Keynotes – Page 4 – eCornell #IMPACT

Here’s How to Make Innovation Real

There’s a wealth of information on innovation out there, but how can you turn all the theories into action?

Professor Neil Tarallo, a senior lecturer at Cornell’s Hotel School, focuses on how to foster innovation within the workplace in his most recent discussion with eCornell’s Chris Wofford.

Wofford: Neil, it’s great to have you back here with us. What do your students and our webinar viewers need to know about innovation?

Tarallo: My favorite definition of innovation—and believe me, there are many of them out there—was articulated by Peter Drucker, a great researcher out of Harvard who really had a great take on how and where innovation and entrepreneurship come together.

Drucker said, “Innovation is change that creates a new dimension of performance.” I really like that concept of a new dimension. It provides us with opportunities to apply things in a very different way than they’ve ever been applied before.

Innovation really comes in two different levels. One is incremental, or what some people call “sustainable innovation.” And then there is disruptive innovation.

Wofford: Can you walk us through what you mean by those?

Tarallo: Well, an incremental innovation is really a small improvement or upgrade to an existing concept. It can be technology, a product or service. Think of software upgrades that fix minor things or add new features. In the physical world, think of Gillette. They started with a single razor. Over time, Gillette has innovated and created a lot of different things. They went to disposable razors, they have multi-angle blades, they have lubrication bars. So Gillette is an interesting example of how incremental innovation has allowed a company to sustain market leadership for a very long time.

When it comes to disruptive innovation, we’re talking about innovation that changes the way people think about things. Clay Christensen coined the term to describe a process by which a product or service takes root initially in a very small and unnoticed way but gathers momentum as it goes to the market and then people start to really grab onto it.

One of the interesting things about disruptive innovations is that we don’t know if disruption is happening before it actually starts to happen. An example of this, to stay within the shaving realm, is Dollar Shave Club, which has taken us away from the expensive replacement blades by saying they’ll just send you new blades every month for just a couple of dollars.

Wofford: Right, for them it is a subscription-based product and a recurring revenue model for the company. That’s kind of how they get you.

Tarallo: Exactly, and that disrupts the old business model that Gillette created, which was to give you the razor handle and then sell the blades at very high prices.

The important thing to remember is that both incremental and disruptive innovations are necessary for organizations. In my opinion, you need to have a plan for both the incremental improvements that you’ll be doing as well as constantly searching for that disruption that’s going to completely change things.

These two innovations generally focus around three areas: technical innovation, product innovation, and service innovation. A great example of service innovation is how Netflix changed the movie rental business.

But in order for innovation to be successful, you have to create an opportunity within the organization for entrepreneurial behavior to really manifest itself and to take hold. You need an organizational architecture that fosters and supports entrepreneurial behaviors so that you can be chasing after these innovations as you go along.

Wofford: How does a business go about establishing that?

Tarallo: There are two components that I think of when I try to action innovation within an organization. One is what I like to think of as “opportunity discovery” and the second is value proposition design.

When it comes to opportunity discovery, there is a clear methodology that applies. It starts with observation of the market and of potential customers, getting them to talk about their experiences—doing interviews with them to gather information, applying surveys and focus groups and the science behind those. It’s observing people and how they behave as they go throughout their days.

This process is actually called ethnography, which is sort of a fancy word, but it’s really a simple process of just watching people and taking note of what they’re doing and what they’re experiencing as they go through their daily lives. We’re looking for things that are missing for them as they try to accomplish tasks. We’re looking at problems that they encounter that need to be overcome and we’re also looking for pain that they’re experiencing along the way.

In those observations, I’m thinking about three specific behaviors: the functionality of what it is that they’re trying to apply, the social implications of what they’re doing, and also any emotional implications.

Wofford: We have some open-ended questions here that I think it would be good to get the audience to think about. When was the last time that you spoke with your customers regarding their experience with your product, service, or technology? If you would put your answers in the chat window please.

Tarallo: Look at that, someone wrote “just yesterday.” I like that, that’s great. Someone else replied “every single day.” That’s a lot of work so I would be curious how that actually works. Is that through a survey, and what do you do with that information when you get it? That’s really the big thing.

Wofford: That brings me to the natural follow-up question. What do you do with this feedback?

Tarallo: For me, every time a student comes into my office to talk to me about anything, I get information from them for some research that I’m doing about entrepreneurship and how we teach entrepreneurship. I’ll ask a very simple open-ended question, which is “What has it been like for you registering and taking entrepreneurship classes here at Cornell?” And when that student leaves, I have a little red book on my desk and I’ll open it up, put the date and their name and take notes on what they told me. So it’s good to pose these really open-ended questions to get your respondents to tell you stories.

Storytelling is really one of the most powerful tools in this process. When you can get people talking you through their experience, you really learn things you wouldn’t have anticipated.

Obviously an important part of that is to listen carefully, but you also need to look for those nonverbal cues as well as you go along. From there, you can start to generate a hypothesis about what is going on in the marketplace or what is happening within the context of your interest.

Wofford: And what’s the best way to get people to share their stories with you?

Tarallo: It can be through singular and/or multiple engagements, meaning I can sit down with you for an extended period of time and have a longer interview, or we can do multiple engagements where I’m talking to you for 10 to 15 minutes over a long period of time. Both of those are powerful applications of the interview process.

Surveys are another step. Here we start to move away from the qualitative aspects of our research and we start moving more into the quantitative. Surveys primarily help validate hypotheses by reaching a very large sample size. You can also use surveys at the very beginning of your process simply to identify the people that you want to be speaking with to make sure that you have a diverse population in your sample size. You’ll be looking for demographic information like race, geographic location, household income, age, and so on to ensure that you get the right population to ask. Otherwise, your validation is not going to be accurate and you’ll have problems going forward.

Focus groups are another popular thing but I personally stay away from them because there is a real science to focus groups. To run a focus group well, I think you need to be trained in it or you need to hire people to do it for you. And they’re expensive, so when I’m in startup mode, focus groups are generally not something I’ll incorporate.

Wofford: Whichever method you choose, you need to then do something with the information you gather. What do you do?

Tarallo: When we analyze the data, there are a handful of things we do: code the information that we have, look for patterns or anomalies in the information, and then start to generalize and create a narrative around it.

We want to track our assumptions and any biases that we think were brought in and then we want to validate it in the market through a series of controlled experiments and prototyping. We know that these experiments are often designed to fail, but they’ll teach us something that will help us move forward again and take that next step.

I’m a big fan of controlled experiments that are likely to fail, but when they fail, they’re not going to impact our market or people’s perception of our company. I’m not a proponent of the philosophy these days of going out and failing big and failing fast. Failure is just not a good thing, I’m sorry. Controlling it makes a lot more sense, as I can learn more when I do that.

This, in my opinion, is particularly true in the service industries. Service-based businesses are much harder to innovate in and much harder to build business models around. It’s relatively easy to hand somebody a tangible product or put a technology in front of them and have them tell you what’s wrong with it and then you can do an update or a new iteration. But if you’re trying something new out in your restaurant and it results in bad service, most of the affected customers won’t come back to your restaurant a second time. So we want to be very careful. It’s about testing. It’s about failing in a controlled way. It’s about repeating that process until we have what we need as we go forward.

Wofford: Can you tie all of this together for us?

Tarallo: As I’m going through the innovation process, I’m thinking about and utilizing all of the information that I got through the ethnographic research that I’ve done. Through that process of observation, storytelling, interviewing, surveying, and validation, I’m bringing those components in and placing them on the value proposition canvas, which is a powerful tool that presents a graphic illustration of what I’m experiencing and what I’m seeing in the marketplace. I use Post-it notes so that I can take them down and move them as things change, so it’s a very dynamic tool and really lets us get to where we want to go.

My advice to folks is always that if you find yourself sitting at a computer doing research, you’re doing it wrong. It’s all about really interfacing with the marketplace. All your hypotheses need to be validated in the market. We need to be doing those small controlled experiments that help us validate things without damaging our relationship with our customers.

Wofford: Neil, thank you so much for joining us once again.

Tarallo: Thank you, Chris. And just remember, it’s all about getting out there and trying it. You probably won’t succeed the first time you do it, but don’t be dissuaded. Get out and practice. It’s the application of it that you get better and better at.

Want to hear more? This interview is based on Neil Tarallo’s live eCornell WebSeries event, A Fresh Look at Innovation. Subscribe now to gain access to a recording of this event and other Entrepreneurship topics.

January 4, 2018 0

Does Your Environment Impact What You Eat?

How to Improve Healthy Eating and Active Living in Rural Communities

America is in the grips of an obesity epidemic. While it may be tempting to lay the blame on personal choices, the reality is much more complicated. It’s hard to live healthily when you have limited nutritious food options nearby or if your community does not provide the types of environmental features that promote physical activity.

As part of our Expanding Nutrition Frontiers WebCast series, Chris Wofford was joined by Rebecca Seguin, an associate professor in Cornell University’s College of Human Ecology, to discuss healthy living in rural communities.

Wofford: Rebecca, what is the current state of affairs when it comes to healthy eating and active living? Why is this something we should be concerned about?

Seguin: I think everybody knows that we have a major problem with the number of overweight and obese Americans. Two out of three adults are overweight, and that is certainly problematic in and of itself. But it also carries all of these additional risks like cardiovascular disease, diabetes, and some types of cancer.

We also have a major epidemic of child obesity, with one in three children being overweight or obese and about one in five children qualifying as actually obese. We know that if individuals are overweight as children, they are more likely to be overweight or obese as adults and that will then carry through all these additional health risks. If current trends continue, the next generation will be the first to die younger and sicker than their parents.

We know that while individuals make their own decisions about what they eat and what they do, they are part of social and physical environments that influence them both negatively and positively. So we need to better understand the features of those environments so we can help guide people towards making healthier living choices.

We can also influence policy at the local, state, and federal levels in terms of policies and guidelines that can help people make better choices and live healthier lives.

Wofford: Can you give us an example of how the physical environment in rural communities affects healthy living?

Seguin: There’s a town in Pennsylvania that we’ve worked with that’s fascinating. There’s a sort of a triangle in the middle of these two state highways and the community center and school are sandwiched in between. You have residential communities on each side of the highways and the children all get driven to school even though they only live a 16th of a mile away.

They have to be driven because there’s no safe way for them to get from their residences to the school or to the other side to the library, which is really the heart of this community. I myself took a walk through this area and it really felt dangerous. There weren’t sidewalks, there weren’t crosswalks. Cars were not looking for pedestrians at all.

So the question becomes whether you could build some structures and start changing social norms that would enable the kids to actually be more active in their daily lives. That’s what we really need. We don’t necessarily need people to be more active by going to gyms. They need ways to become more active in their daily routines.

Wofford: What’s the solution?

Seguin: A local policy might be to organize “walking school buses.” Parents could sign up to take one day a week in which they would help the kids safely walk to school. That’s an example of a residential policy initiative that could really help kids get active in their day-to-day lives.

Wofford: So that ties in to what’s known as the “built environment” concept, right? And doesn’t the same concept apply to things like the availability of healthy food?

Seguin: Absolutely. Something we have to think about, particularly in rural environments, are the small businesses. Small store owners, for instance, are often barely staying in business. So while you might want there to be healthier choices for people in those small town retail environments, in some cases healthier food choices are going to spoil because people aren’t buying enough of them. A local initiative that might actually help drive business would be to use local marketing to highlight some of these healthy options. If you can create enough demand within these small stores, the owners wouldn’t lose money and then they could stock more variety and higher quality products.

Wofford: As you said, the obesity epidemic is a national problem, not something that is confined to rural communities. What are some of the factors behind it?

Seguin: This is really simple stuff but I think it’s important to remind people that when we talk about obesity it is about energy in and energy out. What we want is for people to maintain an energy balance. Even if you are overweight, staying weight stable is a benefit compared to continuing to gain weight. And if you’re obese or overweight and want to lose weight, that means you have to expend a bit more energy and eat a bit less. If you just make those tiny shifts over time, you’ll get closer to a healthier body weight.

A lot of this has to do with sedentary behavior. We’ve built all of this efficiency into our lives and that efficiency has actually caused us to hold onto extra weight and not be as physically active or physically fit.

Two out of three people are not getting any daily physical activity. And at our schools, this number is a little out of date, but around 90 percent of children have no physical education classes. We need people to be more active. We want them to engage in vigorous physical activity. We want them to do a range of leisure activities and to simply sit less.

We’re all sitting down a lot but there are little things you can do to help: just getting up and moving around, parking a couple blocks away when you’re running errands, taking the stairs, that sort of thing. Those little bits of activity really add up throughout the day.

Wofford: Activity is one thing, but what about what people eat?

Seguin: We really need to see a shift in eating patterns, like eating more whole grains and having fruits and vegetables take up a much bigger bit of real estate on your plate, as well as having a variety of protein sources.

Let’s look at what Americans are eating. Too much in the way of refined grains, not enough in the way of whole grains. Too much in the way of added sugars and sodium. I don’t think people realize all of the foods that have added sugar. Bread and cereal are good examples. Both can have quite a lot of added sugar—more than people might realize.

Part of this is individual decision-making but part of it is also the social environment. And part of it is the built environment—financial access and physical access.

Wofford: Can you tell us about some of these environmental factors?

Seguin: When it comes to health in rural communities, there is a list of questions you need to look at. Is there a sidewalk? Are there crosswalks? Is there a restaurant there? Is it a fast food restaurant? Is there a grocery store? Is the only food store in town the gas station that sells convenience food? The built environment matters.

When people think about the environment, they think about things in nature but when we talk about the built environment, these are man-made features: streets, playgrounds, sidewalks, community centers, et cetera.

Wofford: So, making a community more walkable can help with obesity?

Seguin: Yes, but it really depends on a variety of factors. Part of it depends on how far people actually live from where they’re walking. There are also factors related to low-income neighborhoods and minority neighborhoods and there are safety and transportation factors. There’s not a clear answer but in general, community features that we consider to promote active living are associated with lower obesity rates.

Wofford: You mentioned earlier trying to walk a few blocks when out running errands, but in some rural communities the nearest market might be ten or more miles away.

Seguin: That’s right. For a lot of people the closest market is far from home and in a lot of cases it’s not even a good market in terms of healthy choices. That’s what people are faced with. They are basically forced to drive.

We did some work in rural Montana and, in some cases, people out there only shop once every three weeks or more because they are driving 100 miles to a mega-superstore and getting all this food.

Wofford: You hear a lot about “food deserts.” When it comes to access to food, what are we talking about?

Seguin: I think people will often hear the term “food access” and they just think maybe there isn’t a store there. But it’s actually more than that. It’s proximity to the store—can you get there? There are many people, including a lot of the older adults whom I work with, who don’t have access to consistent or reliable transportation. And so, that Dollar Store or the local convenience store becomes their only food access point because they don’t have any other options.

Wofford: A big part of your work has been dealing with the local community members, whether that be in Pennsylvania or Montana or wherever. How did you get people engaged and did you meet with any resistance?

Seguin: We absolutely faced resistance. In food environments, the big issues are working in schools. There are huge barriers involved, like the food that the schools have access to, and time factors for the workers involved.

When it comes to the built environment and a focus on increasing physical activity, the biggest resistance is cost. How do you pay for all of this? It might sound great to build a bridge over those two busy roads to get the kids from the library to the school and then home again. But who’s going to pay for it?

There’s also the capacity issue. People have limited capacity and they’re busy, so how do you keep them engaged over time? That’s an ongoing challenge.

However, through some of the community work that we do, we can see that one of the key motivators for residents in the projects that we run is that they’re incredibly concerned about their children, their grandchildren, and future generations. That motivates them to get involved in changing community environments, because they want their grandchildren to be healthier.

Wofford: We’ve covered a lot of ground here today. Rebecca, thank you for joining us.

Seguin: Thank you, this has been great.

Want to hear more? This interview is based on Rebecca Seguin’s live eCornell WebSeries event, Improving Healthy Eating and Active Living in Rural Communities Through Citizen Science. Subscribe now to gain access to a recording of this event and other Expanding Nutrition Frontiers topics.

January 4, 2018 0

Why It’s So Hard to Say ‘No’

Exploring social perceptions in the workplace

Imagine that your phone has just died but you have a very important call to make. Would you be comfortable approaching a stranger and asking to use their phone? How many people do you think you’d have to ask before someone agrees?

These are the kinds of questions that fascinate Vanessa Bohns, an associate professor of organizational behavior at Cornell University’s ILR School. Bohns does research on social influence and our perceptions of the influence that we have over other people.

She’s interested in the underlying psychological mechanisms like how feelings of self-consciousness, awkwardness, and embarrassment affect our willingness to ask others to do something for us and how these dynamics play out in the workplace.

As part of eCornell’s Women in Leadership WebCast Series, Bohns joined Chris Wofford for a discussion on how to get others to say yes and why it can be so hard to say no.

Wofford: Vanessa, thanks for joining us today. What can asking a stranger to borrow their phone teach us about interactions in the workplace?

Bohns: The real question is, why is it so hard to ask people for things? Likewise, why is it so hard to say no? A lot of it has to do with the underlying psychological mechanisms like emotions that prevent us from recognizing our own influence over others and potentially prevent us from seeing when other people feel like they can’t ask us for help.

In many cases, it comes down to awkwardness. Something as simple as asking someone for their phone can be a very distressing interaction. The self-consciousness, the awkwardness, this idea that you’re imposing on someone, it can create anxiety.

There is also a gender aspect to the discomfort of asking. Studies have shown that women experience about two and a half times more anxiety when asking for things than men. We all probably think of the stereotype about men not wanting to ask for directions, but that comes from a different place than when you have to ask for something for yourself, like a raise or promotion at work, for example.

We all tend to mistake our own feelings of discomfort for other people’s feelings of discomfort. We all deal with egocentric biases, because we know what’s happening in our own head—it’s very rich with information about our own experiences, and because of that, we don’t necessarily recognize other people’s experiences.

Wofford: Can you give us an example of these biases in action?

Bohns: I’ll start with something called the spotlight effect, which is basically the idea that people are paying more attention to us than they actually are. There’s a classic study from the 1990s in which college-aged participants were given this Barry Manilow t-shirt, which was considered a pretty embarrassing thing to wear. The participants were asked to go interact with others and then come back and rate how likely it was that these other people recognized what they were wearing. Of course, they all thought everyone noticed their Manilow shirts and judged them harshly for it, when, in fact, most people didn’t even notice what they were wearing and if they did, they certainly didn’t judge them because of it. So we tend to think that everyone’s looking at us, noticing our bad hair days, noticing our bad outfits, noticing when we trip. But most of the time, people are much more interested in themselves than anything you are doing.

Wofford: So I shouldn’t worry about wearing this outfit again tomorrow?

Bohns: Exactly, no one is going to notice.

The spotlight effect is very related to another egocentric bias that’s called the illusion of transparency, which is this idea that our emotions sort of leak out of our skin and everyone can see how anxious we are when we’re giving a talk, for example. The truth is that people in the audience usually say they had no idea that the speaker was anxious. Our emotions don’t leak out to the extent that we think they do.

Another egocentric bias is the illusion of courage and this is one of my particular favorites. The illusion of courage is this idea that other people are less affected by self-consciousness, embarrassment, and awkwardness than we are ourselves. A classic study on this entailed playing the song ‘Super Freak’ by Rick James really loudly in a big auditorium full of students. The students were told that a number of them would be brought up to dance in front of the entire audience, so naturally a lot of people get nervous and worried that they’d be the ones picked. As part of the experiment, the students were asked to write down how much money they’d need to be paid in order to get up on stage and dance. They were also asked how much they thought other people would need to be paid to do the same.

On average, the students said that they would need more than $50 before they would actually consider dancing up on stage but when they judged other people, they thought that they would take less than $20 to do it. They thought that other people just wouldn’t be as embarrassed or feel as concerned about doing this as they themselves would. This is the illusion of courage.

Wofford: So when when you take all these egocentric biases together, they sort of suggest that we think that other people would judge us more harshly than they actually do?

Bohns: Exactly. We think that they’re paying attention to our mistakes, that they’re remembering them and that they’re making all sorts of judgments based on them.

So that’s why if we ask for something, we think people are going to judge us. If we say no to something, people are going to judge us. We simply don’t realize the extent to which other people also have feelings of anxiety and self-consciousness. We’re so worried about how people view us that we’re not paying attention to how other people feel in a lot of situations.

This goes beyond our personal interactions. Just recognizing the extent to which self-conscious concerns affect us and the decisions we make on a daily basis as managers, as employees, as bosses—and the extent to which our employees are making similar decisions based on self-conscious concerns—is a really important thing when it comes to organizational behavior.

Wofford: Let’s turn to another big question: why is it so hard for people to say no?

Bohns: In part, people are just mindlessly following a social norm that we say yes to people. So when someone comes up to you and asks for something, you just go along with it without really thinking. That’s part of it. Another big factor is that we don’t want to impolite. If you say no, there’s something that you could be insinuating about the other person that there’s something wrong with what they’re asking.

At the end of the day, it’s just really awkward to say no. And so it’s often just easier and more comfortable to say yes, and just go along with whatever somebody is asking you.

Wofford: Am I wrong to feel encouraged by this? I feel like people are generally good.

Bohns: I think there’s something to be said for the fact that our mindless default is to agree, to just go along with helping other people. The takeaway is that people are often much more willing to help us than we think—and that we have a certain degree of influence.

But there can be a dark side to this. There’s the phenomenon of social engineering that can be used to get people to do things that they should say no to. That can be used by nefarious people who understand this and who want, for example, to gain access to sensitive information by exploiting psychological vulnerabilities. So instead of technically hacking into someone’s computer, you call them up and say, “Hey, I know so-and-so and he said that maybe you’d be willing to give me this, and I just need your password to log on.” One of the reasons this is so effective is that people feel so awkward challenging what someone is saying to them.

The last thing I want to talk about is how this idea that we don’t recognize other people’s feelings of discomfort can affect the ways in which we can encourage them to ask us for things. When we are the ones who can actually help others, do we recognize the barriers that prevent people from seeking our help? Do we realize how awkward they might feel and can we better encourage people to actually come ask for help when they need it?

You can imagine a situation where you have an employee who’s struggling with a project but just too nervous or self-conscious to ask you, the boss, for help. You might not realize that the reason he’s not asking is because he feels awkward, not necessarily because he doesn’t have any questions related to the project.

Wofford: And that might directly affect the outcome of the project.

Bohns: Yes. On the other hand, you can imagine a more nefarious situation in which a supervisor asks a subordinate to do something that she’s uncomfortable with. She feels awkward saying no and the supervisor, because he’s not aware of this discomfort, assumes that she was fine with it. He assumes that if she didn’t want to do what he was asking, she would just say no. A lot of us make this assumption because we’re in our own egocentric world.

Wofford: You’ve shared some really interesting examples. What are some of the conclusions and takeaways you want our audience to leave with?

Bohns: One major conclusion that should be completely evident from all these studies is that self-consciousness drives much of human behavior. We usually think that embarrassment is this trivial emotion but it actually drives so much of behavior that we should take it seriously. We should be aware of the extent to which we are likely to overlook embarrassment in others and the extent to which it drives our own behavior.

So part of the takeaway is to manage the control that self-consciousness has over you. You might think that you’re the only one who is affected by embarrassment, but actually everybody is. Also, be aware of how it might affect others’ behaviors and prevent them from doing things like asking for help.

When it comes to asking for things that you actually need, the first thing is to just ask. People are much more likely to say yes than you think.

Finally, don’t worry about the way people will interpret a request. Be direct. People tend to think that they should be indirect and sort of beat around the bush, when in fact people are much less likely to respond positively to these kinds of subtle hints. They are much more likely to respond positively to a direct request.

You might think that if people are saying yes out of awkwardness or because they feel they can’t say no, that means they’re going to interpret this as being pressured into it. But actually we have actually found that, afterwards, people re-interpret why they did something in a way that makes them feel good.

Want to hear more? This interview is based on Vanessa Bohns’ live eCornell WebSeries event, Your Power of Persuasion: Getting Others To Say “Yes,” and Why It Is So Hard To Say “No.” Subscribe now to gain access to a recording of this event and other Human Resources topics.

January 4, 2018 0

Building Digital Brands with Analog Products

Here’s How Today’s Hottest New Companies Actually Disrupt

Micah Rosenbloom, managing partner at Founder Collective in San Francisco, knows a thing or two about bringing digital ideas to the analog world. The Cornell grad started the 3D scanning company Brontes, which introduced a handheld scanner to replace the conventional dental impressions used for centuries.

His company was purchased by 3M, which he says “put enough money in my pockets to start angel investing.” At Founder Collective, he and his partners built a fund to invest in the next generation of great businesses at the seed stage. While the company originally focused on technology companies like Uber, BuzzFeed and Hotel Tonight, Rosenbloom quickly became attracted to brands that were building digital success while selling old-school analog products like mattresses, jewelry and eyeglasses.

Rosenbloom joined eCornell’s Chris Wofford as part of our Entrepreneurship WebCast Series. What follows is an abridged version of his presentation.

Casper. Dollar Shave Club. Warby Parker. These days, some of the fastest-growing companies aren’t what you think of, traditionally, as tech businesses.

These companies are what Andy Dunn, the CEO of Bonobos, has dubbed ‘DNVBs”—Digitally Native Vertical Brands.” In other words, brands that have a direct relationship with their customers. For example, if you were to buy a mattress from Sealy in the past, Sealy didn’t know that you yourself were the buyer of their mattress. All the company knew was that it was selling mattresses to Sleepy’s Mattress Store, and Sleepy’s was the one that actually had the knowledge of the buyer. What most businesses come to realize is that whoever knows the end customer has the most value. In the end, the customer information and that relationship is the most valuable.

Many new companies have decided to go directly to the customer rather than through retailers. Some may not even go through Amazon. There are exceptions to this, of course, but the idea is that most of these brands are primarily online.

Most of these “DNVB” brands were born in the last ten years and that newness has allowed them to be built on modern systems. They’re not saddled with legacy software. They’re not bogged down by crazy inventory systems that have to talk to Target and Walmart. They’re building on web-based technologies that give them a way of speeding up the process in the way they communicate with customers or offer promotions.

That’s just too hard for the incumbents—they simply couldn’t build a business this way. So that’s why you are seeing a lot of the big players starting to buy these new guys up.

That’s the D—digital—in DNVB. Now let’s talk about the V: the vertical specific. One of the things you learn in the startup world is focus, focus, focus. While conventional wisdom has always been that it is better to have a bigger menu and the more options the better, what some of these new hot brands have realized is that people are overwhelmed with information. It’s actually very difficult to pick which glasses, which mattress, which this and which that. We want people to help us pick it. So what we’re seeing is a realization of the benefits of just having one or maybe a few products.

Price is also really important here. The best Digital Native Vertical Brands are a fifth to a tenth of the cost of the traditional ones. Dollar Shave Club is probably the perfect example of this. Just as the name suggests, they came in and said, “It’s a dollar.” There are those who say that the blades at Dollar Shave Club are not as good as Gillette blades, but for the lion’s share of the customer base, being able to save that much money on the product and still get a good enough product is a really strong value proposition.

So when you’re thinking about these businesses, both as an investor and as a builder, the goal is to be able to charge five to ten times less than a similar equivalent by pulling out of physical retail, by focusing on a few products and by not paying a margin to a distributor.

Some DNVB companies have also managed to disrupt the traditional buying practices. I think most consumers kind of hate the experience of buying a mattress and even to an extent, buying things like glasses or luggage. You just feel like it was a lot of B.S., a lot of marketing. One of the interesting things about Casper is they have a 100 night trial. After a hundred nights or fewer, if you don’t like it, they’ll take it back for a full refund. Changing the way people think about buying things—taking out the risk, the anxiety, the dealing with that sleazy salesperson—really changes the game and that’s why you’re seeing the growth of a lot of these brands.

I feel like I’m doing a commercial for Casper, but it is also a good example of how these types of businesses focus on design and packaging. If you search on YouTube, you can find all of these videos of people unboxing their mattresses and they spring out because they are so highly compressed into this box. If you think about it, it’s a real innovation. In the past, if you were buying a mattress, not only would you have to buy it from a sleazy dude but usually a couple other sleazy guys would come into your home, maybe take their shoes off if you’re lucky, go into your bedroom, take out the old mattress, and put in the new one. The reason they did this is that mattresses just couldn’t ship via UPS. Now all of a sudden, you’ve got a brand that uses traditional delivery services, and that changes the way one can get a mattress.

A lot of the innovation also centers around packaging. We’re involved with a company called PillPack, which is a pharmacy that fills all your prescriptions. Instead of those little brown bottles with the white tops that are hard to open, they put the pills in this beautifully designed sealed envelope that will have your name and the day of the week. The pack will say ‘Thursday’ and then you rip it open and it’s everything you should take on Thursday. It’s a great experience but it’s not a different product. These are the same pills you would take if you went to CVS or Walgreens, but it’s the packaging and the design.

The other thing these great brands share is having a voice. They have a unique edge, a unique perspective, a unique way of talking to their customers. Casper’s branding, for example, uses a lot of animation. The Warby Parker branding uses a lot of cool literary names to market the glasses. The Honest Company has the actress Jessica Alba as the spokesperson and face behind it and even that word, Honest, suggests something very specific about the company’s voice, which is, “You’re going to know the ingredients, you’re going to trust us, and this is going to be good for you.”

That voice has to be very inherent to the owners of the brand, it can’t be artificial. I think that’s what sets these modern companies apart from the traditional guys. When you see a Gillette commercial you kind of think, “Yeah, it was entertaining, but there was probably an agency, and there was a committee, and there were edits.” Then you watch the Dollar Shave Club video with the the dude who says, “Our blades are f’ing great,” and you think, “ I like that guy.” There’s something really authentic about it and it makes you want to buy them.

We’re starting to see the fruits of these new approaches and I think it’s just the beginning. You see Unilever buying Dollar Shave Club for a billion dollars, you see Unilever also in talks to buy Honest Company, and I suspect it’s only a matter of time before we start seeing some of the other brands, like Warby and Casper and these others, potentially get acquired or maybe even go public.

That’s sort of the next chapter, but as they say, it’s the early days. Having said everything I’ve said about these brands, I think you have to be careful. It’s not as easy as simply saying you’re going to come up with the best new earbuds or shirts or cell phone cases. Most of these categories have been historically extremely hard to break into, and there are many, many companies out there.

Product companies, unlike traditional technology companies, require building stuff, making stuff, slow turnarounds, and taking inventory. It is not just bits and bytes like software, where you can write some more code, see how it goes, release it into the wild, and fix it tomorrow. You can’t do that with glasses or mattresses or shampoo.

I think one needs to do a lot of homework before thinking about launching their own brand, or investing in one. So here’s some of the cold water. One, the multiples in these industries are low. Historically, consumer goods have traded at one to 3x sales, not five to 10x like software and technology. Second, you’ll quickly find that you have a lot of competitors. If you Google “buy a mattress online,” you’ll see Casper was first but is now hardly alone. So new companies will find that others will quickly copy them and undercut them on pricing, so that’s a challenge. Third, the brand message is hard to get right. You really have to have that voice and it’s got to be authentic. Some brands do that well and some don’t.

Finally, this idea of creating a hipster brand for everything that’s going to cost less is just not that simple. There are structural differences between all these industries. You’ve got to really look at the industry structure and see if you think there are some soft spots.

Let’s take glasses for example. If you Google Luxottica you’ll discover it owns almost every other brand in glasses you could ever imagine. But I think what what is nice about monopolies from an entrepreneur’s standpoint is that typically one company that owns a lot of the market will price a little bit too high because it’s had pricing power, so if you can get in there with a new product you can really disrupt practices that have been around for a long time.

Want to hear more? This article is based on Micah Rosenbloom’s live eCornell WebSeries event, Building Digital Brands in Analog Product Categories. Subscribe now to gain access to a recording of this event and other Entrepreneurship topics.

January 4, 2018 0

What #OscarsSoWhite and Chipotle Can Teach Us About Crisis Communication

In today’s age of instant social media amplification, there has been no shortage of examples of crises and crisis communication in popular culture.

To walk us through what organizations should do to prepare for a crisis and how to best react, eCornell’s Chris Wofford was joined by Amy Newman, a senior lecturer of management communication at Cornell University.

While Newman says that “crisis is inevitable,” she believes that when handled properly a crisis can actually give a boost to an organization. What follows is an abridged version of her eCornell WebSeries presentation.

Wofford: There are a lot of things that could constitute a “crisis” within an organization. What are we talking about when we talk about crisis communication?

Newman: Let’s start by looking at an academic definition. Timothy Coombs, one of the leading researchers in crisis communication, defines a crisis as “the perception of an unpredictable event that threatens important expectancies of stakeholders and can seriously impact an organization’s performance and generate negative outcomes.”

It’s important to note that while a crisis is unpredictable, it’s not necessarily something that you can’t anticipate. Some organizations should know what crisis is coming and even if they don’t, they should be prepared for some crisis because it will happen at some point. It’s just a matter of what it is and when it strikes.

A crisis does threaten the expectancies of stakeholders. There might be health or safety issues, environmental consequences or economic consequences, and all of these will have an impact on the organization. So by definition, a crisis affects the organization’s reputation or bottom line or something else.

Wofford: What’s a good example you could share? Are there any recent situations you can point to as a case of crisis communication?

Newman: There’s one that I’m sure you’re aware of and that the viewers are aware of. The Academy of Motion Pictures recently identified their slate of nominees for this year’s Oscar awards and they were all white for the major categories. There was a lot of backlash about this, with Spike Lee and some major actors threatening to boycott. There’s a hashtag trending on Twitter called #OscarsSoWhite. So this is something that has evolved to the level of a crisis.

Wofford: The consequences in this case are pretty obvious, right?

Newman: If there are people who are respected in the industry who don’t attend the awards because of this, the ceremony is going to suffer and advertising revenue might go down. I would also say also the general reputation of the organization is being harmed. The Los Angeles Times has been doing the most reporting about the situation and they took a look at the demographics of the academy itself and guess what the average age of the people voting for the Oscars is?

Wofford: I’d say it’s up there. 50-plus, 60, 70.

Newman: It’s about 62. So, you know, it’s people who have won awards, people who have been in the industry for a long time. They have a lifetime membership. You can see why there might be a lack of diversity.

In this case, I wouldn’t say that the crisis was entirely unanticipated. They should have known better. Last year, there were also all white nominees and criticism of the Academy. At the time, the Academy president,Cheryl Boone Isaacs, who happens to be an African American, was adamant that the Academy didn’t have a problem recognizing diversity. But now it’s escalated to the point that they really do need to do something about it.

We’ll talk later about their response, but first I’d like to talk about three phases of crisis management: preparing for a crisis before it happens, managing through the actual crisis, and then learning from a crisis.

Wofford: It’s the leader’s job to prepare an organization for decisions using these three steps, right?

Newman: It certainly is. The preparation is very important. We usually think about crisis management happening at the most senior level of an organization and certainly if it’s a large organization, there’s a corporate communication department that handles much of this.
But it becomes everyone’s responsibility during a crisis to represent the organization well and to try to turn things around.

So in preparing for a crisis at first, well, of course the best way is to prevent a crisis from happening at all. You can’t do that in every situation but you can in some. I’ll present Volkswagen as the case here. They installed diesel deception software in their cars so, in effect, created their own crisis. It was bound to come out at some point.

Wofford: Do you think Volkswagen was at all prepared for this? They got caught red-handed.

Newman: It really didn’t seem they were ready for it. What I understand about Volkswagen is that they have a very tightly controlled centralized management. That’s good in some situations but in a situation like crisis communication, it made them very slow to respond. I think it’s because they kept information so tightly closed—they really were not prepared for what happened at all.

One thing an organization should do is to document what would happen in case of a crisis. This means identifying contacts and putting together a team of crisis communication people. Usually that will be some HR people, maybe your local department, communications people, of course, some emergency management people, safety—All of those functions should be represented.

Included in that kind of plan is an approach for the media. What should we say if we get a phone call? What will the communication challenges be? Which channels should we use? How do we notify different audiences?

Part of the preparation process is being honest about the vulnerabilities in an organization, and this really depends on the industry. If I own a restaurant, I am likely to have a problem with food poisoning at some point or some other food safety issue that has to be handled. If I work for a hospital, we will probably have a malpractice situation, so we might as well think about how we’ll address that when it happens.

The other way to think about this is situational. If we’re doing layoffs, well, we might have a situation of workplace violence. If we’re in the process of labor negotiations, we might face a strike so we should prepare our messages ahead of time.

When a crisis hits an organization, emotions are running high and you have to act quickly. You don’t want to be trying to craft messages and figuring out the best way to respond. That should be done ahead of time.

Another thing we can do is to try to catch a situation before it becomes a full-blown crisis. An example I can give is McDonald’s.

Wofford: Okay, I see your slide shows a poster saying ‘You’re not alone. Millions of people love the Big Mac”. But yikes, the woman looks very depressed or even suffering from mental illness. I can’t imagine this campaign worked out very well.

Newman: Well, a lot of people suffer from mental illness, depression in particular, and this was not appreciated. So someone took an image of the ad and posted it to social media and there we go: a crisis is born.

But I have to compliment McDonald’s for handling it quickly. They immediately put an apology out. They also blamed their ad agency, which could be a dangerous strategy. But the ad agency in Boston took responsibility and confirmed what McDonald’s had said, which is that they had not approved the ads. So the agency apologized as well.

The ads were taken down and it quickly resolved, which is the best way to handle a crisis.

Wofford: McDonald’s probably offended some people but by responding quickly, there wasn’t a major effect on the company’s bottom line.

Newman: Exactly, McDonald’s handled it correctly.

But sometimes, despite our best efforts, there is still a crisis. I’m going to review three principles and I’ll show some examples of each. The first is to communicate quickly. That is essential, especially within the social media environment. The second is communicating consistently. And the third principle we’ll talk about is communicating openly.

Let’s start with the first. A study found that 53 percent of Twitter users who expect a response from a company on Twitter expect that response within just one hour. The thing is, within an hour all sort of things can happen on Twitter. One tweet could go to millions of people, so if companies aren’t in that conversation they’re really going to miss out.

Let’s give an example. People may know of the movie ‘Blackfish’, which came out in 2013. It’s about SeaWorld and how they treat their animals. It showed how SeaWorld was treating their orcas, putting them in restricted spaces. According to the film, there were some trainer injuries and a couple of trainer deaths because of how the orcas were being treated. It is a pretty damning film.

SeaWorld had no response to the movie at all and the conversation just kept elevating and elevating and social media celebrities were all over it. Some acts canceled planned events at SeaWorld. PETA, of course, had its own campaign. People were making this analogy of living in a bathtub for 40 years, referencing the confinement that the orcas had suffered.

SeaWorld showed exactly what not to do in a crisis situation. They refused to do any interviews. Months later, they finally did start to use social media and their website to share some videos meant to portray that they’re actually an organization that helps animals. But it was too late, and now what we’re seeing is that SeaWorld has really suffered in terms of ticket sales and lost partnerships. This was just a classic example of a tone-deaf organization that wouldn’t admit to wrongdoing.

Wofford: You mentioned you would get into how the Academy responded to the #OscarsSoWhite crisis.

Newman: Well, after that hashtag started trending, Cheryl Boone Isaacs did respond pretty quickly. The Academy tweeted out a statement from her, which you can see on my slide.

In her first statement, she says “I’d like to acknowledge the wonderful work of this year’s nominees.” And I think it’s really important to remember that when a leader is working on a crisis situation, there are many, many audiences involved, and many people to try to appease. One thing she can’t do is take anything away from the current nominees, so she’s doing the right thing here in acknowledging them.

She goes on to use really strong words: “I am both heartbroken and frustrated about the lack of inclusion. This is a difficult but important conversation and it’s time for big changes.” This sounds sincere.

Wofford: And she’s owning it by using “I”, right?

Newman: Yes. She’s doing the right thing. She’s the president of the organization but she’s also saying this as an African American. I’m sure she probably has her own feelings about this as well.

She goes on to say: “In the coming days and weeks we will conduct a review of our membership recruitment in order to bring about much-needed diversity.” So she’s promising action and, of course, you say that you had better do it, right?

She continues by saying that the Academy has done quite a bit to encourage diversity in recent years but she acknowledges it hasn’t been enough. So I think that’s good too.

But then I think she really falls a bit short in the end when she says “This isn’t unprecedented for the Academy. In the ’60’s and ’70s, it was about recruiting young members.” Now, as my students would remind me, that was a long time ago.

Wofford: Right, and probably a lot of her detractors haven’t been around that long so I’m not I’m not sure that line did her any favors.

Newman: Exactly, it makes you think of old white guys. But she ends on a positive note: “I recognize the very real concerns of our community.” That’s a good line.

So the Academy’s response, issued just four days after the crisis, is not a perfect response, but it is a good example of a quick response.

Now let’s look at another principle for communicating, which is communicating consistently. You’ve got three tools that are going to help you communicate consistently within the organization. One is the crisis communication plan that we looked at before. The second tool I would suggest is social media guidelines. The third tool I want to recommend is to have a communication plan.

Organizations need to identify all of their audiences, internal and external, and think about how those audiences might feel or respond to a crisis situation. That helps us really empathize and then identify what we are trying to accomplish with our communication. What do we want them to feel after they read our message or watch our video? What do we want them to think differently about the company?

It’s always good to use a variety of communication channels because we know that people have different learning styles and different ways of receiving information. So you have to use multiple forms: social media, emails, press releases, statements on websites and, of course, video can be very powerful in a crisis situation.

Too often companies forget about internal employees so I would recommend prioritizing those before anything goes to the press to make sure that internal employees are aware of what’s happening and any response that the company is planning to make.

Wofford: Your third principle is communicating openly, right? What does that mean?

Newman: Being available to the media, being honest about the communication and, ideally, being transparent. Now, there can be a lot of questions about how transparent an organization really should be. There’s always this healthy tension. Lawyers tend to be more conservative and don’t want the companies to disclose much. They might prefer an organization to say “No comment.” But corporate communicators know that kind of stance is not going to help the company in the long run. People really want to know what’s going on.

My view is that information will come out anyway, so you might as well control the message as the organization.

Another area of great debate within some companies is whether organizations should apologize. Lawyers sometimes argue that apologizing demonstrates guilt. But we don’t have to apologize in a way that says we’re responsible. We can apologize in a way that shows sympathy and regret. There’s a ton of research that says showing sympathy will actually mitigate the reputational damage for an organization in the long run and could actually reduce financial loss.

Wofford: Once you’ve made it through a crisis, what should you have learned?

Newman: What most people want to do is just get back to work because it’s incredibly emotionally draining and time consuming, but one of the most important things a crisis leader can do is to reflect on what happened. How did we do in terms of the media coverage and community relations? How did the crisis management team itself do?

Taking stock in that way is really important to build leaderships skills and to prepare for another crisis if it does happen again.

I want to end on a positive note here and that’s to say that there’s definitely a life after crisis. I’ll give an example with the Tylenol case. In 1982, cyanide-laced Extra Strength Tylenol appeared on the shelves. At first, the company said it didn’t come from their plant; they denied responsibility and the predictions were that the company was pretty much done.

But then they acted very proactively, pulled all of the product from the shelves, and they actually came up with those tamper-proof bottles that we know today. They took real positive action and became an industry leader.

For a more current example, we can look at Chipotle’s response to its E. coli breakout. They are being very transparent about changes. Just this past week, the company had a meeting at all its locations. They closed down for four hours and they live-Tweeted the meeting. Chipotle founder Steve Ells says that he wants to become a leader in the industry in terms of food safety. We’ll see whether he achieves that goal, but most analysts say they have no doubt that the company will recover.

People have short memories and as soon as another crisis comes along, we will forget about this one.

Wofford: Amy has a Twitter account, @bizcominthenews, that is very current and keeps up with all of these sorts of issues—we invite you to check it out.
Amy, thank you so much for joining us today.

Newman: Thanks for having me. It’s been fun.

Want to hear more? This interview is based on Amy Newman’s live eCornell WebSeries event, Crisis Communication: Expect the Best, Prepare for the Worst. Subscribe now to gain access to a recording of this event and other Women in Leadership topics.

January 4, 2018 0

Want to Build High-Performing Relationships at Work? Try This.

Building collaborative work relationships with colleagues and avoiding threats to project collaboration are issues that every employee today must deal with.

To address the real-life challenges that people face in today’s diverse and often global – or even virtual – workplaces, eCornell’s Chris Wofford was joined by Dr. Michele Williams, a scholar at Cornell University’s Scheinman Institute on Conflict Resolution as well as a Faculty Fellow at the Technology, Innovation and Entrepreneurship Research Network. Their wide-ranging discussion is part of our ongoing Women in Leadership WebCast series.

Wofford: Michelle, thanks for joining us. I’d like to start with the results of some poll questions we posed to our audience. Here’s the first one: “Do fear, stress, or anger play a part in the erosion of trust at your organization?” The overwhelming response was ‘yes’, which is probably not much of a surprise.

Williams: No, it’s not. But what I think is really important in today’s society is that there’s so much economic pressure, a lot of mergers and acquisitions, restructuring and so on, so fear, stress, and anger have become almost a daily part of work. Figuring out how we build and maintain trust when emotions are starting to be just a common part of our work experience is a real challenge.

Wofford: I’ve got another one here I think will be interesting to look at, which is, “Do you believe that lack of trust in your organization is an issue that needs to be addressed?” Again, probably no surprise that 100 percent of the responses say “yes”.

Williams: This is a widespread issue. If we look more broadly, the erosion of trust in our institutions and politicians and government parallels what’s going on within organizations.

I would argue that trust is really the key to collaborative relationships because it really increases things that are essential to collaboration, like information sharing, helping behavior, responsiveness,and flexibility.

If something goes wrong every time you work with a contractor, for instance, you have to renegotiate the contract. That’s extremely costly. If you trust them, you can respond in a more responsible way that allows you to work around whatever problems arise.

Trust also decreases the need to monitor everyone. If you have to watch everything your team member does, it’s going to really slow down the project.

Wofford: Ok, trust is important. I think that’s something we would all agree on. But what is trust, really?

Williams: Everyone has almost their own definition, including academics, economists and
organizational people, and all of them tend to vary a little bit. But what we’re going to talk about here is psychological trust.

Whenever you collaborate with someone, if they don’t do their part, it can really harm you. When you rely on someone there really is a risk of opportunism or revenge. But you take this risk, not as a huge leap of faith but based on the expectation that others will be helpful or at least not harmful.

This belief that others have benevolent integrity and confidence is really the basis of trust; the trustworthiness you perceive in your colleagues. Do they have the ability to carry out the tasks or write the report or analyze the numbers? Do they follow through on what they say? That’s really what we’re talking about when we’re talking about building trust.

Wofford: Going back to our opening question, how does trust deteriorate?

Williams: Fear and stress can undermine rational cooperation. Time and time again, research studies show that people will punish others even at a cost to themselves if they believe they’ve been treated unfairly.

Tough economic times and layoffs make people fear that others are not going to be able to cooperate and are just trying to protect themselves. Fear can also cause employees to avoid one another and it’s very hard to get work done when people are avoiding you.

When it comes to anger, it can really cause vengeful behavior and override understanding and forgiveness. Everybody makes mistakes, but if people aren’t given a second chance, it often ends up undermining your project without giving them the chance to either explain what happened or to rebuild the trust.

Wofford: How do our different personalities and personal assumptions play into issues of workplace trust? I mean, we’re all individuals right?

Williams: I teach a course in intergroup dialogue and part of the foundation of that course is trust and how you give people the benefit of the doubt when talking about issues that are controversial. Can we have a discussion with people who have different assumptions and can we do it in a way that moves things forward rather than placing blame?

Wofford: Isn’t a lot of that just making people feel comfortable?

Williams: Exactly, and honesty is what brings about those high-quality connections that really facilitate work.

I want to talk a little bit about emotional work. Everyone’s probably had a colleague who’s had a bad day and you’ve tried to cheer them up. That’s what emotional work is. It’s when you try to change your own emotion or someone else’s emotion. Emotional work is really key to building trust in settings where there may be high emotions.

If you are all working really hard to get something done, there’s a lot of stress and tension. If team members are able to help each other manage that, they’re able to maintain that trust at a higher level.

Wofford: So we have to manage emotions in addition to doing our work? How does this play out in a real-world setting?

Williams: Emotional work has two fundamental foundations. One is emotional influence. Can you make the other person feel differently than they’re feeling now in a way that will help them work and continue their relationship with you and with a project? Can you see the situation from the other person’s point of view so that you can figure out the best strategy for interacting?

So how do you do that? There are several different things you can do. One is to alter the situation. Managers often do this if they have a negative feedback report to give to an employee. Instead of calling them into the conference room or the manager’s office, they might instead take them out to lunch and make it a more informal situation.

Another way is to alter the other person’s interpretation of events. You know, projects often fail and that can be crushing. But being able to reframe that into a message of “failures only lead to success” is very effective. Get them to think about it in a different way. Those types of interpretations help people go forward and build and maintain trust.

You can also change the environment. Go play racquetball, go out for a drink – that’s probably not a long-term solution but it works in the short term.

Another approach is that sometimes people say, “Suck it up, just keep going and move on.”

Wofford: Is this emotional work the responsibility of HR, of leadership, or of all of us?

Williams: This is definitely something that leaders do and something that people expect of their leaders. But it’s also something that people do within a team. You need to support each other.

If you don’t notice how other people are feeling, there’s not as much the manager can do about it. Team members have a huge impact because they’re with that person every day, so they’re in the position of being able to reframe a failure or a challenge in a way that makes people go forward.

I think that this is important at all levels of the organization. HR certainly has a critical role to play, including in what type of training they can provide so that people start to understand these behaviors.

Wofford: I want to turn back to our audience for a moment and ask them to weigh in on this poll question: When you feel anxious, stressed or angry, what would you like your team members and managers to do? We have some options: one, use humor to distract you; two, listen to your story; three, help you think more positively; and four, give you advice.

The answers are now in and I don’t know if you’ll be surprised by this, Michele, but the most popular answer was two, to simply listen.

Williams: Listening is critical. I think that a lot of times people jump in with advice when they haven’t understood the situation because they haven’t taken the time to really listen to the person. They’re only half listening and then they start offering solutions. So listening is extremely powerful and it shows that you care and are trustworthy.

Wofford: Not everyone is willing to share their feelings though. How do you find out that your team members are angry or stressed if they don’t come out and say it? How do you anticipate it?

Williams: You’re right that people won’t always tell you, so you might have to look for clues. It may be that you have a team member who used to always go to lunch. If they stop going out to lunch with you, that’s a clue that something’s probably up.

A lot of this is about the proactive process of imagining other people’s thoughts or feelings from their point of view. This is important not only in terms of emotional influence but also just in terms of communication. Communication scholars have looked at perspective-taking and it turns out that when you take someone else’s perspective, you adjust what you say to their knowledge level and to their experience. You frame things in a way so that they actually understand what you’re saying better. It also helps you feel closer to people once you’ve taken their perspective and this in turn makes you care more about their outcomes. It’s a very powerful process if people engage in it.

You know, there is this myth that people are simply trustworthy or not and all you have to do is watch your colleagues and see how they behave and you can figure out if they’re trustworthy or not. But in reality, trustworthiness is something that’s negotiated. Both sides have expectations for trustworthiness and you have to talk about them to figure out where to meet in the middle.

Wofford: So we know that perspective-taking and managing other people’s emotions and emotional influence are important, but how do we get there? How do we get to a place where we’re doing that regularly?

Williams: I would just say practice, practice, practice. Perspective-taking is critical because perspective-taking decreases when people are under stress, under time pressures or when they’re trying to multitask. And of course, this is exactly when it’s most needed.

On a personal level, get feedback. Solicit feedback from individuals about how well they think you understand their perspective. Ask people, what are the situations in which I’m at my best?
Think about those types of situations so that you can build on those strengths.

And finally, practice generative listening. Generative listening goes beyond active listening. So you are listening – you’re not texting while they’re talking to you – but more than that, you’re also affirming their perspective.

You don’t have to agree with someone to affirm that you’ve heard, what they’re saying, and what assumptions they are moving forward from.

Wofford: What are the takeaways you hope people get from our talk here today?

Williams: Building high-performing, collaborative work relationships requires effort, perspective-taking, emotional work, and threat reduction. It’s an interpersonal process that’s ongoing. You don’t do it once and stop.

In today’s global workplace, effective work relationships are key to promotions, project success, and a company’s profitability. Some of the concepts we’ve talked about today can help you build and maintain the trust you’ll need within your team or organization.

Wofford: Michelle, this has been fantastic. Thank you for joining me.

Want to hear more? This interview is based on Michele Williams’ live eCornell WebSeries event, Building High-Performing Relationships at Work: What Leaders, Followers and Team Members Need to Know. Subscribe now to gain access to a recording of this event and other Human Resources topics.

January 4, 2018 0

Should We Abandon Tipping? Here’s What Would Happen.

A question that has been on the minds of many in the restaurant business of late is whether or not eateries should abandon the concept of tipping.

To discuss the arguments for and against dropping this long-entrenched practice, we invited Michael Lynn, a professor of consumer behavior and marketing at Cornell University’s Hotel School, to join eCornell’s Chris Wofford as part of our Hospitality WebCast series.

Wofford: Michael, thanks for joining us. Restaurants have been around forever, tipping has been around forever. Why is this suddenly such a hot topic now?

Lynn: Well, the debate over whether we should tip has also been going on forever. There’s a guy named William Scott who wrote a book in 1916 called The Itching Palm: A Study of the Habit of Tipping in America. All the way back then, he was saying that Americans should get rid of tipping and that it was undemocratic.

In the 1980s there was a bunch of interest within the industry in getting rid of tipping because the tax law made restaurants more liable for paying taxes on cheap income. Today, the increased interest in raising the minimum wage is creating price pressures on restaurants. So it’s a perennial kind of debate.

Wofford: Let’s get right to it: should restaurants abandon tipping?

Lynn: If I had to give a quick answer, I would say that if you’re a mid-priced or lower-priced restaurant then no, not yet. But if you’re a really upscale high-priced restaurant, you should consider it.

Wofford: You and I have both worked in restaurants for years. Something that always comes up is that there’s a big disparity between the money that servers make compared to those working in back. So as you talk about the minimum wage thing, is the idea to ultimately bring the wages of these groups a little bit closer?

Lynn: Well, let’s just take New York City as an example. Servers there are making about $25 to $30 an hour. Cooks are making $13 to $15 an hour. Yet the skill sets are not that different. There might be an appearance of difference in the kind of language used to describe the minimum requirements to be a server – you have look a certain way, you’ve got to be able to speak properly, etc – but serving is not a skilled job. Cooking is perhaps more skilled, but those people are making less money.

If restaurants, through higher prices or through service charges, were able to pay servers more than $15 an hour but less than the $30 they’re currently making, they could take that money and redistribute it to the back of house or keep some of it for themselves for more profit. Servers are making upwards of 25 percent of a restaurant’s gross sales while the owners don’t make anywhere near that level of profit despite taking all the risks. It’s a model that people need to start thinking about.

Wofford: Michael, you wrote ‘The Business Case for (and Against) Restaurant Tipping’. Let’s talk about the years-long research behind that: how do you go about it, who did you talk to and what were you hoping to learn?

Lynn: My very first study was standing outside of an IHOP restaurant interviewing customers and asking them to rate their service experience and tell me what their tipping point was. I was simply interested in whether or not tips really are affected by the service quality. And the answer is that people do tip more for better service but not a whole lot more. To give you some sense of the magnitude, if someone rates the service at 3 out of 5, they’re likely to leave on average a 14 percent tip. If they rated the service a 5, they might leave a 16 percent tip.

Wofford: When we talk about the idea that maybe we should eliminate tipping, what kind of behavioral changes might take place within a within a staff?

Lynn: Theoretically, if servers start making less money, they’re going to leave and go elsewhere to make the money that they’re accustomed to making. So you might lose your top-level employees. On the other hand you ought to be able to replace them with equally competent people. I’ve done a lot of research that shows that experience is not that strongly correlated with the quality of service. It doesn’t take that long to learn how to be a good waiter, and a lot of it has to do with disposition, not skill set.

So restaurants could expect to lose some current employees, but you ought to be able to replace them with equally competent people. You’d pay your back of house more, making it easier to attract higher quality back of house people, and you should be able to keep them.

Wofford: Let’s say tipping’s gone. What happens?

Lynn: You’re either going to replace tipping with higher services, including menu prices, or you’re going to add on an automatic service charge. The advantages of an automatic service charge is that it separates the paying of services from the payment for food, and it keeps your menu prices low.

Wofford: Would the charge be related to the overall cost of the meal?

Lynn: Sure. Let’s say I’m going to charge an 18 percent service charge. I have a choice: I could add the charge to every bill or I could increase my menu prices by 18 percent. Functionally it’s the same thing from the standpoint of the total expenditures by the consumer, but consumers won’t perceive them the same. Because when consumers judge the expensiveness of a restaurant, they’re looking at the menu prices. And when they see 18 percent higher menu prices, all they know is that their burger now costs a lot more than what it used to. But if there is an 18 percent service charge, they’re still seeing a normally priced burger. So, the perceptions of expensiveness are not going to be harmed by adding a service charge.

Wofford: Ok, but might customers’ perceptions of that service charge have a negative effect on them? You’ve basically mandated an 18 percent tip, which might rub people the wrong way.

Lynn: I have just completed two studies looking at the impact that moving away from tipping has on restaurants’ online service ratings. In one study, I looked at Joe’s Crab Shack, which recently replaced tipping with higher prices at 12 of its restaurants. I looked at the Yelp reviews and found that their service ratings declined when they abandoned tipping. In another study, I looked at a bunch of restaurants across a variety of states, mostly upscale, that replaced tipping either with service charges or by raising the menu pricing. What I found was that their declines in online service ratings were stronger if they replaced tipping with service charges than if they replaced it with service-inclusive menu pricing, and it was stronger for downscale restaurants than upscale restaurants. The only group that was able to do this without suffering a decline in online service ratings were the upscale restaurants that replaced tipping with higher menu prices. Why? I don’t know for sure, but I think it’s because customers hate service charges and that hatred translates to lower service ratings.

Replacing tipping with higher menu prices makes things seem more expensive, but that’s not so bad if you’re already a super expensive restaurant catering to a pretty wealthy, not price-sensitive clientele. But if you are a restaurant with customers who are a little bit more price sensitive, then the extra expensiveness that’s perceived when you raise menu prices will lower your ratings.

Wofford:So we are back to where we started – if you’re a downscale restaurant, you probably shouldn’t abandon tipping just yet. What about the fact that customers actually seem to prefer tipping? Tipping is empowering in a strange way.

Lynn: Absolutely. You get all kinds of perceived benefits from tipping. There’s assurance that I’m going to be treated well, otherwise I can withhold payment. There’s status and power that some people get off on. There are a lot of benefits to the consumer psyche from tipping.

Want to hear more? This interview is based on Michael Lynn’s live eCornell WebSeries event, Should Restaurants Abandon Tipping?. Subscribe now to gain access to a recording of this event and other Hospitality topics.

January 4, 2018 0

Hunger and Obesity from an Economic Perspective

A distinguished economics professor may not be the first person that comes to mind as an expert on global nutrition, but John Hoddinott has spent years at the intersection of the two fields, studying the consequences of poverty, hunger, and undernutrition in developing countries.

Hoddinott, the H.E. Babcock Professor of Food and Nutrition Economics and Policy at Cornell University, has conducted research in countries around the world, including Bangladesh, Ethiopia, Guatemala, Mali, Namibia, and Zimbabwe.

As part of Cornell’s Expanding Nutrition Frontiers WebCast Series, Hoddinott joined eCornell’s Chris Wofford to discuss chronic undernutrition in developing countries and the obesity epidemic in developed countries, as well as possible solutions to both issues.

Wofford: John, thanks for joining us. Let’s begin by defining our topic. What is chronic undernutrition?

Hoddinott: One way to think about this is to think about the nutrient content of foods, here being micronutrients and macronutrients. Micronutrients are things like iron, vitamin A, plus a ton of other things, but we’re not talking about those. We are going to talk both directly and indirectly about the macronutrients, which are calories, proteins, and fats.

Wofford: So we’re talking about a deficiency in calorie intake, right? Spending more than you’re taking in.

Hoddinott: That’s exactly right. We know that if children are not consuming enough of these calories or other macronutrients, they’re not going to grow as fast as they should. We can measure that in two ways: we can look at how much they weigh relative to their height or we could look at their height relative to their age and sex.

About 15 years ago, the World Health Organization commissioned a massive study in five or six different parts of the world in communities which were relatively resource rich. These were places where kids had adequate access to food and good access to health care, water, and sanitation. The WHO basically just followed these kids as they grew for the first two years of their lives and it turns out that well-nourished, healthy kids by and large grow at the same rate everywhere in the world. That is really useful for us because it gives us a reference standard.

So when we talk about a child who’s chronically undernourished, we are saying they are undernourished in terms of their height relative to the standard.

At the moment, there are about 160 million children in the world who are chronically undernourished. Most to those children live either in Sub-Saharan Africa or parts of South Asia.

Wofford: A cynic might ask, why we should care that little kids are a bit shorter than they should be?

Hoddinott: Well, the first part of the story is that people who are short when they are very young are more likely to be short when they are adults. And how might that actually matter for them in terms of how their lives turn out? Well, to give one example, women who are very short face a greater risk of obstetric difficulties when giving birth.

On the economic side of things, economists have looked at this and for every additional percent in height you have as an adult, your wages are higher by maybe one to three percent.

But there is something else that arises that is actually much more important. Children who are chronically undernourished suffer neurological damage in terms of the way their brains form and develop. We know that’s linked to how well they do in school.

I was part of a 40-year study that followed individuals from birth in rural Guatemala in the 1960s and 1970s through the early 2000s.

We’re actually just in the process of going back to find them and re-interview them again, but what showed up in this study is that people who are malnourished when they’re young didn’t go as far in school. They got less well-paying jobs. They also do worse on the marriage market. When you talk about marriage, for most people that involves thoughts of love and romance, but I’m an economist and we think of these things differently. Marriage is like a market in which you are looking for a match. The taller you are, the better educated you are, the better you are going to do in the marriage market. You are going to get a better partner.

What we found is that people who are chronically undernourished at the age of two are more likely to be poor when they’re adults between 25 and 40. This tells us that being chronically undernourished early in life carries long term consequences.

Wofford: The obvious question here is, what can we do to avoid those long-term consequences?

Hoddinott: You might think there is a simple thing you can do, which is to just make sure there’s more food, right? The simple solution is saying, “Look, kids need to grow, so if we grow more food, kids will grow faster.” But say you’re living in a country where food production is already growing really fast. Bangladesh, for example, has gone from a country that was famine prone in the 1970s to one which is self sufficient in terms of food production. You’d think we would see the nutritional status of kids actually improving really dramatically. But there is no correlation whatsoever.

So then you say, “Okay, well maybe it’s not so much about food, but more about income.” With greater incomes, people could buy more food for their kids, receive better healthcare, that kind of stuff. But income doesn’t have a direct correlation either.

Wofford: Is the problem the quality of nutrition?

Hoddinott: Yes. There has been work done by nutritionists, particularly nutritionists at Johns Hopkins University, where they have gone around and analyzed the blood of chronically undernourished kids in Africa, particularly in Malawi. One of the things they found in those kids is that they have very low levels of essential amino acids.

Researchers have identified something called an mTOR and there’s a particular type of mTOR that signals the body to create growth. And what does an mTOR need to work? It’s essential amino acids.

So everytime someone suggests that the solution is just to produce more food and produce more calories, well, maybe it’s not just calories you need.

When you see that big increases in income aren’t having such a big effect on nutrition, you think that while people may be buying stuff they need, maybe they’re not quite buying the right stuff.

There is an experiment I’ve been working on with some colleagues I’d like to share.

Wofford: Please do.

Hoddinott: Okay, so we take a group of people and we’re going to randomly assign them to different treatment groups. Some people, and this is specifically related to mothers, get a cash transfer every month for two years. So that’s group number one.

Group number two consists of households where we’re going to give those mothers a food basket that consists of cereal and a lot of calorie-based food.

Then we’re going to have a third group that will get the cash transfer but they’ll also get nutrition counseling on what their kids eat. Another group will get the food baskets plus the nutrition counseling and finally we’ll have a control group. This goes on for two years and we look to see what happens to the kids.

Wofford: What were your findings?

Hoddinott: The cash transfer group—and, remember, this is a significant amount of money—had a little bit of an effect on what the kids ate but no effect on their height. There was also no effect whatsoever in the food basket group. It didn’t matter what they ate, even though it was stuffed full of calories. The same was true for the group that got the food baskets and the nutrition education: no effect whatsoever.

Wofford: This isn’t looking great. What about the cash and education group?

Hoddinott: That’s where you see growth that is large enough to be meaningful. To put it in context, the prevalence of chronic undernutrition falls by seven percent over two years in the group that gets the cash and the nutrition training. That’s the equivalent of three and a half percent per year. At the moment in Bangladesh, the rate of chronic undernutrition amongst kids is falling at the rate of about one percent per year and that’s one of the fastest reductions in the world. We’re seeing results that are triple the national rate, which is already excellent by international standards. So what’s going on? Why does the cash and nutrition training make the difference? Well, they used the money to buy extra calories but because of the training they were also much more likely to buy animals or soups, milk, eggs and a little bit of fish—that kind of stuff.

Wofford: What are the next steps? What do you do with that kind of information?

Hoddinott: What it suggests is a very large shift away from worrying about the amount of calories to worrying more about their quality.

There are things that point in the direction of there being something about animal source foods that is really important for child growth. So what should we be doing about that?

You might suggest that everybody gets chickens, but for most people they’d probably either die or run off. We could give everybody a cow, but that’s also really expensive and most people are probably not that great at raising livestock. A real constraint on these animal source foods is that they’re really expensive, particularly in poor populations. If we can’t get the price of those things down, it’s very hard to increase consumption levels. We need to look at both the supply and the demand for quality food products and then think about how that is best attained.

Wofford: Speaking of animals, there is a trend here in the United States in which people are eating far less meat than they used to. There’s a focus on eating fewer processed foods and so on. There are also a lot of people worried about the environmental impacts of meat production as it relates to land and water degradation and the emission of greenhouse gases. How do you weigh the benefits of an animal-based diet against some of the drawbacks?

Hoddinott: I think the answer is not so much to think about the total level of production and consumption but to think about how it’s distributed globally. North Americans and Europeans probably consume more than they should, while we have very poor populations in developing countries that aren’t consuming enough.

Wofford: How about calorie intake, obesity rates, things along those lines?

Hoddinott: Again, I’m an economist, not a nutritionist, but I think there are a couple of really interesting and important issues, one of which is the significant health costs to the U.S. economy. Certainly the overweight and obesity problems represent a significant drain on the market economy.

Globally, the prevalence of overweight and obesity are rising dramatically. For every person in the world who is considered hungry, there are two and a half people who are overweight. What that means is that designing policies and interventions becomes much, much harder, in the sense that if you are worried about the undernutrition part, you can’t just say, “Well, I think we can actually address the undernutrition part by making calories really cheap.” That might help one part of your population, but it might be somewhat detrimental to another part. So trying to get the balance right becomes really tricky.

Wofford: You said a moment ago that there’s no silver bullet solution, but are there any shining examples of economic policy or prescriptions that you think might work in one place versus another?

Hoddinott: If you’re concerned about the hunger and nutrition part, then you want to make sure that economic growth is concentrated at the bottom. In the context of chronic undernutrition, you also want to align it with work in other areas. You’ve got the nutrition education part to encourage people, for example, to have their kids consume more diverse healthy foods. You want to work on things like improving water quality. You want to improve the sanitation infrastructure, all that stuff.

Wofford: Let me ask you this. How does everything that we’ve described here translate to your work at Cornell?

Hoddinott: I actually teach a course called The Economics of Food and Malnutrition. The philosophy of the course is that it’s open to both economists and nutritionists. The idea is that if you are an economist, we’ll teach you about the nutrition, and you’ll see how the two link together. For the nutritionists who come to the course, we’ll teach you the economics and you can see how the two link.

We start off with the big picture type statistics and we drill down to ultimately, why farmers grow what they grow, particularly in developing countries. Then we move on to talk about dimensions of undernutrition, some of the things we’ve been talking about here. We talk a little bit about acute undernutrition and micronutrient deficiencies and various ways it can be addressed. Then we round that off by talking about issues around overweight and obesity, and some of the trends and economics behind that.

And that takes us back to where we began, which is the somewhat amazing factoid about the numbers of people who are hungry on the one side and overweight or obese on the other.

Wofford: This concludes our latest Expanding Nutrition Frontiers WebCast. John, thanks for making yourself available and thanks to the audience for tuning in.

Hoddinott: Thank you.

Want to hear more? This interview is based on John Hoddinott’s live eCornell WebSeries event, Chronic Undernutrition in Developing Countries: Retrospect and Prospects. Subscribe now to gain access to a recording of this event and other Expanding Nutrition Frontiers topics.

September 8, 2016 0

Leadership Communication – Power Up Your Presence

Professional presence is a combination of how you look, act and speak. Presence helps others around us quickly decide whether they want to work with us or trust us with greater responsibility. Many people are unaware of behaviors they exhibit that detract from their professional presence. This webcast will make you aware of some simple things you can do to power up your presence and improve the opportunities provided to you at work.

In this interactive session, Angela Noble-Grange, Senior Lecturer of Communication at the Johnson School, will help you identify your own shortcomings and outline how you can overcome them to communicate and act with confidence, authority and a powerful presence.

In this fast-paced discussion, you’ll learn:

How to correct your communication style to be more effective and get results.
To develop your own personal pitch and communication style.
How to capture a listener’s attention and elevate your standing as a leader.

Here’s a 5-minute excerpt from our recent WebCast with Angela Noble-Grange of the Johnson School at Cornell.

Would you like to see the full-length presentation? Then go here to sign up for your free 30-day trial and view the entire presentation on the Women in Leadership Channel.

June 9, 2016 0

The Triple Bottom Line In an Entrepreneurship Enterprise

Entrepreneurs have a unique opportunity to structure their businesses in a way that achieves balance in the “Triple Bottom Line” (TBL). To find this balance in the TBL, you must manage the competing, as well as complementary, business interests of people, planet and profit. This one-hour webinar will highlight the value of a strong TBL strategy that promotes environmental and social initiatives while optimizing the financial health of the enterprise.

By the conclusion of the discussion, attendees will understand:

Why entrepreneurs should integrate this strategy throughout their enterprise
The framework and conditions necessary for establishing a Triple Bottom Line
Key factors for implementing a successful TBL strategy and how this strategic approach creates value for the entire business enterprise.

Click here to preview this WebCast. Sign up for a 30-day trial of our Entrepreneurship WebSeries Channel to attend for free!

Inspiring people across the world through lifelong learning.

Tag: Keynotes

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The Triple Bottom Line In an Entrepreneurship Enterprise

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