Driving CO2 emissions to zero (and beyond) with carbon capture, use, and storage

Any pathway to mitigate climate change requires the rapid reduction of CO2 emissions and negative-emissions technologies to cut atmospheric concentrations. Technology and regulation will be the key.
Driving CO2 emissions to zero (and beyond) with carbon capture, use, and storage

Reduced dividends on natural capital?

The world’s stock of natural resources performs a range of services that are essential to human well-being. But climate change is accelerating the depletion of natural capital.
Reduced dividends on natural capital?

Using analytics to get European rail maintenance on track

By harnessing data and analytics, European rail-infrastructure operators can deliver better performance at a lower cost.
Using analytics to get European rail maintenance on track

African banking after the crisis

Here’s how African banks can manage the impact of COVID-19—and prepare for recovery.
African banking after the crisis

COVID-19 and the employee experience: How leaders can seize the moment

The return phase of the COVID-19 crisis is a good time for organizations to create more tailored responses to workplace challenges, expanding on the goodwill and camaraderie earned in earlier phases.
COVID-19 and the employee experience: How leaders can seize the moment

Building security into the customer experience

Companies need to secure their digital channels against malicious attackers—without creating a negative experience for their customers.
Building security into the customer experience

Leaving the niche: Seven steps for a successful go-to-market model for electric vehicles

To regain momentum after the COVID-19 pandemic ends, the players in this market must reconsider their strategies.
Leaving the niche: Seven steps for a successful go-to-market model for electric vehicles

What makes Asia−Pacific’s Generation Z different?

Gen Zers in the Asia–Pacific region aren’t like their older siblings. Here is what you need to know.
What makes Asia−Pacific’s Generation Z different?

Maximizing the Benefits of B2B Supplier Diversification

As America’s population becomes more diverse and social movements highlighting the need for inclusion have taken center stage, governments, nonprofits, and large companies from a wide variety of industries (for example, Nike, Nordstrom, Pfizer, IBM, Microsoft, Dell, Coca-Cola, Fox News) have responded to these demographic changes with initiatives to promote supplier diversity and inclusion. These B2B programs are intended to make it easier for small businesses or those owned and operated by people from socially or economically disadvantaged groups, such as minorities, women, the LGBTQ community, and veterans, to win contracts and sell their goods and services. For instance, Google’s supplier diversity program has helped small and minority-owned businesses win contracts for a wide variety of commodity products and for services like transportation and catering.

Such businesses are vital to the economy and society of the United States. Small businesses alone account for nearly half of the country’s GDP and have created over 60% of the country’s new jobs in recent years. Women own 40% of all businesses in the U.S., and ethnic minorities own nearly 30%. Taken together, these numbers make small and diverse businesses a key facet of the U.S. economy — and the numbers will continue to rise.

Many companies describe the implementation of these supplier diversity initiatives as a moral decision and treat them as an investment in corporate social responsibility, demonstrating that their company stands for a set of core values. But despite these initiatives’ economic and social significance, their success has been mixed, due in part to doubts about their effectiveness.

Assumptions of Financial Inefficiency Results in Lackluster Support

Despite the fact that many large businesses proudly describe their supplier diversity initiatives on their websites, very few of them actually report the key results or disclose how many of their contracts are won by diverse suppliers. This lack of disclosure easily leads to cynicism; big companies may pay lip service or implement half measures, but it’s unclear how much they embrace and practice supplier diversity.

Some buyers fear that such initiatives do not make financial sense — that choosing to buy from any but the cheapest business increases their purchasing costs. Some politicians and analysts have criticized supplier diversity initiatives as financially inefficient and relevant monitoring systems as weak or lacking. Compounding the problem, even supportive politicians’ track records often fall short of their vision. In his 2020 presidential campaign, Pete Buttigieg included an ambitious supplier diversity initiative as a key part of “how we’re going to tackle systemic racism in this country,” stating that women-owned and minority-owned businesses would receive 25% of all federal contracting dollars. But such businesses received only 3% of South Bend, Indiana’s contracting dollars during his time as mayor.

Financial Benefits for Buyers

The assumption that supplier diversity initiatives are financially inefficient is common — but flawed. Supplier diversity initiatives not only are beneficial for the diverse businesses that get to sell their goods, they are also economically attractive to the buyers that implement them. A stream of academic research has demonstrated that supplier diversity initiatives can quite substantially reduce the buyer’s purchasing costs in a wide variety of industry settings. Such initiatives were shown to save $45 million in the radio spectrum industry, reduce expenditures in the logging industry by 10%, trim Montreal’s snow removal costs by 6%, and most recently, cut Virginia’s government procurement expenditures by 12%.

The key element among these research findings is the level of competition among businesses. In many product categories, there are a handful of large, highly efficient suppliers and a substantial number of smaller, slightly less-efficient suppliers. Without buyers’ supplier diversity initiatives, the large businesses essentially compete only against each other, leaving the remaining suppliers no realistic chance of competing on price. But when buyers have a supplier diversity initiative, the large businesses can no longer count on winning contracts just by being a dollar cheaper than the competition. As a result, supplier diversity initiatives intensify the level of marketplace competition, forcing large businesses to cut their prices further, which can lead to cheaper, more efficient purchases for the buyer.

The results are counterintuitive yet powerful: Supplier diversity can be valuable for buyers solely for reasons of short-term cost minimization. Buying from multiple suppliers decreases any single supplier’s monopoly power. Because buyers’ needs may change in the future, suppliers must remain nimble and innovative to stay viable and win future contracts. Thus, even companies that don’t truly value the socially responsible aspects of supplier diversity can attain substantial and immediate cost benefits from a supplier diversity program.

Of course, supplier diversity initiatives can also catalyze meaningful qualitative perks and strengthen relationships with customers. Being able to work with multiple suppliers ensures that buyers can best address the needs of diverse and emerging customer segments. Such initiatives allow companies to better connect with their increasingly diverse customer base, which may have significant implications for future growth, given that minority population growth will account for as much as 70% of the total increase in purchasing power from 2020 to 2045.

For society at large, supplier diversity and inclusion expand economic opportunity for the traditionally disadvantaged, reduce inequality, and are conducive to social stability and the promotion of civil society. Indeed, combating social inequality and promoting diversity are included in the United Nations’ 2030 Sustainable Development Goals.

Overcoming Barriers to Supplier Diversity Initiatives

Many barriers to adoption of supplier diversity initiatives are due to false assumptions and information gaps. The false assumptions are usually on the buyer’s side: Buyers often rely on past habits and relationships, assuming they’ll face higher costs with new vendors. Some eligible businesses choose not to participate in diversity initiatives, assuming it’s not worth their time; other eligible companies remain unaware of supplier diversity opportunities.

Information gaps, on the other hand, work both ways. In CVM’s “2019 State of Supplier Diversity Report — Diverse Suppliers”, surveyed suppliers shared that their biggest challenges were “difficulty in being discovered by bigger companies”; “purchasing, procurement, and other decision makers not attuned to how their supplier diversity programs work”; and a “fixation on the bottom line.” If the buying process is opaque or if the odds appear long, suppliers can easily get discouraged from bidding. Exemplifying a common sentiment among suppliers, one response read, “In the end, the companies only care about price. Diversity is a nonissue when price is involved.”

Given the power asymmetry of buyers and the historical disillusionment from minority suppliers, buyers must make deliberate choices in order for the supplier diversity initiatives to bear fruit and move the economic needle for both parties. For government buyers at the local, state, or federal level, this simply means committing to a clear diversity initiative and publicizing this information on the procurement website, on the bidding portal, and at government trade shows. Private-sector buyers have to make a more concerted effort to reach their target audience of suppliers, but partnering with corporate membership organizations can simplify this task considerably. Organizations like the National Minority Supplier Development Council and the Women’s Business Enterprise National Council can facilitate connections through their large networks of minority- and women-owned businesses.

Buyers also need to strategically promote their supplier diversity initiatives by, for example, highlighting supplier outreach programs and promotions at trade conferences frequented by minority suppliers. Furthermore, buyers must make the effort to deliberately encourage diverse business owners to participate, simplify the often-daunting purchasing process, and provide suppliers with guidance on how to be successful.

Small and diverse businesses are foundational to society’s economic stability, but they are also particularly sensitive to economic shocks given their size and often fragile financial standings, as evidenced by the current COVID-19 disruptions. Proactively including small and diverse businesses in government and large company procurement processes is a win for buyers, for diverse business owners and their employees, and for economic and social progress. These shared successes, across diverse members of society, can significantly contribute to prosperity and inclusion for all.

Maximizing the Benefits of B2B Supplier Diversification

Why Some Retailers Are Thriving Amid Disruption

A crisis reveals as much as it devastates. Retailers that were struggling before the coronavirus outbreak are now crumbling. Not well positioned to pivot going into the crisis, J.C. Penney, with more than 800 stores and nearly 85,000 employees, recently filed for bankruptcy, joining Neiman Marcus and J. Crew in the running list of retail casualties in the last two months. Other retailers have been forced to pivot quickly, and some have done so successfully, like Target, which reported a 141% first-quarter increase in digital comparable sales, albeit at a significant cost. Walmart also appears to be well positioned and saw a comparable sales increase of 10%, including a 74% jump in online sales.

However, in March, overall U.S. retail sales, including online transactions, suffered an 8.7% drop. That was the largest monthly decline on record since 1992, when the data was first made available by the Census Bureau — until April, when almost 630,000 outlets were forced to close, plunging sales by another 16.4%.

In China, where businesses are further ahead in reopening than in the United States and other countries in which peak outbreaks occurred later in the year, wearing a mask and having one’s temperature checked when entering a mall or supermarket are compulsory. As retail resumes in phases in portions of the U.S., it’s expected that measures to promote physical distancing and prevent virus transmission will remain in place for months to come. All these create friction, which will decrease foot traffic for another few months. No silver lining is in sight. The decline is likely to continue, if not accelerate.

And yet, a mortal blow to retail has not been felt universally. Some companies are thriving amid the darkest of months.

Consider Peacebird, a billion-dollar fashion retailer with seven brands and 4,600 brick-and-mortar stores. It’s a Chinese brand with a growing reputation for resilience. The company achieved revenue of more than 10 million yuan ($1.41 million) during the first three weeks of the Chinese New Year starting Jan. 25, the period when the coronavirus outbreak ravaged Wuhan and triggered the complete lockdown of the sprawling capital of Hubei Province. During the subsequent month of February, Peacebird continued to ship a total of 490,000 online orders while fulfilling 2 million transactions via its retail network.

Yet Peacebird is hardly alone. Cabbeen Fashion, a leading Chinese menswear designer brand, managed to top 2 million daily sales via WeChat Mini Programs during the first week of February, leveraging China’s largest social media app without resorting to pricing discounts. Multibrand jeweler Ideal similarly fast-tracked its “New Retail” initiative to navigate the crisis. It turned the company’s sales associates into livestream broadcasters on social media, each managing their own virtual store.

Then you have Forest Cabin, a cosmetics company that decided to go online with full force, promoting products through multiple livestreaming platforms and several social media apps. After its sales plunged by more than 90% during the Lunar New Year holiday as half of its physical stores were forced to close, the company made a stunning recovery during a two-hour livestreaming session on Valentine’s Day in which the founder appeared. That move alone brought in some 60,000 visitors and sold over 400,000 bottles of the company’s flagship camellia oil. During the week of International Women’s Day, from March 1 to 8, the company reported a fivefold jump in online sales.

The resilience of these companies is due to one simple fact: They have transformed their traditional business models rapidly by leveraging a plethora of digital practices. And this transformation is hardly unique to China: It is what players must undertake in the economy of the pandemic to survive.

Some retailers do more online. The U.K. retailer John Lewis is setting up an online hub giving advice to new parents and providing well-being services. Walmart and Target are doubling their efforts in curbside pickup, a service where customers order things online, drive to the store, and wait while a worker loads everything into their trunk. Perhaps most drastic of all is Nike, which managed to post 5% in revenue growth during the quarter that ended Feb. 29 — even though over 5,000 of its stores in China, a key growth market, were forced to close during January. With the help of livestreaming, Nike’s online sales in China increased by more than 30%. The brand launched the Air Max March Party on March 26, which was broadcast online on Alibaba’s Tmall. It attracted some 2.7 million viewers and 24 million likes, which translated into more than 5 million yuan (about $705,000) in sales in a mere three and a half hours. As a result, Nike’s sales revenue for the greater China region dipped only 5% in the first quarter of 2020, a figure that even Apple couldn’t match.

How do incumbents achieve such resilience? Here are five lessons for every traditional retailer:

1. Accelerate operations through multichannel marketing. Speed matters as retailers switch their operations from an offline or mixed model to online-only sales. Peacebird chairman Zhang Jiangping responded by going all in on e-commerce, and he personally drove the transition. He issued a notification to all sales agents giving them the authority to post content on social media channels while representing Peacebird. Then, in a milestone occasion on Jan. 28, the fourth day of the Chinese New Year, retail director Andre Gao hosted Peacebird’s first livestream session. His session, which over 100,000 people joined, inspired and excited many sales agents at the company. Thousands of in-store sales managers were motivated to become online sales agents.

Note that such digital-first pivots are not exclusive to Chinese companies. U.S. kitchen and housewares retailer Williams-Sonoma is doing the same thing. Although a lot of its digital tools were already in place, during the lockdown, the company quickly added services such as virtual design chats with experts, an ask-the-expert chat, and enhanced virtual design options. Despite closing its over 600 stores, the group posted an increase in comparable sales of 2.6%.

Meanwhile, department store Intime launched live commerce when the virus closed its 65 stores. All sales agents, working from home, interacted with customers via Taobao Live — the livestreaming platform run by Alibaba — and reached as many new clients in a three-hour period as they would have in six months inside an actual store. It’s a future that Bloomberg dubs “the next frontier of shopping.” That’s why Swedish home-goods retailer Ikea also took to a livestreaming session in March to promote the launch of its new Tmall store.

In light of these examples, business leaders should reframe their current thinking of multichannel approaches to retail and embrace livestreaming as an important arena to create direct, real-time engagement.

2. Retrain for revamps. While many traditional retailers are busy laying off or furloughing hundreds of salespeople, some are opting for skill upgrades. Jeweler Ideal proactively transformed its sales associates into online influencers, or, as they are known in China, key opinion leaders (KOLs). To help employees less experienced with social media marketing and live presenting, the company expanded its online corporate university to include special curricula on such topics. Later on, jewelry expert and KOL broadcaster Ming Zhang was recruited to train Ideal’s employees to further upgrade their broadcasting skills. Regardless of their role and position, employees could have immediate access to online training, and hundreds have since become effective presenters. Companies can and should take steps to retrain employees across different positions.

3. Empower teams. At Peacebird, the executive team has dramatically increased the autonomy of its front-line sales teams. Teams can decide, for instance, which marketing format to use — from livestreaming, to friend-circle promotion, to group-buying tactics. The company also tracked the success and conversion rates of different formats and shared this information through the online sales network, empowering employees to use collective data and knowledge.

Meanwhile, the company also launched a virtual chatbot, an online sales service system, and, finally, a set of standard operating practices, along with a scoring and measurement system for customer-facing employees. The system tracks conversion rates to identify the online sales practices that result in the highest actual sales. Such focused activities helped activate sales teams, provide needed resources, and offer quick feedback loops.

4. Fuel offline traffic. Physical department stores and shopping malls in the U.S. have long struggled to compete with online players. However, physical stores can be an important asset to connect with customers when coupled with technology — or, more precisely, brick-and-mortar stores remain an important asset to connect with customers despite the arrival of e-commerce. The amount of space needed may have decreased, but the need remains nonetheless: This is where human interaction takes place. Coupled with technology, brands can provide a seamless experience. In fact, online success may fuel offline foot traffic to brick-and-mortar stores. During the first week of March, as China began to ease traffic restrictions, Forest Cabin saw its online sales rise by 400%, matched by another 140% jump offline. “Our offline layout will remain unchanged because of digitalization, but we will focus more on the integration of online and offline sales and customer engagement channels,” said founder and CEO Sun Laichun. “In the future, it is imperative that different channels are optimized and integrated.”

5. Virtualize the back-end supply chain. Amid the closing of physical stores during quarantine, retailers can gain agility by investing in virtualizing their back-end inventory systems. For example, Peacebird shared real-time sales data with suppliers and franchisees, who, in turn, integrated it into various enterprise resource planning (ERP) systems to generate aggregated data analytics. Transitioning from a push to a pull strategy, Peacebird lets demand determine when and how it should ramp up production.

To quickly meet the needs of this new strategy, the company leveraged its existing cloud-based warehouse management system (WMS). The scalability of a cloud-based supply chain proved crucial: Over 65% of its total offline sales were shipped through its cloud-based WMS across 3,000 chain stores, which amount to nearly 10 times the total in 2019.

Finally, production is organized as a network of factories, some of them — but not all — owned by Peacebird. The company’s own factories have the highest flexibility and complete the design-to-production cycle within a week. Meanwhile, the partner factories supply the company with more conventional economies of scale but with longer turnarounds.

Business leaders should consider rethinking how their back-end supply chain could be more responsive to demand by leveraging existing cloud solutions. That’s how efficiency and flexibility can both be achieved.

The coronavirus has been devastating for many companies, turning countless shopping malls into retail wastelands. Yet the pockets of success also illustrate a path to forge ahead, despite the most challenging conditions, highlighting the wisdom of the saying, “no crisis should go to waste.”

Why Some Retailers Are Thriving Amid Disruption

How to Support Your Workforce in Critical Times

A few years from now, job candidates will want to know: “How did your organization's leadership respond to COVID-19?” Are you confident that your people will answer in a way that will make someone want to work for you?

In this session, Liz Fosslien and Mollie West Duffy, coauthors of The Wall Street Journal bestseller No Hard Feelings: The Secret Power of Embracing Emotions at Work, will guide leaders on how to best support their people during these unprecedented times.

Related Reading

Liz Fosslien and Mollie West Duffy, “Managing Stress and Emotions When Working Remotely,” MIT Sloan Management Review, March 31, 2020.

In this webinar, you’ll learn:

• Scientifically backed tactical tips for striking the right balance between showing empathy and encouraging productivity.
• Managing the stress of being a leader.
• Practicing selective vulnerability.

How to Support Your Workforce in Critical Times

Power and people: How utilities can adapt to the next normal

With economies and energy demand hit hard by the COVID-19 crisis, European and North American utilities need to rethink their operations to put themselves into position for long-term success.
Power and people: How utilities can adapt to the next normal

Communications get personal: How leaders can engage employees during a return to work

As organizations embark on the reentry phase of the COVID-19 crisis, four practices can help them build trust and a sense of purpose for the long term.
Communications get personal: How leaders can engage employees during a return to work

Designing data governance that delivers value

Follow these principles to shift from a data-governance model of loosely followed guidelines to one that makes the most of digital and analytics.
Designing data governance that delivers value

How US companies are planning for a safe return to the workplace

In a new survey of 100 executives, respondents expect most employees to be working on-site by December. To do so, they are implementing a range of interventions that could transform how people work.
How US companies are planning for a safe return to the workplace

Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era

The need for speed has never been greater. Here are nine ways companies can get faster.
Ready, set, go: Reinventing the organization for speed in the post-COVID-19 era

Unlocking enterprise efficiencies through zero-based design

Zero-based design allows even mature companies in asset-heavy industries to cut costs and complexity without compromising safety, quality, or customer trust.
Unlocking enterprise efficiencies through zero-based design

Resetting capital spending in the wake of COVID-19

Amid the pandemic, many CFOs are struggling to stabilize cash flows. A quick reset of capital spending—which can usually be achieved in about four weeks—can help them reach their goals.
Resetting capital spending in the wake of COVID-19

The Best of This Week

Preserving Your Company Culture When WFH

The pandemic resulted in a sudden, widespread shift to remote work, leaving many people feeling nostalgic for even the mundane facets of office life. Office life helps sustain organizational culture — the largely taken-for-granted beliefs and practices that underpin how people work together — but dispersed work arrangements can endanger it. Leaders can take deliberate action to protect and sustain company culture with these recommendations.

Building New Skills to Manage Through Disruption

Crisis, it’s said, begets opportunity — making the current coronavirus crisis an extraordinary cauldron in which to develop new skills. For better or for worse, the practice of core leadership skills that we all know are important (and may ordinarily struggle to implement) is no longer theoretical, having suddenly become a daily exercise. Leaders are developing new skills and seeing a meaningful payoff in three critical areas: prioritization, innovation, and humanity.

Are Leaders Hired to Tackle Racism Being Set Up to Fail?

In the midst of a national reckoning on systemic racism in America, major leadership departures have highlighted who does and doesn’t hold power. But companies bringing in new leaders to help tackle issues of race must also be mindful of the “glass cliff” phenomenon. Being elevated to high-level positions when things are going poorly can bring significant successes, but the risk of failure is also elevated.

Don’t Let Your Strategy Be Hijacked

Thanks to the connectedness of social media, it’s much easier for consumers to unite against companies in strategy hijacks — situations in which companies must adjust their strategies due to consumer backlash. These recommendations can help organizations diversify offerings to keep customers content and to monitor, preempt, and respond to disruptive strategy hijacks.

What Else We’re Reading This Week:

• Creating an anti-racist workplace requires measuring outcomes across all people practices in organizations — “from recruiting and hiring to promotions, compensation, and attrition”
• How intelligent is your AI? Here are four key questions to ask
• Five tips for data protection while working remotely

Quote of the Week:

“Opportunity marketplaces tap into all of the organization’s talent, protect employment, build loyalty, and enable the organization to effectively respond to shifting priorities in the short term and thrive in the long run.”

— David Kiron, Jeff Schwartz, Robin Jones, and Natasha Buckley in “Create a Crisis Growth Plan: Start With Opportunity Marketplaces”

The Best of This Week

An operating model for the next normal: Lessons from agile organizations in the crisis

Companies with agile practices embedded in their operating models have managed the impact of the COVID-19 crisis better than their peers. Here’s what helped them cope.
An operating model for the next normal: Lessons from agile organizations in the crisis

Transformation and resilience: An interview with Best Buy’s executive chairman Hubert Joly

Hubert Joly shares lessons from leading the turnaround of the retail and technology giant and how it prepared him and the company for the current crisis.
Transformation and resilience: An interview with Best Buy’s executive chairman Hubert Joly

A global view of financial life during COVID-19

As the pandemic spreads across the globe, financial decision-maker behavior and sentiment continues to shift.
A global view of financial life during COVID-19

Demystifying modeling: How quantitative models can—and can’t—explain the world

The COVID-19 crisis has brought quantitative models to the forefront. Here are some ways that modeling helps us—as long as we avoid its pitfalls.
Demystifying modeling: How quantitative models can—and can’t—explain the world

LGBTQ+ voices: Learning from lived experiences

New research reveals the challenges that LGBTQ+ employees face, and six ways to help them bring their authentic selves to work.
LGBTQ+ voices: Learning from lived experiences

How artificial intelligence can improve resilience in mineral processing during uncertain times

Even before the COVID-19 pandemic, mineral-processing companies were grappling with profound uncertainty. Those that took steps to harness the power of AI improved agility and operational resilience.
How artificial intelligence can improve resilience in mineral processing during uncertain times

Don’t Let Your Strategy Be Hijacked

Early in 2020, wireless sound-system manufacturer Sonos announced that it would no longer provide support for some of its oldest products: wireless speakers launched between 2006 and 2009. The company argued in an official blog post that the wireless speakers had been “stretched to their technical limits in terms of processing power” and “would no longer receive software updates or new features.” Moreover, systems containing both new and legacy products would no longer receive updates, making perfectly functional devices more-or-less useless, according to some critics. Hordes of angry users took to Twitter under the hashtag #SonosBoycott and argued that loyal early adopters were being punished. It did not take long for Sonos’s CEO to reach out, stating “We heard you. We did not get this right from the start,” and promising continued technical support for older devices.

This example illustrates a strategy hijack — that is, a situation in which groups of dissatisfied customers overtake the control of an organization’s strategy. Sonos is far from alone in having its strategy hijacked: Adidas, Coca-Cola, Carlsberg, H&M, and Lego, to mention a few examples, have had to adjust strategies in response to consumer backlash.

Our research explores the underlying causes of strategy hijacks, the changing nature of consumer-company dynamics, and resulting implications for leaders. Together, our findings suggest a fundamental shift in power dynamics in the realm of strategy stemming from technological and social developments that have changed how companies and customers interact. Thanks to the connectedness of social media, it’s becoming much easier for consumers to unite against companies — and thanks to the transparency of widely available data, it’s now also much easier for consumers to keep an eye on company behaviors.

Why Are Strategy Hijacks So Prevalent Now?

We argue that strategies increasingly become hijacked due to significant technological developments and fundamental changes in consumer behavior. Specifically, customers have become more entitled, engaged, and entangled. (See “Three Dimensions of Customer Behavior.”)

Three Dimensions of Customer Behavior

Customers who are entitled, engaged, or entangled with brands may attempt to hijack a brand’s strategy.

Let’s explore each of these dimensions of the modern customer.

Entitled. Customers become more entitled due to both technological and competitive developments. Technological developments have accelerated customer demands, both in terms of customization, real-time responsiveness, and customer centricity. Moreover, companies increasingly compete with each other to fulfill consumer needs. In many ways, the situation can be described as “the Red Queen’s race,” in which companies run faster and faster just to stay in place. As a result, what were extraordinary, nice-to-have features meant to delight customers have become taken-for-granted baseline features that are expected by customers. Failure to deliver on the features expected by customers triggers strong responses. In other words, customers have become entitled.

A symptomatic example of customer entitlement arose when Mondelez International announced that it was changing the iconic shape of its globally recognized chocolate bar, Toblerone, by leaving out every other mountain peak, thereby reducing the weight of its 170-gram bar to 150 grams. The company blamed rising ingredient prices and indicated that the new shape would allow it to maintain the same price. The announcement fueled immediate attention and outrage online, as illustrated by a Google Trends search around the day of the announcement (see below).

Google Searches for ‘Toblerone’ From 2004 to 2018

Google searches for “Toblerone” spiked after the company announced a change in product design.

When we first read the strategic announcement from Mondelez, we predicted that Toblerone’s consumers would “hijack” the company’s strategy and force it to revert to the initial shape — and we were right. Companies can’t scale down performance on taken-for-granted expectations, illustrated by Mondelez’s 2018 reintroduction of the Toblerone bar — in its original shape and even bigger than before.

Engaged. Companies increasingly want to engage their customers, and technology has been a driving force in connecting consumers to companies and each other. Users have been given tools to codevelop products with companies, online communities have applied themselves to problem-solving product features, and loyalty programs and analytics have helped companies understand consumer behaviors and deepen consumer ties to products. Consequently, many customers develop deep, personal relationships with organizations and brands. While such engagement is important for satisfaction and loyalty, it can also result in dissatisfaction if the organization acts in ways that are incongruent with customers’ ideals.

For instance, the Swedish clothing brand H&M recently faced consumer backlash around potential “greenwashing” following accusations that the company burned unsold clothes despite issuing ambitious sustainability statements. H&M experienced further backlash some time later when the company ran an advertisement that many consumers regarded as racist. Whether their critics were right or wrong in their outrage, consumer engagement always entails the risk of turning sour. When you develop a relationship with consumers, you similarly provide them a stake in your business.

Entangled. Social media has increasingly entangled customers and companies in intricate, interconnected networks. Companies increasingly want to connect with customers on social media and seek positive word-of-mouth communication among consumers. Customers, too, desire this type of connection and, consequently, are immersed in virtual networks of fellow consumers, businesses, and other stakeholders — all trying to influence each other. As a result, changes desired by consumers or other stakeholders cannot be isolated but spread like ripples in the water in these entangled networks.

This was evident in the complicated case of Lego, Shell, and Greenpeace, in which each organization and its consumers was entangled in networks and connected via social media. In 2014, Greenpeace began to pressure Lego to end its partnership with Shell by launching a YouTube video showing a Lego universe slowly drowned in oil. The video quickly went viral and obtained widespread support among consumers. After three months of aggressive campaigning, the Danish toy company announced that it would not renew its contract with Shell.

What Can Strategists Do?

Strategy is about making choices and accepting trade-offs. But when customers hijack your strategy, they make choices on your behalf and, ultimately, change or even reverse your strategies. What can strategists do in such situations? We offer four pieces of advice.

Predict and preempt. Ideally, strategists must recognize that plans may be in danger of being hijacked by customers and take preemptive measures to counteract such resistance. We were able to accurately predict the troubles that Mondelez would face when it decided to change Toblerone. Had the relevant managers done the same, effective preemptive measures might have been put in place, perhaps by launching a “Toblerone light” version alongside the conventional Toblerone. By doing so, the company would have avoided taking customers by surprise and in fact would’ve offered consumers an additional choice — reducing the risk of a hijack. The simple rule is: Think it through and take the risk out.

React and revert. If a strategy has already been hijacked, the company must react and, if necessary, revert to the initial position. This response was demonstrated by the Danish brewer, Carlsberg, after launching a new signature beer bottle to replace its standard bottle. Both consumers and distribution partners (especially bar owners) vehemently protested. After three months, Carlsberg’s management team, swayed by customer pressure, lowered its prices for the new bottle. Yet, this was not enough to satisfy consumers, and in the end, Carlsberg relaunched its standard bottle in the Danish market. Companies need to be similarly flexible and keep U-turn options open.

Monitor and mobilize. Companies must continuously monitor sentiments among their customer base and, when applicable, try to mobilize customers around the new strategy. In a surprising turn, consumers have actually begun to show interest in New Coke, the infamous marketing failure popularized by the 1980s nostalgia of the hit series Stranger Things on Netflix. Coca-Cola has partnered with Netflix to capitalize on this sentiment by bringing back New Coke for a brief time. In so doing, Coca-Cola not only utilizes its ability to monitor consumer sentiments, it also mobilizes those sentiments for its own benefit.

Divide and diversify. Another key element of dealing with hijacked strategies is to unbundle the overall strategy into separate projects. The organizations considered here typically did two things at once: They introduced a new product and removed an old one, thereby creating room for a hijack. By treating the two issues as two strategic projects, organizations can simultaneously address different consumer segments and buy themselves time to execute the projects at different speeds. For instance, had Carlsberg introduced the new bottle alongside its old bottle, and only discontinued the old bottle when and if consumers embraced the new one, the company’s strategy probably would not have been hijacked.

When consumers become more entitled, engaged, and entangled, your strategy runs the risk of getting hijacked. When customers hijack a strategy, the strategy’s trajectory starts to resemble that of a boomerang returning after being thrown. While this return is an excellent quality for a toy, it is very expensive for a company’s marketing strategy. Corporate managers can decide to trade out a potential boomerang for an arrow that will hit the target. By following these recommended practices — anticipating future hijacks, navigating once your strategy is hijacked, using consumer sentiment to your advantage, and simultaneously managing different interests among consumers — your strategy’s trajectory will transform from a boomerang into an arrow that is energized by the masses to meet your consumer target.

Don’t Let Your Strategy Be Hijacked

What history can teach us about the economic impact of the coronavirus pandemic

The battle against COVID-19 is unlike any other wars, but the economic consequences offer some similarities, write Gary Pinkus and Sree Ramaswamy in Fortune.
What history can teach us about the economic impact of the coronavirus pandemic

The mass personalization of change: Large-scale impact, one individual at a time

Here’s how technology, data, and human insight are transforming the way we enact change. Fast.
The mass personalization of change: Large-scale impact, one individual at a time

The next normal in consumer: Implications for M&A

Lessons from the global financial crisis teach us that consumer goods companies should consider an active approach to M&A, adapted to the current context, to emerge stronger in the next normal.
The next normal in consumer: Implications for M&A

Entering a new decade of AI: The state of play

While organizations report measurable benefits from artificial intelligence, much work remains to scale impact, manage risks, and retrain the workforce.
Entering a new decade of AI: The state of play

A culture of caring: A conversation with Globe Telecom’s Glenn Estrella

Growing a market-leading business while spawning start-ups depends on freedom to fail and a culture of caring modeled from the top down, according to the start-up chief of the Philippines’ largest mobile telecom provider.
A culture of caring: A conversation with Globe Telecom’s Glenn Estrella

How to Sustain Your Organization’s Culture When Everyone Is Remote

Within just a few weeks earlier this year, the COVID-19 pandemic triggered a massive shift to remote work that may change the office as we know it forever. Many large companies are urging employees to work from home for months to come, and some CFOs are making plans to shed office real estate and permanently move some portion of their workforces to remote working.

With such a swift and large-scale exodus of white-collar workers from their offices, it’s no surprise that some feel nostalgic for even the mundane facets of office life — the cubicle mazes, bad coffee, and watercooler conversation. What makes office life meaningful for many, though, is that it helps sustain organizational culture — the largely taken-for-granted beliefs and practices that underpin how people work together. These are harder to feel and maintain when so many of us are crouched at a kitchen table, fending off children and pets, and growing exhausted with a constant stream of videoconference meetings.

Although remote working is far from new — 8% of U.S. employees worked from home at least once a week before the pandemic — the benefits of face-to-face interaction for individual well-being and corporate culture are clear. In fact, IBM, a pioneer in remote working that heralded the benefits of having 40% of its workforce working remotely in 2009, made headlines in 2017 when it brought thousands of employees back to the office.

It turns out that even in today’s world of abundant online collaboration tools, there is often no substitute for copresence when communication, problem-solving, and creativity are called for. In part, this is because as humans, we make sense of the world and our interactions through our body language, emotions, and embodied experiences, all of which are much different in a virtual space.1

What will the exodus from offices do to organizational culture, which is felt and experienced more than it is articulated? How can managers and employees sustain a culture, or adapt it effectively, in the face of extended periods of remote working?

How Organizational Culture Works — Without an Office

Culture is the holistic and somewhat mysterious force that guides actions and interactions in the workplace. Despite a company’s best efforts to capture culture in words, such as the stated values or commitments posted on the wall, most employees would recognize these as, at best, sparse signposts of a more complex, subtle ethos that pervades everything they do — one that, after a while, becomes largely taken for granted. That’s why we often only recognize our organization’s culture when we step outside of it — for example, by working closely with a new client or switching companies, roles, or geographies, or perhaps through the sudden loss of it when working at our kitchen tables with no physical interaction with colleagues.

The good news is that the some of the most visible signifiers of culture, such as foosball tables or in-house chefs, are only what MIT Professor Emeritus Edgar Schein refers to as its artifacts — at best, they’re vehicles for interactions that fuel a real culture of, say, playful creativity.2 When the artifacts change, the deeper cultural beliefs and habitual practices need not also change.

But when people return to work, the workplace itself will be physically transformed to shield employees from one another and enforce new hygiene standards. How can managers ensure that valued aspects of the culture endure?

Make culture visible by calling it out. Aspects of culture are present — though often obscured — in seemingly mundane, day-to-day happenings, like colleagues interacting or making decisions. Sociologist Ann Swidler describes habitual practices as the core carriers of culture. She argues that people draw from a “tool kit” of cultural habits and practices.3 Knowing how to use a culture’s tools — that is, when and how they apply — is the real mark of belonging to a culture.

In turn, the beliefs about how we do things as an organization are revealed through people’s practices. For example, at one major oil producer, employees default to “getting things done” — dropping other priorities and jumping in to solve problems as they come up — and those who rise through the ranks are particularly effective at such reactive problem-solving.4 Associated with this habitual practice is employees’ belief that their culture is entrepreneurial and even “scrappy,” especially when compared with peers they regard as more cautious and risk averse.

As everyday tasks now occur remotely and practices are sometimes hard to observe, it’s even more important for leaders and managers to call attention to and acknowledge which aspects of culture are on display and why that matters. For example, if a group is making a decision about how some core aspect of its service offering will shift online for a period of time, the nature of the problem-solving around those challenges should reflect valued aspects of the culture. A manager might remind his or her team that they arrived at a certain approach because they are so skilled at drawing on multiple perspectives for input. Laying bare this aspect of the cultural tool kit not only reminds people of its existence but also signals its value; by authentically reflecting employees’ skills, the company’s solution should align better with customers’ expectations, even as competitors are making similar shifts.

Perhaps as important is calling out affronts to culture: When managers don’t visibly censure practices that depart from the desired culture, the boundaries of culture are not well defined. Finally, invite others to name or defend cultural norms when they see them in operation. Culture cannot be simply espoused by leaders but must arise from and resonate with employees’ experiences.5

Welcome modifications to the cultural tool kit. One benefit of thinking about culture as a tool kit is that it alerts us to the fact that we have a variety of tools at our disposal when we get things done in an organization. And, like a real tool kit, we often have more tools than we regularly use. But Swidler argues that this very feature — knowing more culture than we use — is what enables us to use culture flexibly and somewhat expansively. Sometimes it might be entirely appropriate to be entrepreneurial, but under other circumstances in the same organization, it’s important to be risk averse.

Tool kits also change somewhat over time. This is because we all are exposed to various cultural tool kits through other aspects of our lives — such as volunteer activities, sports teams, or even our home lives. Employees can begin to use habits and practices developed elsewhere and perhaps begin to influence how others act, ultimately expanding the cultural tool kit in their workplace.

With your workforce now scattered and working from home, other practices might be more readily at hand. Are best practices from Zoom yoga sessions infiltrating your work calls? Are the ways that teachers coax input from your reticent teens during home-schooling influencing how you check in with your team? These may be useful practices to cultivate as part of a modified cultural tool kit. After all, we now understand organizational cultures to be much more open and interactive with their surrounding environments — responsive to expectations to be more socially and environmentally responsible, for example — and aligned with other aspects of employees’ experiences beyond the workplace.6 Now might be an opportune time to actively notice when your organization’s cultural tool kit is being flexed or extended.

For instance, employees’ actions to connect creatively with vulnerable people in their communities might be showing up as new ways of enacting a cultural commitment to inclusivity at work. By noticing these actions and explaining how they connect to existing elements in the tool kit, managers can reinforce how their culture is responsive to changing circumstances. Conversely, unwelcome modifications to the cultural tool kit that undermine core beliefs should be swiftly countered, perhaps by offering alternatives that are more culturally in tune. After all, cultures thrive and evolve when they are cohesive, meaning that even divergent actions stem from common beliefs but devolve when they allow unmitigated variety.

Use disruption to bolster the cultural core. Not every aspect of culture is equally critical to guard. Some of what is in a cultural tool kit may be the equivalent of many sizes of picture hangers — useful, but only somewhat substitutable and applicable in relatively limited situations. Other contents of the cultural tool kit might be more akin to your grandfather’s well-worn measuring tape — applicable in a variety of situations and holding special value because it is connected to memories and history that are important to you.

A time of disruption presents an opportunity to remind employees of aspects of the organization’s past — founding ideals, stories, and commitments — that have shaped both its culture (how we get work done and think about our work) and are central to its identity (who we are as a company). Building up these core elements of culture can remind employees of the organization’s strengths and help them navigate tough times.

For example, MIT’s president, L. Rafael Reif, recently reminded the university community of the institution’s evolution from a technical college to a leading research entity as a result of World War II: An intense effort to develop radar technology birthed an interdisciplinary, collaborative culture that students, faculty, and staff continue to recognize and value. That collaborative ethos will be critical to how the organization might evolve as a result of the current pandemic.

Conversely, disruption can also open the door to challenging outdated aspects of a culture that are nonetheless given outsize symbolic and ceremonial value but are now holding back needed transitions. Some organizations are finding that long-desired changes, like decentralizing their decision-making or becoming less bureaucratic, have suddenly — and surprisingly — taken place in mere weeks. These changed practices will only last, however, with ongoing work to connect them to some existing aspects of the culture and to suppress or eliminate other aspects that fight against them.

And managers should take care in making changes: Attempting to change aspects of culture that are tied strongly to an organization’s identity can be especially disruptive and generate strong emotions.7

Not all organizations will emerge stronger from the current pandemic and the devastating health, economic, and social impacts it is unleashing. But managers and leaders with a firm sense of what their organizational culture is — a common tool kit that enables their employees to act, and the beliefs and commitments brought forward by acting in certain ways — can help their employees navigate the current environment in a way that is authentic to the organization’s history yet flexible to the realities we all face.

It may be a long time until many white-collar workers see their offices and gather with peers around the proverbial watercooler, but we can remind ourselves that it was never about the watercooler anyway. Culture is ultimately about the actions we take and make visible to others, and the meanings we invest in those — harder, but not impossible, to maintain from the kitchen table.

How to Sustain Your Organization’s Culture When Everyone Is Remote

How the LGBTQ+ community fares in the workplace

Despite visible corporate support, today’s workplace is falling short of full inclusion. Here’s what companies need to know.
How the LGBTQ+ community fares in the workplace

Meeting E&C needs in and after coronavirus: A Q&A with WSP’s Paul Dollin

A global engineering consultancy is planning for recovery by rethinking how its people work, as it safeguards its engineering and construction operations.
Meeting E&C needs in and after coronavirus: A Q&A with WSP’s Paul Dollin

Relation-shifts

What we’ve learned being together, being apart, and being virtual
Relation-shifts

The next wave of healthcare innovation: The evolution of ecosystems

How healthcare stakeholders can win within evolving healthcare ecosystems.
The next wave of healthcare innovation: The evolution of ecosystems

Understanding organizational barriers to a more inclusive workplace

Survey results show that many employees do not feel fully included at work and want their organizations to do more to advance inclusion and diversity. To do so, companies can address four factors.
Understanding organizational barriers to a more inclusive workplace

Customer care: The future talent factory

Customer care employees can bring invaluable customer insights and expertise from the front lines of customer service to positions in other areas of the organization.
Customer care: The future talent factory

The future of customer experience: Personalized, white-glove service for all

The next horizon of customer service will be built on individual customer profiles, enabling companies to quickly resolve issues and even prevent them from occurring.
The future of customer experience: Personalized, white-glove service for all

Technology and innovation: Building the superhuman agent

The latest tools have the potential to transform the performance of contact center agents. Understanding how to apply these technologies before, during, and after customer contact is the first step.
Technology and innovation: Building the superhuman agent

The vision for 2025: Hyperpersonalized care and ‘care of one’

Personalization—and the empathy and connection that go with it—are more critical than ever. What will it take to meet customer’s expectations in 2025 and beyond?
The vision for 2025: Hyperpersonalized care and ‘care of one’

Redefine the omnichannel approach: Focus on what truly matters

Many companies try but fail to build an omnichannel experience for every channel and customer. Leaders should instead limit their focus to the top two or three cross-channel customer interactions.
Redefine the omnichannel approach: Focus on what truly matters

Create a Crisis Growth Plan: Start With Opportunity Marketplaces

The COVID-19 pandemic has completely disrupted how most global enterprises operate. With new priorities comes an urgent and strategically important challenge: ensuring that enough of the right people are working on the right opportunities at the right time, all while operating in an investment-constrained environment. Organizations should have visibility into their workforce capabilities and deployments to make informed decisions about how to optimally allocate their workforces.

Based on recently released research on opportunity marketplaces,i we contend that market mechanisms can be a faster and more effective way to address this challenge than traditional workforce planning and deployment methods. There is evidence of organizations using marketplaces to accelerate the redeployment of employees and workers to business-critical roles and projects in a variety of industries and circumstances. These marketplaces can also have a beneficial effect on workers: They can sustain employment, reveal untapped worker capabilities, and motivate workers in new ways.

What Is an Opportunity Marketplace?

MIT Sloan Management Review and Deloitte’s 2020 research collaboration identifies the growing use of opportunity marketplaces — systems and platforms that enable talent to access strategically valuable opportunities while building skills and capabilities for themselves. Markets that facilitate successful exchanges between organizations and their workers around defined opportunities tend to efficiently and fairly allocate talent.

These markets empower and encourage workers to evaluate, choose, and act on opportunities that are important for the organization and for themselves. In turn, opportunity marketplaces can provide an organization with actionable data and analytics, which can help it become more efficient, valuable, and productive.

Like any fairly designed market, opportunity marketplaces are about mutual gain.

Schneider Electric is a case in point. In 2018, the company created a platform-based open talent market, in part to retain workers: Managers listed opportunities for side projects, training, and mentoring, and workers pursued those opportunities according to their interests and availability. When the pandemic started, Schneider’s marketplace became essential to getting work done. “We’re relying tremendously on our open talent markets,” says Andrew Saidy, vice president of talent digitization. “The pace of employee registrations we’re seeing is unprecedented; more projects are being posted. With the crisis, you have budget cuts here, you have roles being frozen there. But managers still have projects that they need to deliver, so they need helping hands.” Schneider also encouraged managers to split positions affected by a hiring freeze into different projects and post them on the exchange, offering more opportunities to more workers.

Henry Ford Health System is building a talent market to shift capacity from the local hospital level to a cross-system network level. The Michigan-based health care provider is composed of six hospitals, multiple ambulatory sites, and clinics. Pre-COVID-19, office staffing occurred locally rather than centrally. If someone in a given hospital called in sick, someone else within that hospital would fill in. Now, with staffing needs exceeding the capacity of any one hospital or clinic, Henry Ford developed a centralized staffing command center. If a talent need can’t be met at the local level, the request is moved to the Flexible Staffing Command Center where the need can be addressed across the health system or in some cases externally via collaboration with outside partners. The command center is a platform that connects to the company's human resource management system, enabling managers to request resources or note staff as available. Those who participate complete a profile with background information on their skills, including the languages they speak and licenses they hold, to help managers assess their fit for specific roles. Ultimately, this has increased business leaders’ access to more resources and people, and workers have had more opportunities for work.

In this pandemic market environment, opportunity marketplaces represent a step change in companies’ ability to efficiently and effectively match labor with tasks.

Our report, “Opportunity Marketplaces: Aligning Workforce Investment and Value Creation in the Digital Enterprise,” shows that such digital platforms can improve data-driven decision-making and align talent quickly to new priorities.ii In this pandemic market environment, they represent a step change in companies’ ability to efficiently and effectively match labor with tasks. They can also overcome information constraints: The typical brew of HR information about workers, such as job descriptions, résumés, and skill inventories, offers only a partial view of worker capabilities. What’s more, these markets offer options that promote personal agency and enhance trust between an organization and its workers. For companies looking to thrive in — and beyond — the current crisis, opportunity marketplaces represent a powerful tool for advancing the interests of management and workers.

Value Creation With Opportunity Marketplaces Beyond the Current Environment

At their core, opportunity marketplaces are platforms and systems that enable talent to pursue opportunities that are valuable to both themselves and their organizations. Our ongoing research documents the slow emergence of these platforms pre-COVID-19 and their rapid proliferation during the pandemic.

Opportunity marketplaces come in different shapes and sizes. Some are entirely internal, as is the case with Schneider’s internal talent market. Other opportunity marketplaces cross organizational boundaries. Examples — Henry Ford among them — are legion across the business landscape. The Wall Street Journal identified several supermarket chains in the U.S. and Europe that recently created an exchange to bring on furloughed or laid-off workers from food-service and hospitality companies.iii In industry after industry, companies that have furloughed workers are actively referring their own employees for temporary roles at other businesses that need more staff to handle increased demand.

To be clear, opportunity marketplaces are not simply tools for managing redeployments in a crisis or as a retention mechanism. They also help companies execute growth strategies. One large global bank is using its marketplace to allocate excess workforce capacity to better support regions where the business anticipates postcrisis growth.

Opportunity marketplaces appear to offer distinct advantages that are expected to outlast the current crisis. A distinctive benefit is their ability to uncover, display, and communicate worker skill sets and capabilities that managers either are less familiar with or simply don’t know about. Former Hewlett-Packard CEO Lew Platt is said to have once remarked, “If only HP knew what HP knows, we’d be three times more productive.”iv Opportunity marketplaces offer companies the ability to learn more about the competencies and capabilities it already has. That understanding, in turn, improves management’s ability to direct talent where it can generate the most value. Many organizations are finding that source of learning to be an ongoing source of value. Given that it could be five years before employment levels return to pre-COVID-19 levels, some leaders are already applying their deeper understanding of worker interests, talents, and capabilities.v Their encouraging results show that opportunity marketplaces can boost worker loyalty, improve an organization’s brand reputation, and advance the acquisition of new talent when priorities shift.

Successful opportunity marketplaces both demand and elicit agency from workers.

These markets also offer a window into who is willing to take on new projects or, in Saidy’s words, act as “owners” of their careers and roles. This information can be a valuable source of insight into a company’s morale and entrepreneurial spirit. Workers’ willingness to take advantage of opportunity is distinct from, but likely just as important as, providing new opportunities to workers. Attending to one without the other can doom market initiatives. Successful opportunity marketplaces both demand and elicit agency from workers.

Three Keys to Developing an Opportunity Marketplace

Deriving strategic value from opportunity marketplaces often depends on having an effective platform that is capable of listing and communicating opportunities. Managers can use the platform to make opportunities available and accept workers who willingly choose to pursue these opportunities.

1. Commit to digital platforms that support opportunity marketplaces. Despite the challenges and constraints most organizations currently face, leaders have several options for developing the technology platforms necessary to establish an opportunity marketplace now. Many companies can build off their existing human capital management systems to get started. Henry Ford was able to set up its command center within two weeks using this approach. Some providers offer cloud-based solutions that enable organizations to develop a platform relatively quickly and cost-effectively.

2. Clearly communicate and reinforce expected behavior change. Developing and implementing the platform technology is arguably the easiest part of the development process. A more difficult prerequisite for opportunity marketplaces may be behavioral: changing the minds and practices of managers and employees. Opportunities should be listed and pursued. Reluctant managers won’t add opportunities. Hesitant workers won’t participate in the exchanges. Understanding and managing the dynamic between worker agency and management’s provision of opportunity is crucial. The figure below illustrates how tensions between these factors can undermine the effectiveness of opportunity marketplaces. For instance, creating an environment where managers are comfortable requesting help from different corners of the organization (and beyond) is a natural part of the marketplace-building exercise but can be a cultural challenge. Senior leadership should help managers become comfortable offering opportunities and ensure that workers are comfortable taking the initiative to sign up. At Schneider, Saidy is emphatic that the company’s talent market has empowered leaders and managers to better embrace and enact Schneider’s core values.

The Worker Agency-Organizational Opportunity Model

An integrated 2×2 framework shows how organizations and their leaders might describe their own opportunity marketplace cultures.

Source: M. Schrage, J. Schwartz, D. Kiron, R. Jones, and N. Buckley, “Opportunity Marketplaces,” MIT Sloan Management Review and Deloitte, April 2020

3. Recognize that opportunity marketplaces are a strategically valuable source of data about your workforce. Opportunity marketplace design rests on the design of data systems that continually help identify which opportunities are (and should be) listed, who is listing the opportunities, where the opportunities are happening, and who is taking advantage of them. These markets signal the most sought-out tasks and projects, the managers who are sought out most, and the employees who are engaged on the platform. Ensuring that this data is incorporated into performance management systems in a transparent way — and, more broadly, integrated into executives’ understanding of their workforces — can be key. Proper governance of this data, such as ensuring its display on executive dashboards, conditions the overall value of opportunity marketplaces to the enterprise.

Opportunity marketplaces tap into all of the organization’s talent, protect employment, build loyalty, and enable the organization to effectively respond to shifting priorities in the short term and thrive in the long run.

The Time to Begin Is Now

Opportunity marketplaces can be valuable during growth times, but they can be just as relevant — perhaps even more so — in times of market uncertainty. Some leaders may believe that layoffs are the only way to respond to significant short-term market challenges. However, opportunity marketplaces offer an alternative. They can tap into all of the organization’s talent, protect employment, build loyalty, and enable the organization to effectively respond to shifting priorities in the short term and thrive in the long run. For leaders thinking beyond survival, opportunity marketplaces can be an invaluable tool for better understanding their workforces, building new capabilities, and learning how to more effectively execute their strategies.

Create a Crisis Growth Plan: Start With Opportunity Marketplaces

Top ten myths of technology modernization in insurance

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Top ten myths of technology modernization in insurance

Opening with care

By acknowledging the economic rationale of the care economy, India can make it easier for women to work for pay-and equally reap the productivity gains of doing so, write Roopa Purushothaman, Anu Madgavkar and Vivek Pandit in Hindustan Times.
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A recent McKinsey survey of Chinese agents offers insights into how COVID-19 has affected the Chinese insurance industry and what insurers can do moving forward.
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Cybersecurity in automotive: Mastering the challenge

With the software content of cars increasing, what do automotive players need to know about cybersecurity?
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The next software disruption: How vendors must adapt to a new era

Over the turbulent past decade, many legacy software players proved to be remarkably resilient. Now they must adopt a new strategic playbook to weather the different challenges ahead.
The next software disruption: How vendors must adapt to a new era

How Intelligent Is Your AI?

In a world where buzzwords come and go, artificial intelligence has been remarkably durable. Since it first emerged as a concept in the 1950s, there has been a relatively constant flow of technologies, products, services, and companies that purport to be AI. It is quite likely that a solution you are investing in today is being referred to as AI-enabled or machine-learning-driven.

But, is it really?

The reality today for most organizations is that AI and machine learning form a rather small piece of the overall analytics pie. Indeed, research conducted by London-based investment firm MMC Ventures revealed that 40% of Europe’s artificial intelligence startups did not use any AI at all. Furthermore, the offerings of many startups and analytics providers, even if quite advanced, fall short of even basic AI.

We define AI as any computer-based system that observes, analyzes, and learns. The key here is that these systems are iterative — they get better and more accurate as they collect and analyze more data, without explicit intervention from humans. As the term implies, these are machines that learn, however simple the learning may be.

What Isn’t AI

Just as it is important to define what characterizes a system as AI, it’s equally important to identify what isn’t AI. Mistaking advanced analytics and computing techniques for AI and machine learning can often lead to confusion, and the following section details some of the most common AI fallacies for leaders to understand.

1. Just because a system uses an algorithm and advanced statistics, that doesn’t make it AI.

An algorithm is simply a set of predefined steps or rules to solve a problem. These can be simple (think of an if-then statement) or very complex (think of a chess-playing machine). However, most algorithms are static: They will always return the same output given the same input. That is, they do not adapt or learn.

These algorithms are often coded using standard statistical models, like correlation or regression, that are very good at identifying trend lines in well-defined data. These trend lines allow them to offer predictions of future states based on a set of past states. However, true AI is able to work with data that is not well structured, well defined, or even numeric. Some of the biggest breakthroughs in AI and machine learning have come from insights generated with natural language, image, and video data.

2. Just because a system answers questions, that doesn’t make it AI.

There are plenty of technologies, like conversation agents, that have the ability to answer questions posed to them. Recall the popularity of decision support systems in the 1980s and 1990s. These tools provide automated responses for a variety of problems through digital dashboards, and versions of these systems exist even today for tasks like inventory management and sales projections. In most cases, they do this by either matching the question with a database of prepopulated answers (think of a software “help” function) or calculating the answer based on applying an algorithm to data. Some go further by searching the internet if nothing appropriate can be found in the database. Most of these systems do not have the ability to place the question in context, nor do they learn from the accuracy of past answers. Therefore, they do not qualify as AI.

3. Just because a system is advertised as AI, that doesn’t make it AI.

We have encountered many startups, vendors, and “analytics” providers that promote themselves as providing cutting-edge AI/machine learning solutions. Unfortunately, we have been disappointed with most of them. While they may indeed be good at advanced statistical methods, they are unable to build learning models from structured and unstructured data, especially the large volumes of data that are typically needed to build useful models.

What Does AI Really Do?

To evaluate whether the strategy or approach you’re evaluating requires artificial intelligence, let’s turn back to our definition of AI as any computer-based system that observes, analyzes, and learns.

First, it needs to observe. This means that it needs to be able to augment its database of information and insights. A rich but static data set is not enough, because it becomes stale the moment it’s created. Thus, a true AI system is able to sense its own environment and augment its base of knowledge in close to real time. Most Tesla cars have at least 21 sensors, including cameras, ultrasonic sensors, and radar. The purpose of these sensors is to observe the car’s surroundings and feed real-time information to the powerful autonomous driving system onboard. OrangeShark, an AI-based digital marketing startup, closely tracks various metrics of past advertising performance and automatically adjusts ad placement, targeting aspects of creative content for future ads.

Second, AI needs to analyze — that is, make sense of its environment. An AI system needs to be able to analyze information it observes and collects, even if that information is very messy. Thus, it needs to have advanced tools to find signals in very noisy data sets. A Tesla’s onboard computers analyze the images, blips, and other data it collects to make sense of its surroundings, allowing for the automation of several driving decisions. Gong.io helps salespeople in high-impact B2B environments by analyzing various aspects of sales calls, including voice sentiment and tone. Using this data, companies and sales professionals are able to arrive at many counterintuitive insights — for instance, calls with more positive sentiment are actually associated with lower closing rates than calls with less positive sentiment.

Third, an AI system needs to be able to learn. This third criterion is the most important differentiator between AI systems and plain-old data science. The ability to test, learn, and improve is only available to the most advanced machine learning systems today. These systems are able to proactively make assumptions, create and test hypotheses, and learn from them. Thus, they become more accurate over time. Tesla’s self-driving technology gets smarter with each kilometer it spends on the road. It does this by observing and analyzing the data from hundreds of thousands of Tesla cars and then learning from this data to improve the autonomous driving capabilities. It may learn to distinguish between an animal in the middle of the road and a plastic bag being blown by the wind, figuring out that it needs to stop in the first instance but can safely continue driving in the second. Several recommendation systems today, including those used by Netflix and Stitch Fix, start off making generic recommendations (when they have little knowledge about your preferences). Over time, they learn from your choices and improve to make more tailored, personalized recommendations — a capability that systems without machine learning would lack.

If you are not sure if the system you are using or are thinking about buying is really AI, we have developed a list of key questions to ask. (See “Is My ‘AI System’ Really AI?”)

Is My ‘AI System’ Really AI?

1. Does it use large amounts of data across a variety of formats?

   • It only needs a small amount of data — probably not AI.

   • It has a hard time handling unstructured or messy data, like free-form text, images, or video — probably not AI.

   • It uses large amounts of data in different formats, either through manual input or automated sensors — probably AI.

2. Does it update the data it uses over time?

   • The data it uses is static — probably not AI.

   • It doesn’t update with new data very often — probably not AI.

   • It updates itself with new data in close to real time — probably AI.

3. Does it adapt its decision-making logic over time?

   • Its underlying decision-making logic doesn’t change — probably not AI.

   • Its underlying decision-making logic only changes with scheduled updates — probably not AI.

   • It iteratively improves its decision-making logic in close to real time to the point that it is nearly impossible to understand how it reaches a given output — probably AI.

4. Does it adjust for possible biases?

   • It doesn’t attempt to assess or measure potential biases — probably not AI.

   • It doesn’t automatically adjust for biases, even if it sees them — probably not AI.

   • It proactively measures and adjusts for potential biases — probably AI.

Of course, organizations first need to identify the right problems to solve and only then try to determine whether AI/machine learning techniques are the right solutions to those problems. AI can be very useful for solving challenging business problems, yet the actual percentage of use cases where AI is significantly better than simple data science, or human insight, is quite low.

In most cases, the best insights can be generated using the simplest tools. Never let the tool dictate how you will solve a problem. But if you decide you need AI, then make sure the product you’re building or buying fits the bill.

How Intelligent Is Your AI?