By John Almandoz and Carlos Rey

It’s one thing to talk about corporate purpose, quite another to make it happen in a way that has real-world meaning for those at all levels of the organisation. In this article, the authors offer a framework designed to assist leaders in doing just that.

Corporate purpose has become a hotly debated topic in recent years, yet its practical implementation often lags behind the rhetoric. Defining purpose is only the starting point; the real challenge lies in living it—creating an emotional connection to a set of ideals and translating them into tangible actions and practices. Purpose is not a slogan; it is a strategic and cultural force that shapes how organisations operate and how they impact society.

This article explores purpose-driven leadership as a multidimensional concept, combining internal motivations—the intrinsic and transcendent motivations of employees—with external impact—in response to societal or environmental challenges. Drawing on insights from companies such as Unilever, Best Buy, ISS, La Fageda, Anglo American, and DaVita, we examine how leaders can embed purpose into the very fabric of their organisations—turning aspirations into reality.

Corporate Purpose Dimensions

Recent research identifies two complementary perspectives of purpose—inside-out and outside-in¹—along with three key dimensions—head, heart, and hands². Together (figure1), these lenses offer a robust framework for leading with purpose, enabling leaders to transform it from an abstract ideal into a living force that inspires people and shapes society.

Inside-Out and Outside-In Perspectives

Understanding corporate purpose begins with two complementary lenses: inside-out and outside-in. Together, these perspectives illuminate how organisations balance and integrate internal motivational alignment with the external impact that society increasingly demands.

• Inside-Out: this perspective focuses on aligning an organisation’s purpose with the values, beliefs, and aspirations of its members. When employees find personal significance in their work, they become more passionate and committed, contributing energy and creativity to organisational goals. Leaders play a critical role as “meaning-makers,” articulating a purpose rooted in core values and inspiring employees by making their impact visible—connecting daily tasks to service or a greater cause.
• Outside-In: this perspective emphasises a company’s responsibility to address broader societal and environmental challenges, such as social injustice and climate change. Leaders adopting this perspective act as “statesmen,” prioritising systemic impact, building legitimacy, and collaborating with external organisations to advance social causes.

The Three ‘H’ Dimensions of Purpose

Purpose is not one-dimensional. It comes to life through three interconnected dimensions—head, heart, and hands—that transform lofty ideals into strategy, emotion, and action.

The Head

Purpose must be clear. This dimension focuses on the rational articulation of purpose. It involves defining and clearly communicating the organisation’s reason for being, answering questions such as: What is our business for? What should our business become? The head dimension establishes a coherent vision that connects strategic objectives with societal contributions.

The Heart

Purpose must resonate emotionally, not just intellectually.

Purpose must resonate emotionally, not just intellectually. The heart dimension ensures that purpose aligns with the values and aspirations of stakeholders, creating a shared sense of meaning. Emotional engagement is cultivated through stories and narratives that bring purpose to life, inspiring genuine commitment and passion.

The Hands

Purpose must be operationalised. The hands dimension ensures that purpose is embedded in actions, decisions, and day-to-day operations. This includes aligning performance metrics, integrating purpose into incentives, and demonstrating commitment through leadership and participation in initiatives—even social movements. The hands dimension transforms purpose from an aspirational ideal into a lived reality.

The Six Key Drivers of Purpose Implementation

Purpose-driven leadership is not a one-time declaration; it is a continuous process that requires alignment across strategy, culture, and operations. Within the inside-out and outside-in perspectives—and across the dimensions of head, heart, and hands—we identify six fundamental drivers that enable organisations to lead with purpose effectively (see table 1).

1. Crafting an authentic purpose (Head–Inside-Out)

Defining and communicating a company’s purpose is the cornerstone of the inside-out approach. This involves articulating why the organisation exists and what makes it unique—not as a vague aspiration, but as a rational foundation for strategy and decision-making. A well-crafted purpose brings clarity, aligns teams, and strengthens identity.

Authenticity is critical. Purpose must resonate with the company’s values and culture, making it more than words on paper. Many organisations draw on founder motivations or internal stakeholder needs. For example, La Fageda was born from Cristóbal Colón’s vision to provide meaningful work for people with mental disabilities. Yogurt production became the means to fulfil a deeper social mission—the actual work could have been something very different— creating a strong sense of identity and shared meaning.

Similarly, Unilever, under Paul Polman, revisited its historical roots to shape a narrative that connected sustainability with its core business. DaVita engaged employees at every level to co-create and articulate its values, fostering ownership and alignment. Best Buy used executive retreats and workshops with frontline staff to define its values, which ensured broad buy-in, turning purpose into a shared commitment. Other companies may use tools such as the Ikigai framework—exploring the intersection of contribution, passion, capabilities, and financial sustainability—to help them define a purpose that inspires and endures.

2. Articulating how purpose addresses societal challenges (Head–Outside-In)

A purpose confined to internal motivations risks appearing self-centered or narrow. Increasingly, companies are redefining their purpose to address societal challenges—social, environmental, and ethical. This outside-in perspective involves engaging with systemic issues and aligning the company’s mission with broader stakeholder needs.

Unilever exemplifies this evolution. Beyond its roots in hygiene and nutrition, it championed sustainability and social equity through initiatives such as the Unilever Sustainable Living Plan, the €1 billion Climate and Nature Fund, and campaigns like #Unstereotype. Its brands integrate activism into messaging, advancing causes like climate justice and body positivity. The company’s commitment extends to ensuring living wages across its supply chain and combating modern slavery—actions that reinforce trust and legitimacy.

Other organisations, such as La Fageda and ISS, expanded their impact by supporting communities and improving working conditions. Patagonia shifted from producing outdoor gear to leading environmental activism. These efforts demonstrate that success can be measured not only by profit but by contributions to societal well-being.

3. Harmonising personal and organisational purpose (Heart–Inside-Out)

Purpose must be internalised—not just understood intellectually but felt emotionally. This inside-out “heart” dimension transforms corporate values into a shared source of motivation. When employees see how their work improves lives, engagement deepens. Motivation becomes more intrinsic and transcendent.

Best Buy’s CEO Hubert Joly reframed the company’s mission around “happiness,” inspiring employees by connecting their efforts to customer well-being. Research by Adam Grant shows that gratitude from beneficiaries significantly boosts employee commitment. Companies like ISS and DaVita reinforce this connection through storytelling, recognition rituals, and symbolic language—calling employees “teammates” or “citizens” and referring to the company as a “village.” These practices foster belonging and shared purpose.

True internalisation also requires leaders to show genuine care for employees, recognising their values and aspirations. Initiatives such as ISS’s community programs strengthen emotional bonds. Large-scale training, like Unilever’s personal purpose workshops, illustrates how embedding purpose throughout the organisation can inspire thousands and foster a vibrant, purpose-driven culture.

4. Inspiring stakeholders through purposeful brands and narratives (Heart–Outside-In)

Internal alignment is essential, but credibility depends on external legitimacy. Companies with a strong outside-in “heart” perspective inspire stakeholders by addressing societal challenges and championing meaningful causes. Leaders act as statesmen and responsible role models, setting industry standards and rallying others to create positive change.

Purpose-driven marketing connects brands with values. When companies weave their mission into slogans and campaigns, they differentiate themselves and build loyalty. Examples include Warby Parker’s “Buy a Pair, Give a Pair” initiative and Dove’s body positivity campaign, which embed social impact into brand identity. Rebranding around purpose can transform culture. DaVita, meaning “giving life,” rebranded itself and took that name to foster a community-first mindset focused on service. These narratives galvanise not only employees but also patients and their families and creates goodwill in the communities  proving that purpose can be both inspiring and commercially powerful.

5. Embedding purpose into behaviours and systems (Hands–Inside-Out)

Purpose must move beyond words and emotional connection to become actionable. The “hands” dimension ensures that purpose is integrated into core processes—recruitment, performance evaluation, promotion, and incentives. When behaviours and systems reflect values, purpose becomes a lived reality.

When behaviours and systems reflect values, purpose becomes a lived reality.

Companies operationalise purpose by equipping employees with tools and knowledge to embody values in their work. ISS conducts workshops for frontline staff, while DaVita uses recognition systems to reward values-driven behaviour. In both organisations, team-building activities connect leaders to the mission through service, reinforcing cultural alignment.

Measurable goals are essential. Leading companies like Unilever and Best Buy set ambitious targets—from sustainability milestones to employee engagement metrics. Tracking progress demonstrates commitment and builds trust among stakeholders.

6. Measuring impact and securing external validation (Hands–Outside-In)

Internal systems are vital, but self-assessment alone can lead to bias or complacency. To ensure objectivity, organisations increasingly adopt external frameworks such as ESG (environmental, social, and governance) criteria, SROI (social return on investment), and certifications like B Corp. These tools provide rigorous methods for quantifying impact and benchmarking against global standards.

External validation enhances credibility and drives continuous improvement. By integrating these frameworks into operations, companies demonstrate that their commitment to purpose is genuine, measurable, and aligned with societal expectations.

Starting from Within: Leadership at the Crossroads

Leadership stands at the crossroads of the inside-out and outside-in perspectives of organisational purpose, serving as the pivotal force that unites them. Great leaders don’t just connect with their organisation’s history and core values; they cultivate authenticity and pride among employees, building a strong, cohesive culture. This deep internal orientation, as shown in the example of La Fageda, can create lasting bonds, but risks an excessive company-centered outlook unless balanced with openness to the outside world.

Equally important is a leader’s ability to interpret and respond to the shifting expectations of society and external stakeholders. By integrating their organisations into broader social systems and engaging with groups such as unions, as demonstrated by ISS, and regulators, leaders ensure that their companies remain both legitimate and impactful beyond internal boundaries. The best leaders understand that external collaboration amplifies their organisation’s collective influence and credibility.

However, our research—based on these six cases presented in this article and over 100 companies studied across 15 years—shows an important sequence: authentic purpose-driven leadership starts from the inside-out and is reinforced by the outside-in engagement, not the other way around. True purpose isn’t imposed by outside pressures or regulatory demands. It’s first forged in a leader’s personal convictions, often rooted in the values and company history, then refined by responding to the world around them. When this sequence is followed, inside-out and outside-in perspectives reinforce each other, creating a meaningful and sustainable sense of purpose.

The six-drivers framework illustrates how purpose may spring from within, then may grow to shape the world outside, uniting personal conviction and societal impact. When leaders inspire their organisations with genuine purpose, they not only foster social change but also infuse daily work with meaning. Lasting purpose is not an external mandate; it is a journey that begins in the head, heart, and hands of leaders and radiates outward, transforming both business and society.

Cynthia Carroll’s early leadership at Anglo American shows how inside-out and outside-in purpose can be mutually reinforcing. She began with a deeply held personal conviction that every miner deserves to return home safely, which directly confronted one of the mining sector’s most entrenched societal challenges. Rejecting the industry’s fatalism about deaths, she reframed safety as a moral non-negotiable, then worked to translate this conviction into organisational purpose by building a guiding coalition of internal influencers who shared her intolerance for preventable harm and by inspiring broader stakeholders with a bold narrative of “zero harm.”

Yet she quickly discovered how difficult it was to embed this purpose into behaviours, systems, and mindsets across a vast, hierarchical, and historically divided organisation. With little external pressure for reform, Carroll deliberately activated outside-in forces by engaging the South African government, the National Union of Mineworkers, and local communities to form the Tripartite Alliance, an unprecedented partnership aimed at raising safety standards across the entire industry. She opened the company to public scrutiny, co-hosted a national safety summit, and initiated global benchmarking of best practices. The results were substantial: fatalities fell from 44 in 2006 to 17 in 2011, a 62 per cent reduction. Over time, she built mechanisms for measuring impact and securing external validation, revealing a central truth: authentic purpose can spark transformation, but operationalising it demands sustained coalition-building, systemic redesign, and the intentional mobilisation of societal actors.

About the Authors

John Almandoz, Professor of Managing People in Organizations at IESE Business School and Juan Antonio Perez López Chair, brings industry and nonprofit experience and Harvard training in organisational behaviour. He publishes on corporate purpose and societal institutions in top journals, and teaches leadership across MBA and executive programs.

Carlos Rey is founder of DPMC Foundation and Director of the Chair in Management by Missions and Corporate Governance at Universitat Internacional de Catalunya (UIC Barcelona). He is the co-author of Management by Missions, published in six languages, Purpose-Driven Organizations: management ideas for a better world, and other books and articles in leading academic journals.

References

1. Almandoz, J. (2023). “Inside-out and outside-in perspectives on corporate purpose”. Strategy science, 8(2), 139-48.

2. Rey, C., Bastons, M., & Sotok, P. (2019). Purpose-driven organizations: Management ideas for a better world. Springer Nature.

Sources to read more about these companies

1. Joly, H. (2021). The Heart of Business: Leadership Principles for the Next Era of Capitalism. Harvard Business Review Press.

2. George, W. W., Palepu, K. G., Knoop, C.-I., & Preble, M. (2013, May 23). Unilever’s Paul Polman: Developing Global Leaders (HBS Case 413-097). Harvard Business School.

3. Almandoz, J., Lee, Y.-T., & Vila, N. (2010). “A Legacy of Purpose and Achievement at ISS Spain” (IESE Case DPO-0910-E). IESE Business School.

4. Segarra, M., Ochoa, I., & Segarra, J. A. (2008). “La Fageda: An Outrageous Initiative” (IESE Case IES227-PDF-ENG). IESE Business School.

5. O’Reilly, C., Pfeffer, J., Hoyt, D., & Drabkin, D. (2014). “DaVita: A Community First, A Company Second” (Stanford GSB Case OB89). Stanford Graduate School of Business.

6. Carroll, C. (2012, June). “The CEO of Anglo American on Getting Serious About Safety”. Harvard Business Review, 90(6), pp. 43–6.

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Today’s investment environment is defined by rapid change. Exciting tech developments and financial innovations are happening at a rate faster than ever in human history, and it’s easy to see the investment appeal. But picking a winner is like betting on a horse race; it’s fraught with risk and uncertainty.  While assets such as crypto and A.I. are creating headlines, beneath the surface lies a volatile mix of ever-changing regulations, competitors, and limited historical benchmarks for assessing the risk involved.

Against this backdrop, it’s no wonder tangible assets are seeing a resurgence. Gold’s recent record highs are one example of investors seeking stable, consistent investments as a key part of their portfolios to spread risk and build resilience.  Another sector that stands out for its stability is industrial real estate, which can generate income for a portfolio.

The value of tangible assets

The core advantages of real estate, particularly industrial real estate, are its physical, utility-driven nature. Unlike digital or highly speculative assets, industrial properties underpin our economies by serving an essential function: they house goods, support manufacturing, and enable the just-in-time supply chain movements that bind countries together. This intrinsic function provides a fundamental layer of value that is less dependent on market sentiment or technological hype.

Industrial real estate also offers predictable cash flows. Long-term leases, often with built-in rent escalations, provide investors with recurring revenue that can help offset volatility elsewhere in a portfolio. While value may not surge overnight, industrial real estate assets tend to appreciate steadily, supported by durable real-world demand.

Real estate has historically served as a solid hedge against inflation. As construction costs, land values, and rents rise over time, well-located industrial assets can preserve purchasing power in ways that many financial or digital assets cannot consistently achieve.

Portfolio diversification

Adding industrial real estate to a portfolio can introduce strong diversification across asset types. While technology-driven investments may be sensitive to regulatory and political shifts or sudden market corrections, industrial real estate is influenced by different drivers, such as trade volumes, supply chain efficiency, and population growth. Importantly, these drivers can have strong historical data points to inform risk and trajectory and are far less susceptible to the political pitfalls above.

This diversification is especially valuable in periods of extreme market volatility. There is plenty of current commentary on an impending A.I. ‘bubble’ that serves as a great example of this volatility.  Income from real estate tenants can continue even when capital markets are volatile, helping to stabilise overall portfolio performance. For investors seeking to balance growth-oriented investments with defensive assets, industrial real estate can play a critical role.

Geopolitics and the strategic importance of industrial real estate 

Geopolitical shifts are increasingly shaping investment decisions, and real estate is no different. Trade tensions, supply chain disruptions, and conflicts have prompted companies to rethink where and how they produce and store goods. As much as we investors diversify to spread risk, so do businesses when making business-critical supply chain decisions. Trends such as nearshoring, reshoring, and regionalisation of supply chains have increased demand for strategically located industrial facilities.

Governments are also investing heavily in infrastructure and domestic manufacturing capacity to reduce reliance on foreign supply chains. This means higher demand for logistics hubs, warehouses, and advanced manufacturing facilities. For investors, this means industrial real estate is not only a financial asset but also a strategic one – closely tied to national economic priorities and long-term policy direction.

In periods of global uncertainty, international capital often gravitates toward stable jurisdictions that uphold the rule of law with transparent legal systems and strong property rights. Industrial real estate in these markets can benefit from increased investor demand, reinforcing its role as a store of value.

A long-term anchor

While innovation-driven assets will continue to shape the future of investing, they are best complemented by assets that offer durability, income, and real-world relevance. Industrial real estate provides this balance. It anchors portfolios with tangible value, benefits from structural economic trends, and responds to geopolitical realities in ways that purely digital or speculative assets cannot. For investors navigating an increasingly complex and volatile investment landscape, adding industrial real estate can help portfolios endure.

About the Author

Timur Tillyaev is an international investor and philanthropist. His business experience and interests span sectors including energy and renewables, finance, logistics, consumer goods, real estate, healthcare and tech. Timur is well-known as the founder of Abu Saxiy market, which he launched in 2006 and grew into the largest commercial and wholesale market in Uzbekistan before selling the business in 2017.

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This article argues that modern leadership goes far beyond authority and titles. It highlights five essential competencies—emotional intelligence, adaptability, strategic thinking, inclusive leadership, and decisiveness—as the skills that separate struggling organizations from resilient, high-performing ones. Through real-world examples and practical insights, the piece emphasizes that effective leaders must stay human, flexible, forward-thinking, and action-oriented in an unpredictable business environment.

Leadership today isn’t what it used to be. Gone are the days when you could just bark orders and expect results. The modern business world is messy, unpredictable, and frankly, kind of exciting if you know how to navigate it.

I’ve been watching leaders struggle (and some absolutely nail it) through everything from tech disruptions to global pandemics. What I’ve noticed is that the ones who thrive don’t just manage—they adapt, connect, and make tough calls when it matters most.

I’m diving into five leadership competencies that I think are absolutely crucial.

Emotional Intelligence: The Game Changer Nobody Talks About Enough

Let’s start with something that makes a lot of traditional executives uncomfortable—feelings. Yeah, I said it. Emotional intelligence isn’t some touchy-feely concept that belongs in HR training videos. It’s the difference between leaders who inspire loyalty and those who watch their best people walk out the door.

I remember working with a CEO who could read a room like nobody’s business. During a particularly brutal quarterly review, instead of just delivering bad news and moving on, he acknowledged how everyone was feeling. “I know this sucks,” he said. “We’re all frustrated, and that’s okay.” Then he shifted the conversation to solutions. That’s emotional intelligence in action.

The data backs this up, too. Companies with emotionally intelligent leaders see 20% better business results. But here’s what the studies don’t capture—the day-to-day moments that build trust. It’s the manager who notices when someone’s struggling and offers support. It’s knowing when to push and when to pull back.

Want to get better at this? Start small. Pay attention to the energy in meetings. Ask “How are you really doing?” and actually listen to the answer. Create space for people to be human at work. Trust me, your bottom line will thank you.

Adaptability: Rolling With the Punches (And Sometimes Throwing a Few)

If 2020 taught us anything, it’s that your five-year plan might become irrelevant overnight. I watched companies that had been around for decades either pivot brilliantly or completely fall apart. The difference? Leaders who could adapt without losing their minds.

Take restaurants during the pandemic. Some owners sat there complaining about lockdowns. Others transformed their entire business model in weeks. One local place I know went from fine dining to meal kits to virtual cooking classes. Their revenue actually increased. That’s not luck—that’s adaptability.

Being adaptable doesn’t mean being wishy-washy. You need core principles that don’t change, even when everything else does. Your values, your commitment to your people, your quality standards—these stay constant while your methods evolve.

The best leaders I know are constantly learning. They’re not afraid to say “I don’t know” or “Let’s try something different.” They encourage their teams to experiment, fail fast, and learn faster. When you’re implementing new HR solution approaches, for instance, adaptable leaders don’t just mandate change—they involve their people in figuring out what works.

Strategic Thinking: Playing Chess While Everyone Else Plays Checkers

Strategic thinking sounds fancy, but it’s really about connecting dots that others can’t see yet. It’s looking at today’s decisions through tomorrow’s lens. And honestly, most leaders are terrible at it because they’re too busy fighting fires to think about preventing them.

I know a tech startup founder who, back in 2018, started preparing for a recession that hadn’t happened yet. Everyone thought she was paranoid. When COVID hit and venture funding dried up, guess who was the only company in her space that didn’t have to lay people off? She’d built cash reserves, diversified revenue streams, and created flexible cost structures.

That’s strategic thinking. It’s not about predicting the future—it’s about being ready for multiple futures.

Schedule time for thinking. Block out hours each week just to think about where your industry is heading. Read stuff outside your field. Talk to customers about their long-term challenges, not just immediate needs. Ask yourself, “What would we do if our biggest competitor disappeared tomorrow?” or “What if our main revenue source became obsolete?”

The goal isn’t to have all the answers. It’s to ask better questions.

Inclusive Leadership: Beyond the Buzzwords

“Inclusive leadership” has become corporate speak that makes people’s eyes glaze over. But strip away the jargon, and you’re left with something powerful: getting the best ideas from everyone, not just the loudest voices in the room.

I’ve seen this play out in real time. A software company was struggling with user adoption among women. For months, the (mostly male) leadership team threw solutions at the problem. Nothing worked. Finally, someone suggested actually asking the women on their team what they thought. Turns out, the onboarding process had subtle barriers that the leadership team never noticed. Three small changes later, their female user base doubled.

That’s what inclusive leadership looks like in practice. It’s not about checking diversity boxes—it’s about recognising that different perspectives lead to better solutions. The research is clear: diverse teams outperform homogeneous ones by 35%. But the real magic happens when you create an environment where people feel safe to disagree with you.

How do you build this? Start by examining who gets heard in your meetings. Who gets interrupted? Whose ideas get credited? Then change the dynamics. Rotate who leads discussions. Use an anonymous idea submission. Most importantly, admit when you’re wrong and give credit where it’s due.

Decisiveness: The Art of Good-Enough Decisions

You’ll never have enough information to make perfect decisions. Ever. The leaders who succeed are the ones who can make good-enough decisions with incomplete data and adjust as they learn more.

I watched a manufacturing company’s leadership team spend six months analysing whether to expand into a new market. By the time they decided, two competitors had already established themselves there. Meanwhile, another company I know made the same decision in six weeks, entered the market, learned what worked, and adapted quickly. Guess who captured more market share?

But decisiveness isn’t about being reckless. It’s about setting decision deadlines, gathering the most important information, and then committing to a direction. You can always course-correct later, but you can’t get back time lost to indecision.

The trick is building systems that support quick decision-making. Define what information you actually need (not everything you want). Set clear criteria for decisions. And here’s the big one: create a culture where changing course isn’t seen as failure—it’s seen as learning.

The Reality Check

Developing these competencies isn’t a weekend workshop kind of thing. It takes time, practice, and probably some uncomfortable feedback along the way. You’ll mess up. I’ve seen brilliant leaders stumble because they thought they had it all figured out.

Great leaders keep working on themselves even when they don’t have to. They seek feedback, admit mistakes, and genuinely care about the people they lead.

So here’s my challenge to you: pick one of these areas and commit to getting better at it over the next 90 days. Not perfect—just better. Because in the end, leadership isn’t about being flawless. It’s about being human enough to connect with people and skilled enough to guide them toward something better.

The businesses that thrive in the coming years will be led by people who master these competencies. The question is: will that include you?

About the Author

Peter Fenley is a tech and business writer specializing in how digital innovation impacts modern organizations. With a background in emerging technologies, entrepreneurship, and market strategy, he breaks down complex topics—from AI and data to leadership and growth—into clear, practical insights for business leaders and professionals.

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By Charlie Curson, Barbara Salopek, Dominic Colenso, Jenny Millar, Angela Cox, Mehdi Paryavi and Jean-Paul Fonteijn

This article explores the key leadership mindsets set to shape 2026, highlighting the importance of strategic clarity, economic awareness, curiosity, diverse collaboration and cultivating a healthier workplace culture. Drawing on insights from leading experts, leaders and authors, this article reveals how leaders can make 2026 your best year yet.

The New Year offers a rare opportunity to step back, refocus, and set intentions that will shape the coming months. Whether you’re leading a team, managing a department, running your own business, or contributing your skills as an employee, thoughtful resolutions can help you strengthen performance, enhance well-being, and position yourself for your strongest year yet in 2026. 

With this in mind, we reached out to a diverse group of internationally-recognised authors, leadership specialists, and experienced business figures. Each has shared practical, forward-thinking New Year’s resolutions designed to spark genuine change, support professional growth, and begin your year with clarity, vision, and purpose.  

Have a strategy – not a plan 

Setting a powerful long-term vision starts with the ability to step back from the day-to-day noise and reconnect with what truly drives sustainable growth. To this end, Charlie Curson, author of Be More Strategic, suggests introducing a short daily reset to help maintain this wider lens: “For executives, strategic clarity is eroded by constant noise. A simple daily pause enhances emotional regulation, sharpens intent, and supports more deliberate choices. It protects leaders from reactive patterns that undermine long-term strategic execution.” 

With that said, do not make the mistake of sacrificing agility. Speed and decisiveness are still critical – arguably more so than ever – for remaining ahead of the competition and leveraging emerging opportunities. As Mehdi Paryavi, CEO and founder of The International Data Center Authority (IDCA), puts it so well “We are living in a dynamic era where everything is a moving target. With that, the speed of your adoption to change is critical. Those with more resources have a wider spectrum of access and visibility. For you to manoeuvre the competitive landscape, you must lead with more agility.” 

A strong grasp on economics is key

In an unpredictable economy, pricing is an integral facet of wider business and economic strategy. To this end, Jenny Millar, pricing expert, CEO of Untapped Pricing and co-author of The Pricing Sprint, advocates for a more proactive, rather than reactive, approach to pricing: “Many teams get stuck setting prices reactively, adjusting to competitors and market noise rather than steering their own strategy. Make 2026 the year you take back control. Start by understanding how customers actually make decisions. Get curious about what drives willingness to pay, test more of your assumptions, and design your prices as intentionally as you create your products. When pricing is designed with intent, it becomes the fastest lever to protect margin, shape customer behaviour, and create dependable, accelerated growth.”  

Jean-Paul Fonteijn, author of Bring Down the Billionaires! has even more ambitious ideas for economic reform, highlighting the need to “commit to a new economic model this year – one that tackles extreme wealth so that businesses and governments can become healthy again by advocating for fairer financial rules. Our businesses and governments cannot thrive in a system that unfairly favours the super-rich.” 

Fortune favours the curious  

More than ever before, a spirit of curiosity, and willingness to explore new ventures, avenues and emerging technologies, is key to remaining abreast of the chasing pack. These thoughts are put succinctly by Mike Brent, Adjunct Professor at Hult Ashridge Executive Education, leadership expert and co-author of The Leader’s Guide to Collaboration, who says “the best tip I can give to leaders is to get into the habit of telling less and inquiring more – in other words being more curious. The key reason is that leaders are facing more so-called “wicked “problems – problems for which there are no fixed solutions, only options. So leaders need to tap into the collective intelligence of their team or organisation in order to come up with the best possible option. And that means being more curious.”

And, one of the richest sources of insight? Your colleagues. We spoke with Barbara Salopek, author of Future-Fit Innovation, who encourages us all to “ask three diverse colleagues for input before making decisions on new initiatives.” Salopek’s given reasoning for adopting this powerful habit is to “reduce group blind spots and strengthens idea quality. Diversity of thought helps leaders avoid functional fixedness, improves creativity, and leads to better innovation outcomes.” 

Dominic Colenso, a specialist in leadership communication and the author of Cut-Through: The pitch and presentation playbook, also shares another invaluable tip for encouraging insights from your colleagues – speak less, listen more. He says “Most leaders talk to fill the silence. But silence is where the magic happens. A pause draws attention, gives the audience time to think, and makes you look confident and in control. The best communicators don’t just know what to say, they know when to stop.” 

Drop the Win/Lose Mindset – It belongs to a different era 

In today’s fast-paced workplaces, many leaders still fall into the trap of shouldering burdens alone, or feeling threatened by others’ success. This is a belief that often does more harm than good, crippling company cultures and can quickly lead to exhaustion, and even burnout, if left unchecked. Angela Cox, founder of the National Coaching Conference, discusses how to reverse this damaging trend: 

 “One of the most exhausting patterns I see in leaders is the quiet belief that success is a limited resource and that if someone else shines, they somehow dim. It’s an old survival strategy from school, early career conditioning, and perfectionist tendencies. But it’s completely misaligned with how modern teams actually thrive. Notice where you slip into scarcity: hesitating to praise, protecting your territory, or subtly comparing yourself. Then remind yourself: nobody wins alone. When you choose a “win together” approach, collaboration deepens, ego settles, and the whole team’s potential expands. That’s real leadership maturity.” 

Ultimately, 2026 will favour professionals and organisations that remain open-minded, proactive, and willing to experiment with fresh approaches. Explore the ideas that resonate, put small but consistent actions into motion, and stay committed to continual improvement. Doing so will strengthen your workplace, elevate your personal impact and empower you to build a year defined by momentum – and the results to match.

About the Authors

Charlie Curson is a strategic advisor, accredited leadership coach and the author of Be More Strategic: 12 Essential Practices for the Life and Career You Want. He advises founders, leaders and teams on strategy, leadership and growth, and is an angel investor in early-stage businesses. 

Barbara Salopek is the author of Future-Fit Innovation and Founder & CEO of Vinco Innovation, a consultancy helping companies build sustainable innovation cultures. She is also a lecturer at BI Norwegian Business School and an internationally recognised expert in innovation, leadership, and organisational transformation.

Dominic Colenso is an international speaker, communication coach and the author of Cut-Through: The pitch and presentation playbook (out 2nd December).

Jenny Millar is a pricing expert, CEO of Untapped Pricing, a consultancy specialising in behavioural pricing strategy, and is the co-author of The Pricing Sprint, to be published by Bloomsbury in May 2026.

Angela Cox is the founder of the National Coaching Conference, happening in February 2026.

Mike Brent is Adjunct Professor at Hult Ashridge Executive Education, leadership expert and co-author of The Leader’s Guide to Collaboration.

Mehdi Paryavi is the CEO and founder of The International Data Center Authority(IDCA).

Jean-Paul Fonteijn is the author of Bring Down The Billionaires! and founder of the SuperRichTax.com, a movement which has already gained over 32,0000 signatures across more than 150 countries.

The post Powerful 2026 Resolutions from Leaders Shaping the Future of Work appeared first on The European Business Review.

By Sebastian Reiche, Stefan Jooss, Margaret Shaffer and Jan Selmer

More and more professionals are extending the time they spend on international assignments, building lives in new countries, but many companies continue to overlook this pool of globally savvy talent. Drawing on new research, we explore who long-term expatriates are, the value they create and how managers can support them.

For decades, international assignments have been framed as structured, time-bound career accelerators: one to five years abroad, followed by a return home and a well-earned promotion. But more and more, a growing number of these professionals don’t return at all. Some remain abroad for a decade or longer, while others move from country to country, crafting careers that are far from temporary. Some end up marrying abroad, having kids, living a fully international life.

These “long-term expatriates” are a growing segment of the talent pool — one that companies frequently overlook. But long-term expatriates bring distinct value to the workforce. They build strong institutional knowledge across borders, demonstrate resilience and adaptability, and provide globally savvy skills that can lead across cultures and regions.

In our research paper published in Human Resource Management Review, we highlight the opportunities and risks of tapping into this global talent. Companies often underprepare for retaining long-term expatriates; while at the same time, individuals can find themselves drifting away from their career path after many years away. Finding ways in which both firms and expatriates can benefit from each other is crucial for the globally-connected world we live in today.

The untapped value of repeat expatriates

The traditional model of the expatriate no longer applies. International assignments are not just a one-off experience anymore — repatriation rates drop sharply the longer individuals spend abroad, and after ten years, returning home becomes altogether rare. That’s because many expatriates integrate deeply into local life, accepting long-term roles in the host country or pivoting to opportunities in other regions.

These decisions can be shaped by career ambitions, attachment to particular people or places, lifestyle preferences, family needs and emotional turning points — factors that rarely appear in formal mobility frameworks yet profoundly shape global careers.

For companies, there is real risk in ignoring this group of international workers. Organizations invest significant resources in sending employees abroad — often hundreds of thousands of dollars per assignment, between visas and travel fare — but often fail to capture the long-term benefits because of the assumption that repatriation is inevitable. Without proactive planning, however, returning employees may feel sidelined, while those who stay abroad may drift away from headquarters or exit the company altogether.

In our research, we’ve identified four distinct types of long-term expatriates:

• “Planted Pioneers” are individuals who move abroad on their own initiative and choose to stay indefinitely. They often become deeply rooted in the host country, building their careers locally rather than within corporate structures. In many ways, they resemble skilled migrants more than traditional expatriates.
• “Stationed Settlers” begin their journey on a formal assignment but decide not to return when it ends. They may switch to a local-plus contract or find new opportunities in the host market. Their choice is often shaped by personal ties — a partner, a child’s schooling or a strong sense of belonging.
• “Free Floaters” represent a more mobile, lifestyle-driven segment. They move between countries by choice, assembling careers across borders. This group includes digital nomads, fully remote professionals and independent contractors who prioritize autonomy over stability.
• “Jetstream Leaders” are typically senior executives who take on successive international postings. They rotate between subsidiaries, provide continuity across regions, and act as organizational glue in complex global structures.

These varied typologies show why a one-size-fits-all corporate approach to global mobility doesn’t work. Each “expatriate path” involves different motivations, risks and expectations — and offers different values to companies.

The double-edged nature of staying abroad

Long-term expatriates bring powerful advantages to organizations. They provide deep cultural intelligence, robust international networks and an ability to navigate complex, multicultural environments. Many exhibit a high degree of adaptability and independence — the very qualities global companies prize in leaders. Their long-term presence abroad can enhance local responsiveness, strengthen subsidiary performance and improve knowledge transfer across markets.

But these benefits can be undermined by a series of challenges. Long-term expatriates often face ambiguous career paths, especially when return options are unclear or unsupported. Some grapple with legal and visa uncertainties, particularly those who move independently rather than through corporate channels. Family issues can also add to the strain, especially when partners struggle to find work or children face repeated reintegration. Many long-term expatriates report a sense of organizational invisibility: as the years pass, they become peripheral to decision-making at headquarters and are overlooked in succession planning.

These challenges, however, are not inherent to expatriation — they often stem from managerial blind spots and outdated assumptions. Long-term expatriation may unfold through a mix of planned decisions and unplanned life events, but long-term success depends on intentional choices. Many expatriates drift into extended stays without clear direction, while organizations often fail to recognize how their support — or lack of it — shapes these trajectories.

Intentionality matters on both sides. Individuals who regularly reflect on their goals, cultivate support networks and communicate openly with employers tend to navigate global careers more successfully. Meanwhile, companies that treat long-term expatriates as strategic assets, rather than logistical complications, are far more likely to retain them.

What managers can do to retain long-term expatriates

Supporting long-term expats requires a mindset shift. Managers can make a significant difference simply by engaging in more open conversations about long-term career possibilities, rather than assuming that every assignment ends with a return home. When employees express interest in staying abroad or moving to another country, leaders should explore these options proactively instead of treating them as disruptions.

Staying connected also matters. Long-term expatriates are often forgotten about at headquarters, making it harder for them to be considered for leadership roles. But managers can counteract this drift by maintaining regular contact, including them in strategic discussions and keeping them plugged into promotion and development opportunities. Inviting periodic conversations about changing priorities can create space for long-term alignment.

Another critical factor is family. Many decisions about whether to stay, return, or move again hinge on how well family members adapt. Organizations that support employees’ partners in navigating local labor markets or help their children integrate into schools signal that they care about the employee’s wellbeing, not just who they represent for the company.

Financial and legal complexities are another pressure point. Tax implications, pension gaps and visa transitions can become overwhelming, particularly for those who shift between corporate and local contracts. When managers show awareness of these issues and direct employees to trusted support structures, they reduce uncertainty and reinforce trust.

What’s clear is that long-term expatriation is no longer an anomaly — it is a growing and often strategic career pattern. While the pool of international workers is diverse, they all bring unique value and benefit from support that reflects the evolving realities of global work. Companies that understand this will be better prepared to harness the strengths of their global workforce; while at the same time, individuals who approach their international journeys with intention (rather than drift) are more likely to craft careers that are both meaningful and sustainable.

The future of global careers is not a straight line. And for many professionals, it no longer entails returning home.

About the Authors

Sebastian Reiche is Professor of Managing People in Organizations at IESE Business School in Barcelona. His award-winning research, speaking, and work with leaders and organizations focus on how to navigate global and distributed forms of work. He regularly blogs on topics related to global work (http://blog.iese.edu/expatriatus).

Stefan Jooss is a Senior Lecturer in Management at the UQ Business School, The University of Queensland, Australia. His primary research focuses on human resource management, particularly in the areas of talent management, global mobility, and the future of work. His work has been published in leading peer-reviewed journals and practitioner outlets.

Margaret A. Shaffer is Professor Emerita of Management and International Business at the University of Oklahoma, USA. Her research interests are in the areas of global mobility, expatriation and work-life interplay. She is an associate editor for the Journal of Global Mobility and serves on several editorial boards.

Dr. Jan Selmer is Professor, Department of Management, Aarhus University, Denmark. He is the Founding Editor-in-Chief of Journal of Global Mobility. He has published ten books and almost two hundred journal articles and book chapters. His latest book, Research Handbook of Expatriates, is the first academic research handbook about expatriates.

The post How to Turn Long-Term Expatriates Into Global Assets appeared first on The European Business Review.

By Frida Kristina Nilsson

Many in the modern workplace are reaching the limits of their decision-making capacity. Leaders face a rising tide of choice paralysis, transformation fatigue, and anxiety provoked by AI, hybrid work, and a thinning capacity for genuine human coordination. Swedish and Nordic leadership offers an alternative: psychologically grounded leadership, structured cooperation, and cross-functional understanding; conditions under which responsible decision-making can still thrive.

The Global Crisis of Decision-Making

If leadership ever depended on heroic clarity, that age has passed. Today, leaders are not starved for information but drenched in it. The average worker reads four emails for every one they send, most in under fifteen seconds. McKinsey’s research shows that executives now spend almost 40% of their working hours making decisions. Decisions have multiplied; clarity has not. Microsoft’s Work Trend Index also reports that 68% of workers struggle with the pace and volume of work, and though AI can be a much needed help, rapid, uncoordinated AI adoption has introduced its own emotional strain: uncertainty about responsibility and stress about technological development.

Roy Baumeister’s research in this area shows that repeated choice challenges the mental resources required for strategic thinking. Decision-makers appear “burned out,” but beneath that is a collapse of cognitive spaciousness and agency. In discussions it becomes safer to look active and agreeable than to pause and take a real position.

One of the most important leadership skills today is to delegate minor decisions and take time for those that really matter. The question for many leaders to ask themselves is: “Is it important or is it merely urgent?”

Leaders are less effective partly because the workplace rarely creates the cognitive or psychological conditions in which strategy can form, partly because of decision fatigue and low ability to deal with it. The hybrid work place can actually help to create space for deeper reflection if utilised correctly. Pondering a strategic challenge while accomplishing some physical task at home or while taking a walk can be much better, to get your brain into a more creative mode compared to sitting still, staring at a computer screen. Sadly many middle managers I meet feel guilty for “wasting time” if they schedule pure time for reflection on larger issues.

Strategic thinking requires depth, stillness and the ability to tolerate uncertainty. And, above all, other perspectives than your own. Without leaders who take time for this, organisations become fast-moving but directionless.

What Decision Fatigue Is and Why It Spreads

Decision fatigue is often described casually, but it is a measurable shift in how the brain functions. It emerges when people face too many complex decisions without emotional or cognitive recovery. Baumeister shows that decision fatigue leads to a temporary reduction in the capacity for steering one self: weighing options, controlling impulses, initiating meaningful change. Reasoning narrows, avoidance rises, and “we’ll revisit this later” becomes the default decision.

Hybrid work accelerates this if not organised correctly: everyone is reachable, yet few are genuinely connected. Slack’s State of Work shows that over-coordination; emails, pings, meetings, is now a primary driver of burnout. Constant messaging traps leaders in permanent partial attention. They move from one unresolved thread to another without seeing a fuller pattern. Deprived of uninterrupted time, the brain shifts into defensive, short-horizon thinking: “How do I avoid trouble today?” rather than “What is happening here? How can we work better”

Without the ability to acknowledge their own anxiety or frustration, leaders “hide” in overworking simple tasks instead of taking time to deal with more complex issues. They over-collect information, delay decisions, or try to control every variable, working too much on their own.

International comparisons show where this leads. OECD data reveals that Japan, with a very strict hierarchic leadership, is working some of the longest hours among advanced economies, while ranking far below peers like Norway and Germany in productivity per hour.

The Nordic Alternative

Across Sweden and the Nordics, leadership is shaped less by heroic individualism and more by steady, structured cooperation. Let’s look into their winning method.

First, leaders are expected to recognise their own emotional reactions to uncertainty or conflict. Nordic practice begins instead with a calm admission of not having the full picture, but build it with others. Quality communication, a structured workshop or a cross-functional conversation, creates more clarity and a higher perspective.

Second, cooperation begins early. Scandinavian organisations rarely wait for full clarity before bringing people into the discussion. Complexity will always outpace individual understanding, so leaders build shared understanding before alignment hardens.

As researchers Tengblad and Heide have shown, Nordic leadership rests on disciplined principles: clear goals, delegated responsibility, active participation and a coaching approach that treats employees as partners. This tradition of co-workership, where initiative is shared, means the leader’s task is to organise the group’s collective intelligence and to create the psychological safety needed for members to share their thoughts and ideas freely.

Third, participation is expected, but paired with ownership. Input is encouraged; responsibility for the decision still sits with the leader. This dual structure avoids both authoritarianism and diffused responsibility. The queen might be “the king” on the chess-board but the chess player needs to work with all players and have the ability to understand their different perspectives and make them all work together strategically to win.

Case: Avoiding conflict can counteract development 

Years ago, I worked with a group in a large public-sector organisation. All types of personnel were invited to the workshop and the work-groups had been formed randomly. An HR-person came to me with great concern. Two leaders who had previously been in conflict had been put in the same group! The two individuals had gone through a conflict resolution process where they did not become friends, but they articulated what they needed to work professionally together. The instinct from HR was to keep them apart, but since they had agreed to work together and this was a working setting I encouraged the groups to stay as they were.

In that group we watched them contributing from their different perspectives, and ultimately co-presented the group’s conclusions. The conflict melted away since they worked together in a setting where they had common goals and were dependent on each other. Peace often comes from development, not just development from peace.

Conclusion

The world faces a crisis of decision-making driven by overload, fragmentation and new psychological pressures. Nordic leadership offers not an ideology but a practical model for restoring decision capacity. When organisations commit to structured cooperation, emotional steadiness and shared understanding, leaders regain the space to think, and decisions regain the quality they require.

About the Author

Frida Kristina Nilsson is a licensed psychologist and specialist in leadership and organisational psychology. Frida has worked with various organisations, supporting peacebuilders in the Middle East, helping leaders handle financial crises, and supporting Director Generals. She has written several books and developed an e-learning platform teaching Swedish Leadership.

The post Nordic Leadership in an Age of Decision Fatigue appeared first on The European Business Review.

By Donna McGeorge

Innovation isn’t always about what’s next or new. Sometimes, it’s about what you’re willing to walk away from. Strategic subtraction is a design choice, and it just might be the smartest one you make this year.

There’s something deeply satisfying about solving problems. It makes us feel useful, productive, even heroic and most of us have been trained to solve problems in one direction … by adding more. More meetings to align. More tools to manage our tools. More initiatives, more check-ins, more dashboards, more complexity. It’s like watching someone try to fix a cluttered garage by buying another shelf. Then another box and then a label maker to label the boxes that hold the stuff no one has used in five years.

We’ve become addicted to addition which is supported by a sweeping 2021 study from the University of Virginia that found individuals rarely consider removal as a solution. When asked to improve something, the dominant reflex was to “add”. Scientists call this phenomenon ‘addition bias’. And it’s not just academic. The MIT Sloan review on meeting‑free days found that organisations which implemented one day a week without meetings saw measurable improvements in employee engagement, autonomy and productivity. They subtracted meetings and their world got better.

When addition is the default, bloat becomes culture

Every organisation has its fair share of good intentions gone rogue. When kicking off projects we pile on the extras: a cross-functional working group, a Slack channel, a project board, bi-weekly standups, weekly stakeholder updates, and an end-of-month progress dashboard. We’ve barely started the thing and already doubled our workload managing the management.

Default thinking says, “if something’s broken, add something new to fix it” but this logic is flawed because more is not a neutral choice and it has hidden costs. Every added step, tool or layer creates drag and over time, those small frictions become a systemic slowdown.

The big risk is that this the bloat doesn’t just waste time and energy it becomes culture. When everything is additive, nothing gets questioned. Scarcity of time becomes a badge of honour and while work expands, energy contracts and innovation stalls.

The concrete block principle: stronger by subtracting

Ever looked closely at a concrete block (sometimes known as a cinder block, or as we like to call them in Australia, besser block)? It’s a solid, reliable building material. Strong enough to hold up bridges and buildings but what makes it clever is not how much material it uses, it’s what’s missing. The holes in the middle are deliberate features that reduce weight, improve airflow, and make it easier to handle, transport and stack. It’s not just lighter, it’s more efficient and stronger because of what’s been removed.

We need more of this thinking in business. Where are there opportunities to remove something and in doing so, it makes the people, team or business stronger, more efficient or just plain better?

• Don’t build another layer of process until you’ve stripped away the parts that aren’t working.
• Don’t launch another initiative until you’ve asked what shouldn’t exist anymore.
• Don’t assume the answer is more check whether it might be less.

Subtraction is the new leadership strategy that’s needed

It takes real courage to say, “Let’s not do that anymore,” especially if it was your idea in the first place. Smart leaders know that progress doesn’t always mean forward and sometimes, it means clearing the path, removing friction and making space. If subtraction feels like surrender, remember this: the strongest leaders are not the ones who juggle the most, they’re the ones who make it look easy because they’ve removed everything that doesn’t belong.

There’s no need to be dramatic about it … you don’t have to cancel Christmas. Start small with things like a recurring meeting that adds no value or a process that causes more confusion than clarity. That tool that no one loves but everyone tolerates … let it go. These micro-subtractions are how we build the habit of questioning instead of blindly adding.

From reflex to rhythm

Red Brick Thinking is about being clear and clarity is what most organisations seem to be dying for. Clarity can more often be found when we remove the noise, waste and layers that are in the way. So, next time you’re tempted to fix something by adding something new, pause and ask:

• What would happen if we just stopped doing this?
• If we removed it altogether, would anything break?
• Or would things finally start to flow?

Innovation isn’t always about what’s next or new. Sometimes, it’s about what you’re willing to walk away from. Strategic subtraction is a design choice, and it just might be the smartest one you make this year.

About the Author

Donna McGeorge is the author of the new book Red Brick Thinking, a bold new call to simplify work by removing what no longer adds value. A productivity expert and best-selling author of The ChatGPT Revolution and the It’s About Time series, including The 25 Minute Meeting, The First 2 Hours, and The 1 Day Refund she equips leaders and teams with practical strategies to reclaim time, reduce friction, and amplify what matters. Learn more at www.donnamcgeorge.com.

The post Stop Solving With Addition: How Default Thinking is Costing Your Company appeared first on The European Business Review.

By Dr Melissa Dunlop and Professor Adrian Furnham

The remote-working era brought us many challenges in communicating effectively with our fellow humans via a computer screen, but there are surely few contexts where the extreme subtleties of human interaction matter more than that of conversation between therapist and client. Can the relationship really work virtually?

There were many consequences of the COVID-19 pandemic, but one of the most lasting is the working-from-home phenomenon. We had to do everything online: hiring and firing, teaching and decision making, even partying. Further, some of the most sensitive and personal conversations, like that between therapist and client, coach and coachee, now had to be “virtual”.

Digitally mediated living changes the orienting anchors around which everyday realities are built. Public and private lives are less defined and contained by limitations of the time and space when activities are with people who don’t inhabit our physical location.

In this article, we share some of the things experts think about in supporting the development of safe, trusting relationships where each party is able to take “relational risks”. We look at some of the key differences between online and in-person “relating”, and share some of our experiences of what helps when it comes to really getting to know people online. This explains why many professionals still prefer to develop key relationships in person. We also suggest some considerations and adaptations for communicating more openly and effectively online.

Therapeutic views on space: shared physical environment versus digital window

For the first 100 years of its practice, psychoanalysis and its descendant and related fields of counselling, psychotherapy, and coaching have taken place in real rooms which are managed and cared for by the practitioner to ensure privacy, comfort, and an unchanging backdrop for the work. Since Freud first developed the analytic method, there has been a strong consensus that the predictable and unchanging nature of the meeting time, and the room itself, have a beneficial effect upon the patient or client. Anyone visiting Freud’s rooms in London or Vienna cannot easily forget their uniqueness.

Counselling, coaching, and psychotherapy practitioners usually pay a lot of attention to the space in which they work, ensuring that it is private and calm, with enough detail of interest to engage the imagination, without overwhelming the senses with too much that is specific to the personality of the practitioner. Clients can rely upon the physical environment to be safe and unchanging and so they can relax, their attention freed to focus inward.

Yet meeting in the same location on a weekly basis is impossible for many, like those who are living as “digital nomads”. Meeting online allows access for people whose ability to travel is limited by health conditions, disabilities, a rural location, or one where the professional that they need isn’t available. Others have interesting reasons for choosing to work with someone they can never meet in real life, such as having a high profile in their own social sphere. For people who are especially concerned about privacy, knowing that the person they are working with is completely unrelated to their network can give much-needed reassurance. The potential to have a professional relationship that goes in-depth, yet remains essentially anonymous, can thus be enabled by an online framing.

But by replacing physical presence within the same room with a relationship that is mediated through a screen, online relating profoundly shifts a core foundation of therapeutic theory and practice: the assumption of embodied presence in the same space as an orienting anchor, the place that can be relied upon to stay the same while the people within it make changes. There was therefore a lot of questioning and doubt amongst practitioners about whether a therapy / counselling relationship could really be developed online.

In online meeting spaces, the four walls that contain the people meeting together in a shared environment are replaced by a screen, in fact two screens. While these give a feeling of a relation of closeness, each participant knows that there is distance between them. This dislocation between what is known cognitively and what is felt emotionally is a central feature of online social experience.

The online meeting room is both a digital space itself, and an analogous representation of the attachments and detachments of digital life. It has contributed to enabling the disparate geographies of many people’s lives and loves, for good or ill. In online meetings, we encounter one another within the contemporary relational structure of neither / both, where we each experience both places simultaneously, while at the same time existing together in neither. We are together-apart.

There is no pretending that this condition can provide the same sense of containment as can be found when one person comes into a space where they are hosted by the other, and where they can reasonably expect that the host has ensured that it is private, comfortable, and relatively predictable (there will be chairs, some water, etc.). But we have found that a different sense of containment is possible.

Subtle cues and visual communication

What does the online setting do to that human need for the consistency of physical relational contact which is so reassuring and helps us feel centred and oriented within reality? And can in-depth, emotionally sensitive relating really happen in this context?

Working online changes the “holding container” of therapeutic work from a room managed entirely by one person into something that has to be mutually created and maintained. Each party is responsible for ensuring they can be somewhere private and comfortable, with a stable internet connection and where they feel able to speak without inhibition. How each party meets this challenge will directly affect the quality of the relationship, with some of the immediate circumstances of each person’s life being in evidence, alongside their creative response to any adversity that may be present.

Working online changes the “holding container” of therapeutic work from a room managed entirely by one person into something that has to be mutually created and maintained.

For some people, meeting this initial challenge is a simple matter, as they already have a private study with a computer set up for work. A common difficulty for these people is switching psychologically out of other work modes and into the frame of mind that psychotherapy and coaching encourages: expansive, non-linear, creative, emotionally open, and relationally engaged. To achieve this, some, but certainly not all, will switch off notifications and other distractions coming through on their screens, while many find they need to change the physical device they are working on, a symbolic physical act which signals an internal shift of mode and status. This is an example of an apparently simple, everyday challenge that actually shows a lot about our interlocutor, their capacity for presence of mind, and their willingness to be present with us.

Those without a predefined private space in their home or workplace may find clever ways to adapt. During the pandemic, people often used their cars, as there was nowhere inside where they were able to be alone. People frequently come to online meetings on, or even in, their beds, as the bedroom can be the only private space in their home.

Some online practitioners are very firm about the importance of being formally dressed and presented for therapy and coaching, to be clear that it is a professional arrangement. Yet the choice of a more intimate setting and personal presentation can be interesting in the context of building more emotional authenticity. People’s choices about how to allow themselves to be seen, while usually pragmatic on a conscious level, act as a reminder that deeper relationships also engage with layers of identity and experience that are more private, ephemeral, and fluid than a polished presentation would convey. While, in the early stages of forming a relationship, the lack of good presentation might feel disrespectful or unserious, it is usually a sign of growing trust and confidence that the relationship is well established when someone gradually begins to present more informally with us.

Noticing how the other person is managing their part of the “container” can be part of the work of supporting the growth of a healthy relationship. This includes how they allow its solidity to slip, perhaps by not finding a sufficiently private space or by going somewhere with poor Wi-Fi. This often can’t be helped but, since it makes communication challenging, it also raises questions about whether they might be annoyed or ambivalent about the relationship.

The use of filters that conceal their real backgrounds is also interesting, along with other points of detail around people’s use of the screen as a framing device. We are visually motivated creatures and immersed in visual culture. While most of us have no formal training in visual communication, in online work it is helpful to be attentive to how people make use of visual language to portray themselves. Some appear to think carefully about this, while others seem to give it little thought; we find it interesting how the unconscious finds expression in these choices.

Working thus online introduces aspects of a person’s character that wouldn’t appear when working in-person. The aesthetics of their background give a flavour of their personality, while clothing, shoes, and general physical presentation carry less significance than they would in person.

In psychotherapy and coaching, we are mindful not to overwhelm those who could potentially be experiencing emotional difficulties. When considering having a potentially sensitive conversation online, it is important to think about the mental state. This could be worth clarifying directly, if it isn’t clearly evidenced both in their demeanour and in the way they manage the “online frame”. If these initial prerequisites aren’t sufficiently well met, it is certainly worth considering postponing the meeting to a time when the other person is in a better frame of mind and is more able to make space for an open dialogue with you.

Physical or virtual presence

The other major challenge posed by online working to established theories and practices is the absence of physical co-presence. Being physically present allows for subtle bodily attunement between people, much of it happening outside our conscious awareness. The most obvious of these is what happens around and through eye contact, which may be unobtrusively experienced, with qualities of comfort and connection, or perhaps painfully awkward to engage with or maintain.

In face-to-face interaction, a person feels when the other person’s pupils constrict or dilate, even if they don’t realise it has happened. The sensation of another person having an emotional response is conveyed through this and other biological responses, such as changes of temperature, the precise nature of which typically fall outside conscious awareness but are picked up somatically. We tend to feel it quite clearly when another person becomes sad or angry, and know that something has changed for them.

Psychotherapeutic practitioners working in person are used to relying on this “felt-sense” of the other person’s emotional landscape. Many find their sensitivity to be impaired when working online, to a degree that makes them uncomfortable working at emotional depth. They simply do not feel confident that they are working within their client’s window of tolerance and fear causing undue suffering or re-traumatisation as a result.

Eye contact isn’t possible online, even though we can make close approximations of it. It is also harder to spot when someone is feeling something upsetting. This can be concerning for practitioners who are keen not to overwhelm clients who are sensitised by conflict or trauma. However, clients themselves often report liking the sense of safety they gain from being more able to hide their bodies and bodily responses from their psychotherapist. Many report feeling less anxious, and enjoy the sense of control they experience by retaining some physical distance and being in control of their own personal space.

Sexual tension and the mystery of what can’t be known

Online relating seems to carry less potential to be erotically charged. This is perhaps paradoxical, since the online environment is generally disinhibiting, but no measure of “chemistry” can really be made. The physical sensation of anxiety is much reduced in the absence of embodied presence. However, more of what is usually inhibited can be spoken about, which suits talking therapies very well. There is no fear, for example, that talking about sexual matters could lead to confusion or misunderstanding.

The online environment enables more frankness, particularly where people might be hesitant to bring potentially shameful or taboo content in person. Thus the relationship carries no tension and may not feel very real.

In online work, the potential for crossing a physical boundary is removed, so there is not the same need to contain ourselves in the relationship. Therefore more extreme expression can often be risked without fear of consequence. While that is a problematic issue generally for contemporary culture (vis à vis the prevalence of extreme violent and sexual expression online), in a therapeutic context that disinhibition enables people to get to the heart of what they need to discuss much more quickly.

The “unreal” quality of the online relationship can be experienced as a barrier to true connection, or it can be worked with and used in positive ways, to overcome relational inhibitions. There are risks, however, where these shifts move too fast in psychotherapy, and people can feel destabilised emotionally as a result, so pacing needs careful handling, and it remains part of the skill of the practitioner to ensure that people don’t expose themselves beyond what they can comfortably bear.

In online relating, there is still a great deal of common feeling, be it love and desire for more contact, or fear of loss or abandonment. Online clients are important presences in the lives of therapists and coaches and, even though they may never physically meet, they do develop a sense of meaningful mutual connection.

While certain non-verbal aspects of mutual communication are missing, others can be present. We cannot tell if someone is tapping their foot nervously as they smile but, since part of them is obscured, there is an opening for asking about what is happening offscreen. In other words, we can explore verbally that which is hidden visually, in ways that would perhaps seem rude or inappropriate in person. This can lead the way to exploring other, more psychological parts of the client that they may also tend to keep hidden.

Some advice for relating with sensitivity online

Consider online working to be more, not less, of an embodied practice and pay attention to your presentation on the screen. Make sure you are comfortably seated and have recently had a chance to move around and attend to your own comfort needs. Use a wider-angled camera to show more of yourself physically than just your head and shoulders, and think about your background and how you are communicating visually through the lens. Don’t feel obliged to stare at the camera or screen; no eye contact is being made anyway.

Consider doodling and taking notes, in order to engage your body haptically during meetings and assist your listening. Find your inner focus by attending to your own breath and posture, and notice how the presence of the other person affects your inner feelings and sensation. This is good information about how they are likely to be feeling, too. You may wish to share some of your inner experience, including physical sensations and other impressions that come to you, such as visual images or references to films or other shared cultural objects, to see if these associations are helpful in bridging the physical gap.

Consistency remains necessary, in order to ensure that the person can experience the online relationship as something safe and dependable. The rhythmicity of a regular weekly meeting can help to build this, even when locations and their associated time zones are changing. Try to keep your own location and background the same and think about what your background might represent symbolically for people who are seeing it on a regular basis and how they may associate it with you. Be mindful if travelling yourself that a change of setting can be disturbing to people who are not expecting you to appear in a different environment. You may wish to forewarn them of your plans.

The medium affects the message

Therapeutic change is akin to the Observer Effect in physics, in which the attempts to measure a phenomenon change the phenomenon itself. The quality of our attending to the client is what matters. Working online is likely to work well for those who are happy and comfortable in that environment and less so for people who dislike it for any reason. Colleagues who remain committed to working only in person have valid reasons for upholding the primacy of the embodied, material reality as a core component of therapeutic relating, and human health and well-being more generally.

Those of us in the coaching, counselling, and therapy environments need to be particularly attentive to how the medium influences the message.

About the Authors

Dr Melissa Dunlop is a psychotherapist, supervisor, coach and researcher, mainly online.

Professor Adrian Furnham teaches and coaches people online.

The post Virtual Working: When It Comes to Sensitive Conversations, the Medium Affects the Message appeared first on The European Business Review.

By Carlos Hernandez Jerónimo

Digital tools are rushing into boardrooms like robots into kitchens. Yet, without order, structure, and clear management, they only speed up the chaos. Carlos Hernandez Jerónimo challenges the notion that technology alone delivers transformation, and argues that leadership, research, and scientific management are the true engines of sustainable innovation.

In the frenzy of all things digital, many companies behave like children in a high-tech candy store: fascinated, impulsive, and utterly disoriented. Everyone wants their own internal ChatGPT to link clients, operations, contracts, meeting notes, and procedures. They want it now, because someone, somewhere, declared that failing to digitalise is a death sentence. But few stop to ask the right question: on what structure will this intelligence operate?

Recently, during a meeting with a major public institution, that question became unavoidable. The enthusiasm around implementing an AI-powered knowledge system was real. But the moment someone asked, “Who will have access to what?”, the conversation stalled. Algorithms faded into the background. The room shifted to concerns over access levels, data silos, accountability, and the risk of exposing sensitive information. Technology stepped aside. Management stepped in.

We often fall for the illusion that technology will fix what management has avoided, as if artificial intelligence were a magic button capable of turning confusion into efficiency. But it isn’t. AI simply accelerates and amplifies what already exists. If the organisation lacks clarity, AI will only reproduce that lack of clarity – faster, louder, and at scale.

The temptation to implement digital tools before building a solid foundation is strong. But it’s no more effective than installing precision sensors on a ship with no compass. And that’s the irony. The more advanced the technology becomes, the more essential the basic principles of management become. Mapping information. Clarifying who makes decisions. Defining access. Establishing processes. Ensuring that what gets automated has first been understood and owned.

Management is not the enemy of innovation. It is the quiet infrastructure that makes innovation possible.

Meanwhile, we’re seeing a renewed appetite for management education. According to GMAC, enrolment in management programmes has increased by 23 per cent over the last three years. And it’s not because MBAs promise higher salaries. It’s because, in an increasingly automated world, those who know how to lead, decide, and structure have become indispensable. We can code in Python, but we struggle to resolve conflict. We integrate APIs, but not people. Management is no longer a back-office skill. It’s core business.

Most digital failures aren’t technical. They’re strategic. They come from rushing toward the future without pausing in the present.

Modern organisations need leaders who understand technology. But, even more, they need technologists who understand management. And above all, they need executives who realise that digitalising isn’t about burying chaos beneath a glossy user interface. It’s about having the courage to reimagine how the organisation actually functions.

Most digital failures aren’t technical. They’re strategic. They come from rushing toward the future without pausing in the present. Management, by its nature, is deliberate. It observes before acting. It decides before executing. It doesn’t oppose digital transformation. But it must not be flattened by it either.

And no, no one is suggesting we halt all activity to write detailed manuals while the world speeds ahead. Quite the opposite. The point is this: if we’re about to bring a new robot into the kitchen, we should use the opportunity to get the pantry in order. Let’s check where the ingredients are, who handles the utensils, what hygiene rules apply, and who’s in charge of cooking what. With the robot, everything will be faster. But only if we know what we’re automating.

If management is neglected, the future will be automated … but even more unpredictable.

About the Author

Carlos Hernandez Jerónimo is CEO of Winning Consulting, Professor, and Executive Director of the Executive Master in Program and Project Management at ISCTE Executive Education. He combines executive leadership with academic research, bridging scientific knowledge and practice to help organisations rethink strategy, structure, and execution in the digital transformation era.

The post The Digital Revolution Forgot Management appeared first on The European Business Review.

By Dr. Anna Rostomyan

In order to thrive, start-ups and other innovative ventures are well advised to begin with a well-thought-out plan. Could the concept of strategic management have something to offer in that regard? Here, Anna Rostomyan checks out the pros, cons, and potential pitfalls of the approach.

In today’s globalized, capitalized, and digitalized world, there is a distinct need for better management skills, strategies, and techniques. There is a novel field of study in the applied sciences that entails the strategic planning, implementation, management and assessment of such policies, namely strategic management.

Definition: Strategic management (SM) can be defined as formulating, defining, planning, implementing, evaluating, and tracking the progress of the set objectives (David, 2001).

In this respect, we have to bear in mind that all the interrelated processes should be involved, such as marketing, branding, finances, research and recruitment so that to optimize successful operations.

Here, it is highly important to note that all the current trends in the market should be taken into account to ensure supply and demand optimization.

SM consists of the following main three stages:

1. Strategy formulation

Developing and setting a clear mission, having a vision and values, assessing strengths and weaknesses, establishing short-term, long-term, monthly, and bi-monthly, as well as annual objectives, generating alternative strategies, choosing distinct paths to follow, conducting proper market research to reveal trends and tendencies, choosing team numbers, and setting clear-cut priorities.

2. Strategy implementation

Establishing an organizational structure (hierarchical / flat / mixed), selecting between, for example, a goal-friendly, market-oriented, clan- (team-) oriented and family-oriented organizational structure, recruiting the required staff, segmenting the corresponding divisions in accordance with the team members’ strengths and weaknesses, allocating budgets, mentoring and coaching the team towards mutually beneficial goals, utilizing the available information tools, rewarding the successes of the employees, applying the best-possible policies, tools, and techniques of both the C-suite-level management and leadership, the division heads, and of the mid-level employees to guarantee eventual success, strengthening the bonds between the team members by various team-building events and joint ventures, sometimes rotating the team members to reveal their talents and relevant skills.

3. Strategy evaluation

First and foremost, to be able to evaluate and assess at a final stage the team’s success, the C-suite-level top managers should set clear KPIs to follow, which should include the management’s clear-cut expectations of the employees. Secondly, all the internal and external factors hindering success should be taken into account to be able to clearly assess progress and threats. Thirdly, an elaborate level of equity should be set when measuring each of the team participants’ personal capacities, abilities, and skills to ensure equality. Last, but not least, in the evaluation process, even the smallest and biggest wins should be celebrated and taken into account when deciding whom to promote. All this will give the strategists the maximum ability to assess and reassess what went well and what went wrong, so that they can adjust the future strategic goals and intentions in order for the company to flourish.

Strategic management actually allows an organization to be more proactive in following its initiative and the correlated activities in which reinforcement should be at the core, while benefiting from mutually set goals and strategies.

Strategic management actually allows an organization to be more proactive in following its initiative.

In this connection, it is noteworthy that higher management should to a certain degree empower the employees to be creative and innovative, which can be very beneficial in acquiring the set objectives and realizing the initial mission and vision, while sticking to its core values and promoting a healthy workplace culture where the well-being of the employees is of paramount importance.

If the above is respectfully and consistently followed, there may be various crucial benefits, such as:

a. Financial benefits

High performing firms and teams that set clear goals and target the market with a market-oriented strategy will eventually attain high sales by means of leveraging the potential of their team-members. As Simon Sinek truly stated, “Take care of your people and your people will take care of you”, which brings us to the second highly important point. If the company gains financial benefits in terms of a stable gross income and high revenue, it can pay back the employees and pay off business partners, as well as invest in further ventures.

b. Personal benefits

if its “people” are at the core of the company’s values, both the company and the involved parties (both external and internal stakeholders) will eventually benefit from such a strategic perspective, since, when doing business, we should always remember that we are dealing with people endowed with emotions, feelings, beliefs, motivations, and intentions. As Dale Carnegie stated, “When dealing with people, remember, you are not dealing with creatures of logic but creatures of emotion.” Thus, if we take into account the emotions and feelings of those with whom we interact, both parties will consequently benefit from such interactions, since people may forget what you said or did, but they will never forget how you made them feel.

c. Non-financial benefits

It follows from the above that an organization’s people are its greatest asset. Thus, if a company is not only market-oriented, but also people-focused, the investment in its people will surely pay off in the longer run. This may manifest itself, for instance, through human sustainability, with people staying in the company for the long term, since nowadays Gen Z are inclined to change roles and companies far quicker compared with, for instance, baby-boomers. Thus, if the company manages to keep its people involved, interested, and respected, the human capital of the company will be raised and there will be no need to invest time and energy in training newbies (Rostomyan & Rostomyan, 2023).

Although the foregoing suggests that strategic management is mostly beneficial for organizations, companies, and institutions, it has both advantages and disadvantages. According to Campbell (1999), a common complaint is that, “Strategic plans are documents that you prepare for the corporate center and later forget.”

Here are some insights into their benefits and pitfalls:

a. The possible advantages of SM

1. With the provisions of SM, the businessmen will not lose track of their initial plan, mission and visions, without overlooking their values.
2. Joint ventures can open up wider opportunities and chances to cooperatively work towards mutually beneficial goals.
3. Foreign operations can accelerate the sales and heighten costs, as well as provide wider markets.
4. SM can provide a much better cost-efficiency while working on multiple projects.
5. The political treatment and business policy in foreign countries can be more attractive and highly beneficial in expanding the scope of the company.

b. The possible disadvantages of SM

1. While always only looking for the plan, we might neglect the needs, worries, concerns, and expectations of the people.
2. In case of doing business internationally, one might lose track of the initial plan, if not holding it in front of the eyes of the upper management.
3. Going international can inquire learning the new local educational, cultural, legal, economical, traditional, social, environmental, occupational, emotional, and technological rules and regulations.
4. Dealing with a new system of monetary funds can complicate a bit the entire strategic process.
5. Therefore, one must be flexible to acquire new skills and get adapted to newly sprouted situations.

Taking into account the benefits, pitfalls, and drawbacks of strategic management, companies should have a mission statement that will guide them throughout the entire process, acting as a lighthouse.

For this, one should understand what statement in a business setting is.

Definition: A business statement is a clear purpose that differentiates one organization from the other: it answers the most crucial question on what makes a business stand out from the crowd (David, 2001).

Thus, with the help of the business statement, otherwise called “creed statement”, the founders can set out their philosophy concerning the beliefs, goals, objectives, and targets of the company.

Definition: As for mission statement, it is a declaration of attitude, purpose, and outlook towards a specific plan that makes the business ride worthwhile (David, 2001).

Let us have a closer look at the mission statement’s characteristics:

1. Firstly, a clear mission statement makes it possible to generate objectives, as well as facilitate feasible alternatives and strategies in a creative manner.
2. Secondly, in the mission statement, the reconciliation of all standpoints should not be overlooked, where all the stakeholders are taken into account, such as the board directors, the managers, employees, suppliers, customers, consumers, business partners, general public, competitors, etc.
3. Therefore, a clear mission statement is essential for effectively establishing goals and objectives. In fact, an enduring statement of purpose distinguishes a business from other similar corporation.

As a matter of fact, the importance of vision and mission in companies must not be undervalued and should be paid respect to. Campbell (1999) claims that both of these terms are crucial, saying that a “vision” is a possible and desirable future state of the organization, whereas a “mission” is more of an associated phenomenon linked to behavior, skills, and the present state of the organization and its people.

Furthermore, the significance of the vision and the mission statement of the company / organization / institution in effective strategic management is unarguable. Therefore, before starting a business, founders and managers should focus their attention on elaborating its development.

The process may, for instance, be as follows:

1. To set clear goals and communicate them effectively with the team-members.
2. To ensure that the purpose and company culture are followed in the company.
3. To create a positive workplace atmosphere where everyone is feeling seen, heard, and appreciated.
4. To specify the organizations purpose, and translate it into distinct milestone objectives.
5. To be a role model for the team-members to look up to and to follow.
6. To lead the team towards success, occasionally adjusting leadership styles according to the situation, in order to meet the set objectives collectively.
7. To praise achievement.
8. To assess progress.

Apart from the above logically constructed strategies, there is also a subtle field that should not be overlooked, namely the phenomenon named as intuition. In fact, intuition and gut instinct are the ones that tell you what to do when everything just does not feel right. Have you ever found yourself in a situation where all the facts and logical verifiable were all greatly seeming beneficial for the launch of your business or a joint venture, but deep inside a voice told you that that is not the right direction to take, that is our intuition on play.

As a matter of fact, women are believed to based their decisions (both in their private lives and in business-related issues) more on intuition rather than on logically grounded facts, which our research at Porsche Central and Eastern Europe and Porsche Center Yerevan also came to prove.

We conducted an online survey of 20 corporate participants from Porsche Central and Eastern Europe and Porsche Center Yerevan on whether men and women tend to rely more on their intuition and emotions when taking decisions. The results were obvious, since women are more often inclined towards taking decisions based on their intuition and gut instinct; as they say, when a woman asks you a question, she most probably already intuitively knows the answer.

Our research suggests that the new concept of FQ (female quotient) does truly reflect this difference in decision making in men and women, pointing to the fact that in the business sector, too, there is place for intuition and gut instinct.

As for the interrelation between strategic planning and intuition, it is vital to state that, here as well, we should not let go of our gut instinct and intuition, which have the greatest potential to guide us in the right direction in choosing the best path, since based on past experiences, people have the ability to make the better-suited decisions that their gut tells them to. In fact, as they say, we have three heads, namely (a) the cephalic (head), (b) the cardiac (heart), and (c) enteric (gut), the cooperation of which guides us in our daily activities, in both the personal and professional contexts.

Our gut instinct and intuition have the greatest potential to guide us in the right direction in choosing the best path.

Furthermore, as Albert Einstein once stated, “Imagination is more important than knowledge, because imagination is boundless, whereas knowledge is limited.” This quote suggests that it is always good to have a plan and to stick to it, especially in situations of uncertainty, yet we should activate our imagination, which will open up doors unimaginable in the past. As manifestation experts tell, we have to first imagine our end-goal in order to be able to manifest it. Yet, as Marisa Peer, the RTT guru, says, we should not let our dreams extract us from reality; they can simply be a map for us to follow. And, as Mel Robbins suggests, manifestation is not a simple trick to do by means of imagining end results; instead manifestation is the bridge towards our goals and if we also clearly see the obstacles on our imagined path and picture how we can overcome them, these actions will become the bricks of the bridge leading us towards our dream results.

In addition, for efficient strategic management, there should be a code of conduct embedded in the ethics of the business. Business ethics, in fact, entails the unspoken form of conduct that encompasses an outspoken, articulate verbal and non-verbal, as well as visual, demeanor of the parties involved, such as, for instance (but not limited to):

1. Dressing accordingly (whether strict business or business casual style in accordance with the dress code)
2. Being on time according to the set schedule (even a little bit before the set time)
3. Greeting politely (respecting hierarchical factors)
4. Firmly shaking hands when greeting other parties (showing respect)
5. Display a smiling face (a vital component of emotional interaction)
6. Looking straight into others’ eyes (being trustworthy)
7. Drafting professionally tailored emails, reports, and annual greeting cards
8. Participating in the company’s meetings, events,  and webinars
9. Building a strong network with internal and external stakeholders
10. Apologizing when at fault, showing integrity and compassion
11. Being open to constructive feedback and providing advice when asked
12. Doing extra, while showing interest in the company’s eventual success.

The above are just a few vivid examples that belong to everyday business ethics. If all the parties involved take good care of their ethical demeanor and expression in professional settings, and upper management praise such manifestations, both the company and the people involved will certainly thrive in their endeavors, while enjoying and loving what they do and those with whom they interact. These seemingly minute actions can also be considered to be part and parcel of strategic management, where people express themselves ethically.

One example of effective strategic management is Apple Inc., which was facing bankruptcy in the 1990s. A possible reason for this might have been the estrangement of co-founder Steve Jobs, who was basically the lighthouse of the company’s first mission and visions. With this alienation, the company, representing a ship, might not know which path to follow in order to achieve success according to its initial goals and objectives. So, one the of the strategic solutions was calling Steve Jobs back to the company to lead it again. When Steve came back in 1997, he realized that the divisions were not functioning well. After analyzing the situation, he came up with a very clear strategic plan involving “experts leading experts,” meaning that only a marketing expert could lead the marketing department, only an IT expert could lead the IT department, etc. This strategic change led to beneficial results and, alongside some other strategic actions like the launch of the iMac (1998), iPod (2001), and iPhone (2007), brought the company out of bankruptcy also due to its strong brand heritage.

Ever since Steve Jobs implemented the so-called functional organization, Apple’s managers at every level, from from the top downwards, have been expected to possess three key leadership characteristics: (a) deep expertise that allows them to meaningfully engage in all the work conducted within their individual functions; (b) immersion in the details of those functions; and (c) a willingness to collaboratively debate other functions during collective decision-making processes. As a result, when managers have these attributes, decisions are made in a coordinated fashion by the people best qualified to make them (Podolny & Hansen, 2020).

To sum up, it is always a good idea to have a plain plan to follow in your hands, especially when starting a business, that will allow you to stick to your initial plan, while also being flexible to adapt to novel situations, contexts, and opportunities. Here, the notions of mission and vision must not be underestimated. Furthermore, it is highly recommendable to rely on your intuition, too, since the heart knows reasons which reason knows nothing of. Strategic management is there to guide managers towards mutually beneficial end-goals. If we take all the advantages and disadvantages of strategic management into account, we can be better at leading our teams towards mutual success, where all the involved parties are taken into consideration and are taken good care of. 

About the Author

Dr. Anna Rostomyan an assistant professor and certified EI coach, specializes in the linguo-cognitive analysis of emotions and their vast impacts on our lives and businesses. With seven books, about 100 publications, and readers from across 100 nationalities, her research and writing mainly highlight the immense role of emotional intelligence in achieving better business outcomes.

References:

1. Campbell, Andrew (1999). “Thinking about… Tailored, Not Benchmarked: A Fresh Look at Corporate Planning”. Harvard Business Review, March-April. 41-51, available at: https://hbr.org/1999/03/tailored-not-benchmarked-a-fresh-look-at-corporate-planning

2. David, Fred D. (2001). Strategic Management: Concepts & Cases. Eigth edition. Francis Marion University, New Jersey: Prentice Hall.

3. Podolny, Jole M. Morten T. & Hansen (2020). How Apple is Organized for Innovation. Harvard Business Review. November-December issue, accessed on 10.12.2022, available at: https://hbr.org/2020/11/how-apple-is-organized-for-innovation

4. Rostomyan, Anna (2022). “Efficient Decision-Making with EQ Skills in Business”. The European Business Review, September-October, available at: https://www.europeanbusinessreview.com/efficient-decision-making-with-eq-skills-in-business/

5. Rostomyan, Anna & Armen Rostomyan (2023). The importance of emotional capital in companies. Int J Res Hum Resour Manage 5(2):53-57. DOI: 10.33545/26633213.2023.v5.i2a.150

The post Insights into the Relevance of Strategic Management appeared first on The European Business Review.

By Lord Mark Price

An engaged workforce drives performance, but dissatisfaction often surfaces quietly. Drawing on 40 years’ experience, Lord Mark Price identifies six warning signs that signal team unhappiness. He outlines his Six Steps to Workplace Happiness: recognition, information, empowerment, wellbeing, pride, and job satisfaction, to restore morale and strengthen organisations. 

An engaged workforce is a productive workforce but too often, unhappiness creeps into teams unnoticed until it’s too late. In my work with organisations worldwide for over 40 years, I’ve seen how six tell-tale signs can reveal underlying dissatisfaction. Here’s how to spot them and how my Six Steps to Workplace Happiness, from WorkL, the employee engagement platform I founded, can help turn things around.

Employee unhappiness rarely arrives with a grand announcement. It shows itself in subtle ways, such as the once-vocal team member who now stays silent in meetings, the sudden uptick in employees off sick, or the dip in collaboration. Recognising these signs early allows leaders to act decisively. Below, I share six common warning signs, along with practical steps you can take, guided by my Six Steps to Workplace Happiness; reward and recognition, information, empowerment, wellbeing, sense of pride, and job satisfaction.

1. Drop in Productivity

A noticeable decline in performance or output is often one of the first visible signs that something isn’t right. Targets are missed, deadlines slip, or quality falters. While external factors may play a part, consistent underperformance usually reflects disengagement.

What to do

Focus on reward and recognition. People want to feel their efforts are seen and valued. Recognise contributions both publicly and privately. Sometimes a simple “thank you” or acknowledgment of good work goes further than financial reward. By making appreciation part of your daily leadership style, you restore motivation and pride.

2. Increased Absenteeism and Turnover

When employees are unhappy, they disengage physically as well as emotionally. Absenteeism rises, sick days become more frequent, and eventually, people leave. High turnover is costly, not just financially but culturally.

What to do

Focus on wellbeing. Unhappiness often stems from stress, poor work–life balance, or burnout. Leaders must create environments where taking care of mental and physical health is encouraged, not stigmatised. Encourage flexible working, ensure workloads are manageable, and create a supportive culture where people can ask for help.

3. Silence in Meetings

Silence is not golden in the workplace. When employees stop offering ideas, questioning processes, or contributing to discussion, it’s usually a sign of disconnection. It may also mean they don’t feel safe speaking up.

What to do

Prioritise empowerment. Employees thrive when they feel trusted to contribute and make decisions. Invite input, create forums for safe discussion, and make it clear that diverse perspectives are valued. Empowered employees are more engaged, more creative, and more invested in outcomes.

4. A Breakdown in Communication

When gossip replaces open dialogue, or when team members seem left out of the loop, morale suffers. Poor communication is both a symptom and a cause of unhappiness, it signals a lack of transparency and erodes trust.

What to do

Improve information sharing. Leaders often underestimate how much employees want to understand the bigger picture. Be open about company performance, strategy, and challenges. Consistent, honest communication helps employees feel involved and respected. Even when the news isn’t positive, transparency builds trust.

5. Loss of Pride in Work

When employees no longer talk positively about their organisation, or stop recommending it to friends and family, it’s a clear sign of declining engagement. Pride is an emotional anchor, without it, people feel disconnected and uninspired.

What to do

Reinforce a sense of pride. Celebrate successes, share customer stories, and connect individual roles to the bigger mission. Remind people why what they do matters. Pride grows when employees can see the positive impact of their work, both for the business and for wider society.

6. Going Through the Motions

Perhaps the most insidious sign of unhappiness is when employees do only the bare minimum. They show up, complete tasks, and leave, without passion or initiative. This “quiet quitting” reflects a lack of job satisfaction and can spread quickly across a team.

What to do

Revisit roles and responsibilities to ensure they align with employees’ skills and aspirations. Provide opportunities for development, training, and progression. When people feel they are learning and moving forward, satisfaction rises. Encourage managers to have regular career conversations, not just annual reviews.

My Six Steps to Workplace Happiness

When you align leadership practice with the Six Steps to Workplace Happiness, reward and recognition, information, empowerment, wellbeing, sense of pride, and job satisfaction, you create the foundations of an engaged workforce. These aren’t one-off fixes, they’re ongoing commitments.

1. Reward & recognition

Pay must be fair and transparent, or nothing else lands. But don’t wait for annual reviews to say “thank you.” Build weekly recognition rituals tied to outcomes, not presenteeism.

2. Information sharing

Lack of sharing breeds rumour and disengagement. Adopt a “show the work” cadence where a monthly all-hands meeting includes reviewing real metrics, a working roadmap, and team-level dashboard for all to see.

3. Empowerment

Empowering employees means involving them in decision-making, valuing their ideas, and integrating their feedback into the company’s strategies. Everyone brings unique experiences and perspectives to the table, and only by considering all views can a team achieve the best possible outcome.

4. Wellbeing

Employee wellbeing encompasses physical, emotional, and financial health. Addressing all three areas leads to improved engagement and productivity. A positive workplace culture can reduce absenteeism, as engaged employees tend to be healthier and more committed.

5. Instilling pride

Employees who take pride in their work and workplace naturally become advocates, sharing their positive experiences with colleagues, potential hires, customers, and the community. Their pride will be evident when they talk about where they work.

6. Job satisfaction

A range of factors influence job satisfaction, but two stand out; opportunities for personal growth and the quality of the employee-manager relationship. Employees are an organisation’s greatest asset, and high engagement is essential for success.

No team will ever be free from challenges. But as leaders, our responsibility is to ensure those challenges don’t translate into unhappiness and disengagement. By staying alert to the subtle signals and applying the Six Steps to Workplace Happiness, you can transform dissatisfaction into resilience, negativity into purpose, and silence into a stronger, more collaborative voice.

After all, when teams are happier, organisations are stronger and everyone wins.

About the Author

Lord Mark Price is former UK Trade Minister, founder of happiness at work platform WorkL and author of Work Happier: How to be Happy & Successful at Work, published by Kogan Page.

The post Six Red Flags Your Team is Unhappy and How to Fix Them Fast appeared first on The European Business Review.

By Maria Brinck

Businesses can thrive globally by integrating environmental, social, and governance principles into long-term strategy, demonstrating that responsibility and profitability go hand in hand. 

In business, two things have traditionally mattered above all else: growth and profit. Everything else is often treated as window dressing. If a new CEO sought to implement voluntary safety measures to protect humanity—measures that would significantly reduce quarterly profits—she likely wouldn’t remain CEO for long. This reality helps explain why 68 percent of species on Earth have gone extinct in the last five decades, why each summer brings record-breaking heat waves, and why society accelerates toward environmental and technological cliffs as companies compete to develop AI and other high-risk innovations, consequences be damned.

This raises a critical question: is capitalism itself the problem?

The answer is both yes and no. Free market capitalism has lifted billions out of poverty, generated unprecedented innovation, and connected nations economically and culturally. This interdependence can create peace, as seen in the unlikely prospect of a war between China and the United States, whose economies are deeply intertwined. Businesses have enormous potential to advance humanity and global unity, especially those that operate across multiple countries, cultures, ethnic groups, and religions.

However, the detrimental effects often attributed to capitalism are not inevitable. They result from short-sighted greed and suboptimal leadership choices rather than any structural requirement of the system. The following are key shifts organizations must make in order to achieve profits without sacrificing the wellbeing of people or the planet.

Adopt holistic decision-making frameworks—ones that value employees, communities, and the environment as much as profits. Contrary to popular belief, there is no legal obligation for companies to prioritize shareholder profits above all else. Emerging initiatives, such as the “Universal Declaration for the Rights of Mother Earth,” challenge this notion by advocating for the recognition of ecocide as a crime prosecutable by the International Criminal Court, alongside genocide and war crimes. These movements underscore that businesses can integrate a broader perspective into decision-making, valuing social, environmental, and economic outcomes equally, not only for ethical reasons but because they align with long-term business viability.

Value stakeholders, not just shareholders. As a leadership consultant, I emphasize that the ruthless “make money while we can” mentality is not just unethical—it is outdated. Modern, effective leaders recognize the importance of valuing stakeholders rather than focusing solely on shareholders. While the terms are sometimes used interchangeably, they are fundamentally different. A shareholder owns stock and seeks the highest financial return on investment. Rising stock prices create profit opportunities, especially in today’s era of algorithmic trading, where many shares are held for mere fractions of a second. Investors, including pension funds, typically care less about individual companies than the overall performance of their portfolios.

By contrast, a stakeholder is anyone who can impact or be impacted by a company. Stakeholders include employees, suppliers, distributors, customers, regulators, and even external partners. Modern European and global leaders recognize that a company’s operational footprint—on air, water, land, wildlife, and future generations—must be considered alongside financial performance. Patagonia’s founder Yvon Chouinard captured this philosophy when he famously said, “Earth is now our only shareholder.”

Embrace annual reporting instead of quarterly reporting. Prioritizing shareholder interests over those of stakeholders harms both business and society. CEOs fixated on short-term gains to satisfy shareholders may neglect the long-term health of the company and its wider impact on society. This dynamic is reinforced in the United States, where publicly held companies must report quarterly to Wall Street. Research published in The Accounting Review demonstrated that shorter reporting intervals “engender managerial myopia,” reducing long-term investments, operating efficiency, and sales growth.

Companies reporting annually, as opposed to quarterly, achieved 10 percent greater annual sales as a percentage of assets, 3.5 percent higher annual sales growth, and 1.5 percent higher return on assets. Frequent reporting pressures executives to prioritize short-term results, often at the expense of sustainable long-term strategies. By contrast, longer reporting cycles—more common in the European Union—encourage leaders to make decisions that improve long-term viability, maximize profits sustainably, and allow executives to “do the right thing.”

Paul Polman’s tenure as CEO of Unilever from 2009 to 2019 exemplifies this approach. Together with Andrew Winston, he co-authored Net Positive: How Courageous Companies Thrive by Giving More Than They Take. Polman shifted Unilever from quarterly to annual reporting while embedding environmental and social responsibility into the Unilever Sustainable Living Program. Under his leadership, Unilever outperformed rivals, achieving returns more than double the FTSE index.

Alignment of profit and ethics is possible

The business case for responsible leadership is clear. Acting responsibly toward people and the planet reduces costs, mitigates climate risks, and enhances insurability and investment appeal. Long-term strategies also stabilize companies, nurture a culture of care, and cultivate employee engagement and purpose—critical factors for attracting and retaining talent, the most valuable asset in business.

European regulators and investors increasingly recognize that environmental, social, and governance (ESG) factors are not optional but central to sustainable growth. The EU’s Corporate Sustainability Reporting Directive (CSRD) exemplifies this shift, requiring companies to report their impact on people and the planet with the same rigor as their financial results. This aligns with the global trend of redefining corporate purpose beyond mere shareholder profit.

Modern leadership is therefore not about sacrificing profit for ethics; it is about aligning the two. By prioritizing stakeholders, extending financial reporting horizons, and integrating environmental and social responsibility into strategy, companies can thrive while contributing to a sustainable, equitable, and prosperous future. The leadership we need is bold, forward-thinking, and guided by the principle that long-term success requires doing the right thing for people, the planet, and profit alike.

About the Author

Maria Brinck is a top leadership training expert and Gallup Strengths Certified executive coach. She is the founder of Zynergy International and author of The Leadership We Need: A New Mindset for a Brighter Future. Maria helps leaders unlock hidden strengths, build thriving teams, and achieve sustainable success.

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By Katie Shonk

Cultural mismatches, especially between “tight” and “loose” organizational norms,  can derail even the most promising business partnerships. Here, Katie Shonk explores the importance of addressing these cultural differences early in the negotiation process and offers a practical framework for navigating cultural divides and building more resilient, successful collaborations.

When negotiating a new business partnership, from a product collaboration to a sales agreement to a corporate merger, organizations often approach negotiations with optimism about their strategic complementarity. Enthusiasm about the prospect of creating synergy through combined strengths spurs the belief that each side will overcome its weaknesses and begin anew.

Unfortunately, this focus on strategy often completely overlooks the importance of assessing cultural complementarity—that is, how well the organizations’ cultures are likely to mesh. That’s a significant oversight, as a culture clash—specifically, between “tight” and “loose” organizational cultures—is often to blame for partnerships that fall apart during the implementation stage, Stanford professor Michele Gelfand and her colleagues have found in their research. Recent negotiation case studies illustrate why cross-cultural partnerships are often bumpy and offer clues on how to avoid such pitfalls.

Troubled from the start

In 2022, online game engine Unity Technologies announced it had negotiated to purchase Israeli app-monetization platform IronSource for $4.4 billion. San Francisco-based Unity is known for democratizing game development—giving game designers at all levels, including beginners, the tools to bring their creative vision to (virtual) life. IronSource, by contrast, works to ensure that companies like Unity succeed financially through analytics, monetization, and other tools. By teaming up with IronSource, Unity aimed to grow and offer users new opportunities to market and profit from their games.

The tie-up remained troubled as reports of a debilitating culture clash emerged.

That might sound like a recipe for a win-win agreement, but many longtime Unity customers were upset by the news. They were suspicious of IronSource’s past ties to malicious adware and accused Unity of moving in a more corporate, bottom-line direction that betrayed its core audience. Shares of Unity fell 18 percent ¹ at the announcement.

Two years later, the tie-up remained troubled as reports of a debilitating culture clash emerged. “Unity’s working culture is slower and messier than the fast, aggressive way IronSource staff do business,” mobilegamer.biz reported.² Some Unity personnel perceived IronSource managers as bullies who didn’t tolerate disagreement.

Attempting to course-correct, Unity cut ties³ with IronSource’s founders in early 2024. Unity was “moving to a flatter, more functional structure,” but the change was also “cultural,” interim president and CEO Jim Whitehurst wrote in an email to his team: “Across the entire organization, we will need to come together and intentionally think through what type of team we want to be in order to reach our full potential.”

Though significant, the changes and soul-searching may have been insufficient. Many months later, IronSource middle managers were still clashing with Unity staffers, and morale remained low, sources told mobilegamer.biz.²

The Tight–Loose Divide

While there were doubtless numerous reasons for which the merger struggled, inattention to obvious cultural differences between Unity and IronSource during the negotiation phase and early days of the partnership stand out.

In their work, Gelfand and her colleagues have identified a cultural difference that helps to explain the misunderstandings and conflict so often found in cross-cultural partnerships and other interactions: the relative “tightness” or “looseness” of cultures’ social norms.

Social norms are the behaviors that a culture—whether a nation, a company, or a family—prescribes to be acceptable. Is jaywalking common or a punishable offense? Do meetings begin on time or start 10 minutes late? Are you expected to get straight As or to simply do your best? From childhood, we passively absorb the social norms of the cultures we belong to and often adhere to these norms unthinkingly throughout our lives.

In a survey of about 7,000 people from 33 countries,⁴ Gelfand and her team found national variation in the relative tightness of social norms. Some cultures, such as Japan, India, and Turkey, lean tight. In these countries, people are expected to adhere closely to laws, rules, and norms, and punishment for norm violations can be severe. Other cultures, including the United States, Brazil, and the Netherlands, fall on the loose end of the spectrum. In these countries, people face fewer constraints on their behavior. Still other countries fall in different points on the spectrum between tight and loose.

These cultural differences appear to have evolved over centuries in response to the level of threat in the environment. Countries and regions that have faced repeated threats to their survival, such as disease outbreaks, invasions, and natural disasters, developed strong social norms that promoted collaboration and an efficient response, writes Gelfand. By contrast, regions that have faced few threats have had less need for strong social norms and thus evolved to be looser.

These norm expectations shape the thoughts, preferences, and behaviors of a culture’s members. Generally speaking, people from tight cultures tend to be rule followers. They are often organized, self-controlled, resistant to new ideas and experiences, and rigid. By comparison, people from loose cultures tend to be more comfortable breaking rules. They are more likely to be disorganized, impulsive, open to new ideas, and creative.

Differences in Organizational Culture

Just as nations evolve to be relatively tight or loose, so do organizations, as well as industries and professions. Organizations such as hospitals, nuclear power plants, airlines, police departments, construction, and the military are usually tight; they are rule driven, formal, and hierarchical. Because mistakes within these organizations can cost lives, there’s little room for error, and a need for tight social norms that promote safety.

By contrast, organizations that thrive on creative thinking, flexibility, and innovation, including technology, design, and entertainment firms, tend to lean loose. In these organizations, risks can lead to big payoffs, and mistakes are often useful learning opportunities rather than devastating disasters.

More subtle tight–loose variations can be found within fields. While Unity and IronSource are both tech firms, Unity developed a loose culture in keeping with its mission of promoting creativity and innovation; by contrast, IronSource, with its focus on efficiency and the bottom line, established a tighter, more disciplined, and more hierarchical culture.

Big Differences, Big Problems

In a study⁵ of nearly 4,700 international $10 million-plus M&A deals from 1989 to 2013, Gelfand and colleague Chengguang Li found that companies with significant cultural differences experienced poorer long-term financial performance than those with more similar cultures. Mergers between companies with very different cultures “took longer to negotiate and finalize, had lower stock prices following the deal, and yielded much lower returns for the buyer in the deal,” writes Gelfand in her book Rule Makers, Rule Breakers.⁶ For typical deals, such cultural gaps were associated with the equivalent of $245 million in reduced net income over three years.

One prime example is the $36 billion merger in 1998 between automakers Daimler-Benz and Chrysler. Strategically, the DaimlerChrysler match seemed heaven-sent, enabling Germany-based Daimler to enter the lower-priced car market and U.S.-based Chrysler to make headway in Europe. The combined company’s share price soared on its debut.

But when staff came together at their shared headquarters in Stuttgart, Daimler’s tight, hierarchical German culture and Chrysler’s loose, egalitarian American culture didn’t mix well, explains Gelfand. To take one example, the Germans engaged in intensive prep work for team meetings and followed a strict agenda, while the Americans showed up expecting loose brainstorming sessions. As problems and conflict mounted, Daimler responded by taking over U.S. operations and laying off thousands of Chrysler employees. After years of low morale and stock price declines, the companies admitted defeat in 2007 and divorced.

Now consider the merger of two American companies from different industries: Amazon’s 2017 $13.7 billion acquisition of Whole Foods. Hopes were high⁷ that it would enable Amazon to expand beyond its online business and Whole Foods to lower prices and correct a sales slump.

But combining the loose, value-oriented culture of teamwork at Whole Foods and Amazon’s culture of tight, efficient business practices hasn’t been easy. Whole Foods employees were demoralized by Amazon practices they deemed heavy-handed, such as compliance scorecards that could lead to punishment and termination. Amazon has failed to capture a significant portion of the grocery market, and in January 2025, a Philadelphia store became the first in the grocery chain to unionize. In June, an Amazon reorganization plan leaked⁸ that included a new leadership team for Whole Foods and closer oversight of its corporate staff.

Negotiate Effectively Across Cultural Divides

As we have seen, partnerships between organizations with very different social norms are unlikely to succeed without a thorough consideration of their cultures. Here are four steps you and your organization can take to avoid a tight–loose culture clash and make the most of your contrasting strengths.

1. Identify differences

“Culture is like an iceberg,” writes Gelfand in Rule Makers, Rule Breakers. “Because organizational norms aren’t always visible, diagnosing a company’s relative tightness or looseness requires a deep dive to understand its practices, its people, and above all, its leaders.”

When negotiating a new business partnership, we often become so focused on negotiating financial terms and business goals that we neglect to carry out this kind of cultural comparison. Yet it’s an essential step in setting the deal up for long-term success.

Partnerships between organizations with very different social norms are unlikely to succeed without a thorough consideration of their cultures.

You might start by taking note of seemingly small differences in negotiating style. A negotiator from a tight culture might prefer to build trust gradually before getting down to business, whereas someone from a loose culture may be more open from the start—and less patient with trust-building niceties such as small talk and shared meals. When behavior seems puzzling, think about whether it might reflect unfamiliar but adaptive social norms.

2. Discuss preferences and values

Once you’ve identified cross-cultural differences, it’s time to address them directly. Gelfand recommends a “cultural assessment to understand how people, practices, and management reflect tightness or looseness in both companies.”

The aim should be to discuss not only the possible synergies of a cross-cultural partnership but also core values and potential challenges. For example, in its merger talks with IronSource, Unity leadership might have emphasized the value it places on inspiring creative thinking among its staff and users, as well as how its looser style manifests day to day in the organization. How were employees accustomed to being managed? How were they likely to respond to a more hierarchical management style?

IronSource negotiators, in turn, could have shared what management practices worked best for them and how they expected to lead. This information exchange could open up a frank consideration of what might go wrong and how culture clashes could be avoided and addressed.

3. Plan for success

After you have identified differences and complementarities between cultures, it’s time to come up with a plan to integrate them. Discuss whether this will be an equal partnership or whether one organization will take control. What areas of the combined business might benefit from greater tightness? Greater looseness?

Consider enshrining your core values and expectations in writing. When Disney purchased animation studio Pixar in 2006, Disney CEO Robert Iger agreed to ground rules aimed at protecting Pixar’s looser culture, according to Gelfand. Deal terms ranged from not requiring Pixar staff to sign Disney employment contracts to continuing Pixar’s annual paper airplane contest.

4. Address the disconnect

When cultures clash during the deal implantation stage, one side will often try to wrest control and impose its culture unilaterally. As we have seen, such power plays can exacerbate problems.

DaimlerChrysler was conceived as a “merger of equals”; when Daimler executives instead fell back on a tighter, unilateral decision-making style, they lost the trust of Chrysler employees. At Unity, replacing IronSource leadership didn’t address the underlying cultural disconnect. As Amazon imposes stronger managerial control on Whole Foods, it risks further employee backlash.

What works better? The careful, deliberate work of integrating the best of both cultures into the partnership. That might mean making projects more collaborative while adopting the efficient practices of the tighter culture. Above all, business partners should strive to address conflict head-on and try to appreciate what each side brings to the table.

About the Author

Katie Shonk writes articles on negotiation and dispute resolution for the Program on Negotiation at Harvard Law School, a university consortium comprising Harvard, MIT, and Tufts that conducts research and offers executive education programs in negotiation. The former editor of Negotiation Briefings, she is also a research associate at Harvard Business School and the Harvard Kennedy School. Shonk received her BS from the University of Illinois at Urbana-Champaign and her MA in creative writing from the University of Texas at Austin. She has published articles in the Harvard Business Review and other management journals. She is also the author of a novel, Happy Now?, and a short story collection, The Red Passport.

References

1. Why did Unity Software stock crash today? IronSource merger, lowered guidance hit shares. July 13, 2022. Seeking Alpha. https://seekingalpha.com/news/3856539-why-did-unity-software-stock-crash-today-ironsource-merger-lowered-guidance-hit-shares.

2. Inside Unity’s troubled $4.4bn IronSource merger. October 29, 2024. mobilegamer.biz. https://mobilegamer.biz/inside-unitys-troubled-4-4bn-ironsource-merger/.

3. IronSource founders out at Unity in major exec reshuffle. January 10, 2024. mobilegamer.biz. https://mobilegamer.biz/ironsource-founders-out-at-unity-in-major-exec-reshuffle/.

4. Differences Between Tight and Loose Cultures: A 33-Nation Study. May 27, 2011. Science. https://www.science.org/doi/10.1126/science.1197754.

5. The influence of cultural tightness-looseness on cross-border acquisition performance. March 2022. ScienceDirect. https://www.sciencedirect.com/science/article/abs/pii/S0167268122000105.

6. https://www.simonandschuster.com/books/Rule-Makers-Rule-Breakers/Michele-Gelfand/9781501152948.

7. One Reason Mergers Fail: The Two Cultures Aren’t Compatible. October 02, 2018. Harvard Business Review. https://hbr.org/2018/10/one-reason-mergers-fail-the-two-cultures-arent-compatible.

8. Leaked memo reveals new leaders reorganizing Amazon’s grocery business and integrating Whole Foods. January 12, 2025. Business Insider. https://www.businessinsider.com/amazon-grocery-leaders-reorganizating-whole-foods-2025-6?utm_source=chatgpt.com.

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By Dr. Max Reinwald

In the global context of mass migration and aging workforces, immigrant newcomers play a vital role in the labour markets of their host countries. Organisations must be aware of local and regional political climates, as support for far-right political parties may translate into colleagues undermining immigrant co-workers’ social standing and career prospects. This, in turn, can lead to stress, burnout, and risks to successful labour market integration.

Estimates place the number of people living outside their country of birth at over 280 million as of 2020, accounting for roughly 3.6 percent of the global population. Such high levels of international migration play an important role in the business ecosystem, with immigrants helping companies fill labour shortages, increase innovation, and secure prosperity in their host countries.

Yet, research shows that adjusting to work in a new cultural environment is difficult. Factors such as the local political climate can affect how easily immigrant workers can integrate into the workforce.

Many countries have seen a recent rise in far-right political parties, reflecting a growth in anti-immigrant sentiments. A better understanding of how this phenomenon creeps into work environments is crucial for organisations because this ideology manifests in social hierarchies that may exclude or undermine immigrant employees, affecting both their wellbeing and career development.

When Political ideology becomes social undermining

In a study I published with my colleagues Benjamin Korman, Florian Kunze, and Sebastian Koos, we investigate how support for far-right parties in a region affects the level of social undermining – deliberate behaviour to harm a person’s social standing and goal achievement – perceived by immigrant and native workers working there.

We collected and analysed survey data from over 1,000 immigrant and native apprentices based in Germany during their first 13 weeks of their apprenticeship. This is a critical time for employee onboarding, when newcomers start to build social relationships with co-workers.

Research also shows that contract dissolutions in Germany between apprentices and their organisations are reported as the highest within the first four months of the apprenticeship. This is when roughly 34 percent of contract dissolutions happen, suggesting this is a critical phase of the onboarding process.

We find that immigrants working in regions where far-right political support accounts for around six percent or less of the voter share report decreasing perceptions of social undermining over time. In contrast, immigrants working in regions where far-right political support comprises over 13 percent of the voter share perceive social undermining increases with time.

So, why is there a link between far-right ideology and this undermining behaviour?

The impact of social undermining on immigrant employees

One reason may be that far-right parties shaping public discourse portray immigrants as a threat to the prosperity and cultural identity of the native population. These political messages can seep into the workplace.

As a result, native co-workers may feel their group’s dominant position is under threat and respond by subtly undermining immigrant newcomers’ efforts to integrate and gain recognition. This social undermining can take many forms, such as being left out of conversations, receiving less support or information, or being criticised more often than peers.

These actions often have the effect of alienating immigrants in the workforce. Our findings show that increases in social undermining over time increase emotional exhaustion and hurt job satisfaction. Accordingly, immigrants working in regions with five percent or lower far-right political support report lower emotional exhaustion and higher job satisfaction due to their perception that social undermining by colleagues is decreasing with time.

On the other hand, immigrants in regions where far-right support is at 18 percent or above of the voter share experience the emotional toll of increasing social undermining. Native employees, whose perceptions of social undermining are unaffected by far-right support, show no comparable changes in their wellbeing.

The effect on immigrants stems from the repeated experience of rejection as they try to establish themselves as valued members in the workplace. Past studies have shown that immigrant newcomers are a group that tends to be particularly motivated to improve their social standing through work. However, their sense of belonging and future prospects may be eroded over time, with their mental health hanging in the balance.

What Organisations and leaders can do

To properly address the challenges facing immigrant newcomers, organisations located within far-right communities must acknowledge the increased risk that their employees may face negative social interactions, which could have a toll on their mental health.

Given the higher likelihood that immigrant workers may feel isolated or undermined, organisations must pay close attention to social dynamics outside of the immediate work environment. This is especially important because, as our study finds, it only takes 13 percent of the local population to support far-right political parties for immigrant workers to perceive increasing levels of social undermining.

There are several steps organisations and managers can take to support immigrant newcomers better.

First, organisations should proactively create an inclusive internal climate that counteracts negative societal narratives. Past research shows that inclusive organisational climates, where differences such as immigrant status are respected and valued, can significantly improve relationships across demographic groups. This means building a workplace where immigrant employees feel seen, supported, and included from day one.

Second, managers and leaders must set the tone. Even seemingly minor behaviours that repeatedly undermine immigrant employees, like systematic exclusion from conversations or repeated overly harsh criticism, can erode wellbeing over time. A zero-tolerance approach to such systematic social undermining is essential. Leaders should model inclusive behaviour and intervene early when problems arise.

Last but not least, our findings point to a broader message: companies should care about the political climate in which they operate. In the context of aging workforces and growing labour shortages, many firms depend on immigrant talent. If these employees are made to feel unwelcome, it risks harming both their wellbeing and the organisation’s long-term success. Defending the mental health and preserving the career prospects of immigrant employees and their native co-workers is both a moral and an economic imperative.

About the Author

Dr. Max Reinwald is an Assistant Professor of Management at Mannheim Business School. His main fields of research include responsible leadership, diversity in organisations, and change management. He is widely published in well-respected academic journals and is the recipient of numerous honours, including the Best Paper with International Implications Award in the Organisational Behaviour Division at the Academy of Management Annual Conference in 2022.

The post Onboarding Immigrant Employees Amid Growing Far-Right Support appeared first on The European Business Review.

By Fernanda Arreola, Damien Guermonprez, and Renaud Redien-Collot

The skills required to successfully lead one type of enterprise may not fully apply or be relevant to lead a different kind of business, even within the same industry. Adapting one’s approach is often necessary to meet the unique demands of each venture. The following article focuses on the differences between a startup’s business transfer (also known as a takeover) versus an established small or medium-sized enterprise (SME).

The business transfer market is set to grow significantly, with France expecting a 10 per cent increase in 2024 compared to 2023.¹ This surge is driven by baby boomers retiring, COVID-19-induced cashflow issues, and managers’ growing interest in partial ownership. France alone has around 80,000 firms for sale, impacting one million employees and leading to 7,000-9,000 takeovers annually.²

New research has attempted to understand how the strategy-building process differs between smaller firms and innovative start-ups. While SMEs are smaller versions of traditional corporations, start-ups are newer entities with innovative technologies or business models. Start-ups’ pace of development is more intense and irregular than that of small businesses.³

The business transfer process involves three phases and six steps⁴: the entrepreneurial decision phase (with the trigger to purchase, and the personal reflection), formalization (the implementation, and the turning point), and the buyer’s entry into the target (with the transition and the setting of a new direction). Emotional rebounds during this process can cause ruptures between buyers and sellers. But in the end, if the process is achieved, the acquirers will find themselves with three objectives: creating or defining their job, leveraging the transfer for economic advancement, and setting a strategy.

Building a strategy post-transfer involves identifying new opportunities, creating an entrepreneurial decision-making process, and focusing on performance. Leaders must balance a new strategic vision with their acceptance as legitimate leaders. Historically, one in five external business transfers in France fails after six years due to transparency issues and execution challenges⁵.

Case Study: Sme VS. Start-Up in the Financial Sector

At 36, Damien Guermonprez had a vision of his future while attending a business meeting in Lisbon. He realized that, like many high-level directors in his organization, he might end up in a non-strategic role before retirement. Determined to avoid this fate, he considered his options. He wanted a career filled with challenges and novelty in a high-paced environment and contemplated owning a firm. A decade later, when he found himself unemployed, he saw this as his opportunity. His main question was: How does a CEO become a small business owner?

Damien’s Origins

Damien was born into a family with a tradition of business ownership. His father was a successful businessman who provided a good standard of living for his seven children. Observing his father, Damien realized that owning and running a business in France could be complex due to bureaucracy and a high tax burden. He also feared the personal and financial consequences of entrepreneurial failure.

After graduating, Damien embarked on a remarkable career in financial services. By 2008, he was the CEO of Oney Bank, the banking division of Groupe Auchan. Under his leadership, the bank’s activities multiplied sixfold, expanded into a dozen countries, and established strategic partnerships with major brands. After nine years at the head of the bank, despite his success, Damien knew he had to evolve and he sought a new challenge.

Damien accepted a proposal to run the French operations of Aon, a global leader in insurance brokerage. However, a year later, a global restructuring ended his mandate, leaving him uncertain about his next career move.

A Unique Opportunity

Damien analyzed his options and decided that acquiring a small firm was the best path forward. He joined Cédants et Repreneurs d’Affaires⁶, an association for people seeking acquisition targets. Many members were former executives like Damien, lacking entrepreneurial experience. He believed that former CEOs were not always suited to buying small companies, due to their lack of operational management experience and necessary funds.

In 2010, Damien learned that Cetelem Belgium, a subsidiary of BNP Paribas, was for sale. Despite the financial risks, he saw potential due to his experience in consumer credit. He convinced Apax Partners to finance the acquisition, securing a 7 per cent ownership stake and the CEO position. The transaction required an initial investment of 13 million euros.

Transforming Buy Way

Damien rebranded the company as Buy Way, involving employees in the process to build a shared vision.

In September 2010, Damien moved to Brussels to lead Cetelem Belgium. The company had accumulated significant losses, and employees lacked trust in its future. Damien rebranded the company as Buy Way, involving employees in the process to build a shared vision. He implemented a new strategy within 100 days, emphasizing independence from BNP Paribas and collective effort.

Damien’s approach restored employee confidence and encouraged innovation. He introduced training plans, a Buy Way award for innovation, and upgraded IT tools to support e-banking. New partnerships and market entries followed, leading to rapid growth and profitability within a year. Four years later, Buy Way was sold to a London-based investment fund, Damien received his share of the proceeds and reinvested half of them. In 2024, Buy Way bought a Dutch consumer credit company to cover all Benelux markets.

Joining lemonway

In 2015, Damien joined Lemonway, a fintech start-up facing growth challenges. Founded by Sébastien Burlet and Antoine Orsini, Lemonway initially focused on mobile payment solutions. However, competition and financial losses forced a pivot to B2B services, providing payment solutions for platforms. Obtained in 2012, a new Payment Institution license enabled Lemonway to serve marketplaces, which had to delegate their payment operations to trusted third parties for regulatory reasons. The fintech provides them with payment processing, wallet management, and third-party payments within a “know your customer” (KYC)/anti-money-laundering (AML) regulated framework.

As CEO, Damien fostered a dynamic workplace culture and empowered young employees. He secured Series A fundraising and later became Executive Chairman, focusing on relationships with regulators, investors, and the payment industry. Antoine managed day-to-day operations, while Damien drove strategic direction.

Skills and achievements

Damien’s strategic vision and adaptability were crucial in both Buy Way and Lemonway. At Buy Way, he built trust and collaboration, leading to rapid profitability. At Lemonway, he navigated a constantly evolving business model and high employee turnover, maintaining a vibrant and motivating culture.

By 2021, Lemonway had become a leading pan-European payment institution, with significant growth in transaction volumes and revenues. Despite not yet achieving profitability, Damien remained committed to the company’s success. He balanced the customer portfolio and established partnerships with major banks, positioning Lemonway for future growth. Lemonway reached €40m revenues in 2024 and had become highly profitable the year before, certainly doubling its 2021 valuation.

Reflecting on the journey

Damien’s journey from Buy Way to Lemonway highlights the differences in leading an SME versus a start-up. His ability to adapt, build trust, and navigate complex situations was key to his success. He recognized the importance of leveraging existing resources, fostering strong relationships, and maintaining a strategic vision⁷.

The business transfer processes for Buy Way and Lemonway differed in business model evolution and ownership transfer. Buy Way’s transfer had no impact on its business model, while Lemonway’s new investors influenced key market decisions. Buy Way’s ownership transfer was complete and immediate, whereas Lemonway’s was gradual.

Many differences exist in both companies, starting with the fact that Buy Way continues in its existing market while Lemonway radically pivots. Buy Way’s opportunity is to become autonomous and more agile and to gain market share, whereas Lemonway seeks to exploit a regulatory opportunity. Finally, in the case of Buy Way, Damien is in sole charge of operations. In the case of Lemonway, Damien is associated with Sébastien Burlet, the co-founder, who left in 2018. Damien then forms a dynamic tandem with Antoine Orsini, who takes charge of operations, while Damien adopts a more strategic and political stance, focusing on the company’s external relations (regulators, payments, and crowdfunding associations).

To sum up, Buy Way and Lemonway’s business transfer processes differ in two respects: (1) from the point of view of the evolution of the business model, and (2) from the point of view of the transfer of ownership. Regarding the business model, Buy Way’s business transfer has no impact on its business model. Meanwhile for Lemonway, the arrival of new investors affects many key market decisions, including the consumers, the market where it operates, the size of its clients, and the services proposed. Regarding the transfer of ownership, the ownership of Buy Way is transferred in full and in one go from BNP Paribas to Apax, whereas in the case of Lemonway, the transfer of ownership is gradual. Damien’s approach to legitimacy differed between Buy Way and Lemonway. With Buy Way, Damien was experiencing more direct leadership than he had ever known in his professional career as CEO. At Lemonway, he learned to deploy his leadership skills by participating more directly in the ownership structure.

Business transfers require strategic vision and adaptability, with different approaches needed for SMEs and start-ups.

A final important point is the mobilization of the skills of the new head. Damien’s motivation and self-confidence, bolstered by prior achievements, enabled him to adapt to different leadership roles and create trust. His ability to navigate complex negotiations and pivot strategies was crucial in relaunching Buy Way and Lemonway. Entrepreneurial legitimacy, based on demonstrating and sharing motivation, was key to facilitating change. At Buy Way, he involved staff in organizational changes, while at Lemonway, he built relationships with founders and the core team. High turnover in start-ups made relational legitimacy more challenging than in SMEs.

Meanwhile, not all skills were processed by Damien. During the entry phase of the business transfer, Damien relied on existing teams for information and support, consolidating his legitimacy. Socialization dynamics helped him gain recognition and respect from employees, boosting their motivation.

In summary, Damien’s skills and legitimacy played a critical role in the successful transfers of Buy Way and Lemonway. His ability to adapt, build trust, and navigate complex situations ensured the development and growth of both entities.

Finally, we must point to the fact that the motivation will be stimulated by a sense of self-efficacy. For such a reason the acquirer must have identified one of three possible objectives of the business transfer:

• Using the business transfer to create a job for oneself to no longer be dependent on a sometimes-burdensome hierarchy. This implies that the targeted business is small and is currently capable of providing a salary over the long term.
• Leveraging the business transfer as a vehicle for economic and social advancement. The targeted business therefore has the potential to increase its profitability, resulting in a higher level of income for its manager.
• Leading the business transfer as a personal fulfillment project⁸. The targeted business has a structure and stable day-to-day operation, providing the acquirers with the possibility to free themselves from repetitive or operational tasks and assume a directive role.
• In summary, business transfers require strategic vision and adaptability, with different approaches needed for SMEs and start-ups. Successful transfers depend on clear strategic action and the ability to navigate complex emotional and operational challenges.

Even if Damien’s case remains unique, we could make the hypothesis that a first experience of taking over an SME can be an excellent test bed for taking over a start-up. Of course, the takeover of start-ups in France and Europe primarily raises the question of the flow of capital that can be mobilized. However, Damien’s leadership with both investors and employees could inspire a new generation of start-up buyers. To improve the management of start-ups in Europe, we may need to encourage more systematic research into serial business transfer, which combines the takeover of SMEs and start-ups.

About the Authors

Fernanda Arreola is a Professor of Strategy, Innovation, and Entrepreneurship at ESSCA. Her research interests focus on service innovation, governance, and social entrepreneurship. Fernanda has held numerous managerial posts and possesses a range of international academic and professional experiences.

Passionate about innovation in financial services, Damien Guermonprez has managed some fifteen credit institutions, leasing and insurance companies for major groups. He was CEO of Oney, the bank of the Auchan Group. Then, he became an entrepreneur by buying out a Belgian credit company and running the Lemonway payment institution.

Renaud Redien-Collot (Ph.D Columbia U., New York and HDR,URCA) is dean of faculty at ESCE International Business School (OMNES GROUP). His research interests cover the study of gender in the fields of entrepreneurship, organizational theory and strategy. He is a member of the ERD and RIPME editorial committees.

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By Ari-Matti Erjansola

This essay discusses the plural nature of value in business, arguing that value is not fixed or purely economic but relational and shaped by context and culture. Drawing on marketing, psychology, and economics, it shows how people assign worth and helps businesses to value in financial and social terms.

“Anything capable of being appreciated (wished for) is a value.” — Park & Burgess

The concept of value is central to business and economic thinking, yet it remains surprisingly elusive. Markets typically treat value as objective and price-based, but in practice, people often prioritize other considerations. From emotional attachments — such as loyalty to a long-time supplier despite cheaper options — to moral convictions, like supporting a politically sensitive cause that risks reputational damage, and aesthetic preferences, such as insisting on a particular shade of product packaging because it “feels right” even though it tests poorly in focus groups, people routinely value things that defy market logic. As Park and Burgess noted nearly a century ago, value is not inherent in objects but found in their capacity to be appreciated.

Even within business itself, the term value has contradictory meanings. In branding, for example, authors have distinguished between brand value — a financial measure of how much a brand contributes to a firm’s market value — and brand equity — a consumer-centric concept based on perceptions, emotions, and cultural meanings. Brand value may show up on a balance sheet, while brand equity lives in people’s heads. This distinction already suggests what this essay will argue: that value is plural, contingent, and identity-bound. It cannot be reduced to price or utility, but must be understood as a socially and psychologically embedded phenomenon.

From customer value to socially embedded valuations

In business and marketing discourse, “creating value” is often shorthand for increasing performance, efficiency, or distinctiveness. A basic assumption here is that value can be designed and delivered. A common way to approach this is to distinguish four types of customer value: functional, experiential, symbolic, and cost-based. Functional value refers to how effectively a product or service performs its intended purpose, while experiential value focuses on the emotional and sensory responses it evokes. Symbolic value, on the other hand, reflects the psychological meanings people associate with it, while cost or sacrifice value involves the perceived effort, time, or money required to obtain or use the product, emphasizing an objective price and subjective trade-offs.

These categories are rarely isolated in practice, and a single product can often address multiple types of value. A car can for example transport people reliably, provide experiences through its design and driving characteristics, meet symbolic needs by expressing various identities, such as environmental friendliness, safety and responsibility or freedom and youthfulness.

Both in marketing and economics, value is, however, increasingly approached not as an inherent feature of a product, but as something constructed in a cultural context through interpretation and use. Reflecting the distinction between brand value and brand equity, consumption is viewed not as simply a response to needs, but a way to construct identity and navigate social worlds. Value is subjective, and experienced individually in co-creation between the firm and the customer. The symbolic meaning and the corresponding economic value of a product are thus shaped by the norms, shared beliefs, and social relations of those acquiring it. Someone who is environmentally conscious may find added value in purchasing second-hand, while the very same product might be rejected when sold new. This highlights how utility of a product can become disconnected from functional considerations due to identity-based needs.

For any business, a key consideration is this distinction between financial and perceived value. As value is subjective, price considerations tend to be reference-dependent and bound to evaluations of the fairness of the deal and how the evaluator categorizes the investment, depending on expectations, prior experiences, and how the overall situation is presented and perceived. Owners of electric cars have had firsthand experience of this through price cuts. While lower prices make the segment more accessible, they can also trigger feelings of unfairness and diminish the symbolic and identity-based value that early adopters associated with their purchase. While the material utility of the car remains the same, its value as a marker of identity and group membership may decline as the product becomes more commonplace and less distinctive within the social category it once signified. Financial and perceived value are thus closely intertwined, but not necessarily aligned.

If we move from this business perspective to the multiplicity of human needs, we of course realize that behind each of these value types lie diverse needs, desires, and motivations. Two customers may disagree on whether food should be valued for its authenticity or its ease of use. Both may agree that it should reflect their identity, but differ in what that means. For one, buying organic ingredients from a local producer may signal self-discipline, health, or a sustainable lifestyle, while for another, choosing a ready-made supermarket meal may reflect practicality and ease-of-use. The value in these judgments lies in the eye of the beholder.

The psychology of values

A potential psychological explanation for this variation comes from Schwartz’s theory of basic human values, which identifies ten universal values clustered into four higher-order orientations. These orientations are organized along two dimensions, i.e. openness to change versus conservation, and self-enhancement versus self-transcendence. Prioritizing one orientation typically involves downplaying the other — for example, valuing tradition may conflict with novelty, just as striving for personal status may be at odds with commitments to equality. Similar logic often applies in business, where positioning requires making choices instead of appealing to everyone.

The value types from functional utility to symbolic and identity-based meaning illustrate how people prioritize differently. Furthermore, the differences align with basic human values: we can emphasize what is familiar and reliable, what is novel or self-expressive, or we can be guided by ideals, such as fairness, loyalty, or efficiency. These orientations also shape how we evaluate worth. Rather than assessing value in absolute terms, we compare against what we expect, what others have, and take the social context of the transaction into account. Our position and identity influence the reference points we use, and in turn, how fair, desirable, or costly something feels.

Understanding what people value means understanding who they are and what they seek to express. For someone who values security, functional reliability and predictability may matter most. Those drawn to excitement or self-expression may expect novelty, aesthetics, or emotional richness. If achievement is the priority, value may be found in performance, distinctiveness, or signals of success. Cost and sacrifice may be valued not only financially, but also in what they communicate. Buying second-hand can express sustainability or restraint, while paying full price may feel like a privilege or a burden, depending on the frame. A supermarket meal might reflect efficiency or pragmatism. An electric car can express an environmental identity, but lose that meaning if it becomes too commonplace. While products, prices, and brands all carry value cues, they need to align with how the targeted customers see themselves.

Taken together, the frameworks explored in this essay support a pluralistic view of value — one that acknowledges that value is not objective or fixed, but shaped by context, culture, and identity. Market price can be a poor proxy for symbolic, experiential, or identity-relevant worth when what is perceived as desirable, legitimate, or even offensive is filtered through the lens of social belonging and self-understanding. And while companies strive to craft value through features or design, value is always co-created, emerging through use and interpretation.

This also helps explain why value is often contested. What one group finds meaningful or admirable, another may find trivial or even harmful. Value creation is thus never a strictly technical or economic task, but a social, cultural, and political one.

Conclusion on value

“Anything capable of being appreciated (wished for) is a value,” wrote Park and Burgess — a reminder that value is not fixed in things, but in how they are experienced. This helps explain the frequent disconnect between what is considered valuable in economic terms and what people actually find meaningful. A product may be priced high yet fail to resonate; another may offer little financial return but carry personal or symbolic weight. Value is not simply measured — it is felt, interpreted, and situated in context.

Social science perspectives help explain why. Findings from psychology, marketing, and economics all point to the same insight: what people consider valuable depends on who they are, what they believe, and what is their social context. From this perspective, “adding value” means aligning these subjective valuations with the economic or strategic goals of a product, service, or institution — making something matter in ways that are both emotionally and organizationally significant.

This understanding has consequences for businesses. Attention should shift from features to social fit, i.e. from what a product does to how it connects with customers, by considering who they are, what they value, and how their needs are met. Businesses need to understand identity motives, anticipate trade-offs, and align products, prices, and brand narratives with the way their customers see themselves. For some, functions may carry deeper significance, while others prioritize novelty, aesthetics, or moral alignment. Even pricing decisions are never neutral, as they shape perceptions and are affected by expectations and contextual factors. Value, then, is not a property, but a relation — and to understand it is to ask not only what something is worth, but to whom, why, and in what context.

About the Author

Ari-Matti Erjansola, PhD, is a social and organizational psychologist and Senior Lecturer at Laurea University of Applied Sciences, where he teaches business administration and conducts multidisciplinary research on organizational change. He has an extensive background in helping companies and professionals across industries solve business challenges through executive education.

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By Karin Mugnaini

Negotiation is a strategic business driver with impact on value creation and performance. This article explores how companies can achieve consistent success by developing a negotiation mindset. It highlights key levers—training, alignment, role clarity, and structured frameworks—that enable organizations to negotiate effectively across all levels and functions.

Winning a negotiation is of course a great feat. However, one win may not always assure the next. How important really is negotiation today in business? And why is it critical to hone your and your company’s skills as much as possible to make your negotiations consistently successful?

Besides contributing qualitatively to business, negotiation offers quantitative advantages– value creation, cost savings, enhanced revenue, and risk mitigation. Although often difficult to measure, one commonly cited statistic is that companies that invest in improving their team’s skill sets can improve overall EBIT by 5 to 7%. Consequently, company negotiation training programs can yield strong returns for you and your firm. The learnings from such programs can help to uplift revenues through higher close rates and better pricing strategies; achieve improved terms and reduced discounting, yielding margin growth; give you the confidence to close more quickly with better-prepared teams, thus delivering efficiency gains; reduce your opportunity costs by speeding up cycles so you can consider additional deals, and deliver strategic benefits including enhanced customer lifetime value, more resilient partnerships, and sustained long-term growth.

Key here is the reference to both you the negotiator, and your organization. Mastering negotiation depends on the individual, the team and the company. It is important that the individual negotiator, the broader team and overall organization be skilled and aligned in negotiation. Set up in this way, strategic consistency becomes achievable, preparation and intelligence can be more easily shared, and both trust and confidence can be built– all of which lead to repeatedly better outcomes.

Many top negotiation consulting firms emphasize that individual “brilliance” of say, one top negotiator or one high performance negotiation team cannot substitute for organizational readiness. This readiness requires company-wide negotiation frameworks, aligned go/no-go criteria, and role clarity (who leads, who escalates, who approves). Such preparedness separates the good from the great, the transactional negotiators from the strategic negotiators. This organizational readiness is what we will herein refer to as the negotiation mindset.

Moving your organization towards a negotiation mindset is a smart step to future-proof your business. By instilling your company with a new negotiation mindset, you can avoid painful and costly misalignment or skill gaps—ones that can lead to inconsistent objectives, internal undermining, missed leverage and post-deal execution problems. No company can afford such outcomes in today’s challenging environment.

If we define mindset as set of beliefs, attitudes, and perspective that shapes how a company interprets situations, makes decisions, and responds to challenges, we can better understand how, even in today’s VUCA (volatility, uncertainty, complexity and ambiguity) world, we can proactively shift towards growth and progress. American psychologist and Stanford Professor Carol Dweck’s research and writings on fixed versus growth mindsets is useful here. She explains that a fixed mindset is the belief that abilities are static and avoids challenges, in contrast to a growth mindset which represents the belief that abilities can develop and embraces learning. Dweck’s work has had major influence in education, leadership, coaching, and personal development worldwide and is also highly relevant to the push for a negotiation mindset transformation. Why? Because through repeated learning, companies can develop their abilities to negotiate—and this drives growth in business.

Achieving a real negotiation mindset switch in a company—shifting from reactive, transactional, or siloed behavior to proactive, strategic, integrated and value-driven negotiation—requires a deep cultural and structural transformation, not just training (NB: culture will not be covered in depth in this article, as it warrants a much deeper discussion).

So what does it take to start a negotiation mindset transformation? Some evident answers include seeing the negotiation as a relationship-building opportunity, not a battle; preparing thoroughly, not improvising; seeking understanding, not arguing; and looking for value-creating trade-offs, not rigid dig-ins. Negotiation mindset champions negotiate for results, embrace discomfort and negotiate to win.

One recommendation is to begin with the entire organization—from board, C-suite or executive leadership levels, senior management or operational leadership, to middle management, frontline or supervisory management and individual contributors or staff. Include all levels in the transformation so the company is aligned. Make sure the strategy set is understood by all, and the negotiation requirements and goals are clear throughout all hierarchical levels.

Next, assure that the right negotiation teams are created and that roles are clearly defined. Who is part of the team? Who is the ultimate decision-maker on the team? Who authorizes the negotiator to negotiate? Who supports the negotiator during the negotiation? What are the communication and reporting channels between these actors, and how and when are they to be used?

Now, as a company, build a disciplined roadmap and consistent framework that takes into account the strategy, the tactics, and even ways for overcoming power imbalances and difficult stakeholders. Elements of an effective framework that supports negotiation mindset transformation include executive sponsorship and role modeling; shared language; scheduled company-wide training and application; internal alignment on goals and negotiation mandates; embedding the appropriate technology, processes and metrics; a negotiation culture.

To succeed in today’s complex business environment, negotiations must be conducted in a coordinated and strategic way—across every level of your organization. This unified, company-wide approach to negotiation ensures that everyone speaks the same negotiation language – from preparation, to opening, with leadership and through deadlock.

About the Author

Karin Mugnaini is Associate in Negotiation Excellence at the world renowned Schranner Negotiation Institute. Karin was the former Head of the International Alumni Association at IMD and President & COO of the Lorange Network. She has held positions in Europe, Asia and the US across diverse sectors, in business development, marketing and communications.

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By Alex Milovanovich

Blending classic and modern strategy thinking, this article presents the Dynamic Strategy Map – an iterative, seven-step process, integrating deliberate strategy building with adaptive execution. The model – illustrated by Microsoft’s Nadella-era pivots – equips leaders to address uncertainty, test assumptions, build scenarios and adjust course as conditions evolve.

The inspiration for this article stems from a persistent challenge: the absence of a comprehensive strategy map capable of effectively tracking the intricate decision-making process during the strategy formulation stage, while simultaneously providing clear visual linkages between the initial situation, underlying assumptions, strategic choices, and eventual execution – in a way that remains relevant amid continuous change. While strategy maps based on the Balanced Scorecard have proven valuable for visualizing strategy execution, there remains a critical gap in tools that support the messy, iterative work of strategy formulation itself.

This gap becomes especially problematic in an environment where competitive landscapes shift abruptly, technological disruptions accelerate unpredictably, and geopolitical tensions introduce sustained volatility. Traditional methods of strategic planning – often built on linear, static models – are no longer sufficient in an era where adaptability is a core requirement. Today’s leaders need tools that support real-time updates, scenario testing, and iterative refinement, rather than rigid frameworks that assume a predictable path.

To address this urgent need, this article introduces a novel approach to visual strategic mapping – one that integrates continuous adaptation and real-time feedback loops into the core of the strategy formulation process. By integrating continuous environmental sensing, assumption tracking, and scenario war-gaming into a single visual model, it enables organizations to navigate volatility, enhance their agility and resilience, without losing strategic coherence in the face of change. Grounded in both ancient wisdom (Sun Tzu’s principles of fluid adaptation) and modern strategic theory (including agile and adaptive frameworks), and illustrated through Microsoft’s cloud transformation, this approach does more than plan for multiple futures – it builds an organizational capability to continuously evolve strategy as reality unfolds.

Theoretical Foundations for Adaptive Strategy Visualization

Across history, strategists have aimed to formulate and execute winning strategies. Yet, today’s volatile and uncertain environment demands a new approach: one rooted in continuous evaluation, dynamic adaptation, and real-time feedback. This article’s mapping logic synthesizes foundational principles from ancient wisdom, military strategy, corporate foresight, systems thinking, and visualization techniques, addressing diverse challenges of dynamic environments.

Adapting to a Dynamic Environment: Lessons from Sun Tzu

Sun Tzu’s The Art of War remains one of the most influential strategy texts, offering principles that remain highly relevant in contemporary decision-making. One of his core ideas is that strategy must flow like water, adapting to the terrain rather than rigidly following a predefined path. This concept of dynamic adaptation is central to navigating unpredictable environments.

Closely tied to this idea is situational awareness, another key theme in Sun Tzu’s work. His “Know Yourself, Know Your Enemy” principle emphasizes the importance of understanding both internal and external conditions before making strategic decisions. He also stresses constant evaluation, arguing that successful strategists must continuously assess strengths and weaknesses, adjust tactics, and exploit opportunities as they arise.

Furthermore, his recognition that “The Unpredictable is Invincible” underscores the need to embrace uncertainty and build strategies that can adapt to unforeseen events. This mindset calls for learning, flexibility, preparation for multiple outcomes, and a willingness to pivot when necessary.

Scenario Planning: Preparing for Multiple Futures

Scenario planning emerged as a structured methodology in the 1970s, pioneered by Royal Dutch Shell under Pierre Wack. Unlike conventional forecasting, scenario planning does not attempt to predict one definitive future but instead explores multiple plausible outcomes based on critical uncertainties and market dynamics. This approach helps organizations stress-test their strategies against different possibilities, enabling them to remain resilient in the face of sudden change.

OODA Loop: Decision-Making in Fast-Moving Environments

Developed by U.S. Air Force Colonel John Boyd in the late 1970s and early 1980s, the OODA Loop – Observe, Orient, Decide, Act – is a decision-making framework designed for rapid adaptation in dynamic and competitive environments. The key insight behind OODA is that strategy is an ongoing process, requiring constant observation and adjustment rather than a one-time decision. This iterative process is not just about speed, but about improving the quality of decisions through continuous learning and adaptation. Organizations that cycle through OODA faster than their competitors can gain an edge by outmaneuvering uncertainty.

Balanced Scorecard & Strategy Maps: Structuring Strategic Execution

While traditional Balanced Scorecard-based strategy maps (Kaplan & Norton, 2001) have proven useful for visualizing and communicating strategy during execution, they focus primarily on translating strategy into operational objectives across four key areas: Financial, Customer, Internal Processes, and Learning & Growth. However, they do not inherently address strategy formulation – an important limitation when dealing with complex, evolving environments. They excel at tracking what to achieve but not how to adapt the strategy itself.

Emergent Strategy: An Alternative to Deliberate Planning

While many strategy frameworks assume a deliberate approach, Henry Mintzberg introduced the concept of emergent strategy, which contrasts with pre-planned strategic decision-making. Instead of top-down formulation, emergent strategy unfolds during execution, shaped by bottom-up discovery, learning, and adaptation – allowing organizations to adjust dynamically based on real-world developments.

Each of these frameworks offers essential insights into awareness, adaptability, uncertainty, and feedback – core needs for navigating today’s turbulent environment. While powerful on their own, their integration into a dynamic mapping structure creates a more cohesive and responsive approach. Ancient wisdom reminds us that strategy is fluid; modern tools provide components for responsiveness. The next chapter introduces such a framework, designed to guide continuous strategic adaptation.

The Adaptive Strategy Process: Seven Essential Steps

This chapter introduces the Dynamic Strategy Map (DSM), a seven-step process for guiding organizations through strategic design and adaptation in dynamic, uncertain environments. Building on the theoretical foundations from the previous chapter, it presents a practical, visual framework. Microsoft’s transformation under Satya Nadella serves as the primary example, illustrating each step in action. The DSM offers a structured yet flexible approach, emphasizing continuous learning, iteration, and responsiveness to change.

1. Situation Analysis – Seeing the Strategic Landscape Clearly

Every great strategy begins with a clear-eyed view of reality. The first step in our dynamic mapping process calls for a candid assessment of both internal and external conditions – what Sun Tzu might describe as “knowing yourself and knowing your terrain”.

Internally, this means understanding your organization’s core capabilities, culture, and key stakeholders, including employees, senior leadership, and shareholders. Starting here helps prevent later misalignments between strategy and organizational DNA, such as cultural resistance to change.

Externally, the assessment includes customers, competitors, markets, and the broader environment. A thorough industry analysis – using Porter’s Five Forces – examines competitive rivalry, the threat of new entrants, buyer and supplier power, and substitutes. A PESTEL analysis adds depth by evaluating broader macro forces: political, economic, social, technological, environmental, and legal.

A critical element of this analysis is placing customer needs at the heart of strategic thinking. Equally important is identifying other key stakeholders – employees, suppliers, regulators, and communities – and articulating a clear value proposition for each.

Microsoft’s transformation under Satya Nadella offers a powerful example. When Nadella took the helm in 2014, he began by confronting uncomfortable truths. Internally, Microsoft’s legendary Windows-centric culture had become a straitjacket – engineering silos prevented collaboration, while the company’s identity remained tethered to declining PC markets. Externally, the ground was shifting beneath their feet: developers were flocking to open-source platforms, enterprises were embracing cloud solutions, and mobile-first workflows were becoming the norm.

Microsoft’s leadership performed a deep analysis of its ecosystem, visualizing how technology layers from infrastructure to platforms were evolving. They distinguished between hard facts – like stagnating Windows revenue growth – and soft signals, such as GitHub’s rising popularity among developers indicating a broader open-source movement. Crucially, they placed customer needs at the center, recognizing that value had shifted from software licensing to cloud-enabled productivity.

2. Surface Key Assumptions & Uncertainties – Stress-Testing Beliefs

The purpose of this step is to identify and examine the assumptions, fragile beliefs, hidden biases and uncertain variables that underpin current strategic thinking, before they are undermined by changing circumstances. Acknowledging that strategic inflection points often begin with the courage to question core beliefs, this step emphasizes that unchallenged assumptions can silently sabotage even the most well-intentioned strategies. Assumption mapping helps by visually identifying key assumptions, their interdependencies, and their influence on strategic outcomes. This makes the underlying logic of a strategy easier to interrogate – and its vulnerabilities more visible.

Microsoft, under Nadella, challenged several deeply held assumptions: that Windows should remain the central focus of the user experience, that open-source software was fundamentally incompatible with their business model, and that their existing dominance in the enterprise market guaranteed future relevance.

To rigorously test these assumptions, Nadella’s team drew on Red Team-style thinking – an adversarial process designed to expose blind spots and stress-test core logic. One key assumption they dismantled was that platform lock-in remained a viable strategy. In its place, they recognized the strategic importance of openness, developer ecosystems, and cross-platform interoperability. This shift also surfaced new uncertainties – such as whether open-source adoption would threaten margins, or whether developers would trust Microsoft’s new posture.

3. Explore & Test Scenarios – Anticipating Alternative Futures

Strategic decisions cannot be made in isolation – they must be stress-tested against alternative futures to ensure resilience. This step begins with examining possible scenarios and understanding how key stakeholders (customers, competitors, regulators, and market influencers) might react under varying conditions. Instead of simply considering optimistic or pessimistic outcomes, organizations must develop 3-4 distinct scenarios – such as a disruptive competitor entry, regulatory shock, or a fundamental shift in customer behavior.

To avoid groupthink and confirmation bias, it is essential to include contrasting perspectives and divergent assumptions. Tools like scenario planning and war-gaming – simulations of competitive and market dynamics – enable organizations to anticipate potential reactions from customers, competitors, and regulators under each scenario.

Microsoft confronted the rapid rise of Amazon Web Services (AWS) by analyzing how AWS might scale its advantage, how regulators might intervene in cloud markets, and how enterprise customers could shift expectations. By stress-testing its strategies against these scenarios, Microsoft determined that leaning into hybrid cloud solutions and open-source integration would differentiate Azure while mitigating antitrust concerns. These insights shaped Microsoft’s decision to expand cross-platform compatibility, strategically balancing openness with proprietary advantages.

4. Develop Strategic Options & Trade-Offs – Weighing Paths Forward

A well-crafted strategy is not a single, rigid path – it is a set of viable alternatives, each with its own advantages, trade-offs, and risks. This fourth step transforms insights from scenario testing into concrete strategic options, and establishes a framework for prioritizing among them. To facilitate this process, several tools can be employed, including Real Options Logic (viewing strategic investments as options, not just commitments) and Strategic Choice Structuring (a systematic approach to decision-making).

The prioritization of strategic options should be guided by a comprehensive set of criteria:

• Value Creation Potential: The degree to which the option is expected to generate value for key stakeholders – customers, employees, and shareholders.
• Feasibility: The availability of resources, the alignment with existing capabilities, and the potential challenges associated with implementation.
• Risk and Return: What is the expected upside, and what’s the worst-case downside? Tools like scenario-adjusted Net Present Value (NPV) help quantify both reward and risk, including the probability of success and scale of potential loss.
• Resilience: The option’s ability to adapt and remain viable across multiple scenarios and uncertainty.
• Differentiation: The degree to which the option offers a unique and defensible position in the market.
• Time to Impact: The balance between short-term and long-term effects.
• Strategic Fit: The alignment of the option with the organization’s overall vision, core values, and existing capabilities.

Microsoft demonstrated this kind of trade-off analysis when evaluating the acquisition of LinkedIn. While no internal details are public, it’s likely that Microsoft considered building comparable social-professional capabilities in-house. However, creating a competing platform would have taken years, with uncertain user adoption and limited defensibility. In contrast, acquiring LinkedIn provided immediate access to a massive professional user base, a rich data ecosystem, and network effects that enhanced Microsoft’s AI and enterprise offerings like Dynamics 365 and Azure AI. Strategically, the acquisition scored higher on speed to impact, data-driven differentiation, and long-term value creation – despite its high financial cost.

5. Make Strategic Choices & Set Direction

After identifying viable strategic options, organizations must commit to a clear direction, define their goals, and articulate the rationale behind their choice. This step is critical – it transforms analysis into action and ensures alignment across the organization. Strategic decisions should be bold yet adaptable, backed by structured foresight mechanisms to prevent miscalculations.

Effective decision-making involves two crucial elements:

• Pre-Mortems: Organizations must assume failure and ask, “Why did this strategy fail?” to uncover potential blind spots, fragilities and second-order effects before execution.
• Tripwires: Conditional checkpoints trigger a reassessment if certain key metrics deviate, preventing organizations from sticking to failing strategies out of inertia.

Microsoft’s high-stakes decision to partner with OpenAI is a textbook case. It chose to integrate cutting-edge AI capabilities into its ecosystem, rather than develop them entirely in-house. This strategic bet aligned with its cloud-first vision and accelerated differentiation in productivity tools and cloud services. The decision signaled a long-term strategic intent: to embed AI as a “copilot” across work, code, and search. While the commitment was significant and partially irreversible, Microsoft remained attentive to emerging signals – such as user adoption, developer feedback, and regulatory pressures – ready to adjust how the partnership evolved over time. Nadella’s leadership combined bold intent with adaptive awareness.

6. Identify Risks & Mitigation Plans – Building Resilience

No strategy is immune to disruption. Anticipating potential derailers, mapping internal and external risks, and designing backup plans are essential to ensuring long-term viability. In this sixth step organizations must assess the likelihood and impact of key risks, developing structured mitigation strategies to address them proactively. Resilience isn’t about resisting change – it’s about absorbing shocks, adapting, and, as Netflix’s use of Chaos Monkey shows, even introducing controlled disruptions to expose vulnerabilities before they cause real crises.

As Microsoft expanded its cloud and AI presence, it faced regulatory scrutiny over market dominance. To strengthen industry-wide interoperability and developer trust, the company embraced open-source collaborations. Under Nadella’s leadership, Microsoft open-sourced .NET, acquired GitHub, and supported Linux integration within Azure – moves that softened its historic “walled garden” image, bolstered ecosystem adoption, and strengthened its position as a trusted, neutral platform – while also reducing its antitrust exposure.

7. Adaptive Execution – Steering Through Uncertainty

The final, yet continuous, step in the Dynamic Strategy Map is Adaptive Execution. This phase acknowledges that even the most meticulously formulated strategies must be implemented flexibly, with a constant emphasis on monitoring, learning, and real-time adaptation. It is here that the strategy truly comes alive, responding to the dynamic environment it seeks to navigate.

At the core of adaptive execution are structured feedback loops. Tools like After-Action Reviews (AARs) allow teams to capture lessons from critical decisions and feed them back into future planning. Continuous experimentation, such as A/B testing, provides granular feedback for data-driven adjustments. Dynamic dashboards track performance in real time – not just outputs, but responsiveness itself.

Microsoft’s evolution under Satya Nadella exemplifies structured adaptation. As Azure scaled, Microsoft employed Objectives and Key Results (OKRs) to drive growth and monitor strategic direction. Feedback from customers, developers, and partners was embedded into product roadmaps, enabling dynamic refinements across the ecosystem. When enterprise demand shifted toward hybrid cloud solutions, Microsoft pivoted by integrating customer feedback into product development and ensuring seamless transitions between on-premises and cloud infrastructure.

At Microsoft, this structured adaptation existed alongside space for emergent strategy. Azure’s container services evolved in response to developer frustrations with virtual machine management. Rather than dismissing this bottom-up innovation, Microsoft recognized its traction and scaled it into a core cloud offering – reinforcing Mintzberg’s thesis that the best strategies blend deliberate and emergent elements. As he observed, strategies often emerge from the ground up through incremental adjustments to reality. That’s why the Dynamic Strategy Map embeds feedback loops not just at the execution stage, but throughout the entire strategic process.

Yet, tools and metrics alone aren’t enough. Adaptive execution requires a culture and structure that values flexibility over control. Organizations with rigid hierarchies often struggle to respond quickly. The ability to observe, orient, decide, and act – the OODA Loop originally developed for fighter pilots – must be internalized across the organization. Execution becomes not a linear process but a circular loop of sensing, learning, and adapting.

To visually represent this approach, the accompanying figure introduces the Dynamic Strategy Map. This circular map emphasizes iteration, feedback, and fluidity between steps. The background evokes rough water – symbolizing the turbulent environment organizations must navigate. The outermost layer incorporates the OODA Loop – Observe, Orient, Decide, Act – representing the continuous execution feedback that fuels strategic adaptation.

Conclusion

In today’s turbulent environments, strategy can no longer be treated as a one-time exercise or a rigid blueprint. The Dynamic Strategy Map offers a structured yet flexible alternative: a seven-step process designed to help organizations navigate complexity while remaining responsive to emerging realities.

Rather than favoring a purely top-down approach or relying entirely on adaptive emergence, the Dynamic Strategy Map integrates both perspectives, blending deliberate decision-making with agile responsiveness. Its mapping logic helps leaders connect strategic context with direction and choices with consequences, fostering an ongoing, adaptive dialogue between thinking and doing.

Applicable beyond the corporate sphere, the framework supports strategy work across profit-driven businesses, non-profits, military operations, healthcare systems, and other domains where strategy matters. The DSM enables organizations to assess realities, challenge assumptions, test scenarios, weigh options, mitigate risks, and execute adaptively.

Yet strategic frameworks are never final. As new challenges emerge, so must the tools and methods that support strategic thinking. The growing role of AI promises to enrich each step – from uncovering hidden patterns to stress-testing options and accelerating adaptive execution. These developments point toward a broader research agenda centered on fusing human judgment with machine intelligence.

About the Author

With over 35 years of international leadership and advisory experience, Alex Milovanovich – a former Fellow and Goodwill Ambassador of the CMI – helps executive teams navigate strategic complexity, uncertainty, and transformation. From South Africa to the Western Balkans, Mr. Milovanovich worked across industries – construction, media, chemicals, and banking.

Bibliography

BOYD, J. R. (1987). A Discourse on Winning and Losing. Unpublished briefing, U.S. Air Force.
[Primary source on the OODA Loop by John Boyd].

KAPLAN, R. S., & NORTON, D. P. (2004). Strategy Maps: Converting Intangible Assets into Tangible Outcomes. Harvard Business Press.

MINTZBERG, H. (1985). Of Strategies, Deliberate and Emergent. Strategic Management Journal, 6(3), 257-272. https://doi.org/10.1002/smj.4250060306 

NADELLA, S., & SHAW, G. (2017). Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. Harper Business.

PORTER, M. E. (1979). How Competitive Forces Shape Strategy. Harvard Business Review, 57(2), 137-145.

RICHARDS, C. (2004). Certain to Win: The Strategy of John Boyd, Applied to Business. Xlibris, Corp.

SUN Tzu. (2005). The Art of War (J. Minford, Trans.). Penguin Classics.

WACK, P. (1985). Scenarios: Uncharted Waters Ahead. Harvard Business Review, 63(5), 72–89.

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As a small business owner or solopreneur, you are the engine of your business—and the driver, mechanic, and GPS all rolled into one. But if you have ever felt like days are consumed by non-strategic tasks or scaling seems just out of reach, you are not alone. In previous articles in our “Scaling You” series, we explored how effective delegation and smart outsourcing free up time for high-impact work and how solopreneurs and small business owners can tap into freelance talent to scale efficiently and effectively.

This article explores one of the most powerful truths I’ve seen in decades of working with entrepreneurs: tapping into the right blend of human support and digital tools (like AI) is essential for growing and sustaining a small business.

The Great Dilemma: Too Much to Do, Too Little Time

Small businesses often get caught in a common trap: the sheer volume of operational tasks can prevent you from focusing on the activities that generate the most value. You want personal customer experiences, efficient execution, and space to innovate, but, as the business owner, you are only one person.

The fact is human talent is intuitive and creative but not always cost-effective or readily available.

Many business owners default to one of two extremes: doing it all themselves until they burn out or relying on AI and automation to handle the load, only to end up with impersonal customer service and rigid workflows. But the answer isn’t choosing one or the other – it is combining the best of humans and AI.

The fact is human talent is intuitive and creative but not always cost-effective or readily available. AI is fast and scalable, but it cannot think or care the way humans do. That is why the best systems for small businesses today blend both, leaning into automation for efficiency and human pros for judgment, nuance, and execution.

Why a Human + Technology (AI) Hybrid Model Works

As small business owners aim to do more with less, blending human ingenuity with digital efficiency enables them to reclaim time, scale efficiently, and build sustainable systems. Here is why the model works so well:

• AI handles the repetition.Think scheduling, templated communications, and first drafts of content.
• Humans provide the judgment.A skilled virtual admin assistant brings creativity, relationship-building, and critical thinking that no algorithm can replicate.
• Together, they scale you.By automating routine tasks and delegating higher-value work to freelance pros, you free up your time for what matters most: delivering your core value, growing your business, and – yes – taking a day off once in a while.

Practical Examples: What a Human + AI Mix Looks Like in a Small Business

The synergy between AI tools and virtual assistants is more than theory, it is changing the game for business owners every day. Explore a few ways small businesses are using a hybrid approach to offload work, grow faster, and stay focused on what matters:

Marketing that Multiplies Impact 

Marketing is critical, but it often falls to the bottom of the list. With the help of AI tools, a virtual marketing assistant (VMA) can draft email newsletters, repurpose blog content, create social media calendars, and even suggest hashtags based on trends. It takes a human VA to prompt AI correctly for the best output, edit that content to ensure it reflects your brand voice (and doesn’t ‘scream AI’), target the right audience, and post at the right time.

This combo saves you hours each week and ensures your marketing isn’t just happening but working.

Sales and CRM Support That Converts

AI-powered CRMs are great at capturing leads and triggering automated emails. But real sales often require real conversations. A tech-savvy VA can take over follow-up tasks, set appointments, and even respond to inquiries on your behalf. A virtual assistant knows how to personalize outreach and keep the conversation moving.

That blend of automation and high-touch follow-up creates a seamless experience for your customers – and helps you close more deals.

Customer Support That Builds Relationships

While chatbots can answer FAQs and route requests, there comes a point when your customers want to talk to a real person.

While chatbots can answer FAQs and route requests, there comes a point when your customers want to talk to a real person. A customer service freelancer can handle those escalations with empathy and problem-solving skills, reinforcing your brand’s reputation and turning issues into opportunities. They can also track patterns in customer feedback, insights that help you improve service long-term.

The combination of AI speed with human understanding creates a support experience your customers will not soon forget (in a good way).

It Is Not Either/Or – Choose Both

At ResultsResourcing, we have helped hundreds of business owners scale by combining smart digital tools with skilled freelance talent to build a virtual assistance team that is flexible, cost-effective, and customizable to your business’s unique needs.

One of the frameworks we recommend is the “Process → Tools → People” method – identifying repeatable workflows first, then plugging in the right tech, and finally bringing in fractional talent to optimize and manage it all. I cover that approach in more detail in this previous EBR column if you would like to dive deeper.

But the big idea is this: you do not need to become an expert in everything. You only need the right blend of support to make the most of your time and energy.

Scale YOU with Intention

You are the most valuable asset in your business. The best way to scale isn’t by doing more – it is by doing less of what drains you and more of what drives results. A thoughtful combination of smart tech and human expertise helps you achieve this. And in today’s competitive, trust-driven marketplace, that human touch is what sets small businesses apart.

For further insights on strategic hiring and scaling your impact, visit ResultsResourcing.

About the Author

Elizabeth Eiss is a well-known speaker on entrepreneurial growth and a sought-after expert on the future of work, business performance, and culture, on-demand talent/virtual staffing trends, as well as leadership transformation from intrapreneur to entrepreneur. After decades of running Fortune 500 business operations, she launched ResultsResourcing, a virtual fractional talent platform, and service to help solopreneurs and small business owners find the resources they need to grow and scale.

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By David Booth and Eva Tomas Casado

The business environment is changing, and strategy needs to follow. Traditional strategic planning methods no longer serve their purpose in today’s complex, unpredictable world. This article explores how organizations can build dynamic strategy capabilities that embrace uncertainty, foster adaptability, and integrate futures thinking, ensuring ongoing thriving in an ever-changing landscape.

 All is in flow – so is strategy

The ability to adapt and transform is and has been a survival necessity in the complex environment our world creates. While we accept this as a given, the pace of the changes around us in the past few decades has come as a surprise for many. For example, while businesses in the past operated for long periods on the same business models in relatively stable industry sectors, this is no longer the situation today: according to PwC’s Annual Global CEO Survey this year, 40% of CEOs believe their companies won’t be viable in 10 years if they continue on their current trajectory.

Yet our management tools and methods have not kept pace with these challenges: the traditional approaches to strategic planning, which served organizations well in the past, are no longer sufficient. They are designed for a more stable environment: their approaches are too linear and static, based on predictions and extrapolations, and fail to account for the complexity and non-linearity that is the reality of our world today.

So how can organizations start their journey into a different way of strategizing, one that addresses the reality of today’s environment in a more holistic and coherent way, considers the uncertainties of futures with confidence, and enables the organization to adapt and respond dynamically to challenges and opportunities as these futures evolve?

Changing the approach to strategy

Developing such a dynamic and ongoing approach to strategy requires a shift in focus within an organization – away from the dogmatic application of tools and frameworks to developing its strategy capabilities.

Capabilities, in this context, refer to the broader organizational potential that combines both knowledge and skills, allowing a company not only to perform tasks effectively but also to adapt, innovate, and deploy those competencies flexibly in the face of changing conditions and uncertainty. Importantly, they also involve developing the organizational mindset and shared understanding about how the organization is approaching strategy and thinking about the future.

This focus on capabilities is arguably a major and fundamental development in organizational strategy: as Professor Kurt Verweire states, “Strategy is no longer about finding a favourable position in a well-defined industry and exploiting a long-term competitive advantage: it’s about building dynamic capabilities to cope with changing conditions and turbulent times.” (‘Strategy in Turbulent Times‘, Lannoo, 2023)

There are three key aspects that organizations need to consider in developing a more dynamic approach to strategy:

• How strategy ‘flows’ in their organization: the conversations, processes and engagement that occurs in their ‘Strategy Work’, including considering multiple possibilities and anticipating and responding to any changes in the organization’s ‘ecosystem’, continuously adapting decisions and actions as situations evolve.
• How the organization considers multiple possible futures and their implications and integrates this ‘Futures Work’ into their strategic thinking. This is more than strategic foresight and scenarios planning: the goal is to become more confident in uncertainty and to develop an anticipatory mindset. By embracing futures as a resource organizations become more resilient and adaptive.
• How it cultivates the organizational culture (the environment, relationships and values) that enables and supports the organization’s approach to strategy and futures – how people are engaged in strategy and supported in decisions and risk-taking, and fostering continuous learning to create an environment where adaptability is sustainable rather than draining.

What strategy capabilities should organizations consider?

These three key aspects do not operate in isolation, they are shaped through each other. Strategy is shaped by and shapes the future, and its effectiveness depends on the organizational culture that supports it. Strategic thinking directly influences futures thinking, and vice versa, while culture underpins both by enabling them.

Considering these three key aspects together offers a conceptual structure to help frame this, but to provide more actionable clarity we need to look at the key capabilities embedded in each aspect.

• Strengthening the organization’s ‘Strategy Work’ capabilities includes the strategic thinking abilities of people across the organization, both individually and collectively; how strategy develops and is managed, the processes by which strategy conversations occur and decisions are made; and how strategic leadership guides and enables this
• ‘Futures Work’ capabilities include not just the skills, thinking and processes by which the organization considers various futures and their implications and integrates this into its strategy work, but also developing the organizational mindset to accept the lack of certainty and to begin to view this as an opportunity. There are implications too for how the organization assesses and manages strategic risks, and – critically – how it can respond and adapt to opportunities or challenges (actual and anticipated) with agility and confidence
• How the organization engages people in this, and how it supports them, are key capabilities within the ‘Culture Work’ domain, fostering adaptability, risk taking, and continual learning (both individually and for the organization as a whole)

Since the three aspects are interconnected, the capabilities within them can’t be developed in isolation—they grow together, not apart. 

How do organizations strengthen these strategy capabilities?

The first step in building strategy capabilities is to acknowledge that there is no single “magic bullet” or ‘best practice’ method that will transform the organization’s approach to strategy. Rather, this is a journey of continual development, working collectively through aspects of these capabilities across all three of the ‘domains’, making adjustments (which will depend on the organization’s context, maturity, and readiness for change), and learning from the experience of putting these into practice. These are iterative steps that together help cultivate a more adaptive and responsive approach to strategy over time.

These gradual improvements – whether it is incorporating creative futures practices, regular horizon scanning to sense future changes, moving towards participatory practices that engage the wider organization in setting the strategic direction, or piloting small, safe-to-fail experiments in organizational units – serve to strengthen the organization’s overall strategic capabilities and enable it to navigate uncertainty with greater agility. It is for each organization to embark on their own journey to build the strategy capabilities they need to thrive in an unpredictable world.

At the same time, it is important not to discard traditional strategy practices altogether. Traditional strategic methods still hold value. They provide valuable insights into the current landscape and offer clarity in well-defined contexts. However, their applicability is limited in an environment where the degree of complexity means that linear predictability is no longer possible: strategy needs to be treated as a dynamic, evolving process that adapts to the needs of the organization, the market, and the changing global landscape. The key lies in understanding the strengths and weaknesses of traditional strategy tools and methods and recognizing when it is appropriate to use them—while also embracing new approaches that allow organizations to anticipate, sense, and adapt to the complexities of the future.

Strategy is an ongoing journey

Strategy is not a fixed point on the horizon, nor is it a one-time event – it is an ongoing journey. Organizations need to be prepared to adapt continuously, refining how they think about and act on strategy. The journey is not linear; it is iterative, where every step forward informs the next.

By shifting from method-driven strategy to a capability-centered approach, organizations can enable adaptive strategy. This ongoing journey begins by focusing on three interrelated areas – Futures Work, Strategy Work, and Culture Work – each carrying essential capabilities that need to be developed together, not in isolation.

This is not a one-time effort but an ongoing process of action, learning, and improvement. It is the interplay of these ‘building block’ capabilities that strengthens the organization’s ability to navigate uncertainty with agility and foresight, positioning it for sustained success in a volatile world.

About the Authors

Eva Tomas Casado Futurist by nature. Engineer by training. Philosopher by heart. Eva helps organizations understand complexity and build practical strategies to shape their futures with clarity and foresight, while honouring their legacy.

David Booth is a Fellow of the Strategic Planning Society and an author. His recent work has included helping individuals and organizations to strengthen their strategy capabilities and adopt a more dynamic and responsive approach to strategy.

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By George Kohlrieser, Andrew Kohlrieser, Lord Mark Price, Zoe Sinclair, Michael Wade, Amit Joshi and Tim Duggan

In an era where employee wellbeing fuels business performance, happiness is emerging as a measurable driver of success. Gone are the days of seeing workplace joy as a perk. Today’s leaders recognise that fostering a culture of happiness builds stronger teams, drives innovation, and delivers real, sustainable growth. 

In today’s fast-changing world, where agility, innovation, and resilience are vital for business success, the traditional lines between performance and wellbeing are quickly blurring. As employee engagement, mental health, and leadership effectiveness rise to the top of organisational priorities, fostering a positive, happiness-driven work culture is no longer just a “nice to have” – It’s a strategic imperative.   

In this article, we asked five influential business leaders to share their perspectives on why happiness at work isn’t just good for people – it’s great for business. From improving retention to boosting productivity, they explore the tangible returns that come from putting people first.  

Professor George Kohlrieser & Andrew Kohlrieser 

Happiness in the workplace is not a luxury – it’s a strategic necessity. Happy teams are built on emotional bonding, trust, and psychological safety—core pillars of high performance. Neuroscience shows we are feeling beings who think, not the reverse.  

When people feel valued and empowered, they become more innovative, collaborative, and resilient. Leaders who create secure bases unlock this potential, transforming teams from reactive to proactive, from disengaged to inspired.  

Happiness isn’t the absence of conflict – it’s the presence of meaning, choice, and connection. When leaders shift from control to dialogue, they foster workplaces where people flourish – and so does business. 

Lord Mark Price  

Measuring and improving workplace happiness is crucial for business success, as happy employees are more engaged, productive, and loyal – it’s what I call Happy Economics.   

A positive work environment encourages creativity, reduces stress, and enhances collaboration, ultimately leading to higher performance and retention.   

To assess employee wellbeing, businesses can use surveys, feedback mechanisms, and performance metrics, such as the ones we offer at WorkL. Key factors include reward and recognition, information sharing, employee empowerment, job satisfaction, instilling pride and wellbeing. Investing in employee happiness not only boosts morale but also drives long-term business growth and a competitive edge.  

Zoe Sinclair  

Happiness at work is essential, not only because employers have a duty of care to support the mental wellbeing of their employees, but also because happier employees are up to 12% more productive too*.   

Leaders can play a key role in tackling stigma about mental wellbeing in the workplace, leading by example to ensure employees feel psychologically safe to ask for the support they need. Don’t be afraid to ask employees how they are feeling, what their current levels of stress are, how well they feel supported by their manager, and more – these are key to understanding the crux of wellbeing in your workplace.   

If an employee raises the red flag that they are in mental health crisis mode, offering them reactive support will go miles to building trust and fostering happiness. Listen to how staff are feeling with a judgement-free ear, and understand what would best help them. Ensure that you have an EAP in place to help with reactive support as needed, and build a culture of peer-to-peer support too, such as through Mental Health First Aiders, champions or allies.   

Employees feeling safe, supported and listened to is an essential step in the path to workplace happiness. 

*Oxford University’s Saïd Business School and the University of Warwick 

Michael Wade and Amit Joshi 

AI and AI agents will not only automate mundane daily tasks, but can also handle increasingly complex processes and systems.  

Employees may soon not only be relieved from boring, repetitive tasks like data entry, but they may also get some relief from stressful work that requires them to interact with a variety of different systems. Indeed, our research suggests that use of generative AI at work is positively linked to satisfaction due to improved output quality.  

Moreover, increasing productivity of organisations may prompt them to move to shorter work weeks. The net effect of these gains may be happier and more fulfilled employees. 

Tim Duggan 

The happiest and most engaged workplaces are those that are co-created by both employees and employers. If you want to instantly improve where you work, empower all levels of an organisation to come up with ideas, refine and execute them.  

If you end up always outsourcing the responsibility for cultural and social events to committees or the HR team, it will always seem like an add-on. Instead, actively encourage everyone in the business to contribute and bring ideas to life to make for a happier and more engaged workplace.

About the Authors 

Professor George Kohlrieserand Andrew Kohlrieser are co-authors of Hostage at the Table (second edition)  

Lord Mark Price is the founder of WorkL and WorkL for Business, and author of Happy Economics: Why The Happiest Workplaces Are The Most Successful. 

Zoe Sinclair is a workplace wellbeing expert and the founder of mental wellbeing consultancy and conference This Can Happen.  

Michael Wade and Amit Joshi are leading AI experts, professors at IMD Business School and co-authors of GAIN: Demystifying GenAI for office and home  

Tim Duggan is a leading expert on work and careers, and author of new book Work Backwards: The Revolutionary Method to Work Smarter and Live Better 

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By Joerg Niessing and David Dubois 

Amid the rise of GenAI, executives must master prompt crafting to optimize their marketing and sales strategies.

In the ever-evolving world of digital marketing, the ability to craft impactful, audience-centric campaigns has become both an art and a science. By the end of 2025, AI is expected to drive 95 percent of customer interactions in some capacity.

Central to this evolution is the growing importance of prompts—carefully unstructured inputs that guide AI tools and systems to generate creative, targeted, and data-driven outputs. By mastering the “art of prompting,” brand and sales executives can augment and transform their strategies, foster deeper engagement, and drive tangible results. For chief marketing officers (CMOs) and marketing leaders, mastering prompts is no longer a technical skill but a leadership imperative.

Why prompts matter in marketing strategy

Prompts are unstructured, often textual inputs that direct GenAI-powered tools to produce specific responses or outputs. Acting as a bridge between prescriptive inputs by humans and AI capabilities, they translate strategic goals into actionable content. These inputs range from straightforward instructions (e.g., “generate an Instagram caption for a new luxury watch”) to more specific requests (e.g., “create a five-part email sequence promoting a new sustainable fashion collection, emphasizing ethical sourcing and exclusivity).

Prompts have a wide range of applications, including (but not limited to) competitive analysis, online presence and SEO (search engine optimization) audits, marketing and brand positioning, and channel strategy and execution. In short, prompts inform, augment, and/or transpose strategic marketing goals into actionable outputs by AI systems.

Here are four ways effective prompting can ensure big wins for brands.

1. Personalization at scale

One of the most significant challenges in digital marketing is balancing scale with personalization. With the right prompts, brands can create hyper-personalized campaigns tailored to different audience segments.

A prompt such as “generate a personalized itinerary for a couple visiting Paris, emphasizing hidden gems and romantic spots” ensures that content resonates with travelers’ unique preferences.

For instance, L’Oréal’s GenAI Beauty Content Lab, CREAITECH, has started training GenAI to recognize the unique visual codes of the brands in their portfolio by leveraging logos, imagery, styles, packaging, typography, and colors. This enables the company to launch innovative campaigns faster and generate customized product recommendations for millions of users based on their individual preferences and skin types.

Then there’s the hospitality industry, which has the most potential to create significant value from AI, according to a study by McKinsey. Many operators, including Airbnb, increasingly utilize prompt engineering to power tailored travel suggestions for users. A prompt such as “generate a personalized itinerary for a couple visiting Paris, emphasizing hidden gems and romantic spots” ensures that content resonates with travelers’ unique preferences. This approach has helped Airbnb achieve a 30 percent increase in click-through rates on email campaigns.

2. Speed and efficiency

Prompts significantly reduce the time and resources spent on content creation, enabling marketers to move from ideation to execution more quickly. For example, in March 2023, Coca-Cola used AI-driven tools during its “Real Magic” campaign to encourage the creation of hundreds of variations of advertising copy and visuals to suit different markets. Within minutes, more than 120,000 AI-powered pieces of content (prompted by real humans) were posted.

Similarly, Nike uses prompts to fuel dynamic campaigns tailored to local markets, particularly in out-of-home advertisements. During the Paris 2024 Olympics, Nike integrated AI into their marketing strategy through AI-led billboards in cities across the United States, Europe, South America, and Asia that updated promotional messages in real-time based on the latest results. Whenever an athlete featured in the campaign won an event, the billboards immediately displayed the winning athlete, mirroring the thrill and uncertainty of the Games. Thanks to this strategy, Nike saw a peak in website visits on 31 July 2024, reaching two million visitors. Of these visits, 86,900 resulted in a sale. This increase in site traffic contrasted sharply with declines observed by competitors such as Adidas, Hoka, and On during the same period.

3. Consistency across channels

In today’s omnichannel environment, maintaining brand voice and consistency is crucial. Prompts ensure that messaging aligns with brand values, regardless of the platform. A prompt such as “Write a LinkedIn post and a corresponding Instagram caption about our new electric vehicle” ensures greater consistency while optimizing content for platform-specific formats and audiences.

4. Enhanced creativity

AI tools powered by prompts can act as creative collaborators, pushing the boundaries of what marketers can imagine. Marketing and sales leaders can use prompts to explore bold, unexpected ideas that go beyond traditional campaigns. For instance, Sephora launched the Sephora Skin IQ tool, which provides personalized beauty recommendations and tutorials. Prompts such as “suggest a lipstick shade to match an olive-toned complexion” allow for expert advice to be disseminated through digital channels, delivering value instantly. The tool boosted user satisfaction, and Sephora’s skincare sales grew by 35 percent following its introduction.

How CMOS can craft (more) effective prompts

To unlock the full potential of AI, marketing and sales leaders must learn how to craft effective prompts. Here are four key best practices:

1. Be specific: Clearly articulate the desired outcome, objective, or message. Instead of stating “write an email,” opt for “write an email to first-time customers offering a 10 percent discount on their next purchase, emphasizing fast delivery and eco-friendly packaging.”.
2. Incorporate context: Provide relevant details about the culture, market, audience, channel, or platform, as well as the objective. For example, “generate Instagram captions for a Gen Z audience in India, promoting a new line of sustainable and affordable sneakers.”.
3. Iterate and refine: Test different prompt variations to identify which deliver the best For instance, a fashion brand could test prompts like “write a product description for a high-end handbag” vs. “write a product description for a high-end handbag targeting millennials who value sustainability.”.
4. Align with data: Use prompts informed by customer insights and analytics. A luxury brand analyzing purchasing patterns might use a prompt like “suggest upselling strategies for customers who purchased premium leather jackets last winter.”.

The future of prompts

As AI continues to advance, the role of prompts in marketing and sales will only grow, with future opportunities including:

• Real-time prompting: AI systems capable of generating and refining prompts based on live data, such as trending topics or breaking news.
• Multimodal prompts: Expanding beyond text to include visual or auditory inputs. For instance, a prompt such as “Create a video ad for TikTok promoting a new sportswear line, using upbeat music and vibrant colors” could guide tools to produce complete video assets.
• Automated campaign optimization: AI systems that autonomously test and tweak prompts to maximize campaign performance.

Beyond crafting individual prompts, organizations must start adopting comprehensive, automated tools that manage and execute these processes simultaneously. Platforms like VSTRAT.ai enable companies to orchestrate the entire workflow, addressing strategic challenges such as designing customer journeys tailored to specific objectives, markets, and target audiences. Similarly, the Anthropic Console allows users to generate, test, and evaluate the effect of prompts through a built-in prompt generator.

These tools go beyond manual interventions by integrating advanced analytics, prompt generation, and content deployment into a seamless, easy-to-use system. By ensuring consistent and optimized messaging at scale, they empower marketing and sales teams to shift their focus from operational execution to strategic planning and creative innovation, while the platform manages the execution and continuous refinement autonomously.

In a digital era defined by rapid change and fierce competition, prompts have emerged as a critical tool for marketing and sales leaders to unlock creativity, enhance personalization, drive efficiency, and optimize their messaging. Brands that master the art of crafting and deploying prompts will stay ahead of the curve, empowering them to achieve measurable success and build long-term, personalized relationships with their audiences at scale.

About the Authors

Joerg Niessing is a Senior Affiliate Professor of Marketing at INSEAD and is passionate about bridging the academic and the business world on topics related to digital transformation, customer centricity, and data analytics. At INSEAD Joerg teaches executives and MBA students and he is the co-director of INSEAD’s programmes Leading Digital Marketing Strategy and B2B Marketing Strategies and Driving Digital Marketing Strategy (OOPS).

David Dubois is a tenured Associate Professor at INSEAD, specializing in data-driven innovation and customer-centric transformation. His research and teaching help professionals leverage digital insights for competitive advantage, particularly in areas like GenAI and social media. An expert in luxury brand management, his work has been featured in publications like The Financial Times and The Economist. He directs INSEAD’s digital marketing strategy programs and develops award-winning case studies.

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As Europe (and the rest of the world) continues to navigate the daily twists and turns of President Trump’s recent tariff announcements, Dr Angela Garcia Calvo evaluates the options and outcomes for Europe’s next move. With a 90-day pause currently in place, what happens next could be make or break. 

On April 2nd , President Trump announced a wide sweeping range of tariffs on most countries. Peter Navarro, Trump’s senior counsellor for trade and manufacturing, justified the measures as a long-overdue restructuring that “will make both the US and global economies more resilient and prosperous by restoring fairness and balance to a system rigged against America.” 

The uncertainty and seemingly daily changes that followed the initial announcement  have kept markets and businesses on their toes, with no clear conclusions on how the tariff tale might end. Stock markets have been on a rollercoaster ride, with a last-minute reprieve for some tech goods made with materials from China resulting in a market rebound. In recent days Sony has increased the price of its PlayStation 5 console in Europe, Britain, Australia and New Zealand, citing a challenging economic environment, inflation and fluctuating exchange rates. 

Despite a current 90-day pause for nations hit by higher tariffs, how Europe reacts now will be crucial for long-term market stability.  

Numerous experts have weighed in to assess the rationale behind Trump’s tariffs but less attention has been devoted to the question of how should Europe respond. I would argue that Europe should refrain from engaging in a tariff war. Instead the EU should focus on strengthening Europe’s industrial base, ensuring reliable access to inputs and critical technologies developed by others, and establishing chokepoints that enable Europe to avoid one-sided dependencies. 

Let’s explore the possible approaches and outcomes further by examining Europe’s options.  

1. Europe could respond to Trump’s tariffs with tariffs of its own. This would unleash an escalating war with no real winner and concrete casualties – namely consumers, workers and producers. 

A tariff war would also cause deep intra-European splinters that could compromise Europe’s efforts to address existential industrial and security challenges. EU countries have very different production structures. Therefore, tariffs on a given set of goods/services will affect EU countries differently. Since the EU does not have a common fiscal system or a comprehensive redistribution mechanism to compensate losers, the effect would be to increase intra-European economic differences causing resentment and mistrust. In turn, this would undermine the broad-based consensus necessary to address the challenges identified by the Draghi and Letta reports on EU competitiveness and the Single Market. The outcome would be European stagnation and decline.  

2. Alternatively, Europe could leverage the Commission’s regulatory capacity, especially when it comes to responding to the power of dominant US platform firms. The US would view this as a form of tariff worthy of retaliation, which brings us back to the previous option.  

Further, targeting the platform economy would expose Europe’s own dependencies and possibly backfire. Platform firms provide essential services for economic, political and social life. Europe is entirely dependent on the services provided by US platform firms. In the face of regulatory measures that they deem punitive, private firms could decide to restrict their services or exit the EU altogether, leaving Europe to manage a 21st century economy, with 20th century tools. I dare you to imagine the impact of conducting economic activities via fax and feature phones, managing logistics without Google maps, conducting searches through physical libraries, or storing and managing data off the cloud.    

3. The third option is to do nothing. However, in today’s unfolding scenarios, this is not feasible. As the Draghi report convincingly argues, if  Europe stays on its current course, it will become poorer, politically unstable and irrelevant on the global stage. Trump’s tariffs will simply worsen the situation further.   

4. This leaves us with one option: strengthen Europe’s industrial base, especially in the advanced, skill, capital-, and technology-intensive industries that are the main drivers of growth in advanced economies. Even in the most adverse scenario, this is the best guarantee that Europe can withstand external turbulences such as the announced US tariffs, exercise its political powers, and uphold its choices without external coercion.   

Of course, this is a long-term strategy rather than a short-term reaction. Further, under the best of circumstances, Europe’s lack of natural resources and its dependence on technologies developed by others (especially the US), mean that Europe will continue to rely on relationships with other countries to access vital resources.   

The key will be to develop points of leverage that enable Europe to avoid one-sided dependencies. Europe could do so by supporting the efforts of firms to establish themselves in chokepoints within industries that lay at the intersection of general purpose technologies which touch a broad range of economic activities, such as semiconductors or electric vehicles. 

By establishing positions of durable advantage in specific stages within these important industries, Europe could exert a degree of power with which to project and protect its interests. On the whole this would be a more effective way for Europe to navigate the uncertain waters of today’s global economy than a tic-for-tac reaction, reliance on its regulatory capacity, or a passive approach. 

About the Author

Angela Garcia Calvo is a Lecturer in International Business Strategy (Assistant Professor) at the Henley Business School.

Angela’s research focuses on comparative political economy, industrial transformation, business policy, globalization, and the intersection of the above themes. She explores the interconnections between her topics in her book State-Firm Coordination and Upgrading.

The post US Tariffs: How Should Europe Respond? appeared first on The European Business Review.

By Georgie Fienberg and Adrian Furnham

If you want the best from your car, it helps to have some idea of how it all works. But do you know what’s going on under the bonnet of your team? What’s that weird rattling at the back? Why have we slowed down? And where’s that smoke coming from? Here’s an owner’s guide.

Most of us work in teams; we have to. The psychology of teamwork has been extensively studied. Successful teams, particularly and inevitably the board (the grown-ups), improve all business outcomes – morale, revenue and performance. Working in a happy, safe, and healthy team is a primary driver of employee engagement at all levels.

Equally, unhappy, inward-looking, back-stabbing, and politically devious teams cause mayhem. We know that boards often experience problems that render them dangerously ineffective. This includes bloated membership, naked ambition, conspiracies of silence, an ambiguity of roles and, despite this, resisting help.

But teamwork does not happen by chance. Teams are made of individuals with quirks and passions, blind spots and insights, foibles and strengths. We study the three cornerstones of individuals: their ability, (bright- and dark-side) personality, and motivation. They “come to the party” with complex needs, hopes, and contributions and set up complex dynamics, just like families. Some have an insight into their dynamics but most are focused on other things. Many fail and need help.

Team types

Over the years, we have observed and worked with teams in many organisations. Some come to us for help; others have been referred. Our research has led us to come up with a taxonomy of teams. This has always been based on a mixture of individual difference data from robust psychometric tests, as well as observation and … data. We believe our list is both comprehensive and insightful. What have tried to do is first describe the behaviours they display and what they think they’re great at. We have been particularly interested in the reality of how they actually operate and, critically, the consequences of their habits. Most important of all, we have noted around three actionable recommendations for each to improve team functioning.

1. The PLU (people like us) team

Behaviour:

They stroll into the meeting room mid-laugh, reminiscing about last night’s drinks or that one legendary offsite way back that no one else was at. Their inside jokes and shared history are thicker than concrete. These are the “People Like Us” – and, if you’re not “us”, good luck getting a word in.

There’s a lot of nodding, a lot of “great point”, and an alarming amount of back-slapping (sometimes metaphorical, sometimes physical). Their loyalty to each other is admirable – until you realise that it extends to never meaningfully challenging each other, ever.

Their energy is warm, their connection is genuine, but they use language, humour, and metaphors that unwittingly exclude people – private jokes, shared references, even an unwritten set of rules about how things get done. Outsiders don’t get it, but that’s fine, because PLUs don’t really notice outsiders.

What they think they’re great at:

“We have an amazing culture – there’s so much trust and support in this team.”

Reality:

The trust is real, but it’s selective. Challenge is rare, because deep-rooted patterns of friendship complicate the candour in conversation. Diversity of thought is limited, because anyone who “doesn’t fit” either stays silent or exits. The team reinforces its own perspective, making it an echo chamber rather than a high-performing unit.

Consequences:

• Strong “groupthink”, with ideas rarely sc
• Exclusion of outsiders, severely limiting diversity of thought and decision quality.
• Lack of honest feedback, leading to strategic blind spots.

How to Fix It:

• Introduce structured debate. Assign a “devil’s advocate” in discussions to challenge consensus thinking.
• Rotate team dynamics. Switch up project groups to mix people who don’t normally work together.
• Seek external / outsider input. Bring in different perspectives to challenge and test ideas.

2. The big-character team

Behaviour:

This team moves fast, because their leader moves fast, and often loudly. Every idea is met with enthusiasm, momentum is non-negotiable, and meetings feel more like TED Talks, except that no one else is allowed on stage. The leader speaks and heads nod, perhaps too enthusiastically. They may even clap. The introverts are left staring at their notepads, waiting for this to be over.

The leader finishes making their point. “Thoughts?” they ask expectantly. Silence. No one actually disagrees. Or at least, no one is willing to be the one who does. The Big-Character Team follows momentum, not scrutiny. The leader is magnetic, articulate, and convincing. The result is that ideas get nodded through without being tested.

What they think they’re great at:

“We have a strong, visionary leader who keeps us moving forward.”

Reality:

There’s movement, but not necessarily progress. The “spectators” in the team don’t contribute, and dissenting voices are drowned out. The leader assumes agreement but, in reality, many people are just nodding along.

Consequences:

• The loudest voices dominate decision-making.
• Over time, rather than challenge or contribute, team members disengage, and valuable perspectives are lost.
• Ideas aren’t stress-tested, leading to poor execution.

How to Fix It:

• Reverse the hierarchy. The Leader speaks last to prevent premature alignment.
• Build psychological safety. Explicitly ask
  for opposing views and acknowledge
  dissent positively.
• Balance airtime. Introduce a “no repeat contributions” rule to force new voices into the conversation.

3. The false-harmony team

Behaviour:

This team is suspiciously polite. Meetings run smoothly, decisions come quickly, and consensus is reached without friction. But the real conversations happen later, in side chats, carefully worded emails, and coffee break venting sessions.

On the surface, everything looks seamless, but tension simmers beneath. People nod along, not out of true agreement, but because challenging ideas feels risky. They have opinions, but they’ve learned to share them elsewhere, where it’s safer.

The fear of being seen as negative or “not a team player” keeps people from speaking up when it matters. Concerns get whispered in corridors, frustrations surface in vague Slack messages, and disagreements turn into passive resistance rather than open discussion.

The fear of being seen as negative or “not a team player” keeps people from speaking up when it matters. Concerns get whispered in corridors, frustrations surface in vague Slack messages, and disagreements turn into passive resistance rather than open discussion.

No one is outright lying, but no one is being fully honest either. It’s an organisation-wide game of pretend consensus, where silence is mistaken for alignment, and discomfort replaces productive debate.

What they think they’re great at:

“We’re all on the same page. We don’t waste time on unnecessary conflict.”

Reality:

Disagreement hasn’t disappeared; it’s just been relocated. People conform in meetings but save their concerns for corridor conversations or passive-aggressive email threads. This team mistakes silence for alignment and, as a result, they miss out on the healthy tension that actually improves decision-making.

Consequences:

• Superficial alignment, with issues bubbling under the surface.
• A reluctance to challenge weak ideas, leading to poor decision-making.
• Passive resistance; people agree publicly but don’t execute properly.

How to Fix It:

• Introduce accountability. Before a decision is finalised, each person must write down their view and classify it as “green” (fully aligned), “amber” (some concerns), or “red” (not aligned). The leader sets a minimum number of greens before proceeding. Writing it down forces people to reconsider what they’re truly prepared to back.
• Encourage enquiry over direct challenge. Instead of outright disagreement, prompt discussion with open questions like, “That makes sense from an operational perspective. How would it play out for our customers?”
• Require pre-submitted input. Have team members submit concerns in advance, ensuring that issues are surfaced before discussions, not after.

4. The bright-sparks team

Behaviour:

If ideas were currency, this team would be billionaires. They don’t just brainstorm; they erupt with creativity, throwing out new concepts, angles, and innovations at breakneck speed. Meetings are a whirlwind of inspiration, sticky notes pile up, whiteboards overflow, and the air crackles with excitement.

But, while they excel at the art of conception, they flounder in execution. They make ephemeral progress on multiple fronts, but nothing ever truly lands. There’s always a new idea, a better approach, or an even more exciting opportunity just around the corner. And so, the cycle repeats.

They are always creating, but they aren’t prioritising. And creativity without prioritisation, pragmatism, and follow-through? That’s just expensive procrastination.

What they think they’re great at:

“We’re a highly creative, innovative team.”

Reality:

They are creative. But in their world, the spark is more exciting than the fire. The thrill of ideation trumps the discipline of delivery. And, while they may pride themselves on being idea generators, without execution, all that brilliance is wasted potential.

Consequences:

• High energy but little tangible progres
• Chaos and burnout in the layers below; good people leave.
• Lack of impact because nothing is executed properly.

How to Fix It:

• Prioritise ruthlessly. Not every idea deserves time and resources.
• Set execution deadlines. Hold people accountable for completing what they start. If there’s no deadline, it’s not real.
• Appoint a “closer”. Someone needs to own delivery. This person ensures that at least some of the brilliance makes it out into the real world.

5. The rapid-responder team

Behaviour:

This team don’t just react; they overreact. They’re always in motion, “always on”. Emails are answered in milliseconds, Slack messages get immediate replies, and meetings are more like triage units than spaces for meaningful discussion. The pace is relentless. They take pride in their ability to handle anything but the truth is that they mistake constant activity for actual productivity.

They thrive in crisis mode and, in fact, they unconsciously seek it out. If things are too calm, they get twitchy. Stillness feels like inefficiency. They measure their value in how fast they solve problems, not whether those problems should exist in the first place.

There’s little patience for reflection, big-picture thinking, or long-term strategy. They fight fires all day but never build fire prevention systems.

What they think they’re great at:

“We are the most efficient team in the company. If there’s a problem, we’ll fix it – fast.”

Reality:

They get things done, but often the same things, over and over again. There’s no space for strategic thinking, because they’re so busy reacting to urgent (often trivial) issues; long-term projects suffer.

Consequences:

• Problems are solved on the surface, but deeper issues remain unaddressed, creating an endless cycle of reactivity.
• Short-term fixes dominate. Success is measured by speed, not impact—leaving no space to evaluate whether the right problems are being solved at all.
• The rest of the organisation learns to rely on them as a rapid-response unit instead of taking ownership of their own responsibilities.

How to Fix It:

• Create a pause mechanism. Ask, “Is this urgent or just loud?”, “Are we solving the same problem again?”
• Introduce reflection time. Set aside time to identify patterns, think strategically, and improve processes.
• Instead of always being the first responder, the team should coach others to solve their own problems.

6. The overthinkers

Behaviour:

This team is addicted to complexity. Every decision is a masterpiece of analysis, dissected from every conceivable angle, with every risk painstakingly documented. Nothing moves until every possible scenario has been explored, stress-tested, and debated into submission.

Their meetings are exercises in intellectual endurance. The phrase “Let’s take a step back” is used 10 times per discussion. PowerPoints swell to 60 slides, often with more footnotes than main content. Decisions aren’t made; they are monumental events requiring weeks of prereading, stakeholder alignment, and a multi-step approval process.

Questions are answered with more questions. There is always another variable to assess, another risk to mitigate, another layer of nuance to peel back.

The result? Progress grinds to a halt. A simple “yes or no” becomes a research project. While other teams are executing, this team is still debating whether the decision should even be made at all.

What they think they’re great at:

“We are rigorous, data-driven, and highly analytical.”

Reality:

They believe that their meticulous approach ensures bulletproof decisions but, in practice, it just slows everything down. While they scrutinise every detail, braver (and sometimes less competent) teams are already executing. In their pursuit of perfection, they overlook the cost of delay.

Meanwhile, the rest of the organisation is watching – and waiting. Stakeholders grow frustrated. Colleagues stop bringing them into conversations because they know it will lead to delays. Over time, the team becomes known less for its analytical rigour and more for its inability to get things done.

Consequences:

• Missed opportunities due to slow decision-making.
• Team fatigue from excessive analysis.
• Frustration from stakeholders waiting for action.

How to Fix It:

• Impose deadlines. Force decisions at key moments.
• Set “good enough” thresholds. Define what level of certainty is actually required.
• Appoint a decision driver. Make it someone’s job to move things forward.

7. The martyrs

Behaviour:

They are hardworking, dedicated, and visibly exhausted. Emails at 11 pm – standard; working through lunch – of course; logging in on holiday – only if they take a holiday, which they won’t, because who else would hold the place together? Classic maladaptive workaholism.

The Martyrs pride themselves on their commitment – but it’s not just about dedication. There’s an underlying resentment brewing beneath the surface.

The Martyrs pride themselves on their commitment – but it’s not just about dedication. There’s an underlying resentment brewing beneath the surface. If you leave on time, they notice. If you take a proper lunch break, they see you. And if you dare set a boundary? Expect a pointed “must be nice” comment at some stage.

They say they want better work-life balance. They say they want efficiency. But, deep down, they believe that suffering is a sign of commitment, and anyone who isn’t suffering is somehow letting the side down.

What they think they’re great at:

“We are the backbone of this company. We do whatever it takes.”

Reality:

They are hardworking – too hardworking. But at what cost? Productivity, burnout, passive-aggressive Slack messages?

Their exhaustion doesn’t actually make them more effective; just more resentful. And, ironically, their non-stop work often results in less strategic thinking, more mistakes, and an increasing sense of “what is even the point?”

Consequences:

• Chronic burnout and stress, leading to high turnover.
• A toxic culture of guilt around setting boundaries.
• Short-term wins at the expense of long-term sustainability.

How to Fix It:

• Kill the “busyness badge”. Stop celebrating overwork as a sign of dedication.
• Enforce real boundaries. Leaders need to model leaving on time, taking breaks, and not responding at 11 pm.
• Measure output, not hours. Reward impact, not just effort.

8. The mavericks (aka: the sales team)

Behaviour:

If this team had a LinkedIn bio, it would be: “Breaking records. Breaking rules. Breaking 100 on the golf course.” If they had a WhatsApp group, it would be filled with unread messages and the occasional GIF of a wolf pack.

They are dealmakers, rainmakers, and headline-makers. They win big, because they move fast, take risks, and refuse to be constrained by bureaucracy. Process is for other people. Governance is a suggestion. HR policies? Cute.

They operate on a heady mix of instinct, charisma, and sheer audacity. They don’t just sell an idea, they sell the belief that it will work, often before the details are figured out. They can out-negotiate, out-network, and out-manoeuvre almost anyone, and they thrive in high-pressure, high-stakes environments.

But competition isn’t just external, it’s internal, too. Every win is celebrated but also measured against their peers. Collaboration happens only if there’s an edge to be gained. If you slow them down, they’ll bulldoze past you. If you try to rein them in, they’ll argue their way around the rules. Banter is their love language, and they can charm, hustle, or bluff their way into (or out of) anything.

What they think they’re great at:

“We bring in the business. Without us, there’s no company.”

Reality:

They do bring in business. But their relentless win-at-all-costs approach leaves chaos in its wake. Deals get closed, but the fine print gets overlooked. Targets get hit, but at the cost of client relationships, internal trust and, occasionally, their own integrity.

They resent rules, but the truth is that some of those rules exist to protect them – from lawsuits, reputational damage and, in extreme cases, each other.

Consequences:

• High turnover – burnout, stress, or getting poached by a competitor.
• Risk exposure – regulatory issues, angry clients, “misunderstandings” in contracts.
• Toxic internal competition – every win is someone else’s loss.

How to Fix It:

• Create structure without killing autonomy. Give them flexibility, but with clear guardrails.
• Align incentives with long-term impact. Reward sustainable growth, not just quick wins.
• Manage the internal competition. Channel their drive into collective wins, not just individual battles.

9. The diversity mirage

Behaviour:

On paper, this team is a poster child for diversity. Different backgrounds, different experiences, different perspectives – it looks great in a company brochure. They should be the most innovative, forward-thinking, high-performing team around.

But in reality? It’s not working. Meetings are a minefield. Communication styles clash. Decisions take forever, because no one quite knows how to navigate the differences. Some people dominate, while others retreat.

There’s diversity, but no inclusion. Instead of harnessing their differences, they’re tripping over them. Some feel unheard. Others feel misunderstood. And a few are just quiet-quitting from the whole experience.

What they think they’re great at:

“We are a diverse, progressive team with a wide range of perspectives.”

Reality:

They are diverse, but diversity without inclusion is just optics. The team is fragmented, misunderstood, and struggling to work together effectively.

Instead of leveraging their differences, they’re either avoiding them altogether or fighting over them constantly.

Consequences:

• Great ideas never surface because the loudest voices win.
• Some members feel excluded despite the appearance of diversity.
• Tension, misalignment, and unintentional silos.

How to Fix It:

• Teach the team how to work together, not just exist together. Facilitate real conversations about communication styles and decision-making preferences.
• Equalise airtime. Don’t let dominant voices control discussions; create deliberate opportunities for everyone to contribute.
• Move beyond tokenism. Ensure that diversity translates into meaningful inclusion, where differences are actually valued (not just tolerated).

10. The rotten core

Behaviour:

This team should be unstoppable. They’re bright, good at what they do, respect each other, and challenge ideas without ego. They’ve cracked the code on high performance.

Except there’s a problem. One person – just one – is subtly poisoning the well.

Meet The Rotten Core, who is not overtly aggressive or blatantly insubordinate. That would be too easy to spot. Instead, they operate in the shadows. They roll their eyes in meetings. They make “just saying” comments that undermine decisions. They plant tiny seeds of doubt – about leadership, about a colleague’s competence, about whether this whole thing is even going anywhere.

They excel at plausible deniability. They never outright criticise, just imply. They’re just “raising concerns”. They’re just “playing devil’s advocate”. They’re just “saying what everyone’s thinking”.

And the worst part? They’re not entirely wrong. Every high-performing team has cracks – natural tensions, frustrations, moments of uncertainty. But The Rotten Core amplifies these, distorts them, and makes them fester. The team, once cohesive and driven, starts second-guessing itself. Trust erodes. Motivation dips. And somehow, no one can quite pinpoint why.

What they think they’re great at:

“I just tell it like it is. I’m not afraid to speakthe truth.”

Reality:

They mistake cynicism for insight. Their “truth-telling” is actually selective, designed to stir discontent without offering solutions.

Consequences:

The rot spreads; cynicism is contagious. Once one person starts rolling their eyes or casting doubt, others pick up the same behaviours. Negativity becomes the norm.

Decision paralysis; people hesitate to commit, because they’re worried they’re missing something or, worse, about to be criticised for it.

Instead of focusing on performance, leaders waste time managing politics and emotional fallouts. Energy that should go into growth and problem-solving is spent firefighting internal trust issues.

How to Fix It:

• Make negativity accountable. Ask them, “What solution do you suggest?” every time they raise an issue. If they have none, they’re just stirring the pot.
• Call out the pattern. Not in an aggressive way, but in a “Hey, I’ve noticed a lot of concerns being raised without constructive next steps. What’s going on?” way.
• Reinforce the culture. Remind the team what makes them great and refuse to let one person’s cynicism erode that. If necessary, have a direct, clear conversation about the impact of their behaviour.

11. The Institutional Guardians (AKA: “Tenure is Everything”)

Behaviour:

If you’ve only been here five years, you’re still the new kid. This team runs on history, hierarchy, and a deep respect for “the way things have always been done”.

There is a right way and a wrong way to do things, and, conveniently, the right way just so happens to be exactly how they’ve always done it. New ideas are met with polite scepticism. Fresh perspectives are not needed, thanks. Change only if it was first proposed in 1998.

This team takes immense pride in their legacy; they’ve built something enduring, and they’re not about to let some bright-eyed, MBA-waving newbie come in and ruin it with their modern nonsense. New hires get the message that they can earn their place over a decade or two.

What they think they’re great at:

“We have deep expertise and institutional knowledge. We know what works.”

Reality:

They do have valuable knowledge and experience. But legacy isn’t a strategy. They are so busy protecting the past that they’re stifling the future.

Instead of evolving, they’re preserving. And, instead of leading the industry, they’re watching it move past them, one unapproved change at a time.

Consequences:

• Stagnation – new ideas struggle to take root, and innovation is stifled.
• High turnover of younger talent who feel ignored and undervalued.
• The team feels stable but, in reality, it’s slowly becoming irrelevant.

How to Fix It:

• Separate “valuable legacy” from “outdated tradition”. Audit why things are done a certain way and whether it still makes sense.
• Create structured ways for new ideas to be tested. Pilot fresh approaches without threatening existing systems.
• Mentorship, not gatekeeping. Help long-tenured employees transfer their knowledge instead of just protecting it.

12. The Hub-and-Spoke Crew (AKA: A Group, Not a Team)

Behaviour:

This isn’t really a team. It’s a collection of individuals who all report to the same leader but don’t actually work together. The leader is the hub, and each team member is a spoke – connected to the centre but not to each other.

Meetings feel like a series of 1:1 updates, where each person talks to the leader and no one else says a word. If someone asks for input from another team member, you can physically feel the awkwardness in the room.

They don’t even know what each other does. If someone left tomorrow, half the team wouldn’t even notice, because their job has zero overlap with anyone else.

Collaboration, they believe, is not their problem; alignment is unnecessary; cross-functional projects are irrelevant.

What they think they’re great at:

“We are efficient and focused, and everyone knows their role.”

Reality:

They might be individually productive, but they’re not actually a team. They miss out on: shared learning (because no one talks to each other); efficiency (because information isn’t flowing between them); better solutions (because no one is building on anyone else’s work).

The real irony? The leader is overloaded, because every single issue has to be routed through them.

Consequences:

• The leader becomes the single point of failure, overloaded with decisions, while the team remains disconnected, operating in isolated silos rather than as a cohesive unit.
• Because there’s little collaboration or shared accountability, work gets duplicated, inefficiencies creep in, and valuable insights that could strengthen the team’s output are lost.
• Without a real sense of belonging or interdependence, team members disengage from the bigger picture, focusing only on their own tasks while innovation, problem-solving, and collective progress suffer.

How to Fix It:

• Make meetings about the team, not just the leader. Introduce peer-to-peer discussions instead of just leader check-ins.
• Force some strategic overlap. Design projects where people actually have to work together.
• Get clear on shared purpose. Define why this group exists as a team, not just as direct reports.

Conclusion: the patterns you don’t see

Every team thinks they’re unique. Indeed they are – different industries, different people, different challenges. But, after years of working with teams across the world, we’ve learned that they are far more predictable than they think.

Teams go wrong, and with various serious consequences. They focus on where they want to be, without first getting an honest, objective view of where they are now.

The most important job of a leader is to build a high-performing team. It’s not an HR function or a side project. It is the job. Leaders try to drive performance without first understanding the behaviours, mindsets, and cultural undercurrents that are shaping their team’s trajectory.

We use the Hogan Assessment, not just to describe a team, but to predict how they will behave and perform if nothing changes. It reveals the hidden patterns at play, the unconscious habits shaping decisions, and the risks that could derail progress. We might triangulate that data with broader reviews – team diagnostics, stakeholder feedback, and real-world observations – that make up a very clear picture.

Forewarned is forearmed. Once a leader understands their team – not just their intentions – they face a choice. If they don’t manage it with intention, their team’s effectiveness will be left to chance.

Team-building models, roadmaps, charters and various tools can all help a leader to harness the best of what they have to meet their goals. But, it starts with self-awareness (what do you have?), intention (how will you make the best of it?), courage (to do the right thing, not the easy thing), and discipline (to keep doing it, consistently).

Because great teams don’t just happen. They need to be built, nurtured, and developed – deliberately, thoughtfully, and with full awareness of where they’re starting from.

If you understand the predictability of your team and choose not to act, then performance becomes accidental. But if you take charge, if you own the responsibility of building a high-performing team, then your team’s success is no longer a gamble. It’s a strategy. And that is leadership defined succinctly as the “ability to form, maintain and motivate a team, more adapted and successful than your competitors”. Amen.

About the Authors

Georgie Fienberg is a business speaker and leadership adviser. She works with global clients ranging from FTSE 100 C-suites to the British Parliament, specialising in applying behavioural science to building high-performing teams and cultures.

Adrian Furnham is a business speaker and consultant. He is Professor at Birkbeck Business School and the Norwegian Business School. He has written 100 books translated into 40 languages.

References

• Allen, N.J. & West, M.A. (2017). “Selection for Teams”, The Blackwell Handbook of Personnel Selection. Oxford: (pp. 476-94).

• Belbin, R.M. (2012). Team Roles at Work. Abingdon: Routledge.

• Furnham, A. (2018). “The Dynamics of the Boardroom: Typical Problems and How to Fix Them”, The European Business Review, Oct-Nov, 51-5.

• Johnson, S.S.(2021). “The Science of Teamwork”, American Journal of Health Promotion, 35(5):730-32. doi:10.1177/08901171211007955a

• Kets de Vries, M. (2011). The Hedgehog Effect. London: Wiley

• McCann, D., & Margerison, C. (1985). “Team Management Profiles: Their use in management development”, Journal of Management Development, 4(2), 34–47.

• Mathieu, J.E., Hollenbeck, J.R., Van Knippenberg, D.L., & Ilgen, D. (2017). “A century of work teams in the Journal of Applied Psychology”, Journal of Applied Psychology, 102(3), 452-67.

• Salas, E., Reyes, D.L., & McDaniel, S.H. (2018). “The science of teamwork: progress, reflections, and the road ahead”, American Psychologist, 73(4):593–600.

• van Dierendonck, D., & Groen, R. (2011). “Belbin revisited: A multitrait-multimethod investigation of a team role instrument”, European Journal of Work and Organizational Psychology, 20(3), 345-66.

The post Business Teams: Bad, Sad, and Mad… and How to Fix Them appeared first on The European Business Review.

By Varun Yadav

Introduction

The corporate world has long borrowed insights from disciplines such as military strategy, psychology and philosophy. In this trend of cross-discipline management lessons, music creation appears to be one of the most underexplored yet profoundly relevant areas. Though music itself is a deep art form; music creation is a process-oriented discipline, requiring creativity, integration, and alignment of diverse elements. All these critical components mirror effective corporate management. This piece aims to seek insights from the process of music creation and explores how business leadership can apply lessons from music creation to drive the same excellence in management processes as in musical masterpieces.

Song writing: Staying True to the Core Philosophy

The most critical aspect of creating music is song writing, which essentially encompasses melody, harmony, rhythm, and other elements. Song writing is the core that shapes lyrical messages according to the theme and emotions of the song. The song writing must be faithful to the feelings it wants to convey.

In corporate parlance, the vision and mission reflect the core of a company, wherein the leaders frame the essence of what an organisation stands for. An organisation’s vision, mission statements need to align with the company’s core philosophy. It helps effectively communicate the message to all internal and external stakeholders. Like a catchy piece of music, all stakeholders must be told in its simplest form what the organisation stands for and how it enhances its customers’ life experiences or creates economic value for its users through unparalleled services.

The more significant point here is understanding that a great song remains relevant across generations, always transcending the listeners to the intended zone. Likewise, workplaces or organisations must stay close to that intrinsic core philosophy, even when their vision and mission statements may evolve with structural changes in the industry or economies.

Despite rapid technological advancement and industry shifts, Siemens has stayed true to their core philosophy of engineering excellence, continuously adapting its business model while staying true to their core philosophy. Conversely, though Kodak pioneered the digital camera technology, it could not stay true to its vision of fostering innovation and its mission of providing high-quality imaging solutions. While competitors capitalised on new imaging technology, including digital cameras, Kodak resisted innovation and lost ground to its competitors.

Arrangements: The Role of Organizational Harmony

Arrangement is a critical step as it gives a blueprint of how the instruments and vocal sections will play out one after another in the making of an entire song. Having all the musical elements and randomly playing them out may not bring the desired result. Hence, it is crucial that the components such as intro, verse, pre-chorus, chorus, and bridge gel seamlessly in the composition and create a cohesive and well-structured composition.

Just like different elements of a musical piece, all business verticals – HR, Sales, Marketing, Supply Chain, Quality Control, R&D, etc. – and their employees are essential to an excellent organisation. Like the hook of a song, though some business verticals may have more visibility, it is critical to recognise the importance and support each one of the verticals. The leaders should also have it inculcated through suitable budget allocations, cross-vertical collaborations, aligning goals of verticals to the broader vision and mission, rewards, recognition, and a visible and robust career growth trajectory for all business verticals. Promoting and supporting only the profit centres is the norm in mediocre organisations. However, it’s essential to recognise that songs with customary arrangements tend to fade over time, just like organisations that don’t last. Lehman Brothers, the investment banking behemoth, incentivised risk-taking behaviour, ultimately leading to its crisis. In recent years, inadequate quality control and plane crashes have caused Boeing a great deal of reputational damage.

However, on the other hand, just as a great song requires precise arrangement, Google harmonizes HR and Finance to optimize salary bands, stock options, and benefits, creating an environment that attracts top talent while championing financial sustainability.

Tracking: Recording the Composite Culture of Organizations

Tracking is recording individual instruments like drums, guitar, bass, and vocals on different tracks. Tracking allows engineers and producers to make localised changes and improvements for a better-sounding final piece. With the development of tracking technologies, artists and producers can exercise better control over balance, clarity, and song quality.

Like tracking, in a corporate setup, business practices and processes are recorded through Systems and Controls. Through systems and controls, the functions across the departments are standardised, institutionalised, and integrated into the composite culture of an organisation.

Organisations with laxing systems and controls may institutionalise inappropriate and inefficient practices, adversely affecting the interests of all concerned stakeholders. As tracking allows for isolated adjustments, corrections, and balancing; in leading organisations, recruitment, compensation, sales, marketing, and finance have distinct and independent systems and controls, yet all the components are integrated seamlessly.

While speed, flexibility and growth prospects are intuitively more favoured over structured processes, even for high-growth startups, these systems and controls work as safeguards in the long run. FTX, the crypto exchange, had no proper accounting systems, internal audits or transparency, which led to its failure in 2022. Even for mature organisations, systems and controls are equally important. In 2016, a major scandal was unearthed in Wells Fargo bank wherein, under aggressive cross-sales targets, the bank officials opened millions of unauthorised accounts without customers’ knowledge. The failure of internal detection systems institutionalised a practice of manipulation of customer information without generating alerts, demonstrating how weak systems can normalise unethical behaviour.

Editing: Using Governance as a Strategic Lever

The principles and objectives of editing in music creation and corporate governance in a business setting are similar. In music creation, editing is used to enhance the quality of recorded audio by adjusting timing, rhythm adjustment, noise reduction, harmonisation and pitch, and other elements to achieve the desired sound quality. In the same way, corporate governance needs to concentrate on developing and enhancing the organisation’s structure, stakeholder management, ethical conduct, regulatory compliance, internal controls, risk management, ESG commitments, compliance monitoring and several other parameters to improve its overall performance and effectiveness. While systems and controls ensure that correct business procedures are institutionalised in the normal course of the business, corporate governance on a higher level provides oversight and structure. It ensures that systems align with the long-term goals and regulatory obligations, working as a strategic lever to boost investor and market confidence.

Even the most minor changes in music, like removing background noise or refining a vocal track, can significantly impact the final piece. Similarly, in corporate governance, every decision, policy and control mechanism must be carefully drafted, as oversight may lead to reputational and financial losses. To elucidate and summarise the point, just as in music editing, unwanted sounds and distortions are removed for clarity; under the HR governance framework, DEI (Diversity, Equity, Inclusion) initiatives remove biases in hiring, performance reviews, and promotions to reduce discrimination and reputational risks. The failure of Enron was a direct result of the failure of corporate governance on multiple levels, germinating from poor board oversight, unethical leadership, ineffective audits and misreporting. A profit-centric culture encouraged short-term goals, leading to fraudulent accounting practices, and while executives manipulated the company’s financials, the auditors failed to take an independent view.

Mixing: Strategic Planning for Impact

There are similarities between mixing and strategic planning in businesses as both inherent focus on balancing complexity and refining the priorities to create a harmonious end product. Music mixing combines vocals and instruments to achieve the desired sound. Likewise, various components such as aligning business priorities, managing risks, addressing stakeholder expectations, hiring skilled human resources and several other critical functions are combined in business strategy to produce an effective and cohesive plan.

Mixing is about making creative choices that help show the artist’s vision. Pop music emphasizes clear vocals, while rock focuses on strong instruments. Hip-hop prioritizes deep bass and beats. Similarly, organisations must use creativity in strategic planning to develop innovative strategies to help businesses achieve competitiveness and resonance with the end customers. For example, while Apple focuses on premium hardware, the Apple ecosystem, and its smartphones’ exclusivity, google prioritises open-source Android, partnerships with different OEMs and software innovation.

In mixing, a sound engineer aligns with the artist to define the song’s feel—whether it should sound raw and emotional or polished and commercial. Likewise, business leaders should decide whether their products should be positioned as premium for high-end customers or the focus should be on having deep penetration in the mass market. Similarly, for HR leadership, the talent philosophy of the organisation must be aligned with the broader market strategy in terms of whether the focus is on employee well-being, innovation, high performance, or cost advantages.

Mixing and strategizing involve being creative and focusing on important aspects, finding the right balance, and improving on available options.

Conclusion

Business success depends on having a clear vision, integrating diverse processes, having a resilient structure, refining ideas, and executing plans effectively. In this context, the entire music creation process—including songwriting, arrangements, tracking, editing, and mixing—provides a solid framework for producing work comparable to a musical masterpiece. The key lessons to drive here are:

• Staying true to the core philosophy is vital
• Inter-vertical harmony fuels success
• Strong Systems prevent chaos
• Governance acts as a strategic lever
• Strategy is the final mix

The lessons are equally applicable to both mature organisations and startups.

Mature organisations face several ongoing challenges. However, these companies can truly thrive by embracing cross-vertical harmony for greater efficiency, maintaining robust systems to avoid disruptions, enhancing governance to safeguard stakeholder interests, adapting strategies to industry changes, all while staying true to the core philosophy of the organisations.

On the other hand, start-ups operate in a competitive environment where uncertainty and resource constraints are the norms of the day. It is critical that start-ups focus on strong foundations. Having a clear vision defines purpose and differentiation in a competitive market. Harmony between business verticals result in faster execution of projects. While well-defined systems result in scalable and sustainable growth, good corporate governance boosts investor confidence. Without clear strategic priority, start-ups risk changing multiple goals and losing sight of execution.

To sum up, executives must think like great music producers—balancing structure and creativity, integrating diverse elements, and fine-tuning strategies to create lasting impact. Every day, they must introspect and reflect on whether they are composing a masterpiece or just making noise.

Acknowledgement: The Author acknowledges the use of generative AI tool such as ChatGPT for learning the nuances of music creation so that depth could be added to the arguments.

Disclaimer: The views expressed in this article are those of the author and do not represent the views of the Reserve Bank of India.

About the Author

Varun Yadav is a finance professional based in India with 15 years of experience in analytics and supervision of financial institutions. Presently, he works as an Assistant General Manager with the Reserve Bank of India. His academic background includes a Master’s in Statistics and an MBA from top-tier Indian institutions. His experience in analytics, risk assessment, and supervision has shaped his ability to approach business challenges with a data-driven and strategic mindset. With a deep interest in business, strategy, leadership, and data analytics, he keenly observes corporate leadership, financial insights, and organizational effectiveness.

The post The Business Symphony: Management Lessons from Music Creation appeared first on The European Business Review.

By Dr Alexandra Dobra-Kiel

In an era defined by rapid technological advancements and unprecedented global challenges, the need for disruptive innovation has never been greater. Yet, we are witnessing a marked decline in such innovation. What’s stifling our progress? The answer may lie in an often-overlooked aspect of organisational culture: psychological safety. Organisational culture sets the tone for how employees interact, share ideas, and take risks. A key aspect of a culture that fosters innovation is psychological safety. However, the concept of psychological safety is widely misunderstood, and the absence of a clear and actionable decodification of its enablers hampers its implementation. This article explores the critical role of psychological safety in fostering innovation and proposes a framework for its successful decodification and subsequent nurturing.

Introduction

Economic uncertainty, geopolitical instability, climate change, cybercrime, and a rapidly changing technological landscape add further layers of complexity to an already demanding role for leaders. These complexities demand a surge of disruptive innovation to overcome limitations, achieve breakthroughs in effectiveness and navigate the ever-changing landscape with global solutions. However, a concerning trend emerges from recent research: disruptive innovation is in decline. Studies documented a staggering 90% decrease in disruptive scientific innovation since the mid-20th century, mirroring a decline in U.S. research productivity (Park et al., 2023; Bloom et al., 2020). This shift towards incremental improvements, driven in part by rising research costs (Gold, 2021), poses a significant threat to economic growth, public health, and our ability to address existential challenges.

Disruptive innovation thrives on venturing beyond the familiar, challenging assumptions, and experimenting with new ideas.

While increasing research costs undoubtedly play a role, a deeper explanation lies within the realm of human behaviour – specifically, a declining well-calibrated risk-taking. Disruptive innovation thrives on venturing beyond the familiar, challenging assumptions, and experimenting with new ideas. However, our natural tendency towards comfort creates significant barriers to this essential process. In this context, the concept of psychological safety within organisations emerges as a potent solution (Edmondson, 1999, 2018; Clark 2016). Consider Google’s “20% time” policy, fuelled by psychological safety, which resulted in groundbreaking innovations like Gmail and Google Maps, transforming how we access information. Similarly, Pixar’s culture of experimentation, fuelled by psychological safety, led to “Toy Story,” the first fully computer-animated feature film.

1. Psychological safety: Its role in disruptive innovation decline

The decline in disruptive innovation extends far beyond the realm of academic concern. It manifests in real-world consequences that threaten our collective well-being. Stagnant scientific progress cripples our ability to tackle climate change, potentially leading to more frequent and severe extreme weather events, rising sea levels, and mass displacement. These consequences will disproportionately impact vulnerable populations, further widening the inequality gap.

The economic ramifications are equally concerning. Disruptive innovation is the engine of economic growth, driving productivity gains and fostering the creation of new industries and jobs. A decline in disruptive innovation leads to stagnant or declining GDP, hindering nations’ ability to invest in essential public services, education, and infrastructure. This can exacerbate existing socioeconomic inequalities, as those with lower incomes will continue to be hit hardest.

Beyond the immediate economic impact, the decline in disruptive innovation raises a fundamental question: how can we rekindle the spirit of exploration and discovery that fuelled past advancements? Part of the answer lies in cultivating an organisational environment that empowers well-calibrated risk-taking. This is where the concept of psychological safety becomes paramount.

2. Psychological safety: Its big misunderstanding and why it matters for disruptive innovation

While most organisations acknowledge the importance of psychological safety, a crucial first step lies in dispelling a common misconception: it’s not about creating an exclusively comfortable environment (Davies, 2023). In fact, the term “psychological safety” itself can be misleading. The emphasis on “safety” might seem contradictory in the context of taking risks, a cornerstone of disruptive innovation.

This misconception is reflected in a recent study by Behave where only 16% of HR leaders grasped the true essence of psychological safety (Behave, 2023). A significant portion, 44%, defined it as an environment where employees feel secure and protected, essentially prioritising comfort over risk-taking.

This misconception is partly explained by the natural human tendency to gravitate towards comfort. Comfort zones are cosy as they provide a sense of security and predictability, making it easier to focus on short-term results and established metrics – a common approach that prioritises efficiency over disruptive innovation. But this focus on efficiency can lead to:

• Reluctance to try new things: Familiarity breeds comfort, potentially leading to a reluctance to disrupt established processes. People may become hesitant to question the status quo for fear of jeopardising existing results.
• Fear of failure: Stepping outside our comfort zone involves risk, and the fear of failure can be a powerful deterrent. The comfort zone provides a sense of security, even if it limits potential growth.
• Lack of stimulation: Our brains thrive on novelty. When constantly in our comfort zone, we’re not stimulating new neural pathways or challenging ourselves to think differently. This stagnation can stifle creativity and make it difficult to come up with innovative solutions.

Comfort breeds complacency, which ultimately hinders the kind of disruptive innovation needed to address complex challenges and navigate a world of constant disruption.

An overemphasis on comfort stifles progress. Comfort breeds complacency, which ultimately hinders the kind of disruptive innovation needed to address complex challenges and navigate a world of constant disruption. We’re already seeing the effects of this in the rise of the “quiet quitting” phenomenon, where employees do the bare minimum to get by, and the “zombie workforce,” characterised by a lack of engagement and motivation. However, fostering a work environment built on real psychological safety offers a potential solution to quiet quitting and the zombie workforce.

3. Psychological safety: Its real understanding and why it matters for disruptive innovation

Having a more nuanced definition of psychological safety is not merely a matter of semantics; it is crucial for fostering an environment conducive to innovation (see, Christensen et al., 1997; O’Reilly and Tushman, 2010, 2013).

In response to this misconception and building and expanding on existing work on psychological safety (Edmondson, 1999, 2018; Clark 2016), Behave defines it as “an environment where employees balance comfort and discomfort to take well-calibrated risks” (Dobra-Kiel, 2023). This definition is further operationalised through a proprietary framework that identifies three core enablers of psychological safety: growth, belonging, and resilience. Each of these enablers encompasses a pair of measures, reflecting the critical interplay between comfort and discomfort. Having these enablers and measures equips companies with a specific and actionable framework to diagnose their current state and implement targeted interventions to cultivate a psychologically safe environment.

• Growth – Proactive
  Collaboration and humility serve as key measures within the “growth” enabler.

Collaboration: By working together, individuals expose themselves to different ideas, skill sets, and experiences. This “cross-pollination” of knowledge sparks new approaches and solutions that wouldn’t be possible in isolation. It allows teams to explore uncharted territory by combining diverse strengths.

Humility: A willingness to learn and adapt is crucial for disruptive innovation. Humility fosters an environment where people are open to admitting they might not have all the answers, which allows for the exploration of new ideas and experimentation. It removes the fear of “being wrong” which can stifle creativity.

• Belonging – Inclusive Contribution. Participation and examination are key measures within the “belonging” enabler.

Figure 1 Psychological safety decodification by Behave, all rights reserved, developed by Dr Alexandra Dobra-Kiel

Participation: When everyone feels valued and their voice is heard, it encourages them to contribute their unique perspectives. This can lead to unexpected connections and ideas that wouldn’t emerge if only a select few were involved. It allows for a wider range of possibilities to be considered.

Examination: Diversity of thought is essential for disruptive innovation. Encouraging questioning of assumptions from different viewpoints helps identify flaws and limitations in existing approaches. It pushes the boundaries of “what if” and challenges the status quo, leading to potentially groundbreaking solutions.

• Resilience – Safe Challenge.
  Disagreement and vulnerability are key measures within the “resilience” enabler.

Disagreement: Healthy debate and constructive criticism prevent stagnation and groupthink. When people feel safe to express differing opinions, it forces the team to re-evaluate ideas and consider alternative approaches. This “creative friction” sparks disruptive innovation and leads to more robust solutions.

Vulnerability: Being open about challenges and failures allows for learning and growth. It fosters a culture where experimentation is encouraged, even if it doesn’t always lead to immediate success. This reduces the fear of failure, a major barrier to taking risks and venturing into new territory.

A fear of stimulating discomfort in a global context that is already challenging is understandable. Striking the right balance between comfort and discomfort is not easy. Organisations may face challenges, including resistance to change, concerns about short-term performance, or difficulties in establishing clear metrics for psychological safety. It is crucial for organisations to address these challenges proactively and transparently.

Conclusion

The decline in disruptive innovation is a significant challenge, but not an insurmountable one. This article has proposed a framework for nurturing psychological safety. Through the enablers of growth, belonging, and resilience, – and their respective pairs of comfort and discomfort – organisations can foster an environment where disruptive innovation can occur. To nurture psychological safety, organisations will need a multi-faceted approach that involves not only redefining organisational culture but also addressing potential challenges, providing actionable strategies, and establishing appropriate metrics for progress tracking.

Nurturing psychological safety is not just about staying ahead of the curve, it’s about ensuring our collective ability to solve the complex problems facing the world today. From mitigating climate change to decreasing inequality, the solutions lie in unconventional thinking and bold action. By embracing this framework and empowering their human capital, organisations can become the architects of an environment that can be conducive to disruptive innovation.

About the Author

Dr Alexandra Dobra-Kiel is a seasoned management consultant specialising in corporate strategy, trademarked innovation, and behavioural science. She co-founded and co-leads the management consulting venture of Behave and serves on the Advertising Association’s AI Taskforce. With previous experience at Deloitte, Kroll, and Accenture, Alexandra has provided strategic guidance to executives. She is a media commentator, conference speaker, and author, and holds a PhD from Warwick and a master’s from Cambridge.

References

• Behave (2023). The Death of the Comfort Zone? – Unwrapping Psychological Safety in the Workplace. Behave.

• Bloom, N., Jones, C. I., Van Reenen, J. and Webb, M. (2020). Are Ideas Getting Harder to Find? American Economic Review, 110(4), pp. 1104-1144.

• Christensen, C. M., Meyer, R. and Roth, E. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press.

• Davies, J. (2023). Why Employer Misunderstanding of Psychological Safety Is Hurting Teams’ Worklife, 28 November. [Interview with Dr Alexandra Dobra-Kiel, Dr Amy Edmondson and Sope Agbelusi]. Retrieved 2 July 2024, from https://www.worklife.news/leadership/why-employer-misunderstanding-of-psychological-safety-is-hurting-teams-performance/

• Dobra-Kiel, A. (2023). What Is Psychological Safety and Why Do HR Leaders Need to Understand It? Unleash, 29 November. Retrieved 2 July 2024, from https://www.unleash.ai/future-of-work/what-is-psychological-safety-and-why-do-hr-leaders-need-to-understand-it/

• Edmondson, A. (1999). Psychological Safety and Learning Behavior in Work Teams. Administrative Science Quarterly, 44(2), pp. 359-383.

• Edmondson, A. (2018). The Fearless Organization: Creating Psychological Safety in Ferociously Competitive Environments. John Wiley & Sons.

• Gold, E. R. (2021). The Fall of the Innovation Empire and its Possible Rise through Open Science. Research Policy, 50(5), pp. 104-226.

• Park, M., Leahey, E. and Funk, R. J. (2023). Papers and Patents Are Becoming Less Disruptive Over Time. Nature, 613(7942), pp. 138-144.

• Tushman, M., Smith, W. K., Wood, R. C., Westerman, G. and O’Reilly, C. (2010). Organizational Designs and Innovation Streams. Industrial and Corporate Change, 19(5), pp. 1331-1366.

• Tushman, M. L. and O’Reilly, C. A. (2013). Organizational Ambidexterity: Past, Present and Future. Academy of Management Perspectives, 27(4), pp. 324-338.

The post Psychological Safety: The Visible Hand of Disruptive Innovation appeared first on The European Business Review.

By Knut Haanaes and Julia Binder

In any given moment we have two options: to step forward into growth or step back into safety. This quote, attributed to Abraham Maslow, emphasizes the importance of change management. Change is never easy but companies that embrace change and its growing pains often create new competitive advantages.

Not all companies survive transformation, but those that do often redefine their industries. Neste, once a traditional oil refining company, faced a critical crossroads as the world moved away from fossil fuels. When Matti Lievonen took over Neste in 2009, the Finnish oil refining company faced strong headwinds, including a sharp fall in oil prices, market overcapacity, falling margins, and coming EU carbon emissions legislation. The company’s market value dropped 50% between 2008 and 2011. Instead of resisting change, the company made a radical pivot—shifting its core business from petroleum-based products to renewable fuels and sustainable solutions. This wasn’t a minor adjustment; it was a complete reinvention that required new technologies, new markets, and a new way of thinking about value creation. Today, Neste is the world’s largest producer of renewable diesel and sustainable aviation fuel, proving that embracing transformation can lead to both financial success and a leadership position in the global energy transition.

Neste’s transformation didn’t happen through strategy alone. It required bold decision-making at every level, a cultural shift that engaged employees and stakeholders, and the ability to execute at scale. Change of this magnitude isn’t just about having the right plan—it’s about mastering the head, heart, and hands of transformation. The head ensures that the strategy is forward-looking and well-defined, the heart creates the motivation and cultural buy-in necessary to move forward, and the hands ensure that change is implemented effectively and at scale. Even the best-laid plans fail to take root without alignment between these three dimensions.

A bold strategic vision alone is not enough; it must be matched with leadership that mobilizes people, drives cultural shifts, and ensures execution at scale.

What makes this kind of transformation particularly challenging is the unavoidable short-term versus long-term tradeoff. Companies in transition often face pressure to deliver immediate financial results while simultaneously making investments that may not pay off for years. Many organizations hesitate, fearing the short-term costs of change—whether it’s capital investment, shifts in workforce skills, or restructuring business models. However, those that delay transformation risk falling behind permanently, while those that take bold steps forward create new competitive advantages. Neste’s leadership understood that transitioning to renewable fuels required years of investment and an initial financial burden, but the long-term payoff—market leadership in a growing sector and alignment with global sustainability trends—far outweighed the short-term sacrifices.

Companies that aim to lead in sustainability or any large-scale transformation must learn from examples like Neste. Change is not just about adopting new goals—it requires shifts in thinking, leadership, and execution, all working in continuous alignment. This interplay can be visualized as an infinity loop, where strategy and leadership continuously reinforce each other.  A bold strategic vision alone is not enough; it must be matched with leadership that mobilizes people, drives cultural shifts, and ensures execution at scale. At the same time, leadership must remain adaptable, feeding insights back into strategy to refine and evolve it over time. Neste’s transformation exemplifies this approach—its shift to renewable fuels was not a one-time decision but an ongoing process where strategy and leadership worked in tandem, adjusting to market dynamics and technological advancements. Companies that embrace this continuous cycle create a self-sustaining mechanism for transformation, ensuring that change is not only envisioned but fully realized.

Strategy: A Blueprint for Resilience and Reinvention

For many organizations, strategy is treated too much as a one-time roadmap—an initial push in a new direction. But leading real change, particularly in sustainability, requires a dynamic and adaptive strategy, where each decision fuels further transformation. The companies that get this right don’t just react to external pressures; they proactively shape their own futures. This starts with breaking free from the limitations of the present. Too often, organizations are bound by short-term performance metrics or industry norms that no longer serve them. Leaders must resist the urge to optimize existing systems and instead design for the future, using tools like scenario planning and future-back thinking to anticipate what’s coming and position themselves accordingly. A critical link between strategy and leadership is that of crafting an aspiration. An aspiration differs from a vision, as it is time-bound and can be changed as the context changes. A good aspiration inspires people.

Some key strategic decisions define successful transformation. Companies that integrate circular economy principles, redesign their supply chains for resilience, or invest in regenerative business practices are not just mitigating risk—they are creating entirely new value propositions. Siemens is a strong example of this approach, embedding circularity into its operations and product lifecycle. By designing products for longevity, modularity, and recyclability, Siemens not only reduces waste but also creates new business opportunities, such as refurbishing and reselling industrial equipment rather than discarding it. The company has also embraced digital twin technology to optimize resource use and energy efficiency across its supply chain. Organizations that hesitate, waiting for perfect solutions, often find themselves left behind. Instead, companies that lead in sustainability experiment with emerging technologies, pilot alternative energy sources, and develop new service models that will give them a competitive edge when the market catches up.

Financial priorities must evolve as well. Traditional return-on-investment models often fail to capture the long-term benefits of sustainability. Organizations that integrate sustainability metrics into their financial decision-making, link them to investor expectations, and embed them in capital allocation are better positioned for the future. Sustainability must also become part of the broader business ecosystem. No company can tackle it alone. Successful businesses form partnerships—working with governments, NGOs, suppliers, and even competitors to drive systemic change rather than isolated impact.

These decisions don’t just dictate a company’s trajectory; they redefine the playing field entirely. But even the best strategic choices will falter if leadership fails to execute them effectively.

Leadership: Mastering the Human Side of Change

If strategy is about deciding what needs to change, leadership is about ensuring that change actually happens. This is where many organizations fail—not because their strategy is flawed, but because they underestimate the human factors that drive or block transformation.

Leading change requires leaders to redefine their roles, moving beyond traditional models of top-down authority to become architects of culture, mobilizers of action, and enablers of progress. Leadership is no longer just about making decisions; it is about creating the conditions in which transformation can take root and thrive. To do this, leaders must shift from command and control to influence and empowerment. People don’t follow change because they are told to; they follow it because they believe in it. Leaders must craft a compelling vision that connects sustainability to a broader sense of purpose, helping employees, investors, and partners see their role in building something bigger than themselves. A powerful narrative is essential—not just a set of facts and figures, but a story that creates urgency, meaning, and momentum.

At the same time, leaders must recognize that change is deeply personal. Fear, uncertainty, and inertia are natural responses to transformation, and ignoring these realities only deepens resistance. Trust is the foundation of any successful change effort. Employees and stakeholders need transparency, not just in the company’s goals but in the challenges and trade-offs along the way. A leader’s willingness to acknowledge setbacks, explain decisions, and engage in open dialogue can make the difference between skepticism and commitment.

Adaptability is another critical trait of leaders who successfully manage change. Organizations cannot afford to abandon their core business overnight, but they also cannot afford to stand still. Leaders must simultaneously operate in two modes: stabilizing current operations while exploring new frontiers. They must create environments where continuous learning is encouraged, where failures are treated as sources of insight rather than mistakes to be punished, and agility becomes a fundamental business capability.

The most forward-thinking leaders also recognize that sustainability and large-scale transformation cannot be achieved within the boundaries of a single organization. True impact requires systems leadership, where leaders look beyond their own company to shape change across entire industries, supply chains, and ecosystems. Collaboration with governments, NGOs, industry peers, and even competitors is becoming essential to driving systemic shifts. Whether it’s setting industry-wide sustainability standards, co-developing breakthrough technologies, or influencing policy, leaders must think at a systems level. Organizations that act in isolation may find their efforts falling short, but those that engage broader networks can accelerate transformation at scale. Beyond internal engagement and external partnerships, governance plays a crucial role in embedding sustainability at the highest levels of decision-making. Leadership must ensure that sustainability is not an isolated initiative but a core part of corporate governance. Boards must evolve to reflect this new reality, integrating sustainability expertise, redefining executive incentives, and holding leadership accountable for long-term impact rather than just short-term financial performance. Change also requires courage. Leaders who succeed in sustainability transformation understand that they will face resistance—not just from within their organizations but from investors, customers, and markets that are slow to adapt. Standing firm in the face of skepticism, making long-term decisions even when unpopular, and staying committed to sustainability even when immediate financial returns are uncertain are the hallmarks of leadership that drive meaningful change.

Standing firm in the face of skepticism, making long-term decisions even when unpopular, and staying committed to sustainability even when immediate financial returns are uncertain are the hallmarks of leadership that drive meaningful change.

The change at Microsoft provides a good example of such leadership transformation. Satya Nadella, who became CEO in 2014, has transformed the company by embedding a growth mindset, in parallel with shifting its focus toward cloud computing, artificial intelligence, and cross-platform solutions. He moved the culture from the mindset of knowing and judging to that of learning and development. He did that by promoting continuous learning, collaboration, and innovation. Nadella also underlined empathy as an important leadership principle, shaping a more inclusive and customer-centric approach. By embodying this shift himself, he inspired the organization, suppliers, and partners. This cultural shift has driven remarkable business success, revitalizing Microsoft’s competitive edge and solidifying its position as a more future-ready leader.

The Future of Change Leadership

Leading change for good—where sustainability and transformation become lasting advantages—requires a deep integration of strategic foresight and human leadership. The companies that master this balance, aligning strategy with leadership in a continuous loop, will survive change and define the future.

Change is not a one-time initiative; it is an ongoing journey. The organizations that thrive in this landscape are those that view strategy as a living process, not a static plan. They engage the rational and emotional sides of change, ensuring that logic, culture, and action move in unison. They see sustainability not as a challenge to be managed but as an opportunity to lead, innovate, and leave a lasting impact.

The future belongs to those who embrace change with vision, determination, and the ability to bring people along for the ride. The leaders who master this balance—between the head, the heart, and the hands—will be the ones who turn transformation into legacy.

Implications for Executives

• Accept the short-term cost to unlock long-term value – Transformations may require initial financial sacrifices, operational shifts, and even temporary instability, but delaying change risks losing competitive advantage in the long run.
• Treat strategy as a continuous process, not a one-time plan – Sustainable transformation requires ongoing adaptation, future-back thinking, and the flexibility to evolve as new challenges and opportunities arise.
• Lead with both logic and emotion – A strong business case (the head) must be matched with purpose-driven leadership (the heart) and clear execution (the hands) to drive lasting change.
• Create ecosystems, not just internal change – Collaboration across industries, supply chains, and regulatory bodies accelerates impact and ensures sustainability is embedded beyond the organization.
• Balance stability with innovation – Leaders must optimize their current operations while actively exploring disruptive solutions, ensuring long-term resilience without neglecting present needs.
• Build trust through transparency and shared ownership – Engaging employees and stakeholders early, communicating openly about trade-offs, and giving people a stake in the transformation fosters commitment and accelerates adoption.

About the Authors

Prof. Knut Haanaes is an IMD Professor of Strategy and Lundin Chair Professor of Sustainability.

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Prof. Julia Binder is Professor of Sustainable Innovation and Business Transformation at the Institute for Management Development (IMD).

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Prof. Knut Haanaes and Prof. Julia Binder are the editors of Leading the Sustainable Business Transformation, an IMD playbook for planning, executing, and showcasing corporate sustainability.
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References

1. Neste and IMD: Partnering for renewal. IMD. https://www.imd.org/solutions-for-organizations/clients/neste/impact-story/

2. See “Leading the Sustainable Business Transformation: A Playbook from IMD,” Edited by Julia Binder and Knut Haanaes, Wiley, December 2024.

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By Francis Rodino 

If you don’t truly understand your market, you’re shooting in the dark. Successful businesses thrive on market intelligence—knowing exactly who their customers are, what they want, and how they behave. This guide explores how to gain deeper market insights, outmanoeuvre competitors, and position yourself as the go-to authority in your industry. 

Why Market Leaders Obsess Over Their Audience 

Many businesses think they know their market, but assumptions don’t drive growth—data does. If you’re not constantly refining your understanding of your audience and competitors, you’re not standing still—you’re falling behind. In today’s rapidly changing landscape, staying relevant means evolving your offers, testing new strategies, and adapting to what the market actually wants—not what you assume it wants. A winning strategy starts with a structured, proactive approach to market research and positioning. 

1. Define Your Ideal Customer Avatar

To connect with your market, you need to know exactly who you’re speaking to and communicate in a way that resonates with them. This means going beyond basic demographics and understanding their pain points, desires, and decision-making process. When your message speaks directly to them, they’ll listen. 

Who are your ideal customers? What industry, niche, or profession do they belong to? Consider demographics—age, gender, income, education, and location—but also dig deeper into their psychographics. What do they value? What interests them? What challenges do they face daily? How do they make purchasing decisions? 

The clearer you define your audience, the more precise and effective your marketing becomes. Instead of casting a wide net, you’ll engage the right people who are already looking for your solutions. 

The best way to gain these insights is by speaking directly to your customers. Ask about their biggest challenges, frustrations, and what they wish existed to make their lives easier. Surveys and feedback loops can uncover hidden objections and unmet needs. Online communities—Facebook groups, LinkedIn discussions, Reddit threads—offer unfiltered insights into what your target market is thinking. 

Data analytics further refine your understanding. Look at website traffic, email engagement, and conversion rates. Which pages get the most visits? What offers get the best responses? Which ads perform best? Every interaction is a clue that helps sharpen your messaging and positioning. 

At the core of all successful businesses is one principle: the better you understand your customers, the better you can serve them. When your message aligns perfectly with their needs, they won’t just notice you—they’ll trust you. And in today’s competitive landscape, trust is the foundation of long-term success. 

2. Analyse Your Competitors

If you don’t know your competition inside out, you’re at a disadvantage. Identify your top three competitors and examine their strategies: 

• What promises and claims do they make? 
• How do they engage with their audience? 
• What are their pricing structures? 
• How do they differentiate themselves? 
• Why would your prospects choose them over you? 

Identify gaps in their approach and position your business to dominate where they fall short. Understanding what’s working (and what’s not) in your industry allows you to refine your own strategy and stand out in the marketplace. 

3. Assess Market Awareness and Sophistication

Not all customers are at the same stage of awareness when it comes to your product or service. Some don’t even realise they have a problem, while others are actively comparing options. Your messaging needs to align with their level of awareness: 

• Unaware: They don’t yet recognise the problem. Your job is to educate. 
• Problem-Aware: They know something’s wrong but aren’t sure of the solution. Focus on their pain points. 
• Solution-Aware: They’re researching options. Demonstrate why your solution is the best fit. 
• Product-Aware: They’re comparing competitors. Use social proof, case studies, and clear differentiators. 
• Most Aware: They just need the right offer or incentive to convert. 

Markets also evolve in sophistication. In an unsophisticated market, customers aren’t aware they need your service, so education is crucial. In a new sophisticated market, demand is growing, and thought leadership helps establish authority. In an established market, differentiation becomes essential. In a complex market with heavy competition, strong positioning and storytelling matter most. And in a saturated market, only innovation, brand loyalty, or exclusivity will set you apart. 

By understanding where your market falls on this spectrum, you can craft messages that truly resonate and drive conversions. 

4. Leverage Data to Drive Sustainable Growth

Businesses that capture and analyse data gain a significant competitive advantage. Instead of making decisions based on gut instinct, they use real insights to refine their strategies, optimise operations, and accelerate growth. 

By tracking website traffic, customer engagement, and sales patterns, you can pinpoint where your most valuable customers come from. Are they finding you through organic search, referrals, or paid ads? Understanding these trends allows you to invest in the highest-performing channels. 

Customer engagement metrics highlight what resonates most with your audience. Which content generates the most interest? What messaging leads to conversions? What types of posts spark conversations? Fine-tuning your marketing based on real behaviour ensures your efforts align with what your customers actually care about. 

Conversion rates and customer lifetime value provide deeper insights. How many leads turn into paying customers? What is their long-term value to your business? This data helps refine sales strategies, improve retention, and maximise revenue. 

Competitor analysis and market trends also play a crucial role. Monitoring shifts in customer behaviour and industry changes allows businesses to adapt quickly and seize opportunities before their competitors do. 

The fastest-growing companies aren’t just making better decisions—they’re making data-driven decisions. Knowing what works, what doesn’t, and where to focus ensures you scale with confidence. 

5. Test, Optimise, Repeat

Understanding your market isn’t a one-time task—it’s an ongoing cycle of testing, analysing, and refining. The best businesses don’t rely on assumptions; they continuously gather real data, identify patterns, and adjust their strategies accordingly. 

To truly understand your market, you must test different approaches. This could mean experimenting with pricing models, refining messaging based on customer feedback, or adjusting your services to better meet demand. Pay close attention to how your audience responds—what offers get the most engagement? What objections keep coming up? Where do leads drop off in the buying process? 

Every interaction with your market is an opportunity to learn. Surveys, customer interviews, and A/B testing reveal insights that help fine-tune your approach. Perhaps your ideal customers prefer a different communication style, or they prioritise features you hadn’t considered. The key is to remain adaptable. 

Markets evolve, and so must your strategy. The businesses that thrive are the ones that consistently analyse trends, optimise their offerings, and double down on what works. By treating market understanding as an ongoing process, you’ll stay ahead of the competition and position yourself for sustained success.

About the Author

Francis Rodino is an award-winning expert in sales automation and digital marketing, focused on helping SMEs thrive in the AI-powered era. With over 20 years of experience at the intersection of technology and marketing, Francis has led digital campaigns for global brands like PlayStation, Disney, and the Olympics, and helped Top Gear reach its first 10 million followers on Facebook. Now, as an international speaker and founder of Lead Hero AI, Francis helps SMEs leverage AI tools, marketing automation, and scalable strategies to generate leads, boost profits, and secure lasting success in today’s competitive digital landscape. He is also the author of Leads Machine. 

The post How to Better Understand Your Market to Drive Business Growth appeared first on The European Business Review.

By Frank Cespedes and Georg Krentzel

Companies need digital technologies in an omni-channel buying world where online and in-person interactions are complements, not either / or substitutes. Multi-channel hybrid sales solutions are required, but what are the key requirements for using the available technology for competitive advantage?

What options does digital technology offer us in order to gain competitive advantage in hybrid sales channels? Based on work with companies, we see lessons from dealing with a humble but pervasive retail outlet: convenience stores and small eating / drinking venues. In the United States, 8 out of 10 people visit weekly one or more of 150,000 convenience stores, 65 per cent of which are independent and not part of a chain such as 7-Eleven or Circle K. The U.S. has one such outlet for every 2,200 people, and the channel is even more important in other countries. In Mexico, there are 800,000 outlets (one for every 160 people), and in Europe the ratios are similar (e.g., Italy has about 350,000 small restaurants, bars, and hotels).

This is a fragmented and high-cost-to-serve channel, but for CPG (consumer packaged goods) companies, these outlets generate up to 50 per cent of their revenue in many countries. Sales productivity is key here and three capabilities are crucial:

Design capability. Begin by answering a core question: What is the role of channel partners in your strategy and the customer buying journey? Is it primarily about cost efficiency: a channel partner can perform important tasks less expensively than your firm can? Or does that partner provide access to certain segments? Or is the partner a necessary part of the solution that customers buy because it provides important complements (e.g., other products or a value-added feature)? These roles have different implications for required interactions and relevant tools.

For instance, about 25 per cent of U.S. apparel shoppers visit Amazon early in their buying journey, but most buy elsewhere. This suggests that online channels are important for search and discovery, but less so for product evaluations and purchase. Moreover, omni-channel customers in this category spend a third more annually than offline-only shoppers. A hybrid solution here should reflect the interactions between online and brick-and-mortar channels for these high-value customers.

The relevant digital investments should also reflect your go-to-market approach. U.S. convenience stores stock up to 3,000 items in as many as 400 categories. “BevCo” delivers direct. Its investment in a proprietary digital sales platform enables retail customers to order at their convenience, receive product information, access their last order and payment details, and track delivery to plan the arrival of goods. The platform allows BevCo to recommend products and stocking levels based on store-specific analyses of buying patterns, complementary products, and the margins to BevCo and the retailer. These recommendations are now constantly refined via AI tools that help BevCo and retail partners target promotions to consumers. The result has been better consumer retention plus increases in average ticket value and purchase frequency.

In contrast, “CPG Co” sells through distributors and its smaller retail customers use distributor platforms for orders. So, CPG Co uses digital tools to promote its products on distributor platforms and provide sales and loyalty rewards. Moreover, because the distributors are not exclusive to CPG Co, its sales force must also build relationships with retail accounts. As in many firms, their contact was determined by a routing system of physical visits. But tools for access to real-time data and data sharing with distributors now allow the sales force to better target business-development activities and, via digital communications, increase interactions and touchpoints without a corresponding increase in physical visits. This has brought more agility to the CPG Co distributor-retailer relationship while improving service and cost efficiencies.

Data capability. Hybrid sales solutions are highly dependent on using timely data for relevant business insights. But two issues often impede this capability.

One is siloed systems. For example, BevCo’s legacy systems included online ordering, sales force automation, dispatching and inventory, flanked by Excel files for prices, promotions, stock transfers, and order management — none of which were linked to each other or to the ERP (enterprise resource planning) system. Further, the initiation of a digital transformation project generated a wish list that added even more complexity. The result was costly delays, organizational cynicism about an already time- and resource-consuming process, and loss of market position.

CPG Co avoided this trap by opting for different work streams, such as sales force productivity, distributor connection, and supply chain management, led by the business areas, with a cross-functional team of digital specialists to connect the different solutions. This approach helped to prioritize relevant tools and avoid diffuse investments. For data sharing with distributors, the responsible team first defined the expected output, such as granular understanding of outlet sales to develop fact-based business plans and prioritize sales force activities with distributors. The desired business result shaped selection of the digital tools – i.e., those which facilitated tracking of segment-specific business development activities and calculating the ROI of different trade marketing activities.

Clarifying the outputs also shaped the data sources and type of data manipulations required. More than 40 internal processes were re-engineered in this way and the approach also helped CPG Co to redefine job positions and descriptions. Equally importantly, the approach clarified how the different systems should interact, such as the flow of data between the SFA (sales force automation), CRM (customer relationship management), and sales force routing analytics. This coordination helped to provide a single version of market truth that aided relations between CPG Co sales teams, distributors, and retail outlets.

A second issue is that, even with relevant systems, data has been hard to find in addressing omni-channel buying behavior. But companies providing this data are emerging, such as Roamler or SharpGrid which use big data techniques, and Asseco, UVE, or Mobilvendor in Latin America which link information between outlets, distributors, and manufacturers. These links help in managing the ecosystem required to deal with omni-channel buying and help companies to understand and manage inherent limitations with market data.

CPG Co developed a customer targeting system with a third-party database on food service outlets that provided their turnover, demographic data about each outlet’s area, and information about its opening hours, menu, prices, products and brands. But CPG Co found that only a minority could be converted into customers. Many outlets turned out not to be high potential after review by the sales force, and others already had exclusive agreements with other manufacturers. But the system still provided benefits. It minimized sales time on false-positive targets and so increased time on other opportunities. Better-quality leads improved business development efforts, enabling distributors to fine-tune CPG Co’s offering by outlet type and, in turn, instigated a continuous improvement cycle in manufacturer-distributor–outlet relations.

Better-quality leads improved business development efforts, enabling distributors to fine-tune CPG Co’s offering by outlet type and, in turn, instigated a continuous improvement cycle in manufacturer-distributor-outlet relations.

This final benefit is important. An often-overlooked data capability is making it easier for channel partners to work with your sales teams. If you sell thru broker channels, for instance, low friction and easy communication are often as important as commission dollars in getting brokers’ attention and commitment to your products. Too often, however, sellers ship products to a channel partner but the material and information needed for effective selling are not provided. Here, digital technology is an enabler. The means for establishing and maintaining partner sites that provide content, online demos, deal registration data, and other relevant sales tools are decreasing in cost and increasing in scope. These tools enable partners to leverage your branding, messaging, and demand-generation knowledge in their selling efforts for your products. The rewards of getting this right are significant. As one executive notes, “Nobody does cartwheels for software. The payoff comes in the form of collaboration. We had no way to share ideas and track this across our offices and multiple partners. Now we can. It’s meant a 30 per cent increase in call volume and productive leveraging of the tribal knowledge in this ecosystem.”

Change capability. Many channel arrangements lag market developments. Managers with quarterly metrics often know what their established channels can deliver in the short term, and a change means transition costs. Also, most producers’ accounting systems can measure product profitability but often lack data needed to assess cost-to-serve and profitability by channel. The result is Catch-22: channel inertia enables new entrants, while change risks retaliation or lost support from established channel partners.

The initial decades of the twenty-first century saw this play out in many consumer product categories. Razors, blades, and other items generated high margins for the established suppliers and retailers, and the incumbents faced a choice in responding to entrants like Harry’s or Dollar Shave Club. Cut prices and you cut profits and earnings; develop online channels for your products and you antagonize retail partners. Within five years of Dollar Shave Club entering its market, Gillette had lost about 13 points of market share. Yet when Gillette finally responded by introducing its subscription service, it required customers to sign up with a retailer rather than directly with Gillette. Consumers bought the way they wanted to buy, not how Gillette wanted them to buy.

What can you do to manage change in hybrid sales models? First, specify and keep up to date the levels of quality control required for a channel function – an area where real-time data from digital tools can help. Too often, managers speak of “distribution” as an undifferentiated category in their marketing plans. But distribution always means a set of discrete activities including demand generation, inventory, delivery, after-sale service, and so on. Depending upon buying behavior and your strategy, different activities require different levels of quality control. Some must be performed flawlessly and others just need to be good enough. Effective hybrid selling reflects these differences in channel design and management.

Second, evaluate periodically the options available for shifting a given activity to a different point in the channel. As products mature, suppliers often find that many service and stocking activities which initially required full-service partners can be performed more efficiently and just as effectively by generic service providers or even self-service. It’s usually better to anticipate these shifts rather than react after the fact. BevCo, for example, significantly reduced visits to retail customers with self-ordering features on its platform.

Third, hybrid approaches require the sales organization to change its way of working. Salespeople must develop partnerships with channel players to access data and work with them to implement the approach. This often places more emphasis on account management tasks (“farming” rather than “hunting,” in common sales parlance), being more disciplined in analyses of consumer and channel data, and managing channel contact beyond physical visits. Processes can be redesigned but the challenge is how to change the habits of sales people. BevCo selected a group of their best sales people to train the rest of the team. This helped to build trust and a deeper understanding of specific concerns, and made a more gradual but enduring change possible.

Finally, recognize the trade-offs. No channel manages itself. So consider how many partners you can realistically support and work with. A trade-off between control and resources is inherent in a hybrid multi-channel approach. Don’t deny this trade-off. Instead, consider its implications for the best uses of time, people, and digital tools in your go-to-market programs.

About the Authors

Frank Cespedes teaches at Harvard Business School and is the author of books on strategy, sales, and marketing.

Georg Krentzel is a senior partner at Globalpraxis, a consultancy focused on route-to-market and revenue growth strategies.

The post Getting Value from Digital Technologies appeared first on The European Business Review.

By Laetitia Cailleteau, Philippe Roussiere and Professor Thierry Rayna

With the game-changing explosion of AI into the commercial world, business leaders have, predictably, focused on the technology’s potential to boost their organizations’ pursuit of their business objectives. However, as in any sphere of activity, with great power comes great responsibility. Enter “responsible AI.”

In the realm of artificial intelligence, generative AI (“gen AI”) opens up a range of previously unimaginable possibilities, guiding organizations toward a future filled with innovative solutions to complex problems. However, the unprecedented pace of adoption and fears of unintended harm have intensified the discourse on responsible AI. With regulators stepping up efforts to regulate the development and use of generative AI through legislation such as the EU AI Act, organizations, large or small, need to focus on responsible AI now.¹

Businesses, however, have much catching up to do. Asked, “Do you know where AI is being used within your organization?”, “Do you understand the risks you are exposed to and how to manage them?”, and, “Who is the accountable leader?”, many CEOs today answer “No” to the first question, “In process” to the second and, “It varies” to the third. Only 2 per cent of CEOs self-identified with the leading practices of responsible AI. The good news is that 31 per cent commit to getting there by the end of 2025, propelled by the EU AI Act, which became law in August 2024.²

But they are not alone in grappling with the responsible use of gen AI. Academia, too, has long participated in and informed discussions around the theoretical foundations, ethical considerations, and long-term impact of technology; it’s no different with gen AI. This article aims to present a holistic perspective, juxtaposing solutions that can be implemented today with a vision for more equitable and ethical use of gen AI tomorrow on four key issues: improving reliability and fairness, user experience, impact on workforce, and sustainability.

Improving the Reliability and Fairness of Results

When deciding to use gen AI, enterprises need to consider the suitability of the technology, associated risks, and the cost to deliver responsibly. Gen AI algorithms do not retrieve data; they generate it based on existing data. This is why they are better suited for narratives than for facts; they get the general story right, but not details such as dates or prices.

When using gen AI, some of the techniques below can mitigate the risk of generating irrelevant outputs:

1. Involving a human in the validation or decision process of the AI system. For example, a recent field experiment conducted by Accenture and MIT revealed that introducing cognitive speed bumps, which prompt users to pause and engage in critical thinking, resulted in improved accuracy. However, depending on the frequency and complexity of the task, this can be laborious and not always precise.³  Human oversight is also a requirement of the EU AI Act for high-risk AI systems.
2. Reinforcement learning with human feedback. This approach enables AI to learn through feedback from human trainers or users, online or offline.
3. Customization of pretrained models for specific tasks with specialized data. Such measures minimize hallucinations and errors.
4. Red-teaming. Simulating attacks to test defenses can uncover vulnerabilities that call for preventive measures to avoid the generation of harmful content and data leaks.
5. Responsible AI user interfaces (UI). This could include a “validity score” that gives a higher rating to prompts aiming to generate a (well-known) narrative compared to those that aim to dig into details. A UI that graphically illustrates the random nature of the algorithmic process, such as rolling dice, could help users grasp the probabilistic underpinnings of gen AI outputs.

Apart from reliability, fairness of outputs is also of essence when using gen AI. This is because large language models (LLMs), trained on widely available content (such as news and social media), can also reinforce existing biases and create digital echo chambers that eliminate diverse perspectives.

To improve the fairness of output from gen AI, users can employ several strategies, including advanced prompting, retrieval augmented generation (RAG), and fine-tuning. Companies must involve skilled individuals to ensure quality, and use representative and high-quality datasets to supplement LLM technology. Bias may also be reduced by ensuring data lineage, structured curation, and creating synthetic data (if needed) to provide a trusted LLM context or training.

However, since today’s major gen AI algorithms are subject to randomness, we cannot completely remove bias and hallucinations. Attempts to artificially correct them can backfire. For example, when text-to-image models tried to apply bias mitigation techniques, the output’s signal-to-noise ratio and accuracy declined. Unless we have an intelligent system—symbolic AI—that understands the concept mentioned in the prompt, one that doesn’t rely solely on statistics and probabilities, it’s impossible to completely eliminate bias while maintaining the quality of the output. Being responsible means recognizing that this is not a bug but an integral feature of the algorithm that cannot be resolved but only mitigated. So, it is important to set up alert systems along with human oversight.

Delivering a Safer, Better User Experience

Gen AI is reinventing the user experience by predicting and adapting content to users’ needs in real time. This can help provide a hyper-personalized experience, which is critical for inclusive design. Executives recognize the opportunity to forge more natural human-product interactions, but good intentions do not always translate into good outcomes, as consumers are sometimes frustrated with technology that fails to understand their intentions accurately.⁴

“Gen AI + human”  is the ideal when it comes to delivering a hyper-personalized experience.

Organizations will need to rethink their customer experience to be more human-centered and reevaluate their processes and information systems. While gen AI improves, streamlines, and accelerates technical implementations, it does not address outdated systems or process-driven experiences that must integrate with rigid back-end systems to trigger transactions.

“Gen AI + human”  is the ideal when it comes to delivering a hyper-personalized experience. The technology is good at producing customized, ordinary results, but it cannot understand intent, symbols, and concepts or read between the lines. Humans, who can provide symbolic knowledge, need to be in the loop.

From a regulatory point of view, the EU AI Act offers safety protection through a risk-based approach. It bans AI systems that carry unacceptable risks, such as the use of subliminal or manipulative techniques, and mandates heightened requirements for high-risk use cases, such as having a quality and risk management system in place. It also imposes transparency obligations on AI systems intended to directly interact with human beings. For instance, chatbots need to declare to users that they are interacting with a machine, rather than a real person.

Preparing the Workforce for a Gen-Ai-Enabled Workplace

Gen AI can reduce drudgery, but workers are worried. In one study, 58 per cent of workers cited job displacement as a concern, despite 95 per cent of executives agreeing that gen AI will create net new jobs. The reality is that roles will change. Industry will need to help workers acquire the skills required to make the best use of this technology.⁵

A bigger concern is deskilling, where heavy dependence on machines will result in a drop in human intellectual abilities. Even when used for routine tasks, AI can deskill experts when their expertise comes partly from performing these routine tasks. Responsible AI means taking this into account and forcing humans to run tasks manually, similarly to how pilots are forced to occasionally fly without autopilot to maintain their skills.

We found that the most advanced organizations — “Reinventors”, as we call them—are almost twice as likely as others to prioritize soft skills development around gen AI (problem solving, creativity, and critical thinking) alongside AI.⁶

Training programs focused on the ethics of data and prompt engineering are necessary to prepare the workforce for their future jobs with gen AI. Organizations are off to a good start: although only 5 per cent have trained their entire workforce on gen AI, 63 per cent have trained at least half of it.⁷  Providing responsible AI training will also help organizations fulfill the AI literacy requirement from the EU AI Act, which requires people dealing with the operation and use of AI systems to be trained properly.

Deploying Gen Ai for a Sustainable Future

We need to consider “AI for green” and “green AI” holistically. Picture two separate lines on a chart; the first one plots AI’s role in deploying sustainable solutions, like low-carbon cement, and the second depicts the consumption of resources by data centers, like electricity and water. The depletion of resources as a result of AI use becoming more ubiquitous could grow exponentially. Industry must aim for a scenario where the first line grows much faster than the second.

On the one hand, gen AI can play a role in the collection, analysis, and reporting of ESG data that informs decisions on sustainable business models. Use cases include accelerating and refining Scope 3 emission calculations and creating comprehensive sustainability reports and consumer information with a focus on net zero targets and ESG metrics. As businesses in Europe grapple with new reporting requirements coming from the Corporate Sustainability Reporting Directive (CSRD), AI can help organize data and fulfill regulatory expectations.

On the other hand, gen AI might pose threats to sustainability, and that is why AI regulations such as the EU AI Act also put sustainability center stage. The Act requires LLM developers to meet a basket of obligations by August 2025, which includes sustainability-related requirements, such as technical documentation including disclosure of energy consumption, copyright policies, and detailed training data summaries. This will aid users in selecting their gen AI model provider and mitigating downstream risks. With the advent of open source LLMs, such as Llama, it may no longer be necessary to train LLMs from scratch, cutting down on the most energy-intensive aspect of gen AI. However, execution could become a key issue if everyone starts using LLMs instead of the front end of search engines. Responsible solutions include designing gen AI to redirect such requests to a search engine and saving and resurfacing typical responses for frequent queries. Local AI, such as device-bound gen AI that relies on neural chips, could help. While these may use less energy-hungry resources, they still require energy to run. Training people on responsible and appropriate usage is critical.

What should you do now?

The risks and issues we have outlined above seem to cast a shadow on the outlook for gen AI. The reality is that gen AI has much to offer, and the future could be promising if we address the potential drawbacks of the technology. Regulators around the world already recognize this, so they are stepping in and proposing a number of regulations in the space. But the road map for executives does not begin with compliance; it begins with gaining a thorough understanding of what gen AI is and how to use it. The first step is to create an inventory of the organization’s AI systems and how they are used.

With this in place, the next step is to:

1. Establish clear governance principles.
2. Assess risks according to the EU AI Act (or another applicable framework such as NIST AI Risk Management Framework or ISO 42001).
3. Systematically test prototypes in critical areas such as fairness, explainability, transparency, accuracy, and safety.
4. Continuously supervise AI compliance while in production.
5. Embrace the full impact, both on the workforce and the environment.

In doing so, organizations not only align with emerging global regulatory trends but also contribute to an ecosystem where gen AI can thrive responsibly and sustainably, creating value for all stakeholders.

About the Authors

Laetitia Cailleteau is the Responsible AI & Generative AI Studios Europe lead at Accenture.

Philippe Roussiere is Innovation and AI Global Lead at Accenture Research.

Professor Thierry Rayna is a Professor of Innovation Management at Ecole Polytechnique, a fellow of CNRS i3-CRG (Management Research Centre, Innovation Interdisciplinary Institute), and leads the Chair Technology for Change of the stitut Polytechnique de Paris.

References:

1. AI Meets Regulation – Driving Innovation Within The EU AI Act by Jean-Marc Ollagnier, Forbes, 25 March 2024; see also LinkedIn blog by Arnab Chakraborty, March 2023.

2. Jack Azagury, et al., Reinvention in the age of generative AI, Accenture, 12 January 2024.

3. Nudge Users to Catch Generative AI Errors, MIT Sloan Management Review, Summer 2024 Issue.

4. Paul Daugherty, Adam Burden and Michael Blitz, Technology Vision 2024: Human by design, Accenture Technology Trends 2024 | Tech Vision | Accenture, 9 January 2024.

5. Ellyn Shook and Paul Daugherty, Work, workforce, workers: Reinvented in the age of generative AI, Accenture.

6. Jack Azagury, et al., Reinvention in the age of generative AI, Accenture, 12 January 2024.

7. idem.

The post Navigating the Ethical Landscape of Generative AI appeared first on The European Business Review.

By Didier Cossin and Yukie Saito

This article examines four critical governance failures in boards: risk management, strategic oversight, executive and non-executive relationships, and integrity. It advocates for a shift in the role of boards from reactive oversight to proactive leadership in managing risks, shaping strategies, selecting and supporting the right CEO, and fostering a culture of integrity.

Introduction

The modern business environment is characterized by unprecedented disruption. Rapid technological advancements, shifting regulatory frameworks, and evolving consumer expectations are reshaping industries and demanding heightened organizational agility. These challenges are compounded by economic volatility and geopolitical tensions, creating a dynamic and unpredictable environment. Further adding to this uncertainty, the anticipated return of Donald Trump to office in 2025 could amplify market volatility, posing additional challenges for organizations.

The role of boards of directors is evolving, requiring them to act as proactive stewards of strategy and risk.

In this context, the role of boards of directors is evolving, requiring them to act as proactive stewards of strategy and risk. By leveraging diverse perspectives and employing innovative, lateral thinking, boards are positioned to address complex risks and capitalize on emerging opportunities. Yet, many boards struggle to adapt, leaving their organizations exposed to missed opportunities and heightened vulnerabilities in an increasingly competitive world.

Through extensive interactions with board members, we estimate that 90-95 per cent of organizational failures related to board governance stem from four key areas: 1) risk identification, assessment, and management; 2) strategy development; 3) relationships between non-executive and executive leaders, particularly in CEO and team selection and support; and 4) integrity. Effective board leadership in these areas is critical, as failures often lead to significant harm. This article will examine these critical areas where boards frequently fall short and illustrate them through the case of Credit Suisse’s collapse.

Four Key Areas Where Boards Underperform

This section outlines four critical areas where boards often underperform. Table 1 offers diagnostic questions to assess specific sources of board failures to identify and address potential vulnerabilities.

1. Failure of risk identification, assessment, and management

The role of boards has shifted significantly in recent years, moving from a focus on oversight to actively shaping the strategic direction of organizations. This evolution requires boards to adopt a forward-looking approach to risk management, integrating it seamlessly with strategy. Effective boards understand that risk is not static; it evolves with market conditions, technological advancements, regulatory developments, and geopolitical shifts. The Russia-Ukraine conflict, for example, underscores the need for incorporating geopolitical risks into decision-making due to its significant impacts on supply chains, energy markets, and global stability. To navigate such complexities, boards must establish proactive approaches that align with the organization’s strategic goals and risk appetite, ensuring timely identification, assessment, and mitigation of risks.

Effective boards understand that risk is not static; it evolves with market conditions, technological advancements, regulatory developments, and geopolitical shifts.

In today’s interconnected environment, risk management has become akin to portfolio management, where risks and opportunities are evaluated for their relevance, proximity, and potential impact. Tools like scenario planning, stress testing, and sensitivity analysis allow boards to explore different futures, assess their organization’s resilience to extreme scenarios, and evaluate the impact of changes in critical factors. A materiality matrix can also be employed to prioritize risks and opportunities based on their significance to stakeholders and their potential impact on the organization’s strategy and goals, focusing efforts on areas that align with long-term value creation.

Boards must recognize that risk management is an ongoing process requiring continuous adaptation. Cybersecurity exemplifies this, with rising threats and regulatory scrutiny, such as the Securities and Exchange Commission’s (SEC) mandate for incident disclosures and oversight practices. By updating cybersecurity frameworks, aligning with regulations, and fostering accountability, boards can address immediate risks while enhancing long-term resilience.

2. Strategic failure

Boards play a critical role in guiding strategic direction, requiring them to integrate risk and opportunity into a cohesive vision. To remain competitive in today’s rapidly evolving environment, boards must combine deep industry expertise with forward-thinking innovation. Anticipating disruptive trends, addressing challenges creatively, and identifying unconventional opportunities are essential for achieving long-term strategic success. This shift is reflected in the rise of science and technology committees, which have grown from 10 per cent of S&P companies in 2019 to 17 per cent in 2024.² These committees enable boards to align technological advancements with strategic goals in an increasingly tech-driven environment.

The effectiveness of a board’s strategic decisions often depends on its ability to think beyond conventional boundaries and foresee transformative shifts. Fostering diversity and incorporating multidisciplinary perspectives within the boardroom is critical for fuelling such lateral thinking, enhancing the board’s capacity to identify unconventional opportunities.

Boards that embrace this approach are better positioned to turn potential risks into opportunities, driving sustained value creation even in volatile environments. Tools such as scenario analysis and strategic exploration can further support boards in aligning their objectives with future trends, ensuring resilience and relevance amid uncertainty.

3. Non-executive and executive issues

The relationship between the board and executive management is a cornerstone of organizational success, directly influencing decision-making and strategic direction. A board’s ability to select, supervise, and support the right CEO is one of its most critical responsibilities. This process requires identifying not just technical expertise but also leadership qualities such as vision, adaptability, and the capacity to foster a culture aligned with the organization’s goals. Selecting the wrong CEO—or failing to provide adequate support—can result in strategic drift or outright failure.

The chair-CEO dynamic is particularly vital. A strong relationship, built on trust and clearly defined roles, ensures that the CEO receives guidance while remaining accountable. Effective chairs cultivate environments where CEOs feel supported but are held to clear performance standards. Regular, transparent communication between the two ensures alignment on priorities, challenges, and opportunities.

A well-functioning board must ensure clarity between non-executive and executive directors, with non-executives providing independent oversight and executives contributing operational expertise. Boards must balance their supervisory and supportive roles with management. Supervision includes holding management accountable for meeting objectives through structured monitoring of key performance indicators (KPIs), scenario reviews, and targeted interventions when performance deviates. Boards must also create processes for transparent information-sharing and maintain a feedback loop to address challenges promptly.

4. Integrity failure

Integrity is essential to effective governance, forming the foundation for accountability and fostering trust among stakeholders. Boards are responsible for upholding ethical standards, managing conflicts of interest, and ensuring transparency in decision-making processes. Failing to maintain these principles can lead to reputational damage, stakeholder distrust, and, in severe cases, legal or financial crises.

Stakeholder engagement plays a critical role in maintaining integrity. Through stakeholder mapping, boards can identify and prioritize issues with the greatest potential impact and address the concerns of diverse stakeholders. Sustainability considerations are integral to this process. Boards must understand how their decisions affect long-term sustainability outcomes and ensure that these factors are incorporated into governance practices.

Governance structures and processes are equally critical. Boards should establish mechanisms such as specialized committees to oversee ethical governance and sustainability efforts, ensuring systematic and transparent decision-making. Independent directors and regular audits can further reinforce accountability and create safeguards against potential breaches.

Organizations can foster a positive culture by prioritizing ethical behaviour over purely financial performance, recognizing employees who act with integrity even if they miss targets for justifiable reasons. This redefines success beyond numbers and reinforces an anti-fraud culture by integrating rewards for ethical conduct into incentive programs while penalizing unethical actions. Anti-fraud training is essential to sustain this culture, equipping employees to identify risks, recognize warning signs, and report suspicious behaviour.

Case of Credit Suisse – Governance Failures Across Four Key Areas

The collapse of Credit Suisse in 2023 epitomizes governance failure across four critical areas: risk management, strategic alignment, CEO selection and support, and integrity. These interconnected shortcomings led to an erosion of stakeholder trust, financial instability, and the bank’s eventual acquisition by UBS.

Risk Management Failures

Risk management failures were evident in the 2021 Greensill scandal, where Credit Suisse became embroiled in a $10 billion debacle tied to high-risk supply chain
funds.³ Compounding this was the Archegos collapse, which resulted in a $5.5 billion loss due to over-leveraged positions that went unchecked by risk oversight.⁴ Despite clear warning signs, the bank failed to establish robust processes to address high-risk exposures, highlighting systemic flaws in its approach to identifying and mitigating risks.⁵

Strategic Misalignment

Strategic changes, such as downsizing the investment bank and focusing on asset management to reduce earnings volatility, were inconsistently executed and failed to inspire market confidence.⁶ The board’s inability to assess risks associated with these strategic shifts or implement them effectively left the bank vulnerable to external shocks. Furthermore, a persistent dependence on volatile revenue streams from high-risk activities contradicted the goals of building a stable, resilient business model.

CEO Selection and Support

Over a 10-year period, Credit Suisse cycled through four CEOs, signalling the board’s inability to identify and support effective leadership. This instability disrupted strategic continuity, undermined employee morale, and eroded client confidence. The frequent turnover at the executive level led to inconsistent leadership, fragmented initiatives, and a lack of clear vision, all of which further destabilized the organization during critical periods of crisis.

Integrity Failures

The “Suisse Secrets” scandal exposed billions of dollars in accounts tied to illicit activities, raising questions about the bank’s ethical practices and compliance mechanisms. Repeated lapses in internal controls and a culture that prioritized short-term gains over sustainable governance and ethical accountability allowed systemic ethical breaches to persist,⁷ further deteriorating stakeholder confidence. Combined with high-profile legal and reputational setbacks, including significant fines and regulatory scrutiny, the bank’s integrity failures underscored a profound disconnect between its stated values and operational practices.

These failures in four areas collectively led to an unprecedented crisis of confidence. Social-media-fuelled rumours and a mass exodus of clients resulted in $120 billion in withdrawals during the last quarter of 2022,⁸ leaving the bank unable to sustain operations. Ultimately, the collapse of Credit Suisse highlights the essential role of cohesive board oversight, strong risk management frameworks, thoughtful strategic execution, and a commitment to ethical integrity in securing an organization’s long-term resilience.

Conclusion

In an era defined by volatility and complexity, the need for robust board governance has never been more critical. Effective boards must address vulnerabilities in risk management, strategic alignment, leadership dynamics, and integrity to build resilient organizations. Failures in one area can trigger cascading effects, amplifying risks and compounding challenges, as demonstrated in the case of Credit Suisse.

To navigate this modern business environment, boards must shift from reactive oversight to proactive, forward-thinking leadership. This means identifying and mitigating emerging risks, aligning strategic decisions with long-term objectives, and prioritizing resilience over short-term gains. Equally crucial is selecting and supporting effective CEOs who can drive stability and vision. A culture of integrity must be deeply embedded, ensuring that ethical practices guide decision-making at all levels. By mastering these principles, organizations can not only weather challenges but also achieve sustainable growth in an unpredictable future.

About the Authors

Professor Didier Cossin is chaired professor of governance at IMD, Switzerland. He is the founder and director of the IMD Global Board Center, the originator of the Four Pillars of Board Effectiveness methodology and author of High Performance Boards: A Practical Guide to Improving and Energizing Your Governance published by Wiley.

Yukie Saito is a Senior Research Writer at the Global Board Center at IMD, specializing in corporate governance, stewardship, and responsible investment. She holds a D.Phil. (Ph.D.) from the University of Oxford and has experience in consulting and with the United Nations.

References

1. This article is based on Chapter 8 from Cossin, D. (2024) High Performance Boards, Wiley (2nd edition).

2. Spencer Stuart. 2024 U.S. Spencer Stuart Board Index. https://www.spencerstuart.com/research-and-insight/us-board-index

3. Financial Times. 28 February 2023. “Credit Suisse breached supervisory law over $10bn Greensill funds”. https://www.ft.com/content/90e1ddae-5ea6-4a88-8f8e-bf10cb3207fc

4. NY Times. 29 July 2021. “Credit Suisse Report Details Failings in Archegos Debacle”. https://www.nytimes.com/2021/07/29/business/credit-suisse-archegos.html

5. FINMA Report. “Lessons Learned from the CS Crisis”. 19 December 2023. https://www.finma.ch/en/~/media/finma/dokumente/dokumentencenter/myfinma/finma-publikationen/cs-bericht/20231219-finma-bericht-cs.pdf?sc_lang=en&hash=3F13A6D9398F2F55B90347A64E269F44

6. Ibid.

7. Ibid.

8. 9 February 2023. “Credit Suisse warns of more losses, drawing regulatory attention”. https://www.reuters.com/business/finance/credit-suisse-logs-worst-annual-loss-since-global-financial-crisis-2023-02-09/

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Small businesses, the backbone of the global economy, face unique challenges in scaling their impact while juggling limited resources. In 2025, the ability to harness business agility, adopt innovative technologies, and leverage the gig economy will define success. This article explores how small employers can strategically utilize the PTP Method—Processes, Tools, and People—to build a sustainable and scalable model that drives customer, community, and capital impact.

In most economies, small employers comprise of 99.9% of all business entities. In the US, as one example, the business count is about 29 million solopreneurs (non-employee firms) and 6 million businesses with fewer than 10 employees, contributing $28 trillion in USD to the GDP. Each business has a purpose: for its goods or services to have a positive impact on customers, community and capital.

Understanding how to scale YOUR impact so you have the biggest effect in all three areas is key to small business success. 

Scaling Impact

The key lies in creating a dynamic workforce model that allocates time and effort to the core, value-generating work of the business, then utilizes a blend of dedicated and contract talent to deliver the outcomes needed for both front and back-office work.

Business agility, flexibility, and efficiency are critical to staying competitive, especially when economic uncertainties, technological disruptions, and changing consumer behaviors are poised to shift how business is done. This can be a challenge for smaller businesses that generally don’t have the resource options of large organizations…but, what if they did?

For years, the Gig Economy has offered a cost-effective, impactful way for organizations to meet their needs, providing access to highly skilled freelance talent that can be scaled up or down. The question is: how can businesses fully harness freelance resources to maximize impact?

The key lies in creating a dynamic workforce model that allocates time and effort to the core, value-generating work of the business, then utilizes a blend of dedicated and contract talent to deliver the outcomes needed for both front and back-office work.

Leverage the Gig Economy to Amplify Your Impact

The question is no longer if a business owner should leverage the gig economy but how to use it to maximize its impact on the business. As the skills and expertise within the freelance space grow, business owners are able to tap into that flexible workforce to fill open skill needs with quality, specialized talent. Whatever a business needs, there’s a contractor equipped to provide it.

To effectively utilize freelance talent, the first step is identifying which roles directly contribute to the business’ value proposition and which serve as supporting functions. Once this distinction is clear, in-house resources should be allocated to executing that mission-critical work (that drives revenue). The work that supports it can be outsourced to trusted freelancers. This approach focuses finite resources on the work that drives primary value for paying clients.

For instance, while social media might not be the cornerstone of most businesses, it is essential for promoting the core value of every business. In this case, finding a freelance social media contractor who aligns with the business strategy can be a game-changer. You can scale their involvement and budget based on results—experimenting with different approaches, like organic traffic versus paid ads. Or, if your marketing drives significant sales, shifting focus to add contract customer service resources to support a growing audience might make sense.

However, understanding core vs. non-core work before outsourcing is just one piece of the puzzle. You must implement resources in the right way to achieve sustainable growth.

Utilize the PTP Method to Scale Impact – Processes, Tools, then People

Getting the most out of your resources begins with building a solid foundation of repeatable processes, enhancing those processes with the right tools, and finally, unlocking the full potential of people. This sequence ensures that your business grows sustainably while delivering consistent value at scale. 

• Build Strong Processes: Your processes define how you deliver value – and they’re one of your most important business assets. Ensuring you have robust, repeatable systems in place both streamlines operations and makes it easier to identify where technology and people can add the most value.
• Adopt Advanced Technology: Leveraging AI-powered software, like CRM systems, can result in streamlined operations and offer new ways to be innovative and competitive. These tools help automate routine tasks, optimize workflows, reduce manual errors, and capture and analyze data. With tools taking on this work, time is freed up for a solopreneur or small team to focus on strategic, high-impact – high-ROI activities, like expanding the business, building customer relationships, creative problem-solving, and product/service innovation.
• Engage Freelance Virtual Assistance for Human Brainpower: Maximizing the unique capabilities of people after processes and tools are in place enables you to focus human effort where it matters to get the most value. The gig economy allows business owners to access highly skilled professionals in many areas including, operations support, marketing, project management, and more, with no long-term commitment or overhead costs associated with traditional hires. For small employers with limited budgets, this agile approach provides the resources and expertise needed to enhance capabilities and improve operations cost-effectively.

Scaling your impact requires the right mix of processes, tech tools, and people to create a business model that delivers consistent value and drives sustainable growth.

Transform Your Business in 2025

Scaling your impact requires the right mix of processes, tech tools, and people to create a business model that delivers consistent value and drives sustainable growth.

The gig economy is a real solution for businesses looking to thrive in any economic climate. Freelance talent allows organizations to scale their workforce up or down with optimal capital efficiency, providing the flexibility to pivot quickly. This adaptability ensures businesses can adjust their operations as needed, regardless of economic conditions, and this flexibility often translates directly into a competitive edge and impact.

Embracing the gig economy’s flexibility and expertise ensures a business is poised not only to survive but to excel with a scalable and efficient business model ready to meet the challenges of 2025.

But consider this: time is valuable – and finite – so spending hours finding the right talent is often not the best use of time. That is where a technology staffing platform and service like ResultsResourcing can step in as a valuable partner, offering expert matching, comprehensive support, and a team-based approach that aligns perfectly with the needs of small businesses.

Redefine how your business operates (applying the PTP Method), scale your impact, and achieve sustainable growth with scalable support. Here’s to your success in 2025!

About the Author

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“Stay lean, flexible and deliberately profitable.”

Miles Welch, Partner, Milestone Advisory 

“It’s been a challenging year for many businesses with lots of headwinds still present going into 2025. Larger firms are able to absorb more shocks and sacrifice some profit to weather the storm. Smaller ones can’t do that without feeling the cash flow impact and a few have balanced on a knife edge this year. With uncertainty heading into next year, those best placed will be the ones who can keep lean, flexible and deliberately profitable. Being able to make the tough choices, not being afraid of reinventing the model and looking for positive changes will be the winning formula in 2025.” 

“Filter out the noise and focus on delivering value.”

Chris Wright, Founder, Fifty Five and Five

“A key lesson was accepting that change is pretty much constant in our world now. We are raising for an AI startup, and focusing our existing B2B agent on AI powered services. The pace of change is incredible. But that is OK. We have learned to stay on top of what is new, filter out the noise, and focus on what delivers value to our investors and customers.”

“Create a cast-iron case for outsourcing production.”

Ben Wylson, Creative Director & Co-Founder, The Big Sky

“Agencies and brands going in-house with production hit us production companies hard, so we asked ourselves why companies would want in-house in the first place? (too close to brand, less experienced, fewer connections, vast overheads, especially post-Reeves’ budget). We kept sane by developing our Subscription Service so that we can out-do in-house by replacing in-house!’

“Partner with peers to drive growth.”

Ritam Gandhi, Founder, Studio Graphene

“This year we placed a strong emphasis on partnerships, especially with peers. Building genuine connections with others who face similar challenges created a space where we could exchange ideas, share experiences, and lean on each other. This approach not only helped us drive growth but also provided a sense of camaraderie, making the journey feel less isolating and more rewarding.”

“Deliver work that drives real impact.”

Ian Millner, Global Chair, Iris Worldwide

“This year has made one thing clear: it’s time to get back into creating things – ideas, platforms and solutions – that deliver definite value and do what clients simply can’t do for themselves. In an industry atmosphere defined by one crisis after another, we need to embrace change with urgency and face reality head-on. Motivated talent can’t be taken for granted. Now more than ever, our focus must be on what we do best, delivering work that not only stands out but drives real impact.” 

“Delegate to grow.”

Kevin Gibbons, CEO, Re:signal

“To grow by 30%, you need to delegate a third of what you did before.” I heard this quote a few years ago at a conference, and it really stuck with me. That’s something I’ve really tried to embrace this year, in a similar spirit to “what got us here, won’t get us there.”

For me personally, that meant building capability, hiring for gaps, and trusting our senior leadership team at Re:signal, to allow them to step-up and grow the business. In turn, that frees my time to focus on new growth opportunities, which I simply wouldn’t have been able to do if I stuck to what I was doing previously. We didn’t quite grow by 30%, but we did come pretty close – and the key to 2025, is challenging myself to do that again so that we can make things happen!”

“AI helps optimise processes and unlock innovative solutions.”

Elizabeth Lukas, chief executive office, Americas, AutogenAI

 “This year, one transformative shift I made was fully embracing AI in my day-to-day work. By leveraging AI tools to accelerate mundane, time-consuming tasks like data analysis, drafting initial content, and project planning, I freed up valuable time to focus on high-impact strategic initiatives. Beyond efficiency, I used AI as a springboard for creativity—exploring new ideas, generating fresh perspectives, and enhancing storytelling approaches that resonate more deeply with audiences. The lesson I took away is that AI isn’t just a productivity tool—it’s a collaborator that amplifies human creativity and decision-making. Going forward, I’ll continue integrating AI into my workflows to not only optimize processes but also unlock innovative solutions that drive business transformation. Embracing AI has not only retained my sanity during busy periods but has also redefined how I approach challenges with agility and vision.”

“Explore Accounts Based Experience for Pipeline and Growth.”

Stefan Ferguson, Managing Partner, Hex Digital

“The last 18-24 months have been tough trading conditions in agency land.
Historically – like many agencies – we grew 80% on word of mouth and referrals. We relied upon this for growth. 
This is no longer enough. 
Although we’ve known we needed to build an inbound engine for some time, it was only this year that we really leaned into ABX.

ABX (or Accounts Based Experience) is the latest iteration of accounts-based marketing.
I’m generally very sceptical of one-size-fits-all frameworks and processes but ABX is all about building a demand and lead generation engine around what makes you great. 
We spent a lot of time focusing on our Ideal Customer Profile and their jobs to be done – mapping the buying centres and personas then tailoring our positioning, offering and content strategy accordingly. 
Similarly to the concept of product-market-fit, you feel when it’s easy to produce engaging content, have lead-generating conversations with the right people, and ultimately win new work off the back of activity. If you are struggling for pipeline – and growth of existing client accounts – I’d recommend looking at ABX.”

The post “Delegate to Grow, Deliver Work with Real Impact, Stay Deliberately Profitable:” Eight Creative, Tech and Marketing Industry Leaders Reflect on the Rollercoaster that was 2024. appeared first on The European Business Review.

By Dr. Anna Rostomyan and Dr. Monika Klein

Emotions play a significant role in political decision-making. In this hypothesis, the authors suggest that emotions, such as anger, hatred, fear, love, admiration, joy, delight, awe, and hope, play a crucial role in shaping political opinions and decisions. This article illustrates interdisciplinary research on the significance of emotions in politics. The results of our empirical analysis are based on an online cross-cultural quantitative survey analysis.

1. Introduction

While discussing the prominence of emotions in politics, it might seem trivial to touch upon this topic, since it is now generally accepted that emotions enter into all spheres of human activity, even intermingling with the higher cognitive processes, which greatly influence our thinking abilities and decision-making processes.

In the present geopolitical landscape marked by brinkmanship and populist rhetoric, the significance of this scholarly approach is evident. It is essential to examine the concept of “celebrity politics”, the portrayal of politicians as distinct “personae”, and the communication methods and emotions that underlie these issues. This investigation is critical for gaining a deeper understanding of the current political scenario. The significance of basic emotions to individualization applies to studies of political leaders and elites (Berenskoetter & Van Hoef, 2017; Van Hoef, 2018) and of citizens, increasingly characterized as self-actualizing, informal, and affective, that can have a great impact on the audience (Beck, Giddens, & Lash, 1994; Bennett, 2008; Loader, Vromen, & Xenos, 2014).

Moreover, although formerly the role of emotions in politics was accepted and commonplace, during the years of human evolution it tended to be disregarded and overlooked. Nonetheless, we can truly state that academics and politicians have shown a new interest in the significance of emotions in politics during the last decade. This discussion brings us to the times of ancient Greece right back to Aristotle, Seneca, and Plato, where there was a tight relation between emotions and political discourse, narrative and rhetoric in front of the larger public, where the orator tried to gain the positive disposition of the audience by means of their speech.

Cicero pointed out that very often the decision of those who decide greatly depends on the level of emotionality of the speaker.

There has been much debate even since the ancient times on how emotions influence reason and whether our decisions are linked with emotions. In the Rhetoric, Aristotle (1932) argues that rhetoric gives its user the best chance of convincing the listeners when it uses certain language units to have an impact on the audience, reviving the scene in front of the listeners’ eyes. Cicero placed a greater emphasis upon the emotive language applied in terms of achieving the desired emotional impact on the audience. He pointed to the fact that very often the decision of those who decide greatly depends on the level of emotionality of the speaker.  This was mainly related to rhetoric, where the speakers by means of applying emotional language reach their desired impact on the audience. By this, he does not claim that it is a disadvantage and should thus be avoided. On the contrary, he even recommends that:

“Men take a decision oftener through feeling than through fact or law. They are moved by evidence of character in the speaker and in his client. The only way to rebut feeling is by feeling.” (Cicero 1895:178)

We may thus come to think that clinging just to the mere dry facts is not always the right thing to do, nor is it right to be driven by an abundance of emotions. Those who decide should not be distracted by the emotional speech of the speakers or, at the other extreme, totally ignore their emotions, but should strive to find the happy medium of the combination of logical and emotive evidence. The present article, thus, discusses the significance of emotions in politics, their impact on the listeners, and the power of politicians appropriately applying emotions in their demeanour to reach a positive influence on the general public.

2. Theoretical Background

2.1. Classification of Emotions and Various Theories

The list of feelings, emotions, and physical and mental reactions to external stimuli that we associate with the term “emotion” is almost infinite. Therefore, before speaking about the classification of emotions, we should dive into the essence of them and the subsequent processes therein. N. Demertzis (2013, p. 4) claims that whether approached as an interpersonal state, a process, cultural construct, subjective experience, syndrome or disposition, emotion is thought to mainly be composed of five distinct elements, namely:

1. activation of key body systems and action readiness towards something,
2. appraisal of situational stimuli, relational contexts and objects,
3. overt or inhibited expression through facial, vocal and paralinguistic movements,
4. culturally provided linguistic labels of one or more of the first three elements,
5. socially constructed rules on which emotions should be experienced and expressed (Demertzis, 2013:4).

In their book Politics and the Emotions (2012), P. Hoggett and S. Thompson assert that emotions are felt, so that it follows that they involve feelings – a generalized state of being that influences one’s attitudes, perceptions, interpretative power and, finally, behaviours and actions. According to this viewpoint, people are moved by their very own emotions, as well as the emotions of others. This suggests that if a politician wants to succeed in getting elected, they should try their best to emotionally “move” the public.

In this connection, it should be noted that Paul Ekman (1994) differentiated several “basic” emotions which can be found in our everyday routine depending on the stimuli we perceive across cultures and situations; he identified the six basic emotions as anger, surprise, disgust, enjoyment, fear, and sadness.

As we know, emotions do not arise by themselves but quite often have external stimulators which arouse them after outward perception. Knowing, too, that emotions can have degrees of intensity (Rostomyan, 2013), we can draw the succession of emotions which most possibly lead to political protests and become apparent in political communication.

The fear of a prosperous future may result in frustration when not able to see a solution to the situation at hand. This can result in annoyance, which will gradually ascend in the form of anger at not being able to handle the situation. This can also have the forms of rage, wrath, and agony, which are truly detected in the verbal and non-verbal manifestations of protesters shouting out vulgar words and engaging in offensive actions, as well as damaging cars and buildings. The succession of these emotions can be gradual, one succeeding the other, and may result in final protests / demonstrations. As we can truly see, politics, especially political protests, are full of intense emotions, especially negative ones. It follows that emotions are apparent in political communication and find their outward expressions in political speech by means of various verbal and non-verbal markers (Rostomyan, 2022). For instance, D. Ost (2004) claims that politics itself should be more accurately conceived in emotional terms as the “mobilization of anger”, where the anger of the masses should be managed by the political apparatus. The table below by N. Demertzis (2013) truly shows the implications of emotions in protest and their appraisals.

Demertzis (197) further states that anger, as experienced by protesters, is mainly observed in the context of actions that conform to the norms of the existing social system (such as taking part in lawful demonstration). We can also here add that anger can also be conditioned by the discontent of the crowd with the present political leader, whereas guilt, shame, and regret are some social emotions which are linked with in-group attachments, where drastic actions are implicit. As for solidarity, it forges bonds between the members of a social group and creates the feeling of togetherness, implying that together you can achieve more when all stand for one and one for all. Here, it should also be mentioned that after the protest when the emotions calm down and people re-analyze the created situation, there might be cases of disappointment and regret when the damage is perceived.

While speaking about the classification of emotions and their interrelationship with, and presence in, politics, it is noteworthy that Hoggett & Thompson (2012:8) outline the following groups of emotions and emotional states connected with morality which are evident in politics:

1. Positive moral emotions

There are a range of internal feeling states which are specifically bound up with our internal moral values and ethical lives; these can be divided between positive and negative moral emotions. Positive moral feelings, such as compassion, concern, sympathy and forgiveness, create a bond between the interactants in the process of successful political communication. Here, compassion gains prominence in politics, since politicians should have compassion towards the nation to be of support and positive guidance for the crowd towards a common goal. On their side, the voters should feel compassionate towards those whom they elect and understand that politicians are not all-powerful. Here, it is noteworthy that if voters detect a compassionate politician, they are more likely to be drawn to them.

2. Negative moral emotions

It is noteworthy that if voters detect a compassionate politician, they are more likely to be drawn to them.

By contrast, negative feelings repel us from their object. The most powerful negative moral emotions aimed at others are disgust and contempt, hatred and annoyance. Such emotional experiences may occur when the nation is dissatisfied with its political leader’s activities and, thus, even if they themselves have voted for that leader, a huge gap between them is being generated. It goes without saying that negative moral political emotions are not beneficial for the politicians. While such sentiments are directed towards another, some more common self-directed negative feelings include guilt, remorse and regret for having chosen this or that very political figure to solve the problems of the country and to represent the voice of an entire nation.

Thus, when we speak about politicians, we can state that if they become more aware of the essence of emotions and the way they can influence perception, motivation, intention, and resultant action, as well as their impact on thinking, reasoning, and decision-making, they will generally stand a better chance of gaining their desired goal. Moreover, if politicians manage to elicit positive moral emotions in the process of political communication, both parties will greatly benefit from well-being and actual better results.

2.2. The Interrelation of Emotions and Politics alongside Survey Data Analysis

The relationship between emotions and politics is demonstrated through affective polarization, which refers to the emotional attachment or detachment that individuals feel towards their political opponents in the process of two-fold political communication. This attachment can lead to a breakdown in communication and compromise, ultimately hindering democratic processes. Additionally, emotions play a significant role in political messaging, as political actors often use emotional appeals like fear, hope, and anger to gain support from people.

Emotions can be more effective than abstract concepts and data, because they are more relatable and accessible to individuals. There has been much evidence that political campaigning is winning both hearts and minds, since the voters may sometimes be directed towards a goal by their emotions ruling over their minds. As for the opinion about the pertinence of emotions in the general public, we got the following results, which go to prove that generally emotions should also be pertinent in politics as well.

Out of the 20 people questioned, 16 answered “yes” to the relevance of emotions in politics, which comes to suggest that they should be pertinent in this aspect of human activity as well, since political figures are also human beings endowed with certain emotions and feelings. Moreover, if politicians deploy emotions in political communication, they will consequently stand a better chance of influencing their audiences, since we are all not only rational but also emotional beings, also mostly governed by our internal emotional states.

When we speak about the hearts and minds of the people, we should consider them in separation as single individuals on the micro-level who together shape the macro-level of the socio-psychological society (Demertzis, 2013). T. Scheff (1990) is among the first scholars to have placed much stress, importance, and effort in developing socio-psychological analyses that tie the micro- and macro-levels of the population within a certain social circle. In this respect, it is interesting to look at the macro-level, including numerous different humans representing micro-levels, who together shape the collective intelligence and actual decision-making. In this connection, it is noteworthy that N. Demertzis (2013:17) speaks about the role of affective intelligence, which offers a new understanding of the citizen not as a political expert, but rather as a human, being part of the whole political body system. In this line of thought, humans are viewed as affective creatures whose decisions and actions are highly affected by their emotions.

As mentioned in our earlier discussion, one of the positive moral emotions present in politics is compassion, which has a humanitarian essence. According to M. Nussbaum (1996), compassion is indeed the basic social emotion which helps to keep a society going and people feeling involved. Compassion may be the real cause of Lady Diana’s success in winning the people’s hearts and becoming the “Queen of Hearts”. In an interview for the BBC, in response to the interviewer’s question concerning whether she thought she would ever become Queen, Lady Di answered that she would love to be the queen of people’s hearts. She was indeed involved in humanitarian aid, she tried to be present in people’s lives, sharing their problems, their famine, their sicknesses, their dreams, their motivations. This helped her become greatly loved by millions of people, even beyond the United Kingdom.

According to R. Overy (2004), love, admiration, and awe also play a great role in building our positive relations to something higher, whether this be a beloved political or religious leader. Studies of charisma clearly reveal the idealization of political leaders, even those of the most autocratic nature. Here, we can cite the example of the former Chancellor of Germany Dr. Angela Merkel, who, when being photographed in the same dress and being embarrassed by the journalist telling her that she was wearing the same dress 10 years ago, very courageously answered: “My job is to lead the people of Germany, not to be a fashion model.”  This goes to prove that she was devoted to her job and gained the sympathy of many Germans, sharing their everyday concerns, which consequently ensured her a six-minute standing ovation and applause on her last speech bidding farewell as the Chancellor of Germany.

People like politicians who are real, humane and approachable, and politicians who deploy emotions stand more chance of influencing public opinion.

To the question of whether a political figure should be emotionally authentic, we got the following picture, which truly reflects how ordinary people feel towards the emotional behaviour of a political leader in the process of political communication:

The results of this question from the online survey fully represent the opinion of the vast majority in the shape of 100% answering “yes” to the question on the emotional authenticity of political figures. This suggests that people like politicians who are “real”, who are humane and approachable, which promotes our hypothesis that when emotions are deployed by politicians, they stand a better chance of influencing the public opinion.  Moreover, authenticity has the ultimate chance to win votes, which can even be simply expressed by a mere genuine smile and not an artificial one.

In conclusion, we strongly believe, and our research has also shown, that politics and emotions go hand in hand. They sometimes support one another, often denoted by the display of a positive emotion like happiness through confidence, sometimes by vetoing an action.  They serve as a true “compass” in the hands of a merciful political figure who, being an emotional being, too, can understand the needs and requirements of the public and, by displaying an emotionally sound demeanour, be a role model for them.

About the Authors

Dr. Anna Rostomyan is an assistant professor, international author, researcher, editor, reviewer, speaker, translator, and certified EI coach. She received her doctorate degree with the highest grade in 2013 in cooperation between the University of Freiburg (Switzerland) and Yerevan State University (Armenia, her alma mater) within the framework of a research grant. As a world-renowned author and scholar of seven books and 50 publications worldwide, she reaches a readership of around 100 nationalities.

Dr. Monika Klein is a movie and design producer, a digital and traditional art collector. Her movies receive awards and recognition all over the world. She has written over 80 articles and books. She specializes in the economics of the creative sector, its impact on regional development, and business models of the creative and cultural sector. She knows everything about design management and service design at the microeconomic level and successfully manages diverse creative projects.

References:

1. Aristotle (1932). The Rhetoric. New York: D. Appleton and Company.

2. Beck, U., Giddens, A., & Lash, S. (1994). Reflexive modernization: Politics, tradition and aesthetics in the modern social order. Cambridge: Polity Press

3. Bennett, W. L. (2008). “Changing citizenship in the digital age”. In W. L. Bennett (Ed.), Civic life online (pp. 1–24) Cambridge, MA: MIT Press.

4. Berenskoetter, F., & van Hoef, Y. (2017). “Friendship and foreign policy”. In Oxford research encyclopedia of politics. Retrieved from http://politics.oxfordre.com/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-429

5. Cicero (1895). De Oratore, trans. by W. B. Owen, Boston.

6. Demertzis, N. (2013). Emotions in Politics: The Affect Dimension in Political Tension. Hampshire: Palgrave Macmillan.

7. Ekman, P. (1994). The Nature of Emotion: Fundamental Questions. Oxford: Oxford University Press.

8. Hoggett, P. & Thompson, S. (2012). Politics and the Emotions: The affective turn in contemporary political studies. New York: Continuum International Publishing.

9. Loader, B. D., Vromen, A., & Xenos, M. A. (2014). “The net-worked young citizen: Social media, political participation and civic engagement”. Information, Communication & Society, 17(2):143-50.

10. Nussbaum, M. (1996). “Compassion: the basic social emotion”. Social Philosophy and Policy, 13 (1):27-58.

11. Ost, D. (2004). “Politics as the Mobilization of Anger”. European Journal of Social Theory, 7 (2):229-44.

12. Overy, R. (2004). The Dictators: Hitler’s Germany, Stalin’s Russia. London: Allen Lane.

13. Rostomyan, Anna (2013). “A Linguo-cognitive Analysis on Verbal and Non-verbal Expressions of Emotions (on the material of English)”. Dissertation. Yerevan, 120 pages.

14. Rostomyan, Anna (2022). The Ultimate Force of Emotions in Communication. Düren: Shaker Verlag.

15. Scheff, Th. J. (1990). Microsociology. Discourse, Emotion and Social Structure. Chicago and London: The University of Chicago Press.

16. Van Hoef, Y., & Oelsner, A. (2018). “Friendship and positive peace: Conceptualising friendship in politics and international relations”. Politics and Governance, 6(4):115-24.

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By Alan Thorogood and Stephanie L. Woerner

When undertaking a sizable project, a large organization might consider partnering with a small company in order to leverage their greater agility. However, such partnerships bring risks as well as benefits. How to get your head around the issues? What about a case study?

In a digital world, no organization can thrive alone, and partnerships with xTechs – nimble small companies – present large companies with powerful opportunities to innovate quickly. An xTech offers speed, agility, and lower cost for developing and implementing innovations, because xTechs don’t face large organizations’ processes, scale, and governance. In exchange, the large organization provides significant capital, revenue, and cash flow to the xTechs. This article will discuss what motivates large organizations to work with xTechs and three practices that help the partnerships succeed while managing the risks. We will use the Bendigo and Adelaide Bank case to illustrate our findings.

Motivations and challenges of partnerships with xTech

We started this research by asking senior executives from large organizations what they hoped to achieve by engaging with xTechs as part of the innovation process.¹ They identified faster speed to market and the internal adoption of an agile mindset as the desired outcomes.

At the same time, the executives were primarily concerned with regulatory, compliance, and brand risks that could arise from working with xTechs. Over half of the interviewees reported that the due diligence necessary to ensure compliance and protect the brand was extensive and expensive.

We then surveyed to understand what kinds of mechanisms large firms can use to increase their rate of innovation in their partnerships with xTechs. Our analysis identified three mechanisms associated with an increased rate of innovation:

• Create collaborative innovation teams with members from the large organization and the xTech who have decision rights. Building such teams requires a clear vision of the innovation process and desired outcome, solid and straightforward guardrails, and direct access to executives.
• Bake risk management into the innovation process when setting up the project and leverage existing processes to maintain alignment between the organization and the xTech.
• Partner with xTechs where there are existing relationships and trust. Typically, the project scope can increase when there is a stronger relationship.

Innovating with xTechs at Bendigo and Adelaide Bank

In a digital world, no organization can thrive alone, and partnerships with xTechs present large companies with powerful opportunities to innovate quickly.

Bendigo and Adelaide Bank (Bendigo Bank) is a midsize retail bank in Australia with a reputation for excellent customer service. For over 165 years, the bank has been providing customers with services and products to meet their financial goals. It has also been named Australia’s most trusted bank by Roy Morgan, an Australian market research company. Bendigo Bank’s total 2023 revenues were AU$1.9 billion, a 14 per cent increase over 2022 while investing in substantial digital transformation.

Up, a New Digital Banking App

In 2016, Bendigo Bank recognized it could serve more customers in the 18–35 age bracket, but it would need new technology. To develop a new banking app for these customers, the bank joined forces with Ferocia, an xTech that had previously designed and built the bank’s mobile banking app. Ferocia, a software engineering company with a staff of 27 people at the time, had skills in customer-centricity, product design, continuous delivery, and agility. Ferocia defined its mission as improving people’s financial well-being.

In 2018, Bendigo Bank began offering its new smartphone-only banking service, Up. Up was designed to encourage ongoing customer engagement and improved customer financial outcomes. The colorful and quirky interface stimulated interest and supported fast referrals and setup, enabling rapid customer acquisition by word of mouth. Ferocia and Bendigo Bank, using design principles, built gamification features into Up. ‘Savers’, for example, encouraged saving. Up customers could instantly create Saver accounts from their smartphones, each associated with a financial desire. Customers gave each Saver a name, an emoji, and a goal. Most of Up’s customers are under 35 and engage a lot. More than one-quarter of Up customers log in over 100 times per month, and the customer churn rate steadily sits in the single digits.

While the Up launch was successful, Bendigo Bank needed to address its legacy systems and, at the same time, continue innovating with Up and increase its customer share. In 2019, Bendigo Bank’s Managing Director, Marnie Baker, appointed Ryan Brosnahan as the bank’s chief transformation officer to lead Up and Bendigo’s digital transformation. Growth by merger and acquisition had left Bendigo Bank with eight core banking platforms, complex technology silos, and IT spaghetti. The goal of the digital transformation was to reduce costs and increase flexibility. Brosnahan noted, “We are in the midst of unwinding the labyrinth of technology we have and rebuilding it in a way that is digital-first, run in the cloud, API-enabled, and driven by microservices.“”

Innovation Teams with Allocated Decision Rights

Fast delivery was in Ferocia’s genes. However, the cadence and velocity of the Up innovation team – composed of both Bendigo Bank and Ferocia staff – differed from that of the core bank. Enabling the team to maintain this speed when working with the core bank required substantial delegations to the collaborative team. Partitioning the Up team from the bank development teams also helped the bank to focus its core teams on the transformation.

Bendigo Bank set the innovation team up for success by articulating a clear vision, setting up guardrails for project decision-making, and giving access to senior executives. Baker and Brosnahan made sure the vision for Up – helping 18–35-year-olds achieve financial well-being – was clear to its team by reinforcing the message. The Up team had the authority to make decisions about product features, launch dates, and requirements but within specific guardrails, such as using only a prebuilt set of APIs to link to the core banking engine and complying with cybersecurity. Finally, the Up team reported directly to Brosnahan, rather than indirectly through the bank’s product, distribution, technology, and operations teams. An advisory group was also established for Up that included CXOs to enable rapid feedback loops and fast decision-making.

Risk Management Baked into the Process

Brosnahan knew that managing a large-scale digital transformation at the same time as innovating a project like Up would increase the risks for both the transformation and Up. The Up team had to move fast and the bank had to deliver on the transformation. Further, the Up product had to conform to regulatory requirements for financial services and customer privacy regulations and protect Bendigo Bank’s reputation.

In Up’s initial setup and design stages, the bank managed credit and technology risks upfront. During the design stages for the Up home loan product and before product feature elaboration, management made credit risk management a central requirement for the new home loan to increase confidence in the assessment of Up loan applications.

Similarly, technology risk requirements were part of the initial setup for Up. The bank wanted to avoid creating another technology silo, so it required that Up operate on the core technology architecture under development as part of the bank’s digital transformation project. Limiting access to existing APIs and requiring requests for technological changes to operations to go through the Jira ticketing system were among the mechanisms the bank used to achieve this. Although the Up team initially found these constraints frustrating, it adapted quickly.

Temporary staffing assignments were another point of risk management for the bank. Baker approved assigning one product and risk person to the Up collaborative team, making those communities more comfortable with the Up team’s working methods. Cybersecurity and marketing people also took part in Up team sprints.

Project Scope Reflected in the Relationship’s Strength

Partnering with other organizations is an established practice at Bendigo Bank and it has produced decades-long relationships with numerous small businesses. The bank’s relationship with Ferocia began in 2012, when Ferocia developed the bank’s mobile banking app. Marnie Baker was Bendigo Bank’s chief customer officer at the time and championed Ferocia as a partner to the bank. Following that first successful engagement, the scope of the partnership grew.

When the bank set out to grow its under-35 market share, interpersonal trust, a belief that their strategies aligned, and substantial goodwill strengthened the partnership between Bendigo Bank and Ferocia. Shared confidence in the alignment between the companies allowed the scope to expand, leading first to a joint venture to develop Up and then to the bank’s eventual acquisition of Ferocia.

More than one-quarter of Up customers log in over 100 times per month, and the churn rate steadily sits in the single digits.

To build on the Up product offering, the bank engaged two other xTechs – Tiimely for home loan origination and Wise for international transactions, which were well known to Bendigo Bank. Tiimely, an xTech with a product that reduces the time to approve a mortgage, linked its online approval service to Up. After some tweaks, the results were so successful that Bendigo Bank’s core bank adopted Tiimely’s new services with its digital mortgage process for its BENexpress product. Approving mortgages quickly is a significant competitive benefit, because people buying a home compete with other buyers who may also be arranging a mortgage. The first to make a committed offering to the seller is at an advantage. In this way, Bendigo’s core mortgage offering became more attractive to home buyers. Wise, a UK xTech, helps Up offer market-leading experience and foreign exchange rates.

As of 2024, the bank continued partitioning its core business from the Up team. Even though Up shares its governance and management processes with Bendigo Bank, the Up team maintains its own culture and ways of working.

The relationship between Bendigo and Ferocia began a decade before Up launched a mortgage offering. The scope grew as trust grew and the partners got to know each other – again a robust mechanism that the survey results show works for others.

Leapfrogging Competitors

Bendigo Bank reports that it has a fraction of the investment budgets of the large banks in Australia. But spurred by high customer advocacy (i.e., customer brand promotion), with a market leading NPS, and following on its ranking as Australia’s Most Trusted Bank, its customers expect a superior experience and proposition. The most recent results³ show that digital mortgages have grown from 8.9 per cent of settlements a year earlier to 16.3 per cent. The digital deposits in Up ($1.7bn) surpassed the main bank’s digital deposits ($0.9bn). The bank does things differently from its competitors by realizing and sustaining high customer satisfaction and advocacy levels.

The bank will continue to partner with xTechs to accelerate customer and employee experience improvements and increase execution speed and adaptability while improving its risk posture. The next stage for Bendigo Bank is to leverage the success of its innovations further with xTechs. Bendigo is using the shared capabilities it has developed with xTech partners such as Ferocia and Tiimely to innovate quickly, safely, and at scale to help accelerate the digital transformation of the broader Bendigo Bank proposition.

Partnering to Accelerate Transformation

Executives want xTech partnerships to deliver innovation quickly. So, be fast by giving the xTech collaboration team authority to make decisions, access to executives, and clear guard rails. And manage the downside by identifying and baking key mitigation into the innovation process and relationship and include the xTechs and your risk professionals in the management framework. Finally, trust takes time, so don’t rush to engage in projects with a large scope; instead, focus first on smaller-scale projects that can be delivered quickly. Trust will grow with success.

About the Authors

Alan Thorogood, PhD, is a researcher at MIT CISR.  Based in Sydney, Australia, he works with sponsor organizations in Asia-Pacific. His research draws on his background in financial services, the public sector, and multinational consulting companies. He is also a Senior Visiting Fellow at UNSW, where he teaches and supervises research.

Stephanie L. Woerner, PhD, is a Principal Research Scientist at the MIT Sloan School of Management and Director of MIT CISR. She is a renowned researcher and speaker, and coauthor of Future Ready: The Four Pathways to Capturing Digital Value and What’s Your Digital Business Model? Six Questions to Help You Build the Next-Generation Enterprise, both published by Harvard Business Review Press. Stephanie studies how companies use technology and data to create more effective business models as well as how they manage the associated organisational change and governance and strategy implications. Stephanie’s research has appeared in MIT Sloan Management Review, Harvard Business Review, CNBC, Forbes, Chief Executive, and CIO.

References

1. This research is based on interviews and surveys from 2021–3. The Bendigo Bank case study was written in 2023 (also reported in Kwong, C., Van Toorn, C., & Thorogood, A. (2022, July). Banks responding to FinTechs in the Digital Era. In Pacific Asia Conference on Information Systems (PACIS)). The mechanisms identified in the survey analysis were significant in regression with innovation as the dependent variable. Innovation was measured as the percentage of revenues from products and services introduced in the last three years.

2. The longer the arrow, the more influential the motivation as drawn from qualitative analysis of interviews with senior executives in financial services who work extensively with fintechs. The analysis used a five-point Likert scale and a structured Delphi technique to verify the findings.

3. See Results Presentation, February 19, 2024.

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Picture running a marathon as if it were a sprint. Initially, your speed puts you ahead, but as the race progresses, your energy wanes, and those who maintain a consistent pace steadily overtake you. This scenario mirrors the challenge many companies face with their sales incentive models. By focusing solely on short-term gains, they risk burning out sales opportunities and jeopardizing long-term success. Just as marathon runners need a strategy for endurance, companies must design incentive plans that balance immediate achievements with sustainable growth. This challenge was made painfully obvious by some highly visible corporate failings at the senior executive level.  

Collapses at Lehman Brothers and Bear Stearns helped ignite the 2008 financial crisis. Part of what led to these firms’ failures was excessive risk taking by the executive teams. It has been accepted that this risk taking was fuelled in part by the structure of the executives’ compensation plans. Senior leaders at Lehman and Bear pocketed more than $1 billion in equity-based short-term compensation in the years 2000-2007 and still had significant exposure to their firms when they unwound in 2008¹. The resulting firestorm of publicity around these executives’ earnings helped fuel passage of the Dodd Frank Reform Act of 2008 which mandates disclosure of the relationship between executive compensation and the company’s financial performance. This, in turn, has led most companies to structure executive pay with a significant focus on medium and long-term performance. 

But it’s not only senior executives who have had misaligned incentive compensation. In the years 2002 to 2015 Wells Fargo sales staff had incentives to generate short-term results at the expense of longer-term shareholder value. Driven by the incentive structures of the senior management team, sales staff were given high sales goals with lucrative pay packs to achieve those goals, while at the same time the bank lacked the control framework to guard against undesirable sales practices. As a result, sales staff engaged in notorious practices such as opening over 1 million unwanted customer accounts and applying for over 500,000 unrequested credit cards. In 2016 the bank was fined $185 million due to these aggressive sales tactics. The bank ultimately fired over 5,300 staff, lost its CEO (twice), and restructured its board of directors and compensation structure due to the scandal.² 

The Wells Fargo case is an extreme example of a sales incentive program designed to maximize short-term results that had the unintended consequence of driving behaviors that destroyed longer-term stakeholder value. It highlights the point that most sales compensation plans focus on current-year performance. This aligns sales rep focus with the short-term goals of the firm. However, is this short sighted? Could this unintentionally lead to the next Wells Fargo?  

Most publicly traded firms compensate executive leaders with a mix of incentives, with much ‘at-risk’ compensation tied to long-term objectives. A recent assessment by AJ Gallagher found that long-term incentives accounted for 74% of average CEO compensation in 2022.³ This represents a significant shift in compensation standards since the onset of Dodd Frank, when executives’ at-risk compensation was typically tied to short-term performance. Much has been written about the danger of tying significant executive pay to short-term metrics such as EPS, as it pushes executives to focus on moves to boost short-term performance while putting potential longer-term performance at risk.⁴ 

In most businesses sales professionals also have a material amount of their compensation ‘at risk.’ Typically sales reps earn north of 50% of their total pay from commissions, with upside potential to earn many multiples of their base salary. This is quite different from roles with compensation tied to bonus plans, which tend to have a variable component making up 10-25% of total pay and without significant upside for peak performance.⁵ 

With a commission plan solely focused on current year results, sales professionals have a material incentive to maximize current-year performance as it can lead to exceptional earning opportunities. This incentive could lead sales staff to make decisions that are not aligned with their firm’s long-term value, a similar moral hazard to that faced by senior executives in past years. As sales professionals have the ability to focus on selling opportunities that can pay off in the current year or longer term, why not apply a similar compensation approach to them?  

Best practice incentive compensation design is to tie pay to performance, where staff can observe a direct linkage from a comp plan metric such as booked sales to individual earnings. For a company whose revenues are based on the stability of repeat business and long-term customer relationships, current-year sales form the foundation for future performance. Thus, most firms use current-year sales as the foundation for sales compensation plans. But if sales booked in the current year do not renew in the future shareholder value is compromised. It is not sufficient to focus sales compensation plans on current-year sales only, there should also be some responsibility for the sustainability of those sales to generate future sales. A separate aspect of best practice is to have a variety of metrics tuned to different sales timelines. Some metrics take time to reveal, and these are best linked to longer-term resolution. We found three examples of firms employing this philosophy using a variety of metrics and tools.    

Firm 1 – A leading technology firm addresses this concept by adding sales incentives focused on long-term stability and value creation to a standard current-year base plan. This approach maintains the firm’s focus on short-term performance and enables sales professionals to outperform financially if they drive business that is long-term in nature. There are two main downsides to this approach. It can be expensive to implement, as the base plan focused on current year objectives is ‘at budget’ with the long-term-focused sales earning incremental commission. The other downside is that the plan does not penalize or discourage sales reps from engaging in short-termism.  

Firm 2 – Another technology firm takes this a step further by dedicating a portion of a sales professional’s quota to multi-year contracts. For example, if a seller is assigned a $1 million new business quota, $300,000 must qualify as multi-year contracts. This gives the seller two quotas to pursue and holds them accountable for generating business that will provide a level of stability to the firm. The approach also re-defines the definition of success, which under a traditional plan would focus solely on maximizing top-line growth.  Under this program success focuses on responsible top-line growth. The downside of this approach is that it can be challenging to implement without flexible incentive compensation management systems.  

Firm 3 – The two previous examples focused on maximizing commission opportunities for sales professionals – – all carrots. Our final example is from a FMCG firm that focuses on maximizing portfolio value by using a mix of carrots and sticks. This firm’s plan assigns specific growth expectations on different product lines. In the FMCG market product-line stability is a key component of earnings stability. It is important that new products serve to grow the firm’s overall market presence and do not cannibalize existing market share. Therefore, the Key Accounts sales teams have an overall sales goal but with the condition that new products are not allowed to outsell existing ones. If a team successfully places a new product but the core product line does not reach a minimum growth level the sales team is penalized. While this may appear short sighted – – why discourage the adoption of new products? – – the firm recognizes that its long-term success is predicated on stable growth in its core product line.   

All three of these examples show different ways that firms attempt to mix long-term strategic growth with current-year objectives. All compensation plans include tradeoffs, some overt and some hidden. While Firm #1 trades commission budget against potential long-term stability, it has the benefit of not ‘rocking the boat’ with a perceived penalty on the sales team. Firm #2 focuses on a desired mix of contractual commitments, trading off the need for stable revenue against the risk of seller attrition. Finally, Firm #3’s focus on long-term stability trades off the risk of potentially blunting new product adoption. These strategies also have different data and systems requirements. Firm #1’s approach is the simplest as the long-term sales incentives are built on top of the core commission plan. Firm #2’s approach requires an ability to track multiple quotas for each sales professional against different contract characteristics. Finally, Firm #3’s approach requires significant historical data to set appropriate product-level thresholds and an incentive system that can track performance at the product group level.⁶  

To address the need for more sustainable and strategic incentive practices, a comprehensive framework designed to guide organizations in assessing and refining their sales compensation models can be a very useful tool. While understanding the benefits of innovating compensation approaches is important, a framework enables the firm to evaluate the applicability of different  strategies. The following ‘Incentive Mix Matrix’ example can help ensure that incentive structures not only drive immediate sales achievements but also align with long-term organizational goals, advancing a culture of lasting success and value creation.  

Incentive Mix Matrix Example – Subscription Sales⁷ 

Once the appropriate metrics are determined the next key decision is how to weigh them in the commission plan. We can look to the state of the firm’s evolution for guidance here. Firms in the early stage of development are highly focused on cash flow and establishing market presence, thus their primary need is for current year sales. At the other end of the spectrum, a mature firm in an established market is focused on efficiency and sustained growth. The focus here is on repeatable sales, and given the focus on efficiency, to discourage new sales with a low probability of recurring. Overlaying this metric mix on a standard business lifecycle chart shows how firms should consider their compensation strategy as the firm evolves. 

As a next step, firms need to determine how a desired incentive strategy can be put into production and used effectively. Therefore, a second framework is required focused on implementation. The best strategy must be able to survive the environment if it is to flourish and reorient behavior. 

Key Implementation Concepts: 

• Does the plan and metric mix align with the firm’s priorities based on its market position? 
• Does the sales organization have sales roles focused on delivering against these priorities (e.g., does the customer success team allow for focus on retention, does the prospecting team allow for focus on new customer acquisition?) 
• Does the firm have the data, tools and analytics to execute the changes? 
• Does the firm’s sales culture allow for a realignment from current-year focus to one more nuanced? 
• Is the plan compliant with relevant laws and regulations? 
• What is the feedback loop to assess reps’ understanding of the plan and if the plan meets its objectives? 

To win in the long run, companies must redesign their sales incentive plans to balance immediate performance with sustainable growth. Just as marathon runners need a well-paced strategy, sales teams require incentive structures that encourage enduring success without neglecting short-term achievements. By incorporating a mix of short, medium, and long-term goals into sales compensation plans, firms can cultivate a culture that values both immediate results and long-term stability. This approach not only aligns sales professionals’ incentives with the company’s overarching objectives but also ensures that every stride taken today paves the way for future success. To truly win the marathon of business, sales teams must be equipped with incentives that drive enduring growth and lasting success.

About the Authors

Jason Kofman has extensive experience in sales strategy and operations with over 20 years in global sales and a decade leading these functions at a B2B industry leader.  In addition to writing he advises firms on sales incentive design, go-to-market strategies, sales role definition, territory planning and sales operations.  

Leo Rocha has nearly 20 years of experience in sales compensation, incentives, and rewards across various industries. Currently, he is the Sr. Director of Compensation at CHG Healthcare. Leo specializes in designing and implementing programs that drive performance and motivation. He has held leadership roles at Moody’s and Equifax, focusing on sales incentive strategy and governance. 

References

1. L. Bebchuk, A. Cohen and H. Spamann, “The Wages of Failure: Executive Compensation at Bear Stearns and Lehman 2000-2008,” Harvard Law and Economics Discussion Paper No. 657, Cambridge, Massachusetts, December 2009, Revised January 2010, page 22.

2. C. Cooper and R. Gnanarajah, “ Wells Fargo—A Timeline of Recent Consumer Protection and Corporate Governance Scandals,” Congressional Research Service Report IF11129 – Version 4, Washington, D.C., Updated February 27, 2020.

3. Arthur J. Gallagher & Co., “CEO and Executive Compensation Trends, 2023 Edition,” ajg.com, Figure 1.4.

4. For example, see: Blackrock Investment Stewardship, “Our Approach To Engagement on Incentives Aligned With Financial Value Creation,” Commentary issued January 2024, blackrock.com.

5. World at Work, “2021-2022 Salary Budget Survey,” worldatwork.org, Figure 31.

6. Only Firm #3 above has a ‘stick’ that takes sales away from reps. While this may seem extreme, it is well aligned with the concept of loss aversion originally promulgated by Daniel Kahneman and Amos Tversky. People seek to avoid losses more highly than they will pursue a similar level of gain. Given this asymmetry, firms could optimize comp plans by instituting a metric of modest loss in a plan in order to generate an outcome of net sales that would be higher than a metric aimed at a similar level of gain.

7. Firms that do not rely on subscription sales may need to construct an incentive mix matrix aligned to their revenue model.

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Repetitive strain: Consistency bias can blind decision-makers to key factors when making similar choices.

Practice makes perfect, or so the saying goes. However, that is not necessarily true when it comes to making complex decisions with unpredictable outcomes.

Behavioural science has revealed many patterns that guide human decision-making. This includes common biases and ‘mental shortcuts’ that can lead to poor choices.

Understanding these patterns can be highly valuable for business leaders. It can help them to identify those patterns in the decisions they make on a daily basis and make better choices as a result.

Business owners and managers typically have to make a wide range of choices. Many of these involve a certain level of uncertainty.

These include important decisions that might result in significant financial gains or losses for their business.

Understanding how these unpredictable outcomes affect the decisions we make can help leaders to recognise and avoid potential bias.

Many managers assume that the more risky and important decisions they make, the better they get at making them.

Empirical evidence, however, suggests that this is not necessarily the case.

Groundhog day for decision-makers

We found that when people repeatedly make decisions in similar scenarios, they tend to be guided by consistency rather than rationale.

This creates a significant risk for business as it could prevent managers from weighing all the available options.

Instead it could lead them to prefer certain options, simply because they closely resemble the choices they have made in the past.

We asked a group of participants to repeatedly choose between two options.

One of these options was risky, as it entailed either a sizeable financial gain or a financial loss.

The other was safe, as participants were certain to receive a smaller pay-out.

We asked participants to complete the test again one week later. This allowed us to examine their choices over time, unveiling patterns in their decision-making.

The key objective was to determine whether people make consistent choices, improve over time, or pick things randomly.

Interestingly, we found that participants who were asked to make choices in risky scenarios time and time again became increasingly consistent.

Do decision-makers favour repetition over reason?

Our findings suggest that when people start choosing a risky option over a safe one, they typically make risky choices in the future.

Similarly, if they choose the safe option, they will be more likely to select safer options in the future.

This trend was apparent in the behaviour of participants in our study.

Most participants did not follow a rational approach of considering the outcome of previous trials and balancing their risk. Instead, they remained consistent with the choices they had made before.

Previous studies had found that the order in which choices are presented to people affect the decisions they make.

If participants select a few risky options in a row, they are likely to reverse their strategy to balance the risk by picking a few safer choices.

Surprisingly, we did not observe this balancing behaviour at all.

Instead, our findings suggest that in risk-associated situations that they already encountered in the past, people tend to make the exact same choices they made before.

Implications of the consistency trap for business decisions

Our results could have valuable implications for business leaders making decisions with uncertain outcomes.

Many people assume that the more choices they make, the better they become at making choices in similar situations. Typically, this is not the case.

The tendency to consistently make the same choices might prevent managers from adequately assessing the available information and calculating the risks when faced with similar decisions to those they have made previously.

This can hinder their growth, preventing them from learning from situations and truly improving their ability to make difficult decisions.

Rather than becoming better at making specific types of decisions, managers are far more likely to become increasingly consistent.

This means making exactly the same choices they made previously, especially if those decisions happened to have a positive outcome.

They might select the same vendor or manufacturing partner to fabricate their products without weighing other options.

Alternatively, they might follow the same procedures for prolonged periods of time, employ the same systems, and renew the same contracts without considering different approaches.

How to avoid the consistency trap

In many cases, managers can feel that they evaluated these options carefully, when in fact they simply selected the same options as before.

Becoming aware of this tendency could help them to re-evaluate the unique risks and conditions of each new situation they face.

So, how can one avoid falling into this consistency trap?

A useful strategy to avoid inadvertently making the same decisions as before is to step out of the situation you are in.

Try to adopt an ‘outside’ view, rather than an ‘inside’ view.

This involves re-evaluating what thought processes led to a specific choice from an external viewpoint, to exit the ‘tunnel vision’ that people commonly adopt when making decisions.

For instance, managers could ask themselves, “If I was someone else and I was evaluating how I made this decision, what would I think? Would I think that I carefully considered options and deliberated or does my decision seem more like a knee-jerk reaction?”

Using behavioural science to make more rational decisions

By pulling back from a situation and observing it from the outside, people can re-orient themselves and take the time to reflect on the thought processes behind their actions. This can help them to recognise the cognitive biases involved, rather than just going through the motions.

Business leaders can use this to make better informed decisions by evaluating the risks and potential benefits of each option, whatever their previous choices.

Overall, behavioural science studies suggest that people tend to be overconfident in their ability to make decisions.

Taking the time to step back and re-assess situations, irrespective of whether you have encountered them before, is a highly useful practice to improve the decision-making process.

About the Author

Dr. Tim Mullett teaches on the Executive Diploma in Behavioural Science at WBS London at The Shard. Find out more about how our Behavioural Science programmes can provide you with a deeper understanding of Behavioural Science here: The Warwick Executive Diploma in Behavioural Science | The Warwick Executive Diplomas | Warwick Business School (wbs.ac.uk)

The post The Consistency Trap: How to Make Better Decisions appeared first on The European Business Review.

Tough times don´t last, tough people and tough companies do. This statement is exemplified by 206 companies of 1,621 listed Nordic companies that were able to achieve different metrics of growth amid disruptions like COVID-19, the energy crisis, and the Russia-Ukraine war. Here is a look into what some of these companies did differently.

Background

In 2022 alone, 66% of the companies, over 1,000 firms, increased their revenues compared to 2021, with a median annual growth of 12.1%. This suggests effective price adjustments with inflation and the identification of new growth areas.

In 2022, our exploration into the impact of COVID-19 on listed Nordic companies, detailed in “Strategies for Sudden Shock” (The European Business Review, May-June 2022), revealed surprising resilience. Despite challenges, 160 companies out of approximately 1,900 listed companies studied, managed to increase revenues, profits, and market capitalizations in 2020. Expanding on this research, we extended our analysis to cover the five-year period from 2018 to 2022, covering significant disruptions such as COVID-19, the energy crisis, supply chain disruptions, and geopolitical tensions including the Russia-Ukraine war. In our study, we assessed the performance of 1,621 listed Nordic companies during this volatile period.

From 2018 to 2022, the global economy averaged a growth rate of 2.4%, with annual fluctuations ranging from a 3.1% decline to a 6.2% increase. Meanwhile, the Nordic countries experienced modest annual GDP growth, averaging 1.7%, with variations ranging from -2.4% to 6.8%.

Key Findings

Out of 1,621 listed companies:

• 206 companies achieved annual revenue growth compared to 169 in the previous period (2016-2020).
• 10 companies consistently increased profits annually, up from 7 companies in the previous period.
• 18 companies saw annual increases in market capitalization, a decrease from 56 companies in the previous period.
• One company managed to improve revenue, profit, and market capitalization over the entire five-year period (another achieved this in 2016-2020 but was not the same firm).

The most notable difference was in market capitalization improvements compared to results in 2020, with fewer companies able to increase their value consistently. Despite Nordic stock markets showing growth between 6% and 10% from 2018 to 2022, the year 2022 proved challenging with a decline ranging from 4% to 28%.

Analysis by Company Size

Analyzing the 5-year data by company size, we noticed the following:

• Large Companies (Revenues > €1 billion): Out of 180 large firms, 39 (22%) achieved annual revenue growth, with only one large firm improving profits each year.
• Small and Medium Size Companies (Revenues < €1 billion): Among 1,441 firms in this segment, 167 (12%) achieved annual revenue growth, with nine small firms consistently improving profits.

These results mirror our previous findings, highlighting a larger proportion of revenue growth among the large companies.

2022 Performance

In 2022 alone, 66% of the companies, over 1,000 firms, increased their revenues compared to 2021, with a median annual growth of 12.1%. This suggests effective price adjustments with inflation and the identification of new growth areas. However, only 17% of companies saw profit increases. Large companies (87%) demonstrated more adeptness in revenue growth compared with small and medium-sized firms (63%), with 42% of large companies also improving profits, versus 14% of small and medium-sized companies.

Overall Winners

Our analysis shows that winners – companies that either improved their top and bottom line or market cap or combination of these – can be categorized into four groups depending on the company’s focus and time horizon of strategic actions (see Figure 1).

1. Core Performers – sales and profit improved in 2022

Companies that strategically focused on improving sales and implementing cost-saving measures successfully enhanced their revenue and profit margins. Our analysis identified 240 companies, comprising 15% of the sample, that fall in the category of Core Performers.

Case Norsk Hydro: Achieving Record Financial Performance Amid Global Challenges

Norsk Hydro, a leading company with €2 billion in annual revenue, specializes in aluminum and renewable energy. In 2022, the company achieved its best financial performance to date, with both sales and profits increasing by double-digit percentages. This success came despite formidable challenges, including an energy crisis, geopolitical tensions, inflation, and a sharp decline in aluminum demand.

Entering 2022, Norsk Hydro benefited from historically strong aluminum markets, a rebound fueled by the recovery from the COVID-19 pandemic. However, the company’s true test came as it navigated a rapidly changing economic environment. President and CEO Hilde Merete Aasheim highlights the company’s resilience: “Our record performance underscores the effectiveness of our improvement initiatives and robust margin management across the organization. It illustrates how essential it is to be both robust and adaptable when faced with fast-evolving conditions.”

Norsk Hydro’s ability to thrive amid such volatility demonstrates the critical importance of strategic resilience and operational flexibility. By focusing on continuous improvement and margin optimization, the company has positioned itself to not only withstand but excel in the face of global economic fluctuations.

2. Topline Champions – sales improved annually from 2018-2022

These companies dedicated themselves to building and scaling new revenue streams consistently over a five-year period. Among our study sample, we identified 51 firms, comprising 3%, as Topline Champions who achieved annual sales growth each year from 2018 to 2022.

Case Elisa: Leveraging Long-Term Strategy for Sustained Growth

Elisa, a Finnish telecommunications and digital services company with a 140-year history, has demonstrated remarkable growth, expanding its revenues from €1,832 million to €2,130 million between 2018 and 2022. This success is largely attributed to a strong commitment to a strategic vision centered on growth within its core markets of Finland and Estonia, while simultaneously expanding its international digital service offerings and enhancing operational efficiency and quality.

CFO Jari Kinnunen highlights the company’s customer-centric approach: “We have focused on organic growth by understanding and responding to customer needs. As pioneers in offering unlimited mobile data with pricing based on speed tiers, we’ve successfully adapted this strategy for both 4G and 5G networks. Our customers appreciate the value of speed, and this has fueled our growth.”

Companies that strategically focused on improving sales and implementing cost-saving measures successfully enhanced their revenue and profit margins.

In recent years, Elisa has extended its reach beyond Finland and Estonia, with a strategic emphasis on international digital services. The company has introduced advanced software solutions for network optimization using AI, designed for other operators and built on Elisa’s own expertise. This expansion includes some strategic bolt-on acquisitions. Another domain is industrial Software solutions designed for optimizing processes in manufacturing industry. CFO Kinnunen further explains: “We aim to grow close to our core business. By leveraging our core business capabilities, we offer network optimization solutions with AI for other operators and industrial software solutions for manufacturing sector. This has facilitated our expansion into 20 countries through targeted acquisitions.”

Looking ahead, Elisa’s management remains focused on sustaining top-line growth, setting ambitious targets for double-digit expansion in global digital services.

3. Profit Leaders – bottom line improved in 2018-2022

Achieving consistent profit growth year-over-year from 2018 to 2022 is challenging. Our research identified 10 companies, comprising just 0.6% of the total sample, as Profit Leaders. These firms demonstrated the ability to improve their bottom line annually throughout the entire five-year period.

Case Alma Media: Transforming from Print to Digital for Long-Term Growth

Alma Media, a Finland-based digital services and media company, operates across 12 countries with a diverse portfolio encompassing recruitment, housing and commercial property, mobility, media, and information services. From 2018 to 2022, the company achieved substantial growth, with sales increasing from €255 million to €308 million and its operating margin rising from 19.8% to 25.9%.

The foundation of Alma Media’s recent success was laid nearly two decades ago. Recognizing early on the transformative potential of digital technology, the management committed to a comprehensive digital transformation strategy. By 2022, the digital segment had grown to represent 81% of total revenue, up from just 5% in 2005.

CEO Kai Telanne elaborates on this long-term vision: “Our strategy for the past 20 years has been consistent: grow our digital footprint, transform our traditional print business, and expand internationally. We’ve executed over 70 acquisitions and divestitures, primarily selling off print assets while acquiring digital capabilities. This approach has allowed us to secure top positions in our markets.” Alma Media’s successful shift to digital is complemented by a significant cultural transformation. CEO Telanne reflects on the evolution: “We transitioned from being a slow-moving media company with fixed long-term plans to a dynamic organization capable of adapting to new scenarios each year. We now develop 2-3 scenarios at the start of the year and adjust our strategy quarterly if needed. This flexibility has enhanced our resilience and agility, enabling us to navigate global crises effectively.”

This cultural shift toward greater adaptability and scenario planning has been instrumental in Alma Media’s ability to respond swiftly to external challenges, ensuring continued growth and profitability in a rapidly evolving industry landscape.

4. Elite Performers – revenues, profit and market cap improved in 2018-2022

Achieving annual improvements in both revenue and profit over a five-year period is impressive. Even more exceptional is achieving concurrent growth in market capitalization. Our study identified only one exceptional company that successfully improved all three measures—revenue, profit, and market capitalization.

Case FirstFarms: Cultivating Success Through Diversification and Circular Operations

FirstFarms, a Danish agricultural and food products company, achieved record performance in 2022 despite challenging conditions, including unpredictable markets, extreme weather, and high inflation. With annual revenues of around €56 million and approximately 300 employees, FirstFarms operates across 20 locations in five EU countries and strives to be one of Europe’s best-run and most profitable companies in its sector.

A cornerstone of FirstFarms’ success has been its long-term commitment to risk diversification both in production and geographically. Recently, the company has complemented this approach with a strong emphasis on circular operations, particularly in optimizing efficiency and sustainability.

CFO Michael Hyldgaard underscores the importance of diversification: “Our extensive risk diversification, spanning both geography and operational branches, significantly enhances our earnings stability. Efficient and circular management of our operations, especially in areas like pig production, ensures effective control over our value chains.”

A cornerstone of FirstFarms’ success has been its long-term commitment to risk diversification both in production and geographically.

This strategic focus enables FirstFarms to maintain resilience and profitability even in adverse conditions. The management’s efforts are geared toward maximizing operational efficiency while reducing dependence on external factors, aiming to achieve greater energy self-sufficiency. Chairman Henrik Hougaard elaborates on this vision: “We prioritize making ourselves as energy independent as possible against external factors beyond our control. The next phase involves developing a stable and profitable business model that capitalizes on the energy we generate.”

By integrating these principles, FirstFarms is positioned not only to navigate current challenges but also to build a sustainable and profitable future.

Conclusions

Despite a decade marked by substantial disruptions, Nordic companies have proven their resilience and adaptability. Our study reveals that strategic focus and robust operational frameworks have empowered certain firms to not only survive but thrive amid uncertainty. On average, large companies outperformed small and medium-sized companies, possibly due to their access to a larger pool of resources, better access to capital and more diversified operations, making them more resilient to economic shocks. Companies that effectively manage revenues, profits, and market capitalization provide valuable insights into resilience, innovation, and long-term strategic planning. As we continue navigating a volatile global economy, these findings emphasize the critical importance of adaptability and strategic foresight in sustaining business growth and performance.

Key Takeaways for Business Leaders

• Embrace Strategic Resilience: Companies that adapted quickly to economic shocks by focusing on resilience in their operations saw sustained growth in revenues and profits. Implementing robust risk management and agile strategies can bolster your company’s ability to weather economic uncertainties.
• Leverage Long-term Growth Plans: Successful firms like Elisa demonstrated the value of long-term commitment to strategic goals, particularly in areas like digital transformation and market expansion. Ensure your growth plans are adaptable but based on a clear, long-term vision.
• Prioritize Revenue Diversification: Diversifying revenue streams and markets helped companies like FirstFarms and Norsk Hydro mitigate the impacts of external shocks. Explore new markets and product lines to reduce dependency on single sources of income.
• Apply Effective Cost-Cutting Tools: Employing cost reduction as a part of a growth strategy focusing on eliminating inefficiencies and optimizing processes using automation, digitalization and AI technology.
• Invest in Innovation and Efficiency: Continuous investment in innovation and efficiency, as seen in Alma Media’s transformation, can drive sustainable profit growth even in turbulent times. Focus on modernizing operations and leveraging technology to enhance productivity and competitiveness.
• Emphasize Agility: The ability to adjust quickly to changing market conditions, evident from the performance in 2022, highlights the importance of adaptability. Foster a culture of flexibility and readiness to pivot in response to new challenges and opportunities.

Our findings demonstrate that amid global economic volatility and various shocks, companies can emerge as leaders by demonstrating adaptability, innovation, and strategic agility.

About the Authors

Olli-Pekka Lumijärvi, Ph.D. (Econ.), Managing Director, Profit Isle, a former Managing Director at Accenture, he is based in Boston.

Olga Nissen, Ph.D. (Computational Mathematics and Cybernetics), VP, head of Transformation at Tryg A/S, a former Partner at McKinsey Digital and Accenture’s Head of European technology M&A and Private Equity practice. She is based in Copenhagen.

Alexandra Selmer, D.Sc. (Elect. Engineering), MBA, PwC’s lead of Intelligent Procurement and a member of Financial Services Consulting, a former strategy senior consultant at Danske Bank and Accenture, she is based in Helsinki.

References

• World Bank, MSCI, Orbis company database, annual reports, company presentations, senior executive interviews

The post Economic Shocks and Business Resilience: Exploring the Success Strategies of Nordic Companies in a Period of Global Economic Instability appeared first on The European Business Review.

By André Laplume and Sepideh Yeganegi

In the dynamic landscape of entrepreneurship, individual visionaries often hog the spotlight. Yet, beneath this glare lies a startling fact: the heroic garage or independent entrepreneur is mostly a myth. Research conducted over the last decade reveals that the most successful entrepreneurial businesses were actually spinout ventures, incubated in parent companies.

Knowledge and Networks

Spinout ventures are created when employees leave established organizations to form new businesses. What makes them successful? Spinout founders’ familiarity with the inner workings, industry nuances, and organizational intricacies of their parent companies provide them with a head start in navigating the entrepreneurial landscape, akin to having a secret map to uncharted territories.

In addition, within the halls of their former workplace, spinout founders are able to develop strong networks – former colleagues, mentors, and industry contacts become lifelines, offering support, introductions, and collaborative opportunities. These connections act as turbochargers for the spinout ventures, propelling growth.

Strong networks—former colleagues, mentors, and industry contacts—act as turbochargers for the spinout ventures, propelling growth.

For example, Zoom’s triumph owes much to the 40 engineers who migrated from Cisco, and Intel’s ascent emerged from a “brain drain” out of Fairchild. Ideas also fuel spinouts; consider Kik, originally a co-op project at Research in Motion (now Blackberry), which harnessed messaging innovations.

Expertise gained during their tenure becomes the spinout’s competitive edge. Whether it’s technical prowess, market insights, or operational wizardry, they carry specialized skills that set them apart in the entrepreneurial arena.

A Delicate Balance

Innovation seeds often sprout within established organizations. Spinout entrepreneurs recognize these latent concepts, nurturing them into full-fledged ventures. Yet, there’s a delicate balance. Spinouts can bask in the halo of their parent’s reputation, attracting customers, investors, and partners. But they also risk drawing negative attention—friction, legal skirmishes, or strained relationships—when they compete head-on or disrupt the status quo.

Nurturing Innovation Beyond Corporate Walls

Many business ideas remain untapped in parent companies due to resource constraints, strategic focus, or other limitations. These dormant ideas often find their escape route through spinout ventures when employees leave taking an idea, technology, or concept and transform it into a new venture. This mechanism allows rejected or underutilized ideas to flourish outside the corporate confines.

While spinouts are a natural consequence of organizational creativity, they sometimes raise ethical eyebrows. Critics argue that departing employees should leave their intellectual baggage behind. However, reality paints a different picture. Most venture capital-backed startups draw inspiration from their founders’ experiences within former employers. It’s a pragmatic dance between loyalty and ambition.

The Genesis of Spinout Ventures

Spinout ventures find their origins in diverse soil. Recent research reveals a series of nuanced factors that propel them beyond the corporate walls.

Strategic Disagreements

Some spinouts germinate from disagreements within the parent organization. When divergent visions clash—whether about which initiatives to pursue or the strategic direction—the entrepreneurial spirit seeks refuge elsewhere. These dissenting founders embark on their spinout journey, driven by a belief that their vision deserves independent cultivation.

Managerial Frictions

The soil of frustration nurtures many spinouts. When employees feel stifled by bureaucratic hurdles, rigid hierarchies, or uninspiring management, they seek greener pastures.

Interpersonal Conflicts

Sometimes, it’s not just strategy or management—it’s people. Interpersonal conflicts, simmering tensions, or clashes of personalities can push talented individuals toward the exit. The startup becomes an attractive escape, where they can forge their own path without the weight of office politics.

Ethical Triggers

Spinout founders often carry ethical compasses. They question the practices of their parent organizations. Consider the oil driller who turns geothermal well driller, seeking a more sustainable energy future. Or the social media leavers who build safer, more democratic alternatives.

Liquidity Events

Start-ups need fuel, and capital is their lifeblood. Liquidity events—such as IPOs or acquisitions—act as catalysts for spinouts. When eBay acquired PayPal, the corporate culture shift triggered a talent exodus.

Three Trends Boosting Spinout Ventures

Spinout ventures are gaining momentum due to several key trends:

The relaxation of restrictive covenants, especially non-compete agreements has significantly facilitated the process for departing employees to create their own startups. With reduced fear of potential legal repercussions, leavers can now pursue entrepreneurial endeavors more freely.

Spinout founders often carry ethical compasses, questioning the practices of their parent organizations.

The practice of open innovation has revolutionized the sharing of innovative components. Organizations are increasingly collaborating and exchanging ideas, technologies, and intellectual property. This openness accelerates the development of spinout ventures by leveraging collective knowledge.

Companies like Palantir exemplify the trend of fostering spinout ventures. The Palantir Pack, composed of former employees who have either launched their own ventures or invested in them, demonstrates how friendly parent organizations can encourage entrepreneurial initiatives and gain a reputation for incubating innovations.

Myth of The Independent Entrepreneurship

Generations of prospective entrepreneurs have indulged in the myth of the heroic garage or independent entrepreneur. Setting the record straight is important. Studies show that employee spinouts are more successful than other types of start-ups. Employee entrepreneurs should be heartened by this information. Parent companies, too, can benefit from understanding the true nature of spinouts. Once they embrace the concept of spinouts, incumbent organizations can differentiate themselves as workplaces that nourish innovation and support employee entrepreneurship. This creates a win-win situation for all.

About the Authors

Dr. André Laplume, co-author of SPINOUT VENTURES, is a Full Professor in Entrepreneurship and Strategy at the Ted Rogers School of Management, which is part of Toronto Metropolitan University. Laplume researches the intersections where new entrants and incumbent firms meet with the aim of breaking down the barriers facing entrepreneurs, while helping managers deal with entrepreneurial ambitions in their organizations. His research has appeared in top journals like Human Relations, Journal of International Business Studies, and Journal of Business Research, among others. He received his PhD in Management from the University of Manitoba in Winnipeg, and spent seven years at Michigan Tech, teaching in its MBA program. Earlier, Laplume was a business and information technology consultant, helping clients integrate businesses and automate units. He is a frequent judge at entrepreneurship pitch competitions and an experienced entrepreneur, having launched a startup while in Michigan.

Dr. Sepideh Yeganegi, co-author of SPINOUT VENTURES, is an Associate Professor in Strategic Management at the Lazaridis School of Business and Economics in Waterloo, Canada. She received her PhD in Management from the University of Manitoba in 2018. Yeganegi’s research centers on the intersection of strategy and entrepreneurship, especially employee entrepreneurship and spinouts. She has been studying spinout ventures, the focus of her PhD dissertation, for over a decade, investigating how enablers, like venture capital availability and work experiences, can propel employee entrepreneurs. Her projects also explore the barriers that employee entrepreneurs face (e.g., non-compete agreements). Yeganegi has interviewed dozens of spinout founders and reviewed the growing literature on private sector employee spinouts. Her research has been published in journals such as Research Policy and Journal of Small Business Management.

The post Deconstructing the Myth of Entrepreneurship appeared first on The European Business Review.

By Mireia Las Heras and José Pérez del Valle

Flat organizations are becoming popular across industries, emphasizing employee autonomy and responsibility. While these models promote transparency and purpose, they also face new challenges. However, proponents of flat structures say their benefits outweigh the hurdles.

Non-hierarchal companies are in right now. More and more organizations are ditching the traditional top-down management and opting for “flat” or “de-centralized” company models. This doesn’t necessarily mean getting rid of bosses altogether – at least not always. It’s a matter of restructuring a company so that each team works as an autonomous committee where responsibility falls on those closest to the task, instead of on a boss that’s far removed from day-to-day activities. Essentially, the idea is that every role is equally important. There’s no hierarchy, hence the name – and employees have more agency over their work.

But because it’s still a somewhat unconventional approach, these companies tend to be met with suspicion and false assumptions: It can’t work because it’s chaotic, there’s no structure, and decisions are impossible to make.

Based on our months-long research on self-managed companies, however, we’ve found that it can work – though not without its challenges.

Many Ways To “Flatten” A Business

Self-managed teams were first seen around 65 years ago in coal mines when the prevailing practice was to separate workers into teams responsible for different tasks – similar to an assembly line.

The trend toward non-hierarchal business models is being seen across industries and the world. In April, pharmaceutical giant Bayer announced it was getting rid of middle managers¹ and throwing out its corporate handbook, allowing nearly 100,000 employees to self-manage. Last year, Meta’s CEO Mark Zuckerberg noted in a company-wide email that “flatter is faster.”²

But these models are hardly new. Self-managed teams were first seen around 65 years ago in coal mines when the prevailing practice was to separate workers into teams responsible for different tasks – similar to an assembly line. Miners had to wait for the previous shift to finish their tasks before starting their own. As a response, miners reorganized into multiskilled, autonomous groups with minimal supervision that allowed them to work around the clock without depending on others.

While it happened organically as a way to increase efficiency, today’s flat companies are more likely to adopt this model for political or philosophical reasons. One of the terms that come up often within non-hierarchal organizations is “conscious capitalism,” which refers to the idea that companies should transcend mere profit-making and actively consider the well-being of its stakeholders, employees, the environment and society at large. These organizations recognize the unintended consequences of their business activities and therefore define a purpose beyond their economic benefits in order to create a virtuous cycle of higher purpose.³

Flat companies today are also much more complex than people expect them to be. It’s not a “one size fits all” – rather, each organization tailors its non-hierarchal structure according to its needs. This usually leads to purposeful and organized environments that empower individuals to take ownership of the tasks at hand.

Although each company has its own unique and complex system, most flat organizations can be separated into four prominent models: Democratic organizations, where decisions are made through voting and every employee has a say in shaping the organization’s direction and policies; holacracies, where decision-making authority is divided into autonomous teams instead of individuals; teal organizations, which doesn’t rely on a specific decision-making process but allows teams to self-organize; and sociocracies, which relies on consent-based decision-making within “circle structures”.

Transparency and Autonomy are Key

Without transparency, many flat companies wouldn’t work. It’s crucial to make sure employees make informed decisions – something they’ll have to do more often than in traditional firms because of the autonomous nature of their roles.

One example of the need for transparency is when employees review their salaries. At Basetis, a technology consulting company that transitioned to a teal organization in 2017, every employee’s salary is publicly posted. The idea is to avoid salary inequality – which, according to various research, has also been shown to shrink the gender wage gap.⁴ Salaries are not struck down by executive leaders – they are the result of a robust discussion between team members who take into consideration various factors, including experience and salaries in similar roles. Basetis also follows the Tinbergen Norm, which sets a 1:5 income ratio limit between the highest-paid employee and the lowest-paid employee. (In traditional companies, the income ratio tends to be between 1:20 and 1:30.)

Without transparency, many flat companies wouldn’t work.

Transparency was the main reason tech company Voxel changed to a sociocracy in 2017. It came about after the realization that, in a traditional hierarchy where only directors made important decisions, critical information stayed behind closed doors. By transitioning to a self-management model, that information was disseminated across the company – a key step in making sure both employees and leaders can make the best possible decisions regarding their work.

And transparency goes hand-in-hand with autonomy. In flat organizations, there is no top-down performance tracking system – managers don’t put pressure on employees to meet targets. Instead, every employee is responsible for their own tasks and goals – which they communicate to their colleagues in order to create a healthy level of group pressure. The belief is that motivation comes from meaningful work and collective success.

At Basetis, employees are required to ask for advice when trying to solve a problem – they are especially encouraged to reach out to those co-workers who may know best about that particular subject matter. However, the final decision is always made by the employee herself.

The company Eboca, which provides vending machines and coffee stations, adopted a philosophy that cedes responsibility to those closest to the task. The holacratic company organizes its employees in “circles” of teams responsible for decision-making and governance over their respective areas, giving employees a say in shaping the rules and guidelines of their work. Maintenance workers, for example, decide how often to check on the various locations where the company has set up machines – not the director of operations. The idea is that maintenance workers are the ones who best understand the machinery, so they should be the ones making those decisions, instead of a director who’s far removed from their daily activities.

Granting substantial control to employees over their work also echoes humanistic values that prioritize skill enhancement and conscious development. This is crucial in creating a clear sense of purpose, which elevates engagement and productivity because it allows employees to align their personal goals with organizational objectives.

New Model, New Challenges

No transition is without its challenges. In the past, flat companies have been accused of lacking diversity and causing power struggles.⁵ Criticism about the business model has also often focused on the need for centralized authority in quick decision-making processes.

But self-managed companies themselves will admit to their own shortcomings. At Voxel, CTO Manel Ibáñez says the hiring process is more time-consuming and costly than the average company. Because the end goal is to protect Voxel and its employees from hires who don’t fit in, there’s a strong emphasis on ensuring applicants align well with the culture. This means it can take many rounds of interviews before a candidate is deemed trustworthy enough to join the team – after all, trust is key in cultivating autonomous roles. At Basetis, they don’t even bother with job postings – only applications through referrals are accepted.

Basetis leader Marc Castells says the relationship between employees can be more complicated at their organization than in traditional firms. One side effect of having more transparency and room for discussion is that there’s also more conflict. However, the company works hard to mitigate discord and prioritizes constructive and non-violent communication, which can sometimes take time and effort away from day-to-day tasks.

These challenges can be even greater for companies that transition from a traditional model – as opposed to starting a flat company from scratch – which was the case for both Voxel and Basetis. Remnants of the previous model can persist over months or years, despite the effort to take on a new culture. But, across the board, the companies we spoke to believe the challenges of a flat structure are worth the struggle for the common good. To help with these obstacles, some organizations hire consultants or go on unconventional community-building activities like silent retreats.

Many self-managed companies also try to find a middle ground and take on a more hybrid approach: Alternative structures that aren’t completely stripped of hierarchies, but also stay true to the philosophy of shifting away from conventional productivity and profit-focus goals. After all, the non-hierarchal framework is mostly there to serve as a roadmap for creating and sustaining a self-management model. The key is for organizations to continually review and adjust their culture in order to align with their changing needs and aspirations.

About the Authors

Mireia Las Heras is a professor in the Managing People in Organizations Department at IESE Business School and the director of the International Center for Work and Family. She holds a degree in Industrial Engineering from the Universitat Politècnica de Catalunya, an MBA from IESE and a PhD in Business Administration from Boston University. She is an expert on work and family issues.

José Peréz del Valle is a research assistant at the International Center for Work and Family at IESE Business School. He holds a degree in Applied Psychology and is pursuing an MSc in Applied Statistics with Data Science. With experience in education, mental health and social care, he brings a practical and multidisciplinary approach to his research work.approach to his research work.

References

1. Pharmaceutical Giant Bayer Is Getting Rid of Bosses and Asking Nearly 100,000 Workers to ‘Self-Organize’ to Save $2.15 Billion. 11 April 2024. Fortune. https://fortune.com/europe/2024/04/11/pharmaceutical-giant-bayer-ceo-bill-anderson-rid-bosses-staff-self-organize-save-2-billion/.

2. Update on Meta’s Year of Efficiency. 14 March 2023. Meta. https://about.fb.com/news/2023/03/mark-zuckerberg-meta-year-of-efficiency/.

3. Transforming Business into a Place for Personal Growth. A New Paradigm? (Part 2). 8 August 2023. Voxel Group. https://www.voxelgroup.net/blog/en/transforming-business-into-a-place-for-personal-growth-a-new-paradigm-part-2/.

4. Why Pay Transparency Can Help Reduce the EU’s Gender Pay Gap. European Council. https://www.consilium.europa.eu/en/infographics/pay-transparency/.

5. Flat Structure Companies. 07 July 2023. The New York Times. https://www.nytimes.com/2023/07/05/business/flat-structure-companies.html.

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The hospitality industry is responsible for 15 percent of global greenhouse gas emissions, and according to the Global Hotel Decarbonization Report published in 2017, the hotel industry must reduce its GHG emissions by 66 percent based on 2010 levels by 2030 and by 90 percent by 2050. 

At this stage, such targets will only be achieved through a rapid transition to an efficient and renewable business model. It is vital to make the right choices and enact sustainable practices across the business, but how can this be done? By utilising new technologies and data. 

For the hospitality industry to become more sustainable, there is much that should be considered and changed. For example, do you know what impact your next hotel opening will have on the planet? Have you considered that in your business forecasting? To make the industry more eco-friendly, these are the areas we need to consider. And of course, we also can’t forget the levels of waste, the supply chain systems, or the ethics of the produce your business is purchasing. 

It sounds like a lot, but don’t be overwhelmed. My research has explored how different data can be utilized by hospitality leaders in areas such as sustainability management, ethical consumer choices, supply chain management and innovations in food waste management. If each of these areas are taken into consideration, hospitality leaders will be sure to see positive changes. In this article, I’ll delve into some of the ways that the industry can utilise data, and the different tools available that can help.  

Uncomplicating “data driven” sustainability management 

Gathering data for sustainability management might sound overwhelming, but it is actually much clearer than one would believe. Using tools such as sustainability scorecards and dashboards to measure, manage and communicate sustainability efforts in tourism and hospitality can prove to be so highly effective. For example, something similar to Bloomberg Green´s Data Dash, where you can measure the damage of your business decisions in real time.  

These tools will clearly track emissions and help management to formulate strategies to reduce the amount of damage being done by the business. It also helps to have the numbers available to make it clear to stakeholders why efforts to reduce emissions should be a top priority.  

Tools like this are also vital for making informed decisions about the future of the business. Forecasting the sustainability impact of opening a new hotel, merging with travel operators or hosting big events will help your management team to make informed decisions about the long-term benefits or drawbacks that such decisions will have.  

Whilst economically, a merger may seem like the right choice, the long-term sustainable damage may mean the opposite. Business growth is important, but understanding the full effects of this growth is key for making sure your growth is sustainable long term. 

Utilizing data in hospitality management is the best way to learn and understand the impact your business is having on the earth. If you put the right tools in place now, you can make informed decisions for the good of your business and the world, for now and in the future. There are many different tools to utilize, including blockchain technology.   

The perks of blockchain technology in supply chains  

Blockchain technology can help improve how sustainable your company is as it increases the transparency and traceability in the supply chains used by the hospitality industry.  

Management teams can use it to assess the ability of their processes to verify the origin and quality of the products being purchased, and more importantly, the blockchain can help you to ensure that you are making ethical, sustainable choices. It also allows you to ensure that you’re working with companies who value the health and safety of their employees. 

Consumers nowadays place their trust in hospitality businesses to be ethical with their choices. They want to know that everything, from the food they’re eating, to the products they’re using were fairly purchased from ethical, sustainable sources. Using blockchain can help you to ensure that the wants of the consumers are being met. With the blockchain technology, you can work to ensure your supply chains are as green as possible, and there are many options for this.  

Having sustainable supply and value chains is key 

Alongside the blockchain technology, having smarter, greener supply chain systems in place is vital for hospitality businesses if they want to ensure that all aspects of their business are acting in the best interest of sustainability. There are almost certainly new options for your business to consider in their supply chains. 

For example, using local supply chains is a sure way to guarantee a big reduction in your businesses carbon emissions. As well as supporting local economies, you can also see first-hand how your suppliers act in terms of fair wages and labor. 

Outside of using local supply chains, opting for greener supply chain management is a must. As I said before about utilising blockchain data, greener supply chain management involves collecting data about waste or resource use. When analysing the data, your management will instantly know what needs to be fixed.   

Hospitality leaders should also consider adapting to a more circular supply chain. This would see suitable products being reused or recycled, and will help to reduce waste drastically. Food waste in particular, is an area that the company can revolutionize if their food waste management is adjusted.  

Be innovative with food waste management  

In the UK, the hospitality industry wastes up to 920k tonnes of food each year. But, with the correct food waste management, this can be reduced by up to 75 percent. There are new tools coming out every day to help hospitality businesses reduce their food waste.  

Using AI and data tools, for example Kitro, a 100% automated food waste analysis program, can aid your management in keeping track of the food that is available in the restaurant, and will help to reduce any waste. It tracks any food waste in real time, alongside the reasons for that waste. That way, any “trends” in food waste can be spotted, and future purchasing can be adapted. There are also many innovations being developed in automated inventory management. The hopes of these innovations are to reduce any overordering, to ensure that everything that is ordered will actually be used.   

As mentioned previously, adapting circular supply chains and economies in the business will also make a massive dent in the amount of food being wasted. Why not look for a local company who can make use of your used oil? Or donate food to local charities, give scraps to nearby allotments? When you think something is at its end, research ways that it can be used again, and thus the circular economy will strive. 

What can you do? 

These topics are just some of the areas that can help you, as hospitality leaders, to increase efforts in sustainability measures. Making the hospitality industry more sustainable doesn’t have to be an overwhelming process. Utilizing data from the industry and gathering your own data to develop strategies is the key to success in sustainable practices. So, don’t be afraid to start utilizing industry data and taking small steps in the right direction. Every small change makes a difference!

About the Author

Dr. Carlos Martin-Rios is Associate Professor at EHL Hospitality Business School. With a background in strategy and management, and as an author of over 40 refereed journal publications, Dr. Martin-Rios is an expert in Sustainability, Innovation, Eco-Innovation and other areas. 

The post Hospitality Industry Need to Utilize Data to Become More Sustainable  appeared first on The European Business Review.

Arguably one of the most powerful examples of a performance-defining event for a company was done by a chain-smoking, alcohol-drinking CEO. His actions shaped performance for years at his company, and his employees loved it. In fact, he decorated the company’s locations with pictures from the event to remind them all about the story and its message to every employee. 

This is the story of “Malice in Dallas,” and in typical corporate world style, it started with a legal dispute that led to a lawsuit. 

It all started when Stevens Aviation sued Southwest Airlines for trademark infringement for using their slogan “Just Plane Smart.” Herb Kelleher, the Southwest Airlines CEO and protagonist of this story, was a lawyer by training and responded to the lawsuit in an unusual way. He invited the Stevens Aviation CEO to an arm-wrestling contest. Kelleher did not know that Stevens Aviation’s CEO Kurt Herwald was a bodybuilder. Herwald did not fully appreciate Kelleher’s leadership style. Both sides accepted.  

Kelleher booked the Dallas Sportatorium, a major stadium, and invited employees and press to the event. He jokingly “trained” for the event by smoking and lifting bottles of bourbon while watching Mohammad Ali’s videos. In the spirit of pro wrestling, he showed up in full regalia and was welcomed by thousands of employees who cheered him on from their seats. To enhance the story, he competed while smoking a cigarette. He lost in two out of the three matches. But despite the loss, Stevens Aviation received so much free publicity from the event that they let it go, eventually settling with Southwest and allowing them to use the slogan.  

Legal fights are long, expensive, and usually result in both sides feeling cheated. They never end well. For a company with a promise of great customer service, going forward with a lawsuit would have been the wrong move. Kelleher did something else to send a message to all his current employees and future employees as well: Southwest does it differently. They showed that they do not follow the beaten path. They sought quick and fun ways to resolve disputes, and to do things in a way that is easier, cheaper, and more fun for all involved.  

Kelleher knew that the power of story is far greater than any corporate memo he could issue with the same message. This is why he kept pictures surrounding the story in every office. The story will live on and reinforce the company’s values, a far greater building block in the corporate culture. 

The Power of Stories to Shape Reality 

During a nationwide transformation project for a major car manufacturer, I gave each branch a quota of creating five shareable stories in sixty days. I wanted them to create the stories and then document them and share them with other branches, especially ones that embodied the company’s commitment to customers. The stories had to be real and authentic, exceed expectations, and surprise the customers. 

We collected over five thousand stories in less than a year. During the process of documentation, we videotaped many of the participants and shared them publicly with all the branches. By documenting the stories, we created an inspiration and a support mechanism that enabled employees to tell their stories. It inspired employees to think big but also provided a safety net that made them feel secure in daring to create future stories.  

The CEO’s response? “I didn’t know they could perform at that level.” 

I was not surprised. Most employees want to do an amazing job and be proud of their work. But a company culture with a lack of inspiring stories usually has employees stick to formulated manuals that require them to perform to strict guidelines. The overall performance becomes blandly consistent, boring and undifferentiated for customers. Only with inspiration, permission, and encouragement will employees bring their personal touch and creativity to wow customers.

Stories are a source of inspiration and living proof that the company lives up to the values, purpose, and mission that it took upon itself. As we discussed in the previous chapter, purpose is not what is on the wall. It is what is in the soul. The soul of the organization is their decisions, behavior, and actions. By creating inspiring stories, we give permission to perform exceptionally.  

As a leader, your role is to remove obstacles and help your team members rise to higher levels of performance. Sometimes that obstacle is not physical, but mental—employees do not believe they have permission to perform at those standards. Create stories that will inspire them to do so.  

Herb Kelleher knew that he could not be in every customer interaction or guide employees to the best resolution to a dispute. But his stories can be there, whispering how to do things the Southwest way.  

Stories at the Moment of Truth 

It was the ultimate freak accident in consulting. One of our consultants conducted a focus group at a branch of a Fortune 500 services company. The employees participated to gather insight and assist the branch in improving its performance. But one of the participants, against the original agreement, decided to talk about another participant who spoke badly about the branch manager. Fuming, the branch manager fired the employee who spoke badly about him on the spot and held my consultant accountable for a “coup” in his branch. He also threatened to escalate the situation to the company’s CEO and demand that we be fired.  

It was a moment of truth. We did not have much time to plan a story. The episode was evolving in front of our faces. 

One of my colleagues (who was a veteran of one of the big four consulting firms) suggested we go the route of his previous employer. He suggested we fire the consultant and blame her for not following the rules, to isolate the situation and distance ourselves from it. I called the consultant to debrief. She actually had followed the rules, and not only that, the insights she had gathered about the branch manager were real. It was simply that the branch manager felt threatened by what was discovered and lashed out, a typical situation in our line of work. I decided we would stick by this consultant, as she had done nothing wrong, and try to fix things with our client. It would be no small feat, but I was determined to stick by our value: “Always do the human thing first.” 

I personally reached out to the branch manager and had a heart-to-heart discussion with him. I was respectful of the manager’s experience and expertise, but firm about the call for action I requested. The fired employee was rehired and the project was brought back on track. 

That consultant shared that story with others in the organization, and it became a legend. She was sure we would fire her and distance ourselves. It would have been the easy way out. But instead, we stuck by her. It inspired many of our consultants for years to come. Our people know that we have their back when they work on difficult transformation projects. We will not side with clients, especially if the clients are wrong. I still remember that moment and the decision we had to make. I was afraid that I would lose the project. I was not sure what would be the ultimate outcome. But the decision to stick with our consultant was in line with our company’s values, and everyone thereafter knew that this value was real. It became part of our storybook, and a guide for everyone else to follow. 

Organizations are not a pile of manuals and legal warnings. They are a set of stories and chapters written every day. Author them, document them, and share them to create the culture and behavior you want. Culture is what happens when the leader leaves the room. The stories they share are the true story of your company, much more powerful than sweeping statements. They are also the true predictors of future employee behavior of your employees, while manuals and procedures are escape routes for employees not to deliver their best. Stories are the inspirational accelerators to help your employees reach an exceptional level of performance. 

Excerpted from Dare to Author! Take Charge of the Narrative of your Life by Lior Arussy.  Published by Greenleaf Brook Group Press. Copyright © 2024. All rights reserved.

About the Author

Lior Arussy, author of DARE TO AUTHOR!, is one of the world’s leading authorities on customer experience, transformation, and change, and the founder of the transformation firm Strativity Group. Arussy helped some of the world’s leading brands write the next chapter in their story through transformative process. His clients include Mercedes-Benz, Delta Airlines, Royal Caribbean Cruises, BMW, Cadillac, Novo Nordisk, MasterCard, The Met, Thomson Reuters, HSBC, E.ON, FedEx, SAP, and Johnson & Johnson, among others. 

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By Jason Woldt and Mary Sue Woldt

What makes a great leader? Can children be trained for leadership right from the cradle? In this article, Jason and Mary Sue Woldt explain how children´s books and a robust reading culture help to develop emotional intelligence and the needed soft skills for managers.

The great NFL Hall of Fame coach Vince Lombardi (2023) said, “Leaders are not born, they are made.” Those who believe this to be true have long tried to determine the right skill set and training to cultivate a great leader. Using successful leaders as units of study, researchers have found the defining trait separating a good individual contributor from a good manager is a high level of emotional intelligence (ie, soft skills) (Goleman, 2017). A leader with a high level of emotional intelligence can more easily defuse conflict, empathize with others, develop deeper relationships, and ultimately motivate better team performance. To that end, organizations spend billions of dollars every year on emotional intelligence and soft skills training (Research and Markets, 2022). Furthermore, expensive leadership graduate programs continue to be in high demand as a viable path for mid-career professionals to develop and refine their managerial skill set and move up the corporate ladder. Yet, there is still a dearth of talent and a limited number of candidates who truly possess and desire the managerial skill set that is in such high demand. According to the US Bureau of Labor Statistics (2023), there are 1.1 million management vacancies each year, and the growth for management professionals over the next eight years is expected to outpace the total average growth across all other professions, demonstrating the current and future supply and demand imbalance.

In this paper, we address two fundamental questions:
What is the managerial skill set that is in such high demand?
How does one build the foundation for the managerial skillset early in one’s life?

The Managerial Skillset In High Demand

Measuring the managerial skillset can be difficult to define and assess. As such, we seek insights from the profession to understand what organizations most desire. The World Bank in collaboration with LinkedIn publishes data showing how professional skill requirements have changed over time using updates made to member profiles (World Bank, 2023). When LinkedIn members update the skills in their profiles, they do so to reflect the valued needs of their professions. The data collected from 2015-2019, show that the top four soft skills for managers and management consultants were: 1.) Leadership 2.) Communication 3.) Teamwork and 4.) Negotiation. Interestingly, there was little deviation associated with the rankings of these skills across the five years. Furthermore, the mass of literature that exists on these topics suggests that these same managerial soft skills have been in demand for decades.

Building The Managerial Skillset

While training at any stage of life can be beneficial, simple exposure to positive examples at a very young age can lay the groundwork for one to learn managerial norms and mimic best practices, giving one a head-start in developing important managerial and life skills.

Acquiring the managerial skillset can also be challenging with many managers finding themselves unprepared for the role. Research shows that developing high levels of emotional intelligence and a wide breadth of soft skills requires training, experience, and deliberate practice (Cooper, 1997). This raises the question of why the formal training process starts so late in one’s life. While training at any stage of life can be beneficial, simple exposure to positive examples at a very young age can lay the groundwork for one to learn managerial norms and mimic best practices, giving one a head-start in developing important managerial and life skills. This paper uncovers the important links between the themes in bestselling children’s books and the managerial soft skills that are in such high demand, making the case for more exposure and deliberate practice earlier in one’s life.

Children’s Literature As A Deliberate Practice

Before one can read or even speak, managerial training tools exist in the simplest form: children’s books. Reading, especially nonfiction, can broaden one’s exposure to new information and expand one’s vocabulary, anchoring experiences, and allowing one to keep an open mind in difficult situations. Research shows that the single biggest reading success factor is reading loud to children (Trelease, 2013). Furthermore, the American Academy of Pediatrics (2021) recommends reading aloud to children as young as six months old. It is no surprise that many of our nation’s most successful business CEOs are known to engage in this deliberate practice by reading several hours a day (Warren Buffet, Mark Cuban, Bill Gates, and Oprah Winfrey) (Seifert, 2020).

As a society, if we want managers to possess and model the traits that we most desire, it is imperative that we teach and reinforce those traits early to ensure there is a reasonable level of managerial literacy.

Engaging short stories consisting of colourful pictures and talking animals could be seen as allegories offering insight into real-life managerial scenarios. The elements of any children’s book consist of five components: 1.) characters 2.) plot 3.) setting 4.) conflict 5.) and theme. Comparable structural elements exist in any managerial environment. On a daily basis, managers must also navigate the complexities associated with 1.) internal and external stakeholders 2.) competing strategic objectives 3.) tenuous environmental factors 4.) personality conflicts 5.) business implications and performance assessments. Through stories, children are provided a pseudo stepping stone to a future managerial skillset. Sharing stories with cultural implications has been a foundation of civilisation. Stories rich in cultural meaning offer specific reference points that can consciously or subconsciously anchor behaviour. As a society, if we want managers to possess and model the traits that we most desire, it is imperative that we teach and reinforce those traits early to ensure there is a reasonable level of managerial literacy.

Parents and guardians should be aware of the influence that they have on a child’s early development. Research shows that two-thirds of a child’s lifetime vocabulary is formed by the age of two, underscoring the importance of exposure to children’s literature as a deliberate practice. During this period of neuroplasticity, repetitive exposure to words, phrases, concepts, and themes is critical for language development and formative in how a child makes associations (Trelease, 2020). Reading aloud is not only an efficient formula for scaffolding literacy development, but it builds emotional circuitry that allows children to wrestle with the chaotic journey of the human experience. Children who are read to early and often, benefit from rich oral tradition and deep emotional bonds with caring adults. Amid the widespread educational/mental health crisis, reading aloud can be considered a nutritional jumpstart to IQ and EQ.

Access to a wide variety of high-quality children’s literature has for decades been one of the great equalisers in our country. The free use of a wide variety of high-quality children’s books at public libraries across the country eliminates one of the larger financial barriers to entry. Yet, it is important to note that children cannot decide to pick up these books on their own. Arguably, the biggest barrier is the important role of parents and guardians in encouraging and promoting this deliberate practice. Research shows that it just takes reading aloud fifteen minutes per day to have a transformative impact on child development (Trelease, 2020).

Connections Between Children’s Literature And The Managerial Skillset

In any context, research shows that increasing one’s skillset to the level of expert requires deliberate practice (Gladwell, 2008; Ericsson, 2008). Being exposed to different scenarios, being forced to make decisions, and being assessed on the quality of those decisions enable managers to fine-tune their skill set. While we acknowledge there is no good substitute for managerial experience when one is a manager, we argue that regular exposure to high-quality children’s literature allows a path to model that same deliberate practice when one is only a child. In the Appendix, we show the direct connection between ten of the bestselling children’s books and the elements of the managerial skill set. By following the suggested deliberate practice of just reading fifteen minutes per day, this reading list can serve as a starting point that can be completed in less than a month (423 pages * 1 minute per page/ 15 minutes per night= 28.2 days.

Empowering children to eventually take the career path they most desire is always good practice but enabling them to have the most opportunity should be a best practice. Exposure to stories where characters encounter diverse challenges offers potential managers in training heartwarming and simple reminders that reinforce interpersonal and managerial best practices paving a path from cradle to manager. Albert Einstein said, “If you want your children to be intelligent, read them fairy tales. If you want your children to be more intelligent, read them more fairy tales.”

Appendix

About the Authors

Jason Woldt – University of Wisconsin Oshkosh. Email: woldtj@uwosh.edu. Dr Jason Woldt is an Associate Professor and Department Chair of Supply Chain Management at the University of Wisconsin Oshkosh. With 20 years of experience in industry and academia, he published ten peer-reviewed articles in top management journals focusing on topics related to supply chain disruptions and big data.

Mary Sue Woldt – Appleton Area School District (Retired). Email: mswoldt@gmail.com. Mary Sue Woldt is a retired elementary reading and writing teacher with over 25 years of experience working with children across many grade levels. Her graduate thesis work focused on the impact of reading aloud to children. She is also a published children’s book author. 

References

• Cooper, R. K. (1997). Applying Emotional Intelligence in the Workplace. Training & Development, 51(12), 31-39.

• Einstein, A. (n.d). Goodreads. Retrieved from: https://www.goodreads.com/quotes/14912-if-you-want-your-children-to-be-intelligent-read-them, accessed: 2023

• Ericsson, Anders K. (2008). Deliberate Practice and Acquisition of Expert Performance: A General Overview. Academic Emergency Medicine, 15(11), 988-994.

• Gladwell, M. (2008). Outliers: The Story of Success. (Little, Brown).

• Goleman, D. (2017). Leadership That Gets Results (Harvard Business Review Classics). Harvard Business Press.

• Lombardi, Vince. (2023) Goodreads. Retrieved from: https://www.goodreads.com/quotes/464361-leaders-aren-t-born-they-are-made-they-are-made-by Accessed: November 20, 2023

• Research and Markets. (September 6, 2022). Global Soft Skills Training Market to Reach $47.16 Billion. Retrieved from: https://www.prnewswire.com/news-releases/global-soft-skills-training-market-to-reach-47-16-billion-301618215.html#:~:text=The%20global%20soft%20skills%20training,12.3%25%20during%202022%2D2027 . Accessed: November 20, 2023

• Seifert, C. (2020, March 6). The Case for Reading Fiction. Harvard Business Review. Retrieved November 13, 2023, from: https://hbr.org/2020/03/the-case-for-reading-fiction

• Start Reading to Your Child Early. (2021). American Academy of Pediatrics: Pediatric Patient Education. 10.1542/peo_document382 Retrieved from: https://publications.aap.org/patiented/article-abstract/doi/10.1542/peo_document382/82001/Start-Reading-to-Your-Child-Early?autologincheck=redirected Accessed on: November 20, 2023.

• Trelease, J. (2013). The Read-Aloud Handbook. Penguin.

• US Bureau of Labor Statistics. (September 6, 2023). Occupational Outlook Handbook, Management Occupation. Retrieved from: https://www.bls.gov/ooh/management/home.htm Accessed: November 20, 2023.

• World Bank, (January 19, 2023). “World Bank LinkedIn Digital Data for Development” by World Bank Group & LinkedIn Corporation, licensed under CC BY 3.0. Retrieved from: https://datacatalog.worldbank.org/search/dataset/0038027/Skills—LinkedIn-Data Accessed: November 10th, 2023.

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No aspect of a person’s behaviour exists in a vacuum, so that there is no clearly delineated boundary between the ways in which we, as individuals, approach the various activities in which we are involved. One way of acknowledging and consciously taking advantage of this is to find inspiration in art.

KEY TAKEAWAYS

This note is about the intersection between art and business strategy. It attempts to link art to a particular analytical framework for business strategies developed elsewhere¹. Many art collectors do, of course, follow clear strategies when it comes to building their art collections. And equally there are several well-documented approaches to making strategy decisions, all attempting to follow given strategic approaches. But I have never seen anything about how art might have a direct bearing on particular strategic business decisions. In this article, I claim that there can be a strong connection between the two – art and business strategy. I claim that one might actually be inspired by art when making strategic business decisions, the result being better strategic decisions.

In his seminal book from 1950, still perhaps the most famous of all art books, Sir Ernest Gombrick states, “To look at a picture with fresh eyes and to venture on a voyage of discovery into it is … difficult.”² My own “discovery” has been to gain inspiration from my various pieces in order to come up with better business decisions. There are, in particular, nine aspects of strategic decision-making that seem to have “benefited” from inspiration from my art collection, listed in the appendix.

While perhaps only relatively few people in decision-making positions will have art collections to draw on, with perhaps even fewer having their own private ones, such as I am fortunate to own, there is probably a much broader set of applications at work here. Other decision-makers might draw on music, movies, or architecture. The essence, it seems to me, is to be able to draw on any such source, to gain strength and confidence when it comes to one’s strategic decision-making. There is clearly research to be done here. So far, I do not see much documentation of any empirical evidence when it comes to this, but I firmly expect this to come. So, while the reader might at the outset consider what is to be reported in this note to be too narrow, only applying to a relatively small elite, my sense is that the topic at hand is included in a much broader one, with widespread application among many decision-makers: how to gain confidence from peripheral sources when it comes to strengthened strategic resolve. For me, my art collection has provided a major source for this, but I am confident that others may draw on a wide array of other sources.

While strategy is a foundational skill in business, art-collecting might be seen as a rare endeavour. How could a person put some of the insights regarding the link between art and business into action? What is universal in an endeavour is the deeply personal experience, as described in this paper.

Principles of strategy seem to be embedded in all art, be it painting, sculpture, music, or drama. I have perhaps learned to see those embedded principles in my collection. However, all art, to a varying degree, reflects these universal principles. One can perhaps think of the early impressionists as disruptors of the existing paradigm, in the same way that we can think of Walmart as a disruptor of the retail industry in the 1960s. We can see Picasso as a great innovator, in the same way we see Steve Jobs as a business innovator. They all saw the world differently and found a compelling way to express that vision. So my hope is that my paper might inspire business people to look at art in all its forms not only as an aesthetic experience, but as an inspiration and a reflection for business.

What strategic dimensions are we talking about?

Art might typically be labelled as more subjective than most frameworks for business strategies. To find a common “language” for art and business might perhaps be difficult, just as C.P. Snow experienced when he attempted to combine science and culture³. My own taste and preferences are indeed the glue between the two, as we shall see.

My attempt to link art and business strategy thus focuses on the delineation of a particular strategic decision-making culture, consisting of nine dimensions, given in the appendix.

When faced with a particular strategic challenge, I consult particular art objects in my own collection which I sense might be associated with those dimensions, i.e., with those that might be especially appropriate, given the specific strategic decisions I am faced with.

Analytical strategic approaches might be complemented by subjective, artistic dimensions. This might perhaps imply more creative decisions, even more innovative, and perhaps also with longer time horizons. Better decisions might perhaps be the end result. And both the art collector and the business might indeed evolve towards a masterpiece!

The context for my own strategic decision-making

I have been inspired by art when making many strategic decisions. The areas in which I have been actively involved are shown in my exhibit, Areas of decision, below:

• Academic Leadership. I was head of two leading business schools (IMD for 15 years; Norwegian School of Business (BI)); The Lauder Institute (University of Pennsylvania); and two virtual educational institutions (Lorange Institute (hybrid) and Lorange Network), both of which I founded.
• Shipping. I owned the ship-owning firm S. Ugelstad’s Rederi and have invested in more than 30 ship projects.
• Portfolio Investing. I developed S. Ugelstad Invest, a portfolio investment company with five main areas of investment: stocks/bonds; shipping; real estate; ventures; real estate; ventures; educational.

My art collection

My art collection consists of some 100 pieces, mostly paintings, but also some lithographs, as well as a few sculptures. The composition of this art collection has evolved over time. During the early stages of my collecting, I primarily focused on what I liked. Over time, generally, I started to look for pieces of art that I felt might inspire me when it came to any of the dimensions indicated in the appendix. So, gradually, my collection evolved in the direction that this exhibit suggests, and these two poles, art and business, both important in my life, began to align.

To be inspired by these pieces of art, I might definitely say, implies gaining confidence in decisions to be made. It is, however, important that each piece of art might be relatively easily accessible, i.e., not stored in some sort of vault, but “hanging on the walls”.

Accordingly, all of my collection can be easily found in one of the five residences where I tend to spend most of my time making key decisions (Pully, Küssnacht am Rigi, and Verbier in Switzerland; Asker and Ulvösund in Norway).

Some examples of linking art and factors of strategic decision-making culture

I shall now give nine examples of how I associate particular pieces of art with the factors listed in the appendix. It should be stressed that this should not be seen as “hard” categorisation of art pieces into specific categories. Different people may see different sides of a particular piece of art. My own way of interpreting a given piece of art may change over time, too.

Another caveat should also be made now: my art collection has a predominantly Nordic focus – Norwegian, above all. For me, being Norwegian but having lived outside of Norway for almost 50 years, I have perhaps become more open to letting myself be inspired this way.

The overriding driving force for me, however, has been to identify objects of art that would help me to develop a better focus in various settings of business decisions. Thus, each piece of art is therefore not only emotionally important to me but stimulates my strategic decisions.

1. Quality Per Kirkeby (1938–2018). This is a large painting (200 × 120 cm), featuring mostly variations of red, with some yellow and black also. Here quality is “it”! While the painting is basically abstract, a half-moon-shaped contour can be seen on the right-hand side. The moon is indeed a surrogate for quality for me. This painting represents one of the artist’s latest works before his death. While I never actually met him, my sense is that he might have agreed with my interpretation.
2. Diversity The Norwegian painter Ludvig Karsten (1876–1926) is represented with two oil paintings. The first portrays the diverse landscape overviewing the shore (Skagen), with the Danish flag. The artist lived in Skagen for long periods of time and spent much of his life in other parts of Denmark. The second painting shows a diverse scene from Nyhavn, Copenhagen, with boats, houses, and water. For me, these paintings capture the theme of diversity in a clear manner.
3. Risk and Uncertainty The Spanish artist Joan Miró (1893–1983) has provided a print that seems to portray a young lady. As is so typical for this artist, however, the motive is highly simplified and the colours are strong (black, yellow, red, and green). There is a hair accessory in red with black dots on top of the lady’s head. While several different associations might come to mind when studying this print, the strongest theme that comes to mind is how it “vibrates” risk. The lady that is shown is not sky, an “innovative” hair style and strong colours!
4. Networking Olav Kristoffer Jensen (1954) is a Norwegian artist, but lives in Berlin. This large painting consists of irregularly shaped “lines” in bright colours (yellow and green), mainly in the upper part of the painting, with the bottom part being relatively empty. The underlying colour of the entire painting is white. The same artist’s other painting, “Season/Biographie”, also demonstrates clear lines. The colours are perhaps less “stunning”, the “lines” being held in darker, greyish tones. The two convey the concept of networking, with the various lines criss-crossing in intricate ways. It all hangs together in effective networks.
   
5. Speed A sculpture by Norwegian artist Arnold Hankeland (1920–1983) in stainless steel manifests speed. This represents the prototype of what later became a full-scale monument outside Sandefjord city hall. The various relatively thin stainless steel metal sheets, with sharp angles, typical for Hankeland, are complemented by a carved sheet of stainless steel, showing a sail. Speed is indeed a critical element of successful seafaring!
6. Cycle Management The physical round shape that is depicted in many of the art pieces by the Norwegian artist Anna Eva Bergmann (1909–1987) gives me a clear association with cycles. In one, which features a large, broken silver circle at the top, with a sharply contrasting black section at the bottom, and with a band of gold, we can literally “feel” cycles. To better understand the “ins” versus the “outs” in a world of cycles is key. Bergmann’s pieces seem to clearly indicate “bottoms”, as well as peaks.
7. Discipline Jacob Weidemann (1923–2001) is another Norwegian artist. This oil painting by Weidemann features a house, together with four birch trees, in black and white. The familiar mountain Kalsaas (near Oslo) can be seen in the background. Its strict layout makes the painting very recognisable, despite its being abstract. The artist comes across as highly disciplined.
8. Proactivity, Positivity, Innovation Kitty Kielland’s (1843–1914) artwork is from the south-western part of Norway. This painting (40 × 50 cm) is “green”, featuring a fertile landscape, probably Jæren, in south-west Norway. A few cows can be seen grazing. This manifestation of a harmonious, fertile mother nature gives me a strong sense of positivity, almost a precondition for innovation. To me, nature, as well as the colour green, represents positivism and proactivity!
9. Honesty, Integrity The Dane Asger Jorn (1914–1973) has several paintings in my collection. Two of these feature people in a struggle to be honest. The first features a group of people, all seemingly in pain as they struggle to reach honesty. The second features only one person, but with a similar attempt to achieve honesty. The paintings illustrate that honesty and integrity do not come automatically; one needs to work on them. This is a key inspirational point.

A case study

There are, indeed, many cases that I might have cited which all illustrate how my art collection inspired me when it came to making important strategic decisions. However, I choose to discuss in some detail the latest major decision that I made, namely the sale of Lorange Network to IMD in the fall of 2021. There were primarily three major concerns that I had when deliberating whether to go ahead with this decision. Clearly, there were strong emotions at play here. After all, I had put a lot of effort into building the network to a membership of around 3,300 members. The financials that IMD proposed were fine.

However, there were, above all, three key concerns that I had:

• It seemed critical that this transaction would have to be executed with speed. To drag it out by endless concurrencies from various sources at IMD would cause potentially irreparable damage among the membership base.
• That all would perceive that this transaction would be one of high quality was essential. I had earlier flirted with the idea of selling the network to various private investors or to a bank. Members had reacted negatively to this. The commercial integrity of the network was at stake! As such, IMD, a highly reputable business school and foundation, would be ideal.
• The networking side of how Lorange Network might hopefully continue. So far, the eclectic nature of what we had done seemed key to our success. I was hoping that this might continue, but was worried about potential difficulties when it came to this, in light of a relatively disciplined focus, so common in academic institutions.

So, I consulted with several of my paintings, such as all the Kirkeby pieces and, when it came to quality, I felt increasingly assured that this issue would be manageable. I had more of a challenge to become comfortable with the networking issue. The two paintings by Jenssen underscored that things criss-cross in typically rather complicated ways. Admittedly the criss-crossing seemed to be in a vertical/horizontal pattern, but still! In the end I reluctantly concluded that I would have to live with an element of risk when it came to broad, eclectic focus. My third concern, speed, was however more easily reconciled with. Hankeland inspired me to see this scenario to sell as essentially a transaction of sailing at sea. Speed and resoluteness would be essential for success, and I was fine with this.

So, I did go ahead and sell Lorange Network to IMD in 2021. I had major concerns regarding this, but the inspiration I got from several of my art pieces helped me to reach a final decision with which I was comfortable. Obviously, I had had several objections “in the small”, many of these emerging from my “conversations” with the art pieces. In my opinion, it all came out well in the end.

Conclusions

As can be gathered from this note, my art collection has not only inspired me when it comes to my own strategic decision-making, but also indeed represents a manifestation of who I am and what I like. This has been a true source of support for me. It is probably also an example of what Jean-Paul Sartre said so well, namely that an art collection indicates who the collector (i.e., me!) is⁴! As far as I have been able to find out, no other art collections make such an explicit link to strategic business decisions. My final point is, both my art collection and my reference to my key business principles are two pillars in my life which I refer to, observe, and reflect upon daily. These poles ground me; they assist me in my own personal alignment. As we know, an alignment between career and core values produces satisfaction, a sense of happiness, and fulfilment. Self-expression and creativity are also very much part of this.

All photos in the article: credit to Francois Wavre

About the Author

Peter Lorange, after having sold his shipping company in 2006, has been a successful entrepreneur and owner of a highly diversified family office. He has been regarded as one of the world’s foremost business school academics, holding the position of President at IMD, Lausanne for 15 years, as well as several positions on shipping company boards. His entrepreneurial journey spans across key areas such as education, shipping, investments, and pre-dominantly Family Businesses. Peter founded the Lorange Network, a digital learning and networking platform, in 2017. Peter is Norwegian, residing in Küssnacht am Rigi, Switzerland.

References

1. See Lorange, P., (2022), Learning and Teaching Business: Lessons and Insights from a Lifetime of Work, Springer.
2. Gombrick, E.H., (1950), The Story of Art, Phaidon (p. 35).
3. Snow, C.P., (2019), The Two Cultures, Cambridge University Press.
4. Sartre, J.-P., (1946), Existentialism and Humanism, Methuen Publishing.

The post What Makes a Business a Masterpiece? appeared first on The European Business Review.

By Simon L. Dolan, Adnane Belout, Jean-Luc Cerdin, and Javier Casademunt¹

Introduction

Organisational resilience refers to an organisation’s ability to adapt, respond, and recover from disruptive events and changes in its environment. In a VUCA world, which stands for volatility, uncertainty, complexity, and ambiguity, organisational resilience becomes even more crucial.

To become resilient, the organisation needs to develop certain characteristics that were not so crucial in running the business in former years but have become so essential in today’s business. For a firm, not being able to adjust quickly may lead to death and extinction. The objective of this article is to describe the principal features of organisational resilience, with an emphasis on culture, structure, leadership, and other relevant features.

What are resilient organisations according to Deloitte’s 2020 report?²

To become resilient, the organisation needs to develop certain characteristics that were not so crucial in running the business in former years but have become so essential in today’s business

In the wake of a tumultuous 2020, Deloitte Global’s fourth annual readiness report explores the concept of organisational resilience. Deloitte consultants wanted to know how organisations were coping with the unexpected challenges they faced in the past year and get their opinions about what made their organisations able to withstand chaos. From that analysis, they sought to identify what traits define resilient organisations – traits business leaders can emulate to build greater resilience into their own organisations.

The Deloitte report has identified five characteristics of resilient organisations that enabled and promoted nimble strategies, adaptive cultures, and the implementation and effective use of advanced technology. Businesses that were able to bounce back from unexpected challenges typically were:

1. Prepared. Most successful CXOs³ plan for eventualities, both short- and long-term. More than 85 per cent of CXOs whose organisations successfully balance addressing short- and long-term priorities felt they had pivoted very effectively to adapt to the events of 2020, whereas fewer than half of organisations without that balance felt the same.
2. Adaptable. Leaders recognise the importance of having versatile employees, especially after a year like 2020. To that end, flexibility / adaptability was, by far, the workforce trait that CXOs said was most critical to their organisations’ future.
3. Collaborative. CXOs indicated the importance of collaboration within their organisations, noting that it speeded up decision-making, mitigated risk, and led to increased innovation. In fact, removing silos and increasing collaboration was one of the top strategic actions CXOs took before and during 2020.
4. Trustworthy. CXOs understand the challenge of building trust. More than a third of responding CXOs were not confident that their organisations had succeeded in developing trust between leaders and employees. Those who are succeeding are focusing on improving communication and transparency with key stakeholders, as well as leading with empathy.
5. Responsible. Most CXOs acknowledge that the business world has a responsibility beyond the bottom line. Eighty-seven per cent of surveyed CXOs who said they had done very well at balancing all their stakeholders’ needs also felt that their organisations were able to adapt and pivot quickly in response to disruptive events. That’s nearly 50 percentage points more than the proportion of CXOs who said the same at organisations that hadn’t done well at balancing their stakeholders’ needs.

A culture of business resilience

The culture of business resilience is a mindset and set of values that prioritise the ability to adapt, recover, and thrive in the face of adversity or disruption. It involves a proactive approach to risk management and a commitment to building and maintaining the necessary capabilities to withstand and recover from various challenges.

The culture of business resilience includes the following key features, which include some that were described in the Deloitte report, as well as many more:

Key Feature I: Preparedness

The organisation must be proactive in identifying and assessing potential risks and vulnerabilities and take steps to mitigate them before they occur. This includes having robust contingency plans in place and regularly testing and updating them.

• Risk assessment and contingency planning: Conduct a thorough risk assessment to identify potential risks and vulnerabilities. This includes analysing internal and external factors such as political instability, economic fluctuations, natural disasters, cybersecurity threats, and supply chain disruptions.
• Maintain, diversify, and strengthen supply chains: Relying on a single supplier or location can be risky. Businesses should consider diversifying their supply chains, sourcing from multiple regions, and establishing alternative suppliers.
• Ensure robust cybersecurity measures: With increasing cyber threats, businesses must prioritise cybersecurity preparedness. Implement strong security systems, regularly update software, train employees on cybersecurity best practices, and have incident response plans to quickly address any breaches or attacks.
• Foster a culture that encourages innovation and flexibility: This will enable quick decision-making and the ability to pivot when needed. Regularly assess market trends and customer needs to stay ahead of the competition.
• Strengthen financial resilience: Maintain a healthy financial position to weather uncertainties. Have adequate cash reserves, diversify revenue streams, and establish relationships with financial institutions.
• Have a crisis communication plan in place: Establish a comprehensive crisis communication plan to effectively communicate with employees, customers, stakeholders, and the public during times of uncertainty or crisis.
• Invest in employee training and well-being: This will enhance employees’ skills and knowledge, making them more adaptable to changing circumstances.
• Conduct scenario-planning exercises: This helps to anticipate potential future events and their impact on the business.
• Implement continuous monitoring and evaluation routine plans: Reassess the effectiveness of preparedness measures. Stay updated on emerging risks and trends and adapt strategies accordingly.

Key Feature II: Agility

An agile organisation refers to a company or institution that embraces the principles of agility in its operations, decision-making processes, and overall organisational structure. This is characterised by its ability to quickly adapt, respond to changes, and remain competitive in a rapidly evolving business environment. Here are a few examples of agile organisations:

An agile organisation refers to a company or institution that embraces the principles of agility in its operations, decision-making processes, and overall organisational structure.

• Spotify: Is known for its agile organisational structure, where teams work in small, autonomous squads that make decisions independently, experiment with new ideas, and adapt to changing customer needs.
• Amazon: Is renowned for its agility, driven by its customer-centric approach. It encourages employees to experiment, take risks, and learn from failures.
• Zappos: Is an online shoe and clothing retailer that has built an agile organisation by focusing on core values such as customer service, employee empowerment, and innovation.
• Google: Is known for its ability to adapt to changing market conditions and continuously innovate. It promotes a culture of experimentation.
• Toyota: Is often cited as an example of an agile organisation due to its renowned Toyota Production System (TPS), which emphasises continuous improvement, waste reduction, and the empowerment of employees to identify and solve problems.

These organisations showcase different approaches to agility, but all share a common focus on flexibility, adaptability, and continuous improvement to remain successful in dynamic business environments.

Key Feature III: Learning and Innovation

Many studies show that an organisation that has a culture of continuous learning and improvement encourages employees to learn from past experiences and uses them to inform future actions. It also fosters an environment of innovation, where new ideas and approaches are encouraged and supported.

Overall, a learning and innovation culture is essential for business resilience. It enables organisations to embrace change, continuously improve, solve problems creatively, take calculated risks, share knowledge, and stay future-ready. These attributes help businesses withstand challenges and thrive in an ever-evolving business landscape.

Key Feature IV: Collaboration and Communication

An organisation that is transparent about its common values and communicates them to the workforce repeatedly, both to internal and external stakeholders, promotes collaboration across different functions and departments, as well as with external partners and stakeholders. This enables the sharing of information, expertise, and resources, which is critical in times of crisis.

Sharing and leveraging values allows individuals and teams to share their knowledge, expertise, and experiences. This sharing of information helps organisations to better understand their challenges and potential solutions, enabling them to adapt and respond effectively to disruptions or crises.

Collaboration and effective communication foster trust and build strong relationships among team members and departments. This trust enables individuals to rely on each other, share information freely, and work together towards common goals, even in challenging times.⁴ Strong relationships also help organisations to mobilise resources, access external support, and leverage partnerships to enhance their resilience.

Key Feature V: Leadership and Corresponding Accountability

The organisation’s leaders must be committed to building a culture of resilience by setting the tone from the top. They should lead by example, demonstrating resilience themselves, and hold themselves and others accountable for maintaining resilience capabilities.

Accomplished leaders can sustain organisational resilience by articulating and communicating a clear vision of where the organisation is headed. This helps in building a sense of purpose and direction within the organisation, enabling it to adapt and bounce back from challenges.

Sometimes, it is easier to describe the characteristics of an effective and resilient leader by focusing on the antithesis, leaders whose actions can become counterproductive to themselves and to their organisation. Among the features of such anti-resiliency leaders, we can identify:

• Employing a strategy of personal attacks and bullying: Social media platforms often witness political or business leaders engaging in personal attacks and bullying tactics against their opponents. This not only sets a negative example to the public but also distracts from meaningful debates and discussions on important issues.
• Lack of transparency: Instead of using social media to provide transparent and honest communication, some leaders may use it as a tool to obfuscate or manipulate information. This can erode trust in public institutions and contribute to a growing sense of cynicism among the public.
• Oversimplification of complex issues: Twitter’s character limit can lead to oversimplification of complex issues by political or business leaders. This can result in nuanced topics being reduced to sound bites and slogans, failing to address the intricacies and complexities that require thoughtful analysis and discussion.
• Inciting violence or hate speeches: Political or business leaders with a large following on social media can potentially use their platforms to incite violence or spread hate speech. Such messages can contribute to a toxic online environment and have real-world consequences, including acts of violence or discrimination.
• Lack of accountability: Social media platforms often lack effective mechanisms to hold political or business leaders accountable for their messages. This can allow leaders to spread false information, engage in unethical behaviour, or avoid taking responsibility for their actions.
• Bombarding with spam messages: This happens when the leader bombards their followers with excessive promotional content or irrelevant information, without providing any real value or engaging with their audience.

Key Feature VI: Controlling Emotions – Emotional Intelligence

Resilient leaders are empathetic and understand the emotions and concerns of their employees. They can provide emotional support, foster a positive work environment, and help employees cope with adversity, thus enhancing the overall resilience of the organisation.

Overall, emotional intelligence leaders can build strong relationships, promote a positive work culture, encourage open communication, manage conflicts effectively, and adapt to change, contributing to the organisation’s ability to withstand and recover from adversity.

Key Feature VII: Building a Capable Team

Accomplished leaders understand the importance of building a strong and capable team. They hire the right talent, provide them with the necessary resources and support, and empower them to take ownership of their work. This creates a resilient workforce that can effectively respond to and overcome challenges. In other words, a leader who builds a capable team contributes to business resilience by ensuring that the team is equipped with the necessary skills, knowledge, and resources to handle challenges and adapt to change. Here are some ways in which such a leader fosters business resilience.

Key Feature VIII: Promote Genuine Employee Well-Being

A real must for organisational resilience is the recognition of the importance of the well-being of the employees. This promotes work-life balance, provides resources for mental and physical health, and offers support during challenging times, helping to build a resilient workforce that can effectively cope with stress and adversity⁵.

Healthy employees are better equipped to deal with adversaries for several reasons:

• Healthy employees have higher physical stamina and energy levels, allowing them to handle challenging situations more effectively.
• Good physical health is closely linked to mental well-being. Healthy employees are more likely to have better cognitive function, including improved memory, focus, and problem-solving abilities.
• Physical fitness and overall health contribute to emotional stability. Healthy employees are better equipped to handle stress, anxiety, and other negative emotions that may arise when dealing with adversaries.
• Good health boosts the immune system, making healthy employees less susceptible to illness and more resistant to the physical effects of stress.
• Maintaining good health often involves adhering to healthy habits and self-care routines.
• Healthy employees are more likely to engage in teamwork and to contribute positively to team efforts, which can be crucial when dealing with issues that require collective problem-solving and cooperation.

Towards a systemic view of organisational resilience

An interesting angle from which to view organisational resilience is to examine the organisation in a more holistic and systemic perspective. Figure 1 proposes the principal subsystems that need to be analysed and strengthened to build organisational resilience.

Figure 1: A systemic view of organisational resilience

Let’s add a few words on each of the six subsystems that operate in every organisation.

Subsystem I – Workforce & Leadership Resilience

Workforce and leadership resilience refers to the ability of individuals and organisations to adapt, recover, and thrive in the face of challenges and adversity in the workplace. It encompasses the skills, attitudes, and resources necessary to navigate and overcome stress, change, and uncertainty.

Here are some examples of firms that, over the years, have shown the resiliency of their workforce:

• Johnson & Johnson: Is a multinational pharmaceutical and consumer goods company that has a reputation for its strong commitment to employee well-being and resilience. They provide extensive employee support programmes, including mental health resources and stress management initiatives, which help their workforce stay resilient in the face of challenges.
• Southwest Airlines: Is known for its resilient workforce, which invests heavily in employee training and development and fosters a sense of camaraderie and support among its staff.
• Netflix: Is a popular streaming service known for its innovative and resilient workforce and embraces a culture of freedom and responsibility, allowing employees to take risks and learn from failures.

Obviously, and as we have discussed before, to nurture workforce resilience, leaders need to withstand and adapt to the challenges, setbacks, and uncertainty while maintaining a positive and proactive approach. They possess a strong sense of purpose, emotional intelligence, and the ability to make tough decisions in the face of adversity and “sell it to the workforce” as a real necessity.

Subsystem II – Strategic Resilience

Accomplished leaders understand the importance of building a strong and capable team. They hire the right talent, provide them with the necessary resources and support, and empower them to take ownership of their work.

Strategic corporate resilience refers to a company’s ability to withstand and adapt to various internal and external challenges while maintaining its long-term goals and competitive advantage. It involves proactive measures and preparedness to navigate through uncertainties and disruptions. Here are a few examples of strategic corporate resilience:

• Diversification: For instance, an electronics manufacturer that produces smartphones may diversify into wearable technology or home appliances to reduce its dependency on a single product line.
• Sustainable practices: Companies can demonstrate resilience by adopting sustainable practices that help them mitigate risks associated with environmental and social issues. An example might be an energy company investing in renewable energy sources to reduce its reliance on fossil fuels and comply with changing regulations.
• Crisis management: Building a robust crisis management plan is crucial for corporate resilience. This involves identifying potential risks, establishing clear communication channels, and implementing protocols to effectively respond to crises.
• Innovation and technology adoption: Embracing innovation and leveraging emerging technologies can enhance a company’s resilience. An example could be an automotive manufacturer investing in electric vehicles and autonomous driving technology to adapt to changing consumer preferences and industry trends.
• Supply chain resilience: This includes diversifying suppliers, creating redundancies, and implementing risk management strategies. For instance, an apparel retailer might maintain relationships with multiple suppliers across different regions to mitigate risks associated with disruptions in a single country.
• Talent management: Investing in talent development and retention strategies is essential for corporate resilience. This involves creating a culture of learning and innovation, providing opportunities for skill development, and having a succession plan in place to ensure continuity in leadership.

Subsystem III – Technological Resilience

Corporate technological resilience refers to a company’s ability to withstand and recover from technological disruptions, including cyberattacks, system failures, or emerging technologies. It involves having robust technology infrastructure, effective cybersecurity measures, and the ability to adapt and innovate in the face of technological advancements. Here are a few examples:

• IBM: In the 1990s, IBM faced significant challenges due to the rise of personal computers, but the company successfully transformed itself by shifting its focus towards services and consulting. This resilience helped IBM stay relevant and thrive in the rapidly evolving tech industry.
• Microsoft: Microsoft has demonstrated technological resilience through its ability to address security vulnerabilities and respond to cyberattacks. For instance, after the infamous WannaCry ransomware attack in 2017, it quickly released patches and updates to protect its systems and help customers mitigate the risks.
• Amazon: Amazon’s technological resilience is evident in its cloud computing arm, Amazon Web Services (AWS), which offers a highly reliable and scalable infrastructure, enabling businesses to build resilient applications and withstand technological disruptions. Recently, they have also incorporated AI technologies into their services and products to strengthen the company’s resilience.
• Tesla: Tesla has revolutionised the automotive industry by introducing electric vehicles and autonomous driving technologies. Tesla’s resilience is focused on embracing new technologies.
• JPMorgan Chase: One of the largest banks globally, the company demonstrates technological resilience by investing in cybersecurity and developing advanced fraud detection systems. It is continuously enhancing the technology infrastructure to protect customer data and prevent cyberattacks.

Subsystem IV – Financial Resilience

Financial corporate resilience refers to the ability of a company to withstand and recover from financial shocks or disruptions, such as economic downturns, market volatility, natural disasters, or regulatory changes. It involves having strategies, policies, and practices in place to mitigate risks and ensure the long-term stability and sustainability of the company’s financial position.

Examples of financial corporate resilience measures include:

• Diversification of revenue streams: By diversifying their revenue streams across different products, services, or geographical regions, companies can reduce their exposure to specific risks. For example, a technology company may diversify its revenue by offering both hardware and software products.
• Strong capital and liquidity management: Maintaining adequate capital reserves and liquidity buffers is crucial for withstanding financial shocks. They ensure sufficient cash flow, access to credit facilities, and a well-structured debt profile in any given context of distress.
• Risk management and contingency planning: This is essential for identifying and mitigating potential risks. Companies that prioritise risk management conduct regular stress tests, scenario analyses, and have contingency plans in place. For instance, financial institutions may stress-test their portfolios to evaluate the impact of adverse market movements on their capital positions.
• Sustainable cost management: Prudent cost management is vital for financial resilience. Companies that maintain a disciplined approach to cost control can better weather economic downturns or market volatility.
• Adapting to changing market conditions: This involves quickly adapting to changing market dynamics, monitoring industry trends, customer preferences, and regulatory changes to identify potential risks and opportunities. For example, companies that successfully transition from traditional brick-and-mortar retail to e-commerce have demonstrated financial resilience.
• Robust corporate governance: Sound corporate governance practices contribute to financial resilience by ensuring effective oversight, risk management, and accountability. Such companies have independent boards, transparent decision-making processes, and effective internal controls. In the end, this fosters confidence among investors and stakeholders, helping to maintain financial stability.

It is important to note that financial corporate resilience is not a one-size-fits-all concept, and the specific measures taken by companies may vary based on their industry, size, and other factors.

Subsystem V – Operational Resilience

Operational corporate resilience refers to an organisation’s ability to withstand and adapt to various internal and external disruptions while maintaining critical operations and delivering value to stakeholders. It involves strategies, processes, and structures designed to identify, assess, and mitigate risks and vulnerabilities that could impact the organisation’s ability to function effectively.

Examples of operational corporate resilience measures include:

• Business continuity planning: It is essential to ensure that the business functions during and after a disruption. This includes identifying critical processes, establishing backup systems and infrastructure, and creating communication protocols.
• Incident response and crisis management: Establishing protocols and procedures to effectively respond to incidents and crises. This includes defining roles and responsibilities, establishing communication channels, and conducting regular drills and simulations to test response capabilities.
• Employee resilience: Building resilience within the workforce by providing training and support to employees, as discussed earlier.

Line management plays a crucial role in operational corporate resilience. They are responsible for implementing and enforcing resilience measures within their respective departments. Line managers are involved in identifying and assessing risks, developing and implementing business continuity plans, and ensuring that employees are trained and prepared to respond to disruptions. They also play a key role in communicating and coordinating response efforts during incidents or crises.

Subsystem VI – Brand Resilience

Corporate brand resilience refers to a company’s ability to withstand and recover from various challenges, crises, or negative events without significant damage to its brand reputation. It involves implementing measures to protect the brand and ensure its long-term sustainability. Here are some key measures to protect the brand:

• Crisis management plan: This plan should include clear protocols, designated crisis management teams, and predefined communication strategies to minimise the impact on the brand. An example would be Johnson & Johnson’s response during the Tylenol poisoning incident in 1982, where they swiftly recalled and reintroduced
  the product, demonstrating their commitment to consumer safety.
• Proactive communication: Maintain open and transparent communication with stakeholders, including customers, employees, investors, and the media to build trust and credibility. An example is Patagonia’s consistent communication on environmental sustainability and their initiatives to reduce their carbon footprint, which aligns with their brand values and resonates with their target audience.
• Strong corporate culture: Foster a culture that emphasises ethical behaviour, transparency, and accountability. This builds a foundation of trust among employees, which translates into consistent brand representation and reduced risk of internal issues impacting the brand⁶. The most popular example is Google’s corporate culture, highlighted by their mission statement, “to organise the world’s information and make it universally accessible and useful”. This culture has helped them maintain a positive image and attract top talent.
• Customer experience management: Prioritise customer satisfaction and loyalty by delivering exceptional customer experiences. Focus on delivering quality products and services, personalised interactions, and prompt resolution of customer issues to protect the brand’s reputation. A widely known example is that of Apple’s emphasis on user experience through innovative design, ease of use, and excellent customer service, which has contributed to their brand resilience, resulting in a loyal customer base.
• Social media monitoring: Actively monitor social media platforms and online channels to identify and address any negative sentiment or misinformation promptly. Engage with customers, respond to their feedback, and address their concerns to maintain a positive brand perception. For example, Starbucks’ effective social media presence allows them to quickly respond to customer complaints or negative comments, demonstrating their commitment to customer satisfaction.
• Diversified brand portfolio: Diversify the brand portfolio to mitigate risks associated with depending heavily on one product or service. This helps protect the overall brand reputation, even if one component faces challenges. An example is Unilever’s diverse brand portfolio, including Dove, Ben & Jerry’s, and Lipton, which allows them to weather market fluctuations and maintain a strong brand image across different consumer segments.

Conclusion

Yes, an organisation can prepare for adversity and become more resilient; it can be re-engineered to develop a culture of resilience. Here is a summary of some strategies and steps that should be taken:

Line management plays a crucial role in operational corporate resilience. They are responsible for implementing and enforcing resilience measures within their respective departments.

• Create an environment where values are shared and aligned with the objectives of the corporation.⁷
• Identify potential risks and vulnerabilities that the organisation may face. This can include natural disasters, economic downturns, cybersecurity threats, or supply chain disruptions.
• Create a detailed plan that outlines how the organisation will respond to and recover from adversity.
• Ensure that the organisation has diverse revenue streams, a skilled workforce, and a flexible supply chain.
• Establish partnerships and collaborations with other organisations, government agencies, and community stakeholders that will provide support and resources during times of adversity.
• Test and update the plan regularly, engage in exercises and drills to test the effectiveness of the contingency plan. Identify weaknesses and areas for improvement and update the plan accordingly.
• Learn from past experiences and analyse previous instances of adversity and learn from them.
• Lastly, foster a culture of resilience by nourishing a proactive and resilient mindset among employees. Encourage innovation, adaptability, and continuous learning.

By taking these steps, an organisation can enhance its preparedness and develop the ability to withstand and recover from adversity, ultimately becoming more resilient.

About the Authors

Dr Simon L. Dolan is full professor and researcher at Advantere School of Management (affiliated with Comillas, Duesto and Georgetown Universities). He is the former Future of Work Chair at ESADE Business School. He has published 85 books (in multiple languages) and over 150 articles in referees’ journals. He is also the cofounder and President of the Global Future of Work Foundation (www.globalfutureofwork.com). His work, consulting, and research is about values, leadership, coaching, stress management, and resilience, as well as issues connected to the future of work. He holds an MA and PhD from Carlson Graduate School of Management at the University of Minnesota. He was a former editor of cross-cultural management and member of the editorial board of half a dozen scientific journals. His full bio can be found at: www.simondolan.com

Dr Adnane Belout is an associate professor at the University of Montreal. In addition to his speciality in the management of human resources (PhD), he has developed expertise in the field of HR data analytics. Formerly, he specialised in the field of project management (MA). In addition, he is the Director General and founder of Le Groupe Canadien MDS, a consulting firm based in Montreal, which offers training services in French throughout the globe but with a focus on West Africa (www.groupemds.com).

Dr Jean-Luc Cerdin is a full professor of International Human Resource Management at ESSEC Business School, France. He researches, publishes, and consults in three primary areas: global mobility, human resource management in MNCs, and global career and talent management. He has contributed numerous articles to international top-tier professional and academic journals, such as the Journal of International Business Studies, the Journal of World Business, Human Relations and Human Resource Management. Additionally, he serves on several editorial boards for HRM and international business journals. He has been visiting professor in American Universities like Wharton and Rutgers, as well as leading business schools in Europe, such as ESADE in Barcelona, Spain.

Javier S. Casademunt is a consultant and the director of the Brazilian branch of the Global Future of Work Foundation (www.globalfutureofwork.com). He has served for many years as the director for Brazil, and academic collaborator of the Strategy and General Management Department at ESADE Business School. He is the founder and CEO of the Neuromentoring Institute of Florida. He is a visiting professor to several top business schools in Latin America, and an expert in the areas of leadership, mental health, resilience, and performance. He has more than 20 years of successful experience in managing, teaching, and consulting for companies, governments, and top leaders globally. His email address is javier@.javiercasademunt.com, and his website is www.javiercasademunt.com.

References

1. The authors are currently working on the development of an innovative tool designed to audit organisational resilience.

2. This section was inspired by the Deloitte report. The full report can be found at: https://www2.deloitte.com/us/en/insights/topics/strategy/characteristics-resilient-organizations.html

3. CXOs are high-level executives who focus on creating consistent, frictionless CXs that meet or exceed expectations across all customer touch points and at every stage of the customer journey – before, during, and after a sale is complete.

4. Much more on the effect of building trust can be found in: Dolan S.L. Brykman K. (2024) The Art and Science of Building Trust (forthcoming).

5. For more, read: Dolan S.L. (2023) De-Stress at Work. London. Routledge.

6. An example is the annual or biannual ethical assessment. The use of state-of-the-art audit tools is recommended. For instance: myDova.com

7. For more, see: Dolan S.L. (2020) The Secret of Coaching and Leading by Values. London. Routledge.

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Transform how you approach international business negotiations with new findings that provide a novel contribution to the field. Discover how embracing diversity and inclusion through the biculturals on your team can drive your strategic growth and sustainable competitive advantage in the global marketplace, thanks to their unique gap-bridging and boundary-spanning abilities.

International business negotiations can be immensely challenging, but your efforts don’t have to be lost in translation. You can effectively unlock the many hidden powers of the biculturals on your team to navigate the choppy cross-cultural waters and better seal the deal. Biculturals are individuals who have internalised two or more cultures and they shouldn’t be confused with multiculturals, who accept cultural differences in society.^1&2 Given the spike in migrants across the globe with people moving countries for brighter prospects, biculturals aren’t rare, so the chances of your already having some on your team are rather decent. In the article “Biculturals in international business negotiations: moving away from a single culture paradigm”, published in the Journal of Organizational Change Management, Priyan Khakhar, Hussain Gulzar Rammal, and Vijay Pereria³ study for the first time the role that biculturals play specifically in international business negotiations, sharing new findings. To uncover these findings, senior managers in Lebanon across diverse public and private sectors (from real estate to marketing consulting, food export and import, and NGOs) were interviewed. Their cultures spanned fusions from Lebanon, the UK, France, Australia, Canada, the USA, Armenia, and even Brazil. What makes this interesting is that, while Lebanon is not necessarily a multicultural society, it has high levels of biculturalism because of the people who left during the 1975-90 civil war but maintained ties with the country^4&5 and the rich mix of religions, languages, and cultural influences from the East and West. Even Hofstede⁶ wanted to treat Lebanon differently from neighbouring countries while developing his famous cultural dimensions, but the data he received had already been merged with other Arab countries. All this not only made Lebanon an ideal place to focus exclusively on biculturals, it makes the findings about biculturals relevant to any country, and applicable to organisations and businesses in any sector. And these takeaways will change how you think about and approach your international business negotiations game with negotiators who have internalised more than one culture.

The General Positive Impact of Biculturals

Regardless of whether you’re a domestic or international firm, having bicultural employees can help your organisational efficiency. How? These team members may bring new perspectives and ideas, in addition to being able to support new hires who are migrants and expatriates in adapting to your business environment. If your firm has an entrepreneurial outlook, hiring biculturals raises your chances of success in cross-cultural settings, enhancing your competitiveness and performance. And if you’re a multinational enterprise (MNE), bicultural employees can assist you in traversing the bumpy roads of the contemporary socio-political global business scene. But what about international negotiations? A prime reason that negotiations fail at times is not understanding the national and unique ethnic cultural differences between the negotiators sitting at the table. To lessen this risk, firms should select negotiators who have a solid understanding of cultural issues.⁷ Biculturals fit this bill and can act as a bridge for communication between cultures.⁸ So, what’s the bottom line? Knowing how to manage the knowledge and skills of your bicultural team members is key.

Bridging the Gap in International Business Negotiations

Biculturals play a crucial role in bridging the gap between parties during negotiations and this is how they do it³:

Integrating Cultures for Results: Combining more than one culture and accordingly shifting identities, biculturals naturally adapt to the cultural requirements of the negotiations at hand. This “cultural blending” or “mixing” sparks social integration fuelled by adaptability and the keen ability to identify commonalities. This beneficial superpower helps create understanding and synergy between parties with different cultural backgrounds.

Tapping into the Potential of Multifaceted Adaptability: Imagine being able to effortlessly switch between two or three entirely different ways of thinking, cultural contexts, cultural frames, and perspectives. That’s the cognitive adaptability that biculturals boast. Developing general principles to decipher cultural cues, they can think strategically and, like a chameleon, adjust their approach based on the situation. Biculturals possess advantageous emotional adaptability, too, that’s like amplified cultural intelligence. They understand the hidden language of emotions linked to specific behaviours, allowing them to navigate tricky situations and build rapport across cultural divides. In a tense negotiation, biculturals can sense the emotional undercurrents, diffuse tension, and turn the tide with empathy and understanding. Their cultural intelligence, emotional flexibility, and high network range make them better at decision-making, bridging cultural gaps, and evaluating cultural fit, hence positioning them to play a pivotal role in international business negotiations.

Reducing the Blow of Cultural Shock: Culture shock can cause ripples in any international business negotiation. Trying to close a deal across a cultural chasm wider than the Grand Canyon is no easy task. Misunderstandings lurk, tension escalates, and the deal hangs precariously on a thread. Unlike negotiators who are monocultural (individuals who predominantly adhere to a single culture, tradition, or way of life), who might stumble on unfamiliar terrain, biculturals experience reduced cultural shock, thanks to their behavioural adaptability. They can choose appropriate behavioural strategies based on the cultural context, so they can effectively respond to others’ actions and intentions.

Engaging in Impactful Cultural Frame-Switching: Cultural frame-switching is like having many pairs of coloured glasses for different situations. When you switch between languages or cultures, your perspective changes and you perceive the world from a new angle. Biculturals display a high level of cultural frame-switching, especially since they can use more than one language to communicate effectively. This flexibility makes it easier for them to find common ground and connect with negotiators from different cultural backgrounds. Biculturals with higher cultural frame-switching skills are more likely to succeed in international business negotiations due to their ability to understand, deliver, and communicate effectively with other parties from different cultures, and distinguish between cultural norms, beliefs, values, and verbal and non-verbal behaviours. This makes them more prone to understanding, delivering and communicating with other parties from different cultures in pursuit of a desirable agreement or deal. The result? The creation of opportunity and better results.

Avoiding “Groupthink” and Generating New Ideas: Poor decision-making. Silencing dissenting voices. Lack of creativity and innovation. An unjustified sense of confidence. Ignoring external information. “Groupthink” comes with a tsunami of pitfalls. Luckily, biculturals can help to avoid the dreaded phenomenon and even generate new creative ideas and inject creativity that help overcome stalemates during negotiations. By bringing diverse perspectives and thinking styles to the table, they can facilitate innovative solutions and consensus-building.

Possessing Valuable Tacit Cultural Knowledge: Your organisation can strategically use biculturals’ tacit cultural knowledge to mitigate cross-cultural communication challenges and develop trust between the negotiating sides. This trust forms the basis for long-term relations and successful negotiations. This is further bolstered by biculturals’ tendency to try to connect with members of their in-group in the other party to build a rapport.

Playing the Key Role of Boundary-Spanners: In the intricate dance of international business, biculturals emerge as boundary-spanners, effortlessly moving between internal networks and external knowledge sources. They act as conduits, ensuring effective knowledge acquisition and application, propelling teams to unparalleled success. Think of it like this: an organisation operates within its own well-defined network, holding valuable internal knowledge (the “home turf”). Beyond its walls lie vast external information sources, each with their own cultural nuances (the “unfamiliar territory”). Biculturals possess the remarkable ability to explore both worlds simultaneously. They understand the internal language and dynamics, translating them seamlessly into the external context, and vice versa. This boundary-spanning prowess unlocks a treasure trove of knowledge, fostering innovation and strategic decision-making that transcends cultural barriers.

It’s Not All Rosy, but It’s  Still Worth It

It’s worth noting that some authors argue⁹ that there are limitations to biculturals. These include biculturals experiencing a conflict between their cultural identities; their encountering bias or prejudice from colleagues or clients because of their mixed cultural background, which can impact their credibility and effectiveness in negotiations; or their struggling to fully grasp cultural nuances, integrate into organisational cultures, and communicate. They can also face strain from constantly having to adapt to different cultural expectations, potentially leading to stress and reduced performance in negotiations and organisational roles. But overall, the benefits of biculturals far outweigh the drawbacks, especially since they bring a wealth of unique strengths and advantages to international business negotiations and organisational performance³.

Beyond Borders…

Biculturals can be your secret weapon for international business negotiations, since they are more adept at dealing with diverse cultures, unlocking valuable knowledge, and driving innovation in comparison to monoculturals. This is something worth considering in human resource management and your organisation’s global success plans.

Beyond this, biculturals are an invaluable asset waiting to be unlocked, thanks to their unique mix of knowledge and abilities which empower organisations with a competitive advantage in international markets.³ Their rich social interactions and experiences ignite an entrepreneurial mindset that fosters creative solutions and innovation at your firm. Natural catalysts for the intrapreneurial edge many firms seek, biculturals’ distinct cultural understanding bridges gaps, promotes collaboration, and pushes results. Bringing merger magic to the big picture, biculturals offer their cultural intelligence during mergers, easing integration and lessening cultural divides. Acting as mentors for expats and repatriates, they can smooth transitions and maximise potential by alleviating the upheaval of culture shock.³ Investing in biculturals may open many doors for your organisation. So think beyond borders: think bicultural. 

About the Authors

Dr. Priyan Khakhar is faculty lead of the International Business course at Northeastern University London and affiliate faculty with the International Business and Strategy Group at D’Amore-McKim School of Business in Boston, Massachusetts. His vast and eclectic international experience includes working at the Ecole Supérieure de Commerce de Paris, the American University of Beirut, and the American University of Bulgaria. He has aPersonnel Reviewlso taught within the Strategy and International Business Division at the Alliance Manchester Business School at the University of Manchester. His research includes impact publications such as in the International Business Review, Journal of Transnational Management, Critical Perspectives on International Business, and the Journal of Change Management to name a few.

Jasmina Najjar is a Fellow of the Chartered Institute of Marketing (FCIM), Chartered Marketer (CMktr), Fellow of Advanced HE (FHEA), academic, marketing and corporate communications consultant, and author. Before joining the American University of Sharjah, she taught at the American University of Beirut, impacting course-specific and programme-wide development as a course coordinator and programme coordinator, and was a journalist, editor-in-chief, and senior advertising creative with major pan-Arab accounts.

References

1. Engelsberger, A., Cavanagh, J., Bartram, T. and Halvorsen, B. (2021), “Multicultural skills in open innovation: relational leadership enabling knowledge sourcing and sharing”, Personnel Review, Vol. Earlycite.
2. Murdock, E. (2016), Multiculturalism, Identity and Difference: Experiences of Culture Contact, Palgrave Macmillan, London.
3. Khakhar, P., Rammal, H. G., and Pereira, V. (2023). “Biculturals in international business negotiations: Moving away from the Single Culture Paradigm”. Journal of Organizational Change Management, 36(1), 180–94. https://doi.org/10.1108/jocm-04-2022-0110
4. Ghosn, F. and Khoury, A. (2011), “Lebanon after the Civil War: Peace or the Illusion of Peace”, The Middle East Journal, Vol. 65 No. 3, pp. 381-97.
5. Lischer, S. K. (2005), Dangerous Sanctuaries: Refugee Camps, Civil War, and the Dilemmas of Humanitarian Aid, Cornell University Press, Ithaca, New York.
6. Hofstede, G. (1991), Cultures and Organizations: Software of the Mind, McGraw-Hill, Berkshire, England.
7. Kim, M.-S. and Hubbard, A. S. E. (2007), “Intercultural Communication in the Global Village: How to Understand ‘The Other'”, Journal of Intercultural Communication Research, Vol. 36 No. 3, pp. 223-35.
8. Thomas, D. C. and Brannen, M. Y. (2010), “Bicultural individuals and intercultural effectiveness”, European Journal of Cross-Cultural Competence and Management, Vol. 1 No. 4, pp. 315-33.
9. Rudmin, F. W. (2003), “Critical history of the acculturation psychology of assimilation, separation, integration, and marginalization”, Review of General Psychology, Vol. 7, pp. 3-37.

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By Klaus Heine and Vanessa Brunner

Most brand managers today see room for improvement in their repurchase rates, particularly as Generation Z tends to exhibit lower brand loyalty amidst intensifying competition. As it is more difficult to acquire new customers than to retain existing ones, loyalty programmes stand out as a promising tool. This article outlines a seven-step decision process to create loyalty programmes that are effective because they align with consumer psychology and the brand’s overall purpose.

According to a McKinsey study (2020), members of loyalty programmes are 30 percent more likely to spend more on the brand after subscribing. Even more, Ourself, a beauty brand recognised for its tech-centric products, attributes 40 percent of its sales to its rewards programme (Morris 2023). Research shows that loyalty programmes are also a crucial step in enhancing the share-of-wallet (Leenheer et al., 2007). Many brand managers have yet to fully realise the great potential of loyalty programmes, given the significant number of brands that resort to unoriginal, standard loyalty approaches like basic point-collection systems for discounts, which may not engage consumers effectively.

The cosmetics industry represents a vital area for studying loyalty programme usage, as it remains ahead of many other industries in digital marketing innovation. While smaller companies can greatly benefit from well-designed loyalty programmes, they face the challenge of competing with established programmes from major players like Sephora, as consumers often hesitate to engage with multiple loyalty schemes. This article aims to persuade brand managers of the critical role loyalty programmes play in accelerating business growth and provides advice on effective implementation. While the focus is on luxury beauty, the findings are applicable across various consumer markets.

Comparative Analysis of Loyalty Programmes

We conducted a comparative analysis of loyalty programmes in the high-end beauty segment. To create a representative sample, we gathered all brands available on the websites of the three most prestigious retail stores in the Western world: La Samaritaine Paris, Bergdorf Goodman New York, and Harrods London. Our objectives were to gain insights into the usage rates and designs of loyalty programmes.

Our findings revealed that the high-end beauty segment is driven by 247 entry-prestige to ultra-luxury beauty brands.

Our findings revealed that the high-end beauty segment is driven by 247 entry-prestige to ultra-luxury beauty brands. Among these, a quarter of the brands are owned by major parent companies, while roughly 16 percent belong to parent companies that own four or fewer brands. Another 58% of them are independent brands.

• Usage Rate of Loyalty Programmes: From all 247 brands that were covered, only about a quarter (60 brands) have put a loyalty programme in place. However, an additional two-thirds of the brands (63%) employ other loyalty-building initiatives, such as inviting customers to subscribe to newsletters or create customer accounts. Only 13% (31 brands) do not offer any loyalty-building initiatives at all.
• Naming of Loyalty Programmes: The biggest part of loyalty programme names (66%) includes words like ”rewards” or ”loyalty program”. While this approach ensures that customers easily understand the programme’s purpose, it often sounds commercial and overly focused on marketing, which can contradict efforts to foster a sense of ”community”.

A valuable branding technique involves the use of brand puns, which utilise creative wordplay with the brand name to generate a distinctive name for the loyalty programme. For instance, NARS makeup named its loyalty programme ”NARSissist Rewards”, RéVive skincare uses ”RéVive RéWards”, and La Mer uses ”Waves de La Mer”. Brand puns help make the name more memorable and relatable to consumers while conveying the brand identity, making the loyalty programme stand out from the competition.

Even more promising is the use of community-driven names. Approximately a third of loyalty programmes (17 brands) incorporate terms such as ”club”, ”society”, ”circle”, or ”insiders” into their names. For example, Valentino Beauty offers the ”Valentino Beauty Dreams Club”. Our analysis revealed some innovation in rarity marketing, with four brands labelling their programmes as ”VIP” or ”VIC” rewards programmes, like Armani Beauty’s ”VIP Beauty Programme”. Such names leverage the rarity principle, implying the opportunity to join an exclusive association not open to everyone.

Instead of emphasising exclusivity, Furtuna Skin calls its programme ”La Famiglia” (Italian for ”The family”), reflecting their slogan ”family is everything”. Community-driven names tap into the passion principle, suggesting that consumers are deterred by overly commercialised marketing and are instead drawn to brands that genuinely enjoy and believe in what they do. Drawing from social identity theory, loyalty programme memberships offer customers a sense of social identity aligned with their desired self-concept, becoming a source of pride and self-esteem.

Seven Key Decisions in Loyalty Programme Design

The next step was to gain a general understanding of the loyalty programme designs. Most programmes, specifically 45 out of 60 (75%), employ a straightforward design that aligns with how customers expect and know loyalty programmes. They typically offer either status tiers or loyalty points that customers can either climb to achieve a higher status or redeem for rewards as a way to incentivise brand loyalty. These insights underscore that customers tend to favour a simple design that is easy to understand and works well – which is one of the key success factors for loyalty programmes.

To develop a basic loyalty programme design, it is recommended to follow a seven-decision process, which is illustrated in Figure 1 and also outlines the main options available to brands at each stage.

Decision 1 

Involves choosing between a solo or coalition strategy

Will the programme be operated independently or in partnership with other brands? Most luxury beauty brands prefer to operate an independent loyalty programme to preserve their distinct identity. The primary challenge of coalition programmes is the risk that consumers might develop loyalty to the programme itself rather than to individual brands. As a result, all the beauty brands we analysed have chosen to run independent programmes. However, the potential of the coalition strategy remains largely untapped. The significant advantage lies in cross-promotion opportunities. Instead of competing individually, coalition partners can actively promote each other and leverage their respective customer bases for the benefit of the entire coalition. To avoid collaborating with direct competitors, there are (1.) affinity groups, which unite like-minded entrepreneurs sharing a common interest or affiliation, (2.) sector-specific programmes, such as those in travel or hospitality, and (3.) multi-partner programmes spanning different industries.

Decision 2

Entry Requirements

What are the requirements for joining the loyalty programme? Some brands such as Sephora have minimal entry requirements. Consumers can simply sign up for free without the need to make any purchases and gain instant access to the Beauty Insider Community, including its beauty classes. Sephora’s advantage lies in collecting detailed contact information from potential future clients. On the other end of the spectrum, the highest level of entry requirements may be an invitation-only membership to a hidden community that the general customer is not even aware of.

Decision 3

Membership Fees

Does the loyalty programme require a membership fee? A recently emerging trend is the development of paid loyalty programmes. According to a McKinsey survey on loyalty programmes, members of paid loyalty programmes are 60 percent more likely to increase their spending on the brand after subscribing. Furthermore, they drive higher purchase frequency, basket size, and brand affinity compared to free loyalty programmes. The landscape of paid loyalty programmes today is small but rapidly expanding. Among the brands we analysed, only the fragrance brand Bond No. 9 offers a paid loyalty programme. Convincing people to invest $950 annually for entry-level membership ensures a dedicated customer base committed to regular purchases. Besides generating a new revenue stream, it enables the funding of unique, bespoke, high-value rewards, cultivating an exclusive community and an air of distinction among its members. Paid loyalty programmes are particularly well-suited for competing in highly fragmented markets, such as luxury beauty.

Decision 4

Number and Type of Tiers

How many and what types of tiers does the programme offer? Standard loyalty programmes are typically divided into tiers, with members advancing through these tiers based on their spending. Approximately 35% of brands use no tiers, 8% employ a four-tier approach, and only the makeup brand Charlotte Tilbury adopts a six-tier system. The majority of brands (57%, or 34 brands) prefer a three-tiered approach, which seems to be the most suitable and proven choice. This aligns with research indicating that a three-tier structure is the most favoured hierarchical structure (Nunes & Dréze, 2009).

Approximately 35% of brands use no tiers, 8% employ a four-tier approach.

Drawing from the Pareto Principle, tiered structures allow companies to reward the 20% of customers responsible for 80% of their profits. The top tier must be relatively small because the fewer people are granted elite status, the more superior these people will feel. Adding a subordinate elite tier enhances the status among consumers in the top tier because being ranked above other elites feels better than being above the masses. However, the research did not find evidence that adding a third elite tier would significantly enhance the perceived status of the top tier.

Tiered programmes feed people’s desire for status. An interesting strategy is to show members what percentage of the total members are in each tier. This can make elite members feel more special and trigger the competitive desire to reach the next higher tier. How much do consumers need to spend to become a member of the top tier? The highest limit, at €5000, is set by Charlotte Tilbury (with 6 tiers) and Joanna Czech (with 4 tiers). Nevertheless, the industry average for the highest tier threshold is around €1500.

Decision 5

Programme Currency

How many points should a member receive per euro spent? The standard option is ”1 point per €1 spent”. The big advantage of this option is its simplicity and ease of understanding. In categories with relatively low prices, the promising option of ”multiple points per €1 spent” often translates to ‘‘10 points for each € spent”. This approach makes the accumulation of points appear faster and more rewarding for consumers, thereby having a greater perceived value. Conversely, in high-value categories, an appropriate option is ”fractional points per €1 spent”, such as 0.5 points per € spent.

Decision 6

Points Earning Criteria

How can members earn points? In the beauty industry, loyalty currencies are a common framework. Approximately 75 percent of loyalty programmes (44 brands) employ loyalty currencies, with points being the most frequent form (also called miles, stars, pearls, etc.). Typically, companies inform customers of the number of points needed to redeem certain rewards, which may include a specific product or a selection of products from which they can choose. The problem is that this prevents any surprise moments – which are a standard tactic in the luxury industry and a key driver of customer delight.

In contrast, some brands opt not to have a loyalty currency, choosing instead to keep the details of their rewards secret. This lack of visible benefits might initially deter consumers from signing up for any programme, but such ”secret” rewards offer unique advantages. Customers are pleasantly surprised with (personalised) gifts, reflecting a gift scheme based on the purchase price. This strategy employs the norm of reciprocity, suggesting that people are inclined to return favours. Unlike typical rewards that are perceived as part of the transaction, surprise gifts create a stronger emotional bond and a sense of obligation for further purchases.

Non-Monetary Rewards Lead the Way

Loyalty point programmes allow customers to accumulate points, which can be redeemed for various rewards. The nature of these rewards is critical, as it significantly influences subscription rates and active engagement with the loyalty programme. Figure 2 presents an overview of the types of rewards that brands can offer their members.

Traditional rewards often include various discounts. Research indicates that consumers perceive non-monetary rewards as ”gaining something extra”, whereas monetary rewards are seen as ”losing less than usual”. In essence, non-monetary rewards are framed as gains, and monetary rewards as reduced losses. This framing suggests that non-monetary rewards are generally viewed more favourably and tend to be more effective (Shelper et al. 2023). Therefore, it is advisable to shift from offering discounts to providing free goods or additional product quantities. McKinsey research indicates that such hard-value benefits are particularly effective in convincing consumers to sign up for loyalty programmes, while experiential and status benefits are increasingly important for retaining subscribers.

Key Success Factors in Building Loyalty Programmes

• Award Points for Non-Purchase Activities: There is a trend that people want to use points in new ways and earn points in new ways (Shelper et al. 2023). For example, ‘‘My Lancôme Rewards’’ offers additional points for activities like signing up for text messages or newsletters, writing reviews, referring friends, and completing a virtual service such as makeovers, skin consultations, beauty tutorials or interactive quizzes. Other common activities include event participation, profile completion (which aids in collecting consumer data), and social media engagement like tagging the brand or using specific hashtags. Awarding points for non-purchase activities makes the loyalty programme more dynamic and interactive, which in turn significantly boosts active participant engagement. Furthermore, it can direct participant motivation towards new product offerings and foster a sense of community, particularly as non-purchase points can encourage sustainable or healthy choices, aligning participants with the brand’s overall purpose.
• Create Sunk and Switching Costs: A crucial success factor is designing loyalty programmes in a way that encourages regular purchases while deterring members from leaving. Prospect theory suggests a guiding principle: People exhibit loss aversion, meaning that losses loom larger than gains. Members should feel that leaving the programme would result in significant loss, particularly in terms of status. Common in frequent flyer and hotel loyalty schemes, this approach generates switching costs for members who have attained elite tiers, particularly in the form of status and convenience benefits that would be lost. Glow Recipe adapted this concept for the beauty segment: The points earned per unit spent increase with each tier – from just 1 point per unit in the first tier to 3 points in the top tier. This is particularly effective when consumers realise the substantial time and money required to attain similar benefits should they rejoin the programme. Groups are harder to leave when consumers have invested significant financial, cultural, and social capital. Such sunk costs can be established through one-time membership fees and, more effectively, through social benefits. Glow Recipe ensures that participants feel part of a community, fostering a sense of belonging and possibly status among peers. Leaving the programme would mean losing these social benefits.
• Gamify Programme Features: When evaluating a programme design, consider whether it enhances (1) repeat purchases, (2) upselling and cross-selling opportunities, (3) active member participation, and (4) alignment with the brand’s values and purpose. The latter two criteria are crucial for evolving a loyalty program into a community. Gamification is a key driver of active participation, yet currently underutilised, with only five (8.4%) out of 60 programmes employing it. NARS, for example, opts for subtle passive gamification elements like game-inspired avatars and a progress tracker, which keeps customers engaged in earning and checking points, adding fun to the programme. Chanel’s ‘‘La Collection’’ card game is a role model for interactive gamification elements, originally designed for video games. Purchases and different tasks unlock new cards and rewards, creating a sense of anticipation and surprise.
• Provide a Sense of Purpose: Two powerful techniques to increase emotional commitment are often underestimated. Firstly, giving consumers an excuse or justification for consumption can motivate those on the fence to make a purchase, especially when linked to value-based rewards. For instance, Louis Vuitton launched a campaign highlighting their commitment to donate a portion of purchase revenues to the Red Cross. In the Mugler Circle loyalty programme, participants can ‘‘engage with the planet’’ and earn 450 points by refilling their perfume bottles instead of buying new ones. Secondly, people are most motivated when contributing to something larger than themselves that they believe in. Brands have the opportunity to achieve dual goals: striving for a higher purpose beyond making money while convincing consumers that their purchases are contributing to a good cause. Research shows that resistance to leaving a programme is maximised when participants identify with the values and imagery of a brand (Shelper et al. 2023). Without such emotional commitment, consumers are more likely to switch to competitors when a better product is available.

About the Authors

Klaus Heine is a marketing professor at Emlyon Business School and has collaborated with numerous luxury houses in both Europe and Asia. He helps entrepreneurs find out what they want their brands to stand for – to build high-end brands with a higher purpose.

Holding an MSc in Luxury Management and Marketing, Vanessa Brunner specialises in enhancing brand-customer relationships in the luxury sector. Her experience and insights from her thesis on loyalty in luxury beauty equip her to guide luxury brands towards customer-centric strategies, fostering devoted brand advocates.

References

1. Leenheer, J., van Heerde, H. J., Bijmolt, T. H. A. & Smids, A. (2007). Do Loyalty Programs Really Enhance Behavioral Loyalty? International Journal of Research in Marketing: 42(1): 31-47.

2. McKinsey (2020). Coping with the Big Switch: How Paid Loyalty Programs Can Help Bring Consumers Back to Your Brand, https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/coping-with-the-big-switch-how-paid-loyalty-programs-can-help-bring-consumers-back-to-your-brand.

3. Morris, M. (2023). Building a Rewards Programme That Keeps Fickle Customers Coming Back, January 8, https://www.businessoffashion.com/articles/direct-to-consumer/rewardsprogramme-to-keep-fickle-customers-coming-back/.

4. Nunes, J. C. & Dréze, X. (2009). Feeling Superior: The Impact of Loyalty Program Structure on Consumers’ Perceptions of Status. Journal of Consumer Research, 35 (6), 890-905.

5. Shelper, P., Lyons, S., Savransky, M., & Harrison, S. (2020). Loyalty Programs: The Complete Guide, Loyalty & Reward Co Pty Ltd: London.

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During the past few months, major recruiters have been reporting on the impact that today’s choppy economic headwinds are having on the hiring efforts of businesses in all sectors. What has come to light through these conditions is that getting the right people in to advise on business strategy is more important than ever, but identifying and securing this talent enduring a period of turbulence is a challenge.  

How, then, do businesses do more with less and navigate the current unstable hiring landscape to pursue new business opportunities and stay ahead with exciting new technologies such as AI?  

Prioritising generalists rather than specialists  

More and more businesses want to hire generalists who can be adaptable and versatile in the application of their skills depending on where support is required.  

A prime example often observed in the C-Suite is the transformation of the General Counsel role, which is very rapidly becoming more adaptable and dynamic. Essentially, merely possessing good legal acumen is no longer enough, and General Counsel who can adeptly utilise their expertise to assist other departments, so-called GC+ are illustrating their worth to businesses.  

Indeed, this applies to several positions within the C-Suite, as senior executives are increasingly expected to be flexible and offer their resources and assistance to various areas of the business.  

For General Counsel to be able to do this effectively, however, requires them to have more than just a strong blend of commercial aptitude alongside their legal specialism. They need to be able to communicate, lead, and think critically. These components of a high-level and multifaceted strategic adviser require a range of soft skills as well. 

Some of the common soft skills that should be high on an employers’ list, especially as legal departments increasingly operate cross-functionally, include:  

Versatility 

Amidst the current economic climate where companies and smaller legal teams are being forced to downsize, businesses require candidates who have the skills to collaborate with other team members and handle a wide range of actions including contract drafting, IP, compliance, litigation, and negotiation. This versatility is invaluable as it helps businesses tackle legal and commercial challenges despite straightened resources.   

Proactiveness 

Growing geopolitical tensions have heightened concerns about the impact of economic or political events. As such, businesses need to be seeking talent that actively prioritizes  foresight to stay one step ahead of regulatory requirements and respond swiftly to new developments.  

Innovation 

Incoming talent must be  prepared to embrace the latest processes and technologies will allow businesses to leverage their creativity to uncover innovative solutions for complex solutions. This adaptability and imaginative approach will not only enhance the smooth operation of departmental functions but will also elevate the value of the services it provides.   

New outlooks  

Departments that have teams of diverse individuals with differing perspectives and backgrounds not only promote cultural competence and ethical awareness but also stimulate innovative thinking, crucial in a world where global trends and social expectations are always changing.  

Commercial awareness 

Businesses aiming for growth should be looking for individuals with extensive sector experience, insights into market trends, financial acumen, and the skill to strategically align with an organisation’s expansion goals.  

Diversity across generations  

Recruiters often encounter candidates who feel pigeonholed in their roles, which can lead to feelings of stagnation. In a market that is arguably candidate-driven, this stagnation can pose serious challenges to businesses. Therefore, to attract and retain top talent, organisations can focus on mentorship, people/project management engagements, and succession planning.  

These efforts should not only avoid employees feeling stuck in their roles but can also work to close generational gaps and form clear career paths for advancement, even when immediate promotion isn’t feasible. Indeed, involving junior staff in new initiatives fosters the development of future-focused strategic leaders who can tackle any challenge that comes their way.   

Adopting AI  

As accessible AI, like ChatGPT, becomes more prevalent, the regulatory and operational hurdles related to AI extend beyond  the tech industry. In fact, the  

Economist’s 2023 General Counsel Summit highlighted that AI presents significant opportunities across many different corporate functions.   

In this difficult market, businesses should be seeking talent that can prove their expertise in AI and the transformative impact it is having on departments today as well as the impact it will have in the future. Particular skills employers should be looking for include cybersecurity, data analysis, cloud computing, and digital literacy, which were historically less relevant but are now vital for C-Suite roles like the General Counsel.  

There is also a growing demand amongst employers for professionals who can navigate the evolving regulatory landscape surrounding AI and integrate this knowledge into broader technology adoption strategies. Businesses increasingly require legal experts proficient in AI to collaborate with CTOs, COOs, CEOs, and other boardroom members, providing both legal and commercial insights to ensure that AI investment, implementation policies, and ethical practices align with regulatory and business objectives.  

For a business to future-proof its legal department, it must work hard to attract and retain the best talent. This involves actively seeking hires who have a variety of skills that enable them to play more than one role in advising on a business’s strategy, helping to guide a company through tough economic challenges as well as the most significant technological developments we are seeing unfold in today’s world of business.  

About the Author 

Jerry Temko is a member of the EMEA In-House Counsel Practice and recruits general counsel, chief compliance officers and other high-level specialized legal professionals focusing on the life sciences, TMT, manufacturing and other industries.

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Most business leaders understand that the boldest business strategies are both informed by and delivered through technology. Our study explores three significant challenges that stand in their way and ways in which tech-forward companies overcome them.

Key takeaways:

• Make technology fluency a foundational skill—one as important as being able to read a P&L statement— and a minimum requirement for all C-suite and board members.
• The best strategies need to be developed with knowledge. Technologies such as generative AI are offering the opportunity to compress analysis and planning cycles even more by absorbing more data and leveraging capabilities such as synthetic data generation—all working towards enhanced strategic insights and actions.
• Tech-forward companies have effectively moved from a ‘set-and-forget’ strategy —with long execution programmes— to a synchronised interplay of strategy and execution. They stand out because their strategic north star is supported by deliberate, constant motion to keep it relevant, despite constantly changing, multifaceted variables.

The ongoing technology revolution—everything from cloud and quantum computing to generative AI—has pushed the boundaries of what is possible, bolstering the competitive strengths of some businesses, while bringing others’ weak spots to the fore. As a result, CEOs and leadership teams are increasingly rethinking their strategic choices. The problem is that, at most companies, strategy development isn’t keeping up with rapidly advancing technologies. In fact, according to Accenture’s recent global research study, the bulk of businesses—79 per cent—have not managed to change their approach to strategy to keep up with the pace of technology evolution.¹

Consequently, they may be struggling to separate relevance from noise as many technologies are treated as ‘shiny objects’ and potentially divert attention. They may be facing an unnecessarily high risk of committing resources in the wrong places. And they may be limiting their ability to respond quickly to threats from new business models and markets because they are not using technology well enough to spot them.

Companies struggling to keep up with the pace of technology can learn from the 21 per cent of businesses at the other end of the spectrum. These companies, which we refer to as tech-forward, have successfully changed their approach to strategy development, and now integrate technology in a meaningful way. The outcomes are clear. Tech-forward companies were 2.3 times more likely to outperform peers in terms of revenue growth and return on invested capital (ROIC). They also represent a higher proportion (1.3 times) of resilient companies, meaning they can withstand, prosper through, and emerge stronger—by continually “adapting their ability to adapt”.²

Most business leaders understand at an intuitive level that they need to adjust their business strategy in real time—and that these decisions should be both informed by and delivered through technology. But as our study finds, three significant challenges stand in their way. In this article, we identify those challenges and explore the ways in which tech-forward companies overcome them.

First, the company’s leadership team—from the C-suite to the board—may have a gap in tech fluency that leads to uneven participation between executives during conversations about technology.

There is a default expectation that all members of a business’s executive team need to be able to demonstrate a comprehensive understanding of the company’s products and customers, the business model and market dynamics, the profit and loss (P&L) statement and the balance sheet. This level of knowledge enables executives to meaningfully contribute to subsequent strategy discussions.

But that’s not the case with technology. As recently as five years ago, chief information officers (CIOs), chief technology officers (CTOs) or chief digital officers (CDOs) were assumed to be more knowledgeable than their C-suite peers about emerging technology. And it was believed that this gap didn’t affect a strategy’s efficacy. Business leaders would hand over requirements for tech leaders to provide solutions. That’s changed.

Today, a tech-driven disruption across a company’s value chain and ecosystem can immediately impact its strategy. Limiting technical knowledge to a select few leaders in the C-suite can hinder businesses. It would mean missed opportunities for innovation and collaboration, and a risk of trust breaking down if investments and solutions fall short. In fact, 67 per cent of senior technology leaders indicated that the lack of tech-fluency among their peers is a major barrier to integrating technology into strategy.

How can companies overcome this challenge? By closing the tech-fluency gap across the C-suite and developing a true understanding of the potential that technology offers.

Imagine a travel company developing its entire business strategy without ever realising that it’s possible to fly? That’s the case in many organisations where leaders are unwittingly limiting the potential of their business, rather than developing a tech-fluency that allows them to fully understand what’s possible.

Meanwhile, at tech-forward businesses, they’re leveraging technology to both inform and execute their strategy. We found that 75 per cent of tech-
forward companies report having both a tech-fluent CEO and tech-fluent C-Suite executives—nearly 20 per cent more than other organisations. In companies where the whole board knows more about today’s trending and emerging technologies, it becomes a discussion that everyone participates in, equally.

The outcome is an environment where the CIO or the equivalent leader can be expected to let go of the concept of technology as a ‘black box’ and instead use the deeper knowledge they hold to help leaders separate relevance from noise—and avoid getting distracted by the latest emerging technologies that may offer little or no value to the company’s strategy. For instance, this optimal state can lead to more productive and relevant conversations about how emerging technologies, such as generative AI, relate to the company’s current strategy and strategic choices. Tech leaders can challenge other executives’ orthodoxies during recurring innovation brainstorming sessions, for example, to imagine a different future for the company. They can bring a pragmatic approach that prioritises new tech investments—and debate potential risks and mitigation in the same way as an entrepreneur makes a start-up pitch to a venture capital committee.

In addition, these tech-forward companies are better at capitalising ongoing technology efforts to inform, broaden and, in turn, make strategy development better. They envision ways in which technology expands the range of options before them, seeing opportunity in today’s hard choices.

Specific actions for CEOs:

• Make technology fluency a foundational skill – one as important as being able to read a P&L statement – and a minimum requirement for all C-suite and board members.
• Assess the C-suite members, recruit and / or train consciously for a modern skill set, consider M&As to bring in senior leaders with the right expertise.
• Assess senior technology leaders’ ability to identify advancing tech that will matter most to the company and collaborate with their peers on it. Hold them to account for separating relevance from noise.

Second, the leadership team may be tied, by tradition and by habit, to lengthy strategy cycle times that are unable to evolve dynamically and struggle to course-correct.

Remember when a five-year plan could serve a company well and business leaders could manage volatility by making minor adaptations in execution? No longer. The changing dynamics of strategy development have seen the approach shift from a linear process, conducted annually or maybe biannually, to one that focuses on continually reevaluating strategic choices and adjusting execution efforts. While strategy is still about making hard choices, technology is exponentially increasing the options available and the speed at which those choices need to be made. And now they must be made in days, not months, so the gap between “where to play” and “how to win” has closed.

Companies that don’t take this approach risk falling behind. Conversely, tech-forward companies assess and adjust strategic choices continuously, informed by changing external forces and the exponential speed of technology change and disruption. The majority (88 per cent) of tech-forward companies are using the fast-growing amount of real-time data to rapidly adapt to changes.

How can companies overcome this challenge? By bringing modern agile IT practices to strategy development.

Tech-forward companies have brought modern IT practices to strategy development by testing strategies through experimentation and rapid sprints. Based on our research, they spend 1.2 times more budget than other companies on piloting new emerging technologies, supporting minimum viable products (MVPs), and scaling when the indicators show high potential.

Agile development also enables potential ideas to come from all levels of the organisation. Six out of 10 tech-forward companies state that their business strategy development process includes some form of bottom-up participation. One of the benefits to this approach? A flattened hierarchy. Managers collaborating with frontline staff can come up with an MVP—a minimal viable product that can be rolled out quickly—and used to test the strategy along the way. Simultaneously, the real-time data gathered can be leveraged to assess strategic choices and inform future decision-making, instead of following a costly and highly visible central approach.

Further, technologies such as generative AI are offering the opportunity to compress analysis and planning cycles even more by absorbing more data and leveraging capabilities such as synthetic data generation—all working towards enhanced strategic insights and actions.

Specific actions for CEOs:

• Consider technology as important an input to strategy as capital and talent. Assess a range of strategic options through scenario-planning, differentiating hype from relevant opportunities, setting a plan and course-correcting in real time based on context changes.
• Activate far shorter, continuous strategic cycles – not to replace long-term business strategy development, but to keep it fit for purpose and amplified by innovation. Build real-time data analysis into the approach, and ensure that the insights can be easily accessed, understood, and communicated to relevant stakeholders.
• Experiment with rapid sprints and reallocate resources based on their outcomes.

Third, companies may be held back by business strategy development that is tied to a rigid, multi-year capital allocation.

To support accelerated cycles, tech-forward companies have moved away from locking down their strategy on a chassis of a rigid multi-year capital allocation. In fact, 73 per cent said that they reallocate resources dynamically. They have effectively moved from a ‘set-and-forget’ strategy—with long execution programmes—to a synchronised interplay of strategy and execution. They stand out because their strategic north star is supported by deliberate, constant motion to keep it relevant, despite constantly changing multifaceted variables.

A strategic planning session at a tech-forward health services company provides an example of how balancing knowledge of technology with strategy considerations upstream allows an organisation to make better and bolder decisions on capital allocation. The board of directors were debating the merits of investing in graphics processing unit (GPU) machines, rather than having continued reliance on external GPU capacity. The group was able to discuss whether such a purchase would help them better achieve their goals and how the potential of this technology would support a bold strategy to grow new, innovative, AI-powered healthcare solutions. In fact, the more the C-suite learned about this technology, the more ambitious they became.

How can companies overcome this challenge? By breaking bigger decisions into smaller ones that lend themselves to real-time evaluation.

Not all strategic decisions can be agile in the way we’re describing. But in a growing number of cases, technology is turning what would have been “irreversible” investment into chunks of smaller, reversible decisions. This doesn’t mean changing strategic direction every two minutes. It does mean a more dynamic allocation of resources, using technology to strategise and plan before investing. This approach can even be effective in industries that don’t lend themselves to agility. For instance, oil and gas exploration, industrial and automotive manufacturing or drug discovery often require large investments and long-term commitments. But a growing number of these companies are using digital twin simulations to help tweak their strategic investment decisions (for example, by creating digital twin simulations to optimise before making investments to develop or change the physical layouts).

Take BMW’s recently announced investment of more than €2 billion in its Hungarian plant, where the all-electric Neue Klasse will be produced from 2025. But, more than two years before the official launch, vehicle manufacturing is already underway – virtually, at least. The plant is indeed BMW’s first facility to be planned and validated completely virtually using NVIDIA Omniverse Enterprise. With this pioneering project, BMW Group is taking a digital-first approach to sharpen its strategy and optimise complex manufacturing decisions ahead of investments.³

Specific actions for CEOs:

• Dedicate time for creativity in the C-suite to inspire a greater range of bolder, broader strategic options for growth and competitive positioning.
• Encourage innovation that explores new, tech-inspired ideas that are untethered from existing, deeply held orthodoxies.
• Leverage real-time data to support decision-making with strategic insights and recommendations.

Strategy development that makes sense for today

In a volatile, tech-driven, and faster-paced environment, conventional approaches to business strategy no longer suffice as organisations find themselves in the nascent stages of several potential S-curves, sometime simultaneously. But the most successful companies over the long term are those that are the most resilient and don’t just weather disruption but take decisive actions that enable them to grow profitably, while also effectively managing costs.

What’s needed for today is an approach to strategy that’s informed by, delivered through and responsive to technology. One that successfully navigates today’s macroeconomic environment, sustainability pressures and the opportunities—and challenges—that come with technology.

This article has been published on 3 October 2023.

About the Author

Rachel Barton Working with the largest global brands, Rachel advises business leaders on how they can transform and create new growth – moving at speed from strategy to execution.

Within Accenture, Rachel leads the Strategy business across Europe and the Middle East. She brings together world-class capabilities across Technology Strategy, M&A, Private Equity, Growth & Pricing, Sustainability, Cost and Productivity and Functional Strategy anchored in the industry and convergence dynamics of our clients. With a passion for social responsibility, Rachel sits on Accenture’s Global Corporate Citizenship Council, and is a trustee for UnLtd and for the King’s College Hospital Charity. Rachel was listed in Management Today’s 35 Women Under 35 to Watch, the Women of the Future Awards and Red magazine’s Women of the Year awards and has been voted Most Inspirational Leader for Accenture UK.

She is a regular contributor to the media, with appearances on BBC News 24, Sky News, CNN and CNBC, and press contributions in The Times, The Guardian, The Economist, Critical Eye and Management Today.

Reference:

1. Based on analysis of 1,600 companies across nine countries and 18 industries to examine the role technology plays in their strategy development, see “Strategy at the pace of technology”, August 2023
2. Based on the Accenture Resilience Index, an analysis of 1,615 companies across 18 industries to identify the shared traits of the most resilient among them, see “Reinventing for resilience: A CEO’s guide”, April 2023.
3. BMW Group, “BMW Group at NVIDIA GTC: Virtual Production Under way in Future Plant Debrecen”, March 2023.
   

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By Jack McGuire, David De Cremer, Leander De Schutter, and Yorck Hesselbarth

In the contemporary digital era, innovations such as artificial intelligence (AI) are profoundly transforming the business landscape (De Cremer, 2020). The buzz surrounding ChatGPT, coupled with recent assertions about the sentience of Google’s LaMDA, a large language model, underscore the prominence of chatbot technology in these advancements (Adamopoulou & Moussiades, 2020; Ryu & Lee, 2018; Tiku, 2022). Customer-oriented chatbots, an emergent application of this tech, offer unparalleled efficiency and cost-effectiveness, operating ceaselessly and responding to client inquiries in real time (Salesforce, Research, 2019). Yet, amidst these advantages lies an ethical conundrum. Customers cherish genuine human interaction and can become quickly disillusioned when they realise they’re communicating with a bot, not a person (Ciechanowski, Przegalinska, Magnuski & Gloor, 2019). Balancing this desire for authenticity with the allure of operational efficiency poses a challenge, making it tempting for businesses to deceive customers by blurring the lines between human and machine.

Specifically, organisations nowadays are confronted with a reality where chatbots demonstrate remarkable human-like qualities (Collins & Ghahramani, 2021; Leviathan & Matias, 2018). This reality makes the choice to cut costs by adopting human-like chatbots a rational one. However, this choice is not so straightforward for organisations to make. After all, customers prefer the real thing (i.e., interactions with a human) over the artificial one, and therefore making the rational choice requires organisations to adopt a strategy of deceiving their customers by not disclosing to them that chatbots are used.

However, what are the risks when firms use chatbots without disclosure? What happens to the reputation of organisations engaging in these deceptive acts when customers find out what is really happening? And, even more important, what happens to the employees working for those organisations? When deception is found out, organisations are likely to suffer reputational damage, but will it also tarnish the careers of their employees? Several high-profile tech companies have faced backlash over the unethical use of emerging technologies.

Consider the fallout from the Theranos fraud and misconduct scandal. While the company suffered legal and reputational damage, employees faced a backlash, too. Several of them reported difficulties in job transitions, with potential employers associating them with the scandal (Lapowsky, 2021). As companies carry responsibility for their employees, it is imperative from an accountability point of view that they are aware of any potential effects on the careers of their employees before succumbing to the allure of deploying chatbots under a veil of deception. To test whether employees indeed suffer in their career prospects when the organisation they work for engages in deceptive chatbot practices, we conducted several experimental and field studies (McGuire, De Cremer, De Schutter, Hesselbarth, Mai & Van Hel, 2023).

The Ripple Effect on Careers 

First of all, our research unsurprisingly finds that organisations employing undisclosed chatbots are perceived as less ethical by customers when found out. Obviously, if you work for an organisation that is seen as unethical in its use of emerging technologies, it will affect your work identity. If this is the case, how will it affect the judgements and subsequent actions of these employees? The Uber scandal involving the suppression of sexual harassment allegations presents some useful insights regarding how to respond to that question. Employees at Uber, even those uninvolved, experienced that the company’s ethical breaches overshadowed their individual reputations and motivated many of them to resign (Kosoff, 2017).

Organisations that deceive their customers by pretending to have humans handle customer enquiries are judged to be unethical by both customers and the employees working for those organisations.

To validate this idea, we ran a series of experimental studies where employees in a simulated company were asked to facilitate deceptive chatbot use. Putting employees in this situation made them more likely to perceive their organisation as cultivating a culture of making unethical requests to their workforce. In turn, because of these perceptions, we found that those employees wanted to quit their job more.

So, organisations that deceive their customers by pretending to have humans handle customer enquiries are judged to be unethical by both customers and the employees working for those organisations. As a result, customers will show no loyalty to those organisations, and employees want to leave them. But where can those employees go? Are they contaminated for the job market? With today’s rapid transmission of information online, a company’s unethical practices can become widely known, and thus impact employees’ professional trajectories.

To study this phenomenon, we conducted two more studies, where we assessed how those employees are seen by recruiters. Our results showed that employees that had worked for an organisation known to use chatbots deceptively were perceived by recruiters to be less trustworthy, were less likely to be offered a job, and were given a lower salary when offered one. The deceptive use of chatbots therefore has widespread repercussions. It harms not only the company, but also the people who work there.

The Responsibility of Tech Professionals: A Call to Action 

The case is clear. Tech professionals must champion ethical AI use. The broader societal implications of our creations cannot be ignored. Advocating for transparency and ethical guidelines protects both the company’s reputation and your own professional standing. The findings from our research offer two actionable takeaways:

1. The role of leaders. Leaders must recognise the lasting harm of deceptive practices. Ethical technology use can bolster company reputation, morale, and customer trust.
2. The role of employees. Employees should be proactive, voice concerns about unethical technology use, and leave companies using deceptive practices before those deceptions are revealed. Communicating these concerns anonymously, in private with your manager, or publicly in team meetings and town hall sessions are all useful and should be considered.

In conclusion, as AI’s role in business grows, its ethical use is critical. It’s not merely about company profits; it’s about the careers and reputations of those who make up the organisation. Prioritising ethical AI practices isn’t just a business imperative; it’s a career necessity.

About the Authors

Jack McGuire is Jack McGuire is a Postdoctoral Research Associate at the D’Amore-McKim School of Business at Northeastern University (Boston). He received his PhD in Management & Organization from the National University of Singapore Business School and his MSc from University College London. Prior to this, he was an Experimental Lab Manager and Research Assistant at the University of Cambridge, Judge Business School. Jack’s research examines the psychological consequences of artificial intelligence and its increasing application in the workplace. This work has been published in Journal of Business Ethics, Computers in Human Behavior, International Journal of Human–Computer Interaction, and Harvard Business Review, among others. 

David De Cremer is currently the Dunton Family Dean of D’Amore-McKim School of Business and professor of management and technology at Northeastern University (Boston), and an honorary fellow at Cambridge Judge Business School and St. Edmunds College, Cambridge University. Before moving to Boston, he was a Provost chair and professor in management at National University of Singapore and the KPMG endowed professor in management studies at Cambridge University. He is the founder and director of the Center on AI Technology for Humankind (AiTH) in Singapore, which was hailed by The Higher Education Times as an example of interdisciplinary approaches to AI challenges in society. He is one of the most prolific behavioral scientists of his generation, and a recognized global thought leader by Thinkers50. He is a best-selling author, including “Leadership by algorithm: Who leads and who follows in the AI era?”, and his newest book “The AI-savvy leader: 9 ways to take back control and make AI work”, which will be published by Harvard Business Review Press in 2024. 

Leander De Schutter is assistant professor at the Vrije Universiteit Amsterdam, the Netherlands. He is interested in leadership and decision-making in the workplace. 

Yorck Hesselbarth is building foundational models with European values at Nyonic AI, contributing to digital sovereignty on the continent. Previously, he conducted research in the field of human-computer interaction and led several cutting-edge AI projects for the German Armed Forces. 

References 

• Adamopoulou, E. & Moussiades, L. (2020, June). “An overview of chatbot technology”. In IFIP International Conference on Artificial Intelligence Applications and Innovations (pp. 373-83). Springer, Cham. 

• Bogost, I. (2022). “Google’s ‘Sentient’ Chatbot Is Our Self-Deceiving Future”. The Atlantic. Retrieved from: https://www.theatlantic.com/technology/archive/2022/06/google-engineer-sentient-ai-chatbot/661273/ 

• Collins, E. & Ghahramani, Z. (2021, May 18). “LaMDA: our breakthrough conversation technology”. Google Blog. Retrieved from: https://blog.google/technology/ai/lamda/ 

• De Cremer, D. (2020). Leadership by Algorithm: Who leads and who follows in the AI era. Harriman House. 

• Kosoff, M. (2017, March 20). “Uber’s President Resigns as Employees Head for the Exits”. Vanity Fair. Retrieved from: https://www.vanityfair.com/news/2017/03/ubers-president-resigns-as-employees-head-for-the-exits 

• Lapowsky, I. (2021, August 31). “What became of Theranos employees?”. Protocol. Retrieved from: https://www.protocol.com/newsletters/sourcecode/theranos-on-trial 

• Leviathan, Y. & Matias, Y. (2018, May 8). “Google Duplex: an AI system for accomplishing real-world tasks over the phone”. Retrieved from: https://ai.googleblog.com/2018/05/duplex-ai-system-for-natural-conversation.html 

• McGuire, J., De Cremer, D., De Schutter, L., Y. Hesselbarth, Mai, K.E. & Van Hiel, A. (2023). “The reputational and ethical consequences of deceptive chatbot use”. Scientific Reports, 13, 16246. 

• Ryu, H. S. & Lee, J. N. (2018). “Understanding the role of technology in service innovation: Comparison of three theoretical perspectives”. Information & Management, 55(3), 294-307. 

• Tiku, N. (2022). “The Google engineer who thinks the company’s AI has come to life”. The Washington Post. Retrieved from: https://www.washingtonpost.com/technology/2022/06/11/google-ai-lamda-blake-lemoine/ 

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