May 2014

The CEO of TJX on How to Train First-Class Buyers

Reprint: R1405A

TJX operates seven brands in the United States, Canada, and Europe—including T.J. Maxx, Marshalls, and HomeGoods—and is the leading retailer of off-price apparel and home fashions in the U.S. and worldwide. It operates very differently from traditional retailers: Each of its stores has a vast number of SKUs, offering customers virtually an entire mall within about 23,000 square feet of selling space; and to find the right products, it sources from more than 16,000 vendors around the globe. Customers expect to have what Meyrowitz calls a “treasure-hunt shopping experience” when they enter a TJX store.

The company’s buyers are crucial to providing the merchandise for that experience, and its CEO puts a high priority on teaching and developing them. They must thoroughly understand consumer and fashion trends and the right value for every product TJX sells. They must be opportunistic and extremely flexible. And they must develop relationships with the vendors. Meyrowitz’s long-term vision is to grow TJX revenue from $26 billion today to $40 billion and beyond—and that will require many more buyers who are entrepreneurial, empowered, and team-oriented. “They need to be intelligent risk takers,” she says. “They need to have great instincts and to be comfortable making big decisions.”

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Beware the Next Big Thing

Reprint: R1405B

Innovative management ideas that bubble up in other companies pose a perennial quandary for leaders: Should you attempt to borrow new ideas, and if so, which ones and how? Even the most promising practices can be disastrous if they’re transplanted into the wrong company, writes Julian Birkinshaw of London Business School.

Broadly speaking, there are two ways to borrow from innovative companies, he argues. The first, observe and apply, is the most commonly used approach for adopting new management ideas. It can and does work well, but only under limited sets of circumstances: when the observed practice easily stands alone or involves just a small constellation of supporting behaviors (think of GE’s well-regarded succession-planning process) and when a company’s management model or way of thinking is very similar to the originator’s (think of two software firms that both use the Agile development approach).

The second method is to extract a management practice’s essential principle—its underlying logic—and ask a series of questions to determine if it is right for your firm, including: How is your company different from the originating firm? Are the goals of the practice important to your organization?

Many management innovations are launched with great fanfare, only to fade in popularity. With careful analysis, you can avoid falling prey to this hype cycle. And even if it turns out that a borrowed idea isn’t right for you, the analysis will help you better understand your own management models and sharpen your practices.

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Blue Ocean Leadership

Reprint: R1405C

Ten years ago, two INSEAD professors broke ground by introducing “blue ocean strategy,” a new model for discovering uncontested markets that are ripe for growth. In this article, they apply their concepts and tools to what is perhaps the greatest challenge of leadership: closing the gulf between the potential and the realized talent and energy of employees.

Research indicates that this gulf is vast: According to Gallup, 70% of workers are disengaged from their jobs. If companies could find a way to convert them into engaged employees, the results could be transformative. The trouble is, managers lack a clear understanding of what changes they could make to bring out the best in everyone. Here, Kim and Mauborgne offer a solution to that problem: a systematic approach to uncovering, at each level of the organization, which leadership acts and activities will inspire employees to give their all, and a process for getting managers throughout the company to start doing them.

Blue ocean leadership works because the managers’ “customers”—that is, the people managers oversee and report to—are involved in identifying what’s effective and what isn’t. Moreover, the approach doesn’t require leaders to alter who they are, just to undertake a different set of tasks. And that kind of change is much easier to implement and track than changes to values and mind-sets.

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Your Scarcest Resource

Reprint: R1405D

Most companies have elaborate procedures for managing capital. They require a compelling business case for any new capital investment. They set hurdle rates. They delegate authority carefully, prescribing spending limits for each level. An organization’s time, by contrast, goes largely unmanaged.

Bain & Company, with which all three authors are associated, used innovative people analytics tools to examine the time budgets of 17 large corporations. It discovered that companies are awash in e-communications; meeting time has skyrocketed; real collaboration is limited; dysfunctional meeting behavior is on the rise; formal controls are rare; and the consequences of all this are few. The authors outline eight practices for managing organizational time. Among them are: Make meeting agendas clear and selective; create a zero-based time budget; require business cases for all initiatives; and standardize the decision process.

Some forward-thinking companies bring as much discipline to their time budgets as to their capital budgets. As a result, they have liberated countless hours of previously unproductive time for executives and employees, fueling innovation and accelerating profitable growth.

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Get Your Team to Do What It Says It’s Going to Do

Reprint: R1405E

It’s one thing to set goals—and entirely another to get the people in your organization to actually accomplish them. To make the leap from vision to execution, you can’t just define what needs doing; you also need to spell out the details of getting it done. One motivational tool that enables this is “if-then planning,” which helps people express and carry out their intentions.

If-then plans work because contingencies are built into our neurological wiring, says social psychologist Halvorson. Humans are very good at encoding information in “If x, then y” terms and using such connections to guide their behavior, often unconsciously. When people decide exactly when, where, and how they’ll fulfill a goal, they create a link in their brains between the situation or cue (If or when x happens) and the behavior that should follow (then I will do y). This creates powerful triggers for action.

To date, most of the research on if-then plans has focused on individuals, but new studies show that they’re very effective with groups, improving performance by sharpening focus and prompting members to execute key activities in a timely manner.

If-then planning helps organizations avoid poorly expressed goals, groupthink, the tendency to cling to lost causes, and other problems. It pinpoints conditions for success, increases everyone’s sense of responsibility, and helps close the troublesome gap between knowing and doing.

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How to Outsmart Activist Investors

Reprint: R1405F

Since the start of the 21st century, a new breed of shareholder—the activist hedge fund—has frequently played a decisive role in interactions between corporations and markets. The game of these activists is simple: They buy stocks they view as undervalued and pressure management to do things they believe will raise the value, such as giving more cash back to shareholders or shedding divisions that the activists think are driving down the stock price. With increasing frequency they get deeply involved in governance—demanding board seats, replacing CEOs, and advocating specific business strategies.

The authors have identified six ways in which to fend off activist challenges or use them to improve your organization: (1) Have a clear strategic focus and stick to it. (2) Analyze your business as an activist would. (3) Have your external advisers lined up in advance and familiar with your company. (4) Build board chemistry. (5) Perform in the short run against declared goals. (6) Don’t dismiss activist ideas out of hand.

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Managing the “Invisibles”

Reprint: R1405G

Even in an age of relentless self-promotion, some extremely capable professionals prefer to avoid the spotlight. “Invisibles” work in fields ranging from engineering to interpreting to perfumery, but they have three things in common: They are ambivalent about recognition, seeing any time spent courting fame as time taken away from the work at hand. They are meticulous. And they savor responsibility, viewing even high pressure as an honor and a source of fascination.

Something else unites Invisibles: They represent a management challenge. The usual carrots don’t motivate them; however, managers can take several steps to ensure their satisfaction. Leaders should recognize who their Invisibles are; decide if they want more Invisibles on the team; reward them fairly, soliciting reports on their accomplishments; make the work more intrinisically interesting; and talk to the Invisibles about what works best for them.

These actions are well worth taking, as Invisibles not only bring exceptional levels of achievement to an organization but quietly improve the work of those around them, elevating performance and tone across the board.

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From Purpose to Impact

Reprint: R1405H

Over the past five years, there’s been an explosion of interest in purpose-driven leadership. Academics, business experts, and even doctors make the case that purpose is a key to exceptional leadership and the pathway to greater well-being.

Despite this growing understanding, however, a big challenge remains. Few leaders have a strong sense of their own individual purpose, the authors’ research and experience show, and even fewer can distill their purpose into a concrete statement or have a clear plan for translating purpose into action. As a result, they limit their aspirations and often fail to achieve their most ambitious professional and personal goals.

In this article, the authors present a step-by-step framework that leaders can use to identify their purpose and develop an impact plan to achieve concrete results. Effective purpose-to-impact plans use language that is uniquely meaningful to the individual, rather than business jargon. They focus on future, big-picture aspirations and work backward with increasing specificity. And they emphasize the individual’s strengths and encourage a holistic view on work and family.

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Right Up the Middle: How Israeli Firms Go Global

Reprint: R1405J

Small and midsize companies that want to expand abroad often face a daunting task: finding the sweet spot between multinationals, with their extensive resources and economies of scale, and the smaller players in the foreign markets, which have an intimate understanding of local conditions.

The more than 75 Israeli companies that have transformed themselves into global players in the past four decades prove that it can be done. Their approach: Focus on countries and regions that offer an opportunity that multinationals don’t find attractive and local companies can’t adequately address, and then penetrate this middle ground in ways that won’t immediately trigger a response. Given the size of their home market and their limited opportunities in the Middle East, Israeli companies have not had many other options for pursuing growth.

The stories of three Israeli companies—Netafim, Teva Pharmaceutical, and Amdocs—illustrate tactics for seizing the middle ground: Evade the giants, disguise yourself as a local, and focus on weak spots.

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Navigating the Cultural Minefield

Reprint: R1405K

As we increasingly work with colleagues and clients who come from all parts of the world, it is vital to understand how cultural differences affect business. Yet too often we rely on clichés and stereotypes that lead us to false assumptions. To help managers negotiate the complexity of an international work team, INSEAD professor Erin Meyer has developed a tool called the Culture Map, which plots the positions of numerous nationalities along eight behavior scales: Communicating, Evaluating, Persuading, Leading, Deciding, Trusting, Disagreeing, and Scheduling. Meyer suggests that comparing the relative positions of different nationalities along these scales can help us decode how culture influences workplace dynamics. She adds four important rules:

Don’t underestimate the challenge.

Management and work styles stem from lifelong habits that can be hard to change.

Apply multiple perspectives.

Be aware of your own expectations and behaviors, but also consider how members of other cultures perceive you and fellow teammates.

Find the positive in other approaches.

The differences that people of varied backgrounds bring to a work group can be great assets.

Continually adjust your position.

Be prepared to keep adapting your behavior to meld with the styles of your colleagues.

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