More Organizations Are ‘Crowdsourcing’ Product Ideas from Employees

More Organizations Are ‘Crowdsourcing’ Product Ideas from Employees

One major consequence of our increasingly digital society and economy is that the next great business idea really can come from anywhere. Companies are increasingly taking this lesson to heart and looking for ways to solicit ideas from their entire community of employees, not just those formally dedicated to the development of new business. Last week, Digiday’s Max Willens took note of this trend in the media, observing the innovative techniques publishers are using to generate product ideas, such as a “Shark Tank”-style competition Politico tried out last summer:

Politico joins other publishers that are turning to their own employees to develop new revenue ideas. Before it was acquired by Meredith last fall, Time Inc. ran a similar internal competition that attracted nearly 60 submissions from employees. The Globe and Mail in Toronto and New York Daily News have run their own accelerator programs for years. Those programs have resulted in The Globe and Mail’s Workplace Awards, a profitable award and events program, and an ad-viewability tool at the Daily News.

Finding new sources of revenue has become a top priority for publishers everywhere. But in these cases, the goal is also to instill entrepreneurial thinking in a mature industry.

This concept is being tried in many industries, not just publishing. In our recent and ongoing research at CEB, now Gartner, we’ve seen many organizations turning to their employees through these types of ideation programs—some of which are much more effective than others. As you might imagine, inviting entire workforces to generate ideas can result in a certain amount of idea or information overload. The more interesting solutions we’ve seen guide employees to focus on and share the most helpful kinds of ideas, creating a sort of self-filtering mechanism.

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Propelled by a Put-Down: the Surprising Motivational Effects of Trash Talk

Propelled by a Put-Down: the Surprising Motivational Effects of Trash Talk

It happens abundantly in sports, entertainment, and politics, but what about in the office? According to a recent study, the business world is also rife with trash talk and it has some interesting implications.

Jeremy Yip, a professor at Georgetown, and Wharton professor Maurice Schweitzer are the authors of the study, titled “Trash-Talking: Competitive Incivility Motivates Rivalry, Performance and Unethical Behavior.” Yip shared some highlights from their findings in an interview with Knowledge@Wharton this week, noting that the CEOs of Virgin, GM, and T-Mobile have publicly jabbed at their industry opponents.

“It’s this style of aggressive communication in competition that we explore in our paper,” Yip said.

After surveying full-time office workers at Fortune 500 companies, Yip and Schwitzer found that 57 percent had experienced monthly occurrences of trash-talking. When studying the consequences of this surprisingly prominent form of incivility, they discovered that trash talk (or more specifically, being the target of trash talk) can actually have a positive effect on productivity.

“When people are the targets of these kind of messages,” Yip explained, “What we find is that they become much more motivated. They increase their effort and the performance goes up. Indeed, one key finding of our work is that targets of trash-talking become very motivated.”

This observation held even when controlling for the financial stakes:

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How Necessary Is That Non-Compete Clause?

How Necessary Is That Non-Compete Clause?

Last March, the US Treasury Department issued a report examining and criticizing a recent trend in which employers were including non-compete clauses in contracts for workers who were unlikely to become privy to the kinds of trade secrets such clauses are meant to protect. In a feature last week at the New York Times, Conor Dougherty explored the impact this trend has had on employees, many of whom find themselves unexpectedly unemployable after leaving a company with whom they had signed a non-compete agreement:

Companies have always owned their employees’ labor, but today’s employment contracts often cover general knowledge as well. In addition to noncompete clauses, there are nonsolicitation and nondealing agreements, which prevent employees from calling or servicing customers they have worked with in the past. There are nonpoaching agreements that prevent employees from trying to recruit old colleagues.

Put it all together, and suddenly some of the main avenues for finding a better-paying job — taking a promotion with a competitor, being recruited by an old colleague — are cut off.

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Study: Common Ownership Is Driving Outsized CEO Pay

Study: Common Ownership Is Driving Outsized CEO Pay

The practice of tying executive compensation to business performance isn’t getting any less controversial as CEO pay faces increasing scrutiny and as organizations come under pressure to justify the vast difference between the compensation of their C-suite executives and the average front-line employee. A big factor in the controversy is that when their businesses underperform, many CEOs still get paid handsomely—rewards that employees and the public might feel they didn’t really earn.

The latest research from economics and finance professors Miguel Antón, Florian Ederer, Mireia Giné, Martin Schmalz adds a new dimension to this controversy. Presenting their findings at the Harvard Business Review, the four researchers assert that CEO pay packages are becoming larger and less performance sensitive, owing to the trend of “common ownership”—i.e., when large, diversified asset management companies own major stakes in competing firms in the same industry. CEOs of such companies, they found, tend to get rewarded based on the performance of their entire industry, rather than their own firm’s performance against its competitors:

We found that when firms in an industry are more commonly owned, top managers receive pay packages that are much less performance-sensitive. In other words, these managers are rewarded less for outperforming their competitors. This difference in compensation has a sizeable effect. In industries with little common ownership, executive pay is about 50% more responsive to changes in their own firm’s shareholder wealth than in industries with high common ownership.

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What If Meritocracy Is a Myth?

What If Meritocracy Is a Myth?

At the LSE Review of Books, Dan McArthur praises economist Robert Frank’s new book, Success and Luck: Good Fortune and the Myth of Meritocracy, which argues that wealthy, successful people in developed countries really don’t know how lucky they are:

For Frank, luck is especially important to economic success in the era of ‘winner-take-all markets’. This term refers to a situation where transportation and communications technology increases the competitiveness of markets and, in doing so, allows the producers of the best products to capture the entire market. One of Frank’s examples is the way in which local accountancy firms have gradually been superseded by franchised services, and then by tax software. Where once the best accountant in a given town would have served only the richest customers in that particular town, now the producer of the best tax software can sell their product across the world.

In winner-take-all markets, there are more people competing to provide the best product, and the winner can take the entire prize themselves. Frank argues that under such circumstances, ability and effort are important, but so is luck. He uses mathematical simulations to show that, as contests get larger, luck becomes more important in determining the outcome, and the winner of the contest is less likely to be the most ‘skilful’ but rather the luckiest.

Drawing on behavioural economics and psychology, Frank discusses some of the cognitive biases that lead successful people to fail to appreciate the role of luck in their success. It seems to be harder to delay gratification and self-motivate if you believe that luck, rather than effort, plays an important role in your life. But overlooking the role of luck makes successful people more hostile to paying taxes. For Frank, in the US at least, this unwillingness to support higher taxes is seriously damaging physical and social infrastructure, including the roads, railways and public education on which the entire population depends.

In the May issue of the Atlantic, Frank expounded further on his theory of success and luck, suggesting that “this state of affairs”—in which those who have benefited the most from good fortune are the least likely to recognize it as such—”does not appear to be inevitable”:

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