Spy Versus Spy Versus Spy

There are more first-run programs on the summer television schedule than ever before, but so far shows like ''North Shore'' and ''The Ultimate Love Test'' have nothing to offer viewers other than newness. Meanwhile, a trio of reruns from decades ago — BBC America's new Friday night line-up of ''The Avengers,'' ''The Saint'' and the ''The Prisoner'' — delivers truly original programming.

All three programs were produced between 1966 and 1969, but they feel surprisingly contemporary — there's not a hippie in sight, and their detached cool suggests current fashion and design trends. The characters' clothes are impeccably tailored, they are surrounded by sleek furniture and they drive sexy cars — the life to which every metrosexual in an Eames chair or a Mini Cooper aspires.

BBC America will show 57 episodes of ''The Avengers'' in the 8 p.m. slot — 25 with Diana Rigg in her signature Emma Peel role and 32 with her successor, Linda Thorson. Those with Ms. Rigg capture ''The Avengers'' at its 1967 peak, the screen crackling with the charisma of Peel and Patrick Macnee's John Steed. The plots are formulaic — mysterious events occur; Steed, the Pierre Cardin-clad secret agent, calls in his amateur aide, the cat suit-wearing Ms. Rigg; and the investigating begins. The key to the show's appeal is the chemistry between Steed and Peel, and its original success was in part due to the mystery of the characters' relationship — are they or aren't they? That seems less central now — the flirty push-and-pull was novel in the 1960's, but it's been a required dynamic for every show since ''Moonlighting.'' In any case, it's quite obvious that Ms. Rigg's karate-chopping Peel would stomp all over the bowler-hatted Steed.

So instead of sexual tension, we have entertaining and cheerful presentations of plot flourishes that are still outlandishly fantastical — a standard criminal on ''The Avengers'' might travel through time or be invisible. Almost 40 years later, the anxieties behind the mysteries (involving corporate treachery or false information being peddled to governments) seem less escapist, but the presentation is so breezy you rarely sense anyone is in danger. You also never forget that ''The Avengers'' is a product of its era — the lo-fi special effects are a dead giveaway — but you are happy to be swept along to the conclusion of each episode, where Steed and Peel ride into the sunset. Chastely, of course.

Roger Moore's portrayal of Simon Templar, hero of Leslie Charteris's ''Saint'' novels, is similarly lustrous — here's a man who dons a wet suit, swims at night to infiltrate a K.G.B. safe house and emerges with hair beautifully coiffured, looking like a male model. BBC America has 43 color episodes of Seasons 3 and 4 and has been screening the show since April; it will be restarted this Friday at 9 at the beginning of the third season. It is amusing to see Mr. Moore as the vain and charming Templar, whose less-than-saintly past as a jewel thief is glossed over — his notoriety, in fact, only seems to help him. Templar's mysterious background is never explained — he's a loner who travels to help those in need, always with the cloud of his rumored profession hanging over him. This week's episode is a typical one for ''The Saint'': a Russian scientist wants to defect, the scientist disappears, his beautiful daughter seeks Templar's help.

Mr. Moore graduated from the series to replace Sean Connery as James Bond, where he removed the lethal, angry edge Ian Fleming had written into that character. His blithe characterization works better on ''The Saint'': Mr. Moore's portrayal may be shallow, but he looks great and everyone goes home happy.

Whether by accident or design, BBC America has left Friday night's best until last. If you accept ''The Avengers'' and ''The Saint'' at face value, you will be jolted out of your comfort zone by ''The Prisoner,'' the classic 1967 series created by and starring Patrick McGoohan. Each episode is likely to gnaw at you slowly, and you won't feel reassured when the short series concludes. There are a mere 17 episodes — Mr. McGoohan wanted to produce only seven, but was required to do more to sell the series to CBS — and all begin by reprising the basic plot: an unnamed spy (Mr. McGoohan) angrily resigns and is packing a suitcase when he is gassed, only to wake in a place known as the Village. No one uses names — Mr. McGoohan's character is simply No. 6 — and many episodes start with the same conversation between No. 6 and No. 2, who is played by a succession of actors. No. 2 wants to know why the prisoner has resigned; the character is replaced in virtually every episode, apparently dispensed with for failing to discover the information. When told he is now known as No. 6, Mr. McGoohan's character declares: ''I am not a number. I am a free man.'' No. 2, who sits in a futuristic control room in a Philippe Starck-like bubble chair, just laughs.

''The Avengers,'' ''The Saint'' and ''The Prisoner'' present different countenances of Britain's Mod period — the first two jovially embrace the splashy, colorful Pop art of the 60's, the third, the era's paranoid minimalism. Series with a political framework are always at risk of being dated, and the cold war backdrops of these three spy programs definitely reflect an old world order. But in a cable television universe where reruns are still standard fare, this threesome demonstrate that vibrant art direction and storytelling can go a long way toward agelessness.

Published by The New York Times, July 4, 2004.

Pushing the buy buttons

As the old ways of reaching customers grow less and less effective, marketers are using increasingly esoteric research to crack the code and sell more.

In a leafy suburb about 15 minutes from downtown Atlanta, a magnetic resonance imaging machine is whirring to life. Under most circumstances, a person receiving an MRI scan feels a sense of dread and uncertainty: is it a tumor? Multiple sclerosis? Evidence of a stroke? The machine begins its incessant hammering noise as the electrical current rises in gradient magnets opposed by the main magnetic field, so strong it can pull objects across rooms. You’re trapped, flat on your back, in an enclosed space. An MRI scan is an uncomfortable, lonely and often scary way to spend half an hour.

Yet the people at Emory University are not battling disease or illness. As the MRI process continues, images are flashed before the subject’s eyes - cars, people, products – and elicit different brain responses. But it is the lighting up of one particular area – the ventromedial prefrontal cortex – that interests these researchers. That is the region associated with preference or, more precisely, your sense of self. And for advertisers, manufacturers and retailers struggling to understand just what makes consumers tick, the prefrontal cortex seems the closest thing to a map.

“A lot of what motivates our behavior occurs below the level of conscious awareness,” the research director of the Atlanta consulting firm working with Emory, BrightHouse Neurostrategies Group’s Justine Meaux, told The Atlanta Constitution-Journal last year. “We give [companies] insight into how to develop relationships with consumers.”

Meaux would not be interviewed for this article, despite repeated requests. Indeed, after enthusiastically discussing the emerging field of “neuromarketing” in recent years, those involved are now significantly less forthcoming amid growing cynicism about the motivation of their research. All deny the holy grail is a “buy button” in our brains – we are, apparently, much more sophisticated than that – yet opponents are already lining up, lobbying the United States Congress and raising frightening claims of potential misuse.

BrightHouse’s research at Emory was halted last year after complaints led by Commercial Alert, a non-profit group at the forefront of demanding answers about neuromarketing. In a letter to Emory president James Wagner, Commercial Alert executive director Gary Ruskin argued universities “exist to free the mind, and enlighten it”. “They do not exist to find new ways to subjugate the mind and manipulate it for commercial gain,” Ruskin wrote, later saying much the same to Senate Commerce Committee chairman John McCain as Commercial Alert sought an investigation into neuromarketing.

“Those with a stake in this new research predictably (and understandably) try to make it sound like nothing special,” Ruskin says. “Leave aside the dubious prospect that corporations are going to pay money for a technology that causes people to buy less. The argument just accentuates the basic question, which is: in a democracy such as ours, should anyone have such power to manipulate the behavior of the rest of us?”

**

Manipulating behavior is, of course, what marketing and advertising is all about. A man standing on a street corner handing out discount vouchers is fundamentally no different to a television advertisement costing a million dollars or a mammoth billboard: the purpose is to get you to spend money. Fortunately, at a base level, the decision about whether you do remains yours alone.

Yet manufacturers, retailers and marketers are realizing that while the actual decision to buy is ultimately beyond their control, there are many ways people can be nudged in their direction. The prefrontal cortex is central to this way of thinking, which seeks to place a scientific explanation on what may once have been simply attributed to dumb luck – someone having a seeming knack for selling, or one product inexplicably succeeding while rivals flounder. That is because marketers are beginning to believe that in a world where products seem increasingly alike and commoditized, consumer loyalty may have little to do with size, color, convenience or even price – and everything to do with what happens to that small portion of your brain.

An example. In the summer of 2003, neuroscientist Read Montague at Baylor College of Medicine in Houston, conducted his own “Pepsi Challenge”: where consumers taste test Pepsi and Coke. When subjects were unaware which drink was which, about half preferred Pepsi. When told of the brands, about three-quarters said Coke tasted better and MRI tests shows the prefrontal cortex lighting up like a neon sign. Publishing his findings in Neuron last October, Montague and his colleagues concluded  “brand knowledge for one of the drinks had a dramatic influence on expressed behavioral preferences and on the measured brain responses”.

In the words of the worldwide chief executive of Saatchi & Saatchi, Kevin Roberts, the drinkers had “an emotional connection”: their long knowledge of Coke, their perceptions of its image and memories associated with it overrode objectivity on taste alone. It is precisely that relationship that people like Roberts are seeking to develop in a sales environment where consumers are empowered by information, swamped by choice and traditional advertising mediums – free-to-air television in particular – are reaching fewer and fewer eyeballs.

“What you have to create is what I call loyalty beyond reason,” Roberts says from his downtown New York office. “When I was growing up in the 80s, the brands had the power. Then we saw in the 90s this complete transformation where Wal-Mart became the world’s biggest company – Wal-Mart now does 17 per cent of Procter & Gamble’s global business. So retailers had the power. What’s happened now is the power has switched from the retailer to the consumer. [Consumers are saying:] ‘You’ve got to emotionally connect with me and you’ve to reach me in a way that I don’t have to think, I don’t have to listen, I just have to feel’.”

Given this premise, it is no wonder companies are working so hard to engender customer loyalty by a variety of means. A senior analyst at knowledge service company FIND/SVP, 30-year advertising and marketing veteran Jay Chase, says consumer preferences shaped early in life are lasting: which is why children often buy the same products as their parents; Coca-Cola and other companies pay US schools for exclusive access; and McDonald’s offers toys with meals and kids’ playgrounds. Aiming at older consumers, McDonald’s has now hired an entertainment marketing firm to cut deals for hip-hop artists to cite its Big Mac burger in song lyrics. “Hip hop can make or break a brand,” Lucian James, whose Agenda Inc ranks products by song references, told New York’s Daily News. Agenda’s latest top 10 “American Brandstand” survey includes Cadillac, Rolls-Royce and Gucci.

Of course, marketers have long understood the benefits of celebrity endorsement. One booming related field is product placement in television and movies, where products are not explicitly endorsed by individuals. Experts believe it is a far more effective way of tapping into consumers’ aspirations and the flow of dollars suggests companies agree: market research firm PQ Media says the dollar value of product placement cracked the $US1 billion mark in the US last year as spending on television product placement jumped 46 per cent and film 15 per cent. In case you were wondering, movie product tracker brandchannel.com says Ocean’s Twelve was last year’s biggest culprit with 41 brands featured, although it does not reveal how many were paid placements. The same theory explains the annual designer battle over dressing stars at the Academy Awards.

Another way retailers seek to tie themselves to your image of yourself is within stores. US retailers such as Pottery Barn now sell compact discs of the music they play while you’re shopping, which is carefully chosen to enhance the mood created by the décor. Marketing experts cite global coffee chain Starbucks as the gold standard in this department – although calling it a “coffee” chain may be misleading. Chase says Starbucks is instead marketing a lifestyle – the expensive and arguably not particularly good coffee is merely the cost of entry.

Roberts insists companies need to realize they no longer own their brands – consumers do. “They have to have it imprinted: the consumer is boss,” he says. “The consumer is not paralyzed by choice – the consumer is having a blast. I will choose to absorb a communication or a message when I want, where I want. You’ve got to make sure that when I’m in the mood to think about your product that you are engaging me, not interrupting me.”

**

In 1957 at a movie theater in New Jersey, James Vicary placed a tachistoscope in the projection booth and flashed messages for 1/3000th of a second every five seconds throughout the film Picnic. The messages were imperceptible to theatergoers and encouraged them to drink Coca-Cola and eat popcorn – and sales rose 18.1 per cent and 57.8 per cent respectively as a result. At least, that’s the story. Asked later to recreate the study, Vicary confessed he had falsified data and the amazing effect of subliminal advertising was perhaps not so great, although US Congress in 1974 banned subliminal advertising from television and radio anyway.

The point is that marketers have for decades been trying to reach scientific conclusions about why consumers act as they do – and to capitalize on that knowledge. Neuromarketing was pioneered by Harvard University’s Gerald Zaltman in the late 1990s and he maintains it is “revolutionizing our ability to understand consumers”, according to The Harvard University Gazette. Indeed, researchers last year conducted MRI tests ahead of the November US Presidential election in an effort to determine what issues voters viewed as crucial and to better target advertising. “These new tools could help us someday be less reliant on clichés and unproven adages,” a former strategist for President Bill Clinton, White House aide and research sponsor Tom Freedman told The New York Times. “They’ll help put a bit more science in political science.”

One the key drivers of this kind of research – and the work done by Saatchi & Saatchi’s Roberts and others seeking to foster emotional connections between consumers and products – is a sheer sense of urgency. Companies face a world where the effectiveness of traditional media as an advertising vehicle is waning as audiences fragment, at the very same time that consumers feel more empowered to make decisions than ever. Some companies are even eschewing television and print advertising entirely in favor of guerrilla marketing campaigns – using word-of-mouth and artificially-created street buzz – and other methods designed to make consumers believe they have themselves discovered and road-tested products.

In an environment where more and more advertisers and products are competing for increasingly picky customers, the suggestion neuromarketing could crack that elusive buying code is all the more alluring. “It’s an interesting area of research: whether there is a particular hot button,” says FIND/SVP’s Crane. “I don’t think it’s going to create a need for a product where there is no need. But it will create a lot of understanding.” Roberts has a different take: “If anybody thinks they’ve got the answer, they don’t. I don’t know what the answer is but at least I know the question: how do you get the consumer to buy?”

Published by AFR BOSS, May 2005.

The phluff factor

The presentation tool PowerPoint is killing our capacity for conceptual thinking, says its nemesis, Edward Tufte.

Of all the ways that pushing the universe's frontiers can go awry - running out of oxygen in space, equipment failure, any of the dreaded rocket malfunctions movies love - this was probably the last imaginable. There were no astronauts; no high-risk maneuvers; no space walks. There was simply a meeting.

As the space shuttle Columbia orbited earth in January 2002, National Aeronautics and Space Administration engineers gathered to discuss a piece of foam that had struck the craft's wing during its launch. A PowerPoint presentation by Boeing offered research and a key slide headlined "Review of Test Data Indicates Conservatism for Tile Penetration". A casual observer might have been forgiven for thinking the Columbia was safe - indeed, no further probe of the threat was undertaken.

We all know the outcome. Columbia exploded on re-entry and the cause was finally determined to be the damage caused by the foam. In its report, the Columbia Accident Investigation Board said it was "easy to understand how a senior manager might read this PowerPoint slide and not realize it addresses a life-threatening situation". Did NASA learn its lesson? Apparently not. The investigation board complained it was also forced to endure several PowerPoint sessions during its probe.

"The Board views the endemic use of PowerPoint briefing slides instead of technical papers as an illustration of the problematic methods of technical communication at NASA," its report said. The man whose work fingered PowerPoint, Yale University Professor Edward Tufte, is less diplomatic. The Microsoft software, he declares, is so "stupid" and "evil" that no "serious person" would use it.

"Imagine a widely used and expensive prescription drug that claimed to make us beautiful but didn't," Tufte says. "Instead the drug had frequent, serious side effects: making us stupid, degrading the quality and credibility of our communication, turning us into bores, wasting our colleagues' time. These side effects, and the resulting unsatisfactory cost/benefit ratio, would rightly lead to a worldwide product recall."

Yet if you work at any major corporation, chances are you'll instead soon find yourself sitting in a darkened meeting room as a PowerPoint presentation drones on. Far from being recalled, the computer program seems more ubiquitous than ever. But has it, and other technological advances, really helped us communicate more effectively?

* * *

Sometimes it's hard to remember the days before laptop computers, before email and voicemail, before BlackBerrys and PDAs and a 24/7 world. Just two decades ago, the business presentation tool of choice was the overhead projector, the cheap and easy successor to 35mm slides.

In 1984, the former head of computer science research at Bell-Northern Research, Bob Gaskins, formed a Silicon Valley software firm called Forethought. Gaskins, who acknowledges his work was inspired by the work of a BNR colleague, Whitfield Diffie, was developing a graphics program to link slides of information on screen and allow computer users to create and edit the content. He called it "Presenter" but had an epiphany in the shower and renamed it "PowerPoint". It went on sale in April 1987.

"I can't describe how wonderful it was," Gaskins told The New Yorker in 2001. "When we demonstrated at trade shows, we were mobbed." Microsoft bought Forethought for $US14 million in cash but allowed Gaskins and his team to remain at arm's length, a situation that changed as the software giant sought to more tightly integrate PowerPoint with its suite of Office software products. In 1992, Gaskins quit - followed quickly by several other original developers - and said the program had become "a cog in the great machine".

The common refrain from those involved in PowerPoint's creation is that it has morphed from a tool designed to complement business presentations into the entire presentation. Critics argue it has removed those trained in the art of graphic and text communication from the process by allowing anyone to create presentations, particularly by using PowerPoint's AutoContent feature, which was added in the mid-1990s and offers ready-made presentation templates.

"When you think of it, colour used to be in the hands of professional artists and graphic artists. Now it's in the hands of anybody with a dot matrix printer," says the principal architect at BioLogic Software Consulting, Ben Lieberman. "I have seen some great presentations. I have seen some miserable presentations. On the whole, I think [PowerPoint] helps but, again, it's putting a really sophisticated tool in the hands of people who aren't really trained in its use. I think Microsoft recognised that by coming up with the templates. With the templates, at least they're not doing any damage. The content might suck, but the presentation will be OK."

Tufte hates the AutoContent feature, arguing "designer features will not salvage weak content". In a career that spans three decades, Tufte has become the world's foremost analyst of visual information and its effectiveness. His trilogy of books - The Visual Display of Quantitative Information (Graphics Press, 1983); Envisioning Information (Graphics Press, 1990); and Visual Explanations (Graphics Press, 1997) - are regarded as classics, while The New York Times even named him "the da Vinci of data". In dissecting tens of PowerPoint presentations, Tufte almost always reaches the same conclusion: slideware such as PowerPoint reduces the analytic quality of presentations; templates weaken verbal and spatial reasoning; and serious analysis is replaced by what he calls "PowerPointPhluff" - chart junk, over-produced layouts, cheerleader-type logotypes and branding, and corny clip art.

"PP convenience for the speaker can be costly to both content and audience," Tufte writes in his 28-page evisceration of the program, "The Cognitive Style of PowerPoint". "These costs result from the cognitive style characteristic of the standard default PP presentation: foreshortening of evidence and thought, low spatial resolution, a deeply hierarchical single-path structure as the model for organising every type of content, breaking up narrative and data into slides and minimal fragments, rapid temporal sequencing of thin information rather than focused spatial analysis, conspicuous decoration and Phluff, a preoccupation with format not content, an attitude of commercialism that turns everything into a sales pitch."

In short, Tufte told AFR BOSS there is "a ton of empirical evidence indicating the stupidity of PP compared to all sorts of other tools for communication". Indeed, one of Tufte's primary criticisms of the software is its inability - through low resolution, the urging of templates and other factors - to display and convey more than a handful of statistics at a time. He calculates that statistical graphics in 2003 in Science magazine on average displayed more than 1000 numbers, Nature magazine more than 700, The New York Times 120, and The Wall Street Journal 112. PowerPoint averaged 12 numbers per graphic, topping only the Russian propaganda newspaper Pravda during the Communist era, which averaged five numbers per graphic.

Larry Gales, the senior computer consultant in the Computing & Communications department of the University of Washington, agrees the "principal limitation in displays today is low resolution". Anyone who has squinted to read figures during a PowerPoint presentation can relate, which is why so many people substitute numbers for pie or bar charts or line graphs. "Tufte makes a big point of the fact the human eye can grab a whole bunch of information at once ... whereas if you have a low-res screen you are forced to go screen-to-screen, so you lose context," Gales says, although he believes both the internet and computer displays can convey some information more effectively than the printed word.

"I don't hate [PowerPoint] as much as Tufte does," he adds. "He really hates it because it forces a very sequential type of display, especially when you just have a few bullets. I would say we now have a new medium of communications power and we have not yet learned how to use it effectively. That the transition from a laboriously constructed paper technology to a very quick summation combined with current low-resolution screens and a lack of standards in terms of how materials should be navigated - that is the problem."

Microsoft estimates about 30 million PowerPoint presentations are made every day. The software boasts some 400 million users globally. It is not, regardless of what Tufte and his supporters say, going away. "We're proud of it," Microsoft's chief product manager for Office software, Dan Leach, told The New York Times in 2003. Leach added it is a tool, "a blank for you to fill in".

That is the central argument of PowerPoint's defenders: don't shoot the messenger. Tad Simons, the editorial director of Presentations magazine, puts the software in the same drawer as email, mobile telephones, video-conferencing and other technologies that have made communication possible by more means and at a faster rate than ever. "You can't blame PowerPoint for bad presentations any more than you can blame a frying pan for a lousy meal," Simons says. "It's a tool. Unfortunately, it is a tool most people use poorly, so it gets a bad rap. Most people are terrible cooks, too."

* * *

One of the major problems with Tufte's criticism - in relation not just to PowerPoint but to the effectiveness of communication generally - is whether it is grounded in reality. People seem to want bite-sized information and mediums are complying, whether it is newspapers embracing the use of colour and news briefs, or cable television networks constantly scrolling tickertape headlines across the screen. Simons suggests Tufte simply "hates the culture that created and uses PowerPoint - the get-it-done, do it fast, sound-bite, bullet-point culture of business that values speed, efficiency and profit over thought, depth and quality".

"PowerPoint isn't evil, it's just a product of its times - which may or may not be evil, depending on your perspective," he says. "Yes, our get-to-the-point business culture sacrifices depth and context for the sake of speed, but is PP the cause? No, I'm afraid it goes much deeper than that - people were ignoring details, subtleties and context well before PowerPoint came along, and will continue to do so long after PowerPoint is gone."

Under these circumstances, the onus appears to be on presenters. If PowerPoint can help the communication challenged, it can also turn good communicators into droning commentators. Executives relate stories of audiences breaking into spontaneous applause not when PowerPoint presentations begin but when the equipment fails.

Experts have myriad suggestions for making PowerPoint more effective. However, the most important is to remember that while it's a reasonable method for displaying visual information - presumably its effectiveness will improve as screen resolutions do - it is not a verbal medium. As Simons notes, PowerPoint slides "are meant to be commented and elaborated upon by a human being, not exist as stand-alone gems of communication craftsmanship".

As for visual information, Tufte, Gales and software architect Lieberman are all proponents of a decidedly low-tech means of communication: the printed handout.

Lieberman likes to refer to the trend towards managers wanting information in small doses as the "eight-and-a-half by eleven mentality", referring to the size in inches of America's equivalent of A4 paper. "When you get into that mentality, you warp your presentation to fit the medium rather than the medium to fit your presentation," Lieberman says.

The solution? "I now present my models on huge pieces of paper and fold them again and again," Lieberman laughs. "Then they can punch holes in them and put them in their notebooks."

Published by AFR BOSS, July 8, 2005.

Attention Getter

Name: Danielle Fisher

Home: Bow, Washington
Gig: Mountaineer
Height: 5'7"
Weight: 130
Age: 20

In June, Fisher became the youngest American to stand atop Mount Everest—and the youngest person ever to complete the Seven Summits, knocking off the highest peak on each continent in just over two years.

SEEN NEXT: On Pakistan's 26,470-foot Gasherbrum and 26,360-foot Gasherbrum II next summer, as she moves on to more 8,000-meter peaks. But she says K2 will keep her from becoming the first woman to climb all 14 of the world's tallest mountains: "I don't want to put myself in that danger."

CLIMBING FIX: Fisher was diagnosed with attention-deficit disorder in sixth grade and credits the intensity of mountaineering—which she got into five years ago, at the urging of her father—with improving her focus. "Increasingly, who I am on the mountain is who I am in the rest of my life."

STEPPING UP: Fisher used guides on Everest, Europe's Mount Elbrus, Antarctica's Vinson Massif, and Africa's Kilimanjaro but plans to climb on her own more in the future—and possibly become a guide herself. But that decision will have to wait until after she graduates from Washington State University, where she's considering a major in material sciences or engineering. "I want it to be a choice when I go climbing. I want to have something else."

SECOND OPINION: "Usually somebody that young doesn't necessarily do very well up high," says Alpine Ascents International senior guide Dave Morton, who led Fisher up Everest. "She is definitely one of the strongest people I've climbed with at altitude."

Published by Outside, October 1, 2005.

Bashful business

The meek may inherit the Earth but they have a tough time in the modern firm, where extroverts thrive. But there is a cure, psychologist Philip Zimbardo tells Luke Collins.

David Brent is walking through the warehouse of paper merchants Wernham Hogg, expounding his management philosophy to his none-too-amused boss. "The thing is though," Brent says, trying to convey a certain gravitas, "no one's dispensable in my book. Because we're like one big organism, one big animal. The guys upstairs on the phones, they're like the mouth. The guys down here, the hands."

"And what part are you?"

"Good question," he shoots back, no beats missed. "Probably the humour."

The central character of the UK television program “The Office”, Brent imprinted himself on millions of people as a triumph of style over substance, someone who has risen beyond his station in life through a mixture of bluff and bluster. He even gets offered another promotion before his incompetence is laid bare.

Most office workers can probably name a handful of real-life David Brents without even trying. We live in superficial times where companies place a premium on appearance and the illusion of competence. It's not necessarily fair or even logical. In Blink: The power of thinking without thinking (Allen Lane, 2005), Malcolm Gladwell notes that it even manifests in terms of height: 58 per cent of American chief executive officers are more than six feet tall (183cm), compared with just 14 per cent of the total population.

"In the United States we have such a narcissistic culture - it's all about self-presentation," says Lynne Henderson, a visiting professor in psychology at Stanford University. "It's a sickness in the American culture."

For two decades Henderson has been trying to do something to counter that culture - by helping the reserved and bashful compete with the extroverts. Working at The Shyness Institute and The Shyness Clinic in California, she treats people who suffer from a syndrome that can be as damaging to your career as any.

Those being treated come from all backgrounds, ages and personalities, introverted and extroverted alike. As Henderson points out, outwardly confident people can be inwardly uncomfortable.

Interestingly, more men than women seek treatment, which bucks the general societal trend of men being less prepared to seek help in such situations. As Henderson points out, "sensitive" men often face difficulties in a professional world which rewards assertiveness, pushing them to seek treatment because their personalities are "counter to what they're supposed to be".

Both institutions draw on the work of their co-founder, the famed Stanford scholar Philip Zimbardo, who remains co-director of the facilities. Zimbardo shot to fame more than 30 years ago with an extraordinary study of human behaviour known as the Stanford Prison Experiment. It didn't have much to do directly with shyness but it was revelatory about what happens to people under pressure.

Zimbardo took 24 normal, healthy college students, randomly divided them into two groups - prisoners and guards - and placed them in a simulated jail. The study was stopped after just six days. Despite knowing it was staged, students assigned as guards quickly became sadistic power-wielders; the prisoners were broken mentally, becoming subservient, introverted and passive.

The outcome astounded researchers and led directly to the conclusion that human behaviour is very much a product of environment. As Zimbardo, now an emeritus professor at Stanford, says: "It's not about the people, it's all about the situation."

Fast forward to the 21st century corporation. Peer pressure encourages business suits and conservative haircuts, just as prisoners wear uniforms and have shaved heads. No guards, but there are colleagues with dominant personalities who monopolise meetings, grab promotions and pay rises, and leave the less assertive invisible and resentful.

"It's nothing to do with fairness and it's all unwritten," Zimbardo says. "In American culture the social facade is very important: to not only look good physically but to be a socially competent person. If you're not, you're just categorised ... there are sanctions against you."

When Zimbardo first began researching behaviour, surveys showed about 40 per cent of Americans considered themselves to be shy. That number is now above 50 per cent and continues to grow, despite the emphasis on appearance in social or work situations.

Zimbardo believes one of the reasons is that society as a whole is becoming less interactive: children camp in front of television rather than playing outside; they text message rather than talk; they listen to iPods and tune out. Adults suffer because technology has all but eliminated the art of small talk: you buy petrol, swipe your card and leave; you deal with machines rather than telephone operators; you can even do your own grocery scanning in some places. So while email and other technologies can help you communicate more effectively on a remote basis, they also reduce the amount of social interaction critical for shy people to overcome their fears.

"There are a lot of skills involved in a two-way conversation," says Zimbardo. "Non-verbal skills such as making eye contact, knowing when to look away, monitoring how much you've spoken and how much they've spoken, knowing how to cut in without interrupting. How do you learn except by practising?

"All the technology has the same consequence: there's virtually no simple social relationship anymore. Each of these things is a very small element, but it becomes pervasive and insidious and part of your everyday life. And the next generation doesn't even have the contrast that I do as an older person to remember what it used to be like. It's just the way it is."

The results can be profound. Studies show shy people typically join the workforce at a later age, earn less money, and can even suffer greater health problems due to the lack of a robust support network and reluctance to admit to medical issues.

But it's not just an individual's problem, because companies that fail to identify and assist people who are quiet achievers can suffer.

"It hurts the company, because as an employee you begin to feel resentment," says Zimbardo. "If I know that my performance is better than yours and yet you're getting promoted, you're getting raises, you're given more opportunities than me ... resentment builds up and over time I say, 'Why bother? Why should I put myself out and give 100 per cent when I'm being passed over?' "

So what constitutes shyness? It should not be confused with introversion, which can be an innate temperamental quality - people may simply be less social, more sensitive and somewhat cautious. Shyness is when the individual is negatively affected by that introversion: they are overly sensitive to criticism, avoid social interaction, and become isolated. There can even be physical manifestations, including sweating, shaking, nausea and dizziness.

"People have quiet temperaments and more introverted temperaments and more sensitive temperaments," says Henderson. "But where shyness interferes in life is when there's such a concern about being evaluated that people don't perform. They don't do what they want to do, they don't perform to their own goals. One can have an employee who's shy and they could be one of the best employees.

"You will even see, at the extreme, somebody who has very good social skills and is even meeting their goals, but they will say, 'I'm still uncomfortable inside.' That's why when you work with shyness you're often working with negative thinking patterns: the self is seen as inadequate and others are seen as critical."

It is easy to see how a personality that leans towards introversion can be exacerbated in an office environment. But it's encouraging to note that psychologists can identify hundreds of individuals throughout history who were like that - Abraham Lincoln and former US Vice President Al Gore among them.

Other studies show the attributes often exhibited by introverts can outweigh the negatives. These people are often good technically and tend to be collaborative team players, despite finding it hard to interact with others.

Henderson says shy people are often conscientious and ethical: "Competence does not correlate with confidence. We all know people who are very confident and we wonder why. The good news for shy people is it's only at the very beginning of an acquaintance that people judge others on their confidence; it quickly becomes about results."

While executives such as Donald Trump and Jack Welch grab headlines, studies show that the best corporate results are more often achieved by management teams you may never have heard of and by people who exhibit classic shy traits. As Jim Collins detailed in his book Good to Great: Why some companies make the leap ... and others don't (Harperbusiness, 2001), executives such as long-time Kimberly-Clark boss Darwin Smith (now deceased) are the best performers - people who "channel their ego needs away from themselves and into the larger goal of building a great company".

That's encouraging, because it suggests you are not necessarily missing out because you are not extroverted. Despite the popular perception that vocal, outwardly confident people are more successful in a business world that seems to place a premium on appearance and confidence, less extroverted individuals can thrive.

"If you look at companies and you look at the management team, a lot of the managers have been shy," Henderson says. "The reason they get to be managers is that people find them effective and want to work for them. A shy person can find role models in any company. One of the beliefs of the person who's shy is that the biggest bully wins. The biggest bully doesn't [win]. There are a lot of excellent managers and a lot of excellent chief executive officers who aren't getting recognition - because they don't care about it. They care about doing their job."

The challenge for companies is to identify and nurture those who do not fit the stereotype of a confident, assertive professional. Ros Coffey, a New York-based global human resources director for a top Wall Street investment bank, says that means not taking people entirely on face value, whether they are overly confident or meek.

"If someone's quiet it could be due to one of several factors: they could be shy, they could be introverted, they might not be knowledgeable, they may be nervous, or maybe they're just not talkative," Coffey says.

"It's absolutely critical that someone's personality or self-presentation is interpreted appropriately. And the impact of a person's outward demeanour depends very much on the type of role you're looking to hire someone for. It's very easy to assume that if someone is quieter they must be more technically inclined. Or to assume that if they're quiet they won't be good at managing a team. People make these sorts of assumptions, and while sometimes these things are true, often they're not. It's impossible to use a broad-brush approach."

However, psychologists agree that shy people need to address the issue. Zimbardo says it is expected that "employees are socially competent, socially adept". Many institutions use Henderson's "social fitness model", which helps shy people attain a level of social fitness - the ability to adequately interact to a point where you are not being negatively affected by shyness.

Says Henderson: "We're changing them from seeing themselves as a shy person to seeing themselves as someone, maybe, with a sensitive temperament, an introverted temperament. That's why I talk about a 'social workout': you wouldn't say if you're out of shape that you have a disease, and you don't have a disease if you're shy. There are many ways to work out socially."

There are some basics. Smile. Make eye contact. Look for common interests to stimulate conversation. Be comfortable giving compliments and receiving them. Make your work visible by drawing people's attention to it, not aggressively but assertively. Collaborate with co-workers and learn to make small talk. Rather than eating lunch at your desk, get out and eat with others. If you have a problem, speak up but talk it through with yourself first. If you're scared of speaking in meetings, practise at home in front of the mirror. And when you find yourself having negative thoughts, challenge them - why would you think that?

"The only thing that kills the shy person in the work environment is isolation and avoidance," Henderson says. "Do not let it go on."

Much of the work of The Shyness Clinic involves changing the way people present themselves, because that dictates how others treat them. "Rather than thinking of shyness as something you're stuck with, there are lots and lots of things you can do in a particular situation," Zimbardo says. "It's how you present yourself and not allowing other people to put a negative label on you."

Published by AFR BOSS, October 14, 2005.

The new consumers

They are forcing companies to walk their green talk. And they have money to spend. Even Wal-Mart is listening. Yet one company is doing much more than following the trend — it’s leading the pack.

Perhaps it's best that the outdoor clothing and equipment group Patagonia is a private company. Its founder, Yvon Chouinard, doesn't exactly live to work: he has just returned from a trip to Russia to spend a single day in the office before heading to Wyoming for more of the derring-do adventures for which he is famous. Indeed, the spry 66-year-old has a simple response when asked about business: "I don't read Fortune or Forbes or Inc. I'm kind of out of it."

Nearly everything Patagonia does should make Wall Street shudder. In the early 1970s, it abandoned its core product - rock-climbing pitons - to reduce environmental damage. After demand for its clothes pushed growth rates to 50 per cent a year in the early 1990s, Chouinard deliberately capped further expansion. In 1996, Patagonia switched all of its cotton products to more expensive organic cotton while barely lifting retail prices, even co-signing loans for farmers as it sought to develop a supply chain that barely existed. And Chouinard isn't driven to make money or even make clothes: he actually wants to change the world. "That's why my company exists," he says.

But guess what? Patagonia is growing steadily at 4 to 8 per cent a year and will this year record sales approaching $US250 million, while customer and employee satisfaction levels are through the roof. And suddenly, its traditions of funding grassroots environmental groups, adopting sustainable manufacturing processes and urging customer activism don't seem so strange. Patagonia is no longer the somewhat lonely flag-bearer for corporate involvement in environmental issues: it now has unlikely bedfellows such as the retail behemoth Wal-Mart and the energy company BP.

Chouinard, however, is underwhelmed. "There's not much going on," he says from Patagonia's California headquarters. "There's an interest, I think, in green marketing - making your company appear to be green. I think most of that came about just through fear because of what happened to Nike and their problems with production. I think a lot of companies have cleaned up their act in that respect. But as far as anybody doing it because it's the right thing to do, I don't think it has happened. There are companies making small attempts, but until it really comes from the heart, from the inside, I don't think they're serious." Or are they?

An interest in environmental and ethical responsibility on the part of corporations is not new. Patagonia has been around for more than 30 years, while Anita Roddick founded the environmentally conscious cosmetics group The Body Shop in the UK in 1976. Yet the episode that brought corporate responsibility to the doorstep of major global companies was that referred to by Chouinard - Nike's battle against accusations that it exploited workers in Asian "sweatshops" to produce its expensive sports footwear.

That controversy erupted in 1996 and quickly prompted Nike's chief executive, Phil Knight, to issue a set of labor initiatives. While the response was praised by crisis management experts, the genie was out of the bottle: the episode revived a much broader debate about just how companies conduct business.

In 2000, Canadian journalist Naomi Klein's book No Logo: Taking aim at the brand bullies (HarperCollins) skewered the effort of companies such as Starbucks, Microsoft and The Gap to disassociate brands from the practices that produce them, and popular culture has continued to drive the point.

The trend has proven fickle in the past: in contrast to a few years ago, no one wearing a fur coat in a New York winter now expects to be jeered. Yet experts believe this latest broad push towards environmental responsibility is likely to last, largely because companies are not independently adopting environmentally friendly practices but are being forced to do so by their customers.

Wal-Mart spokeswoman Tara Stewart insists the company doesn't just want to look responsible. However, it has recognized the public relations potential by heavily advertising its Acres for America initiative, in which an acre of priority wildlife habitat is conserved for every acre that Wal-Mart develops.

"The impetus is, it's the right thing to do," Stewart says. "We looked at how we could offset the footprint [of Wal-Mart stores], be a leader, show other retailers that we could get out in front of this, even more so as our company is turning towards environmental sustainability in building stores. We understand that folks have issues with big box companies."

Chouinard remains skeptical and his response is unusually business-like: examine the numbers. In 2004, Wal-Mart recorded sales of $US285.2 billion and a net profit of $US10.3 billion, owned land worth $US14.5 billion, and spent $US1.4 billion on marketing. Its commitment to Acres for America is $US35 million over 10 years: at an average $US3.5 million a year, that's a minuscule fraction of annual sales.

"They [Wal-Mart] have taken the first step; a tiny little step,'' he says. "Hopefully, they'll see positive results from it and they'll take another step. You might look at a company ... and see how many millions of dollars they give out, but as a percentage of their sales it's nothing."

Of course, public companies such as Wal-Mart have a very different responsibility from privately-held groups such as Patagonia - maximizing returns to shareholders. Yet, like Nike in the wake of the sweatshop controversy, many listed companies are beginning to realize that earnings and environmentalism are not mutually exclusive. Despite all of its very public problems, Nike just reported record fourth quarter net income of $US349.5 million ($452.7 million).

"There's a growing realization that there's a new economy emerging," says Menno van Wyk, the president of shoe company Montrail and head of Conservation Alliance, a group of outdoor companies providing environmental funding. "I think every business has to look at their own economic, long-term self-interest."

One of America's fastest-growing clothing chains is American Apparel, whose entire marketing push surrounds the fact that its products are "sweatshop free": made in the US by staff paid reasonable wages. America's booming food retailer is Whole Foods, an organic food chain, and multinational manufacturers are today well aware of the growing demand - and higher prices - of organic foods. Almost 10 years after Patagonia, Wal-Mart is beginning to sell organic cotton garments (the cotton is produced without pesticides and finished without chemicals) as are many fashion designers and even companies such as Nike.

"Walking the walk, not just talking the talk, is important," says Wal-Mart's Stewart. "Our suppliers are working with us, they're excited about it. We say, 'Here's what we want to do: we want to be able to source organic cotton or provide packaging made out of corn syrup. How do we go about doing that?' "

So who is driving the shift? Marketing experts point to a new group of consumers dubbed LOHAS - lifestyles of health and sustainability. This group comprises people driving organic food's popularity; those on waiting lists for Toyota's hybrid Prius car; buyers of natural health products; and those who listen when celebrities tout the benefits of yoga and meditation. Three in 10 Americans are estimated to be members of this $US225 billion-plus economy.

Some examples: With the American government and manufacturers inactive in terms of lifting car fuel efficiency standards, consumers began lining up for the handful of hybrid cars on the market. Now several car companies are catering to that demand. When the so-called obesity epidemic prompted lawsuits against fast food companies such as McDonald's, suddenly salads and other more nutritionally sound options began appearing on menus. And who would have thought, just a year ago, that Starbucks would today be selling antioxidant-rich green tea Frappuccinos? Corporations respond to changes in consumer demand.

"This market segment has been identified in the States as about 50 million Americans who are predisposed to make purchasing decisions based on their values," the executive director of 1% For The Planet, Terry Kellogg, says of LOHAS consumers. "My question is: are there enough companies speaking to these Americans in ways that are meaningful to them? And my answer is no."

1% FTP grew out of Patagonia's decision in 1985 to donate one per cent of its net sales or 10 per cent of net income - whichever was larger - to environmental organisations. Now an independent non-profit group, it has more than 130 members worldwide who are required to annually donate one per cent of net sales for distribution to conservation causes.

The task of signing members has been made easier by last year's addition of musician Jack Johnson as a supporter. His latest album, In Between Dreams, boasts a 1% FTP logo on the back. Interest resulting from Johnson's involvement has prompted the appointment of a local outreach director - Byron Bay-based Kirra Pendergast - to sign members across the South Pacific. Pendergast began work in June and says Johnson's contribution has been invaluable.

Getting publicity for good deeds is always a priority for corporations. Flip through almost any annual report and the list of causes that companies assist is mind-boggling. Groups such as BP, of course, can afford to expensively advertise their efforts: the company has a series of American television commercials touting its work in developing sustainable energy. One famously features a woman declaring that the ultimate environmentally friendly solution - choosing not to drive a car at all -would be "like asking someone to give up chocolate".

Kellogg says the benefit of a group such as 1% FTP is the ability for corporations without big marketing budgets to publicize their environmental work by displaying the logo on their products. However, while 1% FTP's membership has rocketed by almost 50 per cent in the past three months, he concedes there is a glaring hole in the membership list. The challenge, he says, is to crack the bigger companies.

But big corporations don't always drive change.

Wal-Mart and BP are high profile when it comes to pushing their environmental credentials, but it's arguable that it has been prompted by the actions of smaller players.

"I believe if you want to change government, as a Zen master would say, you don't focus on changing the government," Chouinard says. "If you really want to change government you really have to change corporations, because government is just a pawn to corporations. And if you want to change corporations, consumers really have to change. What we're doing here is giving people the choice to change."

Organic cotton's growth path is an example. When Patagonia decided in 1994 to switch to organic cotton garments, it literally had to create a supply chain because none existed. Even with other manufacturers on board, organic cotton retail sales totaled just $US85 million in 2003, according to the Organic Trade Association - or about 0.05 per cent of the total American apparel market.

Chouinard remains confident: "When the benefits are obvious to consumers, they'll buy. Before we came along there was no way to get clothing made from organic cotton. We're giving people a choice and consumers are reacting.

"People are very selfish. It takes a real leap of faith to buy organically grown cotton clothing because it's not any healthier for you. But it's a lot healthier for the people who are growing it for you, whether it's in Egypt or Indonesia or Texas."

Kellogg joined 1% FTP earlier this year after five years at the apparel group Timberland, where he was the company's director of environmental stewardship. He admits that working at the intersection between business and the environment can be frustrating, but says it has never felt hopeless.

"Sometimes I feel like we're not effecting change as quickly as we could, but I've always felt like we've been making progress," he says. "The way I look at it is we're in the midst of what has been a very slow and gradual trend of more and more companies doing more and more things along a bigger spectrum of environmental initiatives."

In that sense, while the level of commitment from companies such as Wal-Mart and BP may be criticized, no one dismisses the importance of their efforts. Production of hybrid cars - which run on both petrol and electricity - has taken off since Toyota's Prius became popular, and if Wal-Mart customers begin buying organic cotton products, you can be sure fellow retailers will not take long to follow the retailing giant's lead.

"It would be great if we had folks following our lead. We'd love to see it," Wal-Mart's Stewart says.

Montrail's van Wyk adds: "I don't know what their motives are and I don't care. What really matters is, are they going to start doing the right thing? I just think the fact they're doing it says something about how mainstream these values have become."

Of course, driving a hybrid car, buying organic food or wearing clothes made from organic cotton are very much first-world dilemmas. Just back from Russia, Chouinard, who was named by Time magazine in 1999 as one of its Heroes for the Planet, is downbeat about the world rapidly altering its unsustainable path.

"I certainly don't come back [from Russia] optimistic," he says. "They're a long way from buying organic food and clothing - they're in survival mode, unfortunately. I think the majority of the world is in survival mode."

Published by AFR BOSS, October 14, 2005.

Dr. Happy

We spend our lives correcting ourselves, our kids, and our employees—and still we’re not happy. The answer is to try focusing on strengths rather than weaknesses.

Martin Seligman is in the garden of his Pennsylvania home, weeding. A few months earlier, he had been elected president of the American Psychological Association by the biggest margin in the group’s history. It’s 1996, and Seligman has spent months trying to decide on the direction in which he will push the APA. While he wants it to concentrate more on methods of preventing mental illness, his focus is fuzzy.

Seligman’s five-year-old daughter, Nicole, is helping him. But it’s a child’s definition of help: she throws weeds in the air, dances and sings. Seligman yells at her and she walks away, returning a few minutes later.

“Daddy, I want to talk to you,” Nikki says. “Daddy, do you remember before my fifth birthday? From when I was three until when I was five I was a whiner. I whined every day. On my fifth birthday, I decided I wasn’t going to whine anymore. That was the hardest thing I’ve ever done. And if I can stop whining, you can stop being such a grouch.”

The story is recounted in Seligman’s latest book, Authentic Happiness (Random House, 2002). He laughs at the memory, but he’s not belittling it. He is laughing at the life he used to lead, the one that made him one of the country’s most influential psychologists and gave him his present position as the Fox Leadership Professor of Psychology at the University of Pennsylvania. But it was the moment with Nikki that forever altered Seligman.

“Three things happened in that epiphany,” he tells AFR BOSS. “The first was I realized she was right about me. I had been a nimbus cloud, a curmudgeon. I had basically lived my life around using critical intelligence to find out everything that was wrong with everything anyone had said to me. It occurred to me – really for the first time in my life – that any success I’d had in life might have been in spite of those things. Personally, I resolved to change.

“Insight number two was that any corporation, therapy, child-rearing or endeavor that has as the base of its program correcting errors, the best it can ever get to is zero. Zero errors. But when we lie awake at night, we’re usually thinking about how to go from plus two to plus five, not from minus eight to minus three. And there was no science for that. So the notion that raising children is somehow based on reducing errors, or that getting a profitable corporation is somehow based on becoming error-free, that just wasn’t enough. My job was to take the strengths you’ve shown in life and get you to run with it, to use it as a buffer against your flaws.

“The third thing I learned was that psychology itself was unbalanced and half-baked; it was only about the negative side of life and how to undo it. What we needed was a science and a practice of creating the enabling conditions of life, not just undoing the disabling conditions of life. Those were the three things I realized at that moment and the three things that have given me my mission in life.”

That’s not to say the 63-year-old had spent the preceding decades – he earned his PhD in psychology from the University of Pennsylvania in 1967 – drifting aimlessly. His work had concentrated on the notion of positive psychology for years, highlighted by his 1990 book Learned Optimism: How to change your mind and your life (Free Press), and his criticism of what he calls “learned helplessness”. That might loosely be described as the way traditional psychology has offered people convenient excuses for their behaviour, such as blaming it on events from their childhood.

Yet Seligman, who has written more than 20 books, today is a man on a very specific mission. His website, www.authentichappiness.com, has more than 400,000 registered users globally. His work has been featured in everything from The New York Times to Time magazine. And his focus has been on examining what makes people lead fulfilling, engaging and happy lives. The result of his research has been surprising.

Root causes

First, the bad news. No one really knows why people are increasingly unhappy. Seligman says it’s not biological: in spite of pharmaceutical companies insisting depression is the result of neurochemical imbalances (some 19 million Americans suffer from clinical depression, with the antidepressant market worth $US10 billion), he says there is “no reason at all to think our genes, our hormones or our brain chemistry has changed tenfold in any era”. It’s not ecological either. As Seligman points out, the Amish – the puritanical religious denomination with a major community just 50km from his Pennsylvania home – shares his air, water and food yet has only one-tenth the general rate of depression.

So what’s to blame? Seligman breaks it down into four categories. The first is what he calls “the balance between the ‘I’ and the ‘We’”: that is, the modern world’s focus on the individual.

“The problem is when you have a very big ‘I’ and a very small ‘We’, the consolations for failure go down,” Seligman says. “So, 50 years ago or 70 years ago, our parents and grandparents tended to have larger things that they believed in than their own successes and failures. They had a belief in God, they had patriotism and a sense of nation, they had large extended families, they had communities that they were part of. Statistically, all of those things have eroded. And the downside of that is that when we fail, we have a threadbare spiritual pantry to sit in and console ourselves.”

Seligman’s second culprit is “footless self-esteem”, or the notion that it is “the job of every classroom, every psychotherapist, every parent to give their kid high self-esteem regardless of how good the kid is”. An example: in 20 years from the early 1970s, the average Scholastic Aptitude Test score (the SAT is America’s standardized college entrance exam) fell by 35 points. During the same period, the number of college-bound high school students with A or B averages rose from 28 percent to 83 percent. As Steve Salerno wrote recently in The Los Angeles Times, “society has embraced such concepts as self-esteem and confidence despite scant evidence that they facilitate positive outcomes”.

“Even in its less extreme manifestations, confidence may easily be expressed in the kind of braggadocio – ‘I’m fine just the way I am, thank you’ – that stunts growth, yielding chronic failure,” says Salerno, author of SHAM: How the gurus of the self-help movement make us helpless (Nicholas Brealey Publishing, 2005).

Seligman’s third category is victimology, or the tendency to blame external factors for personal failures. “One of my students fell asleep in class recently and came to me and said, “I’m sorry Dr Seligman, I’m a victim of ADHD’,” he says, referring to Attention Deficit Hyperactivity Disorder. “The increasing rate at which we blame external things for our own failures, while I think it increases self-esteem, is a formula for learned helplessness.”

The final category is the most important: the actual components of happiness. Seligman identifies three, and the first is readily apparent to anyone who has tried shopping to cheer up – it is called the “hedonic life”. The others are the “engaged life”, where a person is absorbed by what they are doing, and the “meaningful life”, where you serve something bigger than yourself. Concentrating on these, Seligman is trying to move modern psychology away from correcting a person’s weaknesses and toward maximizing their strengths.

Money talk

In 2000, Kentucky forklift driver Mark Metcalf was struck by the kind of luck most can only dream of. Metcalf won a $US34 million lottery jackpot, sweeping him from near-poverty to rarified financial heights. In a statement announcing his rags-to-riches tale, he said he planned to move to Australia. “I’m going to totally get away,” he said.

Three years later, Metcalf was dead. His first wife had sued for child support, while a former girlfriend swindled $US500,000 while he was drunk. In the end, Metcalf died of complications related to alcoholism, while his second wife, Virginia Merida – they were separated when he won and shared the jackpot, divorcing a year later – was last year found dead in her bed, her body partly decomposed.

“Any problems people have,” Merida’s brother, Robert, told The New York Times, “money magnifies it so much it’s unbelievable.”

So many of us believe money will make our problems disappear. We rail at millionaires and think: “All I want is $US50,000! It’s nothing to you but would change my life!” Yet study after study shows happiness has only a tenuous link to money, probably because many people use wealth in the pursuit of the wrong type of happiness, the hedonic type. Will a new television really make me happy? Would a luxury vacation cure depression? And why is the buzz from pure pleasure so fleeting?

“It’s like French vanilla ice cream: the first taste is great, the second taste is 50 per cent as good as the first, and by the third taste, it’s cardboard,” Seligman says. “What I want to say is we’ve squandered our wealth. We’ve spent most of our wealth on trying to increase the hedonic part of our lives – pleasure as a positive emotion – and that’s not doable, not doable biologically.

“We bought a new dishwasher and for the first two loads of dishes it made me feel really good. Now I only notice if it breaks. The only thing my dishwasher can now bring me is anger and discontent. And that is the way of the hedonic life.

“There are strong biological limitations on the pleasant life. But I think when we spend our wealth as our parents did – on more engagement and more meaning – that’s the way around the Easterbrook paradox.”

The “Easterbrook paradox” is named after writer Gregg Easterbrook, whose book The Progress Paradox: How life gets better while people get worse (Random House, 2004) examined the disconnect between wealth and happiness. Seligman’s solution is to concentrate on introducing more engagement and meaning into your life, and it’s a notion that applies to companies as much as individuals. His patients undertake an analysis of their strengths, a test available on his website that identifies what makes you tick. Tapping into that can help increase what psychologist Mihaly Csikszentmihalyi calls “flow” – those times when you are completely absorbed in what you’re doing.

“The amount of meaning and engagement you have are vastly more important than the amount of positive emotion you have,” Seligman says. “There is reason to believe that productivity follows very similar laws to life satisfaction. That is, it’s related to the amount of meaning you have at work, to the amount of absorption and flow you have at work, and, to a lesser extent, the amount of positive emotion you have at work. That means to me that, if you’re a manager, what you want to be doing is attending very carefully to how much meaning and purpose your employees have. You want to be designing what they do every day to have more engagement, more flow, more time-stopping. And you also want to think about how much positive emotion there is on the job.”

Positive spin

Putting it more radically, Seligman believes corporations have tried the same techniques as many parents and therapists. “The idea is that if you can find all the things your employees are doing wrong and you can beat them into correcting those things, you get high productivity and high retention and high job satisfaction,” he says. “I’m saying that’s not true.”

There are promising signs. Employees have been increasingly demanding, and receiving, more flexible work hours, and there seems to be greater recognition that happiness equals productivity. Seligman agrees there’s “something in the air, but for all of my life, much of my nation’s industries have been centered around hedonic principles”.

Seligman says he’s not a puritan. “I’m all for vanilla ice-cream and Lexuses and things like that,” he insists. “But I know enough to know that it’s not going to increase national well-being.”

Of course, achieving that is easier said than done. As the Austrian philosopher Ludwig Wittgenstein noted: “I don’t know why we are here, but I’m pretty sure that it is not in order to enjoy ourselves.” It often seems easier to embrace unhappiness as life’s near-perpetual state, especially when there always seems to be someone more successful than you. It is, Seligman believes, a consequence of what he calls “the Pleistocene brain”.

“The brain that survived the Ice Age is not a brain that thinks, ‘What a beautiful day it is today! It’s going to be beautiful tomorrow,’” he says. “It’s a brain that thinks, ‘It’s a nice day today but there’s a glacier coming.’

“It’s the default of the tongue to swish around your mouth and find a cavity, to find something wrong, and then worry it. The default is not to find a really nice tooth and caress it. The uphill battle is re-educating attention and memory and consciousness to be more aware of the positive side of life.”

Published by AFR BOSS, February 2006.

Psych Out Anyone

Stay in control of any situation with these easy solutions.

Trash talk might work on the basketball court, but tell the clerk at the DMV that her mama is fat and you'll be riding the bus. Here are five types of trouble, and the psychological subterfuges that'll put you in control.

YOUR GIRLFRIEND'S EX 

Sure, he knows how she trims her topiary. So what? "Make it look like you're a very strong couple without becoming possessive or jealous," says Tracey Cox, author of Superdate. Subtly put your hand on the small of your girlfriend's back to show him who's in control. And, no matter what the ex says, stay cool.

A FASHION SNOB 

You're in jeans, he's in a suit. Take control of the situation and offer a sidebar apology to the host and laugh it off. "Just be yourself," says Ben Widdicombe, who writes the "Gatecrasher" gossip column for the New York Daily News. "No one who's self-confident is underdressed."

A WOULD-BE MUGGER

It's late, and you're being followed. "Walk confidently with your back straight, shoulders square, and head up," says John Whitman, president of Krav Maga Worldwide and a fourth-degree black belt in the freestyle fighting art.  "Nothing is as intimidating as calm confidence under pressure."

A LOVE RIVAL

"Look for signals to see whom she prefers," Cox says. Are her feet pointed toward you? Is she holding her drink in front of her chest, a defensive pose? If so, make a move that ditches the loser. "Women understand what you're doing. If she wants to, she'll play along," Cox says.

YOUR POKER BUDDIES

Confidence kills in poker. "I have to make them think they have the upper hand," says 1998 world champ Scotty Nguyen. Nguyen also talks a little trash. "Every player is different, baby, but the game is the same," he says. "I have to throw them off theirs. It's the only way, baby!" Start by calling everyone at the table "baby."

Published by Men’s Health, October 31, 2006.

Why we want it all

One of the world's greatest economists reflects on the west's fundamental shift from survival to self-actualization.

It might be the third-largest in population terms, but Chicago is undoubtedly America's second city. Largely destroyed by fire in 1871, it was reborn as the country's most architecturally stunning city. It also houses some of America's finest art collections, is home to the historic baseball ground Wrigley Field, and can even claim credit for inventing the deep-dish pizza.

Yet there's one tourist attraction that is fiendishly difficult to visit without planning months in advance. Tickets are scarce, demand huge, and those who manage to get in speak of it in reverential terms. It's The Oprah Winfrey Show. It's difficult today to recall just how revolutionary the 20-year-old talk show was when it began exploring issues never addressed on broadcast television: domestic violence, pedophilia, infidelity. Yet the overriding focus of this program - hosted by a woman born in Mississippi to poor unmarried teenage parents who is now worth an estimated $US1.3 billion - is the meaning of life: it urges viewers to looking within, to question and examine their existence.

Robert Fogel doesn't look like a typical Oprah viewer. The white-haired 79-year-old enters the University of Chicago's Graduate School of Business leaning on a walking stick, ushering visitors into an office heavy with stacked papers, books and the kind of clutter academics seem obliged to accumulate. He speaks slowly and deliberately, thoughts punctuated by long pauses that tempt listeners to complete his sentences. But that would be rash: Fogel answers carefully because his words carry decades of experience, not to mention the 1993 Nobel Prize in economics. And this devoted Chicago Bears gridiron fan, amateur cabinet maker, and Charles R. Walgreen Distinguished Professor of American Institutions happens to be an expert on what might be called "the Oprah Winfrey phenomenon": the Western world's increasing preoccupation with just why we are here and how we should live our lives.

"She's done a terrific job," he says, leaning back and smiling. "And her own story is an incredible success story. This is a woman who really self-educated herself and has become a powerful intellectual influence on the whole country, and probably abroad too."

Even 50 years ago, existential musings about the meaning of life were of little concern to the vast majority of people. Simply surviving was hard enough. However, a variety of factors have pushed people in modern, industrialized economies to historically unprecedented affluence.

Fogel calls humankind's advances in the past 300 years "technophysio evolution", laying out its development and implications in his latest book, The Escape from Hunger and Premature Death, 1700-2100: Europe, America and the Third World (Cambridge University Press, 2004).

In pre-industrial Britain and Europe, spending on food alone constituted up to 75 per cent of all expenditures of laboring families. Add shelter and clothing and there was nothing left to spend on extras. Up until 1820, just 5 per cent of the American population lived in urban areas as crop yields were simply not able to support both those on and off the land.

Fogel says it took four people working on the land to support one person off the land, but America quickly began to increase the availability of food and that, in turn, had some dramatic effects. Fogel describes technophysio evolution in the 20th century as "remarkable": the increase in average global life expectancy during the past 100 years has been twice that of the previous 200,000 years, more than quadrupling the planet's population between 1900 and 1990; homelessness rates have dropped from somewhere between 10 and 20 per cent of the population in the United States in the mid-19th century to 0.4 per cent today; average heights continue to increase (the average height for males in Holland, for example, has increased by 20 centimetres in just four generations); and the average number of chronic diseases per American male aged 65 to 69 dropped from 6.2 in 1900 to 1.9 by 1996.

So what does this all mean? It means that, on average, people in western nations are living longer and with fewer health problems. They are more physically robust throughout their lives, making them more productive and fueling unprecedented affluence across all levels of society. Even if you wanted to try to understand what life was like two centuries ago, there are precious few ways you could - at least, there are few ways to understand it if you happen to live in an industrialized nation.

"There are still spots in the mountain areas of the [United] States where people ... take great pride in being able to live off the land," Fogel says. "But you know, if you're a hunting and gathering society, even in lush areas it takes about five square miles of wild products to support one person. It's only when you figure out how to produce relatively densely by going from hunting and gathering to agriculture that you get a very dense population. And agriculture didn't become efficient enough to let the majority of people be exempt from agricultural production until well into the 19th century.

"Urbanization is really a 20th century phenomenon and if you look at it on a global scale you'd say it's the second half of the 20th century. Only about a third of the world was urbanized in 1950. You're now up to about 45 per cent urbanized and the UN [United Nations] projections are that in about 15 years or so 60 per cent of the world's population will be urbanized. So on a global scale - as opposed to the Organisation for Economic Co-operation and Development countries, which are now about 80 per cent urbanized - the rest of the world is sitting much lower but is changing rapidly."

For people in America, Australia and Europe, technophysio evolution has dramatically altered the way we spend our time and money, in turn dramatically altering the focus of our lives.

An example. When Hurricane Katrina swept over New Orleans in September, the deluge caused levees to burst and the city to flood. The immediate focus became survival. Residents waded through chest-deep water, their belongings floating in garbage bags. Others camped on roofs without food or water, holding signs aloft seeking help from the tens of television helicopters. Local stores were looted, both by thieves and people simply seeking the means to survive. When the federal government provided $US2000 debit cards to help people get back on their feet, the displaced were concerned with finding shelter, buying clothes and getting something to eat.

Yet one person's necessity of life is not another's. Within days, flood relief debit cards had been used at Atlanta's Louis Vuitton store to buy $US800 handbags. Sony PlayStation Portable computer game devices were bought at a nearby mall. Television sets and DVD players were being snapped up, forcing some retailers to throw up their hands in exasperation.

"This is totally and morally wrong," an Illinois retailer, Vicki Haniford, told the New York Daily News. "Many hard-working Americans donated money to the disaster victims so they could have food and clothing, not buy outrageous items."

Yet what constitutes an outrageous item? What if, despite losing your house, you retain a job, savings, or some other means of funding those basics of life: food, shelter and clothing? The fact is that people living in developed nations today spend less and less of their income on pure survival. Fogel says spending on life's essentials today comprises less than a third of American incomes compared with more than 80 per cent two centuries ago.

"The average poor person - poor not by our standards but by early 20th century standards - a person who's at the poverty line, someone who's in the 15th percentile from the bottom, has more real income than people who were in the top 10 per cent of the income distribution in 1900," he says.

"And there are some things you couldn't get [in 1900] at any price. JP Morgan couldn't get a heart bypass operation if he offered his whole fortune for it. But people on Medicaid ... can get those operations paid by the government. If you take leisure time activities, the main advances have been in the forms that poor people use. Rich people can still go to the opera. They can still go to Broadway plays. They can go to live symphonies. But now even poor people can watch those things on TV or listen to them on the radio or on their MP3 players."

Everywhere Fogel looks, he sees evidence of the ways in which our increasing leisure time manifests itself. While some people choose to spend extra hours camped in front of the television set, many others are using it to ponder the nature of life itself. Changes to the way our days are structured have resulted, Fogel says, in humankind being more self-realized than ever.

How old were you when someone first mentioned needing "closure" to an emotional event? Or when a friend - or you - began seeing a therapist? When did you notice yoga, pilates and meditation had become trendy? Do you wonder at America's broad swing towards religiosity in recent years, or the sudden broad popularity of Buddhism and explosive growth of obscure faiths such as Kabbalah? Just how did The Oprah Winfrey Show become popular?

"Today, ordinary people have time to enjoy those amenities of life that only the rich could afford in abundance a century ago," Fogel writes in The Escape from Premature Hunger and Death. "Today, people are increasingly concerned with the meaning of their lives. A half century from now, perhaps even sooner, when increases in productivity make it possible to provide goods in abundance with half the labor required today, the issue of life's meaning and other matters of self-realization may take up the bulk of discretionary time."

Born in 1926, Fogel can still remember his mother spending hours repeatedly boiling spinach to make it clean enough to eat. He talks about Herbert Hoover running for President amid promises that every American would have a car in the garage and a chicken in the pot - suggestions regarded as outlandish. Yet today, even Americans defined as "poor" by the Census Bureau live in conditions that would once have been regarded as comfortable: 46 per cent of poor households own their home, 76 per cent have air-conditioning. Almost 78 per cent have a VCR or DVD player, 62 per cent have pay television. Almost three-quarters own their own car, while 30 per cent own two or more.

"When we were deprived of all of these things, we thought if only we had radios and irons and washing machines and dishwashers, life would be perfect," Fogel says. "Now that we have that, we're saying, 'Wait a minute - what's life all about? What am I doing all of this stuff for?' We're much more focused on what I call these immaterial aspects of life and that explains the upsurge in religiousness in the United States. I don't know what the status is of the religious movement in Australia, but you've also had a huge upsurge all over Latin America and Africa and Asia. The only place that has been relatively untouched is western Europe, including England, which remains very secular."

These changes also have important implications for companies. Fogel sees a time when work is a means to an end and society's general affluence means more importance will be placed on how time is structured. That means even greater flexibility will be required from corporations that have struggled over the past two decades to adapt to employees demanding flexible hours, the ability to work from home, more part-time opportunities, and increased sensitivity to personal demands.

"[Businesses] have to adjust to the fact that control over people's time may be as important as their wages," Fogel says. "If you look at the surveys and ask the question, 'Is money or time your most severe shortage?', you're going to get more people who say time than money. That doesn't mean there isn't a significant group that are pressed financially, even in rich countries. But most people feel well enough off so that they complain more about how busy they are than about how little income they have."

At the same time, society is going to have to deal with even greater strain on the health care system. Indeed, Fogel views health care as the great growth industry of the 21st century, especially if life expectancy continues to rise. In fact, even as chronic disease rates have dropped precipitously in recent decades, the amount spent on health care - particularly in the United States - continues to rise exponentially. Fogel is largely unconcerned, viewing spending on health care as a choice Americans make given their increased wealth.

"Well, what are we going to spend [money] on?" he says. "If you measure it in hours, 160 hours of labor per year will buy all the food that the typical household needs. If you put food and clothing into the mix, you're into about 320 hours but we're working about 1700 hours. So the rest of what we're working for is to buy services, including a lot of leisure services, but also including health care and education."

That includes exploring the meaning of life.

"I think the increase in life expectancy in the 21st century will be as big as during the 20th century, which means that life expectancy in 2100 will be close to 100 years," Fogel says. "[You will] spend nearly 25 years of your life getting educated, you'll work for 30 years, and then you'll have another 40 to 45 years to explore the world on your own. I don't mean to say that people might not do some work that produces income. But they'll really be doing work they want and income will be nice if it comes with it, but it's not the driving element in what they do."

Published by AFR BOSS, November 11, 2005.

Mr. Porter

You’ll spot them at any shopping mall or department store: glum-faced men perched wherever they can rest their weary legs, waiting for wives and girlfriends to emerge with their fashion loot. They are begrudgingly living proof, as Natalie Massenet says, that “most men hate shopping”. For Massenet, a former fashion journalist who founded women’s online luxury retailer Net-a-Porter, the key is “most men”. She is banking on the small percentage who are active shoppers to drive the success of Net-a-Porter’s urbane older brother, Mr Porter, which launched in February and is the most ambitious effort yet to harpoon affluent male shoppers—the white whale of online retailing. “We know there’s demand for this,” Massenet told The Wall Street Journal. She’s cracked the code before before: Net-a-Porter in 2000 pioneered the sale of designer goods online to women, spawning imitators, a Web push by everyone from Gucci to Cartier, and a buyer in the form of Swiss luxury group Richemont, which last year snapped up the retailer in a deal that valued it at up to £350 million. Mr Porter has similar ambitions, offering a carefully edited range of luxury brands and products presented with stylish minimalism, modeled primarily by real-world men. While there’s plenty of products that are of-the-moment, the primary emphasis is on classic clothes and accessories. “Men aren’t about trends,” Massenet told American magazine GQ. “They want to build a wardrobe.” She’ll soon learn if that’s true.

Published by AFR BOSS, April 2011.

GE and the art of leadership

In early 2009, it had no name. What’s today known as the Great Recession was simply the financial calamity of a lifetime, a hurricane of uncertain destructive impact. Investment bank Lehman Brothers collapsed in September 2008. The United States Government injected hundreds of billions of dollars to prevent a financial system meltdown. Housing prices plunged across the nation, drowning overextended creditors and their American dream. In boardrooms across the country, senior executives surveyed the damage, stumped by the same simple question: “What just happened?”

Among those wanting answers was Jeffrey Immelt, the chief executive of General Electric Company, one of the world’s greatest and most enduring corporations. For more than 130 years, GE had built a reputation for leadership excellence. Yet something had gone very wrong. Its senior executives not only failed to insulate the company from the financial meltdown, they actively pushed it into increasingly risky territory. Once renowned for actually making stuff—from household appliances to light bulbs—GE had morphed into a financial-services behemoth.

When the Great Recession hit, the company’s GE Capital was one of the world’s largest non-bank lenders, with a portfolio ranging from commercial real estate to private-label credit cards for retailers such as Ikea and Walmart. As the unit’s losses mounted, GE struggled. In April 2008, it committed the cardinal Wall Street sin of missing its earnings forecast—by $700 million. In September that year, it needed to shore up its balance sheet and Warren Buffett’s Berkshire Hathaway chipped in $3 billion. In February 2009, GE cut its dividend for the first time in 71 years. And a month later, the company’s share price bottomed at $US6.66, having lost 84 percent of its value in just 17 months. A reputation for exemplary, visionary leadership was on the brink and, with the dust of early 2009 clearing, Immelt wanted to know why.

*  *  *

About 50 kilometres north of Manhattan lies Westchester County, an enclave of affluence that ranks among the wealthiest areas of the United States. It was here that GE in 1956 decided to establish the Crotonville Learning Center, the world’s first corporate institute devoted to leadership, organizational development, innovation and change. Universally known as just “Crotonville”—although it was formally renamed the John F. Welch Leadership Development Center in 2001 as a tribute to GE’s iconic former chief executive—the facility acquired an almost mythical reputation both inside and outside the company over the course of half a century. Its alumni included not just Immelt and Welch, but NBC Universal chairman Bob Wright, Boeing chairman James McNerney and a host of executives who excelled at GE or were eagerly courted by other companies. To be invited to learn at GE Crotonville’s sprawling, 53-acre campus was the management equivalent of beatification.

Yet cracks began to appear in GE’s leadership armor even before the financial meltdown. The emergence of nimble competitors such as Google was accompanied by mutterings about whether Crotonville remained the gold standard by which leadership development should be judged. “To have a monolithic view of leadership sets you up for a lot of problems,” Laszlo Bock, Google’s vice-president for people operations, told Bloomberg Businessweek last year. Bock, a former vice-president for human resources at GE Capital Solutions, declined to comment for this article. He reportedly said Google eschewed a “big, corporate, top-down, university model of training” because it was “too static.” To a generation of professionals flourishing in the dot-com era, Crotonville may as well have been located a little to the east in Wilton, the bucolic Connecticut town that inspired novelist Ira Levin’s The Stepford Wives. GE’s approach, critics charged, churned out robotic, carbon-copy leaders with little ability to adapt and thrive in more modern, less bureaucratic environments. Stepford leaders.

It was against this backdrop that Immelt in early 2009 sought an audience with an eclectic group of six external thought leaders: two professors, a publisher, a millennial, an historian, and a futurist. The topic of discussion was leadership, plain and simple. “We just said, ‘What is your view of leadership?” GE’s chief learning officer and vice-president of executive development, Susan Peters, told AFR BOSS. “What are those attributes of leadership that stand the test of time, and what should leadership be in today’s environment?”

Immelt’s roundtable discussion marked the start of an 18-month journey to overhaul GE’s leadership development and executive training programs. The process was led by Peters, who joined GE in 1979 and worked around the world for the company before becoming the vice president of executive development in 2001 and taking control of all leadership training in 2007. She described the leadership review as initially “a lot of reflection and wallowing and thinking”. It’s also arguably the corporate equivalent of Roger Federer deciding, after a couple of unexpected defeats, to retool the game that has won him more Grand Slam singles titles than any man in history. “It’s courageous,” said Stewart Friedman, the founding director of the Wharton School’s Leadership Program and former director of Ford Motor Company’s Leadership Development Center. “The really interesting part of what GE is doing is saying, ‘Here’s who we want to be, and it’s different than who we were’. To be able to say that as a person, let alone as a highly complex organization, is kind of inspiring.”

The objective may be inspiring, but the process has been sheer hard work. In the US summer of 2009, GE decided that participants in its most senior Crotonville program, the Executive Development Course, would take responsibility for investigating leadership worldwide. These executives—GE’s top three dozen or so globally—fanned out, spending time with almost 100 entities around the world ranging from the United States Air Force Academy to the China Communist Party School to the National Basketball Association’s Boston Celtics. And, yes, GE executives even visited Google. “The real question to those entities was, ‘What’s your view of what leadership is in today’s environment, and how are you developing it?’” Peters said, adding the program continues today. “Then we spent all of 2010 really working with other people. We got real GE input. We leveraged a lot of academics at brand-name institutions—Harvard, Wharton, Columbia, Insead, MIT—to spend time with us and with GE leaders and with Jeff Immelt and we learned from them.”

The net result is an evolution of the company’s growth values: the five benchmarks by which it evaluates its 160,000 employees globally. Of the five, external focus—the ability to understand a role and expectations for success in a context beyond GE—has changed the most. “It’s very clear that those constituents, those stakeholders, are much more varied than they had perhaps been a decade ago,” Peters said. “If you roll back the tape back five or 10 years, many leaders—and I would say this is true in GE and elsewhere—would think of their stakeholder as the shareholder or customers. We are now trying to ensure that managers understand that it’s not only customers, but it’s government and regulators and NGOs and the community and employees … it’s so much more complicated. This whole idea of external focus is about context and how it helps you decide your decisions.”

Another value whose importance has increased is clear thinker, or what Peters describes as how an employee thinks through decisions and undertakes and accomplishes projects within the broader business context. “Are they decisive and know when to say yes or no to a project, the kiss or kill mentality?” she said. “Do they know how to lead and understand in ambiguous situations? That kind of adaptive thinking is even more required today than pre-crisis, for sure.”

GE’s other three growth values—expertise, inclusiveness, and imagination and courage—have also evolved, but more incrementally. That can be interpreted one of two ways: that the company was loath to undertake wholesale changes, lest it be seen as admitting to a systemic failure of leadership; or as affirmation that the underlying structure of GE’s talent development process remains world-beating and is merely evolving. Peters, obviously, subscribes to the latter. “The bottom line is that these five values have stood the test of time,” she said, adding all were subject to “updating or contemporarizing”. Friedman, who has worked with GE and dined with Immelt, agrees that the company’s key move is the “conscious and deliberate shift to focus on attributes that involve the world as we anticipate it, rather than the world that we’ve known”. “That’s my headline view of what they’ve done,” he said. Is that enough?

*  *  *

Look at any US list of companies MBA students most want to work for, and you’ll see the usual top consulting firms and a cavalcade of familiar names: Google, Apple, Walt Disney, Nike. GE ranks 14th, but that’s actually something of a surprise: the company has for a long time bucked the MBA-hiring trend. “We are much more undergraduate focused and believe we can then train you,” Peters said. “Many of the programs we have are really designed to do that. Now, this doesn’t mean we never hire a graduate student. But it’s not our primary focus and, in fact, we believe you can learn a lot at GE. The whole idea of development really comes down to experience and education. We can provide both.”

Now look at another list: the best companies to work for in the US. The common thread between organizations that people love to work for can be quickly summarized: they are fun, flexible, perk-filled, and value employees personally as well as professionally. To risk a cliché, they strive for work-life balance. It’s here that Wharton’s Friedman wants a more explicit focus from GE. “I’d like to see more emphasis on sustainability from the perspective of the individual in the context of her or his whole life,” he said. “It actually doesn’t take all that much to look at the person from the perspective of their different life interests, not just work. And the magical result of doing so, when you say to a person, ‘What’s important to you outside of work and how can we enable that?’, is that you get so much in return in terms of energy and commitment and motivation and results. It’s paradoxical, but I’m increasingly confident but it’s what’s going to be a key differentiator in the labor market.”

It’s on this dimension that GE has come under the greatest scrutiny. Is the company’s time-tested approach to developing leadership talent the right model in today’s business world? Do high-potential candidates want careers punctuated by development programs seen as rigid and top-down? Or, more importantly, does GE risk missing out on the best and brightest candidates because they fail to see an environment that relishes entrepreneurship, risk-taking and the kind of intangible personal rewards that can’t be measured by metrics? “They have challenges that they didn’t face 20 years ago, that’s for sure, in terms of competition for the best talent,” Friedman said. “It’s tough to compete with Facebook. But not everybody wants to work at Facebook.”

In terms of sheer numbers, Facebook and Google certainly aren’t GE. At last count, Facebook had about 1700 employees and Google 25,000. GE has 160,000, and spends about $US1 billion annually on training and development. More than 35,000 employees undertake formal leadership training annually, while another 10,000 per year do residence classes at Crotonville or facilities in Bangalore, Shanghai, Munich, and Rio de Janeiro. “We’re more contemporary than folks realize,” Peters said of GE’s critics, noting the company has introduced an “executive stamina” course for senior managers about “how to give themselves the gift of time”. New age indeed.

“We get some negatives that I personally think are often based on a lack of knowledge and of people not seeing what we’re doing, particularly lately,” she said. “In the last five-plus years we have re-looked at, re-evaluated, and updated a lot of what we do. These 21st century attributes are being embedded into all the leadership courses that we teach around the world.” And the suggestion that entrepreneurial candidates see GE as lumbering and bureaucratic rather than nimble and creative? “We’ve been around for 130 years,” Peters said. “It’s hard to envisage a company that’s survived, for all the things that the past 100-plus years have thrown at us, that isn’t entrepreneurial and hasn’t had incredible invention and reinvention, not only of product but of itself. That’s not to say everybody’s an entrepreneur—I don’t think any system, even those small entrepreneurial companies, has that. You need the other talent, and often these are not in the same person, of people who just get things done. I would argue that we have the best of all worlds. We’re a large-scale company that enables global, large-scale entrepreneurs to flourish.”

*  *  *

Just three days into the new year, GE’s top 600 executives gathered at Crotonville for the company’s annual Global Leadership Meeting. At some point in the previous 12 months, Immelt has personally discussed each of these executives with Peters and GE’s senior vice president of human resources, John Lynch, as part of what’s known internally as the “Session C” process. In recent years, Immelt has even hosted 185 of them at his home in nearby New Canaan, Connecticut, where they dine one-on-one on a Friday night, stay nearby, then reconvene on Saturday to discuss “who they are, how they fit, how I see their strengths and weaknesses,” Immelt told Bloomberg Businessweek.

This year’s three-day Global Leadership Meeting was an occasion for more than swapping Immelt dinner tales: it was the first event where GE’s revamped definition of leadership was unveiled. Each of those 600 executives, Peters said, is charged with “owning the dialogue” as the development program is rolled out globally. “By the end of 2011, we’ll start measuring people on these new, more currently reflected growth values,” she said, adding: “We’re not done. This is a never-ending process. I think we’ve got a good thing here, but we’re not arrogant enough or naïve enough not to know that there’s lots of stuff we can learn and get from others, and we’re constantly looking for that.”

GE’s success or otherwise in adequately preparing a new generation of leaders may not be fully apparent for years. Immelt is entering his second decade at the helm, having succeeded Welch in 2001 after being picked from what Friedman called “the most powerful leadership cadre in the corporate world”. After all adjustments, GE’s share price today remains about 65 percent below its July 2000 record, although Immelt has steadily rebuilt the company’s reputation and value from the dark days of the Great Recession. GE’s share price now hovers around $US20, giving the company a market capitalization of more than $US200 billion: good enough to place GE among the dozen largest corporations on the planet.

While wishing GE had gone further, Friedman is unequivocal in his praise of the company’s decision to seek to revitalise its leadership approach. “For a company with such a long history and such an embedded sense of superiority in developing leadership talent to look at it afresh … is really quite courageous,” he said. “What they came up with makes a lot of sense. I disagree with some of the pieces of it, but I think as a move forward it’s once again in the vanguard of big companies.”

For her part, Peters has a long year ahead. She could, she said, spend three-quarters of her time explaining the GE approach to outsiders and skeptics, but “that’s not my core constituency”. “My constituency is inspiring, connecting and developing the GE leaders of today and tomorrow. That’s where I put 90 percent of my effort. If you really peel away the onion on what we do, where we do it, how we do it, how engaged our leaders are … I’d challenge you to find any institution in the world that does it better.”

She paused.

“But I’m obviously biased.”

Published by AFR BOSS, April 2011.

Coupon kings

Psst — have we got a deal for you. The rise of Groupon and its imitations is a classic internet story. But where does it end?

A few short months ago, they were the kind of emails you could have mistaken for ill-directed spam: discounts on fondue dinners. Cut-rate Bollywood dance lessons. A chicken soup care package. Yet for deals website Groupon, offering discounts on items consumers never realized they wanted or needed has fueled the most dramatic growth story in the history of the Internet. And, like all good stories, there are twists and turns. Hundreds of copycat competitors have sprung up. An expensive advertising campaign turned into a public relations nightmare. And a critical executive has departed, just as the company is rumored to be mulling an initial public offering valuing it at an eye-popping $US25 billion. Even by the exponentially inflated standards of the Internet, Groupon’s rags-to-riches tale is remarkable.

It begins in America’s Midwest, with 30-year-old Andrew Mason. After graduating with a music degree, Mason moved into Web design and pursued a masters in public policy before founding The Point, an Internet site that, in his words, “existed to solve the world’s unsolvable problems” by harnessing the power of social networks to lobby companies and governments. It went nowhere. Yet Mason realized that collective action lent itself to a less altruistic end: the largely untapped world of local commerce, where store owners often struggle to find new customers. In November 2008, the platform created for The Point was repurposed to offer consumers in Chicago a daily “group coupon”, or Groupon, with discounts for local businesses. Barely two years later, the company employs some 6,000 people, delivers daily emails to more than 60 million subscribers in 43 countries (including Australia—more on that later), and boasts revenue approaching $US1 billion annually. Oh, and by the time you finish that sentence, you can be sure those numbers are obsolete.

“It’s certainly a fun one,” Groupon’s president and employee number 200, Rob Solomon, told AFR BOSS in March of his experience at the company. An independently wealthy veteran of Yahoo!, Sidestep and venture-capital firm Technology Crossover Ventures, Solomon joined Groupon with management heft to complement the creative Mason, a practical joker who, among other things, created office space for a fictitious character, instituted a holiday called “Grouponicus”, and publicly backed a television campaign that poked fun at serious causes before a PR firestorm prompted the advertisements to be withdrawn. Presumably, Solomon’s Groupon ride wasn’t quite fun enough: just two weeks after our interview, he revealed he was leaving after barely a year. “I’m great at a lot of things; I’m not the guy who wants to run a 10,000 person company,” Solomon told Bloomberg Businessweek. “I’m much better at the startup and growth stage.”

His departure comes at a critical time for the company, whose explosive growth seems to be making the lure to cash in irresistible. Groupon was valued at about $US1.3 billion a year ago. Late last year, it rejected a $US6 billion takeover offer from Google. It’s now said to be considering an IPO valuing it at $US25 billion, and the pressure to get a deal done increases daily: while Groupon is currently the coupon behemoth, its easily replicable business model has unleashed hundreds of competitors, most seriously the Amazon.com-backed LivingSocial. In addition, companies including Facebook, Foursquare and, yes, Google are eyeing the same space. “The reality is that, over time, there’s going to be a few big players,” Solomon told AFR BOSS. “We’ve seen it in just about every category of the Internet, and I think we’ll see a similar phenomenon in this category.”

Here’s the Groupon concept. Its salespeople work with local businesses to devise a deal to drive customer demand: say, offering a coupon for $10 that buys $20 worth of food. The coupon is emailed to Groupon subscribers in the relevant geographic area, and only becomes active when a predetermined number of consumers buy it. Groupon keeps a slice of the revenue as commission, while the retailer pockets the rest. In theory, it’s a way for local businesses to tap new customers, with the advantage that the financial outcome is largely predetermined. “I think of Groupon as the e-commerce engine for local businesses,” Solomon says. “The tried and true methods from the old days of Yellow Pages and newspaper advertising and traditional advertising just don’t work at all for these small businesses. And Groupon came along with this new concept.”

The reality can be less of a win-win. Groupon pockets its commission immediately, while retailers must wait 30 days for the first payment and 60 days for the second. For small businesses with limited turnover, that delay between the cost of providing a good or service and receiving payment can be difficult to bridge financially. In addition, while Solomon says the company’s standard commission is one-third of the coupon value, the Internet is rife with complaints about salespeople seeking to impose higher rates—even up to 100 percent. Finally, there’s a fundamental question about the nature of the coupons. If consumers can’t dictate the kinds of discounts they want and are limited to whatever Groupon happens to email on a given day, all of their activity is opportunistic. Does that foster loyalty to the retailer? Or to Groupon?

There are other challenges. In many markets, the company failed to secure the Groupon name, perhaps not anticipating its rapid expansion or the publicity that would accompany it. That’s why Groupon operates in Australia as “Stardeals”—a company called Scoopon has registered both Groupon Pty Ltd and Groupon.com.au. “We sure wish we had our brand name to play with, but someone has decided to squat and take that,” Solomon says, declining to comment further because of ongoing legal action. Nonetheless, Stardeals is pressing ahead in what Solomon calls a “fantastic market”. “The things we look for are high population densities in large cities, a wired and very connected audience, and the demographics: high household income, well educated,” he says. “Melbourne, Sydney, Brisbane, soon-to-be Perth—Australia has these amazing big cities that map to all of the trends that make Groupon successful.”

But can Groupon stay on top? LivingSocial, the rival backed by Amazon.com, just raised $US400 million and is trialing a mobile application called LivingSocial Instant that delivers time-sensitive discounts to consumers. Not to be outdone, Groupon is testing an application for mobile devices that allows people to click one of two buttons: “I’m hungry” or “I’m bored”. Based on the location relayed by the device, an electronic coupon is instantly delivered for a nearby retailer—maybe a place for lunch or, perhaps in typical Groupon fashion, an eight-week salsa dancing course. At the same time, Groupon’s core product—the daily email—continues to be rolled out in more locations as it strives to develop what Solomon says is a category of local e-commerce that didn’t exist before. It’s a high stakes game that, given the history of the Internet, seems certain to end badly for the vast majority of players.

“There’s only been five or so iconic Internet companies that have stood the test of time and are global,” Solomon says. “The first three were Yahoo!, Amazon and eBay; then came Google and Facebook. I think we have a chance to be one of those iconic Internet companies if we keep executing well and make the right strategic choices and get this thing right.” It seems those choices must now be made without him.

Published by AFR BOSS, June 2011.

Workplace Design

Most people like to work in a sociable setting, writes Luke Collins.

Back in 1999, employees joining animation studio Pixar were in for a shock upon entering the company’s California headquarters. Designed by Pixar’s founder, the late Steve Jobs himself, the building extends from a massive central atrium with high-top tables, couches and other areas to sit and chat. All corridors—if you can call them that—lead to that airy space, which has a café, mailboxes and initially housed the only bathrooms in the entire building until a staff outcry forced the installation of another pair. Everything about the Pixar building forces you to interact with co-workers, whether you’re arriving for the day, grabbing a coffee, having lunch, or sneaking to the toilet.

“There’s a temptation in our networked age,” Jobs told biographer Walter Isaacson, “to think that ideas can be developed by email and iChat. That’s crazy. Creativity comes from spontaneous meetings, from random discussions. If a building doesn’t encourage that, you’ll lose a lot of innovation and the magic that’s sparked by serendipity.” It may be a stretch to add “workplace design” to the lengthy list of products and sectors where Jobs is rightly regarded as a visionary. But like the iPad, iPod, iTunes and humble computer mouse, he got it right.

We typically notice workplace design when it’s bad: when we find ourselves enclosed in a fabric-walled cubicle, the outside world replaced by a neon tube and a potted plant. Yet while it’s long been clear that our office environment is a major factor in how happy and productive we are, it’s only recently that a more worrying theory has emerged: we may have been working the wrong way for a very, very long time. “It’s one of those things you don’t see when you’re living it,” says Ben Watson, the executive creative director of iconic office furniture manufacturer Herman Miller. The good news is that change is afoot. And having endured a period of technological innovation that convinced many that we’d all we be working from home and telecommuting, a fresh balance is being struck between working alone and collaborating with others. And by doing so, we may actually be returning to the original intent of what became the bane of the modern office: the cubicle.

Bob Probst certainly didn’t imagine corporate drones trapped in sardine-sized spaces when he conceived the “Action Office” half a century ago, an era when corporate America’s ideal office comprised an ocean of grey-flannelled professionals seated at identical, orderly rows of desks. In 1958, the founder of Herman Miller, Hugh DuPree, gave Probst carte blanche to rethink workplace design. Probst, a former professor of fine arts at the University of Colorado, had noticed that the successful companies he’d worked for allowed employees to circulate freely. He envisioned the workplace as a large open area in which all employees could freely interact, sectioned off with a mixture of completely enclosed and semi-enclosed spaces. In 1964, Herman Miller unveiled Probst’s vision to escape corporate corridors and boxes: the Action Office. In 1968, he modified it to become completely mobile: partitions and desks and shelves could be moved, allowing offices to be remade overnight.

What Probst never envisioned was the way companies would instead use the Action Office as a means to cram workers into ever-smaller spaces—the dreaded cubicle. “The dark side of this is that not all organisations are intelligent and progressive,” he told Metropolis magazine in 1998, two years before his death. “Lots are run by crass people who can take the same kind of equipment and create hellholes. They make little bitty cubicles and stuff people in them. Barren, rat-hole places.” Herman Miller’s Watson agrees. “No matter what people think now, it certainly wasn’t the original intent of the Action Office to divide workers into individual cubicles,” he says. The intent was for it to be “a very flexible, easily changed workspace that could adapt to different kinds of work,” Watson says—which sounds very much like the latest trend in workplace design.

So it seems that our ideal working environment is coming full circle. After decades of cramming workers into smaller and smaller spaces, the partitions are coming down again. And the catalyst is the very technology that was originally thought to spell the end of working in offices: the Internet. After more than a decade of struggling to maintain productivity and connectivity with co-workers, a generation of employees is recognizing what Apple’s Jobs foresaw: a wifi network can’t replicate actual human interaction.

In fact, we’re increasingly living two working lives. We undertake individual tasks whenever, wherever we have to—checking e-mails from home in the morning, tapping away on laptop computers in coffee shops. Yet research shows that once we are in a workplace, the majority of our time is spent collaborating with others—whether it’s a formal meeting, or chit-chat. That’s why companies are devoting less and less floor space to individual workstations, instead adding group space in all of its varieties, from communal tables to lounge seating to coffee bars. A decade ago, the percentage of corporate real-estate budgets devoted to individual workspaces was as high as 90 percent; today, it’s regularly 50-50. And freelancers and consultants—who only a few years ago relished the opportunity to work remotely—are flocking to shared office spaces.

“I don’t know if it’s a backlash against that ideal of a decade ago that we were all going to go home to work. I just think there wasn’t the understanding of the social nature of what work is,” says Watson. “We all know that from our own personal experience: human interaction is powerful. Who we are as human beings hasn’t changed. The digital workplace means we can get our individual work done at Starbuck’s or at home. But if the actual benefit of work and the productivity happens when knowledge is shared—that’s 70 percent of our productive time—organizations have to create the place where that can happen.”

It seems some countries and employers have always understood that. Cubicles never took off in Europe the way they did in the United States, for example. And when Herman Miller’s director of insight and exploration, Gretchen Gscheidle, sought advice on places to study collaboration, the company’s United Kingdom researchers recommended workplaces in a familiar country. “They said very clearly: ‘You have to go to Australia. There’s something relative to collaboration that they collectively are doing more, better, and with ease’,” Gscheidle says. “We found you had more of those types of collaborative spaces and collaborative events at a higher rate as well. We’re still trying to understand what you’re doing more and better and so forth, but it was palpable.”

Published by AFR BOSS, February 2013.

Harvard breaks down class walls

A new boss tries to transform a place rich in tradition. Sounds like an HBS case study, but this time it’s the institution itself. Dean Nitin Nohria wants change.

Interview by Luke Collins

Within two weeks of Nitin Nohria becoming the 10th dean in the 102-­year history of Harvard Busi­ness School, a documentary premiered chronicling how the complex interrelationships between the worlds of finance, politics and academia ultimately led to the global financial crisis. The movie, “Inside Job”, subse­quently won the 2010 Academy Award for best documen­tary. Whether Nohria can garner his own accolades remains to be seen.

There’s little doubt his ascension to the helm of HBS – where the master’s of business administration was born in 1908 – came with weighty messages. For those placing blame for the GFC at the feet of hordes of MBA­-educated financiers, Nohria could point to a life of research into management ethics and behavior, not to mention his early support of a controversial initiative urging students to adopt the business school equivalent of a Hippocratic oath. For critics claiming the US-­centric business education model was obsolete, Nohria had that covered, too: he was born in India, and promised a global perspective as the first HBS dean who is not a native of North America.

Since formally taking the helm in July 2010, Nohria has barely caught breath. He travels incessantly and confesses he’s still adjusting to his new­found influence. “It’s like my IQ has gone up 20 points and I speak with a megaphone even when I whisper,” he told The New York Times.

He is overseeing the most radical change in decades to the curriculum of the school’s flagship two­-year MBA: the introduction of the field method, which aims to provide real­-world experience to complement the school’s famous class­-based case study program. And he continues his quest for business to be regarded as a profession alongside medi­cine or law, in an atmosphere where business leaders remain decidedly unpopular. “Humility as a component of character takes work,” Nohria told the class of 2011 at its graduation in May this year. “Your challenge is to reclaim humility for yourselves and for your generation of leaders.”

In an interview with Financial Review Boss, Nohria talks about his goals, for the institution, and for rebuilding trust between the business sector and the rest of society.

Let’s take stock of your first year. How has the school fared?

We have been very fortunate that the economic downturn has, rather than diminish the quality of our classes, resulted in healthier enrollments through this entire period. Higher quality students are applying in general. What has been heartening is the fact that we have seen a much stronger pool of people apply from non­-traditional sectors. People from manufacturing, particularly globally, amazingly quali­fied women. We’ve been able to inch up a bit from roughly 36 per cent of our class being women to now 39 per cent.

The same [variety] seems to be true in terms of where our students are going after they graduate. While we con­tinue to place students in sectors where we have historically been strong, such as finance, private equity and consulting, we also now have many students who have chosen careers in health care, social enterprise and entrepreneurship.

What about the perception that it’s harder to get into busi­ness school than graduate from it, which feeds into the idea that business school is simply a resume builder?

Yeah, that is a perception. The greatest mistake business schools could make would be to become trade schools, where students begin to think of us as a place that enables them to get the best next job. I think the real measure of our success is whether we prepare students for a lifetime of leadership. Maybe in the first three or four years, there may be a slight advantage for a Harvard MBA. But the real advantage begins to show when companies start to con­sider who should become a partner, or who should become a senior vice-­president – when you get into real leadership jobs. It would be a shame for the entire field of MBA education if it just got reduced to a golden ticket that you have to punch to get the next promotion.

What’s the advantage of preparing for leadership roles via an MBA, rather than learning on the job?

It’s the compression of learning and the ability to be sur­rounded by remarkable people. It’s cultivating early the meta­-habits: the range of cases and business frameworks, how to analyse those cases, and the fact that while there are a range of answers that are correct, the specific answer will vary depending on who you are as a leader, the people around you and the specific company that you’re in.

You’re introducing what you’re calling the “field method”, which seeks to give students a learning experience that more closely replicates what they would do in a real-­world environment. That implies you felt the existing curriculum, focused on case studies, was somehow deficient.

It’s what we think we need to get better at doing. There’s still a knowing-­doing gap. A lot of that is through real-­world experience: the capacity to get better at translating what you think the right decision is into executing it and work­ing with other people to bring to life what you think that decision is going to yield. It’s a different kind of sensibility. The question you inevitably ask in a case study is, “What would you do if you were in the protagonist’s shoes?” That’s not the same as saying, “You are the protagonist. Do it.”

You’ve made it clear you believe that while the 20th cen­tury was the American century for business, the 21st will be global. HBS has research centers in Buenos Aires, Hong Kong, Tokyo, Paris – do they play a role in preparing graduates for this new century?

Different people are preparing students for globalization in different ways. INSEAD says, “We have multiple cam­puses, and you can spend a semester in Singapore or some­where else.” We’ve invested in these research centers all over the world, through which faculty members end up writing cases. So we bring the world’s thinking and the most imaginative business practices that evolve anywhere in the world here to our campus. It’s not just that you learn a lot about China, which is where the action is today, but you also learn about Brazil, and you also learn about India, and you also learn about Europe. That’s what our network of research centers allows us to do.

And we are now leveraging them one more way. In Janu­ary, we’re taking all of our students out for a global, emerg­ing [market] experience somewhere in another part of the world. All 900 of our students will spend, as part of their required first­-year experience, some time abroad. We will do this for the first time with this new group. We’re not going to make people experts on India or China or any where else in two weeks. It’s developing the contextual sen­sibility to know that when you go to a different place, you will always have to adapt, revise and be sensitive to how your ideas may emerge. That’s truly valuable to global leaders.

It seems those leaders increasingly will come from outside the US. What does the emergence of China, India and other developing nations mean for the US-­centric Western model of business education?

There’s no doubt that – just as these countries are building, from nothing 30 or 40 years ago, amazing business enter­prises that are capturing the global imagination – we should not be surprised if, 20 or 30 years from now, there are new household names. We’ve seen this happen with INSEAD. It wasn’t a serious competitor in business educa­tion 25 years ago, but today you can’t talk about the land­scape in global business education without taking INSEAD seriously. So there’ll be a different landscape, and I think that will be for the better because we know that these coun­tries have massive local demand for business education.

What about Australia’s role in this new century?

As we think about this globalization of the landscape of business education, Australian business schools have every reason to be a part of this new imagination. There are some pretty remarkable institutions in Australia that are worthy players on this scene. Asia will be an important part of this global century and, to the extent that Australian business schools leverage their presence within one of the most advanced economies in Asia, they’re in a position to have every reason to imagine a bright future.

How did the global financial crisis affect the perception of business and business schools?

They’ve certainly not been easy years. As growth in the United States has slowed and the prospects of business in developed countries looks less exciting, at least in the short to medium term, people aren’t rushing to business schools generally. There has been a flight to quality: the top schools have all seen a slight improvement, but it has been very damaging to those not in the top 10 or 20.

So has that perception of the MBA as the ubiquitous degree to take your career to the next level shifted?

On aggregate, between 1950 and 2000 … one in five peo­ple who got a graduate degree got an MBA. I don’t think it’s going to be the fastest­-growing graduate degree in America or the vast economies any more. It may be the fastest­-growing globally: if you look at global demand, we may see an even greater golden age for the MBA in the next 20 years than in the past 50. As enterprises grow in India, China and all kinds of emerging markets, there is going to be an acute need for trained business leaders. So, I don’t think the bloom is off the MBA degree in general.

Is this flight to quality a response to what happened during the past few years? Business education has endured some slings and arrows in the wake of the financial meltdown.

Everyone in business is confronting that and we’re not any different in business education. How do we restore society’s confidence that business is an engine that creates value not just for the individual but for society more broadly? If you look at what banks are doing, what other firms are doing; if you look at ideas colleagues of mine, such as [HBS professor] Mike Porter are championing about creating value, they’re all ways in which we’re realizing that society’s willingness to give business a broad licence to operate has taken a bit of a beating. That licence will be restored only if business shows more broadly that its success creates prosperity for society as well. We have to make sure we’re educating business leaders who under­stand this win­-win relationship they must have with society.

The student-­driven code of ethics now seems to have gained wider acceptance – students at more than 250 schools around the world have adopted it.

It built upon some ideas that my colleague [HBS professor] Rakesh Khurana and I had advanced, and it was a student­-led initiative that has been converted into the MBA Oath. Each year, the movement seems to be expanding in scope and is really being seen as something that business school students across many institutions are embracing as a way to signal to the world that these are the values they would want to live by and hope to be judged by.

Published by AFR BOSS, December-January 2012.