Tuesday, April 22, 2014

Startling Murmuration - Synchronicity in the Sky

Are You Ready to Lose Control?

Eric McNulty
Eric J. McNulty is the director of research at the National Preparedness Leadership Initiative and writes frequently about leadership and resilience.


Control: It’s the essence of management. We’re trained to measure inputs, throughputs, and outputs in hopes of increasing efficiency and producing desired results. In a world of linear processes, such as in the factories of the Industrial Age, that made sense. But in today’s knowledge economy, where enterprises are complex, adaptive systems, it’s counterproductive.
The real problem is confusion between control and order. Control implies centralized control and hierarchical relationships. The person with control tells others what to do and whether they are successful or not. Order, on the other hand, emerges from self-organization. There may not be anyone telling others what to do, yet things get done—often with great efficiency and effectiveness. People know what is expected of them and what they can expect of others.
But how can this be true? Mustn’t an orchestra have a conductor? A dance troupe, a choreographer? A company, a CEO?
Not necessarily. Nature abounds with examples of what is known as swarm intelligence. Termites build intricate dwellings without the benefit of set of plans or engineers with advanced degrees. Birds migrate thousands of miles in formations where the lead position rotates to optimize their collective capacity. There are no marching orders or hierarchies dictating who leads. Massive flocks of starlings engage in intricate maneuvers known asmurmuration with neither collisions nor confusion. There is order without overarching control. Indeed, our obsession with control helps explain why human-designed organizations fail to achieve such beautiful synchronicity.
Swarm intelligence was first described by Gerardo Beni and Jing Wang in 1989 in the context of cellular robotic systems. It relies on rigid adherence to simple rules about how immediate neighbors in a group relate to each other: If you do this, I do that. Shona Brown and Kathleen Eisenhardt have been advocating an order-over-control approach for organizations for many years. (I found the book they co-authored, Competing on the Edge, one of the most insightful business books I have ever read and I continue to recommend it.) Brown and Eisenhardt argue that the leaders of an enterprise need to identify the few core rules—thoughtfully developed and rigorously tested—that set the stage for success and mitigate the risk of failure in an operational context. Then they must give managers freedom to operate in the space between the rules. Too many regulations stifle the adaptive capacity necessary in fast-moving markets; opportunities are overlooked and threats spring up as surprises.
My colleagues at the National Preparedness Leadership Initiative at Harvard—Leonard Marcus, Barry Dorn, and Eric Goralnick—and I discovered something akin to swarm intelligence through our extensive interviews of leaders involved in the response to the 2013 Boston Marathon bombings. We spoke with more than two dozen individuals, and many of them said collective leadership was the model that emerged that week: Each was in charge of his or her own organization, but didn’t view any one person as being in charge of the overall operation.
The coordination and collaboration between agencies and across sectors garnered great praise after the event. It stands in contrast to other response efforts—Super Storm Sandy stands as a good example—where we observed both gaps and overlaps in activities. There, conflict was abundant as individuals and organizations fought for control at the expense of order.
So how can you use simple rules and swarm intelligence to boost performance in your organization?
How can you use simple rules and swarm intelligence to boost performance in your organization?
The first step is to embrace the inherent adaptive capacity of the individuals in your organization. As Patty McCord, the former head of HR at Netflix,wrote recently, that company was able to get rid of most of its human resource policies (control) by hiring experienced adults and trusting them to do their jobs (order). If someone doesn’t work out (adding disorder), they are let go quickly with a generous severance package. The organization takes responsibility for its decisions. Management guru Gary Hamel often writes about getting rid of managers because they add little to adaptive capacity.
Trust is central to enhancing order. In the Boston Marathon bombing response, leaders of the different agencies expressed confidence and trust in each other to shoulder their responsibilities effectively. They could act in service of order because they did not see the need to try to exercise control beyond their span of formal authority. They had built trust by working and training together for many years. How much dysfunction has been spawned in your organization because sales doesn’t trust marketing, or because finance tries to micromanage operational decisions?
The essence of the order-centric mindset is to calibrate the exercise of control in service to order. Where it adds to order, control is beneficial; where it detracts, restraint is the wiser course. Where order prevails, there is clarity around the overall objective. Freedom of action is not only possible but encouraged. There is less concern about whether this is “my project” or whether “I” get the credit than whether “we” achieve our desired outcome.
Achieving alignment within the organization and across the value chain has been a challenge for as long as I have been engaged in management and leadership ideas and practice. Ever more complicated rule-based regimes have emerged. Just look at the business rules embedded in a typical enterprise-wide management system. Ask yourself whether the preponderance of control mechanisms has improved or hindered outcomes at your company. I can readily assemble a long list of instances where the rules obstructed efforts to achieve an organization’s espoused objectives.
Order is something we all generally seek, but few of us want to be controlled. Putting order ahead of control taps into these intrinsic impulses and unleashes initiative and innovation. It simply requires the courage to give up a little control.

Monday, April 21, 2014

Air Canada baggage fail 20 ft bag toss in Toronto

5 Things Every Email Marketer Should Know


  |  April 9, 2014   |  4 Comments
    Every email marketer should have a strong understanding of how email works, including how it is delivered, how it is displayed, privacy practices, and direct marketing fundamentals.
Some years ago, OK many years ago, I joined a custom publishing agency. My first week was one of deep orientation. During that week I was taken through the details of the publishing process. I was taught about the print process: the different types of printers, paper, and printing techniques; color processes, CMYK and spot color; collation, distribution, and the postal system. I was taught about copy writing, editing, layout and proofing, and all the other steps that go into creating the final product. In short I got a five-day backgrounder on how the underlying technologies and processes of the industry worked and how they impacted our work.
What I've come to realize is that in today's digital marketing world, it's very rare that an email marketer gets this kind of background. And I don't mean in print, I mean in email. I commonly come across email marketers who don't know how the channel that is the basis of our livelihood works. Here then are my top five things that every email marketer should know.
1. How Email Is Delivered
I believe every email marketer should know how this works, how their message actually gets delivered, from the basics of mail servers and DNS through to the SMTP (Simple Mail Transport Protocol) transport and delivery of email.
It may seem technical and irrelevant to marketers, but this is important knowledge because it has a significant impact in a wide range of areas. Spam filtering depends on and impacts this process. To understand blocking and filtering, the difference between an RBL and a URIBL means understanding this process. To understand what bounce codes and responses mean and how they impact your delivery requires understanding of this process.
2. How Email Is Displayed
HTML (hypertext markup language) is the language of email. The HTML dialect for email is different to that for websites. The capabilities and limitations in regards to email are important and becoming more so. The growth of mobile and adoption of mobile-first and responsive designs change how our messages look and why. Every email marketer should understand what can and can't be done, what should and should not be done, why content displays differently on different platforms, and how responsive design works.
3. Basic Statistics
Email is a data-driven medium. Unfortunately, all too often email marketers come from non-mathematical backgrounds and never learned these basics. We receive a deluge of data about our programs and campaigns. What often surprises me, though, is how little that data gets used. Top-line metrics such as delivery, open, and click rates are compared month on month but often there's little more than that.
Simply knowing what makes a test good and a result statistically significant is invaluable. Effective use of the available data can make the difference between a good program and a great one.
4. Privacy and Security
As I wrote back in February, email marketers are handling a growing quantity of data and increasingly make essential decisions about collection, storage, transfer, and use of that data. Every email marketer needs to be up on both privacy and security and how it impacts what we do every single day.
There is often a significant disconnect between the policy and the practice of data privacy and security. Understanding the fundamentals, the whys, and wherefores removes that disconnect and enables email marketers to make smart decisions even when the privacy group is not around.
5. Direct Marketing Fundamentals
Email marketers come from a range of backgrounds and email is such an effective channel that it seems oftentimes we can get away with ignoring marketing fundamentals and still get great return on investment (ROI). But even though it's a unique channel, email marketing is still direct marketing and the fundamentals are important.
The four Ps of Product, Price, Place, and Promotion and the three Ms of Market, Message, and Medium are still very relevant foundations to effective marketing in the age of the fragmented customer journey, the mobile consumer, and cross-channel messaging.
I want to be clear that I'm not saying email marketers should know how to write a mail server, be HTML coding wizards, or Ph.D. statisticians. We are doing data-driven marketing with email and an understanding of the fundamental aspects of data, marketing, and email are important. Without these fundamentals we're in no position to have serious discussions about the subtleties and nuances of email strategies and tactics. Instead, we'll be continually rehashing the same conversations and readdressing the same misconceptions.
So that's my list - what's yours? What would you add to, or remove from, the list of things every email marketer should know?
Until next time.

Thursday, April 10, 2014

Innovation lessons from Pixar: An interview with Oscar-winning director Brad Bird

What does stimulating the creativity of animators have in common with developing new product ideas or technology breakthroughs? A lot.

April 2008 | byHayagreeva Rao, Robert Sutton, and Allen P. Webb
If there’s one thing successful innovators have shown over the years, it’s that great ideas come from unexpected places. Who could have predicted that bicycle mechanics would develop the airplane or that the US Department of Defense would give rise to a freewheeling communications platform like the Internet?
Senior executives looking for ideas about how to make their companies more innovative can also seek inspiration in surprising sources. Exhibit One: Brad Bird, Pixar’s two-time Oscar-winning director. Bird’s hands-on approach to fostering creativity among animators holds powerful lessons for any executive hoping to nurture innovation in teams and organizations.
Bird joined Pixar in 2000, when the company was riding high following its release of the world’s first computer-animated feature film, Toy Story, and the subsequent hits A Bug’s Life and Toy Story 2. Concerned about complacency, senior executives Steve Jobs, Ed Catmull, and John Lasseter asked Bird, whose body of work included The Iron Giant and The Simpsons, to join the company and shake things up. The veteran of Walt Disney, Warner Brothers, and FOX delivered—winning Academy Awards (best animated feature) for two groundbreaking movies,The Incredibles and Ratatouille.
Ten days before Ratatouille won its Oscar, we sat down with Bird at the Emeryville, California, campus of Pixar, which is now a subsidiary of Disney.1 Bird discussed the importance, in his work, of pushing teams beyond their comfort zones, encouraging dissent, and building morale. He also explained the value of “black sheep”—restless contributors with unconventional ideas. Although stimulating the creativity of animators might seem very different from developing new product ideas or technology breakthroughs, Bird’s anecdotes should stir the imagination of innovation-minded executives in any industry.
The Quarterly: What attracted you to Pixar?
Brad Bird: One thing that was unbelievably different about this company was that they were worried about becoming complacent. When I came here, they had made three movies—Toy StoryA Bug’s Life, and Toy Story 2—that had all been big hits. I was coming off a film called The Iron Giant that was a highly regarded financial failure.
Steve Jobs, Ed Catmull, and John Lasseter said, in effect, “The only thing we’re afraid of is complacency—feeling like we have it all figured out. We want you to come shake things up. We will give you a good argument if we think what you’re doing doesn’t make sense, but if you can convince us, we’ll do things a different way.” For a company that has had nothing but success to invite a guy who had just come off a failure and say, “Go ahead, mess with our heads, shake it up”—when do you run into that?
The Quarterly: How did your first project at Pixar—The Incredibles—shake things up?
Brad Bird:The Incredibles was everything that computer-generated animation had trouble doing. It had human characters, it had hair, it had water, it had fire, it had a massive number of sets. The creative heads were excited about the idea of the film, but once I showed story reels of exactly what I wanted, the technical teams turned white. They took one look and thought, “This will take ten years and cost $500 million. How are we possibly going to do this?”
So I said, “Give us the black sheep. I want artists who are frustrated. I want the ones who have another way of doing things that nobody’s listening to. Give us all the guys who are probably headed out the door.” A lot of them were malcontents because they saw different ways of doing things, but there was little opportunity to try them, since the established way was working very, very well.
We gave the black sheep a chance to prove their theories, and we changed the way a number of things are done here. For less money per minute than was spent on the previous film, Finding Nemo, we did a movie that had three times the number of sets and had everything that was hard to do. All this because the heads of Pixar gave us leave to try crazy ideas.
The Quarterly: What sorts of things did you do differently?
Brad Bird: There are purists in computer graphics who are brilliant but don’t have the urgency about budgets and scheduling that responsible filmmakers do. I had to shake the purist out of them—essentially frighten them into realizing I was ready to use quick and dirty “cheats” to get something on screen if they took too long to achieve it in the computer. I’d say, “Look, I don’t have to do the water through a computer simulation program. If we can’t get a program to work, I’m perfectly content to film a splash in a swimming pool and just composite the water in.” This absolutely horrified them. Or I’d say, “You can build a flying saucer, or you can take a pie plate and fling it across the screen. If the audience only sees the pie plate very briefly and you throw it just right, they will buy it as a flying saucer.”
I never did film the pool splash or throw the pie plate, but talking this way helped everyone understand that we didn’t have to make something that would work from every angle. Not all shots are created equal. Certain shots need to be perfect, others need to be very good, and there are some that only need to be good enough to not break the spell.
We also made superelaborate storyboards. We even emulated camera movement in them, so everyone knew that “We only need to make things work between here and there.” Once I was able to commit to the camera angles, we could be very specific about how we built things. Something would look beautiful from one position, but if you moved five feet to the right, the image would disintegrate. I gave up the flexibility to move within a set, but in exchange I bought size and scope.


Inside the interview with Pixar's Brad Bird

An interactive feature including a brief biography, audio clips from the interview, and stills from several of Bird’s projects
The Quarterly: Do angry people—malcontents, in your words—make for better innovation? Can you be innovative and also happy?
Brad Bird: I would say that involved people make for better innovation. Passionate involvement can make you happy, sometimes, and miserable other times. You want people to be involved and engaged. Involved people can be quiet, loud, or anything in-between—what they have in common is a restless, probing nature: “I want to get to the problem. There’s something I want to do.” If you had thermal glasses, you could see heat coming off them.
The Quarterly: How important is team dynamics to innovation and creativity?
Brad Bird: Making a film, you have all these different departments, and what you’re trying to do is find a way to get them to put forth their creativity in a harmonious way. Otherwise, it’s like you have an orchestra where everybody’s playing their own music. Each individual piece might be beautiful, but together they’re crazy.
The Quarterly: How do you build and lead a team that collaborates in the way you’re describing?
Brad Bird: When I directed The Iron Giant, I inherited a team that was totally broken—a bunch of miserable people who had just gone through a horrific experience on a previous film that had bombed. When the time came for animators to start showing me their work, I got everybody in a room. This was different from what the previous guy had done; he had reviewed the work in private, generated notes, and sent them to the person.
For my reviews, I got a video projector and had an animator’s scenes projected onto a dry-erase board. I could freeze a frame and take a marker and show where I thought things should be versus where they were. I said, “Look, this is a young team. As individual animators, we all have different strengths and weaknesses, but if we can interconnect all our strengths, we are collectively the greatest animator on earth. So I want you guys to speak up and drop your drawers. We’re going to look at your scenes in front of everybody. Everyone will get humiliated and encouraged together. If there is a solution, I want everyone to hear the solution, so everyone adds it to their tool kit. I’m going to take my shot at what I think will improve a scene, but if you see something different, go ahead and disagree. I don’t know all the answers.”
So I started in: “I think the elbow needs to come up higher here so that we feel the thrust of this action.” “I’m not seeing the thought process on the character here.” “Does anybody disagree? Come on, speak up.” The room was silent because with the previous director, anyone who dared to say anything got their head chopped off.
For two months, I pushed and analyzed each person’s work in front of everybody. And they didn’t speak up. One day, I did my thing, and one of the guys sighed. I shouted, “What was that?” And he said, “Nothing man, it’s OK.” And I said, “No, you sighed. Clearly, you disagree with something I did there. Show me what you’re thinking. I might not have it right. You might. Show me.” So he came up, and I handed him the dry-erase marker. He erased what I did. Then he did something different and explained why he thought it ought to be that way. I said, “That’s better than what I did. Great.” Everybody saw that he didn’t get his head chopped off. And our learning curve went straight up. By the end of the film, that animation team was much stronger than at the beginning, because we had all learned from each other’s strengths. But it took two months for people to feel safe enough to speak up.
The Quarterly: How does your experience with that team compare with your work leading creative teams at Pixar?
Brad Bird: When Pixar asked me to take over Ratatouille, the project had been in development for five years but was not in any shape to produce as a movie. There was a moment, at the very beginning of my involvement, when I was in a room full of about 30 people. At this stage, the rats in the movie had been articulated. Articulation is where they design how the muscles and controls work on the characters. Because people were worried about the audience’s reaction to rats, all of them were designed to walk on two legs.
I thought that was a mistake. I knew it would be an expensive use of resources, at that point in the process, to rearticulate the rats, but I said, “We have to get them so that they walk on all fours. And Remy, the protagonist rat, has to be able to walk not only on all fours but up on two legs.” Everybody said, “Ugh!” because they had spent a year making the rats look good walking on two legs. If you simply took those models, bent them over, and put them on all fours, their hips didn’t work and things just looked wrong. They were designed to be upright.
One of the guys challenged me. He said, “I want to know why you’re doing this.” Now, I had gone into this film reluctantly. It’s not what I was looking to do afterThe Incredibles. And there was a part of me that wanted to say, “Because I’m the director, that’s why. Do you want to take this problematic thing over?”
But I stopped and thought for a second. I thought, these guys have been sent down blind alleys for a couple of years. They want to know that I’m not doing anything lightly and that if I’m going to make them do a bunch more work, it’s for a reason. So I said, “This movie is about a rat who wants to enter the human world. We have to make that a visual choice for the character. If you have all of the rats walking on two legs, there’s no separation between him and the other rats. If we have this separation as a visual device, we can see the character make his transformation and choose to be on two legs, and he can become more or less ratty, depending on his emotional state. That brings the audience into the character’s mind.”
I spent six minutes saying all this and the guy was initially scowling. But gradually the scowl went away, and he said, “OK.” Once I gave that answer, everyone felt, “OK, we’re on this ship and we’re going toward a definite destination.”
The Quarterly: It sounds like you spend a fair amount of time thinking about the morale of your teams.
Brad Bird: In my experience, the thing that has the most significant impact on a movie’s budget—but never shows up in a budget—is morale. If you have low morale, for every $1 you spend, you get about 25 cents of value. If you have high morale, for every $1 you spend, you get about $3 of value. Companies should pay much more attention to morale.
Before I got the chance to make films myself, I worked on a number of badly run productions and learned how not to make a film. I saw directors systematically restricting people’s input and ignoring any effort to bring up problems. As a result, people didn’t feel invested in their work, and their productivity went down. As their productivity fell, the number of hours of overtime would increase, and the film became a money pit.
The Quarterly: Engagement, morale—what else is critical for stimulating innovative thinking?
Brad Bird: The first step in achieving the impossible is believing that the impossible can be achieved. There was a point during the making of The Incredibles where we had a company meeting. We have them about twice a year, and anybody can bring up concerns. Somebody raised their hand and said, “Is The Incredibles too ambitious?” Ed Catmull said, “I don’t know” and looked over at me. I just said, “No! If there’s one studio that needs to be doing stuff that is ‘too ambitious,’ it’s this one. You guys have had nothing but success. What do you do with it? You don’t play it safe—you do something that scares you, that’s at the edge of your capabilities, where you might fail. That’s what gets you up in the morning.”
The Quarterly: If you ask most companies how they innovate, they’ll say, “Know your customer. Find out what your customer really wants you to do.” It sounds like you think about innovation differently.
Brad Bird: Our goal is different because if you say you’re making a movie for “them,” that automatically puts you on an unsteady footing. The implication is, you’re making it for a group that you are not a member of—and there is something very insincere in that. If you’re dealing with a storytelling medium, which is a mechanized means of producing and presenting a dream that you’re inviting people to share, you’d better believe your dream or else it’s going to come off as patronizing.
So my goal is to make a movie I want to see. If I do it sincerely enough and well enough—if I’m hard on myself and not completely off base, not completely different from the rest of humanity—other people will also get engaged and find the film entertaining.
The Quarterly: What does Pixar do to stimulate a creative culture?
Brad Bird: If you walk around downstairs in the animation area, you’ll see that it is unhinged. People are allowed to create whatever front to their office they want. One guy might build a front that’s like a Western town. Someone else might do something that looks like Hawaii. Steve Jobs initially didn’t like this idea, but John Lasseter said, “We’ve got to let it go a little crazy where the animators are.” John believes that if you have a loose, free kind of atmosphere, it helps creativity.
Then there’s our building. Steve Jobs basically designed this building. In the center, he created this big atrium area, which seems initially like a waste of space. The reason he did it was that everybody goes off and works in their individual areas. People who work on software code are here, people who animate are there, and people who do designs are over there. Steve put the mailboxes, the meetings rooms, the cafeteria, and, most insidiously and brilliantly, the bathrooms in the center—which initially drove us crazy—so that you run into everybody during the course of a day. He realized that when people run into each other, when they make eye contact, things happen. So he made it impossible for you not to run into the rest of the company.
The Quarterly: Is there anything else you’d highlight that contributes to creativity around here?
Brad Bird: One thing Pixar does—which is a knockoff of old-school, Walt-era 1940s Disney—is to have all kinds of optional classes. They call it “PU,” or Pixar University. If you work in lighting but you want to learn how to animate, there’s a class to show you animation. There are classes in story structure, in Photoshop, even in Krav Maga, the Israeli self-defense system. Pixar basically encourages people to learn outside of their areas, which makes them more complete. Sometimes, people even move from one area to another.
The Quarterly: On the one hand, you are a leader here. On the other hand, you sound like a bit of a subversive. How do you do both things?
Brad Bird: I think the best leaders are somewhat subversive, because they see something a different way. And I’m not leading by myself. My producer, John Walker, and I are famous for fighting openly, because he’s got to get it done and I’ve got to make it as good as it can be before it gets done. If you look at the extra materials on The Incredibles DVD, there’s a moment where we’re fighting aboutsomething, and John says, “Look, I’m just trying to get us across the line.” And I say, “I’m trying to get us across the line in first place.”
I don’t want him to tell me, “Whatever you want, Brad,” and then we run out of resources. I want him to tell me, “If you do X, we’re not going to be able to do Y.” I’ll fight, but I’ll have to make the choice. I love working with John because he’ll give me the bad news straight to my face. Ultimately, we both win. If you ask within Pixar, we are known as being efficient. Our movies aren’t cheap, but the money gets on the screen because we’re open in our conflict. Nothing is hidden.
The Quarterly: We’ve been talking a lot about how you promote innovation. What undermines it?
Brad Bird: Passive-aggressive people—people who don’t show their colors in the group but then get behind the scenes and peck away—are poisonous. I can usually spot those people fairly soon and I weed them out.
The Quarterly: What kinds of leaders inhibit innovation?
Brad Bird: When I first started at Disney, the old master animators were slowly leaving, and there was an animator in his 40s starting to direct films there; management was sort of grooming him to take over animation at the studio. Anyway, he had taken over a film and had a bunch of us meet in his office. The first thing that came out of his mouth was, “I’m here to teach you. I’m satisfied with what I do.” In that opening statement, he lost me because I had already worked with the old Disney masters—and they were never satisfied.
It’s surreal to think about now, but my first real, formal teachers in animation were the best animators in the world. I’d started a film when I was 11, and a friend of the family knew the composer of the Disney films, who took me into the studio. I met a lot of the great old master animators. Their worst animation was 1,000 times better than this new director’s best, yet they would get to the end of a film and say, “I just started to feel like I was understanding the character, and I want to go back and do the whole thing over. Can’t wait for next time!” They were masters of the form, but they had the attitude of a student. This guy taking over the studio had only done a few pieces of pretty good animation, and he was totally satisfied. Could not have been less inspiring.
The Quarterly: How would you compare the Disney of your early career with Pixar today?
Brad Bird: When I entered Disney, it was like a classic Cadillac Phaeton that had been left out in the rain. It was this amazing machine that was beautiful but old and getting a little decrepit. Still, they had the best system on earth at that time. They had the best talent. The movies were still well executed, if uninspired.
But Disney at this time was pared down. They were making one film every three years rather than a film every year or year and a half, as they had at Disney’s height. Walt had been gone for more than a decade, and the old guys were leaving. The company’s thought process was not, “We have all this amazing machinery—how do we use it to make exciting things? We could go to Mars in this rocket ship!” It was, “We don’t understand Walt Disney at all. We don’t understand what he did. Let’s not screw it up. Let’s just preserve this rocket ship; going somewhere new in it might damage it.”
Walt Disney’s mantra was, “I don’t make movies to make money—I make money to make movies.” That’s a good way to sum up the difference between Disney at its height and Disney when it was lost. It’s also true of Pixar and a lot of other companies. It seems counterintuitive, but for imagination-based companies to succeed in the long run, making money can’t be the focus.
Speaking personally, I want my films to make money, but money is just fuel for the rocket. What I really want to do is to go somewhere. I don’t want to just collect more fuel.
About the authors
Hayagreeva Rao and Robert Sutton are both professors at Stanford University, where Rao is a professor of organizational behavior in the Graduate School of Business and Sutton is a professor of management science and engineering in the School of Engineering. Allen Webb is a member of The McKinsey Quarterly’s board of editors.http://www.mckinsey.com/insights/innovation/innovation_lessons_from_pixar_an_interview_with_oscar-winning_director_brad_bird

Managing Yourself: The Boss as Human Shield


Executive Summary


William Coyne headed research and development at 3M—the company behind Ace bandages, Post-it notes, Scotch tape, and other inventions—for over a decade. Shortly after retiring, Coyne spoke to a group of hundreds of executives about innovation at 3M and his own management style. He said he’d started at 3M as a researcher and learned firsthand how well-meaning but nosy executives who proffer too many questions and suggestions can undermine creative work. So when he became head of R&D, he was determined to allow his teams to work for long stretches, unfettered by intrusions from higher-ups. Coyne understood his colleagues’ curiosity; if successful, an R&D project could generate millions in new revenue. But he limited their interference (and his own) because, he said, “After you plant a seed in the ground, you don’t dig it up every week to see how it is doing.”
Coyne knew that the performance of his employees—as well as his career and the company’s success—depended on shielding them from threats. This notion that management “buffers” the core work of the company from uncertainty and external perturbations is an old theme in organizational theory, going back at least to James D. Thompson’s 1967 classic Organizations in Action. The best bosses are committed to letting their workers work—whether on creative tasks such as inventing new products or on routine things such as assembling computers, making McDonald’s burgers, or flying planes. They take pride in being human shields, absorbing or deflecting heat from inside and outside the company, doing all manner of boring and silly tasks, and battling idiots and slights that make life harder than necessary on their people.
As a boss, you can protect your people’s backs in seven ways.
Resist Your Worst Instincts
Great bosses fret about the load they heap on others. The late theater director Frank Hauser said, in his book Notes on Directing that during rehearsals he didn’t keep “actors hanging about needlessly” because “it demoralizes the entire cast....If they have to wait a half-an-hour, that’s life. But if you are really behind, offer them the chance to go away and come back later. And apologize.” Hauser advised focusing on the play, not yourself: “Guard against the director’s first great vice—rabbiting on, making the same point again and again, getting laughs from your inimitable (and interminable) anecdotes.”
Meetings are infamous time wasters. Yes, some are necessary, but bosses bent on self-glorification often run them in disrespectful ways. If you want to grab power and show little regard for your people, arrive late to most meetings. And now and then, show up very late or send word after everyone has gathered that, alas, you are a Very Important Person who is in demand. But if you want your charges to be proud to do good work for you, then start and end meetings on time. You may miss the thrill of petty power displays, but you will earn more prestige by leading productive and grateful followers.
Will Wright, designer of computer games The Sims and Spore, used Ocean Quigley—a creative, impatient artist who worked for him—as his “canary in the coal mine” at meetings. Wright noted in the New York Times that when Quigley asked to be excused, “that was the point at which we always knew that the meeting had hit diminishing returns.” So Wright would simply end it at the canary’s cue. He also used a trick to make his designers think harder about calling unnecessary meetings. When someone booked one, he charged that person a dollar. Wright and his designers still went to many meetings, but he said “it did make them think twice...even though it was only a dollar.”
Make It Safe to Fight Right
When people have mutual respect, arguments over ideas are productive and creative. The best bosses orchestrate constructive battles—enabling people to feel safe to speak their minds, even to the leader. Pixar’s Brad Bird, who won Academy Awards for directing The Incredibles andRatatouille, is a vigorous advocate of constructive conflict. After a string of blockbusters, starting withToy Story, he was hired by Pixar with a mandate from bosses Steve Jobs, Ed Catmull, and John Lasseter to “mess with our heads, shake it up,” as Bird noted in an interview for McKinsey Quarterly. He took their words to heart and assembled a team of “malcontents” to make The Incredibles. The team members clashed with one another—but these were good fights, built on mutual trust. Indeed, Bird tells his teams, “I want you guys to speak up and drop your drawers. We’re going to look at your scenes in front of everybody. Everyone will get humiliated and encouraged together.”
Bird’s Incredibles team members shook things up as instructed. Pixar’s technical experts initially told them it would take 10 years and cost $500 million to render the realistic hair, water, and fire they wanted. But Bird and his malcontents pushed the technical team and themselves to invent new methods, which enabled them to complete the film for about $100 million. It had great commercial success, got rave reviews, and was a source of immense pride for Bird’s team and everyone else at Pixar.http://hbr.org/2010/09/managing-yourself-the-boss-as-human-shield/ar/1

Tuesday, April 8, 2014

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Wednesday, April 2, 2014

The Credit Card of Tomorrow: Software, Not Plastic


Lloyd Miller
SINCE the 1970s, paying with plastic has been pretty standard everywhere: Customers swiped their cards, signed receipts and took home their purchases.
But after security breaches at Targetlate last year led to the loss of personal data from as many as 110 million customers, the financial industry is racing to adopt technologies that will alter that decades-old ritual.
Driven largely by security concerns, credit card companies and issuers say they are working to make the system as consumers know it obsolete through smart chips and advanced computer programming.
To many, it is about time. The roots of the magnetic strip on credit cards extend back to World War II, ample time for thieves to learn to hack and steal those black lines of prized account information.
Credit card fraud totaled nearly $5.3 billion in the United States alone in 2012, giving the industry plenty of incentive to devise a better system. The amount lost to fraud continues to grow by 30 to 50 percent a year, according to estimates from the Aite Group, a research company.
The Future of Money
Efforts to bolster card security were underway well before hackers broke into the systems of Target, Neiman Marcus, Michaels and other store chains. But the recent data breaches injected new urgency into adopting newer technology.
“I think this will become a defining moment about how we in the industry think about security,” said Eileen Serra, the chief executive of Chase Card Services.
The credit card industry, especially in the United States, has long relied on increasingly sophisticated analytical programs to weed out potentially fraudulent transactions. But it has also focused on a handful of technologies it contends will better protect customers in stores and online.
One is placing microprocessors onto cards, a standard known as E.M.V. for its initial backers: Europay, MasterCard and Visa. Another is known as tokenization, a way of masking consumers’ card information over the Internet.
“It’s about taking vulnerable data out of the merchant environment,” said Ellen Richey, Visa’s chief legal officer.
E.M.V. is the best-known technology. Such cards are embedded with smart chips authenticating that their bearers are their rightful users. The chip is also extraordinarily difficult for thieves to counterfeit.
Cardholders verify the transaction with a PIN or a signature. Though the latter is less secure, it will likely be more prevalent in the United States at first, though Chase and others expect to offer chip-and-PIN cards this year.
Europe and parts of Asia have already used the system for the better part of a decade, while American merchants and issuers have balked, largely because of cost. Chip-equipped cards cost an estimated $1.30 each to make, while a standard plastic card with a magnetic stripe on the back costs roughly 10 cents. Retailers, too, have been loath to update their systems to accept chip technology because of the added cost.
“E.M.V. is going to cost billions of dollars to implement in this country,” said Shirley W. Inscoe, an analyst at the Aite Group.
But research suggests that the system works. In 2005, when Britain fully phased in the E.M.V. technology, credit counterfeit card fraud was 25 percent; such fraud plummeted to 11 percent seven years later, according to the Aite Group.
Visa, MasterCard and American Express all announced road maps for adopting smart chips more than a year and a half ago, with the aim of forcing most retailers and issuers to put E.M.V. in place by October 2015 in the United States. By then, the liability for any counterfeit fraud will fall on whoever has not adopted the chip technology. (Gas stations and A.T.M.s will have until 2017 to meet the new requirements.)
From 17 million to 20 million chip cards have been issued in the United States, according to the Smart Card Alliance, an industry group. But that represents just 2 percent of the one billion cards in use.
In many ways, the chip technology is already decades old. It has been around since the 1990s, born in an era before the Internet and widespread e-commerce.
Industry officials concede that such technology would not have prevented the data breach at Target, or any sort of online fraud in which thieves obtained lists of customers’ credit card numbers. Markets where E.M.V. has been adopted have shown a significant increase in Internet fraud.
That is a gap that tokenization is meant to fill. The technology works behind the scenes of a digital transaction: Customers still put in their card number, but software then transforms that information into a one-time token — a randomly generated code — that is sent through the payment-processing chain. Thieves who intercept the code can do little with it without the means to unscramble the token.
To many in the industry, part of the technology’s appeal is that it requires less upheaval than E.M.V. Customers still put in card information as they always have. And the digital tokens are largely in the same format as traditional card numbers, but mask identifying information.
“Now you don’t have personal information around the world,” Ms. Serra said. “With tokenization, we can keep that data much more secure.”
The hope of digital tokens is that they will not be confined to any one way of paying. Websites, digital wallets and mobile devices could all use the technology, broadening its utility.
“Every device should have the same foundation,” Ed McLaughlin, MasterCard’s chief emerging payments officer, said.
Still, for years token technology lacked the sort of universal standard that underpins chip cards. But in recent months, a joint venture of Visa, MasterCard, American Express and others announced a proposed framework to ensure that everyone was on the same page. At least two of the five biggest card issuers in the United States are adopting some form of tokens, Ms. Inscoe said.
A framework for token systems is still being built, and meaningful adoption is years away, said Randy Vanderhoof, the executive director of the Smart Card Alliance. For now, chip cards will help eliminate the most obvious and pressing kinds of fraud. “If your boat is leaking in multiple places, and you can’t plug them all up at the same time, you plug the biggest one first,” Mr. Vanderhoof said.
Ultimately, while physical cards will remain in use for some time, many in the industry predict plastic as the primary way to pay will give way to digital wallets embedded in smartphones, tablets and other devices.
MasterCard is already testing a way for Australian consumers with Samsung Galaxy S4 phones to pay using their phones.
Smart chips and tokens eventually will be embedded in an array of computers, providing multiple layers of security, Mr. McLaughlin of MasterCard said. A consumer’s smartphone will not only have a unique ID, it will also generate one-of-a-kind tokens for every transaction — ones that can be easily be disabled if the phone is lost or stolen.
“The mag stripe will become functionally obsolete,” Ms. Richey of Visa said. “Mobile will take over.”