May–June 2024

A Better Approach to Mergers and Acquisitions

Twenty years ago, consultants at Bain & Company published a book that explored a dispiriting reality: Although companies spent billions of dollars a year pursuing deals, 70% of mergers and acquisitions wound up as failures.

But today those odds have inverted. According to new research by Bain, over the past 20 years firms have done more than 660,000 acquisitions, worth a total of $56 trillion, with deals reaching a peak in 2021. And close to 70% of them have succeeded. Even among the roughly 30% that were less successful, many of the deals still created some value.

What has changed? This article presents four explanations for the turnabout.

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When AI Teammates Come On Board, Performance Drops

Even when machine intelligence outperforms human workers, when it replaces a human colleague, group productivity falls, a new study found. In addition, the output of people who are simply observers is negatively affected. Managers need to think carefully about the impact that AI has on team sociability, motivation, and trust.

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The CEO and Founder of Praava Health on Reimagining Care in an Emerging Market

Although the author’s grandfather founded the oldest pharmaceutical company in Bangladesh, she never expected to follow in his footsteps. Raised in Roanoke, Virginia, she studied international development and law before working first as a corporate lawyer and then in the Obama administration. But when her mother fell seriously ill during a family wedding in Bangladesh—and Sinha discovered how difficult it was to get access to quality health care in that country even for well-off, well-connected families—she found a new mission. She developed a business plan for a state-of-the-art, full-service primary-care facility in Dhaka, Bangladesh’s capital city, and moved there—where she’d never lived before—to launch it. She focused on hiring a great team and building a culture around the distinctive service they would offer. Five years later, Praava Health has served 600,000 patients, is nearly cash-flow positive, and continues to grow.

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Why the Influencer Industry Needs Guardrails

The author argues for an industry in which unethical behavior is punished; professional expectations, pay, and desired outcomes are standardized; and creators are given the same rights and protections as other professional marketers.

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What Makes a Successful Celebrity Brand?

Celebrities have shifted from endorsing established brands to being influencers for established brands to drawing on their influence to create brands themselves. The authors examine what it takes to make celebrity brands work.

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Should Your Brand Hire a Virtual Influencer?

Followers respond more favorably to sponsored posts by virtual influencers versus those by humans, costs are lower, and creating an influencer from scratch allows marketers to introduce more diversity.

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How Marketers Choose College Athlete Influencers

The authors’ research findings: Athletes’ image and quality of social media posts are more important than their follower counts, posts should feature sports more than personal content, and sexy imagery should be avoided.

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The Art of Asking Smarter Questions

With organizations of all sorts facing increased urgency and unpredictability, being able to ask smart questions has become key. But unlike lawyers, doctors, and psychologists, business professionals are not formally trained on what kinds of questions to ask when approaching a problem. They must learn as they go. In their research and consulting, the authors have seen that certain kinds of questions have gained resonance across the business world. In a three-year project they asked executives to brainstorm about the decisions they’ve faced and the kinds of inquiry they’ve pursued. In this article they share what they’ve learned and offer a practical framework for the five types of questions to ask during strategic decision-making: investigative, speculative, productive, interpretive, and subjective. By attending to each, leaders and teams can become more likely to cover all the areas that need to be explored, and they’ll surface information and options they might otherwise have missed.

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Highly Skilled Professionals Want Your Work But Not Your Job

Companies today are facing a big talent-management challenge. They simply do not have the capabilities they need in-house to transform their offerings, processes, and infrastructures—and they’re increasingly unable to persuade highly skilled professionals to come on board full-time, despite making attractive offers.

In many fields—particularly technology, data sciences, and machine learning—the people with the most sought-after skills are freelancers. Integrating and managing a new “blended workforce” will be one of the main managerial challenges in the years ahead. Force-fitting the model used for temporary staff onto highly skilled freelancers won’t work, however. Firms must fully integrate these professionals into a highly cohesive internal team.

This article looks at successful efforts to manage the blended workforce at companies such as Microsoft, M&C Saatchi, and Mars and lays out some of the most helpful lessons they have learned.

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Transformations That Work

More than a third of large organizations have some type of transformation program underway at any given time, and many launch one major change initiative after another. Though they kick off with a lot of fanfare, most of these efforts fail to deliver. Only 12% produce lasting results, and that figure hasn’t budged in the past two decades, despite everything we’ve learned over the years about how to lead change.

Clearly, businesses need a new model for transformation. In this article the authors present one based on research with dozens of leading companies that have defied the odds, such as Ford, Dell, Amgen, T-Mobile, Adobe, and Virgin Australia. The successful programs, the authors found, employed six critical practices: treating transformation as a continuous process; building it into the company’s operating rhythm; explicitly managing organizational energy; using aspirations, not benchmarks, to set goals; driving change from the middle of the organization out; and tapping significant external capital to fund the effort from the start.

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HR’s New Role

Though the human resources function was once a strong advocate for employees, in the 1980s things changed. As labor markets became slack, HR shifted its focus to relentless cost cutting. Because it was hard for employees to quit, pay and every kind of benefit got squeezed. But now the pendulum has swung the other way. The U.S. unemployment rate has been below 4% for five years (except during the Covid shutdown), and the job market is likely to remain tight. So today the priorities are keeping positions filled and preventing employees from burning out. Toward that end HR needs to focus again on taking care of workers and persuade management to change outdated policies on compensation, training and development, layoffs, vacancies, outsourcing, and restructuring.

One way to do that is to show leaders what the true costs of current practices are, creating dashboards with metrics on turnover, absenteeism, reasons for quitting, illness rates, and engagement. It’s also critical to prevent employee stress, especially by addressing fears about AI and restructuring. And when firms do restructure, they should take a less-painful, decentralized approach. To increase organizational flexibility and employees’ opportunities, HR can establish internal labor markets, and to promote a sense of belonging and win employees’ loyalty, it should ramp up DEI efforts.

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To Create a Greener Future, the West Can’t Ignore China

Fighting climate change is a promising area for engagement between Western companies and China. However, geopolitical strains, the disruption of business relationships by the Covid pandemic, and domestic Chinese policies all make engagement complex. In this article the authors examine the complexities of the current climate-change opportunities in China and present practical strategies for businesses ready to enter the market.

There is a twofold opportunity, they explain. First, China offers a vast market for Western-developed solutions. The Chinese government has set ambitious targets, aiming to achieve carbon neutrality by 2060. That goal creates significant opportunities for firms with cutting-edge technologies. Second, businesses have an opportunity to integrate China’s own advances in climate-related technology.

The authors go on to outline four strategies, all of which involve partnering in some way. They advise companies to make sustainability a global theme, to join or form coalitions to find safe spaces for technological development, to forge partnerships with local companies for market access, and to insource technology.

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How Inclusive Brands Fuel Growth

Years before the Barbie movie phenomenon, leaders at Mattel became concerned that consumer perceptions of the famous doll were out of sync with demographic trends. The company conducted in-depth research to understand how customers felt about Barbie and to determine whether more-inclusive versions presented a strong market opportunity. The findings led to a new inclusion strategy that affected all areas of the brand—product design, distribution, and commercial activities—and coincided with a period of significant growth. Barbie revenues increased 63% from 2015 to 2022—before the boost from the film.

Research shows that in most industries the perception of inclusion can materially change customers’ likelihood to purchase and willingness to recommend products and services.

This article presents a framework for increasing marketplace inclusion in three areas: seeing the market, which is about market definition, market intelligence, and strategies for growth; serving the market, which involves developing products, packaging, and other commercial practices; and being in the market, which looks at advocacy and the customer experience.

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For Success with AI, Bring Everyone On Board

AI is intimidating employees. As machines perform intellectually demanding tasks that were previously reserved for human workers, people feel more excluded and less necessary than ever. The problem is only getting worse. Eighty percent of organizations say their main technological goal is hyperautomation—or the complete end-to-end automation of as many business processes as possible. Executives often pursue that goal without feedback from employees—the people whose jobs, and lives, will feel the greatest impact from automation.

In this article the author examines what keeps leaders from involving rank-and-file employees in AI projects, how they should model inclusive behavior, and what organizations must do to develop employee-inclusive AI practices. Those practices will make companies more likely to improve long-term performance—and to keep their employees happy, productive, and engaged.

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Make Decisions with a VC Mindset

Venture capitalists’ unique approach to investment and innovation has played a pivotal role in launching one-fifth of the largest U.S. public companies. And three-quarters of the largest U.S. companies founded in the past 50 years would not have existed or achieved their current scale without VC support.

The question is, Why? What makes venture firms so good at finding start-ups that go on to achieve tremendous success? What skills do they have that experienced, networked, and powerful large corporations lack?

The authors’ research reveals that the venture mindset is characterized by several principles: the individual over the group, disagreement over consensus, exceptions over dogma, and agility over bureaucracy. This article offers guidance to traditional firms in using the VC mindset to spur innovation.

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Advice for the Unmotivated

Employee disengagement is rampant in the workplace. We’ve all experienced it as customers encountering unhelpful retail clerks and as colleagues dealing with apathetic teammates. But what happens when you yourself feel dead at work?

This article describes what you as an individual can do to sustain your motivation or recover it, even in the most stultifying of jobs. After synthesizing research on this challenge and experimenting with various strategies, the authors have developed a process for recharging yourself called DEAR.

The first step is to detach and objectively analyze your situation so that you can make wise choices about it, instead of reacting in a fight-or-flight way. At day’s end, review what went well at your job and then mentally disconnect from it to give yourself a break. Meditation and exercise can help you do that and will improve your mood and cognitive function. Next, show empathy. Practice self-care, make friends, recognize the accomplishments of others, seek their views, and help them. Research shows that this combats burnout. Third, take action: achieve small wins, invest in rewarding outside activities, redefine your responsibilities, and turn uninteresting tasks into games. Ask yourself how someone you admire would behave in your situation, and dress in a way that projects confidence. Last, reframe your thinking: Focus on the informal roles you enjoy at work, your job’s higher-order purpose, and how others benefit from your work. All these techniques will improve your mental health and increase the energy you bring to your job—even if it is not what you’d like it to be.

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Case Study: How Aggressively Should a Bank Pursue AI?

Siti Rahman, the CEO of Malaysia-based NVF Bank, faces a pivotal decision. Her head of AI innovation, a recent recruit from Google, has a bold plan. It requires a substantial investment but aims to transform the traditional bank into an AI-first institution, substantially reducing head count and the number of branches. The bank’s CFO worries they are chasing the next hype cycle and cautions against valuing efficiency above all else. Siti must weigh the bank’s mixed history with AI, the resistance to losing the human touch in banking services, and the risks of falling behind in technology against the need for a prudent, incremental approach to innovation.

Two experts offer advice: Noemie Ellezam-Danielo, the chief digital and AI strategy at Société Générale, and Sastry Durvasula, the chief information and client services officer at TIAA.

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What Can Business Learn from Art?

A look at three new books and a TV series: The Work of Art, by Adam Moss; The Real Work, by Adam Gopnik; All That Happiness Is, by Adam Gopnik; and Grand Designs, from Naked Television.

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Life’s Work: An Interview with Hernan Diaz

The Pulitzer Prize–winning author reflects on how literature shapes us and more.

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