Incentivos y Buenas Prácticas: Artículo en Effective Executive (India)

3EFFECTIVE EXECUTIVE NOVEMBER 2010

Welcome to the new 3Gs – gurus, governance and globalization.

How are they connected? How do you connect the dots between

these three seemingly different business changers? Why are

they so important for the business world? Undoubtedly, each

of these made an indelible impact on the way business is run

across the globe.

Who taught Henry Ford, Alfred P. Sloan, Henry Nestle,

Charles Coffin, etc? Were there gurus coaching, mentoring

and guiding them? There was no one! In fact they became

the gurus for many other businesses. However, of late, we

have been witnessing management gurus popularized by global

rankings taken out every year in the form of Global 50 Thinkers,

Global Management Gurus, World’s Influential Thinkers etc.

For instance, Peter Drucker, Charles Handy, Frederick Winslow

Taylor, Andrew Carnegie, Henry Mintzberg, Tom Peters, C.

K. Prahlad, Michael E Porter, Jim Collins, Vijay Govindarajan,

etc. What made these thinkers/gurus to occupy such a place

of prominence? Through their relentless pursuit of a perspective/

philosophy advocated either through their ‘influential’ writings

or ‘benchmark-like’ business practices, these gurus had been

able to set a new course of action for all the companies across

the globe.

Gurus, Governance And Globalization

FORMplat

Dr. Nagendra V Chowdary

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Consulting EditorDr. Nagendra V Chowdary

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Volume XIII, No. 11 November 2010

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ISSN 0972-5172

Here comes the contribution of these gurus to globalization.

In a seamless and global ‘village’, their practices or writings

have become precepts and they became the preceptors. For

instance, can someone think of any management tenet without

making a reference to F.W. Taylor’s 14 principles of management?

Their overarching power over the decades has proved that

companies across the globe were immensely benefited. In a

sense, these gurus’ practices and writings have hastened and

smoothened the process of globalization. However, to have

uniformity and standardization of business practices and to

serve the larger interests of the stakeholders, governance

structures had to be installed.

Thus came the need for strong governance structures.

Although many countries have governance codes, colossal

corporate collapses cannot be stopped. Enough has been written

about the need and importance of well-designed and

meticulously-executed governance codes. It is just not good

enough to have the codes but execution is the distinguishing

factor. And therefore the difference between the letter and

spirit of the rule! In this special issue, we tried to connect the

dots between these three seemingly different business enablers.


Effective Excutive_Nov_10.pmd 10/4/2010, 11:57 AM3


Great leaders are pragmatists who can deal with difficult realitiesbut still have the optimism and courage to act.

– Nitin Nohria

Be concerned about due process. People seek fairness – notfavors. They want to be heard. They often don’t even mind ifdecisions don’t go their way as long as the process is fair andtransparent.

– CK Prahlad

Excellent firms don’t believe in excellence – only in constantimprovement and constant change.

– Tom Peters

A visionary company doesn’t simply balance between idealismand profitability: it seeks to be highly idealistic and highlyprofitable. A visionary company doesn’t simply balancebetween preserving a tightly held core ideology and stimulatingvigorous change and movement; it does both to an extreme.

– Jim Collins

An organization’s ability to learn, and translate that learninginto action rapidly is the ultimate competitive advantage.

– Jack Welch

I really had a lot of dreams when I was a kid, and I think a greatdeal of that grew out of the fact that I had a chance to read alot.

– Bill Gates

It is people who are the objects of globalization and at thesame time its subjects. What also follows logically from this isthat globalization is not a law of nature, but rather a processset in train by people.

– Tarja Halonen

O E

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In times of great stress or adversity, it’s always best to keepbusy to plow your anger and your energy into somethingpositive.

– Lee Iacocca

You can’t just ask customers what they want and then try togive that to them. By the time you get it built, they’ll wantsomething new.

– Steve Jobs

It has been said that arguing against globalization is like arguingagainst the laws of gravity.

– Kofi Annan

Globalization could be the answer to many of the world’sseemingly intractable problems. But this requires strongdemocratic foundations based on a political will to ensure equityand justice.

– Sharan Burrow

Globalization is a fact of economic life.– Carlos Salinas de Gortari

Globalization was a deep trend pushed by technology and rightideas, as much as anything else.

–Jeffrey Sachs

I am not someone who believes we should build a fence aroundour country but I do believe there ought to be some fairnesswith respect to the rules of this globalization.

– Byron Dorgan

If you’re totally illiterate and living on one dollar a day, thebenefits of globalization never come to you.

– Jimmy Carter



TENTcon

Interview

Features

Platform .........................................................3

Quotes ...........................................................4

Executive Brief ................................................6

Good Governance and ComplianceRequire New Designs for IncentivePlansIdentifying ’What to Measure’ and ‘What to

Reward’ ........................................................10

Life Lessons from the River ..........16

Branded Customer Service Inside aNon-Profit OrganizationThe Key to Gain a Competitive Edge .............32

Non-Profit Brand and Culture GoHand in HandHow Brands Can Walk the Talk .....................38

Engineering the Primal MovementBuilding the DNA of a Non-Profit Brand .......50

Social ProductionThe ‘Next Big Thing’ in Non-Profits ...............56

Collaborating to WinMeasuring Collaborative Ability ....................66

PERSPECTIVEThe Moral of the MomentGovernance –

It’s All About Implementation ................... 30

LEADERSHIPWinning LeadersHow They Make Great Calls ....................... 74

K Ramesh - 22

Kashi R Balachandran - 46

Vijay Govindarajan - 62



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Internet Brands Deal Comes fromOld MoneyHellman & Friedman (H&F) recently announcedthat it would acquire Internet Brands, the onlinepublisher that began life 12 years ago as Idealab-backed CarsDirect.com. It would appear that H&Fwill do this deal out of its sixth fund, an $8.4 bnvehicle closed in 2006, rather than the $8.8 bnpool raised in late 2009. In fact, the firm still hasn’tspent a dime of that new money. For the uninitiated,it is very unusual for private equity firms to siton new funds for more than a year.

The explanation here comes from an investorin both Funds VI and VII. According to him H&Fwas very close to buying Neuberger Berman in late2008, which would have “sucked down a lot of FundVI.” H&F bailed out of that deal a few months later,thanks to an out tied to S&P 500 performance.By that time, however, it had already committed

itself to raising new capital. “Theywere very open about the timingstarting Fund VII during theprocess,” says the investor.

According to data fromCalPERS, H&F VI was only around70% called through the end of Q1.That would mean around $2.52bn left in dry powder. Since then,it has announced three deals:

Internet Brands ($640 mn), Associated Materials($1.3 bn) and Sedgwick Claims Management ServicesInc. ($1.1 bn, together with Stone Point Capital).

Let’s assume that each of those deals includeda 40% equity check from H&F (or 20% in the caseof SCMS, because the equity was syndicated). Thatwould mean around $776 mn in new equitycommitments, bringing the remaining dry powderto around $1.75 bn.

The firm probably wants to hold onto at least$750 mn for follow-ons or other special situations,which means there is about $1 bn to go. Soundsto me like Fund VII won’t see its first deal until atleast the first quarter of 2011, or 15 months afterit closed. Guess this was the mega-fund to investin if you were having liquidity troubles.

http:finance.fortune.cnn.com

Cloud Computing: Raining MoneyTech titans are battling to pay big bucks for oncebland computing firms. Two questions: Are theyworth it? And who’s next?

When tech titans HP (HPQ) and Dell (DELL)became entangled in a furious back-and-forthbidding war over 3PAR (PAR), they unwittinglyintroduced much of the public to a decidedly-unsexyarea of tech that is becoming indispensable in ourincreasingly smartphone’d, tabletized, app-drivenworld: cloud computing.

In fact, HP’s $2.4 bn acquisition of the datastorage company was just one in a recent spateof acquisitions. Four smaller cloud-relatedcompanies have also recently been scooped up bythe big boys.

Last month, virtualization software-makerVMWare (VMW) announced it would buy Integrien,a provider of network analysis, and TriCipher, asecurity software developer, for undisclosedamounts. Around the same time, Citrix Systems(CTXS) also bought VMLogix for its cloudmanagement technology and Red Bend SoftwareInc., snagged VirtualLogix, which allows Intel andARM-based mobile devices to run multipleoperating systems on a virtual machine. (Again,terms were not disclosed.)

Companies like HP and Dell are going full boreon cloud services because they enable outsourcing,usually via the Internet, of scalable and/or virtualizedIT services, from data storage, software, to billingand payment. The convenience offered by the cloudis significant: why should businesses, app developers,banks, startups or even governments handle theheadaches and cost of building infrastructureinternally when they can be offloaded to cloud services,resulting in increased productivity and cost-savings?

Analysts like Paul Burns, a principal at IT analysisfirm Neovise, attributes the recent activity to therelative longevity of cloud and cloud-based services,like Amazon with its EC2 virtualization service,launched in 2006, and Salesforce.com (CRM),founded in 1999. “It’s early in the cloud computingmarket, so companies think if they move now, maybethings will be a little less expensive in some areas,



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but if they wait, they not only become moreexpensive, they risk having a competitor buyingthat offering instead,” says Burns.

Is cloud overvalued? The hype around cloud,plus the general frenzy in the M&A space, could bewhy we’re seeing companies go to war now overcompanies like 3Par: they’re taking risks early inthe game in hopes that those bets will pay off later– both financially and technologically. The goal iswhat it always is: to be better positioned to profiton the next big thing, as more and more businessesdecided to outsource to the cloud.

In late 2003, EMC Corporation (EMC) boughtvirtualization software company VMWare for $635mn, a large sum that in hindsight turned out tobe a pittance. In 2007 EMC later spun off partVMWare to unlock shareholder value and retaintalent. The company’s market cap is nowapproximately $34 bn. As EMC still owns 80% ofthe firm, and VMWare’s software remains thefoundation for the majority of cloud computingservices that require some form of virtualization.Any big company picking up a cloud firm todayhas to be hoping for a similar outcome.

In fact, 3PAR wasn’t the first cloud acquisitionfor HP. In July 2007, it picked up Opsware, a datacenter automation start-up for $1.6 bn, or 16 timesOpsware’s 2006 revenue. In that respect, HPoverpaid. The Wall Street Journal recently questionedwhether valuation even matters in the cloud sectorright now, citing an analysis by the ISI Group whichreported that over the last five years, HP typicallypaid 1.9 times a company’s 12-month revenue inhardware and networking acquisition.

So, cloud acquisitions or investments are notwinning lottery tickets: execution and integrationare everything. Opsware was famously troubledas a standalone company. A nice exit for shareholdersand new ownership doesn’t magically change that,or any company’s prospects.

Three Clouds Properties Ready to BurstBurns and Gartner analyst, David Smith identifiedthree companies that could bring the rain to anycompany rich enough to snap them up, and wiseenough to run them well:

1) Zuora – the Salesforce.com of subscription-based payment and billing.

Many subscription based businesses still rely oncostly and complex in-house billing systems, butZuora offers cloud based payment and billing servicesfor subscription-based businesses, new and old. CEOTien Tzuo spent nine years at SalesForce.com – hebuilt SalesForce.com’s original system and servedin several roles including Chief Marketing Officerand Chief Strategy Officer.

2) Nimbula – The private cloud company withbig name backers.

Nimbula emerged from stealth mode last Juneand is most notable for its pedigree. The same teamthat built Amazon’s EC2, former execs Chris Pinkhamand Willem van Biljon, are behind Nimbula. Pinkhamand van Biljon’s industry cred has attracted somepretty high-profile VCs, including Accel Partnerswhich has also invested in AdMob, Facebook andComScore, and the legendarySequoia Capital. So far, Nimbulahas raised more than $20 mn intwo rounds of funding.

3) Heroku – Building anapplication platform on the cloud.

Started in 2008, the SanFrancisco-based cloud providerfocuses on “platform as a service,”a concept popularized by SalesForce.com, thatemphasizes ease of use, automation and reliabilityfor app builders. Heroku employs a multi-tenantsoftware architecture, so one instance of softwareon a server can serve more than one client company.Third party add-ons let developers easily integrateadditional features into their deployed apps.Heroku has received over $13 mn in funding todate.

As cloud computing continues to mature, we’llsee more mergers and joint ventures, lots ofoverbidding and maybe even a VMWare level bargainor two. However the sector grows, as WinstonChurchill said about an entirely different matter,“this is not the end. It is not even the beginningof the end. But it is, perhaps, the end of the beginning.”

http://tech.fortune.cnn.com



CLASSICconsulting

DATAsimplified

This report details which HR practices and methodologies are helping companies to createcompetitive advantage and which need a different approach to suit the times. This analysis ofa broad range of HR topics is based on the second survey conducted by The BostonConsulting Group and the World Federation of People Management Associations, whichgenerated responses from more than 5,500 executives in 109 countries covering fivecontinents and spanning many industries.

Source: www.mckinseyquarterly.com

Creating People Advantage 2010:How Companies Can Adapt Their HR Practices for Volatile Times

The economic recovery is fertile soil for the Russian rail container market as all signs indicateup to 10% annual growth rates through 2015. Russia is becoming more attractive for shippinggoods in containers via rail as the country improves its infrastructure, and as containercompanies improve their services. The Russian economy and its trading counterparts arepromising a rapid recovery across the Russian rail container market.

Source: www.atkearney.com

Russian Rail, Containers, and Growth: The Rail Container Shipping Marketis Set to Soar in an Economic Recovery

Reference # 03M-2010-11-01-10





Identifying ’What to Measure’ and

‘What to Reward’

Good Governance andCompliance Require NewDesigns for Incentive Plans

Companies need to

align their variable

pay schemes to their

compliance systems

and the values they

stand for, so that the

former will not impair

the latter. As large

organizations become

more and more

complex, reward

programs should

encourage behaviors

that promote

organizational success

in more complex ways

than those usually

contemplated in the

classic agency theory.

Corporate best business practice andcompliance programs are typically based

on the legal framework ruling companyoperations. However, in recent years, thisapproach has proved to be insufficient toprevent severe wrongdoing, and companieshave been forced to turn to proactiveprograms to foster more ethical businesspractices. These programs go beyond strictcompliance with current regulations. Oneof the essential tools today is goodgovernance and ethical leadership by seniormanagement. Through its everydaybehavior, the top management shouldconvey the message of the need to adhereto ethical practices and must adjust everyday

practices to match the core organizationalvalues. Also known as “tone at the top,”this strategy conveys that a company is trulycommitted to the values proclaimed in itsCode of Ethics, and that it is walking thetalk and not just making meaningless ethicalstatements. It is not always easy for thesenior management to follow this path asit calls for strong discipline and often requiresacting on tough decisions. Yet, this is theonly path that leads to commitment to acompany’s Code of Ethics across theorganization, as it builds an ethical disciplineand also effectively avoids illegal actions andtheir damaging consequences to corporatereputation.



Good Governance and Compliance Require New Designs for Incentive Plans

Matthias Kleinhempelserved as a full time professor at

IAE Business School from 1999 to

2002. In 2009 he joined IAE

again and teaches in the MBA

and the Executive Education

programs. He is the Academic

Director on behalf of IAE of the

Senior Executive Program Miami,

which IAE organizes together

with IESE (Spain) and IPADE

(Mexico). He holds a Master´s

Degree with an MBA (IAE

Business School) and a Law

Degree (University of Hamburg,

Germany). His fields of interest

and research deal with Regional

Strategies and Organization of

International Companies and

Business Ethics and

Compliance.He is co-heading the

Center for Governance and

Transparency at IAE. Mr.

Kleinhempel worked as a lawyer

with focus on insolvencies and

bankruptcy proceedings in

Germany and as an advisor for

foreign investors in

Argentina.He was President and

CEO of Siemens Venezuela, and

simultaneously CFO for Siemens

in the Andean Region, President

of the Power Cable Division,

holding responsibility for the

worldwide business and CEO and

President of Siemens in

Argentina and simultaneously

CFO of the Mercosur Region . He

served as President of the

Argentine-German Chamber of

Commerce, as President of IAE’s

Alumni Association, and as Vice

President of the EU Business

Group in Argentina.

An issue that seems to consistently posea challenge for this approach involves thedesign of variable compensation programs,which threaten the commitment of thebusiness to ethics and jeopardize thecorporate goals and core values in theirattempt to secure short-term financial gains.Variable pay is usually tied to objectivesassociated with sales and market sharegrowth, increased profits, dividends andcompany market value, as well asquantifiable short, medium and long-termtargets – all combined in what is typicallyreferred to as performance metrics. Themakeup of the compensation schemes varyaccording to the responsibility levels: whilea middle manager’s pay often combines a75% fixed salary and a 25% share of variable‘incentives,’ top executives’ fixed salariesnormally account for 60% – at most – oftheir compensation packages, with the restdepending on their performance andaccomplishment of specific goals. Monetaryincentives may be granted in cash or equity(shares, stock options, etc.).1

In general terms, regular compensationplans reward managers for short-termresults, whether these results turn out tobe short- or long-lived. Particularly in thecase of public companies, top managementperformance estimations tend to focus oncompany market value. The fact that a shareof their compensation hinges on securingshort-term results drives executives to seekimmediate gains, even at the expense of long-term company value.2 Specifically, with atypical equity-based compensation scheme,stock options are granted gradually over aspecific period of time, and, once awarded,these shares can be sold by managers forcash. High percentages of variable pay,combined with short-term financialobjectives, strongly indicate that immediatefinancial gain prevails over proclaimedcorporate values. As shown by the recent

financial crisis, this scheme has but promotedthe short-sighted quest for gains thatultimately undermine organizations’ mediumand long-term interests, casting serious doubtson top management’s true commitment tocompliance programs based on integrity andcredible ‘tone at the top’.

In Latin America (and other regions aswell), the organizational structures of themultinational companies featuring localaffiliates and regional headquarters makesit complicated to design the compensationschemes and incentive plans. In these scenarios,multiple executive roles are often assignedto a single individual (e.g., a local subsidiaryCEO serving also as regional head), not onlypaving the way for potential conflicts ofinterests to enhance variable pay, but alsoshowing strong interdependence among thedrivers that determine objective metrics andescape managers’ control.

Chronic issues stemming from thecomplex and difficult business environmentin these regions further contribute to creatingadditional distortions when it comes tosetting incentives. Executives might feeltempted to resort to unlawful means toachieve financial targets established in theircompensation schemes – for example,increasing sales with dubious deals. As aresult, in a setting where illegal practices arecommon, an inadequately designed incentivesystem can not only trigger a short-sightedsearch for results but also foster unlawfulbehavior in the form of acceptance – andcreation – of corrupt practices, introducingboth informal and shady incentives. Indeed,in environments besieged by endemiccorruption, as is often the case in emergingcountries, variable pay scheme design1 Young Stephen B, 2009b, “Board Guidelines for Setting

CEO Compensation,” Caux RoundtableAnnouncement, August.

2 Bebchuk Lucian, 2009a, “Written Testimony, Hearingon Compensation Structures and Systemic Risk,” June11, Committee on Financial Services, US House ofRepresentatives, http://www.house.gov/apps/list/hearing/financialsycs_dem/bebchuk.pdf.



3 Kohn Alfie, 1993, “Why Incentives Plans CannotWork,” Harvard Business Review, September-October, pp. 2-7.

4 Ibid: 5.

5 Ibid: 5-7.

6 Pérez López JA, 1993, Fundamentos de ladirección de empresa, Madrid: Rialp. Chapter 7.

7 Rosanas JM and Velilla M, 2005, “The Ethics ofManagement Control Systems,” Journal ofBusiness Ethics, Vol. 57, pp. 83-96.

demands special attention and care toprevent undesired outcomes.

The Need for Variable Pay andIncomeVariable pay as an incentive has beentraditionally viewed as an imperfect –albeit practical- solution to what is usuallyknown as the “principal-agent” problemor “agency dilemma.” This notionencompasses the difficulties that ariseunder conditions of incomplete andasymmetric information when a principalhires an agent. This issue may surface inseveral employer-employee relationships,when agents pursue their own objectivesand are inherently unable to loyally servetheir principals. The “agency theory,”developed to analyze this crucial problem,provides a possible solution to aligninterests among principals and agents(for example, among an organization andits employees, or among shareholdersand managers, or among executives andemployees) by encouraging agents withmonetary incentives based on theaccomplishment of economic goals thatreflect principals’ interests. As a result,compensation schemes have beendesigned to mitigate the agency dilemmaas much as possible. Financial incentiveshave become a mechanism to ensureagents’ loyalty and commitment to theirorganizations’ strategic goals. A pervasivechallenge for this approach lies in choosingthe performance to be taken into account–that is, deciding whether to baseincentives on past, current, future orexpected performance.

Several currents of thought haverefuted the principles underlying thisapproach, arguing that a system basedexclusively on monetary incentives doesnot factor in satisfying the needs of othersas an ultimate goal, thus undermining

the potential strength of moral valuesand commitment to organizationalobjectives. Material incentives ultimatelyindicate that the intended outcomes donot ref lect a commitment to theorganization but are reflective of thespecific results rewarded by this system.A complementary approach to problemsderived from exclusive monetarycompensation schemes hinges on viewingthem as results of inadequate programmotivational premises rather than systemdesign flaws. Hence, incentives may beconstrued as “extrinsic motivators” thatdo not change our behavior dispositionsnor drive any sort of long-lastingcommitment to values supporting futureactions.3 Monetary incentives would,therefore, have a temporary effect onprofessional performance, ensuring onlya limited, short-lived compliance.

In this light, monetary rewards maybe viewed as punishment, as they areactually manipulative in nature –thatis, monetary rewards impose severalconditions, which an agent needs to meetin order to accomplish certain goals.4

Thus, punishment and reward are, infact, two sides of the same coin:incentives may be highly desirable, but,as they depend on specific behaviors,organizations end up manipulating theiremployees-agents, while the experienceof being controlled is likely to becomepunitive over time.

In turn, any reward systemimmediately tends to cripple intrinsicmotivation: whenever something ispresented as a prerequisite for somethingelse –that is, as a means (performance)to an end (material reward) – the formerwill be viewed as less desirable and will,therefore, be undervalued. The downsideof any such system is clear: as ultimategoals, material incentives curtail

motivation, rupture relationships, ignorereasons, discourage creativity and promptexcess risk-taking, and eventuallyundermine agents’ interest.5

A parallelism may be drawn betweenthe conflicting tension between these twodiverging principles – extrinsic, materialmotivation and transcendent motivation-and organizations’ external and internalmissions. While an organization’s externalmission points to the actual objectivesand needs it is bound to meet, its internalmission involves fulfilling the actual needsof other stakeholders – that is, buildingunity and promoting mutual trust amongorganization members.6 Explicitincentives are typically designed to makesure that the organization achieves itsexternal goals. However, the organizationcan only attain long-term sustainabilityif, at the same time, it lives up to its internalmission – in other words, creating strongties among its members, based oncommon values and mutual trust(transcendent motivation). As a resultand as opposed to formal control systems,the notions of organizational ownershipand loyalty become instrumental.7

Solutions for OverallIncentive ProgramsTo avoid the negative effects of monetaryrewards, several solutions have beendevised both through phased monetaryincentives and by means of broader, non-monetary rewards based on non-quantifiable metrics. There are five typesof possible solutions available:



Good Governance and Compliance Require New Designs for Incentive Plans

� Variable Pay Reduction to a MinorPart of the Fixed CompensationThe purpose of this solution is to finda sound balance between both fixedand variable pay in order to ensurethat neither is conceivable withoutthe other one.

� Setting Long-term FinancialTargetsThis could involve sales volume,income, costs, EVA – for example,through a short and long-term bondsplit with an average 3-to-5-year term.In addition, it is convenient to extendperformance measuring periods,taking into account, for instance,results over the past three to fiveyears instead of considering only thelast 12 month. Thus, incentives wouldbe tied to accumulated, long-termperformance rather than to short-term outcomes.

� Long-term PaymentsThis includes stocks that cannot besold over a numb er of years. In thiscase, it is also advisable to separatethe time when stock options can becashed out from the moment theyare vested. As executives cannotspeed collection, this precautionprevents distortive incentives derivedfrom their desire to do so.8

� Decoupling Targets fromIndividuals’ ControlThis is applicable both to overallcompany targets or region-specifictargets. This can be very effective, for,when executives cannot controltargets, they are not tempted toresort to shortcuts or wrongfulbehavior. This practice fosterscooperation and teamwork across theorganization. It does not matter thatthis goes against the original rationaleof the reward systems (additional

payments for individualaccomplishments). In any case, theidea of controlling an organization’seconomic results is virtually an illusionin large companies’ operations, sincethe influence on volume/income isarguable at best and often sharedamong several company areas, asillustrated by internal transfer prices,tax strategies, strategic priorities andresource allocations in headquarters-affiliate relationships, or global andregional value chains with localresponsibilities only for specific parts.As a result, current discussions onperformance focus on four drivers–control, accountability, influence andsupport.9

� Introducing Qualitative Targets,including specific compliancegoalsA global study conducted by theheadhunting firm, Egon Zehnder withover 1,000 executives from 13countries, including Argentina andBrazil, on current compensation andincentive practices revealed thatmonetary reward systems increasinglycoexist with young executives’ risingappreciation not only for non-monetary metrics but also formotivational mechanisms that gobeyond material rewards. As a result,survey conclusions seem to indicatethat, for most participatingexecutives, material incentives cannot“buy” motivation, and short-termrewards are making way to long-termincentives based on behavioral targets,particularly stressing the formulationof and compliance with codes ofconduct.There is also an increasing appreciation

of job content over materialcompensations, as well as a preferred

choice for more interesting, lessremunerative work over jobs offeringmore attractive compensation and lessappealing professional challenges. Youngerexecutives are showing greater interestin non-material job aspects, such ascorporate culture or a healthy work-personal life balance.10 Job features likegreater accountability, more decision-making autonomy, and regular feedbackare increasingly viewed as motivationaldrivers just as significant as or even moreimportant than monetary compensationitself.11 In 2010, a study on compensationcarried out by Mercer in 120 UScompanies also found a growing interestin the adoption of non-financial targets,revealing a 17% increase in theintroduction of such metrics in theirincentive plans over the past year only.12

Despite the still strong prevalence ofmonetary incentive systems confirmedby the study, the rising importanceattributed by executives to behavioralrewards tied to sound, non-quantifiablebusiness practices points to a consistenttendency towards adopting amultidimensional approach to addresscompensation scheme issues. Both asregards incentives and targets, there isa trend towards incorporating elementsassociated with business practices, likeperceived quality of compliance programs,implementation of code of conduct, etc.

Companies need to align theirvariable pay schemes to their compliancesystems and the values they stand for,8 Bebchuk, Lucian, 2009c, “Fixing Bankers’ Pay,”

The Economist’s Voice, November. 2.

9 For more on this topic, see Robert Simons,“Designing Top Performance Jobs,” HBR, R0507D-E.

10 Egon Zehnder, 2009, “Reward – Seeking theIdeal Blend of Financial Compensation andFulfillment,” Egon Zehnder International 6th.International Executive Panel, June. 5-7.

11 Ibid: 10-12.

12 Mercer, 2010, “The 2010 US ExecutiveCompensation and Performance Survey,”www.mercer.com, June.



13 Bonime-Blanc Andrea and Brzezinski Marc, 2009,“Business and the Way of Democracy,” The NewYork Times, December 27, 2009.

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© 2010 Matthias Kleinhempel. All Rights Reserved.

so that the former will not impair thelatter. As large organizations becomemore and more complex, rewardprograms should encourage behaviorsthat promote organizational success inmore complex ways than those usuallycontemplated in the classic agencytheory.

There are no ideal, foolproof solutionsto offer in this field, but it is clear thatany sustainable compensation schemerequires some of the options listed earlier– decoupling targets from jobs, reducingthe number of targets to accomplish inextended periods of time, andincorporating qualitative targets as well.� Common goals lower incentives to

secure a reward through shortcutsor undesired behaviors, especially insettings where corruption iswidespread.

� A limited number of targets facilitatesthe management to define themmore objectively and measure themmore effectively.

� Additionally, fewer targets allow fora more effective evaluation oforganizational performance over alonger period of time, escaping thetemptation to measure strategysuccess or failure over shorter timeframes that can be easily tamperedwith.

� Assessments based on qualitativemetrics provide a wider scope thatcaptures in a more sophisticatedfashion the true alignment betweenactions and organizational values.Some companies are already adjusting

their incentive programs to these tenets.

Just as authoritarian political systemshave changed into more democraticgovernment schemes over recent decades,the corporate world heads towards atransformation of similar connotationsas a result of the recent global crisis. Thischange involves a substantial turnaroundof a relatively opaque model focusing onshareholders’ interests into a moretransparent system that addresses theneeds of multiple stakeholders, includingmiddle management, employees,investors, customers and NGOs, amongothers.13 The place and role of monetaryincentives can be redefined to play a keypart in the transition towards corporatestrategies based on integrity andtransparency.





Life Lessons from theRiver

Like most rivers, our

lives are constantly

changing. So jump in

– you’re going to get

wet anyway. With the

proper tools and

inner resources, you’ll

be more confident

that you can navigate

these changes

successfully and make

your life an exciting

journey of discovery.

These challenges are

there to nurture and

accelerate your life’s

unfolding. Avoiding

the challenge just

delays what you

ultimately have to

learn.

When you stand in a river for the second time,is it the same river in which you had stood earlier?

Ancient Philosophical Question

A few years ago, I wrote an article abouta river-rafting trip on the Green River

in Colorado, where I had a near-deathexperience. As I was propelled through therapids, behind the raft, I wasn’t sure if I wouldsurvive the swifter currents of the river. Itwasn’t until many years later that I realizedthe significance of what happened on thattrip. I was thirteen at the time.

As I relived this experience, during thewriting of this book, I gleaned eight lessonsand insights from the river experience, andthe river of my life, that have guided me on

my life journey. They form the foundationfor this book. I truly discovered what it meansto be Dancing on the River. It’s an attitudeabout how you approach life. It’s a beliefsystem that you cultivate. It’s a reflectionof a life decision that you make to be happyand to enjoy life in this moment. Yourenjoyment and appreciation of life is notdependent on what might happen in thefuture. I haven’t always felt this way. It’s takenme a while to get here. Some days I feel itmore than others. Some days I forget. Dancingon the River is the journey of how I have gottento this place in my life. It’s been a processof discovering what beliefs and attitudes wereholding me back from moving forward. It’sbeen a process of discovering spiritual practices



Life Lessons from the River

Mark Susnowhas had a unique and varied career

involving multiple transitions. A

former trial attorney for 30

years, Mark has been covered by

The New York Times, Rolling

Stone Magazine, The Boston

Globe and The San Francisco

Chronicle. In 2000 inspired by

the new millennium, Mark sought

a new career and trained to

become a life coach. Since then

Mark has worked with over 1000

people helping them find joy and

meaning in their life regardless of

their circumstances. He is a

contributing author along with

Zig Ziglar, Brian Tracy and Denis

Waitley in the book 101 Great

Ways to Improve your Life.

Mark’s new book, Dancing on

the River: Navigating Life’s

Changes is now available. In

addition to his work in the

business world, Mark is an

accomplished musician who has

played saxophone, clarinet and

flute in clubs throughout the Bay

Area and Hawaii.

and mental disciplines that have supportedme in integrating more empowering beliefsand attitudes into my way of thinking. It’sbeen the awakening to a rich inner life thathas fulfilled me on many levels. It’s been thewillingness to face adversity and to becourageous when I needed to be. It’s abouta leap of faith. It’s also a story about othersand how they have changed their perceptionof life. Underlying all of this is the commitmentto developing the life skills and belief systemsnecessary to face life’s challenges. We areaffected by events and circumstances thatwe have no control over. There are noexplanations for many of the things thathappen. We struggle with trying to makesense of it. More than ever, the world welive in is changing at an accelerating rate.Navigating these changes, both personallyand globally, has become an art form andis the greatest challenge that we all face. Itcan feel overwhelming at times and can drainus emotionally. But it doesn’t have to bethat way.

The river of our lives always has beenand always will be changing. It’s just thatwe are more aware of it now. During mychildhood two dramatic changes occurred,which significantly impacted the course ofmy life. When I was six, I lost my father. Thistragic incident changed the whole dynamicof our family and of my childhood. When Iwas ten, I was taken out of public schooland sent to military school for two years.Most changes that we experience in our livesaren’t as dramatic as the ones that Iexperienced. There are the many changeswe go through as we transition throughdifferent phases in our lives. Once we leavehome, we struggle with satisfying basic needsthat previously we took for granted. Wesearch for a life path that we feel will giveour life a meaning. But as we transitionthrough different phases in our lives, whatgave us meaning at one time also changes.

The breakup of my brief marriage was thewake-up call that opened me to the path ofawakening that I have been on ever since.Meditation and yoga, which have been at thecore of my life’s unfolding, were the first stepson my journey. Soon after, I met my wife,Annie. Once we began a family, our lives shifteddramatically. It was only a matter of time untilI felt a yearning inside that called for somethingelse.

Although I didn’t know what thatsomething else was, I made a leap of faithand stopped practicing law. A year later, aftermuch soul searching, I decided to become alife coach.

I love hearing a good story and like to thinkof myself as a good storyteller. Many storiesconvey a message and an underlying theme,which are remembered long after the storyhas been told. The chapters in this book reflectvarious aspects of my life’s journey and thestories of some of the people that I have beenprivileged to get to know from being theirlife coach. For confidentiality purpose, I havesometimes used a composite to reflect upontheir contributions.

In each chapter I explore with you themany insights gleaned from the Green Riverand the river of my life. I also share with youvarious tools, techniques and resources thathave enabled me to navigate the many changesin my life. To help you with your exploration,at the end of most chapters I present youwith an opportunity to reflect upon someof the concepts explored in that chapter. Iencourage you to journal. Journaling is apowerful way to deepen your learning, andan opportunity to get to know yourself better.Give yourself a gift by taking the time to reflectupon the insights and concepts explored ineach chapter.

It is my sincere hope that after you readthis book you will feel empowered to embracelife’s changes rather than avoiding or reactingto them. Like most rivers, our lives are



constantly changing. So jump in – you’regoing to get wet anyway. With the propertools and inner resources that you willbe able to access in the various chaptersof the book, you’ll be more confident thatyou can navigate these changes successfullyand make your life an exciting journey ofdiscovery. These challenges are there tonurture and accelerate your life’s unfolding.Avoiding the challenge just delays whatyou ultimately have to learn. You’re notalone on your quest. There are many fellowtravelers who face the same challengesthat you do. They wonder about the samethings that you think about. We are all inthis journey together. Enjoy the journey.

A Prayer For The WorldSee the visionBe the dreamLive your lifeKnow who you areFind the lightBe the beacon that lights the way for othersto seeSay the word that speaks to all of usKnow you will be healedWe who are visionaries—Visionaries of the dawnShow the wayBe who you areNow is the timeDon’t wait any longerWe know who you areYour time is at handTake a standTake a stand at this moment in timeJoin with mewe are one—One familyDreaming—hoping for a better worldA world in which we see each other as afriend rather than foeAs brothers and sisters rather than ourseparateness

A world in which our differences inspireus to look deeperA world in which we know that what weall want is to love and to be lovedA world in which we all say yesYes to the momentYes to the spirit in all of us waiting to beexpressedJoin with meLet us see the love in each otherThe love that is all around us in eachmomentLet us say yes to love.Namaste!

Flowing with the Rhythm ofLifeWhen I let go of what I am, I become whatI might be.

Lao TzuWhen I was 13, my Uncle Sam took meon a weeklong river-rafting trip, sponsoredby the Sierra Club on the Green River, atributary of the Colorado River.

It seems like it was yesterday. Up untilthat time in my life, I hadn’t really beenanywhere. I grew up in San Francisco; theextent of my travels were occasional traintrips to the Central Valley, to visit withmy grandparents. The thought of flyingon a plane for the first time seemed notonly exciting, but also scary. I had oneother consideration, which for a thirteenyear old was a big concern. Would I beback in time for my team’s game? I wasthe team’s pitcher.

Once I was reassured that I would beback in time, I was ready to go, but stillwith some reservations. During the flightfrom San Francisco to Boise, Idaho, I couldn’tcompletely relax. Even so, I was able toovercome my apprehension – until I sawwhat was next. At that time, Boise had asmall airport. After getting out of the plane,I followed my uncle toward a hangar that

housed a few small planes, not much biggerthan our car. As I looked up at the littlesix-seat plane, I hesitated. I gathered upmy courage, walked up the few remainingsteps and boarded the plane. We flew overthe mountains to a town close to ourcampsite. Once we landed, I was glad tobe on the ground.

Already an adventure for a thirteenyear old, we climbed onto a flatbed truckand were driven down a long and windingdirt road full of potholes toward the river.Then the truck stopped. I looked at thelast obstacle before reaching the river.

We got out of the truck and beganwalking over an old and narrow woodenrickety bridge. From there it was justanother hundred yards to our campsite.

I looked around at what would becomemy home for the next week: the riverflowing through the sharp canyon withits incredible sounds and reddish colorsand the five rubber rafts, big enough forforty people and supplies. There were 22adults and 18 kids, including the five guides.

That evening we sat around the fireand got acquainted with each other. Safetyand logistics were a big topic of conversationthat first night. Because I was so stimulatedfrom the day’s journey, I had difficulty fallingasleep. At the crack of dawn I woke up. Adelicious breakfast was served: hot cereal,bacon and eggs and a hot drink. Beforegetting into the rafts, we reviewed thesafety considerations that we had discussedthe night before. We were told that witheach passing day the rapids would becomemore challenging and not to expect themost challenging rapids – Hells Half Mile– until later in the trip. The journey of72 miles of whitewater rafting throughSplit Mountain Canyon and DinosaurNational Monument was about to begin.That first day as the current took usdownstream, every once in a while I would



Life Lessons from the River

get out of the raft and play in the waterand let the current take me where it would.

That’s the way the second day beganas I floated alongside the raft. SuddenlyI had an ominous feeling. I was not awareof how quickly the character of the rivercould change. Not only were the currentsswifter, the distance between the raft andmyself w as increasing. Many thoughts racedthrough my mind, yet time seemed tostop. “I might be smashed by the boulders;I might be sucked under the water anddie.” There were the yells: “Get in the raft.Get in the raft.” It was too late. As Idesperately swam toward the raft, notonly did I feel exhausted, I had a sinkingfeeling that I wasn’t going to be able toget back into the raft. More yells: “Stayin the center – Stay in the center,” waswhat I remember hearing and that’s wherethe current was taking me. At the secondin time when I knew I was going throughthe rapids, I stopped resisting and let goand became at one with the path forgedover thousands of years by the incredibleforce of that same river.

At its center, the river surgeddownstream unimpeded between theboulders. I tried to lean back and keepmy feet in front of me, but I was spunaround and turned upside down by theshifting whirlpools. Fear, exhilaration andexhaustion consumed me. Before I knewit, I was through the rapids. I was alive

and intact. I wasn’t smashed by theboulders. I wasn’t trapped under thesurface of the water. For a second, I hada sense of relief as I rejoiced in the stillnessof the river. Then I noticed that the nextseries of rapids was approaching and theraft was still ahead of me. I dreaded thethought of going through them again.“Maybe I won’t be so lucky, this time.”At the moment that I began to feelhopeless, amidst all of the yelling, I sawit! With an extra surge I grabbed the oarmy uncle extended and was pulled ontothe raft. At that instant, the raft wentthrough the rapids again. In just thosefew seconds so much had occurred thathas dramatically affected my life. A fewhours later we reached our campsite. Ilay down exhausted.

On more than a few occasions on thattrip over forty years ago, my Uncle Samsaid to me, “You’ll think about this triplater in your life. It will affect you in waysyou won’t understand.” I think I’m finallygrasping what he meant. Many of thelessons and insights gleaned from theGreen River experience are at the coreof how I live my life today. It’s been myteacher in many ways. That’s the way itis with many things in our lives. We don’trecognize the significance of a particularexperience or meeting until many yearslater. Let your river guide you in thischanging adventure called life. Let it teach

you what is needed to navigate thechanging currents with all of theircomplexities and unexpected moments.

To help you on your journey, let meshare with you the following insightsand practices that have guided me:♦ Find and Live from Your CenterThat was the message from the GreenRiver. When you are centered andconnected to your source, you areconnected with the source of everything.That’s when you are able to let go, to trustand to flow with what is. When I let go inthe river, I became at one with that sameenergy and power that had forged a pathover thousands of years. Even though welive in a fast moving and changing worldfull of uncertainties and complexities,navigating these changes becomes anexciting journey of discovery. Meditationand yoga have consistently facilitated myconnecting with that center.♦ Get Out of Your Comfort ZoneI could have stayed in the raft and playedit safe, but I was curious and adventurous.For most of my adult life my comfortzone had been my law practice and, as aresult, I had not yet realized my fullpotential. On many levels I was gettinglazy. Unless I made the career change thatI eventually did, it would have beenimpossible for me to experience thepersonal freedom and enthusiasm thatI enjoy in this period of my life. Getting



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© 2010 Mark Susnow. All Rights Reserved.

in the current and flow of life involvesrisk, but that is what’s needed. That’s whenyou are truly dancing on the river.♦ Learn to Let Go of ResistanceResistance is a struggle that makes youtired. That’s what I experienced on theGreen River. At first, I resisted the currentand tried to swim back to the raft. ButI became tired from the struggle. At somepoint in your life, not only you do becometired from the struggle, you become tiredof the struggle. It doesn’t have to be thatway. When you allow yourself to flow withwhat is, you experience a synchronicitythat can’t be described in words.♦ Be PreparedI wore a life preserver on the river. Whenyou are prepared it is easier to relax andenjoy life’s unfolding. Preparation involvesnurturing your mind and body, includingeating well and exercising. It involvesworking on yourself and being receptiveto new ideas and concepts. In the processof becoming an expanded person, yoursense of what is possible in your life alsoexpands. You’re more curious and confidentthat wherever the river takes you, youhave the tools and inner resources to swimin the deeper waters and swifter currents.♦ Be Willing to Be Connected. You

Can’t Do it Alone and Why WouldYou Want To

We all want to feel that we belong andthat we are loved. When you allow yourself

to be vulnerable by honestly sharing whoyou are and what matters to you, youcreate a synergy that is greater than thesum of the individual parts. It is in thatmoment that you experience the magicof connecting with a kindred soul.♦ Develop the Practice of GratitudeWhen the oar is extended, accept it! Iam grateful for that oar. I am gratefulfor my uncle and that I got to go on thetrip and experience the river. And I amgrateful for my life. You have a lot to begrateful for, more than you realize. Whenyou express gratitude for some of yourinner resources, such as your ability tolove and to connect with others, youappreciate how much you do have. Youapproach life with a grateful heart andgreater sense of joy and happiness.♦ Be CuriousThink of your life as a river with its lessons,challenges and complexities. Being curiousabout the changing nature of the riverenables you to get to know and senseits many currents. As this knowingemerges, you’re more comfortable withnot knowing where the river is taking you.In the process you become the personyou’ve always wanted to be, fully presentwith life, and passionate about living.♦ Embrace the Great MysteryIt’s unpredictable and you can’t figureit out. But you can try and that’s whatkeeps most of us engaged. Like many of

you, I have concerns about the future,but I have become more comfortable withnot knowing the next step. I’m moreconfident that wherever the currentstake me, I’ll be able to flow with them.Whether the river is “calm” or “raging,”it’s still the same river. There always willbe difficult moments from time to time,which we won’t be able to avoid. Afterall we’re human. But quite often whathappens is that these difficult momentsaffect our ability to enjoy ourselves atother times. After having danced on theriver for some time, we know that nomatter what is happening in our lives,we always have a choice as how weexperience it – one big struggle or anexciting journey of discovery. I choseto play in the river. It is my hope thatafter you finish reading this book, youwill make the same choice. A familiartheme of this book is that we learn fromeach other. Before exploring the lessonsand insights from the river in more detail,let me share with you some of thedifferent phases from my life journey,so that you have a better sense of howI have chosen to dance on the river andnavigate life’s changes.

What you just read was excerpted fromDancing on the River:Navigating Life’sChanges by Mark Susnow.e





‘The Thinkers 50’ list, produced by Suntop Media in association with Skillsoft,is supposed to be a definitive guide to who is the most influential livingmanagement thinker. And this list changes every year. What do the changingnames mean for the world of business – that the old thinkers’ ideas havebecome irrelevant or that new breed of management thinkers have emerged?With respect to changing names, I am not sure the rankings change as much over timeas one might think. For instance, 17 individuals, representing 16 ranks,1 have been inThe Thinkers 50 list in each of the five surveys dating back to 2001. Over roughly thepast decade, a third of ‘The Thinkers 50’ list has consisted of the same group ofindividuals! The data appears to suggest that some management ideas have longertraction and they seem to influence management practices over a period of time. Notonly have some of the thinkers routinely been included in the list, but also they areconsidered the cream of the crop. Management gurus like Prahalad, Hamel, Porter,

If we want to emphasize the word ‘guru,’ then we are not looking at

someone just for his/her ability to identify problems and

opportunities, develop a strategy, and execute it effectively in his/

her organization. The word ‘guru’ has the connotation of someone

who removes the ignorance of others or enlightens others.

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1 Nordstrom and Ridderstrale share a rank.



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K Rameshis Professor of Accounting, Jones Graduate School of Business at

Rice University. Ramesh obtained his PhD from Michigan State

University and has previously served on the faculties of the

business schools at Northwestern University, the University of

Rochester, The Pennsylvania State University, and Michigan

State University where he was Director of Accounting Doctoral

Program. He was an academic fellow at the Office of the Chief

Accountant, US Securities and Exchange Commission during

2007-08. During his tenure as Vice President at two leading

economic consulting firms, Ramesh worked with leading law

firms, Big-4 audit firms, major corporations and governmental

agencies.

His academic research has focused on: Capital market

information environment; Role of accounting information in

contracting and regulation; and Financial information/

disclosures and valuation. His recent research examines the

extent of voluntary disclosure of corporate accounting

information, the information content of financial reports

mandated by securities regulators, the role of newswires and data

aggregators in disseminating corporate accounting information

to different investors, and the interplay between mandatory

regulation and voluntary disclosures. Ramesh has published in

leading academic journals such as The Accounting Review,

Review of Accounting Studies, Journal of Accounting and

Economics, and Journal of Finance. His research was cited in

the recent study conducted by the AAA Research Impact Task Force

on the role of academic accounting research on professional

practice. He was a member of the Editorial Advisory and Review

Board of The Accounting Review.

Ramesh is currently the President-Elect of the Financial

Accounting and Reporting Section (FARS) of the American

Accounting Association and a member of its Steering Board. He

was a member of American Accounting Association’s Financial

Accounting Standards Committee during 2004-06. He has

interacted with the Financial Accounting Standards Board

(FASB) and the Securities and Exchange Commission (SEC) on

various issues relating to standard setting and disclosure

regulation.

Ramesh has won many accolades for his teaching excellence

including the Michigan State University Excellence-In-Teaching

Citation Award, Faculty Excellence in Teaching Award by the

Department of Accounting & Information Systems at MSU, MBA

Association Core Faculty Excellence in Teaching Award at

Pennsylvania State University, and mentioned in the

BusinessWeek Guide to Best Business Schools as an outstanding

faculty member at the University of Rochester.

Kotler, and Peters have been highly ranked on a consistent basisover the period 2001-2009, and, I am sure, they will remain sofor a much longer period of time in the minds of manymanagement practitioners.Where do management gurus come from? Interestingly, 11 of the16 ranks have been occupied by academics. While one may wonderhow one becomes a leading management thinker while sitting inthe ivory tower, the notable academic management gurus havealways enjoyed traversing the two-way street of academic thinkingand the study of real-world management practices. I would findmyself becoming an armchair quarterback if I did not regularlyinteract with standard setters, regulators, accounting firms, andbusiness practitioners. Apart from academics, you will find a fewbusiness leaders ranging from the flamboyant Branson to themuch more understated Gates in this exclusive group on the List.Another interesting question is when do individuals who areconsistently viewed as ‘guru material’ leave the List and when donew gurus join? To answer this question, it is instructive toconsider the case of Greenspan. One conjecture is that the globalfinancial crisis contributed to Greenspan leaving the List in 2009.Interestingly, when Greenspan was ranked third in the List (thehighest rank he ever received), the Dow Jones was hoveringaround 14,000. By the end of 2009, the Dow had dropped to10,000. People are sometimes swayed by ex-post eventsregardless of what the ex-ante assessments were. At the timeGreenspan stepped down from the Fed in 2006, some consideredhim to be greatest central banker of all time, and one USpolitician apparently said that he would prop up Greenspan withsun glasses if, God forbid, he were to die. To provide a balancedperspective, even at that time some argued that Greenspan didnot take steps to avoid a bubble and may have kept the interestrate too low for too long. On the contrary, the same financialcrisis may have been the cause of Taleb and Ferguson entering theList in 2009. For example, while Taleb has held steady with hisideas for years as well as embraced for a long time Mandelbrot’sviews on measuring uncertainty based on the bell curve, theglobal financial crisis probably brought Taleb’s ideas to theforefront and these ideas are slowly becoming part ofmainstream academic and practitioner discussions.

Occasionally, the alleged reasons why an individual was addedto the List may not be commonly viewed as highly relevant tomost when trying to identify management gurus. For example,some in the media alluded to his TV ratings when Trump madethe List in 2007, and in fact, The Times of London identifiedTrump as “US Apprentice Host” in its listing of the top 50



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thinkers! I am not sure whether he would view the ratings of The Apprentice show as theindication of his management prowess.

Another example is Yunus. I understand that Yunus created the Grameen Bank Project in thelate 70s and has been its Managing Director for over quarter of a century, i.e., he has been focusedon helping Bangladesh make economic strides by using a socially bottom-up approach throughouthis work. The fact that he received the Nobel Peace Prize in 2006 and possibly the increasedattention given by strategic thinkers in recent years to developing nations as a key element of globalcorporate strategy may have catapulted Yunus to the List in 2009.

Although Krugman has been on the List before, his third rank in 2009 could have been partiallydue to his receiving the 2008 Prize in Economic Sciences in Memory of Alfred Nobel. Sometimes ahigh profile recognition helps bring an individual’s contributions to the forefront. My colleague, BobHoskisson, from the Jones Graduate School of Business at Rice University was recently recognizedby Times Higher Education as one of the top 25 researchers in business and economics globally. Ihope this will enable him to be placed on the List in the near future!Overall, there are many possible explanations for different individuals earning a spot on the listfrom year to year and these variations are bound to happen in the future as well. Sometimesthe fact that names don’t change may be an indication of multiple new ideas flowing from thesame guru as in, say, Prahalad. By definition, any ranking of management or any other types ofgurus is bound to be subjective and may even be controversial. Regardless, the List is a usefulvehicle for all of us to track the changing perceptions regarding what management philosophies,theories, and practices are influential.Who according to you is a management guru? What specific qualities andcontributions set them apart from the rest of management fraternity?If we want to emphasize the word “guru,” then we are not looking at someone just for his/herability to identify problems and opportunities, develop a strategy, and execute it effectively in his/her organization. The word “guru” has the connotation of someone who removes the ignoranceof others or enlightens others (I think my mother, who is well versed in Sanskrit, would probablycringe if she read this!). The ability to develop innovative, yet implementable, ideas is a keyelement of the equation. However, the ones who can parsimoniously package and effectivelycommunicate their theories to attract followers seem to show up more often in various rankings.At times, even the CEOs get voted as the world’s best management gurus. For instance,in ‘The Thinkers 50’ 2007 list, produced by Suntop Media in association with Skillsoft,Bill Gates, Alan Greenspan, Thomas J Peters, Jack Welch, Richard Branson were in thetop ten list. The others (Michael E Porter, Gary Hamel, and Jim Collins) were typicalacademicians who, with their research and writings, had profound effect on the waycompanies managed their giant enterprises. Noticeably amongst the career executives,Jack Welch and Tom Peters continued to have influence even after a few years of theirreckoning. Michael E Porter who was No. 1 in the list in 2004 slipped to No.4 in 2007 list.What, therefore, explains the enduring power of a management guru?My discussions above indicate that a nontrivial number of management gurus have shownenduring power in their rankings. There tend to be some key attributes in some of these gurus.For example, Prahalad seemed to be generating multiple implementable creative ideas such asBOP (bottom-of-the-pyramid) and democratization of commerce. In addition, gurus like himhave a great ability to communicate the cornerstones of their ideas and theories while havingthe ability to see problems from a nontraditional perspective. For instance, D’Aveni focuses on



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unpredictability and encourages business entities to watch out for dramatic events that couldchange the business landscape instantaneously. Prahalad’s BOP approach turned the strategicthinking upside down by viewing the poor of the world as part of the commercial marketplacerather than considering them as merely recipients of dole. Some gurus thrive on constantlyreaching out to the intended audience with extraordinary levels of endurance. Tom Peters’website indicates that “since 1978, when the work on Search began, he’s given well over 2,500speeches, flown 5,000,000+ miles, spoken before 2,000,000 to 3,000,000 people andpresented in 48 states and 63 countries.” Overall, academics have somewhat cornered themarket on being the List on a consistent basis. There are also a few consultants/writersconsistently on the list. I conjecture that these two groups of individuals may have greaterpropensity to develop a following that leads them to be included on various rankings and listsbased on their ability to communicate their ideas to a broader audience.It is often noticed that several such lists (Wall Street Journal’s world’s mostinfluential business thinkers, Fortune’s world’s best gurus in strategy, etc) aredominated by North Americans, with abysmal representations either from Europe orAsia? What explains this polarization?In some sense, it is what it is. The various lists are based on different methodologies that couldlead to different results. For instance, the Wall Street Journal’s ranking apparently follows themethodology developed by Richard Posner. He received a lot of criticism for his methodology,but he explains his choice of methodology as follows: “It’s been assumed despite my disclaimersthat I was attempting to create a new order of merit. Actually I was just trying to create anappropriate sample for a statistical investigation.” Posner was more interested in doingstatistical analysis to see whether, for example, the number of academic citations is correlatedwith someone being considered a public intellectual based on media coverage. He also wantedto see whether age, gender, race, etc., were correlated with public intellectual status.

Regardless of the merits of the approaches, the Wall Street Journal ranking is determined bythe chosen methodology, similar to any other list. I understand that the compilers of the WSJlist started with the 110 business gurus from the book “What’s the Big Idea?” and added namesof others who had since gained a sizeable following. Then, the final list was prepared bysumming ranks based on Google hits, references in Lexis/Nexis, and citations in academicpublications. Without fully understanding the selection process at each stage of the rankingmethodology, it is hard to explain why the list was dominated by one or other groups ofindividuals, assuming it did. At the end of the day, Darwinism will take over and rankings thatare viewed as more credible should survive.Now turning to your teaching, you have developed a course on corporate governancethat seems to integrate academic research and practical thinking, and furthermore,puts in forefront the key role of accounting information in management leadership.How important is the connection from accounting to governance to managementleadership? What tools do you use to highlight this link when reaching out to businessexecutives and professionals?My graduate course is all about the economics of financial reporting. An important focus of mycourse is to understand how accounting has evolved over the years to be a key element ofcorporate governance. There is extensive academic thought and research on the role ofaccounting as a governance mechanism, and of course, we periodically hear about majorcorporate governance failures, so there are many real-life cases to study. My course integrates the



2 http://www.itcportal.com/our_values/corp_governance.html

two by linking academic thought and research to understand past governance failures, andpossibly, to guard against future ones. Several years ago when I was in the process of assemblingthe framework for my course based on the works of Jensen, Meckling, and others, I came acrossITC’s website2 which included concepts that are very similar to what I had been using to developthe framework. I now refer to ITC’s website as I discuss the framework in my course, although Iorganize and discuss the elements of corporate governance somewhat differently. The rest of thecourse expands on this framework and goes through an elaboration of the role of accounting involuntary (external and internal) and mandatory governance. An important message that I try todeliver to my students is that accounting numbers don’t come from accounting rules, companyspreadsheets or SAP systems; they come from people. Consequently, understanding theincentives of management and employees is sine qua non to ensuring that accounting systemsand reports are built for long-run shareholder maximization. To tie all this together, I havedeveloped a corporate governance fitness test (Exhibit) that I give to graduate students andbusiness professionals as a way to qualitatively assess their own organization’s governance.You have had the rare experience of taking a hiatus from the academic world to engagein full-time economic consulting to multinational corporations, international lawfirms, and global professional services firms. What academic thinking were you able tobring to the economic consulting world? Conversely, how did this experience influenceyour academic agenda? Was this a two-way street?Economic and litigation consulting provides challenging opportunities for people with academic-type training to help solve real-world problems. Unlike management consulting, economics-based litigation consulting involves largely postmortem work, but that’s exactly what academicsengaged in archival research do on a daily basis. For example, did a company earn excess profitsgiven the risks it took? The answer to this question may be an important determinant ofdamages in an antitrust matter. How much of the stock price decline reflects the effects ofaccounting shenanigans perpetrated by a company? The company’s audit firm may beinterested in knowing the answer to this question. What is the economic value of a lost businessopportunity? Did a parent company use unfair transfer prices to extract value from theminority shareholders of a subsidiary? What are the damages from wrongful termination of abusiness executive? These and many other questions that arise from contractual frictions andlack of regulatory compliance can be answered using rigorous methods from finance, economics,and accounting. Moreover, the ability to focus on the big picture is a key to success in litigationconsulting. A mentor of mine used to say that when slicing a pizza, focus on the pizza slices andnot on what’s sticking to the knife! Academics constantly struggle with the principle of Occam’srazor and try to communicate their ideas in a succinct fashion, which is an important trait forsuccess in economics-based litigation consulting.My consulting experience has helped me with both my research and teaching. On the teachingside, I am even more aware of the real-world issues. In fact, after I returned to academics, I tookon the task of developing the course on corporate governance and accounting that I teach nowto MBAs. My current research efforts on corporate disclosures environment is at least partiallydue to my consulting experience. My research focus was further strengthened by my visit to theUS Securities and Exchange Commission as an academic fellow at the Office of the ChiefAccountant during 2007-08. The current fair value debate started to resurface in a vigorousfashion during that time, which is also impacting my research agenda. Overall, interacting with

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Exhibit: A Fitness Test for Evaluating Corporate Governance

Corporate Governance and Organizational Vision� Vision: How does your organization view corporate governance?

• Corporate governance is a set of rules and procedures to enable the organization comply with various laws andgovernmental regulations

• Corporate governance is a set of checks and balances to prevent and/or control unethical, illegal, dysfunctionaland unproductive behavior

• Corporate governance reflects a conscious organizational effort to both empower employees and provideappropriate incentives and controls to achieve the organizational objectives

� Organizational Objectives: How does your organization define its objectives?• Maximize shareholder value by increasing the current stock price• Ensure that the needs of all stakeholders (shareholders, employees, customers, suppliers, etc.) are carefully

balanced• Maximize long-run value to the shareholders by developing mutually beneficial relationships with all other

stakeholders� Tone at the Top: What is your assessment of your organization’s tone at the top?

• Poor, and is a critical obstacle to meeting organizational objectives• Good, but seldom leaves footprints at all levels of organizational hierarchy• Good, and permeates the entire organization

� Corporate Performance Goals: Does your organization set realistic corporate performance goals given thecompetitive landscape?• No, the performance goals are unrealistically high, which creates a culture of excessive pressure with a focus on

short-term performance• While the stated performance goals are realistic, the organization’s focus on value creation has not been

communicated throughout the organization• The organization has clearly communicated a set of realistic goals with a focus toward long-term value creation

� Managing Market Expectations: To what extent has the organization developed a clear strategy formanaging capital market (e.g., EPS) expectations?• The organization responds by continually revising its business plans to meet changing capital market expectations• The organization ignores external pressures from the capital market and stays with its strategic vision• The organization proactively communicates with the external capital markets about its core competencies to

effectively guide the capital market expectations� Response to Regulatory Changes: How does your organization respond to new corporate governance regulations?

• New sets of internal policies and procedures are put in place to comply with the letter of the new regulations• The organization provides training to enable us to comply with the letter and the spirit of the new regulations• With a clear tone at the top, the organization leverages new regulations to reinforce its commitment to effective

governance

standard setters, regulators, law firms, and business corporations has always been a two-waystreet, with me benefitting as much, if not more, as I hope I am giving back.Can you explain how your research on informational intermediaries is providing newinsights on the impact of globalization of the modern business world on the capitalmarkets of even developed countries? Do you see a role for India in the globalinformation revolution that is sweeping the world capital markets?More than 30 years ago, Nobel Laureate, Robert Merton said that, “The acquisition ofinformation and its dissemination to other economic units are, as we all know, central activities inall areas of finance, and especially so in capital markets.” Over the last four decades, there hasbeen extensive academic research on immediate market reaction to public disclosures ofaccounting information. However, there have been limited attempts at examining the processthrough which publicly-disclosed accounting information gets fully impounded in stock prices.The analogy is squeezing an orange to get juice. The first squeeze gives us a lot of juice, but we cancontinue to get juice when the orange is squeezed a second or third time. I view the initial marketreaction as the juice from the first squeeze; there is more juice to be had, but who is doing the

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Corporate Governance and Organizational Design� Empowerment: Do you feel your organization has empowered you to fulfill your professional responsibili-

ties to the organization?• No, I don’t have the freedom to dynamically react to changing business conditions• I have limited decision rights, but I could contribute more if additional authority is delegated to me consistent with

my knowledge and expertise• The organization has sufficiently empowered me to clearly meet my organizational responsibilities

� Performance Measurement Systems: How does your organization utilize the information from itsperformance measurement systems?• Solely to provide incentive compensation to its employees• Mainly to compensate employees, and seldom uses it as feedback for whether the organization is effectively using

its resources• Consistently uses it to compensate employees for their past accomplishments as well as to improve resource

allocation in the future� Compensation Plans: Which statement best describes the way your organization compensates its employees?

• Large compensation to top performers based on short-term earnings or stock price targets• Incentive compensation linked to multiple quantitative performance criteria• A clearly communicated incentive system that considers both quantitative and subjective assessment of performance

� Ethical Corporate Leadership: How does your organization communicate the importance of ethical behavior?• We have a global code of ethics, but it doesn’t impact our day-to-day activities• We have a global code of ethics with detailed rules and procedures, which must followed by all employees at all

times• We have corporate leadership at all levels of the organizational hierarchy that communicates ethical governance

through uncompromising business decisions� Transparency of Public Disclosures: What is your organization’s philosophy regarding transparency of

public disclosures?• Provide minimal public disclosures to satisfy legal requirements• Concerned that additional voluntary disclosures may compromise competitive advantages• Believe that transparent disclosures are an essential ingredient to effective corporate governance

� Impact of New Regulatory Changes: How has the Sarbanes-Oxley Act impacted your day-to-day activities?• The rules have been a panacea given the inadequate controls that existed in the organization before the Act• There are too many stifling rules and procedures now, which has adversely impacted our ability to create

shareholder value• The organizational embracement of this mandatory regulation has not only strengthened our controls but also to

enabled us to focus more effectively on shareholder value creation

second and third squeezes? Here come the pure information intermediaries such as dataaggregators and newswire services to assist the capital market participants by digging throughpublic-released accounting disclosures to provide data in a timely fashion and in forms suitablefor investor needs. Obviously, the benefits of squeezing the orange a second or a third time mustoutweigh the costs. While even large institutional investors might find it costly to squeeze theinformation orange a second or third time on their own, they can collectively delegate datacollection efforts to information intermediaries such as newswires and data aggregators.

My co-authors and I examined the role of newswire services in collecting and disseminatingaccounting information from periodic reports filed with the US Securities and ExchangeCommission (SEC). The earlier researches have generally neglected to consider any timingdifference between when corporations supply information and when the relevant marketparticipants actually receive and process that information. The idea here is that even largeinvestors generally do not satisfy the cost-benefit calculus for combing through periodic reports ofevery stock they own or in their investment possibility set to identify market-moving information.However, the broad market demand for corporate accounting information, coupled with theprevalence of high fixed costs and close-to-zero marginal costs in the market for information goods,provides the impetus for information intermediaries such as newswires to enter the marketplace.We developed an empirical model to identify firm characteristics and circumstances associated with

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e

Reference # 03M-2010-11-04-06

The interview was conducted byDr. Nagendra V Chowdary,

Consulting Editor, Effective Executive

the efforts of newswire services to deliver key accounting information in a salient fashion to marketparticipants. Moreover, our study is the first one to use market microstructure level data todocument the value-added services provided by newswire services. Our study demonstratedinstantaneous (5 to 15 minutes) price and volume reactions to newswire alerts that were issuedseveral hours after the SEC reports were filed. The takeaway from our study is that newswireservices act as delegated information intermediaries for corporate accounting information,consistent with the theory of market for information goods.

A second study we conducted provides evidence relating to the economic forces that explain theexistence of data aggregators in capital markets. Why do various data aggregators such asCompustat, Bloomberg, and FactSet invest large resources to collect high-quality standardizedcorporate accounting data that are not only comprehensive in the cross-section, but also have a longtime-series, especially given that these data collection efforts, even in current times, take nontrivialtime and effort after public disclosures by corporations? And, why do various sophisticated investorspay large sums of money to subscribe to these data services? What benefits do these marketparticipants expect from “belatedly” squeezing the information orange a second time? Based onprior evidence that certain institutional investors rely upon corporate accounting information as alow-cost monitoring system, our study examined the demand from sophisticated investors forstandardized panel data of accounting information to test and develop investment strategies.Specifically, we examined the demand and supply considerations that influence a major dataaggregator’s choice of the speed at which it disseminates corporate accounting information toits commercial clients. The novel contribution of the paper is to clearly predict and find whichtype of institutional investors will demand faster dissemination of accounting information, andto the extent that the dissemination speed changes the richness of the informationenvironment, the study also predicts and finds which institutions’ trading behavior willcorrespondingly change. Overall, the study takes a first look at the role played by dataaggregators in contributing to the informational efficiency of the capital market as well as themutual effects that data aggregators and institutional investors have on each others’ resourceallocation decisions. Overall, we are starting to make progress on understanding the role of pureinformation intermediaries in shaping the information efficiency of capital markets. Of course,there is more work to be done including examining the role of disclosure networks.

Obviously, India is a significant player in the information intermediation market through herexpertise in technology. Cases likes Reuters are an important indication of the bigger role India canplay in other areas as well. While the great technical prowess of India is well known, she is alsoleveraging her language, communication, and journalism expertise to contribute in importantways to the global capital market information environment. Even setting aside capital marketcontexts, I understand that there are more than 100 legal outsourcing companies in India, whichfurther demonstrates the breadth of expertise that India can offer. Personally, I have seen real-lifecircumstances in which some US companies have been pleasantly surprised by the ability of Indianprofessionals to quickly grasp the complex US disclosure requirements and act as effectiveinformation intermediaries. In a nutshell, yes, I do see a continuing and growing role for India inthe global information revolution.

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Governance – It’s All About

Implementation

The Moral of theMoment

Walk down the street, and ask the firstperson who walks by to define the

meaning of “governance.” I’m willing to betif you ask ten people, you’ll get ten differentanswers. For the sake of this article, let’s defineit as, “an exercise of authority or control.”Personally, I don’t think it is as hard to defineas it is to implement.

As an American, I was raised to believethat Democracy would address the challengesof governance. If I voted for someone whorepresented the beliefs that I had, certainlythe promises made would be implemented.In our obsession to avoid a decision-makingmonopoly, a check and balance system wascreated called Congress. Among other noblepursuits, the reality is often an inability toimplement the very promises that garneredour support.

Corporations have struggled with thisconcept for years too. They have beenchallenged by their own form of governance,which they’ll define as, “the process of decision-making and the process by which decisionsare implemented.” Or not implemented.There’s the stubborn word, “implement”again. Whether is a government or acorporation, it seems that it’s harder toimplement a decision than to make a decision,and therein lies the problem.

So what can we do about it? If you arelooking for a political frameworkendorsement you’ve come to the wrong

article. Could wejust agree on onething though?Could we agreethat whateverphilosophy weendorse comeswith a desire forthose we support,to do what theypromised theywould do? That way we can implement whatwe chose to support.

That means whoever we have selectedto lead us have to do something reallyimportant with the trust we’ve placed in them.They need to validate it. That’s done by fightingfor those you represent. That way you canimplement what you promised to do.

The moral of the moment is toremember that with governance comespower. With power comes a responsibilityto not just make decisions, but to implementthem. Maybe it’s naïve, but I’ve always feltwhoever wins an election or corporatesupport wins it based on a specific belief anda desire to actually implement that belief.If it works, we support them again. If it doesn’twork, we don’t support them again. But atleast we’d know. Sometimes, I really wantto know.

Rob L Jollesis a bestselling author, speaker

and president of Jolles Associates

Inc., an international training

corporation. His Bestselling

book, The Way of the Road

Warrior – Lessons in Business

and Life From the Road Most

Traveled, provides a collection of

stories, and lessons he speaks of

in this article. You can also follow

Rob Jolles by reading his weekly

blog at www.jolles.com/blog.

Reference # 03M-2010-11-05-10

e

© 2010 Rob L Jolles. All Rights Reserved.





The Key to Gain a Competitive Edge

Branded CustomerService Inside a Non-ProfitOrganization

Branding your

customer service is a

subtle process. And

many times

customers are not

able to describe

exactly what happens

in branded service

exchanges. But

whether it’s a for-

profit business or a

non-profit business,

something must

happen in that human

exchange that is

aligned with the

overall marketing and

advertising messages.

Non-profit organizations typically havecompelling visions – or they wouldn’t

exist. Take the World Bank. Its vision is toend world poverty. Talk with people who workfor the World Bank and many of them willsay they wake up in the morning and feelstrongly connected to the work of the WorldBank. If you’re interested in impacting povertyin the world, then the World Bank is certainlyone of the best places to work and to beinspired by what you are doing every day.

At the same time, a compelling reasonfor existence can keep staff so focused onthe vision or mission that they fail to noticethere are “customers” around who have tobe satisfied and engaged. I’ve seen no evidence

that this happens at the World Bank, butgiven the size of the organization, it probablydoes from time to time.

Certainly the Red Cross faced this veryissue after it collected enormous sums ofmoney (US$547 mn) following theSeptember 11, 2001, terrorist attacks onthe World Trade Towers in New York City.The Red Cross responds to disasters. That’sits mission, so the bigger the disaster, themore that mission is called into play.

Dr. Bernadine Healy, then president ofthe American Red Cross went on televisionto ask Americans to give generously to helpthe victims of the attacks. A special LibertyFund was created to collect funds for victims



Branded Customer Service Inside a Non-Profit Organization

Janelle Barlowis a businesswoman, author, media

spokesperson, keynote speaker, and

seminar leader. She is a President

and owner of TMI US, Partner of

TMI International with offices in

over 43 countries worldwide; CEO

of Branded Customer Service - The

Americas; CEO, TACK-USA,

Partner with TACK International

with offices in 45 countries

worldwide.

Janelle Barlow is a Vice President

of Global Speakers Federation,

2007-09; she holds designation of

Certified Speaking Professional

awarded by the National Speaker's

Association, USA. And Chair of the

Nevada Forum, Women's Business

Enterprise, 2009. she is a licensed

California Marriage and Family

Therapist. She has worked with

hundreds of thousands of people

from all over the globe in her last

30 years of public speaking.

Dr. Janelle Barlow is an acclaimed

author of the bestselling business

book, A Complaint is a Gift: Using

Customer Feedback as a Strategic

Tool, published in over 20

languages and nominated for the

Benjamin Franklin Business Book

Award. And also authored the

books, Branded Customer Service:

The New Competitive Edge;

Emotional Value: Building

Strong Bonds with Your

Customers; The Stress Manager;

Mind Flexors, I and II; Smart

Videoconferencing: New Habits

for Virtual Meetings. Janelle has

authored or co-authored 8 books,

several of which have been

nominated for awards or have

become business best-sellers.

She holds PhD from University of

California, Berkeley and two

Masters degrees in Political Science

and Psychology. She is a Prize

winning photographer; and avid

swimmer and pianist.

– at least that is what the public thoughtthe Liberty Fund was about. Two monthslater when the fund was closed becausedonations greatly exceeded collection goals,only 30% of the money was spent to help9/11 victims. The Red Cross announced thatthe other 70% would be used to improvethe Red Cross telecommunication systemand equip the organization to better handlesuch disasters in the future.

As far as the Red Cross was concerned,money is fungible, but the donating andconcerned public wanted their donationsto specifically go into the pockets of thosemost dramatically impacted by the attacks.Of the 30% that was distributed, newsreporters carefully looked at those allocationsand revealed that at least some of that moneywas given to wealthy New Yorkers who hadbeen “inconvenienced” by the attacks.

The public was livid, screaming that theyhad been deceived and that they would neverdonate to the Red Cross again. People whodid receive help complained that theyreceived help very slowly and faced enormousbureaucratic hurdles in getting any moneyat all. Congressional hearings took place. Dr.Healy resigned (after receiving a $1.5 mnseverance that came out of the Fund) andthe Red Cross was forced to announce thatall money would be allocated to the 9/11victims.

Since then, the Red Cross has set upsystems to honor donor’s specific intents.But as it played out, the Red Cross bled overhow it handled this massive influx of fundsand this venerable non-profit organization,in some way, became a victim of 9/11 aswell.

The Red Cross was so caught up in itsoverarching mission that it failed to payattention to its “customers,” its donors.People who donated funds to the LibertyFund wanted to feel that their specific dollardonations would make a difference to help

those who had been victimized in the attack.After all, the American public saw interviewswith the victims, saw them covered with soot,crying, injured, and obviously needing help.The Red Cross was taking care of disasters,and certainly it knew there would be futuredisasters – such as Hurricane Katrina whichfollowed a few short years later. The RedCross didn’t consider the business contractit was – in effect – making with each individualdonor.

Most for-profit businesses pay attentionto the agreements they make with individualbuyers. Business people know that it doesn’tmatter to the individual moviegoer, forexample, if the movie company has anoverarching “save the world” goal to distributea movie widely. Entertainment seekers areinterested in their movie experience.

So, non-profits can learn from businessesthat customers want their individual needsto be taken care of, even if the non-profithas a compelling mission. That mission hasto be made meaningful to the individualcustomer – or we might say stakeholder ordonor in the case of a non-profit.

What is a Brand?At its most basic level, a brand is an uniqueidentity. Whether for-profit or non-profit,that unique identity is what makes anorganization stand out in the marketplace.Brand statements are a shorthand way thepublic thinks about what you do, what youwant from them, or what you stand for.

Branding is a central element of marketingstrategies. When well executed, it makessomeone who is attracted to a non-profitorganization feel that this cause is the one,or one of a few, with which they want to beconnected. They make a decision that thisis the non-profit where they are willing todonate money, spend time, or support insome way that fits the non-profit’s mission.If that is a brand, what then, is branded



Branding service means that somebody needs to look athow to reinforce both the logical and emotional aspectsof the brand through service delivery

customer service? You could think aboutit as a layer around the brand’s delivery,an additional way to further distinguisha brand’s unique identity. It’s not justabout being friendly, or engaging, orreturning telephone calls when promised– or even making sure that donated fundsgo to the pocket that the customerwanted to fill.

It’s a strategic and organized way todeliver on-brand customer experiencesthat magnify and support brand promises.It adds emotional value to thoseindividuals who want to be involved withyour non-profit organization by drivinghome essential values for which theorganization stands. These on-brand

customer experiences produce amultiplying effect that is much moreengaging than just a well-recognized brandname. When experiences do not matchbrand promises, as was the case with theRed Cross in the Liberty Fund fiasco, trustis undermined and brand erosion occurs.The way funds were distributed in thatcase made people question whether thebehavior of Red Cross behaviors wasconsistent with its well-established brandimage.

Finding the Link Between aBrand Promise and CustomerExperiencesA brand begins its journey by asking whatdoes it stand for? What is the mission?Why does the brand exist? Once that needis clearly spelled out (whether to providemedical care for impoverished adults orchildren – specifically, for example, children

with a particular kind of cancer) then thenon-profit needs to strategize how it willdeliver the value associated with themission to attract donors, volunteers,stakeholders, or, as referred to here,customers.

This requires finding out what thenon-profit’s target customers value. Themost effective brands understand thatthey are never going to get everycustomer. So, they segment the totalmarketplace to focus on the ones whoare the most meaningful, most importantto them. By understanding what‘customers’ want and what they value,the non-profit can begin to constructcustomer experiences that resonate with

these desires and values and then startdelivering and amplifying thoseexperiences. Branding service means thatsomebody needs to look at how toreinforce both the logical and emotionalaspects of the brand through servicedelivery. Simply put, it means lookingat customer service when it is seen throughthe lens of branding.

The major reason for considering thisadditional layer of how your brand isdelivered is that most brandsunderperform. Most brands rely heavilyon advertisements, marketing,endorsements, and other media-basedapproaches. In effect, the marketingdepartments of most brands make thedecisions about how the brand is to beperceived and they are also thedepartment pretty much in charge of theentire approach to the brand. But thatignores the role that people play in

reinforcing the brand’s position or voice.How many marketing departments payattention to how telephone operatorsanswer the telephone? Yet for a non-profitorganization, how that staffer answersthe phone will in great likelihooddetermine whether the caller will call backa second time, or even continue theconversation. The advertising ormarketing messages might have enticedthe “customer” to get engaged with theorganization, but after that, it’s probablysome individual within that non-profitwho will influence what that customer’sreaction will be.

When a large part of what you haveto offer the public is delivered through

your people, customer experiences thatreinforce your brand messages areperhaps the most enduring means ofkeeping and even getting customers. Inthe case of the Red Cross, part of beingon-brand would have involved a seniorteam discussing how they were going tohandle the huge sums of money that werecoming into the Liberty Fund. They musthave noticed almost immediately thatpeople were donating sums of moneyat higher levels than anyone anticipated.

At that point, a question should havebeen floated: how do we handle this hugeamount of money and stay consistentwith the public perception of the RedCross brand? It’s impossible to say howthat question would have been resolved,but at least the issue would have beenconsidered. At least, it would have givena chance to someone to say, you knowthe American public is pretty riled up at




Brand statements are a shorthand way the public thinksabout what you do, what you want from them, or whatyou stand for

this point and we better handle thesedonations very carefully. If that questionhad been posed and discussed within theorganization then a strategic decisioncould have led to better consequencesfor the Red Cross.

If you visit the Red Cross web page(www.redcross.org) you’ll see all sorts ofaspirational messages. The one recentlyplayed was “every single donation bringshope.” The Red Cross is currently askingfor donations to help with the disastrousflood in Pakistan. It’s a beautifullydesigned website, as are many non-profitwebsites. They have to be because thisis their chance to entice people to becomeinvolved with them. But since the Red

Cross is an organization that primarilycollects donations (whether of moneyor blood or supplies) and distributes them,it has to appeal immediately with imagesand heart wrenching words, such as “everysingle donation brings hope.” That getsindividuals in the door.

But once potential donors are there,what is their experience? In today’s worlda lot of the donor’s experience might bedriven by the webpage itself. But a lotof it is still done by human interactionright down to the person who shows upin a crowd with the Red Cross logo onhis uniform. That person is arepresentative of the statement, “everysingle donation brings hope.”

Most people would expect that theRed Cross would be very grateful forevery “single donation,” regardless of thesize. So, the body language, the thanks,the words, all have to reinforce the

message that “every single donation bringshope.” This means that the brand valueneeds to be understood by everyone whorepresents the Red Cross – the personwho answers a telephone to take adonation, the person who might showup at a disaster with coffee for policeofficers or firefighters, and especially thehead of the organization. When the RedCross announced that it was going to takethe public’s Liberty Fund donations anduse them to upgrade the Red Crosstelecommunications system, it was aperfect example of off-brand behavior.

I have no interest in attacking the RedCross. I think they do great work andthey certainly inspire hope. And I’m

positive this non-profit learned a lessonfrom its Liberty Fund mistake that is stillbeing talked about today (such as I amdoing). If you extrapolate from a hugeoff-brand mistake such as that one, youcan imagine how many small off-brandmistakes are made every day by mostnon-profits.

Yet, it is possible to get so good atdelivering branded customer service thatyour staff-customer interactions subtletyreinforce what you stand for in every waypossible. Obviously, this starts with lettingyour staff know what you stand for, whatyour brand is, what it means to yourcustomers/subscribers/donors/clients/patients – or whatever you call them. Itthen requires starting a discussion, sostaff and volunteers know what it meansto reinforce that position.

In the case of the Red Cross, thatmight involve telling someone who calls

that their donation is particularly welcomebecause people in Pakistan are losing hope.It could involve having a representativemention that they spoke with volunteerson the ground who reported that everytime a package arrived with a Red Crosson it people’s perception completelychanged. Their eyes were brighter becausethey knew that ‘hope’ was in that package.Or, something like that.

I don’t recommend that people begiven scripts, lines to memorize or readand then deliver. It has to come fromtheir feeling of connection to theorganization and its mission. Too muchefficiency, for example, when takingdonations for natural disasters might

not convey that feeling of ‘every singledonation brings hope’. Too muchefficiency might make the donor feel thatthe non-profit is just another businesstrying to get money from people. DavidBurrows with The Design Agency inEngland says that “40 % of marketinginvestment is wasted, as ill-informed ordemotivated behavior by staffunwittingly undermines the promotionalpromise.”

The for-profit world pays attentionto this. The Gallup Organization polledsix thousand passengers and discoveredthat, by a ratio of between three andfour to one, employees of airlines aremore important than advertisingmessages in building brand loyalty.Banking customers are ten to twentytimes more likely to return if theorganization has outstanding employees.And in the telecommunications industry,



the loyalty of customers is moreinf luenced by employees of theorganization at a ratio of between threeand five to one, compared to advertising.

Branding your customer service is asubtle process. And many times customersare not able to describe exactly whathappens in branded service exchanges.But whether it’s a for-profit business ora non-profit business, something musthappen in that human exchange that isaligned with the overall marketing andadvertising messages.

What are some ways this can be done?First, it’s absolutely critical for non-profitsthat staff or volunteers believe in whatthey do, that they support theorganizational premise. That’s a start.

Otherwise, that person who calls forinformation, to donate, or get involvedwith the non-profit purpose, is likely tobe turned off by someone who thinkstheir job is simply to answer thetelephone.

Peter Drucker, America’s foremostmanagement expert, long maintainedthat for-profit companies could learn fromlooking at the non-profit sector of the

world’s economy. Because many non-profits are relying on the good will ofpeople, they have to offer really goodservice. They have to call back on time,or they may never hear from that donoragain. In the for-profit world the customermay need your product or service so badly,they’ll call back multiple times to makesure that they can get what they want.Typically, a non-profit organization ismostly, in effect, selling the positive feelingof having made a contribution.

The other side of the equation is whatnon-profits can learn from the for-profitworld, which is where we started thisdiscussion. If representatives of the non-profit organization are given the freedomto support and express the brand’s

mission, then stakeholders will have thesense that they are being treated as people– and not as number. Once a servicebrand has been defined, the definitionis basically static until the humaninteraction makes it dynamic.

Hiring the right people is critical, andit’s as much an issue for large non-profitorganizations as it is for the regularbusiness world. A second critical issue is

making sure that the staff knows whatthey are representing. The tasks that theyperform (entering data, answering thetelephone, distributing goods, etc.) areimportant, but they are only tasks. Theimportant question is why these tasksare being performed; what role do theyplay in achieving the overall mission ofthe non-profit organization?

At a minimum, the staff must knowthat the non-profit has value and meanssomething specific. They also have to knowthat everything an organization doespotentially affects the brand – positivelyor negatively. And finally, they need toknow which specific behaviors reinforcethe brand. One of the best ways to findout about these things is to create

opportunities for people to browse thewebsite.

I recently called a non-profitorganization to ask a question about acampaign they were introducing. Thecampaign was advertised in a major USmagazine. The receptionist/operator knewnothing about the campaign. In fact, shehad never heard of this magazine, in whichthe non-profit had obviously spent a good

It is absolutely critical for non-profits that staff or volunteersbelieve in what they do, that they support the organizationalpremise



e

Reference # 03M-2010-11-06-01

© 2010 Janelle M Barlow. All Rights Reserved.


deal of money taking out a full-page ad.Yet, the ad would lead people to theorganization, where hopefully additionalinformation could be obtained.

A reasonable question to ask is howmuch was invested in informing thetelephone operators about calls theymight expect and how to address thequestions that were coming in over thephone. This type of investment in staffrequires time and money, but it makeslittle sense to put out an advertisingcampaign that staff or volunteers are notequipped to support.

I frequently hear non-profitorganizations complain that they have torely on volunteers and that they don’talways do the highest quality work. Thatmay be. But volunteers obviously havesome passion for the work of the non-profit or they wouldn’t be there. That’sa huge first step. They aren’t doing it forthe money, so if they had some sharplyfocused tools and education about thebrand, at least their attitudes – and theirbehaviors – would be in the right place.

Managers of non-profit volunteers(and staff who may not be paid as wellas in the for-profit sector) know that theyhave to offer something besides money.They don’t, in Peter Drucker’s words havethe “discipline of the bottom line.” So,the managers tend to focus on keepingtheir staff interested in what they are

doing and aware of the importance ofwhat they are doing. All this leads to goodmanagement. Peter Drucker was verymuch aware of this. He frequently usedto write that if non-profits need to makethings happen without money, they hadbetter well be very good at theirmanagement and leadership skills.

A non-profit organization can focuson four essential aspects of brandedcustomer service. First, they mustcommunicate the uniqueness of theirmission. If it’s about delivering hope topeople facing disasters, then it’s probablyalso delivering a feeling to the donors thatthey made a contribution of hope. Nottoo many organizations are dealing in thehope business, so that uniqueness of hopemust be emphasized.

Second, staff and volunteers need tosee the connection between what theydo and what has been promised to thecustomer. Only if they see the connection,they will be inspired to use language ordo things that resonate the purpose ofthe non-profit.

Third, in order to make thatconnection, staff and volunteers mustbe mentally aware of what they are doing.The moment they go on an automaticpilot, the less likely is the chance that theywill deliver the feeling of the non-profitorganization’s mission. And it’s very muchabout feelings.

And fourth, staff and volunteers needto understand that while they can deliverthese reinforcing feelings in the way thatfits their own personalities, there needto be some range in which everyoneoperates. For example, if a connection of“hope” is part of the message, then thathope needs a range. If it’s connected to anon-profit organization dealing withdisasters, then the hope must be relatedto what is realistic after a big earthquake,a hurricane – or a terrorist attack. It needsto be made tangible. Hope in this casedoesn’t mean “hopefully” solving all theworld’s problems, but helping individualsthrough tough times. There’s a range forthe type of hope that an organization likethe Red Cross impacts, and the messagemust be expressed within that range.

It doesn’t matter whether you areinvolved with a huge non-profitorganization or a very small one. Itdoesn’t matter whether your non-profitdeals with solving heart-wrenchingproblems or supports the arts. Each non-profit has its space. It’s up to the non-profit leadership to define that space,and then make sure that everythingabout the organization is communicatedby the people in the organization, andalso ensuring that what happens insidethe organization is on-brand.



How Brands Can Walk the Talk

Non-Profit BrandAnd Culture GoHand in Hand

To drive a change in

the culture, non-

profits must help

employees recognize

they can make a

stronger contribution

to the treasured

mission by taking

actions that

demonstrate the

target culture. In the

process, employees

will receive a

compelling answer to

the question that is

always top-of-mind

during times of

change: “What’s in it

for me?”

This article highlights the key link thatexists between a non-profit’s brand and

its internal culture. It stresses theimportance of working on the culture behindthe brand, provides a series of pointers onhow to do this critical work and presentsa framework to guide and fuel a culturechange. To illustrate our points, we will drawon our firm’s consulting engagement witha non-profit client respected internationallyfor its poverty alleviation activities. We willuse the name ‘Anti-Poverty’ when referringto this organization, as opposed to its realname. Our involvement started shortly afterAnti-Poverty had embarked on a newstrategic direction that required

repositioning its brand and evolving itsinternal culture.

Critical Link Between a Brandand the Organizational CultureIn the non-profit sector, a brand is a promiseto donors, beneficiaries and volunteers alike.Because a non-profit organization is builton trust, it is particularly critical to deliveron the brand promise. When the actualexperience doesn’t match the brand promise,trust is eroded. If supporters and beneficiariesstart to lose trust in the organization, thenon-profit won’t be able to fulfill its noblemission. The most practical definition of theconcept of organizational culture is: “The



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way we do things here”. When looking atculture from this perspective, the linkbetween a brand and its organizationalculture becomes clearer.

A brand is a promise that must bedelivered. An organization serves itscustomer according to the norms imposedby its culture. Therefore, the culture andthe brand have to be strongly aligned;otherwise the non-profit won’t be able todeliver on its brand promise. This need foralignment becomes particularly importantwhen re-branding.

Anti-Poverty had traditionally beenreluctant to develop partnerships withother players in the development field. Thissoloist mentality was restricting its abilityto enhance the important catalytic role itcould play in mobilizing resources andcreating synergies with others. Therefore,the expansion of existing strategicpartnerships and the initiation of new onesrepresented a major thrust of its newstrategic plan. In order to execute its strategyand enable the necessary rebranding, astrong culture of partnering had to replaceAnti-Poverty’s soloist mentality over time.

Finally, the non-profit’s unique culturemight constitute an opportunity todifferentiate its brand. Often, the variousnon-profit organizations operating in a givensector – for example, the advancement ofhealth – provide very similar services andbenefits. In other words, it is difficult forthese non-profits to differentiate theirbrands based on ‘what’ they do. However,the way they do it – i.e., the ‘how’ – is oftenunique to each organization, because it isdriven by its distinct culture. This uniquenessprovides a basis for brand differentiation.

Working on the Culture Behindthe BrandGiven the strong link between brand andorganizational culture, any branding or re-

branding effort must include serious workon the culture. The first steps are to analyzethe existing culture, define the desiredculture, and assess the gap between the two.

If the existing culture traits prevent thenon-profit from delivering on the promiseof its brand, then either the internal culturewill have to evolve in order to match thebrand; or the brand message will have tochange in order to match the culture. Withoutsuch realignment, the organization won’tbe able to deliver on its brand promise. Itwill lose trust and credibility as a result.

Once the internal culture and the brandare well aligned, it remains critical to continueworking on the culture side of the brandequation. The objective then is to protect,cherish and nurture the organizationalculture to ensure that the non-profit continuesto deliver on its brand promise while evolvingas an organization.

Developing a Culture Model isthe KeyRegardless of the type of work that has tobe done on the culture – i.e., realignmentor nurturing – the key is to develop aprioritized, actionable Culture Model. Thecase of Anti-Poverty will help illustrate.

As part of its strategic planning process,Anti-Poverty produced various documentsthat described the target culture. Collectively,these documents provided an extensive listof the required culture traits.

However, no one in the organization couldremember all the elements of the desiredculture. More problematic, there was noconsensus on where to start or where theemphasis should be. As a result, the culturechange effort had stalled. People wereconfused and sceptical about the wholestrategic and brand direction.

To guide its culture change efforts, Anti-Poverty needed to extract clear answers tothe following questions:

Non-Profit Brand and Culture Go Hand in Hand



� What are the top priorities?� What sequence should we follow?

Therefore, in collaboration with Anti-Poverty’s leadership and the committeein charge of implementing the necessarystrategic changes internally, we developeda Culture Model for the organization.The model captured, in one clear picture,the top priorities and the sequence tofollow in order to drive the necessarycultural change. The modeling processincluded four steps:� Distil the extensive list of culture traits

described in the various strategicplanning documents.

� Make choices, i.e., set priorities.� Determine a logical sequence for the

chosen priorities.� Develop a visual model to

communicate the sequence and acton the priorities.In order for the target culture to ‘stick’

to people’s minds, a culture model shouldfeature a maximum of seven traits. Thatis because research has shown that listretention collapses after seven items, plusor minus two.

In the case of Anti-Poverty, achievingthis objective required combining similarculture traits and organizing the modelaround the words ‘Client centric’ – anelement everyone recognized asimperative.

The initial priority for Anti-Poverty wasto develop or strengthen four culture traitslabelled as ‘Enablers of the strategy’. Theseincluded: ‘Fairness, respect and trust’; ‘Drivefor result’; ‘Teamwork and partnering’;and ‘Confidence in our capabilities’. Thefirst phase of the culture change at Anti-Poverty concentrated on these enablingtraits. It lasted about 18 months.

After the enabling traits were put inplace, the focus switched to developinga second set of priority traits – labelled

as ‘Accelerators of the strategy’ – whilestill protecting and nurturing the enablingtraits. This effort constituted the secondphase of Anti-Poverty’s culture changeprocess. This phase lasted another 18months. The three accelerating traitsinclude: ‘Empowerment and accountabilityfor result’; ‘Learning intensive andinnovative’; and ‘Moderate tolerance torisk and encouraging initiative’.

In addition to developing theseenablers and accelerators, Anti-Povertyhas been working on the unifying traitat the center of its visual Culture Model– i.e., being more ‘Client centric’.

Framework to Guide and Fuelthe Culture Change EffortsThe Culture Change Arch in the Exhibithighlights the key levers available to evolvethe culture of an organization. We usedthis proprietary framework to thinkthrough the challenge facing Anti-Poverty,and to develop a customized CultureChange Roadmap to guide its ongoingefforts.

Two Categories of LeversThe key to succeed with organizationalchange is to work in an integrated andcoherent manner on both the technicaland human dimensions of change.Therefore, in order to drive the necessaryevolution of its institutional culture, non-profit organizations must activate twotypes of levers:� ‘Hard’ Levers (coloured in yellow

on the figure): they correspond tothe ‘hardware’ of the organization.Activating these levers meansredesigning – or at least fine-tuning– the major components of theorganizational hardware. Theobjective is to ensure they all enable,promote and reinforce the desired

attitudes and behaviors. In essence,it is a realignment effort. It is technicalin nature.

� ‘Soft’ Levers (coloured in green onthe figure): they focus on the“software” of the organization – i.e.,its people. Much has to be done onthe human dimension of culturechange, particularly in the followingareas: communication; leadership’sengagement, guidance and develop-ment; deployment of people basedon their fit with the target culture.

The Pillars: Communication of theDesired Behaviors and AttitudesAn organization’s culture is defined byhow employees characteristically handlesituations when not under supervision– especially in the case of pivotal situationsthat present an opportunity to performin an extraordinary and distinctivemanner. The attitudes and behaviors ofstaff members under these circumstancesdetermine the organization’s culture.

Therefore, in order for a non-profit’sculture to change, the staff must adoptdifferent attitudes and behaviors. Ofcourse, a necessary condition is thatemployees know exactly what is expectedof them under the new culture.Consequently, it is imperative that thenon-profit communicates clearly, regularlyand widely the expected attitudes andbehaviors – both to existing and new staffmembers.

At Anti-Poverty, this communicationwork started with the development ofits Culture Model. The second step wasthe design and delivery of Culture Modelworkshops for the leaders. The next stepwas to bring the rest of the staff up tospeed on the model, through acombination of highly participative townhall and team-level meetings.





Communicating the desired behaviorsand attitudes has become an ongoingactivity at Anti-Poverty. The organizationis always looking for opportunities toreinforce the Culture Model and thepriorities it highlights. For example, ithas ordered a series of self-standingbanners featuring a large-size picture ofthe model. When staff members meetfor a planning workshop, a problemsolving session or a training program, oneof these banners is set-up at the frontof the room. The meeting starts with adiscussion about the culture traits thatthe participants must keep top of mindduring the session. The banner helpsanchor and guide the discussions. It helpsensure the decisions and the action plansproduced during the meeting are fullyaligned with the target culture.

The Keystone: Leaders as Role ModelsIn the architecture, the keystone is thewedge-shaped piece at the crown of thearch that locks the other pieces in place.

No matter how well the other componentshave been built and installed, the archwill collapse unless the keystone is in placeand properly set. In culture change, theleaders represent the true keystone.Unless they lead with exemplarity, theculture change won’t hold – regardlessof the efforts applied to the other levers.

At Anti-Poverty, the first priority wasto ensure that all team leaders were‘ready, willing and able’ to lead withexemplarity – starting with the ExecutiveDirector. The Culture Model workshopswere designed to kick-start this importantprocess.

The next step was to launch a seriesof workshops for team leaders. Theybecame known as ‘Leadership Energizers’.These workshops used a special formatthat embodied the principles of structuredaction learning. In essence, they were aboutproviding leaders with a structured settingto learn with and from each other whileworking on implementing the strategyand evolving the organizational culture.

In addition to helping leaders beeffective role models, the LeadershipEnergizers foster a stronger spirit ofteamwork, mutual learning, collaborationand partnering among the leadership –a critical step towards breaking the silomentality that existed at Anti-Poverty.Furthermore, the workshops power thef low of knowledge through theorganization, an imperative linked to theaccelerating trait ‘Learning intensive andinnovative’ on Anti-Poverty’s CultureModel. Finally, the Leadership Energizersfuel and support the efforts to changethe culture and execute the strategy.

Performance Management, Rewardsand Incentives SystemThe following adage captures the essenceof this lever: “What gets measured getsdone; what gets fed back gets done well;what gets rewarded gets repeated.” Whenproperly designed, the performancemanagement, rewards and incentivessystem helps drive the attitudes andbehaviors of the target culture. Itconstitutes an important lever of theculture change.

As part of its program of strategicchanges, Anti-Poverty redesigned itsperformance management, rewards andincentives system to promote andreinforce the target culture – particularlythe priority traits on its Culture Model.The most important change was to startassessing performance across twodimensions:1. The results that people deliver; and2. The extent to which they display

‘culture-fit behaviors’ – i.e., behaviorsthat demonstrate the target culture.In other words, Anti-Poverty is now

assessing performance by looking at boththe ‘hard’ and ‘soft’ factors of theperformance equation.



Promotions, Hiring,Reassignments andSeparationsIn the above section, we talked aboutthe need to ‘re-engineer’ the performancemanagement, rewards and incentivessystems. Once done, this technical workhelps ensure that the human resourcesactivities related to promotions, hiring,reassignment and separations reinforcethe culture change.

The goal here is to ensure people arepromoted, selected, reassigned orterminated not only based on their ‘hard’performance, but also in terms of theirfit with the target culture – i.e., the ‘soft’factor of the performance equation.

For example, during its strategic re-organization, Anti-Poverty made sure todeploy employees with a strongcustomer-orientation to all client-facingroles – not only in its operational units,but also in the support functions. Afterall, ‘client centric’ is at the core of itsCulture Model. Every functionthroughout Anti-Poverty has clients toserve – either external or internal.

Management Systems andPoliciesWe discussed earlier the very special caseof the performance management system.What we said about it also applies to theother management systems and policies:they must enable and promote the targetculture – particularly the ‘priority traits’on the Culture Model.

We developed for Anti-Poverty asimple audit form to assess whether itsmanagement system and policies enabledand promoted the priority traits on itsCulture Model. In essence, the formprovided a ‘culture-fit acid-test’. However,running this acid-test was simply a meanto an end. The key for Anti-Poverty was

to implement the corrective action plansit developed as a result of the audit. Thisensured that all major systems andpolicies truly enabled and promoted thetarget culture.

Learning, Development andOn-BoardingLearning and development representsa very powerful lever for organizationaland culture change. World-classorganizations fuel their road to successby adopting a strong learning and teachingagenda that is intricately linked to theirstrategy and target culture. They deliveron their aspirations by establishing aneffective learning and developmentinfrastructure.

Furthermore, the on-boardingprocess constitutes a perfect opportunityto demonstrate and communicate thetarget culture to new staff. By ‘on-boarding’, we mean the process ofassimilating, integrating and acceleratingnew team members, whether they comefrom outside or inside the organization.

Anti-Poverty adopted a moreambitious learning and teaching agenda.It fundamentally rethought its approachto talent development and organizationallearning. To reach its new strategic andbrand vision, Anti-Poverty establishedan ‘umbrella’ under which it delivered adifferent breed of learning program –driven by and anchored to its strategy.

Anti-Poverty also revamped its on-boarding process. Recognizing that thefirst few days in an organization have alasting impact, Anti-Poverty now makessure that new staff members are exposed– immediately and in a powerful way –to the attitudes and behaviors of the targetculture.

To impress the target culture on newhires, Anti-Poverty shares its success stories

as part of the on-boarding process. Formaximum impact, it adopted a live story-telling format: groups of new employeeshear the stories directly from the staffmembers who played an active role inthe narrative. A member of seniormanagement is also involved in the story-telling process. The approach helps newhires understand Anti-Poverty’s CultureModel. It brings the model to life in avery compelling way. It also contributesto developing the culture trait ‘confidencein our capabilities’.

Organizational Design andPhysical SpaceThe structure of an organization and itsphysical space influence human behaviors.Therefore, both need to be leveragedjudiciously to drive culture change.

Anti-Poverty’s strategic reorganizationproduced a new organizational designthat facilitated several of the priority traitsof the Culture Model – particularly: ‘ClientCentric’; ‘Drive for Result’;‘Empowerment’; and ‘EncouragingInitiative’.

Once the new structure was in place,the priority shifted to making small, welltargeted changes to the physical space.For example, Anti-Poverty equipped itsheadquarters with additional meetingplaces that could be used as spontaneousmeeting spots. This helped develop thefollowing priority traits: ‘Teamwork andpartnering’; ‘Learning intensive andinnovative’; ‘Encouraging initiative’;andeven ‘Fairness, respect and trust’.

Stories, Symbols and RitualsStories, symbols and rituals are powerfulforms of communications that define andinfluence organizational cultures. Theyneed to be leveraged towards culturechange.

Non-Profit Brand and Culture Go Hand in Hand



Reference # 03M-2010-11-07-01

© 2010 ORCHANGO. All Rights Reserved.

e

Anti-Poverty has become better atcapturing and disseminating its successstories. This helps galvanize action bycreating an emotional connectionbetween the employees and the culture,mission and vision of the organization.Good narratives go one step further byproviding a blueprint to take actions thatdemonstrate the target culture and makea difference. Also, these success storieshelp build employees’ confidence inthemselves and in the organization asa whole – thereby developing theenabling trait ‘confidence in ourcapabilities’.

In term of ritual, Anti-Poverty’sExecutive Director, for instance, asksquestions that promote the desiredculture. For example, to promote thetrait, ‘teamwork and partnering’, hewould ask the question: “Who wouldyou benefit from partnering with on thisissue?” Because he asks these questionsas often as appropriate, people have cometo expect some of these questions wheninteracting with him. This simple ritualdemonstrates the importance that theExecutive Director attaches to thepriority traits on the Culture Model. Itcontributes to keeping the target culturetraits at the very top of everybody’s mind.It encourages people to be proactive bytaking actions that are aligned with theCulture Model.

Assessment of the Degree ofCultural AlignmentThe last lever is to gauge at regularintervals the degree of culturalalignment. Measuring the culture gapfuels the change momentum and helpsadjust the focus of the culture changeefforts over time. It also providesimportant inputs when evaluating theperformance of leaders.

Anti-Poverty developed a mechanismto measure the degree of culturalalignment. It used three complementaryassessment methods: brief survey, focusgroups and observations. The resultswere provided to the team leaders aspart of the performance managementprocess.

Anti-Poverty also incorporated themeasure into its Balanced Scorecard. Thedegree of cultural alignment has becomean important lead indicator of thestrategic progress. An increase inalignment means that the organizationis in a better position to reach itsstrategic objectives and deliver its brandpromise.

Non-Profit’s PowerfulEmotional GoldmineWe explained earlier that non-profitbranding and culture change go handin hand. Unfortunately, evolving theorganizational culture takes longer thanreaching a decision about the brand.

Despite its well targeted andsustained efforts, it will take Anti-Povertyabout three years to fully cement itstarget culture. The culture-brand gapwas rather large at the start, so Anti-Poverty needs to be patient with theprocess. However, its customers startedwitnessing significant changes in attitudesand behaviors within the first six months.As a result, the brand experience isalready begins to be different.

The lesson: While non-profits haveto be realistic about the time it takesto evolve organizational culture, theycan start rolling out the new brand earlyon. However, in order to protect thetrust upon which they are built, non-profits should be upfront with theirsupporters and customers about theirability to deliver the new brand promise.

The core message should be that theorganization is embarking on a journeyto fully deliver on its brand promise.As with any journey, progress will bemade one step at a time. The brand-building campaign should talk about thevarious milestones along the way, andreport progress to supporters andcustomers at regular intervals. The keyis to be honest and ensure that themessage matches the perceptions ofoutsiders.

The good news is that during timesof change non-profit organizations havea definitive advantage compared tocommercial entities. In order to fullysupport a change, people need to bemoved – in the emotional sense. In otherwords, they need to connect emotionallywith the change. Of course, this is a veryindividual process. But in the non-profitsector, most people feel a strongemotional attachment to the noblemission of their organization. From achange management perspective, thiswidespread attachment represents an‘emotional goldmine’. By articulating howthe change will allow individuals to betterserve the mission, non-profitorganizations can trigger the kind ofemotional reactions that fuel thecommitment to change.

Therefore, to drive a change in theculture, non-profits must help employeesrecognize they can make a strongercontribution to the treasured missionby taking actions that demonstrate thetarget culture. In the process, employeeswill receive a compelling answer to thequestion that is always top-of-mindduring times of change: “What’s in it forme?”





‘The Thinkers 50’ list, produced by Suntop Media in association withSkillsoft, is supposed to be a definitive guide to who is the most influentialliving management thinker. And this list changes every year. What do thechanging names mean for the world of business – that the old thinkers’ideas have become irrelevant or that new breed of management thinkershave emerged?

VIEWnter

A guru is one who propounds new ideas on management, who can

differentiate between regions, changing world economies, cultures,

practices, incentives and politics in various countries to ascertain

where certain theories may be applicable and where they may not

be.



VIEWnter

Kashi R Balachandranis a professor of accounting and operations management at New

York University Stern School of Business. He teaches courses in

management accounting, management control systems and

financial accounting.

Professor Balachandran joined Stern in 1979. His primary areas

of research include optimal operation of service systems, incentive

contracts and mechanisms, transfer pricing determinations,

conceptualization of unused capacities and their optimal

utilization, warranty contracts, quality enhancement programs

and reporting, activity-based costing systems, business

measurement systems and optimal performance evaluations. In

addition, he has contributed to sustainable business development,

global warming research and management educational process.

He has written and published more than 75 articles in leading

academic journals of economics, accounting, operations research

and management science. He is the editor-in-chief of the Journal

of Accounting Auditing and Finance, Senior Consulting Editor

of Jornal of Applied Management Accounting. In addition to

serving on the editorial boards of several journals, he has refereed

for numerous journals and research funding agencies. He has

organized numerous conferences and symposiums for JAAF in

New York and Europe.

Before joining Stern, Professor Balachandran taught at the

University of Wisconsin, the Georgia Institute of Technology and

University of Kentucky, and was a visiting professor of

management control and performance measurement at SDA

Bocconi University, Italy, University of Rome-Tor Vergata and

International University of Japan. He is also a Chair Professor at

Tunghai University and a regular participating professor for the

Italian Summer School for doctoral students from around the

world. He has served as the associate director of the Ross Institute

of Accounting Research and doctoral program director of

accounting at New York University and a member of the

Wisconsin Governor’s Commission on Education. He has lectured

internationally in the United States, Europe and Asia in several

conferences and universities. He served as a member of the Asian

American Advisory Council to the Governor’s office in New Jersey

and is a member of the International Advisory Board of the Indian

Institute of Finance Business School in India. He has given

executive seminars at the Stern School of Business and

internationally on Information Analysis for Managerial

Decision Making and related topics.

Balachandran earned his Bachelor of Engineering (with honors)

in Mechanical Engineering from University of Madras, India;

Master of Science in industrial engineering and Doctor of

Philosophy in operations research from the University of

California, Berkeley and his certificate in management

accounting from the Institute of Management Accountants.

To make it to the list, one has to be eloquent inenumerating one’s ideas in addition to being practical,showing proof that the ideas do work and have aninternational appeal. Naturally new stars come every nowand then and since the list includes only 50 prominentpersonalities, someone has to be left out. It is not that theideas of the ‘left out’ gurus are no longer relevant. Rather,other ideas are more newsworthy in making a splash. We mayalso realize, with additional focus on the emerging countries,that what is sometimes very applicable to the developedWestern world is not so applicable to the rest of the world. Athinker who has thought more about the rest of the world hasa better chance of getting into the list. In my opinion, they areall great thinkers and gurus. Just shifting focus to rest of theworld outside the West may make recent thinkers appear morerelevant.Who according to you is a management guru? Whatspecific qualities and contributions set them apart fromthe rest of management fraternity?A guru is one who propounds new ideas on management, whocan differentiate between regions, changing world economies,cultures, practices, incentives and politics in various countriesto ascertain where certain theories may be applicable andwhere they may not be. In addition, a guru should be eloquentas to enunciate his or her ideas to command the respect andthe ears of all in management, both academics andpractitioners.Are “Thought Leaders” and “Management Thinkers”same as “Management Gurus” or is there any differencebetween these titles?I differentiate them this way. Thought leaders propound newideas, sometimes speculative, and ask why not. They try toexplain why such ideas may be valid for the practice ofmanagement. They may typically be industry leaders who havebeen successful in trying out new ideas in their own company.A management thinker can analyze a specific theory or practiceof management cogently and analyze where it can be appliedand where it may not be applicable. A guru, on the other hand,is a complete management specialist, who propounds newideas, thinks of their applicability in various environments,thinks of the limitations of the propounded theories andeloquently describes them through lucid writings and lecturesto other educators, students and top industry managementpractitioners. Thus, to be called a guru is a significantachievement.



VIEWnter

Who, according to you, have been some of the global management gurus who haveredefined the discipline and practice of management?Peter Drucker, Michael Porter, CK Prahalad grab my first attention.At times, even CEOs get voted as the world’s best management gurus. Forinstance, in ‘The Thinkers 50’ 2007 list, produced by Suntop Media inassociation with Skillsoft, Bill Gates, Alan Greenspan, Thomas J Peters, JackWelch, Richard Branson were in the top ten list. The others (Michael E Porter,Gary Hamel, Jim Collins) were typical academicians who, with their researchand writings, had profound effect on the way companies managed their giantenterprises? Noticeably amongst the career executives, Jack Welch, Tom Peterscontinued to have influence even after a few years of their reckoning. Micahel EPorter who was No. 1 in the list in 2004 has slipped to No.4 in 2007 list. Whattherefore explains the enduring power of a management guru?Some of the people – the industry leaders, you have mentioned are thinkers and notnecessarily long standing gurus. That does not make them any lesser important. Afterall, they have been extremely successful as industry builders and have displayed toplevel management prowess. But general theory building is different. It is invariablyacademic. It is not that only people from academics can fill the role. People fromindustry with their wide and in-depth and hands-on experience can build generalizedtheories as well. The enduring power of a guru lies in his/her ability to build theoriesthat can withstand changing environment, that are applicable to various cultures,business practices etc. One theory will not fit all, obviously. If the guru can clearlyenunciate where which theory can be applied and why it can be applied and whathappens if the business environment changes, as it has recently been with the emergingeconomies of BRIC, then there is enduring power. Yet, theories are bound to beadjusted with changing times and that is why we have new gurus replacing others in thetop 50 list.It is often noticed that several such lists (Wall Street Journal’s world’s mostinfluential business thinkers, Fortune’s world’s best gurus in strategy, etc.) aredominated by North Americans, with abysmal representations either fromEurope or Asia? What explains this polarization?Academic research has always been North American centric. It has basically ignored thediffering environments of developing and even European countries. There is nothingnegative in this statement. After all, America has dominated and continues to play a



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Reference #03M-2010-11-08-06

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significant role in global business, not to speak of its military might and involvement inthe world. Naturally, when we talk of trend-setters, we tend to look West andsometimes, regrettably ignore the rest.Who according to you has been the best Indian management guru and why?Late CK Prahalad has certainly made a significant mark. He has grabbed the attentionof the entire academic and practicing management community with his eloquent, lucidand powerful writings on management. I do not have to repeat his contributions asthey are well known.In all fairness, although CK Prahlad has been voted as World’s No.1management guru (in 2007 by ‘Thinkers 50’), many critics point out that whenit came to managing the ventures that he himself started, the results were justdisappointing. Therefore, where do you draw a line between a true globalmanagement guru and an ardent advocate of a business (successful, yet times!)practice?It is like asking why a finance professor in a top university is not better than WarrenBuffett in stock trading. Theory building is based on premises that the theoristobserves. It is not possible to include all the variables of relevance in an analysis. Dataon some are not available for observation, some are not clearly definable and future isnot so predictable. There may also be a luck factor, though it remains that people likeBuffett, Gates and Welch call the shots better than most. I do not hold personalfailures against a guru in any field, be it management or finance or economics.Who according to you are the most promising global and Indian managementgurus?Ram Charan, Vijay Govindarajan and Rakesh Khurana. Do I have an academic bias?Probably. As I said, a guru has to be able to generalize his or her management theoriesto a larger environment and not necessarily be focused on one industry. This, in noway, diminishes my absolute admiration for the achievements of people like Ratan Tata,Gopalakrishnan or Narayanamurthy among many other stalwarts of the Indianindustry.



Building the DNA of a Non-Profit Brand

Engineering the PrimalMovement

Branding non-profit

organizations is a

function of

engineering a brand

narrative based upon

the construct of the

primal code. Once this

is created, you have

created the

handholds of any

organization or

movement, and can

begin to attract

others who not only

share your beliefs, but

also believe in what

you are doing.

And, history has

shown, people who

believe in a cause can

change the world.

There have been many political and socialmovements on the planet. These

movements have embraced themes ofapartheid, ecology, global warming, capitalpunishment, disease, animal rights, humanrights, and yellow-legged frogs. Some socialand political causes rise in our conscious mind,some attract our attention for the obligatorynanosecond (or as long as the person standsat our front door) and then disappear likea popping cartoon bubble. The causes andefforts being made to support them numberin the thousands around the globe, and areas various as the people and communitiesand religions and ideologies that supportthem.

However, the causes and efforts thatstick do not always do so because of theirhumanitarian or social content – or themovie star attached to them. Rather, theyglide to the forefront because they havesuccessfully gathered together pieces of abrand narrative that resonate and helpthem not only to exist, but to flourish. Thefoundations of branding a social cause ormovement – and its accompanying narrative– are powered by a construct that, likebinary code or DNA, is as simple as it ispowerful.

Brands are belief systems. Belief systemsactually have a system that includes sevenelements: a creation story, creed, icons,



Engineering the Primal Movement

Patrick Hanlonis acknowledged as one of the top

branding practitioners in the

world. His book Primal Branding:

Create Zealots For Your Brand,

Your Company And Your Future

has been translated into five

languages and included as

marketing curriculum at

progressive universities around the

planet. He has been a guest speaker

at the HP Brand Innovation Series,

IDEO, Institute for International

Research, Urban Land Institute, the

American Marketing Association,

New York University, Parsons

School of Design, American

Advertising Federation, and more.

He has worked with Coretta Scott

King and Cesar Chavez, as well as

with the Bill and Melinda Gates

Foundation, and other social

causes. Most recently, he helped to

develop Connect A Million Minds

(connectamillionminds.org), the

White House’s number one private

initiative to help promote

education in the United States. He

is currently a member of the

Advertising Research Foundation’s

Research Transformation Super

Council.

rituals, a special lexicon, nonbelievers, anda leader. We call this the primal code.

An example: Look at the ideology wecall democracy (American-style). In this beliefsystem, the creation story is about foundingfathers tired of taxation withoutrepresentation. The creed is all about menand women being created equal. (There isalso a parallel creed concerning freedoms.)The icons are the American flag, the soundof The Star-Spangled Banner, MountRushmore, The White House, WashingtonMonument, the Arlington Cemetery, thevoting booth, Uncle Sam and more. (Thelonger that an ideology has been in place,the more pieces of code exist. There hassimply been more time to put them intoplace, strengthening the belief system.) Ritualsinclude voting, of course, as well as celebratingthe 4th of July, Memorial Day, Thanksgiving,Veteran’s Day, President’s Day, raising theflag, lowering the flag to half-mast. Thesacred words are ‘EPluribus Unum’, theDeclaration of Independence, the USConstitution, and ‘In God We Trust’. Leadersstarted with George Washington, and haveincluded every elected President since.

We always assume that the United Statesof America was brought into being throughmanifest destiny, or because democracy isguided by divine right which wills itself intoexistence. If only that were the case, Americandemocracy is continually being tested andtweaked. Its appeal began by unifying againsta common enemy, and continues todaythrough a system of checks and balances,driven by a unifying principle. Throughoutits 200-year history, the United States hasbeen sustained by the elements within theprimal code.

Other political and social movementswould do well to heed the primal code.Because once you create a belief system, youattract others who share your beliefs. Thiscreates a community of people – a

movement. There is no underestimatingthe power of a group of zealous believers.Movements like the French Revolution,Russian Revolution, Civil Rights Movement,Vietnam Antiwar Movement – not tomention Mohandas Karamchand Gandhi,were driven by people who believed in therighteousness of their cause. They joinedtheir arms together and stormed the castlesof their discontent.

It could rightfully be argued that the USCivil Rights Movement in the 1960s mighthave simply found its place in history. Yet,this seems unlikely. The notion of equal rightshas suffered rises and falls throughout thehistory of mankind. And while it is valid thatcertain personalities shaped and took chargeof the Civil Rights Movement itself, it is alsotrue that the very notion of civil rights as aconcept required a belief system to be in place.

The Civil Rights Movement began in thedeep South, stuck in a land before time, andabout which much has already been written.For our purposes here, let’s assume thatthe movement started when Rosa Parksrefused to sit in the back of the bus in Selma,Alabama. The creed or mission statementcan be summed up in one word: Freedom.The concept of peaceful resistance andnonviolent activism inspired by MahatmaGandhi is arguably another operational creedbehind the Civil Rights Movement. The iconsof the Civil Rights Movement are the bannersand signs the demonstrators carried as theymarched to Birmingham, Alabama andWashington DC. The photograph and newsfootage on radio and television included Dr.Martin Luther King delivering his ‘I HaveA Dream’ speech; The images ofdemonstrators marching arm in arm downthe highways of Alabama; There were lesspositive icons, as well. The news footage ofsnapping police dogs, jeering racists and firehoses turned on demonstrators are all iconicimages of the Civil Rights Movement.



The foundations of branding a social cause or movementare powered by a construct that is as simple as it is powerful

The rituals of the Civil RightsMovement, as in the Women’s Movementand the Vietnam Antiwar Movement andmovements around the world, were themarches and demonstrations, thespeeches, rallies and sit-ins. Words likefreedom, equality, civil rights, and ‘WeShall Overcome’ were the favored verse.The speeches by Dr. Martin Luther King,and others also became sacred words.

The nonbelievers, of course, were

racists and the authoritarians who didwant to release their power and the peoplewho believed that the color of their skinmade them superior.

The leaders of the Civil RightsMovement were located in towns andcities throughout the North and South.They included Rosa Parks, Dr. MartinLuther King, President Lyndon B.Johnson, Malcom X, and theirpredecessors W.E.B. Dubois and MarcusGarvey. And the multitudes of organizers,demonstrators and activists from North,South and around the world.

Thousands of people in the UnitedStates – North and South, were involvedin the movement for Civil Rights. Manyof them continue their mission today,to ensure equal rights to Latinos, to

immigrants from Southeast Asia, Africaand the rights of children, the elderly,the impoverished and theunderprivileged.

The pattern of primal code that wasinvolved in the Civil Rights Movementcan be mimicked for other causes of merit.The opportunity is for observers tobecome believers, then advocates andchampions of the cause. The blueprintset forth in the primal code is clear. All

movements begin as a narrative. Theircreation story begins with someone whobelieves that the world has somehowmissed a step and is doing it wrong. Theyhave an alternative credo. Icons aregathered that shout the new credo. Thereare marches and demonstrations andother attendant rituals. In the VietnamAntiwar Movement, they burned draftcards. In the Women’s Movement, theyburned bras. In the Middle East today,they burn effigies of Uncle Sam. Thereare also less inflammatory rituals. Themass sit-ins, the marches, the carryingof signs and banners, the food strikes,the walk-outs, the boycotts.

Sacred words abound – ‘Make love,not war’; ‘We Shall Overcome’; ‘Save theWhales’; ‘Ban the Bomb’; ‘Vote for Jerry’;

‘Give Peace a Chance’. There are always,of course, those who will not follow thenew cause, for whatever reason. They arethe nonbelievers, the pagans. The hawkswho will not be doves (and vice versa),the loggers who chop down the redwoods,the ardent capitalists who cannot helpbut hire cheap child labor.

Finally, there is the leader. Whetherthe leader is Mahatma Gandhi, MartinLuther King, Nelson Mandela, Cesar

Chavez, Al Gore, or feminist GloriaSteinem, their narrative propels themto the front page.

It is all part of narrative, it isstorytelling. When pieces of the story –its primal code – are missing, the storybecomes less interesting and the massesfeel innately dissatisfied, disinterestedand turn away.

Another example. Nearly three billionpeople today – half of the world’spopulation, live on less than two dollarsper day. According to the World Bank’sown figures, the developing world paysback $13 for every $1 of debt it receivesin grants. UNICEF statistics report that640 million children do not haveadequate shelter. Over two billion peoplearound the world live in substandard



Engineering the Primal Movement

housing. Millard Fuller and his wife Lindarecognized these facts in the 1960s. Thefigures were different, but the contextwas the same: poor populations weregetting poorer, people existed withoutfood, clothing or shelter. So in 1965, theFullers decided to discard their millionairelifestyle and do something about it.(Millard Fuller had owned a successfuldirect marketing company.) They movedto Koinonia Farm, a grassroots ruraleconomic development program outsideof Americus, Georgia. It included a pecanfarm, a processing plant, and a sewingindustry that made lady’s slacks. Whilein Koinonia, Millard Fuller helped createPartnership Housing and The Fund forHumanity – the blueprint for a programthat would build one million other homesaround the world.

After a few years and a short stintin Africa, the Fullers opened their Habitatfor Humanity headquarters. Nine yearslater, Americans opened up theirnewspapers to a photo of former USPresident Jimmy Carter wielding ahammer. Carter and wife Rosalynn hadbecome Habitat partners. An outgrowthof President Carter’s human rightsplatform and his continuing outreachprograms, Habitat for Humanity got asorely-needed public relations push.

Today, thanks to millions of volunteers,people are hammering out hope in over

three thousand communities around theworld. Habitat for Humanity homesprovide shelter for Prem Bahadur Thakulaand his family in Tikapur, Nepal. Thereare forty-five Habitat homes in the areawhere Namugenyi Piona lives in her newhome with her daughters in Wobulenzi,Uganda. Ademar de Souza and his wife,Valderene lived with their children in amakeshift shack made of plastic andcardboard until they moved into theirHabitat home. The stories of how over750,000 families got decent, affordablehousing stretch from Nyamakate,Zimbabwe to Waritzan, Papua NewGuinea to Philadelphia, USA.

The official creed of Habitat forHumanity is to eliminate poverty housingand homelessness from the world, andto make decent shelter a matter ofconscience and action. On the human scale,the mission is to provide suitable housingfor people and communities.

“There’s a tremendous need,” saysTed Swisher, head of the US Affiliates.“We would like housing to be where foodis in the United States. Nobody wouldallow somebody to starve in theircommunity, or go without basic clothing.But we would allow people to live insubstandard housing. Even in the UnitedStates, many people still live in veryprimitive conditions.” Proper housingstops the cycle of poverty and

hopelessness for families. It gives themthe survival basics and an opportunityto aspire. There are also positive healthand safety implications. There are fewerplaces for mosquitoes to breed, and theoverall cleaner living conditions allow lesschance of malaria, cholera and othermaladies.

Supplying affordable new housing alsocreates the opportunity for families tobuy proper food and clothing.

The icon of Habitat for Humanity isits logo, of course, but also the hammerand nails, skilsaw, concrete mixer andmason’s trowel that are the ubiquitoustools of home construction. The mostmeaningful icons are the 750,000 homesthat have been constructed around theworld over the last 40 years.

The ritual of home building is olderthan the wheel. Ever since man clawedshelter from under a tree trunk, the ritualof inspecting the proper home site andthe craft of finding proper materials andassembling them in the right way havebeen respected for centuries. Habitat forHumanity engages in a series of ritualswhen selecting families who receivehomes. Prospective homeowners areselected based on three criteria, saysSwisher. “Income, need, and theirwillingness to partner. Habitat familieshave to be willing to help build the houses,so they have to be willing to partner.”



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Reference # 03M-2010-11-09-01

© 2010 Patrick Hanlon. All Rights Reserved.

Once accepted, future homeownersenter a rite of passage that includes classeson home maintenance and homeownership, legal and financial counselingto help them understand theresponsibilities of home ownership. Finally,prospective homeowners must sign aletter of intent. Then they start buildingtheir own sweat equity by helpingconstruct someone else’s home.

The roof-raising of a new home is arite all volunteers participate in. The actof building a home varies by location.In Atlanta, where habitat perhaps hasits strongest support, building a hometakes volunteers about eight weeks or1200 hours. In a rural or third worldcommunity, it can take longer. Habitatalso holds special events called “blitzbuilds” where they might build forty toone hundred homes in a community ina week. “We have a home dedicationwhere we celebrate the completion ofthe house,” says Swisher. In somecultures, carpenters place a small fir treein the house eaves to symbolize itscompletion. When a family moves intoits new home in Celebes, the priestcollects the souls of family members ina bag to protect them from supernaturaldangers. In Habitat for Humanity, muchfestivity surrounds the newhomeowners. It is perhaps no surprisethat political leaders all over the world

have participated in Habitat events,including President Gloria Arroyo of thePhilippines, President Thabo Mbeki inSouth Africa, Poland Prime Minister, JerzyBuzek, Australia Prime Minister, JohnHoward, Korean President, Kim Dae-jung, and others.

When it comes to sacred words, theterms of art in carpentry, masonry,engineering and the other homebuildingcrafts all apply. The name Habitat forHumanity also has built a halo aroundit. Other terms like blitz builds alsobecome sacred nomenclature.

Nonbelievers? Even a cause asbeneficial as Habitat for Humanity hasits opponents. For example, there is acadre that believes the character of thepeople living in Habitat homes brings thevalue of a neighborhood down. Studies,however, have disproven this bias.

The spiritual leaders of Habitat forHumanity are Millard Fuller and his wifeLinda – their initial sacrifice and visionhave meant inspiration and hope for peoplearound the world. Another spiritual leader,of course, is former President JimmyCarter, whose celebrity helps raiseawareness. But perhaps the real leadersare the grassroots personalities who helpto organize, find funding and rally supportat the over 1700 affiliates in the US andanother 550 local affiliates around theworld.

There is no question of Habitat forHumanity’s success. They recruitthousands of volunteers every year whobelieve in what Habitat is all about. Thosevolunteers donate millions of hours inpersonal time to build over 5000 homeseach year, making Habitat one of the Top20 homebuilders in the United States.By the time you read this, over one millionhomes around the world will have beencreated through Habitat for Humanity,thanks to over 6 million volunteer hourseach year. Their impact is enormous.

“So many families around the worldhave terrible housing,” says Ted Swisher.“It doesn’t take much imagination toknow what it means to those families. Ican’t think of anything better than, oncethe basic need of food and clothing isprovided, to provide a decent shelter ata cost a family can afford.”

Branding non-profit organizations isa function of engineering a brand narrativebased upon the construct of the primalcode. Once this is created, you havecreated the handholds of any organizationor movement, and can begin to attractothers who not only share your beliefs,but believe in what you are doing.

And, history has shown, people whobelieve in a cause can change the world.





The ‘Next Big Thing’ in Non-Profits

Social Production

Social production, the

‘third way’ for human

beings to create value

– neither commercial

nor governmental by

nature – is destined to

become a more and

more robust and

important part of

human existence.

Within just a few

decades, in fact, social

production may

become the dominant

form of human

economic activity. Do you use Wikipedia? How about theweb browser Firefox? Have you ever

made a phone call using Skype? Have youever bought or sold anything on eBay?

These are just a few examples of socialproduction, which represents a “third way”people can organize themselves to createvalue or accomplish a task. Rather thanpaying someone to complete a task thatcontributes to a collective goal, as a businesswould, and rather than mandating thatsomeone do it under penalty of law, as agovernment would, social productiondepends on people volunteering toaccomplish a task, in collaboration with otherpeople.1

In the political debate between left andright that has dominated the past hundredyears of economic discussion – with the rightadvocating more free-market solutions andthe left advocating more governmentregulation – social production was neverconsidered. The very idea of it would haveseemed preposterous.2 Today, however,

1 Definitions of Social Production Abound. Probablymost respected is Benkler’s “commons-based peerproduction,” but also see Lessig as well as Shirky:Benkler Y (2002). Coase’s Penguin, or, Linux and“The Nature of the Firm.” The Yale Law Journal,112(3), 369-446; Lessig, L (2002). The Future ofIdeas: The Fate of the Commons in a ConnectedWorld. Vintage; Shirky C (2010). Cognitive Surplus:Creativity and Generosity in a Connected Age. PenguinPress, p. 118.

2 Shirky C (2010). Cognitive Surplus: Creativity andGenerosity in a Connected Age. Penguin Press, p.119.



Social Production

Don PeppersRecognized for well over a decade

as one of the leading authorities

on customer-focused relationship

management strategies, he is an

acclaimed author and a founding

partner of Peppers & Rogers

Group, the world’s premier

customer-centered consultancy.

Don’s vision, perspective and

thoughtful analysis of global

business practices has earned him

some significant citations by

internationally recognized

entities. Business 2.0 Magazine

named him one of the 19

“foremost business gurus of our

times,” and Accenture’s Institute

for Strategic Change listed him as

one of the 50 “most important

living business thinkers” in the

world. TheTimesoi London has

listed him among its “Top 50

Business Brains,” and the UK’s

Chartered Institute for Marketing

included him in its inaugural

listing of the 50 “most

influential thinkers in marketing

and business today.”

Don has a popular voice in the

worldwide media, with recent

contributions to both the

Harvard Business Review (May

2009) and the McKinsey

Quarterly (June 2009). In

addition to frequent posts on

Strategy Speaks, the Peppers &

Rogers Group blog, Don produces

a video diary of his global

business observations, entitled

“Peppers Unplugged,” and is an

active Twitter user, as well.

interactive technologies allow many problemsand tasks to be directly tackled via socialproduction, using unpaid volunteers. Andsocial production is creating immenseeconomic value, even though for the mostpart it operates completely outside of ourtraditional monetary, free-market systemof accounting for profits, costs, investments,and returns:� Wikipedia, a poster-child example, offers

more than nine million articles in 250languages and is today one of the world’smost used references. It was created andis maintained entirely by unpaidcontributors – nearly 300,000 of them.It can’t be denied that Wikipedia addsimmense value to the world economy,if for no other reason than simply helpingpeople find accurate, organized, andreliable information much more quicklyand inexpensively than used to be thecase. Wikipedia does not acceptadvertising on its website, but based onthe volume of traffic it generates today,advertising could produce more than$100 mn a year of revenue for the site.3

� The Mozilla family of Web applications,including the Firefox browser, is open-source software, free for anyone to use,and maintained by a small army ofvolunteers who continually update andimprove it. There are dozens, if nothundreds, of other examples of open-source software. About 70% of corporateWeb servers, including those for manyhigh-traffic e-commerce sites, run onApache software, an open-sourceapplication. And the GNU/Linuxoperating system that runs the serversfor a number of large websites includingGoogle, CNN, and Amazon, is also open-source and free. Presumably, billion-dollarfirms like these don’t use open-sourcesoftware because it’s free, but becauseit’s good. Again, immense value is being

created, but it isn’t being created throughthe traditional economy.

� Millions of individuals now generate theirown content and upload it on theInternet for others to see on a wide arrayof hosting websites, from Facebook andFlickr to Yahoo and YouTube. They canchoose to make the content availableonly for select friends and associates,or for certain categories of other users,or for everyone. Nearly a million newblog posts are uploaded daily to themore than 130 million blogs around theworld that are tracked by Technorati,4

and by late 2009 more than 30 billionphotos had been uploaded to Facebook,making it the world’s largest photohosting website.5 Peer-to-peer networkssuch as Skype and BitTorrent eliminatethe need for hosting servers altogether.But where do we account for the costsavings from making international videocalls on Skype? And what is the realeconomic value of the entertainmentand instruction delivered for free byYouTube?

� “Crowd service” is replacing traditionalself-service for many firms, especiallywhen they sell more complex productsor services. Go to the customer servicesection of Verizon’s website and ask aquestion about installing a homenetwork or programming a high-definition television, for example, andthe answer may come from some othercustomer – a completely unpaidvolunteer. Other companies, includingAT&T, Best Buy, Cisco, HP, iRobot (makers

3 Calacanis J, Wikipedia leaves $100 mn on the table.Retrieved September 21, 2010 from: http://calacanis.com/2006/10/28/wikipedia-leaves-100m-on-the-table-or-please-jimbo-reconsider/.

4 Havenstein H (2008). Blogs becoming entrenched inmainstream – and more profitable. Retrieved July13, 2010 from: http://www.computerworld.com/s/article/9115367 Blogs_becoming_ entrenched_in_mainstream_and_more_pro fitable.

5 Kirkpatrick D (2010). The Facebook Effect: The InsideStory of the Company That is Connecting the World.Simon & Schuster.



of the Zoomba robotic vacuum cleaner),Linksys, and Nintendo also facilitatecrowd service on their own customerservice websites. For some of theseorganizations, the vast majority ofinbound customer service inquiries arehandled by other customers, creatingimmense value for the host companies,not just in terms of reduced service costs,but also in the improved accuracy andhelpfulness of the answers rendered.Solar Winds, a network managementsoftware provider, built a user communityof some 25,000 network administratorswho help each other with their problems,enabling them to handle the serviceinquiries and problems of their 85,000customers with just two full-timecustomer service employees.6

� The fastest supercomputer in the world,as of April 2010, is a distributedcomputing project that generates fivepeta-FLOPS of computer power, or 5X 1015 floating point operations persecond, by connecting hundreds ofthousands of PC processors andPlaystation3 game consoles together intoa distributed computing network calledfolding@home. Each individual unit isowned by a volunteer who installed specialsoftware allowing the network to taptheir processor’s spare computingcapacity in an effort to help scientistsdo the high-intensity calculationsnecessary to analyze protein folding andcomplex molecular dynamics.7 Otherexamples of volunteered computerpower contributing to social productioninclude SETI@home (Search for Extra-Terrestrial Intelligence), Einstein@home(to detect gravitational waves), theMalaria Control Project, andClimateprediction.net. The Quake-Catcher Network provides early warningsof earthquakes by using a distributed

network of Apple Macs and LenovoThinkpads (these laptops are equippedwith accelerometers as standardequipment).8 And Galaxy Zoo,9 a Web-based network of volunteers classifyingmillions of galaxies based on Hubbletelescope photos, is now the world’s“biggest citizen-science experiment onthe Web.”10

These various social endeavors can begenerally classified into three types ofactivities, according to Clay Shirky: sharing,cooperation, and collective action.11 Shirkysuggests that Flickr, for instance, is purelya sharing site, and participants can chooseto share their own uploaded pictures witheveryone, or with just a select group of others,or with no one. Cooperation happens whenparticipants on a social media site begin toact in accord with others on the site, oranticipate and respond to others’ actions.Conversations and discussions are anexample, but so is collaboration. When youpost a photo on Flickr, you are simply sharing,but when you contribute a suggestion forediting an article on Wikipedia, yoursuggestion will be subject to the commentsand opinions of other editors, and the resultis collaborative. Collective action, Shirky says,is the most complex and difficult kind ofgroup activity, because it requires theindividual members to strive to accomplisha single objective, and to bind themselvesto the final, group-decided outcome. In thenon-online world, he suggests, barn raisingsand potluck dinners are examples of collective

Martha Rogers, Ph DRecognized for well over a decade

as one of the leading authorities

on customer-focused relationship

management strategies, she is an

acclaimed author, business

strategist and a founding partner

of Peppers & Rogers Group, the

world’s premier customer-

centered consultancy.

Business 2.0 Magazine named

Martha one of the 19 “most

important business gurus” of the

past century. The World

Technology Network cited her as

“an innovator most likely to

create visionary ‘ripple effects’.”

And in 2008, the Direct

Marketing Association asked her

to serve as Honorary Governor,

noting that her contributions to

the direct marketing business,

and her name “symbolize ECHO

excellence.”

Martha’s counsel and insight are

regularly sought by Global 1000

and Blue Chip executives. Her

experience in optimizing and

documenting customer value, and

her expertise in applying “out-of-

the-box” thinking makes her

equally popular among global

media, engagement planners,

event organizers, as well as

corporate and association leaders

who are eager to learn more about

customer-centric concepts and

methodologies.

6 Li C, (2010). Open Leadership: How SocialTechnology Can Transform the Way You Lead.Jossey-Bass, p. 26.

7 Folding@home. Retrieved September 21, 2010 from:http://folding.stanford.edu.

8 The Quake-Catcher Network. Retrieved August 29,2010 from: http://qcn.stanford.edu.

9 Galaxy Zoo. Retrieved September 21, 2010 from:http://www.galaxyzoo.org.

10 McKie, R. (2010). Google and Galaxy Zoo Could AidGlobal Climate Project. Retrieved September 4, 2010from: http://www.guardian.co.uk/science/2010/sep/05/google-galaxy-zoo-climate-project.

11 Shirky C (2008). Here Comes Everybody: The Powerof Organizing Without Organizations. Penguin Press.



Social Production

Transparency may be the most disruptive and far-reachinginnovation to come out of social media

production, while governments orcorporate entities are examples oforganizations that can take collectiveactions.

A Culture of SharingOnline social production – whether basedpurely on sharing, or on cooperation, oron collective action – is made possiblebecause people voluntarily choose toparticipate. They ‘work’ for no pay, incollaboration with other volunteers and– as the list of examples above shows –they actually get significant tasksaccomplished in this way. Real value isbeing created through social production,which lies completely outside the realm

of traditional economic activity.In the commercial economy, where

profit-making entities operate, what youpay for determines what you get. I payyou, and you give me something of value.I may be the boss paying you a salary,or a customer buying a product or service,but either way neither of us isvolunteering. In the commercialeconomy, we are able to accomplish moreand more complex tasks by dividing ourlabor into finer and finer components,trading value for value, in such a waythat each of us benefit. It is because ofthe way our commercial economy worksthat you don’t have to mine the graphiteyourself for the pencil you want to use.Nor does this seem out of line to anyof us. We all expect to pay for thingswe want. When you pay the grocer $2for a 2-liter bottle of Diet Coke, youdon’t begrudge him the money. You

expect to pay. You wouldn’t evenconsider asking the grocer to give youthe soda for free.

But social production operates ona different set of principles, based noton trading and selling, but on sharingand giving. In the term used byacademics like Yochai Benkler andLawrence Lessig, social production is anexample of a “sharing economy.”12 Andin a sharing economy, Lessig says, moneyis simply not an appropriate form ofexchange. It violates the social ethos.“You can demand that a friend spendmore time with you,” he suggests, “andthe relationship is still a friendship. Ifyou demand that he pay for the time

you spend with him, the relationshipis no longer a friendship.”

The ethos of social interaction in asharing economy eschews the use ofmoney, which is too crass and commercialfor social interactions based on sharing.So while commercial transactionsfunction more smoothly with some levelof trustability, sharing transactionsfunction almost entirely because oftrustability. I share with you, and I expectyou to share with me – but it’s not aquid pro quo exchange, metered at thetill in terms of dollars and cents. It’s anunstated ethos, a culture of sharing, basedon trustability.

And guess what? Over the past severalyears, as more and more people haveparticipated in this culture by uploading,collaborating, and volunteering, we havecome to rely on trustability more andmore. Trustability – the most basic

ingredient of any interaction – hasincreased. We are more trustable, andwe trust more.

“Transparency may be the mostdisruptive and far-reaching innovationto come out of social media.”13

Every serious commentator on thesocial media phenomenon has pointedthis out. Clay Shirky suggests that ournew social tools provide us with theopportunity to create a “culture ofsharing.”14 Charlene Li agrees that a“culture of sharing” has developed as morepeople go online.15 Darren Barefoot andJulie Szabo, in their how-to book Friendswith Benefits, suggest that “with theculture of sharing come two key concepts

we always cite when discussing social mediaand specifically blogs: authenticity andtransparency. A cult of honesty hasdeveloped in tandem with technicalinnovation...”16

Nor should it be any surprise thatthe vast majority of social productionis not initiated by big businesses orgovernments in order to accomplishcomplex tasks (like super-computing),but by individual citizens, to accomplishordinary tasks. Sometimes these

12 Lessig L (2008). Remix: Making Art andCommerce Thrive in the Hybrid Economy.Penguin Press.

13 Gillin Paul (2007). The New Influences: AMarketer’s Guide to the New Social Media.Sanger, CA: Quill Driver Books/Word Dancer Press,p. 24.

14 Shirky C (2008). Here Comes Everybody: ThePower of Organizing Without Organizations.Penguin Press, p. 144.

15 Li C. (2010). Open Leadership: How SocialTechnology Can Transform the Way You Lead.Jossey-Bass, p. 4-5.

16 Barefoot D and Szabo J (2009). Friends withBenefits: A Social Media Marketing Handbook. NoStarch Press.



17 Tavernise S (2009). “Young Pakistanis Take One Problem Into Their Own Hands”. New York Times, May19 (cited in Shirky, C. (2008). Here Comes Everybody: The Power of Organizing Without Organizations.Penguin Press, p. 126).

18 Weerasekara P (2010). How the Twittersphere Helped Keep Oakland Safe. Retrieved September 21,2010 from: http://newamericamedia.org/2010/07/how-the-twittersphere-helped-keep-oakland-safe.php. For more on Ushahidi, see: Shirky, C. (2008) Here Comes Everybody: The Power ofOrganizing Without Organizations. Penguin Press.

19 Rayman N (2010). Jerusalem Mobilizes to Save Leukemia Patient. Retrieved July 13, 2010 from: http://www.jpost.com/Home/Article.aspx?id=178577.

20 Peppers D (2010). Nestle – A Social Media Case Worth Studying. Retrieved July 13, 2010 from:

20 Peppers D (2010). Nestle-A Social Media Case Wor http://www.ltolmedia.com/weblog/2010/03/nestle_-_a_social_media_case_w_3.html.

21 Warner M (2009). Iranian Protesters Mobilize on Social Media Websites. Retrieved Jul http://www.pbs.org/newshour/bb/middle_east/jan-june09/iran2_06-17.html.

22 Fisher L (2009). The Perfect Swarm: The Science of Complexity in Everyday Life. Basic Books.

23 Pink D (2009). Drive: The Surprising Truth About What Motivates Us. Riverhead Hardcover.

24 Kelly M (2009). Not Just for Profit. Strategy & Business, 54, p. 5.

25 Shirky C (2010).Cognitive Surplus: Creativity and Generosity in a Connected Age. Penguin Press.

26 Benkler Y (2007). The Wealth of Networks: How Social Production Transforms Markets and Freedom.Yale University Press.

initiatives grow large, like Folding@Homeand Wikipedia, but more often they staysmall. In Lahore, Pakistan, for example,some teenagers volunteered on a taskto pick up trash around the city viaFacebook – a task apparently beyondthe capability of a corrupt and listlessgovernment.17 And in Oakland, California,in the wake of a racially charged courtverdict several citizens relied on Twitterand Ushahidi, an open source disaster-mapping platform from Kenya, tominimize violent rioting, saving lives asthey tracked events in real time andalerted police, and scooping the mediaon most stories by 20 to 30 minutes.18

Elsewhere around the world, people areincreasingly turning to the network inorder to mobilize their efforts, forinstance, to find bone marrow donorsfor a leukemia victim in Israel,19 or to geta Swiss consumer products company togive up harvesting palm oil forenvironmental reasons,20 or to exposeand publicize a dictatorial regime’s heavy-handed policies in the Middle East.21

Volunteer organizations, of course,from the Red Cross to university alumnigroups and co-op organizations, havealways existed. Worldwide, themembership of co-op organizations nownumbers nearly a billion people, and theUN estimates that cooperativeenterprises secure the livelihoods ofnearly half the world’s population.22 Inthe US alone there are more co-opmembers than there are people whoown shares in the stock market.23 InColombia, a healthcare co-op providesservices to half the population, and theseventh largest industrial concern in Spainis a co-op.24

But today’s technology permitsanyone to volunteer, and to associatetheir own effort with the effort of anyone

else, anywhere around the world. Forfree. Without having to travel to a meetingor sign a physical document or donatemoney. Shirky suggests one of the mainreasons for the dramatic upswing in socialproduction activities is that thesetechnologies enable us (i.e., the humanrace) to pool our collective free time andcreative energies (our “cognitive surplus”)25.He estimates that, globally, our collectivefree time amounts to about a trillion hourseach year.

Yochai Benkler outlines threecharacteristics of the digital network thatallow for the development andflourishing of this kind of volunteerismand social production:� The machinery required is widely

distributed already (i.e., everyone nowhas a computer hooked up to theInternet);

� The “raw materials” to be processedconsist of information, ideas, andintellectual property, as opposed tophysical goods; and

� The structure of the Internet allowsproblems and tasks to be tackled inmodular ways, so a job accomplishedby social production can be assembledfrom multiple components.26

Because of these three characteristics,Benkler maintains, the phenomenon of

“social production” cannot be thoughtof as a temporary trend or fad, but isinstead an inevitable structural outcomeof the network itself. Social production,in other words – the third way – is destinedto become a more and more importantmethod for human beings to organizein order to accomplish a task or createvalue.

The Blurring BoundaryBetween For-Profit and Non-Profit ActivitiesAlthough it’s obvious that socialproduction is entirely different from for-profit production, frequently it can stillbe harnessed to serve the interests ofcorporate or government organizations.“Crowd service,” for instance, involvescustomers volunteering to help othercustomers, but their volunteered effortsalso directly benefit the organizationsponsoring the service, reducing the costof handling inquiries, improvingsatisfaction and loyalty for the peoplewhose inquiries are handled, and boostingthe sponsor’s own corporate profits asa result.

And for that matter, large, profit-making firms like Amazon and eBay relysubstantially for their success on thevolunteered efforts of reviewers and



Reference # 03M-2010-11-10-01

© 2010 Don Peppers and Martha Rogers.

All Rights Reserved.

e

Social Production

raters – perhaps not “social production,”per se, but very close to it. E-Bay, forinstance, was on track to become acomplete failure within weeks of itsfounding by Pierre Omidyar. Plagued withfraud and cheating, the site seemeddoomed, and Omidyar’s going-inassumption that “people are basicallygood” seemed laughable. However,rather than hire the staff required to checkcredentials and vet contributors fromsome central office (an extremely costly,perhaps overwhelming task), Omidyardecided to enlist his own customers, whocheerfully assisted27 for free. And byincorporating a voluntary ratings systemthat allowed buyers to evaluate thetrustability of sellers on an objective basis,eBay became successful. Without thevolunteered “social” part of the eBaybusiness model, in other words, it wouldnot have succeeded at all, but now it isa publicly traded company generatingmore than $2 bn of annual profit for itsshareholders.

Other examples of how the lines areblurring between non-profit socialproduction and for-profit commercialproduction, would include companies suchas Red Hat (owned by IBM), LinuxForce,LinuxCare, and all the other firms thathave grown up to make a profit by servicingthe needs of Linux users. IBM holds moresoftware patents than any other companyin the world, but it now earns more moneyfrom servicing the unpatented, open-source Linux operating system throughits Red Hat subsidiary than it does fromany of its own software patents.

And many large social-mediaplatforms or even for-profit, Web-basedbusinesses rely for their success onvolunteered efforts contributed in a non-

profit manner. Craigslist, for instance,was founded by Craig Newmark in 1995as a completely free community websiteserving San Francisco, where people couldpost free ads offering everything fromhome rentals and jobs to massagetreatments. It has now expanded to some400 US cities. While almost all Craigslistads remain free, the site has imposed feesfor apartment rentals in New York andfor jobs listings in 11 cities. These feesare estimated to total about $20 mn ayear, paying the cost of maintaining therest of the site. The fact is, Craigslist couldturn a much greater profit by chargingfor more ads and perhaps takingadvertising, but Newmark has said publiclythat “we’re not out to make lots of money.”

The Future Will Belong toNon-ProfitAs the technological revolution continuesto drive down the costs of sharing, ‘sharingeconomies’ are likely to develop and thrivein a wider and wider variety of areas. Newtechnologies are already in the processof transforming our species into a dynamicand robust network of electronicallyinterconnected people in a worldwide,always-on festival of creating and sharing,collaborating, editing, publishing,uploading, entertaining, critiquing,commenting, helping, learning, and havingfun. Social production, the ‘third way’for human beings to create value – neithercommercial nor governmental by nature– is destined to become a more and morerobust and important part of humanexistence. Within just a few decades, infact, social production may become thedominant form of human economicactivity.

27 Shirky C (2010). Cognitive Surplus: Creativityand Generosity in a Connected Age. PenguinPress, p. 177.



Professor, Congratulations for being ranked among the ‘top-50 globalmanagement thinkers’ by The London Times and also being named as‘Outstanding Teacher of the Year’ by MBA students. What did ‘one of the top-50global management thinkers’ mean to you?It is an honor to be on the list of Top 50 Management Thinkers – considering howmany millions of people are there in the management profession. At the same time itis humbling. One typically assumes that a guru must know everything. The reality isthat I have so much more to learn. Recognitions like this make me realize how far Ineed to go.

Guru by definition is an expert, a thought leader. A management

guru must have created a set of ideas based on rigorous research. As

such a management guru is a thought leader in a space of critical

importance to corporations.

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Vijay Govindarajan is widely regarded as one of the world’s leading experts on

strategy and innovation. He is the Earl C Daum 1924 Professor

of International Business and the Founding Director of the

Center for Global Leadership at the Tuck School of Business at

Dartmouth College. He is the 2008 Professor-in-Residence and

Chief Innovation Consultant for General Electric.

Govindarajan has been named to a series of lists by influential

publications including: Top Ten Business School Professor in

Corporate Executive Education, named by BusinessWeek; Top

Five Most Respected Executive Coach on Strategy, rated by

Forbes; Outstanding Faculty, named by BusinessWeek in its

Guide to Best B-Schools; Top 50 Management Thinker, named by

The London Times; Outstanding Teacher of the Year, voted by

MBA students; “superstar” Management Thinker from India,

named by BusinessWeek. Prior to joining the faculty at Tuck,

VG was on the faculties of Harvard Business School and the

Indian Institute of Management (Ahmedabad, India). He has also

served as a visiting professor at INSEAD (Fontainebleau,

France), the International University of Japan (Urasa, Japan),

and Helsinki School of Economics (Helsinki, Finland).

The recipient of numerous awards for excellence in research,

Govindarajan was inducted into the Academy of Management

Journals’ Hall of Fame, and was ranked by Management

International Review as one of the “Top 20 North American

Superstars” for research in strategy and organization. One of his

papers was recognized as one of the ten most-often cited articles

in the entire 40-year history of Academy of Management

Journal. More than 70 articles by VG have appeared in journals

such as Academy of Management Journal; Academy of

Management Review; Strategic Management Journal;

Harvard Business Review; California Management Review;

and MIT Sloan Management Review. He has published seven

books, including the international best seller Ten Rules for

Strategic Innovators (HBS Press).

He works with CEOs and top management teams in Global

Fortune 500 firms to discuss, challenge, and escalate their

thinking about strategy. He has worked with 25% of the

Fortune 500 corporations including: Boeing, Coca-Cola,

Colgate, Deere, FedEx, Hewlett-Packard, IBM, JP Morgan Chase,

Johnson & Johnson, New York Times, Procter & Gamble, Sony,

and Wal-Mart. He is a regular keynote speaker in CEO Forums

and major conferences including the World Innovation Forum

and BusinessWeek CEO Forum. He received his doctorate from

the Harvard Business School and was awarded the Robert Bowne

Prize for the best thesis proposal. He also received his MBA with

distinction from the Harvard Business School where he was

included in the Dean’s Honor List. Prior to this, he received his

Chartered Accountancy degree in India where he was awarded the

President’s Gold Medal for obtaining the first rank nationwide.

‘The Thinkers 50’ list, produced by the Suntop Media inassociation with Skillsoft, is supposed to be a definitiveguide to who is the most influential living managementthinker. And this list changes every year. What do thechanging names mean for the world of business – thatthe old thinkers’ ideas have become irrelevant or thatnew breed of management thinkers have emerged?We now live in a world that is constantly changing. Therefore,we need new ideas to navigate in such turbulent waters. It isquite natural that new thinkers will constantly emerge withnew ideas. This is just a natural evolution.Who according to you is a management guru? Whatspecific qualities and contributions set them apart fromthe rest of management fraternity?Guru by definition is an expert, a thought leader. Amanagement guru must have created a set of ideas based onrigorous research. As such a management guru is a thoughtleader in a space of critical importance to corporations.Are ‘Thought Leaders’ and ‘Management Thinkers’,Management Gurus or is there a difference betweenthese titles?Yes, they are the same. You cannot have a guru who is not athinker and a thought leader.Who according to you have been some of the globalmanagement gurus who have redefined the disciplineand practice of management?I will put three names on top of that list: Peter Drucker, CKPrahalad, Mike Porter. Unfirtunately two of those names areno longer with us.At times, even the CEOs get voted as the world’s bestmanagement gurus. For instance, in The Thinkers 502007 list, produced by Suntop Media in association withSkillsoft, Bill Gates, Alan Greenspan, Thomas J Peters,Jack Welch, Richard Branson were in the top ten list.The others (Michael E Porter, Gary Hamel, Jim Collins)were typical academicians who, with their research andwritings, had profound effect on the way companiesmanaged their giant enterprises? Noticeably amongstthe career executives, Jack Welch, Tom Peters continuedto have influence even after a few years of theirreckoning. Micahel E Porter who was No. 1 in the list in2004 slipped to No.4 in the 2007 list. What, therefore,explains the enduring power of a management guru?It is critical for a management guru to continue to producegood ideas. If you want to endure, you have to be coming



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Reference # 03M-2010-11-11-06



with new ideas. You cannot be a one-trick pony. Take Jim Collins, for example. He followedone book, Built To Last, with another book, Good To Great – both books have had profoundimpact on management.It is often noticed that several such lists (Wall Street Journal’s world’s mostinfluential business thinkers, Fortune’s world’s best gurus in strategy, etc) aredominated by North Americans, with abysmal representations either from Europeor Asia? What explains this polarization?America has been the intellectual capital of the world when it comes to management researchand education. Think about the number of world class business schools and academics in theUS. It is to be expected that most gurus will be from the US. However, given the recent rise ofIndia and China, we can expect more gurus from India and China in the future.Who according to you has been the best Indian management guru and why?Without a doubt, it has to be CK. How many new concepts he has introduced – corecompetence, strategic intent, bottom of the pyramid, just to name a few.In all fairness, although CK Prahlad has been voted as World’s No.1 managementguru (in 2007 by Thinkers 50), many critics point out that when it came tomanaging the ventures that he himself started, the results were justdisappointing. Therefore, where do you draw a line between a true globalmanagement guru and an ardent advocate of a business (successful, yet times!)practice?Because you are a management guru, it does not mean you can successfully manage anenterprise. To run a business, you need a lot of knowledge and competencies. Also running abusiness requires very different skills, attitudes and mindsets. As the saying goes, those whocan, do. Those who can’t, teach. Gurus can’t, therefore they should just teach, not do.Are the newly designated management gurus expected to carry moreresponsibilities vis-à-vis their earlier as well as peers’ responsibilities?We are now living in a challenging but exciting times. The growth has shifted from richcountries like the US to developing countries like India. We have to grow in a slow growthworld. Corporate reputation is at an all-time low after the Great Recession. Given thesechallenges, management thinkers have to come up with new ideas on the new growthnorms in a slow growth global village.





Measuring Collaborative Ability

Collaborating to Win

For an organization to

fully partake in

collaboration with

other entities it must

not only have people

with the skills, it also

needs processes and

systems to make

collaboration an

organizational

capability. There are

many challenges to

developing a

pervasive

organizational ability

to collaborate.

Effective

collaboration requires

growing trusting,

purposeful, mutually

beneficial

relationships through

which you can access

and leverage

resources.

Collaboration has become vital todaybecause organizations are realizing that

they can no longer go for ‘it’ alone. To surviveand prosper in today’s globally networkedeconomy, organizations know that they mustbridge their structural silos and successfullycollaborate both internally and externally.Collaboration is no longer an option; it is arequirement for innovation and growth.

Yet, as collaborative capability becomesmore imperative, organizations continue tohave difficulty making the collaborationsuccessful over the long term. Does this meanthat, while collaboration works in theory,it can’t be practically applied? Not at all. Butthe question does strike at the heart of the

problem, which is, collaborative relationships,by definition, are always between theindividual people who interact. Thus, arelationship between two or moreorganizations is really the result of individualrelationships between and among the peoplein the different organizations who are taskedwith collaborating. And that’s when thechallenge begins – in the building of all thosegrassroots collaborative workingrelationships.

A clear sign that a skill or ability is valuableis when it begins to find its way into thecompetencies used to evaluate employeeperformance. Such is the case today withcollaborations. When practiced appropriately,




collaboration is a set of behaviors – a wayof working that involves coordinating specificactivities and communicating certaininformation to leverage resources in thepurposeful pursuit of objectives. It requiresan environment of trust and transparency.Collaboration opens up the possibility ofaccessing the resources, knowledge, andrelationships other people and organizationshave and using each party’s resources formutual benefit. It also introduces the ratherchilling prospect of counting on someonewho has no stake in your success. Thus,collaboration is a sophisticated ability thatdepends on utilizing a range of skills throughan iterative process of achieving desiredoutcomes.

The Collaborating to WinAssessmentBelieving in the adage “If it can’t be measured,it can’t be managed,” The Rhythm of Businesshas invested considerable resources over thepast decade to build a suite of metrics andmeasurement approaches that develop andpromote effective collaboration. One of thesemetrics, called the Collaborative Index,measures the collaborative ability ofindividuals, by addressing the followingquestions:� Do the people tasked with collaborating

engage in the right collaborative activities?� Do they have the skills to do them well?� Do they practice what they believe about

collaboration?Unless and until these questions are

answered, it is difficult, if not impossible,for organizations to evaluate an employee’scollaborative performance in a consistent,measurable, and actionable manner.

The Collaborating to Win assessmentprocess through which the metric iscalculated, starts by identifying the groupof people (employees) to be assessed. Oncethe group has been identified, a limited

number of individuals in the group are askedto participate in a brief, open-ended interviewfocused on how they go about their work,the role that collaboration plays (or shouldplay), and the challenges and barriers toeffective collaboration. The interview datais analyzed using a variety of qualitativeanalysis tools and a model of desirablecollaborative behavior is produced, (seeExhibit I – Modeling Effective Collaboration).The model serves two purposes:� It takes something that seems intangible

and describes it within the context ofthe purpose of collaborating (StrategicObjectives). It creates a tangible picturelinking the objectives of collaborating,the Predictive Metrics that are influencedby effective collaboration (CollaborativeBehaviors), and the specific activities tocoordinate, the information tocommunicate, and the resources toleverage (Operational Implications). Themodel helps people understand howcollaborating can help them and whatsorts of activities/behaviors are not likelyto be helpful in the process ofcollaboration.

� The model informs the specific questionsasked to produce the CollaborativeIndex, again taking something that isconceptual and making it resonate withinthe context of an individual’s work.Once the model of effective collaboration

is accepted by the assessment project sponsorsin the organization, the assessment questionsare developed based on the specific objectivesof the work and the activities, information,and resources needed to achieve thoseobjectives, thus making it extremelycontextual and relevant to employees. Thesurvey uses an algorithm based on collaborativeactivities and skills that are constant acrossall collaborative endeavors, thus providinga consistent measurement base. The followingdefines the five collaborative activities and

Jeffrey Shuman and JaniceTwombly have co-authored

numerous books, articles, and

white papers and regularly speak

at a variety of venues around the

world on the ongoing

transformation of organization

structures to collaborative

networks. They hold the Certified

Strategic Alliance Professional

(CSAP) designation conferred by

the Association of Strategic

Alliance Professionals. Their

methodologies inform Shuman’s

popular MBA courses on

Managing Collaborative

Relationships and Entrepreneurial

Thinking at Bentley University

where he is Professor of

Management.



Exhibit I: Modeling Effective Collaboration

CollaborativeBehaviors

CoordinateActivities

Grow Trust

OperationalImplications

Trust BuildingActivities

PredictiveMetrics

StrategicObjectives

LeverageResources

CommunicateInformation

SpecificActivities

SpecificResources

SpecificInformation

Exhibit II: Pilot Study Data

Beliefs/ Behaviors Matrix

Collaborative Belief

Col

labo

rativ

e Be

havio

r MostCollabo-

rativePosition

1212

60

36

6036

five collaborative skills the CollaborativeIndex tests:

Collaborative Activities� Joint Planning and Reviews

Coordinate planning and reviews ofactions and progress

� Collaborative LearningCapture, share, and utilize learning,knowledge, and insights fromcounterparts through structured andunstructured conversations

� Accessing and CoordinatingResourcesView internal expertise and budgetsas pooled resources; developcollaboration-specific work processes

� Work PracticesAct according to agreed upon valuesand standards with integrity,consistency, and in an ethical manner

� Coordinated ExecutionUse the complementary strength ofthe counterparts in day-to-dayinteractions to achieve desired resultswithout duplicating efforts.

Collaborative Skills� Understand Partners’ Motivations

Know why counterparts engage incertain behaviors in their day-to-dayinteractions and relate it to the overallbusiness context

� Using Conflict for GainUse the challenges and friction ofworking with counterparts formutual advantage

� Win-Win NegotiationBalance the interest and needs of allparties to achieve the best possiblevalue propositions given theobjectives, time, and resources

� Iterative Decision MakingUse an assumption-based frameworkto better understand and prioritizethe circumstances that must occurfor the collaboration to yield desiredresults and how to achieve them, aswell as to ensure that joint decisionsare made in a timely manner

� Work Within Partner NetworksRecognize the similarities anddifferences in the rules of engagingwith multiple counterparts in multiplecollaborations.The specific survey questions asked

are designed to test both what is actuallyoccurring in everyday work and howsurvey respondents believe they wouldrespond, given a specific situation. Thesituational questions are based oncommon challenges identified during theup-front interviews.

Once the survey is drafted, it ispresented for review and approval by

project sponsors. Upon approval of thesurvey instrument, an invitation toparticipate is sent to the target groupby company management, and the entireprocess is then administered using an onlineplatform. Depending on the groups beingsurveyed, the assessment uses slightlydifferent questions for each group. Forexample, the specific questions asked toresearch scientists will be different thanthose asked to members of the sales force.However, the underlying algorithmremains the same, allowing for comparisonacross teams, functions, responsibility,product area, or any other relevant analysis.

The survey generally remains openfor two to three weeks during whichreminders are sent to non-respondents.Depending on the population, responserates have ranged from 65% to 100%.The analysis is systematic and multi-faceted, producing many perspectives onthe collaboration between and amongcompany personnel and partners.

As part of the development of the‘Collaborating To Win’ assessment, a pilotstudy was conducted with more than 100sales representatives involved in ‘sell with’alliances with other global companies.Exhibit II – Pilot Study Data, displays thesurvey results relative to the questionof whether the respondents practice whatthey believe about collaboration. Thebehavior and belief scores ref lect




Exhibit III: Calculating theCollaborative Index

Beliefs/ Behaviors Matrix

Collaborative Belief

Col

labo

rativ

e Be

havio

r

12

12

60

36

6036

Exhibit IV: Pilot Data CIHistogram

Freq

uenc

y

35

30

25

20

15

10

5

010 30 50 70 90

CI Average = 53; CI Minimum = 16;CI Maximum = 88

responses to behavior and beliefquestions for each specific activity andskill. The 45 degree line on the chartreflects alignment of an individual’scollaborative beliefs and behaviors. Theresulting pilot data pattern shows thatwhile the sales professionals believe thatcollaboration is helpful to them inachieving their goals, they generally arenot behaving collaboratively. That is,while they understood what would bethe desirable outcomes, they didn’t knowhow to go about collaborating with theircounterparts to achieve them.

Using the data portrayed on theBehavior Belief matrix, the CollaborativeIndex is calculated as shown in ExhibitIII, where the degree of alignment isproximity to the 45 degree line and thelevel of ability is proximity to a behaviorbelief score of 60-60.

CI = (Degree of Alignment)(Level ofAbility)(100)

A histogram of the CI scores for thepilot study data (Exhibit II) is shown inExhibit IV.

The results of the assessment are usedto drive professional developmentopportunities, assess structural, cultural,and operational factors, and develop aplan of action to achieve better resultsthrough more effective collaboration.Generally, the action plan going forwardis determined in a management meeting/

workshop to review data, develop acommon understanding, and arrive ata future course of action.

The Collaborative Index is an effectivebenchmarking tool. To date, more than8,000 front line collaborators (acrosscompanies and industries) have taken the‘Collaborating to Win’ assessment.Without a doubt, analysis of the datashows with statistical significance (P<.01)that better outcomes are achieved bybetter collaborators.

Sales Force Collaboration atGlobal Pharma Company – ACase StudyCo-promotion collaborations are ofstrategic and financial importance withinthe biopharmaceutical industry.Biopharmaceutical companies enter intocollaborations for a variety of reasons,including maximizing revenue while aproduct is under patent protection,gaining access to additional resources andexpertise, entering new markets, andsharing costs and risks. Today, a drivingforce is the hole created in companyproduct lines and pipelines as what wereonce blockbuster products go off patentand internal R&D is insufficient to fill thegap, due to both a lack of productivityand resource constraints.

While co-promotion alliances in thepharmaceutical industry generally arecreated by fewer than ten people, thesuccess of an alliance is entirely dependenton the interactions of literally thousandsof individuals. These individuals must beskilled in working collaboratively with theircounterparts in their own company aswell as from the partner company.

Co-promotion alliances are a majordriver of growth for Global PharmaCompany, which is highlighted in this casestudy. Products associated with these

alliances account for over 50% of its revenue.In light of this fact, Global Pharma’s alliancemanagement group, working in conjunctionwith a team from sales management, salestraining and development, and ‘TheRhythm of Business’, initiated a programto assess the ability of Global Pharma’ssales force to work collaboratively withits alliance partner counterparts (seeExhibit V. One of the lessons from thehigh-tech world is that alliances are mostlikely to produce desired financial resultswhen the partner sales forces collaboratewell.

The purpose of the assessment was to:� Assess the collaborative capability of

sales management and salesrepresentatives

� Provide context-specific learningmaterials that offer tips, tools, andtechniques for more effectivecollaboration both with co-promotion partners and withinGlobal Pharma

� Recommend next best actions tocreate incremental sales of co-promoted brands.Alliance management knew that the

company’s sales training program focusedon critical product information andtraditional selling techniques; not ongrowing an ability to collaborate. At the



Exhibit V: Sales Force Collaboration in Global Pharma Company

GlobalPharma

Sales Rep

PartnerCompany Sales

Rep

Physicians

GlobalPharmaResults

PartnerCompanyResults

Coordinate ActivitiesCommunicate Information

Leverage Resources

GlobalPharma

Sales Rep

PartnerCompanySales Rep

Physicians

ImprovedResults for Both

Companies

CollaborativeBehavior

Exhibit VI: Pharmaceutical Sales Force Collaborative Behaviors

CoordinateActivities

CommunicateInformation

LeverageResources

GrowTrust

Detailing, Routing,Sampling

Share ofVoice

MarketShare

Key CollaborativeBehaviors

SalesProfessional’s Job Predictive Metric Strategic Intent

Consistent productmessaging, Strategies

for overcomingobjections after-call

notes

BudgetsKnowledge

RelationshipsSamples

Grow TrustHelp each other

Accountable to the team

outset of the project, alliancemanagement’s objectives for growing thesales force’s collaborative ability were to:� Better understand how alliance

management can best support salesmanagement in increasing the efficiencyand effectiveness of the sales force

� Assess the sales force relative toeffectively collaborating with eachalliance partner

� Design a process that provides ongoingmetrics on the effectiveness of thesales force’s collaborative abilities

� Develop and implement a needs-basedlearning program and job aids to beincluded with ongoing sales trainingand career development efforts

� Ultimately, to provide evidence thatalliance capability translates tocommercial success.The underlying questions upon which

the assessment questionnaire was basedwere:� Do Global Pharma’s sales professionals

engage in the right collaborativeactivities to maximize results and dothey have the skills to do them well?

� Do Global Pharma’s salesprofessionals’ beliefs (mindset) aboutcollaborating with their counterpartsalign with their behavior (activitiesand skills)?

Language, meaning, and behaviorcome together in mental models thatlink desired outcomes to how work getsdone. Accordingly, Exhibit VI –Pharmaceutical Sales Force CollaborativeBehaviors was used as a starting pointfor developing a pan-Global PharmaCompany consistent, yet flexible, modelof sales force collaboration.

The selling activities included in themodel are the major activities identifiedthrough the interviews with membersof the sales organization, plus otherinteractions with them. There may beother activities not included in the modelthat are important in certain

circumstances, such as group sessions tolearn from important medical journalarticles. Similarly, there may be activitiesincluded that are not relevant to certainrepresentatives. Different activities mayrequire different information to becommunicated and other resources tobe leveraged. The model is flexible enoughto provide a strategic view of co-promotion collaboration from the salesforce’s perspective, while also accountingfor specific variations among partners,products, geography, and even targetedphysicians.

The model connects collaborativebehavior to a sales professional’s job. Theimproved quality of the sales person’swork because of collaboration meansgreater share of voice and thus marketshare (assuming that the activities thesales force engages in do create share ofvoice and share of voice creates marketshare). The Collaborative Index (CI)evaluates and demonstrates ifcollaboration is a factor in creating shareof voice. For example, if the CI is high,but the share of voice is falling, then itis reasonable to assume that improvingcollaboration is not how to influence share



Exhibit VII – Behavior/Belief Matrices

Beliefs/ Behaviors MatrixSales Management

12

12

60

36

6036 12

12

60

36

6036

Beha

viors

Beliefs

Beliefs/ Behaviors MatrixSales Representatives

01-0506-1011-1516-20

12345

Beha

viors

Beliefs

Exhibit VIII: 2006 CI SalesForce Histogram

% o

f Pop

ulat

ion

40.035.030.025.020.015.010.005.0

0.010

CI Band20 30 40 50 60 80 70 90 100

MGR

REP

C I Distribution by Role

of voice and efforts should be focusedelsewhere.

Key Survey Results for FullImplementationWith over 1,800 completed surveys of30 questions each plus more than 500open-ended comments, the ‘Collaboratingto Win’ assessment provided importantinformation that was not availableanywhere else. The data for salesrepresentatives and sales managementwere analyzed separately and in relationto one another.

Results� Exhibit VII shows that belief in

collaboration, represented on thehorizontal axis, is strong. The colorsand symbols of the data points in thecharts represent how manyrespondents had that specific score.Analysis of the data showed that 72%and 60% of sales management andrepresentatives, respectively, believealliance counterparts contribute totheir success. Additionally, 84% and73% of sales management andrepresentatives, respectively, believethat alliance counterparts provideadditional resources that help achievegoals. So a mindset for collaborationexists within the sales force.

� The CI scores for both the sales repsand their managers are shown inExhibit VIII.

� In addition to assessing the salesforce’s collaborative behavior andbeliefs alignment, the analysis useda spider diagram to show how anindividual scored relative to whethershe/he engaged in the rightcollaborative activities and had theskills to do them well. For example,the diagram in Exhibit IX shows thescores for two people for each of the10 collaborative activities and skillsdiscussed previously. This analysisenabled the authors to identify thespecific areas where each respondentwas challenged in his/hercollaborations. For example the inner(red) pattern showed a different levelof collaborative ability than the outerpattern (blue). For each respondent,the activities/skills with the three (3)lowest scores were identified, and theperson was then sent an email witha link to knowledge base on GlobalPharma’s Intranet that providedexamples of how to improve his/hercollaborative ability in those threeareas.Overall, the survey provided

quantitative and qualitative support thatcoordinating activities, communicating

information, and leveraging resources arethe key collaborative behaviors thatinfluence how a sales representative sellsin a co-promotion environment.

Actionable InsightThe Collaborative Index offersmanagement a lens that is otherwiseunavailable to view their business andgain significant actionable insight. Analysisof the data and synthesis of it with industryand company knowledge, as well ascollaborative business expertise, led tothe following findings:

Collaboration Increases Sales, butBehaviors Lag BeliefThe 43% of sales representatives whoanswered that they always make theirsales goals engage in more collaborativebehavior than those who don’t reportmaking their goals. Additionally, 72% ofsales management and 60% ofrepresentatives believe that alliancecounterparts contribute to their success,but as many as 40% are not collaboratingeffectively, thus squandering resources,including time on territory.

Complexity is Impeding SalesEffectivenessThe complexity of coordinating andcommunicating with multiple partnersin overlapping regions was challenging




Exhibit IX: Collaborative Activities and Skills Scores

to 69% of the sales force and 88% of salesmanagement. A number of participantsindicated that coordinating activities andcommunicating information withinGlobal Pharma alone is challenging enoughwithout adding co-promotioncounterparts. The survey providedsignificant insights into how to removecomplexity and provide clarity andactionable guidance.

Partners’ Resources are Not BeingEffectively Accessed or LeveragedThere was more than a 25% gap betweenthe belief that partners provide additionalresources and the behavior that allowsaccess to those resources. Reasons forthis gap include that only half ofrepresentatives report regularlycoordinating routing and messaging withtheir counterparts. Slightly less than halfreport discussing what they’ve learnedabout how to best sell the company’sproducts with their alliance counterparts.Additionally, just over half ofrepresentatives and less than 40% of salesmanagement believe that counterpartswork to the same standards of integrity,consistency, and compliance as doesGlobal Pharma.

Increasing Sales throughMore Effective CollaborativeBehaviorWhile many of assessment findings werealready known to Global PharmaCompany’s management, theimplementation of Collaborating to Winprovided data to support theseassumptions and exposed, for the firsttime, the interrelation of the variousassumptions and their implications onthe field force’s job. Thus, it allowed salesmanagement to take a systemic view ofselling with co-promotion partners andto focus in on specific actions that addressheretofore non-actionable conditions.

The Alliance Management Groupagain worked with Sales Management toassess the sales forces’ collaborativebehavior in 2007 and 2008. As was seenearlier, the opportunity to increase salesthrough more effective collaborativebehavior was demonstrated by bothquantitative and qualitative data:� There is a statistically significant

correlation between making sales goalsand being a better collaborator (p <.01) in assessments done in 2006,2007, and 2008

� Respondents who commented thatthey value their counterparts• Have a CI 30% higher than those

who comment negatively (66.4vs. 51)

• More likely 50% are to stronglyagree they always make their salesgoals

� Collaborative Index increased overallin year-to-year comparisons (ReferExhibit X . The most significant gainsare made in the first year because ofpaying attention to somethingpreviously ignored. The 2% decline inmanagers’ CI measured in 2007-08was attributed to changing corporatepriorities of one of the partners. Inretrospect, it was an early indicatorof a greater strategic challenge to thealliance.

Money on the TableGiven the statistically significantcorrelation between sales results andcollaborative ability, the financial impactof improving the effectiveness ofcollaboration can be substantial. By wayof example of the potential impact,Exhibit XI shows that if Global Pharmacould increase the CI of its 900 sales repswho could hit their sales goals if theyimprove their ability to collaborate tothe level of the best collaborators, theincremental sales revenue to be gainedmight be as much as $117 mn. Clearly,the magnitude of that number got seniormanagement’s attention.

Strategies for IncreasingSales by ImprovingCollaborationDeveloping collaborative skills mustbecome part of all training anddevelopment activities from initial trainingto in-field manager’s coaching, to

Joint Planning and Reviews

Collaborative Learning

Accessing and CoordinatingResources

Work Practices

Coordinated Execution

Iterative Decision Making

Win-win Negotiation

Understand Partners’Motivations

Creative Conflict Resolution

Work within Partner Networks15,00

13,00

11,00

9,00

7,00

5,00



Exhibit X: Comparative CI Scores 2006-08

Collaborative Index (Max = 100)

Overall Collaborative IndexNumber of Respondents

2006 2007 2008REPS 1631 1720 1730MGRS 215 227 250

Average Cls

2006 2007 2008All 53.8 59.0 61.5REPS 54.0 59.0 62.0MGRS 52.8 59.2 58.0

Year to Year ChangesIncrease2008-07

Increase2007-06

All 4% 10%REPS 5% 9%MGRS -2% 12%

MGRSREPSALL

2008

2007

2006

44.0 46.0 48.0 50.0 52.0 54.0 56.0 58.0 60.0 62.0 64.0

Exhibit XI: Money on the Table

Budgeted revenue from promotedproducts

Number of repsRevenue per rep

Number of additional repspotentially at goal if collaboratingas well as the best collaborators

Estimate of revenue under goalper rep

Potential money on the table

$3.58 bn

2,600$1.3 mn

900

$130,000

$117 mn

About The Rhythm of BusinessThe Rhythm of Business specializes incollaborative business – the organizations,business models, management and ways ofworking to innovate and grow throughcollaboration. For more than 25 years,principals of the firm have built collaborativebusiness models, developed and operatedalliances and supplier networks, and consultedwithin both corporate and civic sectors onbuilding and using collaborative relationshipsto achieve strategic and financial objectives.Through comprehensive managementframeworks, skill development, andmeasurement and analysis tools, we enableindividuals and organizations to innovateand grow through collaboration.

Reference # 03M-2010-11-12-01

© 2010 The Rhythm of Business Inc. All RightsReserved.

e

leadership training if the sales force’s abilityto collaborate is part of how the salesprofessional is evaluated. Whencollaboration is simply how work getsdone, the desired strategic and financialoutcomes for Global Pharma Company’sco-promoted products will result. Salestraining and development has animportant role to play in growingcollaborative competency. As part of thisinitiative, collaboration as a behavior tobe learned and practiced was introducedto the sales force during initial training,and through a coaching at the salesleadership retreat. Additionally, aworkshop – Working WithinPharmaceutical Alliances: Your Role inGlobal Pharma Company’s Success – wasoffered at various sales meetings. AllianceManagement offered a ‘coaching clinic’to new district managers. These training

sessions stemmed from the realizationthat developing collaborative skills iscentral to continuously improving thesales force’s ability to effectivelyrepresent the company’s products tophysicians.

The complexity of working withmultiple co-promotion partnerscannot be denied. However, it is notunmanageable or dependent on theintuitive skills of individualrepresentatives. The actionableinsights from the survey, which shouldbe updated and continued to beadministered as long as co-promotionalliances are part of the strategy,provides management with a regularpicture of its co-promotion activitiesfrom the perspective of its sales force.When combined with themanagement tools and increasedcollaborative competency thatCollaborating to Win produces, GlobalPharma has the means to increasesales through more effectivecollaboration and to realize thecompetitive advantage of being apreferred co-promotion partner.

ConclusionFor an organization to fully partakein collaboration with other entities it

must not only have people with the skills,it also needs processes and systems tomake collaboration an organizationalcapability. There are many challenges todeveloping a pervasive organizationalability to collaborate. Collaboration iscomplex, time consuming, and sometimescounter-cultural. Effective collaborationrequires growing trusting, purposeful,mutually beneficial relationships throughwhich you can access and leverageresources.

Without a doubt, developing thecollaborative ability of every individualand the organization overall is importantto business success. Data collected by TheRhythm of Business through theCollaborating To Win Assessment of morethan 8,000 individuals shows that bettercollaborators are more successful. Theysimply know-how to combine theirtoolbox of skills to accomplish more withless. Additionally, the longitudinal datashows that it is possible to improve anindividual’s ability to collaborateeffectively resulting in improved results.In today’s business environment that isa winning formula.




How They Make Great Calls

Winning Leaders

Building judgment

competency in

organizations is the

core of leadership. It

all starts with

nurturing of skills

such as personal

selling, networking,

personal

commitment, and

self-confidence as

the very

organizational

culture over which

newer ideas, values,

and emotional

energy required to

make winning calls

can be bred. In such

a milieu alone

budding executives

can make good

judgments—even

capitalizing on the

‘wrong decisions’ of

earlier leaders.

The sine qua non of leadership is makinggood judgment calls, says Noel M Tichy

and Warren G Bennis, authors of the book,Judgment: How Winning Leaders Make GreatCalls. Judgments are good only if theoutcome of their execution is good. Obviously,leaders are said to have ‘good judgment’when they are known to repeatedly makejudgment calls that result in good results.It is the leaders’ judgment calls, mainly aboutpeople, strategy, and crisis that ultimatelydetermine the success or failure of theleadership.

Judgment is a dynamic process – it ismore like a drama that unfolds over time.It is a thought process that involves rationalanalysis of information, besides being anemotional, human drama. According to NoelM Tichy and Warren G Bennis, this wholeprocess of emergence of judgment callsquarely rests on a leader’s mastery overits three critical dimensions: one, time; two,domain, and three, constituencies. Again,

‘time’ has three phases: one, preparation– what happens before the leader makes adecision; two, the ‘call’, leader’s decision thathelps it turn out to be right; and three,‘execution’ – what a leader must overseeto ensure that the call yields the anticipatedresult. The ‘domain’ essentially spreadsacross: judgments about important people;judgments about strategy; and judgmentsin the time of crisis. The third dimension,‘constituencies’, comprise leader’srelationships with all those who matter inmaking a successful call. It also provides thenecessary wherewithal to execute the call.It is through his interactions with thesedifferent constituencies and their effectivemanagement that a leader make successfulcalls.

To better leverage on these threedomains and make right calls, a leader, inaddition to the knowledge of ‘just the facts’must have deeper knowledge about: one,self-knowledge—must be clear about one’s



GRK MurtyManaging Editor,

IUP Publications,

Hyderabad,

India.

He can be reached at

[email protected]

own values, goals, and aspirations, their likelyinfluence on the interpretation of facts,ability to develop a mental view about howthe judgment works out and the result itcan generate, knowing when to make thecall; two, social network knowledge—understanding the ability of team membersto make judgmental calls including the trackrecord of their calls, the way they could impactthe judgment process in the organization,ability to influence/bias the leader’sjudgment, etc.; three, organizationalknowledge—knowing how people in theorganization would react to the leader’s calls,how to develop mechanisms for engagingthe organization, knowing how theorganization would adapt and executeleader’s calls, knowing judgment makingprocess at all levels of the organization; andfour, contextual knowledge—understandingthe relationships of and interactions withstakeholders: customers, suppliers,government, investors, competitors thatare likely to impact the end result of ajudgment. This kind of knowledge includesnot only knowing how they would react toa judgment call but also how they interactwith one another, that too, throughout thejudgment process.

Again, amongst all these, what mattersmost in arriving at good judgment is: theleader’s awareness of self. According toBill George, Harvard Professor, “Becomingan authentic leader is not easy.” First, aleader has to understand himself, for thehardest person one has to ever lead isoneself. Once, a leader has anunderstanding of one’s authentic self,leading others become much easier.Secondly, the underlying foundation of alljudgment calls is: leader’s character andcourage. The character is defined by thepersonal values of a leader while courageis the willingness of a leader to act andaccept the consequences of the call in an

imperfect situation. It is indeed the “ideas,values, and emotional energy” of a leaderthat act as his guideposts for makingjudgment calls.

Let us now look at a scene in Aranyakandaof the Ramayana where, in the transactionbetween Surpanakha and Rama, we see allthese forces of judgment call making in theirfull flow. An analysis of this scene is sure toenhance our understanding of the dynamicprocess of making a judgment call and itsexecution. The scene begins with theappearance of Surpanakha before Rama, Sitaand Lakshmana who were relaxing in frontof their hermitage after taking bath in theriver Godavari. Surpanakha, the ogress,with an ugly face, large belly, deformed eyes,and coppery hair looks monstrous. She hasa frightful voice. She is extremely vile ofconduct and has a repelling aspect. SeeingSri Rama with a radiant countenance, mightyarms, eyes large like the petals of a lotus,and a majestic gait, wearing a rounded massof matted hair, tender, yet possessed ofextraordinary strength, endowed with thebodily marks of a monarch, cerulean likea blue lotus, Surpanakha gets infatuatedwith love.

Overcome with passion, she asks Rama:“Who are you to be here in our region?This is the jurisdiction of my brother. Whatis the object of your visit? Be pleased torelate that.” Being a straightforward man,Rama reveals his identity unhesitatinglyand truthfully: “There is a king namedDasaratha. I am his eldest son known amongthe people by the name of Rama. He is myyounger brother, Lakshmana. She is mywife, the princess of Videha, known by thename of Sita. Fettered by the commandof my father, the king, and my mother andseeking to discharge my sacred obligationto them I have come to stay in this forest.I now want to know of you: Whose daughterare you? What is your name and whose



wife are you? Tell me truly what for youhave come here.”

Surpanakha then replies: “I am anogress. Surpanakha by name, andcapable of assuming any form at will. Ihaunt this forest alone. I have a brothercalled Ravana, the valiant son of Visrava.The very mighty Kumbhakarna too ismy brother. Vibhisana is my thirdbrother. He has of course none of theactivities of an ogre. My other twobrothers, Khara and Dushana, are well-known for their valor on the battlefield.I definitely surpass them all in point ofvalor.” She concludes her immodestspeech by making horrid advances: “ORama! Ever since I saw you, I am struckwith your beauty and wish to have youas my husband. I am richly endowed withpower. I am able to range at will. Whatcan you accomplish with Sita? Beingdeformed and ugly too, she is not worthyof you. I alone stand as a match for you.I will gobble up your brother along withthis ugly, vile, hideous human lady witha sunken belly, Sita. Being freed fromthese impediments, you and I can wanderforth in the forest – beholding the peaksof mountains –and enjoy ourselves toour heart’s content.”

Surprisingly here, Rama, much againsthis known value system – “I don’t wantto do that which is ignoble or improperjust for gain”; “I am a truthful person. Inever speak any untruth...”– perhaps, tohave a little fun out of this stupid lady,Suparnakha, says something which is quiteagainst his known character: “O lady, Iam already married. Here is my belovedwife. For ladies like you, the presence ofa co-wife is most painful. Of course, hereis Lakshmana, my younger brother. Heis seelavan – man of good conduct. Heis priyadarshan – good-looking. He isakrutdaar – unmarried. He will prove to

be a husband worthy of your beauty. Hewill be a fitting husband for such a oneas you. Take to him. Don’t bother me.”

Hearing what Rama said, Surpanakha– infatuated as she was with love –suddenly turns to Lakshmana and says:“Possessing as I do an excellentcomplexion, I shall be a wife worthy ofthis comely form of yours. You will happilywander through the entire range of theDandaka forest with me.” ThenLakshmana smilingly replies toSurpanakha: “That gentleman is mymaster. I am his servant. So, if youmarry me, you will have to be the servantof a servant and also be the servant ofSita too. So, O large-eyed lady, be a happyyounger wife of my elder brother, whois fully endowed with all riches. Whyshould he be tied down to a deformed,vile, hideous and aged wife with a sunkenbelly? He will abandon her, discard herand take you.”

The hideous woman, however, notbeing able to understand that they aremaking fun of her and infatuated withlove, goes to Rama saying, “Now lookhere. I am going to marry you. If youthink this vile, hideous and aged wife isan obstacle, I shall devour her right nowwhile you are looking on.” Saying so, asshe rushed toward Sita like the nooseof Death, Rama, angrily tells Lakshmana:“You should in no case jest with crueland unworthy people. See how Sitanarrowly escaped from being devouredby the ogress”, and revisiting his earlierjudgment/call, commands Lakshmana“to mutilate the ugly, vile, highly wantonand big-bellied woman.” Hearing Rama,the angry Lakshmana drawing his sword,chops off her ears and nose while Ramalooks on.

This episode teaches us many insightsinto making judgment calls. It is clear from

the happenings that Rama’s ‘call’ for havingsome fun at the cost of the stupidSurpanakha has misfired – she was almostabout to devour Sita. Rama’s mental visionabout the outcome of his judgmentturned out to be wrong – the humandrama took an altogether unanticipatedtwist. Therefore, as the drama unfolded,Rama, midway, comparing the realoutcome with his contemplatedstoryline, and noticing a deviation, quicklycommanded Lakshmana to mutilateSurpanaka, so as to keep his judgmenton track.

But here again, he fails to anticipatethe ‘derailers’ embedded in hiscommand for mutilating the lady – heappears to have no knowledge of whocould be the people having interest(stakeholders) in Surpanakha, and howthey would react to his ‘call’. After all,a leader’s call is impacted by myriadstakeholders – the actions and reactionsof this group can shatter into pieces evena well-considered judgment – which Ramamissed to factor into his judgment. And,he even failed in visualizing howrevengeful an insulted woman,particularly, a woman infatuated withlove, could become. Incidentally, manya time, the actions of stakeholders willnot create any observable moves andcountermoves, but rather alters the veryassumptions that a leader used to makea call. Precisely, that is what happenedin this case: being punished, instead ofreconciling with herself by quitting thescene quietly as visualized by Rama,Surpanakha, bathed in blood, raising herarms and roaring in various ways, runsto her notorious brother, Khara, andtells him about the mutilation inflictedon her by Rama and Lakshmana in amanner deliberately intended to arousehim to fury at the injustice heaped on





Reference # 03M-2010-11-13-01

e

his sister. She indeed incites her brothers,Khara and Dushana to take vengeanceon Rama. And, after their death, shegoes to her other brother Ravana andstirs up his bestial instincts saying adifferent story: “I saw Sita, the very jewelof the three worlds. Character, beauty,and conduct – all the three are centeredin her. Realizing you would be a properhusband for her, when I tried to bringher here for giving her to you, the twobrothers got very angry and treated mevery shamefully.” Believing this to betrue, Ravana makes up his mind to tryand get hold of Sita. And thus beganall the woes of Sita and Rama.

This entire episode makes one factorvery evident: in decision making whatmatters most is achievement – winninggood results. Winning leaders – thosewho continually make good calls –obviously have a clear vision about howthe world works and based on it so frametheir vision that it tends to result insuccess. They also have the all importantqualities for making good judgments:character and courage. It is themomentary go by Rama that gave to

his known character of being alwaystruthful that made Surpanakha attemptto devour Sita, but it is his courage tocall for her mutilation by Lakshmanathat ultimately saved the day. It is ofcourse a different matter that it is thisvery ‘call’ that led to Ravana taking awaySita from him resulting in the pangs ofseparation from his beloved.Nevertheless, the storyline of Ramareflects all the key elements that a goodcall should be endowed with: he didinterpret the present and shape thefuture; it is emotional and yet rational;it is constantly updated as the dramaunfolds; it upholds his beliefs and values;it comes out of his heart and chargesthe executor of ‘call’ emotionally andpersonally. Yet Rama ended up in greattroubles for himself and his followers,which perhaps echoes what WH Auden,once said: “The Inevitable is what willhappen to you purely by chance. / TheReal is what will strike you as reallyabsurd.”

The episode also reveals anotherimportant reality of life: nobody isbrilliant all of the time. Every leader

makes mistakes and misjudgments. Butwhat matters most for a leader ororganization is: How many of theimportant calls he or she got right? Inthe instant case, Surpanaka’s intrusioninto the lives of Rama, Lakshmana andSita, didn’t appear to be that importantan event – none of the three gave anysignificance to it. Indeed, Rama, like anyother mortal, staying isolated frommankind in a forest, desired to have alittle fun. But as it later turned out tobe the seed-plot of the epic, and as thefuture started unfolding, Rama didexhibit courage and character in framingissues afresh and making many importantjudgments – forming alliance withSugriva, sending monkeys to search forSita, granting refuge to Vibhishana,equipping himself with requisiteweaponry to fight Ravana – all of whichdelivered intended results. And that iswhat making winning calls is all about– adherence to one’s own character andcourage; sans fun-seeking andtransgressions, however minor, fromone’s own value-system.
