LIFE SCIENCE

MEDIA RELEASE - IBN Scientists Develop Green Technique to Transform Carbon Dioxide into Useful Compounds

2011-08-01T20:59:00.000-07:00

Insect Virus Holds the Key to Safer Stem Cell Therapy

An On-Off Switch for Sex and Violence: Scientific American

2011-07-26T07:06:00.000-07:00

An On-Off Switch for Sex and Violence: Scientific American

U-M researchers create reprogrammed stem cells for disease studies

2011-07-26T06:58:00.000-07:00

U-M researchers create reprogrammed stem cells for disease studies

Alnylam Pharmaceuticals - Investor Relations - News Release

2011-07-25T21:14:00.000-07:00

Alnylam Pharmaceuticals - Investor Relations - News Release

TERGANGGU TELEPON SELULAR

2010-12-01T02:19:00.000-08:00

Begitu selesai memperbaiki mesin pesawat Embraer 195 milik maskapai penerbangan bertarif murah Inggris, Flybe, teknisi Flybe tersebut menerima telepon di hp-nya. Teknisi tersebut menerima telepon sambil bekerja. Rupanya pembicaraan di hp itu cukup serius sehingga membuat teknisi tersebut lupa mengunci tutup mesin (engine-cowls) kanan pesawat tersebut. Tutup-tutup mesin tersebut jebol (torn-off) dalam penerbangan dari Jersey ke Birmingham, Inggris, tanggal 23 Februari yang lalu. Hal ini diungkapkan oleh UK- AAIB (Air Accidents Investigations Branch) – KNKT-nya Inggris setelah investigasi (Flight International, 1 November 2010).

Setelah kejadian ini Flybe melarang teknisinya membawa hp ditempat kerja. Embraer 195 adalah pesawat regional jet terbaru buatan Brasil, berpenumpang 95 orang, yang sangat populer saat ini terutama di Eropa dan Amerika Serikat. Sepintas lepasnya tutup mesin ini hanya kejadian biasa, akan tetapi didunia penerbangan terutama penerbangan komersial, hal ini insiden yang serius. Anda bisa bayangkan saat mobil anda melaju pada kecepatan 150 km/jam tutup mesin lepas, hambatan angin akan terasa sangat berat. Sekarang jika anda melaju pada kecepatan 750 km/jam (5 kali kecepatan mobil anda didarat), tutup mesin (pesawat) sebelah kanan tiba-tiba lepas, anda bisa bayangkan bagaimana sulitnya mengendalikan pesawat dengan penumpang 95 sipil, padahal anda saat itu melaju cepat pada ketinggian 10.000 m dari muka bumi.

HARI LAKSONO

Tools of the Day: Bedakan Konflik Kepentingan dengan Konflik Kebutuhan

2010-11-26T03:15:00.000-08:00

Ketika suatu konflik mulai terlahir, ingatlah bahwa tidak semua konflik adalah konflik kepentingan. Beberapa konflik sebenarnya adalah konflik kebutuhan. Kepentingan bisa dilihat dari sifatnya yang sementara dan supersifial. Kepentingan adalah sesuatu yang bisa dipertukarkan, seperti tanah, uang, pekerjaan. Sedangkan kebutuhan dipandang sebagai sesuatu yang mendasar dan mengakar pada tiap manusia. Kebutuhan tidak bisa dipertukarkan, seperti identitas, rasa aman, harga diri.

Ketika konflik terlahir dikarenakan oleh kebutuhan manusia, menyelesaikan konflik ini dengan cara penyelesaian konflik kepentingan akan membuat masalah menjadi lebih runyam. Contohnya, orang akan tersinggung apabila harga dirinya harus dikompromikan. Sedangkan kompromi adalah jalan yang ditempuh untuk menyelesaikan konflik kepentingan.

Takeaway
Jangan pernah mengasumsikan bahwa berbagai konflik yang terlahir adalah konflik kepentingan. Kebutuhan bisa dipenuhi tanpa harus berkompromi. Isu kepercayaan adalah dasarnya.

Anantio Bayuardi

Negotiation in Emerging Culture

(http://bayuardijoelianto.blogspot.com/)

Menjadi Orang Tua Yang Persuasif

2010-11-24T18:34:00.000-08:00

Anantio Bayuardi

Negotiation in Emerging Culture (http://bayuardijoelianto.blogspot.com/)

Ada enam prinsip yang perlu diketahui oleh orang tua dalam mengelola emosi anak

Menghadapi Emosi Didalam Diri Kita

Kunci utama dalam menghadapi anak adalah mengetahui apa yang menjadi pemicu emosi dalam diri kita. Melatih menghadapi emosi dalam diri kita dapat menghindarkan ledakan emosi ketika berhadapan dengan anak kita

Bantulah Anak Untuk Mengatasi Emosi Mereka

Anak-anak pada umumnya kurang berpengalaman dalam mengelola emosinya. Sangatlah penting sebagai orang tua untuk mencukupi kebutuhan emosi anak-anak mereka. Orang tua harus mempersiapkan diri untuk menghadapi reaksi emosi anak-anak dan fokus pada usaha untuk membantu anak-anak untuk mengatasi emosi mereka

Dengar Dan Pelajari

Luangkanlah waktu untuk bercengkerama dengan anak-anak untuk mengetahui apa yang sebenarnya ada dibenak mereka

Ajari Melalui Perkataan

Daripada memberi kuliah akan pentingnya mengerjakan PR, mulailah dengan pesan-pesan pendek, dengan berkata, “PR!” mungkin lebih efektif dalam mengingatkan anak-anak untuk belajar daripada mengkuliahi tentang pentingnya menyelesaikan PR.

Jangan Memaksa, Beri Persuasi

Batasan-batasan yang paling efektif adalah batasan yang ditentukan oleh diri sendiri. Ketika anak merasa berdaya, mereka akan lebih mau bekerjasama

Disiplinkan Secara Bijaksana

Ketika disiplin perlu dilakukan, pastikan kerjakan dengan cepat dan konsisten. Ini akan mengajarkan disiplin diri dan membantu anak-anak untuk menginternalisasikan nilai-nilai.

Anantio Bayuardi

Negotiation in Emerging Culture (http://bayuardijoelianto.blogspot.com/)

Keterbatasan dalam Penggunaan Kesadaran

2010-11-23T18:22:00.000-08:00

Manusia memiliki sesuatu dalam dirinya yang disebut kesadaran. Orang Indonesia yang mengkonsumsi nasi mungkin lebih sadar dalam membedakan kenikmatan nasi dari berbagai varietas padi yang berbeda, dibanding mereka yang lebih suka mengkonsumsi gandum. Kesadaran pada tingkat operasinya, pada saat penggunaanya, bisa tiba-tiba offline atau mengalami kebutaan sementara. Kebutaan sementara atas kesadaran bisa mempengaruhi seseorang dalam membuat keputusan.

Hilangnya Kesadaran Terhadap Lingkungan Sekitar

Sering seseorang menelepon dengan handphone ketika sedang menyetir di jalan raya. Saking asiknya ngobrol, orang tidak sadar bahwa dirinya sedang menyetir, bahwa ada mobil-mobil berseliweran disekitarnya. Hilangnya kesadaran sementara ini mengakibatkan kemampuan seseorang untuk merespon terhadap keadaan di sekelilingnya menurun, seperti merespon terhadap mobil didepannya yang tiba-tiba mengerem mendadak. Ketika kita fokus pada pekerjaan tertentu sehingga kesadaran kita menyelam di dalam alam yang baru tercipta, seseorang akan kehilangan kesadaran pada keadaan dilingkungannya.

Hilangnya Kesadaran Terhadap Perubahan

Pernahkah anda dengar keluhan dari kawan anda bahwa tiba-tiba pacarnya minta putus. Kawan anda bingung, sedih dan tidak tahu mengapa hal ini bisa terjadi . Keadaan ini adalah kebutaan kesadaran seseorang akan adanya perubahan. Seseorang sering tidak memperhatikan perubahan yang terjadi disekitarnya, terutama apabila perubahan itu terjadi secara sedikit demi sedikit. Baginya tiba-tiba dunia tiba-tiba sudah berubah, tanpa menyadari telah terjadi suatu proses perubahan.

Fokus Pada Faktor Yang Menonjol

Ketika orang-orang di California dan Ohio disurvei mengenai tingkat kepuasan hidup, penduduk dari dua tempat yang berbeda mengakui bahwa mereka puas dengan keadaan kehidupan mereka. Ketika keduanya ditanyai siapa yang lebih bahagia, penduduk California atau Ohio, maka keduanya memberikan jawaban yang sama pula, yaitu penduduk California lebih bahagia. Keduanya memberikan alasan yang sama yaitu suhu udara di California yang sangat nyaman. Padahal ketika disurvei mengenai tingkat kepuasan hidup, suhu udara hanyalah satu faktor dari berbagai faktor tingkat kepuasan hidup yang sangat komprehensif. Fokus pada faktor tertentu sering kali menyebabkan rasa syukur atas apa yang kita miliki menjadi terkikis.

Anantio Bayuardi

Negotiation in Emerging Culture (http://bayuardijoelianto.blogspot.com/)

KESELAMATAN PENERBANGAN

2010-11-21T04:21:00.000-08:00

by Hari Laksono on Saturday, 20 November 2010 at 18:52

Amankah transportasi penerbangan di Indonesia?Jawabannya, bila menggunakan standar global, adalah “tidak”. Demikian tulis salah satu majalah mingguan yang gencar menulis mengenai masalah transportasi udara kita baru-baru ini.
Jawaban yang lebih tepat sebenarnya adalah : “Tidak”, tanpa perlu menambahkan “bila menggunakan standar global”, karena industri penerbangan adalah industri global. Dan FAA, yang menjadi acuan industri penerbangan global, pada tanggal 16 April 2007 telah menurunkan peringkat Indonesia ke Kategori 2, atau “a Failure”, karena Regulator Indonesia tidak memenuhi standarPengawasan Keselamatan Penerbangan yang ditetapkan ICAO, badan khusus PBB yang menangani permasalahan Penerbangan Sipil antar negara.

Apa itu Keselamatan Penerbangan?
Industri penerbangan adalah industri global. Dan keselamatan merupakan prioritas utama didunia Penerbangan. “Kiblat” industri yang sarat teknologi tinggi ini adalah ke Barat (AS dan Eropa Barat) dimana pesawat terbang dilahirkan dan dibesarkan selama lebih dari 100 tahun ini. Dan Badan Penerbangan Federal AS, FAA, yang memandu industri penerbangan AS, menjadi acuan bagi otoritas penerbangan sipil disemua negara didunia.
Tugas dan tanggung jawab yang diberikan Konggres AS kepada FAA pada saat diresmikannya tahun 1958 ini, menjelaskan mengenai apa itu Keselamatan Penerbangan, dan apa tugas dan tanggung jawab regulator atau otoritas penerbangan suatu negara.
Konggres AS menugaskan FAA untuk memastikan derajat keselamatan yang paling tinggi didalam penerbangan ( “to assure the highest degree of safety in flight”). FAA bertanggung-jawab memberikan nasihat, bimbingan dan pengawasan (advice, guidance, oversight) dalam bidang Keselamatan kepada industri Penerbangan AS.
Ada 3 unsur yang memberikan kontribusi pada Keselamatan penerbangan: (1) Pesawat terbangnya sendiri - bagaimana pesawat itu didisain, dibuat dan dirawat; (2) Sistim penerbangan negara – airport, jalur lalulintas udara, dan airtraffic controls; (3) Airlines flight operations – yang berkaitan dengan pengendalian dan pengoperasian pesawat di airlines.
Dengan demikian tanggung jawab regulator penerbangan suatu negara adalah memastikan keselamatan penerbangan pada tingkat yang tertinggi diketiga unsur tersebut diatas.
Itulah sebabnya ketika terjadi kecelakaan beruntun diawal tahun 2007 lalu, FAA menjatuhkan penilaiannya kepada regulator atau otoritas penerbangan Indonesia, bukan kepada maskapai penerbangannya.
Indonesia masuk kategori 2, “tidak lulus”.
Penilaian ini diberikan oleh FAA tanggal 16 April 2007, satu bulan setelah kecelakaan pesawat Boeing 737-400 Garuda di Yogyakarta. FAA menurunkan peringkat kompetensi regulator penerbangan sipil Indonesia ke kategori 2, yaitu “a failure” atau “tidak lulus” karena tidak memenuhi standard ICAO, atau dengan kata lain “tidak bisa menjamin keselamatan penerbangannya”.
Hanya ada 2 kategory dalam standar keselamatan penerbangan global, yaitu: Kategori 1, a Pass (lulus), dan Kategori 2, a Failure (tidak lulus).
Bila regulator atau otoritas penerbangan suatu negara tidak kompeten, maka seluruh maskapai penerbangan dinegara itupun praktis tidak terjamin keamanannya. Itulah sebabnya setelah mendapat laporan dari FAA, pemerintah AS mengeluarkan “travel warning” bagi warganya untuk menghindari mengunakan maskapai penerbangan Indonesia dalam bepergiannya.
Akan tetapi sebaliknya, jika regulator negara itu “lulus” atau masuk kategori 1, tapi ditemukan adanya pelanggaran berat disalah satu atau beberapa airlines dinegara tersebut, maka yang terkena sanksi hanya maskapai yang melanggar tersebut, seperti terjadi dengan PIA Pakistan airlines. Kasus seperti PIA ini mudah dan cepat dapat diselesaikan, karena ini murni kesalahan dari maskapai tersebut yang tidak ditemukan dimaskapai lainnya.
Apa temuan FAA yang membuat Indonesia “tidak lulus”?
Pada semua rentetan kecelakaan yang terjadi di Indonesia yang melibatkan pesawat Boeing 737-300/400 tersebut, FAA tidak menemukan adanya kesalahan dari pabrik pesawat Boeing. Dan dengan pengalaman 297 juta jam terbang dari 4.700 pesawat Boeing 737 yang telah menerbangkan 12 miliar penumpang hingga saat ini, sangatlah kecil kemungkinan masih adanya kesalahan pada desain ataupun proses pembuatan pesawatnya.
Akan tetapi dengan mempelajari dokumen pesawat-pesawat Boeing yang beroperasi di Indonesia pasca kecelakaan tersebut, FAA menemukan banyaknya pelanggaran-pelanggaran prosedur keselamatan penerbangan yang berulang, yang dilakukan oleh maskapai penerbangan Indonesia, dan ironisnya “lolos” dari pengawasan otoritas penerbangan Indonesia.
FAA menilai regulator Indonesia tidak memiliki kompetensi yang memadai dalam menerapkan “safety oversight”, sehingga tidak berani mencabut ijin operasi maskapai-maskapai yang melakukan pelanggaran mendasar. Regulator Indonesia juga dinilai terlalu mudah memberikan ijin usaha dan operasi penerbangan kepada “unsafe airlines”, yang mengakibatkan tingginya tingkat kecelakaan pesawat terbang di Indonesia.
Pertumbuhan tinggi, tingkat keamanan rendah.
FAA dan ICAO mengingatkan bahwa pertumbuhan penumpang pesawat di Indonesia sebesar 20% terlalu tinggi dan tidak wajar.
Cina yang pertumbuhan ekonominya 2 kali lebih tinggi dari Indonesia, pertumbuhan penumpangnya hanya 16%. Yang inipun dipandang oleh pemerintah Cina masih terlalu tinggi, sehingga Cina berusaha menurunkannya hingga 14%, salah satunya adalah dengan tidak memberikan ijin operasi airlines baru hingga tahun 2010. Padahal transportasi udara Cina saat ini termasuk yang paling aman didunia.
Untuk menekan tingkat kecelakaan penerbangannya yang saat ini termasuk yang paling tinggi didunia, Indonesia disarankan untuk menekan pertumbuhan penumpang pesawatnya hingga dibawah Cina, karena pertumbuhan ekonomi Indonesia (GDP growth 6.3%) jauh lebih rendah dari Cina (11.4%).
Indonesia diharapkan untuk berani mencabut ijin operasi maskapai-maskapai yang tidak aman, unsafe airlines, dan menghentikan pemberian ijin usaha dan operasi airlines baru.
Dengarkan dan ikuti saran FAA dan ICAO.
Indonesia selama ini hanya terpaku pada larangan terbang yang dikeluarkan UE saja, sehingga mengabaikan temuan dan penilaian FAA. Padahal dasar pertimbangan UE menjatuhkan “sanksi” itu, adalah laporan temuan dan laporan FAA yang menilai Indonesia tidak memenuhi standard keselamatan penerbangan ICAO.
Selama Indonesia masih di kategori 2 dalam penilaian FAA, UE tidak akan mencabut larangan terbangnya. Dan untuk dapat naik ke kategori 1, tidak ada jalan lain, Indonesia harus mau mendengarkan dan mengikuti saran FAA dan ICAO.

Hari Laksono

LARANGAN TERBANG MASKAPAI INDONESIA KE UE BELUM DICABUT

2010-11-21T04:19:00.000-08:00

by Hari Laksono on Saturday, 20 November 2010 at 20:59

Jika ingin meningkatkan standard keselamatan penerbangannya, Pemerintah kita harus merespons hasil Audit ICAO kepada Otoritas Penerbangan kita dan hasil Temuan FAA pada airlines kita pasca kecelakaan beruntun tahun 2006- 2007, bukan merespons pada larangan terbang dari UE. ICAO dan FAA-AS menilai Otoritas Penerbangan kita dibawah standard dan “Tidak lulus”. ini justru yang menjadi dasar travel-warning dari AS dan UE, serta Larangan terbang dari UE.
Semua informasi tersebut dapat di-“download” dari website ICAO, EC dan FAA.

Larangan terbang berlanjut.
Mengapa UE melarang maskapai penerbangan Indonesia terbang ke Eropa?
Karena pesawat-pesawat dari maskapai penerbangan Indonesia tidak terjamin keselamatannya sedangkan pemerintah UE berkewajiban melindungi warga negaranya khususnya dalam bebergian dengan pesawat terbang. Sebenarnya UE juga mengeluarkan travel-warning bagi warganya, akan tetapi UE melihat, bahwa dengan travel-warning saja seperti yang dilakukan pemerintah AS 3 bulan sebelumnya ternyata tidak efektip. Pemerintah Indonesia tidak tanggap dan tidak memperbaiki pengawasan keselamatan penerbangannya. Baru dengan larangan terbang pemerintah Indonesia berreaksi. Akan tetapi responsnyapun keliru.
Pemerintah hanya fokus pada “ UE agar mencabut larangan terbang”, bukan pada “rapor merah” RI (hasil audit ICAO), maupun dari temuan FAA yang menyebabkan RI turun ke Kategori 2, atu tidak lulus. Padahal dasar dijatuhkannya sanksi Larangan terbang oleh UE adalah audit ICAO dan temuan FAA, yang menekankan bahwa Otoritas Penerbangan atau Regulator Indonesia yang “tidak lulus” ICAO. Sehingga praktis seluruh maskapai penerbangan yang mendapatkan sertifikat ijin operasi dari Regulator RI diragukan atau tidak diakui AS ( 17 April 2007) dan UE ( 6 Juli 2007).
Dari sini jelas, bahwa walaupun Garuda dan 5 maskapai lainnya “lulus” audit UE, atau bahkan keseluruhan (51) maskapai Indonesia “lulus” audit UE, tetap saja status Otoritas Penerbangan/ Regulator kita “tidak lulus”, atau dengan kata lain: Keselamatan Penerbangan Indonesia dibawah standard.

Garuda cs lulus. Regulator RI tidak lulus.
Berbeda dengan moda transportasi lain (darat dan laut), industri transportasi udara adalah industri global. Keselamatan adalah Top-priority di industri penerbangan. Dan untuk menghindari persepsi yang berbeda mengenai keselamatan didunia penerbangan antar negara, 52 negara yang dimotori AS, Inggris, Perancis, Jerman mensponsori terbentuknya ICAO- International Civil Aviation Organisation, di PBB (1947).
Indonesia menjadi anggota PBB pada tahun 1950, dan otomatis sejak itu mendapat bantuan dan koordinasi dibidang penerbangan sipil dari ICAO ini.
ICAO inilah yang yang menentukan Global Safety Standard. Rapor Keselamatan Penerbangan Sipil tiap negara anggota PBB ditentukan oleh ICAO dengan meng-audit Otoritas Penerbangannya atau yang biasa kita kenal juga dengan Regulator.
Audit ICAO terhadap Regulator Indonesia terakhir dilakukan pada 6-15 February 2007, pasca kecelakaan fatal pesawat Boeing 737-400 Adam Air dilaut Sulawesi, pada 1 Januari 2007. indonesia mendapat nilai rapor merah dari ICAO terutama untuk 2 critical elements yang sangat vital, yaitu: Safety Oversight dapat nilai 5 (rata-rata dunia 6), dan Technical Personnel Qualification and training mendapat nilai 2 (rata-rata dunia 4).
Rapor merah dari ICAO inilah yang memperkuat hasil temuan-temuan FAA dalam kecelakaan-kecelakaan pesawat Boeing 737 di Indonesia yang mengungkap sangat lemahnya Pembinaan dan Pengawasan Keselamatan dari Otoritas Penerbangan Indonesia kepada maskapai-maskapai penerbangannya ( FAA “membidani kelahiran” semua pesawat-pesawat Boeing, dan juga bertanggung jawab atas kelaikan terbang pesawat yang dirancang bangun dan dimanufaktur dibumi AS).
Kualifikasi teknis yang jauh dibawah standard dunia ditambah dengan kurangnya jumlah inspector untuk mengawasi dan membina maskapai-maskapai penerbangan, menyebabkan rendahnya standard kualifikasi teknis personil pelaksana, serta sangat kurangnya frekwensi pengecekan terjadwal maupun tak terjadwal kepada maskapai-maskapai penerbangan kita. Rendahnya kompetensi personil otoritas penerbangan Indonesia ini juga yang membuat ICAO dan FAA meragukan kredibilitas Sertfikat Ijin Operasi Penerbangan (AOC- Air Operator Certificate) yang dikeluarkan oleh Regulator Indonesia terutama pasca deregulasi di Indonesia tahun 1999 (ICAO menyebutnya “granting operating certificate to unsafe airlines”).
Pasca kecelakaan pesawat Boeing 737-400 Garuda di Adisucipto, Yogya, pada tanggal 16 April 2007 FAA menurunkan kelas Regulator RI ke kategori 2, yang artinya: tidak lulus, karena tidak memenuhi standard Keselamatan Penerbangan yang ditetapkan ICAO (Hanya ada 2 kategori didunia penerbangan. Kategori 1: Lulus)
Pada hari berikutnya, 17 April, Pemerintah AS mengeluarkan “Travel warning” bagi warga AS untuk tidak menggunakan pesawat dari maskapai Indonesia dalam bepergiannya. Semua pesawat terbang dari maskapai Indonesia akan dicek kelaikan terbangnya oleh FAA bila memasuki wilayah AS. Ketentuan tersebut masih berlaku hingga saat ini.
Hasil audit ICAO dan hasil evaluasi FAA terhadap otoritas penerbangan Indonesia inilah yang mendasari Uni Eropa mengeluarkan travel warning bagi warganya, serta melarang semua pesawat dari maskapai penerbangan Indonesia memasuki atau beroperasi diwilayah Uni Eropa. Larangan terbang dan travel warning UE ini diberlakukan mulai tanggal 6 Juli 2007.
Larangan terbang UE ini berlanjut hingga saat ini bagi semua maskapai penerbangan yang mendapat ijin operasi/AOC dari Otoritas Penerbangan RI, kecuali untuk 6 maskapai yang telah “lulus” audit yang dilakukan oleh Otoritas Penerbangan UE. Keenam maskapai itu adalah, Garuda, Mandala, Airfast dan PremiAir yang lulus tahun 2009, serta Indonesia AirAsia dan BataviaAir yang lulus 2010.

Meningkatkan Keselamatan Penerbangan RI
Sebenarnya Uni Eropa sudah menawarkan untuk membantu Indonesia meningkatkan Keselamatan Penerbangannya. Ini tertulis didalam surat pengantar pada Daftar maskapai-maskapai yang terkena Larangan terbang ke Uni Eropa tersebut. Tapi sayang tawaran ini tidak dimanfaatkan. Bahkan sambil menuduh UE “tidak fair” dalam membuat Daftar tersebut, Pemerintah kita (termasuk Presiden SBY) tidak meminta bantuan Komisi Eropa untuk meningkatkan Keselamatan Penerbangan kita, tapi malah meminta UE agar mencabut Larangan terbang untuk seluruh maskapai penerbangan Indonesia. Sampai dengan permintaan yang keenam ( 2 permintaan terakhir oleh Presiden SBY kepada Presiden EC, Manuel Barroso tahun 2009) tetap tidak dapat dipenuhi oleh UE. Hanya 6 dari 51 maskapai yang lulus audit Komisi Eropa hingga saat ini. Dan tidak mungkin pemerintah kita mengajukan 45 maskapai lainnya untuk diaudit oleh UE, karena semua maskapai tersebut tidak berkepentingan dengan UE dan tidak pernah berniat untuk terbang ke Eropa. Lagipula jika semua maskapai “lulus “audit UE, tidak menjamin keselamatan penerbangan Indonesia meningkat, karena Regulator yang menjamin keselamatan penerbangan kita masih “tidak lulus” dari standard ICAO.
Kuncinya adalah: Ikuti saran-saran ICAO dan FAA, karena keduanya bersama dengan IATA- International Air Transport Association adalah Penentu Standard Keselamatan Penerbangan Sipil dunia.Apa saran-saran mereka?

Hari Laksono

Strategi 101: Strategi Perusahaan untuk Pemula (Indonesian Version)

2010-02-13T04:35:00.000-08:00

Strategi 101: Strategi Perusahaan untuk Pemula

Serial tulisan pendek ini, merupakan suntingan dari berbagai jurnal manajemen strategis, ditujukan bagi para mahasiswa atau profesional indonesia yang masih asing terhadap strategi perusahaan tetapi ingin mempelajari strategi perusahaan baik dari sisi teori maupun contoh case study. Semoga serial tulisan pendek ini dapat sedikit membantu para calon profesional maupun profesional muda indonesia untuk menjadi sumber daya manusia yang lebih kompetitif di dunia yang semakin bebas, global, dan terhubung ini.

Seri 1: Pendekatan dalam Strategi Perusahaan

Tanya: Apakah yang dimaksud dengan strategi perusahaan?
Jawab: Strategi perusahaan adalah cara perusahaan dalam membangun kelebihan kompetitif dalam berkompetisi di lingkungan persaingan usahanya.

Tanya: Apakah pendekatan strategi perusahaan yang paling sering dilakukan oleh perusahaa-perusahaan global saat ini?
Jawab: Secara garis besar ada dua model strategi perusahaan yaitu
(a). strategi yang menekankan pada posisi produk-pasar, dan
(b). strategi yang menekankan pada efisiensi sumber daya perusahaan.

Dari dua model strategi tersebut, saat ini ada 4 (empat) pendekatan strategi perusahaan yang dilakukan oleh perusahaan di dunia. Empat pendekatan tersebut dibagi sebagai berikut:

A. Pendekatan strategi yang menekankan pada posisi produk-pasar

(1). Pendekatan pada kekuatan persaingan. Pendekatan ini dikembangkan oleh Michael Porter di tahun 80an. Pendekatan ini berakar pada paradigma struktur-perilaku-kinerja (structure-conduct-performance) organisasi industri yang menekankan pada tindakan-tindakan yang dapat diambil oleh suatu perusahaan untuk menciptakan suatu posisi pertahanan melawan kekuatan-kekuatan persaingan.

(2). Pendekatan pada sebuah konflik strategi. Pendekatan ini menggunakan teori permainan (game theory), atau dengan kata lain pendekatan ini melihat bahwa keluaran dari suatu persaingan adalah fungsi dari keefektifan langkah-langkah strategis perusahaan dalam menjatuhkan pesaingnya melalui tindakan-tindakan yang bersifat strategis (investasi, penentuan harga, pemberian signal dalam persaingan, dan kontrol dari informasi)

B. Pendekatan strategi yang menekankan pada efisiensi sumber daya perusahaan

(3). Pendekatan berdasarkan sudut pandang sumber daya . Pendekatan ini berakar pada kekuatan dan kelemahan perusahaan; dengan kata lain bahwa perusahaan membangun kelebihan kompetitifnya melalui efisiensi dan efektifitas sumber daya perusahaan. Pendekatan ini menekankan bahwa fundamental utama dari kinerja perusahaan adalah kapabilitas dan aset perusahaan.

(4). Pendekatan berdasarkan sudut pandang kapabilitas perusahaan yang dinamis . Pendekatan ini menekankan pada pengembangan kapabilitas manajemen perusahaan, dan kombinasi (yang-susah-untuk-ditiru-oleh-pesaing) dari kemampuan organisasi, fungsi dan teknologi.

Tanya: Analisa apa yang dilakukan pada pendekatan strategi (1), yaitu pendekatan pada kekuatan persaingan?
Jawab: Pendekatan strategi pada kekuatan persaingan menekankan bahwa struktur dari industri (dimana perusahaan tersebut bersaing) menentukan (a) aturan-aturan persaingan dari permainan, dan (b) potensial strategi yang tersedia yang bisa dimanfaatkan perusahaan. Porter mengembangkan model yang berdasar pada 5 kekuatan persaingan di dalam sebuah industri, yaitu halangan masuk kedalam industri tersebut (entry barriers), ancaman dari industri penghasil produk-produk substitusi dari produk yang dihasilkan industri tersebut (threat of substitution), kekuatan pembeli produk yang dihasilkan industri tersebut dalam melakukan penawaran (bargaining power of buyers), kekuatan pemasok terhadap industri tersebut dalam melakukan penawaran (bargaining power of suppliers), dan persaingan antar pemain pada industri tersebut (rivalry among industry incumbents). Lima kekuatan persaingan dalam model ini menentukan potensi esensi pendapatan dari industri tersebut atau segmen turunan dari sebuah industri. Pendekatan yang dikembangkan oleh Porter, yang kemudian dinamai kerangka kerja lima kekuatan, dapat digunakan dalam membantu sebuah perusahaan untuk mencari sebuah posisi di dalam sebuah industri dimana perusahaan dapat bertahan terhadap kekuatan persaingan atau mempengaruhi kekuatan persaingan yang ada.

Kerangka kerja lima kekuatan memberikan cara berpikir yang sistematis mengenai bagaimana kekuatan-kekuatan kompetitif bekerja pada suatu industri dan bagaimana kekuatan tersebut menentukan tingkat pendapatan dari industri yang berbeda dan segmen-segmen industri. Kerangka kerja lima kekuatan juga berisi sebuah asumsi bahwa sumber dari kompetisi dan asal dari proses formulasi strategi.

Karakter dari strategi yang berdasarkan pendekatan ini antara lain adalah (1) pendapatan perusahaan bersifat pendapatan dari monopoli. Perusahaan dalam sebuah industri menghasilkan pendapatan ketika perusahaan itu mampu menghancurkan kekuatan-kekuatan kompetisi. (2) Strategi kompetisi sering dituukan untuk merubah posisi perusahaan terhadap pesaing dan pemasok di dalam industri. Disini dapat disimpulkan bahwa struktur dari industri memainkan peran utama dalam menentukan dan membatasi tindakan-tindakan strategis yang dapat diambil. Sehingga suatu industri menjadi menarik karena industri tersebut secara struktural memiliki halangan terhadap kekuatan-kekuatan kompetitif (seperti entry barrier yang tinggi) yang memungkinkan suatu perusahaan memiliki kesempatan yang lebih baik dalam membangun kelebihan kompetitif yang terjaga. (3) Pendapatan lebih banyak tercipta pada level industri dari pada pada level perusahaan.

Saya kira pendekatan strategi yang pertama diatas memerlukan renungan yang mendalam terlebih dahulu bagi para pembelajar strategi tingkat pemula untuk mendapatkan esensinya sebelum membahas pendekatan-pendekatan strategi lainnya. Pendekatan-pendekatan strategi lainnya akan dibahas pada serial tulisan berikutnya.

STATUS, EMOTIONS, AND BLAME

2010-02-03T21:51:00.000-08:00

There’s some very interesting research being done over at Stanford about the interplay of status, emotions, and blame. Dr. Larissa Tiedens designed some experiments that were beautiful in their simplicity and jaw-dropping in their implications.

Experiment One: Responsibility for Outcome

In the first experiment, students filled out resume forms. Pairs of students were then matched by race and gender into teams, with one assigned a subordinate role and one a superior role based on their resumes. The pair of students was placed into an office environment (with separate offices for the subordinate and superior, furnished to reflect their different status) and given forty minutes to work on a task with no clear right or wrong answer. They were motivated to do well on the problem, as they’d been told that the team that did best would win a significant cash prize.After forty minutes were up, a researcher would take a quick look over the team’s results and give a brief, preliminary evaluation of whether they had done well or poorly. A different researcher then interviewed the two individually about how they felt, and found big differences depending upon who was asked and whether they had done well (“Success”) or poorly (“Failure”). The students reported that they felt as follows:

		Role
		Superior	Subordinate
Outcome	Success	Proud	Grateful
Outcome	Failure	Angry and frustrated	Guilty and ashamed

The researchers also asked who was more responsible. In the success experience, most of the people — subordinate and superiors — felt that the superior was more responsible for the outcome. In the failure experience, most of the people felt that the subordinate was more responsible for the outcome.

The kicker is that who was subordinate and who was superior was selected randomly, as was whether the students were told that they had succeeded or failed.

This tells me that there is something very deeply ingrained in either our culture or our genes that tells us that high-status people do good things and low-status people do bad things.

Experiment Two: Monica

As it happened, the Monica Lewinsky scandal was breaking right as they were doing this research. They took different excerpts from Clinton’s deposition and showed it to two sets of students. One set saw Clinton looking angry and frustrated; the other saw him looking guilty and ashamed.They then were asked if Clinton should resign or not. The majority of the ones who saw him looking angry and frustrated thought he should stay in office; the ones who saw him looking guilty and ashamed thought he should resign.

This tells me that angry people appear high-status, and high-status people do good things. Guilty people appear low-status, and low-status people do bad things.

Experiment Three: Interview

They then taped a job interview and showed the interview to two groups of Stanford MBA students. The tapes differed in only one line: the interviewee (who was an actor) was asked how he felt about a failure condition. In one tape, he said that he felt guilty and ashamed. In the other, he said that he felt angry and frustrated.The students were then asked a number of questions. The one that really stuck in my mind was what starting salary the interviewee should get. The students who saw “angry and frustrated” said something like $60K, if I recall correctly (after two years). The “guilty and frustrated” group, by contrast, thought he should have a starting salary of $15K. One line of difference in the tape, $15K difference in salary!

This tells me that looking angry can be financially rewarding. (I did not want to hear that.)

Interpretation

Many things made much more sense to me after hearing Tiedens speak on this.

Domestic violence

I’d always wondered why people (usually but not always wives) who get beaten up by their significant others (usually but not always husbands) put up with it. Now it makes sense. If Joe beats Jane up, then Joe, being the victor, ends up in the high-status position. Having had a fight is a failure condition. How does Joe feel? Angry and frustrated. How does Jane feel? Guilty and ashamed. Who do they both feel was more responsible for the outcome? Jane. If Jane feels responsible, guilty, and ashamed, she isn’t likely to tell anybody or to seek help.

Women’s socialization

Women are socialized to “be nice”, to not make waves, to not be aggressive, to not display anger — to be low status, in other words. Ooops.

Race relations

It’s easy to see how a vicious cycle can set in regarding race relations. If a group is perceived as low-status, then people will think they do bad things and hence deserve mistreatment — which then leads to lower status, lather, rinse, repeat.Apparently the lot of the Jewish Germans suffered from exactly such a spiral. Little by little, the Nazis decreased the status of the Jews by badmouthing them, restricting what jobs they could have, making them wear special clothes, restricting where they could live, where they could go, etc. By the time that the Nazis started herding them onto trains, they were very low status — which would make German Christians think that they deserved it. I’ve also heard that genocides in Yugoslavia and Rwanda were preceded by significant amounts of derisive propaganda about the minority group.

Black/Latino/Gay/Girl Pride

When I was a (white, middle-class) kid in the 1960s, I didn’t understand the fuss about “Black Pride”. The thought of being proud that I was white seemed completely foreign to me, as I didn’t have anything to do with it!Now I understand that being proud is a high-status emotion, and feeling high-status is key to not feeling overly responsible for one’s own misfortunes. Being proud is a prerequisite to being angry about the failure conditions of your life, and being angry is a great spur to action.

Jesus’ message

One of Jesus’ main messages — perhaps the main message — was to be good to people of lower status. He was kind to lepers, prostitutes, and beggars. He was kind to a Roman centurion (the occupying enemy!) who asked Jesus to heal his slave. (“Slave” might have meant “gay lover”, but that’s a completely different subject.)

Jesus certainly seemed to understand that low-status people were blamed for more than they deserved and not given credit they were due. The parable of the good Samaritan was meaningful precisely because at the time, Samaritans were the lowest of the low. Jews hated Samaritans! Yet this good Samaritan saved the life of the wounded man when a priest and a Levite (both much higher status) passed the poor guy by. (Perhaps the priest and the Levite both thought that since the victim had clearly been on the losing side of a failure experience, that he was low-status and therefore must have deserved it.)

God watching out

I had always been puzzled when reading accounts of people who just missed calamity or who survived calamity and praised God for watching out for them. Never, however, have I ever seen anyone who had been in a calamity blame God for sending them into the path of danger. You never hear, “If I hadn’t made all those green lights, I would have missed the train and thus not have been in the crash and lost my leg. God must have it in for me.”In this context, it makes sense: God is pretty much the highest-status being there is, so God must only do good things. Satan, while powerful, is pretty low-ranking, so much do all the bad things. (Either that or they are afraid of getting God angry at them!)

Beyond the Carrot and the Stick: New Alternatives for Influencing Customer Behavior

2009-03-30T04:53:00.000-07:00

Special offers, service fees, financing deals—these are all examples of how companies try to influence their customers’ behavior from time to time. Historically, the two basic tools for doing this have been the carrot and the stick. But some companies are having success with a third strategy.

So-called normative approaches make use of peer pressure and other social controls—some of the oldest techniques around. They establish credibility by tapping into the collective power of a larger group. In the right circumstances they can produce remarkable results.

Understanding the choices: instrumental versus normative controls

Carrots and sticks are known more formally as “instrumental” controls. A specific reward or punishment is applied to induce the desired behavior. For example, if you keep a minimum balance, your local bank may waive its normal fees. The bank offers you this carrot because it benefits by using your balance to cover the cost of servicing your account. At the same time, the bank may charge a fee for each out-of-network ATM transaction. Since the bank incurs costs for each of these transactions, it uses the stick of a fee both to discourage such transactions and to help cover its costs if they are made.

But JetBlue (Salt Lake City), the upstart low-cost airline, took a normative rather than an instrumental approach when it realized that it needed to turn its planes around at the gate quickly in order to achieve the efficiency required for profitability.

Cabin cleaning is a key element in the turnaround process. JetBlue knew that its customers were generally enthusiastic about the airline, so it asked each customer to clean up her area before leaving the aircraft. There were neither frequent-flier mileage bonuses for a clean row nor fines for crumbs on the floor—JetBlue simply told customers that they could help keep fares low if they would pitch in.

Customers responded positively— even those who might not have been eager to help didn’t want to stick out as shirkers. The company has been able to keep its costs low and is profitable at a time when many airlines are struggling to stay aloft.

Tapping into community

Successful normative controls gain credibility from the collective norms of a larger group. They reinforce that credibility by building on the group’s ongoing experiences. Several decades ago, when most businessmen wore hats as a matter of course, it was considered impolite not to remove your hat upon coming indoors. This wasn’t a law, it was just a social norm: Taking off your hat was simply the proper thing to do. Compliance was widespread, even though the only enforcement tool was the scorn of others in the social group.

We are much less prone to such broad social controls today (note the number of hats being worn indoors), but in specific circumstances they can be as powerful as ever.

Now, however, we need a more explicit explanation of the reasons for compliance and the benefits of doing so. We also need to be part of a group that is willing to undertake enforcement of the norm.

To see how normative controls work, look at Shouldice Hospital in Toronto, which performs only hernia operations. Shouldice has a much higher success rate and is more profitable than other institutions that perform the same operation.

Part of the hospital’s success can be tied to its particular medical practices: The facility is designed specifically for hernia patients, and it admits only patients who, aside from their hernia problems, are otherwise healthy. But that isn’t the whole story.

At Shouldice, there is an understanding not only that the surgery is only one part of the process, but also that its success can be dramatically affected by what happens immediately before and after the surgery. Shouldice relies on its patient community—that is, its customers.

For example, each patient is expected to be a “hernia mentor” to other patients. Patients conduct the hospital’s orientation sessions. They help one another with follow-up care after the surgery. And the facility sponsors reunions among former patients.

Such practices turn patients into a trusted peer group that helps new arrivals understand what they need to do to improve their procedures’ chances of success. By mobilizing the social power of this patient community, Shouldice has increased compliance with best practices and has dramatically improved the overall success rates of hernia procedures.

Using normative controls to improve quality

EBay, the online auction site, faced a quality control predicament as it began to grow. Although its technology was capable of linking large numbers of buyers and sellers around the world, eBay’s future growth could be threatened if customers found the experience unsatisfactory. There was no way that eBay itself could police the hundreds of thousands of transactions conducted on the site without hindering the rapid flow of information that characterizes the auction environment.

How, then, to ensure an environment in which people would feel secure transacting business?

The solution was to let the buyers rate the sellers and post that information on the site. The online community could set and enforce its own norms through the rating process. Sellers gained greater confidence because they could rely on the experience of a broad range of their peers.

Meanwhile, buyers learned that there would be consequences for disappointing sellers. Thanks to this low-cost policing mechanism, the standards on eBay have become so high that some companies have found that they have to provide a higher level of customer service through their online channel than they do to their offline customers.

Zipcar serves as another example of the effectiveness of normative controls. This Cambridge, Mass.–based company provides urban dwellers with access to private vehicles for periods as short as an hour or two through a fleet of vehicles shared by all members. The customer reserves a specific vehicle parked at a specific location in the city. (There are no central lots like those used by traditional rental car companies.)

Zipcar not only asks its customers to return the vehicle on time, it also requests that they not smoke or bring pets in the car and that they leave the vehicle clean and with a full tank of gas. No Zipcar employee monitors each customer’s use; in effect, the company relies on its customers to satisfy one another. In fact, according to one Zipcar official, “the vast majority— 95% or more” of customers— understand the benefits of compliance and do so willingly.

Zipcar also engages in extensive community-building activities—from sending humorous newsletters to organizing its customers to make charitable food deliveries at the holidays— that help deepen the feelings of interdependence among customers. Given that 20% to 25% of the company’s growth comes from customer referrals, the strategy seems to be working.

Even so, normative controls alone don’t always work. Zipcar has instituted a late fee—to date, fewer than 5% of customers have had to pay one—and is considering raising it substantially for repeat offenders. A Zipcar spokesperson says, “No one thing works for everyone. For some people, a fine is a necessary enforcement tool.”

When do normative controls work best?

Based on these company examples, we can make a few inferences about the conditions under which normative controls are most effective.

1. Customers are looking to do things differently. Each of the companies we have discussed here has an offering that appeals to customers looking for an alternative to more traditional-minded competitors. These customers may be more responsive to normative pressure if they feel it increases the new alternative’s chances of success. The company’s success reinforces the wisdom of the customer’s choice, so the customer is willing to help the company.

2. There is a community of interdependent customers. Socially reinforced behaviors require some sort of connection between the individuals affected. At JetBlue, the connection is physical—customers sit next to each other on the plane. At eBay, the connection is virtual. In both cases, however, customers can see the consequences of complying with or ignoring the desired norms—and they feel a natural inclination to act in ways that will garner the approval of their peers.

3. There is a high degree of trust between the company and the customer. If Shouldice Hospital showed its patients a movie with actors demonstrating the right things to do after a hernia operation, there would be less credibility than there is when actual patients—peers with no possible ulterior motives—are the medium for transferring this knowledge.

How Strategic Is Your Sales Strategy?

2009-03-30T04:37:00.000-07:00

Bringing high-level corporate strategy to the ground-level sales effort is a challenge for most organizations. Yes, most high-performing sales teams do carry with them a solid sense of company goals and priorities, but a sizable gap can exist between the way strategy is implemented in most parts of the organization and its role in sales. And into that gap falls a great deal of potential value. Recognizing that, some companies are infusing their sales efforts with a more vigorous sense of strategy and unveiling promising new methodologies in the process.

Putting the right people in the right seats

In Good to Great (HarperCollins, 2001), Jim Collins tells managers to get “the right people on the bus, the wrong people off the bus, and the right people in the right seats.” Could there be any business area in which this advice is more critical than sales? After all, selling is among the most “people” of all people functions.

“Hiring the right people in sales is very challenging. Unless you are very strategic, at best, you may be 50-50,” says Larry MacGirr, vice president of sales for North America for CIBA Vision, in Duluth, Ga. To increase the odds, the contact lens maker developed a profiling instrument that attempts to match the personality traits of prospective account executives with those found in the company’s top performers. Echoing Collins’s belief that companies should put more emphasis on “character attributes” than on specific experience, skills, or background, CIBA Vision worked with the Waco, Texas– based Profiles International to establish the baseline personality traits of its “eagles”—the top 20% of its sales team.

The resulting profile then became the basis of a tool CIBA Vision uses when hiring. Seeking specific traits in new hires “gives us the type of people we need to be successful,” says MacGirr. “We then put new hires into our training program and develop their skills to as high a level as possible.” Developing effective sales managers is another CIBA Vision priority. As with its eagles, CIBA Vision profiled its best frontline sales managers and created a tool for evaluating candidates for managerial positions. The company soon recognized that individual sales success is not a defining indicator of management potential. In seeking sales managers, MacGirr says, “I am not necessarily looking for my top performers as much as I am looking for my top performers who are able to influence their peers.”

So how can you retain high performers who aren’t destined to manage? You provide them “another career path that keeps them selling,” says MacGirr. At CIBA Vision “super-sellers” may be given the large driver accounts. For those who won’t become managers, “we will give you opportunities to have a bigger impact on the marketplace and on the company as your skills and abilities grow as a seller.”

Segmenting on needs and priorities

In 2001, when Hill-Rom Company, a $1.2 billion maker of patient-care products based in Batesville, Ind., decided to rethink its sales effort, the company looked first at its segmentation strategy.

Like many companies, Hill-Rom had been segmenting its customers by size. But after analyzing a variety of customer characteristics—including capital spending, profit margins, occupancy rates, and so forth— and interviews with salespeople and customers, Hill-Rom found that it could better serve its customers using a segmentation strategy that focused not on their size but on their needs and priorities.

The new strategy led Hill-Rom to recast its customer base into two broad groups, which the company termed key and prime customers. Key customers purchased with greater frequency and tended to buy suites of products. Prime customers were more concerned with price and tended to purchase individual products. Hill-Rom also found that selling to prime customers cost four to five times as much as selling to key customers.

When the company implemented a new sales approach and structure based on the new segments, sales effectiveness quickly improved. In a year, the company’s revenue growth rate doubled, sales rose in both segments, and overall customer satisfaction increased 6%. Meanwhile, over two years, the cost of sales dropped 1% each year.

“Amazingly enough, a large number of companies are still working in a world where doing customer segmentation means breaking your customers up by large, medium, and small,” says Mike Weissel, a Boston-based director at the consultancy Mercer Oliver Wyman. Instead, Weissel recommends segmentation that encompasses both demographic and behavioral factors. “The behavioral piece of that allows you to understand buying behaviors and both the relative value today and the potential value of customers in the future,” he says. “The demographic piece allows you to find the customers. The key when you talk about sales force effectiveness is the ability to take segmentation all the way down to tagging individual customers.”

Building a sales process around diagnosis

High-performing sellers can expend as much effort in helping customers understand their own needs and problems as they do in pitching their wares. This diagnostic approach is especially valuable in such industries as high tech, professional services, and health care, says Jeff Thull, author of Mastering the Complex Sale (John Wiley & Sons, 2003). “In a complex environment, customers need expert help to understand their problems and the parameters of an effective solution,” says Thull. “Buying is decision making, and the salesperson who guides the customer through a high-quality decision process is perceived as a valued business partner instead of a self-serving piranha.”

The Graham Company, a Philadelphia-based commercial insurance broker, brings the value of diagnosis into sharp relief. Graham is the 51st-largest insurance broker in the United States, reporting an annual premium volume of more than $200 million, yet its sales force represents less than 10% of its nearly 170 employees, and it generates its premiums from only 200 corporate clients. (Its nearest competitors have 2,000 to 3,000 clients.)

Graham’s approach is a radical departure from tradition. In an industry in which selling is a numbers game (provide enough attractive quotes and you’ll win your share), the company invests in a highly selective process of new client discovery. In each of the last several years, it typically contacted only 350 prospective clients, decided to seek a relationship with only 35 of those prospects, and earned the business of 28.

In pursuing clients, Graham invests substantial resources diagnosing the customer’s situation. The brokerage sends a team, which can include attorneys, risk managers, engineers, CPAs, and experts in the customer’s business, to evaluate the prospect’s insurance issues and exposures. This work is provided free as part of the sales process. (Consultants might charge $75,000 for comparable work.)

Similarly, Graham pursues an engagement with its clients that is deeper than that of the traditional insurance model. The company involves itself in the ongoing alignment of risk management strategies with the customer’s business objectives—for example, reviewing the insurance issues of proposed acquisitions.

How well does such a selling strategy work? Graham enjoys a 75% conversion rate in an industry with a 15% average and maintains a 98% customer retention rate. Three years ago, Waters Corporation, an $890 million maker of analytic instrumentation based in Milford, Mass., also adopted a diagnosis-based sales process. “One of the fundamental differences between other sales approaches and diagnostic selling is the notion that buying and changing are, in fact, similar processes,” says Richard Brooks, vice president of Americas Marketing. “If you understand how difficult it is to change, then you automatically understand how difficult the buying process is.

“Another important difference is the relationship of the whole process to the cost of [the] customer’s problem. It’s not so easy to do, but when you really help a customer understand the cost of their problem, it makes it easier for them to choose an expensive solution as long as they can see it is cost-effective,” Brooks says.

“You want to spend about 35% to 40% of your time with a customer developing that customer’s needs,” says CIBA Vision’s MacGirr. “Once you get the need well defined and established in both of your minds, the next step is not to present, but to confirm the need. Once that’s done, the close is actually pretty quick.”

How Apple and Amazon Manage Product Reviews

2009-03-30T04:32:00.000-07:00

Two interesting stories going around in the last week, which I find to be similar (even if their impact is different): Apple’s being raked over the coals for rejecting an iPhone app that duplicates Apple functionality, and Amazon’s been dealing with the customer review attack on Spore, including purging and then restoring all of the reviews.

As I’ve mentioned before, I used to manage the Amazon customer reviews business, and so I know very well what the current team is going through. My assumption is that the Apple app store review business has some similar processes and problems. Here are some things I learned while dealing with this:

You start with some philosophical rules, and you try to make them stick. Providing guidelines is the only way to start. Example philosophies for Amazon (made-up, these aren’t real, don’t quote them anywhere else) could include “our customer is the Amazon buyer” (so no, Ms. Vendor, we won’t take down the negative reviews of your book, even though you spend a lot of money on advertising with us), “we eliminate reviews with demonstrably false information”, and “fairness is more important than justice” (so if you generally write good reviews and then get caught plagiarizing once, you can be given more chances).

All sensible on face and all make sense to folks who think in these kinds of abstractions all day - there may still be debate but these are good places to start.

There’s a clear chain of command for decisions. The escalation path from “customer service rep in her fourth week receives a review complaint in the mail queue” to “Jeff decides the review stays” should be very clear. (In my ~2 years dealing with customer reviews, btw, Jeff only engaged once on actual content, and the issue was much larger than just reviews (and he was getting hundreds of mails on this topic) - he generally trusted the heads of these teams to do the right thing as long as they could articulate the philosophy.)

All of this sounds good, of course, but then people get involved. And customer service reps are trying to interpret the philosophies (if they can find them among hundreds of pages of other rules), and some of them are judgment calls (what is “demonstrably false?” If I say “the defibrillator didn’t work and my dad died,” is someone going to check? are comments on voting records trustworthy? etc.) that different people will make, and of course you don’t want Jeff or Steve Jobs or anyone making every decision.

So it’s messy, and when it’s messy, strange things happen - reviews appear and disappear, apps go away and come back (like Netshare), etc.

This is a long way of saying that it’s entirely likely that the banning of Podcaster is a problem of human judgment in a theoretically well-structured system - not least because the decision seems inconsistent - and that could easily come back, not because of a correction of a philosophy, but because of a correction of a human error.

Now, it’s Apple’s responsibility to make that correction, and then to treat the errant employee with respect and look at how the company can do a better job.

The Hidden Logic Behind Our Purchase Decisions

2009-03-30T04:27:00.000-07:00

I drifted out of the house Monday morning without the charger for my BlackBerry. A seemingly small oversight, actually more akin to the doctor saying he forgot the tubing for the life support machine. I am utterly useless without it.

Luckily I was at the airport early enough to have time to trot over to another terminal where I knew there was a shop selling various gadgets for wireless. (My family and friends will now appreciate, by the fact that I did this, the extreme direness of the situation).

Once there, even in my pre-Starbucks state, I was very interested to note that the two young men manning the store had a very strong preference regarding the brand of battery charger I should buy -- and for no obvious (i.e., articulated) feature or price rationale. Since these are pretty cheap products, even if there were a sales commission difference, it's hard to imagine it would explain the enthusiasm for which they repeatedly pointed me to one brand over others. There was clearly some hidden logic going on. It may have been as simple (complex) as the "evilness" Umair Haque speaks of, associated with large traditional firms, since it was those they repeatedly steered me away from, in favor of a more "universal," "open" option.

Well, I'm sorry to leave you hanging on that one (I was, as you'll recall, rushing to catch a plane) but the encounter got me thinking about hidden criteria we each use to make purchase decisions -- logic I bet companies don't understand. Here's an example: I strongly prefer one overnight delivery company over another -- based on a rationale I doubt you'd suspect.

I've mentioned before that I live on a farm with a fairly large pack of dogs -- mostly rescues in various sizes and shapes -- together, a generally a happy-go-lucky crowd, always eager to great the next farm visitor. Now, here's the secret: one of the delivery services stocks their trucks with dog biscuits and (at least in our area) has either hired or trained a dog-savvy driver. The gang loves every visit from this company, greeting the truck's arrival, no matter how frequently it turns down the drive each day, with glee unparalleled by children welcoming Santa from the North Pole.

The other company not only does not stock its truck with treats, but has managed to assign a driver to our rural route who clearly does not like animals. This driver stays well up in his truck and hurls our packages out onto the stone wall, all while surrounded by a barking crowd of miffed mutts.

The bottom line is that I ask everyone I do business with to please use company A over B, if at all possible - it makes my life so much simpler.

And, today I wondered if these companies know what is swinging the business in rural Massachusetts. I get a lot of letters and packages -- and all along our country route, my neighbors have a lot of dogs. I think the ROI on a box of biscuits would be pretty high.

By the way, if anyone tells you dogs are color blind, all I can say is mine can certainly discern their beloved purple and white from brown any day.

What hidden criteria do you use that companies may not suspect?

Involve Your Customers in Design Decisions

2009-03-30T04:24:00.001-07:00

Those who read my blog may have been following my frustration with our marvelously engineered, but user-unfriendly European car (cumbersome navigation interface, dreadful cupholders and an iPod interface that only an engineer could love are among its annoyances).

Apparently, I am not alone in my sometime fixation on car amenities. Just this week, Jeff Jarvis of BusinessWeek comes at the same problems but offers a fascinating solution. What if, instead of treating customers like foreign spies intent on subverting the magic of each model years' design process, the auto companies invited them into the very design process, in much the same way that Google invites its users to test and improve its software products? Perhaps we shouldn't be messing about with stuff like energy transmission efficiency and torque, but hey, what would be the harm in letting us weigh in on the amenities that we both notice and use in daily life?

Jarvis puts it this way:

Car companies have no good way to listen to customers' ideas. If they had opened up, years before, I would have been among the legions who'd have gladly told them to invest 39 cents for a plug-in car radio so we could connect our iPods. Every time I try to listen to my music or podcasts in the car via various kludges - FM transmitters that can't transmit to a radio an inch away and cassette-tape gizmos - I curse car companies and their suppliers. At least let us help design the radios you install, I urged.

No such luck.

Jarvis' recommendation is that car companies could help us design cars that we could truly love, because we would imbue them with our personality -- colors we like, add-ons that just scream "us" and so forth. And why not - hey, they're even saying that electric cars will be required to play sounds because their engines are so quiet that people can't hear them coming. Imagine - ring tones for your car! Nobody hearing that old Springsteen number on the road could fail to know that you're on your way.

Actually, although Jarvis uses a software company (Google) as his exemplary ideal of involving customers in design decisions, I think more easily translatable examples for car companies come from other firms that actually make products. Named as one of the most innovative companies in America by Inc. magazine, T-shirt manufacturer Threadless lets its customers actually design the product. Other customers vote on them. Winning designs get produced and sold; losers never see the light of day. The company that makes Legos is famous for including its more avid customers in the design and development of its Lego kits. Sealed Air Corporation (one of my personal 'most admired' companies) sponsors aBubble Wrap innovation contest every year to encourage inventors and entrepreneurs to put their product to the test in ever-more innovative ways. Kettle Chips annually runs a "People's Choice" campaign in which its customers vote on potential new flavors. The winner gets produced and finds its way to supermarket shelves. Harley Davidson for years took inspiration for new product designs from its "HOGs" (Harley Owners' Groups).

The truly ironic aspect about all this is that the concept of seeking inspiration for innovation from users is hardly new. Back in the 1970's, the brilliant MIT researcher Eric von Hippel's research showed that 'lead users' and early adopters were a potent and powerful source of winning product ideas. Indeed, he argued that most successful innovations had their origins in some kind of need expressed by customers. I guess some lessons need to be learned, relearned and then learned again.

Becoming a Customer Experience-Driven Business

2009-03-30T04:16:00.001-07:00

2008 was the year I decided to no longer care about my frequent flyer miles on United. I've been Premier for about 5-6 years, and after finally reaching Premier Executive (having flown 50,000 miles on United in 2007), the only perk seemed to be exit row seating. After being charged $150 to change a ticket, and treated as little more than a nuisance onboard (they don't even offer peanuts!), it became clear to me that "loyalty" is no longer rewarded. I've decided that, whenever possible, I would fly Southwest, JetBlue, or Virgin America instead.

This isn't because of price -- most trips my company pays for, and in the past I'm sure I've spent a little extra to fly United for the miles. It's because these airlines demonstrably care much more about my experience with them. In Forrester Research's Customer Experience Index 2008, Southwest is the only airline to rank in the top 25, whereas American, Delta, Northwest and, yes, United, sit in the bottom 25. Even though they are a low-price alternative, Southwest delivers the better experience. Why? Because customer experience is an organizational mindset. It's not something a business buys, it's something a business becomes.

Customer experience refers to the totality of experience a customer has with a business, across all channels and touchpoints. Southwest succeeds because of the care it puts into providing a satisfying journey at a reasonable price -- from the simple website to their recently redesigned boarding queues to the friendly staff members who help you, it's clear that Southwest considers how the customer will feel every step of the way. This even goes for their pricing, which, compared to the byzantine rules of the legacy airlines, is remarkably straightforward, and doesn't nickel-and-dime you.

Though the business community increasingly recognizes the importance and power of customer experience to drive innovation and positive financial results (witnessed press coverage of such favorites as Apple, Amazon, Proctor and Gamble, and Nintendo), most companies have not successfully embraced it. This is because becoming customer experience-driven is not a snap. It's more than just embrancing "The Power of Design", or building empathy for your customers by observing them (though both of these things are important). Nor can you buy a technological fix, no matter what the CRM providers say.

Embracing customer experience is a process, one that requires fundamental shifts in how your business behaves and is organized. In my 15 years working in user experience, particularly my last 8 helping run Adaptive Path, a leading experience strategy and design firm, I've learned what it takes for a business to embrace customer experience, and I look forward to sharing this with you. As Southwest Airlines demonstrates, this isn't about money -- in my work, the biggest impact I've seen a customer experience mindset have is to help companies understand how they can better orchestrate existing elements to realize new value. I'm sure that sounds like some retread of the dreaded "Business Process Reengineering", but there's a key distinction -- this isn't about efficiency and effectiveness and reducing waste throughout your processes. This is about choreographing what you already have (technologies, people, offerings) to better respond to your customers' needs and wants.

I'm thankful to HarvardBusiness.org to offer me this forum to share my experience. And, let me say at the outset, what I have to say is not definitive. I'm always learning, and hope you are, too. I'd love for this to turn into a continuing dialog about how to successfully change organizations so they embrace customer experience.

So let's get started: Where is your company when it comes to embracing customer experience?

It's Not Who Your Customers Are, It's How They Behave

2009-03-30T04:13:00.001-07:00

Wow. I'm humbled by the commentary from my first post. I hope I can maintain such passionate interest!)

Businesses cannot exist without customers, so it's sadly ironic that many, if not most, businesses, actuallyunderstand so little about them. As a company grows, a smaller and smaller percentage of the staff interacts with the customers. In fact, those folks on the "front line" (think call centers, service counters, retail stores) are typically among the lowest-paid and have the least authority.

Meanwhile, back at headquarters fundamental decisions are made with extremely limited information about customers.There, understanding the customer is often considered someone else's responsibility, because, "we have a department for that." No department has a complete view of the customer, however, and so in place of true understanding are models and frameworks that attempt to describe the customer. Many companies don't go beyond demographics and market segmentation. While it's helpful to know how they break down by age, sex, income, region, and other easily measurable characteristics, there's actually very little you can actually do with that information. In order to become customer experience-driven, you need to go beyond who your customers are, and understand what they do.

When companies think of how their customers behave, it's typically in one of these four ways. See if any of these resonate with you:

1. "A gullet whose only purpose in life is to gulp products and crap cash"
That quote comes from The Cluetrain Manifesto, still one of the best books on how companies should embrace a new way of communicating with their customers. Very few companies would admit it, but you know that some still see their audience this way (I'm looking at you, broadcast media.)

2. Sheep
This view holds that with the right "messaging", you can guide people to behave in certain ways, because they're docile and gullible and respond only to emotional tugs. And while this might be fine in the world of packaged consumer goods, where there's not a lot of complexity in using (i.e., literally consuming) the product, it breaks down when your offering is more complex. During the first Web boom, I remember companies spending tens of millions of dollars on advertising, and a tenth (or even a hundredth) of that on the site experience. You can no longer simply hound people into buying your product.

3. Homo Economicus
If Sheep are one side of the behavioral coin, this is the other. This view argues that customers are highly rational beings who want to maximize the utility of their purchases. This leads to an assumption that what matters most is "bang for the buck," which in turn gives us products with bloated feature lists, because who wouldn't want to buy the item with 14 bullet points on the packaging over the item with just 10? Sadly, there's research that suggests that many customers do make just this purchase decision; however, there's also research that up to 50% of product returns are for items in perfectly good working order -- they're just too confounding to use.

4. Type A Personality
Perhaps the most sophisticated common view of customer behavior is the one that understands customers are completing tasks in the process of accomplishing a larger goal. This view comes out of the world of software and Web design, where the functionality can get quite complex. This perspective becomes problematic when taken to the extreme -- that people are some kind of flesh robot seeking to maximize productivity. This leads to offerings that work, but can be joyless and dull. Perhaps you've used some of Microsoft's products?

Now, these perspectives aren't wholly wrong (well, maybe the gullet), but clearly they're not quite right. In order for a company to deliver truly outstanding products and services, it must embrace the messy complexity of human life, and endeavor to understand its customers as people. In other words, understand your customer as you understand yourself.

This means going deeper than tasks and goals to appreciate behaviors and motivations. A few years ago, I worked with a large national bank to help them better understand how customers decide to purchase the bank's products and services. The bank had a sophisticated demographic model, but didn't understand what cinched the deal.

Our initial efforts focused on the "goal" of buying a product, and we were able to outline the steps that people took to achieve that goal. They researched banks online, then compared products within banks as well as across banks. They visited nearby branches, and spoke with representatives in person or on the phone. And once they amassed enough information, they committed.

In our analysis, we realized this was only part of the story. We asked the research participants to retrace their steps, focusing on the Web site, to walk us through their experience. And in doing so, we saw that while there was a set of discrete tasks that lead to achieving a larger goal. More importantly there was an underlying motivational layer of emotion that actually guided their decisions. Buying financial products is challenging, because unlike physical goods, it's hard to define what you want ahead of time. At Best Buy, you can point to a 52″ television and say, "something like that." You can't do that with a loan or a line of credit.

So what happened was that while people appeared to engage in the appropriate steps to make a purchase decision, because they couldn't articulate an end state, they were simply going through the motions and would never commit.We realized that customers must satisfy three sets of requirements -- functional (does the product meet my basic needs); intellectual (through comparison, am I confident I'm getting the best deal); and, crucially, emotional (could I have a relationship with this bank?). The bank wanted to drive all applications for new products online, but the customer research analysis made clear the importance of maintaining a quality cross-channel experience. Potential customers often wanted to meet representatives, either in person or on the phone, before committing to an application, even if they've done all their research online.

In my following post, I'll discuss our approach for better understanding customers, and sharing that insight throughout your organization. In the meantime- does your company "have a department" for customer engagement? Or is customer understanding something that's infused across your organization?

Why Small Companies Will Win in This Economy

2009-03-30T04:03:00.000-07:00

I just heard a story from a client that's hard to believe but true.

In the worst economy we've seen in decades, Passlogix, a privately owned 100-person software development company, just received over a million dollars in prepaid commitments for the next three to five years of service. And they beat out several much larger more established companies, like CA (14,000 employees) and IBM (400,000 employees), to win those customers.

Now, how do you explain that? The bigger companies aren't getting similar deals. It's not standard in this industry to prepay contracts of that size and duration. And the clients received only a small reduction for their upfront payment, less than the cost of capital.

I think it's a trend. And understanding it might just be the difference between failing and thriving in this economy.

Yesterday morning I had breakfast with a good friend of mine, a mentor in the consulting industry. He's a senior partner in a large consulting company and has worked in one large company or another for the past 35 years. Really smart, really talented.

And now really depressed. He hasn't been having fun for some time but it's gotten worse. He's survived several rounds of layoffs but who knows, he tells me, he might be hit by the next one. And if he isn't, he might leave anyway because it's so miserable. He doesn't understand how his company is making decisions, including how they decide whom to let go. He is one of the most senior leaders in this company and even he doesn't trust it anymore.

This is not an isolated case. I've been hearing this from many of my large clients. People in senior positions don't trust the decisions being handed to them. And if you go one layer down, to middle managers, the distrust is palpable. I don't know a single person who works for a large company who feels confident they'll have a job in 6 months. Not one.

Now, imagine you're a client wanting to buy from one of these companies. You call up your client contact to talk about the sale. One of two things will happen:

You have a relationship with her and so you talk and get a sense of her insecurity, fear, and distrust.
You have no relationship with her because the company is so big and you talk to a different person each time you call.

Either way, you'll probably get the sense that your contact may not be there in the future to fulfill her commitments to you. And that won't make you comfortable committing long-term dollars (or any dollars) to the company?

Now compare that to Passlogix, whose clients know they can pick up the phone and speak with Marc Boroditsky, the CEO. He tells clients about his commitment to the company and to them, and they know exactly who to call if the work isn't done to their expectations. That personal relationship, that trust, is important to them. They're willing to invest in it long term — to the tune of millions of dollars, up front.

And it's not just the CEO. If clients speak with other employees in the company, they'll get the same feeling of trust. A small company gives its employees a sense of security and employees pass that feeling on to clients. Not that small companies don't go out of business. They do all the time. But each employee has much greater control over his own destiny. In a company of 30 employees, if you do a great job, there is a good chance you'll be recognized. But in a company of thousands? It's easy to be missed. And easy to be laid off.

The gap of confidence between small companies and big ones is growing. We used to rely on the security of big companies. That's why we worked for them. And hired them. And put our money in them.

But with the virtual collapse of AIG, Lehman, Citibank, GM, Chrysler, and many more — now even GE is in trouble — all that's changed. Now it's a risk to do business with the big ones.

We simply don't trust companies anymore. We trust people. And in big companies, it's hard to even find a person to trust as we scream "operator" into our telephones only to get transferred to another menu whose options have changed.

That gives small companies a huge advantage.

Just ask John Drummond, who started Unicycle.com after getting laid off from IBM during the last downturn. Once he got the hang of it, he started Banjo.com, his other childhood passion. Both are doing well and he's about to launch more sites.

There are hundreds of thousands of businesses like John's. Small companies that aren't making millions but provide a good living for the people who work in them. Niche companies whose owners are trying to build sustainable businesses they love rather than fast-growing companies they can flip. They have no intention of retiring. They like working in them. And their clients know that. Which is why they have a loyal customer base willing to invest in the relationship.

Big investment banks are burning — but lots of small boutique firms, each with ten to twelve people, are opening up. And they're doing well. They've gone back to the fundamentals. Finding a niche in which they have value to add and deals in which they are experts. And then sitting across from other people in the deal, building the relationship, making reasonable commitments, and following through.

Small companies with low overhead, reliable owners, a small number of committed employees, personal client relationships, and sustainable business models that drive a reasonable profit are the great opportunity of our time.

Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage.

Between my starting this post and finishing it, Marc Boroditsky called to tell me he's about to book another million-dollar prepaid, three-year contract with another client who said he'd lost trust in the other companies he'd been considering.

The client isn't looking for a vendor who has lots of time in the industry, or who's highly capitalized, or who has a long list of big name clients and a flashy office. I'm sure those things don't hurt. But it's not what he's looking for.

He's looking for people he trusts. For a CEO who picks up the phone when it rings.

Academia vs. Industry: The Difference Is in the Punctuation Marks

2009-03-30T04:01:00.000-07:00

Having spent most of my life either in school (five degrees) or teaching in school (tenured professor), one might think that I've lived in a doorless ivory tower. Fortunately along the way I've had transformative interactions with industry in my role as both a consultant and designer for companies like Phillips, Reebok, Samsung, Google, and Cartier. Actively living between the spaces of academia and industry have made me appreciate the necessary synergy between both worlds.

It is common to hear from industry, "Why are academics so insular?" And alternatively from academia, "Why is business so short-sighted?" The stereotypes fit in some cases, but I like to think that there's a simpler way to understand how the two worlds differ in terms of the "punctuation marks" that define the desired outcomes of the two crafts. I focus on four of those punctuation marks here to identify the general difference between academia and industry of "long-term" horizon versus "short-term" horizon thinking, but also offer the "RISD difference" within this simple vocabulary of marks.**

In academia there is the luxury of time. Thus when a thought might start, it doesn't necessarily have to finish. You can begin ... and not necessarily end. It is this kind of open-endedness that makes academia a necessary space of free thought in the world. The free space is a necessary inefficiency designed into the academic system so that new thoughts can form in the most productive manner — which is through the natural reinforcement of the passage of time.

In industry we like to hear the virtues of "execution" and "getting things done." Got an idea? Set a target deadline. When you're done, package the result and move onto the next task. Don't think. Just do. And keep on doing. One of my best friends at Samsung epitomizes this approach to his life at work. And I admire it, and emulate it in things that I do with my own work.

In industry it's important to be heard. Speaking up is critical for an individual's or idea's survival. "I can't hear you." No. I really can't. So what do you do? YELL. YEEEEEELLLLLL. And you still hope to get heard. By your boss, of course. Or even better by your boss's boss. If Darwin were to observe what usually happens in industry, I would think he would conclude that those with the largest larynx (for voicing an opinion), the biggest fists (for pounding the table), and with the greatest cunning (for seeming unannoying) are guaranteed the next level of survival to the next round of The Apprentice.

In academia there's always a need to think critically. Debate is the starting- and ending-point for all meaningful dialogue. Got an idea? Question it. And question the question while you're at it. Incidentally, from my two years working with Becky, there are times when it appears I literally drive her crazy. She'll tell me, "Stop that Socrates sh*t! Give me a definite answer. Not a definitive question!"

So the and the are about the long view. The and the are about what lives in the short term. But what does this have to do with being the president of RISD? Well. I've discovered a new model in which academia exists. I call it the world of the "Question-Period." Let me explain.

At RISD, what I've observed in the students and faculty here is that the is considered to be poor form. There is no need to overstate one's case. A good idea simply has good value, and a critical audience will most easily recognize that value when it is understated. The same can be said for the because at RISD there is a clear sense that work must be completed. And it can't be completed just on a whim. There has to be a rigorous assault at a concept and in its execution. A means that you've given up. So you absolutely need a to make a clear, defensible expression or result. And lastly, and firstly, and in between first and last, you must be constantly asking after because the work makes you think. And thinking is about asking questions. Every day I see folks on campus in this constant mode of Question-Period. It is one of the many reasons why I am proud to be here, and I am excited to introduce the world of business to the ever-inspiring world of RISD.

The New Organization Model: Learning at Scale

2009-03-30T03:56:00.000-07:00

In recent posts we've described a massive institutional transformation that will occur as part of the big shift: the move from institutions designed for scalable efficiency to institutions designed for scalable learning. The core questions we all need to address are: who will drive this transformation? Who will be the agents of change? Will it be institutional leaders from above or individuals from below and from the outside of our current institutions?

Used to be institutional leaders were the only ones who could change institutions. Why? Because, in an era of scalable efficiency, both work and consumption had to be standardized. It was impossible to get the necessary scale effects otherwise. Standardizing them required a top-down approach. Strong institutional leaders were necessary to mold individuals into two primary roles: customers that consumed products pushed to them on fixed schedules and employees who performed repetitive tasks from nine to five.

Now we have a new infrastructure, a digital infrastructure creating near-constant disruption. By freeing people to interact and collaborate with others outside of traditional hierarchical organizations, by reducing information asymmetries between producers of goods and services and those who buy them, by democratizing control over communications and media--in these and other ways our digital infrastructure is granting new autonomy and freedom to individuals, both as consumers and as employees. (For more about this see The Wealth of Networks by Yochai Benkler.) As a result, individuals wield new influence with and power over the institutions with which they interrelate.

They wield this power from two directions: as customers and as talent. From the customer side, increasing customer power forces institutions to become much more responsive to customer needs, moving from mass customization of products to mass customization of companies. Many people have written about this.

The less obvious part has to do with talent. (And by "talent" we mean workers found at every level of the firm, not just the highly trained and deeply skilled knowledge workers one typically thinks of as talent.) From the talent side of the equation the key requirement for institutional success is to move from scalable efficiency to scalable learning.Near-constant innovation is the only way to respond successfully to near-constant disruption. Said differently, the rate of learning, innovation, and performance improvement within the institution must match (or exceed) that of the surrounding environment if the institution is to survive (or thrive). Given that innovation is inherently a human activity--one performed by talented individuals--it follows that talent will pull institutions into the 21st century.

That's because a rapid rate of innovation cannot be programmed from above. At best what institutional leaders can do is to create the environments--the "creation spaces"--that foster innovation and faster learning. But here's the rub: many of these institutional leaders are caught in the mindsets of the previous generation of infrastructures and the related assumption that scalable efficiency is the key to success. Talent, on the other hand, is under increasing pressure to get better faster and will either leave institutions that cannot help them or become catalysts for change within those institutions.

In fact, in a time of recession, individuals will feel even more pressure to improve their talent, and will therefore intensify their pressure on institutions. As they do, the strength of institutions--which is to provide stability and predictability--is becoming an Achilles heel. Institutions are slower to change than individuals so it is no surprise that individuals are responding to the challenges and opportunities of infrastructure change more rapidly. Ultimately, individuals will pull institutions along with them. In fact, the pull of the individual is already visible in the "values-driven" changes to institutional behavior we've seen during the last two decades--for instance in the corporate citizenship, environmental, and work-family movements--as well as in "mass career customization," which creates a more flexible career path for talent.

These shifts have prompted some observers to predict the rise of an economy in which autonomous workers are proudly independent of any corporate employer. We believe the "e-lance" trend, however, may be more of a reflection of our current push-based institutional models, which limit the potential to develop talent more rapidly. Deeply frustrated with the stultifying atmosphere so amusingly captured by Dilbert, many talented individuals have fled their institutional homes and struck out on their own. As institutions begin re-forming around the imperative of scalable pull, we are likely to see a reversal, or at least a leveling off, of this trend towards independent contractors. We believe that, as talent-driven institutions emerge, they will amplify talent development in far more powerful ways than any individuals could accomplish on their own.

We believe that individuals and institutions are in reality coming to need each other more than ever before.Institutions need talent in order to continue monetizing the intangible assets that make up the lion's share of today's corporate profits. And individuals need institutions in order to accelerate and amplify their own growth, and their impact on the world around them. As this mutual dependence becomes more apparent, individuals will focus their energy on molding institutions into platforms that can more effectively serve their needs.

In the midst of a deeply unsettling global economic crisis, at a time when so many people have lost their jobs, many of us may feel far from newly powerful, either as employees or as customers. But we are in fact becoming more powerful. As the big shift progresses, we're going to get only more so.

In what ways do you anticipate the growing power of the individual will become a catalyst for change in big institutions? Do you see it happening already? What obstacles might get in the way? How could institutional leaders help to accelerate this process?

Four Fatal Flaws of Strategic Planning

2009-03-30T03:54:00.000-07:00

Strategy execution is drawing a lot of attention these days, but that in no way means companies have abandoned their time-tested strategic planning processes. In fact, as far as management tools are concerned, strategic planning is as popular as ever, with 88% of large organizations engaging in some form of formal strategic planning, according to Bain & Company's 2007 Management Tools and Trends report. This number may still be on the rise as economic conditions force companies to search for new ways to jump-start business growth.

Yet despite this widespread adoption, managers continue to make fundamental mistakes that undermine otherwise well-intentioned strategy-formulation efforts. Here are four fatal flaws that consistently creep into strategic planning processes that, if avoided, can significantly improve both the process and the results.

Skipping Rigorous Analysis
Many managers believe their business experience and knowledge base alone equips them with all the information they need to conduct effective strategic planning. This belief is almost always untrue and serves only to undermine the kind of critical thinking from which truly creative strategies are born. A good strategic planning process takes full advantage of the numerous tools of strategic analysis — such as the five forces model, strategic group maps, or the value chain — to gain key insights regarding how the industry is evolving, how competitors are changing positions, and where an individual firm's sources of competitive advantage lie.

Eric Okerstrom, vice president of strategy management for Hagerty, a national specialty insurance agency that insures collectible automobiles and wooden boats, learned this lesson during his most recent strategic planning efforts. The company conducted extensive customer analysis and market segmentation work and, in so doing, realized that their brand wasn't as well known as they first thought. "Our entire leadership team believed that most participants in the collector market knew who we were and wanted to do business with us. What we found out during our analysis was that while our brand was strong amongst our core client base, there was room for improvement." It wasn't that Hagerty didn't have a known brand or delighted customers — they did. It was just that marketing perception and share data revealed that their name wasn't as widely recognized as they previously thought. "We reoriented a significant portion of our strategy and reexamined who our true competitors were because of the data we encountered during the analysis," says Okerstrom. They found that while the traditional end-user insurance purchaser was still important, it was equally important to focus more intensively on the general insurance agency channel that was recommending their product. Now they have adopted an innovative sales approach with a key distributor segment that will help them reach a major portion of the market they had not focused on previously.

Believing Strategy Can Be Built in a Day
In Hagerty's case, changing the minds of key managers took longer than one day. Yet many executive teams earnestly believe that effective strategies can be identified, explored, and agreed upon during abbreviated offsite meetings where the main driver of the agenda is the timing of snack breaks. While offsite meetings are useful forums in which to share information and address key issues, meetings should be adequately timed — over days or weeks if necessary — so that sufficient preparation and review and discussion can occur before and during the event.

MDI Group, one of Atlanta's largest IT and financial staffing organizations, has engaged in annual strategic planning each year for the past decade. In preparation for their yearly offsite, the leadership team, after examining a comprehensive package of performance information, completes a series of templates including a SWOT analysis and a key capabilities review. "We would discuss our SWOT analysis in the morning of the first meeting day, summarizing critical issues as we went. Then we would brainstorm how to address those issues immediately following lunch, with a hard stop no later than 3:00pm," recalls Mike Cleland, president of the IT division. "It always felt rushed, and it seemed like we never really got our arms around the underlying forces driving the key issues." In reality, they didn't. MDI leaders became frustrated as they kept encountering the same key issues year after year despite putting significant time and energy into the planning process.

So MDI modified its approach. For their most recent strategic planning efforts, the leadership team conducted the same up-front activities, but this time they identified four key issues a month before — not the day of — their meeting. Each key issue was assigned to an "issue team" comprised of senior managers for detailed analysis prior to the meeting. For three weeks each team applied a structured problem-solving approach to their issue, isolating root causes and identifying plausible courses of action. Teams then briefed their findings the day before the offsite to ensure all participants had a consistent understanding of the issue, the causes, the options, and — most important — the team's recommended plan going forward. The result was a streamlined process and better decisions. "It really accelerated the meeting," said MDI CEO Ella Koscik. "Also, we have a much higher level of confidence in our actions coming out of this meeting than we've ever had in the past."

Failing to Link Strategic Planning with Strategic Execution
According to a recent survey by the Conference Board, execution overall and strategy execution in particular hold the first and second positions when it comes to "top issues" in executive's minds. It's no wonder — executing strategy requires the work of the entire organization, whereas strategic planning only requires the top team. But part of a top team's challenge in execution often stems from the failure to link their work with ongoing strategy execution. In his article, "Obstacles to Effective Strategy Implementation" (Organizational Dynamics, Vol. 35, No. 1, 2006), Lawrence Hrebiniak of the Wharton School notes that "Strategic success demands a 'simultaneous' view of planning and doing. Managers must be thinking about executing even as they are formulating plan."

Prescolite and Progress Lighting — both brands of Hubbell (headquartered in Orange, Conn.) — show how to accomplish this in practice. Both businesses use what they dub the Long Range Strategic Planning (LRSP) process. This integrated strategic planning and execution system incorporates both strategy formulation activities, such as ongoing analysis of changes in market conditions, with execution activities like management of integrated strategic programs. At the start of the planning year, they perform a "deep dive" on critical competitive issues facing the businesses; the remainder of the year they focus on measuring and monitoring the progress they are making relative to the strategy. As they encounter unforeseen issues — which they usually do — they then analyze them within the confines of the LRSP process. They also maintain a running list of "must-do" integrated programs that they readjust as business conditions change. "We've refined the LRSP process over the past several years to not only make it more flexible and responsive to changes in market conditions, but to also make it more integrated," says Charlie Harris, vice president and general manager of the Indoor Lighting division. "The process today is at the center of what we do and largely responsible for driving successful execution of our brands' strategies." These businesses have made their strategy process a continuous and dynamic one — a more realistic approach than the once-a-year planning meeting that still dominates many corporate strategic planning efforts.

Dodging Strategy Review Meetings
Strategic plans quickly become obsolete when there is no activity in place to keep them alive. Worse, managers sometimes feel freed from execution accountability when reviews are continually rescheduled or dropped from the calendar altogether.

The most direct way to maintain a consistent focus on strategy is to schedule and hold regular strategy review meetings. At the end of the strategic plan formulation, managers should establish a strategic governance process where strategy review meetings — whether they are monthly or quarterly — are scheduled a year in advance. This way, managers can be sure the time for the sessions remains sacrosanct. A typical strategy review lasts anywhere between a half and a full day — so leaders must plan accordingly. To make the meetings productive, the leadership team should develop a standing agenda they can follow consistently each time they meet. The strategy that was created at the beginning of the execution cycle should be the topic of conversation at every meeting — no discussion of operational issues should be allowed. Consistent with avoiding fatal flaw number one, the necessary analysis should be prepared and the findings circulated before the meeting so that the session can be dedicated to guiding decision-making as opposed to conducting unbounded, unstructured discussion.

The Federal Bureau of Investigation (FBI) began holding regular strategy review meetings at the end of 2007, when they started developing a new strategy execution system. While the FBI maintains a vigilant 24-hour-a-day, 365-day-per-year focus on their top tactical priorities, they had never formally held strategy review meetings. "It was really interesting watching [Director Robert S. Mueller III] ask his staff how they were progressing on their parts of the strategy," noted Executive Assistant Director Tom Harrington of the FBI's Criminal, Cyber, Response, and Services branch. "People were watching to see if Mueller was serious about the strategy. By the end of the meeting, after some pretty intense questioning, it was clear he was." The FBI has gone on to hold strategy review meetings quarterly at the mandate of Director Mueller. Further, both their reporting process and meeting approach has gotten more refined. "The meetings get better every time. They're more focused now; we've come a long way from where we started," says Ryan Kennedy, the strategy management analyst responsible for facilitating the process. Running effective strategy review meetings is a learned skill but one that starts with scheduling and sticking to the strategy in the first place.

How Leaders Get the Information They Really Need

2009-03-30T03:51:00.000-07:00

Harvard Management Update editor Christina Bielaszka-DuVernay is on-site this week at the Conference Board's leadership development conference in New York City. She reports here on the highlights of a Thursday morning panel discussion on leadership during which Mindy Grossman, CEO of IAC Retailing, which includes the Home Shopping Network, shared some particularly salient ideas on how leaders can get the information they really need, not just what people think they want to hear.

According to Mindy Grossman, the key to accessing good information is for leaders to get out in the organization and establish with employees their accessibility, their trustworthiness, and their willingness to listen.

When Grossman joined IAC Retailing 13 months ago, the Home Shopping Network (HSN) -- IAC’s largest cash generator -- was in an extended sales slump, merchandise returns topped 18%, and competitor QVC was on a roll. Her mandate was to turn things around. Employees knew that changes needed to be made but were understandably anxious about what those changes would be. Grossman realized that employees needed a leader who would listen to them. But she also realized that a willingness to listen will go only so far; people also need to be willing to talk.

To start building the trust that fuels honest communication, Grossman attended standard employee orientation on her first day; her group included midlevel managers, call center employees, and backstage TV techs. On her second day, she held three town hall meetings during which she established her commitment to working within -- rather than against -- the company's existing culture.

Other things Grossman has done to keep her ear to the ground and make sure that accurate, honest information is flowing her way:

• She created “Connect,” a section on the company’s intranet through which employees could email her their questions and suggestions. “I gained an enormous amount of institutional knowledge very quickly this way,” she said.

• Her town hall meetings continue quarterly. To ensure she hears from HSN’s second- and third-shift employees, she staggers the meetings throughout the 24-hour workday.

• Each week, Grossman lunches with a different group of four emerging leaders from across the company. Not only does this expose her to what high potentials are thinking and doing, but it also serves as a valuable networking opportunity for them. They get to interact with people they otherwise wouldn’t have contact with, developing their leadership and increasing their value to the organization.

How Google and P&G Approach New Customers, New Markets (BY PETER SIMS)

2009-03-30T03:39:00.000-07:00

When I worked with entrepreneurs and leaders in Europe, I often heard complaints like: "American companies have a habit of coming into Europe full of ambition, searching for big markets, but without fully understanding what it takes to sell a product, build a brand, or forge partnerships in each country."

It seems obvious: our assumptions become less valuable the farther our experiences are from our decisions and customers. Yet, these cultural traps always seem to cause frustration and agony and, regularly, steep losses or strategy restarts. Local hiring is just the beginning- we have to make sure we are solving the right problems for customers.

Leading companies such as Procter & Gamble and Google have realized that the more clearly you understand your customer or partner, and their context(s), the more likely you will be able to offer the right solutions, build the right business models and win through global expansion - in India, Mexico, China, Russia, or beyond.

Three approaches - bringing together strategy concepts and the emerging field of design thinking (being advanced notably at the Hasso Plattner Institute of Design at Stanford) - can help all firms grappling with these issues.

The three approaches:

1. Proactively understand customer needs and cultural norms unique to each country.

2. Use those insights to run low-fidelity, strategic experiments.

3. Use the resulting assumptions to drive the development of local business models, including product development, marketing and branding, sales and distribution, and manufacturing.

Google wrestles with these challenges every day around the world. Imagine searching for information on Google in China, where the character set is extensive. You can't just drop the United States product in - people wouldn't use it. So, Google uses ethnographic methods to understand users' needs, including shooting video tape of people searching. It learned how hard it was for the Chinese to get satisfactory search results, so they started experimenting with potential solutions. They built "Google Suggest" that would start to pop up search suggestions so that users would not have to finish typing queries, or by asking users, "Did You Mean?" They found that users really valued these tools and added them to their offerings. These innovations were the direct result of Google's consumer observation, understanding, and insight gathering methods, as well as their capability to run experiments.

Meanwhile, Proctor & Gamble's target market in Latin America is often low-income people, the middle 60% of wage earners - a far cry from its marketing employees, not to mention P&G execs. Perhaps not surprisingly, P&G experienced a number of product failures there during the 1980s. In one case, featured in the Game Changer by CEO A.G. Lafley andRam Charan, the company launched a detergent line in Mexico that marketers assumed would be a big hit because it saved customers money and valuable storage space. The product flopped. Why? Many of its customers there did manual labor and were very sensitive to perspiration odors as they bussed home from work. What gave them confidence that their clothes were getting clean was seeing their detergent foam - something the new product lacked.

Under Lafley, P&G launched a program to have its managers actually live with representative customers called"Living It." Dubbed "immersion research," P&G managers and even senior leaders spend time in low-income homes around the world in order to understand what matters to their customers in life, as well as their desires, aspirations, and needs. P&G has a bevy of statistics to suggest that improved insights and assumptions have led to more effective innovations - including laundry detergent with more noticeable suds.

These approaches are straightforward and make common sense, but they often run counter to established management norms. Importantly, consumer or partner insight gathering is very different from market research. The weaknesses of market research are by now common wisdom. Yet, understanding the sometimes-hidden needs of the market through customer observation through live-in immersion or video observation is just coming to the fore--and not a moment too soon.

Have you seen other examples of companies taking this anthropological approach? Where has it worked and where has it fallen short?

Big Company Lessons for Small Businesses (BY ANTHONY K TJAN)

2009-03-30T03:35:00.000-07:00

Dick Harrington was most recently the CEO and President of the world's largest information media company Thomson Reuters and is largely recognized for his transformation of the company from a diversified holding company to the information services juggernaut it is today. He currently serves as my Partner and Chairman at our early-stage investment firm, Cue Ball. He and I recently had a conversation about the wisdom of applying big company lessons to small ones. Here are some highlights from that conversation:

After spending about a decade running a Fortune 500 - the world's largest information media company - what motivates you to now work with early stage and small businesses?

Small businesses employ over half of all American private-sector employees and are responsible for most of the growth within the United States. Over the past decade, they have generated about 75 percent of new jobs annually. Most important, it is where our most creative thinking comes from. Still, most small companies fail because they have poor basic business practices. So I get excited about having the opportunity to mentor them and hopefully share some lessons. Think about it: it's a lot more exciting to get a company from 0 to $100M than getting a billion dollar company its next $100M.

What is the biggest misconception people have between small and big businesses?

Most small businesses think that big companies have limitless resources and tons of money, and accordingly can do whatever they want. At the same time, most large companies think that all small ones are entrepreneurial, acting quickly, and bursting with creativity. Neither of these common beliefs is true. Most big companies do not throw a lot of resources at every project, and most small companies tend to become stagnant when they are through with their initial, entrepreneurial stage.

Give some examples of how you are applying big company lessons to the small firms you are investing in today.

The questions we asked ourselves while I was at Thomson are the same ones that every small business has to ask itself. At the end of the day, business is business. The size of the organization doesn't matter. We all must understand our customers and the markets we serve, put the right people in the right places, and be sure the organization is aligned to deliver on our goals and objectives.

What strengths shold entrepreneurs focus on?

Small businesses have important competitive advantages. When founders are leading the company, they do so with an authentic passion to deliver on a vision. It's their life. They know their business and customers better than anyone else, and this knowledge can be hugely leveraged with the right operational practices. A large company may have more money for research, but the leader of a small company almost always has more direct interaction with their customers. I am a huge believer that customer-driven strategies win over the long run.

What is the most significant challenge facing small businesses?

The biggest issue is how well the entrepreneur can scale. It's important for entrepreneurs to realize that one person can't control everything, that they can't be VP of marketing, sales, operations, etc. That kind of mindset just won't work in the long run.

How can an entrepreneur meet that challenge?

It's important to let go - to trust people you hire - and to be okay with them making mistakes along the way. Even if a manager makes a decision 180 degrees in the wrong direction, it'll probably be okay. Let them learn from their own mistakes.

What other lessons have you learned that would be helpful for small businesses and emerging leaders reading this?

Years ago I started a plumbing supply company with some partners. We did not have a lot of capital so we sometimes had to get creative on how we filled orders. We went out of our way to ensure that every order was filled, always. Sometimes, this meant getting the parts from competitors or buying at retail to complete the order. But that was okay. What mattered was never disappointing a customer. We had "Yes, we can" years before Obama did.

In addition to the customer-comes-first principle, I always had the motto that the higher you get in an organization, the harder you have to work. Success rarely happens on a nine-to five schedule. Also- dive into the important issues and from time to time "work the line" with other employees. The best way to shape people's behavior is to inspire them by doing it yourself.

Finally, focus. Don't sweat the small stuff. Save the intensity and for the most important company priorities and always make sure those are done first. To help make that happen, deal at most with five things at a time, and don't put #6 on until #1 gets knocked off. You'll definitely increase your chances for success.

Five Questions Every Mentor Must Ask (BY ANTHONY K TJAN)

2009-03-30T03:33:00.001-07:00

One of my partners, Mats Lederhausen, recently shared with me a mentorship framework, first inspired by wellness guru, Deepak Chopra, that he's evolved and used over the years. The framework is an amazingly simple-yet-powerful set of five critical questions. As venture capitalists and advisors, we spend significant time partnering with portfolio companies and very often find ourselves in a mentoring role. These five questions, when asked in the order presented, form an effective diagnostic tool that can provide better guidance to mentees, employees, or generally anyone with whom you are playing the role of a counselor. Additionally, they can serve as a self-diagnosis of one's own capabilities and opportunities.

Here are the questions:

1. What is it that you really want to be and do?
2. What are you doing really well that is helping you get there?
3. What are you not doing well that is preventing you from getting there?
4. What will you do differently tomorrow to meet those challenges?
5. How can I help / where do you need the most help?

Let's briefly look at each question:

1. What is it that you really want to be and do? This question is about aspiration and purpose. The reason why someone is doing what they are doing should come out here. The question is also meant to get at the business goals and broader aspirations of an individual - someone wishing to be successful in business so that they can do more to help others, for example. The answer to question one should surface the driving passion of individuals - what is it they do or wish they could be great at doing?

2. What are you doing really well that is helping you get there? This question helps spotlight a core strength and the person's ability to execute towards his/her goal. What is someone naturally good at doing? Detailed and standardized operations? Leading and motivating staff? Numbers? What is it that someone does better than the average person that can help her achieve her aspiration?

3. What are you not doing well that is preventing you from getting there? This is about facilitating an honest and critical assessment of the roadblocks, challenges or weaknesses in a person or company that is slowing their ability to win the game; to meet the goal from question one.

4. What will you do different tomorrow to meet those challenges? Questions two and three help determine whether people are spending the right time on the right things. Progress cannot be measured just by hard work. Someone may have a great work ethic, but if he is not focused on the right priorities, then "you're making good time, but you're lost," as another one of my partners likes to say. People also have a tendency to practice and repeat what they are already good at doing. It is human nature to show off your best side and hide weaknesses. As a kid playing racquet sports, I remember being asked once why I kept practicing my forehand when my backhand sucked. Use this question to probe whether the person has the aptitude to change behavior. Will the person practice start practicing his backhand?

5. How can I help / where do you need the most help? The answers to the first four questions matched against areas where you as a mentor have particular strengths, relationships, or learning resources - should help determine how you can best help someone achieve the goal.

These questions will help you assess where you can really help an individual or a company. Try these five critical questions the next time you are interviewing a mentee candidate, the next time you have a mentoring session, or answer them yourself as a self-diagnostic. The answers can help you or your mentees put together a sensible game plan for forward progress.

Five Questions Every Mentor Must Ask (BY ANTHONY K TJAN)

2009-03-30T03:33:00.000-07:00

Here are the questions:

Let's briefly look at each question:

Tools to Solve Problems

2009-03-23T01:11:00.001-07:00

The first is to look at problems from the point of view of a person with all the power and money in the world — in other words, a person without constraints. The goal is to remove the individual’s internal editor, the nagging voice that raises all the reasons not to pursue a new idea, and replace it with the voice of the customer. “Instead of focus groups or market research, look at this customer in your head, look at how they would solve the problem, and then go make it practical.” What, for example, would Donald Trump do to solve the problem of a fax machine calling your bedroom phone at 2 A.M.? “He’d hire an apprentice to

answer the phone for him,” Nalebuff says. “It’s a great solution, but it’s not affordable for us. But who do we

know who is up at that time, who can screen our calls for free?” The caller. Nalebuff suggests a simple automated voice response when the call goes through, butbefore the phone actually rings and wakes you up:

“You’ve reached the Trumps. Press 1, and the phone will ring. And it better be good.” As Nalebuff explains, “The fax machine won’t know how to get through, but an important caller will.”

The second approach is to look where incentives are poorly designed, and then correct the problem. Barry

Nalebuff brings up the example of Blockbuster Video. When it was founded, the company bought taped

copies of movies at $99 a pop from the studios; this meant Blockbuster had to rent out each tape 50 times to

recover costs. The result was a shortage of stock, leading to dissatisfied customers who often could not find the movie they wanted. “How do you correct that incentive problem? How do you allow Blockbuster to have lots of tapes?” Nalebuff asks. The answer: “Pay per play, or revenue sharing.” Blockbuster negotiated a deal in which it pays only $10 per movie, but shares $1 per rental with the studios. “Changing that incentive allowed them to switch to guaranteed-in-stock, no late fees, much higher customer satisfaction, and much higher profits,” Nalebuff says. “That switch saved their business. It may not save them from video-on-demand, but as they say, seven fat years are good preparation for seven lean years.”

Turning things upside down is the third technique. Nalebuff can point to countless small shifts, like the

banana trick, that can often make big differences. Do you put coffee in your milk, or milk in your coffee? If

you do the former, you know the milk gets mixedautomatically as the coffee is added. So what? “Dunkin’

Donuts made the switch at its outlets,” Nalebuff notes. “It is able to get rid of countless plastic stirrers and save money.” On a grander scale, Priceline.com took the power to set airline ticket and hotel prices away from the sellers and gave that power to the buyers, building a $1+ billion company in the process.

The fourth Nalebuff technique is asking where else a product or an idea could work. Someone else has surely thought of your idea before you. Has the idea worked in other industries, other countries? What can

you learn from other people’s investments? As an example, Nalebuff holds up a Spin Pop. The brainchild of

two postal workers, the Spin Pop is a lollipop that spins on its motorized base when you push a button. The two inventors of the motor-powered candy sold it for $15 million — a pretty good outcome. John Osher, who

headed Cap Candy, the company that bought the Spin Pop, figured there was more that could be done with it.

After walking the aisles of Wal-Mart for inspiration, Osher saw the expensive electric toothbrushes and

decided to create a $5 spinning toothbrush using Spin Pop’s motor. Osher later sold it to Procter & Gamble for $475 million, and today P&G is using the same motor to power yet another product, the Dawn Power Dish Brush, which sold in the tens of millions in 2006. “The success in every case was based on finding the right problem that their existing answer had already solved,” says Nalebuff.

Case Study: Incentive Strategy

2009-03-22T23:14:00.000-07:00

When it was founded, Blockbuster Video bought taped copies of movies at $99 a pop from the studios; this meant Blockbuster had to rent out each tape 50 times to recover costs. The result was a shortage of stock, leading to dissatisfied customers who often could not find the movie they wanted. “How do you correct that incentive problem? How do you allow Blockbuster to have lots of tapes?”

The answer: “Pay per play, or revenue sharing.” Blockbuster negotiated a deal in which it pays only $10 per movie, but shares $1 per rental with the studios. “Changing that incentive allowed Blockbuster to switch to guaranteed-in-stock, no late fees, much higher customer satisfaction, and much higher profits.” “That switch saved their business. It may not save them from video-on-demand, but as they say, seven fat years are good preparation for seven lean years.”

US - SINGAPORE FREE TRADE AGREEMENT: Benefits on Information & Communication Technology Industry

2009-03-19T21:12:00.000-07:00

The telecommunications industry is still characterized by high capital barriers to entry. Even with unfettered access to the market, dominant incumbents can affect the ability of foreign operators to

offer their services viably. This could be done by refusing to enter into interconnection arrangements with the new operator or by pricing essential services like co-location of equipment or access to poles and conduits owned by the dominant incumbent in a manner that effectively prevents the new operator from offering viable services.

The value of digital products lies in the content itself, not in the medium on which the content is stored or in the mode of its transmission. Singapore and the U.S. not only undertook a permanent moratorium on the application of customs duties to electronic transmissions; they agreed that in future, any customs duty imposed would be applied only to the physical medium, not the content.

Singapore companies will also now enjoy better access to U.S. government tenders for telecom equipment. Before the USSFTA came into effect, there was nothing to stop the U.S. government

from discriminating in favor of American companies when reviewing tender proposals for telecommunication equipment. Singapore companies will now be guaranteed non-discriminatory

treatment for such contracts. Considering the size of the United States. Government procurement market for telecom equipment (about US$4.8 billion in 2001), the potential benefit to Singapore

companies can be quite substantial.

Last but not least, the USSFTA will make it easier for Singapore companies to test and certify telecom equipment for sale in the U.S. market. This will be done via a mutual recognition arrangement which will allow both countries to recognize each other’s conformity assessment procedures for telecom equipment. Once the arrangement is finalized, Singapore companies exporting telecom equipment to the U.S. will not need to submit their equipment for duplicative, additional testing or certification in the U.S. once it has been tested in Singapore. This will give real and tangible benefits to Singaporean companies as they would face lower testing costs and enjoy a faster time to market their products.

How Governments Signal Interest in Development Through Foreign Direct Investment

2009-03-19T20:14:00.000-07:00

Governments interested in economic development via FDI are willing to engage in some surprising activities to signal that they will be a good partner. One way to signal is by resolving disputes with former investment partners.

Case Study: The Turkish government’s dealings with Motorola and Nokia.

The two companies had engaged in what is called vendor financing with a Turkish cellular phone operator, Telsim. Essentially, Motorola and Nokia lent Telsim money to buy telecommunications equipment (from them) with the loan to be paid back out of future earnings. In July 2001, Motorola announced that Telsim had defaulted. Motorola and Nokia won legal rulings against Telsim in 2004, but were unable to collect. Telsim’s offshore assets were not sufficient to cover the money owed, and several members of the Uzan family, owners of Telsim, had gone underground. Motorola and Nokia were rescued by the Turkish Savings and Deposit Insurance Fund (TMSF), which conducted a sale of Telsim’s assets, earmarking 20 percent to Motorola and 7.5 percent to Nokia, which had made a smaller investment.

Why did the Turkish government essentially bail out Motorola and Nokia from poor investments in Telsim? Certainly one factor was Turkey’s pending bid to join the European Union. And following the agreement, Motorola made this public statement: “The Turkish government’s cooperation and diligent efforts to find a solution to allow Motorola to collect on its debt while preserving the business operations of Telsim, instills confidence in Turkey’s strong economic and investment climate.

Status Quo Bias in Strategy Formulation

2009-03-19T01:22:00.000-07:00

People are usually more concern about the risk of loss than the potential of gain. In psychology this is called Aversion of Loss. In the LOSS DOMAIN people are more risk taker, while in the GAIN DOMAIN people is less risk taker.

In business world, CEO is usually reluctant to sell business. Divestments are a major potential source of value creation, but largely neglected one. The aversion of loss created a status quo bias. This affect strategy formulation as well.

There are 2 simple tools to deal with status quo bias:

Adopt portfolio division. First approach is to view all business as up for sale. The other is to view divestment not as failure but as healthy renewal of corporate portfolio
Subjects status quo option to risk analysis. Understand the risk of failing to change

Imposing Mental Accounting in Strategic Investment

2009-03-19T01:09:00.000-07:00

In the field such strategic investment, there is a tendency that one is imposing cost caps on her core business while spending freely on start-up. To overcome such issue, one simple tool is to re-classify spending. It simply means that one should not forget that every penny is worth exactly that. And one needs to make sure that all investment are judged on consistent criteria

Overcoming Overconfidence in Strategy Formulation

2009-03-19T00:59:00.000-07:00

There are 3 simple tools to overcome overconfidence when formulating a strategy:

Test strategy under much wider range of scenarios (make 2 - 4 options)
Add 20% - 25% more downside to the most pessimistic scenario
Build more options and flexibility into your strategy to allow for uncertainties

2nd HAND INFORMATION ERRORS

2009-03-19T00:43:00.001-07:00

Why 2nd hand information is not reliable:

People forget or filter much of the original information
People sharpen or enhance what they perceive to be "gist" of information
People throw less essential information to make the story simpler to the point
In general, sharpen personal attribution and downplay situational factor
People make more extreme evaluation than the first generation (1st hand information) thus create polarization

Social Architecture

2009-03-18T22:26:00.000-07:00

There are 6 issues to be resolved to influence the type 1 (automatic) thinking systems in the society:

1. SET DEFAULTS - the path of least resistance. What happened to the decision maker if she does nothing? Example: Automatic renewal for credit card. Setting defaults is a way to overcome inertia heuristic.

2. EXPECT ERRORS. For example: Japanese design philosophy (that there is only one right way to put things together)

3. GIVE FEEDBACK. For example: the digital camera that sounds 'click' after the picture is taken.

4. UNDERSTAND MAPPING. Understand what are the trade-off for decision maker. For example: Megapixel are good, but takes too many memory. Cost of using credit card versus the benefit.

5. STRUCTURE COMPLEX CHOICE. For example: choosing a home (distance, price view, etc)

6. INCENTIVE. Who use, who choose, who pay, who profits? Standard analysis of incentive is salience. Do the decision maker know what incentive they face? for example: having a car vs. take the public transportation (change people behavior)

Learning Breakdown in Complex Context

2009-03-18T21:56:00.000-07:00

There are 3 reasons why some highly experienced managers recruited from outside the organization fail their performance in their new institutions when face with issues involved complex environments:

1. Time lags between cause and effects. The cause of the issue and its effect are not connected immediately. The managers won't be able to have a full data to understand the situation to make a decision.

2. Fallible Estimates. The initial estimate of a project shape the decision of the manager. For example initial estimation of productivity influences decision about the size of the team required. Initial estimation usually is wrong, but the team size directly affect the actual output.

3. Initial Goal Bias (such as cost, time, etc). Project usually change in scope or other unexpected issues. This will render early target obsolesce. When the manager psychologically fail to readjust, they will stuck with initial goals or target.

Tools to de-escalate emotions

2009-03-17T21:54:00.000-07:00

There are three simple tools to de-escalate emotions

Give choice. Consider this: You are about to go to a family gathering. But your daughter refuse to wear a new gown you just bought her. “Please Emma, wear your gown,” said you. She said. “No!” and you encounter, “If you don’t wear your gown, you can’t come with us. You have to stay home.” and she said, “No!”. But consider this, instead of telling her to wear her gown, you give her a choice, “Do you want to wear the one with the flower or the one with princess?” Which setting do you think your daughter will conform to?

Provide perspective. Consider this: a man was fired from his work and he is about to jump from the high rise building. “Please don’t jump, there must be something we can work it out,” you said to him. “I am finished. My life is finished. I have lost everything.” And you said, “How about your children? Is this the way they want to remember you?” The goal is to help people to refocus and see the situation from another perspective

Take a time out. The best thing to do from escalation of emotion sometimes is just back up, take time out. Have some fresh air.

Conceptual Framework for Incentives

2009-03-17T21:04:00.001-07:00

In developing the incentive system for social architecture within a business entity, we have identified a set of four core questions. The questions are related to the institutional environment within which business operates. They include:

1. Who pay the incentives. How the incentives are being funded in the social entity?

2. Who choose the incentives. How the incentives policy being developed within the social system. Which stakeholders have the end-say?

3. Who use the incentives. Which stakeholders should use the incentive for the incentive to profit the system to the fullest?

4. Who profit from the incentives. What systems of incentive structures – including markets, rules, norms, and scientific information – can most effectively improve social capacity within the social entity?

Investment bias in consulting company - client relationship

2009-03-17T00:31:00.000-07:00

One latent issue with the tender process is it takes exhaustive resources in term of time and cognitive energy for the companies to choose what they perceive as the fittest service provider to their specific needs. In the process the service provider who win the contract will share knowledge with its host and create relationship.

The accumulated investment will outlast the contract time, i.e. once the work is done, and when there is a 'continuation' of a project that require different kind of specification, the once tender procedure that is used to select the right candidate will not be powerful enough to outweigh the newly minted relationship. This is the investment bias that occurs often in the consulting company - client relationship.

If clients ignore what the service provider competency, then the investment bias will take hostage the quality of the works that need to be deliver.

Group Territoriality in Group Conflict

2009-03-17T00:26:00.000-07:00

There are two kind of territory, one is tangible territorial such as physical spaces and the other is intangible territorial such as activities, ideas, roles, and information
Group territoriality is defined as an action taken by group or individual on behalf of the group which are design to reflect group psychological ownership of its territory. Psychological ownership means claim of possession of territory. The nature of group territoriality is inward looking, stem from the need to re-affirm the importance of the group within an organization. The importance of the group consists of three major components: Identity, Efficacy and Security of a group in the organization

Inter-group Bias in Group Conflict

2009-03-17T00:25:00.000-07:00

Reason for grouping in the first place is to define the character and reputation of a group. This in turn will define the character and reputation of every individual belong to a group. This mechanism however raise an issue of intergroup bias. What is intergroup bias? It is a systemic tendency to treat in-group better than out-group. Realistic conflict due to this mechanism is group competition for scarce resources

Cognitive Error in Group Conflict

2009-03-17T00:19:00.000-07:00

There are 3 most cognitive errors involved in inter-group conflicts:
1. Fixed Pie Bias
2. Failure to consider decision process of other person
3. Failure to recognize opportunity to negotiate

Fixed pie bias is basically the assumption that the world is as it is and up-for-grab. Fixed pie bias fails to see that values can be created beyond current perception of an issue.

Failure to consider decision process of other person will cause fail to recognize what other people interests are.

Failure to recognize opportunity to negotiate due to lack of effective negotiation behaviors among the stakeholders and lack of data to be shared to solve the problems.