See the movie and read the book or vice versa. Either way, you’re in for a terrific ride. In a riveting fashion, Michael Lewis describes and makes sense out of the 2008 financial collapse that destroyed almost everything in its path. The real key to this story’s success is Lewis’ attention to the eccentric cast of characters. Some saw it coming from as far as a decade away.
It really doesn’t matter what you think of Elon Musk, his story and work are amazing. Musk is one of the few extremely non-risk-averse entrepreneurs out there. He also happens to be talented, smart and not afraid to question, defy and oftentimes battle the status quo. (A LOT like Richard Branson, up next.) The biography by Ashlee Vance is honest, compelling and pulls no punches with Musk’s frequently challenging personality. Take the time to read and get inspired by one of the biggest thinkers alive.
Speaking of non-risk-averse types, let’s talk about Richard Branson. His business and lifestyle motto “Screw it, let’s do it” is tempered by his thoughts on successes and failures in his career. The history alone of how Branson developed into one of the most successful entrepreneurs of all time –after an unauspicious start as a sixteen-year-old dropout with dyslexia– makes one sit up and listen.
But it’s his wise and experienced approach on how he chooses to lead with an emphasis on people/relationships and less on formality that makes the book so valuable. Another book by Branson, Losing My Virginity: How I Survived, Had Fun, and Made a Fortune Doing Business My Way gets a favorable mention here. Especially or the additional and very entertaining details on how Branson went from magazine publisher, to mail order record business to a recording studio/company to an airlines. And his (ad)ventures in just about every product imaginable. Virgin Cola anyone?
Malcolm Gladwell has critics, but I appreciate his focus and interest in areas I find fascinating. I have been a fan of his since The Tipping Point and Blink. Both books made me reexamine a few ideas I had about the world. And reshaped a lot of the thinking I bring into my daily work. Outliers explores how people become extraordinary (or at least successful in their chosen fields). It isn’t always how you might think.
The founder and editor of FiveThirtyEight.com, Nate Silver gained national celebrity status after his almost exact prediction of the 2008 and 2012 elections. This book examines the difficulty in discerning what is relevant in collected statistics. And what may be simply unnecessary and sometimes misleading information. Anyone interested in analytics, statistics, prediction, numbers, science, economics and “seeking truth from data” will enjoy.
Intriguing book by Daniel Kahneman, a psychologist and winner of the Nobel Prize in Economics. It examines the way our brain processes information. As I listened to this, I wished I was able to do some of the exercises the book asks you to do to help discern its examples. Kahneman presents a very thoughtful and revealing view on how perspectives are easily skewed.
A recent study by Nielsen shows 63% of shoppers research products online.* Youtility mentions as far back as 2011, shoppers accessed 10.4 pieces of information before making a purchase. This provides one of the many foundations upon which Jay Baer [Convince and Convert] lays his case that objective, helpful information is appreciated more than ever before by the consumer. By examining entrepreneurs and businesses providing useful content, Baer points out the payoffs for taking the time to create collateral that may -at first- seem like a lot of effort when compared to traditional marketing tactics. I used this book in teaching Entrepreneurial Marketing. Many students enjoyed it, finding it a refreshing counterpoint to traditional marketing and business tactics. Strongly recommended.
I’m almost embarrassed to admit I read this one as its Machiavellian approach makes you feel as though you’re preparing for a role on Game of Thrones. It basically serves as a primer on how to manipulate your way into getting what you want. If you work in an environment of snakes (and this book assures you everyone -including yourself- is a snake) then this is the book to read. However, there is some good advice in its pages. And quite a few in business have read it, along with Sun Tzu’s The Art of War. You might as well arm yourself so you can see ’em coming.
That’s all for now. I’ll update as I come across new books worthy of note. Please leave any suggestions for books that you have particularly enjoyed in the comments below!
Categorizing the problems and small business growth patterns in a systematic way that is useful to entrepreneurs
seems at first glance a hopeless task. Small businesses vary widely in size and capacity for growth. They are characterized by independence of action, differing organizational structures, and varied management styles.
Yet on closer scrutiny, it becomes apparent that they experience common problems arising at similar stages in their development. These points of similarity can be organized into a framework that increases our understanding of the nature, characteristics, and problems of businesses. Ranging from a corner dry cleaning establishment with two or three minimum-wage employees to a $20-million-a-year computer software company experiencing a 40% annual rate of growth.
For owners and managers of small businesses, such an understanding can aid in assessing current challenges. For example, the need to upgrade an existing computer system or to hire and train second-level managers to maintain planned business growth.
It can help in anticipating the key requirements at various points—e.g., the inordinate time commitment for owners during the start-up period and the need for delegation and changes in their managerial roles when companies become larger and more complex.
The framework
also provides a basis for evaluating the impact of present and proposed governmental regulations and policies on one’s business. A case in point is the exclusion of dividends from double taxation, which could be of great help to a profitable, mature, and stable business like a funeral home but of no help at all to a new, rapidly growing, high-technology enterprise.
Finally, the framework aids accountants and consultants in diagnosing problems and matching solutions to smaller enterprises. The problems of a 6-month-old, 20-person business are rarely addressed by advice based on a 30-year-old, 100-person manufacturing company. For the former, cash-flow planning is paramount; for the latter, strategic planning and budgeting to achieve coordination and operating control are most important.
Developing a Small Business Framework
Various researchers over the years have developed models for examining businesses (see Exhibit 1). Each uses business size as one dimension and company maturity or the stage of growth as a second dimension. While useful in many respects, these frameworks are inappropriate for small businesses on at least three counts.
Exhibit 1 Growth Phases
First
they assume that a company must grow and pass through all stages of development or die in the attempt. Second, the models fail to capture the important early stages in a company’s origin and business growth. Third, these frameworks characterize company size largely in terms of annual sales (although some mention number of employees) and ignore other factors such as value added, number of locations, complexity of product line, and rate of change in products or production technology.
To develop a framework relevant to small and growing businesses, we used a combination of experience, a search of the literature, and empirical research. (See the second insert.) The framework that evolved from this effort delineates the five stages of development shown in Exhibit 2. Each stage is characterized by an index of size, diversity, and complexity and described by five management factors: managerial style, organizational structure, extent of formal systems, major strategic goals, and the owner’s involvement in the business growth. We depict each stage in Exhibit 3 and describe each narratively in this article.
About the Research
We started with a concept of business growth stages emanating from the work of Steinmetz and Greiner. We made two initial changes based on our experiences with small companies.
The first modification was an extension of the independent (vertical) variable of size as it is used in the other stage models—see Exhibit I to include a composite of value-added (sales less outside purchases), geographical diversity, and complexity; the complexity variable involved the number of product lines sold, the extent to which different technologies are involved in the products and the processes that produce them, and the rate of change in these technologies.
Thus
a manufacturer with $10 million in sales, whose products are based in a fast-changing technical environment, is farther up the vertical scale (“bigger” in terms of the other models) than a liquor wholesaler with $20 million annual sales. Similarly, a company with two or three operating locations faces more complex management problems, and hence is farther up the scale than an otherwise comparable company with one operating unit.
The second change was in the stages or horizontal component of the framework. From present research we knew that, at the beginning, the entrepreneur is totally absorbed in the business’s survival and if the business survives it tends to evolve toward a decentralized line and staff organization characterized as a “big business” and the subject of most studies.* The result was a four-stage model: (1) Survival, (2) Break-out, (3) Take-off, (4) Big company.
To test the model, we obtained 83 responses to a questionnaire distributed to 110 owners and managers of successful small companies in the $1 million to $35 million sales range. These respondents participated in a small company management program and had read Greiner’s article. They were asked to identify as best they could the phases or stages their companies had passed through, to characterize the major changes that took place In each stage, and to describe the events that led up to or caused these changes.
A preliminary analysis of the questionnaire data revealed three deficiencies in our initial model:
First
the grow-or-fail hypothesis implicit in the model, and those of others, was invalid. Some of the enterprises had passed through the survival period and then plateaued—remaining essentially the same size. with some marginally profitable and others very profitable, over a period of between 5 and 80 years.
Second
there existed an early stage in the survival period in which the entrepreneur worked hard just to exist- to obtain enough customers to become a true business or to move the product from a pilot stage into quantity production at an adequate level of quality.
Finally
several responses dealt with companies that were not started from scratch but purchased while in a steady-state survival or success stage (and were either being mismanaged or managed for profit and not for growth), and then moved into a growth mode.
Revision
We used the results of this research to revise our preliminary framework. The resulting framework is shown in Exhibit II. We then applied this revised framework to the questionnaire responses and obtained results which encouraged us to work with the revised model:
* John A. Welsh and Jerry F. White, “Recognizing and Dealing With the Entrepreneur,” Advanced Management Journal, Summer 1978.
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Exhibit 2 Growth Stages
Exhibit 3 Characteristics of Small Business at Each Stage of Development
Stage I: Existence
In this stage the main problems of the business are obtaining customers and delivering the product or service contracted for. Among the key questions are the following:
Can we get enough customers, deliver our products, and provide services well enough to become a viable business?
Can we expand from that one key customer or pilot production process to a much broader sales base?
Do we have enough money to cover the considerable cash demands of this start-up phase?
The organization is a simple one
The owner does everything and directly supervises subordinates, who should be of at least average competence. Systems and formal planning are minimal to nonexistent. The company’s strategy is simply to remain alive. The owner is the business, performs all the important tasks, and is the major supplier of energy, direction, and, with relatives and friends, capital.
Companies in the Existence Stage range from newly started restaurants and retail stores to high-technology manufacturers that have yet to stabilize either production or product quality. Many such companies never gain sufficient customer acceptance or product capability to become viable. In these cases, the owners close the business when the start-up capital runs out and, if they’re lucky, sell the business for its asset value. (See endpoint 1 on Exhibit 4). In some cases, the owners cannot accept the demands the business places on their time, finances, and energy, and they quit. Those companies that remain in business become Stage II enterprises.
Exhibit 4 Evolution of Small Companies
Stage II: Survival
In reaching this stage, the business has demonstrated that it is a workable business entity. It has enough customers and satisfies them sufficiently with its products or services to keep them. The key problem thus shifts from mere existence to the relationship between revenues and expenses. The main issues are as follows:
In the short run, can we generate enough cash to break even and to cover the repair or replacement of our capital assets as they wear out?
Can we, at a minimum, generate enough cash flow to stay in business and to finance growth to a size that is sufficiently large, given our industry and market niche, to earn an economic return on our assets and labor?
The organization is still simple.
The company may have a limited number of employees supervised by a sales manager or a general foreman. Neither of them makes major decisions independently, but instead carries out the rather well-defined orders of the owner.
Systems development is minimal. Formal planning is, at best, cash forecasting. The major goal is still survival, and the owner is still synonymous with the business.
In the Survival Stage, the enterprise may grow in size and profitability and move on to Stage III. Or it may, as many companies do, remain at the Survival Stage for some time, earning marginal returns on invested time and capital (endpoint 2 on Exhibit 4), and eventually go out of business when the owner gives up or retires. The “mom and pop” stores are in this category, as are manufacturing businesses that cannot get their product or process sold as planned. Some of these marginal businesses have developed enough economic viability to ultimately be sold, usually at a slight loss. Or they may fail completely and drop from sight.
Stage III: Success
The decision facing owners at this stage is whether to exploit the company’s accomplishments and expand or keep the company stable and profitable, providing a base for alternative owner activities. Thus, a key issue is whether to use the company as a platform for growth—a substage III-G company—or as a means of support for the owners as they completely or partially disengage from the company—making it a substage III-D company. (See Exhibit 3.) Behind the disengagement might be a wish to start up new enterprises, run for political office, or simply to pursue hobbies and other outside interests while maintaining the business more or less in the status quo.
Substage III-D.
In the Success-Disengagement substage, the company has attained true economic health, has sufficient size and product-market penetration to ensure economic success, and earns average or above-average profits. The company can stay at this stage indefinitely, provided environmental change does not destroy its market niche or ineffective management reduce its competitive abilities.
Organizationally, the company has grown large enough to, in many cases, require functional managers to take over certain duties performed by the owner. The managers should be competent but need not be of the highest caliber, since their upward potential is limited by the corporate goals. Cash is plentiful and the main concern is to avoid a cash drain in prosperous periods to the detriment of the company’s ability to withstand the inevitable rough times.
In addition
the first professional staff members come on board, usually a controller in the office and perhaps a production scheduler in the plant. Basic financial, marketing, and production systems are in place. Planning in the form of operational budgets supports functional delegation. The owner and, to a lesser extent, the company’s managers, should be monitoring a strategy to, essentially, maintain the status quo.
As the business matures, it and the owner increasingly move apart, to some extent because of the owner’s activities elsewhere and to some extent because of the presence of other managers. Many companies continue for long periods in the Success-Disengagement substage. The product-market niche of some does not permit growth; this is the case for many service businesses in small or medium-sized, slowly growing communities and for franchise holders with limited territories.
Other owners actually choose this route
If the company can continue to adapt to environmental changes, it can continue as is, be sold or merged at a profit, or subsequently be stimulated into growth (endpoint 3 on Exhibit 4). For franchise holders, this last option would necessitate the purchase of other franchises.
If the company cannot adapt to changing circumstances, as was the case with many automobile dealers in the late 1970s and early 1980s, it will either fold or drop back to a marginally surviving company (endpoint 4 on Exhibit 4).
Substage III-G.
In the Success-Growth substage, the owner consolidates the company and marshals resources for growth. The owner takes the cash and the established borrowing power of the company and risks it all in financing growth.
Looking Back on Business Development Models
Business researchers have developed a number of models over the last 20 years that seek to delineate stages of corporate growth.
Joseph W. McGuire
Building on the work of W.W. Rostow in economics,* formulated a model that saw companies moving through five stages of economic development:†
Traditional small company.
Planning for growth.
Take-off or departure from existing conditions.
Drive to professional management.
Mass production marked by a “diffusion of objectives and an interest in the welfare of society.”
Lawrence L. Steinmetz
Theorized that to survive, small businesses must move through four stages of growth. Steinmetz envisioned each stage ending with a critical phase that must be dealt with before the company could enter the next stage.§ His stages and phases are as follows:
Direct supervision. The simplest stage, at the end of which the owner must become a manager by learning to delegate to others.
Supervised supervision. To move on, the manager must devote attention to growth and expansion, manage increased overhead and complex finances, and learn to become an administrator.
Indirect control. To grow and survive, the company must learn to delegate tasks to key managers and to deal with diminishing absolute rate of return and overstaffing at the middle levels.
Roland Christensen and Bruce R. Scott
focused on development of organizational complexity in a business as it evolves in its product-market relationships. They formulated three stages that a company moves through as it grows in overall size, number of products, and market coverage:‡
One-unit management with no specialized organizational parts.
One-unit management with functional parts such as marketing and finance.
Multiple operating units, such as divisions, that act in their own behalf in the marketplace.
Finally
Larry E. Greiner proposed a model of corporate evolution in which business organizations move through five phases of growth as they make the transition from small to large (in sales and employees) and from young to mature.|| Each phase is distinguished by an evolution from the prior phase and then by a revolution or crisis, which precipitates a jump into the next phase. Each evolutionary phase is characterized by a particular managerial style and each revolutionary period by a dominant management problem faced by the company. These phases and crises are shown in Exhibit 1.
*W.W. Rostow, The Stages of Economic Growth(Cambridge, England: Cambridge University Press, 1960).
†Joseph W. McGuire, Factors Affecting the Growth of Manufacturing Firms (Seattle: Bureau of Business Research, University of Washington, 1963).
§Lawrence L. Steinmetz, “Critical Stages of Small Business Growth: When They Occur and How to Survive Them,” Business Horizons, February 1969, p. 29.
‡C. Roland Christensen and Bruce R. Scott, Review of Course Activities (Lausanne: IMEDE, 1964).
||Larry E. Greiner, “Evolution and Revolution as Organizations Growth,” HBR July–August 1972, p. 37.
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Among the important tasks are to make sure the basic business stays profitable so that it will not outrun its source of cash and to develop managers to meet the needs of the growing business. This second task requires hiring managers with an eye to the company’s future rather than its current condition.
Systems should also be installed with attention to forthcoming needs. Operational planning is, as in substage III-D, in the form of budgets, but strategic planning is extensive and deeply involves the owner. The owner is thus far more active in all phases of the company’s affairs than in the disengagement aspect of this phase.
If it is successful, the III-G company proceeds into Stage IV. Indeed, III-G is often the first attempt at growing before commitment to a growth strategy. If the III-G company is unsuccessful, the causes may be detected in time for the company to shift to III-D. If not, retrenchment to the Survival Stage may be possible prior to bankruptcy or a distress sale.
Stage IV: Take-off
In this stage the key problems are how to grow rapidly and how to finance that growth. The most important questions, then, are in the following areas:
Delegation.
Can the owner delegate responsibility to others to improve the managerial effectiveness of a fast growing and increasingly complex enterprise? Further, will the action be true delegation with controls on performance and a willingness to see mistakes made, or will it be abdication, as is so often the case?
Cash.
Will there be enough to satisfy the great demands growth brings (often requiring a willingness on the owner’s part to tolerate a high debt-equity ratio) and a cash flow that is not eroded by inadequate expense controls or ill-advised investments brought about by owner impatience?
The organization is decentralized and, at least in part, divisionalized—usually in either sales or production. The key managers must be very competent to handle a growing and complex business environment. The systems, strained by growth, are becoming more refined and extensive. Both operational and strategicplanning are being done and involve specific managers. The owner and the business have become reasonably separate, yet the company is still dominated by both the owner’s presence and stock control.
This is a pivotal period in a company’s life.
If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold—at a profit—provided the owner recognizes his or her limitations soon enough. Too often, those who bring the business to the Success Stage are unsuccessful in Stage IV. Either because they try to grow too fast and run out of cash (the owner falls victim to the omnipotence syndrome). Or are unable to delegate effectively enough to make the company work (the omniscience syndrome).
It is, of course, possible for the company to traverse this high-growth stage without the original management. Often the entrepreneur who founded the company and brought it to the Success Stage is replaced. Either voluntarily or involuntarily by the company’s investors or creditors.
If the company fails to make the big time, it may be able to retrench and continue as a successful and substantial company at a state of equilibrium (endpoint 7 on Exhibit 4). Or it may drop back to Stage III (endpoint 6). Or, if the problems are too extensive, it may drop all the way back to the Survival Stage (endpoint 5) or even fail. (High interest rates and uneven economic conditions have made the latter two possibilities all too real in the early 1980s.)
Stage V: Resource Maturity
The greatest concerns of a company entering this stage are, first, to consolidate and control the financial gains brought on by rapid growth. And, second, to retain the advantages of small size, including flexibility of response and the entrepreneurial spirit. The corporation must expand the management force fast enough to eliminate the inefficiencies that growth can produce and professionalize the company by use of such tools as budgets, strategic planning, management by objectives, and standard cost systems—and do this without stifling its entrepreneurial qualities.
A company in Stage V has the staff and financial resources to engage in detailed operational and strategic planning. The management is decentralized, adequately staffed, and experienced. And systems are extensive and well developed. The owner and the business are quite separate, both financially and operationally.
The company has now arrived.
It has the advantages of size, financial resources, and managerial talent. If it can preserve its entrepreneurial spirit, it will be a formidable force in the market. If not, it may enter a sixth stage of sorts: ossification.
Ossification is characterized by a lack of innovative decision making and the avoidance of risks. It seems most common in large corporations whose sizable market share, buying power, and financial resources keep them viable. Until there is a major change in the environment. Unfortunately for these businesses, it is usually their rapidly growing competitors that notice the environmental change first.
The United States takes pride in being on the cutting edge of all things digital, and rightly so: American innovations and innovators have led the way. Yet according to recent research from the McKinsey Global Institute, the U.S. economy operates at only 18% of its digital potential, and the sort of productivity gains that digital technologies should be enabling are not showing up in the broader economy. Why is that?
The answer is that a new digital divide has opened up in America. Just about every individual, company and sector of the economy now has access to digital technologies — there are hardly any “have nots” anymore. But a widening gap exists between the “haves” and a group we call the “have-mores”: companies and sectors that are using their digital capabilities far more than the rest to innovate and transform how they operate.
We compiled a digitization index using dozens of indicators to show where and how companies are building digital assets, expanding digital usage, and creating a more digital workforce. The 18% figure is based on comparing how the economy as a whole stacks up against the performance of the have-mores. The latter are not just coming out on top; they are maintaining a wide and persistent gap. At the sector level, the index shows that the leading sectors have increased their digital intensity four-fold since 1997, with the greatest gains coming in the past decade. Other sectors are barely keeping pace.
At the sector level, the technology sector itself ranks with the have-mores, of course, as do media, financial services, and professional services, which are surging ahead of the rest of the economy. This does not mean every technology company is leading; there are plenty of tech companies falling behind, too. Laggard sectors in general include government, health care, local services, hospitality, and construction — but again, even within each of these sectors, there are bright-spark companies that are innovating and in some cases disrupting others.
These sector- and company-level divides have a broader economic significance because the most digitally advanced parts of the economy have increased their productivity and boosted profit margins by two to three times the average rate in other sectors over the past 20 years. Sectors that lag in measures of digitization also post lower productivity performance, and since this group includes some of the heavyweights in terms of GDP contribution and employment, this creates a drag on the broader economy. We calculate that if the U.S. were to capture the full potential of digitization, rather than just 18% of it, this could be worth at least $2 trillion to the economy.
The digital disparity is not the only reason productivity gains are not showing up in the broader economy; the full reasons are hotly debated by economists. But because digital capabilities are closely linked to innovation, growth, productivity, and even business model disruption, addressing this digital gap should be high on the agenda for both public- and private-sector leaders.
To be clear, the new digital divide isn’t about a reluctance to invest in equipment and systems; most sectors and companies now spend heavily on IT. The gap is in the degree of digital usage. Digital engagement between companies and their suppliers and customers is five times larger in the leading sectors than in others. This engagement can range from digital payments and advertising to interactions on social media and in virtual marketplaces. The gap is even wider when it comes to digitizing the workplace. In leading sectors, digital and mobile aids help workers do their jobs more efficiently, and routine tasks are digitized at the same time as new digital jobs are created.
At the company level, the have-mores lead in terms of product, services, business model innovation, and revenue growth — and they are often the ones disrupting their own and other sectors. Digitally enabled innovations often have network effects associated with them, which in turn leads to “winner take most” outcomes; the top-performing companies enjoy far higher profit margins than the rest, and a handful of frontier firms are leaving everyone else in the dust. Our colleagues last year surveyed 150 large companies to measure their digital strategy, capabilities and culture, and found a large gap separating the digital leaders—the top 10% or so—from the rest. Big incumbent firms in particular are struggling to keep up as more agile digital challengers deliver products and services in faster and cheaper ways. But it’s worth noting that not all of the have-mores are young firms that were born digital. Some long-established companies including GE and Nike have successfully revamped their operations and strategies to become digital leaders.
For the economy as a whole, encouraging the digital haves to close the gap with the have-mores is an issue that belongs on the policy agenda. Their catch-up growth could be an important source of momentum at a time when the global economy lacks dynamism.
There is reason to be optimistic. Digital innovation has been largely focused on consumers in recent years, but now big data and the Internet of Things are beginning to change the way things are actually produced. Companies in manufacturing, energy, and other traditional industries have been investing to digitize their physical assets, bringing us closer to the era of connected cars, smart buildings, and intelligent oil fields.
So…
Innovations launched in the U.S. are rapidly adopted around the world, and the winner-take-most dynamics associated with digitization are appearing in other countries as well. Now the rest of the world will be watching to see if the United States can channel its technology prowess into the next wave of productivity advances, turning its digital lead into a broader economic transformation.
James Manyika is the San Francisco-based director of the McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company.
Gary Pinkus is a managing partner for McKinsey in North America.
Sree Ramaswamy is a senior fellow at the McKinsey Global Institute.
In my experience, the office has never been a particularly conducive place for creativity. Instead, it likes to pop out at times when I used to least expect it, such as during runs, or washing dishes (as mentioned in this article by HBR). I am a big proponent of time away from the office but would add that time away from family and friends is important as well. That solitude needs to be in place (as well as that phone shut off) for a complete sense of quiet, solitude and security in knowing that your ideas are yours alone to fuss over.
ANDREW NGUYEN/HBR STAFF
In our contemporary offices and always-busy lives, alone time can be difficult to come by. But successful creative thinkers share a need for solitude. They make a practice of turning away from the distractions of daily life to give their minds space to reflect, make new connections, and find meaning.
Great thinkers and leaders throughout history — from Virginia Woolf to Marcel Proust to Apple cofounder Steve Wozniak — have lauded the importance of having a metaphorical room of one’s own. But today’s culture overemphasizes the importance of constant social interaction, due in part to social media. We tend to view time spent alone as time wasted or as an indication of an antisocial or melancholy personality. Instead, we should see it as a sign of emotional maturity and healthy psychological development.
Of course, positive social interactions and collaboration are a critical part of a healthy workplace. But while some people may be inspired by experience and interacting with others, it is often in solitary reflection that ideas are crystallized and insights formed. As author and biochemist Isaac Asimov wrote in his famous essay on the nature of creativity, “Creation is embarrassing. For every new good idea you have, there are a hundred, ten thousand foolish ones, which you naturally do not care to display.”
Now science has reinforced what countless artists and innovators have known: solitary reflection feeds the creative mind. In recent years, neuroscientists have discovered that we tend to get our best ideas when our attention is not fully engaged in our immediate environment or the task at hand. When we’re not focusing on anything in particular — instead letting the mind wander or dip into our deep storehouse of memories, ideas, and emotions — the brain’s default mode network is activated. Many of our most original insights arise from the activity of this network, or as we like to call it, the “imagination network.”
Its three main components — personal meaning making, mental simulation, and perspective taking — often work together when we’re reflecting. Using many regions across the brain, the imagination network enables us to remember the past, think about the future, see other perspectives and scenarios, comprehend stories, understand ourselves, and create meaning from our experiences.
As mentioned above, activating this network requires deep internal reflection — the state that many artists and philosophers refer to when describing how they arrive at their most original ideas. This type of reflection is facilitated by solitude, which is why we often get creative insights when we’re relaxing or doing mundane, habitual tasks like showering or washing the dishes.
Unfortunately, most people rarely give themselves time for purposeful contemplation. While the modern workplace is often not conducive to this type of alone time, there are things managers and their teams can do to reclaim solitude and improve their creativity — without diminishing collaboration.
One solution is to give employees the flexibility to work remotely, particularly when they’re focused on creative assignments that require them to generate new and original ideas. Another is to designate an office or conference room for quiet work. But most of all, managers should let employees know that they’ll respect their individual work styles, and that slipping away from their desks to think in solitude is OK. In fact, managers should actively encourage this for improved creativity, as well as urge employees to take all of their vacation days. Having time for periodic rest and reflection will give your team the space to replenish their creative energy.
It’s time to allow creative workers (and who doesn’t have to solve problems creatively these days?), as Zadie Smith advised, to “protect the time and space” in which they work. Doing so helps lay the foundation for true innovation.
For business professors, time is always an issue. What do you think? Originally posted in HBR.
Today, more and more students, parents, and taxpayers are demanding a greater return for the cost of college education. TheEconomisthas called it a “revolution” and a “cost crisis” in university education. People are justifiably asking whether there is a reasonable return on their tuition investment and business schools are arguably under the microscope most of all.
This is a pendulum swing from the 1950s when research by the Ford and Carnegie foundations found too much of a focus on vocational training, and business education was criticized for being overly technical and applied. Business schools responded. Now, years later, educators have been criticized for going too far. One notable critic, Warren Bennis, a renowned leadership scholar from the University of Southern California, states that business schools have “an overemphasis on the rigor and an underemphasis on relevance.”
Some business schools have responded by hiring professors of practice, or industry executives without PhDs. The question remains as to whether there is a role for classically trained professors in business schools of the future. Or is it time for business professors to go back to work?
One of us, Holly Brower, decided to put this question to the test. Brower designed a faculty “externship” where she left her university office and for two months become part of global pharmaceutical company Eli Lilly’s daily operations. Rather than act as an outside consultant, she would work as an insider. Brower, along with other colleagues, had from time to time worked as a consultant for companies. These experiences, while helpful to understand contemporary business problems, quickly placed her in the role of teacher/adviser and the company as client. Brower was looking for a different type of experience with a more level playing field. Though short, the immersion within Eli Lilly offered her a litmus test for the material she teaches and researches.
With a company sponsor who was clearly open minded and inquisitive, and her expertise as a leadership scholar, together they mapped out a problem that Eli Lilly was working to resolve — their leadership programs across the globe needed a streamlined framework. She provided both expertise and an apolitical lens to build the new model.
In a separate externship, as part of KPMG’s Professor in Residence Program, a tax professor worked closely with a global team of accountants on implications of tax codes across South America. The project gave the professor a fresh look at the challenges his students would face as tax professionals and gave the accountants a chance to offer input into the professor’s research. As academic articles become sources for textbooks, this early feedback into academic research is critical, and the relevant work experience enhances class examples and coaching of students.
Though faculty externships are rare and there is not a “typical” model, we conducted a series of interviews with interested executives and professors with their own faculty externship experiences to construct a beta-tested protocol for a successful externship. These include identifying an internal sponsor for the faculty extern; an extern who fits with the company culture; and a clear project that is both related to the extern’s expertise and offers value to the company. This project should have specific start and end dates, and clear deliverables. The extern and the company should also come to a clear agreement about confidentiality rules. Once the externship begins, the internal sponsor should communicate the nature of the project and the background of the faculty extern, and help plan interactions such as lunch and learns between the faculty extern and employees. Finally, every externship should end with a debriefing.
One marketing executive who hosted an extern at IBM said of the weekly lunch and learn presentation: “The professor’s lunchtime talk was highly attended and received great feedback. Since many of us do not have a legal background, it was helpful to hear her points of view on how the law is impacting advertising. It was also great having her in smaller group meetings, getting to hear her points of view.”
While externships offer value, both faculty and executives resist the practice for a number of reasons. For companies, including a professor in daily operations can come with angst about whether or not that professor will fit in a positive way that doesn’t require too much “handholding.” The selection of the right extern is critical to find an ideal match. For professors, aside from a few limited exceptions, university norms and incentives currently do not support externships. While the academy values primary research on questions with managerial implications, there are strong trade-offs between working within a company, even for a limited time, and crafting a journal article.
There is also the question of whether professors are in fact more effective having some distance from business. Can more enduring perspectives be better taught through an outside view? Is the real problem not what is being taught in business schools, but instead what is being practiced by businesses? Like most interesting questions, perhaps the answer is “both.”
Holly Henderson Brower (Ph.D., Purdue University) is an Associate Professor at the School of Business at Wake Forest University where she also is the faculty director of the internship program. She consults and publishes on issues related to trust, leadership and effective decision making in both nonprofit and for-profit organizations.
Michelle D. Steward (Ph.D., Arizona State University) is an Associate Professor of Marketing at the School of Business at Wake Forest University. Michelle’s research interests are in the area of business-to-business marketing.
See the movie and read the book or vice versa. Either way, you’re in for a terrific ride. In a riveting fashion, Michael Lewis describes and makes sense out of the 2008 financial collapse that destroyed almost everything in its path. The real key to this story’s success is Lewis’ attention to the eccentric cast of characters. Some saw it coming from as far as a decade away.
It really doesn’t matter what you think of Elon Musk, his story and work are amazing. Musk is one of the few extremely non-risk-averse entrepreneurs out there. He also happens to be talented, smart and not afraid to question, defy and oftentimes battle the status quo. (A LOT like Richard Branson, up next.) The biography by Ashlee Vance is honest, compelling and pulls no punches with Musk’s frequently challenging personality. Take the time to read and get inspired by one of the biggest thinkers alive.
Speaking of non-risk-averse types, let’s talk about Richard Branson. His business and lifestyle motto “Screw it, let’s do it” is tempered by his thoughts on successes and failures in his career. The history alone of how Branson developed into one of the most successful entrepreneurs of all time –after an unauspicious start as a sixteen-year-old dropout with dyslexia– makes one sit up and listen.
Malcolm Gladwell has critics, but I appreciate his focus and interest in areas I find fascinating. I have been a fan of his since The Tipping Point and Blink. Both books made me reexamine a few ideas I had about the world. And reshaped a lot of the thinking I bring into my daily work. Outliers explores how people become extraordinary (or at least successful in their chosen fields). It isn’t always how you might think.
The founder and editor of FiveThirtyEight.com, Nate Silver gained national celebrity status after his almost exact prediction of the 2008 and 2012 elections. This book examines the difficulty in discerning what is relevant in collected statistics. And what may be simply unnecessary and sometimes misleading information. Anyone interested in analytics, statistics, prediction, numbers, science, economics and “seeking truth from data” will enjoy.
Intriguing book by Daniel Kahneman, a psychologist and winner of the Nobel Prize in Economics. It examines the way our brain processes information. As I listened to this, I wished I was able to do some of the exercises the book asks you to do to help discern its examples. Kahneman presents a very thoughtful and revealing view on how perspectives are easily skewed.
I’m almost embarrassed to admit I read this one as its Machiavellian approach makes you feel as though you’re preparing for a role on Game of Thrones. It basically serves as a primer on how to manipulate your way into getting what you want. If you work in an environment of snakes (and this book assures you everyone -including yourself- is a snake) then this is the book to read. However, there is some good advice in its pages. And quite a few in business have read it, along with Sun Tzu’s The Art of War. You might as well arm yourself so you can see ’em coming.
Exhibit 1 Growth Phases
Exhibit 2 Growth Stages
Exhibit 3 Characteristics of Small Business at Each Stage of Development
Exhibit 4 Evolution of Small Companies
