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November 21, 2014 by Best of the Issue Idea Watch Why Chief Human Resources Officers Make Great CEOs The Harvard Business Review Staff No one would be surprised to find that the leadership traits that made someone a strong candidate for COO would also make them a promising choice for CEO. And new research from executive recruiter Korn Ferry confirms this. But surprisingly, the research also found that the C-suite executive whose traits were the next most similar to those of the successful CEO was the chief human resources officer. The CHROs drew top marks, specifically, on proprietary assessments of 14 aspects of leadership effectiveness broadly bundled into three categories – their thinking style, their approach to situations in private, and their emotional competence – which strongly suggests that more companies should consider their chief HR executives when looking to fill the top job. One caveat though. The researchers – Korn Ferry partner Ellie Filler and University of Michigan professor Dave Ulrich – see only a small subset of top HR execs as having corner-office potential – not those who've spent their entire career in human resources but only the top performers with broad experience that included a stint as the top HR exec. Vision Statement How to Lie With Charts The Harvard Business Review Staff Seeing is believing: What you see when you look at a crafty or sloppy chart may easily not be what the data truly demonstrates. For instance, it seems sensible to put population data – number of voters, say or number of customers – on a map. But land area is a poor proxy for population, of course, in both sparsely populated places like Montana and densely packed ones like Manhattan. So rather than coloring in a state to indicate population from a certain place, it's far better to put the population data in bubbles that correspond to its size. (Sure, New Yorkers will end up in the ocean, but at least they'll be properly represented.) It may seem equally sensible, when showing how a percentage of something that changes over time (like the percentage of people who take a week's vacation), to match the y axis with your range of values (that is, if 80% used to take a full week back in the day but only 55% do now, to have the y axis run from 55 to 80). But that will make the slope of the line far steeper than if you had put the data in its proper context by running the y axis all the way from 0 to 100. And if you have managers plot only changes in revenue growth (or sales or profits or whatever) rather than total revenue, sales, or profit levels from year to year, it will be much harder to hide downward trends. But don't take my word for it; see for yourself in this highly enlightening series of illustrations. Spotlight Build an Innovation Engine in 90 Days Scott D. Anthony, David S. Duncan, and Pontus M.A. Siren Practically every company innovates, but few do so in an orderly, repeatable way. Too often, big breakthroughs happen informally, requiring individual heroism and a heavy dose of luck. Most executives will freely admit that, but what can they do? Turning those accidental processes into one that's orderly, replicable, and scalable, as Procter & Gamble has done with its Innovation Factory, is a monumental task. But taking ad hoc approaches like hack-a-thons; on-again, off-again task forces; or cash prizes for innovative ideas, doesn't produce consistent results. The authors, a trio of innovation consultants, detail a middle path – a four-step process for building a corporate innovation function from scratch, without hiring new people, setting up new organizational structures, or making any substantial investment. It starts with matching your innovation efforts with your current and long-term strategies. Then you identify a few areas to pursue that match your company's unique strengths to some widespread customer need. Only then do you recruit a very small team to start working on one or two specific possibilities, and appoint an oversight group to steer the team along in much the same way a VC shepherds a start-up. In this way, even a small company can create a formal and effective innovation function in just 90 days. Feature Why Corporate Functions Stumble Sven Kunisch, Günter Müller-Stewens, and Andrew Campbell As the number, size, and influence has grown of centralized corporate functions – finance, HR, marketing, strategy, risk management, compliance – so have complaints about their performance. Why? Corporate functions go through four stages, say these European researchers, and they can stumble in each one of them. When they're first formed, functions may take on too much too fast, and end up creating more work for themselves than value for the organization. If they wisely start with only a few people and the low-hanging fruit, early success may prompt them to go on in stage 2 to expand beyond their mandate to activities that aren't useful to the firm—a carefully focused strategic-planning function might dream of developing a consulting service, for instance. If they take care to stay lean and stick to things that actually help their colleagues in the business units, they may begin to focus too much, when they reach the mature stage 3, on measuring their effectiveness against industry benchmarks. And even if they keep their focus then on their organization's specific needs, they may fail in stage 4 to change when times change or to recognize when their job is done and they should consider closing up shop. At that point, the researchers say, it's likely time to replace the leaders. Feature Making Dumb Groups Smarter Cass R. Sunstein and Reid Hastie “When there are many who contribute to the process of deliberation,” said Aristotle in advocating for the wisdom of crowds, “some appreciate one part, some another, and all together appreciate all.” Would that were so. But an increasing body of behavioral science is showing us myriad ways people fail to bring their collective intelligence to bear. In business settings, it's not just that they defer to those of higher rank or self-censor views they believe are politically unwise to raise. But more generally, people in groups tend to give undue weight to the first thing that's said and the knowledge everyone shares, which can cause groups to place too much faith in forecasts and overestimate the time projects will take and the money they'll cost. This tendency to converge on shared views tends to cause groups to polarize after they've conferred with one another – propelling people disposed to risk-taking toward riskier options and the risk averse to become even more hesitant to act. To counteract these amplification effects, group leaders should refrain from expressing their point of view early, and take particular care to identify those who hold special knowledge, and have them speak up. |
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