Organizational Citizenship Behavior

Three Critical Innovation Lessons from Apple

It was September, 2005. I was fresh off of a workshop with a media
company where the company's CEO noted, "Trees don't grow to the sky
forever." The company's core business was strong, but the CEO told the
group it had to innovate to sustain success in an increasingly turbulent
environment.

A couple of days later, I was talking to my colleague Matt Eyring. He
said, "So Scott, you've been a big supporter of Apple over the past few
years. What do you think about buying some stock?"

"Trees don't grow to the sky forever," I told Matt.

Whoops.

Since late 2005, Apple's stock has quintupled. With a market
capitalization of close to $250 billion, Apple is (at least today) the
third most valuable company in the world, behind ExxonMobil and Microsoft.

It's a stunning story that's been dissected to death, but still
remarkable enough to warrant reflection. Ten years ago — three years
after Chairman and CEO Steve Jobs had returned to "rescue" Apple — the
company was still largely treading water, with a relatively meager $3
billion market capitalization. Its personal computer products had a
loyal following in niche markets, but that was about it.

Over the past decade, Apple has launched five legitimately game-changing
innovations:

1. *The iPod.* The elegant MP3 player that started Apple's decade of
disruption.
2. *iTunes.* Beautiful software with a powerful business model that
showed that people would in fact pay for music if the price was
right and the interface was simple enough.
3. *The iPhone.* Dubbed the "Jesus Phone" by supporters, a smartphone
that three years later still hasn't been matched by rivals.
4. *The AppExchange.* Sure, no one needs 98 percent of the apps that
Apple offers, but wow, what a selection.
5. *The Apple Store. *The quietest part of Apple's revolution, today
close to $2 billion worth of goods move through Apple
revolutionary stores.

Many expect the iPad to be Apple's sixth big success. It's still too
early to tell (and, as noted before, I'm waiting for the twist
<http://blogs.hbr.org/anthony/2010/04/waiting_for_the_ipads_twist.html>),
but watching my four- and two-year old children play around with our
iPad leads me to believe the device has only scratched the surface of
its disruptive potential.

That's not to say the next decade will be as great for Apple as the past
decade. It now has to think hard about how to manage conflicts that will
emerge at the intersections of its businesses. The company will
inevitably find it hard to maintain its growth rate as revenues approach
$100 billion.

Looking back, my mistake in dismissing Matt was pretty simple. I didn't
count on the impact of items three through five on the list above. It's
a natural enough mistake. The number of companies that have organically
created three distinct multi-billion dollar new businesses in a decade
is pretty short.

And if Apple had indeed stopped at the iPod, my advice to Matt would
have appeared smarter. After all, iPod sales have slowed over the past
few years as that market has approached saturation. But Apple's
brilliance has been to relentlessly push the pace of innovation.

Reflecting on Apple's decade of disruption highlights three critical
lessons:

1. *Don't just focus on building beautiful products. *Build beautiful
business models, new ways to create, deliver, and capture value.
The iPod and iPhone would not have had nearly as much impact if
they hadn't been matched with iTunes and the AppExchange respectively.
2. *Think in terms of platforms and pipelines. *Competitors that
chase Apple's latest release find themselves behind when six
months later Apple introduces its latest and greatest offering.
3. *Take a portfolio approach.* While Apple has been on a phenomenal
run, not everything it has introduced has been a home run. For
example, Apple TV
<http://www.engadget.com/2007/01/09/live-from-macworld-2007-steve-jobs-keynote/>
hasn't had the "revolutionary" impact that Jobs predicted upon its
launch in 2007.

Many companies I've spoken to dismiss the learning from Apple's success.
"Apple has Steve Jobs," they'll note. "We don't."

Of course, Jobs has been a central player in Apple's success. It's
indeed unlikely that Apple could have been as successful without such a
visionary, charismatic leader. But my own view is that the "black box"
of innovation has cracked open, making innovation success more widely
available.

Innovators around the world — whether they are intraprenreurs working
for large companies or entrepreneurs set out to create the next great
business — can meaningfully increase their odds of success by drawing on
the increasingly deep pool of academic research and case examples.
Whether they wear mock block turtlenecks is up to them.

About the Author: Scott is the Managing Director of Innosight Ventures.
Scott has written three books on innovation, the latest being /The
Silver Lining: An Innovation Playbook for Uncertain Times/
<http://harvardbusiness.org/search/12329?legacy=true>.

One Page Proposal for Project Managers

How to Build an A-Team from Day One

Almost every manager begins his or her tenure with the goal of building a top-notch leadership team. Yet as time passes and managers move on to new assignments, they often look back and regret that they didn't develop their team faster and more aggressively. What's behind this seeming contradiction — and what can managers do to establish an A-team as quickly as possible?

Let's start by looking at a few of the dynamics facing a new manager, some of which are described by Michael Watkins in his book The First 90 Days: Critical Success Strategies for New Leaders at All Levels. One factor is that most new managers inherit an existing team and, in fairness, want to give incumbents the benefit of the doubt that they are right for the job. At the same time, most new managers realize that they need to learn about their new business or function, and that much of that learning will come from the existing team. So right from the start, the manager is in an awkward position — evaluating the team members while also dependent on them for internal knowledge and expertise. To make it even more complicated, team members, realizing that they are being assessed, may skew their behavior to reflect what they think the new manager is looking for, so that first impressions may be inaccurate. Given these dynamics, many managers are hesitant to move too quickly, wanting to gather more data before making any dramatic changes. 

Another delaying factor is that many new managers don't want to risk "breaking" a successful organization, especially when they are not completely knowledgeable about their new business or function, their customers' expectations, and the capabilities of the extended team as a whole. Unless they are coming in to an urgent turnaround situation or have a specific mandate for improvement, most managers will therefore wait before making significant changes. This hesitancy is reinforced by the fact that most managers don't like to confront inadequate performance anyway — which means that it's always easier to let developmental discussions slide.

Based on these dynamics, many managers may not focus on upgrading their leadership team until it's too late — when it becomes clear that they cannot achieve their goals with the existing crew.
So what can you as a manager do to overcome this natural hesitancy about building an A-team early on? Let me suggest two simple steps:

First you can conduct an "assimilation" session with your team within a week or two of your appointment. This is a process that was pioneered at GE (and is still standard procedure there) and is now used by many premier organizations. The aim is to quickly clarify expectations between you and your team, and get some of the uncomfortable and difficult dynamics out on the table. The session itself works like this: With the help of a facilitator (and without the manager present) team members share first impressions of their new manager, along with their hopes, concerns, fears, and questions. The facilitator organizes these into themes, which are then presented to the manager without attribution to any single person. The manager then engages in a dialogue with the team about the issues; and also shares his or her first impressions, expectations, hopes, and concerns. A session like this can help you quickly get past some of the awkward dynamics described earlier and allow you and the team to assess each other much more openly.

To make the early assessment and development even more effective, the second thing you can do is to challenge each of your managers early on with a short-term stretch assignment. Give them thirty or sixty days to get something important done that pushes them outside their comfort zone. Not only will this help you to make a difference with the business in your first few months, it also will give you invaluable data about the capabilities of your team. Who is able to step up? How easily do they collaborate with each other? What are their attitudes about taking on tough challenges? In what areas does each person need some help — or are their team members who probably aren't right for the job?

If building an A-team is one of the critical ingredients for success in a new assignment, why not get started on it right away?

How Camaraderie Works: What I Didn't Learn in B-School

In business school, we teach that all the aspects of an organization are connected. This includes, among other things, the structure, rewards, socialization, selection, culture and leadership. Change to one aspect results in change to the whole. Of these, rewards are often the most important. Steven Kerr wrote about the importance of rewards quite effectively in his paper "The Folly of Rewarding A While Hoping for B." In fact, most organizational psychologists will analyze rewards first when diagnosing organizational problems. But very often, it is hard to see the mistakes we are making with rewards until after their effect has been felt through the rest of the organization, when things have started to break down. It's like replacing the water hose on an old car and then finding that you have to replace the water pump. (I learned this the hard way.)

One morning, I arrived at work to find the Colorado guys waiting for me. (This was a group of five very experienced, migrant carpenters from Colorado; out of my crew of 15, these guys lived together and acted as a group). One of them, Riley, approached with a request. "Andy, the guys have been talking. We've been working here for over a year and we're makin' good money. But, our weekends are wasted. We don't wanna go out and find other jobs, so we'd like to know if we can work weekends."

I wanted to help if it would raise morale and keep productivity and commitment up. But I explained that by asking for approval for this, I'd be sticking my neck out for them. Jack (my boss) was predictably resistant to the idea. But after I pressed, he agreed with the following stipulation: "They're your responsibility, Andy. You'll need to keep an eye on them." I was prepared for that, but didn't like it. I looked forward to my weekends off, and I didn't want to have to worry about the job when I wasn't looking. But I wanted to trust the Colorado guys and give this new arrangement a try.

The guys were pleased. Riley thanked me for talking to Jack and we worked out a plan under which we would meet on Friday to discuss specific projects for the weekend and results that I could expect to see on Monday. These quickly became negotiation sessions with me laying out what I wanted, and the crew either agreeing, or more often, trying to scale back my expectations.

And not long into this, Monday morning began to reveal unmet results. There would always be excuses. We ran into complications. We got a late start. We ran out of materials. We underestimated how hard the job would be. It was frustrating, and began to drive a wedge between us.

Weeks after I agreed to the weekend work, I arrived on the site to find the crew waiting for me again. "We want Jack to pay us on a contract basis," Riley announced. Under contract, they felt that they could have more control over their hours and schedule, and possibly make more money.

"I know how Jack's gonna respond," I said. "You remember how he reacted when you first brought this idea up six months ago? He didn't trust you and was dead set against it." Deep inside, I wanted to help them. I wanted to increase their motivation and commitment to the job, and thought some form of partnership arrangement might do it.

Which is what I told Jack. But he was adamant, "No way! They're employees, not subcontractors and not partners. If we get into this, everything'll change. They will compete with us, trying to make more money with little concern for the job." 

"Don't you think I can work with them? Maybe with a contractual relationship, they'll work harder," I said.

"Bullshit! No way!" he said. "Once money comes into the picture, people change. These guys don't have any allegiance to you or to me. They just wanna make money. Think about it. If this is so good for us, why do they want it? I'll tell you why, because they smell an opportunity." 

This was a fundamental tension between Jack and me. He was a hardnosed builder, having worked in the trades for decades. He was hesitant to trust anyone. I, on the other hand, had a strong desire to trust people and build a culture of inclusiveness and camaraderie. This tension represents two positions on managing people, what is referred to as "theory x" and "theory y" or "process" and "content" theory. In the former case, you tell people what they want, laying out the contract in specific terms. In the latter case, you give people what they want, seeking to appeal to their intrinsic motivations. When do you use one versus the other? It depends on the context in which you are working, the specific types of employees you have, and your own personal management style. 

In this case, I had to learn that among carpenters (particularly with these migrant carpenters), it was going to be a challenge to develop a theory y type of work environment. And, in fact, my attempts failed. With a change in the rewards, the terms of the relationship had been changed and that meant that everything had changed. 

The distance between us grew. We had now become, in a small way, adversaries. I was "management" and they were "labor." I wanted more production and they wanted less. I lamented a loss in the camaraderie that I thought we had. I felt that I was on an unavoidable path toward a clash with the crew. Or more accurately, this part of the crew, as the job was increasingly dividing the Colorado guys who worked continuously from everyone else who worked only during the week. 

We were soon on an unavoidable path toward a clash that eventually resulted in more firings.

Then I began to seek people who were driven by the intrinsic pleasures of building as much as the necessary pay for that work. I canceled weekend work, which brought the crew back into a cohesive whole. The camaraderie returned and, with it, a stronger sense of community and work ethic. Structure, rewards, selection, culture and leadership were once again aligned. 

Which theory do you use with those you manage? Is it working?

About the Author of this Article:

Andrew J. Hoffman is at the Stephen M. Ross School of Business, University of Michigan, and is the author of Builder's Apprentice Huron River Press, 2010. This is the third installment in a series of posts on five years spent running a construction company. The first post was "Firing Someone: What They Don't Teach You in B-School." The second post was, Talking Across Cultures (With or Without Profanity). The third post was, Trusting Your Gut: What They Don't Teach You in B-School.

A conversation with CEO Eric Schmidt

Few would dispute that Google sits at the center of the Internet. As the leader in search, Google is now the Internet’s premier brand and the planet’s most potent free service. Managing that commanding position falls largely to seasoned technology executive Eric Schmidt, who in 2001 was tapped for the CEO post by Google founders Sergey Brin and Larry Page. Click Here to follow more on this article.

Building the next-generation business leader

How (And When) to Motivate Yourself

I woke up this morning to pouring rain and temperatures in the low 40s. I had planned on going for an early bike ride in Central Park but now I wasn't so sure. I like to get some exercise every day and given my commitments for the rest of the day, this was my only opportunity. But did I really want to get so wet and cold?
I decided to go for it, though I continued to question myself as I put on my biking clothes and got my bike out of the basement. I paused under the awning of our apartment building, as rain streamed down on either side of me.
A friend of mine, Chris, happened to be dashing home to avoid the rain and stopped under the awning for a second.
"Great day for a bike ride," he said, before running on.
He's right, I thought, this is dumb. I stayed under the awning for a few more minutes as I considered retreating into the warmth of my apartment.
Finally, knowing that I'd feel great after a good, hard ride, I got on my bike and took off, pedaling hard. The initial sting of the cold rain had me questioning myself again but I kept going.
Then, after less than five minutes, the rain stopped bothering me. And after a few more minutes, it felt kind of good. Invigorating. It turned out to be a great ride.
When I got back to the apartment building — drenched, a little muddy, and with a big smile on my face — one of my neighbors commented on how motivated and disciplined I was to be out on a day like that.
But he was wrong. My ride in the rain taught me a good lesson about motivation and discipline: we need it less than we think.
"I didn't need to be motivated for long," I laughed. "Just long enough to get outside."
Because once I was already in the rain, it took no discipline to keep riding. Getting started was the hard part. Like getting into a cold pool. Once you're in, it's fine. It's getting in that takes motivation.
In fact, when you think about it, we only need to be motivated for a few short moments. Between those moments, momentum or habit or unconscious focus takes over.
I write at least one post a week. Does that take discipline? Sure. But when I break it down, the hardest part — the part for which I need the discipline — is sitting down to write. I'll find all sorts of things to distract me from starting. But if I can get myself to start a post, I don't need much discipline to finish it.
Need willpower to work on something difficult? Ask yourself when you need that willpower the most. Received feedback that you should talk less in meetings? Figure out when are you most susceptible to blabbing on. Trying to maintain a commitment to yourself or someone else? Identify the times when you are most at risk of violating that commitment.
Then, whatever you do, don't give up in the moments when you're most vulnerable. Don't give up the bike ride while standing under the awning watching it rain. Even when your friend tells you you're crazy to go out.
In other words, never quit a diet while reading the dessert menu. It's too tempting. That's not the right time to second-guess your commitment. It's precisely the time to use your willpower and discipline.
We waste a lot of time, energy, and focus second-guessing ourselves. Am I doing the right work? Is this project worthwhile? Is this employee going to work out? That moment-by-moment deliberation is a distraction at best and sabotage at worst. If you keep asking yourself whether a project is worth working on, you'll reduce your effort on that project — who wants to spend time on something that might fail? — and doom its success.
On the other hand, it's impossible to ignore those feelings of uncertainty. The solution? Schedule them. Create an established time to second-guess yourself, a time when you know your commitment won't be weakened by the temptations of the moment. If you're going to break the diet, do it when your need for willpower is at its lowest. Decide to decide the next day, maybe after a healthy breakfast or a little exercise, when you know your inclination to stick to your goals will be naturally high.
Then, if you decide to stay on the diet, commit fully and powerfully until the next scheduled time to deliberate. Knowing you have a planned pause allows you to focus and concentrate without hesitation until the established time to second guess yourself.
And if you do eventually decide to change your commitment, you'll know it's not from momentary weakness. It'll be a strategic, rational, intentional decision.
What's important is that your moment of choice is when you are in the right state of mind — when you need the least willpower — to make the best decision.
Which is why, sitting here at my computer, dry, comfortable, and having had a great ride today, I've decided to go out again tomorrow.

Source: By Peter Bregman (Harvard Business Review)

Signs Point to Strong April Jobs Report

Today’s ADP employment report showed the private sector added jobs for the third month in a row. The 32,000 jobs added in April was in line with what economists expected, while the report itself is expected to foreshadow an even more robust jobs  report coming Friday from the  federal government.
The U.S. Bureau of Labor Statistics is expected by economists to show the U.S. economy grew anywhere from about 180,000 to 189,000 jobs in April. If so, that would be the biggest gain since Nov. 2007. In March, the economy added 162,000 jobs, a number the BLS is likely to revise when the April numbers are released in two days.
“The slow pace of improvement from February through April is consistent with the pause in the decline of initial unemployment claims that occurred during the winter months,” explained Joel Prakken, chairman of Macroeconomic Advisers, LLC. The ADP report is drawn from the payrolls the company processes for several hundred thousand U.S. clients. ADPs partner Macroeconomic Advisers handles the statistical analysis.
Prakken observed that the ADP report doesn’t include government hiring. The BLS report does, and will include the thousands of temp jobs added by the U.S. Census Bureau. Still, the ADP report estimated that 50,000 jobs were added in the service sector,while manufacturing added 29,000. Nearly all the new jobs came from companies larger than 50 employees.
The feeling that the economy is on the mend and that things may be looking up is beginning to be shared by Main Street citizens. Last week, the Consumer Confidence Index jumped more than 5 points. It now stands at 57.9, more than 18 points abover where it was in April of last year.
Says Lynn Franco, director of The Conference Board Consumer Research Center: “The Index is now at its highest reading in about a year and a half (September 2008, 61.4). Consumers’ concerns about current business and labor market conditions eased again. And, their outlook regarding business conditions and the labor market was also more positive than last month. Looking ahead, continued job growth will be key in sustaining positive momentum.”
Another economic indicator, the number of jobs advertised online, also took a big positive swing in April. The Conference Board’s Help Wanted OnLine Data Series showed there were 4.15 million openings advertised online in April, an increase of 222,700 jobs over the March count.