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Is China Taking the Lead in AI?

Image courtesy of Carolyn Ann Geason @Calonyr11

In 2017, the Chinese government announced plans to “lead the world” in artificial intelligence by 2030. The announcement has fed considerable uneasiness in the United States and elsewhere about the scope of China’s aspirations and the extent to which the country might use AI to tighten control over its citizens and develop more sophisticated military capabilities. However, the anxiety over China’s plans for AI may be overblown, says Jeffrey Ding, an economics and technology researcher at the University of Oxford’s Future of Humanity Institute. Yes, there are many signs that China is making huge investments in AI, and it leads the world in AI-related patent filings and publications — in 2017 alone, it won some 900 patents related to facial recognition, compared with fewer than 150 in the United States. However, Ding says, China’s overall position is more complicated and requires a nuanced view.

Ding, who shared his perspective last year with a U.S. congressional commission that monitors national security and trade issues between the United States and China, is author of a white paper titled “Deciphering China’s AI Dream” and publishes a newsletter on AI in China called ChinAI. MIT Sloan Management Review correspondent Frieda Klotz spoke with Ding about the current state of AI in China and how he expects the future to unfold. This is an edited version of their conversation.

MIT Sloan Management Review: Many people have suggested that we’re in the midst of an arms race between the United States and China with regard to AI. Are they right?

Jeffrey Ding: The arms race metaphor persists because AI is such a strategic technology. It’s easy to plug it into the old narrative of U.S.-Soviet competition over other strategic weapons, such as nuclear capacity, during the Cold War. Yes, there are some similarities in the sense that two powers are competing over technology, but the analogy is flawed. For one thing, the technology is different — AI is a general purpose technology that applies across many domains. A lot of the benefits will be economic rather than specific to a single field like defense.

The arms race meme is dangerous because it creates a sense of zero-sum competition. We’re talking about something very broad — AI incorporates natural language processing, computer vision, predictive analytics, and many other domains, all of which have lots of different applications. So you need to be specific about which domain you’re talking about. Claiming China has an edge is an oversimplification.

What do you see as the main myths about China’s approach to AI? What are people in the United States and other countries most worried about — and what should they be worried about?

Ding: One big misconception is that China’s strategic thinking about AI started with its 2017 plan. The Chinese government had already developed plans for related areas, such as the internet of things, smart manufacturing, and science and technology. On top of this, local governments and private companies had been making substantial investments in the AI space. So, in a sense, the central government is just following in their wake.

A second myth is that China is taking a monolithic approach to AI. In reality, different local and regional governments are taking different types of steps — for instance, giving subsidies to specific companies. It’s not the highly organized, top-down strategy people might think it is.

Perhaps the biggest myth is that China’s AI capabilities are enormous. Part of this derives from what I call the AI abstraction problem, where people cherry-pick examples of where China might be ahead — such as in facial recognition or smart surveillance — and assume that applies to other areas. However, the fields in which China has big leads are not areas that are likely to spread benefits across the entire economy. Based on my analysis, China is lagging behind the United States in every metric except access to data.

Can you be specific? How can we assess China’s potential in AI?

Ding: It is very important to be specific. I have looked at indicators such as hardware, data use, research, and commercial applications of the technology. China occupies 4% of the world’s hardware market, while the U.S. is at 50%. In the commercial sector, there are twice as many AI startups in the U.S. as in China.

Although some observers like to point to who has more patents and more publications, I think a better metric is who is able to apply innovations faster and at a wider scale. In the U.S., people can study machine learning and data science outside of formal educational institutions, in places like coworking spaces. This provides opportunities for creative applications of new technologies. In China, universities are developing their own AI colleges. It’s still not clear which strategies for diffusing technologies into the mainstream will be most effective, and which country will be most successful in adapting its institutions so that they can take advantage of AI.

What are the fundamental differences between how China and the U.S. are approaching AI?

Ding: To start with, you have to recognize that China and the United States are in very different economic positions. China is trying to escape the middle-income trap and is hoping AI can help it boost its manufacturing outputs. By contrast, the United States has a more service-oriented economy, and AI may be the key to improvements in industries like finance and enterprise — enhancing back-end logistics, communications, transportation, and forecasting. So rather than saying that certain countries are ahead in AI generally, it’s better to think in terms of what makes most sense for the particular environment.

Where do you see China having a competitive advantage?

Ding: One area that’s drawing a lot of attention from companies is natural language processing (NLP), which is a subdomain of AI designed to provide people with better chat-conversation assistance. Chinese companies have a substantial portion of the NLP market that uses Mandarin, while American companies have a better hold on English.

Another area where China is pushing ahead and is eagerly diffusing the technology is facial recognition, especially with regard to surveillance and security applications. In 2017, China received about six times more patents in this area than U.S. companies.

As you know, facial recognition has generated a huge amount of concern based on the fact that China has deployed it to track minorities and suppress dissent. Are there applications that are less highly charged?

Ding: Facial recognition has a number of applications in smart security. It can be used for identity authentication — for example, on mobile phones. But even then, there can be security problems. What’s more, the technology doesn’t seem to have that many productivity spillovers to other industries. It’s not clear that being the leader in that area will yield broader economic benefits for China.

How do you see AI strength playing out for the United States and other countries?

Ding: The real economic advantages will come from improvements in infrastructure — things like smart grids that deliver electricity when it’s needed — and product advances like autonomous vehicles, [such as] the self-driving cars Google and Tesla are developing. The United States and Europe are leading in the technologies that feed these areas, like AI open-source software and hardware. China lags far behind.

Google, as you know, recently got into trouble for accessing health care data without permission. It’s widely assumed that Chinese companies are less inhibited by privacy concerns. Is this true, and if so, do you think it will enable China to take the lead in health care?

Ding: In China, it’s true that researchers can collect more data on hospital patients from a single hospital, whereas U.S. privacy laws require researchers to work with data from different hospitals after a certain threshold has been reached. So this is sometimes seen as an advantage for China, but I think it’s overstated. First, health care data sets are not really national assets. Typically, they are used jointly by researchers from different hospitals and universities; U.S. researchers might have as much access to the data as the Chinese hospital where it came from. There are many collaborative research ventures and alliances where data is shared across national boundaries — or if it isn’t shared, researchers have access or can derive benefits from it.

To deploy AI in health care effectively, you need standardized systems and electronic health records. China got into this relatively late — its electronic health record systems still require a lot of public investment to catch up. We’re still in the early innings of determining who is diffusing AI technology faster or more sustainably in health care.

One more myth I haven’t yet mentioned relates to health care and data privacy: the idea that China doesn’t care about AI ethics. In fact, there’s evidence that academics, bloggers, and Chinese citizens are paying more attention to privacy and other concerns. Now, it’s true that some issues — such as the disproportionate targeting of ethnic minorities for surveillance in Xinjiang — are considered off-limits. But these are notable exceptions. I’ve translated blogs by Hu Yong, a professor at Peking University, who complains that the government infringed on citizens’ privacy in the public health battle against the coronavirus. Discussions are definitely taking place. The big difference is that the Chinese government works hard to suppress civil society, making these kinds of discussions less visible and harder to find.

You presented your views on China’s AI capabilities in Washington last year. What has changed in the meantime?

Ding: The overall picture I painted last year, with the U.S. dominating in AI practice and expertise, remains broadly the same. In my view, the United States, with its universities and open innovation ecosystem, has important structural advantages that enable it to attract the best and brightest. These advantages may even enable it to extend its lead.

Is China Taking the Lead in AI?

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AI’s Communication Upsides

Artificial intelligence has a bad rap. Facial recognition algorithms — like those used by law enforcement agencies around the country — encourage racism. Digital assistants, such as Siri and Alexa, make children ruder. Predictive algorithms, like those employed by Facebook, narrow our perspectives. Meanwhile, language translators, including Google Translate, are said to hinder meaningful emotional connection.

But for all the talk about the harmful impact of AI, there’s also plenty of evidence that it is having a positive impact on our ability to communicate. Across industries, companies are creating tools that use AI and machine learning in combination with other smart technologies to enhance and expedite our social interactions, improve our capacity to learn, and help us build deeper, more meaningful human relationships.

Consider, for instance, the old-fashioned nurse call button. In most hospitals, bedridden patients press a button when they need assistance that sends a signal to the nurse’s station. The signal contains no context or other information. Some patients may need their pillow adjusted; others may be having chest pains. Regardless, the patients must then wait for the nurse to visit their rooms. DeloitteASSIST, a patient care communication technology that uses AI-fueled natural language processing and speech recognition, changes the waiting game. Patients state their requests to the Amazon Alexa-based device, which uses AI to prioritize and route requests. According to pilot results, more than 90% of patients feel the technology improves staff responsiveness, while 87% of nurses say they are more confident knowing how to meet patient needs.

Medtronic, the global medical device company, offers another example of using AI to help patients — in this case, people with diabetes. Medtronic’s personal diabetes assistant, dubbed Sugar.IQ, allows patients to conveniently monitor and track how their glucose levels respond to food intake, insulin dosages, and daily activities. The application, synced with a smart continuous glucose monitoring system and powered by IBM Watson Health’s AI platform, sounds an alarm when a patient’s blood sugar rises or falls to a potentially dangerous level. This signals to patients that they must take corrective action. According to the company, the technology lengthens a patient’s healthy glucose range by 36 minutes per day, or nine days per year. Those nine days mean fewer health complications and lower health care costs.

AI is also transforming education both online and off, and Squirrel AI Learning, the Chinese-based after-school tutoring provider, is leading the way. The company’s engineering team works with teachers to split course topics into the tiniest possible conceptual segments, known as knowledge points. Through diagnostic tests, machine-learning algorithms identify precisely where students are excelling and where they’re having difficulty. Teachers keep an eye on students via a real-time dashboard and provide in-person help as needed. Squirrel AI Learning has been shown to improve test scores in both the short and long term.

Other industries, meanwhile, are discovering that AI-endowed tools and software that handle workers’ routine, repetitive tasks — including manual data entry and cold-calling — can help employees forge better connections with customers. Freeing up employees’ time allows them to focus on creative problem-solving and other customer-oriented activities. Salespeople, for instance, increasingly use personal assistants like Calendly and x.ai to schedule meetings and share the meeting links via email with their prospects. An AI-enabled conversational marketing chatbot, like Drift, can provide personalized sales conversations and generate more leads. With AI managing mundane activities, salespeople have more time and energy to learn about their customers’ needs and wants and to devise solutions that deliver increased benefit and value.

To be sure, AI without humans in the loop does not make for emotionally rich communication. There is no nuance in cyberspace. And without human-to-human interaction — and careful cultivation of trust and engagement — these technologies will ultimately falter. For instance, while AI can make patients aware of their minute-to-minute health status, they still require ongoing support from their caregivers to maintain medical regimens. Similarly, students need motivation and encouragement from teachers to learn at their best. Sure, AI can determine where they’re falling short, but the emotional connection between a teacher and student is not easily replaced. And of course, salespeople who lack emotional intelligence will not achieve success, irrespective of whether AI is managing their tedious tasks.

Soft skills still matter, and people won’t be replaced by AI anytime soon. But when used correctly, AI applications have immense upside potential. This new technology has tremendous capacity to revolutionize communication and deepen human relationships.

AI’s Communication Upsides

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Corporate Responsibility in the Digital Era

Sustainability and digitization have been two of the most significant global business trends over the past several years. Sustainability concerns humanity’s relationship with the natural world, while digitization focuses on the virtual world. Lacking obvious common roots, they have developed more or less independently of each other, but it’s time for these two worlds to merge.

The need for this merger is simple. The risks to humanity of poor or unethical digital practices are increasing rapidly and can no longer be ignored. Imagine the damage that could be caused by a weapon controlled by malevolent AI, the impact of a total loss of personal privacy, or the social and economic costs of unregulated gig-economy jobs with few or no social protections. The potential outcomes of these and other scenarios are starting to be openly discussed within governments and civil society. Now corporate entities need to join the debate.

The corporate world is, in fact, beginning to realize its responsibilities for protecting the planet. Large entities like Unilever have long championed sustainability as a key corporate objective. The 2020 World Economic Forum in Davos, Switzerland, chose “how to save the planet” as a guiding theme. Even the cutthroat world of private equity is taking note, as evidenced by BlackRock’s recent announcement that it will prioritize investments in sustainable entities.

These organizations realize that sustainable practices are not only good for the environment but for business as well. Unilever’s Sustainable Living Brands have accounted for more than 75% of the company’s recent growth.

Within most companies, however, the digital aspects of sustainability have been spread thinly across various corporate departments, if not entirely overlooked. Bringing these disparate and fragmented elements together under a single umbrella allows them to be addressed in a consistent and complementary manner. This new, consolidated focus is known as corporate digital responsibility. CDR is a subset of corporate social responsibility, an already established entity in many organizations.

I define CDR as a set of practices and behaviors that help an organization use data and digital technologies in a way that is socially, economically, technologically, and environmentally responsible.

The Four Categories of CDR

Each of CDR’s four categories contains components that engender significant opportunities to create competitive differentiation. (See “The 4 Categories of Corporate Digital Responsibility.”) They may also become threats if not appropriately addressed.

The 4 Categories of Corporate Digital Responsibility

Social, economic, technological, and environmental aspects of CDR.

Social corporate digital responsibility involves an organization’s relationship to people and society. The vital topic of data privacy protection of customers, employees, and other stakeholders is included in this area. It also incorporates aspects of digital diversity and inclusion, such as bridging an increasing divide between digital haves and have-nots across geographies, industries, social classes, and age demographics.

Economic corporate digital responsibility concerns responsible management of the economic impacts of digital technologies. Much has been said about the replacement of human jobs by robots and other digital technologies, and this is certainly a relevant part of economic CDR. Economic CDR also relates to the creation of new digital-era jobs that are enriching, purposeful, and interesting. Emerging evidence suggests that jobs created by the so-called gig economy are often uninteresting, repetitive, and low paying. Questions are also arising about how companies share the economic benefits of digitization with society through taxation of digital work, and if and how the original owners of monetized data are fairly compensated.

Technological corporate digital responsibility is linked to the responsible creation of technologies themselves. For example, biased or inaccurate AI decision-making algorithms can lead to unfair or discriminatory practices, as has been noted among many recommendation engines. In 2017, more than 1,000 AI researchers, including luminaries such as Elon Musk and Stephen Hawking, signed an open letter calling for a ban on the weaponization of AI and similar digital technologies. Other technologies, such as so-called deepfake videos in which people are realistically made to appear to be saying or doing things that they did not, can also have harmful effects on society.

Finally, environmental corporate digital responsibility concerns the link between digital technologies and the physical environment, including issues of responsible recycling or the disposal of old computer equipment. Extending obsolescence cycles by one year, for example, could have an enormous positive impact on the environment. Another consideration is limiting power consumption, including reducing the use of electricity to support bitcoin mining.

A Consolidated Approach to Digital Sustainability

Many organizational processes, practices, and projects exist to address digital aspects of social, economic, technological, and environmental responsibility, but they’re rarely coordinated or optimized. Cybersecurity, for example, tends to be the responsibility of IT departments, whereas workforce automation may fall under the purview of operations, and yet other elements may sit with HR, legal, engineering, R&D, or particular business lines.

To ensure better mitigation of risks and the capturing of rewards, these disparate areas should be coordinated collectively. The responsibility for this consolidated approach could sit with a CDR office that coordinates and oversees the role of digital technologies to promote ethical and sustainable business practices. This office should consist of a cross-functional team of key decision makers from areas such as IT, legal, supply chain, and administration rather than yet another siloed corporate function.

Organizations need to examine how their digital technologies and practices impact employees, customers, and society at large. Failing to do so may lead to a whole host of problems, such as employee resistance, as we have seen recently at Amazon and in Silicon Valley giants such as Google. Unexamined or insufficient digital sustainability practices may also lead to falling revenues and profits as civil society demands more-responsible practices, targeting organizations that are seen to fall short. Failure to act could also lead to more stringent regulations, such as the EU’s GDPR legislation, which includes severe penalties for noncompliant behavior or inaction.

As sustainability and digitization trends continue to grow, CDR will become increasingly relevant for organizational performance, both to mitigate risks and to delight increasingly digitally and sustainability-savvy consumers in new ways. Organizations that fail to take a synergistic and coordinated approach to CDR may find themselves in trouble with customers, employees, and regulators.

Corporate Responsibility in the Digital Era

The Role of the Board Chair During a Crisis

Experienced chairpersons know that their success depends on how they walk the tightrope of being too involved or too remote in the company’s strategy execution. Yet when a crisis such as COVID-19 hits and the CEO transforms into Chief Crisis Officer, the chairperson may become increasingly unsure how to strike this balance.

Crisis breeds uncertainty and creates emotionally draining conditions for organizations that require fast decision-making with limited information on the part of leaders. The board’s role to monitor the crisis response of senior executives is crucial and in the interests of all stakeholders, but it also risks creating response delays and bottlenecks. Moreover, the chairperson’s objective to preserve future strategic options for sustainable growth might be difficult to implement when the organization’s short-term survival is on the line. These frictions can increase if the chairperson and CEO have conflicting views on crisis response measures, which in turn can divert the attention of both parties to preserving their image and reputation in the face of the media and key stakeholders — a typical “damned if you do, damned if you don’t” situation.

In light of these dynamics, the interactions between the chairperson and the CEO to establish decision rules, guidelines, expectations, agendas, and communication strategies are an essential and often underestimated success factor for leading organizations through a crisis. We took a closer look at this relationship to explore how experienced chairpersons interpret their role during a crisis, and why success and recovery for companies depend on complementary roles, strategic alignment, and chemistry between the chair and CEO.

The Chairperson and the CEO in the COVID-19 Crisis

Traditionally, the board of directors’ job description is “control” and “advice.” As a control function, each board member ensures that senior executives act in the stakeholders’ interests. The advice function contributes to corporate decision-making via strategic guidance and counseling to executive teams. For both functions, the chair builds the bridge between the board and the senior executive team.

There is no question that this relationship between the chair and the CEO is critical for success, particularly during the current COVID-19 crisis. Monika Ribar, chairwoman at Swiss Federal Railways (SBB), focuses regular interactions with her CEO on the main crisis-related activities and actions implemented. By doing as much as she can to be approachable at any time for her CEO, Ribar says she keeps all means of communication open to help and learn as much as possible about the senior executive team’s approach to fight the crisis. Aware of her increased strategic responsibilities for the company amid a global pandemic, these regular exchanges allow her to be involved and informed early on. Effective chairs understand the role they must play in order to lead and use the board of directors as a highly effective team at the service of the company and its stakeholders.

The chairpersons at other organizations, such as Boston Children’s Hospital (BCH), A.P. Møller – Mærsk A/S, Nestlé, and Siemens AG, are similarly ensuring closer proximity and support for their CEOs. For example, Douglas Berthiaume (chairperson) and Sandra L. Fenwick (CEO) at BCH are strongly aligned about preserving the hospital’s core identity, “Until Every Child Is Well,” as well as the hospital’s mission and values for BCH’s clinical care work and its community engagement. This fundamental alignment is accentuated during crises. For example, during this crisis, Fenwick and Berthiaume worked together in communicating across multiple boundaries — to their boards, donors, and staff. Fenwick says, “Keeping people informed of changing situations and policies, answering an extraordinary range of personal and professional questions, and keeping people focused, healthy, engaged, resilient, and optimistic is key.”

Jim Hagemann Snabe, chairman at Mærsk and Siemens, similarly emphasizes that he collaborates closely with his CEOs to ensure the consistency of the company’s overall strategic direction. This collaboration provides a “catalyst for reinforcing the firm’s purpose and strategic intent,” says Snabe. And as chairman he guides the company “to stay committed toward its strategic direction despite a need for short-term focus and actions.” While all chairs maintain their traditional roles of control and advice during times of crisis, we found that experienced chairpersons double down on aligning with leadership and safeguarding their organization’s identity and mission.

Safeguarding the identity and mission. With any crisis response, companies face the major risk of reacting with shortsighted, routine-based actions rather than creating an overall strategic recovery plan. When crises unfold, CEOs are pressured to take immediate action and communicate a response quickly — even when the full scope and impact of the crisis is not known. Divestments, product eliminations, layoffs, and cost cutting help to ease the pressure for immediate performance improvements. Yet, they risk carving up the organization’s heart and soul when these efforts fail to recognize critical skills, capabilities, experience, and culture so crucial to the organization’s long-term recovery.

This critical point in the response is where the relationship between chairperson and CEO plays a key role. For example, at Boston Children’s Hospital, Fenwick and her board chair’s emphasis on “Until Every Child Is Well” accentuates the organization’s purpose, identity, and culture during the crisis. Such strong commitment to the organization’s identity functions as an overarching crisis vision that guides senior executives when formulating and implementing crisis response strategies. It helps to avoid confusion, aligns the guiding coalition toward one aspirational goal, motivates employees, and ensures various stakeholders’ support during the crisis. This is even more important in a crisis, says Snabe, “as uncertainty during crisis may confuse and require challenging prioritization in harmony with the firm’s purpose and strategic intent.” By aligning crisis communications with the organization’s purpose, the chair and CEO can help channel the organization’s energy and passion toward the most fundamental goal: to preserve the organization’s raison d’être.

In order to maintain this focus on purpose, the leadership team must be able to persevere in their roles despite stress and uncertainty. Resilience during a crisis not only helps leaders to keep a clear head but also allows the company to thrive. However, this is easier said than done. Dealing with negative emotions and anxiety, and thus creating a safe space, has surfaced as a critical component that requires the chair’s active attention during a crisis.

Resolving anxiety. Often, leadership teams are unprepared for the fallout of disasters and crises such as COVID-19, which can bring on stress, discomfort, and other negative emotions. The unique circumstances that each crisis presents also make it difficult for senior executives to apply similar action steps or past routines to cope with the current situation. These psychologically challenging conditions are counterproductive when the team could be instilling confidence in employees. Instead, this instability creates doubt and mistrust when responding to often very emotional stakeholder demands.

In all of the leading companies we’ve worked with, chairpersons focused on actively addressing the emotional and psychological impact on their CEOs. At Nestlé, Paul Bulcke emphasizes that emotions are already high during a crisis, and the chairman should not make the mistake of increasing stress and discomfort. By being approachable, expressing sympathy, and applying a team-oriented approach, the chairs display involvement, understanding, care, and empathy — toward their CEO in particular. They provide psychological support and avoid impaired decision-making driven by negative emotions, uncertainty, and fear.

Actively fostering positive energy functions as a catalyst that can help CEOs to remain rational instead of emotional as well. How a chairperson perceives and reacts to the CEO’s negative emotions is key to steering decision-making toward rational facts rather than emotional disagreements.

Creating a safe space. Because of the mutual dependence on a positive crisis outcome, all chairpersons value a trusting relationship with their senior executives and board members. This trust enables the chairperson to function as a sounding board for the CEO during the crisis. The creation of a safe space characterized by openness and honesty not only helps the chair to maintain a close relationship with the CEO but also allows for timely exchanges, feedback, and alignment on strategic actions before presenting them to the full board.

Safe spaces increase the consensus and decision speed during a crisis. However, they should not be forced upon CEOs, who might interpret them as the chair wanting to micromanage the overall crisis response. Instead, CEOs should be encouraged to make independent decisions and act at their discretion. While trust creates a foundation for CEOs to actively seek feedback and advice, it goes both ways. Violating trust can create a vicious cycle of blame and mistrust, causing serious damage to the organization’s chance for recovery post-crisis. This is detrimental to both the CEO and the chair. Consequently, a trusting relationship with the CEO should be built on mutual support and interest. As SBB’s Ribar says, this “we are both in the same boat” mentality brings the chairperson closer to the CEO. In uncertain times, companies need a united leadership front, and safe spaces allow chairs and CEOs to align their individual interests to fight the crisis together.

The Chair Matters

COVID-19 is an unprecedented crisis that has thrown the global economy into turmoil. Now more than ever is a time for companies to ensure alignment and mutual support from the board, the chair, and the CEO. The board and the chair need to stay disciplined, stick to their roles, stay detached from operations, and concentrate on being a sparring partner for the CEO when needed. Experienced chairs don’t interfere or micromanage. Instead, they help CEOs navigate challenges by providing consistent reminders of the organization’s identity and mission.

Moreover, chairpersons use a mix of proximity, positive reinforcement, and trust to ensure timely information flows and to build understanding for the CEO’s challenges and responsibilities. This combination of encouraging mindfulness of business purpose and using empathy enables chairs to help CEOs harness creativity and passion and psychologically anchor themselves when selecting, evaluating, and implementing short-term crisis responses.

Finally, it’s important that chairpersons remain committed to the organization above all — continuing their mission to challenge decisions, defending the organization’s long-term interests, and being prepared to take the lead when needed. After all, facing a crisis does not mean a board chair is invisible or unconditionally supportive. Just as the CEO needs to seize the day, so too does the chair, who plays an especially important role in the organization’s success and long-term survival. Or, as Nestlé chairperson Bulcke says, during a crisis, the chair feels like a “motorcycle driver that needs to look ahead of the curve, because if you keep looking at only what is just in front of you, your wheels don’t come out of the curve well, and you lose your balance.”

The Role of the Board Chair During a Crisis

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Survey: Swedish consumer sentiment during the coronavirus crisis

Survey: Belgian consumer sentiment during the coronavirus crisis

Belgian consumers are feeling the effects of COVID-19, with about a third of Belgians reporting reduced income.
Survey: Belgian consumer sentiment during the coronavirus crisis

Fixing the Overload Problem at Work

Image courtesy of Neil Webb/theispot.com

The way that companies expect employees to work isn’t working. Despite growing awareness of widespread and chronic overload and its ill effects, companies often expect professionals and managers to be “on” well beyond traditional work hours — attending meetings at night, responding to requests on weekends and during vacations, and monitoring their phones, texts, and emails whenever they are awake.1 Many people become exhausted and burned out struggling to meet such expectations. The result is an overwhelming, demoralizing sense that the demands of work are unrealistic and cannot be met with the resources at hand.

Of course, overload is not restricted to salaried, white-collar workers.2 But we have found that they are acutely susceptible. In our survey of more than 1,000 of these workers in the IT division of TOMO, our pseudonym for a Fortune 500 company generally viewed as a good employer and a decent corporate citizen, 41% of the division’s professionals and 61% of its managers agreed or strongly agreed with the statement that there is “not enough time to get your job done.”3

Escalating work demands and the exhaustion they produce surfaced repeatedly in the 400 interviews we conducted with TOMO employees from 2010 to 2014. For example, Vanessa, a director at the company, told us that she expects her direct reports to “be accessible 24-7, 365 days a year.” If they aren’t going to be available outside working hours, she said, “they need to let me know.”

Jonathon, a manager who reports to Vanessa, shared multiple stories of work encroaching on his home life and volunteer activities. He said he often takes late-night work calls, some of which wake his wife. Despite the success he has attained at work, Jonathon said he is steering his children away from professions like his that are prone to overload. He believes it is an unhealthy and unsustainable way to earn a living.

The Research

• The authors led a five-year, randomized field experiment involving 56 teams in the IT division of a Fortune 500 company. This study also involved collaborators in the Work, Family &
  Health Network.

• Over that period, they surveyed 1,000 professionals and managers multiple times and conducted 400 in-depth interviews.

• The survey and interview responses, ethnographic observations, and company data — along with findings from studies looking at other professions and work settings — shaped the insights in this article.

Evidence collected at TOMO and in a variety of other workplaces, including consulting companies and medical facilities, suggests that Jonathon is right. We heard story after story of health concerns tied to overload from the IT professionals and managers at TOMO. They told us about heart attacks and strokes, disrupted sleep and related forgetfulness, unexplained hives, and other ills. They also described an inability to muster the energy to exercise and to prepare healthy meals, and work pressures that prompted them to smoke and drink more than they considered wise. In fact, employees in our study who put in long hours reported significantly higher levels of burnout, stress, and psychological distress (feeling sad, nervous, restless, hopeless, worthless, and that everything is an effort) than employees who worked fewer hours.

Unpredictable schedules and always-on availability also contribute to employee overload and deteriorate their well-being. Specifically, employees who have variable schedules that they do not control report significantly higher levels of burnout, stress, and psychological distress, as well as lower levels of job satisfaction, than employees who have fixed schedules or feel more in control of when they work.4 Studies of all kinds of occupations are now documenting the negative health impacts of very long hours and limited control over work time.5

Companies that push employees as hard as TOMO are hurting themselves, too. Talented people quit when they become overwhelmed by work or resentful of unrealistic demands — voting with their feet after being expected to do too much for too long.6 When they exit, their employers lose expertise, knowledge, and sometimes valuable customer relationships.

When overloaded knowledge workers and managers stay, they are less likely to come up with particularly efficient, creative, or innovative solutions to business and technical challenges. The quality of work suffers when employees are trying to do more than is feasible, at a fast pace and with lean teams.7 At TOMO, the developers we interviewed were mournful about the mediocre code they produced in the face of unrealistic deadlines, and they expressed dread about the problems that were likely to arise because of skipped steps and deferred maintenance. As one of them put it, “We are under siege and doing the best we can, as best as we can, in making shortcuts.”

To better understand the causes and effects of overload, and test solutions to it, we partnered with TOMO over a five-year period. As part of the Work, Family &
Health Network, we collected data from a variety of sources, including the company, employees, and their families. We then conducted a randomized field experiment involving the entire IT division (a total of 56 teams) to test the efficacy of a work redesign initiative named STAR — an acronym for Support, Transform, Achieve Results.8

We basically flipped a coin to determine which units would participate in the STAR initiative and which would serve as the control group by continuing to follow the company’s existing policies. Then we measured the business and employee outcomes in each group and compared them. This article reports what we discovered: Overload is a pernicious problem that is usually caused by organizational demands, but employers can address it by making reasonable and feasible changes to how work is done.

It’s Not a ‘Balance’ Problem

When people are feeling overwhelmed at work, their organizations often define and treat the problem as a lack of work-family balance. But this framing is risky for a variety of reasons.

Given deep cultural associations between family and femininity, both managers and employees are primed to associate the subject of family with women. This makes it more likely that what’s really an overload problem will be treated as a women’s issue or an issue primarily affecting working mothers, along with some involved fathers and employees caring for elderly relatives.

This framing also reinforces the perception that mothers are less committed and less competent employees, while fathers are viewed as dedicated workers, in part because men’s workloads at home tend to be lighter. (It’s assumed that they can do whatever is asked of them by their managers and colleagues.) This bias runs deep and underlies well-known motherhood penalties in hiring.9 But overload affects both men and women, at all ages and life stages. At TOMO, for instance, younger workers, singles, and people with few or no family responsibilities also felt overwhelmed and overloaded at work.

When overload is framed in terms of a work-family or even a work-life imbalance, scholars, advocates, and supportive managers often turn to flexible work arrangements, like a flextime schedule or regular telecommuting, as a solution. But companies usually set up these arrangements as “accommodations.”10 Individuals can ask for a flexible work arrangement, but managers generally have the discretion to approve or deny the request. This creates an undesirable “Mother, May I?” negotiating dynamic, which positions the worker’s personal needs as an outlier.

In practice, many employees, even those who could clearly work at different times and locations, have limited access to these options simply because they report to managers who want “butts in seats.” Meanwhile, those who are granted flexibility run the risk of flexibility stigma. A growing base of research shows that people who pursue flexibility may be viewed as uncommitted to their work and unsuitable for advancement. When that happens, they can end up trading promotion opportunities or wage increases for flexibility.11

Ironically, the career risks tied to flexibility policies can reinforce gender inequality. (It is ironic because U.S. companies adopted such policies partly in response to the movement of women, particularly middle-class mothers, into professional and managerial jobs in the 1980s and 1990s.) A study of high-status management consultants found that women were more likely than men to seek formal flexible work options, to feel marginalized or penalized for doing so, and to leave their companies in frustration. In that study, about a third of the men limited their work hours and travel — compared with their peers, who worked very long hours — without using the company’s official flex policy. These men who chose to “pass” as ideal workers had performance ratings that were “significantly better than those who revealed their deviance” by seeking out informal or formal flexible work arrangements.12 Such arrangements were understood to be mostly for mothers, even though that was not stated in the policy.

Finally, flexible work arrangements allow for shifting hours or work location but often don’t change the expectation that employees will work, answer a call, or get on a plane whenever the need arises. The root problem is the unreasonable amount of work and the expectation of constant availability; flexibility policies that don’t address these issues can easily become a cause of overload, rather than the solution to it.

Creating a New Normal for Work

How can companies address overload and its consequences while avoiding the flaws inherent in flexibility as an accommodation? Drawing on existing research, our team identified three key conditions organizations should foster.13

First, when employees have greater control over when, where, and how they do their work, they are less stressed, report better health, and are more engaged in their work and committed to their jobs. Second, when managers show that they care about and support their employees’ personal lives and priorities, as well as their professional development, workers feel much better at work and can concentrate on giving their best. Third, when work is demanding, it is essential for managers to give employees clear direction on their performance, goals, and priorities. Otherwise, there is a risk that employees will be judged on how many hours they are working, how visible they are to their bosses, and how quickly they respond in a chaotic environment — not on what they are contributing.

The STAR dual-agenda work redesign initiative was developed to satisfy these three conditions. Dual agenda refers to both working effectively and working in ways that are sustainable and sane and that reflect employees’ personal and family priorities while protecting their health. Work redesign refers to constructing a “new normal” by reconsidering and revamping what is expected of — and what is done by — employees. In contrast to flex policies in which the status quo is not questioned, dual-agenda work redesign initiatives involve an entire team or department and provide the time, space, and cultural support needed to collectively change how work should and will be done.

Accordingly, STAR pairs bottom-up changes conceived and implemented by employees with structured training: Over the course of several participatory sessions, work units identify practices and processes that would increase employees’ control over their own time and help reduce “low value” tasks. Meanwhile, managers receive instruction on how to demonstrate support for both employees’ personal lives and effective performance on the job. At TOMO, the participatory sessions totaled eight hours and were conducted over three months so groups could socialize and practice new ideas between sessions. The managerial instruction lasted four hours, spread over two sessions. Managers also were given an app that encouraged them to see supportive interactions as a core part of their role and created new habits by nudging them to act in more explicitly supportive ways.

In the redesign process, teams determine how more flexible schedules and opportunities to work at home — as a norm, not as a special accommodation — could be applied to different jobs. Some colocated team members in TOMO’s STAR units chose a day or two each week to work together in the office or determined together which types of decisions or meetings worked best when conducted in person. No one was pressured to work at home or shift his or her schedule; those decisions were up to employees and informed by team discussions.

TOMO’s STAR units also decided how to communicate and coordinate effectively with fewer meetings, thus creating more time for focused work during the day. Some teams replaced standing work-status meetings with a tracking dashboard. Others sought to run leaner, more efficient meetings by asking in advance for input on agenda items and inviting only participants with a direct stake in the issues and decisions under consideration. And some teams created protocols for contacting one another in urgent situations, so team members could ignore chat and email for several hours each day.14

Many of the people in these groups began to work at home more often and shifted their hours to better accommodate their personal lives. More important, they changed their assumptions about who legitimately decides when, where, and how work is done. For example, managers no longer expected employees to ask permission to work at home on any given day, and people weren’t necessarily required to tell anyone where they’d be working. Employees in STAR groups worried less about working long hours and immediately responding to calls and emails and focused more on getting the work done. For their part, managers supported that focus by identifying and articulating their expectations of individuals and groups, and evaluating performance based upon those expectations. Managers knew that this clarity was useful before STAR, but they were often caught up in the frenetic pace of work themselves and had skipped those discussions.

In short, STAR was much more than a policy change approved by top executives and then rolled out to subordinates. It gave professionals and managers the opportunity to redesign everyday work practices to reflect the realities of their lives, today’s technologies, and the demands of the work. STAR ensured that changes in when and where work happened were accompanied by deliberate efforts to consider how teams worked.

The Payoffs for Companies and Employees

TOMO’s leaders had invited our research team into the organization because of concerns that employees were burned out, exhausted, and looking to leave the company at their first opportunity. The company’s IT executives and HR professionals recognized the overload that had arisen from repeated downsizing, the need to coordinate with offshore counterparts, and always-on technologies. They hoped that dual-agenda work redesign would reduce burnout, increase job satisfaction, and help the company retain valued employees. As it turned out, STAR succeeded on all these measures.

We evaluated the effects in two ways. The field experiment data allowed us to compare the changes that occurred among STAR participants with the experiences of the control group in the same period. Because work units were randomly selected to participate, the employees and managers in the STAR and control groups were extremely similar before the initiative, giving us a high degree of confidence that these are real effects due to STAR. The interview and ethnographic data revealed how work redesign innovation was experienced, providing us with stories and reflections about how changes felt to employees and how teams figured out what would work in specific situations.

One year into the initiative, and without any changes in their job duties, employees and managers in STAR teams reported significantly lower levels of burnout and higher levels of job satisfaction than their counterparts in the control group. These improvements were especially large among nonsupervisory employees. Take Sherwin, a software designer and developer in his 50s who had a heart attack the year before the initiative began. “I’m constantly busy. I stay busy,” he said. “But I don’t feel overwhelmed. So that’s huge.” Sherwin described STAR as producing “100% less stress,” and the broader results of our surveys at TOMO confirmed that other participants’ levels of stress and psychological distress (a preclinical measure of poor mental health) were significantly lower than the levels in the control group.

A Manager’s Guide to Fighting Overload

Even if they lack support from senior leadership, managers can encourage new ways of working and challenge the status quo of overload and work intensification in the following ways:

Focus less on when, where, and how work happens and more on results. Don’t celebrate long hours or treat them as a sign of commitment. Recognize that managing is about getting work done, not monitoring who’s in the office or rewarding those who respond immediately to any email, text, or call.

Acknowledge and support people’s lives and priorities outside of work. Ask employees what is happening outside of work and encourage their efforts to do what matters to them. Be sure that parents and caregivers feel supported, and check that employees who do not have obvious family responsibilities (but do have friends and personal priorities) feel heard and respected too.

Identify and reduce low-value work. In every bureaucracy, meetings without agendas, duplicative tasks, and unnecessary record keeping take time away from real work. Managers and their teams can ferret out those draining activities so that they can better focus on what really needs to be done.

Clarify what is expected of each employee. Do this as a real planning exercise, with employee input, and not simply as a box to fill in on a formal performance review. Remind employees to question tasks and activities that do not seem to be important steps toward their primary goals.

Encourage employees to share when they are feeling overloaded. Ask for alerts when people cannot complete a task within normal hours. Managers may not always be able to hire additional staff members or move deadlines, but they can help prioritize tasks, take over some tasks, and look for others who can pitch in. They can also ensure that people feel it is safe to point out unrealistic expectations and admit to overload, and trust that they will be not penalized for it.

Make it the default that employees decide when and where they work. Build a new team culture that assumes flexibility and then problem-solves to make it work for everyone. If a particular choice does not seem feasible, discuss it with the employee or the team.

Recognize that people need concentrated time (often offline) to work effectively. Support employees who want to unplug for a few hours to work on particular tasks or even to recharge. Discuss, as a team, what counts as an urgent need to interrupt that blocked time and how to reach one another in that situation.

Change up your own work routines to fit in your personal, family, or health commitments. Do that publicly and without guilt, as a role model
for working in more sustainable ways.

The STAR participants also felt they had more control over when and where they worked, and they reported that their immediate supervisors were more supportive of their personal and family lives, compared with their own previous experiences and with the control group baseline. Interestingly, there was a particularly big jump in the degree to which fathers in the STAR group rated managerial support, suggesting that the dual-agenda work redesign reached men whose family responsibilities were either hidden or assumed to be minimal before. Overall, STAR participants reported fewer work-life conflicts and were more likely to say they had enough time for family after the initiative was launched.

Our post-STAR interviews revealed that people were taking better care of themselves by fitting in more exercise, sleeping later on work-at-home days, and finding time to connect with neighbors and friends. Using actigraphy watches that measured sleep objectively, we found that participants in STAR slept slightly longer and were more likely to feel rested upon waking than they had previously. People averaged about 8 to 13 minutes per day of additional sleep, depending on which wave of follow-up data we consider. These are small gains in duration, on average, but it is notable that sleep improved even though the STAR training did not explicitly address healthy sleep. What’s more, these changes lasted throughout the evaluation period.

Finally, using TOMO’s HR records, we found that participants were significantly less likely to voluntarily leave the company than their control group counterparts. Over the ensuing three years, voluntary exits were 40% lower for managers and employees in STAR — a difference in turnover that drove a positive return on investment of about 1.6.

In sum, we found exciting evidence that a team-based approach to redesigning work in relatively small and feasible ways brought benefits to TOMO, as well as to overloaded individuals. However, an unexpected complication arose when a merger was announced during our study. The positive changes in job satisfaction and the reductions in burnout, stress, and psychological distress were much larger and clearer among the employees who entered STAR before the merger was announced. After the announcement, the benefits were dampened — largely because employees worried that the new approach to work would not survive the merger. And indeed, instead of expanding the use of dual-agenda work redesign, the new leadership team in charge at TOMO abandoned it.

The unfortunate decision to revert to old policies notwithstanding, TOMO’s experience with STAR demonstrates that companies can approach professional and managerial work in more effective, sustainable ways. We believe that dual-agenda work redesign will become more and more attractive as executives, managers, and employees increasingly recognize the costs of overload. People burn out and leave — or they stay but struggle to create value because they’re spent.

Clearly, it’s time to make the way we work work better for employers and employees alike.

Fixing the Overload Problem at Work

How to Help Employees Work From Home With Kids

Many of us are now working from home. As I described in my previous column, we are experiencing a new wave of mass experimentation in virtual work: working with (and around) virtual technologies, learning how best to relate to virtual colleagues, and experimenting with virtual collaboration and the new distribution of tasks.

For working parents, virtual work has specific challenging pain points. In a London Business School webinar on virtual working I ran on March 14, 10% of the nearly 3,000 people polled said they were distracted by their families.

Many weeks later under lockdown, this distraction is becoming ever more salient. This is true for people with a variety of caring responsibilities — for children, older relatives, or people with disabilities.

I believe that the family distraction presented by the new work-from-home reality is one of the most pressing management issues of the COVID-19 crisis. It’s one that, if unchecked, could lead to a significant drop in productivity and creativity. We — both leaders and companies — need to move rapidly to gain quick wins to help employees manage their work lives. We also need to prepare the ground for long-term changes.

The Challenge: Dissolving Boundaries

On April 9, I ran another webinar focusing specifically on the challenges and opportunities of balancing work and family to find out what strategies are working. Executives joined from more than 30 companies in Europe, the U.S., Japan, Australia, and New Zealand, and more than 60% of them were working from home with family responsibilities. (That percentage is about the norm for many countries.) To understand their circumstances more deeply, we held a seven-day open platform hackathon afterward, where executives could talk to one another about their experiences and brainstorm solutions.

What these intensive home-based ways of working are revealing with absolute clarity is something psychologists have known for some time — that boundaries matter. One of the ways executives typically manage their working lives, particularly when their identities of, let’s say, hard-hitting salesperson and caring father are distinct, is by creating boundaries between these two domains. They build mental fences between the two spheres, often facilitated by clear transitions and “rite of passage” activities. These could include props such as putting on a suit, or activities like getting on the commuter train, having a pre-meeting coffee, or catching up with The New York Times. People who have been working from home for years typically create similar boundaries and rituals, such as moving into a study and maintaining a schedule that separates work life from family life.

These transitions help to separate and preserve our distinct selves and provide the means for temporal, cognitive, and relational shifts. Maintaining boundaries instead of blurring the line between when you are “on” for one role and “off” for the other means that distraction is minimized. Creativity and flow can happen more quickly.

With whole families quarantined, the boundaries for workers are dissolving. In place of two transitions (home to work, work to home), there are now multiple transitions (work, look after a child, work, prepare lunch, work, play with infant, etc.). Each transition adversely affects concentration and productivity and, ultimately, creativity.

A Veil of Ignorance Is Lifted

Based on what I am hearing, executives are becoming more empathetic to these challenges than ever before. Issues of tensions around work-home have, of course, existed for decades, but what has been lacking is the willpower to do much about this tension. That is beginning to change as executives experience these tensions firsthand.

It’s not that a senior executive in a large house with a garden has the same experience as a single mother in a small apartment lacking outside space. But in the past, there has been a veil of ignorance about the challenges, in the sense that the executive could well have had a team of support people (a nanny, a housekeeper, a cleaner, a gardener).

Now shorn of this team, thanks to varieties of quarantines, lockdowns, and work-from-home orders, executives are experiencing more viscerally the stresses and strains of the work-home challenge. That’s creating a sense of understanding and empathy that many executives had previously lacked.

My projection is that executives are now much more likely to put their shoulders behind both quick wins and long-term changes.

Three Quick-Win Ideas to Adopt Now

Business leaders have a new clarity that normal boundary management is not working, and they are newly highly sensitized to work-from-home challenges. In our hackathon, three ideas stood out that fall into the category of quick wins — meaning they are fast to implement with few barriers or costs:

Empathize with each employee’s context. Some companies are creating deeper insights into the specific situations their workforces face by surveying home workers. When they do so, they uncover a wide variety of circumstances and stresses. Being a single person living and working under quarantine is a very different experience than being a member of a working family with young children. One global professional company, for instance, found that over 60% of its employees were single and either living on their own or with a parent or partner and feeling the pain of social isolation. An immediate quick win was to create daily virtual coffee breaks at 11:30 a.m. Another company found that over 60% of employees were caring for children; their issues were exhaustion and the challenge of focusing during normal work hours. Leadership signaling that working unorthodox hours is OK could make a real difference to their stress levels.

Encourage employees to communicate their new norms. Some companies are actively cocreating new schedules with employees. For example, executives from one global technology company are working with employees to identify blocks of time when they will be “on” and blocks when they will be “off.” These schedules are then being shared with team members to manage expectations about when to expect timely responses to communications. While signaling new work norms, these blocks of time also limit the number of work-home transitions for individuals. Executives told us that both benefits have helped reduce employee anxiety.

Convene like-minded communities. Because home lives come in many forms, people’s needs and the support they require are idiosyncratic. One-size-fits-all responses will not work. That’s why some companies have created collaborative platforms that enable employees in similar situations to find each other, to mentor and coach each other, and to share ideas and interesting experiments. Just as important, the platforms enable communities to channel their specific needs and ideas to management. The results can be really creative: For example, an executive from a global insurer described how a community of parents of young children had spurred the company to provide resources on the company’s intranet to support their home schooling.

Four Long-Term Changes to Work Toward

One of the important topics of conversation during the hackathon was how the future of working practices will change because of the COVID-19 work experience. With the potential of months of home working, people will inevitably develop new habits and expectations. Some of these habits will be dropped as soon as social distancing is removed, but others will have such obvious virtues that they are destined to be adopted into everyday working life.

This is a good time to prepare for those resilient habits. Here are the four that seem most likely to last:

Recognize that virtual meetings are here to stay. The shift to bringing together 10 or more people from across the world into a virtual meeting — both with team members and clients — has happened with extraordinary speed and dexterity. This is a habit that is unlikely to be dropped. Executives need to prepare for more virtual technology and less commuting and traveling.

Embrace flexibility around time. Managing multiple boundaries at home has proved both tricky and stressful. But short-term fixes (like creating blocks of time) are easing the strain and are becoming the foundation for crafting new ways of working. In doing so, they are breaking the norm of working eight hours a day, five days a week. Will we move swiftly back to this traditional time model? I doubt it, and executives should be preparing now to understand and learn how best to manage time more flexibly. They should be prepared to experiment with four-day workweeks and to accommodate more employees who ask to work late in the evening (or very early in the morning) instead of 9 to 5.

Be strategic about the wonder of face-to-face working. It’s clear that many people working from home are really missing their colleagues. It is unlikely that in a post-pandemic world, they will want to stay exclusively at home. Consider a study by Stanford economist Nicholas Bloom that followed the experiences of call center employees of a Chinese travel company who were allowed to do their jobs at home in 2010-11 for nine months. At the end of the experiment, half wanted to go back to working in the office, even with an average daily commute of 80 minutes. They missed the social interaction. Executives need to be a great deal more thoughtful about what it is that face-to-face interaction brings to their organizations and seek to maximize these benefits.

Expect more men to be newly engaged in parenting. In working families, it’s still typically mothers who take on the majority of childcare responsibilities. Numerous studies have shown that although the amount of domestic labor and caring duties shouldered by fathers has increased, working women still do more of both. In our hackathon discussions, we heard some passionate conversations about how parents are experimenting with a more equal sharing of duties and how some fathers are cherishing the family time with their children. The positive caring emotions they are experiencing may well be something they want to hold on to. This has profound implications for executives regarding how issues such as paternity leave and flexible working are tackled.

These long-term changes raise a number of questions that will be debated over the coming months. What does high performance mean in a post-pandemic world when working long hours used to be the proxy? If people are working more flexibly, should their pay be more closely tied to the projects they complete rather than the hours they work? (Bloom found in his China study, for instance, that people working from home were 13% more productive.) And how do we ensure that high-performing people who also want to be caring parents are not penalized?

These next few months are critical. We have an opportunity right now to create more resilient organizations and to push ahead with an agenda of change.

How to Help Employees Work From Home With Kids

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The Best of This Week

During the COVID-19 crisis, we at MIT SMR want to support our readers by offering free resources to help during the pandemic.

MIT researchers and HR expert Josh Bersin have launched a pulse survey on how COVID-19 is impacting organizations. Join the interactive conversation here.

Managing the Remote Work Shift With Peer Coaching

Employees who’ve suddenly found themselves working from home amid the COVID-19 pandemic might be struggling with feelings of isolation and worry — emotions that can make it even more difficult to stay focused and productive. Peer coaching is a powerful tool that can help support employees through this transition.

Good Leaders Need More Than Vision

No one can discount the importance of vision for leadership, but when a leader’s strength rests on vision alone, it can be difficult for a leader to adapt to give employees the support they need in a time of crisis. As Gianpiero Petriglieri writes in Harvard Business Review, “People never forget how managers treated them when they were facing loss. And we will remember how our institutions, managers, and peers, held us through this crisis — or failed to.”

New Leadership Imperatives for Tech-Transformed Business

Transformative digital technologies are changing every aspect of business, including leadership standards. Successful leaders will evolve in five key ways: They’ll champion inclusivity, learn fast and wide, collaborate more intensely, nurture creativity, and act as digital guardians. Adopting these imperatives today can help prepare you for tomorrow.

Let Go of Your Agenda and Prioritize Empathy

Laszlo Bock, CEO of Humu and former head of People Operations at Google, writes that leaders must prioritize empathy in the short term to have any meaningful outcome from this crisis. In the long term, it’s important to emphasize resilience, both internally and externally. As Bock puts it, “Resilience is no longer a nice-to-have. It’s an imperative for business continuity.”

Managing Social Media Risks to Your Organization

Responsible managers must understand the dangers posed by social media and how to protect their organizations — and they should take a more active role in regulating and monitoring social media activity. Despite increased scrutiny, risky online behavior continues to be a big issue.

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• Many states’ unemployment systems are built on a decades-old programming language
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• Why FEMA uses the Waffle House Index as an informal gauge of a crisis’s severity

Quote of the Week:

“As businesses grapple with the COVID-19 crisis, CEOs have a historic opportunity to demonstrate wise leadership and positively reshape the mindsets of their employees to serve the larger good.”

— Navi Radjou and Prasad Kaipa, in “Leading With Your Head and Your Heart”

The Best of This Week

Leading With Your Head and Your Heart

Over the past 30 years, we have studied and consulted for nearly 100 CEOs in Europe, Asia, and North America who had to deal with large-scale crises. Based on these CEOs’ responses to various emergencies, we have identified three ways leaders tend to think during emergencies.

Functional smart leaders rely on their survival instincts. Focused on the bottom line, they do whatever it takes to keep their companies afloat. Business smart leaders are opportunistic. They find clever ways to leverage a crisis and develop strategies to capture post-disaster opportunities. We estimate that 90% of corporate leaders we observed went into one of those two modes during past crises.

A smaller number — just 10% — navigated crises by relying instead on context-aware intelligence to benefit society at large. Rather than simply reacting to — or leveraging — an emergency, these leaders consciously used intuition, logic, and their emotions to choose appropriate responses. Instead of asking anxious workers to simply keep doing their jobs, they helped broaden their perspectives. They inspired employees to use ingenuity to contribute to the greater good of society and to cocreate a higher purpose for the organization.

We call these people wise leaders, and we think they present the best role model for leaders to successfully deal with today’s crises. Endowed with an entrepreneurial mind, a social heart, and an ecological soul, wise leaders are best fit to build the agile, inclusive, and sustainable businesses of the 21st century.

Four Key Capabilities of Wise Leaders

We believe that as businesses grapple with the COVID-19 crisis, CEOs have a historic opportunity to demonstrate wise leadership and positively reshape the mindsets of their employees to serve the larger good.

CEOs can transform their businesses into wise enterprises by leveraging four key capabilities: making a broader purpose an explicit part of company vision, embracing frugal innovation that cleverly reuses existing company resources, framing sustainability and corporate responsibility as mission-crucial adaptability, and channeling radical openness to build strong feelings of connection.

Broaden employees’ perspective and purpose. COVID-19 makes all of us realize how interdependent and fragile human civilization is. A disruption in one part of the world can have devastating ripple effects across the entire planet. CEOs need to broaden the perspective of employees by explaining that their company doesn’t exist in a vacuum but is part of an interdependent whole, where every event in the world impacts the business, and every action of the business affects society.

CEOs can invite employees to serve society at large rather than narrowly focus on customers. In March, James Dyson, founder of the vacuum cleaner and household appliance manufacturer Dyson Ltd., inspired company employees to design and build a ventilator for COVID-19 patients in just 10 days. Dyson said that the company will fulfill an order for 10,000 units from the U.K. government and donate another 5,000 units to international relief efforts.

CEOs should continue their company’s societal focus even after COVID-19 is over and could learn something about how to do so from Siemens, the German industrial manufacturer. Under CEO Joe Kaeser’s leadership, Siemens is evolving from a business-to-business company to a business-to-society (B2S) company. As a B2S company, Siemens is vocally focused on leveraging all of its assets, talents, and partnerships to have a positive social impact in the 200-plus countries in which it operates. That has meant enabling local economic growth and job creation, reducing greenhouse gas emissions, and including more women and minorities in the workplace. The company’s goals have spilled over into its partner companies: In mid-March, the Siemens-backed global teleradiology company USARad launched a global screening program to help clinicians diagnose the coronavirus faster and more accurately.

The message that CEOs should deliver to their stakeholders is both simple and complex: It’s in our enlightened self-interest to maintain the integrity and unity of our world. That means creatively addressing global issues such as social inequality, climate change, and health emergencies.

Embrace frugal innovation. It can be easy to forget our abundant resourcefulness during crises when the scarcity mindset takes over. But leaders like James Dyson know that when employees are asked to tap into their inner resources — like ingenuity and compassion — they are capable of radically reinventing company products, supply chains, and business models for the better.

Specifically, leaders should ask employees to practice frugal innovation — the agile art of ingeniously simplifying and repurposing existing products and assets to serve a higher purpose. We’ve seen this in the past month with carmakers Ford, Tesla, and Toyota repurposing factories to make ventilators; clothing companies Zara and Gap adapting their apparel factories to make hospital gowns and masks; and cosmetic giants LVMH and L’Oréal using their factories to make hand sanitizer.

To innovate frugally, companies also need to collaborate with diverse partners. For instance, GM and Ventec Life Systems, a startup in Washington state, teamed up to mass-produce Ventec’s ventilators. Also in late March, French industrial giants Air Liquide, Groupe PSA, Schneider Electric, and Valeo joined forces to produce 10,000 ventilators in 50 days.

Reframe sustainability as creative resilience. Sustainability and corporate responsibility are about moving forward while reshaping priorities. The most sustainable companies are the ones that continually adapt and progress in a shifting environment yet remain steadfastly loyal to their core values. Like a bamboo tree, these agile businesses stay deeply rooted in their essential values so they can bend with the strongest wind but never break.

When asked in March why the company took the initiative to make masks and ventilators, Ford’s executive, chairman Bill Ford Jr., said: “We’ve been around 117 years. We were the arsenal of democracy during two World Wars, we built iron lungs for polio victims. Whenever we’re called on, we’re there.” He also noted: “Nobody’s talked about the financial implications [of making masks and ventilators], because this is a national emergency. We’ll sort all of that out later.”

Ford is spot on. Studies show that companies that prioritize social and environmental sustainability over short-term monetary gains financially outperform profit-obsessed businesses by as much as 40% in the long run. A CEO could use the current crisis to enshrine sustainability in the DNA of his or her organization by becoming a B Corporation, a type of for-profit company that uses the power of business to solve social and ecological problems. Danone, a world-leading sustainable food producer, is working to become the world’s biggest B Corp by 2030.

Channel radical openness to foster connectedness. Many employees are feeling demoralized and fearful for their lives and economic stability as the number of coronavirus cases and deaths escalate and the economy collapses. It feels awful.

The origin of the word awful is aghe, an old English word for awe. Hence, an awful event is one that fills you with awe, causing respect or fear, or both. What we pay attention to allows us to be either afraid or filled with admiration. So instead of freaking out by constantly checking the coronavirus death rate, we can choose to pay attention to the millions of health workers worldwide who are selflessly serving COVID-19 patients. Their bravery and devotion can fill us with the kind of awe that feels good.

Researchers at the Greater Good Science Center at the University of California, Berkeley found that awe-inspiring experiences can have eight major positive impacts on our lives, including helping us transcend our limited sense of self and connect with a larger reality. We end up experiencing the larger dimension of life inside us and feel more connected to everyone because we sense the whole humanity within us.

Wise CEOs channel radical openness to cocreate a connectedness among their employees, along with a cooperative corporate culture that cares for the well-being of humanity. They create a vision for their organizations to build a better world. And they empower employees to innovate fearlessly toward that vision.

This is what Paul Polman did. Polman became CEO of the consumer goods giant Unilever in early 2009, during the height of the financial crisis. Company revenues and employee morale were in free fall. Rather than downsizing the company by selling off dozens of brands and laying off thousands, Polman upsized the company’s purpose by launching the Unilever Sustainable Living Plan (USLP). USLP established the goal of improving the health and well-being of over 1 billion people and enhancing the livelihoods of millions by 2020, and halving the company’s ecological impact by 2030.

Polman acknowledged that he didn’t have all the answers on how to implement USLP. When the company stopped issuing quarterly reports (a practice that isn’t required in the European Union) to focus on the longer term, its share price initially dropped 8%. Polman invited all employees to find creative ways to turn the ambitious vision into a reality. His authenticity and humility inspired Unilever employees to undertake the Herculean task of reinventing Unilever’s massive supply chain — with thousands of products and suppliers and hundreds of factories and warehouses globally — for increased sustainability.

At this point, Unilever has achieved most of its USLP targets, including gender parity in management and the use of 100% renewable electricity worldwide. Its shareholders have had cause to be happy, given that Unilever delivered a total shareholder return of 290% during Polman’s 10-year tenure as CEO, which ran through 2018. Unilever is now raising the bar higher on sustainability by aiming to become carbon-neutral by 2030. And in March, Unilever teamed up with the U.K. government to target 1 billion people in a global handwashing campaign to fight the coronavirus.

As the COVID-19 crisis worsens, we expect the majority of CEOs to either hunker down (as functional smart leaders do) or selfishly pursue business opportunities (as business smart executives do). But a few enlightened CEOs will use the framework of wise leaders to empower their employees to tap into their ingenuity and resilience. In the process, they will fundamentally reinvent their companies’ cultures and business models to serve a higher purpose.

Leading With Your Head and Your Heart