The Parlor Room

In The Parlor Room's Season 1 finale, host Chris Linnane shares his favorite questions and answers from his conversations with Harvard Business School faculty, including Mihir Desai, Mike Wheeler, Jill Avery, Nien-hê Hsieh, Jeff Bussgang, Joshua Margolis, Forest Reinhardt, and Linda Hill.

Tune in for their insights into finance, conflict management, branding, ethics, sustainability, and leadership.

Catch up on Season 1 of The Parlor Room:

Mihir Desai on Apple's Powerful Financial Model: https://hbs.me/yd84j56n

Mike Wheeler on the Jazz of Negotiation: https://hbs.me/2p8zna3m

Jill Avery on Building a Winning Brand Portfolio: https://hbs.me/yckzfsur

Nien-hê Hsieh on Ethical AI, Decision-Making, and Investing: https://hbs.me/36sw4frv

Jeff Bussgang on the Rise of AI & Raising Venture Capital: https://hbs.me/2p8p9fcu

Joshua Margolis on Elevating Your Leadership Style: https://hbs.me/59st27cn

Forest Reinhardt on Climate Change and the Tragedy of the Commons: https://hbs.me/2p85nasj

Linda Hill on Leading Change and the Paradoxes of Management: https://hbs.me/3hbsm25b

Watch The Parlor Room on YouTube: https://hbs.me/4j99nbwc

Transcript

Chris Linnane:

The Parlor Room is an official podcast of Harvard Business School Online.

Welcome to The Parlor Room, where business concepts come to life. I'm Chris Linnane, and I'm the creative director at Harvard Business School Online. This is a unique episode of The Parlor Room. We conclude each episode with a Q&A session. For this episode, I've selected my favorite questions and answers from each of the eight episodes in season one. Think of this episode as a great buffet. I shouldn't use food analogies because I eat like a five-year-old. I recently started eating salad. In around three or four months, I'll be able to start eating them in public, but if I tried right now, everyone would lose their appetite. Anyway. Back to this episode.

Because of my eating limitations, most buffets cause me great anxiety, and I leave hungry. But this is like a buffet of eight different kinds of Reese's Peanut Butter Cups. I will eat it all because everything is great. So get your plate and get in line. I hope you like chocolate and peanut butter because that's all we're serving.

Welcome to The Parlor Room buffet. We'll start off with a clip from our very first episode.

In episode one, I spoke with Professor Mihir Desai about finance. The question I picked asked: What skills or qualities are crucial to success in today's financial landscape?

Mihir Desai:

Yeah, that's a great question. And let me say what I think is not the right answer, okay? Which is: It's tempting today to think that the right answer is more familiarity with data science and understanding artificial intelligence and knowing how to prompt ChatGPT. I think those are relatively cheap skills. I think what is really lacking in finance and what distinguishes people who do really well is judgment and is really thinking hard about value. So what the traits are that really matter today are the same traits that have always mattered in finance, which are judgment, character, and its consistency. And in some sense, that sounds like very old-fashioned advice, and I think it is very old-fashioned advice, but that's what mattered a hundred years ago. I think that's what matters today, and I think it matters in most fields, but it matters particularly in finance.

Chris Linnane:

Okay, so with judgment, is that something someone can develop over time?

Mihir Desai:

It takes a long time and judgment...

Chris Linnane:

How do they develop that?

Mihir Desai:

Well, so the wonderful thing about finance is you just keep investing in it and it keeps getting better and better. So judgment matters, particularly in finance because it's a very fast-changing world. Markets are quickly moving and you have to make sense of tons and tons of information. And that's if you're a CFO, that's if you're an investor, that's if you're whatever you are in finance because you're going to be embedded in financial markets, perhaps at a corporation, but there's going to be just tons and tons of data coming, and you have to learn how to respond to that data, and you have to do it in a consistent way. And the great news about it is you learn and you get better and better at it because judgment comes by and large from experience. And so with that experience, you learn what you're doing right, what you're doing wrong, and then maybe over time you get better. It's a very, very challenging field because most people don't have the patience to try to develop that judgment, but that judgment is what really, really matters.

Chris Linnane:

Next is Professor Mike Wheeler. He was asked: How can negotiators effectively manage conflicts during a negotiation? Now, this question is great because our Negotiation Mastery course features a fly-on-the-wall view of a real and intense union negotiation, and we get to talk about it.

Mike Wheeler:

Well, one thing that's tricky about that is that there are conflicts where there are honest, there's real anger going back and forth.

Chris Linnane:

Now, I remember in your course, in your Negotiation Mastery course, we had the automotive union. That old footage in Canada, was it GM or was that Ford? I can't remember.

Mike Wheeler:

No, GM.

Chris Linnane:

We have the footage of that negotiation going haywire. Absolutely. And people getting really upset with each other. It's amazing.

Mike Wheeler:

It's very rare to have real-time, unedited video. And this was a strike in Canada between the Canadian auto workers and the factories that were there. And the biggest problems were within the union where there was a battle for leadership and a lot of X-rated language involved. And the person who was the head of the union was very adept in terms of knowing whom he could be courteous to, even though they weren't necessarily supporting him. And then his biggest rival in the time came, as you recall, for him to go toe to toe. And it's fascinating in those instances. You don't want to be surprised by that if you're preparing for negotiation. What could go wrong here? What would I do if it did go wrong? Can you anticipate everything that could go off the tracks? No, but you could in a general way say, "I hope we're going to have a good relationship." But sometimes people yell at each other, "What am I going to do?" There are some options. Yell back isn't necessarily the right one. Sometimes letting it pass, sometimes saying, "I think we need to take a breather here. We need to come back at another point, but we want to be optimistic." I think that we need to say, "What's the best case? What's the worst case?" Not merely about the deal, about what the terms are going to be, but what the relationship is going to be.

Chris Linnane:

I told you this buffet is pretty good. Now we're going to change gears a little bit and talk about creating brand value with Professor Jill Avery. Professor Avery was asked: How does storytelling help in creating brand value, and how can companies use storytelling effectively?

Jill Avery:

Stories are so important in the world of branding. Why? Because stories make everything more memorable, more believable, more emotionally engaging. If you think about advertising as the quintessential place that brands tell their stories, if I give you a list of facts in my ad...that's not very compelling. If I embed those lists of facts in a story with exciting, empathetic characters with a plot that draws you in and brings you along with a conflict, a monster adversary to be overcome, and I leave you with a moral or a message at the end...that's going to be a much more memorable ad, it's going to be a much more engaging ad. It's going to lead to greater brand awareness. It's going to lead to great greater brand liking and connection and hopefully to stronger brand purchase.

Chris Linnane:

Our next question is a big one. It was from an episode discussing business and ethics with HBS Professor Nien-hê Hsieh. Professor Hsieh was asked: What are the most important ethical considerations that businesses should prioritize in today's globalized and interconnected world?

Nien-hê Hsieh :

If we had to choose a way to prioritize what businesses should think about, in this case, I think we're talking about large businesses, we're talking about an interconnected and global world. I guess what I would start in this specific instance is in terms of thinking about basic human rights and our businesses engaged in activities or contributing activities in ways that sort of might violate basic human rights. I think that's kind of a baseline for thinking about activity in a global, interconnected world. What's hard oftentimes is understanding what the impact of business decisions are on human rights. But I think that's sort of where I would start because a list of human rights, it's got a quasi-kind of political institutional background to it because it is part of something that people have signed on to, and they're pretty clearly enunciated in ways that I think we can think about trying to avoid negative impacts on them.

But there may be another way to think about it, and I'll sort of leave you with this. It's actually going back to the statement by the first dean of Harvard Business School, which is over a hundred years ago. And the first dean, Dean Gay, he was asked at a gathering of the railroad industry, so that gives you a sense of how long ago this was. And somebody in the audience asked him to define business because the business school was a new kind of professional school at the time. And so they said to him, "Look, we have medicine, we have law. What is business?" And Dean Gay gave what I think is still one of the best answers. He said, "Business is about making things to sell at a profit decently."

And there are few things about that statement that I really like that I hope will be helpful in sort of thinking about what should businesses do. The first thing is that he defined business in a way that includes a value judgment, right? It's not just business is about making things to sell at a profit. It is business is about making things to sell at a profit decently. So in other words, business by its very activity is something that should be done in a certain kind of way. It's not just buying and selling to make a profit itself. It's about doing it decently. So that's the first thing. Secondly, it's about making things. That means actually producing, creating something, and not simply trading back and forth. You have to create something of value for people. Secondly, it's to do better profit. Why is profit important? Profit is important because profit is one way to understand that what you're doing is actually valuable for people, and then you want to do it decently.

And that covers quite a lot of ground because at first, I think when people think decent, it's not that high of a bar. For example, if you were to ask me how was my meal at this restaurant? And I said, "It was decent," what would you take away from that, Chris? Yeah, it wasn't that great. Wasn't that great? It's acceptable to a certain extent, right? It was decent, right? It's not great, right? But if you think about it, I actually think that that's pretty powerful in a certain kind of way. First of all, it is a standard, and there are lots of ways in which we treat people that aren't decent. We can all be decent. I won't be LeBron James, but I can, well, actually that's not true. I won't even be a decent basketball player, but that's the point. But there's a sense in which we can all treat each other with a certain kind of decency. So it's something that we can all actually strive for in a way that's realistic, and it at the same time also does make a big difference in how we treat other people. And the third one is that decency then applies to all the parts of business. It applies to how you make things, what you're making, things, how much profit are you making? And then finally, are we helping to create a world that's decent? And I think that actually, if we can get to decency, that would actually really make huge difference in the world.

Chris Linnane:

It was hard to pick. Just one question from our next guest Professor Jeff Bussgang. He hit so many great points and everyone has questions about entrepreneurship. In the end, I had to settle on just one, and it's a quick one, but it's super insightful. He was asked: What are the most common mistakes or pitfalls entrepreneurs should try to avoid?

Jeff Bussgang:

So the first pitfall I've seen many founders fall into is that they define too large a market and try to boil the ocean. I gave you the example of C16 Bio and synthetic palm oil. That's an $80 billion market. The founder can't tackle that entire market as a three-person startup out of the box. She's got to focus more narrowly on a finite customer segment and build a first product that matches the needs of that finite customer segment. So first thing is narrow the focus of your market and then make it even narrower still than you think you should just to get started. The second big mistake is when you're in the fog of war, sometimes you fall in love with your own ideas and you forget to step back and really apply the toothbrush test that I described earlier. Is it a must-have value proposition, and is it an everyday recurring value proposition? Sometimes people get wrapped up in their own ideas and fall in love with them such that they forget to really step back and objectively apply those tests.

Chris Linnane:

Our next question came during a discussion on leadership with Professor Joshua Margolis. He was asked: What are some of the biggest leadership mistakes you see people make, and what can they do to avoid them?

Joshua Margolis:

I'm going to point to two in particular. The first is especially when people are new to a leadership role, and I intentionally say new to a leadership role because it happens at each successive elevation in someone's career, not just when they first are handed a leadership role, they feel eyes upon them and they feel they have to have the answer to everything. And that's a mistake because there's no way you're going to have the answer to everything and you have to bring people with you. You have to build the team. You have to build the organization that can collectively become a whole that's greater than the sum of the parts. The first mistake is thinking that you as the leader, are an answer dispenser. No, you're not an answer dispenser. As a leader, you are the one who has to ensure that the organization can truly deliver results, truly deliver getting better and better truly deliver in building new capabilities, truly deliver in enabling everyone to learn and grow. Not your role is to answer every question and be the smartest person in the room. It's to unlock the potential in everyone, unlock the potential in the organization. Second mistake: Believing that the operating system inside me that got me to this point of success in my career is exactly the same operating system that will serve me well as I go from here to the next elevation. So the mistake is that I hang on too long to the formula that got me here and that I don't trust myself to learn a new approach for scaling the next hype.

Chris Linnane:

Our next question is from an episode with Professor Forest Reinhardt on business and climate change. The question was: What are some of the biggest challenges and opportunities for a business transitioning into a low-carbon economy?

Forest Reinhardt:

The challenges include just figuring out where you are. This is not a topic that firms have spent a lot of time studying in the past, so maybe they don't even know exactly what their emissions are. Maybe they don't even know approximately what their emissions are, and if they're burning coal and turning it into electricity, then there are coefficients that they can find in engineering textbooks, which we'll tell them. But if they're raising free-range chickens on an organic poultry farm in western New Jersey, then the coefficients might not be all that accurate. So they need to establish some kind of baseline, and then they need to figure out how to set targets for emissions reduction and figure out how much it's going to cost them to achieve those targets and figure out who's going to compensate them for those expenditures. And it's interesting that lots of firms, big sophisticated firms have set the targets and then try to figure out how they're going to meet them and what the cost is going to be. That seems extraordinary to me actually, because it's not the way firms make decisions about most aspects of their business. They don't say, "I'm going to produce one million pickup trucks next year, and now I'm going to figure out how I'm going to pay for it." They do some kind of interactive thing where they say, "How much would it cost to produce a million? How much would it cost to produce 900,000? Maybe we should produce 950,000.

What are the potential cost savings, et cetera?" They start a dialogue with themselves about the price and the quantity and how they interact. Instead of just having this quantity fall from the sky and then deciding they have to meet at any cost, it seems a little funny. So understand where you are, understand where you want to be, understand how much it's going to cost, understand how you're going to get there, understand how you're going to get compensated, and then importantly, understand what sort of political positions you're going to take. What's your stand going to be in the political arena? And it depends in part on whether you think the customers are going to compensate you for the extra cost. If they are, then you should differentiate the product and carve out a little niche where you can create that extra value. If you don't think that your consumers are going to compensate you for it, then maybe you better figure out some other way, which might involve some kind of collective action with the other members of your industry.

Chris Linnane:

This last clip came from an episode on leadership with Professor Linda Hill. It's a great way to end this episode because it's future-focused. The question was simply: What do you think will be an important skill for future leaders to focus on?

Linda Hill:

So for my new book that I'm working on, the working title is Scaling Genius. I don't know what the title will be, because the publisher gets to choose. This is where you don't have so much influence.

Chris Linnane:

Sure.

Linda Hill:

Critical skill for the future is bridging. And I have been trying to do lots of stories about bridgers. One is a story about Nicole Jones who works at Delta, and she was asked to create an innovation lab for Delta Airlines to make sure that they had the digital tools and data they needed to create a new kind of customer experience. And so she heads up this innovation lab and finds herself working with government, with TSA, with customs, with Clear, because Clear is one of their partners, and I think Delta has actually invested someone in them. And then all the different pieces of Delta to offer us really biometric, biometric tickets, et cetera, so that we won't have to touch anything.

We'll just walk through the airport eventually. I guess you can do this at the Atlanta International Airport. You just get out of your car, you come into the airport, don't need any paper, you walk through the whole airport and get on the plane.

Chris Linnane:

Wow.

Linda Hill:

With these new kind of biometric tools. Now, they started first working with fingerprinting as, I dunno if you use Clear or anything like that to see that. But now they've gone to facial and they had to do that partly because of Covid, because people didn't want to touch stuff. Sure. So we see people in these roles where she has a team of, I don't know, 16, 20 people to really bring in digital transformation in the customer experience. And that requires bridging with all of these different categories of people to get stuff done. So she's an example of what we're seeing.

A lot of people who are asked to come run these corporate accelerators, these innovation labs, et cetera, to make sure that their company has access to talent and tools that really aren't necessarily inside the organization. So she's sort of the bridger between all the startups they're working with to get this stuff done, and the internal parts of the organization that have to operate the way an airline needs to operate very efficiently and safely, et cetera. So she's a bit of a buffer and a translator because again, what we see is most organizations don't have what they need inside.

Or Raja, who works for the government in Dubai was asked to create an innovation lab on the metaverse. So she's been traveling. There are other pieces to this, but she's got to figure out how to travel the world, figure out who they should partner with, who they should try to entice to come to Dubai, to work with their financial institutions to deliver the metaverse, which is part of what Sheikh Mohammed wants to see happening.

So we see many people being asked to do these roles where they have no formal authority, and they're working with people either locally or globally who they have to figure out how to influence and inspire to want to be a part of a new ecosystem that's being created to deliver us new experiences.

Chris Linnane:

So that's it. The buffet is empty. I'm really going to drive this buffet thing into the ground. All the Reese's Peanut Butter Cups are gone. All that's left are a few wrappers and a random Three Musketeers bar. It's time to go home.

So season one is in the books. I want take a moment to thank all of you so much for listening or watching. We were excited to make the show, but we didn't expect to have so many listeners. It's been great. I hope you've enjoyed it, and I really hope you'll join us for season two. If you haven't heard the other episodes in season one, please jump back and have a listen.

As always, if you want to learn more, please visit theparlorroompodcast.com or follow us on LinkedIn, Facebook, TikTok, Instagram, and X. My name is Chris Linnane. Thank you for listening. See you next season.

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