The View from Harvard Business

More than 7 million legal residents who are eligible to become U.S. citizens each year, essentially green-card holders, choose against doing so.

They decide for whatever reason that the benefits of citizenship (voting rights, potential for government employment, ability to bring their families here) are not worth the costs, starting with the $675 application fee. If you are an expert in marketing, as is Harvard Business School’s John Quelch, this fact presents a unique opportunity to view the issue through the lens of pricing strategy in the public sector.

This is a timely issue because immigration officials are thinking of raising application prices for citizenship from the current $675. The last time prices increased, in 2007, applications dropped 50 percent.

Let’s consider citizenship a U.S. product offered in competition with other countries. This country, made strong by immigrants-become-citizens, has an interest in attracting bright and hard working people to our shores. But 90 percent of our 8 million target customers annually aren’t buying the product. A business facing this same issue of underwhelming demand would consider a range of options to boost sales including price cuts (the idea of a price increase would be laughable), better marketing of benefits, promotions, loans, and, in the case of educational products, scholarships.

What should the U.S. do?

“Should the rest of us care?,” Quelch asks on his Harvard Business Publishing blog.  “Should we, as a nation of immigrants, subsidize the cost of processing applications in an economic recession to motivate more qualified but resource-strapped residents to apply? Would our democracy benefit if more legal residents joined the ranks of voters, became fully engaged in community life, and put down stronger roots? How can we quantify these benefits to justify a price below cost? Or should we leave the price as is but market the benefits of citizenship more effectively?”

If you were decision makers in the government, how would you work through this pricing strategy issue?

(Image by Sean Silverthorne)

Despite what they are called, best practices are not always so. Many managers have encountered occasions when their organization’s prescribed rules would cause more harm than good.

Example. Your personnel department spells out a procedure for resolving a personal dispute between two co-workers. Great, except the process takes two meetings and four hours of administrivia, while you know from your own experience with these people that what will really work is an off-the-record airing of grievances over a couple of beers down at Duck’s Tavern. (The Beer Gambit was used to famous effect by President Obama to cool a dispute between a Harvard professor and a local police officer.)

Your personnel department may not agree, but I say trust your gut and head down to Duck’s and see what happens.

How can you tell when its OK not to follow the ‘best’ path?

Harvard Business blogger Susan Cramm offers this three-step filter.

1. Consider the context. Best practices work for a particular organization in a particular market at a particular time. Always adapt best practices to fit your company’s unique culture and situation.
2. Assess feasibility. The “best” may be expensive and time-consuming. Determine whether being the best is worth it. Will the customer pay for it? Will you have the time or energy to achieve it?
3. Use common sense. Sometimes best practices just don’t make sense. Just because someone labeled it “best” doesn’t mean it is. Think critically and strategically before using any best practice.

For more excellent insight, read Cramm’s full post, How Are Your Defying “Best Practice”.

If you do choose to alter, modify or ignore a best practice, I think it’s important to share that information with the organization. Best practices remain best only if they are useful.

How do you employ (or not) best practices at work?

A pair of experts on consumer psychology from Harvard Business School believe shoppers will spend more this holiday season than a year ago, giving retailers a chance to reassess the consumer mindset.

Professors Nancy Koehn and Rajiv Lal offer somewhat different predictions, although they agree that consumer spending is not going to return to pre-recession levels anytime soon, if ever.

Koehn forsees sales that will be “flat or marginally better” than last year’s 3.7% drop in spending. She writes:

“After the shock and awe of last year’s financial crisis, households are taking stock, abandoning the ‘next new thing’ in favor of more enduring priorities, and establishing distinct notions of value from those that have prevailed during the last decade. All of this adds up to the New Normal.”

Lal believes consumers will spend more than expected.

“I am still betting on the power of Santa Claus. While consumer spending may never reach pre-recession levels, I think it will be much better than expected for a number of reasons.”

One reason: consumers have exited that free-fall psychology of last year. We’ve also been saving more over the last year, providing a little war chest for spending.

Both agree that shoppers will be hunting for the basics, not extravagances (unless you are a Wall Street Bonus Baby), and that we will snap up promotions offered by Wal-Mart, Target, Best Buy and other discounters.

Read their more detailed comments.

Time for your forecast. Give us your prediction in our holiday shopping poll.

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(Believe image by chris runoff, CC 2.0)

Proposals for a federal government run health care program for the uninsured, the so-called public option, is the third rail of Washington politics. All who come near in support are likely to get singed, although public support seems to be growing.

But what if a way could be found to provide the goal of the public option — more competition to private insurers that would reduce medical costs — without need for a massive new federal bureaucracy?

Harvard Business School professor Bob Pozen thinks he has an idea that could work. Current reform proposals envision state health care agencies acting as group purchasing agents for those who are currently uninsured. What if we took that a step further and said states will also offer, as one choice, a state run health care plan. “This could be, for example, a health care plan for local teachers or state government employees,” Pozen writes on his  blog post, A Public Option That Would Work.

The beauty of this plan, concludes Pozen, is that public health care apparatus already already exists in every state or region of the land — no great new bureaucracy needed, more local control preserved.

Several of Pozen’s blog readers take issue with the idea, such as Greg’s view that “This plan only shifts problems around from one level of government to the next, it does not address the problems of control and cost.”

What do you think? Are states the answer to providing a public option? The floor is yours.

Related Reading

Public Option: Everything You Need to Know (CBS moneywatch.com)

(No stethoscope image by Mykl Roventine, CC 2.0)

As they become more global, companies are increasingly mandating that their employees communicate in English. Seems logical; English, which is spoken by a billion people worldwide, is the defacto lingua franca to conduct global commerce.

The problem: According to new research, the English mandate, if not handled with sensitivity, can disrupt rather than improve communication, and trigger powerful negative emotional relationships within teams.

“We found that uneven proficiency in English, the lingua franca, distrupted collaboration for both native and non-native speakers,” concludes the recent working paper, Walking Through Jelly: Language Proficiency, Emotions, and Disrupted Collaboration in Global Work.

Researchers at Harvard Business School, Stanford and George Mason studied 145 members of a single company on nine project teams in the U.S., India and Germany.

Among the issues they identified:

• Indian employees took most readily to the English mandate, reflecting its British colonoial history and English-language educational system. Not so enthused were the Germans, who found it difficult to think and articulate ideas outside of their native language. “It’s like walking though jelly,” one employee said. “You could walk so much easier if you could talk in German.”
• Different levels of fluency among team members contributed to personal tensions.
• Non-native speakers fought apprehension about communicating to colleagues and superiors in a second language, and sometimes felt excluded by more fluent English speakers.
• Native speakers felt excluded and devalued when colleagues in a country “code-switched”, or dropped English to talk instead in German or Indian.
• Employees sometimes avoided calling team members in other countries to avoid the stress of speaking in a different language.

As remedies, the paper’s authors suggest managers provide high levels of psychological safety as well as individual language training for those with less developed skills.

“Building awareness of the experiences of coworkers with different language backgrounds and proficiencies and empathizing with those experiences can circumvent the negative cycle and, we believe, is an important step in ameliorating the emotional burden felt on all sides of this issue.”

The report was written by Tsedal Beyene, Harvard Business School; Pamela J. Hinds, Stanford, and Catherine Durnell Cramton, George Mason.

How does your own business handle communications in different countries? Do you have to communicate to colleagues in a non-native tongue?

(Peace image by guitarhippie 29, CC 2.0)

I never would have believed the bold statement in the headline above — that is, until I read John Baldoni’s provocative blog post, What It Takes to Lead Now.

Now I’m convinced, as is Baldoni, that coming through the economic meltdown most managers saw their job much too narrowly. Instead of leading their people and organizations through a time of great change, managers put more emphasis on simply getting things done. If true, that’s a sad commentary about where our companies and “leaders” are heading.

According to a McKinsey and Company survey of executives, only 48% believed that they need to inspire and only 46% believed it was their responsibility to provide direction during this crisis. (BTW, McKinsey doesn’t put the same spin on these results.)

The problem, says Baldoni, is that execution without adequate leadership is short-sighted.

“It will carry a company through a quarter or a year, but it will not provide a foundation for what organizations really need to do, and that is to grow. Leadership requires foresight as well as the ability to execute. Foresight points you in the right direction so that your execution can serve customer needs now and lay the foundation for continued service.”

As a manager, do you consider inspiration and direction as key components of your job?

(Leader image by lumaxart, CC 2.0)

With a nod to Malcolm Gladwell, social networking hit a Tipping Point this year. In Gladwell’s words, “Ideas and behavior and messages and products sometimes behave just like outbreaks of infectious disease. They are social epidemics.” By his definition, social networks and associated technologies have hit epidemic proportions. So David Armano’s look at social media trends in 2010 comes at just the right moment. Armano is founder of Dachis Group, an Austin based consultancy delivering social business design services, and I thought his observations quite insightful.

Here’s a summary of his six predictions:

1. Corporations look to scale. Big companies have experimented with social network marketing and support one-offs, but the prediction here is that corporate efforts will become much more programmatic and strategic in 2010.
2. Social business becomes serious play
. Social networking companies move much more heavily into entertainment.
3. Your company will have a social media policy (and it might actually be enforced. ) 
Expect your company to formalize its views on social media and rules of engagement for employees.
4. Mobile becomes a social media lifeline. Forget the cigarette break at work. In 2010 you will be taking social media breaks.
5. Sharing no longer means e-mail
. What we used to forward to friends and colleagues on e-mail we will now share across networks such as Facebook and Twitter.
6. Social media begins to look less social
. I discussed this in a recent post. The general idea: We will become much more exclusive in our social networking practices.

How do you think social networking will evolve in the coming year?

(Social media logos image by Ivan Walsh, CC 2.0)

Think of it as Diane Von Furstenberg Meets Netflix.

A pair of recent graduates from Harvard Business School have started a new business, Rent the Runway, that allows women to rent high fashion dresses for $50 to $200 for four nights. The dresses are mailed out and returned by mail much like a Netflix DVD.

Co-founder Jennifer Hyman tells the New York Times she got the business idea after watching her younger sister consider buying a very expensive dress to wear to a wedding, a frock she would likely only wear a couple of times.

Some interesting aspects to this business include:

• On-call stylists advise customers on material selection how a particular dress might hang on various body types.
• The service is invitation-only.
• For just an extra $25 customers can choose a second style as a backup.

Whaddya think gents? Would you rent a top-of-the-line designer suit for a special occasion?

U.S. pay czar Kenneth Feinberg believes CEOs should not serve as board chairman, which is now the situation in 63 percent of American companies. The idea behind this seems sound, and UK and Canadian companies are moving in this direction. An independent chair, it is reasoned, is better able to monitor performance of company execs.

Not so fast, argues Harvard Business School professor Robert Pozen, who is also the Chairman of MFS Investment Management. In Should CEOs Be Allowed to Be Chairmen?, he points to numerous studies that show there is no difference in a company’s share price or net income if there is a unified CEO/Chairman.

In addition, according to a recent report on board activities during the fiscal crisis by HBS professor Jay Lorsch, many firms have adopted the practice of employing an independent “lead director” whose duties include presiding over executive sessions when management is out of the room. Pozen agrees with this idea:

“Choosing a lead director is a less dramatic way of fulfilling this listing standard than appointing an independent board chair,” Pozen writes.

One point in favor of combining the two roles is that, ironically, many boards are increasingly packed with independent directors. The problem, and it’s a real one: These directors often lack the necessary in-depth knowledge of the company and industry for which they they are making key decisions.

Lorsch’s report suggest boards spend less time thinking about the split chairman question and more about achieving clarity about their role “in relation to that of management: the extent and nature of the board’s involvement in strategy, management succession, risk oversight, and compliance.”

All companies are different, of course. Some certainly benefit by having a CEO as chairman of the board; for others this is too cozy a relationship. What do you think?

Fortune magazine last week named Steve Jobs CEO of the Decade. It was not a tough decision apparently. In Fortune’s also-in-the-running list were several CEOs who are in prison (Bernie Madoff, Jeff Skilling), another who was in prison (Martha Stewart) and several more who are not known as CEOs (Warren Buffett).

So Steve gets the nod. What I most enjoyed about this largely puff package, however, was a sidebar penned by Harvard Business School historian Nancy Koehn, who sizes up Jobs’ legacy. She says he will most be remembered as an entrepreneur (not so much as an executive), along the likes of Josiah Wedgwood, John D. Rockefeller, Andrew Carnegie, Henry Ford and Estée Lauder.

“Each of these people — and especially Steve Jobs — has been defined by the intense drive, unflagging curiosity, and keen commercial imagination that have allowed them to see products and industries and possibilities that might be. Each of these individuals has also been extremely hardworking, demanding of themselves and others. All have been compelled more by the significance of their own vision than by their doubts.”

• Like  Lauder, Jobs has a talent for making, packaging, and marketing products that everyday consumers want.
• Like Carnegie, Jobs is one of the most hands-on executives in business.
• Like Rockefeller and Wedgwood, Jobs grew up in a time of tremendous social and technological upheaval, but understood the importance of the moment and the opportunities presented.

Do you agree that Jobs belongs in the pantheon of great business leaders who helped define our times?