Tag Archives: motivation

Parallels between engaging Students and engaging Employees (Guest Post by Michael Smith)

One of the great things about my job is that I get to read things I enjoy and then teach them. It is hard to think of anything I’m more proud of than the business communications class I’ve developed for Tsinghua University in Beijing. In this course I teach several applications of psychology to business.

The beautiful thing about teaching, in the traditional sense, is that you end up learning the material better than if you were the student. Why is that? It is because when you explain ideas to other people, you are forced to reflect on the material and put it into your own words. This reflection is where learning occurs. That makes me think that perhaps there’s something broken about the traditional approach of getting up there and lecturing. If I’m doing all the talking, and you’re just listening, I’m the one that’s truly doing the learning. Great for me, but not so great for you as the student.

So how do you engage students? Well, I’m sure you’re reading this because you’re a business guy. Your first inclination might be that you want to skip this paragraph. But what if I were to tell you that there are countless parallels between engaging students and engaging employees. By not being interested in this question, you’ll never draw these connections. Of course, you couldn’t just answer this question with one sentence, or one paragraph, or one blog entry. As a teacher I know my words won’t resonate with you as well as your own words will resonate with you. So think about this question. You’re planning a class, and you want your students to learn — actually learn — and not just go home and forget everything. What do you?

If you’re really clever you might take that first piece of information I gave you about learning. The power of reflection. Of course I want my students to reflect on what I’m teaching them. But they need context. Truly creative thinking comes from drawing parallels with your life and what you’re learning. A great way to do that is through projects. You say, let’s open a coffee shop in Wudaokou. It’s a tough market, because you have Starbucks, Twosome Coffee, Lush, Bridge Cafe, SPR, Paris Baguette, and you have just a handful of differences between them.

Up until then my students are mainly focused on communication with customers. Some of this communication can be very subtle and delicate. Take pricing for example. My students have thought of many creative ways to improve overall margins through the presentation of a menu. And then you ask them a couple of questions they don’t yet have the tools to answer. You ask “How are you going to keep employee turnover low?” and “What will your pay structure be?”

I’ll be the first to admit I had no idea what the wait staff at these establishment were making. Did you know that the typical apartment in Wudaokou goes for 3 to 4000 RMB per month? And if you work full-time at one of these places you make 3000 RMB per month? You’re probably thinking, wow, we really need to pay these employees a lot more for them to be comfortable. And that would be too presumptuous.

You really want an employee that you have a chance to engage, for which your pay level won’t be an issue. You need to go into the job interview with a line of questioning that answers the question: “How much money do I need to give to this employee, so that in giving them this money, they’re not worried about making ends meet?”

So let’s agree it’s a good idea to keep turnover low. If you’re not on board with that assumption, I give you points for thinking critically, but I’m not going to entertain that notion in this posting.

I’ll tell you what you don’t do. You don’t punish your employees for mistakes. What you do is give your employees the respect they deserve. You teach them all the skills of the business. You include your employees in your thinking for the business, from the way you treat customers, to your branding and marketing. You teach your employees how to work the cash register, to make the coffee, to clean the bathroom, to restock the cafe, to do payroll. And you surprise your employees from time to time with generosity, to show to them what they mean to your company. Your business grows as your employees engagement grows. The roles we assign to a position are arbitrary. Make it a multifaceted position, and your employees will grow as people.

By giving up some control, your employees experience autonomy. It allows them to work on their terms. By sharing your vision with your employees, they have a sense of purpose. It provides context for their efforts. And by giving more tasks, and more challenges to your employees, they master many different skills in addition to the typical skills associated with their job, including time management and collaboration.

What I’m describing with autonomy, mastery and purpose are the 3 components to intrinsic motivation, as laid out by Dan Pink. It’s very possible you’ve seen his fantastic Ted talk, but then again, it’s possible you did watch it and just simply forgot about it. If you want your company to improve from the inside out, you should start by asking yourself these questions. In your current role, do you have these 3 elements in alignment? Does your role prevent other people in your company from experiencing true intrinsic motivation?

— Guest Post by Michael Smith

Michael teaches business and psychology courses for the department of foreign languages at Tsinghua University. His entries focus on the growing body of research in behavioral economics.

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Consistency in Strategy – Why is CVS stopping to sell Cigarettes?

This blog entry is about consistency in strategy. It talks about the benefits it can bring, and contributes some examples from our everyday life. Initially I was motivated to write about consistency by US pharmacy CVS’s recent announcement to terminate the sale of cigarettes.

“Good Strategy is Unexpected” – Richard Rumelt

It is interesting how the world reacts to a follow-through in strategy. I for my part find it not too surprising if a pharmacy, which should generally serve the mission of improving customer’s health, stops selling something that is incredibly endangering that very mission. All in all, people seem to perceive this as a sacrifice of short-term profits for growing profits in the long run, especially from the other and growing healthcare services (such as walk-in clinics) of the retailer. The often stated benefits are believed to be:

  •          Positive media exposure (as first to drop cigarettes)
  •          Internal motivation for employees
  •          Clear message to investors and customers

The media exposure appears to be very short termed to me. I find the benefits to be within the message being sent to employees, investors and customers as a whole. The employees and investors will be aware of no longer working for or being investing in a retailer also selling pharmaceuticals, but being involved with a company improving the health state of the American customer base. The customers will, not necessarily only because of this action, start to perceive the company as a healthcare provider – and cigarettes really just do not fit in.

I think the “sacrifice” will be rather low, especially in the long run. I read an interesting bit claiming that the margin on cigarettes is rather low (15%), so the store space could be better used with higher margin products (30%). Of course the sales from people coming to the stores for cigarettes, but buying more items than that, would have to be taken out of the increased profits. Sales are expected to drop by overall $2 billion, with $500 million lost from non-cigarette sales. This would result in a “sacrificed” of roughly $375 million in profits. But with overall cigarette sales going down in the US sales/profits are destined to decline anyway.

When it comes to generic strategies (i.e. low cost vs. differentiation) consistency in approach and action is even more vital. In those cases it is not just about soft facts such as employee perception of the company, but directly impacting pricing and cost structure of the business. In the last blog post Prof. Porter explained low-cost strategy and showed how dedicated one has to follow the decided path in order to gain competitive advantage. I was told a story by a manager at a company that decided to pursue a low-cost strategy, due to commoditization of its products. Their CEO would ask people to take pens from hotels during business trips to the office. While this was clearly not a method to reduce operating cost, it did send a clear message over culture to everybody in the organization. This was combined with a rigorous portfolio management process. Together this resulted in great strategy execution and doubled the company’s market capitalization within a few years. A similar company once used to be able to demand a premium price from differentiated products, but now competition from emerging markets put heavy pressure on the company. The approach should have been the same as with the above example; and in part it was, but the communication by management seemed uncommitted and the execution therefore lacked in effectiveness. The old strategy, wealth of the company and negotiation position was still engrained in minds of mid-level management and sales force. This resulted in a higher cost structure from slack control of costs and investments. Margins eventually came down further with increasing competition.

This is what Porter calls “stuck in the middle”. In those cases a company in neither the lowest cost provider, nor providing a superior offering. When looking around, one can find some examples in which this still works (e.g. airlines with government funding/ special hubs magically offering great service quality for a competitive ticket price) in somewhat regulated industries or not level playing fields.

This paradigm of consistency in strategy can be applied to other situations outside of business, too. What comes to mind are political crises such as the world financial crisis, which would require consistent actions such as system and structural changes in finance and education sectors. Currently we rather see a postponing of adverse effects.

The example I want to illustrate is long the lines of the US’s foreign policy. Not as a whole, but the dealing with terrorism, from a strategy and values perspective. When different decision makers need to come up with smaller policies and tactics, what bigger strategy are they referring to? I my opinion all the clichés about the US would be a great overall strategy. The US should aspire to be the society of equal rights, democracy and global philanthropists. So when it comes to anti-terror the approach derived from that should consider playing by the rules, i.e. no imprisonment without a trial, no torture, and no killing commandos in covered ops against US citizens. The US would aim to rather be a role model than a manipulative force. This would not only eliminate a lot of the recruits flocking to the US’s opposition, but also make it easier for allies to support any endeavors (due to less pressure from citizens) and for the soldiers, since they will have to face less collateral damage and mistreatment of prisoners. The dealing with NSA espionage etc. is a topic on its own, but should follow an overall democracy strategy, too.

For those of you who wish to further dive into the strategy of nations, I recommend having a look at Porter’s Competiveness of Nations.

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