Is your company ready for one-to-one marketing?

One-to-one marketing, also known as relationship marketing, promises to increase the value of your customer base by establishing a learning relationship with each customer. The customer tells you of some need, and you customize your product or service to meet it. Every interaction and modification improves your ability to fit your product to the particular customer. Eventually, even if a competitor offers the same type of service, your customer won't be able to enjoy the same level of convenience without taking the time to teach your competitor the lessons your company has already learned. Although the theory behind one-to-one marketing is simple, implementation is complex. Too many companies have jumped on the one-to-one band-wagon without proper preparation--mistakenly understanding it as an excuse to badger customers with excessive telemarketing and direct mail campaigns. The authors offer practical advice for implementing a one-to-one marketing program correctly. They describe four key steps: identifying your customers, differentiating among them, interacting with them, and customizing your product or service to meet each customer's needs. And they provide activities and exercises, to be administered to employees and customers, that will help you identify your company's readiness to launch a one-to-one initiative. Although some managers dismiss the possibility of one-to-one marketing as an unattainable goal, even a modest program can produce substantial benefits. This tool kit will help you determine what type of program your company can implement now, what you need to do to position your company for a large-scale initiative, and how to set priorities.     

Success that lasts

Pursuing success can feel like shooting in a landscape of moving targets: Every time you hit one, five more pop up from another direction. We are under constant pressure to do more, get more, be more. But is that really what success is all about? Laura Nash and Howard Stevenson interviewed and surveyed hundreds of professionals to study the assumptions behind the idea of success. They then built a practical framework for a new way of thinking about success--a way that leads to personal and professional fulfillment instead of feelings of anxiety and stress. The authors' research uncovered four irreducible components of success: happiness (feelings of pleasure or contentment about your life); achievement (accomplishments that compare favorably against similar goals others have strived for); significance (the sense that you've made a positive impact on people you care about); and legacy (a way to establish your values or accomplishments so as to help others find future success). Unless you hit on all four categories with regularity, any one win will fail to satisfy. People who achieve lasting success, the authors learned, tend to rely on a kaleidoscope strategy to structure their aspirations and activities. This article explains how to build your own kaleidoscope framework. The process can help you determine which tasks you should undertake to fulfill the different components of success and uncover areas where there are holes. It can also help you make better choices about what you spend your time on and the level of energy you put into each activity. According to Nash and Stevenson, successful people who experience real satisfaction achieve it through the deliberate imposition of limits. Cultivating your sense of "just enough" can help you set reachable goals, tally up more true wins, and enjoy lasting success.     

Are you working too hard? A conversation with mind/body researcher Herbert Benson

Stress is an essential response in highly competitive environments. Before a race, before an exam, before an important meeting, your heart rate and blood pressure rise, your focus tightens, you become more alert and more efficient. But beyond a certain level, stress overloads your system, compromising your performance and, eventually, your health. So the question is: When does stress help and when does it hurt? To find out, HBR talked with Harvard Medical School professor Herbert Benson, M.D., founder of the Mind/Body Medical Institute. Having spent more than 35 years conducting worldwide research in the fields of neuroscience and stress, Benson is best known for his 1975 best seller The Relaxation Response, in which he describes how the mind can influence stress levels through such tools as meditation. His most recent research centers on what he calls"the breakout principle," a method by which stress is not simply reduced but carefully controlled so that you reap its benefits while avoiding its dangers. He describes a four-step process in which you first push yourself to the most productive stress level by grappling intently with a problem. Next, just as you feel yourself flagging, you disengage entirely by doing something utterly unrelated-going for a walk, petting a dog, taking a shower. In the third step, as the brain quiets down, activity paradoxically increases in areas associated with attention, space-time concepts, and decision making, leading to a sudden, creative insight-the breakout. Step four is achievement of a "new-normal state," in which you find that the improved performance is sustained, sometimes indefinitely. As counterintuitive as this research may seem, managers can doubtless recall times when they've had an "aha" moment at the gym, on the golf course, or in the shower. What Benson describes here is a way to tap into this invaluable biological tool whenever we want.     

Don't trust your gut

Making high-stakes business decisions has always been hard. But in recent decades, it's become tougher than ever. The choices facing managers and the data requiring analysis have multiplied even as the time for analyzing them has shrunk. One simple decision-making tool, human intuition, seems to offer a reliable alternative to painstaking fact gathering and analysis. Encouraged by scientific research on intuition, top managers feel increasingly confident that, when faced with complicated choices, they can just trust their gut. The trust in intuition is understandable. But it's also dangerous. Intuition has its place in decision making--you should not ignore your instincts any more than you should ignore your conscience--but anyone who thinks that intuition is a substitute for reason is indulging in a romantic delusion. Detached from rigorous analysis, intuition is a fickle and undependable guide. And while some have argued that intuition becomes more valuable in highly complex and changeable environments, the opposite is actually true. The more options you have to evaluate, the more data you have to weigh, and the more unprecedented the challenges you face, the less you should rely on instinct and the more on reason and analysis. So how do you analyze more in less time? The answer may lie in technology. Powerful new decision-support tools can help executives quickly sort through vast numbers of alternatives and pick the best ones. When combined with the experience, insight, and analytical skills of a good management team, these tools offer companies a way to make consistently sound and rational choices even in the face of bewildering complexity--a capability that intuition will never match.     

How to build your network

Many sensational ideas have faded away into obscurity because they failed to reach the right people. A strong personal network, however, can launch a burgeoning plan into the limelight by delivering private information, access to diverse skill sets, and power. Most executives know that they need to learn about the best ideas and that, in turn, their best ideas must be heard by the rest of the world. But strong personal networks don't just happen around a watercooler or at reunions with old college friends. As Brian Uzzi and Shannon Dunlap explain, networks have to be carefully constructed through relatively high-stakes activities that bring you into contact with a diverse group of people. Most personal networks are highly clustered--that is, your friends are likely to be friends with one another as well. And, if you made those friends by introducing yourself to them, the chances are high that their experiences and perspectives echo your own. Because ideas generated within this type of network circulate among the same people with shared views, though, a potential winner can wither away and die if no one in the group has what it takes to bring that idea to fruition. But what if someone within that cluster knows someone else who belongs to a whole different group? That connection, formed by an information broker, can expose your idea to a new world, filled with fresh opportunities for success. Diversity makes the difference. Uzzi and Dunlap show you how to assess what kind of network you currently have, helping you to identify your super-connectors and demonstrating how you act as an information broker for others. They then explain how to diversify your contacts through shared activities and how to manage your new, more potent, network.     

What's your story?

When you're in the midst of a major career change, telling stories about your professional self can inspire others' belief in your character and in your capacity to take a leap and land on your feet. It also can help you believe in yourself. A narrative thread will give meaning to your career history; it will assure you that, in moving on to something new, you are not discarding everything you've worked so hard to accomplish. Unfortunately, the authors explain in this article, most of us fail to use the power of storytelling in pursuit of our professional goals, or we do it badly. Tales of transition are especially challenging. Not knowing how to reconcile the built-in discontinuities in our work lives, we often relay just the facts. We present ourselves as safe--and dull and unremarkable. That's not a necessary compromise. A transition story has inherent dramatic appeal. The protagonist is you, of course, and what's at stake is your career. Perhaps you've come to an event or insight that represents a point of no return. It's this kind of break with the past that will force you to discover and reveal who you really are. Discontinuity and tension are part of the experience. If these elements are missing from your career story, the tale will fall flat. With all these twists and turns, how do you demonstrate stability and earn listeners' trust? By emphasizing continuity and causality--in other words, by showing that your past is related to the present and, from that trajectory, conveying that a solid future is in sight. If you can make your story of transition cohere, you will have gone far in convincing the listener--and reassuring yourself--that the change makes sense for you and is likely to bring success.     

Understanding "people" people

Nearly all areas of business--not just sales and human resources--call for interpersonal savvy. Relational know-how comprises a greater variety of aptitudes than many executives think. Some people can "talk a dog off a meat truck," as the saying goes. Others are great at resolving interpersonal conflicts. Some have a knack for translating high-level concepts for the masses. And others thrive when they're managing a team. Since people do their best work when it most closely matches their interests, the authors contend, managers can increase productivity by taking into account employees' relational interests and skills when making personnel choices and project assignments. After analyzing psychological tests of more than 7,000 business professionals, the authors have identified four dimensions of relational work: influence, interpersonal facilitation, relational creativity, and team leadership. This article explains each one and offers practical advice to managers--how to build a well-balanced team, for instance, and how to gauge the relational skills of potential employees during interviews. To determine whether a job candidate excels in, say, relational creativity, ask her to describe her favorite advertising campaign, slogan, or image and tell you why she finds it to be so effective. Understanding these four dimensions will help you get optimal performance from your employees, appropriately reward their work, and assist them in setting career goals. It will also help you make better choices when it comes to your own career development. To get started, try the authors' free online assessment tool, which will measure both your orientation toward relational work in general and your interest level in each of its four dimensions.     

Seven surprises for new CEOs

As a newly minted CEO, you may think you finally have the power to set strategy, the authority to make things happen, and full access to the finer points of your business. But if you expect the job to be as simple as that, you're in for an awakening. Even though you bear full responsibility for your company's well-being, you are a few steps removed from many of the factors that drive results. You have more power than anybody else in the corporation, but you need to use it with extreme caution. In their workshops for new CEOs, held at Harvard Business School in Boston, the authors have discovered that nothing--not even running a large business within the company--fully prepares a person to be the chief executive. The seven most common surprises are: You can't run the company. Giving orders is very costly. It is hard to know what is really going on. You are always sending a message. You are not the boss. Pleasing shareholders is not the goal. You are still only human. These surprises carry some important and subtle lessons. First, you must learn to manage organizational context rather than focus on daily operations. Second, you must recognize that your position does not confer the right to lead, nor does it guarantee the loyalty of the organization. Finally, you must remember that you are subject to a host of limitations, even though others might treat you as omnipotent. How well and how quickly you understand, accept, and confront the seven surprises will have a lot to do with your success or failure as a CEO.     

Strategy as ecology

Microsoft's and Wal-Mart's preeminence in modern business has been attributed to any number of factors--from the vision and drive of their founders to the companies' aggressive competitive practices. But the authors maintain that the success realized by these two very different companies is due only partly to the organizations themselves; a bigger factor is the success of the networks of companies with which Microsoft and Wal-Mart do business. Most companies today inhabit ecosystems--loose networks of suppliers, distributors, and outsourcers; makers of related products or services; providers of relevant technology; and other organizations that affect, and are affected by, the creation and delivery of a company's own offering. Despite being increasingly central to modern business, ecosystems are still poorly understood and even more poorly managed. The analogy between business networks and biological ecosystems can aid this understanding by vividly highlighting certain pivotal concepts. The moves that a company makes will, to varying degrees, affect the health of its business network, which in turn will ultimately affect the organization's performance--for ill as well as for good. Because a company, like an individual species in a biological ecosystem, ultimately shares its fate with the network as a whole, smart firms pursue strategies that will benefit everyone. So how can you promote the health and the stability of your own ecosystem, determine your place in it, and develop a strategy to match your role, thereby helping to ensure your company's well-being? It depends on your role--current and potential--within the network. Is your company a niche player, a keystone, or a dominator? The answer to this question may be different for different parts of your business. It may also change as your ecosystem changes. Knowing what to do requires understanding the ecosystem and your organization's role in it.     

Change the way you persuade

You call a meeting to try to convince your boss that your company needs to make an important move. Your argument is impassioned, your logic unassailable, your data bulletproof. Two weeks later, though, you learn that your brilliant proposal has been tabled. What went wrong? It's likely the proposal wasn't appropriately geared toward your boss's decision-making style, say consultants Gary Williams and Robert Miller. Over the course of several years' research, the authors have found that executives have a default style of decision making developed early in their careers. That style is reinforced through repeated successes or changed after several failures. Typically, the authors say, executives fall into one of five categories of decision-making styles: Charismatics are intrigued by new ideas, but experience has taught them to make decisions based on balanced information, not just on emotions. Thinkers are risk-averse and need as much data as possible before coming to decisions. Skeptics are suspicious of data that don't fit their worldview and thus make decisions based on their gut feelings. Followers make decisions based on how other trusted executives, or they themselves, have made similar decisions in the past. And controllers focus on the facts and analytics of decisions because of their own fears and uncertainties. But most business presentations aren't designed to acknowledge these different styles--to their detriment. In this article, the authors describe the various subtleties of the five decision-making styles and how best to persuade executives from each group. Knowing executives' preferences for hearing or seeing certain types of information at specific stages in their decision-making process can substantially improve your ability to tip the outcome in your favor, the authors conclude.     

The customer has escaped

Every company makes choices about the channels it will use to go to market. Traditionally, the decision to sell through a discount superstore or a pricey boutique, for instance, was guided by customer demographics. A company would identify a target segment of buyers and go with the channel that could deliver them. It was a fair assumption that certain customer types were held captive by certain channels--if not from cradle to grave, then at least from initial consideration to purchase. The problem, the authors say, is that today's customers have become unfettered. As their channel options have proliferated, they've come to recognize that different channels serve their needs better at different points in the buying process. The result is "value poaching." For example, certain channels hope to use higher margin sales to cover the cost of providing expensive high-touch services. Potential customers use these channels to do research, then leap to a cheaper channel when it's time to buy. Customers now hunt for bargains more aggressively; they've become more sophisticated about how companies market to them; and they are better equipped with information and technology to make advantageous decisions. What does this mean for your go-to-market strategy? The authors urge companies to make a fundamental shift in mind-set toward designing for buyer behaviors, not customer segments. A company should design pathways across channels to help its customers get what they need at each stage of the buying process--through one channel or another. Customers are not mindful of channel boundaries--and you shouldn't be either. Instead, they are mindful of the value of individual components in your channels--and you should be, too.     

Is yours a learning organization?

An organization with a strong learning culture faces the unpredictable deftly. However, a concrete method for understanding precisely how an institution learns and for identifying specific steps to help it learn better has remained elusive. A new survey instrument from professors Garvin and Edmondson of Harvard Business School and assistant professor Gino of Carnegie Mellon University allows you to ground your efforts in becoming a learning organization. The tool's conceptual foundation is what the authors call the three building blocks of a learning organization. The first, a supportive learning environment, comprises psychological safety, appreciation of differences, openness to new ideas, and time for reflection. The second, concrete learning processes and practices, includes experimentation, information collection and analysis, and education and training. These two complementary elements are fortified by the final building block: leadership that reinforces learning. The survey instrument enables a granular examination of all these particulars, scores each of them, and provides a framework for detailed, comparative analysis. You can make comparisons within and among your institution's functional areas, between your organization and others, and against benchmarks that the authors have derived from their surveys of hundreds of executives in many industries. After discussing how to use their tool, the authors share the insights they acquired as they developed it. Above all, they emphasize the importance of dialogue and diagnosis as you nurture your company and its processes with the aim of becoming a learning organization. The authors' goal--and the purpose of their tool--is to help you paint an honest picture of your firm's learning culture and of the leaders who set its tone.     

Want to perfect your company's service? Use behavioral science.

It may seem like the topic of service management has been exhausted. Legions of scholars and practitioners have applied queuing theory to bank lines, measured response times to the millisecond, and created cults around "delighting the customer." But practitioners haven't carefully considered the underlying psychology of service encounters--the feelings that customers experience during these encounters, feelings often so subtle they probably couldn't be put into words. Fortunately, behavioral science offers new insights into better service management. In this article, the authors translate findings from behavioral-science research into five operating principles. First, finish strong: the ending is far more important than the beginning of an encounter because it's what remains in the customer's memory. Second, get the bad experiences out of the way early: in a series of events, people prefer to have undesirable events come first and to have desirable events come last. Third, segment the pleasure, combine the pain: since experiences seem longer when they are broken into segments, it's best to combine all the boring or unpleasant steps of a process into one. Fourth, build commitment through choice: people are happier when they believe they have some control over a process, particularly an uncomfortable one. And fifth, give people rituals and stick to them: most service--encounter designers don't realize just how ritualistic people are. Ultimately, only one thing really matters in a service a encounter--the customer's perception of what occurred. This article will help you engineer your service encounters to enhance your customers' experiences during the process as well as their recollections of the process after it is completed.     

How valuable is word of mouth?

The customers who buy the most from you are probably not your best marketers. What's more, your best marketers may be worth far more to your company than your most enthusiastic consumers. Those are the conclusions of professors Kumar and Petersen at the University of Connecticut and professor Leone at Ohio State University, who analyzed thousands of customers in research focused on a telecommunications company and a financial services firm. In this article, the authors present a straightforward tool that can be used to calculate both customer lifetime value (CLV), the worth of your customers' purchases, and customer referral value (CRV), the value of their referrals. Knowing both enables you to segment your customers into four constituent parts: those that buy a lot but are poor marketers (which they term Affluents); those that don't buy much but are very strong salespeople for your firm (Advocates); those that do both well (Champions); and those that do neither well (Misers). In a series of one-year experiments, the authors demonstrated the effectiveness of this segmentation approach. Offering purchasing incentives to Advocates, referral incentives to Affluents, and both to Misers, they were able to move significant proportions of all three into the Champions category. Both companies reaped returns on their marketing investments greater than 12-fold--more than double the normal marketing ROI for their industries. The power of this tool is its ability to help marketers decide where to focus their efforts. Rather than waste funds encouraging big spenders to spend slightly more while overlooking the power of customer evangelists who don't buy enough to seem important, you can reap much higher rewards by nudging big spenders to make referrals and urging enthusiastic proponents of your wares to buy a bit more.     

What brain science tells us about how to excel

Millions of people are struggling at work. Some are in the wrong jobs. Others feel no connection to their colleagues or engagement with their. The result is rampant dissatisfaction and underachievement. Hallowell, a child psychiatrist specializing in learning differences, describes the Cycle of Excellence, a plan for helping people achieve peak performance. It consists of five steps: Select a job that reflects what you like to do and what you do best and that adds value to the organization. Research has shown that good job fit reduces stress and increases satisfaction and performance. Connect with the people around you. Robust relationships in the workplace galvanize people and build their engagement with their jobs. Small talk may seem trivial, but it pays big dividends. Play on the job. It sounds like an oxymoron, but people do their best--and are most satisfied--when they're imaginatively involved with their work. And when you're hard at play, you're building your brain. Grapple and Grow--that is, work hard to achieve a difficult task. The stress you may feel as you engage with a tough assignment and connect with others to complete it is not the toxic kind. Shine in the acknowledgment of your achievements. Praise releases chemicals that make us feel good, and it fills our uniquely human need to be of value, to matter. If you aren't getting it, ask for it. The need for recognition is fundamental to optimal human performance.     

How market smarts can protect property rights

Intellectual property comprises an ever-increasing fraction of corporate wealth, but what's the good of that if an ever-increasing fraction of the property is copied or stolen? Faced with developing countries' limited and inadequately enforced patent and copyright laws, some companies are resorting to market-based strategies to protect their intellectual property. These include preempting or threatening competitors, embedding intellectual property in environments that can be protected, bundling insecure intellectual property with its more secure cousins, and actually entering the businesses that pose a threat. The authors urge companies coping with weak property rights to follow a decision tree when choosing which strategies to use and when: Start by thinking of the strategies that will protect your business's core. If, for example, a first-mover advantage is within reach, making yourself more committed to intellectual property could be the answer. If you and your rivals are equally matched, ask yourself, "Can those that threaten me with copying be copied in turn?" The knowledge that each of you can hurt the other may dampen the competitive intensity or even lead to voluntary sharing of property. If these solutions fail or don't apply, try forging a connection with a product or business closely related to your own. Doing so may prevent a valued asset from falling into a rival's hands or make the asset harder to misappropriate. This approach can even help you expand your piece of the market pie or reduce the cost of making the threatened product, perhaps to the point where you can compete against pirated goods. Finally, if there still doesn't seem to be a way of making money from your threatened product, you may choose to move into the very business that has hurt your own. Such strategies are behind the economics of successful companies like Intel and NBC, say the authors.     

Can you handle failure?

Handling failure and blame is key to managerial success. But roughly 70 % of Americans have a personality type that tends to react inappropriately when things go wrong. Some people are extrapunitive, always pointing a finger at someone else. Others are impunitive, denying there's a problem or that they played any role. And still others are intrapunitive, heaping too much blame on themselves and seeing disasters where none exist. Fortunately, there are ways to fix such flawed responses. The first step is to cultivate self-awareness; several personality tests can help you assess your interaction style. Next, deepen your political awareness to better understand what messages others are receiving. Once you've identified your bad habits, you can move toward more-adaptive responses. Dattner and Hogan describe several strategies that can benefit any of the personality types. You should make sure to listen and communicate well, reflect on the situation and the people involved, think carefully before acting, and look for lessons when mistakes do happen. Using detailed examples, the authors illustrate how people with the various personality types are apt to react to specific failures and explain what they might do differently. They also offer insights to help you recognize when your bosses, peers, or subordinates fit into one of the problematic categories and suggest ways to influence their behavior. The taxonomy and tactics they present will help you approach failure with an open mind and react in a balanced, constructive way.     

Managing global accounts

Global account management--which treats a multinational customer's operations as one integrated account, with coherent terms for pricing, product specifications, and service--has proliferated over the past decade. Yet according to the authors' research, only about a third of the suppliers that have offered GAM are pleased with the results. The unhappy majority may be suffering from confusion about when, how, and to whom to provide it. Yip, the director of research and innovation at Capgemini, and Bink, the head of marketing communications at Uxbridge College, have found that GAM can improve customer satisfaction by 20% or more and can raise both profits and revenues by at least 15% within just a few years of its introduction. They provide guidelines to help companies achieve similar results. The first steps are determining whether your products or services are appropriate for GAM, whether your customers want such a program, whether those customers are crucial to your strategy, and how GAM might affect your competitive advantage. If moving forward makes sense, the authors' exhibit, "A Scorecard for Selecting Global Accounts," can help you target the right customers. The final step is deciding which of three basic forms to offer: coordination GAM (in which national operations remain relatively strong), control GAM (in which the global operation and the national operations are fairly balanced), and separate GAM (in which a new business unit has total responsibility for global accounts). Given the difficulty and expense of providing multiple varieties, the vast majority of companies should initially customize just one---and they should be careful not to start with a choice that is too ambitious for either themselves or their customers to handle.     

Managing authenticity: the paradox of great leadership

Leaders and followers both associate authenticity with sincerity, honesty, and integrity. It's the real thing--the attribute that uniquely defines great managers. But while the expression of a genuine self is necessary for great leadership, the concept of authenticity is often misunderstood, not least by leaders themselves. They often assume that authenticity is an innate quality--that a person is either genuine or not. In fact, the authors say, authenticity is largely defined by what other people see in you and, as such, can to a great extent be controlled by you. In this article, the authors explore the qualities of authentic leadership. To illustrate their points, they recount the experiences of some of the authentic leaders they have known and studied, including the BBC's Greg Dyke, Nestlé's Peter Brabeck-Letmathe, and Marks & Spencer's Jean Tomlin. Establishing your authenticity as a leader is a two-part challenge. You have to consistently match your words and deeds; otherwise, followers will never accept you as authentic. But it is not enough just to practice what you preach. To get people to follow you, you also have to get them to relate to you. This means presenting different faces to different audiences--a requirement that many people find hard to square with authenticity. But authenticity is not the product of manipulation. It accurately reflects aspects of the leader's inner self, so it can't be an act. Authentic leaders seem to know which personality traits they should reveal to whom, and when. Highly attuned to their environments, authentic leaders rely on an intuition born of formative, sometimes harsh experiences to understand the expectations and concerns of the people they seek to influence. They retain their distinctiveness as individuals, yet they know how to win acceptance in strong corporate and social cultures and how to use elements of those cultures as a basis for radical change.