Category: Management

Open Offices Disrupt Analytical Thinking and Creativity

(p. A13) Visual noise, the activity or movement around the edges of an employee’s field of vision, can erode concentration and disrupt analytical thinking or creativity, research shows. While employers have long tried to quiet disruptive sounds in open workspaces, some are now combating visual noise too.
. . .
“I could barely ever focus,” says Ms. Spivak, marketing and communications director for San Francisco-based Segment.
Her company overhauled its layout when it moved to new offices in April. Its former space was like a warehouse, creating “these long lines of sight across the workspace, where you have people you know and recognize moving by and talking to each other. It was incredibly distracting,” CEO Peter Reinhardt says.
. . .
(p. A15) Being surrounded by teammates with similar work patterns can be comforting to employees. Unpredictable movements around the edges of a person’s field of vision compete for cognitive resources, however, says Sabine Kastner, a professor of neuroscience and psychology at Princeton University who has studied how the brain pays attention for 20 years. People differ in their ability to filter out visual stimuli. For some, a teeming or cluttered office can make it nearly impossible to concentrate, she says.
. . .
In an experiment with Chinese factory workers published in 2012, Ethan Bernstein, an assistant professor of leadership and organizational behavior at Harvard Business School, found teams were 10% to 15% more productive when they worked behind a curtain that shielded them from supervisors’ view. The employees felt freer to experiment with new ways to solve problems and improve efficiency when protected from their bosses’ critical gaze, Dr. Bernstein says.
A loss of visual privacy is the No. 2 complaint from employees in offices with low or no partitions between desks, after noise, according to a 2013 study published in the Journal of Environmental Psychology of 42,764 workers in 303 U.S. office buildings.

For the full commentary, see:
Sue Shellenbarger. “WORK & FAMILY; Why You Can’t Concentrate at Work.” The Wall Street Journal (Weds., May 10, 2017): A13 & A15.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 9, 2017 and has the title “WORK & FAMILY; Why You Can’t Concentrate at Work.”)

The Bernstein paper, mentioned above, is:
Bernstein, Ethan S. “The Transparency Paradox.” Administrative Science Quarterly 57, no. 2 (June 2012): 181-216.

Workers in Open Offices Are Less Able to Focus and Take More Sick Days

(p. R7) Noisy, open-floor plans have become a staple of office life. But after years of employee complaints, companies are trying to quiet the backlash.
Many studies show how open-plan office spaces can have negative effects on employees and productivity. As a result, companies are adding soundproof rooms, creating quiet zones and rearranging floor plans to appeal to employees eager to escape disruptions at their desk.
Companies are “not providing sufficient variety in spaces,” says David Lehrer, a researcher at the Center for the Built Environment at the University of California, Berkeley. Mr. Lehrer studies the impact of office designs on employees, and lack of “speech privacy” is currently a significant problem, he says. Employees in open-plan offices are less likely to be satisfied with their offices than employees in a traditional office layout, Mr. Lehrer adds.
. . .
Companies with open offices, . . . , soon encountered the downsides. For one thing, workers took increased sick days–a 2014 Swedish study of more than 1,800 workers found open-plan workers were twice as likely to take sick days as workers in traditional offices. The reason, the researchers hypothesized: the spread of germs and increased environmental stress of working in an open space. Workers also complained of an inability to focus and were generally less content with their work environment, the study said.
Now, companies are again “realizing people actually have to be productive,” says Ned Fennie, partner at San Francisco-based architecture firm Fennie + Mehl.

For the full story, see:
ALINA DIZIK. “Open Offices Lose Some of Their Openness; Companies look for ways to add privacy and quiet areas without reverting to the traditional design.” The Wall Street Journal (Mon., Oct. 3, 2016): R7.
(Note: ellipses added.)
(Note: the online version of the story has the date Oct. 2, 2016, and has the title “Open Offices Are Losing Some of Their Openness; Companies look for ways to add privacy and quiet areas without reverting to the traditional office design.”)

The 2014 Swedish study mentioned above, is:
Bodin Danielsson, Christina, Holendro Singh Chungkham, Cornelia Wulff, and Hugo Westerlund. “Office Design’s Impact on Sick Leave Rates.” Ergonomics 57, no. 2 (Feb. 2014): 139-47.

Entrepreneur Rothblatt Was Highest-Paid Female CEO in 2013

(p. 3) Martine Rothblatt, a serial entrepreneur, has a unique perspective on female 1 percenters. She not only founded Sirius Satellite Radio, but also founded and serves as chief executive of United Therapeutics, a pharmaceuticals company. Ms. Rothblatt was the highest-paid female chief executive in the country in 2013, with compensation of $38 million, yet she does not see her success as a victory for women. She was born as Martin and underwent gender reassignment surgery in 1994.
“I’ve only been a woman for half of my life, and there’s no doubt that I’ve benefited hugely from being a guy,” she told Fortune magazine.
In an interview, Ms. Rothblatt had some surprising suggestions for helping women reach the top. She supports eliminating “say on pay” rules that allow shareholders to vote on executive compensation, and eliminating shareholder advisory groups. “If shareholders do not like the pay a woman is receiving as C.E.O., they should simply sell the stock, and vice versa,” she said.

For the full commentary, see:
ROBERT FRANK. “INSIDE WEALTH; Plenty of Billionaires, but Few Are Women.” The New York Times, Sunday Business Section (Sun., Jan. 1, 2017): 3.
(Note: the online version of the commentary has the date DEC. 30, 2016, and has the title “INSIDE WEALTH; Why Aren’t There More Female Billionaires?”)

Founder-Led Firms Do Better

(p. A19) A study out earlier this year from Bain & Company, where we work, shows that over the past 15 years founder-led companies delivered shareholder returns that are three times higher than those of other S&P 500 companies.
. . .
Great founders imbue their companies with three measurable traits that make up what we dubbed “the founder’s mentality.”
The first is insurgency: The founding team declares war on its industry on behalf of underserved customers.
. . .
The second trait is an obsession with how customers are treated–an attention to detail that borders on compulsive.
. . .
Third, these companies are steeped in an owner’s mind-set. Too often in business, the founder’s vision becomes distorted.
Bain’s research found that the best companies–the top 20% of performers, founder-led or not–exhibit the three traits we’ve described four or five times as often as the bottom performers. The bad news: Only about 7% of companies, founder-led or not, manage to maintain these traits as they grow to scale. Yet those that do create more than 50% of the net value in the stock market in any given year.

For the full commentary, see:
CHRIS ZOOK and JAMES ALLEN. The Company Founder’s Special Sauce; No one leads a firm as effectively as the person who started it.” The Wall Street Journal (Mon., Dec. 19, 2016): A19.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Dec. 18, 2016.)

The Bain research mentioned above, is:
Chris, Zook. “Founder-Led Companies Outperform the Rest — Here’s Why.” Harvard Business Review Digital Articles (March 24, 2016): 2-5.

The passages quoted above are related to the authors’ book:
Zook, Chris, and James Allen. The Founder’s Mentality: How to Overcome the Predictable Crises of Growth. Boston, MA: Harvard Business Review Press Books, 2016.

“You Never Know for Sure Where Good Ideas Will Come From”

(p. B1) The best-performing U.S. stock over the past 30 years isn’t a household name like Costco Wholesale Corp. or Johnson & Johnson. It’s Balchem, up 107,099% since the end of 1985, according to FactSet Research Systems.
You’d never heard of Balchem? Me either; stocks don’t come much more obscure than this. Based in Wawayanda, N.Y. (population 7,266), about 70 miles northwest of New York City, Balchem makes flavorings, fumigating gases and nutritional additives for animal feed. Its total stock market value is about $1.7 billion.
Since the end of 1985, Balchem has gained an average of 26.2% annually, compared with 10.3% for the S&P 500 and 15.7% for Warren Buffett’s Berkshire Hathaway Inc.
. . .
(p. B7) But you can learn from Balchem and its peers for free. Over the past 30 years, 44 U.S. stocks generated cumulative total returns of 10,000% or more, according to FactSet. The 10 behind Balchem are Home Depot Inc., Amgen Inc., Nike Inc., UnitedHealth Group Inc., Danaher Corp., Altair Corp., Kansas City Southern, Jack Henry & Associates Inc., Apple Inc. and Altria Group Inc. All grew by at least twice the rate of the S&P 500. Investment manager William Bernstein of Efficient Frontier Advisors in Eastford, Conn., has christened such companies “superstocks.”
Perhaps the most notable thing they share, says David Salem, chief investment officer at Windhorse Capital Management in Boston, is that “they have all undergone at least one near-death experience.”
. . .
Balchem shows the patience, grit and good luck it takes for a company to turn into a superstock.
The firm began in 1967 as a specialty-chemicals company that made ingredients for hairspray and ink, among other things, says Raymond Reber, who stepped down as chief executive in 1997.
In 1996, Balchem was losing so much on a new technology to coat nutrients that “it was crazy,” says Mr. Reber. “We couldn’t operate that way.” So, he recalls, he told the company’s factory workers, “‘You have to figure out a way to double our production without raising our costs.’ And they did it.”
But the transition was rough. Balchem’s shares dropped 57% in 13 months between late 1997 and the end of 1998.
Dino Rossi, who was Balchem’s chief executive between 1998 and last year, remembers a staff engineer pointing out long ago that its nutritional choline salts might have a nonfood purpose: to help stabilize clay deposits. Years went by before fracking for oil and gas created a bonanza for that use. The end result: tens of millions of dollars in revenue for Balchem.
“You never know for sure where good ideas will come from,” says Mr. Rossi, “and it doesn’t happen overnight.”
It took years for Balchem to perfect microcapsules that could survive the harsh acids of a cow’s first stomach and then release nutrients farther along in the animal’s digestive system. “You have to be constantly working the technology harder,” says Mr. Rossi.

For the full commentary, see:
JASON ZWEIG. “No. 1 Over 30 Years? You Will Never Guess.” The Wall Street Journal (Sat., Jan 30, 2016): B1 & B7.
(Note: ellipses added.)
(Note: the online version of the article has the date Jan 29, 2016, and has the title The Best Stock Over the Last 30 Years? You’ve Never Heard of It.”)

“A Corporate Jargon of Uplift That Turns Sensitive Souls Suicidal”

(p. C1) Though Dante cataloged many forms of diabolical torture in his “Inferno,” a guided tour of hell, he somehow missed out on what could well be the most excruciating eternal punishment of all. I mean (ominous organ chords, please) the staff meeting that never, ever ends.
You’ve surely been a part of such sessions. They’re those gatherings in which people waste time by talking about how to be more productive, with algebraic visual aids and a corporate jargon of uplift that turns sensitive souls suicidal.

For the full review, see:
BEN BRANTLEY. “A Circle of Hell: The Staff Meeting.” The New York Times (Mon., OCT. 10, 2016): C1 & C4.
(Note: the online version of the review has the date OCT. 9, 2016, and has the title “Review: ‘Miles for Mary,’ a Sendup of the Interminable Meeting From Hell.”)

Blockchain Is a Process Innovation That Will Make Financial Records More Reliable and Easier to Access

(p. A13) Until the mid-1990s, the internet was little more than an arcane set of technical standards used by academics. Few predicted the profound effect it would have on society. Today, blockchain–the technology behind the digital currency bitcoin–might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.
Blockchain offers a way to track items or transactions using a shared digital “ledger.” Blocks of new transactions are added at the end of the chain, and encryption ensures that it remains unbroken–tamper-proof and error-free. This is significantly more efficient than the current methods for logging and sharing such information.
Consider the process of buying a house, a complex transaction involving banks, attorneys, title companies, insurers, regulators, tax agencies and inspectors. They all maintain separate records, and it’s costly to verify and record each step. That’s why the average closing takes roughly 50 days. Blockchain offers a solution: a trusted, immutable digital ledger, visible to all participants, that shows every element of the transaction.

For the full commentary, see:
GINNI ROMETTY. “How Blockchain Will Change Your Life.” The Wall Street Journal (Tues., Nov. 8, 2016): A13.
(Note: the online version of the commentary has the date Nov. 7, 2016, and has the title “KEYWORDS; Is Engine of Innovation in Danger of Stalling?”)

Spreadsheets and Committees Are Enemies of Innovation

(p. B4) “As we became more sophisticated in quantifying things we became less and less willing to take risks,” says Horace Dediu, a technology analyst and fellow at the Clayton Christensen Institute for Disruptive Innovation, a think tank. “The spreadsheet is the weapon of mass destruction against creative power.”
The same could be said of university research, says Dr. Prabhakar. Research priorities are often decided by peer review, that is, a committee.
“It drives research to more incrementalism,” she says. “Committees are a great way to reduce risk, but not to take risk.”

For the full commentary, see:
CHRISTOPHER MIMS. “KEYWORDS; Engine of Innovation Loses Some Spark.” The Wall Street Journal (Mon., Nov. 21, 2016): B1 & B4.
(Note: the online version of the article has the date Nov. 20, 2016, and has the title “KEYWORDS; Is Engine of Innovation in Danger of Stalling?”)

Firm Success May Depend on Being Allowed to Create Corporate Culture Through Hiring

(p. B1) After submitting an online application, completing a video interview and meeting with a hiring manager, the last thing standing between many applicants and a job at G Adventures Inc. is a roughly two-foot-deep ball pit similar to what you might find at a Chuck E. Cheese’s.
Candidates remove their shoes and join three of the Toronto-based tour company’s employees, who spin a wheel with questions such as, “What’s a signature dance move and will you demonstrate it?”
Sitting in a pool of plastic balls seemingly has little to do with selling package tours, but company founder Bruce Poon Tip says it reveals a lot about who will be successful at the 2,000-employee company.
Culture is “like a tribal thing for us,” he says. Lately, many companies seem to agree.
Employers are finding new ways to assess job candidates’ cultural suitability as they seek hires who fit in from day one. While few go as far as G Adventures, companies such as Salesforce.com Inc. have experimented with tapping “cultural ambassadors” to evaluate finalists for jobs in other departments. Zappos.com Inc. gives company veterans veto power over hires who might not fit in with its staff–even if those hires have the right skills for the job.
Though employment experts warn that fuzzy criteria such as culture fit may permit bias in the hiring process and result in a lack of diversity, companies say culture often determines who succeeds or fails in their workplace.

For the full commentary, see:
RACHEL FEINTZEIG. “‘Culture Fit’ May Be Key to Your Next Job.” The Wall Street Journal (Weds., Oct. 12, 2016): B1 & B6.
(Note: the online version of the commentary has the title “Culture Fit’ May Be the Key to Your Next Job.”)

Complex Regulations Stifle Innovation

(p. A15) In “The Innovation Illusion” . . . [Fredrik Erixon and Björn Weigel] argue that “there is too little breakthrough innovation . . . and the capitalist system that used to promote eccentricity and embrace ingenuity all too often produces mediocrity.”
The authors identify four factors that have made Western capitalism “dull and hidebound.” The first is “gray capital,” the money held by entities such as investment institutions, which are often just intermediaries for other investors. Their shareholders, say the authors, tend to focus on short-term outcomes, a perspective that makes company managers reluctant to invest in the research and development that is the lifeblood of the new. The authors’ second villain is “corporate managerialism,” which breeds a “custodian corporate culture” that searches for certainty and control instead of “fast and radical innovation.”
A third villain is globalization, though the authors have a novel complaint: The global economy, they say, has given rise to large firms that are more interested in protecting their turf than pursuing path-breaking ideas. Finally, they decry “complex regulation” for injecting uncertainty into corporate investment and thus stifling the emergence of new ideas and new products.
Echoing the views of Northwestern economist Robert Gordon, Messrs. Erixon and Weigel lament the paucity of big-bang innovation, writing that “the advertised technologies for the future underwhelm.” They wonder why there hasn’t been more progress in all sorts of realms, from the engineering of flying cars to the curing of cancer. Responding to those who worry that robots will drive up unemployment, they say that the real concern should be “an innovation famine rather than an innovation feast.”

For the full review, see:

MATTHEW REES. “BOOKSHELF; Bending the Arc of History.” The Wall Street Journal (Tues., December 13, 2016): A15.
(Note: first ellipsis added; second ellipsis in original.)
(Note: the online version of the review has the date Dec. 12, 2016,)

The book under review, is:
Erixon, Fredrik, and Björn Weigel. The Innovation Illusion: How So Little Is Created by So Many Working So Hard. New Haven, CN: Yale University Press, 2016.