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Falling victim to your job’s low expectations

If you aspire to become a great manager, simply striving to meet your company’s actual (versus espoused) standards probably won’t get you there.

By Linda A. Hill and Kent Lineback, contributors

FORTUNE — One morning, years ago, Kent heard loud laughter outside his office and found several people clustered around Charley, the head graphic designer who was easily the largest and most popular member of the marketing department Kent ran.

“Charley lost 25 pounds,” someone said when Kent joined the group. Charley’s weight was a common topic of office conversation but only because Charley himself brought it up so often.

“That’s great, Charley,” Kent said. “Congratulations!” Then — always the boss, though this was hardly a management matter — he asked, “What’s your goal?”

The smile dropped from Charley’s face.

“That,” he said, “was it.”

It wasn’t one of Kent’s most sensitive moments. Later, when he apologized to Charley one-on-one, Charley said, “You were right. I need to lose more. But I got in a group and we all swore do-or-die to lose 25 pounds. That became my goal.”

To be sure, there’s little connection between losing weight and business performance except that Charley’s experience illustrates a principle — the Opportunity Gap — that we in business often overlook because we work in groups and group norms are powerful forces of influence.

See also: Dating and business: Not all that different

An opportunity gap is the difference between our current performance and what we’re capable of doing. Many times, though, we focus not on our opportunity gap but on our performance gap, the difference between current performance and what we’re expected to do. We’re content to achieve what others expect rather than what we’re truly capable of doing.

Yes, expectations can sometimes exceed our capabilities. A medical condition may have made weight loss extremely difficult for Charley. Or a salesman may be given a quota that truly is unrealistic. But expectations often do reflect only a portion of what’s possible. Charley, for example, ultimately shed four times what he lost in his weight loss group. That was his opportunity gap. But, for a time, he fell into the trap of accepting his performance gap, the 25 pounds expected by the group, as his ultimate goal.

We believe the disparity between performance and opportunity gaps goes far to explain something we’ve observed in our combined 60 years of teaching, researching, practicing, and observation: most managers fall short of what they could be. They simply stop getting better at what they do.

We see this every time we ask bosses to assess themselves as leaders and managers. The great majority say they could be better. When we ask how they could be better, many can identify at least one area — “delegation” is a common answer — where they have room for improvement.

If many, and perhaps most, managers think they could and even should be better, why don’t they take active steps to improve?

Becoming a great manager requires persistent effort over a long period of time. It can require difficult personal change. Converting management principles into practice isn’t easy. There aren’t many role models.

All those reasons play their roles, but we think one is key: Companies simply don’t expect enough of their managers. A statistic we came across recently astounded us: A 2009 survey of companies by Bersin and Associates revealed that they considered nearly four of every 10 mid-level managers no better than “poor” or “fair.”

See also: Internal competition at work: Worth the trouble?

This figure is an admission by companies that they are failing in their fundamental task of creating a corps of competent, capable managers. If 40% of their mid-level — not first-level — managers are mediocre at best, why don’t they recognize that they face a corporate crisis and take dramatic steps to improve?

We’re not aware of any companies that have declared such a state of emergency, which seems to confirm something our experience and observations have also told us: even though companies may claim, implicitly or explicitly, that they set high standards for their managers, they in fact condone managerial practices and behavior that persistently fall short of those standards.

This whole topic deserves more study and discussion, but for individual managers, it seems to convey one clear point: if you aspire to become a great manager, simply striving to meet your organization’s actual, versus espoused, standards probably won’t get you there. Being rated “meets expectations” or even better isn’t necessarily a good measure of your skill or progress.

To grow as a manager, you will need to define your own opportunity gap – identify what you can become — rather than accept the actual performance gap for managers in your firm. This is the first step in taking responsibility for your own development.

Note: We adapted the terms “Opportunity Gap” and “Performance Gap” from Winning Through Innovation: A Practical Guide to Leading Organizational Change and Renewal by Michael L. Tushman and Charles A. O’Reilly II.

Filed under: Contributors, The Management Trap
From:Management and Career

How to make it in the soda industry

Sales of soft drinks are flat and industry giants like Coke and Pepsi are busy looking for the next big thing. For small beverage companies, selling out may be the only path to success.

By Sierra Jiminez, contributor

FORTUNE — If you’ve ever played mix master at the convenience store soda fountain, you know just how rewarding it can be. Indianapolis-based startup uFlavor wants to take that concept and bottle it. The company offers 42 flavors on its website, which consumers can mix and match, customizing sweetness, carbonation and even caffeine levels. uFlavor’s ambition is to make its product available in soda fountain machines as well. The idea is clever, but helping it take off may be difficult.

The $ 74.2 billion soda industry is more or less dominated by the Manichean struggle between Coca-Cola Co. (COKE) and PepsiCo (PEP). Coca-Cola holds about 42% of the market share and Pepsi 29%. “What you have is essentially a duopoly between Coke and Pepsi. So, it’s a real challenge for startups to get any sort of shelf space,” says Michigan State University Assistant Professor and food retail specialist Phil Howard. For a beverage startup, partnering with one of the two inevitably starts to look like the only guaranteed way to grow.

For now, uFlavor is trying to make it on its own. “For us, the dream is to make this an entirely different flavor experience. I would hate to see that not come to fruition because we sold to a large company,” says uFlavor Chairman Michael Cloran. Cloran and his team officially launched the company in December. The company says it plans to allow consumers to personalize their soda flavor and bottle design by the end of 2012. And within the next 18 months, the company says it will have a soda personalization vending machine available that can combine and bottle beverages on demand. The firm is self-funded and distribution of online orders occurs from its Indianapolis headquarters.

MORE: Pepsi’s CEO faces her biggest challenge

Growing beyond there may be difficult, according to Honest Tea co-founder Seth Goldman. In 1998, Honest Tea was in a similar predicament. Goldman’s wife was delivering the product to Whole Foods (WFM) stores on her way to work. And his business partner Barry Nalebuff operated a distribution center out of his garage. “If you read our original business plan, what [is] glaringly missing is any discussion of the importance of distribution. We were just stuck. And this is where so many beverage companies have a challenge,” Goldman says.

The company had put together a patchwork distribution method. Not quite successful enough to be picked up by any major beverage distributors, Goldman and Nalebuff turned to natural and gourmet food distributors to get their products on store shelves. “At that point, we’d been at it for 10 years, and our goal wasn’t to be a beverage distributor, it was to be a brand,” he says. So Goldman approached Coca-Cola with a proposition: invest in a minority stake of the company and allow Honest Tea to use the beverage giant’s distribution manpower. By the time Coke fully acquired the brand in 2011 for an undisclosed amount, Honest Tea had jumped to more than 75,000 retail accounts, up from 15,000 three years earlier. By the end of this year, Goldman says the company will be five times its size before partnering with Coke.

All brands haven’t fared so well. Besides Red Bull, Jones Soda Co. (JSDA) is one of few firms that has managed stay independent and growing. Hopes for Jones Soda were actually pretty glum between 2007 and 2010, with revenue stagnating. After a leadership switch in 2010, the company managed to improve its distribution tactics. The key, says President and CEO of Jones Soda Co. Bill Meissner, is to make a unique product, not just another energy drink or cola. When Meissner joined Jones Soda, he also brought with him a team of ex-Vitamin Water and SoBe veterans — both firms that were acquired by Coke or Pepsi.

MORE: Meet the 18 Fortune 500 female CEOs

The goal was to strengthen Jones’s position as a craft soda company. The Seattle-based company has two key businesses. MyJones, the its individual bottle personalization service, allows customers to order beverages with a home photo and message on the label through the company’s website. It makes up about 8% of the company’s total revenue, Meissner says. (Jones also rotates about 15,000 personal home photo submissions from its customers in regular national distribution each year.) While the company is still underdeveloped in retail, its overall online sales have managed to carry the brand. Meissner estimates Jones will make more than $ 100 million in sales by 2016, up from $ 20 million last year. “Premium soda just isn’t a category big players like Coke and Pepsi can do well,” Meissner says.

Coke and Pepsi have been aggressive about acquisitions. Most recently, the companies have turned their sights to the latest beverage craze, coconut water. In 2009, Coke bought a 20% stake in Zico Beverages for an undisclosed amount. Around the same time, O.N.E. coconut water signed an investment agreement with Pepsi in exchange for use of the company’s distribution arm. Despite the help of industry leaders, Zico is number two coconut water brand based on sales and O.N.E. is number three. The lone holdout? Vita Coco. Instead it partnered with the Dr Pepper Snapple Group (DPS) for distribution only. It then turned to stars like Madonna, Demi Moore, Matthew McConaughey, and Rihanna for capital. The company says acquisition is still a possible exit strategy — just not yet. “When you’re acquired by one of those big companies you lose a lot of the entrepreneurial spirit that drives and creates a brand,” says co-founder Michael Kirban. For uFlavor, meanwhile, it seems like there aren’t many different avenues to success.

Filed under: Contributors
From:Management and Career

The real threat facing the airlines

Over the past decade, the airline industry has desperately turned to mergers in hopes of achieving economies of scale. They’re missing the bigger problem.

By Shelley DuBois, writer-reporter

FORTUNE — The litany of woes plaguing airline executives is well-known: high labor costs, volatile fuel prices, thorny legislation, not to mention trying to sell a highly commoditized product to customers that love to hate them. Management has more or less tried to solve the problem by merging to achieve economies of scale. In the last ten years, US Airways (LCC) and America West, Delta (DAL) and Northwest, Southwest (LUV) and AirTran, Air France and KLM, and, now, Continental and United (UAL) have hooked up. (US Airways and Delta are reportedly eyeing a bankrupt American Airlines, as well.)

Here’s what they may be missing: their brands. Branding consultants and aviation experts say the big airlines have lost focus on their brands as a result of their drive to make operational gains. Yes, successfully running an airline is bafflingly complex, but a strong identity, they argue, still sells tickets. “If three airlines are flying between New York and Chicago, the only reason to pick one over the other is because it’s cheaper,” a position no already-strained business wants to find itself in, says Allen Adamson, managing director at brand consultant firm Landor and Associates.

MORE: American Airlines is better off flying solo

Smaller airlines have generally been more skilled at wielding their brands to differentiate and sustain their businesses. “Success in the airline business has not, in the past, been brand-driven,” Adamson says, “– with the exception of Virgin, Southwest, JetBlue (JBLU).” Consumers happen to really like those firms. According to a JD Power and Associates 2011 North American Airline Satisfaction Study, smaller carriers tended to score higher on average than larger firms. Top scores went to the likes of JetBlue and Southwest.

Of course, such airlines are much smaller than American, United or Delta, which each permanently employ about 80,000 people. Southwest, for example, has slightly over half that number of employees; JetBlue employs some 12,000 permanent workers. Southwest, JetBlue and Virgin have also made an effort to steep employees in their respective corporate cultures from the outset. Virgin has a leg up, argues Chris Rossi, senior vice president in North America for Virgin Atlantic Airways, because the airline came from Virgin Group, which is fundamentally an entertainment company. “Our approach was to prioritize the customer experience — how do we make it something that they look forward to?”

MORE: The dirty little secret of online travel sites

That isn’t the typical DNA at most large airlines. There, a lot of the management came out of the military, says Edward Lawler, the director of the Center for Effective Organizations at the University of Southern California. “Their model was a very traditional, top-down kind of approach that doesn’t necessarily give flexibility to employees or listen to what they need.” Trouble is, he argues, effective customer service begins with personnel. “That was never built into the other airlines,” he adds. Instead, many larger airlines have a complicated relationship with their employees. Shifting around heavily unionized labor forces can be difficult, he adds. What’s more, many employees at newly re-shuffled major airlines are the ones who have weathered the worst including seismic layoffs, says Adamson.

Of course, the major airlines know that branding is important. “American is in the middle of the restructuring process and plans to emerge a very different airline,” an American Airlines spokeswoman said in a statement. “The airline looks forward to emerging from the restructuring process with something new and different for its customers.” Creating a coherent corporate culture is also on United CEO Jeff Smisek’s to-do list. Last year, he told Fortune, “My management team and I are spending a lot of time on developing the new culture. [We're] very focused on that because you do run the risk in any integration of ending up with mediocrity.” Delta did not respond to a request to comment in time for publication.

MORE: Why American Airlines should consider bankruptcy

For now, the success of small airlines with strong brands is likely to begin pushing against the branding approach of larger airlines. “I think the pressure is going to come from the regional guys that are getting pretty good at creating a unique experience and delivering around it,” says Andrew Pierce, U.S. President of brand consultancy firm Prophet. “Those guys are going to become more formidable.” They could chip away at the edges of a market that big carriers guard closely. Without a coherent brand strategy, those major carriers will continue to play the price game. And, in this market, with fuel costs and customer behavior difficult to predict, a broken brand is the last problem any airline wants on top of everything else.

Filed under: Contributors
From:Management and Career

New job? Get a head start now

About 40% of executives who change jobs or get promoted fail in the first 18 months. One way to avoid that is to lay some crucial groundwork before your first day.

By Anne Fisher, contributor

FORTUNE — Dear Annie: I’m starting a new job in about two weeks as head of a somewhat troubled division at my current employer’s biggest competitor. It’s a larger role than I’ve had so far in my career, and I’m pretty excited about it, but it comes with some significant challenges, since the business I’ll be running has been hit hard by the recession and the European debt crisis, revenues and earnings are down, and morale is in the tank.

The CEO who hired me said everyone there is expecting me to “hit the ground running.” I’ve got some ideas about what needs to be done right away, which I talked about in interviews (and which presumably got me hired). But on the theory that there’s no such thing as too much information, I’d appreciate any thoughts from you and your readers about what works, and what doesn’t, in this kind of situation. –Parachuting In

Dear P.I.: It’s fortunate that you have two weeks before your official start date because, according to executive coach George Bradt, you’ll need every minute of that to get off to the strongest possible start. “The best way to build your team, take charge, and get great results fast is to create time by starting earlier than anyone thought you would,” he says. “This one idea can make or break a new leader’s transition.”

Bradt is basing that partly on his own decades of experience as a senior manager at Unilever (UN), Procter & Gamble (PG), and Coca-Cola (KO), and partly on his work with 600 job-changing managers since 2002 as principal of PrimeGenesis, the executive coaching firm he started in 2002. Bradt is also co-author of a new book you might want to check out, The New Leader’s 100-Day Action Plan (Third Edition).

His mission is to lower the failure rate among executives newly hired or promoted into big jobs, which research shows has stood at about 40% for at least 15 years now.

“New leaders who miss the opportunity to get a head start, before their official start date, often find out later that organizational or market momentum was working against them even before they showed up for their first full day at the office,” Bradt says. Gulp. Borrowing a term from the product-development world, Bradt calls the time before you’re officially on board the “fuzzy front end.” Here are four ways to make the most of it:

1. Meet with critical stakeholders as soon as possible. “Identify the people in the company who can have the most impact on your success in the new job,” Bradt advises. “These include your direct reports, critical support people, peers, potential allies, and even the person who wanted your job but didn’t get it.” Call or visit each of these folks, even just for a quick chat or a cup of coffee. It sounds simple but, Bradt says, “It always makes a huge difference. It’s a game changer.”

2. Have a plan for listening and gathering information. “Different stakeholders will have different views of the same situation,” Bradt notes. Asking for their perceptions and suggestions “is not a search for the One Truth. Rather, it’s an exercise in understanding people’s views, both on what’s going well and what’s not and why, so that you can work effectively with each of them. Come into these conversations with an open mind and actively listen.”

While you’re at this, try to find out about what Bradt calls “shadow metrics” in the organization you’re joining, meaning key measures of how things are going that may not be evident at first glance: “What are the key measures of success along the way? How are they tracked, and how can you get access to them?”

3. Craft your message. How are you going to present your ideas — the ones you believe got you hired — on where the business needs to go from here? “Part of preparing to lead is thinking through the messages you want to send, right down to details like whether your office setup will be informal and open-door or more formal and structured,” Bradt says. People will be watching closely and talking to each other about you, he adds: “Everything communicates, and not always what you intended, so be careful.”

4. Start making a hundred-day plan. The knowledge you gather before you officially start “should help you begin to put things in context and decide what you want or need to do on your first day, during your first week, and in your first three months,” says Bradt. “It’s important not so much to learn everything there is to know before you show up, which would be impossible anyway, but to have a plan in place to learn more.”

Granted, this is a lot of work. “People tend to resist doing all this because there’s usually a time squeeze involved in changing jobs, where your old employer wants you to stay as long as possible, and your new one wants to rush your start date,” Bradt notes.

“It’s also very common to want to take at least a short vacation to rest and recharge between jobs,” he adds. But tempting as it might be to sit on a beach and unwind for a few days, if you really want to start strong, you just haven’t got time.

Talkback: What helped you most in starting a new management job? If you’ve ever had a new boss come in from outside the company, what did he or she do well at the start, and what do you wish had gone differently? Leave a comment below.

Filed under: Ask Annie, Contributors
From:Management and Career

Dr. David Agus rethinks the war on cancer

A noted USC oncologist and one of Steve Jobs’ doctors has written a book that turns much of what we thought we knew about medicine upside down.

By Brian Dumaine, senior editor-at-large

FORTUNE — At a meeting of the nation’s top oncologists in Denver a couple of years back, Dr. David Agus, a prominent cancer researcher, was giving a keynote address. Agus talked about the need to take a new approach to treating cancer. He argued that focusing on killing or slowing the spread of cancerous cells was not enough. After all, despite a half-century of research by some of the best medical minds in the world, the death rate from cancer hasn’t changed much since the 1950s. Instead, doctors should try to keep a patient’s entire system healthy so the disease is less likely to take root in the first place. He said we should be able to control cancer without fully understanding it. At that, hisses arose from the audience.

A few Bronx cheers aren’t enough to discourage a scientist as determined as Agus. He believes he has found a new way to greatly reduce the odds of getting sick and has set out his philosophy in a potentially game-changing new book, The End of Illness, which just became a New York Times bestseller. In it, he offers his prescription for preventive medicine, and backs it with studies and lively anecdotes.

When I caught up with this slim, casually dressed man, he rattled off ideas as if he couldn’t let the world know fast enough about his thinking: “I want doctors to treat toward health and not treat toward disease,” he said. Agus had his eureka moment after reading a 2004 Fortune article called “Why We’re Losing the War on Cancer,” by Cliff Leaf. Himself a cancer survivor, Leaf, a Fortune editor at the time, wrote that researchers have come to treat the individual features of cancer rather than putting their efforts into directly controlling cancer. “We have forgotten that curing cancer,” says Agus, who was on the team of doctors who treated Steve Jobs in the last years of his life, “starts with preventing cancer in the first place.”

“We have forgotten that curing cancer starts with preventing cancer in the first place.” –Dr. David Agus

Today, if we get cancer, we attack the cells. If we get a heart attack, we perform a bypass. That’s fine, but why not avoid the disease in the first place? Agus believes that diseases like cancer and heart disease should be thought of as verbs and not nouns. In his lexicon, “cancering” suggests a systemic problem. He points to a study of women who, after treatment for breast cancer, were given either an osteoporosis drug or a placebo. The ones who took the drug had a 40% lower rate of recurrence of the cancer, as their system was changed and the cancer didn’t grow back. “Keep the soil healthy,” says Agus, “and the bad seed won’t grow.”

One way to keep your body’s soil healthy is to treat inflammation. When something is wrong with your body, it goes into panic mode and triggers inflammation, a process that rallies the vascular, immune, and cellular systems to heal injured tissue. Numerous studies show that patients who take statins — which not only lower cholesterol but reduce inflammation — lowered cancer rates by 40%, although no one knows exactly why. That’s not all. A growing body of evidence suggests that inflammation may be linked to a host of other diseases, from heart attacks to Alzheimer’s to diabetes. This doctor’s orders? Ask your physician if you should be on Lipitor or other statins and a regimen of baby aspirin, which help curb your body’s inflammation.

There are other simple ways to fight inflammation. Agus explains that it’s better to walk a lot than to do an intense burst of exercise and then sit behind a desk all day. (The rhythmic part of walking helps your lymphatics function, part of the system that controls your immune system.) Wear comfortable shoes, which lowers stress on joints. (Walking barefoot or in high heels can cause damage to the joints and thus inflame your feet.)

Fortune’s guide to the future

His approach has its detractors. Dr. Rita Redberg, a professor of medicine at UCSF, argues that the evidence doesn’t support the widespread use of statins. “I prescribe medicine to make people feel better or live longer, and statins do neither,” she says. Not only that, statins can have side effects ranging from muscle aches to diabetes.

Of course, Agus thinks statins in many cases do more good than harm and, anyway, are just one tool in his arsenal. The nice thing about his approach is that nothing requires a superhuman effort — a lot of it is just commonsense, healthy living.

Agus also believes we need new tools to really understand our bodies. He suggests that each of us get genetically profiled. This won’t tell us whether we’ll contract a certain disease but will tell us the probability of getting it, allowing us to make the proper adjustments. A few years ago he co-founded Navigenics, a company that does genetic screening at $ 400 a pop and is backed by venture capitalist John Doerr of Kleiner Perkins, an early investor in Google (GOOG). When Agus had his own DNA profiled — the results are in the book for all to see — he found he was at risk of having a heart attack. This was strange because his cholesterol had always been low. Nonetheless, it was enough to persuade him to go on a healthier diet and start taking statins.

New tools may also make it possible to detect diseases at a much earlier stage. The key is understanding how proteins — which are the building blocks of life — operate. Faulty proteins can be early indicators of a disease. The trouble is, tracing proteins is incredibly hard to do — they are the size of a single neutron. About eight years ago Agus started another company called Applied Proteomics. He joined up with supercomputer guru Danny Hillis to create a system with the horsepower to catalogue hundreds of thousands of protein levels. The company is still a work in progress, but if it succeeds, it will provide an important diagnostic tool.

When Agus’s book was reviewed by the Daily Mirror in England last month, he says he got 7,000 angry blog and e-mail responses. Some accused him of trying to cash in on his DNA-profiling firm. Agus’s response? That he has only a small stake in the DNA firm.

Agus, however, has a bigger challenge ahead. He needs to get his ideas widely accepted by the medical community. Maybe then he can turn those hisses into cheers.

This article is from the February 27, 2012 issue of Fortune.

Filed under: Contributors
From:Management and Career