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Ideas Made to Matter


Leading through change: 5 new ideas from MIT Sloan Management Review


Today’s business leaders must navigate a unique set of challenges in order to satisfy employees, customers, and shareholders. The latest insights from MIT Sloan Management Review help executives lead enterprisewide initiatives to improve diversity, corporate culture, and supply chain visibility, and to extract more value from investments in data and artificial intelligence.

Address diversity by going beyond the numbers

Nasdaq now requires companies listed on its exchange to meet gender and racial ethnicity targets for their board membership. This is a “narrow definition” of diversity efforts, according to MIT Sloan professor as it says nothing about how female employees are treated or how the company supports marginalized groups.

Rigobon calls on companies to rethink diversity measures by accounting for inclusion, access, and treatment. This forces firms to assess their efforts to hire, retain, and promote minorities, and to explore how a changing corporate culture is tipping the scale toward inclusion.

Sometimes, initiatives will be about the numbers; for example, tracking exit interviews by gender and ethnicity to better determine what motivates employees to leave. However, the most impactful work extends beyond metrics. The recent Goldman Sachs commitment of $10 billion in investment capital and $100 million in philanthropic capital, with the goal of benefitting 1 million Black women, is less about the numbers and more about investing in housing, health care, education, job creation, and so on. That commitment won’t meet the Nasdaq target, but it’s far more likely to improve lives.

Read “Rethinking diversity measures in the finance industry”

Watch these 5 key factors shaping corporate culture

Americans are quitting their jobs in record numbers, in a phenomenon called the Great Resignation. The biggest factor in keeping employees on board is corporate culture, but at most firms there’s a disconnect between their official core values and the elements of culture that matter to employees.

Analyzing more than 1.4 million reviews posted to Glassdoor, MIT Sloan senior lecturer and CultureX’s Charles Sull identified the major elements of corporate culture that are most closely tied to a company’s culture rating. Some oft-touted factors, such as friendly colleagues, flexible schedules, and manageable workloads, had no noticeable impact.

The authors looked at more than 150 cultural topics and listed 10 that matter most. Five stand out:

Employee respect is 18 times as important as the average cultural topic and twice as important as the second key topic. Simply put, employees don’t like being demeaned or degraded.

Supportive leaders help employees get the job done and have their back in times of need.

Job security may not be a typical corporate value, but if employees are talking about layoffs, firings, or outsourcing efforts, there’s a negative impact on culture.

Leaders living core values earn the appreciation of employees who otherwise expect executives to say one thing but do another.

Benefits have a greater impact on culture scores than compensation. Firms must be careful, though, as front-line workers have different priorities than office workers.

Read “10 things your corporate culture needs to get right”

Use these 4 strategies to encourage supply chain transparency

Government regulators, investors, and consumers increasingly demand transparency from multinational firms about how goods are sourced and front-line workers are treated across the supply chain. Most supply chain transparency efforts focus on audits, but this is only a starting point, according to MIT Sloan associate professor  and co-author Tim Kraft of North Carolina State University. And while technology can help, suppliers in underdeveloped regions often lack the capabilities and infrastructure to implement Internet of Things sensors or blockchain.

To encourage supplier transparency, the authors make four recommendations.

  • Offer carrots, not just sticks. Suppliers who participate in transparency initiatives may be rewarded with preferred status, better contract terms, or joint investments in building capacity. This helps to shift transparency from a compliance requirement to a way to create business value.
  • Link visibility to efficiency. Companies with more visibility into supply chain operations are better able to direct resources where they are needed. This way, they can address specific environmental or social issues — and identify the right suppliers with whom to maintain a long-term relationship.
  • Embed transparency in the value proposition. Companies that source raw materials or products overseas in industries ranging from coffee and chocolate to clothes and cosmetics have captured market share by deliberately communicating the transparency of their supply chain.
  • Control your own destiny. If firms don’t like what they see in their supply chain, they can consider vertical integration. Purchasing a wood mill, coffee farm, or factory, and establishing new labor practices and environmental standards, puts visibility front and center.

Read “How supply chain transparency boosts business value”

Improve data liquidity to make data an asset

Many companies understand the value of treating data as an asset. Unlike fixed assets such as equipment and cash, though, data’s value doesn’t have to diminish over time. The key is maximizing data liquidity, which lets organizations reuse, re-combine, and reanalyze data assets for process improvement, wrapping analytics around existing products, and selling new information-rich products.

It takes time for firms to reach this point of data monetization, notes Barbara H. Wixom, principal research scientist at the MIT Center for Information Systems Research, and co-authors Gabriele Piccoli and Joaquin Rodriguez. When data remains trapped in localized business processes or closed platforms, when it’s been replicated in several locations, or when it is otherwise inaccurate, liquidity is low. It also takes resources to improve liquidity. The authors recommend starting with strategic data assets — any data that’s relevant across the enterprise and can create value in multiple ways.

The goal of data liquidity is to decontextualize data from its usual, designated purpose and to give it six characteristics: accurate, complete, current, standardized, searchable, and understandable. Using a centralized, cloud-based platform gives enterprises a single point for sharing, accessing, applying, and maintaining data; this also has the benefit of better governance and security. By spending less time gathering and cleaning data, data teams can implement new analytics use cases faster and spend more time solving business problems.

Read “Fast-track data monetization with strategic data assets”

Push AI into production from a position of leadership

Many enterprises have struggled to achieve ROI on AI projects, largely because AI remains in an exploratory stage. Thomas H. Davenport, a fellow at the MIT Initiative on the Digital Economy, and BMO Financial Group’s Ren Zhang recommend six strategies to guide the success of enterprise AI initiatives.

  1. Build partnerships with business units that are not only likely to use AI but also understand its potential.
  2. Select projects with tangible business value and a clear path to production.
  3. Establish trust prior to deployment by collaborating with business unit leaders to estimate costs and manage change.
  4. Focus on reusable components, which will reduce the cost and speed of future implementations.
  5. Use proof-of-concept projects to demonstrate value, showcase a solution, and forge a path to production.
  6. Create a data science pipeline to better manage individual projects as well as the organization’s overall AI roadmap.

Read “Achieving return on AI projects”

For more info Zach Church Editorial & Digital Media Director (617) 324-0804