"Expanding the Entrepreneur Class"

The world needs more entrepreneurs: They make innovation real and advance what Brink Lindsey, of the Kauffman Foundation, has called the “frontier economy.” If their ranks are too thin, it is a failure of society—particularly because the knowledge and skills of a successful entrepreneur can be taught.

Indeed, in the recent rise of formal education in entrepreneurship we see these superheroes of creative destruction finally being given their due. The number of U.S. schoolchildren exposed to entrepreneurship as a career choice has grown rapidly. At least 600,000 college students take a class in entrepreneurship every year. Ten years ago their number was negligible.

The problem is that we have nothing to show for it. If the resources devoted to teaching entrepreneurship have increased, but business start-ups have fallen by a third (from a longtime average of 600,000), one might even think that formal education in entrepreneurship is working against us. Perhaps it’s no surprise that some of our most famous business geniuses haven’t had the patience to collect diplomas. Could it be that we lack imagination about how to teach them?

My theory is that a system that leaves the education of entrepreneurs to schoolteachers (whose choice of profession displays little appetite for economic risk-taking, and who thus may be ill equipped to convey what entrepreneurs actually do) is inherently weak. A more obvious weakness is the material typically taught under the rubric of entrepreneurship. Most college-level courses are akin to anthropology, subjecting the tribe of entrepreneurs to curious scrutiny. The ones that aim to provide practical help tend to focus on business-plan writing skills. Few impart what it really takes to get a business up and running.

That is why I’m excited by two programs that show what does work. One is Startup Weekend, which was developed by a Seattle nonprofit and is quickly spreading. In just 54 hours, trained facilitators and rapid prototyping help aspiring entrepreneurs go through many iterations to arrive at viable business models. Startup Weekend has birthed hundreds of new companies.

The other is The Launch Pad, founded at the University of Miami four years ago, as the recession was making a new reality painfully clear: Even college graduates couldn’t find jobs. Rather than pressuring its placement office, the university reconsidered its product. It developed an intensive program for undergraduates whose best shot at meaningful work was to start their own businesses. A glass office block in the middle of the campus was configured to support work on start-ups by juniors and seniors, who receive advice from successful businesspeople (many of them alumni). To date, The Launch Pad is responsible for 65 new companies and 200 new jobs in Miami.

Any region or country could learn from these programs and their “just in time” model of skill transmission. The need is particularly acute in the United States. Back to Lindsey’s analysis: The U.S. has principally served as a frontier economy, propelling the innovation that yields progress and prosperity. Much economic success in the rest of the world has occurred through “catch-up growth” that leverages innovations hatched by U.S. entrepreneurs. If America falters in this, its economic advantage withers—and the rest of the world suffers, too.

But look at how few entrepreneurs we hang those hopes on: Only about 400,000 people started businesses in America last year. This is the less than 1% we should be agitating about. (In fact, it is 1% of 1% of 1%.) As we work to expand our base of entrepreneurs, education can make a difference. But we need to think differently about education.

"Music Boosts Workplace Productivity, Licensers Claim"

The music industry has new proof that you should listen to music while you work. In a survey commissioned by U.K. licensing organizations PPL and PRS for Music, 77 percent of surveyed businesses say playing music in the workplace increases staff morale and improves the atmosphere.

The survey, conducted by market research and survey company Vision Critical, included 1,008 small to mid-size business owners in a range of industries. The licensers’ report did not mention specific jobs. Logically, though, while music can help get aerobics instructors or pole dancers going, librarians may never experience the benefits of having music played in their workplaces.

U.K. law requires businesses that play any recorded music in public (including in offices) to get licenses from both PPL and PRS for Music. This even applies to deli owners who are playing the radio, says Christine Geissmar, director of operations at PPL. Similar lawsexist in the U.S. Asked if the survey was self-serving, Geissmar says, “It’s not why we do this. We genuinely believe music is good to have in your everyday life.”

Whether music is helpful can depend on the individuals and what’s playing. The music service Songza found half of surveyed workers believe Maroon 5′s Moves Like Jagger makes them more productive. Gotye’s Somebody That I Used to Know was preferred by 42 percent.

Yet a summary of recent research from Taiwan shows while some background music can increase worker satisfaction and productivity, music with lyrics had significant negative effects on concentration and attention. The study concluded that music without lyrics is preferable, as lyrics are likely to reduce worker attention and performance.

PPL plays music in its office all day, and what’s on varies by floor. Typically, the first person to arrive that day sets the radio station until the afternoon, when someone usually changes it, says Claire Goldie, a spokesperson for PPL. They can also play CDs and some employees plug their own recordings. Of course, this system puts the office at risk of stereo hogs, who vie to control what’s playing. And hopefully, no one on the floor has too, ahem, distinct a taste in music or cares to hear Christmas tunes all year.

Many workers do find music helpful to get through the day. “I am awake for a long period of time. I also run a lot,” says Nish Mani, a 27-year-old investment banking associate at JPMorgan who likes to listen to electronica at work, including M83 and Phantogram. Unfortunately for fee organizations, he uses headphones.

'Why Top Young Managers Are in a Nonstop Job Hunt"

You might suspect that your best young managers are looking for a better gig—and you’re probably right. Research shows that today’s most-sought-after early-career professionals are constantly networking and thinking about the next step, even if they seem fully engaged. And employee-development programs aren’t making them happy enough to stay.

We reached these conclusions after conducting face-to-face interviews and analyzing two large international databases created from online surveys of more than 1,200 employees. We found that young high achievers—30 years old, on average, and with strong academic records, degrees from elite institutions, and international internship experience—are antsy. Three-quarters sent out résumés, contacted search firms, and interviewed for jobs at least once a year during their first employment stint. Nearly 95% regularly engaged in related activities such as updating résumés and seeking information on prospective employers. They left their companies, on average, after 28 months.

And who can blame them? Comparing the peripatetic managers’ salary histories with those of peers who stayed put, we found that each change of employer created a measurable advantage in pay; in fact, a job change was the biggest single determinant of a pay increase. This represents a significant difference from the past. Job hopping has long been viewed as a shortcut to the top, but research showed that was a myth for earlier generations, who paid a price in terms of promotions and often saw their salaries suffer as well.

The Career-development Gap

Dissatisfaction with some employee-development efforts appears to fuel many early exits. We asked young managers what their employers do to help them grow in their jobs and what they’d like their employers to do, and found some large gaps. Workers reported that companies generally satisfy their needs for on-the-job development and that they value these opportunities, which include high-visibility positions and significant increases in responsibility. But they’re not getting much in the way of formal development, such as training, mentoring, and coaching—things they also value highly.

Why the disconnect? We think it’s because formal training is costly and can take employees off the job for short periods of time. Employers are understandably reluctant to make big investments in workers who might not stay long. But this creates a vicious circle: Companies won’t train workers because they might leave, and workers leave because they don’t get training. By offering promising young managers a more balanced menu of development opportunities, employers might boost their inclination to stick around

"Disrupt Yourself"

My career path has been an unusual one. I started as a secretary on Wall Street, worked my way up in my firm’s investment banking group, and then stepped back to become an equity research analyst. Eight years later, I quit that job to produce a TV show and write a children’s book, but I ended up blogging about work/life issues and cofounding a hedge fund backed by a man I’d met at church. It’s not what you’d call a traditional corporate trajectory. But perhaps that’s the new normal.

In the United States and many other developed, capitalist countries, the idea of a “company man” (or woman) with a job for life has long been outdated. According to the U.S. Bureau of Labor Statistics, the median job tenure for American workers age 25 or older has held steady at about five years since 1983, and for men it has slightly declined. Baby boomers born from 1957 through 1964 held 11 jobs, on average, between ages 18 and 44, says another BLS report.And studies tracking long-term employment from 1976 to 2006 paint a similar picture: The percentages of people who have been with their companies at least 10 and at least 20 years have fallen substantially.

Career change isn’t as easily documented, because it’s harder to define than a job switch. But many economists and sociologists think that these bigger shifts are becoming more common, and case studies to support that hypothesis abound.

Consider Martin Crampton, a former research scientist and math teacher from Australia. He parlayed a stint as a developer and demo specialist for a software company in Melbourne into a decade-long marketing career, first at the software firm and then at two multinational manufacturing companies (Bic and Stihl), before starting his own consultancy. In 1993 he leapt into another profession and, with his partner, created Australia’s first national real estate portal (before Realtor.com). Crampton later sold that business and started another one that focused on online services. He currently works on ventures involving franchised data and social media.

Then there’s Liz Brown, once a hard-charging law firm partner who left Fish & Richardson to become executive director of an angel investment network and a professor; Alex McClung, whose 23-year career has spanned 15 diverse roles at six different health care companies; and Heather Coughlin, who started her career in equity sales at Goldman Sachs, helped it launch a third-party research subsidiary, and is now CEO of a mother-and-baby support, education, and retail chain.

It’s hard to make sense of seemingly wanton—yet ultimately rewarding—career choices like those, until you consider the theories of the man I met in church: Clayton M. Christensen.

As HBR readers well know, Christensen is the father of disruptive innovation —the idea that the most successful innovations are those that create new markets and value networks, thereby upending existing ones. Volumes of research and evidence show how disruptive thinking improves the odds of success for products, companies, even countries. Our investment fund focuses on disruptive stocks, and it has outperformed relevant indices by a sizable margin over the past decade.

I believe that disruption can also work on a personal level, not just for entrepreneurs who launch disruptive companies but for people who work within and move between organizations. Zigzagging career paths may be common now, but the people who zigzag best don’t do it randomly.

"The End of Solution Sales"

Artwork: Chad Wys, Thrift Store Landscape With a Color Test, 2009, paint on found canvas and frame, 42" x 34" x 2"

The hardest thing about B2B selling today is that customers don’t need you the way they used to. In recent decades sales reps have become adept at discovering customers’ needs and selling them “solutions”—generally, complex combinations of products and services. This worked because customers didn’t know how to solve their own problems, even though they often had a good understanding of what their problems were. But now, owing to increasingly sophisticated procurement teams and purchasing consultants armed with troves of data, companies can readily define solutions for themselves.

In fact, a recent Corporate Executive Board study of more than 1,400 B2B customers found that those customers completed, on average, nearly 60% of a typical purchasing decision—researching solutions, ranking options, setting requirements, benchmarking pricing, and so on—before even having a conversation with a supplier. In this world the celebrated “solution sales rep” can be more of an annoyance than an asset. Customers in an array of industries, from IT to insurance to business process outsourcing, are often way ahead of the salespeople who are “helping” them.

But the news is not all bad. Although traditional reps are at a distinct disadvantage in this environment, a select group of high performers are flourishing. These superior reps have abandoned much of the conventional wisdom taught in sales organizations. They:

• evaluate prospects according to criteria different from those used by other reps, targeting agile organizations in a state of flux rather than ones with a clear understanding of their needs

• seek out a very different set of stakeholders, preferring skeptical change agents over friendly informants

• coach those change agents on how to buy, instead of quizzing them about their company’s purchasing process

These sales professionals don’t just sell more effectively—they sell differently. This means that boosting the performance of average salespeople isn’t a matter of improving how they currently sell; it involves altogether changing how they sell. To accomplish this, organizations need to fundamentally rethink the training and support provided to their reps.

Coming Up Short

Under the conventional solution-selling method that has prevailed since the 1980s, salespeople are trained to align a solution with an acknowledged customer need and demonstrate why it is better than the competition’s. This translates into a very practical approach: A rep begins by identifying customers who recognize a problem that the supplier can solve, and gives priority to those who are ready to act. Then, by asking questions, she surfaces a “hook” that enables her to attach her company’s solution to that problem. Part and parcel of this approach is her ability to find and nurture somebody within the customer organization—an advocate, or coach—who can help her navigate the company and drive the deal to completion.

But customers have radically departed from the old ways of buying, and sales leaders are increasingly finding that their staffs are relegated to price-driven bake-offs. One CSO at a high-tech organization told us, “Our customers are coming to the table armed to the teeth with a deep understanding of their problem and a well-scoped RFP for a solution. It’s turning many of our sales conversations into fulfillment conversations.” Reps must learn to engage customers much earlier, well before customers fully understand their own needs. In many ways, this is a strategy as old as sales itself: To win a deal, you’ve got to get ahead of the RFP. But our research shows that although that’s more important than ever, it’s no longer sufficient.

To find out what high-performing sales professionals (defined as those in the top 20% in terms of quota attainment) do differently from other reps, Corporate Executive Board conducted three studies. In the first, we surveyed more than 6,000 reps from 83 companies, spanning every major industry, about how they prioritize opportunities, target and engage stakeholders, and execute the sales process. In the second, we examined complex purchasing scenarios in nearly 600 companies in a variety of industries to understand the various structures and influences of formal and informal buying teams. In the third, we studied more than 700 individual customer stakeholders involved in complex B2B purchases to determine the impact specific kinds of stakeholders can have on organizational buying decisions.

Our key finding: The top-performing reps have abandoned the traditional playbook and devised a novel, even radical, sales approach built on the three strategies outlined above. Let’s take a close look at each

"The Discipline of Listening"

As the up-and-coming vice president and CEO candidate for a Fortune 500 technology corporation sat before the CEO for his annual review, he was baffled to discover that the feedback from his peers, customers, direct reports, and particularly from board members placed unusual emphasis on one potentially devastating problem: his listening deficit. This executive was widely considered among the best and brightest in his company, but it was evident that this issue needed immediate attention if he ever hoped to advance to the top spot.

He wasn't alone in that regard. My knowledge of corporate leaders' 360-degree feedback indicates that one out of four of them has a listening deficit—the effects of which can paralyze cross-unit collaboration, sink careers, and if it's the CEO with the deficit, derail the company. But this doesn't have to be the case. Despite today's fast-paced business environment, time-starved leaders can master the art of disciplined listening. Conventional advice for better listening is to be emotionally intelligent and available. However, truly good listening requires far more than that. As you move toward truly empathetic listening, consider these tips:

Pan for the nuggets. I saw how Larry Bossidy, former CEO of Honeywell, did this. Sitting down with a business unit leader presenting him with information about a $300 million dollar technical investment opportunity, Bossidy divided a sheet of paper about three-quarters across. On the larger left side of the paper, he scribbled detailed notes; on the smaller right side, he occasionally jotted down two or three words, capturing what he perceived to be the key insights and issues being brought to his attention. It was a simple technique that disciplined him to listen intently for the important content and focus follow-up questions on points that really mattered. Whether or not this is your method, you should train yourself to sift for the nuggets in a conversation. Then let the other person know that they were understood by probing, clarifying, or further shaping those thoughts. The benefits of this go beyond ensuring that you heard it right: first, the person on the other end of the conversation will be gratified that you are truly grasping the essence of their thoughts and ideas; second, this gratification will motivate and energize them to create more thoughts and solutions. Listening opens the door to truly connecting and is the gateway to building relationships and capability.

Consider the Source. When working with peers, in and across teams, work to understand each person's frame of reference—where they are coming from. This is extremely important when disagreements arise. When you truly understand the perspective of others, you are most likely to reach productive solutions; further, all the participants will feel heard, whether their solution is adopted or not. Even better, it's likely that the solution will not turn out to be one that was brought to the table by any one party; it will be a new approach crafted in the conversational environment you created. Active listening and probing (with humility, not aggression) energizes groups, encourages them to reach consensus, and helps them arrive at new and better solutions.

Consider Ivan Seidenberg, who rose to become Chairman and CEO of Verizon. Earlier in his career, as a business unit manager, he recognized that he must cut costs. But his division's operations department was adamant it could not be done given the tremendous complexity of its processes. Seidenberg understood their frame of reference, which was that they were in favor of simplification, but couldn't achieve it without the collaboration of the product departments. Seidenberg got the two sides to collaborate and much better solutions were found. Not only were costs cut, but operations became more focused and simplified.

Prime the Pump. After GE achieved its goal of being first or second in several of its businesses with exceptional margins, then-CEO Jack Welch faced the challenge of how to spur continued growth. He actively listened to a Business Management Course team at GE's Crotonville learning center. They suggested that, if a GE business had become the biggest fish in its pond, it was thinking about the pond too narrowly. The definition of the market needed to be changed based on an expanded understanding of its customers' needs. As business unit managers prepared their next round of strategy presentations for the Chairman, Welch told them all to redefine their market in such a way that their share was less than 10 percent. This released GE managers' energy to grow their businesses with new ideas. One of those ideas was to grow the services businesses across GE. Today, GE has a $200 billion backlog in its services business.

Slow Down. There is a reason that, over the years, you have lost your ability to listen. It feels too passive, like the opposite of action. It's much faster to move to a decision based on the information you already have. But in doing so, you miss important considerations and sacrifice the opportunity to connect. Understand that as you begin to change your listening style to a more empathetic one, you may often feel inefficient. It takes time to truly hear someone and to replay the essence of their thoughts back them so that both parties are clear on what was said. The payback is dramatic, but it comes over the long run. 

Keep Yourself Honest. No habit is broken without discipline, feedback, and practice. As well as installing a personal mirror to reflect on your own behavior, find a colleague to give you honest feedback on how well you are tuning into the thoughts and ideas of your colleagues, managers, board of directors, and others. Explicitly lay out an exercise regime by which you will practice empathetic listening every day and strengthen your skills. Make a habit of asking yourself after interactions whether you understood the essence of what was said to you, the person's point of view, their context, and their emotion. Also ask yourself whether that person knows that they were heard and understood.

For leaders, listening is a central competence for success. At its core, listening is connecting. Your ability to understand the true spirit of a message as it is intended to be communicated, and demonstrate your understanding, is paramount in forming connections and leading effectively. This is why, in 2010, General Electric—long considered the preeminent company for producing leaders—redefined what it seeks in its leaders. Now it places "listening" among the most desirable traits in potential leaders. Indeed, GE Chairman and CEO Jeff Immelt has said that "humble listening" is among the top four characteristics in leaders.

Truly empathetic listening requires courage—the willingness to let go of the old habits and embrace new ones that may, at first, feel time-consuming and inefficient. But once acquired, these listening habits are the very skills that turn would-be leaders into true ones. 

"The Key Ingredients of a Successful Team"

I was recently having a long conversation with a colleague, who was passionately outlining a new solution to an old problem, when my cellphone died. I was traveling, and to continue our discussion, I had to walk across the airport to a public pay phone. I kept adding coins to keep the call going. The conversation ended once my colleague convinced me that even though existing solutions would work, a novel approach would result in an exponential performance improvement.

The episode triggered an interesting thought. The pay phone represents the archetypal machine; it responds predictably. You insert coins and the line comes alive; you add coins and it continues to work. But that doesn't quite work with people, does it? My colleague, for instance, was driven by the excitement of trying a new solution, not by persisting with an existing one.

For over two decades, I've tried to understand what drives teams. Conventional theories never work; I find that the secret sauce for a successful team has three ingredients:

1. A big challenge: The fun is in the chase. That mightn't be true in the context of courtship, but it's certainly true of work. When people face big, hairy and audacious goals, searching for solutions becomes exciting, even obsessive. Google's mission statement is bold but simple: "Organize the world's information and make it universally accessible, and useful." It has done well by chasing that incredibly bold goal.

2. People with a passion to perform: It's fun to watch a group that is brainstorming. The excitement and restlessness in people who are trying to find solutions to vexing problems is priceless; that can't be replaced by expertise or experience. People fuel incredible energy, as teams go all out to find solutions. They spare little thought for the rewards; they're absorbed in overcoming the challenges they face.

3. Space to excel:The third crucial element is the space to innovate, to be able to make mistakes and start over. As children, we may have heard the fable about the spider that successfully climbed a wall by morning after falling to the ground all night long. We are all spider-people in that sense — ordinary people with extraordinary powers to succeed. A team leader who can provide the right amount of room for experimentation can ignite the power of passion and generate miraculous results.

If people see a challenge in what they are doing, have the passion to perform, and have the space to create magic, they will. Research challenges the assumption that people will perform only if they're provided financial incentives. In this fascinating video, Daniel Pink, who wrote Drive: The Surprising Truth About What Motivates Us, lists more than one study that dispels traditional carrot-and-stick wisdom. Pink believes that executives would do well to understand the importance of autonomy, mastery, and a sense of purpose in driving success.

The drummer boys creating music today aren't waiting for anyone to wind them up with the key of monetary rewards; they're passionate, self-driven, and often, self-organized. Isn't it time we plugged into them? 

"When Key Employees Clash"

The caller ID on Matthew Spark’s phone read “Kid Spectrum, Inc.” It was someone from the Orlando office, probably administrative director Ellen Larson. She had been in daily contact with Matthew since he purchased the company, a provider of in-home services for autistic children, eight months ago. He appreciated Ellen’s eagerness to help him build the business, even if she was sometimes high-maintenance. Kid Spectrum’s previous owner, Arthur Hamel, had told Matthew that Ellen, with nearly two decades of experience in health services, would be one of his biggest assets.

“Matthew, it’s Ellen. I don’t want to bother you again, but we have a situation down here.”

Matthew sat back in his chair and readied himself. The “situation” could be anything from the copier running out of ink to the building catching on fire.

“I’m calling about Ronnie,” she said.

Ronnie Emerson was director of clinical operations in Orlando, a position Matthew had created soon after taking the reins at Kid Spectrum. Ronnie, whose son had Asperger’s, had been working with special needs children his entire career and had been with the company for a decade. The other 40 clinicians on staff regularly turned to him for advice. So it had seemed like a no-brainer to promote him to a formal management role.

“He’s not up to the job,” Ellen said now.

“That’s a strong statement, Ellen,” Matthew said.

“I know, but it’s true. He’s still resisting the new protocols for time sheets. It’s been eight months, and he has yet to complete them on time. You know the impact that has on insurer reimbursement. And he’s hardly ever here in the office.

"Managing Risks: A New Framework"

When Tony Hayward became CEO of BP, in 2007, he vowed to make safety his top priority. Among the new rules he instituted were the requirements that all employees use lids on coffee cups while walking and refrain from texting while driving. Three years later, on Hayward’s watch, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, causing one of the worst man-made disasters in history. A U.S. investigation commission attributed the disaster to management failures that crippled “the ability of individuals involved to identify the risks they faced and to properly evaluate, communicate, and address them.” Hayward’s story reflects a common problem. Despite all the rhetoric and money invested in it, risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis.

In this article, we present a new categorization of risk that allows executives to tell which risks can be managed through a rules-based model and which require alternative approaches. We examine the individual and organizational challenges inherent in generating open, constructive discussions about managing the risks related to strategic choices and argue that companies need to anchor these discussions in their strategy formulation and implementation processes. We conclude by looking at how organizations can identify and prepare for nonpreventable risks that arise externally to their strategy and operations.

Managing Risk: Rules or Dialogue?

The first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. Our field research shows that risks fall into one of three categories. Risk events from any category can be fatal to a company’s strategy and even to its survival.

Category I: Preventable risks. These are internal risks, arising from within the organization, that are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, illegal, unethical, incorrect, or inappropriate actions and the risks from breakdowns in routine operational processes. To be sure, companies should have a zone of tolerance for defects or errors that would not cause severe damage to the enterprise and for which achieving complete avoidance would be too costly. But in general, companies should seek to eliminate these risks since they get no strategic benefits from taking them on. A rogue trader or an employee bribing a local official may produce some short-term profits for the firm, but over time such actions will diminish the company’s value.

This risk category is best managed through active prevention: monitoring operational processes and guiding people’s behaviors and decisions toward desired norms. Since considerable literature already exists on the rules-based compliance approach, we refer interested readers to the sidebar “Identifying and Managing Preventable Risks” in lieu of a full discussion of best practices here.

Identifying and Managing Preventable Risks

Category II: Strategy risks. A company voluntarily accepts some risk in order to generate superior returns from its strategy. A bank assumes credit risk, for example, when it lends money; many companies take on risks through their research and development activities.

Strategy risks are quite different from preventable risks because they are not inherently undesirable. A strategy with high expected returns generally requires the company to take on significant risks, and managing those risks is a key driver in capturing the potential gains. BP accepted the high risks of drilling several miles below the surface of the Gulf of Mexico because of the high value of the oil and gas it hoped to extract.

Strategy risks cannot be managed through a rules-based control model. Instead, you need a risk-management system designed to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events should they occur. Such a system would not stop companies from undertaking risky ventures; to the contrary, it would enable companies to take on higher-risk, higher-reward ventures than could competitors with less effective risk management.

Category III: External risks. Some risks arise from events outside the company and are beyond its influence or control. Sources of these risks include natural and political disasters and major macroeconomic shifts. External risks require yet another approach. Because companies cannot prevent such events from occurring, their management must focus on identification (they tend to be obvious in hindsight) and mitigation of their impact.

"Happiness Will Not Be Downloaded"

Over the last decade, I've watched hundreds of cooking shows. It's a matter of time before Martha Stewart demands UN sanctions for my stockpile of useless culinary knowledge. In reality, my own cooking is a malignant medley of boiled ravioli, lopsided omelets, and fresh veggies dying of embarrassment. So why do I torture myself with shows about food I can't touch, taste, or feel guilty about? The answer will surprise you ... and possibly change your life.

The proliferation of cooking shows, blogs, celebrity chefs, and their inevitable diabetes drug endorsements proves that everything is better wrapped in bacon. But cooking also taps into something more primal: it's one of the last jobs that still does what most of us don't — make things. In this sterile, white-collar world, where meat comes from ShopRite and homes are built by "guest workers," cooking is the last physical job many of us can relate to.

In fact, we've become voyeurs to the exertion our lives no longer demand. Every popular series about jobs has some physical component — Deadliest Catch, Project Runway, American Chopper, Dirty Jobs. Not surprisingly, no one fetishizes typing, even if it's done loudly and with gusto. Digital desk jobs feel empty because they are empty. They deprive us of the very things that make us human: our five senses and the satisfaction of tangible output. It doesn't have to be that way. Quietly, our bodies have been plotting a revolution. Winning it will take heart, guts and possibly, bacon.

Sensory Deprivation

The job of cooking is a sensory Disneyworld. You dice colorful greens, experience warm gusts of goodness, and perform skillet symphonies. If all goes well, you'll devour physical creations that leave lasting memories. At the end, every sense craves a cigarette and a nap.

My years at American Express felt nothing like cooking. Nudging lifeless rectangles in PowerPoint hardly felt like the plot of Bourne Identity. Sure, occasional meetings or wacky ties gave my eyesight a puny, cosmetic workout. But what about hearing? There was rarely any music and my boss was not Pavarotti. How about taste? I couldn't lick anything at the office without ending up in HR filling out forms. And I can't recall caressing anything more exciting than my Thinkpad.

When I went home, the world looked exactly the same. No stacks of cakes. No boxes of Xboxes. I found myself secretly envying mothers I worked with. We did similar work, but they got to produce the ultimate physical product — a new life. I had to continue roaming the digital jungle, wondering if my great-grandkids will need a body at all — or just a giant head and an iPhone finger.

I was not alone. One study found that office workers are fat, mental, and bored. Then, they self-medicate with booze and coffee. Do the math — we sleep eight hours and spend the rest sitting at work, in cars, on couches and toilets. Shouldn't more nimble beasts be sautéing creatures this stagnant?

Our furry ancestors could taste if a plant was poisonous, hear the rustling of hyenas, and sniff out their next mate. Today, our senses are mostly recreational, but brimming with potential. Scents can make us happier, smarter, and less schizophrenic. Touch could make us better students and athletes. And music might help us learn Mandarin in time to serve our Chinese overlords.

Happy Makers, Sensors, and Helpers

When the National Organization for Research at the University of Chicago asked which jobs made people happiest, most of the top-10 occupations involved creating a product, engaging the senses, or helping others. Only two involved fondling a MacBook. Even disgruntled teachers wouldn't trade their apple a day for your 401(k).

When job site CareerBliss compiled its survey of the most hated jobs, the list was dominated by well-paid techies, managers, and marketers who don't impact the world in a physical way. Let's hope Mark Zuckerberg is safe at home when Facebook's programmers go postal.

Dawn of the Doer

If you're suddenly aching to churn butter or build a teepee, good. It's easy to surrender to the pretty lights on an iPhone. It's easy to accept other people's flawless creations. The harder path lies in understanding how that flawlessness was achieved. How did our steak or iPad get here? If electricity vanished tomorrow, are we back to foraging berries in loincloths?

We have a choice. We can use our amazing evolutionary gifts to create things we can touch, hear, and smell. Make it a chocolate cake, ice sculpture, or model car. But by all means, MAKE IT!

While you're at it, teach your kids to make things. There's no shortage of amazing projects and crafts. Give them Legos, pizza dough, or piles of lumber. Then watch their creativity blossom. You might want to be in the room when Little Sally revs up the circular saw.

Next time something breaks, fix it yourself. Take apart your old clothes or gadgets to make something new. Take a day to kill your own meat. You'll either cherish what's on your plate or become a raging vegan. A publishing executive I know liked it so much he became a butcher. The confidence of knowing you can do real things will permeate every aspect of your life.

I can't guarantee your hobby will become the next Caterpillar or Cartier, but you might make the best damn pantsuit the world has ever known. Start while still at your office job. Not only will your passion make PowerPoint less pointless, but you might end up with a thriving business. The distance between idea and physical product is vanishing. Companies like Quirky and Ponoko could turn your fish trampoline sketch into the next Transformers.

Like the Yellow Brick Road, the path of the doer is lined with temptation, easy answers, and cowardly lions. At the end lies the wizardry of building things that engage our senses and the satisfaction of turning our passions into livelihoods.

Naturally, you can start with food. It's the most engaging raw material we have. The first bite will instantly reveal everything a touchscreen can never be

"Dhoni earns more than Rooney & Bolt"

Team India captain Mahendra Singh Dhoni has pipped the likes of Manchester United star Wayne Rooney and ‘ Sprint King’ Usain Bolt in the latest list of the 100 highest- paid athletes for the year 2011- 12 released by Forbes magazine on Monday.

According to the list, Dhoni is ranked 31st, ahead of Rooney (37th with $ 24.3 mn), Bolt (63rd with $ 20.3 mn), tennis World No. 1 Novak Djokovic (62nd with $ 20.6 mn) and even batting legend Sachin Tendulkar (78th).

Of his total earnings of $26.5 million ( approximately Rs 145.7 cr), Dhoni earned $ 23 mn ( Rs 126.5 cr) through endorsements. Tendulkar earned $ 18.6 million ( Rs 102.3 cr ) with $ 16.5 mn ( Rs 90.7 cr) from endorsements in the past year.

Interestingly, the Indian captain’s earnings through endorsements are more than that of Portugal captain Cristiano Ronaldo and Argentine football star Lionel Messi.

Ronaldo, who is ninth in the overall list, raked in $ 1 million less than Dhoni, while Messi — 11th in the list with total earnings of $ 39 million — earned $ 19 million from endorsements which is $ 4 million less than that by Dhoni. This proves that despite cricket not being as popular as football or tennis, the sheer market size of India has put Dhoni above many of the more renowned athletes.

Serbian tennis ace Djokovic — the winner of six Grand Slams singles titles — is 62nd on the money list with $ 20.6 million to his name in the past year, while Olympic 100m champion Usain Bolt is 63rd with total earnings of $ 20.3 million.

Maria Sharapova is the richest among women’s sportspersons at 26th position with earnings of $ 27.9 million.

Boxers Floyd Mayweather and Manny Pacquiao topped the Forbes list. Mayweather, who ranks No. 1 for making $ 85 million off two fights last year, is serving a three- month jail sentence for domestic battery in Las Vegas.

Pacquiao, second on the list at $ 62 million from earnings and endorsements, lost to US fighter Tim Bradley on July 9.

Tiger Woods, who had topped the Forbes list since 2001, fell to third this time with $ 59.4 million, his earnings off $ 16 million from the previous year and by half since his peak in 2009, mostly due to lost endorsement deals following his sex scandal. Miami Heat star LeBron James ranks fourth at $ 53 million, the highest of 13 basketball players and on the list.

Swiss tennis star Roger Federer was fifth at $ 52.7 million followed by NBA star Kobe Bryant at $ 52.3 million, US golfer Phil Mickelson at $ 47.8 million, English football star David Beckham of the Los Angeles Galaxy at $ 46 million and Portuguese football star Cristiano Ronaldo at $ 42.5 million.

American football star Peyton Manning, of Denver Broncos, ranks 10th overall with his earnings of $ 42.4 million.

"Discovery-Driven Planning"

Business lore is full of stories about smart companies that incur huge losses when they enter unknown territory—new alliances, new markets, new products, new technologies. The Walt Disney Company’s 1992 foray into Europe with its theme park had accumulated losses of more than $1 billion by 1994. Zap-mail, a fax product, cost Federal Express Corporation $600 million before it was dropped. Polaroid lost $200 million when it ventured into instant movies. Why do such efforts often defeat even experienced, smart companies? One obvious answer is that strategic ventures are inherently risky: The probability of failure simply comes with the territory. But many failures could be prevented or their cost contained if senior managers approached innovative ventures with the right planning and control tools.

Discovery-driven planning is a practical tool that acknowledges the difference between planning for a new venture and planning for a more conventional line of business. Conventional planning operates on the premise that managers can extrapolate future results from a well-understood and predictable platform of past experience. One expects predictions to be accurate because they are based on solid knowledge rather than on assumptions. In platform-based planning, a venture’s deviations from plan are a bad thing.

The platform-based approach may make sense for ongoing businesses, but it is sheer folly when applied to new ventures. By definition, new ventures call for a company to envision what is unknown, uncertain, and not yet obvious to the competition. The safe, reliable, predictable knowledge of the well-understood business has not yet emerged. Instead, managers must make do with assumptions about the possible futures on which new businesses are based. New ventures are undertaken with a high ratio of assumption to knowledge. With ongoing businesses, one expects the ratio to be the exact opposite. Because assumptions about the unknown generally turn out to be wrong, new ventures inevitably experience deviations—often huge ones—from their original planned targets. Indeed, new ventures frequently require fundamental redirection.

Rather than trying to force startups into the planning methodologies for existing predictable and well-understood businesses, discovery-driven planning acknowledges that at the start of a new venture, little is known and much is assumed. When platform-based planning is used, assumptions underlying a plan are treated as facts—givens to be baked into the plan—rather than as best-guess estimates to be tested and questioned. Companies then forge ahead on the basis of those buried assumptions. In contrast, discovery-driven planning systematically converts assumptions into knowledge as a strategic venture unfolds. When new data are uncovered, they are incorporated into the evolving plan. The real potential of the venture is discovered as it develops—hence the term discovery-driven planning. The approach imposes disciplines different from, but no less precise than, the disciplines used in conventional planning.

Euro Disney and the Platform-Based Approach

Even the best companies can run into serious trouble if they don’t recognize the assumptions buried in their plans. The Walt Disney Company, a 49% owner of Euro Disney (now called Disneyland Paris), is known as an astute manager of theme parks. Its success has not been confined to the United States: Tokyo Disneyland has been a financial and public relations success almost from its opening in 1983. Euro Disney is another story, however. By 1993, attendance approached 1 million visitors each month, making the park Europe’s most popular paid tourist destination. Then why did it lose so much money?

In planning Euro Disney in 1986, Disney made projections that drew on its experience from its other parks. The company expected half of the revenue to come from admissions, the other half from hotels, food, and merchandise. Although by 1993, Euro Disney had succeeded in reaching its target of 11 million admissions, to do so it had been forced to drop adult ticket prices drastically. The average spending per visit was far below plan and added to the red ink.

The point is not to play Monday-morning quarterback with Disney’s experience but to demonstrate an approach that could have revealed flawed assumptions and mitigated the resulting losses. The discipline of systematically identifying key assumptions would have highlighted the business plan’s vulnerabilities. Let us look at each source of revenue in turn.

Admissions Price.

In Japan and the United States, Disney found its price by raising it over time, letting early visitors go back home and talk up the park to their neighbors. But the planners of Euro Disney assumed that they could hit their target number of visitors even if they started out with an admission price of more than $40 per adult. A major recession in Europe and the determination of the French government to keep the franc strong exacerbated the problem and led to low attendance. Although companies cannot control macroeconomic events, they can highlight and test their pricing assumptions. Euro Disney’s prices were very high compared with those of other theme attractions in Europe, such as the aqua palaces, which charged low entry fees and allowed visitors to build their own menus by paying for each attraction individually. By 1993, Euro Disney not only had been forced to make a sharp price reduction to secure its target visitors, it had also lost the benefits of early-stage word of mouth. The talking-up phenomenon is especially important in Europe, as Disney could have gauged from the way word of mouth had benefited Club 

"Learning Charisma"

Jana stands at the podium, palms sweaty, looking out at hundreds of colleagues who are waiting to hear about her new initiative. Bill walks into a meeting after a failed product launch to greet an exhausted and demotivated team that desperately needs his direction. Robin gets ready to confront a brilliant but underperforming subordinate who needs to be put back on track.

We’ve all been in situations like these. What they require is charisma—the ability to communicate a clear, visionary, and inspirational message that captivates and motivates an audience. So how do you learn charisma? Many people believe that it’s impossible. They say that charismatic people are born that way—as naturally expressive and persuasive extroverts. After all, you can’t teach someone to be Winston Churchill.

While we agree with the latter contention, we disagree with the former. Charisma is not all innate; it’s a learnable skill or, rather, a set of skills that have been practiced since antiquity.Our research with managers in the laboratory and in the fieldindicates that anyone trained in what we call “charismatic leadership tactics” (CLTs) can become more influential, trustworthy, and “leaderlike” in the eyes of others. In this article we’ll explain these tactics and how we help managers master them. Just as athletes rely on hard training and the right game plan to win a competition, leaders who want to become charismatic must study the CLTs, practice them religiously, and have a good deployment strategy.

What Is Charisma?

Charisma is rooted in values and feelings. It’s influence born of the alchemy that Aristotle called thelogos, the ethos, and the pathos; that is, to persuade others, you must use powerful and reasoned rhetoric, establish personal and moral credibility, and then rouse followers’ emotions and passions. If a leader can do those three things well, he or she can then tap into the hopes and ideals of followers, give them a sense of purpose, and inspire them to achieve great things.

Several large-scale studies have shown that charisma can be an invaluable asset in any work context—small or large, public or private, Western or Asian. Politicians know that it’s important. Yet many business managers don’t use charisma, perhaps because they don’t know how to or because they believe it’s not as easy to master as transactional (carrot-and-stick) or instrumental (task-based) leadership. Let’s be clear: Leaders need technical expertise to win the trust of followers, manage operations, and set strategy; they also benefit from the ability to punish and reward. But the most effective leaders layer charismatic leadership on top of transactional and instrumental leadership to achieve their goals.

In our research, we have identified a dozen key CLTs. Some of them you may recognize as long-standing techniques of oratory. Nine of them are verbal: metaphors, similes, and analogies; stories and anecdotes; contrasts; rhetorical questions; three-part lists; expressions of moral conviction; reflections of the group’s sentiments; the setting of high goals; and conveying confidence that they can be achieved. Three tactics are nonverbal: animated voice, facial expressions, and gestures.

There are other CLTs that leaders can use—such as creating a sense of urgency, invoking history, using repetition, talking about sacrifice, and using humor—but the 12 described in this article are the ones that have the greatest effect and can work in almost any context. In studies and experiments, we have found that people who use them appropriately can unite followers around a vision in a way that others can’t. In eight of the past 10 U.S. presidential races, for instance, the candidate who deployed verbal CLTs more often won. And when we measured “good” presentation skills, such as speech structure, clear pronunciation, use of easy-to-understand language, tempo of speech, and speaker comfort, and compared their impact against that of the CLTs, we found that the CLTs played a much bigger role in determining who was perceived to be more leaderlike, competent, and trustworthy.

Still, these tactics don’t seem to be widely known or taught in the business world. The managers who practice them typically learned them by trial and error, without thinking consciously about them. As one manager who attended our training remarked: “I use a lot of these tactics, some without even knowing it.” Such learning should not be left to chance

"Managing Risks: A New Framework"

When Tony Hayward became CEO of BP, in 2007, he vowed to make safety his top priority. Among the new rules he instituted were the requirements that all employees use lids on coffee cups while walking and refrain from texting while driving. Three years later, on Hayward’s watch, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, causing one of the worst man-made disasters in history. A U.S. investigation commission attributed the disaster to management failures that crippled “the ability of individuals involved to identify the risks they faced and to properly evaluate, communicate, and address them.” Hayward’s story reflects a common problem. Despite all the rhetoric and money invested in it, risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis.

In this article, we present a new categorization of risk that allows executives to tell which risks can be managed through a rules-based model and which require alternative approaches. We examine the individual and organizational challenges inherent in generating open, constructive discussions about managing the risks related to strategic choices and argue that companies need to anchor these discussions in their strategy formulation and implementation processes. We conclude by looking at how organizations can identify and prepare for nonpreventable risks that arise externally to their strategy and operations.

Managing Risk: Rules or Dialogue?

The first step in creating an effective risk-management system is to understand the qualitative distinctions among the types of risks that organizations face. Our field research shows that risks fall into one of three categories. Risk events from any category can be fatal to a company’s strategy and even to its survival.

Category I: Preventable risks.These are internal risks, arising from within the organization, that are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, illegal, unethical, incorrect, or inappropriate actions and the risks from breakdowns in routine operational processes. To be sure, companies should have a zone of tolerance for defects or errors that would not cause severe damage to the enterprise and for which achieving complete avoidance would be too costly. But in general, companies should seek to eliminate these risks since they get no strategic benefits from taking them on. A rogue trader or an employee bribing a local official may produce some short-term profits for the firm, but over time such actions will diminish the company’s value.

This risk category is best managed through active prevention: monitoring operational processes and guiding people’s behaviors and decisions toward desired norms. Since considerable literature already exists on the rules-based compliance approach, we refer interested readers to the sidebar “Identifying and Managing Preventable Risks” in lieu of a full discussion of best practices here.

Identifying and Managing Preventable Risks

Category II: Strategy risks.A company voluntarily accepts some risk in order to generate superior returns from its strategy. A bank assumes credit risk, for example, when it lends money; many companies take on risks through their research and development activities.

Strategy risks are quite different from preventable risks because they are not inherently undesirable. A strategy with high expected returns generally requires the company to take on significant risks, and managing those risks is a key driver in capturing the potential gains. BP accepted the high risks of drilling several miles below the surface of the Gulf of Mexico because of the high value of the oil and gas it hoped to extract.

Strategy risks cannot be managed through a rules-based control model. Instead, you need a risk-management system designed to reduce the probability that the assumed risks actually materialize and to improve the company’s ability to manage or contain the risk events should they occur. Such a system would not stop companies from undertaking risky ventures; to the contrary, it would enable companies to take on higher-risk, higher-reward ventures than could competitors with less effective risk management.

Category III: External risks.Some risks arise from events outside the company and are beyond its influence or control. Sources of these risks include natural and political disasters and major macroeconomic shifts. External risks require yet another approach. Because companies cannot prevent such events from occurring, their management must focus on identification (they tend to be obvious in hindsight) and mitigation of their impact.