Horizon Campus Business Digest

Transcription

Horizon Campus
Business Digest
ISSUE 01, MARCH 2016
Published by The Faculty of Management
Horizon Campus
HORIZON CAMPUS BUSINESS DIGEST | FACULTY OF MANAGEMENT, HORIZON CAMPUS
In this edition of Horizon Campus Business Digest;
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ISSUE 01 | MARCH 2016
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ISSUE 01 | MARCH 2016
Each year, companies are spending nearly three-quarters of a billion dollars in an effort to improve
employee engagement — yet you’ll get wildly inconsistent answers if you ask managers what that
means. Academics, consultants, and leaders have been grappling with that question for decades.
Their working definitions range from the simple (“discretionary effort”) to the mind-bending
(“complex nomological network encompassing trait, state, and behavioral constructs”).
That murkiness is a problem, because there are still signs that engagement — whatever it is — needs
to be managed. In a Gallup survey, for instance, organizations whose employees reported high
engagement had 25% to 65% less attrition than their peers (depending on whether they were
traditionally low- or high-turnover organizations). They also received higher marks in productivity
and customer satisfaction. So defining engagement more clearly isn’t just a philosophical exercise. It
has bottom-line implications.
For the most part, companies oversimplify things by viewing personal satisfaction as a proxy for
engagement. As a result, they miss key behavioral signals. What use are Mary’s positive thoughts
about her manager, for example, if she is not giving her maximum effort at work every day? Other
companies use people analytics to examine employees’ behaviors and organizational performance
but then fail to take individuals’ perceptions into
account. John may be interacting with clients
outside work, but is he happy doing so, or is he
burned out and miserable?
It’s critical to look at all these factors —
employees’ perceptions and behaviors, and their
effect on company performance — to figure out
which levers to pull to engage the individuals
who work for you. The levers that matter to Mary
won’t be the same as those that matter to John.
When my colleagues and I work with
organizations, we conduct surveys and interviews
to gauge employees’ perceptions in six areas:
culture, job function, advancement, company
leadership, management, and total rewards. We
also examine self-reported behaviors in six
categories: level of effort, personal development,
company loyalty, recreation, relationships, and
temperament. (We arrived at these metrics by
reviewing the academic literature on employee
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engagement and filling in the gaps with questions about what people actually do, such as going
above and beyond direct job responsibilities.) This approach enables organizations without people
analytics capabilities to start seeing relationships between employees’ perceptions and actions.
Those that already gather and analyze on-the-job behavioral data can use surveys and interviews to
capture additional information — such as whether or not their employees are searching for new
jobs. Then, over time, organizations can track how their employees’ engagement changes and how it
relates to key performance indicators (KPIs), such as sales, customer satisfaction, and attrition.
Returning to our hypothetical examples of Mary and John, we can see how measuring just
perceptions or behaviors could mischaracterize their engagement. We know that Mary has a positive
view of her manager, but does that make her an All Star employee? Maybe she’s doing just enough
to get by, declining to help her colleagues, and refusing additional learning and development
opportunities. That would tell us that she’s actually a Brat who needs an extra push. John is showing
outward signs of engagement by putting in extra time with clients — but could he be a Workhorse or
a Martyr who is suffering in silence? We can find out by looking at how he perceives the meaning of
his work, his opportunities for advancement, and his total compensation.
This holistic approach to understanding engagement will yield more-detailed insights into what
makes people stick around and do their best work. Instead of viewing engagement in terms of low,
medium, and high, organizations will be able to understand how employees perceive them, how that
perception relates to their behavior, and in aggregate, how those factors drive bottom-line
performance. If organizations don’t dig deep like this, they risk misunderstanding their employees
and missing out on all the benefits of high engagement.
Graber, S. (2015, December 04). The Two Sides of Employee Engagement. Retrieved March 22, 2016,
from https://hbr.org/2015/12/the-two-sides-of-employee-engagement?utm_campaign=harvardbiz
HARVARD BUSINESS REVIEW, ONLINE EDITION
About the author;
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Invention has another mother: failure. It may seem counterintuitive, but repeated failures can, and
often do, lead to success. Every time we try something new and fail, it provides valuable information
about what went wrong and, as important, what went right. From that, we can make small changes
and try again, continually learning and innovating. “If you’re trying to solve a problem there are
potentially hundreds of possible pathways to take, but only a few are going to lead to the
appropriate solution. And the only way to discover that is to try and fail and try again,” says Baba
Shiv, a professor at Stanford Graduate School of Business whose research focuses on innovation in
the workplace.
Experimentation and failure are essential to innovation because, by its nature, an innovation is an
unknown that can only be discovered through trial and error. Still, for all the startups that follow the
mantra of “fail fast,” there are many corporate leaders who see failure as something to be avoided,
not embraced. Shiv has categorized this fear-of-failure mindset as Type 1. An innovative point of
view, one that perceives failure as exciting because of the opportunities it presents, he labels a Type
2 mindset. “For Type 2 people, the challenge is to keep experimenting and learning until they get to
what works,” says Shiv.
In corporate hierarchies there is a
tendency to give greater weight
to the opinions of leaders rather
than
their
subordinates.
However, those opinions are
usually based on instinct rather
than information. The one thing
that can trump a higher-up’s
opinion is data, and repeated experimentation and failure lead to a lot of it, says Shiv.
Data can also win over the opposition. Those with a risk-averse mindset generally oppose innovating
through experimentation, like rapid prototyping or continual iteration. “They are constantly looking
for ways to mitigate risk, because that gives them comfort and reassurance,” says Shiv. “Those are
things you can also get from data.”
Yet repeated failure can be tough to justify to management because of the money and time —
yours, your team members’, your manager’s — involved. Experimentation often takes resources
away from other areas of the organization that need them, which is why managers feel obliged to
see results, although there may be nothing to show yet for the work. “Employees have to justify the
investment being made now, even though they don’t know if they will have anything to show for it
and if they do, it will be in the future,” says Shiv.
Organizations also tend to reward big breakthrough successes rather than smaller ones, but those
game-changing innovations generally happen after, or in tandem with, the incremental ones. Shiv
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uses the example of Toyota, a company that encourages experimentation across its organization.
“Most of those experiments result in incremental changes like improvements in production and
manufacturing,” he says. “At the same time, however, the company invested in hybrid technology.”
Shiv says this two-pronged approach relies on exploitation and exploration. Both, he says, are
essential for real success. Exploitation for Toyota means honing competencies it already has to
reduce costs and improve the value for customers — incremental innovations. At the same time
Toyota invests in exploration, which enables breakthrough innovations. “If you don’t invest in
exploration, someone else will, and then you’ll just be licensing or acquiring their know-how,” says
Shiv. The process of exploration also builds a large knowledge base for a company, information that
couldn’t be gained through an acquisition. Yet many companies are hard-pressed to justify a focus
on exploration in a world of increasing short-term pressures, especially on public companies with
stock prices to worry about and dividends to pay. Those pressures cause businesses to be more
oriented toward exploitation and the small innovations that come with that, rather than exploration
and its bigger risks and rewards.
When companies do support experimentation, Shiv recommends they test products or services on
the average customer, not highly knowledgeable customers or early adopters. “The average
customer is far less forgiving,” he says. One thing all companies can and should do is encourage a
culture of innovation at all levels, the way Google has. “Small teams within Google run 3,000 to
5,000 experiments a year,” says Shiv. “A manager there might say, ‘We should use this course of
action,’ and a new hire might say, ‘I think this way of doing it will be better.’ That manager’s first
reaction isn’t resistance, it’s ‘OK, let’s test it.’ That’s the great thing about Google. There are no egos
when it comes to opinions,” he says. “There’s data.”
Zimmerman, E., & Shiv, B. (2016, March 2). Failure is the Mother of Innovation. Retrieved March 22,
2016, from http://www.gsb.stanford.edu/insights/baba-shiv-failure-mother-innovation
STANFORD GRADUATE SCHOOL OF BUSINESS
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By George Slefo. Published on 17 March, 2016.
A record 57% of marketers and agencies are allocating 20% or more of budgets to digital advertising,
including 23% who earmark more than half of their spending for digital, according to the most recent
in a series of studies published by RBC Capital Markets in partnership with Ad Age. Two percent said
they plan to decrease their digital spend, while 82% said they plan to spend more, the study found.
Repondents again said they believed Google provided the best ROI, followed by Facebook, YouTube,
Twitter, LinkedIn, Yahoo and AOL. Twitter was the only platform where respondents' perception of
ROI declined since the prior survey, in September 2015.
Sixty-two percent of respondents said they plan to increase their spending on Facebook in the next
year, compared with 54% for Google, 48% for YouTube and 32% for Twitter.
Other respondents said they planned to cut spending on the platforms: 9% of respondents for
Facebook, 10% for Google, 8% for YouTube and 23% for Twitter.
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"Note that the overall
skew of intentions does
remain positive, with a
greater
percentage
looking to increase rather
than decrease their ad
spend with Twitter," RBC
wrote.
"But taken as a whole, we
view these results as
clearly
negative
for
Twitter, and perhaps the
most negative data-point
from this exercise."
A Twitter spokesman
declined to comment on
the study.
Asked about "emerging" platforms where they might allocate budgets next, respondents cited
Instagram (71%), Snapchat (45%), Pinterest (42%), Spotify (34%), Pandora (27%), Hulu (27%),
Google+ (18%), Tumblr (16%), Reddit (15%) and StumbleUpon (5%).
RBC surveyed nearly 2,000 advertising professionals for the study. Of them, 24% were a marketer or
client, 36% worked for an agency, 10% were a marketing consultant, 13% worked for a media
company, 7% work for a marketing-service company and about 8% were "other."
Slefo, G. (2016, March 17). Marketers Still Eager to Increase Spending on Facebook and Google,
Study Finds. Retrieved March 22, 2016, from http://adage.com/article/digital/marketers-eagerincrease-spending-facebook-google/303148/?utm_campaign=SocialFlow
ADVERTISING AGE MAGAZINE, ONLINE EDITION
About the author
George Slefo is the technology reporter for Advertising Age magazine.
Slefo has a Bachelor of Arts (B.A.) in Journalism from Columbia College,
Chicago and was a reporter for Chicago Sun Times before joining
Advertising Age.
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How The Master's Degree Became
The New Bachelor's In The Hiring
World
More employers are looking to hire candidates with
advanced degrees than ever before.
Lydia Dishman, 17 March 2016, Fast Company Magazine
Nearly a third (32%) of employers are bumping up education requirements for new hires.
According to a new survey from CareerBuilder, 27% are recruiting those who hold master’s
degrees for positions that used to only require four-year degrees, and 37% are hiring college
grads for positions that had been primarily held by those with high school diplomas.
CareerBuilder conducted a nationwide online survey that culled responses from over 2,300
hiring and human resource managers across different industries in the private sector.
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Their responses revealed
that employers pushing their
education
requirements
toward higher degrees are
doing so across all levels of
their
companies.
The
majority of employers (61%)
say they are looking for
more educated candidates
at the mid-level skill level,
but 46% are looking to hire
better educated candidates
at entry level and 43% think
the same for
higher levels.
The Cost Vs. The Benefits
This comes at a time when
the cost of a four-year
college degree is out of
reach for the average
American
family.
But
employers argue that a tight
job market and evolving need for different skills are making it necessary. For example, 60%
of employers who were satisfied with hiring high school graduates in the past claimed their
work requires the skills held by those who have completed higher education.
And even though the U.S. unemployment rate is at a historic low, more than half (56%) of
employers said they are able to get college graduates for positions. Indeed a 2015 report
revealed that about 2.8 million university graduates (holding bachelor’s, master’s and Ph.D
degrees) entered the workforce, but millennials account for about 40% of unemployed
American workers. The worst off were those between the ages of 21-25.
Although the cost is exorbitant, a four-year degree still translates to a better earning
potential than just a high school diploma. A recent Pew Research study found that high
school graduates earn about 62% of what those with four-year degrees earn. That’s evolved
since 1979, when people with only high school educations earned 77% of what college
graduates made.
Employers told CareerBuilder that higher education not only increases an applicant’s chance
of getting hired, but it helps boost the chance they’ll be promoted down the road.
Thirty-six percent of employers reported that they would be unlikely to promote someone
who doesn’t have a college degree.
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That’s because employers have seen education make a positive impact across the board,
from employees' ability to produce better quality work, to productivity and the ability to
boost customer loyalty.
When A College Degree Doesn't Matter
This is in stark contrast to recent moves by the U.K. branches of companies such as EY, PwC,
and Penguin Random House. Global accounting firm PwC, which is one of the largest
recruiters of graduates in the U.K., announced it would no longer consider certain exams
when vetting new recruits because that excluded candidates from disadvantaged
backgrounds.
EY’s U.K. office got rid of grade requirements because an internal study found that academic
success didn’t correlate with job performance. For its part, the U.K. branch of Penguin
Random House removed degree requirements entirely to broaden its appeal to candidates.
The good news for current and future workers is that some companies are taking
responsibility to bridge the skills gap and overcome the talent shortage. Over a third of
employers (35%) said they trained low-skill workers and hired them for high-skill jobs in
2015, and 33% said they’ll do the same this year.
A full 64% of employers said they plan to hire people who have the majority of skills they
require and provide training for the rest. They’ll do this by paying for training and
certifications offered outside the company or sending them back to school. Twenty-three
percent said they would fund an advanced degree partially, and 12% would foot the entire
bill.
Fast Company recently reported that a small, but growing number of companies are offering
employees assistance to pay back their student loans. According to a report on millennials
issued by the White House, total student outstanding loan debt surpassed $1 trillion by the
end of the second quarter of 2014, making it the second largest category of household debt.
The average amount carried by each borrower is in excess of $35,000.
Dishman, L. (2016, March 17). How The Master's Degree Became The New Bachelor's In The
Hiring World. Retrieved March 22, 2016, from http://www.fastcompany.com/3057941/thefuture-of-work/how-the-masters-degree-became-the-new-bachelors-in-the-hiringworld?utm_content=buffer63450
FAST COMPANY MAGAZINE, ONLINE EDITION
About the author,
Lydia Dishman is a business journalist writing about the intersection of
tech, leadership, commerce, and innovation. She is a regular contributor to
Fast Company and has written for CBS Moneywatch, Fortune, The
Guardian, Popular Science, and the New York Times, among others. She is
coauthor of the book Survive to Thrive.
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Before “Banana Republic”
Was Mainstream Fashion, It
Was a Weirdly Wonderful
Safari Brand
Robert Klara, March 16, 2016
Mel Ziegler still recalls the day in the early 1980s when he and his wife, Patricia, opened the most
unusual clothing store Beverly Hills, Calif., had ever seen.
With its jungle expedition theme, the store featured live tropical foliage, a Quonset hut to house the
shoe department and an actual stream gurgling down the center of the sales floor. Life-size model
giraffes and elephants stood amid old leather suitcases and wooden-crate racks piled with khaki
"safari" clothing—Ghurka shorts, pith helmets and chamois shirts with deep cargo pockets.
To complete the effect, Ziegler balanced a World War II Army Jeep atop boulders in the front
window. Above the sales floor, he suspended a salvaged bush plane on wires from the ceiling
painted to resemble a blue Zimbabwean sky.
"We had to close the whole street just to bring the bush plane in," Ziegler recalls. "But that was part
of the fun of it. We were kind of anarchistic. If we could find a rule to break, we broke it."
And what was the name of this exotic, equatorial clothing outpost, this store that broke all the rules?
Believe it or not, you know it already: It was Banana Republic.
Emphasis on the "was," of course. That's because today's shoppers browsing Banana Republic's 700plus locations are in a store without a memory. Gone are the palm fronds, tusks and tin shacks,
supplanted now by stark white walls and glossy parquet floors. Gone are the cartridge belts, Burma
pants and Bombay shirts—all of it replaced by pricey casual wear that's more Nashville than Nairobi.
Nor will today's Banana Republic customers find the brand's once-legendary catalogs—hand-
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illustrated periodicals that featured travel essays, funny and fictitious stories behind the clothing and
(unpaid) celebrity contributions from the likes of Anne Rice, Pierre Salinger and Paul Theroux.
Banana Republic's "safari" era lasted fewer than 10 years, and with the possible exception of khaki
pants hanging from the racks today, not a trace of the original concept remains. As Ziegler puts it:
"It's not even a ghost of what we created."
So what did happen to the original Banana Republic, anyway?
The 'safari craze'
Ziegler met his future wife at the San Francisco Chronicle, where he worked as a reporter and she as
an illustrator. Restless and creatively restricted, they quit on the same day in 1979. During a
freelance press trip to Australia, Ziegler bought an old British Burma jacket from a surplus store in
Sydney and wore it back home. The Zieglers liked the utilitarian swagger of the jacket so much that
they decided to start a business dedicated to reselling surplus military clothing, which Patricia often
customized with civilian touches like suede elbow patches, belts and wood buttons.
With only $1,500 in working capital, the Zieglers started Banana Republic, a term O. Henry coined in
1904 as slang for a corrupt, politically unstable Latin country. Americans, for whom "surplus" meant
only camouflage U.S. Army T-shirts, fell in love with the exotic military leftovers the Zieglers
scrounged on their international buying trips. "In England, we found Melton wool overcoats made
for the British army selling for 25 bucks," Ziegler recalls. Banana Republic marketed the clothing as
rare and marked it up. "We weren't losing money," he says.
By 1983, the couple had a thriving catalog business and two stores in the Bay Area. That's when Don
Fisher, who co-founded the Gap with his wife, offered to buy Banana Republic outright. Gap would
fund an expansion while leaving creative control to the founding couple. It was the sort of offer you
couldn't refuse—and the Zieglers didn't.
The Gap's capital opened the door to a golden age for Banana Republic. Mall stores decorated with
Jeeps and jungle foliage sprouted up across the country. The Zieglers began using surplus as a
template for manufacturing their own clothing. By 1984, Banana Republic was producing 54-page
catalogs eight times a year.
"A lot of people forget that there was a big safari craze in the mid 1980s," recalls Mike Madrid,
Banana Republic's production manager in those years. Having flocked to movies like Out of Africa,
Romancing the Stone and especially the Indiana Jones films, Americans were nuts about khaki twill
and far-flung, steamy destinations. For those who couldn't afford a ticket to Sri Lanka, Banana
Republic's mall stores offered a substitute of sorts.
Today there's this whole idea of 'shoppertainment,' Madrid said, "but Banana Republic was doing
that before there was a term for it."
Bungle in the jungle
Gap was a publicly traded company. That put Banana Republic under the humorless gaze of Wall
Street analysts, who by the mid-1980s began to fear the safari trend would tap out, leaving Gap with
an albatross. Then, in October 1987, the stock market took a 22 percent nosedive. In a panic, Fisher
brought in Mickey Drexler, who'd end up turning the Gap around but did not think very highly of pith
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helmets. When Drexler decided to take Banana Republic in a more mainstream direction, the
Zieglers walked.
Dan Schawbel, an author and business consultant, explains that Banana Republic's parent company
was maximizing an asset. "Gap was looking to expand its product line with a luxury brand and saw
the appeal of Banana Republic to fit this new line," he said. "The Zieglers had evolved the brand to
focus on classic, high-quality clothing, which is what the Gap was looking for."
Gap was also looking for a break with the past, and, by 1990, an entirely new Banana Republic had
emerged—minimal and modern, having turned its back completely on its wild years. (Asked to
comment for this story, Banana Republic did not respond by press time.)
Years later, Ziegler relates, he ran into Fisher at a cocktail party and recalls that the Gap founder was
penitent. "He came up to me and said he really regretted what he had done [to Banana Republic],"
Ziegler said. "If we could wind back the clock, the challenge would have been for us to keep it fresh
year after year. But they felt that we had taken a metaphor and gotten as much as we were going to
get out of it."
Klara, R. (2016, March 16). Before Banana Republic Was Mainstream Fashion, It Was a Weirdly
Wonderful Safari Brand. Retrieved March 22, 2016, from
http://www.adweek.com/news/advertising-branding/banana-republic-was-mainstream-fashion-itwas-weirdly-wonderful-safari-brand-170059
ADWEEK MAGAZINE, ONLINE EDITION
About the author;
Robert Klara is a longtime magazine editor and writer. He’s served on the
mastheads of numerous titles including Town & Country and Architecture,
and he’s currently a staff writer for Adweek and a contributing editor for
American Road magazine. His articles, essays, profiles and podcasts have
appeared in a wide variety of publications including The New York Times,
American Heritage, the New York Daily News, The Christian Science
Monitor, New Jersey Monthly, and The Huffington Post.
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A Tale of Two Brands: Yahoo’s
Mistakes vs. Google’s Mastery
Denise Lee Yohn, February 23, 2016
The latest upswing for Alphabet, parent company of Google, comes as fellow tech giant Yahoo is
mired in increasing challenges to stay afloat. In this opinion piece, author and branding expert
Denise Lee Yohn discusses the stark differences in, and impact of, each company’s approach to
branding. Yohn is author of the book, What Great Brands Do: The Seven Brand-Building Principles
that Separate the Best from the Rest. She is also the former vice president/general manager of
brand and strategy for Sony Electronics’ brand office and former marketing leader and analyst for
Jack in the Box restaurants and Spiegel catalogs.
Less than two weeks after Google’s parent company, Alphabet, became the world’s most valuable
public company, Yahoo put its core business up for sale. The contrast between the two companies
couldn’t be sharper.
While many theories have been offered to explain Yahoo’s downfall in light of Google’s ascent, I
would like to suggest that the difference in the companies’ brand approaches may be the most
illuminating. While Google has mastered brand strategy and management, Yahoo has lacked a
definitive brand purpose and future-oriented
brand vision — and these deficits have led to
key brand missteps including introducing an
impotent visual identity.
Yahoo’s selfdescription
changed 24 times
in 24 years
Yahoo’s Confusion vs. Google’s Clarity
Google’s brand mission is well-known and wellestablished: to organize the world’s information
and make it universally accessible and useful.
.
Founders Larry Page and Sergey Brin crafted the
mission in the company’s early years and, ever
since, the organization has stayed committed to
it. The statement is displayed front and center on Google’s “About” page and regularly appears in
company communication. It has been used by many as a robust descriptor for the company and by
employees as the driving force behind practically everything they do.
Yahoo’s brand mission isn’t so clear — actually it isn’t to be found. An official mission statement
doesn’t exist on its site, and the statements I did uncover elsewhere were varied and often
conflicting. The company lacks both a definitive, compelling description of what it does and why it
does it.
Yahoo’s Confusion vs. Google’s Clarity
Google’s brand mission is well-known and well-established: to organize the world’s information and
make it universally accessible and useful. Founders Larry Page and Sergey Brin crafted the mission in
the company’s early years and, ever since, the organization has stayed committed to it. The
statement is displayed front and center on Google’s “About” page and regularly appears in company
communication. It has been used by many as a robust descriptor for the company and by employees
as the driving force behind practically everything they do.
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Yahoo’s brand mission isn’t so clear — actually it isn’t to be found. An official mission statement
doesn’t exist on its site, and the statements I did uncover elsewhere were varied and often
conflicting. The company lacks both a definitive, compelling description of what it does and why it
does it.
According to one researcher who tracked Yahoo’s boilerplate for press releases, the company’s selfdescription changed 24 times in 24 years.
When Marissa Mayer took the reins at Yahoo, she was hailed as a visionary leader who would rescue
the floundering company. But she failed her most important task: explaining — to investors,
customers, employees and the world, really — why Yahoo should continue to exist.
To be fair, the company was started with a somewhat problematic mission. Two electrical
engineering students at Stanford, David Filo and Jerry Yang, created it as a guide to keep track of
their personal interests on the Internet. But over time the world outgrew the need for a single place
to find useful websites, and one after another, Yahoo’s leaders failed to articulate an alternate
enduring reason for the company’s being.
Mayer eventually tried. Late last fall, she commissioned a book to be distributed to Yahoo
employees. It contains stories, images, quotes and messages about Yahoo’s past and its future, along
with a new statement of the company’s mission, “To be an indispensable guide to digital
information, yours and the worlds.”
But it’s not a pithy point and it’s probably too late — and given the company’s track record, I
wouldn’t be surprised to see it change again.
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Of course, mission statements, in and of themselves, are not really all that important. But
organizations do need a clear and compelling sense of purpose. Leaders of great brands use brand
purpose as a compass and engine for their organizations — driving, aligning and guiding everything
they do. Without the long-term commitment to a definitive purpose, Yahoo has been rudderless.
Reacting at Yahoo vs. Anticipating at Google
Yahoo has also been visionless. While many credit
Mayer with leading the
company’s transition to
mobile, the shift was born
out of necessity to catch up with the world, not out of opportunity to change it. In fact, Yahoo has
been operating in reactive mode for the last decade. Even the new homepage design it recently
introduced is merely an incremental evolution of its past designs and its latest attempt to mimic the
popular features of other sites.
Yahoo doesn’t have a brand vision that would propel it forward, leapfrogging over existing realities
and pushing the limits of what is possible. Mayer once described her vision for the company’s future
saying, “As digital content becomes richer, as search and mail become richer, we need to change
what the format of that guide is, as we move to mobile, wearables, TVs, cars, and all the other
formats in the future. So, we’re focused on search, communications and digital content, all of which
we think are incredibly important parts of that role as a guide, and those are the products that we’re
investing in and building on.” Her statement merely reflects the company’s reactive stance to
changes that it must address — not new growth opportunities it is creating for itself.
Compare this to the
way
Larry
Page
described his vision
for the future when
he introduced Alphabet as the holding company for Google and other entities: “We’ve long believed
that over time companies tend to get comfortable doing the same thing, just making incremental
changes. But in the technology industry, where revolutionary ideas drive the next big growth
areas, you need to be a bit uncomfortable to stay relevant.” Alphabet, he went on to explain, is
intended to give more support to businesses “far afield” from Google’s main Internet products,
including glucose-sensing contact lenses, drone delivery and driverless cars.
The introduction of Alphabet itself embodies the company’s future orientation and brand vision.
Separating the Google brand from the organization’s more far-reaching efforts allows Google to
remain aligned and focused on its brand mission and “un-hinders” from efforts that should have
their own missions, such as Jigsaw, the new brand for the organization’s innovation lab. Having
ditched the former name, Google Ideas, Jigsaw can freely pursue its mission — “to use technology to
tackle the toughest geopolitical challenges, from countering violent extremism to thwarting online
censorship to mitigating the threats associated with digital attacks” — without diluting or derailing
the Google brand.
This kind of brand separation would have been useful for Yahoo to have established before the dire
situation it now finds itself in. A separate brand might have protected Yahoo from the doubts
involved with its decision to spin off its stake in ecommerce giant Alibaba, as well as the
embarrassment when it reversed itself and shelved the plan. And now, the move to put the core
business up for sale calls into question the future of the Yahoo brand as a whole and therefore the
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viability and vitality of any of the units that would remain after such a sale. Again, it’s too late. Yahoo
finds itself behind the brand eight-ball because it hasn’t created a future-oriented brand vision.
Yahoo Style vs. Google Substance
Without a powerful brand purpose to ground the company and a visionary brand ambition to
advance it forward, it’s no surprise that Yahoo missed a critical opportunity when it changed its logo
back in 2013. Not only was the new logo design a mere update of the old version, but it also failed to
communicate anything of substance. In her announcement of the new logo, Mayer said, “We knew
we wanted a logo that reflected Yahoo — whimsical, yet sophisticated. Modern and fresh, with a
nod to our history. Having a human touch, personal. Proud.” She went on to describe the design
details of the new logo, explaining, for example why it didn’t incorporate straight lines, but she said
nothing about how the change achieved any strategic objective or reflected any substantive change
in the brand experience.
Kathy Savitt, the company’s chief marketing officer at the time, explained that the new logo was
intended to reflect the company’s “reimagined design and new experiences.” But I couldn’t figure
out what she was referring to since no new experiences were incorporated into the logo or vice
versa. While Yahoo’s identity refresh was simply about design and brand personality, Google’s new
logo sent a clear message about the brand’s updated functionality. When Google introduced a
sleeker, brighter, animated logo last year, it explained, “Once upon a time, Google was one
destination that you reached from one device: a desktop PC. These days, people interact with
Google products across many different platforms, apps and devices. Today we’re introducing a new
logo and identity family that reflects this reality and shows you when the Google magic is working
for you, even on the tiniest screens.” Moreover, Yahoo’s change seems self-serving whereas
Google’s customer-orientation is clear.
The contrast between Yahoo and Google’s new visual identities illuminates the impact of brand
purpose and vision. With them, visual identity changes are imbued with meaning and value; without
them, they’re merely cosmetic exercises. When a company knows what it stands for and where it is
going, it can focus its people and resources and have clarity in a range of decisions. Not all of Yahoo’s
problems originate from its brand failings, but if Google provides a fair comparison, it’s clear that
more attention to Yahoo’s brand purpose and vision could have helped.
Yohn, D. L. (2016, February 23). A Tale of Two Brands: Yahoo's Mistakes vs. Google's Mastery.
Retrieved March 23, 2016, from http://knowledge.wharton.upenn.edu/article/a-tale-of-two-brandsyahoos-mistakes-vs-googles-mastery/
KNOWLEDGE @ WHARTON | WHARTON SCHOOL OF BUSINESS, U-PENN
About the author;
Denise initially cultivated her brand-building approaches through several highlevel positions in advertising and client-side marketing. She served as lead
strategist at advertising agencies for Burger King and Land Rover and as the
marketing leader and analyst for Jack in the Box restaurants and Spiegel
catalogs. Denise went on to head Sony Electronic Inc.’s first ever brand office,
where she was the vice president/general manager of brand and strategy and
garnered major corporate awards
16
What Happens When We
Become A Cashless Society?
Imagine a future where everything is seamlessly paid for via your
phone. It's a beautiful vision—with some dangerous unintended
consequences
Charlie Sorrel, March 15, 2016
The U.S. government didn’t issue banknotes until 1862. Before that, people paid for goods and
services with a mix of government-minted coins and currencies issued by private banks. And now
cash is on its way out, accounting for just 40% of payments in 2012 and dropping. There are many
benefits to removing cash from the economy, such as eliminating black markets and allowing more
easy monetary policy. But there are also concerns when every single transaction can be monitored,
examined, or manipulated. Regardless of where you fall, though, one thing is clear: As online
shopping becomes yet more prevalent, and prepaid credit cards take the place of more and more
low-value cash transactions, cash is well on its way to becoming obsolete.
Privacy in A Cashless World
Governments and their agencies love electronic transactions. Without cash, it’s much harder to hide
money from the tax man. The police and government agencies like the National Security Agency
(NSA) love the traceable records that cashless payments leave behind. Last year, France and Spain
both enacted laws that limit cash transactions. In
France it is now illegal to use cash for anything more
than 1,000 euros (around $1,080). In Germany,
economist Peter Bofinger supports a ban on cash,
calling it an anachronism. "The markets for undeclared
work and drugs could be dried out," writes Germany’s
Der Spiegel, "and central banks would find it easier to
enforce their monetary policies."
The promise is that banning cash would end black
markets, but for honest citizens, the end of paper cash
brings many unsettling downsides. Credit card
transactions are already traceable, and electronic cash
could bring that lack of anonymity to every single
transaction you make.
While anonymous digital cash is technically possible, governments are unlikely to pass up the chance
to have all currencies tracked as they move through the system (like with credit card transactions),
or with new digital currency that carries a record of its own history along with it.
Once this information exists, it will become a target of government agencies such as the police and
intelligence services and trafficked to insurance companies, tax collectors, fraud squads, and even
marketers. If, as Ben Dyson and Graham Hodgson suggest in their paper Digital Cash, digital cash
were issued by a federal or government-run bank and then administered by private agencies, then
you would have to read the small print in your contract to see just who your information might be
sold to when you bought anything.
17
"When all our payment transactions are tracked," says Rainey Reitman, activism director at the
Electronic Frontiers Foundation, "it creates a trove of data we have no control over. It's easy to
imagine a daring divorce lawyer or a government agent trying to gain access to our financial history
to try to build a story about who we are."
The rich may be better equipped to buy themselves privacy, says Reitman, "whether that's setting
up corporate entities for their transactions. However, for the average person trying to use a
traditional bank account to process a payment online, there's no anonymity."
For poorer people, cashless transactions just aren’t practical. Prepaid credit cards are one
alternative, as are vouchers that can be bought in grocery stores for cash and used to pay for iTunes,
Amazon, Spotify, and other online services.
"There are many people who are unbanked and cannot
receive lines of credit for a whole range of reasons," says
Reitman, "and a ban on cash would particularly impact
the unbanked community."
Around 8% of the U.S. population remains unbanked, and
20% of households are underbanked, meaning that "they had a bank account but also used
alternative financial services (AFS) outside of the banking system," according to figures from the
2013 FDIC national survey. And while the U.S. unbanked population remains more or less constant,
worldwide the numbers dropped by 20% (to 2 billion adults) between 2011 and 2014, according to
the World Bank, as 700 million people gained access to financial institutions.
In 2014, according to a Gallup poll, 29% of Americans didn’t have a credit card, and that figure is
rising, in part because millennials don’t like them. Bankrate published figures putting the number of
millennials without a "major" credit card at 63% (this may be in part thanks to the CARD Act of 2009,
which makes it harder for under-21s to get a credit card). The main alternative for things like online
shopping is prepaid cards, but they are burdened by high fees, further punishing poorer people.
(Although the situation is improving.)
In Sweden, a country on the front lines of cash elimination, the low-income population has already
adapted to the cashless present. Homeless people carry credit card readers supplied by the
charitable Situation Stockholm magazine. The New York Times spoke to 65-year-old Stefan Wikberg,
who now has a home and sells Situation Stockholm to make a living. "Now people can’t get away,"
he told the New York Times. "When they say, ‘I don’t have change,’ I tell them they can pay with
card or even by SMS." Wikberg says his sales have increased by 30% since he started taking cards
two years earlier.
"We didn’t know how it would turn out, or whether people would be reluctant to give their credit
card information to a homeless person," said Situation Stockholm’s Pia Stolt in a news report, "but
the results have been great—vendors’ sales are up 59%."
If government-issued cash does eventually disappear, alternative currencies may take its place.
These nonofficial payment systems are already thriving around the world, from the TEM (Alternative
Monetary Unit) in Greece to the Demi, where Canadians cut $20 bills in half to form a new currency.
And then there are less official alternate currencies, like Tide detergent, which is stolen from
convenience stores and used to buy drugs. Alternate currencies have many advantages. One is that
they can stimulate the local economy. Greece’s TEM, for instance, which is used in the city of Volos,
can be used to pay for goods and services, but as it is only accepted in the city, it has to be spent
18
there, too. And because the rules state that nobody can hold more than 1,200 TEMs, or owe more
than 300, it can’t be hoarded like regular money. You have to spend it in order to accept more,
which keeps the cash flowing through local businesses.
The kinds of rules that are applied to hyper-local currencies could also be useful on a wider scale.
When money is all electronic, instead of hard-to-track paper, you can experiment with innovations in
monetary policy far more easily than when a lot of the money in the system exists as cash in
people's pockets. For instance, all money could be set to automatically devalue itself slowly,
encouraging its owners to spend it. This makes huge cash hoards less useful, and—like the Greek
TEM’s ceiling—keep money flowing. Electronic cash also
allows the spender to attach certain caveats to their
purchases, like how we can already use the Creative
Commons to say how our copyrighted works can be used.
For instance, you could earmark your electronic cash as
ethical, so it could only be spent at other ethical places
down the line. This may devalue the "cash," as it becomes
less useful, but you would assume the extra cost up front, similar to how we already pay a premium
for ethically produced foods. Or parents could restrict their kid’s allowance to only be spent on
wholesome pursuits, like books, or prohibit it from being used in fast-food restaurants.
Some of these what-ifs have already been turned into reality. To see how a society might operate
without cash, we can look to Sweden, which is almost cashless already. In Stockholm, you don’t need
to carry bills or change. You can make donations to your church using a credit card, and give money
to a friend using an inter-person payment app called Swish—when splitting a restaurant check, for
example. Many banks don’t accept or provide cash in their branches, and payment apps are on the
rise.Swedish banks and businesses have good reason to prefer electronic payments. Stockholm has
been a heist capital, with robberies targeting banks and cash-carrying security vans, including the
famous Västberga helicopter robbery. But it’s not just the banks that prefer payments that can’t be
stolen. Stockholm native Peter Mathsson says that locals rarely use cash. Even the smallest
transaction is made with a card. And while Swish is gaining in popularity for person-to-person
payments, Mathsson says that phone payments aren’t yet widespread. "Most people have phones
that are paid for by their employer," he says. "They want to keep their personal transactions
separate." Mathsson is talking about early schemes that billed payments to your cell phone carrier.
New options like Apple Pay tie into your credit cards instead, avoiding this problem.
Living experiments like Sweden prove that cash-free living is not only possible, but desirable and
potentially advantageous. But like any technological revolution, it’ll be the small details that hold
things up.
One could argue that much of the U.S. is already cash free. As a foreigner, when I visit I’m amazed to
see people pay for a single cup of coffee with a credit card, often without signing or entering a PIN.
People are already happy to operate without cash, and with new options like Apple Pay, which lets
you use your iPhone and your fingerprint to pay with better security than an actual card, that trend
is likely to accelerate. But as with most other new technology, it will be unevenly distributed.
Already, you may choose to shop at Starbucks instead of with the coffee cart on the corner because
you don’t have any change. Services like Square, which lets anyone take credit cards with their
smartphones and tablets, may let the coffee-cart guy join the game, but that's taking time for full
adoption.
The end of cash may seem like fancy thinking, but look at how money has changed since credit and
debit cards started to usurp cash. We already route money around with bank transfers enacted from
19
our tablets, we pay for Uber cars with the convenience of a phone app, and we travel abroad
without even thinking about buying foreign currency before we go. And PayPal, the original cashless
payment system, turned 18 years old this year.
Cash is already on its way out. The question is how long will it take before it becomes a niche
product, like vinyl records and film cameras? Or perhaps it will never die off, but still be used to buy
fruit from roadside stalls, or by hipsters who will call it "artisanal money."
Perhaps cash will begin to be seen as low-class, with customer separating by income level. The poor
will pay more for the privilege of giving up cash thanks to higher charges, or the lack of a bank
account.
"If the government banned cash tomorrow," says the EFF’s Reitman, "I’m certain some people would
find a way to continue to exchange goods and services without always using a digital currency.
Unfortunately, it would be a lot harder and riskier than cash."
Sorrel, C. (2016, March 15). What Happens When We Become A Cashless Society? Retrieved March
23, 2016, from http://www.fastcoexist.com/3056736/what-happens-when-we-become-a-cashlesssociety?utm_content=bufferf5c5d
FAST CO.EXIST WEB PORTAL | FASTCOMPANY MAGAZINE
About the author;
Writer at FastCoExist.com editor of Straightnofilter.com and friend of
MacStories.net Previously on Cult of Mac and Wired. You may know me
from such places as Wired.com’s Gadget Lab, or the Cult of Mac, where I
was the Reviews Editor
Ffffffffffffffff
20
Hilkie Plassmann, March 11, 2016
The holy grail of marketing—a universal predictor of customer behaviour—may be closer than ever,
thanks to recent advances in the field of neuromarketing. Even at its best, traditional market
research has built-in limitations. First of all, consumers may be biased or unwilling to reveal their
true opinion. But beyond this, there is only so much conscious insight anyone has into his or her own
decision-making process — especially if you agree that purchases are mostly controlled by the
subconscious mind. This can be a hindrance for marketers who are more interested in knowing the
why of a purchasing decision over the what. For a truly granular understanding of consumer
behaviour, it is necessary to find a method that knows consumers better than they know
themselves.
No surprise, then, that there has been increasing interest in neuromarketing, i.e. the use of brainimaging technology and other psychometric measures to get a glimpse of, quite literally, how
consumers’ minds work when presented with a product or brand. Of the neuroscientific tools
currently available, the most popular with neuromarketing firms are eye-tracking devices (for
measuring how consumers attend to visual information) and electroencephalography (EEG), for
capturing electrical brain activity in order to gauge excitement. With these highly mobile
technologies, experiments can be conducted at reasonable cost in shopping malls, supermarket
aisles, or anywhere actual purchasing gets done.
From the beginning, however, sceptics have questioned whether this nascent field may be more
hype than substance. No body of research has authenticated neuromarketing’s value-add over and
above conventional methods — that is, until quite recently. The last few years have produced a raft
of rigorous scientific studies suggesting that brain imaging has far greater potential to predict a
product or advertisement’s success than simply canvassing for consumer opinions. However, to
maximise this predictive power, companies may have to stretch their neuromarketing portfolio.
Specifically, they should look at fMRI (functional magnetic resonance imaging).
fMRI: The latest findings
Most of us think of fMRI as something reserved for potentially serious medical situations and
neuroscience research. Indeed, it is the most commonly used tool among neuroscientists because of
its unique ability to observe a range of neural activity across the entire brain. By contrast, only 31
percent of neuromarketing practitioners reported ever using fMRI machines, as compared to 88
percent for eye-tracking and 80 percent for EEG, according to a recent survey I co-conducted.
It’s easy to see why. In addition to requiring a laboratory setting (thereby removing consumers from
their native element), fMRI is far more expensive than eye-tracking and EEG, costing up to US$800
per hour just to rent the machine. On top of that, there’s the costly expertise needed to interpret
the results. However, it could still be a worthwhile investment, if recent research is to be believed.
For example, researchers from the Advertising Research Foundation (ARF), the Centre for Neural
Decision-Making at Temple University, and NYU-Stern’s marketing department collaborated on a
massive 2015 study where consumers of various ages were shown 37 television advertisements, and
their responses gathered using eight different neuromarketing techniques as well as traditional
surveys. The study concluded that, out of the eight methods, only fMRI acted as a valuable
additional predictor of actual marketing response to the ads when used in conjunction with the
21
surveys. Specifically, activity in the ventral striatum area of the brain was found to be directly tied to
“rewarding or positive feelings towards a brand”. In another study from last year, using fMRI on a
test group of 47 smokers who were shown various drafts of anti-smoking emails more than doubled
researchers’ ability to predict the actual performance of the emails, compared to relying upon the
test group’s survey responses alone.
Cost-effectiveness - One remarkable aspect of these two studies is their small sample size. fMRI’s
high number of repeated measures within a study participant means that you don’t need great
masses of data to generate statistically significant results. In other words, the much higher cost of
fMRI is offset by the unique opportunity it affords to glean insights perhaps applicable to the
behaviour of millions by surveying the brains of merely a few dozen. Not many marketing tools can
offer such a rich per-participant payoff.
Implications - This is not to say that the less intensive neuromarketing techniques should be
discarded. In today’s challenging omni-channel environment, where the customer journey spans
both digital and physical realms, there is real value in being able to measure even basic responses in
the field. In the coming years, advances in wearable technology may allow neuromarketing
practitioners unprecedented visibility into how customers interact with brands in their everyday
lives.
fMRI can complement this process in a number of ways. First, as with the studies we mentioned,
small-scale fMRI experiments can assist companies in selecting from among multiple versions of the
same advertisement or product design. Second, in a broader sense, fMRI can be used to investigate
how marketing actions affect consumers emotionally and experientially — as our research into
“marketing placebo effects” and “pricing primacy” reveals. Third, since research suggests that
consumers form preferences immediately and unconsciously, fMRI could help companies learn more
about their target market’s pre-existing tastes and biases, especially in contexts where consumers
are less likely to be forthcoming.
Companies can either hire an in-house consumer neuroscientist or use an outside firm to steer their
initial forays into fMRI. Not all neuromarketing firms are equally rigorous with this new
methodology, however. Two key indicators are whether a firm employs research scientists wellversed in fMRI, and whether there are credentialed scientists on the board. If you later decide to
hire in-house talent, the tricky part will be finding someone with both scientific acumen and business
savvy. Otherwise, you may not be able to capitalize on all the possibilities within this newly evolving
area.
Plassmann, H. (2016, March 11). Brain Imaging Triggers Marketing Breakthroughs. Retrieved March
23, 2016, from http://knowledge.insead.edu/customers/brain-imaging-triggers-marketingbreakthroughs-4577
KNOWLEDGE@INSEAD | INSEAD SCHOOL OF BUSINESS, FONTAINEBLEAU, FRANCE.
About the author;
Hilke Plassmann is Associate Professor of Marketing at INSEAD, where she has
been since September 2008. She is an Affiliated Faculty at the Cognitive
Neuroscience Unit of the Ecole Normale Superieure. She has been Visiting
Faculty at the Wharton School and at NYU's Stern School of Business.
22
Manfred Kets de Vries, March 9, 2016
Jeff Bezos, the Chairman and CEO of Amazon, is hailed as one of the most prominent captains of
industry. Known for his charisma, business prowess, and bold, innovative ideas, Bezos’ pursuits are
driven by tenacity and an urgent sense of mission. For many, his professional trajectory and key role
in the growth of e-commerce is inspirational. But Amazon employees have discovered another side
to this dynamic leader.
Working for Bezos is quite a challenge. He is a typical alpha male: hardheaded, task-oriented and
extremely opinionated. He is known to get very upset when things do not go his way, and living up
to his excessively high standards can feel like a mission impossible.
The more pressure Bezos feels to perform, the more his leadership style transforms from being
constructive and challenging to intimidating and even abusive. He is known for outbursts of anger
when things don’t go his way – a consequence of his total commitment to customer service – and for
making demoralising statements like, “Why are you wasting my life?”, “I’m sorry, did I take my
stupid pills today?” or “This document was clearly written by the B team. Can someone get me the A
team document?”
In his dynamic, metrics-driven corporate culture, there is little time for soft talk. He is even known to
walk away from meetings if people do not get to the point quickly. Faced with this alpha male
behaviour, people who work for him do so in constant fear. While this Darwinian-like, performancebased culture reaps benefits for Amazon’s customers, it comes at the price of a devalued and
demoralised workforce.
Leader of the pack
Although there are many successful female leaders, in general, they tend to be not as intimidating
and abrasive as the typical alpha, who is generally male. In fact the term “alpha male” derives from
the animal world, where the alphas are among the highest ranked individuals within a given group.
They are the ones in the community from whom the others get their cues; who are in charge; and
who have priority with respect to food and mating. If we take bands of gorillas as an example, any
challenge to the alpha silverback – either directly or indirectly – is regarded as an unacceptable
threat, to be dealt with decisively and savagely.
Similarly in the Homo sapien’s world, alphas are only happy when they are in charge. Generally, they
are autocratic, intensely competitive, and very results-oriented achievers who insist on top
performance both from themselves and from others. Through courage, confidence, tireless energy
and a fighting spirit, they lead others in competitive and crisis situations. Their great sense of
responsibility can bring organisations to new levels of accomplishments. But the characteristics that
make alphas great can also lead to their downfall.
The high cost of alpha leadership
Hubris is one example. An alpha’s exceptional strengths can become a tragic flaw, especially when
they fail to recognise their limits due to excessive narcissistic behaviour. They often lack emotional
23
intelligence and, with their own needs taking centre stage, they are not good at sensing other
people’s feelings or considering another person’s perspective. This single-minded focus, hard-driving
competitiveness, interpersonal impatience, and difficulties in controlling their anger often endanger
their interpersonal relationships.
As pressures increase, an alpha’s leadership style can move from constructive and challenging to one
of intimidation and even abuse. In many instances, people working for alpha male leaders suffer
from low morale, high absenteeism, high levels of stress and burnout. Not surprisingly, given their
dysfunctional behaviour, companies run by destructive alphas can easily go down the drain.
Alternative models of leadership
Given the high organisational costs to companies, has the aggressive, alpha male style of leadership
had its day? Should we be looking for alternative models?
Interestingly, the closest relative of Homo sapiens is not the gorilla (known for its alpha male
behaviour) but the bonobo, alias the pygmy chimpanzee, which is part of a matriarchal society.
Indeed, as humans, we share 98.7 percent of our DNA with the bonobos which create, maintain, and
use social networks (especially friendships with other female members of the group) to manage
stressful conditions.
In contrast to the alpha male’s “fight-or-flight” behaviour, some researchers have suggested that
females, like the bonobos, often react to stress with a “tend-and-befriend” response, enhancing a
more caring attitude rather than a conflictual and stressful one.
Given our close, evolutionary relationship to our bonobo cousins, perhaps the default position in
contemporary organisations should be a non-alpha – a beta – stance. Betas tend to be better team
players and prefer a coaching culture, essential characteristics of the modern organisation.
Can alpha’s change their attitude?
But changing the status quo could be difficult. Alphas like to be in control, and find it hard to ask for
help. For an alpha male to admit that he has any weaknesses puts him in a vulnerable position. It
makes him feel weak. The question then becomes, how to change his attitude? Experiencing
excessive stress and suffering a burnout or breakdown is an extreme catalyst for an alpha to take
heed and realise that something needs to be done. But there other ways to penetrate an alpha’s
defenses and help him in his leadership development before it is too late.
In my role as an executive coach, rather than condemning alphas for their power-driven, abrasive
behaviour, I find it useful to start by focusing on their positive qualities, enhancing their existing
strengths and turning their limitations into strengths. I help the alpha shave off the rough edges,
making him realise that feeling vulnerable is part of the human condition.
I have learned from experience that deep down, every alpha has a modicum of awareness of his
weaknesses, strengths, fears, and hopes. To be able to address these elements of their personality,
it’s important to first build a trustful and a collaborative relationship, ensuring whatever is said is
framed in a non-confrontational, solutions-based manner.
What I’ve found very helpful once an element of trust is established, is to have alphas go through a
360-degree feedback exercise (including a number of in-depth interviews with the people with
whom they have most contact). This process gives me concrete and specific information as to how
24
their behaviour negatively affects their colleagues, their team, and their organisations. Sometimes
presenting data that illustrates their intimidating style can trigger defensive reactions and may result
in a brutal response. With this in mind, the interface has to be a tactful “dance.”
Eventually it will be the very ambitiousness that drives alpha behaviour, which creates a tipping
point for change. Once alphas realize the dysfunctionality of their behaviour, many will go to great
lengths to try to become more effective.
Finding a balance
There is a place for alpha-like behaviour in organizations which need the drive, competitiveness and
commitment of such leaders. However this should be balanced with models of leadership that
connect, build and nurture. Once this has been achieved, organizations like Amazon (named as one
of the most stressful companies to work for) will discover that employees who work without fear can
be driven to new heights.
De Vries, M. K. (2016, March 09). Are You an Alpha Male Leader? Retrieved March 23, 2016, from
http://knowledge.insead.edu/blog/insead-blog/are-you-an-alpha-male-leader-4571
KNOWLEDGE@INSEAD | INSEAD SCHOOL OF BUSINESS, FONTAINEBLEAU, FRANCE
About the author;
Manfred Kets De Vries is the Distinguished Clinical Professor of Leadership
Development & Organisational Change at INSEAD and The Raoul de Vitry
d'Avaucourt Chaired Professor of Leadership Development, Emeritus. He is the
Founder of INSEAD's Global Leadership Centre and the Programme Director of
The Challenge of Leadership.
25
Padraig Belton, March 18, 2016
The floors of the New York and London Stock Exchanges now exist mostly for show. The real trading
is done automatically by robots. About three-quarters of trades on the New York Stock Exchange and
Nasdaq are done by algorithms - computer programs following complex sets of rules. And this "robotrading" is having a profound effect on the investment world, from global hedge funds right down to
personal savers. But what are the advantages and disadvantages of allowing computers to manage
the world's trillions of dollars?
'Globalisation'
The advantage for personal, or retail, investors is that we now have powerful tools at our fingertips
helping us choose and manage a balanced portfolio of investments, often at much lower cost than
going through traditional brokers or fund management companies. And if you don't fancy the DIY
approach, advisers and intermediary companies have access to these tools as well.
"Robo-advice" companies, such as Betterment and WiseBanyan in the US, and Nutmeg and
MoneyFarm in the UK, are trying to demystify investment while giving us access to such tools.
WiseBanyan co-founder Vicki Zhou says her platform allows people to "invest algorithmically
through a diversified portfolio of low-cost index funds."
And they don't charge the management costs normally levied by traditional funds, she says pointing out that 88% of such funds in the US have underperformed their benchmark indexes over
last five years. Betterment's Joe Ziemer says: "We look at 40 different variables - spousal situation,
rental income, pensions - and from these we will deliver you online, in seconds, a comprehensive
retirement plan."
In a recent report, the UK's Financial Conduct Authority said online financial advice could "play a
major role in driving down costs". This is good news for us, but bad news for advisers - Royal Bank of
Scotland said it would be cutting the jobs of 220 face-to-face advisers in response to this new
technology.
The need for speed
Big financial institutions are always looking for an edge over their rivals. Information is power, so if
you have more of it and can put that into effect quicker than others, you'll win the race for profits.
Robo-trading offers them this advantage. Computers can trade multiple times in fractions of a
second, exploiting tiny changes in stock prices and indexes to turn a profit.
Companies like New Jersey-based Tradeworx are erecting line-of-site networks of microwave relays,
involving towers interspersed every 30 miles or so.
This network will convey financial information from Chicago - where financial products called futures
are traded - to the New York Stock Exchange 2.3 milliseconds faster than data sent over existing
fibre-optic cables.
26
This tiny time saving is enough to give a trader an advantage in the hyper-fast world of "flash
trading" - the controversial phenomenon exposed in Michael Lewis' best-selling book, Flash Boys.
'Greed and fear'
Computers are also unemotional.
"They don't panic... they don't understand things like greed and fear," says Dr Michael Halls-Moore,
whose website, QuantStart.com, teaches people how to write investment algorithms.
And they're also getting smarter.
With the rise of machine learning and artificial intelligence, they can scour reams of news, research
and social media - hundreds of data sets - potentially learning and self-improving as they go. "When
data was scarce, people would hoard information, and find an edge in investing that way," says Dr
Thomas Wiecki, lead data scientist at Quantopian, a crowd-sourced hedge fund.
"Now we take huge mountains of data a human could never analyse, and automate it."
Quantopian gives monthly prizes to private investors who come up with their own market beating
algorithms. Dr Eugene Kashdan, a former London algorithmic trader, now a mathematics lecturer at
University College Dublin, explains that these data sets taken individually might not reveal much
useful information.
But when combined with many others, a picture can emerge - undetectable by the human eye giving a signal whether to buy or sell. New York-based Rebellion Research and California-based
Sentient AI are developing ways that these algorithms can learn from past mistakes and refine their
rules, without the need for much human intervention.
Out of control?
Proponents say algorithmic trading puts needed liquidity - the availability of buyers and sellers - into
the market, and reduces costs. Critics say it wastes the talents of highly trained mathematicians and
physicists, and destabilises the markets in ways no one - especially regulators - yet understands. On
6th May 2010, a "flash crash" took place that regulators blamed on high-frequency algorithmic
trading.
It saw a trillion-dollar drop in US stocks, the second-largest swing ever in the market during a single
day. The markets recovered their value 36 minutes later. US authorities blamed a 36-year old in west
London, who was using commercially available algorithmic trading software to trade part-time from
his parents' house. On 23 March, a UK judge is due to give a decision on whether the trader in
question, Navinder Sarao, should be extradited to the US. The fear is that "flash crashes" could
become more frequent in a trading world dominated by self-learning robots.
Is it too far-fetched to imagine a clever computer deliberately triggering a huge sell-off with the
purpose of buying shares when they're cheap and making a profit as the market recovers?
Stagnation
Some think a more likely scenario is that all these self-learning trading algorithms, accessing all the
market-relevant data there is to know, eventually converge to a single view, leading to stagnation in
the market.
27
Trading volumes would then shrink along with spreads - the difference between buying and selling
prices.
"The best and the worst scenarios would get pretty close," says Dr Kashdan.
But others believe we'll never reach that point - the world is just too complex. No algorithm will ever
be able to predict the future.
"Everyone openly admits it's impossible," says Quantopian chief executive John Fawcett.
"But it's too important to ignore."
Belton, P. (2016, March 18). Would you let a robot invest your hard-earned cash? - BBC News.
Retrieved March 23, 2016, from http://www.bbc.com/news/business-35830311
BBC NEWS | BUSINESS
About the author;
I write for such worthy and august publications as BBC News, the Irish
Times, the Guardian, Telegraph (unbylined obits), the Spectator,
Independent, Irish Independent, the Atlantic, New Statesman, Prospect,
Times Literary Supplement, and Foreign Policy. I also do a bit of political
analysis for Oxford Analytica. My other academic scribbling has included
three (I think) book chapters for Routledge, a few peer-reviewed journal
articles, and encyclopaedic contributions for the Oxford University Press
28

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