Shyam's Slide Share Presentations


This article/post is from a third party website. The views expressed are that of the author. We at Capacity Building & Development may not necessarily subscribe to it completely. The relevance & applicability of the content is limited to certain geographic zones.It is not universal.


Saturday, October 22, 2016

INSEAD Dean Talks B-School’s Past, Present, Future 10-22

INSEAD Dean Talks B-School’s Past, Present, Future.

Times are good for the business school headquartered in the quaint French town of Fontainebleau.
INSEAD, which brushes up against a national forest about 70 kilometers southeast of Paris, is having a stellar year. Last November, it nabbed the top spot in Poets&Quants’ composite ranking of international schools. In January, INSEAD became the first school not named Harvard, Stanford, Wharton, or London Business School to claim number one in the Financial Times’ global ranking of MBA programs. What’s more, the school has more alumni giving and engagement than ever before, enjoys solid job placement rates despite offering a turbocharged 10-month full-time MBA, and is in the midst of planning a new curriculum that will roll out next September.

This past Saturday (Oct. 8), Poets&Quants had the opportunity to meet with INSEAD Dean Ilian Mihov in his Fontainebleau office during a massive alumni reunion weekend to discuss his first three years as dean and where he sees the school — and business education as a whole — going. When Mihov took over as dean, he did so with at least three objectives. He wanted to put greater resources into career development, increase fundraising, and build a new curriculum. Three years later, he’s done all three.

First, Mihov says, INSEAD doubled the budget for career services. This led to increased staff and a new career development center. Students now gain personal career coaches before even starting the program, and more than 180 companies a year trek from around the globe to INSEAD’s Fontainebleau or Singapore campuses. Next, efforts to increase alumni engagement and giving have paid off handsomely. Five years ago, INSEAD raised about €4.7 million ($5.2 million). This past academic year, the school set a goal of €16.5 million ($18.2 million)— and ended up with nearly €24 million ($26.4 million). Meanwhile, Mihov says, alumni attendance at events on campus is up 25%.

Finally, after a lengthy process that was spearheaded by a five-member faculty committee and included input from recruiters, alumni, and current students, the school will roll out a completely revised curriculum for next September’s incoming class. Highlights will include a personalized leadership development program, a cluster of required courses focused on business and society, and, Mihov says, deeper self-reflection and character building.


To keep the upward momentum moving, Mihov says INSEAD must continue to fundraise so it can compete for the best students and professors. Currently, about 20% of INSEAD students receive scholarships, well below the near 50% level at Harvard Business School where the average annual student grant is $37,000. Mihov wants to get closer to HBS’ 50%. “I think that everybody is fighting for two things. One is students, and the other is faculty,” he says. “So the toughest challenge for us is to keep INSEAD an attractive proposition in this competitive environment.”

To be sure, INSEAD has tapped into two of the most saturated markets for MBA applicants. For the past five years, the largest nationalities represented have been from the U.S. and India. Each country has comprised 9% to 12% of the school’s cohort, which is enough for the highest conglomerate from one country. The school regularly enrolls students from more than 80 countries each year and has an alumni base that spans 170 countries. According to Mihov, U.S. applicants are higher than ever before. But to break deeper into the robust U.S. applicant market, Mihov says INSEAD needs to continue to communicate the legitimacy of the one-year MBA — and it needs to innovate.

In a robust and broad-ranging interview, Mihov discusses in detail the process INSEAD went through to revamp its curriculum, future development of the school’s Abu Dhabi campus, improvements the school needs to make, and why the one-year model involves classroom time equal to or more than a two-year program — among many other topics.

You’ve now officially been dean for just over three years. What are some of your proudest accomplishments over that time?

I think there are several key things that we did. At the very beginning, we decided to completely revamp our career services and build a career development center. We more than doubled our budget. We provide the students now with personal career advisers. So when students come to INSEAD, they have somebody who helps them during the year figure out where they want to apply, figure out what they are going to do, preparing them for interviews, preparing them for submitting CVs, recommendation letters — all of these things. Those are some of the technical things, but they also help with the behavioral things like how you behave during the interview. And I think that has a very big impact on how the students feel and the success rates on the reports in terms of matching students with the right employers.

We also invested a lot in business development — that is, relationships with employers. Today we have more than 180 companies coming to campus recruiting, which is quite significant. That was the first thing I really thought was necessary to do.

The second thing that I’m very proud of is that we went through a long process of curriculum review. It’s always difficult to build consensus around something. One of our colleagues warned us — he was at another school before coming to INSEAD and was a tenured professor — and he said that there, they went through the same thing and at the end they went back to the same curriculum as before. But in our case, I’m happy that it went very well. We will be implementing the new curriculum for the class that starts in September of 2017.

We produced a leadership development program so that there is professional coaching, group coaching, and peer coaching during the entire year to make our students more aware about how they make decisions, how they have biases, how to correct those biases, how to behave in teams. It’s a standard coaching exercise. In addition to this, we produced a cluster of business and society courses in our third period. One is political analysis, one is more of a public policy — environmental, sustainability, inequality — all these issues that link business and society and have created some problems in recent years. And the third course is ethics. We had it before as a required course but it was between other courses. Now we put it together in this cluster.

So there are several changes that I think will improve the program and will make it more effective. We have the students develop not only competencies, but also build and further their character and understanding of themselves. That’s the second thing.

The third thing is the relationship with the alumni. Today the alumni engagement at INSEAD is the highest ever. In the last year we have seen a 25% increase in the number of alumni coming back for reunions. Last year, we had 3,200 alumni come back for reunion. This is very important. I think it creates a much stronger school in a sense that the students can benefit much more from this relationship with alumni. Our faculty benefit from the relationships and we are trying to build something for the alumni as well, like a platform for continued learning, so they will benefit as well.

On the fundraising front, we are doing very well. To me, this is one of the most important successes because we have an alumni network that spreads into 170 countries. We have more alumni in more countries than any other business school. So it’s a very powerful network and if we can activate this network and connect it to the school, we can do a lot of new and interesting things.
And a fourth thing that is also quite interesting is in the digitalization we have moved forward substantially. It’s more relevant for executive education, but we are trying to bring it to the MBA class.

The curriculum change is something you mentioned quite a bit when you first took over as dean. Can you share any more about what that process was like and any more detail on key improvements within the curriculum that you didn’t already mention?

Yeah, so, I think what I mentioned already are the most important changes, but I think the process was quite interesting because we did not want to change the curriculum just for the sake of changing it. We wanted to change it to make it relevant for the students and for the recruiters. So we created a committee of five faculty members and then benchmarked against other schools to see what other schools are doing and have been doing, which generated some interesting insights but also we realized, we are not very far from what other schools are doing in many ways.

Then we talked to students and asked what they expect to see at INSEAD. And there were demands for certain courses. At INSEAD, it is critical to do this every 10 or 15 years because INSEAD is different and our electives are a marketplace. At many other schools, the faculty decides these are the electives that we are going to run and people subscribe. Here, if an elective does not run well, we’ll kill it, and we have a very strict criteria for that. If the elective is successful, we launch a bunch of sections so more people can take it. So as we see the demand, we will change electives. But still, there were some, like digital marketing and media, all of these things we just introduced as a result of this.

Then we went and talked to alumni and asked what they thought was good and what they found useful over the years, and what they thought was not as good. We heard very clearly that they wished there was a bigger emphasis on leadership development, there was a bit more emphasis on decision making, on reflection, self-awareness, ethical dilemmas, and so on.

And then we went to recruiters and asked what they need from our students. I think today we are very fortunate that many recruiters are going after our students because of their global nature. So one of the things that they really valued a lot was the global mindset, the diversity of the students coming from all over the world, so they can go back to these countries. Many recruiters need people in Southeast Asia, in Africa, Latin America, and sometimes it’s difficult to convince students who have gone to a top U.S. or European school to go back to their countries. But our students, because of their mindsets, are willing to do that. Last year — the class that just graduated — are placed in 57 countries. And the other thing that recruiters said — and that’s why we introduced it: that they are quite happy with the development of the analytical skills. The program we have is rigorous and comparable to top schools. But they really wanted more emphasis on soft skills. So that’s why we have this leadership development program.

Speaking of recruiters, you all have students coming from all over the world, many of whom are trying to jump industries, functions, and/or countries and have no traditional internship like in a two-year program, yet you all still have impressive job placement stats. Is this because of the increased resources and communication with recruiters?

Yeah, we can do this because now we have focused on career development even before they come to INSEAD. It is a 10-month program, there are no internships, but at the same time, even before they come, we have online courses for building their CV and all kinds of videos on how to prepare for career development. And during the year, there are personal career advisers and group career advisers focused on industries. Everybody understands it’s a very short period of time and we really have to do things very quickly. We enlarged the number of advisers because we realized if we want to do it right, it’s not going to happen with the numbers we had before.

It is impressive how many people switch functions and industry and geography. But obviously the people we take in are very high-quality and the willingness they have to be global and move around is very valuable and valued by companies.

The other big news coming out of INSEAD recently is obviously the Financial Times ranking. How does getting that number one spot feel and how much do you value rankings?

I think rankings matter. Rankings are very good feedback for facts and what things are working well and not working well. And the community is really energized by this number-one spot. I think what we learned from the rankings is that because we are placing students in emerging markets, our salaries are growing faster. Or they are going into industries that have high salaries. But on the salary side, INSEAD has been improving.

The second positive thing that we learned, which was very good, is that our research ranking has increased significantly. To me, this is very important because the school shifted towards research in the 1990s. It was under Dean António Borges. And it was difficult to integrate it into cultures.

INSEAD was a teaching place. We emphasized teaching quality, I would say more than most of the other schools. And here, it’s not that the dean of faculty says you have to be a good teacher, professors feel the pressure. You have to be good in the classroom. Our students are a little bit older, the average age is 29. They also put more pressure on the faculty to be good in the classroom. So integrating these two cultures was sometimes painful. But today we have the best teachers and many of them are also great researchers. We have created a culture where the research and teaching goes hand-in-hand.

The reason I think it is very important is because if you think about the disruptions and the biggest threat coming from online, it is famous professors from top schools delivering high-quality material that is basically distributed for free. And right now of course there are issues with MOOCs. But eventually things will improve. The only way we can stay relevant in an environment like this is if you have a school where professors are at the forefront of research in management sciences and so on. So when you go into the classroom, you are not reading the textbook, which you can get on a video or MOOC, but also you are engaging in a discussion where professors are bringing the latest insights from various empirical studies and theories. And that makes a big difference, and I have seen it in many classes at INSEAD. That students and executives realize they learn something they can’t get easily from the video or newspapers.

For example, I am a macroeconomist and I have had several talks in the past about the economic drought and inequality. And what I was bringing in the classroom were inequality studies that people have published in top academic journals. And sometimes the conclusions from these studies, with the data, was contrary to what you would see in newspapers. And then you realize that you are learning something you cannot learn otherwise. To me, this maintains the competitive edge to the school.

I think it is very easy to see where we are also weak, in terms of the rankings. We want to increase female participation at INSEAD in the number of MBAs. We have 30% women today, which is still big progress to 10 years ago. But, again, it’s not where we want to be. We have looked into this issue. We are trying to analyze why this is happening. And it is, to a large degree, our geographical distribution of applicants. From the U.S. students, we have 45% of women like most of the U.S. schools. From China, we have 60% women. But from Europe, we have 12% and that’s where we are putting emphasis, in trying to change this.

So, to me, this is what rankings give. You can try to understand where the investment has paid off — and where we are still weak and need to improve.

One of the things you mentioned in your interview with Poets&Quants in 2014 was putting a significant emphasis on fundraising. Can you give us some updates on how that is going?

It’s going very, very well. This data is in the reports, so it’s publicly available, but the new one we are still preparing. If you look at fundraising about five years ago, we raised €4.7 million. But it’s been increasing and the last academic year that we just finished, our objective was to raise €16.5 million. And we ended up with close to €24 million. So we exceeded the target by more than 45%. I think that’s where the school can be, and even higher. Most of the money we raise is for scholarships.

We also raise money for research. We raise money for career services. The career development center was funded by donations from alumni because they understand this. So it is still a priority. Because, for me, fundraising is about investing in the future of the school — building a better school, ensuring the quality of the students. And that’s certainly working well.

We’re still not where we want to be in terms of scholarships. We want to go more than double the amount we currently give for scholarships. It’s a very important objective. But things have changed dramatically.

In that interview you also mentioned INSEAD being the most complicated business school in the world and a logistical nightmare moving students across two or three campuses in a year. Do you still feel that way?

It is still the most complicated. I said it today at the reunion. Because we are the biggest MBA program in terms of number of students that we put on the market every year. On campus some U.S. schools have more students, but what really matters is how many students you have to help in finding jobs and it’s quite significant. Still, 75% move between campuses. And now we introduced another complication by offering a period in Abu Dhabi. But at the same time, I think that it is worth doing this. This complication is not for its own sake. I think the students that do move between campuses see firsthand the different environment’s globalization. And some of them go to Wharton. So it’s Fontainebleau, Singapore, and Wharton with the Wharton exchange.

I don’t know if I said this in the previous interview, but I think that if we had not gone to Singapore, INSEAD would not be where it is today.

Why do you think that?

Because I think that today we offer a unique opportunity for people who want to think about the world and to experience the two campuses. And we have developed expertise on Asia and Asian companies that otherwise, I don’t think would have developed. It’s very difficult to build cases on China or India or Singapore or Indonesia by sitting in Fontainebleau. You can do it, but it’s not as insightful as when you’re there. Even when you read the newspaper, you see all of the news coming in and you can integrate it into the teaching. I think our students get information about Asia and Europe more than anybody else among the top schools, just because they are in this environment. Of course you teach a lot of other things like globalization and the U.S. and so on, but it’s the environment. We have speakers, forums, field trips, that help them understand the culture and the way people do business in these countries.

What are some of the most important differences between campuses?

Let me first start with Abu Dhabi. Abu Dhabi is still in the process of development. We are going to possibly build a new campus in Abu Dhabi. Right now we only have our executive MBA there, which works quite well. And we have executive education. Only one of the MBA classes can go there for two months. We want to develop this going forward with getting more periods in Abu Dhabi. So it’s a very different campus compared to Fontainebleau and Singapore.

In terms of culture among the students, I think there is no difference between Singapore and Fontainebleau. The composition of the class is the same. It’s true, we have about 200 in Singapore and 300 in Fontainebleau, but the mix of nationalities is very similar. Of course Singapore is an urban campus, so it’s slightly different and people are in the city. Here there is a potential in getting closer to each other because everybody is in Fontainebleau and there is not much else there unless they decide to go to Paris. It’s a very good environment for studying for one year.

So I think there are slight differences because of this, but at the same time, in terms of culture, students move seamlessly between the two campuses. I have not seen any problems or people from Fontainebleau or Singapore behaving differently.

How do you think applicants from the U.S. view INSEAD and what would you change about that, if anything?

That’s a very interesting question because in the last few years, we have seen a rapid increase in the number of applications from the U.S. In fact, today, the biggest group on campus are Americans — 9% of the new class that we just admitted. In the past five years it has been Indians and Americans as the largest groups, but still a minority like everybody else.

We see now a big increase in applications. I think the number-one ranking has helped people become aware. But I still think it is difficult for some applicants to see the benefit of INSEAD compared to other schools. And there is still skepticism to the one-year program. Academically, there is almost no difference. Because in the U.S., two years is four semesters of three and a half months — so 14 months. And very often you have a day free during the week for career and job search and networking. So basically you have 20% less, so it’s about 11 months of academic work. And at INSEAD, the 10 months are including classes on Saturday. So from an academic point of view, in terms of what you get in the classroom, you get the same thing that you get at other schools. Now, I think that more and more applicants see the one-year MBA as a viable and strong product. I think it was the GMAT data that said more people applied for one-year programs.

Specifically, from the U.S., we obviously have several things that work against us. The first one is the language requirement. On entry, you need two languages spoken and written at a high level. And on exit, you need a third language. Many students come with three languages already but there are also others that do not. In Europe, most people do have these languages. The education system is different where almost everybody starts with a second language in middle school and a third language by the time you go to university.

The other thing is that the U.S. has a lot of other great schools, so there are other opportunities. Many applicants are considering the U.S. schools. And the value of INSEAD, we sometimes don’t communicate properly enough. For us, we think that if somebody is looking for having a career in a global economy, working with teams that are very diverse, then INSEAD has a lot to offer — more than most of the U.S. schools. We have today 86 nationalities on campus. We create teams of people that sometimes are from countries that are at war with each other. Because we want to make sure that during this year they learn how to interact in teams with somebody that you may not like. But you still have to work on that team. So we’re trying to develop them as managers or leaders or entrepreneurs with a global perspective. Again, the two-year schools are excellent of course, but still, most people look for jobs in the U.S. Most people end up with jobs in the U.S. It’s still the biggest economy. But it’s just a different position, competitively. We just have to make our story heard, and if somebody wants to have a global perspective, then hopefully they apply to INSEAD.

Can you give any examples of what you think applicants fail to see about INSEAD?

I think it’s the global perspective. What is different about INSEAD? Well, the one-year program is obviously different than a two-year program. That’s easy to see. But it’s difficult, for example, to see that, from an academic point of view, it doesn’t make any difference. Because people don’t do the calculation and they see two years as two years, but actually, academically, it’s the same duration.

We look at the number of hours we have in the classroom and it’s very similar to the top U.S.
schools. With some we have more, and with others we have less. I have heard this before, that you cannot teach these things in one year. Well, actually you can. And I think that we do. But at the end of the day, the ultimate test is whether students get jobs or not. And our students are placed at top companies around the world. So I think it’s difficult to see that you are not losing anything academically, but you’re gaining this global perspective — this diversity, which is becoming more and more important. It’s difficult to communicate this message sometimes.

This clearly hasn’t had much influence on job placements, but what can you say for students who are considering INSEAD but are also looking for an internship? The internship is an important aspect for many students entering the two-year model.

That’s true, but we also take older students. I think for younger students it’s more important that for ones that are at a different level. We have increased the age to 29 for two key reasons. One is that because of the lack of internship, they have to be able to get that job with just the academic side. The second reason is when they come with more experience and knowledge, we give them academically 90% or 100% of what American schools give them. It’s very intensive. And if you have not heard of strategy and you have not done things in business sufficiently for a long period of time, it could be quite confusing. That’s how we’ve tried to compensate with a lack of internship.

What is the best advice you have for applicants considering INSEAD and other top schools?

I think the advice is, think about your aspirations, your career, what you want to do. Schools in the U.S., again, have their strengths. We have our strengths. INSEAD has not only the global, which we have discussed, but INSEAD has always been entrepreneurial and has been more so in recent years. If you look at the PitchBook ranking that came out a few weeks back, it’s interesting that our alumni — many of them are outside the U.S. — have managed funds that are comparable to what the top U.S. schools have raised in the past five years. INSEAD is becoming more and more focused on entrepreneurship. But what I think is really important is this self-awareness and leadership development, which will be a thing that is helpful to them throughout their careers. It’s not just about getting a job.

What are some of the toughest challenges you anticipate facing in the next few years?

I think that everybody is fighting for two things. One is students and the other is faculty. So the toughest challenge for us is to keep INSEAD an attractive proposition in this competitive environment. To show that the school is continuously innovating and helping students get their jobs. For us, the big issue is that in terms of the amount of money you have to pay for the MBA, we’re still probably the cheapest school in the top 10 — but the amount is still substantial, and the U.S. schools are competing with more scholarships. To me, this is a very big challenge. We are focusing on building a very robust scholarship program. Today 20% of the students receive some form of financial aid. But the idea is to get to 50% at least. And that’s very tough.

And then for faculty, I don’t think we have that much trouble with maintaining faculty. We have professors that are very productive and engaging. In academic journals, they’ve published more than many of the other top schools. We do have the environment but one of the big risks is if this environment changes and we start losing some of the professors. We’re not there yet, it’s more like a risk, and hopefully we’ll never be there.

If I think about another risk, obviously digitalization can be something that can come up. And probably some schools are suffering from the availability of online courses. For us, digitalization is a huge benefit. Because now we can take some of the material out and use it as a digital offering before they come to INSEAD, which is what we’re doing with the new curriculum. So we can free up some more time during the year. For us, it will allow us to do things that are value-adding and good for the students. But for challenges, not in the near future, but in the medium turn, it could be companies or organizations that offer some courses or building out a portfolio of courses that will not necessarily replicate an MBA but that could be viewed as a certificate program with five or six courses at the job that I want. That’s possible.

What are some of the most important lessons you’ve learned as dean?

I think the number-one lesson is, communication is key. I think communication is key in moments when you need to change something. People need to understand why you are doing it. And the second reason communication is key is, in our case, spreading the word of INSEAD is not where it should be. It’s so interesting that today, even at the reunion when we had 500 people in the room — people that are obviously passionate about their school and are coming back and love the school — but when I show them what the school has done in the last 10 years or so, they are very surprised. If you go year after year surprising people in a positive way, it means, on average, the information you have is not out there. People don’t know what is happening in the school. And that’s something that I’ve learned is very valuable. So we’re focusing now on brand awareness, branding exercises, communication, (and) we’ve started an alumni magazine that gives stories about the school and alumni.

And it’s interesting that what I’ve learned is, if you try to understand the demands of the students and alumni, if you try to understand what they’re after when they come to INSEAD or when they reconnect to the school, I think you can achieve a lot of great things. I think that we see some of these things happening. And sometimes it’s difficult, what they want. Sometimes it’s not possible. But when you engage in a conversation, then you either convince them it’s not possible or they convince you it is possible. So engaging in conversations and listening is very valuable.

If you could change one thing about graduate business education, what would it be and why?

I don’t want to continue to sell our curriculum change, but I think we need to continue to focus more on personal development. About the emotional component in working with other people. About psychological issues. About building character and being aware of what your values are and how you align your decisions with your values. If you build these things at this stage, you will see fewer corporate scandals and fewer issues. Because they will be able to check themselves. I think today, most of the business schools are providing excellent quality in terms of competence building and analytical skills. We have created so many exercises — cases, simulations, and so on — that help them develop these skills, and they are absolutely crucial. They have to be there, no doubt.

But now I think we also have to increase our focus on character building, awareness, and reflection. And I think that’s not only true for the MBAs. This is something that we learn from executives and now we are bringing it to the MBAs. We see executives make a decision, start implementing, practice, and move on. You never have the time to stop and reflect and look back and say, “OK, I made this decision, we implemented this, that was wrong, that was right, now let me think about how to do the next one to avoid these mistakes.” This reflection on the practice you have had in the past is still a muscle that many people do not train enough.

Any other final thoughts?

I would add that to the American applicants that are considering business education, probably the most important thing in the process of decision making is to talk to alumni from different schools. To see how this alum talks about the school. What is positive about the school? This is key. Most alumni will be selling their school, of course, but you have to have the filter to figure out what part of the sales pitch is relevant for you. So I would encourage them to find INSEAD alumni in the U.S. and learn what INSEAD gives.

View at the original source

Thursday, October 20, 2016

A Data-Driven Approach to Customer Relationships A Case Study of Nedbank’s Data Practices in South Africa 10-19

South Africa’s Nedbank is a leader in its market — but to stay in that position, it needed to identify new ways to serve its existing business clientele as well as attract new customers. Its solution: Use the extensive transaction data the bank collects to help customers improve their service.


In 2015, store managers at BUCO, a hardware retailer with 46 locations across South Africa, had an intuitive feel for whether men or women were their most frequent customers, which locations had the most loyal customers, and from what suburbs the most valuable customers to a given store were coming. That all changed shortly after Judy Gounden, a group marketing executive at BUCO’s parent company, Iliad Africa Ltd., began using Market Edge, a commercial data service provided by Nedbank Group Ltd., South Africa’s fourth-largest bank by market value.

According to Gounden, Market Edge — which packages credit and debit card information with geolocation, demographic, and other transactional data — enabled new insights into customers’ behaviors that would have been difficult to identify without the new tool. These insights in turn have changed the way the company operates, says Gounden:

We can now look at card transaction data and say, “On a Wednesday at 9:00 a.m., we had the most card transactions versus any other day in the week, and most of these people are 50 and 60 years old.” That’s our pensioner day. In some geographical regions, we’ve got very high loyalty, and in others, we get new customers constantly, so the tool helps us think about how we market in each region. What’s more, when I told a store manager who believed that most of his business was derived from local residents that, in fact, half of his business was coming from residents that lived in a town 10 kilometers away, his eyes went wide and he said, “How do you know that?” So we shared the data with him. At BUCO’s location in Nelspruit, which is on the Crocodile River in the northeast near Kruger National Park, we learned through the data that a large portion of our clientele was female, so we introduced a Saturday craft workshop featuring chalk paint. It’s the latest craze in do-it-yourself painting. The workshop was a huge hit; it just accelerated the craft area of that business. After that, department sales just skyrocketed. Many stores have replicated this example.

Chris Wood, head of emerging payments, strategy, and regulation at Nedbank, counts Iliad Africa and BUCO as one of the many success stories for Market Edge since its public launch in July 2015. Wood’s team sold or gave away the tool to 1,500 of Nedbank’s merchant locations. Several large companies, such as Burger King and McDonald’s, were either involved in co-creating the product with Nedbank as part of the pilot or had purchased the tool, demonstrating that it could make a significant business contribution to the bank’s credit and debit card line of business as well as to retail and business banking (RBB), the largest business division within Nedbank Group. The value of Market Edge to Nedbank may derive less from sales of the tool — the typical price is a flat fee of 500 rand per location a month (about $35) — and more from expanding relationships with existing merchant clients and acquiring new customers. (See “Market Edge: Use Cases.”) 

Nedbank’s Market Edge clients, like Burger King and BUCO, use the tool to analyze potential store locations and drive business into their stores.

A year after its launch, Wood was convinced that he could build a team to place Market Edge in 90,000 merchants. But there was one big challenge: The current sales force in the card and payments line of business was not yet effective at selling Market Edge, despite concerted training efforts. Nedbank had plans to expand the sales force, but there were many competing priorities and it was unclear whether the bank would support a sales force dedicated to Market Edge.

Nevertheless, the tool has shown Nedbank the promise of data and analytics as a commercial offering. It is also just one of several ways that the RBB business cluster is using data and analytics to build an edge in its market. “The strategic challenges that we’ve set for ourselves highlight the need to ramp up all of that [data] capability,” says Ciko Thomas, group managing executive of RBB. “We have momentum, but we need to build institutional and organizational capability.”

View South Africa's Ned Bank Study with videos

Saturday, October 15, 2016

Using behavioral science to improve the customer experience 10-16

By guiding the design of customer interactions, the principles of behavioral science offer a simple, low-cost route to improved customer satisfaction.

Service operations seem a natural setting for the ideas of behavioral science. Every year, companies have thousands, even millions, of interactions with human beings—also known as customers. Their perceptions of an interaction, behavioral scientists tell us, are influenced powerfully by considerations such as its sequence of painful and pleasurable experiences. Companies care deeply about the quality of those interactions and invest heavily in effective Web sites and in responsive, simplified call centers.

Yet the application of behavioral science to service operations seems spotty at best. Its principles have been implemented by relatively few companies, such as the telecommunications business, which found that giving customers some control over their service interactions by allowing them to schedule field service visits at specific times could make them more satisfied, even when they had to wait a week or longer. Many more companies ignore what makes people tick. Banks, for example, often disturb the customer experience by altering the menus on ATMs or the interactive-voice-response (IVR) systems in call centers. They fail to recognize the psychological discomfort customers experience when faced with unexpected changes.

Likewise, for every restaurant that surrounds a bill’s arrival with a succession of complementary desserts—thereby capitalizing on the customer’s preference for service encounters that end positively—there are a lot of call centers that ignore the importance of a strong finish. Indeed, many companies actively work against one by placing so much emphasis on average handling times that they inadvertently encourage agents to end a call once its main business is complete, leaving customers with memories of brusque treatment.

It doesn’t have to be this way. Academics such as Professor Richard Chase at the University of Southern California’s Marshall School of Business have used research on how people form opinions about their experiences to design actual services. In a 2001 Harvard Business Review article,1 Chase and his team even laid out principles for managers to consider when designing any customer interaction. Get bad experiences over early, so that customers focus on the more positive subsequent elements of the interaction. Break up pleasure but combine pain for your customers, so that the pleasant parts of the interaction form a stronger part of their recollections. Finish strong, as the final elements of the interaction will stick in the customers’ memory. Give them choice, so they feel more in control of the interaction. And let them stick to their habits rather than force them to endure the discomfort and disorientation of unexpected change.

Here we review the experience of an insurance company that used those principles to improve its customers’ satisfaction significantly, with no incremental costs or fundamental changes in people or infrastructure. A systematic approach like this one is needed to counteract the natural tendency of service operations to focus on the needs of IT systems and work flows, not to mention the preferences of employees, managers, and service providers, largely ignoring the way customers perceive their service interactions. If companies in a broad range of service industries—including banking, telecommunications, and retailing—applied a rigorous approach, they would reap significant economic benefits, ranging from reduced churn to greater cross-selling to additional customer referrals.

Setting the stage

Executives at a leading North American health insurer sought to help patients manage their treatment programs for serious long-term illnesses, such as diabetes or congestive heart failure. Conditions like these are difficult to manage because treatment is often protracted and outcomes can depend on the patients’ willingness to make significant lifestyle changes.

Patients participating in an experimental health-management program received regular, scheduled calls from a team of nurses over a period of several months. The calls aimed to deliver additional support to patients undergoing long-term treatment, by helping them understand the available options and stick to their treatment regimes, as well as reinforcing lifestyle changes recommended by their doctors. Improved compliance helps insurers too, as better outcomes reduce the overall cost of treatment.

In the past, the clinical-treatment program for each patient had determined the content of such calls, and the company used what it considered to be a tried-and-true method for managing them. Team members had received guidelines on the objectives of the calls and used a checklist to sequence discussions with customers.

Behavioral science in action

To see if this approach could be improved, the company divided the nurses into two groups—approximately 20 in a pilot group and another 20 in a control one—and began applying a behavioral-science lens to the interactions of the former to test different versions of the call structure. Postcall surveys measured the customers’ satisfaction with each call and with the company. Key customer and operational metrics (including sign-up rates) helped estimate the financial impact. The pilot team used behavioral-science principles throughout the interactions.

1. Get bad experiences over with early

The team identified difficult issues—for example, the forthcoming lapse of certain insurance benefits or the need to transfer from one facility to another—and moved them to the start of the call. It also set up a later phase built around constructive coaching from the nurses on how to deal with the issues raised earlier. In addition, general questions that were likely to make patients uncomfortable (about current pain levels, smoking habits, eating patterns, and alcohol consumption, for instance) were moved from the end of the call to the beginning.

2. Break up pleasure and combine pain

By combining the most challenging elements of a call in its first phase, the health-management team could focus on positive aspects during the rest of it. The team found that patients responded very positively to coaching by nurses, so there was an effort to ensure that coaching on multiple topics was an explicit part of every phase of the call. A nurse might, for example, discuss the next treatment steps, how the patient could take advantage of all covered benefits, and ways of minimizing out-of-pocket expenses. There was also an effort to resolve all possible issues within a call and to transfer it to other groups only as a last resort.

3. Finish strongly

The conclusion of the health-management calls was scripted to finish on a positive note by emphasizing the tangible insurance benefits available to patients and, where medically appropriate, the likelihood of a successful outcome to the agreed-upon action plan. At the end of a program lasting several months, with calls taking place every month or so, patients received a final call from their health-management nurse. This call ended by celebrating their progress, reviewing the goals they had met, and summarizing the positive steps they had taken to achieve those goals.

4. Give customers choice

The company made an effort to give customers explicit choice on three critical elements: the type of treatment plan, which facilities to visit and which doctors to see, and the timing of future calls. In each area, the nurse was guided to tell the customer, “You have a choice; let me give you some options.” Customers explicitly had the right to make the ultimate decision, though the outcome may have been limited or strongly suggested—for example, “Hospital A is closest to your home, but B is only 15 minutes further away, and it has a specialist unit with a great track record at treating your condition.”

5. Let customers stick to their habits

In many situations, it was important for patients to change their lifestyles—say, by eating different foods, consuming less alcohol, or exercising. To encourage patients to make these changes while minimizing the discomfort they generated, nurses introduced them gradually over a series of calls. Dietary changes might be discussed initially, for instance, followed by encouragement to begin exercise. The nurses also tried to reframe the patients’ perceptions of the severity of the changes by comparing them with more unfavorable alternatives: for example, “instead of eliminating your favorite foods altogether, why not just try picking low-fat varieties next time you are in the store.”

The team also worked to ensure that the calls themselves became a positive habit for the patients. This approach gave them the option of having the same nurse on follow-up and promoted a consistent approach for every call, so that they became used to the interactions.


The effect of the changes was significant. Patients in the test group reported an average satisfaction level seven percentage points higher than that of patients in the control group—for calls with the same basic content. These patients’ satisfaction levels with the company was on average eight percentage points higher than that of the control group. More important, patients in the test group were on average five percentage points more likely to say that the calls had motivated them to make positive changes in their behavior.

Notably, the program didn’t significantly affect the company’s costs or change key operational metrics, such as the length of a call or the number of calls a day. Moreover, test group nurses reported an average level of job satisfaction higher than that of the control group nurses. Finally, the impact was rapid. Most of the increase in the satisfaction levels of the test group patients happened within two weeks.

Many other service industries could benefit from a similar approach. By breaking down frontline transactions and rebuilding them with behavioral and experiential principles, companies could systematically achieve rapid, measurable improvements in customer satisfaction.

About the author(s)

John DeVine is a principal in McKinsey’s Miami office, and Keith Gilson is a consultant in the Toronto office.

View at the original source

Wednesday, October 5, 2016

Is India Capable of a Surgical Strike in Pakistan Controlled Kashmir? 10-05

Is India Capable of a Surgical Strike in Pakistan Controlled Kashmir?

On Thursday India claimed it had conducted a “surgical strike” in Pakistan controlled Kashmir across the Line of Control (LoC). Pakistan denied that India carried out a surgical strike and claimed that two of its soldiers were killed in cross border fire.

“The notion of surgical strike linked to alleged terrorists’ bases is an illusion being deliberately generated by India to create false effects,” the Pakistani military said in a statement.

India’s director general of military operations, Lt. Gen. Ranbir Singh, publicly announced the strike. He stated, “Based on receiving specific and credible inputs that some terrorist teams had positioned themselves at launch pads along the Line of Control to carry out infiltration and conduct terrorist strikes inside Jammu and Kashmir and in various metros in other states, the Indian army conducted surgical strikes at several of these launch pads to pre-empt infiltration by terrorists.”

Enjoying this article? Click here to subscribe for full access. Just $5 a month.India has provided few details of the operation but sources indicate that the “surgical strikes” consisted of a heliborne unit and Special Forces that infiltrated the LoC and conducted assaults on seven suspected terrorist launch pads that were two to three km beyond the LoC.

Throughout the day Pakistan has continued to deny any surgical strike took place. “There has been no surgical strike by India, instead there had been cross border fire initiated and conducted by India which is existential phenomenon,” the Pakistan Army said in a statement.
A surgical strike operation by Indian forces begs the question of whether Indian forces have the capability to launch such a sophisticated and coordinated attack.

Surgical strikes can be conducted through airborne or artillery based precision guided strikes or ground force based assaults; both of which require sophisticated intelligence collection, platforms to conduct collections, and surveillance of target sites and objectives.

India is still on the cusp of building a sophisticated and modernized asymmetrical capability to conduct counterterror operations, while much of its forces are still organized and trained on Cold War models.

Over the last decade, India has spearheaded efforts to modernize her military to include domestic production of unmanned aerial vehicles (UAVs). Rostum I and Rostum II could provide India with an air platform capable of surgical strikes, long loiter times for target surveillance, and intelligence collection. However, these platforms are still in development and Rostum II just began test trials this summer. India’s drone development program is still in its infancy.

As for artillery, in 2015, India and BAE finalized contracts for the sale and development of new M777 155 mm howitzer system, capable of firing the new Excalibur GPS guided shell. However, development and production of the artillery system is not slated to begin until 2018.
India does currently field a Russian GPS guided munition called the Krasnopol, though its precision fire support is within a 30-40 km radius and its accuracy is far less when compared to the new Excalibur shell.

As far as precision strike missile capability, India has recently acquired the U.S. anti-tank guided missile (ATGM) Hellfire, which has frequently been used for targeting operations by U.S. forces. India is currently producing a domestic ATGM called the Helina, a helicopter launched precision strike missile, though this missile is still undergoing testing.

In other words, much of India’s asymmetrical warfare capability is still being developed and tested. The examples above are by no means an exhaustive list but it certainly details a capacity not fully developed by Indian forces.

Furthermore, a cross border air raid by either heliborne assets or drones would still prove exceedingly difficult as Pakistan boasts an incredibly impressive air defense system. Pakistan controlled Kashmir is a high threat area for shoulder fired surface to air missiles, some of which have found their way into the hands of militant groups. Any air operation over the territory would be under threat from these weapon systems.

India has released little detail on the operation; however if India in fact carried out a cross border surgical strike on terrorist facilities and not Pakistani military posts, it would be a paradigm shift in India’s war against terrorist and militant organizations. It would also boast the perception that India’s asymmetrical warfare capability is further along than many may perceive.

View the article at the original source

Saturday, August 27, 2016

The Surprising Secret of Business Resilience 08-28

Executives dream of insulating their companies from all risks, both natural and manmade, making their company’s revenues impervious to the vicissitudes of a capricious world. This is also the implicit goal of most business strategies, achieved through the use of resource control through vertical integration, supplier dominance through buying power, persuasive political influence through lobbying and campaign finance, and of course, good ol’ market monopolies, among other things. The idea is that by gaining control of your destiny, you foster complete commercial independence.
This dream is popular, but it is, of course, a fallacy. The surprising secret is that dependence, not independence, is the way to protect the organization against risks.

The concept of resilience offers a window into the fallacy. Like the term “sustainability,” resilience has become a standard at global confabs and — as with sustainability — it is a term that means different things to different people. Experts often talk in terms of personal “psychological resilience,” referring to the ability of individuals to bounce back after being hit with disappointments, shocks, or traumatic events. This is an important perspective, and corporate wellbeing specialists have begun developing resilience practices for workers.

But a less-understood perspective is “business resilience,” that is, how to ensure your company can continue creating value in the face of disasters, both natural and manmade.

A good place to learn about business resilience is Indonesia, and a good guide is Karin Reiter, Group Corporate Responsibility Manager at Zurich Insurance Group. I met Karin at the Aspen Institute’s First Mover Summit, and she offered a compelling example.

“Indonesia is often referred to as supermarket for natural disasters,” explains Reiter, “particularly for flooding.” As an insurer, Zurich had exposure to many companies in Indonesia. One customer in particular experienced a severe flooding event and was heavily damaged. In order to reduce future losses, Zurich risk engineers were called in to recommend how to make the factory more resilient to future shocks. Protective improvements such as moving stocks off of the ground floor and building berms to divert floodwaters were made, which would substantially insulate the factory during the next flooding event.

Not surprisingly, Indonesia experienced another flood not too much later. This time, however, the factory was protected thanks to the improvements. “So you would expect that the next day the company would be up and running again at full speed,” says Reiter.

It wasn’t. Instead it stayed shuttered, just like after the last storm.

But if the company had successfully insulated their facility from a natural disaster risk — an executive’s dream — why were they unable to operate? The reason lies in the secret of business resilience. Resilience is not a condition of any single factory. It is a systems condition. It is a community condition. It is a condition of interdependence, not independence.

As Reiter explains, “The challenge was that roads were destroyed and employees couldn’t go to work. And they needed to look after saving their own lives, saving their families’ lives. They were really trying to save all their assets within their community.” An insulated fortress factory in the middle of a devastated community turned out to be worthless. The resilience of the company’s operations was dependent on the resilience of the community in which they operated.
“Look deep into nature,” said Albert Einstein, “and then you will understand everything better.” The secret of resilience can be found in nature. Individual species do not exist in isolation but are part of interdependent ecological webs. Food webs, trophic pyramids, symbiotic mutualisms — all of these relationships are vital to the health and resilience of biological communities. It is the dynamic flow and exchange — as when trees transpire the oxygen needed by animals and the animals respire the carbon dioxide needed by the trees — that makes the biosphere both possible and resilient. The same is true for business.

And, as in nature, the business relationship requires mutuality. Just as the factory was dependent on the resilience of the community, so was the community dependent on the factory. As Reiter explains, a factory closure “has a huge impact on the communities, because if the employees can’t work, they are no longer able to generate income. If they don’t have an income, they can’t invest in their communities, they can’t pay taxes, they don’t have any savings for their children to be sent to school. If flooding happens frequently, then there’s a cycle of poverty that just continues.” And, of course, as the cycle persists, the disruptions for factories and their supply chains persist.

Most business leaders would prefer to isolate themselves from worrying about these dependencies. But gone are the days of Ford when a company could vertically integrate and control everything from iron mines to Model-T dealerships. The alternative is to recognize that independence is a chimera and embrace our interdependencies.

Reproduced from MIT Sloan Management Review

Tuesday, August 23, 2016

How to Beat Procrastination 08-24

Procrastination comes in many disguises. We might resolve to tackle a task, but find endless reasons to defer it. We might prioritize things we can readily tick off our to-do list—answering emails, say—while leaving the big, complex stuff untouched for another day. We can look and feel busy, while artfully avoiding the tasks that really matter. And when we look at those rolling, long-untouched items at the bottom of our to-do list, we can’t help but feel a little disappointed in ourselves.

The problem is our brains are programmed to procrastinate. In general, we all tend to struggle with tasks that promise future upside in return for efforts we take now. That’s because it’s easier for our brains to process concrete rather than abstract things, and the immediate hassle is very tangible compared with those unknowable, uncertain future benefits. So the short-term effort easily dominates the long-term upside in our minds—an example of something that behavioral scientists call present bias.

How can you become less myopic about your elusive tasks? It’s all about rebalancing the cost-benefit analysis: make the benefits of action feel bigger, and the costs of action feel smaller. The reward for doing a pestering task needs to feel larger than the immediate pain of tackling it.

To make the benefits of action feel bigger and more real:

Visualize how great it will be to get it done. Researchers have discovered that people are more likely to save for their future retirement if they’re shown digitally aged photographs of themselves. Why? Because it makes their future self feel more real—making the future benefits of saving also feel more weighty. When we apply a lo-fi version of this technique to any task we’ve been avoiding, by taking a moment to paint ourselves a vivid mental picture of the benefits of getting it done, it can sometimes be just enough to get us unstuck. So if there’s a call you’re avoiding or an email you’re putting off, give your brain a helping hand by imagining the virtuous sense of satisfaction you’ll have once it’s done—and perhaps also the look of relief on someone’s face as they get from you what they needed.

Pre-commit, publicly. Telling people that we’re going to get something done can powerfully amplify the appeal of actually taking action, because our brain’s reward system is so highly responsive to our social standing. Research has found that it matters greatly to us whether we’re respected by others—even by strangers. Most of us don’t want to look foolish or lazy to other people. So by daring to say “I’ll send you the report by the end of the day” we add social benefits to following through on our promise—which can be just enough to nudge us to bite the bullet.

Confront the downside of inaction. Research has found that we’re strangely averse to properly evaluating the status quo. While we might weigh the pros and cons of doing something new, we far less often consider the pros and cons of not doing that thing. Known as omission bias, this often leads us to ignore some obvious benefits of getting stuff done. Suppose you’re repeatedly putting off the preparation you need to do for an upcoming meeting. You’re tempted by more exciting tasks, so you tell yourself you can do it tomorrow (or the day after). But force yourself to think about the downside of putting it off, and you realize that tomorrow will be too late to get hold of the input you really need from colleagues. If you get moving now, you have half a chance of reaching them in time—so finally, your gears creak into action.

To make the costs of action feel smaller:

Identify the first step. Sometimes we’re just daunted by the task we’re avoiding. We might have “learn French” on our to-do list, but who can slot that into the average afternoon? The trick here is to break down big, amorphous tasks into baby steps that don’t feel as effortful. Even better: identify the very smallest first step, something that’s so easy that even your present-biased brain can see that the benefits outweigh the costs of effort. So instead of “learn French” you might decide to “email Nicole to ask advice on learning French.” Achieve that small goal, and you’ll feel more motivated to take the next small step than if you’d continued to beat yourself up about your lack of language skills.

Tie the first step to a treatWe can make the cost of effort feel even smaller if we link that small step to something we’re actually looking forward to doing. In other words, tie the task that we’re avoiding to something that we’re not avoiding. For example, you might allow yourself to read lowbrow magazines or books when you’re at the gym, because the guilty pleasure helps dilute your brain’s perception of the short-term “cost” of exercising. Likewise, you might muster the self-discipline to complete a slippery task if you promise yourself you’ll do it in a nice café with a favorite drink in hand.

Remove the hidden blockageSometimes we find ourselves returning to a task repeatedly, still unwilling to take the first step. We hear a little voice in our head saying, “Yeah, good idea, but . . . no.” At this point, we need to ask that voice some questions, to figure out what’s really making it unappealing to take action. This doesn’t necessarily require psychotherapy. Patiently ask yourself a few “why” questions—“why does it feel tough to do this?” and “why’s that?”—and the blockage can surface quite quickly. Often, the issue is that a perfectly noble competing commitment is undermining your motivation. For example, suppose you were finding it hard to stick to an early morning goal-setting routine. A few “whys” might highlight that the challenge stems from your equally strong desire to eat breakfast with your family. Once you’ve made that conflict more explicit, it’s far more likely you’ll find a way to overcome it—perhaps by setting your daily goals the night before, or on your commute into work.

So the next time you find yourself mystified by your inability to get important tasks done, be kind to yourself. Recognize that your brain needs help if it’s going to be less short-sighted. Try taking at least one step to make the benefits of action loom larger, and one to make the costs of action feel smaller. Your languishing to-do list will thank you. 

View at the original source

How to Create an Exponential Mindset 08-24

How to Create an Exponential Mindset.

A three dimensional image depicting exponential thinking.  Image credit : Shyam's  Imagination Library

Digital business models are a bit of a misnomer. It’s not digital technology that defines them; it’s their ability to create exponential value. The music and video industries, for example, weren’t redefined by converting analog to digital formats. Just ask Sony about Minidisc players and Netflix about their DVD business.

To create exponential value, it’s imperative to first create an exponential mindset. The incremental mindset focuses on making something better, while the exponential mindset is makes something different. Incremental is satisfied with 10%. Exponential is out for 10X.

In the last century, industrial business models were defined by their use of machines to create increasing returns to scale. Digital business models use network effects to create what Ray Kurzweil describes as accelerating returns to scale. The key difference is that industrial models are linear while digital models are exponential, as shown in the chart below.

While others have written about how to design exponential strategies and organizations, I want to focus here on how to create an exponential mindset. My work with clients suggests that the incremental mindset is more deeply embedded than we might think. Unless you are conscious and diligent, you can end up with a strategy that looks digital (i.e. uses digital technology) but doesn’t actually operate digitally (i.e. achieves accelerating returns).

The role of incremental and exponential mindsets vary in each phase of the business journey: launch, grow, and expand.

Launch: Vision and Uncertainty

In the launch phase of a business, the team needs to develop and refine the business model. The Lean Startup approach of test, iterate, and pivot is the right thing to do. But you also need the right way to think. Are you thinking about your business incrementally or exponentially?

The incremental mindset draws a straight line from the present to the future. A “good” incremental business plan enables you to see exactly how you will get from here to there. But exponential models are not straight. They are like a bend in the road that prevents you from seeing around the corner, except in this case the curve goes up.

Without an exponential mindset, Google would never have created such an ambitious vision as “organizing the world’s information,” Facebook would never have set out to “make the world more open and connected,” and Airbnb to “create a world where all 7 Billion people can Belong Anywhere.” Similarly, a group of innovative organizations in the public sector are out to solve global social issues by achieving “transformative scale.”

In Maine they have an expression that “You can’t get there from here.” In the launch phase, you need to realize that an exponential strategy has inherent uncertainty. You can’t know what things will look like on the other side of the curve. You can’t draw a straight line from where you are to where you are going. There’s no step-by-step plan. The exponential mindset helps you become comfortable with uncertainty and more ambitious with your vision.

Take a look at the chart above. In the first part of the build phase, you don’t see a lot of change. It’s not until the second part when the line starts to bend. It’s simply the nature of exponential change. Things happen very slowly before they happen very quickly. If this was the only world we knew, it wouldn’t be a problem. But we were raised with an incremental mindset. So we can’t help but compare the exponential path to the incremental path. And this creates a problem.

We are accustomed to measuring progress linearly and incrementally. If 30% of the time has gone by, we assume that we should be 30% of the way there. That’s how things work in the physical world when we are traveling to a destination. But exponential models don’t work that way.
What happens is that businesses run into something I call the “expectation gap,” where the exponential strategy is at greatest risk from the incremental mindset. It’s where many companies abandon the exponential model for the incremental.

I see this consistently on a micro scale in my own work. My workshops are designed with an exponential mindset to generate new ways of thinking about marketing, culture and strategy. Somewhere around a third of the way into a workshop, the leader invariably says something like “so when are we going to get something done?” The reason is that they are still operating with an incremental mindset. A third of the time has passed, but it seems like they are only 10% of the way to our destination. In fact, most of the progress happens once the curve starts to bend. Invariably by the end of the day the same people are remarking that they can’t believe how much we got done in such a short period of time.

In your exponential journey, pay attention to when people get the most impatient for results. It’s the point in the chart where there is the largest gap between incremental and exponential paths. This expectation gap is a risk to the business strategy because the impatience can be used by opponents or skeptics to convince stakeholders to jump from the exponential to the incremental. You will have the immediate relief of having “line of sight” once again and see steady progress. But you will also have given up the possibility of accelerating returns and the opportunity to keep up with customers and competitors. The exponential mindset helps you have the courage to persevere and the patience to see it through.

Grow: Agility and Control

In the third phase, you have managed the uncertainty of the early days, the impatience of the middle phase, and now you are firmly “in the curve.” Growth is happening faster than you can handle. At this point, the incremental mindset is to try to rein things in and get things under control. But that would be a mistake. To sustain the accelerating returns, you need to shift your mindset about how to mobilize and manage resources.

The incremental mindset assumes that it takes more inputs to produce more outputs. So as growth starts to accelerate, teams start to look for more resources in proportion to the growth. But the addition of too many people or too many resources can “flood the engine” of growth. You need an exponential mindset to figure out how 1X additional input can create 10X additional output.
You also need to apply an exponential mindset to how you manage the resources you have. The incremental mindset about management is like creating a line of dominos. Everything needs to be highly coordinated with active oversight to make progress one step at a time. The exponential mindset is like this demonstration with ping pong balls in which things happen in parallel with a focus on the interactions among participants.

As I’ve written about separately, there is a way to let go without losing control. In the exponential mindset, managers replace control of people with control of principles. The use of doctrine to guide decision-making generates alignment, consistency and empowerment. But most leaders are accustomed to making decisions rather than empowering decisions. The anxiety from a loss of control can easily push companies off the exponential path back onto the incremental path. The exponential mindset helps to grow output faster than input, and empower teams to achieve both alignment and autonomy.

To summarize, digital business models require a shift from incremental to exponential. At the start, it takes vision and a leap of faith to commit to the unknown. In the early days, it takes courage and patience to build the foundation for growth even when results aren’t yet apparent. When growth kicks in, agility comes from empowering others and letting go without losing control. In all of the stages, the challenge is to “unlearn” familiar ways of thinking and embrace the unfamiliar. But with a shift from the incremental to exponential mindset comes the opportunity for real innovation. 

View at the original source