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The

European
Business
Review
January - February 2016
europeanbusinessreview.com

The Appearance of

INNOVATION
Page 18

empowering communication globally

How to Get What You


Want in Negotiations

Design, When
Everybody Designs

Collaborative Innovation
Driver of Growth

Soothe your Senses:


Value Creation in
Luxury Tourism

The European
Business Review
empowering communication globally

JANUARY - FEBRUARY 2016

Change as Strategy, p34

Innovation
10

Collaborative Innovation as Ultimate


Driver of Growth
Mark Esposito and Terence Tse

18

The Appearance of Innovation


Alessandro Di Fiore, Elisa Farri
and Andrea Segnalini

22

Design, When Everybody Designs


Social innovation and design for a new economy
Ezio Manzini

Strategy
27

Structure Follows Strategy But May


not Look Like You Imagined
John Sutherland

34

Change as Strategy
Walter McFarland

41

What We (Think We) Know May


Not Be So: How to Get (More of)
What You Want in Negotiations
Margaret A. Neale and Thomas Z. Lys

Risk
46

The Rationality of Risk, Part 3: Rollercoasters,


Burning Ships and the Heros Journey
Christopher Surdak

Marketing
52

Soothe Your Senses: A Multisensory Approach to


Customer Experience Management and
Value Creation in Luxury Tourism
Klaus-Peter Wiedmann, Franziska Labenz,
Janina Haase and Nadine Hennigs

Leadership
58

An Investor's Least Favourite Statement


Oops, Wrong CEO
Leslie Pratch

Female Leaders
66

Develop a Robust Female Leadership Pipeline


Alexia Vernon

Management
73

Remote Teams: Managing Attitudes, Not Activity


Drew Gurley

Technology
77

The Fairness Challenge of the Internet of Things


Bang Ngyuen and David De Cremer

80

Creeping Towards Creepy: Companies Must Learn


Constraint with Big Data, Before its Too Late
Robert Owen and Christopher Surdak

Production & Design: Angela Lamcaster, Toni Rose Print Strategy: Stefan Newhart Production Accounts: Lynn Moses Editors: Elenora Elroy, David Lean Commissioining Editors:
Ansherina Dela Cruz, Ed Margareth People Operations: Lynn Moses Managing Editor Europe & Americas: Yetunde Olupitan Group Managing Editor: Jane Liu Editor in Chief: The
European Business Review Publishing Oscar Daniel READERS PLEASE NOTE: The views expressed in articles are the authors' and not necessarily those of The European Business Review.
Authors may have consulting or other business relationships with the companies they discuss. The European Business Review: 3 - 7 Sunnyhill Road, London SW16 2UG, Tel +44 (0)20 3598
5088, Fax +44 (0)20 7000 1252, info@europeanbusinessreview.com, www.europeanbusinessreview.com No part of this publication may be reproduced or transmitted in any form or by
any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission. Copyright 2016 EBR Media Ltd.
All rights reserved. ISSN 1754-5501

empowering communication globally

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From the Editors

Free Speech, free for whom?

ree speech: If free speech is free to


consume, free to seek, free to impart
and disseminate and free to gather,
then who is paying, because there is, as yet,
nothing free in this world. To borrow from
the ubiquitous world of the Internet, If you
are not paying for it, you are the product
being bought and sold over and over again.
In the matter of free speech, who gains, who
loses, who pays?
We start the year with that most sacred of
all concepts the freedom of speech and expression. The tragic incident in January last
year, brought Charlie Hebdo new exposure,
recognition, an army of supporters and millions of subscribers which catapulted it to
the role of leader of free speech of the free
world encompassing Western Europe and
North America.
It is not surprising that 2015 saw an
American presidential candidate exercise his
freedom of speech to the fullest possible
extent. In June last year he started his campaign against Mexican immigrants, labelling
Mexican illegal immigrants as rapists, drug
runners, carriers of infectious diseases. This
cost him, it cost Trump a substantial amount
of business such as the Macy and Univision
deals, the cancellation of the Professional
Golfers Association of Americas Grand
Slam tournament at the Trump National Golf
Club in Los Angeles. But he is unbowed,
he is happy to pay to play! And December
last year saw Trump calling for all Muslims

to be banned from the US. Trump is unrepentant, despite the UK, Irish and Scottish
Parliaments entertaining motions to ban
him from their shores. But what about the
Mexicans, the Muslims who have been maligned by the free speech of the potential
leader of the free world?
And not to be left out, Charlie Hebdo, in
its inimitable style, and as the grand patron of
that sacred order, trots out its latest expression in the first week of the New Year with
a cartoon depicting the body of the drowned
Syrian boy, Aylan Kurdi, lying face down in
a puddle of water, accompanied by: "What
would have become of the young Aylan if
he had grown up? A groper in Germany." It
seems that in its zeal, to spread its message,
(whatever the message, because it seems it is
now lost on its many admirers who donned
I am Charlie Hebdo t-shirts following the
January 2015 attack), Charlie Hebdo discounted the pain of the father and the family
of Aylan Kurdi who are still alive and still
mourning the loss of Aylan and many other
members of their family. Is the family to pay
for the sins of others?
Charlie Hebdos freedom to use the image
of a drowned child to drive home its message,
whatever that may be, is paid for, by thousands
of innocent young lives who by virtue of its
brush are robbed of their right to dignity, aspirations and security. Charlie Hebdos latest
offering serves to promote fear and loathing.
The satire is long gone!

www.europeanbusinessreview.com

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Innovation

COLLABORATIVE INNOVATION
AS ULTIMATE DRIVER OF GROWTH
BY MARK ESPOSITO AND TERENCE TSE

Entrepreneurship is the key to economic


growth, and right now, Europes economy
GLIFXOWLHV QHHG VROXWLRQV 7KLV DUWLFOH GLVcusses the challenges that businesses, particularly those in the Eurozone, face in a collaborative innovation partnership, and how
to overcome these challenges in order to
IRUPWKHPRVWEHQHFLDOSDUWQHUVKLS

he idea of collaborative innovation in


Europe takes its cue from the World
Economic Forums long-term studies on
entrepreneurship and drivers of entrepreneurship. Europe in particular has been a region
of interest for increasing entrepreneurshipbased activities because the continent has exSHULHQFHG VLJQLFDQW GLIFXOW\ LQ JHWWLQJ RXW
RI WKHQDQFLDOGRZQWXUQWKDWEHJDQLQ
Whereas the US has slowly but surely been improving its unemployment rate and productivity, countries in the Eurozone have struggled,
especially countries such as Italy and Greece,

10

where the threat of slipping back into recession looms continually.


As entrepreneurship has long been regarded as a path for economic growth, entrepreQHXUVKLSKDVEHHQSURSRVHGDVDVSHFLFFRXUVH
of action to address Europes economic woes.
Fostering entrepreneurship in Europe for the
most part is particularly ideal as the continent
has the elements necessary policy-wise and resource-wise for creating innovative new businesses that can offer the potential for new
markets and new products and services. At
WKHVDPHWLPHKRZHYHULVVXHVVSHFLFWR
Europe such as restrictive regulatory frameworks and lack of access
WRFDSLWDOKDYHDOVRVWLHGHQWUHSUHneurial activity. Entrepreneurship as

The European Business Review January - Febuary 2016

As entrepreneurship
has long been
regarded as a path
for economic growth,
entrepreneurship has
been proposed as a
specific course of action
to address Europes
economic woes.

a concept cannot thrive on its own; it is similar


to a plant seed that must have the right factors
in order to bloom.
In order to understand the factors needed
to support entrepreneurship, researchers at
the World Economic Forum and knowledge
partner A.T. Kearney embarked on identifying
the mechanisms of entrepreneurship. Through
their work, they pinpointed three phases in the
OLIHF\FOHRI HQWUHSUHQHXUVKLSWKHUVWSKDVHLV
to promote entrepreneurship to attract individuals who may not have otherwise considered becoming entrepreneurs or joining entrepreneurial enterprises. The second phase is
capitalisation, or to ensure that access to capital
is available to entrepreneurs to get their businesses off the ground. The last phase is to
scale these businesses and the ideas that come
with them to be able to manage high growth
and increase output quickly in order for new
businesses to succeed.1
The objective of this article is to address
WKH QDO RI  WKHVH WKUHH SKDVHV RI  HQWUHSUHneurship: scaling up. The ideas gathered in a
recent World Economic Forum summit of researchers, business leaders, and academics led
to one main overarching idea: collaborative innovation. In Europe, collaborative innovation
has the potential to change the status quo as it
offers an alternative to future and present entrepreneurs who may have become frustrated
or have had their momentum stopped by the
slowing constraints of regulatory policies and
government oversight.
WHAT IS COLLABORATIVE INNOVATION?
Collaborative innovation is the partnership
EHWZHHQ D \RXQJ HQWUHSUHQHXULDO UP RQ WKH
move and an established, large corporation.
The goal of these partnerships is to commercialise new ideas and technology, with the intent
of promoting economic growth and improving regional competitiveness. The idea behind
collaborative innovation is that the partnerVKLSV DUH PXWXDOO\ EHQHFLDO HQWUHSUHQHXULDO
UPV JDLQ DVVLVWDQFH LQ VFDOLQJ XS  DFFHVV WR
PDUNHWV DQG FDSLWDO  ZKLOH HVWDEOLVKHG UPV
enhance their competitiveness by adding or expanding their businesses through technology

and market innovations gained from collaborative innovation. However, collaborative innovation comes with its own set of challenges, which
the researchers at the World Economic Forum
DQG$7.HDUQH\KDYHGLYLGHGLQWRYHFDWHJRries. We will describe each of these challenges
in turn, along with ways to overcome them, followed by ideas on the role that policymakers can
play to help facilitate collaborative innovation.
FIVE CHALLENGES TO
COLLABORATIVE INNOVATION
7KH YH FKDOOHQJHV WR FROODERUDWLYH LQQRYDWLRQ
are: 1. understanding the business case for collaborative partnerships; 2. utilising the full poWHQWLDORI QHWZRUNVFRQVWUXFWLQJH[LEOHSDUWQHUVKLSVWUXFWXUHVGHQLQJPXWXDOO\EHQHFLDO
intellectual property (IP) agreements; and 5. preparing management and employees for shifts in
company culture in a collaborative environment.

Collaborative innovation offers an opportunity for


both young firms and established companies to fill
the gaps in either how their businesses are run or
how they meet the needs of their customers.
1. The Business Case for Collaborative Innovation
With rapid improvements in technology and
EXVLQHVV HIFLHQFLHV PDUNHWV DUH PXFK PRUH
likely to evolve more quickly than ever before.
Within this macro-environment, businesses both large and small face a continual uphill
climb to stay competitive and relevant. For
this reason, constant innovation be they
product or process innovations or incremental or revolutionary innovations is necessary.
Collaborative innovation offers an opportuniW\IRUERWK\RXQJUPVDQGHVWDEOLVKHGFRPSDQLHVWROOWKHJDSVLQHLWKHUKRZWKHLUEXVLQHVVes are run or how they meet the needs of their
FXVWRPHUV)RU\RXQJUPVODFNRI FDSLWDORU
access to markets in a very sensitive, early stage
of existence can severely inhibit the chances
for long-term survival. Meanwhile, many estabOLVKHGUPVKDYHSUREOHPVZLWKWRRPXFKUHG
tape that prevent them from having the type
of agility that small startups have to produce

www.europeanbusinessreview.com

11

Innovation

THE IDEAL NETWORK FOR FINDING STRATEGIC


PARTNERS AND PROMOTING COLLABORATIVE
INNOVATION EFFORTS INCLUDES FIRMS,
ADVISORS, INTERMEDIARIES, CAPITAL PROVIDERS
AND SERVICE PROVIDERS WHO UNDERSTAND
THE GOALS OF COLLABORATIVE INNOVATION
AND HAVE THEMSELVES THE CAPACITY AND
NETWORKS TO MAKE THE RIGHT CONNECTIONS
AND PLAY THE ROLE OF MEDIATOR.

is given funding and an advisor/mentor and


access to Coca-Colas core business units such
as marketing or distribution.2 In this collaboraWLRQVHWWLQJSUREOHPVDUHMRLQWO\LGHQWLHGDQG
solutions attempted by the entrepreneur. When
the startup is ready to start, Coca-Cola provides
additional funding to nurture the new business.
Although Coca-Cola invests funds and resources while not receiving any ownership stake or
rights to the IP in return, they perceive these
SDUWQHUVKLSVDVDQRSSRUWXQLW\WRQGZD\VWR
expand the brand creatively for the longer term.3

and test novel ideas and approaches. They are


obliged to many layers of management that
FDXVHV ODUJH UPV WR GLVWULEXWH UHVRXUFHV LQ D
way that rarely prioritises or rewards the risk
that comes with R&D spending.
With collaborative ventures between young
DQGHVWDEOLVKHGUPVWRJHQHUDWHDQGFRPPHUcialise innovation, however, both of these business predicaments may be addressed. Put differently, the economic incentives are unique for
HDFK W\SH RI  UP IRU WKH \RXQJ UP VKDULQJ
and co-creating business innovations with an esWDEOLVKHG UP FDQ JDLQ WKHP DFFHVV WR FDSLWDO
and to markets, credibility through brand recognition, and management expertise in scaling and
distribution. For the established company, partQHULQJZLWKD\RXQJUPDOORZVWKHEXVLQHVVWR
let its partner take the risk of doing discovery
and R&D and also because they can accomplish these goals more quickly. In addition, the
HVWDEOLVKHGUPJDLQVNQRZOHGJHLQQHZDUHDV
In the beginning, the value and business case
of collaborative innovation for small, young
UPVZLOOEHPRUHHYLGHQWWKH\DUHLQDSRVLWLRQWREHQHWLPPHGLDWHO\IURPPDUNHWLQJDQG
operational and scaling know-how. For estabOLVKHGFRPSDQLHVWKHEHQHWVDUHOHVVREYLRXV
in the short-term, but the most successful businesses understand that blockbuster products
and services dont appear overnight, and require
an investment of time and effort. For instance,
the Coca-Cola Company developed the program
Coca-Cola Founders to pursue innovation by
means of partnering with an experienced entrepreneur from any country. The entrepreneur

2. Utilising the Full Potential of Networks


In Europe, networks are fundamental for entrepreneurial businesses seeking to scale up their
ideas and innovations. With twenty-eight countries each functioning as a different market complete with its own distinct legal and regulatory
obstacles, collaboration with local, established
UPVRIIHUVDZD\WRHQWHUQHZPDUNHWVZLWKRXW
having to start from square one. For the young
UPWKHULJKWW\SHRI SDUWQHUZLOOEHDUHSXWDEOH
business that has a long-term view of operating
the company, and therefore more likely to think
strategically about their partnerships. Moreover,
businesses which understand that market condiWLRQVDQGSUHIHUHQFHVDUHFRQVWDQWO\LQX[DUH
much more likely to be open to collaboration
because they can see the value that startups offer
experimentation, pilot programs, risk-taking,
and agility. In other words, established businesses that understand the business case for collaborative innovation are ideal for partners because
they understand the value and are much more
likely to be helpful in providing the necessary reVRXUFHVUHTXLUHGIRUD\RXQJUPVFDOHXS2Q
the other end, location and proximity to young
UPVLVPRUHLPSRUWDQWIRUHVWDEOLVKHGUPVIRU
DFROODERUDWLYHSDUWQHUVKLSZKLOH\RXQJUPV
have yet to discover core competencies or their
markets, established companies have existing
markets and customers to serve that may have
an impact on the type of strategic partnerships
related to collaborative innovation to form.
7KHLGHDOQHWZRUNIRUQGLQJVWUDWHJLFSDUWners and promoting collaborative innovation
HIIRUWV LQFOXGHV UPV DGYLVRUV LQWHUPHGLDUies, capital providers and service providers who

12

The European Business Review January - Febuary 2016

understand the goals of collaborative innovation and have themselves the capacity and networks to make the right connections and play
the role of mediator. Partnerships within such
a network also foster a commitment and responsibility to achieve goals so as to protect
those relationships. Ultimately, the networks
should form an ecosystem within which each
actor is part of an interconnected value web.
Additionally, joining and reinforcing the
capacity and effectiveness of already existing innovation-centric networks and ecosysWHPVZLOODLGVRPHUPVLQGHYHORSLQJDQGLPproving partnerships. EIPs, or European
Innovation Partnerships, a European
Commission initiative, are one place
ZKHUHVPDOODQGHVWDEOLVKHGUPVFDQDGG
to the diversity of actors seeking mentorship, partnership, and better coordination of
resources and participants.4 &RQYHUVHO\ D UP
may elect to create their own formal ecosystem.
One example is Lufthansa. With their headquarters based in Cologne, Germany, the company
decided to start a unit called the Lufthansa
Innovation Hub in Berlin, where there is a
bigger startup scene. Using the power of their
own reputation as a technology giant to attract
entrepreneurs and startups, the Lufthansa
,QQRYDWLRQ +XE VFRXWV VSHFLFDOO\ IRU WUDYel-oriented tech startups with the intention to
co-create new products and services, and also
to gain knowledge on startup tech technology
trends for the main corporation.5 Networks, for
ERWK\RXQJDQGHVWDEOLVKHGUPVDUHDQLPSRUtant factor for collaborative innovation, whether
it is drawing upon the aid of colleagues, creating
an innovation ecosystem, or adding value to an
existing network or ecosystem.

have different interests. As a result, to reconcile


those differences, having clear sight of a vision
and understanding the objectives and business
FDVHIRUFROODERUDWLYHLQQRYDWLRQLVWKHUVWVWHS
towards having an effective partnership. With
WKDWLQPLQGDSDUWQHUVKLSVWUXFWXUHWKDWLVH[ible to be able to react to various scenarios will
EHWKHPRVWIUXLWIXOVHWXSIRUERWKUPV
It should be noted that partnership structures
are different from corporate legal structures.
Partnership structure refers to the conditions
and boundaries within which the two companies
work together. They can be formal or informal,
and range from knowledge-sharing to acquisition.
Technology innovation ecosystems have become
a popular structure for corporations to collaborate with technology startups. For instance, in the
technology sector, Microsoft works with startups through Microsoft Ventures, a three-pronged
program that includes providing standard accelHUDWRUVHUYLFHVVXFKDVRIFHVSDFHDQGPHQWRUV
3. Creating Flexible Partnership Structures
2SWLPDO SDUWQHUVKLSV UHTXLUH D H[LEOH VWUXF- as well as free use of Microsoft products, access
ture in order to strike a balance between two ob- to Microsofts network and corporate partjectives of collaborative innovation: to quickly ners, and seed funding for those startups ready
capture moving market opportunities while also to scale.6 GE Healthcare has a similar structure
carrying out due diligence and negotiations in with Healthymagination, a strategic fund dedicatRUGHU WR IXOOO WKH QHHGV DQG SURWHFW WKH LQ- ed to funding startups. GE has the opportunity to
terests of both partners. As one partner will become a more involved partner once a startup
EH D \RXQJ HQWUHSUHQHXULDO UP DQG WKH RWKHU is ready for commercialisation. For instance, one
SDUWQHU ZLOO EH DQ HVWDEOLVKHG UP HDFK ZLOO RI  WKHLU UVW VWDUWXSV &KHFN&DS HYHQWXDOO\

www.europeanbusinessreview.com

13

Innovation

Economic Forums research indicate that corporate attitudes toward IP negotiations were perFHLYHGE\KHDGVDWWKHQHZUPVWREHXQIDLU
leading to a breakdown in goodwill and unwillingness to continue open collaboration in the
ORQJHUWHUP(VWDEOLVKHGUPVVKRXOGDWWHPSW
WRXQGHUVWDQGWKH\RXQJUPVSRLQWRI YLHZ
when negotiating IP agreements or even
share their own technology. In the case of
pharmaceutical industries, companies like
Eli Lilly & Co. licenses drugs to startups with
an option to buy back the drug if they successfully pass some clinical trials.
2WKHUZD\VWKH\RXQJUPFDQIHHOLQFRQWURO
established
a formal relationship with of their IP is to document interaction. Informal,
GE when they needed a partner oral conversations should be summarised in
to manufacture their product.7 In writing after discussion to provide clarity on the
summary, partnership structures should information shared and evidence in the case of
be able to minimise risk while taking advan- DQ ,3 GLVSXWH (QWUHSUHQHXULDO UPV FDQ DOVR
protect themselves by having experienced and
WDJHRI HHWLQJPDUNHWRSSRUWXQLWLHV
Moreover, the level and type of collabora- sophisticated investors and members on their
tion will also depend on the industry and the board of directors. Governance controls, mademands of technology development. For in- terial transfer agreements and restrictive covestance, capital-intensive industries may choose nants should all be reviewed and approved by
to focus on early-stage collaboration so that WKHERDUG,3DQGVSHFLFDOO\,3SURWHFWLRQLV
they may test and assess technologies on their SURJUHVVLYHO\EHFRPLQJDSOD\LQJHOGIRUFRPinternal platforms before moving on to invest petitors. While successful IP litigation can genmore on a potential innovative technology. A erate licensing revenue for companies and enconsortium approach as opposed to a collab- feeble competitors, such as in the case of Apple
oration between just two companies, a young versus Samsung, using IP protection as competUP DQG DQ HVWDEOLVKHG UP  LV OHVV QLPEOH itive and comparative advantage runs counter to
and thus makes more sense only in particular in- advancing innovation and cooperation.
,Q (XURSH WKHUH LV DQRWKHU VSHFLF VHW RI 
dustries where the level of complexity requires
challenges in IP protection. With the excepmore than two companies to innovate.
Finally, time should also be a factor in the tion of startups in the UK, web startups cannot
structure. Innovation takes time to make an patent text and datamining (TDM) inventions
impact, and established companies should con- under European national copyright legislation.
centrate their capabilities and resources on how This means that startups are limited to treating
their software and algorithms as trade secrets,
to scale up impactful innovations.
which have virtually no legal protection. With
the increase of human capital movement across
4. Defining Mutually Beneficial Intellectual
borders and higher risk of compromised IT
Property Agreements
2QFHD\RXQJUPKDVGHYHORSHGLWVLQWHOOHFWX- systems, safeguarding trade secrets is an unrelial property to a point where it has value, how able way of protecting intellectual property.
to share its value becomes an issue in a collaborative innovation partnership. Entrepreneurs 5. Preparing Employees for Shifts in
LQ \RXQJ UPV VHH ,3 DV WKHLU PRVW LPSRUWDQW Organisational Culture
DVVHWZKLOHHVWDEOLVKHGUPVYLHZHYHU\WKLQJDV Culture is an important component in collabfor sale. Interviews conducted during the World orative innovation. Attempting to merge two

14

The European Business Review January - Febuary 2016

separate identities into a single identity is neither the goal


QRUDQHFHVVLW\,QVWHDGQGLQJZD\VWRUHODWHWRHDFKRWKHU
creates an environment for working together as partners,
and not as one symbiotic creature. Now that industries and
GLVFLSOLQHV DUH QR ORQJHU DV VROLG DV WKH\ RQFH ZHUH UPV
are aware that they need partners in order to stay innovative and competitive. For collaborative innovation, more
than likely the two partners will have different styles of opHUDWLQJHVSHFLDOO\VLQFHRQHSDUWQHULVD\RXQJUPDQGRQH
SDUWQHULVDQHVWDEOLVKHGUP(QWUHSUHQHXULDOUPVWHQGWR
focus on completing things quickly, as popularised by the
OHDQVWDUWXSPHWKRG7KLVFRXOGEHDJRRGLQXHQFHIRUHQWUHQFKHG UPV ZKR KDYH PRUH OD\HUV RI  PDQDJHPHQW DQG
are used to requiring more time to implement a project, but
LQPRVWFDVHVZKDWWKHHVWDEOLVKHGUPFDQGRWRDVVLVWLQ
successful collaboration is to be open about what they seek
from collaboration.
,QRUGHUWRDFKLHYHWKHLUJRDOVDQHVWDEOLVKHGUPQHHGV
to be comfortable about being more open about sharing
competitive insights and information. Building trust goes
a long way toward developing the potential of the partnerVKLS7KHUVWVWHSWRZDUGVGRLQJVRLVWRZRUNWRJHWKHUWR
QGFRPPRQJURXQGRQWKHYLVLRQDQGVWUDWHJLFJRDOVLQWKH
QH[WWKUHHWRYH\HDUVWKDWUVWPDGHWKHFDVHIRUSDUWQHUing together. This essential step goes a long way toward eliminating apprehension or hostility about collaborating togethHU,GHDOO\HDFKUPZRXOGORRNIRUZD\VWKH\FDQKHOSWKH
RWKHUUPUHDFKWKHLUJRDOVDVZHOO7KHVHVHVVLRQVZLOOXOWLmately help build internal support for collaboration. Another
idea includes employee exchanges, where employees from the
startup and employees from the corporation switch positions
WRLQFUHDVHXQGHUVWDQGLQJRI WKHRWKHUUPVFXOWXUHDQGZD\
of working, as well as to gain business knowledge. Being
ready to allow mistakes to happen and accept failures along
with small wins will also keep a collaborative culture intact.

rather than discourage collaborative innovation. For instance, patent registration is one area where policymakers
can have a substantial effect for innovation. Patent costs are
too high; patent attorneys and translation make up 94-99%
of the cost; one way policy can lower costs is through simplifying the system and harmonisation. To create a multigenerational entrepreneurial outlook, policymakers can also
use the classroom setting to create future entrepreneurs by
teaching them the fundamentals of starting a business as
well as how to become comfortable with risk-taking and
with the possibility of failure.

CONCLUSION
7KHJUHDWHVWFKDOOHQJHIRU\RXQJUPVDQGFROODERUDWLYHLQnovation is in choosing the right partners. This may mean
SDUWQHULQJZLWKVHYHUDOUPVDVORQJDVWKH\RXQJUPGRHV
not stretch itself so much that it has trouble managing either
LWVSDUWQHUVKLSVRUUHVRXUFHV4XHVWLRQVD\RXQJUPPD\DVN
to help them select partners include how a potential partner
FDQ DLG WKH UP LQ UHDFKLQJ LWV JRDOV DQG ZKHWKHU RU QRW
there are many barriers to getting started. Additionally, young
UPV PXVW QRW XQGHUHVWLPDWH WKH VNLOO DQG LQYHVWPHQW RI 
time it takes to build and access networks. Although larger
corporations may have more leeway in choosing partners iniWLDOO\D\RXQJUPZLOOKDYHPRUHOHYHUDJHRQFHLWGHYHORSV
its own value proposition.
)RUFROODERUDWLYHLQQRYDWLRQWRKHOSWKHHVWDEOLVKHGUP
meet its business goals, commitment from top management
LV LPSHUDWLYH $GGLWLRQDOO\ WKH HVWDEOLVKHG UP VKRXOG VWD\
aware of any tendency to slip into attempts to assimilate the
VPDOOHUUPLQWRWKHODUJHUUPDVLWZLOOJRDORQJZD\IRU
the partnership the startup needs to maintain creative mentality and entrepreneurial drive that is necessary for innovaWLRQEXWHDVLO\GLOXWHGLQDODUJHUUP7UXVWVWUXFWXUHDQG
comprehension of the strategic goals that each partner strives
to gain from collaborative innovation is key to working together and creating value.
PUBLIC POLICY CAN AID COLLABORATIVE INNOVATION
Collaborative partnerships are meant to be mutually
Public policy can help spur collaborative innovation by proYLGLQJH[LELOLW\WRPDUNHWV)RUEXVLQHVVHVWRWKULYHSXEOLF EHQHFLDO\RXQJUPVJDLQDFFHVVWRJOREDOQHWZRUNVDQG
policy should provide a framework that facilitates busi- resources while large companies gain new knowledge and
nesses ability to run smoothly. In order to create the right potential new markets to drive their own renewal process.
framework, creating a conversation with multiple stakehold- *LYHQWKHLQQLWHVFHQDULRVDQGQHHGVWKHLGHDRI FROODEers will provide the necessary perspective on what business- RUDWLYH LQQRYDWLRQ LV DERYH DOO WR EH H[LEOH DQG RSHQ
HV QHHG VXFK DV VFDO DQG OHJDO VWUXFWXUHV WKDW HQFRXUDJH about possibilities.

Building trust goes a long way toward developing the potential of the partnership. The first step
towards doing so is to work together to find common ground on the vision and strategic goals in
the next three to five years that first made the case for partnering together.

www.europeanbusinessreview.com

15

Innovation

The greatest
challenge for
young firms and
collaborative
innovation is in
choosing the
right partners.

About the Authors


Dr. Mark Esposito is a Professor of
Business and Economics, teaching at
Grenoble Ecole de Management,
Harvard University Extension and IE
Business School. He serves as
InstitutesCouncilCo-Leader,attheMicroeconomics
of Competitiveness program (MOC) at the Institute
of Strategy and Competitiveness, at Harvard
Business School. Mark consults in the area of corporate sustainability, complexity and competitiveness worldwide, including advising to the United
Nations Global Compact, national banks and
NATO through various Executive Development
Programs. From 2013-14, Mark advised the
President of the European Parliament, Martin
Schulz, in the analysis of the EU systemic crisis and
worked as cross theme contributors for the World
Economic Forum reports on Innovation Driven
Entrepreneurship. He tweets as @Exp_Mark
Dr. Terence Tse is an Associate
Professor of Finance, ESCP
Europe Business School & Head
of Competitiveness Studies at i7
Institute for Innovation and
Competitiveness. In addition to working in governmental advisory capacity, Terence writes extensively and appears on television programmes
in China, France, Greece and Japan, discussing
the subjects of competitiveness and economic
affairs. Before joining academia, he worked in
mergers and acquisitions at Schroders, Citibank
and Lazard Brothers in Montral and New York.
Terence also worked as a business consultant
both independently and at Ernst & Young. He
tweets as @Terencecmtse
Endnotes
1. World Economic Forum. Collaborative Innovation:
Transforming Business, Driving Growth. World Economic
Forum, 2014.
2. Ron Miller. Coca-Cola Hopes Its Startup Incubator Is The Real
Thing. November 10, 2014. http://techcrunch.com/2014/11/10/
coca-cola-hopes-its-startup-incubator-is-the-real-thing/.
3. Ibid.
4. European Commission. European Innovation Partnerships.
http://ec.europa.eu/research/innovation-union/index_en.
cfm?pg=eip.
5. Lufthansa Group. Lufthansa Group unveils raft of quality
and innovation actions. July 9, 2014. http://www.lufthansagroup.com/en/press/news-releases/singleview/archive/2014/
july/09/article/3077.html.
6. Wilhelm, Alex. Microsoft brings BizSpark, Bing Fund, and
its accelerators under one roof. The Next Web. June 25, 2013.

16

The European Business Review January - Febuary 2016

http://thenextweb.com/microsoft/2013/06/25/harmonizedunder-the-name-microsoft-ventures-microsofts-startup-activity-set-to-rise-with-increased-investment-3-new-accelerators/.
7. Parmar, Arundhati. GE Healthymagination Fund looking
for startups to invest in. http://webcache.googleusercontent.
FRPVHDUFK"T FDFKH,38+U-F-KWWSVZZZNDXIIPDQ
org/resource-center/ge-healthymagination-fund-looking-forstartups-to-invest-in.aspx+&cd=1&hl=en&ct=clnk&gl=us.

References
1. Butler, David. From Startup to Scaleup: the Next Wave of
Innovation. August 6, 2013. http://www.coca-colacompany.com/
innovation/from-startup-to-scaleup-the-next-wave-of-innovation.
2. Butler, David. Startup Refreshed: Why Coke is Joining the
Entrepreneurial Revolution. May 30, 2013. http://www.coca-colacompany.com/innovation/startup-refreshed-why-coke-is-joining-the-entrepreneurial-revolution.
3. The Coca-Cola Company. Coca-Cola Founders. http://coca-colafounders.com/.
4. The Economist. Apple versus Samsung: Copy That. August 25,
 KWWSZZZHFRQRPLVWFRPEORJVVFKXPSHWHU
apple-versus-samsung.
5. European Commission. European Innovation Partnerships.
http://ec.europa.eu/research/innovation-union/index_en.
cfm?pg=eip.
6. GE Healthcare. About healthymagination. http://
healthymagination.gehealthcare.com/en/about.
7. General Electric. Healthymagination | GE.com. http://
www.ge.com/about-us/healthymagination.
 +XJKHV -RQDWKDQ DQG :HLVV -HII 6LPSOH 5XOHV IRU 0DNLQJ
Alliances Work. Harvard Business Review, November 2007. https://
hbr.org/2007/11/simple-rules-for-making-alliances-work.
9. Jarvis, Lisa M. Licensing Out. Chemical and Engineering News
vol. 92:12, March 24, 2014.
10. Krasny, Jill. 6 Companies That Want to Invest in Your
Startup. Inc.com. February 14, 2014. http://www.inc.com/jillkrasny/six-companies-that-want-to-invest-in-your-startup.html.
10. Kurtz, Nathan. Microsoft Ventures: The Original Startup
Goes Back to Its Roots. Entrepreneurship. http://www.entrepreneurship.org/resource-center/microsoft-ventures-the-original-startup-goes-back-to-its-roots.aspx.
11. Lufthansa Group. Co-creation hub. http://hub.lh.com/.
12. Lufthansa Group. Lufthansa Group unveils raft of
quality and innovation actions. July 9, 2014. http://www.
lufthansagroup.com/en/press/news-releases/singleview/
archive/2014/july/09/article/3077.html.
13. Meisner, Jeffrey. Announcing Microsoft Ventures for startups to build, innovate and grow. Microsoft. June 25, 2013. http://
blogs.microsoft.com/blog/2013/06/25/announcing-microsoftventures-for-startups-to-build-innovate-and-grow/.
14. Miller, Ron. Coca-Cola Hopes Its Startup Incubator
Is The Real Thing. TechCrunch. November 10, 2014.
http://techcrunch.com/2014/11/10/coca-cola-hopes-itsstartup-incubator-is-the-real-thing/.
15. Parmar, Arundhati. GE Healthymagination Fund looking for
startups to invest in. http://webcache.googleusercontent.com/
VHDUFK"T FDFKH,38+U-F-KWWSVZZZNDXIIPDQRUJUHsource-center/ge-healthymagination-fund-looking-for-startupsto-invest-in.aspx+&cd=1&hl=en&ct=clnk&gl=us.
16. Van Gool, Lorenzo. Google-backed Factory Hub and
Hardware.co Accelerator coming to Holland. Startup Juncture.
February 17, 2015. http://startupjuncture.com/2015/02/17/
google-factory-hub-hardware-co-accelerator-holland/.
17. Wilhelm, Alex. Microsoft brings BizSpark, Bing Fund, and
its accelerators under one roof. The Next Web. June 25, 2013.
http://thenextweb.com/microsoft/2013/06/25/harmonizedunder-the-name-microsoft-ventures-microsofts-startup-activity-set-to-rise-with-increased-investment-3-new-accelerators/.
 :RUOG (FRQRPLF )RUXP &ROODERUDWLYH ,QQRYDWLRQ
Transforming Business, Driving Growth. World Economic
Forum, 2014.

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Innovation

The Appearance
of Innovation
BY ALESSANDRO DI FIORE, ELISA FARRI AND ANDREA SEGNALINI

Look at Salesforce.com, the San Franciscobased CRM company. According to the 2015
Forbes Most Innovative Companies ranking,
6DOHVIRUFHKDVDSHUFHQW,QQRYDWLRQ3UHPLXP1
ppearances are important. Look at lead- This is almost double the industry average. Why?
ership. How a leader looks and behaves Salesforce not only has an innovation track
in front of followers is key to the suc- record, but also a strong reputation as innovacessful practice of leadership. But, while we tor. Marc Benioff, its CEO and founder, has sucaccept the importance of appearances in a range cessfully marketed the companys innovativeness
of business disciplines marketing and com- across different channels. It is an innovative ormunication for example in some it is strange- ganisation, but it also looks like one.
The reality is that innovation is a battle that
ly under-valued.
Consider innovation. Companies invest in in- has to be fought on two fronts. First, companies
novation to foster growth and competitiveness. have to develop their innovation capabilities.
This hopefully results in a higher Innovation Building long-lasting capabilities throughout the
Premium the difference between the market organisation lays the foundation for enduring
FDSDQGWKH139RI FDVKRZV%XWZHZHUH innovation and growth. Today, most companies
surprised when our research into the Innovation XQGHUVWDQGWKHLPSRUWDQFHRI WKLVUVWOHYHUWR
Premiums of major corporations found that sustain future performances. The real challenge
WKH\ YDU\ VLJQLFDQWO\ DPRQJ FRPSDQLHV ZLWK here concerns execution.
The second front is the world of appearancWKHVDPHQDQFLDOIXQGDPHQWDOVHYHQZLWKLQWKH
es. Compared to developing innovation capasame industry.
We then examined what differentiated these bilities, innovation marketing is neglected. But,
companies. We found that where companies our research suggests that it is vital. Investors
differ is primarily in their ability to explain to in- need to be informed and convinced of a comvestors that they can sustain innovation. In inno- panys ability to continue to innovate far into the
vation, reputation is crucial; being seen to be inno- future. This means being able to build a thought
OHDGHUVKLS SUROH RQ LQQRYDWLRQ EH NQRZQ
vative is a vital differentiator. Seeing is believing.

Developing innovation capabilities is no


longer enough. For organisations, innovation marketing is the next frontier.

Investors need to
be informed and
convinced of a
companys ability to
continue to innovate
far into the future.

18

The European Business Review January - Febuary 2016

and perceived as an innovative company at the


leading edge in the industry.
THE BARRIERS
Innovation capabilities and innovation marketing are both important. The second element is
routinely overlooked. There are three main barriers for this:
2EVHVVLRQ ZLWK FRQGHQWLDOLW\ DQG SULYDF\. Some
companies, particularly those active in IPsensitive industries, such as chemicals, are
ZRUULHG DERXW EUHDFKHV RI FRQGHQWLDOLW\
Worry becomes paranoia and all the good
things they are doing are automatically cateJRULVHG DV FRQGHQWLDO HYHQ ZKHQ WKH\ DUH
not sensitive. We have regularly met companies that have turned down the opportunity to be a case study for Harvard Business
School or another leading business school.
This is often self-defeating. The perceived
ULVN RI GLYXOJDWLQJ FRQGHQWLDO LQIRUPDWLRQ
to the external world hinders effective innovation marketing beyond the company.
5HVHUYHG FRPSDQ\ FXOWXUH In some organisations, to broadly communicate what you
have done and achieved, to market them to
raise your social visibility, is acceptable behaviour. In other companies the culture is

WKH RSSRVLWH +DYLQJ D ORZ SUROH VSHDNing only through results, avoiding visibility
are the norms. We found that having a reVHUYHG FXOWXUH LQXHQFHV WKH VW\OH DQG LQtensity of a companys communication with
the outside world. Take the fast moving consumer goods industry. On one hand, there
is P&G. Its culture can be described as egopowered, self-centric, show you are the best.
It has built a reputation and image on innovation through articles, books, case studies
and research studies. It comes naturally to
P&G to spend time, resources and effort
to let the world know how great it is. On
the other hand, Colgate-Palmolive has a reserved culture and it doesnt come naturally
for the company to invest time and resources to boost its innovation reputation beyond
the standard corporate actions (annual
UHSRUWV QDQFLDO URDG VKRZV DQG VR RQ 
/DFN RI DFFRXQWDELOLW\ Often, there is no clear
accountability for innovation marketing. The
&KLHI ,QQRYDWLRQ2IFHUDQGWKH5 '93
are responsible for driving the companys innovation funnel and priorities. Innovation
marketing is not part of their individual goals and targets. The CFO and Investor
Relationship Manager are focused on

Innovation Marketing
Three Main Barriers:

1
Obsession with
confidentiality and privacy

2
Reserved company
culture

3
Lack of accountability

www.europeanbusinessreview.com

19

Innovation

Fig. 1 - Overview of the Innovators Thought Leadership Framework

Events and road shows to deliver


innovation-related messages

Online media content to spur


powered conversations

Research studies by top business


schools and authors

Prestigious and
quality publications

To create thought
leadership,
companies need
to design a
clear Innovation
Marketing plan that
states what the
company should do.

20

communicating to analysts on the companys


QDQFLDO PHDVXUHV DQG KRZ LW LV SURJUHVVing on them. The External Communication
Manager is usually focused on the old fashioned activities of press releases and sponsorships to raise a generic corporate image.
In contrast, in our best practice cases, we
found that the CEO was the driving force
behind innovation marketing. Think of Marc
%LHQRII DW 6DOHVIRUFH RU $* /DH\ DW 3 * LQ
KLV UVW WHQXUH :KHQ WKH &(2 LV QRW GULYLQJ
innovation marketing, then the organisation
is ill equipped to design and execute a proper
innovation marketing plan.
THE INNOVATION MARKETING PLAN
While innovation marketing is often overlooked,
as we have seen, there are exceptions, companies that match innovation capabilities with

The European Business Review January - Febuary 2016

innovation marketing. Best practice companies


use a number of levers, summarised in what
we call the Innovators Thought Leadership
Framework (see Figure 1 above), to raise their
H[WHUQDO LQQRYDWLRQ SUROH
Intuit is a great example of a company that has
increased and sustained its Innovation Premium
by using most of the levers in the framework.
Starting in the mid-2000s, Intuit has supported
the diffusion of cutting-edge innovation methodologies such as Customer-driven Innovation and
Design for Delight with the aim of strengthening
innovation capabilities that create value for customers and the company. Moreover, Intuit has
communicated the new capability-building programs through various channels:
The companys story was featured in prestigious books on management and innovation
(The Innovators Method by N. Furr and J. Dyer;
Inside Intuit by S. Taylor and K. Schroeder);
Intuit has opened its doors to authoritative professors and researchers, who have published
extensively on the company. For example,
Harvard Business School has published more
than 10 cases focusing on management practices and business challenges at Intuit;
CEO Brad Smith and founder Scott Cook
published Harvard Business Review articles and
attended conferences, actively promoting
Intuit as a leading innovator also in terms of
management practices.
Not only did Intuit effectively communicate
its ability to continue to innovate far into the
future, but it also raised the companys thought
leadership and coolness on innovation management practices to the eyes of the external world.
To create thought leadership, companies need
to design a clear Innovation Marketing plan that
states what the company should do. Content
is the centerpiece. Companies should create
content that is relevant and valuable and select
the core messages to highlight their innovation
capabilities in order to position the company as
truly innovative.
Then, companies should identify the
Collaborator they need to help build or amplify
high-quality marketing messages covering
WKHLU LQQRYDWLRQ SUROH 7KHVH FROODERUDWRUV
may include expert journalists or authoritative

professors who are interested in researching the company


and publishing about it.
Finally, identifying the right communication Channels is
crucial. Successful companies carefully screen the available
channels, and identify priorities based on content and target
audience. Clearly, online media is now a powerful communication channel. It enables companies to engage external
people in online discussions about innovation-related topics.
In addition, it prompts people to talk to each other about
the companys innovativeness. Traditional media should not
be overlooked and be included in the Innovation Marketing
plan. However, we believe that the use of traditional channels should be more selective. Prestigious management magazines, as well as academic journals, provide, for instance,
the right communication link between the company, leading
JXUHV LQ LQQRYDWLRQ DXWKRULWDWLYHQHVV DQG WKH WDUJHWHG FRPSDQ\V LQQRYDWLRQ SUROH
To organise the work plan around these three streams
Content, Collaborators, Channels while keeping a constant eye
on synergies and consistencies within the 3Cs will help compaQLHV WR SODQ WKH ULJKW DFWLRQV WR UDLVH WKHLU LQQRYDWLRQ SUROH
CONCLUSION
Salesforce and Intuit have well understood that innovation
marketing is the ticket to leverage the innovation capabilities and performances built inside, which leads to even higher
Innovation Premiums.
Investors look for companies that are not only innovative,
but spark meaningful change in the industry and its innovation practices through thought leadership. If you are doing
it, then you should tell the world in a concerted and thoughtWKURXJK ZD\ 6KDUHKROGHUV YDOXH ZLOO EHQHW DV ZHOO DV \RXU
companys reputation. Innovation marketing is the new frontier for innovation. Why wait?
About the Authors
Alessandro Di Fiore DGLRUH#HFVLFRQVXOWLQJ
com) is the Founder and CEO of the European
Centre for Strategic Innovation (ECSI)
and ECSI Consulting (www.ecsi-consulting.
com), London.
Elisa Farri (left) is a Senior
Consultant at ECSI Consulting,
Milan. Andrea Segnalini (right)
is a Consultant at ECSI
Consulting, Milan.
Reference
1. http://www.forbes.com/innovative-companies/list/

THE BASF CASE


For its 150th anniversary, the worlds leading chemical company BASF
chose to combine celebration and co-creation. For co-creation, they
launched Creator SpaceTM, a program aimed at connecting innovationminded companies and individuals around the globe to address challenges of urban living, smart energy and food.
The program, still underway, is offering an opportunity to raise the
companys innovation profile. How? Lets see how BASF is attempting to leverage the four levers of our Innovators Thought Leadership
Framework:
1 Creator SpaceTM Tour. Throughout the anniversary year, BASF hosted
a global road show covering six mega-cities: Mumbai, Shanghai, New
York, Sao Paolo, Barcelona and Ludwigshafen (headquarters in Germany).
BASF showcased its innovation capabilities, provided insight and connected with experts, innovation leaders, journalists, policy makers and
other stakeholders globally. BASF was able to build a unique innovation
ecosystem in each city. In Barcelona, for example, BASF brought together more than 500 specialists in different areas of food consumption, including customers, suppliers, scientists and NGOs. Jointly they worked
together to respond to the challenge of feeding a growing world population through a sustainable supply of food. Overall, the Tour has offered
a great opportunity to extend the companys network and generate a key
innovation profile in each visited city and country.
2 Creator SpaceTM website. BASF has successfully leveraged online
media to create buzz around the program. Through a dedicated website,
BASF has gone beyond simply sharing information. The company has
driven multiple online discussions about ten challenges derived from
three innovation-related themes: urban living, food and smart energy.
Over 11,000 experts and interested minds worldwide have discussed
extensively about the proposed challenges. To foster the online discussions further, BASF has published a series of blog posts by employees,
including experts and top executives, thought leaders and researchers.
Information about emerging trends and innovation initiatives has taken
the conversation to the next level.
3 Business School Case on Creator SpaceTM. Convinced about the
uniqueness of the program, BASF has proactively scouted for top business schools interested in researching about Creator SpaceTM. After an
initial round of preliminary meetings, BASF accepted to collaborate with
an academic professor from a prestigious business school. With a case
study and a scientific management article under production, BASF is an
example of how a company can position itself as a case for innovation to
MBA students and global executives.
4 Creator SpaceTM publications. Due to its uniqueness and complexity, the program has gained increasingly media attention. In addition, insights from discussions and collaboration with experts and scientists have
generated compelling content. Indeed, BASF has effectively leveraged
this content and published it in the form of thematic White Papers. For
instance, in the Mumbai White Paper, BASF has consolidated the findings
on the citys water challenges and outlined a potential path forward as
discussed with numerous experts. This Paper has provided the basis for
further discussion, but also positioned the company as a reliable source
of ideas and an innovative partner to tackle Mumbais water challenges.

Those are examples of good activities which fits well the four levers
of our suggested framework. If those activities and eventual future ones
will have a concrete impact on the BASF Innovation Premium should be
monitored in few years from now, considering that the program is still
running. In fact, in our experience only companies with long term commitment and multi-year programs of Innovation Marketing are able to
generate sustainable Innovation Premium in their equity stories.

www.europeanbusinessreview.com

21

Innovation

Design, When Everybody Designs


Social innovation and design for a new economy
BY EZIO MANZINI

In a fast and profoundly changing world everybody designs. The result of this diffuse
designing is that society as a whole can
be seen as a huge laboratory in which new
social forms, solutions and meanings are
produced. These transformative activities
require unprecedented economic models
and courageous design choices.

y starting point is that in a fast and


profoundly changing world everybody
designs. Everybody means not only
individual people, groups, communities, companies and associations, but also institutions,
cities and entire regions; and design means
that, whether they like it or not, all these individual and collective entities are forced to bring
all their designing capabilities into play to devise
their life strategies and put them into practice.
The result of this diffuse designing is that
society as a whole can be seen as a huge laboratory in which unprecedented social forms, solutions and meanings are produced and social innovation is created.1
Social Innovation
In the boiling pot of contemporary society we
FDQ QG D JURZLQJ QXPEHU RI  FDVHV RI  VRFLDO
innovation. Examples of them can be found
everywhere: from how we deal with the most
general issues, to the ways in which we organise our everyday lives. If they often go unrecognised it is because, being radically new, they
doesn't emerge just where we are looking and
often we have to change our point of view
and approach them from a different angle. In

22

the complex and contradictory present society


these innovations can change the systems in all
the possible directions. Some of them, the ones
that are interesting for us here, can be seen as
promising steps towards sustainability and I will
refer to them as promising cases of social innovaWLRQ WRZDUGV VXVWDLQDELOLW\
With this expression I refer to all those new
ideas emerging over the last 10-20 years that
have led a growing number of people to act in
their everyday lives in ways that are promising in
terms of social and environmental sustainabilLW\ 2QH HOG LQ ZKLFK WKHVH LQQRYDWLRQV KDYH
led to particularly evident results is that of food
and the relationship between city and countryside. All over the world we have seen new
food networks being created based on organic

The European Business Review January - Febuary 2016

The result of this


diffuse designing
is that society as a
whole can be seen as
a huge laboratory in
which unprecedented
social forms, solutions
and meanings are
produced and social
innovation is created.

production and on seasonal and proximity consumption. Other examples could be: forms of
mobility in alternative to individually owned
cars; social services conceived as collaborative
activities; models of housing and neighbourhood living better geared to the current reality
of family life; activities aimed to redevelop the
social and environmental quality of cities. The
list could continue.
Looking at these examples more closely we
can see that, diverse as they are, they share a
fundamental characteristic: while solving speFLF SUREOHPV WKH\ DOVR SURGXFH VRFLDOLW\ DQG
thus contribute to rebuilding the social fabric)
and new qualities (thus contributing to the production of new value systems). In short, they
can be considered as experiments in new ways
of thinking and doing things: working prototypes of a sustainable everyday life.
Given this short overview on social innovation towards sustainability (to which, from here on
, ZLOO UHIHU WR VLPSO\ DV VRFLDO LQQRYDWLRQ , I can now
move to design and to describe the possible interactions between the two.
Diffuse and Expert Design
7KHUVWREVHUYDWLRQWREHGRQHLVWKDWDV,
YH
mentioned in the introduction, the social innovation I'm talking about can be described
as an interweave of co-designing activities. So
all those who foster social innovation, though
in very different and differently commendable
ways are also actors in complex, and frequently
contradictory, co-design processes. In effect, it
is easy to note that an awareness of the need to
adopt a design approach, and consequently also
design tools, has been spreading in recent years.
For example, the expression design thinking has
recently been meeting with success worldwide,
impacting on social enterprise and the institutions. However, we can go further.
This diffuse design (i.e. the design as a diffuse
human capability) is not the only form in which
WRGD\GHVLJQLVDSSHDULQJ:HFDQQGLWDOVRLQ
a second form, the one of the expert design: the
design performed by who has acquired special
skills and tool, becoming a design expert.
Precisely because everybody designs, it becomes
useful and even necessary for someone to help

them to do so, someone equipped with the cultural and practical skills required to integrate and
promote the design abilities of the others, the
non-experts. This means someone who is expert
in the various ways of stimulating and supporting wider, more complex co-designing processes.
Emerging Design
In a rapidly and profoundly changing world, the
activity conventionally known as design has
also changed. And like everything else, it has
changed much more than the cultural categories
normally used to interpret it have evolved.
To cut a long story short, we can say that
design as a discipline and profession, which here
we are calling expert design, emerged at the beginning of the last century in relation to the
changes brought by industry. The result was that
LWV LQLWLDO GHQLWLRQ ZDV WLHG WR ZKDW DW WKDW WLPH
was making it necessary: industry as it was then
and the products it was generating. So, design was
mainly seen as industrial design and was associated with mass-produced industrial products.

This diffuse design


(i.e. the design as
a diffuse human
capability) is not
the only form in
which today design
is appearing. We
can find it also in a
second form, the one
of the expert design.

Figure 1: A design modality map

design mode map


expert design

3
Design and
Technology
Agency

Design and
Communication
Agency

problem
solving

sense
making
Grassroots
Organisation

Cultural
Activists

2
diffuse design

A Design modes map can be built considering two main design dimensions:

the actors and competence axis, which moves from diffuse design to expert design

the motivations and expectations axis, which moves from problem solving to sense making.

By crossing these tow axes, we obtain four quadrants, each of which proposes a characterising
design mode. This map also indicates the various ways of putting designing capacity into action, the
different ways of designing and being designers.

www.europeanbusinessreview.com

23

Innovation

IF WE CLING TO THE DEFINITION OF


20TH CENTURY DESIGN, AS TOO OFTEN
HAPPENS, WE CANNOT HOPE TO
UNDERSTAND HOW DESIGN COULD
OPERATE AND PLAY A SIGNIFICANT ROLE
IN SOCIAL INNOVATION AND IN STEERING
IT TOWARDS A SUSTAINABLE FUTURE.
However, nowadays, the change has spread to
and impacted on not only products, but also services, organisations and a growing number of
everyday activities.
It follows that all these entities can no longer
be reproduced conventionally (i.e. by replicating and adapting the way it has always been
done). Now they require designing. Therefore,
they require that everybody participate in the
design process (where everybody designs) and,
in principle, they also call for the intervention of
design experts. The result of all this is what we
can call emerging design2 (see Figure 1: A design
modality map on the previous page).
Today, the basic features of emerging design
are already clear. And they are very different
from those dominant in the 20th century. The
main difference is that its focus has shifted
from objects (meaning products, services and
systems) towards ways of thinking and doing
(meaning methods, tools, approaches and, as
we will see, design cultures). In so doing, design
becomes an agent capable of tackling widely
differing issues adopting a human-centred approach: from traditional product-oriented
design processes to complex and often intractable social, environmental and even political
problems).3 A second main change, linked to
WKH UVW LV WKDW DOO GHVLJQ SURFHVVHV DUH GH IDFWR
to be considered co-design activities involving a
variety of actors: professional designers, other
NLQGV RI H[SHUWV DQG QDO XVHUV4
Now, given this overview on the recent evolution of the notion of design, I can go back
to the initial question concerning its relationship with social innovation. And introduce the
notion of design for social innovation (to be more

24

The European Business Review January - Febuary 2016

precise I should name it design for social innovaWLRQ WRZDUGV VXVWDLQDELOLW\. But lets assume that,
from here on, writing design for social innovation I will always refer to the one oriented
towards sustainability).
Design for Social Innovation.
From this introduction it is clear that the design
(both diffuse and expert) that is involved in the
social innovation processes is quite far from the
idea of design that has been prevalent in the
past century.
The recognition of this difference is crucial:
to understand the possible relationships between
design and social innovation we have to, as a
precondition, understand how much design has
changed in the past decades. If we cling to the
GHQLWLRQ RI th century design, as too often
happens, we cannot hope to understand how
GHVLJQ FRXOG RSHUDWH DQG SOD\ D VLJQLFDQW UROH
in social innovation and in steering it towards a
sustainable future.
:KHQ WKLV SUHFRQGLWLRQ LV JLYHQ WKH GHQLtion of design for social innovation becomes
quite simple: it is everything that design can
do to foster and support social innovation, to
make its results more widely accessible and its
meaning richer and deeper.
:LWK WKLV GHQLWLRQ LW DOVR EHFRPHV VLPSOH
to observe that design for social innovation is
not a new design discipline. Rather, it is a new
ability that can be extended to all the designing
actors: the ability to recognise the most promising social dynamics and work with them.
In this framework, very different kind of design
initiatives can be considered as design for social innovation. To give a general overview of them, we
can group them in three main typologies:
Design activism, when design experts actively
promote social innovation.
Design with communities, when design experts
collaborate with active groups of people in
making a given solution more accessible and
more capable of lasting in time.
'HVLJQ IRU IDYRXUDEOH HFRV\VWHPV, when design
experts conceive and develop material and immaterial artifacts capable of making a whole
eco-system more favourable for new initiatives
WRHPHUJHRXULVKVSUHDGDQGFRQQHFW

Emerging Economy and Design


To understand the design for social innovation potentialities we have to consider both the deep crisis
of the old business models and the signals of an
emerging one. An economy that (mainly) produces services, knowledge and networks of meaningful interactions. An economy that is neither a
utopia, nor a far off future possibility, but one of
ZKLFK WKH UVW H[DPSOHV FDQ EH UHJLVWHUHG WRGD\
and that, hopefully, will boom in the near future
becoming the economy of the 21st century.
Considering this emerging economy, and
looking at it with the lens of design, there is a lot
to be done. Collaborating with a multiplicity of
actors, design can play a role in the ecological re-orientation of the production and consumption system
WRLQFUHDVHLWVRYHUDOOHFRHIFLHQF\ LQWULJJHULQJ
and supporting the social production of services (to
increase social cohesion), in developing sustainable urban settlements (to face the new demands
and regenerate the existing cities and slums), in
developing regional eco-development programs (to
promote the sustainable use of local physical and
VRFLDOUHVRXUFHV $QGQDOO\LQIHHGLQJWKHVRFLDO
conversation on wellbeing (to generate a metanarrative capable to be the cultural framework of
all the previous threads of action).
These transformative activities, to take place,
require unprecedented economic models and
dynamic social innovation initiatives (including
here also cultural and institutional innovation).
And most importantly, they require courageous
design choices.
About the Author
Ezio Manzini has been working
LQ WKH HOG RI  GHVLJQ IRU VXVWDLQability for more than two decades.
Most recently, his interests have focussed on design for social innovation. In this perspective he started DESIS: an international network of schools of design
VSHFLFDOO\DFWLYHLQWKLVHOG
Presently, he is Chair Professor of Design
for Social Innovation at the University of the
Arts London (London), Honorary Professor at
the Politecnico di Milano and Guest Professor
at Tongji University (Shanghai) and Jiangnan
University (Wuxi).

His most recent book is Design, When


(YHU\ERG\ 'HVLJQV $Q ,QWURGXFWLRQ WR
Design for Social Innovation, MIT
Press 2015.
References
1. This paper is largely based on the book: Ezio Manzini,
'HVLJQ:KHQ(YHU\ERG\'HVLJQV (MIT Press 2015)
2. A very clear statement on the nature of emerging design,
and in my view of its present limits, was proposed in 2014
in a manifesto named DesignX, collaboratively authored by:
Ken Friedman (Tongji University, College of Design and
Innovation and Swinburne University Centre for Design
Innovation), Yongqi Lou (Tongji), Don Norman (University
of California, San Diego, Design Lab), Pieter Jan Stappers
(Delft University of Technology, Faculty of Industrial
Design Engineering), Ena Vote (Delft), and Patrick Whitney
(Illinois Institute of Technology, Institute of Design). http://
www.jnd.org/dn.mss/designx_a_future_pa.html (accessed
October 2015).
7KHOLVWRI DXWKRUVZKRFRQWULEXWHGWRVWDUWWKLVUHGHnition of design could be very long. My main references are:
Richard Buchanan, Wicked Problems in Design Thinking,
'HVLJQ,VVXHVQR 6SULQJ 1LJHO&URVV'HVLJQ
Thinking: Understanding How Designers Think and Work
(Oxford, UK: Berg, 2011); Tim Brown, Design Thinking,
+DUYDUG%XVLQHVV5HYLHZ -XQH 
4. Pelle Ehn, Participation in Design Things, 3DUWLFLSDWRU\
Design Conference Proceedings, (Bloomington, Indiana, USA:
6HSW   2FW    (]LR 0DQ]LQL )UDQFHVFD 5L]]R
Small Projects/Large Changes. Partecipatory Design
as an Open Partecipated Process, CoDesign, Vol. 7 no
3-4 (2011): 199-215; Pelle Ehn, Elisabeth M. Nilsson eds,
Making futures(Cambridge: MIT Press 2014).

www.europeanbusinessreview.com

25

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Strategy

Feature

Structure Follows Strategy


But May not Look Like You Imagined
BY JOHN SUTHERLAND

,Q WKH ZRUOG RI VWUXFWXUDO GHVLJQ RQH VL]H GRHV QRW W


DOO ,W SD\V PDVVLYH GLYLGHQGV WR JHW WKH VWUXFWXUH W IRU
WKH SXUSRVH DQG VWUDWHJ\ RI \RXU YHU\ VSHFLF EXVLQHVV
In this article, John Sutherland discusses the seven
structural archetypes and the six guidelines for structural design to make organisations more effective and
capable of delivering your strategy.

rian and his team had come up with their new strategy, after several months of vision setting, market analysis and detailed feasibility studies. Now he needed
to ensure he had a structure that was capable of supporting
the delivery of their new business plan. At this point many
UPV UHDFK IRU WKH WULHG DQG WHVWHG OLQH VWUXFWXUH EDVHG RQ
a clear hierarchy. But that would not have given Brian what
KH QHHGHG 6R KH VHW DERXW GHVLJQLQJ LW IURP UVW SULQFLSOHV
using the six guidelines laid out here.
1. Structure Follows Strategy
The purpose of structure is to organise your resources in such
D ZD\ WKDW \RX DUH DEOH WR GHOLYHU \RXU VWUDWHJ\ 6R WKH UVW
guideline is to ensure you have coherence of direction before
embarking on the journey to determine your structure. Tick in
the box for Brian and his team here. You must be able to articulate what the structure has to enable in order to build an effective organisation. If, for example, you plan rapid growth or
International expansion your structure must be able to scale

and cope with multiple time zones. If you need to bring in innovation, into a traditional structure, something will have to
VKLIW LQ WKH GHVLJQ WR HQDEOH LQQRYDWLRQ WR RXULVK RU LW ZLOO EH
suffocated at birth by bureaucracy. You could be forgiven for
thinking that structures are independent of strategy, when you
consider how many businesses trot out similar versions of the
traditional line structure despite having diverse aims and purposes. It saves brain work to reach for the usual line diagram
EXW WKH UHDOLW\ LV WKDW RQH VL]H GRHV QRW W DOO LQ WKH ZRUOG RI
structural design. It pays massive dividends to get the structure
W IRU WKH SXUSRVH RI \RXU YHU\ VSHFLF EXVLQHVV
2. Structure Must be Aligned with Values and Espoused Culture
<RXU VWUXFWXUDO GHVLJQ ZLOO OLH DW WKH FRQXHQFH RI \RXU LQtentions on strategy, values and culture. If your value statements are ever going to be more than just aspirational words
on a page, and you want to turn your espoused culture in
tangible behaviour, this will have massive implications for
your structural design work. If your stated value is to be
'customer focussed' but your organisational design is all internally orientated and lacks an external radar then you are
building a fundamental clash of values into your structure
and the outcome will be confusion. If you claim that your
workforce is your key asset, but your organisation is driven
by compliance and control, you will end up with dispirited
employees and high churn. Effective structures bring clarity
so that everyone can quickly understand how they are to act

Effective structures bring clarity so that everyone can quickly understand


how they are to act and relate to others, internally and externally.
www.europeanbusinessreview.com

27

Feature

and relate to others, internally and externally.


And they are consistent with the aims and purposes of the organisation, so that everything
resonates harmoniously. So how does your
VWUXFWXUHQHHGWREHH[HGWREHWUXO\DOLJQHG
with your values and emerging culture?
3. Size Matters
:LWKDVPDOOEXVLQHVVRI XSWRSHRSOHUPVQDWurally run as a family cluster. Once they reach 24-30
they start to operate as an extended family, and everyone still knows everyone. The big changes start
to kick in when the group size exceeds our ability
to function like a family. The more people, and the
more complex the interactions, the more you will
QHHG WR FOHDUO\ GHQH KRZ \RXU VWUXFWXUH ZRUNV
%\WKHWLPH\RXJHWWRSHRSOHWKHIDPLO\IHHOKDV
been replaced by multiple families, a tribe or has
transformed into one of the organising principles
discussed in the next section.
6RPH UPV DWWHPSW WR LPSRVH KHDY\ VWUXFWXUHVRQVPDOOUPVWKDWDUHVWLOODWWKH
IDPLO\
size' end of the spectrum, and this usually
leads to problems of unnecessary bureaucracy,
slowing down the organisation rather than enabling it. It is akin to trying on your dad's suit
when you are still a kid. There is no need to
complicate structures too soon.
7KLVDUWLFOHLVDLPHGDWRUJDQLVDWLRQVLQWKH
- 10,000 employee size. For much larger organisations, over 50,000, issues of control re-assert
themselves. Some attempt to tackle the problem
by imposing a strong command and control
culture, aimed at quality assurance, health and
safety and budget control. Others allow diviVLRQDO VWUXFWXUHV WR DGDSW WR VXLW VSHFLF ORFDO
needs whilst ensuring their reporting structures
are consistent and aligned.
4. The Organising Principle and
Structural Archetypes
Behind every structure is an inherent organising principle. As Yuval Harari helped us understand, in his wonderful book
6DSLHQV$EULHI 
KLVWRU\RI KXPDQNLQG
, as a species we are in a constant search for an organising principle around
which to cluster. Our rise to dominance, on this
fragile planet, is in large part attributable to our
ability to organise very large numbers of people

around a compelling idea, such as a belonging to


a tribe, region, political party or sporting club. It
gives us a massive advantage over other species.
Millions of people follow Manchester United
Football Club even though the majority seldom
get to Old Trafford to watch a match in person.
Organising principles are powerful catalysts and,
of course, are also active in our working lives.
So the fourth principle in structural design is to
match the organising principle of your structure
to the needs of your strategy. Here are seven archetypes to stimulate your thinking.

Wherever you
have a line
drawing with
a multitude of
dotted reporting
lines you can
safely assume
that hierarchy
is the wrong
organising
THE HIERARCHICAL LINE STRUCTURE
principle for
Let's start with the one we all know. Here the or- your firm. Time
ganising principle is positional authority. I am in
to move on.
charge of you and you are in charge of them.
The vast majority of organisations assume that
their new structure will be some variant of a hierarchical organisational chart. This became
popular in the days of the 'mill owner' industry, where there was a clear boss who (hopefully) knew more than everyone else about what
to do and how best to do it. But few organisations today have a boss who knows more or can
perform better than their 'subordinates'. In fact
many managers pride themselves on their ability
to hire people who are better than themselves.
Recently, line structures have developed
GRWWHG UHSRUWLQJ OLQHV LQ DQ DWWHPSW WR UHHFW
the more complex organising patters that are
actually at play than a simple command and
control chart can convey. Wherever you have a
line drawing with a multitude of dotted reporting lines you can safely assume that hierarchy is
WKH ZURQJ RUJDQLVLQJ SULQFLSOH IRU \RXU UP
Time to move on.

The Hierarchical Line Structure

CEO

TECH

OPS

SALES

FD

www.europeanbusinessreview.com

29

Strategy

Finance

les

ns

Sa

isio

Customer

Technical

Ope

n
keti

rati

ons

Mar

30

Customer Doughnut

Div

Whenever you
hear that an
organisation is
values led or is a
meritocracy you
know that there
are a set of agreed
guiding principles
that steer actions
day by day. It is
the constitution,
rather than the
hierarchy, that
provides the rules
of engagement.

THE PROJECT MATRIX


Matrix organisations tend to get a bad press
as it can be hard to make them work effectively when superimposed on a traditional
culture. But the key to unlocking their potential, at least in my experience, is to understand
that the organising principle behind them is to
focus on the larger scale projects that are required to give the customer what they need.
Arrayed around the matrix are the organisational strands of customer interface (North
plane), divisional strands of internal organisation (West plane), 'job family' strands of
skills clusters (South plane) and support functions (East plane). Once a customer project
KDV EHHQ LGHQWLHG WKH DSSURSULDWH UHVRXUFHV
to deliver that project are drawn from the West,
South and East planes for the life time of that
project, and then return to base awaiting the
next project. The senior team's role is to ensure
the constituent parts of the matrix remain just
ahead of the emerging customer's need.

The European Business Review January - Febuary 2016

Customers / Region

Divisions

Project Matrix

Support functions

THE CUSTOMER DOUGHNUT


Another popular concept, although more frequently described than actually used as the
basis for the true design. Here the organising principle is customer focus. Everything we
do needs to make sense of what the customer needs or can be encouraged to want, so we
put them in the middle of our 'doughnut' and
ensure that all are activities and resources are
co-ordinated around their discernible current
and future needs. Some organisations extend
the model to think about how to view all staff
as 'customers', with operations being the customers of the sales team, and so on.

Job families / Skills group

THE STAR PERFORMER CLUSTER


A variation of the matrix archetype is to cluster
resource around a small number of 'brilliant'
star performers, rather than client projects. As
in the matrix, the resources are used in an agile
and mobile way so that the unfolding needs of
WKH HQWHUSULVH FDQ EH H[HG DV WKH VWDUV
 ZRUN
evolves. This structural principle can often be
found in fast paced technology development
companies, such as software houses or hi-tech
HQJLQHHULQJ UPV ,W WHQGV WR ZRUN EHVW ZKHQ
the resources are all in the same building so they
FDQ PRYH XLGO\ EHWZHHQ
VWDUV
 DQG EHJLQV WR
creak at the edges when the work crosses locations and time zone.

Star Performer Cluster

THE CONSTITUTION
A number of organisational designs are, essentially, empowerment structures where an agreed set
of guidelines, values or meta processes become the
organising principle. This allows the work force
to crack on with tasks unimpeded by the need to
gain permission and sign off for their work. As
long as they abide by the constitution they are free
to act. A well worked through example of this

Feature

You are not finished when you have the structure design neatly laid out on a sheet of A3.
That is often just the start of a journey. The next step is to ensure the senior team understand
and abide by the inherent organising principles in the structure and 'walk the talk'.
is 'Holacracy', as described by Brian Robertson
(www.holacracy.org) but there are many others
based on the same principles. Whenever you hear
that an organisation is values led or is a meritocracy you know that there are a set of agreed guiding
principles that steer actions day by day. It is the
constitution, rather than the hierarchy, that provides the rules of engagement. What Robertson
has shown is how the system also leads to governance, which is a useful development.
At present some 'values led' organisations
also have a residual line structure, as if not able
yet to fully commit to this form of structure.
In most cases we have come across this has
only served to confuse people who, when push
comes to shove, revert to authority to satisfy
their felt need for control. If you are going for a
constitutional paradigm it needs to be the dominant and deciding force.

The Constitution
Values

Principles

Processes

CEO

THE AMOEBAE
How much do you remember from your biology
classes at school? The amoebae has the ability to
slowly change shape to suit its purposes and the
HQYLURQPHQWLWQGVLWVHOI LW$GDSWDELOLW\LI QRW
agility, is the organising principle here. There is
a nucleus, aka the senior team, that governs the
overall shift of evolution and rate of adaptation
not so fast that the inherent structure is lost
not so slow that it fails to capitalise on changes
in the environment. Because of the inherent

X[ LQ WKH VWUXFWXUH WKH DPRHEDH SULQFLSOH UHquires the organisation to have the ability to articulate its current and future structure requirements on a regular basis, usually once a quarter.

The Amoebae

THE FAMILY GROUPING


Evolution has hard wired us to do well in groups
of up to 12 as a family or 24-30 as an extended
family. So some organisations use 'family' clusters
as their organising principle. There may be a technology cluster and a key account cluster but each
has their own space in the organisation and develops an inherent sense of belonging. I work with
a market research organisation that is successfully structured in this way. Outside of the work
environment Churches, Mosques and Temples
often use this structure, so that each person is
a member of a study or house group, allowing
the overall size of the organisation to continue to
grow without losing the sense of family grouping.
The Family Grouping

www.europeanbusinessreview.com

31

Strategy

5. Descriptive and Prescriptive


7KHIWKVWUXFWXUDOGHVLJQSULQFLSOHLVWKDWWKHVWUXFWXUHKDV
to genuinely say something predictive about the observable
behaviours in your organisation. Anyone can draw a new
structural diagram, that is relatively easy, but to have that
DFWXDOO\LQXHQFHGD\E\GD\DFWLRQVDQGGHFLVLRQVLVPXFK
harder. Sometimes an organisation will base their structure
on the behaviours that actually take place in the real world of
work, rather than attempt to change culture. Petra's organisation was a case in point. They wanted to bring in a new CFO
DQGKDGKDGGLIFXOWLHVQGLQJDVXLWDEOHPDWFKWRWKHH[LVWing senior team as the ones they found were used to more
traditional structure. Although they had never articulated it
Petra's organisation was running as a matrix with a constitution, and had been doing so since the early days of its formation. Everyone knew the rules of engagement but they
were never written down. Fine when you have been there a
number of years but confusing if you are joining from a different mind-set. So we wrote down the key rules they actually ran the organisation by, which were to do with meritocracy (the best idea wins regardless of 'rank') and organising
around main projects. Once 'described' these rules were then
'prescribed', as the constitution and matrix through which
they worked.
,WIROORZVWKDWLQ\RXUVWUXFWXUDOGHVLJQZRUN\RXDUHQRWQished when you have the format neatly laid out on a sheet of
A3. That is often just the start of a journey. The next step is to
ensure the senior team understand and abide by the inherent
organising principles in the structure and 'walk the talk'. In fact
I usually suggest the senior team try the new structure out 'for
size' to see if they can live by it before announcing to the rest of
the organisation. Less embarrassing that way.

0RVWRUJDQLVDWLRQV,KDYHZRUNHGZLWKKDYHQHHGHGWRQG
a way to do both/and set clear parameters within which
people must work and free up the talent to produce excellent
results. Some structural designs emphasise control and compliance, such as the hierarchical line structures. Others emphasise independence, such as the constitution. But you are likely
to need both in your design. How will you reconcile the competing needs in your organisation, especially if you are a person
who has a felt need for control?

Integrating Your Structural Design


,QGLWKHOSVWRGUDZWKHGLIIHUHQWVWUDQGVRI VWUXFWXUDOGHVLJQ
out on one page, as we did with Brian's engineering organisation. The plan was to grow from 20 to PRYHUYH
years in a business focussed on providing commercially focussed technology development for its clients. The business
was now too big (over 100) to be a family structure; it had
become a tribe. He required clear governance but also needed
UHVRXUFHVWREHH[LEO\FOXVWHUHGDURXQGWKHLUVWDUSHUIRUPers. And he wanted to underscore the strong Northern pride
that was alive and healthy in the business. People needed to
want to work there. It was more than just a job.
Putting it all together Brian's call was to have a mix of a constitution and star performer clusters as their organising princiSOHV7KHFRQVWLWXWLRQIRFXVVHGDURXQGDVSHFLFPHWDSURFHVV
that applied to all internal and external projects, allowing each
person to know what stage gate they were at. The star performers worked on varied aspects of their clients technology develRSPHQWSURMHFWV$VEHWVDFRPSDQ\IRFXVVHGRQFRPPHUFLDO
technology development, Brian had designed a structure that
was inherently 'state of the art', matching the culture in his organisation. An old style line based hierarchy would simply not
KDYHZRUNHGIRUWKHP7KH\ZHUHWRRHHWRI IRRWIRUWKDW
6RZKDWDERXW\RXUVWUXFWXUH":KHQ\RXUHHFWRQKRZ
6. Compliance and Independence
One of the most intriguing aspects of structural design you are organised is it aligned with the needs of your busiPDNHV XS WKH QDO SULQFLSOH $OO VWUXFWXUDO GHVLJQV KDYH ness plan, values and culture? Most businesses have structo cope with holding opposite forces in balance. Some are tures that lag behind their strategy and have the net effect
well known, such as the tension between sales and opera- of slowing down progress against plan. Getting the strucWLRQVZKHUHWKHQHHGIRUH[LELOLW\RI VDOHVRIIHULQJLVKHOG ture exactly right is like taking the hand brake off. You will be
LQFUHDWLYHWHQVLRQZLWKWKHQHHGIRURSHUDWLRQDOHIFLHQF\ amazed at the difference it makes.
Others are less well articulated, of which the most common
in our experience is the compliance and independence co- About the Author
nundrum. The organisation needs its members to comply
John Sutherland is the Director of Strategic
with a number of key performance constraints, for example
Resource, which assesses and develops senior
health and safety policies and 'just in time' processes. Set
teams in order to support them achieving their
against that need is the fact that individuals usually want to
business plan. He is also the Director of the
feel empowered to achieve their objectives their own way,
Leadership Initiative, which provides bespoke
DQGQGWKHLUHQHUJ\LQKLELWHGLI 
PDQDJHG
WRRFORVHO\QRW LQKRXVH SURJUDPPHV IRFXVVHG RQ WKH VSHFLF VNLOOV UHonly being told what to do but also how to do it.
quired for each unique organisation.

32

The European Business Review January - Febuary 2016

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Strategy

CHANGE AS
STRATEGY
BY WALTER MCFARLAND

This article suggests that some traditional approaches to


organisational change are obsolete and recommends
a new approach focused on creating new types of organisations optimised for change and changing. These
change-focused organisations view change mastery as
a source for sustainable competitive advantage.

hat if organisations didnt fear change? What if


the mastery of organisational change was actively pursued viewed as a source of real competitive advantage?
The above questions, and others, were asked to a group
of executives from Fortune Global 500 companies as part of
research for the book Choosing Change1. The executives uniformly reported that learning how to perform organisational change efforts faster, better, and with fewer resources than
competitors would be a source of real competitive advantage.
The purpose of this article is to explore how organisations
create competitive advantage by pursuing a strategy focused
on change mastery.
change as a 3 stage process (unfreezing, moving, and refreez$UVWVWHSLQSHUIRUPLQJFKDQJHEHWWHULVWKLQNLQJDERXW ing) to be applied periodically by external experts caught the
it differently.
imagination of the world and focused scholarly attention on
the topic of organisational change. Further, Lewins perspecThinking Differently About Change
tive on the change process as linear, sequential, and periodHow should 21st century organisations think about and LFKHDYLO\LQXHQFHGWKLQNLQJIRU\HDUVWRFRPH:ULWLQJLQWKH
perform organisational change? Is change best viewed as a early 1990s, Kanter observed that some form of this approach
process outside of normal business operations that is period- dominated the thinking and practice of organisational change
ically performed by external change experts or is it better for the second half of the 20th century3. This process-based
viewed as something integral to business operations that is perspective continues today as evidenced by the websites of
continuously performed by everyone?
many leading management consultancies offering change
The former perspective dates back to the 1940s and the management services. Their continued reliance on some form
work of Kurt Lewin. Lewins2 depiction of organisational of a linear and sequential change process can be clearly seen.

The executives uniformly reported that learning how to perform organisational change efforts faster,
better, and with fewer resources than competitors would be a source of real competitive advantage.

34

The European Business Review January - Febuary 2016

processes, systems and culture with an overall strategy of


change. This approach integrates change into every aspect of
business operations and actively involves everyone.
The problem with this approach is that very little is known
about how to apply it in todays organisations. This article will
discuss how to create new types of organisations optimised
for change and changing. These organisations are referred to
here as change-focused ones.

From this perspective, successful organisational change


is about applying the same process in every change effort.
The problem is that this approach to organisational change
usually fails and has for decades4-7. One potential reason
is the global business environment and its growing level of
competition. Change has become increasingly complex and
nearly continuous. Disruptive changes are surprising whole
industries and different parts of the same organisation can
experience change differently. A linear, sequential solution to
these kinds of problems doesnt stand a chance.
7KHODWWHUSHUVSHFWLYHLVPRUHUHFHQWDQGLVLQXHQFHGE\WKH
growing emphasis on systems theory that views organisations
as highly complex, open systems in which every piece affects
every other. This perspective views constant change as a critical and necessary element in high performing systems. From
this perspective, successful organisational change is about continuously aligning all pieces of an organisation: structures,

Defining the Change-focused Organisation


The central idea behind a change-focused organisation
(CFO) is this: The volume and complexity of environmental
changes now overwhelm some traditional approaches to organisational change. Because these changes affect all parts of
the organisation and each part differently the entire organisation must constantly respond as a system.
The change-focused organisation views performing
change better as source of sustainable competitive advantage and seeks to focus the full power of the organisation on
achieving it. Said another way, in the CFO, change is strategy
and all parts of the organisation are aligned with and constantly reinforce it.
The idea of aligning all parts of an organisation with a
particular business strategy is not new. Organisations have
risen in prominence based on their abilities to align themselves with strategies such as least cost, customer service, innovation, speed, etc. In each case, the organisations structures, processes, systems and perhaps even their cultures were
aligned to continuously support and reinforce the strategy.
Over time and this is important the CFO learns how
to perform change better with each new change effort
IXUWKHU UHQLQJ LWV FDSDELOLWLHV DFURVV WKH HQWLUH V\VWHP
Change stops being seen as a threat and starts being seen as
fuel for continuous performance improvement. Regardless
of whether a market change is major or minor the changefocused organisation consistently responds faster, better, and
with fewer resources than its competitors generating real
competitive advantage.
The next section discusses ideas for transforming an organisation into a change-focused one.
Becoming a Change-focused Organisation
The executives interviewed had several ideas about how to transform an organisation into a change-focused one. Here are four:
1. Make change strategic
2. Create/Brand a cadre of change leaders
3. Build a change-enabled workforce
4. Ensure organisation-wide learning
Each idea is discussed below.

www.europeanbusinessreview.com

35

Strategy

MAKING CHANGE A PART OF STRATEGY SIGNALS AN IMPORTANT


SHIFT IN THE ORGANISATIONS STANCE REGARDING CHANGE.
THE ORGANISATION IS NO LONGER PASSIVELY WAITING FOR THE
NEXT MARKET SHIFT. IT IS DEVELOPING NEW CAPABILITIES TO HELP
PREDICT MARKET SHIFTS AND EVEN TO PROACTIVELY SHAPE THEM.
Make Change Strategic
Making change strategic is the central idea underpinning the notion of a change-focused organisation because strategy addresses the organisation as a system. By formally making change
a part of strategy, the organisation is declaring
that the ability to perform change more effectively than its competitors is viewed as a source
of competitive advantage and will be pursued.
In the CFO change is no longer merely important: it is strategic. Making change strategic has
several advantages:
It makes the priority of change clear to
everyone. By making change a formal part
of strategy, top management is making the
priority of organisational change clear to everyone. This makes it easier for the workforce
to understand and support organisational
change efforts particularly when the CEO
and senior leadership team are out front.
It builds clarity and consensus among the
leadership team. A common understanding
of what change means to us and how we
conduct it here is very important in uniting
leadership and the whole organisation
behind the strategy. When leaders have developed this consensus, any confusion and/or
disagreements about future change effort are
more easily resolved. The organisation stays
constantly focused on improving its capabilities to perform change.
It reduces fear of change and builds engagement. Making change a part of strategy
signals an important shift in the organisations
stance regarding change. The organisation
signals that it is moving from being reactive
to proactive. The organisation is no longer
passively waiting for and dreading, the next
market shift. It is developing new capabilities

36

The European Business Review January - Febuary 2016

to help predict market shifts and even to


proactively shape them. As importantly, it
is involving members of the workforce in
developing these new capabilities. The organisation is no longer merely reacting to change.
It is meeting change head on.
It improves performance on change
efforts. Participating in a change effort is no
longer just one more thing to do. It is the opportunity to work side-by-side with top leaders
on something important to the organisation.
Create/Brand a Cadre of Change Leaders
The executives interviewed uniformly cited
great leadership as the key ingredient in successful organisational change. In fact, they
often shared examples of how a great leader
made all the difference during a critical change
effort sometimes even saving the organisation. However, they noted that the quality
of change leadership was often inconsistent
across the change effort. The executives saw
real value in developing an organisation-specific brand for leading change and in training a
cadre of high performing change leaders over
time. They recommended these activities:
'HQHRUJDQLVDWLRQVSHFLFFKDQJHOHDGership competencies. This means identifying a set of change leadership competencies unique to the organisation and consistent
with its core values. Competencies can be informed by the change literature that is ones
that address recurring problem areas for largescale change efforts. For example, one recurring problem is the ability to actively engage
the workforce in the effort. A related competency might be the ability to do two things as
change leader: demonstrate high-level project
management competence and high-level talent

GHYHORSPHQW FRPSHWHQFH 7KH UVW DGGUHVVHV


such things as cost, schedule, and performance
of the change effort. The second addresses the ability to use change efforts to accelerate the development of the workforce. In this
way, change leaders are equipped to effectively
lead a current change effort while also building
more change capacity for the future.
Apply the new competencies to all leadership levels. The roles of change leaders
vary among leadership levels. For example,
senior executives may focus on identifying and leading the largest and most significant change efforts things that offer the
organisation the game changing opportuniWLHV 6LPLODUO\ PLGGOH PDQDJHUV DQG UVW OLQH
supervisors might focus on leading smaller
change efforts and on integrating change
leadership into all levels of the workplace.
As suggested by Tushman and OReilly9,
their continuous attention to change activities enables senior executives to focus on the
game changing opportunities.
Integrate the new competencies into the
overall leadership development program
and formally assess leaders on them. In
this way, change leadership becomes an essenWLDO HOHPHQW RI KRZ DQ RUJDQLVDWLRQ GHQHV
overall leadership and fosters a culture of
change leadership over time.
By taking the above steps, the CFO is able to
create a high performing cadre of change leaders
and use them for best effect. Decisions on leading
high priority change activities are informed by a
leaders preparation and proven performance
rather than by his/her availability. The quality of
change leadership improves over time.
Build a Change-Enabled Workforce
Building a change-enabled workforce means
training and empowering everyone over
time. Just as the CFO creates a leadership brand,
it creates a special kind of workforce one optimised for high performance in organisational
change. Several activities are particularly important in building a change-enabled workforce:
Use change efforts to accelerate workforce development. Change efforts provide
many opportunities for an organisation to

improve its performance, but a key one is the


opportunity to develop people. Adult learning theory notes that because change efforts
DUH YLHZHG DV VLJQLFDQW KLJKSULRULW\ DQG
unfamiliar events, people are particularly
open to learning during them10-11. As noted
earlier, the CFO uses change efforts to build
important new capabilities in the workforce.
Integrate change activities into day-today business operations. The change literature notes that the failure to engage the workforce is a key reason why change efforts fail.
One way the CFO addresses this is to integrate change activities into day-to-day work
activities and by empowering the workforce
to proactively engage in making changes that
improve performance. Although some organisations emphasise compliance in their
workforce, the CFO emphasises, seeks, and
expects everyone to actively address change.
Formally assess performance on change.
Ultimately, the CFO formally alters its performance management system to include assessment of change performance. This action
helps build a culture focused on change.
Ensure Organisation-Wide Learning
What sets the CFO apart isnt just that it does
different things but that it remembers lessons
learned about organisational change and constantly applies them to the organisational
system. Each change effort is more than a reaction to a market shift it is the next opporWXQLW\ WR UHQH VWUDWHJLHV VWUXFWXUHV SURFHVVes, systems and culture. These activities enhance
the learning process:
Create change plans that include metrics
for performance and learning. Change
efforts are assessed on their ability to quickly
respond to a market shift and their ability to
generate and use new knowledge about change.
Each change effort improves the change effectiveness of the organisational system.
Require change leaders to create, share,
and use new knowledge about change.
Change leaders are boundary-spanners and
role models each focused on assuring the
ZKROHRUJDQLVDWLRQJHWVPD[LPXPEHQHWIRU
every change.

4 IDEAS ABOUT
BECOMING A
CHANGE-FOCUSED
ORGANISATION:

1
2

Make change strategic

Create/Brand a
cadre of leaders

Build a changeenabled workforce

Ensure organisationwide learning

www.europeanbusinessreview.com

37

Strategy

organisational change obsolete.


The organisational environment of the 21st
century affects every part of an organisation simultaneously and often in different, and surprising, ways. Said simply, todays environment
affects the organisation in a system-wide manner
calling for a system-wide response. This response
demands the creation of new types of organisations optimised for continuous change. These
change-focused organisations view performing organisational change better, faster, and with
fewer resources as a source of competitive advantage and a focus of their strategies. These organisations use every change effort as an opportunity to continuously improve all parts of the
organisational system for change. Todays change
efforts build the capabilities needed to better
address tomorrows.
Rather than fear change, the change-focused
organisation meets change head on.
Employ communications programs (including robust social media) to constantly share new learning about change. New
learning is used to update all relevant parts
of the organisation to further optimise it for
change and changing.
Create new processes for remembering
what change activities worked best and
why. These change repertoires become the
starting point for the next change effort and
are constantly updated.

Todays environment
affects the organisation
in a system-wide
manner calling for a
system-wide response.
This response demands
the creation of new
types of organisations
optimised for
continuous change.

38

Conclusion
For several decades, change efforts of every kind
have under-performed, failed or made things
worse. Even more disturbingly, this trend does
not seem to be improving which argues for
a fundamental shift in how organisations think
about and perform organisational change.
Although there are myriad approaches to
change, evidence suggests that one approach
the process-based approach may be negDWLYHO\ LQXHQFLQJ RXU WKLQNLQJ DQG SHUIRUmance on organisational change. This approach
views change as a linear and sequential process
best performed periodically by external change
agents. The rise of the global economy with
its unprecedented competition and ever increasing complexity has made this solution to

The European Business Review January - Febuary 2016

About the Author


Walter McFarland is the founder
of Windmill Human Performance,
LLC, and an Associate Fellow at
Oxford University, Said Business
School. He is co-author of Choosing
Change, selected as a Soundview Best Business
Book of 2014 and as an $[LRP Silver Medalist.
References
1. McFarland, W. and S. Goldsworthy, Choosing Change. 2013,
1HZ<RUN0F*UDZ+LOO
2. Lewin, K., )URQWLHUVLQJURXSG\QDPLFVSDUWFKDQQHOVRI JURXS
OLIHVRFLDOSODQQLQJDQGDFWLRQUHVHDUFK Human Relations, 1947. Vol.
1: p. 143-153.
3. Kanter, R.M., B.A. Stein, and T.D. Jick, The challenge of organizational change. 1992, New York: The Free Press.
4. Beer, M., R.A. Eisenstat, and B. Spector, :K\FKDQJHSURJUDPV
GRQ
W SURGXFH FKDQJH +DUYDUG %XVLQHVV 5HYLHZ     S

5. LaClair, J. and R. Rao, +HOSLQJ HPSOR\HHV HPEUDFH FKDQJH
McKinsey Quarterly, 2002.
6. Cope, M., 7KHVHYHQ&
VRI FRQVXOWLQJ 2nd ed. 2003, London:
Financial Times/Prentice Hall.
7. Raps, A., ,PSOHPHQWLQJVWUDWHJ\6WUDWHJLF)LQDQFH  
p. 49-53.
0RUJDQ*,PDJHVRI WKHRUJDQL]DWLRQ([HFXWLYH(GLWLRQ 3rd ed.
2007, Thousand Oaks: Sage.
9. Tushman, M.L. and C.A. O'Reilly. Leading change and organizaWLRQDOUHQHZDO 2010. Harvard Business School: Harvard Business
School Press.
10. Knowles, M.S., (YHU\WKLQJ \RX ZDQWHG WR NQRZ IURP 0DOFROP
.QRZOHV DQGZHUHQ
WDIUDLGWRDVN 7UDLQLQJ  S
11. Mezirow, J., 7UDQVIRUPDWLYH GLPHQVLRQV RI  DGXOW OHDUQLQJ 1991,
San Francisco: Jossey-Bass.

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Strategy

What We (Think We)


Know May Not Be So:
How to Get (More of) What
You Want in Negotiations
BY MARGARET A. NEALE AND THOMAS Z. LYS

The results of empirical research on the


performance of negotiators offers many
VXUSULVLQJ DQG RIWHQ FRXQWHULQWXLWLYH QGings that are often at odds with the commonly held beliefs of most negotiators. In
this article, we discuss two counterintuitive
ways highlighted by empirical research that
will help you get (more of) what you want
in your negotiations. First, negotiators often
underestimate the power of the powerless
in negotiations and try to match the dominant behaviors of their powerful counterpart. Second, negotiators can use persons
which are seemingly adverse to their interests strategically.
1.The Curious Case of Not Having Power and
Still Getting (More of) What You Want
Not surprisingly, negotiators would prefer to
have more power to less. But are you really
doomed to getting less of what you want when
you are less powerful than your counterpart?
Probably the most straightforward reason for
differential power in negotiations is due to negotiators alternatives: what happens if no deal
were reached; how easy is it for you to simply
walk away from the current negotiation and

take your alternative instead. Decades of reVHDUFKKDYHFRQUPHGWKDWKHRUVKHZKRKDV


the better alternatives (i.e., can more easily walk
away) claims more of the available surplus in the
interaction.1 What choices do you have when
your alternatives are not particularly attractive
when you do not have the upper hand in a negotiation? Must you simply settle for less, sometimes substantially so?
By understanding and leveraging the paradoxical power of being less powerful, having
less power than your counterpart can be your
secret weapon. Consider that the amount of
power that a negotiator possesses dramaticalO\ LQXHQFHV WKH JRDOV WKH\ KDYH LQ WKH QHJRtiation. High power players are concerned primarily with value claiming (e.g., who gets what).
Low power negotiators realise that for them to
get (more of) what they want, they need to be
able to take advantage of the potential synergy
that exists between them and their counterparts.

By understanding and leveraging the paradoxical


power of being less powerful, having less power
than your counterpart can be your secret weapon.
www.europeanbusinessreview.com

41

Strategy

When compared to negotiations between individuals of equal power, those that were between
high- and low-powered counterparts create
more value and it is the low-power party who is
the engine for this value creation.2
It is not always obvious how powerful you
are compared to your counterpart in a particXODU QHJRWLDWLRQ 5HFHQW UHVHDUFK LGHQWLHV D
strategy that can help you get (more of) what
we want in your negotiations when it is not clear
who is more or less powerful.3 Powerful negotiators often exhibit dominant behaviours such
as expanding their body posture and taking up
more physical space, using gestures often, reducing interpersonal distances, and speaking in a
loud voice. In contrast, negotiators who are less
powerful typically express deference by making
themselves physically more compact, limiting
their physical gestures, maintaining interpersonal distances, and speaking softly.
When you encounter a negotiator who
behaves dominantly you may be tempted to
match your counterparts bluster with your own
dominant behaviours. While sometimes quite
tempting, you would be better advised to be disciplined by complementing your counterparts
dominance with deference. Matching dominance with dominance often increases the aggressiveness of both parties and leaves little
space for value creation. Both parties are simply
focused on claiming more.
In contrast, behaving in a complementary
fashion meeting your counterparts dominance
ZLWK \RXU GHIHUHQFH FDQ EHQHW WKH GLVFLSOLQHG
negotiator in surprising ways. Even though in
most situations, the dominant negotiator will get
more than her deferent counterpart, the deferHQW FRXQWHUSDUW FODLPV VLJQLFDQWO\PRUH YDOXH
when behaving deferentially than the value that
is ultimately claimed by a counterpart matching
dominance with dominance, with the increased
value claiming coming from greater value creation. So the pool of resources that is available for division becomes larger and the split
RI WKLVODUJHUSLHEHQHWVWKHGHIHUHQWQHJRWLDtor proportionately more. But the complementarity works both ways: If you negotiate with a
counterpart who is deferential, you are better
off responding more dominantly. More value is

42

Deference is not
yielding; it is an
active state of
cooperation and
agreeableness that
involves subtle
persuasion and
influence tactics
in the pursuit of
ones interests
while avoiding
direct conflict.

The European Business Review January - Febuary 2016

created and both you and she gets more than the
value that would have been available to two deferential negotiators.
But before you rush to apply this strategy, you need to consider a couple of important caveats. Deference is not yielding; it is an
active state of cooperation and agreeableness
WKDW LQYROYHV VXEWOH SHUVXDVLRQ DQG LQXHQFH
tactics in the pursuit of ones interests while
DYRLGLQJ GLUHFW FRQLFW 7KH FRPSOHPHQWDULty between a dominant and a deferent negotiator creates opportunities for successful coordination. Dominant negotiators are more likely to
express their preferences or positions while their
deferent counterparts, by asking questions and
making proposals.
Importantly, human beings naturally respond
deferentially to a dominant player or dominantly to a deferential player in cooperative social
settings. This dance of coordination is typically associated with increased liking and positive
emotions between the parties. As such, even if
the social setting is characterised by the mixed
motives of cooperation and competition the
hallmark of negotiated interactions a skilled
counterpart will do well to frame the overall
exchange as cooperative and complement her
counterparts dominance with deference or deference with dominance.
So the next time you face a potential titan in
a negotiation, you should consider using this negotiation jujitsu of power complementarity if
you want to claim more.
2. Sometimes Your Foes May Help You Get (More
of) What You Want.
A negotiators reservation price the bottom
line or the worst possible deal that the negotiator will accept is an incredibly strategic piece
of information. It is the least a seller is willing
to accept or the most a buyer is willing to pay.
However, while in a purchase the reservation
price is often indeed a price, that term is used
more widely, frequently referring to a basket (or
baskets) of characteristics that comprise the
worst deal one is willing to accept, the tipping
point between an agreement and an impasse.
Negotiators often query their counterparts,
asking for their bottom lines. Not surprising,

you would be well advised not to share your


true reservation price with your counterpart.
If your reservation price becomes known to
them, the most you can hope for is exactly that:
your bottom line. And they will be able to reap
the entire surplus (i.e., the difference between
your reservation price and theirs) available in
the negotiation.
Knowing the strategic value of the reservation price, negotiators who are asked to share
their bottom lines often respond with an answer
that is, in effect, a faux bottom line - one that is
much better than the one they would be willing
to accept. In fact, a negotiator might be able to
get an extraordinary deal if he were able to convince his counterpart that his reservation price
was just slightly different than the counterparts.
If an agreement were reached, the negotiator could essentially capture the entire surplus.
However, a counterpart is unlikely to believe
that a reasonable negotiator would share his or
her true reservation price. So, how can a negotiator convince his or her counterpart that the revealed bottom line is real?
The recent tug of war between Congress and
the Obama Administration regarding the proposed nuclear deal with Iran provides an interesting setting to explore such a situation.
$FFRUGLQJ WR RIFLDO DFFRXQWV WKH 2EDPD
Administration was close to agreement with
Iran when the Republican Caucus invited Israels
Prime Minister Netanyahu a staunch critic of
the proposed agreement to outline his objections in a speech to Congress. In addition,
Netanyahus speech was preceded by numerous
accounts in the press of how the two leaders disliked each other.
On March 3rd 2015, in a speech lasting almost
three quarters of an hour Prime Minister
Netanyahu outlined his concerns. Such an agreement he believed, would provide Iran with a
path to the bomb rather than assuring that Iran
would never develop nuclear weapons.
Consider the impact of Netanyahus speech
on Obamas position in the negotiation with
Iran. Obama would like to persuade the Iran
negotiators that his reservation price is more
extreme than it really it to get a better deal
from the US perspective. However, statements

What is one to do, particularly when facing


an impasse? Obviously revealing ones true
reservation price is not the answer because it
cannot be verified and, thus, is not credible.
An alternative strategy is to enlist an ally.
from the US negotiators about their bottom line
is likely not to be credible and Iranian negotiators are likely to believe that the US true reservation price is even more favourable to them
rejecting the US proposals and pressing for
a better deal. Too often this strategy increases
the likelihood of impasse, even when there are
agreements that exceed both parties true reservation prices.
So what is one to do, particularly when
facing an impasse? Obviously revealing ones
true reservation price is not the answer because
LW FDQQRW EH YHULHG DQG WKXV LV QRW FUHGLEOH
An alternative strategy is to enlist an ally. For
example, when contemplating purchasing an
expensive home, one could enlist one wealthy
ally (or even better several) to make a low bid
on the property only to walk away with much
fanfare when her (low) offer is not accepted.
Psychologically, such a strategy may create uncertainty in the sellers mind as to the true value
of the house, making them more willing to entertain a lower offer than they otherwise might
have considered.
Of course for such a strategy to work, this
ally cannot be easily associated with the negotiator. So, a statement by United States Secretary
of State John Kerry to the Iranian counterpart
that the US simply cannot accept this deal would
carry little credibility. The connection and the
interests between John Kerry and the US negotiators are too closely aligned.
For the strategy to work, the US would need
to enlist an ally whose interests are not so obviously aligned. So the spectacle in Washington
Netanyahu addressing a joint session of
&RQJUHVVDPSOLHGE\WKHKLJKO\SXEOLFDQLPRVLty between President Obama and Prime Minister
Netanyahu may have had the effect of credibly raising Irans assessment of the USs reservation price and, in the process, helped the US

www.europeanbusinessreview.com

43

Strategy

negotiators gain concessions from the Iranians


that they otherwise might not be able to secure.
And of course, the more President Obama and
Prime Minister Netanyahu appear adversarial, the
more likely Netanyahus intervention would help
the US obtain a better deal from the Iranians.
So the press reports on how President Obama
was offended by Prime Minister Netanyahus
interference in US politics, or the stories that
the Republican Caucus was out to make the
President look bad, or the analysis showing that
Netanyahus motives were simply to increase the
likelihood of his reelection, all increase the likelihood of the strategy working. So, too, did the
recent legislation that the agreement has to be ratLHGE\&RQJUHVVWKLVZDVVLPSO\LFLQJRQWKLV
strategic cake.
%XWWKHUHLVDQDOLURQLFWZLVWWR1HWDQ\DKXV
speech: It will increase the likelihood that the
Iranian parliament will ratify the treaty. The
reason for this is that often negotiators faced
with uncertainty of complex situations, turn to
their opponents reactions to assess how good a
deal they got. So if the Israelis (Irans self-proclaimed enemy) and the Republican Congress
hate the deal, it must be good for Iran.
Interestingly, these effects are not dependent
on what the Prime Ministers intentions were
whether he intended to help the US in the
Iranian nuclear treaty negotiations or to derail
such a deal from the perspective of negotiation strategy, Netanyahu strengthened the hand
of the US negotiators and increased the likelihood that Iran would ratify the agreement.

44

About the Authors


Margaret A. Neale
(left) is a faculty
member at the Stanford
University Graduate
School of Business and
Thomas Z. Lys (right) is a faculty member at
the Kellogg School of Management at
Northwestern University.
T
They
are the co-authors of Getting
0
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6HFUHWV
RI (FRQRPLFVDQG3V\FKRORJ\&DQ
+ <RX1HJRWLDWH$Q\WKLQJLQ%XVLQHVV
+HOS
D /LIH (New York: Basic Books.)
DQG
B iti h version of the book is published by
A British
3UROH %RRNV ZKLOHD'XWFKYHUVLRQ(Handboek
RQGHUKDQGHOHQ SV\FKRORJLVFKH HQ HFRQRPLVFKH WDFWLHNHQ
RPHONHVLWXDWLHQDDUMHKDQGWH]HWWHQ is published by
Maven Publishing.
References
1. Pinkley, R. L., Neale, M. A., & Bennett, R. J. (1994).
The impact of alternatives to settlement in dyadic negotiation. Organizational Behavior and Human Decision
Processes, 57(1), 97-116. Morris, M. W., Larrick, R. P., &
Su, S. K. (1999). Misperceiving negotiation counterparts:
When situationally determined bargaining behaviors are
attributed to personality traits. -RXUQDO RI  3HUVRQDOLW\ DQG
6RFLDO3V\FKRORJ\, 77, 52-67.
2. Mannix, E.A., & Neale, M.A. (1993). Power imbalance
and the pattern of exchange in dyadic negotiation. Group
Decision and Negotiation, 2, 119-133.
3. Wiltermuth, S.S., Tiedens, L.Z., & Neale, M.A. (in
SUHVV 7KHEHQHWVRI FRPSOHPHQWDULW\LQQHJRWLDWLRQV
1HJRWLDWLRQVDQG&RQLFW0DQDJHPHQW5HVHDUFK

The European Business Review January - Febuary 2016

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Risk

The Rationality of Risk, Part 3:


Rollercoasters, Burning Ships and the Heros Journey
BY CHRISTOPHER SURDAK

In part three of the series on The Rationality


of Risk, Chris Surdak gives some guidance
on making friends with risk. Loss, failure
and disappointment are a fundamental part
of risk, and they are the part that most of
us dont particularly care for. But, if you
arent facing the real possibility of negative
outcomes, are you really taking any risk at
all? And further, if you never take real risks,
what is the likelihood that you will generate
anything of real value?

n this third installment Id like to address


why certain leaders are willing and able to
take risks even after a history of losses. Ill
address why we celebrate these heroes even as
most of us would not make the same decisions
DVWKH\GLG$QGQDOO\,OOSURYLGHVRPHJXLGance for those who may be interested in embracing risk as part of their approach to business in
order to start their own heros journey.

WE HAVE MET THE ENEMY, AND HE IS US


The vast majority of business people I interact with hold a healthy fear of risk; indeed
they expend enormous amounts of time,
energy and money attempting to avoid it.

As I pointed out in my earlier installments,


western business people have been trained to
believe that risk is the enemy of commerce,
and that businesses should be able to produce
SURWVZLWKRXWWDNLQJULVNV,QHIIHFWWKLVLVD
belief in, and expectation of, free money. This
sounds good in fairy tales and governmental budget meetings, but it rarely survives the
harsh realities of the marketplace.
As I mentioned in part 1 of this series, riskless rewards are possible only when we are
taking advantage of new resources in new ways.
Humanity has followed a strategy of Discover,
,QOWUDWH([SORLW ',( IRUPXFKRI RXUKLVWRU\
and this is the basis of much of our success as a
species. Early in the DIE process it is possible to
make gains with little risk. However, as we fully
exploit a new resource, the low-hanging fruit
vanishes quickly, and we must climb to higher,
riskier branches in order to continue to eat.
THE NECESSITY OF FAILURE
Some of the most successful people in history
achieved success only after experiencing extremely large doses of failure. These people tried
something new, something big, something bold,
and something risky, but their efforts were met

Humanity has followed a strategy of Discover, Infiltrate, Exploit (DIE) for much
of our history, and this is the basis of much of our success as a species.
46

The European Business Review January - Febuary 2016

with the ugly side of risk, rather than the beautiful side that we universally celebrate. For most
people such failures strengthen their avoidance
of risk; eminently rational and Pavlovian. When
an action is met with a negative response the
brains in most of us are hardwired to tell us,
Dont do that again.
Fortunately there is a small portion of our
population whose brains are wired differently. These people are willing to accept risk and
loss again and again, without surrendering
their vision and without taking an easier path.
Something in them makes them continue to
strive for the rewards they see beyond all of
WKHQHJDWLYHVWLPXOLDQGWKH\FRQWLQXHWRJKW
through the urge to just give in.
If all of us were wired like this wed soon
EHQLVKHGDVDVSHFLHV$IWHUDOODYRLGDQFHRI 
risk is a survival instinct. But, when a small proportion of a population is willing to take larger
risks, absorb the costs associated with occasional loss, LEARN from these experiences and persevere in taking wise risks, the population as a
ZKROHEHQHWVJUHDWO\
Some people are successful without going
through this sort of Darwinian selection process,
but Id argue that such people are lucky, rather
than good. This leads to the old saying, Id
rather be lucky than good. I beg to differ. The
SUREOHPZLWKOXFNLVWKDWLWLVDFNOHEHGIHOORZ
one that may leave you at any time. Statisticallyspeaking, it is certain to do so. Luck is for the
young and the foolish.
Taking risks, accepting loss, and rising again
to the challenge is the stuff of legends. As a
species we celebrate those who survive this
process, because we know that most of us cant
and wont. From Odysseus to King Arthur, from
Rostam to Beowulf, we idolise those who take
the heros journey and win in the end; if only
because were not sure we could do so ourselves.

went through to achieve them. Examples of


these people include:
Steve Jobs, father of such dramatic failures as
the Newton, NeXT Computer and Macintosh TV.
George Washington, who lost nearly
HYHU\ EDWWOH KH IRXJKW LQ WKH UVW KDOI  RI  WKH
$PHULFDQ 5HYROXWLRQDU\ :DU DQG LQ WKH UVW
44 years of his life.
Albert Einstein, was a washed up physicist
who became a patent clerk in order to pay his
bills, right before he intuited General Relativity.
Winston Churchill, whose hubris led to the
horrible losses at Gallipoli in World War I and
whose humility and resolve led to Britains eventual victory in World War II.
Thomas Edison, who tried thousands of
different elements for his incandescent light
EHIRUHQDOO\QGLQJRQHWKDWZRUNHG
J.K. Rowling, who went from being penniless and on welfare to being one of the richest
women in the world in less than a decade.
Stephen King,ZKRVHUVWERRNZDVUHMHFWHG
by 30 different publishers before launching his
writing career (something I can well relate to).

Fortunately there
is a small portion
of our population
whose brains are
wired differently.
These people
are willing to
accept risk and
loss again and
again, without
surrendering
their vision and
without taking
an easier path.

MODERN DAY HEROES


There is no shortage of such people in more
recent history. These are people who have taken
great risks in their lives, failed, and nevertheless
were successful in the end. We celebrate them,
perhaps because we only acknowledge the beneWVRI WKHLUVXFFHVVHVDQGLJQRUHWKHSDLQVWKH\

www.europeanbusinessreview.com

47

Risk

IF YOU WANT TO BE A WISE RISK-TAKER AND MAKE GAMECHANGING BREAKTHROUGHS, A SURE SIGN OF SUCCESS IS
THAT MANY AROUND YOU DONT LIKE WHAT YOURE DOING
BECAUSE YOURE MAKING THEM UNCOMFORTABLE.
The list goes on and on. Naturally, for
each person who succeeds there are hundreds
or thousands who did not, which is why they
remain unknown to us. But, when someone
risks mightily, faces great loss, perseveres and
eventually wins, thats the stuff that moves us all.
It is these innovators, these risk takers, who
QGQHZZRUOGVIRUXVWRFRQTXHUWKURXJK',(
These people are the discoverers of new frontiers. They lead us into undiscovered countries
VR WKDW ZH PD\ LQOWUDWH WKHP DQG WKH\ VKRZ
XVKRZWRH[SORLWWKHPWRWKHEHQHWRI XVDOO
Somehow they are able to see through shortWHUPQHDUHOGULVNVHHWKHZRUOGKRZLWFRXOG
be, rather than how it is, and boldly lead us there.
They survive the losses that are necessarily part
of any meaningful risk, they learn from them,
and they push on through in order to eventually
receive their just rewards.
We idolise these people, and rightfully so. They
are a small minority of the human population
that creates vastly disproportionate value for the
rest of us. There is perhaps only one in tens of
thousands of us who willingly accepts such risks,
and only one in tens of thousands of those few
who actually succeed in the end. But thankfully,
this tiny fraction of our population keeps our civilisation growing, our lives more safe and secure,
and our world less risky for the rest of us.
A RECIPE FOR LEVERAGING RISK
If you have bought into the notion that nothing
great comes without accepting great risk, you
may then be compelled to ask, How do I do
this myself ? Im no scholar on the topic, although I too have had my share of epic failures in my career (two failed startups in my past,
along with a prior failed attempt at publishing
a book). But, if you analyse these people and
look at their life stories several common themes

48

The European Business Review January - Febuary 2016

present themselves. Though not comprehensive,


I think the following elements are key factors in
successful risk taking.

Get Comfortable with Discomfort


First and foremost, successful risk takers
are naturally uncomfortable with the status
quo. For whatever reason, for these people good
enough never is. They view the world not as it
is, but as it could be. Indeed, many of them view
the world as it SHOULD be, and then work tirelessly to make it so.
This world view necessarily makes one look
like a mal content, or at least someone not
willing to play along. There are many who have
power and privilege in the status quo, and theyre
not likely to suffer those who seek to change the
world around them. If you want to be a wise
risk-taker and make game-changing breakthroughs, a sure sign of success is that many
around you dont like what youre doing because
youre making them uncomfortable. To succeed
at this change thing you need to be comfortable
with discomfort; yours and others alike.
One of the best descriptions I have come
across to describe process is imagining that
youre on a roller coaster. As you go through the
ride you experience all manner of stimuli that
are designed to scare you. For some of us the
ride is terrifying. For others, its invigorating.
The stimuli is the same, its the response thats
different. If you can wire yourself to be motivated by risk youre much more likely to achieve
great results in the end.

Lead the Choir


As with any characteristic in a population,
tolerance for and comfort with risk follows
a normal distribution curve. Some of us are terULHGRI WDNLQJULVNVRWKHUVDUHHPSRZHUHG%\

and large the majority of us are in the middle;


not paralysed by fear of risk, but we certainly
dont actively seek it out either. It would seem
reasonable that risk-lovers and risk-haters would
not get along too well. They have completely opposite world views, and have completely different motivations when faced with the risk of loss;
RQHWRJKWWKHRWKHUWRLJKW0RVWRI XVDUH
somewhere in the middle.
Successful risk takers recognise that they are at
the far end of this continuum, and that there are
many other perspectives around them. Like a choir,
some will sing the high parts, others the low parts,
many others will be in the middle. The ability to
harmonise these different views behind a course
of action for all seems to be a key to success.
It would be easy for those open to taking
risks to dismiss those who advise against it. But,
those whom we admire for succeeding after
failure seem to understand that there is value
LQWKRVHZKRZRXOGUXQIURPDJKW<RXZLOO
never convince these people to be comfortable
with taking a risk, yet they are likely pointing out
potential costs associated with risk taking that
the risk-lover would not consider. Further, risk
takers who are able to articulate their vision to
the majority in the middle are able to lend weight
to their efforts, and become the compelling
heroes that the rest of us are willing to follow.
So, successful risk takers have a vision of the
world beyond the risk, articulate that vision to
those of us who are hedging our bets, and listen
to yet neutralise the voices of those who are naturally risk adverse.

Note that this doesnt mean you need to know


exactly what the rewards will be if you succeed.
Rather, you need to know that whatever is on
the other side of your risk taking is likely to be
worth the potential costs. When youre in the
'LVFRYHURU,QOWUDWHVWDJHVRI WKHKXPDQ',(
SURFHVVLWPD\EHGLIFXOWWRFKDUDFWHULVHH[DFWO\
what a better world may look like. However, it
should be reasonable to determine how much
risk to accept against the potential rewards.
When I was in elementary school I was taught
that when queen Isabella of Spain decided to
bankroll Christopher Columbus voyage to the
Americas, she took an enormous personal risk.
Certainly, hiring three sailing ships, hundreds of
crewmen and half-a-years provisions represented a substantial investment. And three or four
decades ago we were taught that Isabella had no
way of knowing if Columbus was right about a
westward route to China.

Successful risk takers have a vision of the world


beyond the risk, articulate that vision to those of us
who are hedging our bets, and listen to yet neutralise
the voices of those who are naturally risk adverse.

Decades later, we now believe that the reality


of this story is very different. There now appears
to be substantial evidence that by the late 15th
century China had already mapped much of
the new world and had shared this knowledge
with Western leaders (like the papacy and the
royal courts of Europe). Isabella wasnt taking
a gamble that Columbus expedition was going
Be Risky, Not Reckless
While it is not always obvious, there is a to sail off the edge of the world. She was taking
VLJQLFDQW GLIIHUHQFH EHWZHHQ ULVN\ DQG a calculated risk that the Chinese maps she had
reckless. Risky means taking an action where heard of were genuine, and that a whole new
the potential for loss is met or outweighed by world was waiting to be conquered, rather than
the potential for gain. Reckless is simply ignor- discovered. The distinction may be subtle, but
ing risk and acting without concern for poten- so too is that between risky and reckless.
tial gain. Obviously, we want to take our heroes
journey without being reckless, but how do we
Invest in the Boundaries
do this? Mostly, its about awareness. You must
Within the human DIE process, the greatcharacterise both what you stand to lose by
est chance for game-changing rewards
taking the risk and what the potential reward is moving between the phases. There is much
may be. Only then can you take reasonable to be gained in Discovery, but the risks are
rather than reckless risks.
rather high. It is not uncommon for those who

www.europeanbusinessreview.com

49

Risk

JXULQJ RXW KRZ WR LQOWUDWH WKH XVH RI  VRPHthing like the Internet into the marketplace (think
Cisco, Google, IBM, etc.) or how to exploit a resource like the Internet to create entirely new
value (Facebook, Twitter, Alibaba, etc.)

Photo: Mark Zuckerberg at G8


in Deauville, France.
The real opportunity for
making huge returns on risk
comes from moving from
Discover to Infiltrate, or from
Infiltrate to Exploit. Facebook
is an example of how to
exploit a resource like the
Internet to create entirely
new value.

Aim Small, Miss Small


Another lesson learned from these heroes
is that risk can be better managed when
managed in small amounts. In Homers Odyssey,
it took Odysseus ten years to return home after
the Trojan War. While he held to his eventual
goal of reaching Ithaca and his wife, along the
way he dealt with all manner of risks in a just-intime manner. Its great to know that you eventually want to get home, but to get there you better
be able to defeat the one-eyed Cyclops thats
about to eat you right now.
I was a spacecraft systems engineer early in
my career, working on a number of satellites and
VSDFHFUDIW6SDFHLJKWLVDQH[WUHPHO\ULVN\EXVLness where billions of euros and many lives are at
stake. While astronauts are perceived to be risktaking mavericks, rocket scientists are emphatically risk-averse. We used the phrase frequent, fast
failure to explain our approach to risk management. Whenever we were doing something new
we tried to break down the unknowns as much
as possible, and test those unknowns in order to
retire risk early, cheaply and in small ways.
This is nothing new, and we see it all around
us these days in rapid prototyping, pilots,
proofs of concept, etc. When trying something
risky, it is best to take the risk and its attending losses in small amounts, so that each loss is
not fatal. If you learn as you go, as Edison and
others did, you can actually resolve to the end
goal you seek faster, cheaper, better and with
less risk along the way.

discover new lands, new ideas or new technolRJLHVQRWWREHQHWWKHPVHOYHVIURPWKHLUGLVcoveries. At the other end are those who try to
further the Exploit phase, but they do so against
diminishing returns and falling margins.
The real opportunity for making huge returns
on risk comes from moving from Discover
WR ,QOWUDWH RU IURP ,QOWUDWH WR ([SORLW
Christopher Columbus didnt discover the New
:RUOGKHVWDUWHGLWVLQOWUDWLRQE\(XURSH7KHUH
is still controversy over whether Edison was the
UVWWRLQYHQWWKHOLJKWEXOEEXWKHZDVFHUWDLQO\
WKHUVWWRLQOWUDWHWKHPDUNHWDQGPDNHPRQH\
RQLW$QGFDSWDLQVRI LQGXVWU\IURPWKHV
didnt discover the processes for mass production
of steel, they didnt discover petroleum, and they
didnt invent the railroad or steam power. But,
ZKDWWKH\GLGZDVLQOWUDWHWKHJOREDOPDUNHWIRU
these technologies, and then exploited their use in
order to make themselves wealthy.
So, the message here is not to go and re-inRisk Big With Conviction
vent the Internet; we still dont know who did so,
By the same token, sometimes we cant
although were fairly certain it wasnt American
break down a big risk into a series of smaller
politician, Al Gore. Rather, the goal should be ones. Sometimes, the world that visionaries

When trying something risky, it is best to take the risk and its
attending losses in small amounts, so that each loss is not fatal.
50

The European Business Review January - Febuary 2016

see on the other side of a risk requires a big


gamble, a leap of faith. When this is the case,
the WORST thing that you can do is take a halfmeasure. In America we have the popular term
of being all-in, from the game of poker. No
one talks of being half-in, because half-in isnt
compelling. Half-in isnt motivating. Half-in isnt
heroic. When Cortez landed on the New World
he had the goal of conquering it for Spain. To
ensure that he succeeded, he burned his ships,
and stranded himself, and his men, on enemy
JURXQG7KDWFHUWDLQO\TXDOLHVDVDOOLQ
More modernly, Elon Musk, billionaire entrepreneur and founder of Tesla Motors and Space
X, faced a similar choice, and made a similar decision. In 2010, as Musk was trying to build Tesla
Motors into something greater than a niche car
boutique he literally ran out of cash. Legend
has it that he made an all-in bet, including all
RI  KLV DVVHWV WR NHHS 7HVOD DRDW 0XVNV ULVN
seemed to have panned out, as Teslas market
FDSLQHDUO\H[FHHGVELOOLRQ
When choosing to take an epic risk, act like it.
Frankly, the odds are against you; thats why we
call it taking a risk. But, when you do take such a
risk, and go all-in, it is likely that youll gain the
support of others, and tip the odds more in your
favour. Most of us feel compelled when we see a
hero struggling against the odds to achieve some
unlikely result; it is the stuff of countless books,
movies, TV shows and video games. Most of us
are wired to avoid risks, unless we are led to and
through them. When a leader appears to show
us the way many of us not only follow, we rise to
the occasion and achieve our own heros victory.
What is impossible for few, becomes probable
with many, and becomes inevitable with all. That
is how you turn risk in your favour.
THE END OF THE ROAD OF RISK?
I was compelled to write this series of articles
after literally hundreds of meetings with thousands of business and political leaders over the
past two years. These people were struggling to
meet expectations of riskless rewards, at a time
when many industries are at their end of their
DIE lifecycle.
Traditional, capital-intensive, bureaucratic organisations are being completely outmaneuvered

We need new ideas, new technologies,


new frontiers and new thinking in order to
reinvigorate humanitys DIE process, and
that necessarily means taking new risks.
by newer, smaller, nimbler organisations that not
only play by different rules, theyre playing entirely different games. New companies are using
the Digital Trinity of Mobility, Social Media and
Advanced Analytics to remove barriers to entry
and cause massive disruption throughout our
society. The equations of risk, and their input
factors, have completely changed for most organisations at a time when most business people have
been trained to avoid risk at almost any cost?
While humanity has managed to maintain the illusion of riskless rewards for a very long time, it is
and always was just an illusion. Many of the costs
that weve deferred along the way are now coming
due, and making those payments will challenge
our entire society. If we manage to get ourselves
RXW RI WKLV [ RQH WKLQJ LV FHUWDLQ $V (LQVWHLQ
famously quoted, We cannot solve todays problems with the same thinking that created them.
We need new ideas, new technologies, new
frontiers and new thinking in order to reinvigorate humanitys DIE process, and that necessarily means taking new risks. As the Digital Trinity
continues to drive change throughout our world,
risk avoidance is starting to look like the reckless
path. Conversely, a measured approach to taking
intelligent risks becomes the path to success.
About the Author
Christopher Surdak is an
Engineer, Juris Doctor, Strategist,
Tech Evangelist, 2015 Benjamin
Franklin Innovator of the Year,
and Honored Consultant to the
FutureTrek Community, Beijing, China. He has
recently accepted a new position as the Vice
President of Data Analytics for Oracle
Corporation. He is also the author of Data
Crush: How the Information Tidal Wave is Driving
New Business Opportunities, which is GetAbstracts
International Book of the Year for 2014.

www.europeanbusinessreview.com

51

Marketing

Soothe Your Senses:


A Multisensory Approach to Customer
Experience Management and
Value Creation in Luxury Tourism
BY KLAUS-PETER WIEDMANN, FRANZISKA LABENZ,
JANINA HAASE AND NADINE HENNIGS

52

The European Business Review January - Febuary 2016

A growing trend in luxury tourism is the


consumers desire for highest levels of customer service and full range travel expeULHQFHV WKDW FRPELQH UVW FODVV WUDQVSRUW
excellent accommodation and location,
gourmet dining, outstanding entertainment
and superior relaxation. As a consequence
to the rapidly evolving consumer demands
in a competitive business environment,
luxury hotels seek innovative ways to create
the ultimate guest experience and memorable holidays. Against this backdrop, the
article focuses on a multisensory approach
to customer experience management in the
domain of luxury tourism.

onsidered as one of the fastest growing


economic sectors in the world, the travel
and tourism industry is constantly evolving. Despite continuing recession in the western
world, the number of international travelers is
FRQWLQXRXVO\ LQFUHDVLQJ (YHQ IDVWHU WKDQ QDQcial services, transport and manufacturing, the
travel and tourism sector is forecast to continue growing at 4 percent annually.1 In particular, the upscale or luxury market of international travel and tourism is rapidly expanding. In this
context, luxury tourism is understood as travel to
exclusive tourist resorts, tailor-made packages, including
private jets, and an emphasis on comfort, service, relaxDWLRQ VXPSWXRXV TXDOLW\ DWWHQWLRQ WR GHWDLO DQG H[DFWLQJ
VWDQGDUG 0RUH LPSRUWDQW WKDQ WKH SULFH DUH WKH
ZLGHU YDOXHDGGHG HOHPHQWV WKH H[FOXVLYLW\ RI WKH H[SHrience, and above all, the uniqueness for the consumer.2
A growing trend in luxury tourism is the consumers desire for highest levels of customer service and full range travel experiences that
FRPELQH UVW FODVV WUDQVSRUW H[FHOOHQW DFFRPmodation and location, gourmet dining, outstanding entertainment and superior relaxation.
As a consequence to the rapidly evolving consumer demands in a competitive business environment, luxury hotels seek innovative ways to
create the ultimate guest experience and memorable holidays. In a multisensory approach that
promises the ultimate luxurious experience,
sensorial stimulation of the guests sight, taste,
hearing, smell, and touch is provided by the use
RI  DSSURSULDWH FRORUV WXQHV VFHQWV DYRXUV

Representing service excellence in a combination of


travel, accommodation, wining and dining, wellness and
events, more than other service industries, luxury travel
and tourism has the potential to stimulate consumer
emotional reactions in a holistic, memorable experience.
and materials. Against this backdrop, the article
focuses on a multisensory approach to customer experience management in the domain of
luxury tourism. In accordance to recent trends
in the upscale travel and tourism market, the importance of delivering a fully sensual client experience is presented as an opportunity for generating customer value.
Luxury Tourism From Decadence
to Exclusive Experiences
Taking into account the subjective and multidimensional character of the luxury concept in
general, the meaning of luxury in the tourism
sector depends on the subjective perception and
individual needs of the consumer as well. While
the luxury travel and tourism industry has formerly focused on materialistic attitudes, status
and decadent lifestyles, nowadays, authentic and
exclusive experiences are in the center of attention. Representing service excellence in a combination of travel, accommodation, wining and
dining, wellness and events, more than other
service industries, luxury travel and tourism has
the potential to stimulate consumer emotional
reactions in a holistic, memorable experience.
A useful approach is a multisensory marketing
concept as outlined in the following section.
Appeal to all Senses Multisensory
Communication in Luxury Tourism
Due to the rising number of brands and the convergence of product quality, it becomes increasingly essential for brands to stand out from their
competitors. Thus, marketing communication
needs to be more effective. An adequate approach
to better appeal to the consumer can be found in
multisensory marketing. According to Krishna
(2012)3PXOWLVHQVRU\PDUNHWLQJFDQEHGHQHGDV
marketing that engages the consumers senses and affects
their perception, judgement and behavior. So far, brands

www.europeanbusinessreview.com

53

Marketing

THE ENTIRE EXPERIENCE A COMPANY CREATES FOR ITS CUSTOMERS


IS NOT SIMPLY REPRESENTED BY THE PRODUCT OR SERVICE, BUT
INCLUDES THE WHOLE EXPERIENCE CREATION PROCESS SUCH AS
PRE-PURCHASE, MOMENT-OF-TRUTH AND POST-PURCHASE.

54

still predominantly focus on conveying advertising messages merely through the visual channel
and, if any, the acoustic channel. However, consumer perception evolves from the composition
RI DOOYHVHQVHV VLJKWKHDULQJWRXFKVPHOODQG
taste). Therefore, a holistic multisensory communication concept is needed. This enables not only
to exploit the potential of all senses separately
EXW DOVR WR EHQHW IURP PXOWLVHQVRU\ HQKDQFHment, i.e., the positive interaction effects between
the senses. So, communicating an advertising
message congruently through multiple senses will
strengthen consumers perception. Hence, using
DOO YH VHQVHV PD\ \LHOG WKH PD[LPXP LPSDFW
of communication. Especially with regard to the
luxury industry, having the focus on an exceptional brand identity, it is of major importance
to create a comprehensive and unique multisensory experience. In practice, a few luxury brands
have already quite successfully adapted this apSURDFKHJ%XUEHUU\E\LPSUHVVLYHDJVKLSVWRUH
openings, Rolls-Royce by interactive exhibitions
or Singapore Airlines by an overall multisensory
communication concept compassing stimuli of
DOO YH VHQVHV IURP WKH VWHZDUGHVVHV PDNHXS
WR D EUDQGVSHFLF SHUIXPH WKDW LV H[XGHG QRW
only in the cabin but also in hot towels etc. In
particular, luxury travel companies, and above all,
luxury hotels have to carefully set various sensory
stimuli, so that an extraordinary experience adGUHVVLQJ DOO YH VHQVHV RI  WKH FRQVXPHU FDQ EH
offered leading to superior customer experiences.

value aspects were hitherto neglected, businesses need a greater understanding of consumer behaviour. Consumers no longer merely buy
products and services, but rather pay for the
experience being offered. Therefore, the customer experience concept has gained increased
attention among marketing scholars and practitioners. A good experience is an excellent way
to add value to the customer and differentiate
from the competitors, as it affects, generates
and strengthens customer satisfaction, customer loyalty and contributes to repetitive purchasing.4 The entire experience a company creates
for its customers is not simply represented by
the product or service, but includes the whole
experience creation process such as pre-purchase, moment-of-truth and post-purchase.
The concept of experiential marketing has been
successfully applied to many businesses in different industries. Especially for luxury brands,
possessing the highest level of quality and symbolic value to the customer in all touch-points,
the adaption of this holistic approach is more
than suitable. As an example, luxury airlines, e.g.
Etihad Airways or Emirates, offering an excepWLRQDOSHUVRQDOWUHDWPHQWIRUUVWFODVVSDVVHQJHUVVXFKDVLQLJKWPDVVDJHVRUSHUVRQDOFKHIV
can be mentioned. In particular, experiential
luxury marketing can be found in the hospitality and tourism industry providing the highest
experiential products such as dining and staying
in a luxury hotel or visiting a hotel destination.

They will remember how you made them feel


Creating Memorable Customer Experiences
Traditionally, companies have focused on physical and functional aspects of products such as
quantity, quality, price or availability. However,
competing successfully in a global market requires more than a sole concentration on those
usual elements. As consumers emotions and

A Value-Based Perspective on Multisensory


Customer Experience Management
The orientation on customer experience as a
key component in luxury travel and tourism has
led to a shift in the concept of value creation.
Following the principles of experiential marketing, value is co-created by hotels and guests in
high-quality interaction processes. As illustrated

The European Business Review January - Febuary 2016

superior quality and excellent performance. A


hotel that claims to be in the luxury category
and promises superior travel experiences has to
deliver on this promise to its guest and has to
IXOOOWKHKLJKH[SHFWDWLRQVZLWKH[FHOOHQWIDFLOities, accommodations and the local tourism environment. Besides, reasoning that the service
industry is a people business, excellent service
means excellent personnel who anticipate consumer needs and are enthusiastic in creating
personal relationships and memorable brand
experiences from the guests arrival to departure. Due to the fact that luxury is a highly subjective concept, the individual value of luxury
Figure 1: Conceptual Model
brands represents a customers personal orientation toward luxury consumption related to
self-identity as well as materialistic and hedoSight Hearing Touch
Smell
Taste
nistic buying motives. Aspects such as customisation and individuality have particular importance in the context of travelling. Some tourists
are looking for rest and relaxation, others
prefer adventure and excitement. Luxury travelers have an especially high demand for perFinancial Functional Individual
Social
sonal enrichment, privacy and authentic experiences that are very special, unique and distinct
from mass travel and tourism. The passion for
the exceptional, personalised travel experience
can be seen in the desire for highly exclusive
destinations (e.g., private islands, villas, suites,
Sensory Affective Intellectual Behavioral
or a private beach, and pool) and personal services (e.g., a private chef, host, nanny or tour
guide). Finally, the social dimension of luxury
value addresses prestige orientation and status
,QWKLVFRQWH[WWKHQDQFLDOFRPSRQHQWRI  consumption. As differentiated the motives for
luxury value focuses on monetary aspects and the purchase of luxury have become, as diverse
prestige pricing as a signal for exclusivity and is the group of luxury tourists and travelers.
uniqueness. Even if the price may be a subordi- Covering multiple age ranges and family situanate criterion for luxury consumers, they want tions, the market for luxury travel and tourism
good (or better: excellent) value for money. targets highly heterogenic segments such as the
They are willing to pay a higher price, however, EXVLQHVVWUDYHOHUWKHKRQH\PRRQFRXSOHDIXthey know what they want and expect superi- ent families with children and adolescents, reor service in all respects. In a luxury travel and tirees some of them are wealthy, others are
tourism context, customers prefer to get their looking for a once-in-a-lifetime experience. In
money's worth with an all-inclusive package VXPUHHFWLQJWKHVXEMHFWLYHDQGPXOWLGLPHQcompared to a solution with extra charges for sional character of the luxury concept, the difadd-on-services such as internet usage, spa ferent dimensions of luxury value have to be
treatments and entertainment. Closely related addressed simultaneously in a sophisticated
to these expectations, the functional value di- PDUNHWLQJFRQFHSWWRIXOOOWKHOX[XU\FRQVXPPHQVLRQ UHIHUV WR WKH FRUH EHQHWV VXFK DV ers expectations.
Brand
Experience

Luxury Value
Perception

Multisensory
Marketing

in Figure 1, consumers evaluate products, services and experiences they are getting based on a
multifaceted spectrum of values. Especially in
the luxury travel and tourism market, where traditionally the price component has always reFHLYHGVSHFLFDWWHQWLRQ HJDVFXHIRUVWDWXV
prestige and value for money), it has been shown
that luxury consumers with different desires are
less driven by costs, but driven by the individual perspective on a multifaceted value composiWLRQWKDWLQFOXGHVQDQFLDOIXQFWLRQDOLQGLYLGXal and social components:5

Due to the fact


that luxury is a
highly subjective
concept, the
individual value
of luxury brands
represents a
customers
personal
orientation
toward luxury
consumption
related to selfidentity as well
as materialistic
and hedonistic
buying motives.

www.europeanbusinessreview.com

55

Marketing

The value-based orientation on multisensory


approaches and memorable customer experiences has an enormous potential, especially in the
luxury travel industry. Some high-end hotels are
DOUHDG\ TXLWH VXFFHVVIXOO\ RSHUDWLQJ LQ WKH HOG
of multisensory marketing. For example, the
Six Senses Group, obviously positioned by its
name, addresses the gustatory sense by locally inspired and sustainably sourced cuisine offering
an exceptional taste experience in unique backdrops. Moreover, an emerging trend in the luxury
hotel industry is given by signature scents. So do
Thompson Hotels, which spread their customdesigned perfume Velvet in rooms and open
spaces. Moreover, all elements in the Armani
Hotel are personally designed by Giorgio
Armani, so that visual and aesthetic qualities are
centered. In order to appeal to the acoustic sense,
the Burj Khalife, for instance, plays Zen ambient
relaxing music or Arabic sounds. For haptic stimulation, the Four Seasons goes for the communication of warmth through light, e.g. in terms of
phototherapy or a ribbon of 500,000 LED lights.
In addition, the interior is equipped with notions
of the surrounding natural area.

56

An emerging
trend in the luxury
hotel industry is
givenby signature
scents. So do
Thompson Hotels,
which spread their
custom-designed
perfume Velvet
in rooms and
open spaces.

The European Business Review January - Febuary 2016

For the creation of memorable experiences


to the customer, some luxury hotels have already
been updating programs to do so. For the implementation of a sensory experience, the Armani
Hotel Dubai works with delicate Armani fragrances across the hotel, exquisite and culinary food at the restaurant or panoramic views
from the rooms. To affect and stimulate customers' emotions, a hotel in Singapore has karaoke
screens in their limousines, which take the guests
from the airport to the hotel to elicit delight and
happiness. Impeccable services, 24-hour care
and amenities at Hamilton Island make sure
that guests feel absolutely best. Whether desert
hiking or downhill skiing offered at the Four
Seasons Hotels and Resorts, there are a lot of
activities and special programs people can enjoy
that will provide a physically active and memorable experience.
Conclusion and Outlook
The dream of luxury is shared on a global level
and refers to all categories of products and services. One industry where consumers have particularly high demands is the luxury travel and

tourism market. Being an escape from everyday


life, a holiday is often the once-a-year opportunity to relax and recover. Consequently, consumers
expectations are high in particular in the upscale
and luxury market where world-class service and
an outstanding accommodation experience are
expected. The luxury travel and tourism industry
has to balance the preservation of traditions and
heritage and the necessity to innovate according
to a contemporary understanding of the luxury
concept. In the rising tension between the claims
of EH WUXH WR \RXU YDOXHV and innovate or die, luxury
hotels have to create superior experiences and
memorable holidays. In a luxury context, sensory
stimulation is not a hunt for the next big thing, but
UDWKHU D FRQFHQWUDWLRQ RQ WKH VXEWOH UHQHPHQW
of colors, tastes, fragrances, sounds and textures
in an orchestrated holistic concept. Especially
in an age of information overload and sensory
overstimulation, a true luxurious experience provides a calming relaxation a perfect example is
the global trend of tech-free zones and digital detox
holidays. The primary goal of a value-based perspective on multisensory customer experience
management is to translate the brands true values
into a sensory customer experience that soothes
the senses and relaxes the soul.
About the Authors
Prof. Dr. Klaus-Peter Wiedmann
is a Full Chaired Professor of
Marketing and Management and the
Director of the Institute of
Marketing and Management, Leibniz
University of Hannover, Germany. He has many
years of experience as a management consultant
and top management coach, and takes a leading
position in different business organisations as well
as public private partnerships. Main subjects of research and teaching as well as consulting are:
Strategic Marketing, Brand & Reputation
Management, Corporate Identity, International
Marketing, and Consumer Behaviour.
M. Sc. Franziska Labenz is a
6FLHQWLF 5HVHDUFK $VVLVWDQW DW WKH
Institute of
Marketing and
Management, Leibniz University of
Hannover, Germany. Her main subjects of research and teaching as well as

Sensory stimulation is not a hunt for the next big


thing, but rather a concentration on the subtle
refinement of colors, tastes, fragrances, sounds
and textures in an orchestrated holistic concept.
management consulting are: International
Marketing, Marketing Strategy, Consumer
Behaviour, and Luxury Brands.
M. Sc. Janina Haase LV D 6FLHQWLF
Research Assistant at the Institute
of Marketing and Management,
Leibniz University of Hannover,
Germany. Her main subjects of research and teaching as well as management
consulting are: International Marketing,
Marketing Strategy, Consumer Behaviour, and
Luxury Brands.
Dr. Nadine Hennigs is an
Assistant Professor at the Institute
of Marketing and Management,
Leibniz University of Hannover,
Germany. Her main subjects of research and teaching as well as management consulting are: International Marketing, Marketing
Strategy, Consumer Behaviour, and Luxury
Brands. She is the author of several publications
on luxury marketing and in collaboration with
Prof. Wiedmann the editor of /X[XU\
0DUNHWLQJ $ &KDOOHQJH IRU 7KHRU\ DQG 3UDFWLFH at
Springer Science + Business Media.
References
1. World Travel & Tourism Council (WTTC) 2015. WTTC
Travel & Tourism Economic Impact 2015, available at: http://
www.wttc.org/-/media/files/reports/economic%20
impact%20research/regional%202015/world2015.pdf
2. Page, S.J. 20117RXULVP0DQDJHPHQW0DQDJLQJIRU&KDQJH, 3rd
ed. Oxford: Butterworth-Heinemann; Elsevier Ltd., Oxford.
3. Krishna, A. 2012. An integrative review of sensory marketing: Engaging the senses to affect perception, judgment
and behavior. -RXUQDORI &RQVXPHU3V\FKRORJ\, 22/3: 332-351.
4. Brakus, J.J., Schmitt, B.H., & Zarantonello, L. 2009. Brand
experience: what is it? How is it measured? Does it affect
loyalty? Journal of Marketing
5. Wiedmann, K.-P., Hennigs, N., & Siebels, A. 2007.
Measuring consumers luxury value perception: A crosscultural framework. $FDGHP\RI 0DUNHWLQJ6FLHQFH5HYLHZ, 7:
1-21; Wiedmann, K.-P., Hennigs, N., & Siebels, A. (2009).
Value-based segmentation of luxury consumption behavior. 3V\FKRORJ\ 0DUNHWLQJ, 26: 625-651.

www.europeanbusinessreview.com

57

Leadership

An Investor's Least
Favourite Statement

Oops, Wrong CEO


BY LESLIE PRATCH

It is possible to identify executives


who are likely to act with consistently
high integrity and who demonstrate
sound, timely judgment when they
occupy positions of power. These
executives as distinct from others
who have similar backgrounds and
WHPSHUDPHQWVKDYHVSHFLFunderlying motivations and coping tendencies.
Understanding active coping, as I
GHQHLWDQGPHDVXUHLWLVFHQWUDOWR
predicting leadership.1 Executives
can also learn how aspects of their
personalities and particularly their
coping styles might adversely affect
how they work and use that knowledge to make themselves (and their
colleagues) much more effective.

ffective leaders must meet challenges and resolve them productively, day after day, for many
years. They must constantly adapt
to the unforeseen and must mobilise, coordinate, and direct others. But
when hiring executives, how do you
know which candidates possess such
qualities? When they all look good
on paper, how do you make a choice?
Given the frequency of CEO turnover,
and the frequent cases of CEO failure

58

after long, successful careers in the


same place where they became CEO
(e.g., Jeffrey Immelt at GE, David
Pottruck at Schwab, Doug Ivester at
Coke), it's apparently not that easy. But
it can be done, by including an analysis of executives readiness to acquire
new skills and strategies for coping
with complexity and change in other
words, their active coping.
Active Coping is a Style of Approaching
Life, Baked into Who you Are
How a person approaches life's challenges develops as a result of nature
and nurture. Some people run from
problems, some lash out at others, and
some passionately wait and hope that
problems (or even opportunities) will
just go away.
Active copers, by contrast, are built
to be capable and eager to deal with
whatever obstacles and opportunities
they face. Active coping is being ready
and able to adapt creatively and effectively to challenge and change. Active
copers continually strive to achieve
SHUVRQDO DLPV DQG RYHUFRPH GLIFXOties, rather than passively retreat from
or be overwhelmed by frustration.
They move towards the problems and

The European Business Review January - Febuary 2016

opportunities with open hearts and


open minds.
In business, unexpected events
occur, for which no playbook has been
written. Active copers do not lose their
footing in such cases, but rather thrive
on the opportunity to seek out information about what is happening, rally
the right team, and learn as part of the
process of steering towards success.
Leaders with other personalities and styles may do as well in circumstances that can be predicted in
advance, but active copers are the best
people to have in place when the unexpected occurs.
Whereas active copers seek to confront and resolve, passive copers are reactive and avoidant. Passive coping is refusing to tolerate the full tension that a
situation imposes, for instance, reacting
EHIRUH WKH IDFWV DUH VXIFLHQWO\ XQGHUstood. Passive coping is retreating from
reality, tuning out information, and resisting change. Its dealing with minor
problems in order to avoid confronting the anxiety of major problems. In
a crisis, passive copers will be prudently hoping that the problem goes away,
or trying to do what they did before in
vaguely similar circumstances.

Leadership

Leaders with other personalities and styles may


do as well in circumstances that can be predicted
in advance, but active copers are the best people
to have in place when the unexpected occurs.

7 TRAITS OF
ACTIVE COPERS:

1
Awareness

2
Courage

3
Resiliency, toughness,
and the ability to learn
from experience

4
Energy, fortitude, and the
willingness to persevere

5
Resourcefulness

6
Decisiveness

7
Executing a Plan

60

Predictive Validity and Utility


Using the methodology that I have researched,
developed, tested, and validated at the University
of Chicago and in my practice,2 I have been assessing senior executives for public and privateO\ KHOG UPV IRU  \HDUV , KDYH DVVHVVHG RYHU
450 corporate executives and over 50 partners at
SULYDWH HTXLW\ UPV , NQRZ ZKDW PRWLYDWHV DQG
impedes business leaders and especially what it
takes to make it in the world of private equity.
My assessments have a documented predicWLYH YDOLGLW\ RI  7KDW PHDQV WKDW RYHU DOO
of the situations in which Ive assessed execuWLYHV DQG PDGH UHFRPPHQGDWLRQV LQ  RI
cases, the client who observes the executives
subsequent performance says that my analysis
and conclusions capture the key elements of the
persons performance and of the challenges of
working with that person.
In an assessment, I learn what conscious and
unconscious characteristics make the person
succeed or fail not just whether he succeeded in
the past. I come to understand how he approaches and manages (well or poorly) key relationships,
and the challenges in how he leads that he will
have to overcome, work around, or have other
people work. When a private equity sponsor has
me assess a CEO as part of due diligence, preor post-close, then I become a uniquely capable
resource for also monitoring and coaching the
companys most valuable human capital
Skills and Traits associated with Active Coping
Ive found in my 20 years working to evaluate
executives that active coping is an attribute of
a healthy personality structure. This means that
the activity is not always overt and observable;
sometimes it takes place internally, in decisions
PDGH YLVLRQV GHYHORSHG DQG FRQLFWLQJ GULYHV
resolved. An active coping stance, however,
often gives rise to certain observable traits and
skills. These should be sought out in anyone

The European Business Review January - Febuary 2016

being courted to run a business. They include:


$ZDUHQHVV Active copers are able to see
reality, including their own needs, capabilities, and limitations.
&RXUDJH Active copers are brave. They seek
out new experiences; they are not intimidated by challenges.
5HVLOLHQF\ WRXJKQHVV DQG WKH DELOLW\ WR OHDUQ IURP H[SHULHQFH Active copers, like all humans, make
mistakes. Life is too complicated to anticipate
every possible contingency. Active copers
regroup and recover.
(QHUJ\ IRUWLWXGH DQG WKH ZLOOLQJQHVV WR SHUVHYHUH
Active copers summon the energy to continue to move forward even under the most
trying circumstances.
5HVRXUFHIXOQHVV Active copers invent solutions
to problems by creatively pulling together the
resources they have at hand or by developing new ones.
'HFLVLYHQHVV Active coping gives a person the
IRUWLWXGH WR KDQGOH FRQLFWV DPRQJ FRPSHWing goals. Making a choice means giving up
an alternative. Active copers face that loss
and move on.
([HFXWLQJ D 3ODQ Active coping involves planning. Active copers anticipate, strategise, and
weigh the risks of potential actions. Then
they act. Active coping combines introspection and action.
These are the kinds of traits active copers
show and business leaders need to have for
dealing well with fast-changing and always uncertain situations.
Common Mistakes Employers Make When
Considering Candidates for Leadership Roles
A very common belief is that past performance
is the best predictor of future performance.
But all that past performance shows is that the
person was able to do what was demanded in
the past; it says nothing about what the person
could do with new challenges.
Another is hiring someone who looks like
me. People like people they can communicate easily with, and feel that a common background reduces uncertainty about who this
other person is which is not an effective way
to choose leaders.

$ WKLUG H[DPSOH LV QRW GHQLQJ ZHOO HQRXJK ZKDW D


company is looking for. You need to know the challenges that
the person is going to have to deal with. For example, many
investors do not have experience leading the sort of company
they have invested in, and so they lack a feel for the challenges of dealing with the rest of the management team, customers, and even the other investors.
:KDW DUH VRPH H[DPSOHV RI OHDGHUV LQ EXVLQHVV DQG HOVHZKHUH ZKR
seem to have excellent active coping skills? What about the opposite?
Its hard to tell from peoples public personas or even from
their actions whether they are active copers, but I will hazard
a guess about people whose public image seems consistent
with active coping.
Nelson Mandela decided to get smart rather than get
angry when imprisoned. He used the time to learn Afrikaans
to be able to understand the oppressors. He kept his eye on
his goal and was willing to switch tactics, embrace opponents,
invent new forms of interaction, and generally do what it
took to move forward and he did it all with style, charm,
and balance.
Lewis and Clark.,QWKHVHPHQKHDGHGZHVWIURP
6W/RXLVZLWKDJURXSRI PHQWRQGDZDWHUURXWHWRWKH
3DFLF7KH\KDGQRJRRGPDSVDQGOLWWOHLQIRUPDWLRQWRJR
on. Over a period of two years and a few months, they jourQH\HG VXFFHVVIXOO\ WR WKH 3DFLF DQG EDFN WKURXJK WHUULWRU\
OOHGZLWKSRWHQWLDOO\KRVWLOH$PHULFDQ,QGLDQV7KH\SUHSDUHG
well, but just about everything was unexpected. They succeeded, and only one member of the expedition died.
Jim Lovell, who commanded Apollo 13. Although the
safe return from space was clearly a group win, the crew was
a key part of the response. As Lovell explained, We were
given the situation to really exercise our skills, and our talents
to take a situation which was almost certainly catastrophic,
and come home safely.
In the world of business, Jim Collins put together his list
of the 10 greatest CEOs. Although he wasnt looking necessarily for active copers, one of his choices was Katharine
*UDKDP D WHUULF DFWLYH FRSHU ,Q  DV FKLHI  RI  WKH
Washington Post, she considered the risks of publishing the
Pentagon Papers, the leaked Defense Department study that
revealed government deceptions about the war in Vietnam.
If the Post published, it risked being prosecuted for theft of
government secrets, which, in turn, could doom its pending
public stock offering and other businesses. Graham wrote,
I would be risking the whole company on this decision.

Nonetheless, she approved publishing and the Post still had


an extremely successful IPO.
For non-active copers, we can certainly start with plenty
of executives who appear to have a narcissistic personality.
I won't name names but a quick Google search for narcissists and CEOs will show where others have made the
link. Narcissism can be extremely successful but extreme
narcissists are not active copers. Why? They lack empathy.
They are not seeing the reality of the world; theyre seeing
WKHZRUOGOWHUHGWKURXJKDYLHZRI WKHPVHOYHVDVWKHJUDQdiose center of the world, assuming that whatever action
they take will be praiseworthy.
Can Active Coping Be Learned?
Active coping is something that is learned over a lifetime.
It is something that someone can get better at, but the improvement process is slow, incremental, and mostly internal. It means learning much more about the ways you've
learned to protect yourself from what you fear by retreating, by lashing out, by neurotically doing X and then
choosing to abandon those techniques because there's a
better approach available.
Active coping is helpful wherever it's not likely that everything will go as planned that is to say, everywhere and anywhere. Active copers experience each twist and turn in life
even unavoidable losses such as the death of close relatives or
their own impending death as an opportunity as well as a loss.
With each new moment, active copers ask: What can I learn
from this event? How can I use it to strengthen my commitment to the ideals I pursue? What's really happening now, and

All that past performance shows is that the person was able to do what was demanded
in the past; it says nothing about what the person could do with new challenges.

www.europeanbusinessreview.com

61

Leadership

what is the healthiest response I can make?


Active coping is important not only for
Gender, Coping, and Leadership
leaders and companies evaluating people for
In our research, we found that women leaders need to be even better at
leadership positions, but also for leaders who
active coping than men to be seen as effective in their roles3 because a female
FDQ EHQHW IURP XQGHUVWDQGLQJ WKHLU FRSLQJ
leader faces certain higher barriers to reaching any goal than a male leader
style to improve their own performance.
does, and active coping is about overcoming barriers to goals. Specifically, a
Active coping lets a leader go farther and
woman will have a harder time getting and keeping followers than a man will.
faster more surely. Consider an analogy with
Here's why: A woman's followers will have mixed thoughts about her
a car. We can get where we need to go driving
when she is strong and directive, and mixed thoughts about her when she is
an ordinary, inexpensive car, and we can make
collaborative and interested in others. A man's followers, on the other hand,
it through life with a less than optimal coping
will laud him for being strong and directive, and give him a pass when he is
style. But to drive on curvy, treacherous roads in
collaborative and interested in others. It's not fair, but it's reality.
dark and foul weather, we need a superbly engiA female leader trying to achieve the same goal from the same starting
point as a male leader has a harder task, simply because of this tangle of
neered car, and that car will get us farther, faster,
attitudes, which stem from typical expectations about men, women, and
with less likelihood of accident or breakdown in
leaders. As a result, a female leader needs to be a better active coper than her
other situations. A strong framework of active
male counterpart would.
coping enables a leader to survive the rough
spots and also to perform better than others
would in ordinary times.
If youd like to improve your active coping,
some of the most important things to keep in References
Pratch, L. (2014). /RRNV *RRG RQ 3DSHU" 8VLQJ ,Q'HSWK 3HUVRQDOLW\
mind are:
$VVHVVPHQW WR 3UHGLFW /HDGHUVKLS 3HUIRUPDQFH New York, Columbia
(1) Know what you want; (2) recognise University Press.
sources of threats or frustration; (3) possess the Pratch, L. (2001). Assessing potential leaders of private equity
funded ventures.-RXUQDORI 3ULYDWH(TXLW\, 15-29.
psychological freedom to act take the action 3UDWFK/  7KHXVHRI
DFOLQLFDOSV\FKRORJLFDOPHWKRGRI 
that is in your own best interest, not the action assessment to predict management performance. Journal of Private
that feels easiest; (4) be ready to deal with resis- (TXLW\, 1-25.
Pratch, L., & Jacobowitz, J. (1996). Gender, motivation, and coping
tance and overcome threats; and (5) pursue what in the evaluation of leadership effectiveness. &RQVXOWLQJ 3V\FKRORJ\
you want in a way that is consistent with your Journal: Practice and Research  
Pratch, L., & Jacobowitz, J. (1997). The psychology of leadervalues and ideals.
ship in rapidly changing conditions: A structural psychological approach. Genetic, Social, and General Psychology Monographs,
123, 169-196.
About the Author
3UDWFK/ -DFRERZLW]-  ,QWHJUDWLYHFDSDFLW\DQGWKHHYDOLeslie Pratch is the founder and uation of leadership: A multimethod assessment approach. Journal
CEO of Pratch & Company. A clin- RI $SSOLHG%HKDYLRUDO6FLHQFH  
L., & Jacobowitz, J. (2004). Successful CEOs of private eqical psychologist and M.B.A., she Pratch,
uity-funded ventures. -RXUQDORI 3ULYDWH(TXLW\
specialises in helping private equity Pratch, L., & Jacobowitz, J. (2007). Optimal psychological autonoinvestors and management commit- my and its implications for selecting portfolio CEOs. Journal of Private
(TXLW\, 53-70.
tees and boards of directors of public and privately-held companies identify whether the exec- Endnotes
utives being considered to lead companies possess 1. In research funded by the University of Chicago Graduate School
RI %XVLQHVV,OHGWKHUVWV\VWHPDWLFHIIRUWWRLGHQWLI\LQDGYDQFH
the psychological resources and personality individuals with the psychological resources needed to be successful
strengths needed to succeed. In addition to her business leaders. This research established the ability of measures
consulting work, Leslie actively conducts research of active coping to predict leadership beyond conventional stanof chance occurrence among already high-achieving leaders
and publishes in peer-reviewed journals in the dards
HJ3UDWFK -DFRERZLW] :HVXEVHTXHQWarea of successful business leadership O\FRQGXFWHGWKHUVWHYHUHPSLULFDOVWXG\LQWRWKHSHUVRQDOLW\FKDUDQG SHUVRQDOLW\ DVVHVVPHQW +HU UVW acteristics of successful CEOs of private equity-funded ventures
noteworthy book, Looks Good on Paper?, 3UDWFK -DFRERZLW] DQGKDYHFRQWLQXHGWRUHQHRXUSUHGLFWLYHPRGHOWKURXJKRQJRLQJHPSLULFDOUHVHDUFKLQWKHHOG HJ
was published by Columbia University 3UDWFK -DFRERZLW] 
2. Pratch and Jacobowitz (1996)
Press in July 2014.

62

The European Business Review January - Febuary 2016

Active coping is
important not
only for leaders
and companies
evaluating people
for leadership
positions, but also
for leaders who
can benefit from
understanding
their coping style
to improve their
own performance.

Uncover what
will make a
senior executive
succeed or fail.
Past performance does not reliably predict future success.
Understand whether your key executives will successfully cope
with or fail to cope with unexpected challenges. Understand
if they will capitalize on or miss unexpected opportunities.
Understand their minds and how they work.

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www.pratchco.com

Negotiating Advice for Women:


The Problem-Solving Conversation

ou cant improve on a skill that youre


avoiding, says Wharton management
professor Nancy Rothbard. Many people
shy away from negotiations because they associate them
with conlict, but avoiding them means youll never get
better at it.
Rothbard tells executives in High-Potential Leaders:
Accelerating Your Impact and Womens Executive
Leadership: Business Strategies for Success to consider
changing this negative mindset negotiation as
confrontation to one that is positive. hink instead
about negotiations as problem-solving conversations.
his switch helps you engage with and practice them.
here are so many negotiation opportunities around us
many more so than we are aware of when we view
them negatively.
But these problem-solving conversations, says
Rothbard, shouldnt be approached haphazardly.
Preparation is key, she says. First, determine what
you want, what you need (your bottom line), and what
your alternatives are.
Once you understand yourself, you can then take
the perspective of the other party. What do they want?
What do they need, and what are their alternatives?
Rothbard notes that active perspective-taking involves
systematically thinking about and researching what
they have done in the past, what kinds of industry
information could shed light on their alternatives, and
what their competitors have done.
Above all, you need to avoid a fallacy its so easy
to fall into: projecting your desires on someone else
and assuming what you want is what they want. If you
do that, you start the conversation believing there is a

conlict: we all want the same thing, so there is a ixed


pie that has to be divided. hey may in fact have very
diferent priorities.
Job negotiations are a good example. You and your
employer both care about salary, but your employer
may care more about potential vacation days or other
beneits that are invisible to you. You may care more
about a start date or bonus. When your priorities difer,
you have tradeable interests, and there is a greater
possibility that you can both get something you want.
Shared interests, says Rothbard, can also be
challenging to see. Both parties can be so busy hiding
what they want that they dont realize they both want
the same thing. In a problem-solving conversation, you
need to create an atmosphere of trust in which you can
reciprocally get information on the table.

You cant always avoid


conflict in negotiations,
but its not mandatory.
Your mindset can make
an enormous difference.
Wharton management
professor Nancy Rothbard

01:30
00:45

Watch the videos today at:

www.WhartonWomensLeadership.com

Women and Negotiation


For women, the challenges can be more complex.
Women tend to be more apprehensive about
negotiating in general, says Rothbard. When we
talk about this in my session in Womens Executive
Leadership, we discuss how men and women use very
diferent metaphors for negotiations. Men describe
them as a ball game or a wrestling match, whereas
women say its like going to the dentist. Reframing
negotiations as problem-solving conversations helps.
Instead of expecting them to be confrontational,
they can approach negotiating as a collaborative
efort.
Citing research by Linda Babcock of Carnegie
Mellon and Hannah Riley Bowles of Harvard,
Rothbard explains that when women do negotiate,
they may be negatively perceived as not relational or
warm, and that can result in a backlash. Rothbard
tells participants in Womens Executive Leadership,
though, that the result is not inevitable. She
shares three techniques Bowles and Babcock have
identiied that can lead to more positive perceptions:
Invoke relationship: use we and us
language instead of I and me, and link
your request to a sponsor or another person
of higher status to provide legitimacy.
Frame things as a question: seek advice
rather than make a demand (how would
you suggest I go about this?)
Frame the negotiation as a skill-based
contribution: emphasize that what you
are negotiating for is beneicial to the
organization and that you are a positive
contributor.
Problem-solving conversations take work,
notes Rothbard. Before they begin, research and
preparation are important. And, for women, the
language you use and the frame you put around
the conversation can help you get what you want.
You cant always avoid conlict in negotiations,
but its not mandatory. Your mindset can make an
enormous diference.

Whartons Womens Executive Leadership program


runs April 48, 2016. For more information please
contact +1.215.898.1776 (worldwide) or
execed@wharton.upenn.edu, or visit:
www.WhartonWomensLeadership.com

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TO ASCEND THE MANAGEMENT RANKS

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office politics, the issues for women as executive leaders
continue to stir conversation and controversy. Women looking
to seize greater challenges need a full understanding of the
dynamics involved.
This program for executive women, offered by one of
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in recognizing leadership strengths and confidence in
understanding the building blocks of business acumen.
The program covers new ground based on the latest Wharton
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network of influential peers.

APPLY TODAY:

www.WhartonWomensLeadership.com

Female Leaders

Develop a Robust Female


Leadership Pipeline
BY ALEXIA VERNON

In this article, Alexia Vernon provides actionable strategies for organisations to


develop their next generation female leaders.
Grounding her recommendations in research
DQG UHDOZRUOG H[DPSOHV VKH GHP\VWLHV
what holds women back from positioning
themselves for senior leadership opportunities and what companies can do to ensure
WKDW TXDOLHG ZRPHQ GR QRW OHDN RXW RI WKHLU
SLSHOLQHV E\ PDNLQJ VLJQLFDQW VKLIWV LQ KRZ
they develop their high potential women.

hile there is ample evidence that companies across industries and sectors do
better when there are women in senior
leadership positions, unfortunately in Europe,
and even in the United States, the lack of female
corporate leaders is staggering. Only 3% of the
largest publicly listed companies in the EU have a
female CEO, and only 7% have a female chairperson of the board. Across the Atlantic, in the US,
women hold less than 5% of Fortune 500 CEO
roles and comprise only 19% of board seats.
When discussing this lack of representation,
the questions that often emerge are, not very
surprisingly, :K\ DUH WKHUH QRW PRUH ZRPHQ LQ VHQLRU
leadership roles? As well as, How do we create more
corporate female leaders?
When these questions are the focal point
for inquiry, the answers that emerge are often:
create more mentorship opportunities for

mid-level women, address corporate pay inequity, or engage in more diverse corporate leadHUVKLSUHFUXLWPHQWWROORSHQVHQLRUSRVLWLRQV
Rarely does the question Im more interested in
answering come up: :K\ GR VR PDQ\ H[SHULHQFHG
KLJKO\ HGXFDWHG ZRPHQ QRW EHOLHYH WKH\ DUH UHDG\ WR OHDG"
Why Dont More Women See Themselves
as Leaders?
In one of the most frequently referenced books
on women and work, Sheryl Sandbergs Lean In,
Sandberg points to the reality that while both
men and women experience self-doubt about
their abilities, for women the fear of being seen
DVDIUDXGLVVLJQLFDQWO\PRUHSURQRXQFHG$V
she reveals, Multiple studies in multiple industries show that women often judge their own
performance as worse than it actually is, while
men judge their own performance as better than
it actually isand in situations where a man and
a women each receive negative feedback, the
ZRPDQV VHOIFRQGHQFH DQG VHOIHVWHHP GURS
to a much greater degree.1
In their book How Remarkable Women Lead,
authors Joanna Barsh and Susie Cranston attribute this fear of stepping into leadership as
the damned-if-you-do, damned-if-you-dont
problem.2 Too many women who know they
want to lead have seen others who speak up
DQG RXW JHW EUDQGHG DV DJJUHVVLYH GLIFXOW
self-promoting.

3%
Only 3% of the largest
publicly listed companies in
the EU have a female CEO

7%
and only 7% have a female
chairperson of the board.

< 5%
Across the Atlantic, in the US,
women hold less than 5% of
Fortune 500 CEO roles

19%
and comprise only
19% of board seats.

www.europeanbusinessreview.com

67

Female Leaders

Current research
into womens lack
of representation
in business and
political leadership is
increasingly pointing
to unconscious
gender bias as a key,
contributing factor.

68

Current research into womens lack of representation in business and political leadership is increasingly pointing to unconscious
gender bias as a key, contributing factor. From
traditional male traits that are privileged over
female ones to male names, pronouns and interests used in conversation and company culture,
men and women are failing to see the presence
not only of women but also of the feminine.
And as a result, women are failing to see themselves in spaces that are marked male and masculine. Sadly, this bias starts early. In Harvard
Graduate School of Educations Making Caring
Common report, Leaning Out: Teen Girls and
Leadership Biases, Harvards research of approximately 20,000 students revealed that 59 percent
of young people surveyed preferred the idea of
a male student council leader to a female one.3
How Do We Give High Potential Women
What They Need to Succeed?
We can, and must, bring male and female leaders
together to call out and address gender bias,
overt or unconscious, wherever it exists. Even
more importantly, if we are truly serious about

The European Business Review January - Febuary 2016

OOLQJ RXU OHDGHUVKLS SLSHOLQHV ZLWK ZRPHQ


we must fundamentally alter how we prepare
women to lead as a result of these real and at
times self-imposed barriers. We must create
learning opportunities and learning environPHQWV ZKHUH ZRPHQ FDQ JDLQ FRQGHQFH DQG
competence in who they are as leaders in order
for them to learn how to lead their way.
This work happens best in single-sex environments where women are able to speak candidly about both the systematic and internal
gender struggles they encounter at work, in
the home and in their communities, avoid gendered stereotypes of what effective leadership
ORRNVOLNHDQGUHQHWKHFRPPXQLFDWLRQVNLOOV
needed to step into leadership.
The Sudikoff Family Institute for Education
and New Media, through collaboration with
UCLAs Graduate School of Education &
Information Studies, published a comprehensive study of how over 6000 female graduates of
single-sex secondary schools faired in college.
While the women consistently earned higher
SAT scores and felt more engaged in their
classes and their professors, what is perhaps

PRVWQRWHZRUWK\LVWKHGLIIHUHQFHLQFRQGHQFH
SHUFHQWRI IHPDOHJUDGXDWHVRI LQGHSHQdent single-sex schools rate themselves above
average or in the highest 10 percent for academic ability, compared to 75 percent of
women graduates of independent coeducational schools. And nearly 60 percent of women
graduates of independent single-sex schools rate
themselves above average or in the highest
SHUFHQWZLWKUHJDUGWRLQWHOOHFWXDOVHOIFRQdence, compared to 54 percent of their independent coeducational school counterparts.4
$QGWKLVFRQGHQFHVWD\VZLWK\RXQJZRPHQ
beyond their college years. In the US, graduates of
womens colleges and universities make-up more
than 20% of women in Congress, and they represent approximately 30% of Businessweeks list of
rising women in corporate America. Yet despite
the growing recognition that young women both
IHHOPRUHFRQGHQWDQGKDYHKLJKHUUDWHVRI DVpiration and achievement when they attend girls
schools, there hasnt been tremendous movement
to take these principles and apply them to developing professional womens leadership skills.
Womens Leadership Development
From Theory to Practice
To develop strong female leaders, participants
must be able to get up on their feet, put into practice what they are learning about themselves and
how to lead others, and receive real-time feedback
WRVROLGLI\DQGZKHQQHFHVVDU\UHQHWKHLUOHDGership skills. This is where most well intentioned
womens leadership development programs
fall short. Too many are built from conferences or mentorship programs where participating women are passive recipients of advice given
by others. Unfortunately, as we know from the
HOGRI OHDUQLQJDQGGHYHORSPHQWOHDUQLQJWUDQVfer does not happen effectively this way. While
expert leadership advice has a place, if high potential women are to believe they are capable of
leading, they need the rehearsal space to see their
leadership in action.
In McKinsey & Companys Remarkable
Women Program, participants have the opportunity to engage in experiential learning opportunities. Participating women are able to try out the
behaviors and skills they are learning in real-time

In the US, graduates of womens colleges


and universities make-up more than 20%
of women in Congress, and they represent
approximately 30% of Businessweeks list
of rising women in corporate America.
and receive coaching and feedback on areas where
they can improve. The curriculum is holistic in
addition to studying the art and science of leading
participants also develop their emotional intelligence, particularly in the area of self-awareness,
so that they can more effectively play to their
strengths, enhance their resilience, and overcome
their limitations. And, once mastering their own
self-leadership, more effectively lead others.
,Q,QXHQFHU$FDGHP\WKHZRPHQVOHDGHUship program that I lead, women from across industries and sectors have the opportunity to go
through a curriculum that develops their skills in
such critical leadership areas as identifying and
playing to ones strengths, developing ones interpersonal communication skills, public speaking, stepping into thought leadership, coaching,
QDYLJDWLQJWKURXJKGLIFXOWFRQYHUVDWLRQVIDFLOitating learning for others, persuasion and negotiation. While there are opportunities to learn
IURPDQGEXLOGPXWXDOO\EHQHFLDOUHODWLRQVKLSV
with program alumni and executives in the community who champion the program, the priority is for participants to role play the conversations, presentations and coaching and consensus
building skills they need to employ in their
work in simulated situations. Just like MBA programs at the Harvard Business School and IESE
Business School task their students with examLQLQJ GLIFXOW EXVLQHVV LVVXHV DQG GHYLVLQJ DQG
arguing on behalf of their solutions, womens
leadership programs must similarly utilise realworld scenarios and provide opportunities to
role play behaviors and communication.
What Executive Women Can Teach Us
As Ive created my own incubator for womens
leadership success, Ive become somewhat obsessed about examining what executive women
believe has contributed to their achievement. In

www.europeanbusinessreview.com

69

Female Leaders

Every single one of the executive women who I have spoken with sees herself
as the protagonist in the story of her life. These women believe that success is
the inevitable product of hard work and consistently tell stories and engage in
self-talk that sets them up to shift setbacks into catalysts for future success.
P\ GR]HQV RI UVWKDQG LQWHUYLHZV ZLWK ZRPHQ
in industries ranging from hospitality and technology to public relations and social enterprise,
four key themes have emerged.
First, every single one of the executive women
who I have spoken with sees herself as the protagonist in the story of her life. While some of
these executive women have impressive pedigrees, a few did not complete college. Others encountered teen pregnancy and in some cases grew
up economically disadvantaged. Nonetheless,
these women believe that success is the inevitable
product of hard work and consistently tell stories
and engage in self-talk that sets them up to shift
setbacks into catalysts for future success.
Second, each woman spoke of her success as
the byproduct of the people in her work life
people senior, lateral and junior. All report benHWWLQJ IURP UHODWLRQVKLSV ZLWK PHQ ZKR KDYH
championed them in their careers, and all spoke
about developing teams whose collective success
enabled their individual success.
Third, each woman believed a primary contributing factor to her success was her ability to
respond effectively to feedback. Whether feedback was solicited or thrust upon them, whether
it was in praise of their work or critical of it, each
interviewed woman spoke about her ability to
receive the feedback with little to no emotion and,
DIWHU UHHFWLRQ DSSO\ LW ZLWKRXW SHUVRQDOLVLQJ LW
Fourth, each woman spoke about times in
her career where she was uncomfortable. From
salary negotiations to project pitches to addressing boards to being the dissenting opinion on
a big decision, each spoke about her ability to
accept that discomfort is part of leadership and
had cultivated the ability to be comfortable with
being uncomfortable.
Where Do We Go From Here?
While more and more organisations are recognising that their senior leadership is

70

disproportionately male, whether organisations will make the right investments to create
a pipeline that empowers women to lead is less
clear. For companies who want to set their high
potential women up for success, its important
to prioritise three key things. Womens leadership development should happen in single sex
environments. It should incorporate opportunities to develop real-world leadership skills
WKURXJK FDVH VWXGLHV DQG UROH SOD\LQJ GLIFXOW
situations. And, just as importantly, it needs to
address inner work as much as outward leadership. From arguing on behalf of an idea to
GHYHORSLQJ PXWXDOO\ EHQHFLDO UHODWLRQVKLSV
from being comfortable being uncomfortable
to seeing ones self as the protagonist in her
career and in the story of her life, women are
hungry for leadership development opportunities that are as holistic as they are practical.
About the Author
Alexia Vernon is the Founder and
'LUHFWRURI ,QXHQFHU$FDGHP\D
womens leadership development
program based in Las Vegas,
Nevada, USA. Branded a Moxie
0DYHQE\WKH:KLWH+RXVH2IFHRI 3XEOLF
Engagement, Alexia is an in-demand keynote
speaker, trainer and consultant on developing
next generation female leaders. Alexia has been
featured by media such as CNN, NBC, the Wall
Street Journal, Inc., and Forbes.
References
1. Sandberg, S. (2013). Lean In: Women, Work, and the Will to Lead (New
York, NY: Random House) p. 29.
2. Barsh, J & Cranston, S. (2009). How Remarkable Women Lead: The
Breakthrough Model for Work and Life (New York, NY: Crown) p. 197.
3. Harvard Graduate School of Educations Making Caring Common
Project (2015) Leaning Out: Teen Girls and Leadership Biases. http://
VLWHVJVHKDUYDUGHGXVLWHVGHIDXOWOHVPDNLQJFDULQJFRPPRQOHV
mcc_leanout_report.pdf.
4. UCLAs Sudikoff Family Institute for Education and New Media
(2009) Women Graduates of Single-Sex and Coeducational High
Schools. https://sudikoff.gseis.ucla.edu/archive/pdfs/genderstudies/
Summary_SingleSexEd_Sax.pdf.

The European Business Review January - Febuary 2016

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Management

REMOTE TEAMS:
Managing Attitudes, Not Activity
BY DREW GURLEY

locations? And, what if those team members


dont even work for you?
Thats the situation for my company. I am cofounder of an independent life, health and retirement agency in the United States. We have
more than 600 agents in 25 states and the vast
n its most simple form, managing a team has majority are independent business owners who
represent insurance products from many comtwo components: functional and attitudinal.
Managing the functional components panies including some from my company,
of a team is simple: It is smart people follow- Redbird Advisors. It is my job to make sure they
ing good process to meet clear goals. There are sell something represented by Redbird.
Heres the kicker (and the crux of this story):
work plans, status meetings, face time with team
members, ongoing critiques and so on. Im not With minor exception, Ive only met a few of
saying this is easy, but results are pretty predict- our agents face to face. Thats our business
model. We recruit independent agents who
able if you follow this approach.
Managing the attitudes of team members already have a vision of what they want and are
is an entirely different challenge. Its the dif- looking for partners like Redbird to help faciliference between share of mind and share of tate their dreams, not the other way around.
One of our best agents run a two-person
heart. You have their bodies but have you captured their commitment? Are they enthusias- agency in Virginia. I typically speak with him
tic? Does their enthusiasm rub off on others? I daily, sometimes multiple times a day. Recently
EHOLHYHWKDWDWWLWXGHVDUHWKHFODVVLFDW- I was distracted by another project and had not
WLWXGHVLQXHQFHSHUFHQWRI WKHHIIRUWDQG spoken with him. Toward the end of the day
he called and asked if everything was all right.
SHUFHQWRI WKHRXWFRPH
Not all teams are created equal. Teams in He wanted to know if something was wrong
the same location have a great advantage; the because I had not called him. It doesnt get any
team leader can both see and feel how the better than that.
To the vast majority of our agents Im a voice
team is performing and often take action on
issues much faster. But, what if team members and an email address, imploring them to sell my
are in different locations? What if the entire products. They likely have a half dozen or more
team is remote and all members are in different people like me pounding on them as well. Im

Managing remote teams is tricky. If attitude is the icing, function is the cake. In
this article, Drew Gurley discusses why
we should manage attitudes within remote
teams and not their activities.

Managing the
attitudes of
team members
is an entirely
different
challenge. Its
the difference
between share
of mind and
share of heart.

www.europeanbusinessreview.com

73

Management

can have a great conversation with a prospective


agent and then two hours later they are totally unresponsive to email or phone calls. In the past
I would have chased them for several days. No
more. And, for the agents that do respond, typically by email, we have no patience for sloppiness.
)DWQJHUVRQDVPDOONH\ERDUGDUHQRH[FXVH
If they cant communicate then they arent
for us.
Establish Expectations
We live by the motto: If it isnt written down it
IDFHGZLWKWKHGLIFXOWWDVNRI WU\LQJWRLQXHQFH doesnt exist. Agreeing on expectations up front
individuals who dont really know me and dont heads off many downstream problems. We cant
have to listen to me. But, they are our version of obligate an independent agent to do anything
they dont want, but we can create an air of proa team and they need to be remotely managed.
We believe the functional things are table fessionalism that the right agents will appreciate.
Our company has developed several proVWDNHVOLNHFOHDQRRUVLQDJURFHU\VWRUH,I 
you cant do these then the greatest attitudes in prietary programs in which we hold agents acthe world wont matter. We spend most of our countable for performance just like in a captive
time focused on the attitudinal aspect by trying environment. Our typical agreement for indeto be top of mind and encouraging agents to pendent agents contains performance goals,
see us as a valued partner we want to be the roles and responsibilities (including Redbirds)
UVW SODFH WKH\ WXUQ OLNH RXU DJHQW LQ 9LUJLQLD and a non-disclosure clause which helps protect
our intellectual capital.
Following are a few ways how we do that.
Some agents will have nothing to do with
agreements by rationalising thats why they
Be a Picky Eater
We have become very selective as weve grown EHFDPHLQGHSHQGHQWLQWKHUVWSODFH7KH\VHH
older. In the early days of our company we were them as negative. We think of it just the opsusceptible to being sold by agents. They posite: the agreement commits both sides to
would regale us with their sales conquests and putting out their best effort. While an agent can
intense desire to work with us. Ive got some simply walk away from our agreement with no
risk, most dont.
swamp land in Florida
For an agent to become a part of Redbird
today they must prove a track record of sales, Over Communicate
must already be independent and, possibly So much of what we see and read on the Internet
most important, they must demonstrate strong WRGD\ OOV VSDFH QRW PLQGV 7KRVH OHDVW TXDOLHGWRFUHDWHFRQWHQWDUHRIWHQVKRYHGLQWRWKDW
writing and communications skills.
Its amazing how many prospects fall to the role, being asked to not only think broadly, but
wayside when you require them to prove their sales also do it quickly. Its like asking a 16-year-old
record. To further make that point, we see a direct who just got their drivers license to compete in
correlation between those not willing to give us a Formula One race.
Over communicating is a two-edged sword.
proof and those most irritated by the request.
For us, communications skills are what really Over communicating badly is like an obnoxseparate winners from losers. In the same day I ious television ad that runs too often. No one

WE LIVE BY THE MOTTO: IF IT ISNT WRITTEN DOWN IT DOESNT EXIST. AGREEING


ON EXPECTATIONS UP FRONT HEADS OFF MANY DOWNSTREAM PROBLEMS.

74

The European Business Review January - Febuary 2016

really complains about seeing the good ads


over and over.
Our communications focus on two priorities:
message and delivery method. If the message is
weak, nobody will consume it, no matter how
it is delivered. A strong message coupled with
alternative ways to consume it is a home run.
Maybe an email works best for one message and
video for another. Or, we can drive agents to
our agent portal. We are strong believers in the
When in Rome approach to communications
as we try to make it as easy as possible for agents
to consume what we produce.
Our agents are starved for valuable information and we spend an inordinate amount of time
developing what we believe to be thoughtful, insightful content.

an issue or an idea. Most of the time the disFXVVLRQVDUHDERXWSURGXFWVRUDVSHFLFFOLHQW


issue. But, once in a while we get an agent who
has veered off course and is looking for serious
help. Thats when we know weve been successful in developing a safe landing zone.
Creating an atmosphere of home is something you do, not something you promise.
This all comes down to one of the most overused phrases in business: adding value. Activity
doesnt equal value. Cutting your own margins
to give an unproven agent a higher commission
is not adding value. Selling products where you
make the most commission is not adding value.
I can count on one hand the number of producing agents with us today who negotiated us
up on their commissions when they joined. Blue
moons happen more often than this.
Adding value for agents is helping them be
Follow Through on Promises
Like many sales-driven businesses, independent better stewards for their clients. Happy clients
insurance is littered with promises not kept. make your job easier and your teams happier. Its
Many independent agencies spend most of their all about attitude.
Managing remote teams is tricky. If attitude
time recruiting new agents, often with promises of the best support with the highest commis- is the icing, function is the cake. Do you have
air-tight functional processes in place? Does evsions. If it sounds too good to be true
While many agencies emphasise products, eryone understand the goals? Have you had a
pricing and commissions, we put all of our eggs chance to talk with all team members to head
into one basket: agent support. And, we do that off issues before you get started? Spend the
E\ QGLQJ DJHQWV ZKR ZDQW DQG YDOXH KDYLQJ proper time up front in preparation to save time
a trusted resource. We emphasise training and and reduce risk on the back side. If you do these
communications and use those as the founda- you will be in a better position to drive higher
tion for recruiting the kind of agents who will quality performance in your team.
EHVWWRXUFXOWXUH7KHQZHVKRZHUWKHPZLWK
tools to help them grow their business, which in About the Author
turn grows ours.
Drew Gurley is an established execThere are few things better than having an
XWLYH LQ WKH QDQFLDO VHUYLFHV DUHQD
agent thank us for doing what we said we would
and co-founder of Redbird
do. And, maybe even more satisfying is when an
Advisors. Drew has developed hunagent we spoke with years ago calls out of the
GUHGVRI VXFFHVVIXOQDQFLDOVHUYLFblue to see whats going on at Redbird.
es agencies from the ground up and he has
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Create a Home
professionals across the US. Drew's work with
A house is a place you live. A home is a place Redbird has helped thousands of agents and adyou belong. Being on their own doesnt mean visors build a stable foundation for their personal
our agents arent looking for a place they can businesses. His focus on customer experience
go to re-charge, re-start or just simply hang out. marketing has been the cutting edge to help drive
Sometimes thats just having someone on the growth within Redbird's wholesale division. You
other end of the phone to brainstorm a problem. FDQQGPRUHLQIRUPDWLRQDERXW'UHZDQGKLV
:HHQFRXUDJHDJHQWVWRWXUQWRXVUVWZLWK business at: www.redbirdadvisors.com.

Adding value for


agents is helping
them be better
stewards for their
clients. Happy
clients make
your job easier
and your teams
happier. Its all
about attitude.

www.europeanbusinessreview.com

75

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Technology

THE FAIRNESS CHALLENGE


OF THE INTERNET OF THINGS
BY BANG NGYUEN AND DAVID DE CREMER

The Internet-of-Things essentially enables mass data


FROOHFWLRQ DQG DQDO\VLV WR WKH EHQHW QRW MXVW RI EXVLnesses, but individuals and society too. However the
question is, are businesses behaving ethically when collecting, storing and leveraging this data?

he Internet-of-Things (IoT) revolves around interconnected devices, systems and services within the existing Internet infrastructure. The IoTs value lies in it
being able to capture and analyse the data obtained from the
sensors at the endpoints of the
connected devices. The ability to
put all of this data together means
that IoT can bring considerable
EHQHWV WR LQGLYLGXDOV EXVLQHVVHV
and society. Take a look at the following examples:
Acts of integrating IoT into
the health care system can
be the implementation of a
chip into individuals, for instance with wearable technology, allowing for hospitals to
monitor the vital signs of the
patient, which could help indicate whether or not serious assessment is necessary.
For businesses, the IoT can be useful in many different
categories including asset tracking and inventory control,
security, individual tracking, shipping and location, and
energy conservation.
The crux of the IoT is that it allows for communication between devices, allowing extensive data tracking and

measurement that makes it possible to predict and subsequently automate logistical processes. Because IoT relies extensively on delivering information to a business to capitalise on the data supplied, a problem of integrity, however,
may be around the corner. As Michael Snyder noted, The
Internet allows us to reach into the outside world from
inside our homes, but it also allows the reverse to take place
as well. The IoT industry is slowly starting to recognise
WKDWWKHLUVHFXULW\WUDFNUHFRUGKDVEHHQSRRU+LJKSUROH
cases such as the US Federal Trade Commission (FTC) settlement with TRENDnet revealing that because of poor security
practices their Home CCTV system
allowed strangers to see, and sometimes listen into, over 700 home security camera feeds, have contributed to this sense of awareness. As a
matter of fact, from cameras to industrial controls to GPS systems, the
increased connectivity of devices
leads to increased security threats
and should thus be managed properly by the IoT industry. But, is it?
We fear it is not. In fact, realising
that it is increasingly becoming the
norm among knowledge driven companies to collect enormous amounts
of data to predict the behaviour of their customers, the risk
of integrity breaches is only likely to go up. This unfortunate lack of attention to the integrity aspect of the business
is further enhanced by the belief that IoT will enhance the
UPVFRPSHWLWLYHEHKDYLRU7KLVPHDQVWKDWFRPSDQLHVGR
not shy away from, for example, monitoring and targeting

www.europeanbusinessreview.com

77

Technology

It is not surprising to
see that trust in the
data collection process
is diminishing and
malicious intentions
and practices are
widespread and
appear to be growing.

talented people directly. Also, as the research


of Ana Canhoto, a senior lecturer at Oxford
Brookes University, shows, although the use
of personal data to target talented individuals already holds an integrity problem in itself,
most practices are considered perfectly legal.
For example:
LinkedIn is used to spot where professional
talent is moving, so if a particular company is
hiring people with certain skills, such as programming or editorial skills, it can be anticLSDWHG WKDW WKH UP LV SODQQLQJ WR DGYDQFH
these aspects.
Foursquare or other geo-tagged posts (location
based posts) can give an idea about whether
D VSHFLF SODFH LV EHFRPLQJ D KRWVSRW VR LI 
key staff are travelling to certain locations this
might be a sign of something occurring.
Online presence of employees and suppliers will contain information about what
they might be working on, for example, with
clues about their projects, workshops, work
patterns etc., so the ability to put those clues
together will generate a picture of the stratHJ\RI WKHFRPSHWLWLYHUP
Other market information such as company

communication and behavioural marketing data from the competition may also
provide information about the direction they
are headed. Monitoring blog posts can alert
FKDQJHVLQPDUNHWG\QDPLFVDQGJLYHWKHUP
a head start in their preparation for a counter
competitive strategy.
Given the prevalence of these practices,
which are considered legal and therefore raise
no questions anymore about integrity in the
minds of those using this technology, it is not
surprising to see that trust in the data collection
process is diminishing and malicious intentions
and practices are widespread and appear to be
growing. For example:
 ,R7 UPV GHOLEHUDWHO\ ELQG FXVWRPHUV ZLWK
contracts to their unique IoT ecosystem,
bleeding them with fees and confounding
WKHPZLWKQHSULQW7KLVLVDFRPPRQSUDFtice among insurance providers, health clubs,
and banks.
 ,R7 UPV FRQIXVH DQG PLVOHDG FXVWRPHUV
into making poor purchase decisions through
the use of complicated and detailed rules and
conditions of use/sale. Some of those practices include confusing usage rates, high penalties when customers exceed credit limits,
overdrafts and payment deadlines, or fall
short of minimum balances in bank accounts.
Overcoming Distrust in the Data
Collection Process
Although these practices can be considered
borderline exploitation (some are simply poor
service practices) they do destroy the trust of
the end-users (i.e. customers). We argue that one
of the main reasons leading to this violation of
trust is that the fairness of both the data collection process and the monitoring technology that
is used is poorly managed.
Customers may experience that they are
treated differently and even deprived from
FHUWDLQVHUYLFHVDQGEHQHWV)RUH[DPSOHYXOnerable groups such as the young, elderly or
SRRUPD\EHWDNHQDGYDQWDJHRI E\UPVZLWK
malicious intent, in that they can make the IoT
system overly complicated and a pricing system
VRFRPSOH[WKDWWKHVHJURXSVZLOOQGLWGLIFXOW
to make an informed decision. It also happens

78

The European Business Review January - Febuary 2016

In addition, providing a certain degree of


control to customers helps to reduce perceptions of unfairness. The IoT is about long-term
relationships and the challenge lies in building
relationships within the IoT network where all
parties feel fairly treated. Carefully building and
managing customer expectations not only help
to design experiences that are less likely to be
perceived as unfair, but also minimise the negative impact when illegitimate situations occur.
So, even when security breaches are present,
customers are able to understand the situation
EHFDXVHWKHUPKDVDWUDQVSDUHQWFRPPXQLFDtion process to keep them informed.
It is important to note that fairness must be
a commitment at the strategic level, from the
VHQLRU PDQDJHPHQWV LQXHQFH LQ WKH UPV
philosophy and values statement to the front
RIFH RI  FXVWRPHU VHUYLFHV ,PSOHPHQWLQJ
training sessions to promote the fairness of
IoT practices is a must. Finally, although buildHow Can IoT Managers Establish Fairness
ing fairness is a highly participative and timewith Their Counterparts?
6RZKDWFDQEHGRQHE\,R7UPVWRHQVXUHDIDLU consuming activity, the level of fairness that
and hence trustworthy relationship is built with can enhance the overall trust in the IoT is
its customers? We advise the following guidelines: forever. With fairness in place, new advance 7KH ,R7 UP VKRXOG PRQLWRU DOO FXVWRP- ments in the IoT will not be seen as a threat,
er and stakeholder touch-points in order to but rather as an opportunity to reveal more efensure that all relationships are managed to FLHQF\ZLWKLQWKH,R7UHODWLRQVKLS
EHQHWDOOSDUWLHV0XWXDODQGIDLUYDOXHIRUDOO
About the Authors
needs to be created.
 7KH,R7UPPXVWKDYHFOHDUJXLGHOLQHVDJDLQVW
Bang Nguyen is Associate
privacy invasion and information misuse, for
Professor of Marketing at the East
instance, with permission from the customers
China University of Science and
to guide how value can be generated from the
Technology, Shanghai, China, and
data. Moderation and fairness is key.
Futurist at Nucleon AI Industries.
Consumers need to feel that they are respect- He is the guest editor of Journal of Marketing
ed and the seller must value their relationship. Management on the Internet of Things.
Such relationships built towards long-term Previously, he was a marketing educator at
value is mutually rewarding and progressive.
Oxford Brookes University, Oxford, UK. He is
Customers must receive a consistent message the author of the book The Dark Side of CRM.
IURP WKH UP LQ DQ LQWHJUDWHG PXOWLFKDQQHO
David De Cremer is the KPMG
customer experience. In this case, the cusProfessor of Management Studies
tomer must be reminded of the co-creation
at the Judge Business School,
RI YDOXHWKDWWKHUPEULQJV
University of Cambridge, UK.
 ,R7 UPV PXVW EH FRQVWDQWO\ DYDLODEOH WR
Previously, he was a Professor of
WKHFXVWRPHUVZLWKDVXIFLHQWDQGWUDQVSDU- Management at China Europe International
ent communication system and procedures. Business School in Shanghai. He is the author
Interaction is key and important in main- of the book Pro-active Leadership: How to Overcome
taining fairness.
Procrastination and be a Bold Decision-Maker.
that customers feel that they do not receive a
fair share of the pie in exchange of their personal information. For example, extensive R&D
LQWR WKH ,R7 WR EHQHW WKH UPV PD\ EH FRQsidered as a focus on creating more value for
WKHUPLWVHOI DQGOHDYHWKHFXVWRPHUVZLWKWKH
lesser value. Finally, customers may fear that the
way companies deal with their personal data will
violate fair decision-making procedures. For
H[DPSOHUPVFROOHFWLQJDQGLQWHJUDWLQJLQIRUmation about their customers are hardly ever
checked upon in terms of whether they sell this
LQIRUPDWLRQWRRWKHUUPVZLWKRXWWKHFXVWRPers knowledge or permission.
All of this makes clear that the IoT industry has to come up with ways that make customers feel safe and perceive that they themselves
and their personal information is dealt with in
fair ways.

Fairness must be
a commitment at
the strategic level,
from the senior
managements
influence in the
firms philosophy
and values
statement to the
front office of
customer services.

www.europeanbusinessreview.com

79

Technology

Creeping Towards Creepy:


Companies Must Learn
Constraint with Big Data,
Before its Too Late
BY ROBERT OWEN AND CHRISTOPHER SURDAK

Companies have invested billions just to


utilise technology to analyse customer
needs and wants with maximum accuracy.
Technology has been developed in such a
manner that it can be already seen as creepy.
In this article, Robert Owen and Christopher
Surdak go into why companies should limit
their use of technology in business.

y now in America it has become trite to


note the exponential growth of Internetlinked devices and their ability to improve
our daily lives. Not only are we all familiar with
them, most of us are utterly addicted to them.
Ironically, one of todays biggest challenges is
simply managing the power that is available literally in the palm of our hands. In this quest for
ease through the utilisation of technology, our
DQRQ\PLW\DQGSULYDF\ZHUHVDFULFHGORQJDJR
Early adopters among us have incrementally
PDGHSULYDF\VDFULFHVLQRUGHUWRDFFHVVWKHFRQveniences found on so many of those shiny tech
things we now consider necessities. While done
ZLOOLQJO\DWUVWDVZHFRPHWRWUXO\XQGHUVWDQG
the full depth and breadth of just what it is we are
surrendering, this apathetic acceptance of privacy

80

The European Business Review January - Febuary 2016

intrusions is not likely to last.


Anyone familiar with smartphones and apps
has likely experienced the moment when customer intimacy suddenly becomes too intimate,
too present and too invasive. It is no exaggeration that given contemporary algorithms and
the trove of available customer data, companies
have begun to move from mere marketing to a
deeper level of manipulation than ever before
possible. Anyone surprised by the revelation that
Facebook and others have been emotionally manipulating their customers clearly doesnt understand the fundamental business model behind
such free platforms and services.
At a completely subconscious level, our beKDYLRUVDQGEX\LQJLPSXOVHVFDQEHLQXHQFHG
and exploited. As such, our free will may no
longer be so free. At these times many of us feel
unsettled, as though were being watched and
analysed a little too closely, known a little too
well, and it all becomes just a little bit creepy.
Over the past decade, social media, Big Data
and mobile technologies have been integrated into our lives at a blistering pace. All told,
thousands of companies have invested billions
of dollars in these technologies. The purpose of
these investments is obviously to make money
and in order to do that, customer analytics have
become increasingly sophisticated, accurate,
persuasive and, ultimately, creepy.
In this post-Snowden world the public at
large may be wondering who, if anyone, is protecting them. Where is their right to privacy, to
anonymity? Does it really even exist anymore?
While the revelations made by Snowden have
placed governmental monitoring of the citizenry squarely in the sights of Congress and the
Judiciary, there appears to be little hue and cry
over private industrys use of our data. Indeed,
the state of the art in this arena is moving so
rapidly that any attempt to legislate or regulate
the use of consumer information in targeted
marketing would be futile; provisions of such
legislation would be obsolete before they had
undergone a single subcommittee hearing.
This then begs the question, if our government cannot protect our privacy interests as they
pertain to how companies engage us online, who
is in a position to provide such oversight, and

ultimately protection, from those who would


sell us that which we might not actually want?
Arguably, it is those companies that best understand and make use of all this consumer data
who may be best positioned to provide appropriate standards for its use. Major data generators
such as Google, Facebook, Twitter, Microsoft,
Amazon and etc., hold much of this consumer
information and drive much of the innovation
in its analysis and subsequent use.
They are also the leaders in creating new definitions of what is the appropriate use through
constant evolution of their business models. As
the custodians of both our data and our digital
consciousness, it stands to reason that these
businesses are also digital psyches.
Fortunately, there are precedents for such
self-regulation by industry, including FINRA
()LQDQFLDO ,QGXVWU\ 5HJXODWRU\ $XWKRULW\) and the
VWRFN H[FKDQJHV LQ QDQFLDO VHUYLFHV 6HOI
regulation works because these businesses know
their industry better than any regulator could,
DQGEHFDXVHWKH\DUHGULYHQE\WKHSURWPRWLYH
to avoid losing the goodwill of their customers.
Customers who are creeped out by a business
conduct do not become repeat customers.
And so the businesses that leverage Big Data
in their business models are best positioned to
know the technical innovations and to implement
proper safeguards to empower customers to
control the degree to which they surrender their
IUHHGRPLQH[FKDQJHIRURWKHUEHQHWV

It is those companies
that best understand
and make use of
all this consumer
data who may be
best positioned to
provide appropriate
standards for its use.

www.europeanbusinessreview.com

81

Technology

FOUR KEY ATTRIBUTES FOR PRIVACY MANAGEMENT

Disclosure

Companies must
temper their
enthusiasm for Big
Data analytics with
a strong sense of
responsibility, even
humility, over the
power that they
now wield with
regard to customers.

82

Transparency

A Framework for Privacy Management


What might an industry coalition implement
to assure customers that their best interests
are being preserved? Such a framework might
include at least four key attributes:
1. Disclosure: &RQVXPHUV ZRXOG EH QRWLHG RI
what is collected, how frequently, by whom
and how it may be used.
2. Transparency: &RQVXPHUV ZRXOG EH QRWLHG
when their data is being used, in real time, to
LQXHQFH WKHLU RSLQLRQV RU DFWLRQV
3. Recourse: Consumers must be allowed to
change how their data is used according to
their own comfort level. This means no more
blanket authorisations when a user downloads an app or signs up for an account;
rather, authorisation must be extremely granular and under the end-users control.
4. Monitoring: &RQVXPHUV PXVW EH DEOH WR FRQUP
that businesses respect their wishes. This means
a Reagan-esque trust-but-verify capability.
By implementing such a framework, companies could continue takinhg advantage of customer data to drive business without running
the risk of scaring off the very customers with
which they are trying to connect. Perhaps most
importantly, they would continue to engage in
their regular operations without running the risk
of a backlash and the ham-handed government
regulation that would inevitably follow.
Over a year ago Amazon patented predictive
shipping, where the company intends to ship
products to customers in anticipation of an
actual purchase. That is, Amazon will ship, and
bill you for, things they know you want, whether
you know it or not. Such is the state of the art in

The European Business Review January - Febuary 2016

Recourse

Monitoring

predictive analytics.
To some this may sound like a valuable innovation, like receiving a surprise birthday present
every day of the year, while to others it may represent a new plateau of customer manipulation
and intrusion. If this is the case for the majority,
the backlash against such aggressive use of our
personal data may be substantial.
Technology has no morality, it just is. The
manner in which we utilise a given technology
is what determines its morality, or lack thereof.
Companies must temper their enthusiasm for
Big Data analytics with a strong sense of responsibility, even humility, over the power that
they now wield with regard to customers.
If they do not, they risk offending them and
awakening the sleeping giant of government
over-regulation and eventual destruction of the
business model on which their entire business
ultimately rests.
About the Authors
Robert Owen is Partner in Charge
RI WKH 1HZ <RUN 2IFH RI
Sutherland, Asbill & Brennan LLP.
He has decades of commercial litigation experience and is an experienced teacher of trial skills. Chambers &
Partners consistently ranks him as RQH RI YH UVW
UDQN OHDGLQJ LQGLYLGXDOV LQ H'LVFRYHU\ LQ $PHULFD
Christopher Surdak, JD, is the
author of the book Data Crush,
getAbstracts International Book of
the Year 2014. He is a technology
evangelist specialising in the organisational and legal impact of new technologies.

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