Strategy+Business Summer 2022

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editor’s letter Working in new ways 1 Illustration by Lars Leetaru The way that we’re working is of work,” page 42), leaders from Change is afoot in the way we changing, and I’m not just talking fields as diverse as aviation and ad- work here at strategy+business, too. about learning how to add cool vertising weigh in on the manifold From the time the first issue ap- Zoom backgrounds. Rather, the work and talent issues they face. peared, in 1995, we have chronicled way we think about what work disruptions and energetically partic- means, and how to maintain bal- The disruptions to the physical ipated in them—launching a web- ance and health while doing it, is a workplace have highlighted the im- site, a digital edition, and a social hot topic of conversation. The pan- portance of the human connections media presence—always striving to demic has a lot to do with this re- that people make on the job. In an meet our readers where they are. But assessment. But so, too, do forces excerpt from her new book, Rede- we’re mindful of our environmental such as technology, globalization, signing Work, Lynda Gratton of the footprint and eager to connect more and evolving consumer habits. London Business School delves into directly and urgently in the fast- the importance of the weak and changing world. At work, disruptions and in- strong ties formed between col- novations tend to pile up ceaselessly leagues—and how they can in- This 107th issue of s+b will be (fax, email, conference calls, the fluence innovation (“Maintaining the last quarterly print issue. We’re web, remote work) and people adjust network connections,” page 50). going to be picking up the pace. on the fly. But the organizational Elsewhere, clinical psychologist And we’re deploying our editorial contexts in which people operate— Dana Gionta and Liz Sweigart, a resources and ingenuity to create the the ways we organize, and the bu- former PwC principal, note the successor: a new, free, all-digital reaucracies and systems we set up to importance of establishing psycho- publication that will continue to de- get the work done—tend to evolve logical boundaries (“How healthy liver the essential business perspec- much more slowly. boundaries build trust in the work- tives our readers have come to ex- place,” page 20). pect. You can sign up to receive each It’s incumbent upon us, as lead- new digital issue of strategy+business ers and readers, to get ahead of sys- Climate change is one of the directly to your inbox by visiting temic changes. Our cover story by forces creating an urgent need for strategy-business.com/alldigital. Bhushan Sethi, Blair Sheppard, and change in the way we live and Nicole Wakefield of PwC, “Meet work. In our Thought Leader inter- It all means more timely in- the four forces shaping your work- view (page 66), author Elizabeth sights, delivered more frequently force strategy” (page 32), provides Kolbert argues that for all the ob- and efficiently. And we can’t wait to a compelling guide to resetting pri- stacles we face, the reservoirs of hu- get to work. orities. In one of our periodic man ingenuity are sufficiently deep excerpts from conversations with that they may potentially power Daniel Gross CEOs (“Navigating the new world meaningful progress. Editor-in-Chief

leading ideas 6 6 Leaders should revisit the works 58 of three corporate culture pioneers 50 Jon Katzenbach and Carolyn Black A trio of 20th-century thinkers yields insights into how to align culture with strategy and energize employees today. 8 Why human resources chiefs are reaching the corner office James Ashton The ability to manage people at scale is more relevant than ever to the CEO role. 12 Feeding the future Enel Sintonen and Laura W. Geller Annikka Hurme, CEO of the Finnish dairy company Valio, on innovating for growth and sustainability. 15 Are you really working on a team? Benjamin Tarshis and Jonathan Roberts Hybrid and remote work are complicating many of the collaborative challenges that were present long before the pandemic arrived. 17 The bullies are back Linda Rodriguez McRobbie The pandemic has encouraged some bad behaviors that leaders need to look out for in the new hybrid world of work. essays ORGANIZATIONS & PEOPLE 20 How healthy boundaries build trust in the workplace Dana Gionta and Liz Sweigart Boundaries clarify responsibilities and expectations. Both employers and employees need to identify, set, and maintain them to keep people engaged and deliver strong performance. TECH & INNOVATION 24 The real value of video content Kim David Greenwood, Kate Kennard, and Chris Mowry As spending on streaming content skyrockets in the entertainment and media industry, a new formula is needed to drive a sustainable return on investment. LEADERSHIP 28 Great feats require crucial decisions Brad Borkan CEOs can hone their decision-making skills by studying leaders who directed world-changing projects.

features THE THOUGHT LEADER INTERVIEW ORGANIZATIONS & PEOPLE 66 Elizabeth Kolbert 32 Meet the four forces shaping your Amy Emmert workforce strategy Human ingenuity has gotten Bhushan Sethi, Blair Sheppard, and Nicole Wakefield us into a global environmental Specialization. Scarcity. Rivalry. Humanity. crisis. According to the Pulitzer Companies that understand—and harness—these Prize–winning author, it also forces will have an edge in creating vibrant has the potential to get us out. workforces capable of achieving sustained, positive outcomes. 72 BOOKS IN BRIEF INSIDE THE MIND OF THE CEO Business needs to adjust its political antennae 42 Navigating the new world of work Deborah Unger Whether they run organizations in telehealth, 74 Follow your S curve advertising, or aviation, CEOs around the globe are facing common challenges in finding, hiring, Theodore Kinni and developing talent. 76 How the Fed came through ORGANIZATIONS & PEOPLE the pandemic 50 Maintaining network Mike Jakeman connections 79 A guide to growing older Lynda Gratton As we redesign work for the hybrid future, Daniel Akst it is vital to understand the ways that information flows and networks form within organizations. 82 To err is human, to regret, divine LEADERSHIP Tom Ehrenfeld 58 It’s time to challenge ENDPAGE: STRATEGY SHOP the status quo at family businesses 84 Leaders need to be good writers, too Peter Englisch Adam Bryant Next-generation leaders need to prioritize environmental, social, and governance issues Effective management requires strong communication to build their own legacy. skills, including writing. Cover illustration by Miguel Montaner Issue 107, Summer 2022

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leading ideas Leading Ideas 6 Leaders should revisit the a certain thing, but your actions do works of three corporate not line up with that belief, you will culture pioneers feel uneasy until you modify either your beliefs or your actions (or both). A trio of 20th-century thinkers yields insights In contrast, acting in accordance into how to align culture with strategy and energize with your beliefs achieves resonance, employees today. or positive feelings about what you are doing. by Jon Katzenbach and Carolyn Black form a foundation for successful cul- strategy+business issue 107 tural alignment and evolution. Sim- Why his ideas are still relevant: A s consultants, we’ve been ply put, these “oldies” are goodies working in the world of that have worked for decades—and Understanding Festinger’s theory corporate culture much still do. and ensuring that words and actions longer than it has been popular to align gives leaders the metaphorical do so. Over the past ten years, cul- So, who are these folks, and grease for motivating employees. ture has become a regular topic of how is what they said years ago still For instance, organizations today discussion among leaders, and writ- relevant today? have caught on to the idea of ener- ing on the topic has exploded. And gizing employees around a shared yet, even with these new and some- Leon Festinger purpose or mission. But for employ- times very insightful voices to draw Festinger (1919–89) was an Ameri- ees to sustain energy for any change from, we find ourselves repeating can psychologist and professor at the related to that mission, leaders need the wisdom of three 20th-century Massachusetts Institute of Technol- to ensure employees can act out thinkers: Leon Festinger, Frederick ogy and the University of Michigan, the promise of the mission. If words Herzberg, and Daniel Goleman. who was best known for developing and actions cannot align, it will the theory of cognitive dissonance dampen the impact of the compa- We assure you, we’re not just in the 1950s. ny’s message and breed discontent. stuck on “the oldies.” Rather, we’re PwC’s Global Culture Survey 2021 pointing you to classics. These au- What he said: Festinger’s theory identifies the negative impact of a thors put forward clear, pragmatic proposes that a mismatch between disconnect between what organiza- insights that have stood the test of beliefs and behaviors causes psycho- tions say about culture and what time. Used together, these ideas help logical tension (i.e., cognitive disso- employees experience. For example, nance). In other words, if you believe a financial institution that touts its customer-centricity but doesn’t give its call center workers the lati- tude to forgive a late fee for loyal

customers yields frustrated, dissatis- vation—the drive to perform and there an opportunity for feedback leading ideas fied employees and customers. achieve—lies not in external drivers that can inform more experimenta- (whether incentives or punishments), tion? The people one works with also Making the necessary changes but instead in making the actual have a significant impact on employ- to align your culture with your busi- work itself more satisfying. ees’ feelings toward the work (just as ness goals is gradual work. Some- much as, if not more than, the per- times finding behaviors that resonate Why his ideas are still relevant: son one works for). This is because of with existing mindsets but nonethe- the contagious effect of how others less move the organization in a new, In a time when many employers are feel about the work. desired direction can create powerful trying to figure out what combina- tion of perks, pay, and purpose will Great, one might say—if leaders could ensure mindsets and actions Motivation—the drive to perform and achieve— line up (Festinger) and enrich each 7 lies not in external drivers, but instead in making employee’s job (Herzberg), they the actual work itself more satisfying. could unlock immense stores of pos- itive energy for the organization. momentum. We often work in an help them combat the “great resig- But how can any large entity do iterative dance, starting with behav- nation,” many are overlooking Herz- this? That’s where Daniel Goleman iors, then coming back to mindsets. berg’s simple message: it’s not all comes in. that stuff but the work itself—and Frederick Herzberg employees’ emotional connection to Daniel Goleman Herzberg (1923–2000), another it—that drives employees. A longtime New York Times science American psychologist, taught at journalist and the author of numer- Case Western Reserve University According to Herzberg, the key ous books, Goleman, born in 1946, and the University of Utah. He be- to motivating workers is enriching is most celebrated for his ground- came one of the most influential their jobs by giving them enough re- breaking work on “emotional intel- figures in management thinking, sponsibility, control, and data to fa- ligence,” detailed in his 1995 book and is best known for developing the cilitate growth and “play,” or exper- of the same name and in many sub- concept of job enrichment and for imentation. Today’s leaders and sequent works. the motivator hygiene theory, devel- managers should ask themselves: Do oped in 1964. employees have a view of and con- What he said: Goleman identi- trol over their work, from inputs to fied that, contrary to what was then What he said: The most impor- impact? Can they take on new but the popular belief, traditional intel- tant motivator is the work itself ! surmountable challenges? Is there ligence, or IQ, cannot fully explain Herzberg demonstrated that moti- room for them to make mistakes? Is an individual’s success and impact. Rather, a critical determinant of suc- Illustration by Lasse Skarbövik cess lies in what Goleman termed emotional intelligence, or EQ. He defined EQ abilities across five cat- egories: self-awareness, self-regula- tion, motivation, empathy, and so- cial skill. He provided tools for how to identify individuals with superior EQ. He also pointed out that orga- nizations not only fail to prioritize these characteristics in hiring and promotion, but often unwittingly screen against them. Goleman didn’t argue against the value of data-driv- en analysis and rational influence. Instead, he called to light the still

leading ideas overlooked emotional side of man- they help employees and peers con- Why humanagement and success. struct fulfilling roles. It’s through Why his ideas are still relevant: AILs’ insights and way of being that resources we unlock resonance and self- chiefs are Many leaders are overlooking the sustaining motivation within an or- people most critical to their organi- ganization—and ultimately drive zation’s success. Many organizations transformation. do now consider EQ, particularly in hiring. But they inadvertently fil- reaching ter against it. Self-awareness (can- Putting it all together dor) is often seen as highlighting Understanding the ways in which the cornerweakness, self-regulation (restraint) the work of Festinger, Herzberg, and is often seen as lack of passion, and Goleman overlaps is critical to officeempathy (awareness of others’ feel- achieving the high-performing cul- 8 ings) is often seen as an inability to tures that organizations now finally make hard decisions. Promotions see as so important to their success. The ability to manage are most often based on people’s It takes first realizing the power of people at scale is more performance in their current roles as what Festinger and Herzberg detail, relevant than ever to opposed to demonstrated capabili- then seeing that you need the type of the CEO role. ties for the management roles they help Goleman describes to imple- might step into. ment those ideas. But emotionally intelligent peo- These three authors, read to- by James Ashton ple, whom we at PwC’s Katzenbach gether, provide an understanding of T he sharp focus placed on the Center call authentic informal lead- why successful cultural interven- people agenda over the last ers, or AILs, are the key to putting tions work. But they also give two years has also put a the concepts of Festinger and Herz- achievable, time-tested strategies for berg into action at scale. AILs un- how to get started on your own cul- spotlight on those who lead the hu- doubtedly exist throughout your or- tural transformation. Armed with man resources function within ma- ganization, at all levels and in all this knowledge, you can drive dra- jor companies. During the pandem- departments. You can find them matic change. Begin with a pilot. ic, many chief human resources through simple surveys, crowd- Pick one team or department and officers (CHROs) were lauded for sourced nominations, and inter- give it a try! + taking broader management respon- views. When working with clients, sibility when staff safety and remote we sometimes use organizational Jon Katzenbach working quickly forced changes to network analysis, which allows com- [email protected] strategy and outlook. panies to construct maps of complex is an advisor to executives for Strategy&, So it should come as no surprise internal social relations using email PwC’s strategy consulting group. He is a man- and instant message statistics, as well aging director with PwC US, based in New that those leaders are now being pro- as meeting records. On the most ba- York, and founder of the Katzenbach Center, pelled to new heights. In December Strategy&’s global institute on organizational 2021, Leena Nair, Unilever’s CHRO, culture and leadership. His books on orga- sic level, you can simply ask employ- nizational culture, leadership, and teaming was named as the next leader of ees, “Who do you look to within include The Wisdom of Teams: Creating the Chanel, swapping Dove soap and the organization when you are hav- High-Performance Organization (with Magnum ice cream for suits, luxury Douglas K. Smith) and The Critical Few: ing a problem?” Patterns will emerge. Energize Your Company’s Culture by Choos- handbags, and perfumes. A month strategy+business issue 107 Finding AILs is at the heart of ing What Really Matters (with James Thomas later, the 2,000 employee–strong and Gretchen Anderson). UK sandwich chain Greggs an- our work. They have an innate un- nounced that Roisin Currie, for derstanding of Festinger’s and Herz- Carolyn Black many years its group people director, berg’s theories and a knack for ap- [email protected] is an independent consultant and executive plying them. They help identify coach based in New York. She has worked would become CEO in May 2022. behaviors that align with an organi- closely with Jon Katzenbach and the Katz- And before both, Anne Jessopp led zation’s objectives and beliefs, and enbach Center since 2016. the way in 2018, when she was

named CEO at the UK’s Royal Mint their performance. More often than This increased focus on people leading ideas after having joined as human re- not, these report cards did not make has taken place in tandem with sources director in 2008 and then a difference. But given the demand changes to the human resources adding business services responsibili- for ongoing flexible working, the function. No longer is it simply a ties to her CV. “great resignation,” and the scramble cost center or supporting function, a for talent, staff are speaking up poor cousin to a company’s income- These are examples of a leader- within their organizations and ex- generating units. ship trend that has been a long time pecting to be treated as customers. coming. Predictions that CHROs— During the pandemic lock- once mere human resources direc- CEOs need to listen. The re- downs, it was HR that provided a tors—could be the CEOs of the sponsibilities placed on leaders are vital line of sight horizontally across future began to appear as HR execu- evolving. The soft skills associated the organization. Helped by in- tives took on more roles within orga- with the human resources depart- creased digitization, the function nizations, and have been around for ment now must flow right to the has a mission of its own to create most of the last decade. A 2014 study by University of Michigan professor 9 Dave Ulrich and Ellie Filler, a Korn Ferry headhunter, found that CEO The soft skills associated with the human traits were more similar to those of resources department now must flow right to the CHROs than to the traits of other top because they can drive transformation, too. lieutenants (with the exception of the COO, whose responsibilities are top, not just as a sign of the times, value for the wider enterprise by often shared with those of the CEO). but because they can drive trans- boosting skills and culture, and en- formation, too. HR has long at- gaging in long-term planning. As But back then, the authors did tracted women to its ranks, and noted in a recent report by Strate- not foresee a path to the CEO role now, with diversity and inclusion gy&, PwC’s strategy consulting for HR lifers. They thought success initiatives high on corporate agen- business, human resources manag- was far more likely for those who das, this has resulted in more wom- ers today “must be able to translate had broad managerial experience en being considered for leadership business strategy into human capital that also happened to include some roles. The exigencies of the pan- strategy and talent requirements, le- time running the people function. demic have also elevated the im- verage data-driven insights to advise That was the way it used to be. The portance of the HR role. business leaders on how to boost best example was Mary Barra, who Illustration by James Yang became CEO of General Motors in 2014. An engineer by training, she worked her way up GM’s operations side before serving for two years as vice president for global human re- sources and then holding senior posts in product development. HR for her was more like a tour of duty on the way to leadership of the Chevrolet-to-Cadillac automaker. Today, in light of the high turn- over rates facing so many organiza- tions, CEOs need HR experience more than ever. Before the pandem- ic, CEOs could look to the work- place review site Glassdoor, where outspoken staff commented on the boss’s actions, for assessments of

leading ideas workforce and business perfor- same customers, same marketplace, one way of working will be abso- mance, and tailor change manage- same way,” Jessopp told me. “The lutely critical.” She added: “We have ment approaches and transforma- CEO could more easily be expert [in to make sure we engage with every- tion strategies to the needs of specific one area]. Now change is so fast, and one around what this change pro- business units.” That sounds very organizations have got to be looking gram means. People resist change much like a CEO’s job description. at new opportunities and threats because they are frightened and constantly. The CEO has got to be don’t know the impact it will have. Minting success expert at enabling others.” From Day One, we’ve tried to be as In 2018, Anne Jessopp, who studied Such skill demands a closeness transparent as possible.” Since 2019, economics at Leicester Polytechnic to the workforce and speaks to the Greggs has sold more coffee in the in England (now De Montfort Uni- new corporate agenda, in which UK than Starbucks, and in 2020, it versity), broke new ground at the people trump the previous priorities shared bonuses worth £20 million Royal Mint, which manufactures of brand management or revenue on (US$26.8 million) with staff. The 10 public share price nearly doubled in calendar year 2021. More diverse boards have led to greater open-mindedness in looking beyond finance Additional responsibility and operational functions for the next boss. During her 24 years at Unilever, Chanel’s Leena Nair promoted the coins for the UK and 22 other coun- the path to success. Human capital HR function as a forward-looking tries. She became the first female has become disproportionately im- part of the business, rather than sim- CEO at the 1,100-year-old organiza- portant to modern companies that ply being reactive to the needs of its tion. (Yes, it was back in the second make nothing tangible, within other parts. “I passionately believe half of the ninth century that coin which intellectual property (IP) is that HR needs to lay the road for the making was centralized.) At the created from the best ideas. Success business, not merely fill the cracks time she took the job, she was also a is contingent on how well IP is pro- after the business has gone ahead,” rare leader from a human resources moted and distributed by the work- she said in an interview while still background. Her previous jobs in- force, and transformation, be it digi- at Unilever. “We can’t lay the road if cluded personnel roles for consumer tal or to a hybrid world of work, is we’re not out there, finding out products giant Procter & Gamble top of mind. what’s happening in technology, and the industrial arm of UK-based Roisin Currie explained the what’s happening to people, what is vehicle leasing firm Lex Autolease. importance of the people agenda in happening to jobs and employment.” Jessopp thinks that in the past, driving change in an interview. At Nair also strove to connect HR CHROs had made little progress the time, Greggs was overhauling with the financial outcomes and ef- getting to the top spot in organiza- legacy IT systems inherited through ficacy of the business, an approach tions because chairmen were used to a series of acquisitions while also that included using a predictive at- replacing like with like. More di- pushing into new markets. The trition tool to forecast who was most verse boards—around 30% of board Main Street bakery, famous for its likely to quit their job. positions in both the EU and the US sausage rolls, was transforming into “If we forecast that X number of are now held by women—have led a food-on-the-go provider. Currie people are going to leave the busi- to greater open-mindedness in look- was instrumental in managing ex- ness, that translates to a waste of, ing beyond finance and operational pansion into new lines, such as say, €200 million [US$253 mil- functions for the next boss. She also serving coffee in competition with lion],” she said. “If we can retain a believes that the agility required of Starbucks and McDonald’s, which certain number of people with active strategy+business issue 107 today’s leaders has forced boards to required training staff and altering conversations, then we’ll have saved consider more options. working practices. €50 million [$58 million] for the “I’m exaggerating to make the “Technology is part of it, but business. We aim to encourage HR point, but organizations did the people are much more important,” people to think in that way and same thing for quite a long time: Currie said. “Getting people behind quantify what they do.”

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leading ideas Nair joined Unilever as a man- goal was to help establish a new rela- Feedingagement trainee in India in 1992 tionship with the Mint’s trade union and progressed through a series of and find ways to preserve long-term the futurepersonnel roles, first within the employment in the region—she country and then across South Asia. used a combination of soft and hard She became CHRO and a member skills requisite of a CEO in waiting. Annikka Hurme, of the group’s leadership executive In 2015, she was appointed con- CEO of the Finnish dairy team in 2016, which exposed her to company Valio, on broader decision-making. Nair also sumer managing director, oversee- innovating for growth gained wider experience in another ing the creation and marketing of and sustainability. way, by joining BT Group, a multi- coins commemorating everything from major historical events to the national telecom company based in rock band Queen. Today, the Mint the UK, as a nonexecutive director employs more than 1,000 staff and 12 in 2019. is still in state hands. Its currency Currie spent most of her work- arm, which issued more than 2 ing life in HR roles, but she also billion coins and coin blanks in took on added responsibilities as 2021, loses money, but other, profit- Greggs’s retail and property director able activities, such as the commem- by Enel Sintonen in 2017. Those responsibilities in- orative coins unit, have kept the and Laura W. Geller cluded the development of the phys- organization viable. Its latest venture W alk the aisles of any ical real estate—the shops—plus a is a service to extract and recycle gold shop or market in Fin- delivery business in partnership with and other precious metals from elec- land, and you are likely the takeaway app Just Eat. Before tronic waste contained in the circuit joining Greggs in 2010, she worked boards of discarded laptops and mo- to encounter a diverse selection of at Asda, where she held HR roles in bile phones that would otherwise be Valio products. Whether it’s the the retail and distribution sides of sent abroad. company’s milk, cheese, butter, or the supermarket chain. Moving beyond HR “helped yogurt, its offerings have long been Throughout her career, Jessopp me practice managing and leading synonymous with quality and inno- was accustomed to extending her something when I didn’t know how vation, and a source of Finnish responsibilities and seeking to mas- to do it,” said Jessopp. “It really pride. The Helsinki-based dairy and ter new skills. Prior to joining the taught me that the core skill is man- food company has been producing Royal Mint, she had worked with aging and leading people.” milk since 1905, when it was found- a team of external consultants She hopes that a renewed focus ed by a small group of family-owned brought in to develop a new strategy on the people agenda serves as a re- Finnish dairy farms. for her employer. So when Jessopp minder that those leaders with soft Today, Valio—with net sales of arrived as the Mint’s HR director in skills have no qualms about making €1.8 billion (US$2 billion)—is a pri- 2008, she quickly expanded her hard decisions. As she told me, vate company that is still owned by portfolio to include other responsi- “True diversity and inclusion says: the 4,000 cooperative family farms bilities such as health and safety, IT, who is the best person to do this job? that produce its milk. Led by CEO and a change program. It doesn’t really matter where they Annikka Hurme, Valio is Finland’s The Mint is essentially a manu- come from.” + biggest food exporter, selling prod- facturing business that is destined ucts in some 60 countries around to shrink as cash in circulation de- James Ashton the world. The company employs clines. Most staff are based at its [email protected] about 4,200 people in its factories strategy+business issue 107 site at Llantrisant, in South Wales, is a UK-based business writer and speaker and laboratories, and has subsidiar- where already poor labor relations with more than 20 years’ experience, ies in Sweden, the Baltics, the US, were made more fraught when the including working as city editor for the and China. In addition, Valio indi- government raised the prospect of Sunday Times of London. His book The Nine rectly employs thousands of people Types of Leader was published in 2021. privatizing the business. Jessopp’s at farms and small enterprises relat-

ed to agriculture and food. Hurme They never cut resources from our very innovative player and a market leading ideas joined Valio in 1989 after earning a R&D organization. leader. We entered this space in degree in food economics from the 2018 with the launch of Oddly- 13 University of Helsinki and held sev- We’re also working with our good, and sales have doubled each eral leadership roles within different owners to respond to the rise of year since. We want to develop a business units; she was appointed global trends toward vegetarianism whole range of plant-based prod- CEO in 2014. and more climate-friendly food. In ucts in the future. It’s not because that discussion, it is important that we want to produce less milk, it’s As part of Hurme’s vision to ac- we know our own climate impact because we want to grow. celerate growth, Valio entered the and actively reduce it. Our owners plant-based sector in 2018, with its understand that it is necessary to be In May 2021, we spun off the oat-milk brand Oddlygood. This active in different fields—for exam- business operations of Oddlygood new offering, which appeals to shift- ple, that we both pursue sustainable to form Oddlygood Global. We did ing consumer preferences, is also milk production and play a role in this to further enable the commer- consistent with Valio’s efforts to the plant-based sector. cial utilization of our company’s ex- build an environmentally responsi- pertise and to pursue international ble business. The company has com- S+B: How have you framed this growth. We have to think a bit dif- mitted to a net-zero carbon footprint ferently in this space to make sure for milk by 2035 and is pursuing conversation—about entering a that we will be successful. Because a variety of initiatives to achieve our primary mission is to maximize this goal. In an interview with competing sector—with your farmers? the price of our farmers’ raw milk, it strategy+business, Hurme explained makes sense for us to create a part- the company’s innovative approach HURME: We see that people are in- nership network so we can raise to growth and sustainability. creasingly consuming plant-based capital from other sources to grow products. Why not take our share in our plant-based offerings. [In De- S+B: Valio is owned by its that growing segment? We can earn cember 2021, Finnish private equi- more money. And we can use the ty firm Mandatum Asset Manage- dairy farmers. What are some of R&D capabilities and operations ment announced an investment of that we have—we can use the same €25 million ($28 million) in Odd- the benefits and challenges of factories, the same logistics, the lygood Global.] same sales force, and the good mar- this structure? ket position we have established to S+B: What other trends are shaping compete in the plant-based, dairy- HURME: One of the benefits for me substitute category. We had also en- your growth strategy? and for the other company leaders tered other nondairy categories de- at Valio is that our purpose and cades before, such as fruit juice and HURME: We’ve seen increased pref- our mission are clear. We know that [a Finnish specialty] berry soup. erence for products with less sugar the company’s owners are farmers and more protein. For example, we who want to keep their business In fact, in the plant-based cate- alive, generation after generation. gory, we have the chance to be a We also know what our farmers Photograph courtesy of Valio want us to do, first and foremost: to maximize the value of the raw milk they produce. Of course, our structure also presents some challenges. The prof- its we bring in from the customer go back to our owners. But we also need to keep money in the com- pany to innovate and develop our brand portfolio. Fortunately, our owners understand why we have to think about the future, not just next week’s or next month’s results.

leading ideas have developed lactose-free milk target in factories or logistics, versus nure. We’ll be able to make fuel, but powders with various added ingredi- at the farm level? They also won- also circular products, such as eco- ents that we can offer to chocolate dered how much money they would logical fertilizer and clear water, as companies. By using the powders, need to spend to achieve these tar- part of the process. Our biogas ini- they can maintain the quality and gets. But luckily, climate actions at tiative is going to take a few years, taste of their chocolate, with less farms also mean savings, as resourc- but this is one part of how we can sugar. This is something very specif- es are used more wisely. Today, our help the farmers to achieve our car- ic that we can do for our customers farmers are very committed to our bon reduction targets. that sets us apart from competitors. common goals. We are pursuing this initiative Everyone can offer lactose-free; our We did the research and believe by creating a joint venture with St1, advantage is that we can lower the that we can achieve our targets: re- a Nordic energy company [with op- sugar content. ducing emissions for milk by 50% at erations in Finland, Sweden, and We’re constantly monitoring 14 how the consumer thinks and then “Climate actions at farms also mean savings, considering how to adjust accord- ingly. Some of our factory leaders as resources are used more wisely. Our farmers sometimes say that we have too are very committed to our common goals.” many stock-keeping units [SKUs] compared to our overall efficiency. the farm level, 47% at the plant level, Norway], as soon as we are approved But we need to have different kinds and 28% at the collection logistics by the EU. It’s crucial for us to have of products, package sizes, flavors, level by 2030, compared to 2019 lev- a partner who knows the biogas sugar levels, fat levels, ingredients, els, and reaching a net-zero carbon business and the fuel business, be- vitamins, and so on. And our prod- footprint for milk by the year 2035. cause we are not an expert in these uct development has to be fast to Of course, there are still some things areas. We have the raw materials and make sure that we can maintain our that we don’t know today in terms of can arrange delivery from farms to market-leader position or gain more how we get there. But we are con- the biogas plants. St1 can help with market share in other areas. Look- vinced we will figure them out and distribution, through its fuel sta- ing ahead, I believe there will also be develop solutions during the next tions for heavy-duty vehicles. In this laboratory-made food in our pipe- few years. In 2020, our targets for way, we combine our knowledge. line. As an innovative food and 2030 were validated by the Science The goal is to create up to 1,000 dairy company, we want to be part Based Targets initiative. And then GWh of biogas production by 2030. of these changes. Perhaps in the fu- we have our additional targets that Right now, we are lobbying the gov- ture, people won’t be thinking about reach out further than that, to 2035. ernment to create subsidies so that plant-based or milk-based, but in- To support the farmers in our more businesses can convert their stead about what they need and how sustainability journey, we pay them heavy vehicles from fossil diesel to it tastes. more money for their raw milk for biogas. This would go a long way in following the rules of our program— helping Finland to achieve its na- S+B: Valio is also confronting a premium of 2 cents per liter. It’s tional decarbonization targets. + climate risk and has set a target to not much per liter, but if we look at cut milk’s carbon footprint in Finland the impact on an annual level, it Enel Sintonen to zero by 2035. Can you talk about means €8,000 [$8,655] additional [email protected] the company’s sustainability for a farm with 45 cows, which is the serves PwC audit clients, helping them journey? average farm size at Valio. navigate a diverse array of financial and nonfinancial reporting topics. Based in Hel- HURME: I’m happy that we started sinki, she is a partner with PwC Finland. early, but it was not easy to set S+B: One of your sustainability Laura W. Geller strategy+business issue 107 that target.… When we first told initiatives involves the production [email protected] [our owners] about our plans to re- of biogas. is a senior editor at strategy+business. duce emissions, their thought was, HURME: We are already today pro- wouldn’t it be easier to achieve this ducing biogas from our cow ma-

Are you really working If you feel that your group is leading ideas missing any one of these ingredients, on a team? you might not be part of a real team. This isn’t inherently a bad thing. But it does prompt the question: what Hybrid and remote work are complicating many should you call the group of people of the collaborative challenges that were present you work with every day? long before the pandemic arrived. We can typically break down collaboration groups into three types (see chart, page 16): by Benjamin Tarshis and If not teams, then what? • Real teams are all about solv- Jonathan Roberts Teams don’t exist simply because ing the hardest, most complex prob- W e’ve been thinking a lot someone puts some names in boxes lems. A diverse set of perspectives 15 about teams lately. As on an org chart and assigns a leader. and skills is required to untangle more companies re- lease formal policies around hybrid Real teams are thoughtful and their members and remote work, leaders are telling push one another to do better. They require us that remote work has made work- leaders who prioritize building connections. ing together, or teaming, difficult and has frayed the culture of their Quite the opposite. Teams exist for these sorts of problems, for which organizations. Of course, many specific reasons and have specific there is no obvious solution. Mem- companies, including our own, supporting structures. Our col- bers of a real team trust one another PwC, have long embraced remote league Jon Katzenbach defines a real and work toward a common goal. work, with great success. And if we team as a small group of people with Real teams are thoughtful. Team listen carefully to the types of prob- complementary skills who are com- members argue, and they push one lems leaders and workers say they’re mitted to a shared purpose, who another to do better. Real teams re- encountering with teaming, the re- succeed or fail together, and who quire nimble leaders who prioritize ality is that most of these issues ex- hold one another accountable. building connections within the isted prior to the pandemic. Many, if not most, workers are frustrated with the groups of people they work with. Leaders and mem- bers struggle with long hours, inef- ficient ways of working, lack of ac- countability, and frustrating group dynamics. The COVID-19 pan- demic didn’t create a teaming crisis. It exposed deficiencies in the in- person model while introducing even more complexity. Illustration by Phil Marden In the course of our work with clients across various industries, we have identified several issues that contribute to this frustration. But the most basic one is this: in many cases, people are not and have nev- er been on real teams, nor should they be.

leading ideas team. They create clear boundaries share information, and complete team-in-name-only has a leader, she that reinforce a strong sense of trust. tasks individually. Individual ac- or he often has minimal leadership They have a shared purpose and countability is high; emotional skills. Members of a team-in-name- clear norms. And, importantly, they commitment and sense of shared only spend a lot of time talking produce a collective output. If you purpose are relatively low. If you about their own individual responsi- see a group of people focusing in- see people execute a disciplined bilities, and team meetings become tently on solving a single, very com- “five-minute stand-up,” they’re act- a series of one-on-one conversations plex problem, you’re probably look- ing like a working group. between managers and their subor- ing at a real team. • Teams-in-name-only are groups dinates. If you aren’t having conver- • Working groups are all about that claim to be a team, but lack sations about how you work, your efficiency. Most people spend most emotional commitment and shared objectives, and your commitments of their productive time in working purpose. They are like working to the people you work with, there’s groups. We’ll say it again: there is groups, but without the efficient a good chance you are functioning 16 as a team-in-name-only. The five- If you aren’t having conversations about how you minute stand-up that lasts 90 min- work, your objectives, and your commitments to utes is a common characteristic of a the people you work with, there’s a good chance team-in-name-only. you are functioning as a team-in-name-only. Although most people are told that they’re part of a team, the reality is that, more often than not, they’re nothing wrong with being in a processes and individual responsibil- members of a team-in-name-only. working group. In fact, working ity. Work gets done, but not always groups are often best suited to the in the most efficient or effective Why does work feel so much tasks at hand. Managers of working manner. Being on a team-in-name- harder now? groups focus heavily on techniques only requires neither discipline nor Consider how you probably would to make their collaboration more commitment, which typically makes have solved a problem or worked efficient. Members assign work, it the default mode of working. If a through a crisis as recently as Feb- ruary 2020. The process probably Whose team are you on? would have begun with a manager saying, “Team, I think it’s going to Real team Working group Team-in-name-only be a long week,” and you and your Work New project or problem Routine/business Undefined fellow group members would have type as usual responded in kind. You would have rolled up your sleeves, found a place Needs from Intellectual Information sharing Undefined to serve as your war room, and fig- colleagues partnership and ured out a way to get the task done. emotional commitment You might not have worked together in the most effective or satisfying Leadership Shared and fluid Single, strong leader with No formal leader, or an way, but you would have worked requirements leadership responsibilities well-defined role appointed leader lacking hard and produced a result. distributed among the necessary skills or all members experience This is a quintessential team-in- Time use Open-ended, Efficient, with interactions Open-ended and not name-only experience—a recipe for accommodating ample a result that is acceptable or even that allow the group to well-defined discussions and active reach answers quickly or good, but not necessarily satisfying strategy+business issue 107 problem-solving delegate a decision or great. As we flash forward to the Emotional High Low Low present, many organizations still haven’t decided to work smarter. investment Rather, they’ve doubled down on Source: PwC analysis this version of “non-teaming.” Here

are two ways the team-in-name-only Shrink your group size. We’ve The bullies leading ideas is manifested today: found that the ideal size for virtual are back teams is actually three individuals, 17 1. Meeting bloat. When a leader potentially four if the leader isn’t a The pandemic has avoids making decisions or it’s un- full-time member of the team. Hav- encouraged some bad clear who should be in the room, the ing more people involved requires behaviors that leaders default approach is to have more significant facilitation and strong need to look out for meetings or invite more people. But norms in order for the group to be in the new hybrid world what happens when a meeting is no effective. Look at any meeting you of work. longer confined to a physical space? host, and ask if everyone really needs The ten people who used to max out to be involved. Working groups can by Linda Rodriguez McRobbie the available seating in a small con- often handle a larger size (six to eight ference room can quickly turn into participants), as long as the purpose B ullying feels like a play- 50 people on a video call, most of of the meeting is well understood ground word. It’s the kind whom are unsure of their role, why (e.g., information-sharing versus of thing we should have left they were invited, or whether they problem-solving). behind with awkward school dances could have declined the invitation. and braces and homework. And it is Make the implicit explicit. As certainly the sort of thing that we 2. Excess use of email and chat. your teams and groups add and lose adults should be above. But, of members, it becomes necessary to course, we’re not. In a pre-pandemic world, managers reinforce norms. Don’t rely on infor- and colleagues could complement mal means of reinforcing teaming Trying to get a sense of the prev- these less-effective communication behaviors. Be deliberate about dis- alence of bullying in the work- modes with in-person contact cussing matters like when you com- place—the adult version of the play- (whether it was planned or sponta- municate, how meetings will be run, ground—is difficult. But researchers neous). Now that in-person connec- and the expectations team members agree that bullying is an understud- tions are not always available, we have of one another. ied and widespread problem; the have overcorrected with a less-than- data we do have seems to show that ideal technology solution. These suggestions aren’t silver bullying, in the US at least, is on the bullets, but by making deliberate rise: according to a January 2021 Both of these outcomes have choices about how to collaborate, survey by the Workplace Bullying made work harder and are a direct you can avoid the worst of both Institute (WBI), 30% of US workers result of not being deliberate about worlds: a bloated team-in-name-only reported being bullied, up from 19% how to work as individuals and as that has unclear expectations. After in 2017. Bullying, as defined by the a collective. So, what are some of identifying whether your work re- WBI’s survey, is a pattern of repeat- the choices and decisions you need quires a real team or a working ed mistreatment, abusive conduct, to make to be most effective in group, you can start taking advan- or work sabotage that humiliates, your work? tage of remote and hybrid work’s intimidates, or harms the targets benefits instead of constantly grap- and interferes with their ability to Ask whether you need to function work. “It’s gotten worse,” confirmed pling with its downsides. + Gary Namie, head of the WBI, as a working group or a real team. which has conducted this survey ev- Benjamin Tarshis ery five years since the late 1990s. Recognize that those two ways of [email protected] working together look very different. works with clients on workplace issues While it should probably go It’s not impossible to switch between as part of PwC’s Workforce Transforma- without saying, I will say it anyway: them. But it’s helpful to be clear tion team. Based in Boston, he is a senior there are no benefits to bullying in which mode you’re using and why. manager with PwC US. the workplace—not to the people Are the problems this group needs to solve sufficiently complex to warrant Jonathan Roberts the expenditure of emotional energy [email protected] it takes to build a real team? Is the works with clients on organization as part expected output a collective effort of PwC’s Workforce Transformation team. that requires active problem-solving? Based in Northampton, Mass., he is a senior Or is a high-functioning, efficient manager with PwC US. working group good enough?

leading ideas suffering it or the employees wit- nessing it, and not to the company’s bottom line. It does not make orga- nizations more competitive, weed out the weak, or give anyone an edge. It cannot be justified as “just the way things are done” or by the idea that because some workers dealt with it, everyone should—that it’s a kind of “paying dues.” And more and more employees are recognizing that. Right now, we’re in the midst of a “great resig- 18 nation” that’s driven in part by peo- ple no longer tolerating toxic work- places. In an article published in the MIT Sloan Management Review in January, researchers Donald Sull and Charles Sull, of analytics firm CultureX, and Ben Zweig, of Reve- lio Labs, analyzed data from 34 mil- lion online employee profiles in the it may be connected to the sudden challenge than keeping them out of US Bureau of Labor and Statistics exodus of employees from the office a meeting room. database, as well as 1.4 million during the pandemic. Namie says In addition to forcing employees Glassdoor reviews, and determined that back when remote work was out of the office, the pandemic also that “toxic corporate culture” was called telework—because it was lit- moved people out from under the the single biggest predictor of em- erally done over the telephone—he watchful eyes of their supervisors. ployee attrition, ten times as signifi- noticed a trend: “There was always a Not all organizations have managed cant as compensation. higher level of aggression when the the shift gracefully—witness the And if one person takes a supervision was disembodied. When problematic rise of digital surveil- stand, others are likely to as well: you do away with face-to-face, it gets lance technology, also known as tat- some evidence suggests that quit- a lot worse.” tleware. That employees were still ting is almost as contagious as Reams of evidence—both lived productive without being watched COVID—it’s called turnover conta- and scientific—underscore that peo- (read: controlled) has put some gion, a term used by academics to ple are less likely to self-censor some bosses on the defensive. Increased describe how the decision of one behavior when in online spaces, a employee freedom, Namie told me, employee to quit can influence oth- phenomenon known as online dis- “drives the insecure people, already ers to follow suit. inhibition. Though this effect is behind a lot of the bullying, crazy. So, when word gets out that a most evident when people are “I feel supervisors and managers company tolerates bullying, that or- anonymous, many of the conditions have a harder time justifying their ganization is going to have a hard that enable it, such as asynchronous roles…so they’re ratcheting up the Illustration by David Plunkert time keeping and attracting employ- communication and the propensity aggression,” Namie continued, add- ees. With the talent wars raging, toward cyber-incivility, exist in re- ing that in this new remote and hy- that’s not a position any business mote work as well. It’s easier to be brid landscape, aggression has in- wants to be in. mean when you’re hiding behind a creasingly included belittling and screen. Hybrid and remote work humiliating targets during group Remote work, remote bullying also potentially make it easier to ex- virtual meetings. What’s driving the reported rise in clude individuals—keeping people At the same time, remote work workplace bullying is complex, but out of a Slack channel is less of a also blurred the boundaries between

office and home, since these are of- the institute’s research has shown figures the WBI survey uncovered leading ideas ten the same space now. “Before, that more and more people are will- was that 63% of the actions taken by you could easily cut off your per- ing to challenge inappropriate be- employers in response to reports of 19 sonal life from your work life—you havior in the workplace. Exactly bullying just reinforced the abuse. walk through the front door of your why has a lot to do with what the Workers reported that their employ- company’s office, and you’re there,” broader culture values now. ers frequently denied or discounted Jana Morrin, CEO of Speakfully, a their experiences, rationalized bad workplace reporting platform that Young adults who grew up with behavior as just the way business is enables employees to report harass- anti-bullying messages in school are done or as “banter,” or even encour- ment and bullying anonymously, entering the workplace and are less aged it as somehow necessary for a told me. “Now, everything is hap- willing to rationalize mistreatment competitive atmosphere. Ultimately, pening all in one space. People as paying dues or dismiss it as 52% of those surveyed said that the see where you live; they can see a joke. bullying stopped only when the tar- your home.” That access to an indi- get—not the perpetrator—left the vidual’s personal life can and has Younger generations also re- job or was fired. provided would-be bullies with portedly care less about earning more sensitive areas to pick on; it potential than they do about main- “What’s disappointing is the can also make bullying feel more in- taining a healthy work–life balance. lack of effective action by some tense, because it’s never really left at “They care about being respected employers in resolving complaints the office. and being recognized,” says Morrin. when they are raised,” Suff wrote in “They want to do good work and do an email. something that matters to them.” In Fighting back Young adults who grew up with anti-bullying messages in school are entering the workplace Though the reported rise in bully- and are less willing to rationalize mistreatment ing is troubling, there is a bright as paying dues or dismiss it as a joke. spot: people don’t seem to want to put up with it. As research demon- that calculus, putting up with being Now that fewer employees are strates, the record number of people bullied in the workplace simply isn’t willing to buy into cultures that en- leaving their jobs in the last year worth it. able bullying—and a growing co- was propelled by employees fed up hort of workplace leaders are learn- with toxic work cultures. “We’re fi- Namie, Morrin, and Suff also ing, perhaps the hard way, that it’s in nally getting to a point that people all point out that we are living in a their best interest to root it out— are starting to believe and under- moment in which entrenched, often change is possible. At the heart of stand that you need to respect your protected, and systematic abuse is this change is building an environ- employees,” says Morrin. “Compa- being publicly called out. Social ment where bullies of any kind nies need to start listening, or else movements—#MeToo, Time’s Up, are understood to be unacceptable. they’re not going to have any em- Black Lives Matter—are all putting “That happens over time,” says Na- ployees left.” a focus on the structures that uphold mie, “when you stop letting them get abuse, and on the individuals who It’s also possible that the rise in perpetuate it. People who are stand- away with it.” + reports of bullying might not indi- ing up to abuse in the streets are far cate that bullying itself is increasing, less likely to take it in the workplace. Linda Rodriguez McRobbie but rather that employees are now is a freelance journalist living in England more likely to call out abusive be- Unfortunately, not all employ- whose work examines why people do the havior when they see it. ers seem to have gotten the message. things they do. She writes regularly for the In the UK, a 2021 survey found that Boston Globe and Smithsonian magazine. I’m not just being optimistic. only half of British workers felt their According to Rachel Suff, senior organization took seriously com- employment relations advisor at the plaints about bullying or abusive be- Chartered Institute of Personnel and havior. One of the more startling Development (CIPD), the UK’s pro- fessional body for human resources,

essay organizations & people ORGANIZATIONS & PEOPLE joking. Left to his own devices, Eric had allowed work to take over his life; he had burned out, which caused him to underperform. What went wrong? Neither Eric nor his bosses saw that the issues resulted from a lack of boundary setting by both the individuals involved and the organization. Al- though it is a critical piece of inter- personal know-how, the skill of boundary setting is rarely taught either in college or at work. It’s one 20 area that too many companies and employees fail to understand, and that failure comes with a cost: the How healthy well-being of individuals and the productivity of the enterprise. boundaries build trust Unrealistic work schedules and poorly written job descriptions can in the workplace exacerbate these issues. Trust breaks down over time. Studies link burn- out to boundary violations, such as work consistently intruding on Boundaries clarify responsibilities and personal time. In addition to lost expectations. Both employers and employees need productivity and poor performance, to identify, set, and maintain them to keep people it is also contributing to the record engaged and deliver strong performance. number of employees leaving their jobs in what has become known as the “great resignation.” By contrast, by Dana Gionta and Liz Sweigart recognized by his bosses. Instead, he when employees believe their voices U pon joining a new team, started missing deadlines and found are heard and their boundaries re- Eric quickly established that he was no longer getting staffed spected, they become more engaged himself as one of its most on the prestigious client projects— with their organization. ones with a lot of face time with Boundaries are the mental, technically skilled members. Eager senior executives, ones that would emotional, and physical limits peo- to prove himself, he dove in head- help his advancement. He became ple maintain with respect to others first, volunteering for assignments confused and resentful. During a and their environment, and psy- with tight deadlines and demanding one-on-one meeting with the team chologists consider them healthy if deliverables. Between the late nights leader, Eric voiced his frustration they ensure an individual’s contin- and marathon weekend sessions, it and asked why it felt like she and the ued well-being and stability. They wasn’t long before most of Eric’s other leaders weren’t seeing his dedi- serve many valuable functions. They Illustration by Lars Leetaru personal time was consumed with cation. Rather than directly address- help protect us, clarify our own work. His friends joked that he slept ing how Eric’s all-work-and-no-play responsibilities and those of others, with his laptop under his pillow, approach was hurting both his own and preserve our physical and emo- just in case—that is, they said, if he performance and the company’s, she tional energy. They help us stay slept at all. simply noted his missed deadlines. focused on ourselves, honor our val- Eric was convinced that sacrific- When another leader suggested he ues and standards, and identify our ing his personal time would get him take time off, Eric thought he was personal limits.

Physical workplace boundaries This requires both self-awareness graphic below), which measures the essay organizations & people may include delineating an individ- (understanding why we do what we intensity of negative emotion (such ual’s personal space in a shared of- do) and situational awareness (un- as discomfort, resentment, or guilt) 21 fice or limiting body contact to derstanding the dynamics of others an individual feels in response to a handshakes rather than hugs. Men- in the environment around us). situation on a scale of 1 (lowest in- tal boundaries reflect individuals’ tensity) to 10. Scores of 4 or higher important beliefs, values, and opin- Developing greater self- and sit- may indicate a need for an individ- ions. At work, that may mean not uational awareness is one of the first ual to set or reinforce a boundary. participating in activities that con- and most important steps managers For example, when an overeager col- flict with a person’s religious convic- and employees can take to encour- league interrupted Susan in a meet- tions, like betting pools, or personal age healthy boundary setting at ing, she rated the experience a 2 be- choices, such as avoiding alcohol at work. Reflective practices such as cause it was a one-time occurrence office events. Emotional boundaries journaling, spending time alone (es- and the colleague meaningfully relate to people’s feelings being ac- pecially in nature), and meditating apologized. In another instance, Su- knowledged and respected and may can help individuals recognize feel- san worked through the weekend to manifest themselves as individuals ings that may signal the need for a not discussing their personal lives with coworkers. Studies link burnout to boundary violations, such as work consistently It’s therefore important for intruding on personal time. individuals and organizations to understand the role that boundaries boundary. Pay special attention to deliver a report that her boss de- play in protecting us from harmful feelings of discomfort, resentment, manded by Monday but did not re- outcomes, such as burnout. There or guilt with a particular person or view until Friday. He then asked for are three steps to better boundary work situation. When determining her to address his changes by the management: identifying boundar- whether a boundary is needed, think following Monday morning, which ies, setting boundaries, and main- of these feelings as being on a con- meant she’d be required to work over taining boundaries. tinuum, not black or white. a second weekend in a row. For Su- san, this interaction rated a 10, indi- Identifying boundaries A simple tool for raising self- cating to her that she needed to set a Individuals need to be able to recog- awareness around these feelings is firm boundary with her boss. nize the need for one or more men- the Boundaries Signal Scale (see tal, emotional, or physical limits or boundaries in a particular situation. Boundaries Signal Scale Score of 1–3 Score of 4–6 Score of 7–10 Low level of discomfort Medium level of discomfort High level of discomfort Source: From Stressed to Centered: A Practical Guide to a Healthier and Happier You, by Dana Gionta and Dan Guerra

essay organizations & people Setting boundaries are skilled at boundary setting can Setting and communicating People must communicate their also help. Notice the language they boundaries fosters a sense of inter- boundaries clearly and consistently use, their tone, and the body posture personal safety and trust. In a stress- to others, a skill known in psychol- they take to assertively communicate ful moment, emotions can cloud ogy as assertive communication. their boundaries and expectations. judgment and make it difficult to effectively set boundaries. Using a Maintaining boundaries involves simple eight-step process offers clar- ity (see table below). the continued practice of confirming Maintaining boundaries the appropriateness of the set limits. Maintaining boundaries involves the continued practice of confirm- ing the appropriateness of the set 22 Open and assertive communication The most effective boundaries limits, adjusting them if need be, styles are essential to healthy bound- are those set and maintained collab- and communicating them assertive- ary setting. Managers and employ- oratively with open, up-front com- ly, especially when they may be chal- ees should clarify expectations up- munication about intentions and lenged. It is important to communi- front and continuously reevaluate needs. In Susan’s case, she and her cate clearly and in a matter-of-fact them over the course of the working boss never had a conversation clari- tone the consequences if the bound- relationship. Often, people assume fying expectations. If, however, they aries are tested or ignored, and then their needs and preferred ways of had candidly and transparently dis- to follow through if it happens. working are understood, so they cussed overtime hours and lead time Emotionally charged communica- don’t state them. This can result in for deliverables earlier in their work- tions are frequently ineffective in misunderstandings. ing relationship, a healthy boundary producing sustainable change. Teams should collectively con- would already have been in place. Consequences should be mean- sider and challenge assumptions and Employers and employees should ingful for the other person and re- suppositions. Taking this step inten- work together to define mutually ac- sult in a behavior change. For in- tionally can help foster better com- ceptable boundaries for performance stance, if a coworker continuously munication and transparency in the expectations during the onboarding calls after work hours to address group, which builds trust. Identify- process and when an individual is ongoing work issues, a low-impact ing and observing role models who promoted or changes roles. consequence would be to keep an- Eight steps for setting boundaries 1. 2. 3. 4. 5. 6. 7. 8. Name Tune Give Make Consider Seek Be Start your in to your yourself self-care your support. assertive. small. limits. feelings. permission. a priority. environment. Get clear about Use the You may question Taking steps Think about If you’re finding It’s important to Begin by setting your emotional, Boundaries whether you to ensure your what in your it difficult to communicate boundaries mental, physical, Signal Scale to can even set well-being environment set healthy clearly and that feel and spiritual become more boundaries in the improves your is supporting boundaries, there respectfully when nonthreatening limits. What will aware of the need first place. When ability to set and your healthy are numerous a boundary is to you. As you you accept? What to set or maintain these thoughts maintain healthy boundaries and courses and crossed. Be develop your makes you feel a boundary. Set arise, reaffirm boundaries. what may be books on the topic. specific about how skills, progress uncomfortable? and communicate your right to creating Other valuable the boundary- to setting a boundary if set healthy obstacles. sources of support crossing affected boundaries you consistently boundaries. are employee you, and state that feel more rate a type of assistance your expectations challenging. interaction in programs (EAPs), for future strategy+business issue 107 the medium or therapists behavior. high zones. specializing in boundaries, and knowledgeable friends. Source: From Stressed to Centered: A Practical Guide to a Healthier and Happier You, by Dana Gionta and Dan Guerra

swering the phone while saying Over time, if the uncomfortable or Perceived power imbalances be- essay organizations & people these intrusions are inconvenient. A unwanted situation or behavior con- tween employers and employees medium-impact response would be tinues, resentment builds, and when may make setting healthy boundar- 23 to decline to take the calls and set a employees reach their limit, they ies difficult, particularly for entry- meeting to clarify mutual expecta- end up expressing their frustration level professionals. This is where it tions for communications outside in an aggressive way. In these in- is imperative for employers to re- regular working hours. A heavy stances, coworkers and managers member that employees who set consequence would be to lodge a who had the impression that every- and maintain healthy workplace complaint with human resources. thing was going well are taken by boundaries have been shown to be The most effective consequences surprise, feel confused, and may feel less prone to burnout. Therefore, it match the level of the boundary- blindsided by their colleague’s be- is in employers’ best interest to sup- violating behavior. havior. This breakdown in commu- port healthy workplace boundaries nication ultimately erodes trust as among all employees. For example, if Susan and her managers and employees feel in- boss had previously set expectations creasingly uneasy and uncertain It takes energy and courage in that she would not work over the about one another’s true thoughts the face of internal resistance to weekend, and this was repeatedly and motivations. In Eric’s case, he change ways of working. Individuals disregarded, it would be appropriate lost faith in his managers and successfully build their boundary- for Susan to renegotiate her boss’s setting skills by starting slowly and Monday deadline for a last-minute, nonessential project requested late Employers need to explicitly in the week. state what is expected and what is not expected of employees. Overcoming obstacles In the workplace, individuals may abruptly resigned to take a job at a acknowledging that early attempts struggle to set healthy boundaries competing firm. Susan and her boss may be imperfect. Coaching can be for a variety of reasons, including: struggled to work together because valuable for both managers and em- Susan felt taken advantage of, and ployees. By taking steps to identify, • A previous negative experience her boss constantly questioned her set, and maintain healthy boundar- when attempting to set a boundary commitment to her job. Eventually, ies at work, employees and managers Susan left to start her own company. can build trust, improve resilience, • Fear of conflict or negative re- and contribute to a higher-perform- percussions, which often leads to Clear expectations avoidance behavior This is where employers need to step ing environment for everyone. + in. They need to explicitly state what • A lack of confidence in their is expected and what is not expected Dana Gionta, Ph.D. ability to respectfully communicate of employees. It is also important [email protected] a boundary, either because they that employers pay attention to and is a clinical psychologist, executive coach, don’t know what language to use to empathetically inquire into a sig- and speaker with a background in business, set one or because they fear it will nificant change in an employee’s psychology, coaching, and health. She is the come out aggressively due to built- performance, something that didn’t coauthor, with Dan Guerra, of From Stressed up frustration happen with Eric. Employers can to Centered: A Practical Guide to a Healthier provide opportunities for managers and Happier You. • Not realizing a situation war- and executive leaders to learn how to rants a boundary develop their own healthy bound- Liz Sweigart, Ph.D. aries, model boundary setting, and [email protected] • Self-doubt about whether they coach others in doing the same. is the chief product and strategy officer have a right to set a boundary. at Safe Kids AI and a former principal at PwC US. She holds a Ph.D. in organizational This struggle with boundary leadership from the Chicago School of setting—when an employee feels Professional Psychology and an MBA from unable to clearly share their true the University of St. Thomas. thoughts, feelings, needs, and ex- pectations—often results in an un- intentional style of passive-aggres- sive interpersonal communication.

essay tech & innovation TECH & INNOVATION or even survival—as the streaming wars rage on through 2022 and be- yond. To be sure, global spending on streaming services is continuing to grow (as the chart on page 25 shows), but competition is growing, as new services proliferate. As rights holders pull their con- tent from streaming services in droves to offer it on their own, the rules of content ROI have changed dramatically. The days when com- panies could count on a stream of 24 revenue during theatrical “win- dows”—box office, DVD, premium The real value of and basic cable, broadcast syndica- tion—are coming to an end. So are the cushy licensing deals that al- video content lowed poorer-performing titles to be packaged with blockbusters. In this new world, every content As spending on streaming content skyrockets asset matters. One clunker can mean in the entertainment and media industry, a new a mass subscriber exodus. That’s why formula is needed to drive a sustainable return we created a three-pronged formula for content valuation that can help on investment. drive meaningful and sustainable ROI. The formula is simple and con- by Kim David Greenwood, Burstyn as the mother of a demon- sists of three variables: demand, ex- Kate Kennard, and Chris Mowry possessed child, terrorized theater- pansion, and exclusivity. T he consumer demand surge goers nearly 50 years ago. Viacom- Demand for streaming video content CBS, meanwhile, has been busy To properly value any third-party is yielding blockbuster— selling $3 billion in stock to fuel TV show or movie, one must under- spending on content for its Para- and eyebrow-raising—deals. Netflix mount+ streaming service—spend- stand demand. That’s no easy task in reportedly paid US$450 ing that includes a whop- the era of streaming. Most platforms million last spring for the ping $900 million for six opt not to share detailed viewership rights to Knives Out 2 and extra seasons of South data with the public. However, some Knives Out 3, the sequels Park and 14 movies set in independent data and analytics to the 2019 murder mystery that the fictional South Park universe. In firms, including Parrot Analytics, grossed $312 million at the box of- an industry projected to shell out have built their own demand metrics fice. Universal Pictures and NBC- $230 billion on content globally in based on the level of piracy and social Universal’s streaming service, Pea- 2022, megadeals like these have be- media chatter, and these can serve as Illustration by Lars Leetaru cock, in partnership with produc- come routine salvos in the fight for a good starting point. The next step tion companies Blumhouse and streaming customers. Some will hit is to aggregate all forecasted and ac- Morgan Creek, reportedly signed a the mark; others won’t. That’s al- tual revenue-based metrics (such as $400 million–plus deal to purchase ways been the nature of the enter- ticket sales and total views) together the worldwide rights for a new fran- tainment and media industry. with social-impact metrics (such as chise of The Exorcist—even though But this tried-and-true portfolio social media impressions) and qual- the original film, starring Ellen approach won’t guarantee success— ity metrics (such as awards or Rotten

Tomatoes ratings). That will help The Mandalorian takes place five wide launch of the service or any essay tech & innovation you create your own demand metric years after Star Wars: Episode VI— other new programming event, in- for current and future content. Return of the Jedi and 25 years before cluding Premier League soccer. Episode VII—The Force Awakens. Disney+, meanwhile, offers a similar Expansion Market-intelligence provider Anten- value proposition with Marvel’s Content that can be expanded into na found that 29% of Disney+ sub- superhero fare, which moved from sequels, spin-offs, and TV series scribers who signed up during the Netflix after Disney+ launched in tends to be more valuable than “one- launch of The Mandalorian’s second late 2019. Since then, Disney-owned and-done” shows and films. Titanic was a historic box office success, In this new world, every content 25 taking in $2.2 billion worldwide, asset matters. One clunker can but the movie doesn’t easily lend it- mean a mass subscriber exodus. self to expansion. The ship sank at the end, after all, and nearly all the season had actually subscribed to Marvel content has been a huge driv- main characters died. Titanic also Disney+ in the past. To wit: these er of customer acquisitions. hasn’t sold a lot of merch. In con- customers were joining back up to trast, Harry Potter is fertile ground watch one particular show that held Playing to type for expansion. The eight Harry Pot- the promise of more to come. There is no single right way to apply ter films took in $7.7 billion at the our formula for content valuation. worldwide box office. But thanks to Exclusivity Each player in the streaming eco- toys, video games, Halloween cos- Exclusivity plays a major role in system has its own content strategy tumes, and the Wizarding World of helping companies attract customers and business and revenue model. Harry Potter theme parks, the fran- to their streaming platforms. Think Some companies will offer content chise is valued at more than $25 bil- back to January 2021, when the be- free with the goal of increasing view- lion, which suggests an active and loved nine-season, 201-episode NBC ership and merchandising sales. engaged fan base that’s always hun- sitcom The Office moved from Net- Others will only want to increase gry for more content. flix to Peacock. Fans helped NBC- subscriber revenue. Every media ex- Universal’s streaming platform earn ecutive must see the formula through Now consider expansion in a more paid sign-ups around The Of- the lens of their own business and streaming context: The Mandalorian fice’s debut than during the nation- future growth strategy. In our analy- is part of the expansion strategy of perhaps the most successful content franchise of all time: Star Wars. Having debuted on Disney+ in 2019, The streaming boom Over-the-top video-on-demand (VOD) is on a historic growth trajectory, but competition is making content valuation more important than ever. Subscription VOD Transactional VOD Global revenue 100 $29.7 $38.0 $46.3 $58.4 $65.1 $73.0 $80.9 $87.3 $93.9 in US$ billions 90 2017 2018 2019 2020 2021 2022 2023 2024 2025 80 70 60 50 40 30 $22.1 20 10 0 2016 Note: 2020 is the latest available data. 2021–25 are forecasts. Source: PwC, Global Entertainment & Media Outlook 2021–2025; Omdia; Bundesverband Audiovisuelle Medien; ANCOM

essay tech & innovation sis of the industry, four instructive important variable: Netflix must clusivity matter to Nostalgists, ex- archetypes emerged. Each calls for a find new opportunities for growth pansion is the most important vari- different application of our content- beyond monthly subscriptions. For able. Proven hits have established valuation formula. every content investment made, universes of fans ready to give up Netflix must ask itself: Can this their time and money for spin- 1. The Reigning King piece of content be expanded to real- offs, sequels, and merchandise. Netflix is in a category of its own. ize its full value? Can it drive higher Some Nostalgists, like Disney and The company has almost 222 mil- average revenue per user (ARPU) NBCUniversal, are in the business lion paying subscribers, as of its first- via other revenue streams such as of developing new material, and as a quarter 2022 earnings report. Com- merchandising and new experienc- result still rely on the box office suc- pare that with Amazon Prime es? To bolster its two main sources cess of new content properties for Video’s more than 175 million, of revenue—streaming and DVD revenue. Disney+’s roughly 130 million, and rentals—Netflix recently launched 26 Peacock’s approximately 25 million. an online shop for branded mer- 3. The Ecosystem Techies Netflix is projected to spend chandise like Stranger Things hood- Nostalgists see content as the pri- more than $17 billion on content in ies. However, in emerging markets mary driver of value, but others per- ceive content as a means to an end. Proven hits have established Companies in this category aren’t concerned with viewership as much universes of fans ready to give as how that viewership translates to up their time and money. other outcomes, such as customer interaction on their platforms (Meta/ Facebook), mobile device usage (Apple), data generation (Google), 2022, a 25% increase from 2021 and where customer attrition is less of a and deeper participation in a trans- a 57% increase from 2020, as the problem for the company, the de- actional ecosystem (Amazon). The company must replace hundreds of mand and exclusivity variables take Ecosystem Techies are focused on a shows and movies that have left or on greater importance. new phase of streaming growth— are scheduled to leave for other plat- one that’s more centered on improv- forms. Yet even with hit shows like 2. The Nostalgists ing customer experience, building Glee disappearing, Netflix still has Recent streaming entrants, includ- communities around universes of the largest content library in the ing Disney+, HBO Max, and Pea- content, and retaining and creating world. And its strategy is to continue cock, have garnered millions of new value from their immense subscriber building that library with its own customers and continue to gain trac- bases and troves of subscriber data. content, particularly shows tailored tion in the market. One common How Ecosystem Techies should for international customers, such denominator of their success: nos- use the formula: Demand is the most as Narcos: Mexico and the Spanish talgic blockbusters. Whether it’s critical variable. More eyeballs trans- crime thriller Money Heist. Disney+ with Star Wars, HBO Max lates to a larger ecosystem. The ex- How the Reigning King should with The Sopranos, or Peacock with pansion of any content would be use the formula: In April 2022, Net- 30 Rock, the formula revolves nice to have but is not crucial. Exclu- flix reported its first decline in paid around the familiar comfort of hit sivity is even less important. Ecosys- users in more than ten years. As the shows and movies. The sentimental tem Techies are accustomed to cata- company matures in its second appeal of such content is also multi- lyzing the demand of other players decade of streaming, the equation generational: Star Wars pulls in old- (e.g., Nostalgists and the Reigning strategy+business issue 107 varies by geographic market. In sat- er viewers who fondly remember the King) to take a cut of transactions. urated markets such as North original 1977 film while hooking America, where Netflix is losing younger fans with The Mandalorian. 4. The Sell-Side Creators subscribers and projecting even How Nostalgists should use the Sell-Side Creators spark bidding more losses, expansion is the most formula: Although demand and ex- wars with their content. One of the

leading examples of this archetype is boots. Exclusivity becomes an asset Kim David Greenwood essay tech & innovation Sony. Instead of spending billions of in selling to the highest bidder. [email protected] dollars to develop its own streaming specializes in growth and innovation, trans- 27 platform, Sony decided to offer its A new equation formation, and risk management strategies vast catalog of shows and movies— Proper content valuation represents for Strategy&, PwC’s strategy consulting which includes The Karate Kid, a fundamental strategic choice for business. Based in San Francisco, he is a Ghostbusters, and Spider-Man—to the future. As competition evolves principal with PwC US. the highest bidder. Under a deal with the rise of the metaverse, digital inked last year, Sony’s new theatrical products such as NFTs (non-fungi- Kate Kennard releases will debut in theaters first ble tokens), and immersive digital [email protected] and then premiere on Netflix. After storytelling, companies must make specializes in growth and innovation, the conclusion of that first pay- sound, data-driven decisions about transformation, and customer strategy for TV window on Netflix, those films content and maximize the value of Strategy&. Based in New York, she is a will leave and take their permanent every asset. Ultimately, the key is senior manager with PwC US. place on Disney+ or Hulu, which seeing this formula not as the an- Disney co-owns. swer in and of itself, but rather as Chris Mowry one tool in a company’s strategic ar- [email protected] How Sell-Side Creators should senal. Used effectively, the formula is a managing director in PwC US’s deal can help dictate and frame the con- practice, focusing on valuation. He works use the formula: Demand and ex- siderations to weigh and the choices with the telecommunications, media, and pansion are critical to Sell-Side Cre- to make about content acquisition technology sectors nationally, as well as ators. Before selling any content, the valuation practice in Dallas, where they should forecast future viewer- and development. + he is based. ship and potential sequels and re- Also contributing to this article were PwC’s Layton Cox, Ryan Pennock, Daniel LeFoll, and Kevin Joyce. “The healthier the networks— ©2022 PwC. All rights reserved. PwC refers to the cutting across age, race, and PwC network and/or one or more of its member experience—the stronger the firms, each of which is a separate legal entity. Please performance and social cohesion. see www.pwc.com/structure for further details. People are social beings.” Julia Hobsbawm Where is the office now? Visit strategy-business.com for a daily dose of the best ideas in business.

essay leadership LEADERSHIP David Hirzel and I explain how three extraordinarily successful peo- ple made decisions to accomplish great feats. Our focus in the book was to show what modern CEOs and other business decision-makers can learn from these overachievers. So, what did they do? British engineer Isambard King- dom Brunel (perhaps the greatest engineer who ever lived), a house- hold name in the UK but little known elsewhere, served as chief en- 28 gineer of the first tunnel under a flowing river, the Thames, at Rother- Great feats require hithe, in the 1820s. He also pio- neered the modern railway in the 1830s, designing and building the crucial decisions UK’s Great Western Railway, which connected London to the port city of Bristol. At the time of its con- CEOs can hone their decision-making struction, it was the longest (116 skills by studying leaders who directed miles, or 187 kilometers) and fast- world-changing projects. est (50 miles, or 80 kilometers, per hour) railway in the world. President Theodore Roosevelt by Brad Borkan ganizations, not by machines or by was the driving force behind both W hat do the building the people who prepare briefing doc- the creation of the US national parks of the Great Western uments. And the core way we as hu- and the construction of the Panama Railway across Britain mans make decisions has not evolved Canal. Norwegian explorer Roald nearly as fast as computer technolo- Amundsen was first to sail a ship in the 1830s, the construction of the gy amassing and sorting data has. through the Northwest Passage, the Panama Canal in the early 1900s, We still make decisions based on the arctic sea route connecting Europe and your work as an executive today information in front of us, even if to Asia that had been sought for cen- have in common? the entire picture isn’t yet clear. turies. Amundsen was also the first The answer: they involve mak- Having spent many years work- explorer to reach the South Pole. ing crucial decisions—introducing ing in high-tech Fortune 100 com- Three people. Three profes- new technology, addressing supply panies, and the past seven years re- sions. Three nationalities. Despite chain disruptions, and overcoming searching and writing about the these differences, we discovered myriad unexpected obstacles—based leadership and decision-making be- that when faced with challenges, on the imperfect and incomplete hind major historical endeavors, I these leaders overcame them with information available at the time. came to see that modern executives surprisingly similar mindsets. Their Illustration by Lars Leetaru Although analytical tools and can glean a significant number of accomplishments had similar ele- computer modeling have become lessons and insights from leaders ments. They were large undertak- exponentially more sophisticated of the past. ings, watched by the world. They in recent years, one element of In our recent book, Audacious were multiyear and multifaceted, decision-making has not changed. Goals, Remarkable Results: How an and they attracted a multitude of Decisions of great magnitude must Explorer, an Engineer, and a States- detractors who claimed “it can’t be be made by CEOs and leaders of or- man Shaped Our Modern World, done.” But Brunel, Roosevelt, and

Amundsen all persevered. They the quest was derailed by friction then at Compaq when it was one of essay leadership consistently proved the naysayers between the captain of the ship the world’s leading PC manufactur- wrong by making bold decisions at and the expedition leader. Amund- ers. Steve Jobs recruited Cook in 29 critical moments. sen spent years studying, training, 1998 as senior vice president of and enduring grueling voyages to worldwide operations. Cook fol- CEOs who find themselves in get his sea captain’s license so he lowed the dictum “focus on what similarly challenging situations can could be both expedition leader and you know” and transformed the way learn from how Brunel, Roosevelt, captain of his own ship on his Apple builds products and works and Amundsen measured their op- Northwest Passage attempt. with suppliers. tions. Like so many other things, their process started with informa- His study also led him to con- Second, seek firsthand knowl- tion. All three men made decisions clude that a small team of seven men based on the facts in front of them. in a single-masted 47-ton, 70-foot edge to avoid wishful thinking or un- That sounds straightforward. But former herring sloop could achieve doing so requires three actions be- what the mighty British Navy had bridled optimism. During the Pana- cause not all facts are created equal. failed to do with the ill-fated Sir ma Canal construction, Roosevelt John Franklin expedition. The ear- insisted that his visit to the site take First, master the right details. lier mission consisted of 129 men place during the rainy season so he could see it at its worst. In the early Brunel knew every mile of his rail- 1900s, the Panama Canal was the way. In 1833, he personally surveyed the entire line on horseback to find Amundsen spent years studying the exact, most level route across to get his sea captain’s license so the undulating English countryside, he could be both expedition leader reasoning that the more level the and captain of his own ship. route, the faster the train could trav- el. This detailed knowledge was crit- and two well-founded ships, yet all biggest, most difficult, and most ical to his success in gaining govern- the men perished. A small ship, expensive construction project the ment approval, after he defended the Amundsen surmised, would be modern world had ever seen (costing chosen route in front of an 11-day more maneuverable through the around US$36 billion in today’s dol- approval hearing at the Houses of narrow inlets and shallow seas. lars). The canal dig took 11 years Parliament the following year. He and cost the lives of tens of thou- had to explain how and why he Amundsen’s success is legend- sands of workers. would build a two-mile tunnel near ary. In today’s world, his breadth of the village of Box Hill, for example. knowledge could be equivalent to The challenge was immense. It would be far longer than any tun- the CEO of a consumer goods The Isthmus of Panama was filled nel ever built and require five years manufacturing company knowing with swamp and jungles. The rainy to complete. all about how its products are creat- season stretched from April to De- ed, including detailed information cember. The local river, the Chagres, In the early 1900s, Amundsen about suppliers and customers. Ap- was one of the most volatile in the was the most knowledgeable person ple is an exemplar of detail-based world, rising 40 feet in a single rain- in the world on the Northwest Pas- leadership. storm. The region was also rife with sage, before he set sail to find its loca- yellow fever, malaria, and other tion. He achieved this status by We know Tim Cook as the tropical diseases. After a disastrous studying the 400 years of expedi- CEO of Apple, but his experience start in 1904, Roosevelt hired two tions that had failed to find such a was not in the traditional functions experts: the engineer John Stevens valued trading route, which he was from which people ascend to CEO and the tropical disease expert confident could be traced among the positions, such as finance or sales. Dr. William Gorgas. The goal was myriad small and large islands, pen- Cook’s expertise was in supply to dig efficiently, and to rid the insulas, and ice-laden waters be- chains and logistics at IBM, and tween Greenland and Alaska across Northern Canada. What he learned was that on all previous attempts,

essay leadership canal zone of mosquitoes carrying tomers because it failed to under- to the business, Riesenbach told me yellow fever. To give some sense of stand the market. that he had to present an accurate scale to the challenge, the amount of Third, weigh alternatives, make view of the situation and not sugar- earth that needed to be excavated decisions quickly, and communicate coat it; otherwise, the shareholders, would, if shaped into a form like the changes effectively. Roosevelt used suppliers, and car dealers would lose Great Wall of China, stretch from these skills to great effect to make faith. The company’s cash position Newfoundland, Canada, to the two central decisions. The first was became a critical factual element of Florida Keys. agreeing to the costly change from the decision-making process. With so much at stake, in 1906, attempting to build a sea-level canal Rapid choices and timely com- Roosevelt sought a firsthand, unvar- with no locks to building one that munication were Riesenbach’s go-to nished view of the work. It may involved constructing the largest approach, enabling him to manage seem hard to believe now, but his dam in the world to control the expectations with customers, suppli- visit was highly controversial be- Chagres River, creating the world’s ers, employees, and shareholders. He 30 cause, up to that point in history, no largest artificial lake, with 12 locks, could not indulge in wishful think- sitting US president had ever set foot each of which was three times as big ing, since early in the recession it was not clear how (or even if ) the Theodore Roosevelt talked about auto industry would recover. In the end, he had to cut 35% of the work- striving for “glorious triumphs” force and divest two noncore divi- sions. The business survived and still when undertaking great challenges. exists today. Theodore Roosevelt talked about striving for “glorious tri- out of the United States. As a leader, as any lock previously built. Second, umphs” when undertaking great Roosevelt wanted to form his own he decided it was imperative to fund challenges. Obstacles and setbacks opinions, so he preempted the offi- a massive health initiative to eradi- were part of the process. Brunel, cial agenda to see all the parts of the cate mosquitoes, and yellow fever, in Roosevelt, and Amundsen achieved canal dig and talked directly with the canal zone. their triumphs because of their the engineers and workers. His visit I discussed the Brunel-Roosevelt- decision-making: it pays to be well to the canal zone and his inspira- Amundsen approach recently with prepared for change. If you are tional speeches were a turning point Jim Riesenbach, who was CEO of steeped in your business, you under- in the project and gave him added AutoWeb, a US-based car and truck stand both the risks and the oppor- leverage in overcoming his detrac- brokerage firm linking buyers to tunities, and you know how to com- tors back home. auto dealers and manufacturers, dur- municate how you want people to There are many cautionary tales ing the 2007–08 economic down- act, it’s much more likely that the of CEOs who didn’t seek on-the- turn. He faced two decisions: how decisions you make will lead to suc- ground knowledge and, blinded by much to downsize the company and cessful outcomes. + optimism, made poor choices for how fast to do it. Cut too deep and the companies they led. High- the company might never recover; Brad Borkan profile cases include Kodak missing go too slow and expenses could well [email protected] strategy+business issue 107 the digital camera revolution, even exceed revenues, thus tipping the is the coauthor of two books, When Your though the firm had invented the company too far into the red. Life Depends on It: Extreme Decision Making technology. It clung to its past reve- Lessons from the Antarctic and Audacious nue streams and failed to under- “I was already immersed in the Goals, Remarkable Results: How an Explorer, details of the business, including the an Engineer, and a Statesman Shaped Our Modern World. A former senior director stand what was changing. Block- analytical models we developed to at leading high-tech companies, he is a buster famously chose not to buy simulate alternative scenarios and fellow of the Royal Geographical Society, Netflix in 2000 for $50 million. It contingency plans. Details were the Vice Chair of the Friends of the Scott Polar Research Institute, and a member of the didn’t recognize that Netflix’s mail- key to my credibility,” explained Society of Authors. order model would appeal to cus- Riesenbach. On the proposed cuts

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feature organizations & people 32

Meet the feature organizations & people four forces shaping 33 your workforce Illustration by Miguel Montaner strategy Specialization. Scarcity. Rivalry. Humanity. Companies that understand—and harness—these forces will have an edge in creating vibrant workforces capable of achieving sustained, positive outcomes. by Bhushan Sethi, Blair Sheppard, and Nicole Wakefield I f you lead, manage, or plan a workforce, you’re familiar with disruption—and have seen a lot of it lately, including geopolitical and social crises and the biggest public health emergency in living memory. And you’ve spent time and energy on everything from designing remote and hybrid work experiences, to understanding the “great resignation,” to simply trying to keep your people safe. Against this backdrop, you need to keep sight of the urgent, fast-moving workforce challenges you face— without losing sight of the long game. You need to inspire and support your people now, even as you help them redefine the nature of their jobs and roles so they can thrive in a highly uncertain future. Only by getting the balance right can you create the kinds of sustained outcomes that will benefit the company, your workforce, and even society.

Bhushan Sethi Blair Sheppard Nicole Wakefield The authors thank Justine [email protected] [email protected] [email protected] Brown, Ingrid Carlson, is the joint global leader of is the global leader of strategy is the global financial-services Nadia Kubis, and Victoria PwC’s people and organization and leadership for the PwC advisory leader for PwC. She Robinson for their contributions practice. Based in New York, network. He leads a team that is a senior client advisor and to this article. he is a principal with PwC US is responsible for articulating part of the global people and and an adjunct professor at PwC’s global strategy across organization practice. She is a NYU’s Stern School of Business. 158 countries and the develop- partner with PwC Singapore. ment of current and next- generation PwC leaders. He is professor emeritus and dean emeritus of Duke University’s Fuqua School of Business, and is based in Durham, N.C. feature organizations & people A good place to start is by grounding your thinking force strategy was misaligned with its business strategy in a better understanding of the dynamics that your and objectives after the company missed out on a sig- workforce strategy arises from, and that it depends on. nificant opportunity, in part because it neglected to an- Four underlying forces—specialization, scarcity, rivalry, ticipate the strategic need for key experts (specialization). and humanity—have been shaping workforces at key points throughout human history, and they’re highly • A large financial-services company recognized relevant again today. Taken together, the forces offer a that broad skills deficits among employees (scarcity) were framework to help companies understand the interplay contributing to poor customer outcomes—and were in between workforce strategy, business strategy, culture, fact a symptom of a bigger cultural problem the com- and technology. For example: pany urgently needed to address. • A company in the telecommunications, media, • A large service-sector company slowed its special- and technology (TMT) sector came to see how its work- ist recruiting in cities where competition was fiercest, choosing instead to build a strong presence and feeder Navigate the interplay of four forces to create a more future-ready workforce BUSINESS STRATEGY 34 SPECIALIZATION WORKFORCE RIVALRY The expertise we obtain STRATEGY and build to succeed The reasons employees How can we anticipate choose us over competitors strategy+business issue 107 the roles we’ll need (and Are we winning now? How the roles being displaced)? can we win as our requirements change with our strategy? HUMANITY SCARCITY The good we do for our people—and the world The talent shortages and Does our company purpose skills deficits that could resonate with our people? harm our performance Where are we short on Source: PwC analysis talent now? What skills will we need?

network in smaller cities with significant untapped po- Technology also encourages specialization. For ex- feature organizations & people tential (rivalry). ample, the industrialization of the late 19th and early 20th centuries helped inspire Frederick Winslow Tay- 35 • A coalition of more than 250 companies banded lor’s theory of scientific management, which influenced together to improve workforce diversity in their own or- the mass production approaches that relied on special- ganizations, while also pushing a much wider set of col- ized jobs and machines. lective priorities that would improve racial equity in the local community (humanity). Today, digitization promotes specialization among organizations by easing collaboration. As companies fo- This article will highlight how companies are navi- cus on what they do best, they may tap external special- gating the interplay of the four forces to help create a ists or ecosystem partners for the rest. Consider how more future-ready workforce, and then lay out some merchants rely on Amazon’s e-commerce engine for practical steps that leaders can take in their own work- sales and fulfillment tasks they formerly would have force planning. For many leadership teams, the resulting done in-house. conversations will almost certainly have bigger strategic and organizational implications—and that’s the point. For individual workers, meanwhile, the effects of Workforce considerations are at the heart of everything technology are visible in any number of highly special- your company is and does, and by grounding your ized roles (think data scientists, cyber-risk specialists, or thinking in the four forces, you can keep that lesson software engineers) that your company must define, front and center for your management team. harness, and anticipate. The anticipation piece is key for at least two reasons: fail to predict what kinds of First, though, let’s examine the forces themselves. experts your business will need, and you will miss op- portunities; fail to anticipate how roles are changing, Meet the four forces and what were once specialized skills may become less Four forces have shaped workforce strategies at key valuable or even obsolete. This can happen anywhere in moments throughout human history—and they’re at your organization. it again. By understanding how the forces have oper- ated in the past, you can better prepare your contem- Consider a typical sales force. Some of its traditional porary workforce to weather tomorrow’s challenges tasks used to be fairly specialized (for instance, gathering (see graphic on page 34). market intelligence or analyzing customer sentiment). Today, they are significantly augmented by technology. SPECIALIZATION Therefore, the value the sales team provides must come increasingly from new areas—say, from developing Since the dawn of agriculture (if not before), specializa- deeper, more trust-driven relationships with customers. tion has shaped the workforce. Indeed, the increased Likewise, a highly specialized radiologist might find her- food supplies that farming provided helped make divi- self pressured to pivot to cancer research and treatment sions of labor sustainable. as AI applications learn to diagnose cancer.

As a leader, you face tricky questions in dealing with fields, while a growing need for workers in advanced and increasing specialization. How do you develop a view on emerging technologies is generating shortages in others. feature organizations & people what new skills you need and when? And where will you Demographic trends also help determine how scarce or get them? Your access to specialized talent may be affect- plentiful workers are—and have huge economic and so- ed by factors as varied as your employee value proposition cial implications. and the regulatory environment in which you operate. But scarcity isn’t just about head count or even deal- And if you decide to build specialized skills, how do ing with the unprecedented challenges of the “great res- you create the relevant learning and development paths? ignation”—it’s also about the abundance of skills your How do you identify candidates for upskilling (and people have. For example, your company may have the avoid biased decisions)? And finally, how will you orga- right experts and specialists in place, and plenty of work- nize, structure, and incentivize an increasingly special- ers to fill vital roles. But you may still face a scarcity prob- ized workforce to come together and deliver better cus- lem if your workforce lacks the broad-based skills it will tomer experiences, higher productivity, and other need to succeed. The company may have a deficit in lead- outcomes that matter? ership or management skills, for example, or decision- making skills, project management skills, or even inter- personal skills. Companies frequently try to address such SCARCITY deficits through skill-building and reskilling efforts. 36 We live in a world where all manner of shocks can alter Finally, the scarcity of skills outside your company the workforce in unpredictable ways. Whether geopo- also affects you. Consider how the take-up of electric litical crises, public health emergencies, or other shocks, vehicles (EVs) could be slowed by a lack of people able to big changes affect workers in big ways. For example, in repair and maintain EVs. For EV manufacturers, there- the mid-1300s, the bubonic plague that struck Europe fore, the question becomes how to support the develop- led to the death of roughly one-third of the population. ment of capabilities outside the organization that are The precipitous shrinkage of the labor force boosted the nonetheless vital to its success. bargaining power of serfs and helped break down the economic power of feudal lords. Today’s pandemic—in addition to taking its terri- RIVALRY ble human toll—has spurred a new shift in the balance The revolution in mass production, distribution, and of power in the workplace. Demand for labor has in- transportation of the late 19th and early 20th centuries strategy+business issue 107 creased sharply in some industries, as workers have quit created an economic surplus that savvy leaders such as to seek better opportunities in new fields (or even started Henry Ford shared with employees in order to stabilize their own businesses). the workforce and retain critical skills. (In fact, by dou- Scarcity also emerges from technological shifts. For bling his employees’ wages in 1914, Ford is often credit- example, automation is creating redundancies in some ed with helping launch the US middle class.)

As a leader, you face tricky questions in dealing with increasing specialization. How do you develop a view on what new skills you need and when? And where will you get them? Such actions also provoked debate over shareholder current pandemic pushed tens of millions of workers to feature organizations & people versus stakeholder value and, over time, further intensi- reevaluate what matters to them in an employer. Or how fied the competition for labor. the widening global divide between the haves and have- 37 nots, the rising expectations of generation Z, and the Flash forward to today, when the digital revolution existential threat of climate change create new impera- has created new forms of workforce rivalry. Consider how tives for employers to bring meaning, humanity, societal digitization has blurred traditional sector boundaries; or impact, and inclusion to their workforce. how the widespread move to remote and hybrid working makes geographic barriers much less relevant; or how Some companies increasingly seek to differentiate technology companies have boosted pay for in-demand themselves on their humanity—for example, by taking skills that companies in other industries also rely on. ethical and responsible stances on issues related to cli- mate change and social justice. When successful, such As a leader, therefore, your rivalry challenge is both efforts help the world, and help firms attract and retain perennial and brand new. As always, you want your or- workers. Indeed, fully 75% of respondents to a recent ganization to stand out as an employer so you can as- PwC survey said they wanted to work for an organiza- semble the right people and talent programs in order to tion that would make a positive contribution to society. bring your business model and strategy to life. But to compete in the future, your strategy might depend on Similarly, if you make your workforce more diverse your being able to attract and retain a workforce with a and inclusive—across all elements of the human experi- very different set of skills than you have today—to sup- ence and identity—you help society while helping ad- port your move into adjacent businesses. Consider the dress challenges of specialization and scarcity. In the skills shifts necessary for Apple to move from its roots in book Beyond Digital, our colleagues highlight the ex- product design into services such as banking, and health ample of Titan Company Limited, an India-based jew- and well-being. eler that invests heavily in capability building and im- proving the working conditions of local artisans. This HUMANITY helps the community while supporting a healthy pipe- line of workers in jewelry production. The Renaissance that took place in Europe from the 14th to 17th centuries (and that arose from the after- Finally, humanity requires you to think deeply shocks of the global pandemic that preceded it) brought about your company’s culture, with a view to connect- a rebirth of humanism and the early flowering of the ing (or reconnecting) people with your organization’s scientific method. This set the stage for the Enlighten- purpose and making clear to them how they may tangi- ment, and a reimagined social contract between citizens bly contribute to it. When the company’s purpose reso- and the state. nates with people, and they see clearly how they further it, not only are they more likely to stay (which could The shocks to our contemporary world are also hav- help with any of the other three forces), but they tend to ing a huge effect on the workforce. Consider how the be more engaged—and productive.

The relationships between the forces can themselves be a useful nudge toward valuable conversations with your team—talks that lead to insights in other areas well beyond HR or even workforce strategy. Learning from the four forces a source of innovation, let alone how this might chal- Given the highly interrelated nature of the forces, there’s lenge the company’s long-held strategy. Consequently, feature organizations & people no single best way to approach them. Perhaps one force the company hadn’t anticipated the need for the kinds of represents a pressing threat, or an exciting opportunity. engineers it would have required to customize the prod- If so, start there. uct (a problem of specialization). Therefore, even if the But don’t stop there. The relationships between the sales force had pursued the partnership, the company forces can themselves be a useful nudge toward valuable would have struggled to hold up its end. conversations with your team—talks that lead to in- Finally, all of this was exacerbated by misaligned sights in other areas well beyond HR or even workforce incentives. The account managers were closest to the strategy. Let’s look at how this is playing out in practice. company’s customers, and therefore best positioned to spot growth and innovation opportunities, but they The case of the sluggish sales force were rewarded for keeping costs low. In other words, A company in the TMT sector was facing slowing they weren’t looking for growth opportunities because growth and a maturing product portfolio. The compa- the company was effectively paying them not to. ny’s strategy had always focused on cost—it acquired The episode was galvanizing for the company’s lead- depreciating assets from other players and managed ership, spurring them to ask bigger questions, starting them for maximum efficiency. This approach was reflect- with how the strategy ought to change to adapt to the 38 ed in people’s incentives, and over time became a defin- changing environment. Leaders also began soul-search- ing characteristic of the company’s culture. Yet what had ing about how the workforce strategy could better align been a strength also created a worrying blind spot as the with the future objectives of the business. It was in pos- business environment changed around employees. ing these sorts of questions that the four forces became This became clear to company executives in the part of management discussions. wake of what turned out to be a missed opportunity: a Ultimately, the discussions about the forces helped deal proposed by a key customer to partner on improving inform the company’s choices, including a move to one of the company’s products. Why was it missed? In ramp up the business’s learning and development capa- part because the account managers whom the customer bility to upskill its workforce in targeted areas. The work approached with the idea had a broad-based skills deficit is continuing, in the form of a new change program that the TMT company’s leaders weren’t fully aware of (a to help anticipate workforce skills requirements and problem of scarcity). They lacked the management skills match them to the various segments of the company’s strategy+business issue 107 and decision-making skills that could have helped them product portfolio. engage with the customer in a new, more collaborative, creative, and potentially quite profitable way. A financial-services company connects the dots Similarly, the TMT company’s senior executives As the TMT company’s example suggests, the four had not considered how customers might themselves be forces can prompt uncomfortable yet necessary C-suite

conversations. This was true at a large financial-services tract and retain people (rivalry); and tapping into skills feature organizations & people company. Specialized skills were not an issue here; across a wider range of geographic locations to help ad- the company had formidable pockets of specialized dress both scarcity and specialization. 39 talent. In fact, for years it had been benchmarking specialist tech skills and employee experience metrics A service provider gets creative against top-tier technology industry players—and not just its direct competitors—to stay ahead of the Rivalry proved to be the force that unlocked a smarter curve (a smart practice that harnessed rivalry to address workforce strategy for a large service-sector company. Its specialization). executives had started the workforce planning process with specialization in mind—specifically, the need for Nonetheless, company executives could see they specialist engineers. were facing a skills scarcity challenge. The organization no longer had enough people in the right places with a But as the leaders looked more closely, some began deep understanding of regulatory risk, or with “softer” challenging the assumption that the company needed to human skills in areas such as collaboration and prob- continue to compete strongly in major cities with the lem-solving. Moreover, the leaders recognized that they largest concentrations of engineering skills. After all, too needed to amp up certain skills to ensure they had these were the same cities where everyone—including the necessary end-to-end vision and deep sense of competitors from other industries—was fighting hard- accountability. Without these things, the executives est for talent (rivalry). realized, the company would continue to have a hard time linking its specialists together in a consistent way Instead, the company’s leadership stepped back and across its business lines—and customers would contin- got creative. Their plan? Select a region outside the major ue to suffer for it. cities and become the employer of choice there, in part by forging links with local universities, communities, Ultimately, the leadership team saw that the com- and government authorities (which even offered invest- pany needed to change its culture in order to put a great- ment incentives). Although building up the resulting er emphasis on care and diligence, renew the organiza- pipeline of talent would take time, the leaders knew that tion’s sense of purpose, and start rewarding how work a longer-term approach would ultimately support its got done and not just what (or how much) work got business strategy more effectively than simply compet- done. Only then could they be sure to consistently at- ing head-on in existing talent hot spots against rivals tract and retain the right people. with potentially deeper pockets. These realizations sparked a transformation that in- Seeking greater humanity through partnership cluded improving workforce diversity and inclusion (a focus on humanity); addressing skills deficits in leader- Although the examples thus far have concentrated on ship development and succession planning (scarcity); the actions of individual companies, some challenges imbuing more humanity into their culture to better at- are broad enough or difficult enough—or both—to benefit from a collective response. Achieving greater

workplace diversity and racial equity (at its core a chal- ations directly affect everything else, including your lenge of humanity) is just such a problem. To address it, business strategy, organizational model, and operating feature organizations & people more than 250 companies in the US city of Atlanta approach. Anything that provides more insight into have come together under the auspices of the Metro these relationships and how to improve them is Atlanta Chamber of Commerce to form ATL Action worth your time and management attention. Begin for Racial Equity. with three questions: As part of the effort, which launched in February 2021, participating organizations prioritize actions from 1. What’s our starting point? shared “playbooks” that provide guidance and resources It’s a good idea to document your position against each to help advance Black talent, promote inclusive econom- of the forces. Ask: Which roles risk being automated ic development, expand access to education, and invest most quickly (specialization)? Where are our biggest in workforce development. skills surpluses and deficits—and which employees are The initiative encourages companies to report statis- most at risk of leaving (scarcity)? What’s our employee tics on Black representation in their businesses and sup- value proposition, and how could it be stronger (rivalry)? ply chains (to keep feet to the fire), and to promote a What’s our current commitment to an organizational range of initiatives that, for example, improve access to purpose, as well as to the communities in which we op- credit, create safe spaces on city streets, and work to end erate (humanity)? 40 the racial profiling of young Black men. The participants The point of this discussion is to get a clear-eyed are also encouraged to revisit their hiring and develop- baseline of the bets that you have already placed yet ment processes to align recruitment and upskilling prac- might not be aware of. Look closely for how one force tices with workforce representation goals. Although the might be affecting others in subtle ways. program is in its early days and much work remains, the results to date are encouraging. For example, a recent 2. Do the forces help or hinder our strategy? survey of participants found that 82% of companies UCLA professor Richard Rumelt reminds us that track representation of the Black workforce, and 55% strategy isn’t an aspiration; it’s a plan. And if your strat- assess pay equity across race. Among the participating egy is a good one, designed upon a unique set of attri- Fortune 1000 companies, fully 80% have formal sup- butes or conditions that distinguishes you from rivals, plier diversity programs as well. then the four forces are a great (and fast) test to see where things are likely to go right—and wrong—in strategy+business issue 107 Putting it all together your strategic execution. Are you really going to hire As the examples suggest, when companies start examin- the 10,000 data researchers next year that your strategy ing workforce challenges and opportunities with the implies? A clear-eyed look at the four forces relative to four forces in mind, they often see more than they ex- your strategy could spark some awkward, but impor- pect. And that’s the point: your workforce consider- tant, conversations.

When companies start examining workforce challenges and opportunities with the four forces in mind, they often see more than they expect. And that’s the point: your workforce considerations directly affect everything else. 3. Can we translate our business strategy into commitments with action). The company carried this feature organizations & people workforce strategy? spirit through to its reskilling efforts, going so far as to Winning companies create differentiation. What’s the make learning and development a distinctive part of the 41 unique value your company creates, and what must your employee value proposition. By showing employees that people be uniquely good at to make it happen? And by leaders were committed to helping them learn and grow, contrast, where are your efforts better spent on creating the company has over time improved its relationship partnerships and ecosystems? with clients and strengthened employee engagement, re- tention, and productivity. The company’s rivalry prob- Now, with this in mind, take your starting point lems are now largely behind it. Now, it is the one luring from the first question and look ahead, say, five years. What force shifted the most or the fastest? Where might people away from blue-chip rivals. + you be the furthest ahead, or behind? What moves have your competitors been making to undo your plans? Resources To make these discussions rigorous, use a scenario- Luna Corbetta and Barbara Poenisch, “Do sweat the small stuff when it based approach—and be prepared to revisit and adjust comes to inclusion,” s+b, Jan. 11, 2022: Many employees feel that their your scenarios regularly to maximize their efficacy. In a leaders’ everyday actions don’t match their words. So what can be done recent PwC survey of business and HR leaders, respon- to build trust? dents whose companies used both scenario-based plan- Denise Hamilton, “Turn the ‘great resignation’ into the ‘great renegotia- ning and dynamic planning (to revisit strategies and re- tion,’” s+b, Feb. 8, 2022: Encouraging employees to approach you with allocate funding as needed) were nearly twice as likely to their wish lists might seem counterintuitive, but it may just be the key say their company had met or exceeded its financial and to retention. other targets. This resonates with our experience, which Paul Leinwand and Mahadeva Matt Mani, Beyond Digital: How Great suggests that the most successful companies find ways to Leaders Transform Their Organizations and Shape the Future, Harvard keep an eye on the long view, even as they address their Business Review Press, 2022: Winning in today’s world requires more more pressing, short-term workforce challenges. than digitization. It requires understanding that the nature of competi- tive advantage has shifted—and that being digital is not enough. A global financial-services company took this lesson More thought leadership on this topic: to heart as it addressed an urgent rivalry challenge. strategy-business.com/organizations-and-people Though the company was consistently losing people to competitors, its leaders recognized that their best hope would be in taking the time to invest in a multiyear commitment to strengthening elements of the compa- ny’s humanity. The organization dramatically increased efforts to help local communities, made meaningful en- vironmental, social, and governance (ESG) commit- ments, and doubled down on purpose (and followed its

feature inside the mind of the ceo 42

NAVIGATING feature inside the mind of the ceo THE NEW WORLD OF 43 WORK WHETHER THEY RUN ORGANIZATIONS in telehealth, advertising, or aviation, CEOs around the globe are facing common challenges in finding, hiring, and developing talent. Illustration by Quick Honey

Featured CEOs Alain Dehaze Wendy Clark Andrew Slater The Adecco Group Dentsu International Whakarongorau Aotearoa Headquarters: Switzerland Headquarters: United Kingdom Headquarters: New Zealand Industry: Talent solutions Industry: Marketing and Industry: Healthcare CEO since: 2015 advertising CEO since: 2015 CEO insider/outsider: Insider CEO since: 2020 CEO insider/outsider: Outsider CEO insider/outsider: Outsider (the organization’s first CEO) feature inside the mind of the ceoMore than two years into the pandemic, employers are wrestling with what it means to return to normal. Even though COVID is still with us, workplaces are moving strategy+business issue 107 beyond stopgap solutions and emergency measures. For many companies, this means experimenting. Some have announced plans to bring employees back to the office en masse. But such decisions could come at a high cost—large numbers of people are wary of a full return because of health concerns or a preference for greater flexibility. And in today’s tight talent market, dissatisfied workers can vote with their feet, leading to high turnover. Other companies are doubling down on remote or hybrid models, which raises questions about how training, mentoring, and culture will need to evolve. In recent conversations with chief executives, conducted as part of our Inside the Mind of the CEO interview series, we heard about such challenges firsthand. One CEO runs a global talent solutions company; 44 another is working with clients to reimagine the traditional office. Elsewhere, company leaders have shared their experiences managing talent shortages and turnover, and engaging employees in ways that are more purpose-led and tech-driven—at businesses as diverse as a telehealth company in New Zealand, a UK-based global marketing and advertising firm, a Canada-based business aviation manufacturer, and an Indian engineering and construction conglomerate. Each CEO’s story is unique to his or her company’s industry and the countries in which the company operates, but we also see universal themes emerge. Such themes are reinforced in articles throughout this issue, underscoring the imperative for a new approach to workforce strategy— one that is equipped to meet short-term demands but that is also prepared to serve the business’s long-term needs (see “Meet the four forces shaping your workforce strategy,” page 32). It’s an imperative that CEOs are grappling with in real time, as they navigate the new world of work. LauraW. Geller SENIOR EDITOR

S.N. Subrahmanyan Christian Ulbrich Éric Martel These are edited and Larsen & Toubro (L&T) Jones Lang LaSalle (JLL) Bombardier condensed versions of longer interviews with the featured Headquarters: India Headquarters: United States Headquarters: Canada CEOs. The full-length Industry: Conglomerate (engineering, Industry: Real estate services Industry: Business aviation interviews can be found at procurement, and construction; high- CEO since: 2016 CEO since: 2020 strategy-business.com/inside- tech manufacturing; and financial- CEO insider/outsider: Insider CEO insider/outsider: Outsider the-mind-of-the-ceo. services and technology sectors) CEO since: 2017 CEO insider/outsider: Insider “The ‘great resignation’ is a reckoning on whether we’ve thought about the lived experience of working at our companies.” ness on the people who CONFRONTING were filling the gaps of Wendy Clark THE TALENT CHALLENGE those who left while we DENTSU feature inside the mind of the ceo replaced roles. I worried INTERNATIONAL DEHAZE: Ultimately, the “great resignation” is being driven by people—especially the younger generation— about them, as well. reevaluating their choices. They are asking themselves: what do I want to do with my life? And having a pur- Make no mistake— pose-driven life is becoming increasingly important to them. Some people have also discovered a new way of the great resignation is a life during the pandemic; perhaps they left a big city and don’t want to come back. reappraisal of leadership. It is a great reckoning on how In some countries, this talent scarcity has been nur- we’re leading our companies and whether we’ve really tured by people retiring faster than anticipated. The US has lost 2 million workers during the pandemic [due to thought about the lived experience of working at our early retirement], shrinking the labor force and accelerat- ing the war for talent. All told, these trends have led to companies. I have never felt a more profound sense of intense recruitment activity. This was surprising to us given where we are in the recovery cycle. In past recovery my “duty of care” toward our people.… We fundamen- cycles, we mainly witnessed a rise in temporary staffing, because companies lacked visibility about the future. tally believe in our ability to create growth from good, Companies now think, if they want to attract people, they need to offer them a permanent job immediately. both for ourselves and for our clients. This is critically CLARK: The great resignation had a deep impact on our important, if not nonnegotiable, to our people, certainly business and on our clients’ businesses. The challenge for us as a service company is that our clients count on us. to millennials and gen Z, who now comprise the major- We’re often the last line of defense. I had clients coming to me asking, “Can you second employees to us?” And ity of our workforce—our median age is 32. They’re 45 there was the issue of the incremental weight of the busi- built-in advocates within our organization. SLATER: My worst days in COVID were early on, when the morning disc jockeys on the radio were calling in on our [telehealth services] lines to see whether we’d answer the phone by the end of the show, because the sudden spike in demand from COVID was slowing our opera- tions down. There’s nothing more distressing for a chief executive than hearing that on your way in to work. We’ve had to build the capacity to manage our COVID outbreak response—we had to scale really quickly. This has meant building an operating model that can quadruple capacity on the front line if there’s an increase in COVID cases in the community. We’re also responsible for the surge capacity necessary for contact tracing, which could require us to expand our staff manyfold in a week’s time.

Finding solutions during the pan- “In the first way. Commercial real estate is also mov- demic was a reminder of the value of phase of the ing away from monoliths that are built in working with people that you trust. For pandemic, our an area but aren’t really integrated into example, someone I knew also knew the 280,000-strong that area. This is true of the architecture CEO of a travel agency who had just labor force itself, but it’s also about how space is be- served his staff redundancy notices be- was down to ing used. For example, there’s so much cause the border was closing, and travel 70,000. With meeting space in buildings that is com- active outreach, was plummeting. We both trusted this we were able pletely empty from 7 p.m. onward that one person, and he connected us. And to bring many you could make open to the public by within 24 hours, more than 600 of his laborers back.” hosting community events. feature inside the mind of the ceo call center staff had been trained and S.N. Subrahmanyan Consider JLL’s Shanghai office, were answering our calls. which is hard to even tell is an office.… LARSEN & TOUBRO You walk in, and it looks more like the SUBRAHMANYAN: During the pandemic, (L&T) lobby of a designer hotel, with green our EPC [engineering, procurement, and [planted] walls and water coming down construction] projects and manufactur- the walls. Coming into that office feels ing work were impacted the most, be- more like entering a recreation center cause they are highly dependent on labor. In the first than a workplace. On the main floor, there is a gym and phase of the pandemic, our 280,000-strong labor force there are yoga classes taking place. Desks only take up was down to 70,000. With active outreach, we were able about 25 to 30% of the overall building space. There is a to bring many laborers back to our worksites. But then floor that we call a collaboration space, where in the the next wave of the pandemic hit, and our numbers evening we have pop-up shows and exhibitions for our dipped again—and we had to again convince people to employees, clients, and friends. Because of these fea- come back to work, assuring them of their safety and tures, people see the office as more than just a place well-being. We implemented new standard operating where they work. 46 procedures and digital solutions to enable social distanc- As this trend spreads around the world, desk space ing. For instance, at a worksite, there would be five peo- will go down significantly. But that doesn’t mean that ple handling a job instead of ten. All these changes re- demand for overall office space will go down. The sulted in project delays and a decrease in productivity. amount of experiential space, as you might call it, will increase even faster than desk space can be freed up. This shift will require customization based on local pref- CREATING erences and job profiles. It will also require cultural transformation within organizations. Tell experienced A HYBRID partners at some large firms that they won’t have a per- sonal office anymore, and they will say, “I don’t want to WORKPLACE sit with everyone else.” That’s a real challenge. But we strategy+business issue 107 have to do it, because if we don’t, people will leave. ULBRICH: The office needs to be a place for collaboration MARTEL: During a pandemic, there’s no way you can and connection—a place where you touch and feel the build a cockpit or a wing in your basement, so we have company’s brand and purpose. That is what buildings to keep the factories running. This is probably the one have to deliver, and they have to deliver it in a consistent thing that kept me and my management team awake

“In many industries, at night. The good news is that we haven’t lost efficiency be performed remotely. If, but especially as a company, you don’t in technology, during the pandemic. We implemented mask protocols offer this flexibility, you people are are creating a competitive leaving their early on. And we’ve been pushing hard on vaccination, current roles feature inside the mind of the ceo too. We opened our own vaccination center. Our main priority is to protect our disadvantage. In many in- for companies “My salespeople employees and our opera- dustries, but especially in that allow are still traveling, tions, and we’re doing this technology, people are leav- them greater but they do a successfully. ing their current roles for flexibility.” lot more from home than they For other types of companies that allow them Alain Dehaze used to in the jobs, we discovered that greater flexibility. Related we’re capable of running to this trend, companies THE ADECCO GROUP past. We’ll likely this company with many need to rethink how they have a hybrid employees working from model moving home. Yes, my salespeople measure and value pro- forward.” are still traveling, but they ductivity. In a recent study of 14,800 workers in 25 Éric Martel do a lot more from home countries, we found that 73% [of respondents] want than they used to in the BOMBARDIER performance to be measured by outcome rather than 47 past. But at the same time, hours worked. we’re all human. We need [Our company] conducted an internal survey to to get together, and that’s see what our employees were thinking about remote happening in a limited work. Three reasons to work from the office at least way. Truthfully, we’ll never go back to having people in 50% of the time emerged: culture, coaching, and col- the office five days a week. We’ll likely have a hybrid laboration. First, we found that organizational culture model moving forward. cannot be transmitted through digital channels alone. We’re thinking about exactly how we’re going to set Second, we found that physical presence is crucial for ourselves up to be successful in attracting the best young coaching, especially where newcomers are concerned. talent available. Bombardier is going to lose many em- Last, while a lot of effective collaboration can and does ployees in the next five years to retirement. We need to happen remotely, there are some cases—for example, a keep the people we have, and we want to be the em- multidisciplinary research project—where in-person ployer of choice for younger people who have a different meetings are productive and valuable. This is why we way of seeing the world today. ask our people to be at the office at least two days per week, with their whole team. Each team can decide DEHAZE: If we look at our recruitment activities in the when it wants to be in the office, as long as it has those US, we see that 50% of our customers’ posted jobs can two days together.

end up actually creating or reinforcing distrust. To earn feature inside the mind of the ceo ENGAGING the trust of your employees, you need to be transparent and honest, give context, and change things. At the EMPLOYEES heart of this issue of trust is the fact that we’re account- able, as leaders, for reinforcing the reality that we want other people to enforce. If everybody, for the rest of the SLATER: We have a native plant here in New Zealand month, told you that the sky had turned pink, you called the toetoe that’s been used to fish deep in the water would eventually doubt your own perspective. It is in by Māori since before European settlement. I like to ask, these “pink sky moments” that we need to help reinforce how do we toetoe people what’s best; to help our staff with the reality of reinforc- out from the depths and “To earn the ing trust through our own actions. help them grow? We aim trust of your to identify our strongest employees, CLARK: Although we certainly have more work to do, talent with a few simple you need to we really amped up our internal communications and increased everyone’s accessibility to leadership. I do a questions that we ask ev- be transparent monthly call with the entire organization—anyone can ery leader: who on your and honest, join and ask any questions they want, and they can do so give context, anonymously. I’ve gotten some incredibly tough ques- 48 team could do your job if and change tions, which I answer, even when I have to admit that you got hit by a bus today? things. We’re Who could do it in a year’s accountable as time? And who could do it leaders.” my answer may not be perfect or necessarily what some in three years’ time? They Andrew Slater people may want to hear. can’t choose the same per- [As a result of this transparency,] I think we have son for all three scenarios. WHAKARONGORAU And then we think about AOTEAROA taken the temperature down on some of the issues that have been particularly hot. For example, there have been what the people they have ongoing debates around remote work. We’ve been clear named need in those time about our adoption of a hybrid model, with no manda- frames to be successful. tory return to the office, except where certain roles re- We have an in-house leadership development program quire it. People continue to feel jittery, so we just need to where we are relentless in upskilling; we make sure all keep repeating that we are committed to modern ways strategy+business issue 107 our leaders know and can operate our management sys- of working. Of course, there are things we can do from tems so they appreciate and understand how prescribed the office that we can’t do from our homes. I look at this we need to be about keeping it all flowing. as a marketing job—to create massive FOMO of what’s Too often, organizations spend so much energy going on at the office to draw people back, rather than building mechanisms, processes, and procedures that forcing them back.