JINDAL KNOWLEDGE CENTRE

Table of Contents

HARVARD BUSINESS REVIEW

September 2010 Issue Features

Title Author Page

No.
The Big Idea
The Big Idea: The Judgment Deficit Why Men Still Get More 44-54
Promotions Than Women
Why Men Still Get More Promotions than Herminia Ibarra , Nancy 80-85
Women M. Carter , and Christine
Silva
Four Mistakes Leaders Keep Making Robert H. Schaffer 86-91
Kaiser Permanente’s Innovation on the Front Lew McCreary 92-98
Lines
The Globe: A Cautionary Tale for Emerging J. Stewart Black and Allen 99-103
Market Giants J. Morrison
Spotlight
A New Alliance for Global Change Bill Drayton and Valeria 56-64
Budinich
Making Social Ventures Work James D. Thompson and 66-73
Ian C. MacMillan
The High-Intensity Entrepreneur Anne S. Habiby and 74-78
Deirdre M. Coyle, Jr.
Idea Watch
CEOs with Headsets Andrew Zimbalist 23-25
Be a Better Manager: Live Abroad William W. Maddux , 26
Adam D. Galinsky , and
Carmit T. Tadmor
How Anger Poisons Decision Making Jennifer S. Lerner and 28
Katherine Shonk
When Emotional Reasoning Trumps IQ Roderick Gilkey , Ricardo 29
Caceda , and Clinton Kilts
Defend Your Research: It’s Not Giuseppe “Joe” Labianca 30-31
“Unprofessional” to Gossip at Work
Vision Statement: Tired of PowerPoint? Try Daniel McGinn and 32-33
This Instead. Stephanie Crowley
Column: Redefining Failure Seth Godin 36
Column: Want People to Save? Force Them. Dan Ariely 38
How I Did It: Timberland’s CEO on Standing Jeff Swartz 39-43
Up to 65,000 Angry Activists
Experience
Managing Yourself: The Boss as Human Robert I. Sutton 104-107
Shield
Crucible: A New Will to Win Daniel McGinn 108-110

HBR Case Study: When the Longtime Star Jimmy Guterman 111-115
Fades
Synthesis: Bridging America’s Income Gap Justin Fox 116-117
 The Big Idea

The Big Idea: The Judgment Deficit

by Amar Bhidé

The modern economy creates and spreads unprecedented prosperity by drawing on the
resourcefulness and enterprise of the many, not by blindly following the dictates of a few.
Individuals today make and act on their own judgments to a degree that would have been
unimaginable to our forebears. Indeed, many of us value this humanization of our work
as highly as we do the material comforts that the work secures. (The great virtue of a
dynamic capitalist economy, the economist Edmund Phelps argued in his 2006 Nobel
prize lecture, lies in the opportunities it provides for more engaging work rather than for
more leisure.)

This triumph of independent initiative and judgment—of what I call the venturesome
economy—is, however, far from absolute, nor should it be. Yes, the collapse of the
Soviet Union and of top-down, Soviet-style management in monolithic corporations
liberated millions from mindless, unproductive toil. But we are all subject to traffic laws
telling us which side of the road we can drive on, and that’s a good thing. The designers
of the iPhone and iPad (and of their apps) defer in matters large and small to the dictates
of Steve Jobs, to the benefit of Apple consumers and shareholders alike. Discerning the
appropriate balance between top-down command and control, on the one hand, and
individual initiative and judgment, on the other, will always be a challenge for our society
and our organizations. But at least we’re aware of the conflict and have experience
managing it.

TOP

Why Men Still Get More Promotions than Women

by Herminia Ibarra, Nancy M. Carter, and Christine Silva

Nathalie (all names in this article are disguised), a senior marketing manager at a
multinational consumer goods company and a contender for chairman in her country, was
advised by her boss to raise her profile locally. An excellent intracompany network
wouldn’t be enough to land her the new role, he told her; she must also become active in
events and associations in her region. Recently matched with a high-level mentor through
a companywide program, she had barely completed the lengthy prework assigned for that
when she received an invitation to an exclusive executive-training program for high
potentials—for which she was asked to fill out more self-assessments and career-
planning documents. “I’d been here for 12 years, and nothing happened,” observes
Nathalie. “Now I am being mentored to death.”
TOP
 Four Mistakes Leaders Keep Making

by Robert H. Schaffer

The 50 years I’ve worked with business leaders have been marked by a dizzying rate of
economic, social, and environmental change. In response, senior managers and scholars
have produced a flood of research, articles, books, and consulting programs offering
countless methods for adapting to new circumstances. Strangely, just about all those
efforts overlook four basic behavior traps that thwart organizational change, particularly
its elusive human dimension.

Deeply rooted in the managerial psyche, the traps are extremely difficult to recognize
because they are almost always mechanisms for avoiding anxiety. They serve to protect
egos and prevent discomfort.

In advising companies on organizational and cultural change, my colleagues and I have

seen hundreds of clients fall into these traps again and again—but we’ve also found some
ways to mitigate their impact. Drawing on that experience, I’ll describe the traps and
share examples that show how executives can manage them.

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Kaiser Permanente’s Innovation on the Front Lines

by Lew McCreary

Chris McCarthy shows up for an early-morning interview wearing raspberry-colored

scrubs. Later he’ll head to one of Kaiser Permanente’s Bay Area hospitals to watch
nurses at work. McCarthy, a KP innovation specialist, is just beginning a project aimed at
optimizing the time nurses spend with their patients. He’s often in clinical settings,
observing how health care providers do their jobs; how they interact with one another,
with technology, and with patients; and how patients respond.

McCarthy is part of the Innovation Consultancy, a small team within Kaiser Permanente
that was born of the company’s involvement with the design firm IDEO. In 2003 KP
hired IDEO to help it develop better, more-efficient ways of performing certain high-
value activities, and gained a distinctive innovation methodology in the process.

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 The Globe: A Cautionary Tale for Emerging Market Giants

by J. Stewart Black and Allen J. Morrison

Fifteen years ago, Japanese companies accounted for 141 of the companies and 35.2% of
the revenues of Fortune’s then brand-new Global 500 list. By 2000 their share of
revenues had fallen to 20.8%, and by last year it had shrunk to 11.2%, with only 68
Japanese companies making the list. During the same period, U.S. firms’ portion of
Global 500 revenues, which was 28.4% in 1995, grew slightly, to 30%. Firms from the
European Union and Switzerland, meanwhile, increased their portion from 31% to 36%.

Much of Japan’s loss has been a gain for firms from emerging markets. Since 1995
companies from the BRIC nations (Brazil, Russia, India, and China) have seen their
combined share of Global 500 revenues leap from 0.9% to 10.4%. But will those
countries lose their edge in the years ahead, as Japan did? Or will they find ways to
remain globally competitive and protect their share—as the U.S. and Europe have done?

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 Spotlight
A New Alliance for Global Change

by Bill Drayton and Valeria Budinich

We are witnessing a sea change in the way society’s problems are solved, work is
performed, and businesses grow. Collaborations between corporations and social
entrepreneurs can create and expand markets on a scale not seen since the Industrial
Revolution. These markets will reach everyone, but especially the 4 billion people who
are not yet part of the world’s formal economy. They will offer new and remarkable
products and services in sectors as diverse as education, transportation, and finance.

You may be skeptical of this claim, and with good reason. The citizen sector—the term
we use to define the millions of groups established and run by mission-minded
individuals across the globe who are attempting to address critical social needs—has long
been regarded as understaffed and inefficient. But that has changed. We work with some
3,000 social entrepreneurs worldwide, and over the past 30 years we’ve seen the citizen
sector catch up with business as it has increased its productivity, size, and reach. Its
organizations are attracting talented and creative leaders, and their work is changing the
game in critical industries and areas such as energy and health care.

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Making Social Ventures Work

by James D. Thompson and Ian C. MacMillan

In recent years, we’ve all experienced considerable volatility—financial breakdowns,

natural disasters, wars, and other disruptions. It’s clear we need new approaches to the
world’s toughest economic challenges and social problems. Entrepreneurs can play a
central role in finding the solutions, driving economic growth (building infrastructure,
developing local talent, infusing struggling regions with investment capital) and helping
hundreds of millions of people worldwide. If successful, socially minded entrepreneurial
efforts create a virtuous cycle: The greater the profits these ventures make, the greater the
incentives for them to grow their businesses. And the more societal problems they help
alleviate, the more people who can join the mainstream of global consumers.

The failure rates for new companies and markets, however, are high. That is true
anywhere in the world, including emerging economies. The management challenges
associated with producing and marketing goods and services at the base of the economic
pyramid include imperfect markets, uncertain prices and costs, nonexistent or unreliable
infrastructure, weak or totally absent formal governance, untested applications of
technology, and unpredictable competitive responses.
TOP
 The High-Intensity Entrepreneur

by Anne S. Habiby and Deirdre M. Coyle, Jr.

The story of entrepreneurship in the twentieth century was about individuals who got
access to sophisticated capital in a few advanced markets and created massive economies
of scale. That’s how AT&T, Home Depot, and Microsoft swiftly made their way onto the
Fortune 500. But in the twenty-first century, a very different story is unfolding.

Today entrepreneurs anywhere can create value with relatively little capital. Barriers to
entry in almost every industry have come crashing down, opening vast opportunities for
small companies. These developments are especially apparent in emerging markets,
where we’re seeing signs that an entrepreneurial economy is ready to bloom. We’ve spent
the past two years studying entrepreneurship in the Middle East, Africa, and South Asia,
and we’ve found hundreds of world-class ventures poised for significant growth there.
Most people’s assumptions about entrepreneurship in the developing world—that
entrepreneurs either don’t exist there or are microentrepreneurs—are wrong. High
potential ventures are surfacing where no one is looking for them—in Beirut instead of
Boston, in Cape Town instead of Silicon Valley—among people who have historically
been outside the economic power structure.

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 Idea Watch

CEOs with Headsets

by Andrew Zimbalist

Analysis of college coach compensation shows how hard it is to align pay with
performance.
Back in 1924, Centenary College in Shreveport, Louisiana, was denied accreditation by
the Southern Association of Colleges and Schools because the school placed an “undue
emphasis on athletics.” The primary evidence of Centenary’s misplaced priorities was
that the college paid its football coach more than its president. The next year the football
coach was gone and the college gained accreditation.

Starting in the 1950s, Bear Bryant, the legendary football coach at the University of
Alabama, insisted his salary be $1 below that of the school’s president and kept it that
way for his nearly quarter-century tenure. Bryant believed that it was symbolically
important for the university president to be paid more than the head football coach.

TOP

Be a Better Manager: Live Abroad

by William W. Maddux, Adam D. Galinsky, and Carmit T. Tadmor

Travel and living abroad have long been seen as good for the soul. What’s perhaps less
well-known is that they’re also good for the company. People who have international
experience or identify with more than one nationality are better problem solvers and
display more creativity, our research suggests. What’s more, we found that people with
this international experience are more likely to create new businesses and products and to
be promoted.

For example, we ran an experiment in which 220 MBA students from Northwestern’s
Kellogg School were asked to solve the famous Duncker candle problem. In this
behavioral test, individuals are presented with three objects on a table: a candle, a pack of
matches, and a box of tacks. They’re asked to attach the candle to a cardboard wall—
using only the objects on the table—so that the candle burns properly and does not drip
wax on the floor.

TOP
 How Anger Poisons Decision Making

by Jennifer S. Lerner and Katherine Shonk

You’re late for work, and it’s pouring rain. In the parking lot, a car speeds around you
and takes the last spot near the building entrance. You end up trudging from the back of
the lot and get soaked to the skin. You’re mad, and you know your judgment at the
moment is probably impaired. Worse, the leftover anger will continue to color your
decisions at work, our research suggests, without your awareness—not a good thing for
anyone trying to steer the best course through the day’s business problems.

Many organizations have anger-management programs for their most egregious bullies,
but the reality is that the vast majority of employees will experience anger triggered by
anything from a family quarrel to a lost parking space—and their work will suffer for it.
For example, angry people tend to rely on cognitive shortcuts—easy rules of thumb—
rather than on more systematic reasoning. They’re also quick to blame individuals, rather
than aspects of a situation, for problems.

TOP

When Emotional Reasoning Trumps IQ

by Roderick Gilkey, Ricardo Caceda, and Clinton Kilts

Many companies and B schools still treat strategy and execution as separate beasts,
despite increasing evidence that the divide does much more damage than good. A large
part of the problem may be that people view strategic reasoning as a high-level executive
function of the brain and tactical thought as a discrete, lower-level activity. But the two
kinds of thinking are linked in an important way: They both draw considerably on social-
emotional reasoning, particularly in the brains of the most adept strategic thinkers.
Indeed, strategic thought entails at least as much emotional intelligence as it does IQ.

In a recent study we conducted with Diana Robertson and Andrew Bate of the Wharton
School, we asked managers in an executive MBA program to react to fictional strategic
and tactical management dilemmas and measured their brain activity using functional
magnetic resonance imaging, or fMRI. Instead of simply identifying which parts of the
brain “lit up” in response to particular tasks, we looked at how the brain regions were
interacting.

TOP
 Defend Your Research: It’s Not “Unprofessional” to Gossip at Work

by Giuseppe “Joe” Labianca

The finding: Gossip can benefit individuals and organizations, though managers often
consider all of it to be derogatory and tend to punish gossipers with lower performance
ratings.

The study: With Travis J. Grosser and Virginie Lopez-Kidwell, both doctoral candidates
in management, Joe Labianca examined the social interactions in a branch of a U.S.
company, surveying 30 of its 40 employees about their social networks in the office,
whom they gossiped with and how, and how much informal influence each colleague
had. The more staff members gossiped, the better their understanding of their social
environment and the higher their peers rated their influence.

The challenge: Gossip often consists of hearsay, half-truths, and innuendo, and can
absorb large amounts of your staff’s time. Can it really be valuable? Professor Labianca,
defend your research.

Labianca: Gossip can be very helpful to people in organizations, especially when the flow
of information from the top gets choked off, as often happens when companies are in
crisis or undergoing change. If a few people know what’s really going on, gossip
becomes the means of spreading that information to everyone else. What’s more, research
shows that gossip often reduces individuals’ anxiety and helps them cope with
uncertainty.

TOP

Vision Statement: Tired of PowerPoint? Try This Instead

by Daniel McGinn and Stephanie Crowley

For a big client meeting in April, Accenture senior manager Mark Papia hired a type of
practitioner he’d never encountered before: a “graphic recorder.”

During the session, artist Julie Stuart drew large murals depicting the participants’
discussion on 4-foot-by-8-foot sheets of paper. The goal: to help people make
connections and better recall key points. “The artwork generated a tremendous amount of
interaction,” Papia says.

Graphic recording—also called visual facilitation—has been around since at least the
1970s, when it was popularized by a group of San Francisco architects. It’s grown lately,
driven in large part by PowerPoint fatigue. The wall-sized depictions can be captured
digitally and distributed widely by e-mail, and serve not just as meeting summaries that
get stuffed in folders but also as visual references for key goals or processes. “I want
somebody who hasn’t been in the conversation to be able to look at something I’ve done
and quickly digest the key points,” says San Francisco artist Bree Sanchez.
TOP

Column: Redefining Failure

We think we know what failure looks like. Products don’t get purchased. Reorganizations
make things worse. Shipments aren’t delivered. Speeches don’t get applauded. Things
explode. These are the emergencies and disasters that we have nightmares about.

We think that failure is the opposite of success, and we optimize our organizations to
avoid it. We install layers and layers of management to eliminate risk and prevent
catastrophes. One surefire way we’ve found to avoid failing is to narrowly define what
failure is—in other words, to treat almost everything that happens as a nonfailure. If the
outcome of our efforts isn’t a failure, there’s no need to panic, is there? Failure creates
urgency. Failure gets you fired. Failure cannot stand; it demands a response. But the
status quo is simply embraced and, incredibly, protected.

Given our strong cultural bias against failure, this probably won’t win me any fans, but I
think we have no choice but to aggressively redefine the concept to include far more
outcomes than our current definition does.
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Column: Want People to Save? Force Them

by Dan Ariely
In Chile last June, I had the opportunity to spend some time with Felipe Kast, the new
government’s minister of planning, and a few of his compadres. (We also went dancing,
but that is another story.) One of the topics we talked about was the Chilean retirement
saving plan.

By law, 11% of every employee’s salary is automatically transferred into a retirement

account. Employees select their preferred level of risk, with the following restrictions:
They may not choose either 100% equities or 100% bonds, and the percentage of equity
that they can select diminishes as they age. When employees reach retirement, their
savings are converted into annuities. The government auctions off the rights to annuitize
retirees in groups of 250,000.
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How I Did It: Timberland’s CEO on Standing Up to 65,000 Angry Activists

by Jeff Swartz
The Idea: After Greenpeace pressured Timberland to pull out of Brazil, CEO Jeff Swartz
chose instead to engage with the activist group and Timberland’s Brazilian supplier in
hopes of making a positive difference.

You can tell a lot about how your day is going to unfold by the number of e-mails that are
waiting for you. I’m a pretty early riser—4 AM most days—so I typically start out ahead
of the game when it comes to e-mails. But on June 1, 2009, they kept coming, and
coming, and coming.

The first one accused Timberland of supporting slave labor, destroying Amazon rain
forests, and exacerbating global warming—all in the first sentence. The second was a
repeat of the first, as was the next, and the next. I had a funny feeling it was going to be a
long day.

The fan mail was from Greenpeace supporters reacting to a newly released Greenpeace
report about deforestation in the Amazon. The gist of the report was (a) Brazilian cattle
farmers are illegally clear-cutting Amazon rain forests to create pastures, and (b) the
leather from their cows might be winding up in shoes—including Timberland’s. (A) plus
(b) equals (c): New Hampshire–based bootmakers are desecrating the environment. Take
them to task. And take us to task they did. The senders didn’t threaten a boycott but said
they were “concerned” and urged us to work with Greenpeace to find a “permanent
global solution” to both deforestation and climate change.

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 Experience
Managing Yourself: The Boss as Human Shield

by Robert I. Sutton

Good leaders protect their employees from lengthy meetings, meddlesome superiors, and
a host of other roadblocks to doing real work.

William Coyne headed research and development at 3M—the company behind Ace
bandages, Post-it notes, Scotch tape, and other inventions—for over a decade. Shortly
after retiring, Coyne spoke to a group of hundreds of executives about innovation at 3M
and his own management style. He said he’d started at 3M as a researcher and learned
firsthand how well-meaning but nosy executives who proffer too many questions and
suggestions can undermine creative work. So when he became head of R&D, he was
determined to allow his teams to work for long stretches, unfettered by intrusions from
higher-ups. Coyne understood his colleagues’ curiosity; if successful, an R&D project
could generate millions in new revenue. But he limited their interference (and his own)
because, he said, “After you plant a seed in the ground, you don’t dig it up every week to
see how it is doing.”

Coyne knew that the performance of his employees—as well as his career and the
company’s success—depended on shielding them from threats. This notion that
management “buffers” the core work of the company from uncertainty and external
perturbations is an old theme in organizational theory, going back at least to James D.
Thompson’s 1967 classic Organizations in Action. The best bosses are committed to
letting their workers work—whether on creative tasks such as inventing new products or
on routine things such as assembling computers, making McDonald’s burgers, or flying
planes. They take pride in being human shields, absorbing or deflecting heat from inside
and outside the company, doing all manner of boring and silly tasks, and battling idiots
and slights that make life harder than necessary on their people.

TOP

Crucible: A New Will to Win

by Daniel McGinn

NASCAR team owner Rick Hendrick lost his senior management group—and his son—
in a 2004 plane crash. Here’s how he got his company back on track.

Rick Hendrick was driving home from lunch on a Sunday afternoon in 2004 when his
cell phone rang. A longtime employee was on the line, and he nervously asked the boss to
pull over so they could talk.
Hendrick was 55 years old. He owned a $3 billion chain of automotive dealerships and a
460-employee NASCAR racing operation. As he eased his BMW X5 off the road, he
figured there’d been a wreck at that afternoon’s race and that one of his drivers was
injured.

In fact, the news was far worse. A company plane en route to the race had disappeared
from the radar. Initial reports said it carried 10 passengers, including Hendrick’s only
son, Ricky, age 24; his brother, John, 53, who was the racing company’s president; two
nieces; two of his top managers; and two other employees. “At first I thought they just
had to fly somewhere else to land because of the weather, and they were OK,” Hendrick
says. So he began dialing the passengers’ cell phones. “That’s when I knew something
was wrong—if they’d been on the ground, they would have answered.” He drove home,
told his wife, Linda, what had happened, and waited. By midafternoon authorities had
located the crash and notified the Hendrick family that there were no survivors. “They’re
very strong Christian people—they were devastated, but everybody prayed,” says Felix
Sabates, a close friend and rival NASCAR team owner who was with them. “It was a
tough day.”

TOP

HBR Case Study: When the Longtime Star Fades

by Jimmy Guterman

The music business has changed radically. Can an employee who’s been an industry
legend keep up?

“And then there’s the time the Rolling Stones left me behind at a truck stop outside
Amarillo.”

It never took Bob Antice long to grab a crowd. Thirty-six years into his career at
Powerful Entertainment, he was a legend in the recording industry, the most successful
salesman in the company’s history, friend and mentor to generations of performers, and a
sought-after speaker at industry events like the one in this Santa Monica hotel. Every tale
was funnier than the one before; every anecdote showed how deeply Bob loved his work.

Unlike many of his contemporaries, Bob at 61 was a decent, humble man who didn’t use
his time in front of a microphone to boost his own ego or settle any scores. He didn’t
mind being the butt of the stories he told, whether they were about the Stones at the truck
stop or the aging R&B superstar who had knocked down his hotel room door at 5 AM
and accused him of stealing a Mars bar.

TOP
 Synthesis: Bridging America’s Income Gap

by Justin Fox

Five new books consider the political choices behind rising income inequality, and ways
to fix the problem.

In the late 1970s, a 50-year trend toward more equal distribution of incomes in the United
States was reversed. At first there was debate over the evidence, but by the 1990s
economists of almost every stripe agreed that income disparity was rising. When
President George W. Bush declared in early 2007 that “income inequality is real—it’s
been rising for more than 25 years,” the matter seemed settled.

But three big questions remained: Why were incomes becoming less equal? Was this
disparity really a problem? And how come inequality of consumption wasn’t nearly as
great as that of income?

The last two questions now seem to have been answered. Americans below the very top
income percentiles (where paychecks continued to grow) had borrowed to keep spending
despite stagnant or declining incomes. For a time, rising asset prices—especially home
prices—masked how leveraged households had become. But when home prices began to
decline in 2006, the result was a global bust.

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