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Editor's Note: The following was prepared by a machine algorithm and may not perfectly reflect the interview's audio fileThe following was prepared by a machine algorithm and may not perfectly reflect the interview's audio file
Chris Linnane:
The Parlor Room is an official podcast of Harvard Business School Online.
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Welcome to this very special bonus episode of The Parlor Room. In this episode, we're hitting some of the top listener questions from this season. Now I really enjoy these Q&A episodes-- quick, actionable insights on a variety of subjects. So let's kick things off with Professor Christina Wallace on the topic of entrepreneurship and marketing. She explains why direct interaction is key and how overcoming discomfort can unlock valuable insights.
Chris Linnane:
As an entrepreneur without traditional marketing experience, what should I do first in my entrepreneurial marketing journey?
Christina Wallace:
I'd say to go and get as close to the customer as possible, so whether that means taking a marketing role that allows them to interact with customers constantly, or looking at a product opportunity or a community role, something that gets you comfortable talking with people.
I think there's, sometimes, a discomfort with that, especially among younger folks who have grown up in an age of technology where you keep people at an arm's length, this notion of talking to people, intercepting them in a grocery store, riding along with them, and seeing how they spend their day can be really scary at first.
And so getting comfortable with that is going to be one of your top skills because the customer is going to tell you what they want, what they need. Even if they don't have the words for it, you're going to discover it by being close to them. And so if you're trying to keep them at arm's length, you're never going to get those best nuggets.
Chris Linnane:
Wow, that makes me nervous because I get very anxious talking to people about stuff. Is there a cheat? Is there a workaround?
Christina Wallace:
No. Everyone thinks I'll just send a survey. And I'm like, pick up the phone. Talk to them.
Chris Linnane:
That's some advice I need to take to heart. Many of us are wallflowers. And that word, "wallflower," it sounds so nice. Who wouldn't want to be a wallflower? Well, I guess anyone who wants to get things done. It's time for us to move into the garden and mix in with the other plants. I'm doing tough garden talk now. That's as far as I should take this botany metaphor. OK, let's move on. Forget AI for now. Just for now, forget AI. Professor Felix Oberholzer-Gee says the biggest shift coming to business is the global workforce shortage. With shrinking populations, he says, companies will soon compete fiercely for talent. I'm still trying to figure out if this is good news or bad news.
Chris Linnane:
What's one business trend you're most excited about seeing develop over the next 10 years?
Felix Oberholzer-Gee:
I know I'm supposed to say AI, but I'm not going to say AI. I think we're in the middle of a demographic revolution that would fundamentally change how we think about the relationship between companies and employees. As you probably know, the planet decided not to have kids other than in some countries in Africa. We are far from fertility rates that would keep the world's population stable. So over the next 20-30 years or so, you see most rich economies will lose anywhere from 20% to 30% of their population. And there's nothing we can do about it.
Hungary is a great example. They spent almost 5% of GDP on incentives to have kids, and people just don't. So now the question is oh my god, we're going to have fewer and fewer people, and we will compete for these people in a way that if you think it's tough right now because the US economy is working so well and the labor market is really tight, I tell you, you have seen nothing yet.
So that trend, how do I compete better for the employees with a differentiated value proposition, which is really the key here? For some reason, differentiation in the relationship with customers. That's very intuitive. Everybody does it. You don't even have to think about it. It's really the core of what it means to be a business.
Somehow, with employees, we're not nearly as sophisticated. They wanted flexibility forever, and we didn't really give it to anyone. And even now, there's this fight between the bosses and the employees arguing over how much flexibility can you really have? And so I think if you want to think about the future and how to position your company, thinking about competition for talent-- more important than anything else.
Chris Linnane:
Really, numbers are going down?
Felix Oberholzer-Gee:
Oh yeah. South Korea will lose about a third of its population over the next 20 years. China will go from 1.4 billion to 800 million.
Chris Linnane:
Wow, so we're about 8 billion people in the world right now. 30 years from now–
Felix Oberholzer-Gee:
Probably, depending on how long girls go to school, but in places where girls don't go to school for very long periods of time, they still have large families. But other than that, basically nowhere are we close to replicating the size of the population.
Chris Linnane:
Wow. Maybe this AI think, is not going to be able to take as many jobs because there won't be as many things out there.
Felix Oberholzer-Gee:
Yeah, exactly. Yes.
Chris Linnane:
Is psychological safety at odds with performance? Professor Amy Edmondson says no. Psychological safety is essential for success. When I was a teenager, I worked on a maintenance crew, and I had a boss who was so mean. One day, he was trying to open a pack of cigarettes and drove his lawnmower right into a pool.
Amy Edmondson:
As all 10 of us were pulling the lawnmower out of the deep end, surrounded by laughing children, I could see his ego melting away in the hot summer sun. From that moment on, we all felt very safe, and I don't think it was a coincidence that our work also improved. I'm not sure that's the psychological safety Professor Edmondson is referring to, but I might be in the right ballpark.
Some argue that psychological safety may come at the expense of performance in competitive context. How do you balance safety and drive results?
I don't see it as a balance. I see it as two incredibly important leadership responsibilities-- the creation of psychological safety and the motivation toward high performance.
And we can fill out four quadrants with those two dimensions. If you have neither psychological safety nor motivation to perform well, then you will have people in what I call the apathy zone. If you have people with high psychological safety but not much motivation, eh, sure, that's where I think people don't want to be. That's where that-- what lies behind that question.
And if you have people who are very motivated but have no psychological safety, they work in the anxiety zone, and it's a very hard place to produce excellence from. Finally, if you have people with high psychological safety and high motivation, that's where learning happens. That's where high performance happens.
So I think you need to push back when people are saying that psychological safety comes at the expense of performance. The fact is, and the research is pretty clear, that psychological safety is a means toward performance. In an uncertain, complex, interdependent world, the only way, truly, to achieve excellent performance is when people feel able to speak up candidly about what they see, what they worry about, and the ideas they have.
Chris Linnane:
Customers blend online and offline, but companies often treat them separately. Professor Sunil Gupta explains why integrating digital and physical marketing is key, and how businesses can measure and optimize the entire customer journey.
Chris Linnane:
What are some examples of how digital and physical marketing can most effectively integrate?
Sunil Gupta:
So I think this is an interesting question because, for a long time, companies have been keeping them in silos. So there's somebody, they have an agency which does only digital marketing, and there is an agency that only looks at the offline channel. But consumers mix and match. So you might start your search online, and then you go offline. So I think there's a lot more effort on companies' part to integrate these two components.
And the challenge also becomes that you start the search on online because you are affected by digital marketing on online, but you actually end up being in the store, and that creates a challenge. How do you measure this? So a lot of people are trying to do test and control that in one market, you only spend money in digital channel, and the other market you don't, and see the traffic in the store, and you start measuring those components.
Sometimes, the online channel does one job, offline channel does another job. So online channel may be simply to create awareness. The offline channel may be for actual conversion where you can talk to a salesperson. So I think the best way to think about is to entire customer journey, how the customers go through one step to the next step and then manage that process. Sephora does a fantastic job of doing exactly that.
Chris Linnane:
A company's financial reporting reflects its strategy and culture. Professor VG Narayanan reveals how accounting choices shape behavior, why incentives can backfire, and how businesses must balance autonomy with accountability.
Chris Linnane:
How does a company's accounting approach and financial reporting style need to align with its culture and strategy?
VG Narayanan:
I think it's very important for the financial reporting to take into account the culture and the strategy of the company. Earlier, we discussed about an airline, whether it's flying shuttle flights from Boston to New York versus whether it's doing long distance across the Atlantic from Boston to London, impacts their financial statements, the depreciation policy. That's an example where a company's strategy makes a difference to their accounting.
So the culture is a little bit more difficult one. There, too, I think it's important. So we have this saying in accounting-- the faster the car, the better the brakes need to be. And what we mean by that is let's say you're an organization where there's a hard-charging culture with very high expectations for performance. But also, we give you a lot of autonomy. We don't second guess everything. We're not constantly checking on you. We trust you. Huge upside for getting hitting the metrics, but we're not going to constantly check on what you're doing.
Now when opportunity and pressure for performance are there, there's a third lever that kicks in, which is called the-- this is called the fraud triangle-- human beings bring in rationalization. And they use the rationalization to say, everyone does this. I'm doing this for the greater good of the company. If you want to succeed in my country or my industry, you have to cut some corners. When we add this rationalization to the other two, then we have fraud.
And therefore, depending on the culture of the organization, we need to put in better control systems in certain organizations if they have this highly autonomous, decentralized organization structure and high-powered incentives, the culture could be very innovative. People, when you have this kind of high powered incentives and autonomy, people tend to be very innovative. That's great. But cutting corners is also a kind of innovation, not the kind of innovation we want, but it is a kind of innovation. So we need to have strong belief systems, boundary systems, internal controls that compensate for this very aggressive culture, if you will.
Other cultures which are more sort of egalitarian, if you will, where there are no huge upside for winners and huge shame for people who have not seen as performing as well, moderately ambitious people, if you will, there it's a different culture, where you don't have to worry so much about people sort of doing the wrong things. You can expect the fact that others are watching me. We are a team. Therefore, I cannot let my buddies down, those things to take care of making sure people don't cut corners.
So culture is very important for the control environment. And the control environment has a direct bearing on the financial statements that the organization is creating.
Chris Linnane:
Leadership-- some leaders shape history through persistence. Professor Nancy Koehn shares the story of an activist who spent decades fighting for justice and equality, proving that resilience and purpose can change the world.
Chris Linnane:
What modern leader do you most admire, and what can we learn from their approach?
Nancy Koehn:
I'm a great admirer of Gloria Steinem, who is a writer and an activist and a speaker and a lobbyist and a woman, a leader who's lobbied and worked and agitated for civil liberties for all people, regardless of race and gender and religion. And she's best known as one of the real leaders and activists in the early women's rights struggles of the 1960s and '70s.
But she's still very much at it. She's still going strong. She's, I believe, in her late 80s or early 90s right now and still agitating and still working and still bringing all kinds of different people together in interest, in unity around this incredibly important truth, which is talent is widely distributed. Talent, gifts, humanity is extraordinarily, widely distributed. But opportunity is not. So how do we build a world where possibility is as widely available as talent and gifts and commitment and integrity?
And Steinem just won't quit. And so I really admire her resilience, her persistence, her eloquence, and her ability. And this is true of all great leaders-- her ability to keep affecting the her world as it changes. I mean, things look very, very different in this country, for example, with respect to women's rights than they did in 1968. And Gloria Steinem has moved right with the changing context, the changing world in which she lives to stay relevant, to stay inspirational, and to stay effective. So she's just a phenomenal, phenomenal leader who, I think, doesn't get the attention that would benefit a lot of us so that we can learn from her.
Chris Linnane:
Leadership development isn't just about delegation, it's also about timing. Professor Tony Mayo explains how skill and motivation determine when employees are ready for more responsibility and why coaching is key to long-term success. So to close the loop on that story I was telling you earlier, that same boss who drove a lawn mower into a pool also literally painted himself into a corner while painting a second floor balcony, and we had to rescue him with a ladder. He did that twice. He painted himself into a literal corner twice. I digress. Here's Professor Mayo on leadership.
Chris Linnane:
What strategies have you seen work well for developing the next generation of leaders from within an organization?
Anthony Mayo:
The appropriate thing for developing the next generation of leaders is thinking about what are the appropriate next stretch opportunities for them? Who gets access to those opportunities and why? And so what you want to do-- the last thing you want to do is to delegate to somebody before they're ready.
So oftentimes, there's this two dimension of leadership that I like to draw upon quite a bit. It's from Hershey and Blanchard. And it's this notion of skill and will. So you have certain employees that have a lot of skill or low skill, and then but will-- by will we mean passion, excitement, and drive. And so if you have an employee who has a lot of will, a lot of passion, and a lot of skill, you want to delegate. You want to get out of the way because they can do the job.
And for people who don't have a lot of skill and don't have a lot of will, they're probably new employees. You want to be very directive with them. And so the challenge, often, is the people who have a lot of will, they're passionate, they're driven, a lot of the new millennials in the workforce. And they want responsibility more before they're ready. And if you do that, if you delegate too quickly, you may be setting them up for failure.
So what you need to do is guide them. You need to coach them and support them, enable them to build the skills that they need so that you can feel comfortable delegating to them going forward.
Chris Linnane:
So we've covered it all from marketing to leadership, from purpose to lawnmowers. It's all there. Thank you so much for listening to The Parlor Room. And remember, you can also watch each episode on YouTube. And if you haven't already, please hit the Follow button on your preferred platform. We'd really appreciate it. Thank you again, and we'll see you next time in The Parlor Room.
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