Magazine and learn more about making your dreams come true!

Simply London 13 01 05 Article

 

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8 Opportunities to Lead in 2013 | Are you ready to seize the moment?

13 01 14

 | 

Dec 20, 2012

8 Opportunities to Lead in 2013

Leadership is just a series of moments where you do the right thing. Here are eight ways to do that in the coming year.

Thomas Barwick/Getty

Leadership is comprised of a series of moments, and it can be difficult to sort out individual moments over time.  A continual leadership challenge is to be aware of which moments matter and what to do about them.

As the year comes to a close, take a minute to reflect upon some of the key moments of your leadership in 2012. If, in hindsight, you could have made better decisions, how will you remind yourself to make different choices in the coming year?

Here are a few positive moments of leadership to work toward in the coming year.

The moment you don’t let someone off the hook

Organizations are full of dropped commitments.  Keeping people “on the hook” until their commitments are fulfilled can be uncomfortable for them, and for you.  It is tempting to let them off prematurely, because you are causing their discomfort.  For the greater good, resist.  Accept that progress requires pressure, and it is your job to apply it responsibly.

The moment you deliberately deflect attention from yourself

When you sincerely refocus the spotlight, the immediate impact is to help others thrive.  The secondary effect is that you get time and space to observe others. Leaders must be excellent observers in order to decide where to go next.  It is hard to observe while in the spotlight.

The moment you ask a different, deeper question

Many questions skim the surface of an issue, or are asked when one already knows some of the answer, or are really statements masquerading as questions.  How can you avoid these un-helpful questions?  During an important conversation, how well do you choose a different, deeper question to get to the heart of the matter?  How do you decide what to ask, and find the courage to ask it?

The moment you simply say, “Well done”

This two-word statement carries tremendous positive influence when offered genuinely and on time.

The moment you gather yourself before doing something uncomfortable

It can be easy to shy away from the build-up to uncomfortable events, conversations, and decisions.  We often create distractions rather than embrace uncertainty and fear.  And yet, it is precisely the sensations of discomfort that signal the need for preparation.  You can decide how best to prepare only when you sense the moment – so be aware.

The moment you pursue what’s best, even if it’s inconvenient

A leader must consistently demonstrate commitment to the shared purpose of the organization. When a leader decides not to pursue a complicated or messy problem, it can easily appear that the leader is simply taking the path of least resistance.  Conversely, when a leader embraces an inconvenient challenge, the message is clearly one of devotion to the shared purpose.

The moment you let something pass

As important as deciding what to pursue is deciding what to let go.  Distractions abound, real and imagined, and making the time to decide what is better left unaddressed will maintain your focus on the wider view and more important tasks.

The moment you rightly give yourself a break

As a leader, critics are all around – and none may be louder than the one in your own head. Lowering the volume of self-criticism is always a good idea, because too much internal noise will interfere with your ability to reflect, and drown out the helpful perspectives of others.

Recognizing the importance of individual moments will allow for more authentic and effective leadership.

Have a Happy New Year!

Brian Evje is a management consultant with the organizational-effectiveness practice Slalom Consulting and an advisory board member of Astia, a global not-for-profit dedicated to increasing women’s participation in high-growth businesses.

 

8 Opportunities to Lead in 2013 | Inc.com.

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