September–October 2022

The Chair of Illycaffè on Creating Virtuous Agricultural Ecosystems

In the 1990s most coffee beans were still commodity products, cheaply priced, undifferentiated by quality, often blended, and sold through an exchange. Suppliers were underpaid not only because they sat at the bottom of the value chain but also because margins were very thin. Francesco Illy founded his eponymous coffee company in 1933 with higher ambitions, intending to create an institution respected for both its products and its contributions to society. His son, Ernesto, and grandson, Andrea, pressed on in that tradition—first by implementing better quality-management systems and pioneering direct trade with growers, and then by adopting their new production model at scale. The idea was to incentivize farmers to cultivate more-flavorful beans, thereby generating bigger profits to be shared among all stakeholders and reinvested in further improvement and growth: a virtuous circle of increasing returns. Over the past two decades illy has been accomplishing what it set out to do. Its annual revenue is currently €500 million, with earnings before interest, taxes, and depreciation of nearly €60 million and a compound annual growth rate of 10%. And it pays its growers an average of 30% more than market price for coffee beans and is consistently recognized as one of the world’s most socially responsible companies.

READ FULL ARTICLE

• Save
• Share

Should Your Company Sell on Amazon?

Selling on Amazon allows brands to reach millions of consumers—but that exposure comes with costs. They include smaller margins, more competition, the risk of commoditization, and less knowledge about customers.

In this article, the authors present a scorecard to help brands determine whether the benefits exceed those costs. Companies can evaluate themselves on such topics as ease of shipping their products, degree of customization needed, distribution issues, and counterfeiting concerns.

Companies that choose to sell on the platform will need to make smart decisions about assortment offerings, page design, and fulfillment options so that they can take advantage of Amazon’s scale while protecting the long-term value of their brands.

READ FULL ARTICLE

• Save
• Share

Building Your Own Brand Platform

Some branded product companies are sidestepping digital aggregators like Amazon and Google Shopping and instead building their own brand flagship platforms. These platforms are more than just a direct sales channel. They provide a mix of specialized products, services, and content by involving participants—consumers and third-party businesses—in the value creation process, as both receivers and providers of value.

In this article, the authors introduce four types of brand flagship platforms: platform as instrument, as guide, as canvas, and as companion. They describe the relationship style, risks, and opportunities associated with each one.

READ FULL ARTICLE

• Save
• Share

Selling on TikTok and Taobao

In China, livestream commerce—selling products via live video on platforms such as Taobao and TikTok—will account for as much as 20% to 25% of online sales in 2023. In the United States, it accounted for $11 billion in sales in 2021, and growth is increasing dramatically. It’s no wonder brands as diverse as Nordstrom, Petco, and Walmart are embracing the format.

This article explains why consumers are so drawn to livestream commerce and what’s motivating companies to use it. No single company has yet cracked the code for livestream-channel success, but the author lays out lessons from early successes, including which type of platform to choose, how to select influencers, and how to measure your efforts.

READ FULL ARTICLE

• Save
• Share

Strategy-Making in Turbulent Times

In the traditional strategic-planning model, managers attempt to forecast how markets will evolve and competitors will respond, and then define a multiyear plan to position their company to win in this future state. That worked well when markets were more stable and the primary factors influencing future growth and profitability were easier to forecast. But the world is now changing so quickly that no business can plan for every eventuality. And fewer than a quarter of large organizations employ the most notable tools and frameworks for strategy development under uncertainty: scenario planning, Monte Carlo simulation, and real options analysis. Executives say that those tools require data that is impractical to gather and analysis that is too expensive to execute routinely and that their output can be counterintuitive and complicated to explain to senior leadership and the board.

In this article the authors offer a new approach and mindset for making strategic decisions, along with a new model for managing strategy development and performance monitoring. They describe what it takes to produce great results in uncertain times and propose a practical model for strategy development that they have seen succeed at several leading companies.

READ FULL ARTICLE

• Save
• Share

Don’t Let Cynicism Undermine Your Workplace

Some company cultures are marked by mistrust and paranoia, which leads to a slew of negative outcomes: poor performance, burnout, turnover, and cheating. People who worry about the behavior of others spread gossip and are prone to backstabbing. That brings out the worst in their colleagues, leading cynics’ suspicion and distrust to become self-fulfilling prophecies. The good news is that cynicism has antidotes, according to the author, who shares research findings—his and those of others—to help leaders understand how people fall into a “cynicism trap,” how their organizations’ policies and practices may be pushing them into it, and what they can do to escape it. Tactics include redirecting the organizational culture toward collaboration and trust and making sure that all managers—not just those at the top—are modeling trusting behaviors and combating cynicism in their interactions.

READ FULL ARTICLE

• Save
• Share

Dig, Bridge, Collectively Act

#MeToo and Black Lives Matter have inspired many companies to announce commitments to combating discrimination and racism. Commitments alone won’t dismantle systemic inequities, however. In this article two professors who have studied that problem present their solution: the Shared Sisterhood framework. It’s based on a set of practices they call Dig, Bridge, and Collectively Act, and though it initially was designed to help Black and white women connect and overcome their mutual challenges by working together, it can help strengthen relationships between other identity groups as well.

The first practice, dig, entails identifying your social identities (which might include, say, “woman” or “man” or “nonbinary” and “Hispanic” or “Black” or “Chinese”) and researching the power dynamics associated with each one. Some identities are imbued with social power; some have been historically marginalized. You need to recognize your blind spots about those dynamics in order to succeed at the second practice: bridging, or building authentic, trusting connections with others across your differences. In the third practice, collectively act, you and the people who share your values turn those bridges into channels for positive change, mobilizing to make organizations more welcoming and equitable.

READ FULL ARTICLE

• Save
• Share

A New Social Contract for Teams

Companies have traditionally emphasized leadership competencies, not team competencies. But the transformation of an organization must begin with the transformation of its teams; team leaders and members must commit to new behaviors to escape mediocre or even merely good performance, accelerate innovation, and unleash growth. Drawing on more than a thousand assessments of teams conducted over two decades of research and coaching, the author presents a simple diagnostic that enables leaders to evaluate their teams on critical dimensions that relate to performance. He describes several practices designed to move members away from outdated behaviors and facilitate lasting, positive change: collaborative problem solving, “bulletproofing,” candor breaks, red-flag replays, safe words, and open 360s. Although the examples often involve leadership teams, the practices outlined can be used at any level. They can be implemented in any context but are especially effective in virtual environments, where tools permit a broader range of collaborative practices than strictly in-person formats allow.

READ FULL ARTICLE

• Save
• Share

The Surprising Benefits of Work/Life Support

To succeed, almost every employee needs work/life support at some point. Women and people of color need it the most, research shows, because they face greater challenges and have fewer resources available to them. They are also the least likely to receive it, however, and as a result often are forced to change or leave jobs and lose out on opportunities for advancement.

Given that situation, the authors decided to examine what effects various corporate work/life programs had on the management workforce. Analyzing data from more than 800 U.S. companies over 30 years, they found that when companies offered flexible work schedules, family leave, and childcare support to all employees, the percentage of women and people of color in management rose significantly. In fact, those work/life benefits had a larger impact than the most popular racial-equity programs did.

Companies have long known that programs promoting work/life balance boost productivity, reduce turnover, and improve employees’ mental and physical health. And now it’s clear that they are also a powerful way to increase organizational diversity.

READ FULL ARTICLE

• Save
• Share

How to Digitalize Your Sales Organization

Companies can reap great benefits from digitalizing their sales organizations—that is, using technology, data, and analytics to improve the sales process. Done well, digitalization increases customer engagement, boosts the skills and performance of salespeople, and supports a more customer-focused business model. But digitalization initiatives are often plagued by slow progress, poor adoption, or low sustained impact. This article discusses why that happens and recommends five actions to increase the odds of success: (1) Put a “boundary spanner”—someone with both sales and technical experience—in charge, and secure an executive sponsor; (2) build in accountability by establishing the business case, setting key performance indicators, and creating a governance framework; (3) deploy a functionally diverse team; (4) implement an agile approach; and (5) foster change in salespeople’s mindsets as well as in the sales process.

READ FULL ARTICLE

• Save
• Share

Performance Management Shouldn’t Kill Collaboration

Companies today need cross-silo collaboration to survive a volatile competitive environment and grow revenue. But often their performance management systems discourage it. Indeed, in research involving more than 8,000 senior managers in biotech, banking, consumer products, energy, law, and other sectors, the authors found that a siloed approach to performance targets is a huge barrier to collaboration. Too many companies incentivize employees to take an overly narrow, short-term view, which makes them scramble to hit their numbers and lose sight of their organizations’ bigger objectives.

This article offers a better approach and outlines specific ways companies can retool their performance management systems to boost collaboration. It starts with implementing a four-part performance scorecard for every employee that establishes shared goals for tackling big challenges while still holding people accountable for delivering individual results. Each component—cross-silo goals, team goals, individual goals, and long-range programs—is weighted according to its importance in helping the company achieve its strategic aims.

READ FULL ARTICLE

• Save
• Share

The Essential Link Between ESG Targets & Financial Performance

Despite heightened attention to environmental, social, and governance (ESG) issues, surprisingly few companies are making meaningful progress in delivering on their commitments. Most firms are not integrating ESG factors into internal strategy and operational decisions and are giving investors little to no explanation of the impact of ESG performance on corporate earnings.

To integrate ESG efforts into their core business models, firms should take these steps: (1) Identify the ESG issues material to the business; (2) factor in ESG effects when making strategic, financial, and operational decisions; (3) collaborate with stakeholders; (4) redesign organizational roles; and (5) communicate with investors.

READ FULL ARTICLE

• Save
• Share

How to Navigate Conflict with a Coworker

Interpersonal conflicts are common in the workplace, and it’s easy to get caught up in them. But that can lead to reduced creativity, slower and worse decision-making, and even fatal mistakes. So how can we return to our best selves? Having studied conflict management and resolution over the past several years, the author outlines seven principles to help you work more effectively with difficult colleagues: (1) Understand that your perspective is not the only one possible. (2) Be aware of and question any unconscious biases you may be harboring. (3) View the conflict not as me-versus-them but as a problem to be jointly solved. (4) Understand what outcome you’re aiming for. (5) Be very judicious in discussing the issue with others. (6) Experiment with behavior change to find out what will improve the situation. (7) Make sure to stay curious about the other person and how you can more effectively work together.

READ FULL ARTICLE

• Save
• Share