March–April 2024

Don’t Let Gen AI Limit Your Team’s Creativity

No one doubts ChatGPT’s ability to generate lots of ideas. But are those ideas any good? A recent real-world experiment showed that teams engaged in a creative problem-solving task saw only modest gains from AI assistance for the most part—and some underperformed. Surveys conducted before and after the exercise showed that the teams using AI gained far more confidence in their problem-solving abilities than the others did, but that much of their confidence was misplaced.

But don’t blame the technology, says Kian Gohar, CEO of the leadership-development firm GeoLab and one of the study’s authors. “Brainstorming with generative AI requires rethinking your ideation workflow and learning new skills,” Gohar says. This article offers guidance for approaching the exercise as a structured, ongoing conversation, opening up a staggering capacity to develop better and more-creative ideas faster.

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For Start-Ups Seeking Talent, a Lofty Purpose Can Backfire

Announcing that your firm has set out to make the world a better place can help you recruit employees—if your company is large and established. For new ventures, a social mission may actually be a drawback, making job candidates perceive that they offer fewer opportunities for success.

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The Chair of Honeywell on Bringing an Industrial Business into the Digital Age

The author, Honeywell’s CEO until June 2023, writes: “There’s zero chance that we would have made it through Covid, inflation, the upswing in geopolitical risk—all the challenges we faced over the past several years—had we not developed a transparent and coherent digital strategy.”

In this article he describes the company’s multifaceted transformation from a diversified industrial conglomerate into an integrated company. Internally, the goal was to improve productivity, transparency, and agility with centralized data to guide business decisions. Externally, it was to harness all the information generated by systems Honeywell sold in order to offer clients a whole new kind of value: a means to track emissions, save energy, improve safety, and more.

First the company had to simplify and reorganize its infrastructure, going from 150-plus enterprise resource planning systems (ERPs) to 10, from 1,700 websites to fewer than 100, and from 2,700 applications to fewer than 1,000. Next it had to define master data for products, employees, customers, and many other things. Then it developed a strategy for putting all that data to work. By running the monthly meetings and the operating reviews himself, Adamczyk sent a message to everyone: “I care about this transformation personally, and we’re committed to this path.”

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How Fast Should Your Company Really Grow?

Growth—in revenues and profits—is the yardstick by which the competitive fitness and health of organizations is measured. Consistent profitable growth is thus a near universal goal for leaders—and an elusive one.

To achieve that goal, companies need a growth strategy that encompasses three related sets of decisions: how fast to grow, where to seek new sources of demand, and how to develop the financial, human, and organizational capabilities needed to grow. This article offers a framework for examining the critical interdependencies of those decisions in the context of a company’s overall business strategy, its capabilities and culture, and external market dynamics.

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Create a System to Grow Consistently

Delivering consistent growth is one of the hardest things a company can do. A brilliant idea or product innovation can create a burst of episodic growth, but few companies demonstrate growth year in and year out, especially amid the disruptions and uncertain economy we’ve experienced during the 2020s. Some companies have managed to sustain consistent growth, however.

Research from PwC reveals that the highest-performing organizations invest in a growth system, an integrated collection of capabilities and assets that drives both short-term and long-term growth. The authors provide a framework for building a growth system offering case examples highlighting Toast, IKEA, Vertex, Adobe, and Roblox.

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How to Succeed in an Era of Volatility

Over the past 30 years we’ve lived through a remarkable era of macrostability, characterized by largely peaceful geopolitics, generally falling interest rates, expanding credit markets, and moderate inflation. The landscape has shifted, and we’ve now entered an era of volatility in which new rules apply and the intuitions that leaders have developed over the past few decades cease to be useful—and the shape of opportunity and risk are entirely different.

This environment requires an approach to strategy that integrates bold investments in three capabilities: prediction, adaptability, and resilience. This article offers guidance on determining how best to allocate your resources across the three capabilities.

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Bring Human Values to AI

When it launched GPT-4, in March 2023, OpenAI touted its superiority to its already impressive predecessor, saying the new version was better in terms of accuracy, reasoning ability, and test scores—all of which are AI-performance metrics that have been used for some time. However, most striking was OpenAI’s characterization of GPT-4 as “more aligned”—perhaps the first time that an AI product or service has been marketed in terms of its alignment with human values.

In this article a team of five experts offer a framework for thinking through the development challenges of creating AI-enabled products and services that are safe to use and robustly aligned with generally accepted and company-specific values. The challenges fall into five categories, corresponding to the key stages in a typical innovation process from design to development, deployment, and usage monitoring. For each set of challenges, the authors present an overview of the frameworks, practices, and tools that executives can leverage to face those challenges.

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Redesigning Retirement

Businesses today face serious talent gaps. The share of companies reporting staffing shortages is at an all-time high: 77%. Last fall the United States had 9.5 million unfilled jobs but only 6.5 million unemployed workers. Many open positions demand sophisticated know-how that cannot be supplied by AI or by training new hires.

Every day 10,000 Americans reach the traditional retirement age of 65, which exacerbates the problem. Critical skills, experience, and connections can walk out the door with each retirement. The good news is that many older employees want to keep working; in fact, nearly 60% say they’re receptive to the idea of working during retirement.

It’s time for companies to stop overlooking this large, valuable labor pool. Employers need to shed their misconceptions about older workers and take measures to make the most of their experience, creating phased retirement programs, offering refresher courses, and recruiting through retiree networks, among other strategies. Older employees’ knowledge can be leveraged through coaching roles, on multigenerational teams, and in institutional systems. But companies will have to work to engage their seasoned staffers, offering them flexibility, the right benefits, and opportunities for connection.

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How to Market Sustainable Products

Many companies overestimate customers’ appetite for sustainable products, flooding the market with offerings that don’t sell. The reality is, social and environmental benefits have less impact on purchasing decisions than basic product attributes do. Consumers buy products to get specific jobs done, and only after they find something that will do that will they look for a product that provides some social or environmental advantage.

Of course, that’s only if they value sustainability. Not everyone does, and marketers need to recognize that. Some customers (greens) place a premium on it, some (blues) value it only moderately, and some (grays) don’t care about it and view it skeptically. The three segments cannot all be approached in the same way. How sustainable product benefits interact with traditional benefits is also critical: They can have no impact on a product’s performance (independence), diminish it (dissonance), or enhance it (resonance). Marketers need to follow different playbooks for independent, dissonant, and resonant products, tailoring their approaches to green, blue, and gray customers with each.

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Nurturing Innovation

Despite a multitude of initiatives in cross-sector collaboration and open innovation, businesses still struggle to support the development of game-changing ideas. The authors argue that the solution to this problem starts by recognizing an important truth: Innovation is about more than an idea—it is a long, collaborative journey. Innovation is more likely to succeed when it is a curated process in which an intermediary takes responsibility for sparking and sustaining collaboration among the people involved.

In this article, the authors demonstrate how intermediaries can support collaboration throughout the entire innovation journey. First, they provide opportunities for innovators to make connections. They don’t simply bring people together; they carefully select participants and curate the experience to generate the best results. Second, they help innovators develop relationships, using structured follow-ups and offering holistic mentoring. And third, they help entrepreneurs sustain their relationships and manage the team over time as the collaborations evolve and team members change.

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Heavy Machinery Meets AI

Until recently most incumbent industrial companies didn’t use highly advanced software in their products. But now the sector’s leaders have begun applying generative AI and machine learning to all kinds of data—including text, 3D images, video, and sound—to create complex, innovative designs and solve customer problems with unprecedented speed.

Success involves much more than installing computers in products, however. It requires fusion strategies, which join what manufacturers do best—creating physical products—with what digital firms do best: mining giant data sets for critical insights. There are four kinds of fusion strategies: Fusion products, like smart glass, are designed from scratch to collect and leverage information on product use in real time. Fusion services, like Rolls-Royce’s service for increasing the fuel efficiency of aircraft, deliver immediate customized recommendations from AI. Fusion systems, like Honeywell’s for building management, integrate machines from multiple suppliers in ways that enhance them all. And fusion solutions, such as Deere’s for increasing yields for farmers, combine products, services, and systems with partner companies’ innovations in ways that greatly improve customers’ performance.

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How Companies Should Weigh In on a Controversy

Executives need guidance about managing their organizations’ engagement with societal issues—including hot-button topics such as gender, climate, and racial discrimination. Success in this realm does not mean avoiding public controversy or achieving unanimous support among key stakeholders, the authors write. Rather, it results from adhering to certain processes and strategies, which they have derived from recent global survey research along with examples from managerial best practice.

They offer an approach that is anchored in data but sensitive to values and context. It can be helpful in figuring out which issues to address and how; in ameliorating disappointment among stakeholders; and in managing any potential blowback.

Data can tell you what your various stakeholders care about, they write, but judgment is necessary to act in careful consideration of conflicting preferences while being consistent with your company’s values.

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Retailers and Health Systems Can Improve Care Together

Health systems are struggling to address the many shortcomings of health care delivery: rapidly growing costs, inconsistent quality, and inadequate and unequal access to primary and other types of care. However, if retailers and health systems were to form strong partnerships, they could play a major role in addressing these megachallenges.

While some partnerships do exist, they are rare and have only scratched the surface of their potential. Rather than focusing on the direct-to-consumer model that retailers have largely employed, the partnerships should offer much broader care.

Drawing on real-world examples, the authors outline four key actions that retailers and health systems should take: (1) They must move beyond convenience to offer comprehensive care. (2) They should move care from clinics into the home. (3) They should leverage data to improve clinical care and the customer experience. And (4) they should change how—and by whom—health care work is done. Implementing these four actions would generate improvements that would benefit not just patients but also the organizations that pay for their health care.

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How Machine Learning Will Transform Supply Chain Management

Businesses need better planning to make their supply chains more agile and resilient. After explaining the shortcomings of traditional planning systems, the authors describe their new approach, optimal machine learning (OML), which has proved effective in a range of industries. A central feature is its decision-support engine that can process a vast amount of historical and current supply-and-demand data, take into account a company’s priorities, and rapidly produce recommendations for ideal production quantities, shipping arrangements, and so on. The authors explain the underpinnings of OML and provide concrete examples of how two large companies implemented it and improved their supply chains’ performance.

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Negotiate Like a Pro

During his former career as a kidnapping and extortion negotiator, the author handled sensitive cases all over the world. Through his experiences, observations, and conversations with other experts in the field, he developed a deep understanding of what works and what doesn’t in high-stakes negotiations. Now he advises executives and corporations about what he calls the level-five mindset, which involves deep listening to better understand and interpret a counterpart’s self-perception and perspective. He offers eight tools to both ensure and demonstrate that mindset: minimal encouragers, open questions, reflecting back, emotional labeling, paraphrasing, “I” statements, effective pauses, and summarizing. Using them, he writes, will “boost your capacity for empathy, your ability to find common ground, and your chances of gaining your counterpart’s cooperation.”

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Case Study: Navigating Labor Unrest

Paulo Ferreira, the president of Luna Brazil, has an ambitious plan to turn around the dismal performance of the plant he oversees in Campinas. The wrinkle is, he needs the buy-in of the powerful local union, which is still smarting from a 10-year-old labor conflict and lately has begun to step up its demands and picket outside the factory. Headquarters, running out of patience with the dispute, wants Paulo to consider converting the plant to a distribution center. But that would mean hundreds of layoffs, which would decimate the local community that Paolo loves.

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Does Capitalism Need Reform—or Revolution?

Six new books come down on both sides of the debate: The Alternative, by Nick Romeo; The Road to Freedom, by Joseph E. Stiglitz; Capitalism and Crises, by Colin Mayer; Climate Capitalism, by Akshat Rathi; Venture Meets Mission, by Arun Gupta, Gerard George, and Thomas J. Fewer; and Slow Down, by Kōhei Saitō.

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Life’s Work: An Interview with Renée Fleming

The renowned soprano talks about developing confidence, overcoming stage fright, and juggling five jobs at once.

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