Knowledge that Transforms

In 2009, TED, an organizer of highly respected conferences on ideas worth spreading, threw its doors open, allowing anyone, anywhere, to manage and stage local, independent events under its banner. In the next few years, an army of volunteers produced some 5,000 such TEDx events in more than 130 countries. The brand extension and new content TED gained through these gatherings would have cost millions to produce by traditional means. But they came with a risk: TED no longer completely controlled its brand, and an extended community of people who didn't work for TED were now capable of damaging it. And when TEDx licensees began putting dubious pseudoscientific presentations on their programs, that risk became a real threat. The blogosphere trashed TED for producing dumb content and questioned its overall credibility. In this article, Nilofer Merchant describes the uproar and the lessons it offers: (i) that open does not mean easy or free and (2) that you need to get the crowd working with you, not against you. TED did that, turning things around by adopting three practices: listening loudly, realigning the community through shared purpose, and being strategic about the parts of the business it opened to the crowd and the parts it kept under tight control.

In the post-9/11 world, companies have been jittery about investing in the 22 countries that constitute the Arab League. Political turmoil and misconceptions of a closed society where people are taught to hate Western products and culture have led many to conclude that the region is unstable, chaotic, and closed for business. But Arab consumers have the same demands as people everywhere, and the region's markets are growing, globally interlinked, and intensely competitive. To do business in the Arab world, companies must understand the inseparability of Islam and Arab society and business. Consumers yearn for progress, modernity, and inclusion, but they don't wish to abandon their deeply held religious traditions, as expressed in the five pillars of Islam. Companies that conflict with any of the pillars by, for instance, insulting the prophet Muhammad or interfering with daily prayers will damage their reputations and fortunes. But several of the pillars present opportunities for foreign businesses and organizations: The hajj, or pilgrimage, draws more than 1.5 million visitors to Saudi Arabia annually; most retailers in the Arab world sell as much during the month of Ramadan as they do the rest of the year; and the annual philanthropic donation required of all Muslims, zakat, creates possibilities for the global social sector.

For years, people have bemoaned executives' zealous focus on short-term results, which often leads CEOs to make moves that undermine their firms' long-term prospects and, some say, act irresponsibly. But all the talk won't change anything if the business world doesn't adopt a new way of measuring performance. Three professors from France's Insead believe they have the answer: an innovative scorecard that evaluates CEOs on the basis of the results they delivered over their entire tenures in office. It incorporates three metrics: industry-adjusted shareholder returns, country-adjusted shareholder returns, and increase in market capitalization over that time frame. Using this scorecard, the authors have studied and objectively ranked the performance of thousands of CEOs of major corporations around the world. In this issue, we reveal who made it into the top 100. This is the second installment of the ranking, which we published for the first time three years ago. Since then, the authors have expanded the group of CEOs studied, making it even more global. And, recognizing the growing sentiment that great financial performance is no longer enough, they also looked at social and environmental ratings to see which of the top CEOs also did well on those metrics. Accompanying this year's list is an interview with Jeff Bezos, the CEO of Amazon, whose well-known focus on the long term has served his company extremely well-earning him the #2 spot in the ranking. INSETS: Jeffrey P. Bezos;The Legacy Litmus Test;How We Created the Scorecard.

In the wake of the corporate missteps of recent years, we've heard plenty about how boards of directors should act as more-responsible stewards. But one voice has been notably missing from the chorus of advice-the voice of the CEO. The authors, who include the founder of the Yale Chief Executive Leadership Institute, have tapped their networks to ask dozens of well-regarded chief executives: What keeps boards from being as effective as they could be? Are they realty the cartooned millstone around the CEO's neck, or do they help shape the enterprise in positive ways? What can they do to become a greater strategic asset? The answers--surprisingly candid and highly revelatory--can be distilled into five prescriptions. Boards should be careful not to rein in boldness too tightly. They should do their homework on the company and the industry at large. They should recognize that character and credentials, not celebrity, are what's needed for a high-functioning board. Directors should also overcome any conflict aversion and bring energetic, constructive debate to the boardroom-contrary to conventional wisdom, CEOs don't want rubber-stamp approval of their plans. And they should work to make the inherently fraught succession process less awkward, taking care not to overlook talent in the internal pipeline. As the debates over governance continue, those seeking to improve board performance should listen to every informed perspective, including the constituency that knows boards and their failings best.

Salesmanship is central to a startup's success, but many entrepreneurs ignore this simple fact. They may believe that their idea will sell itself or that there's no point visiting a prospective customer without a finished product in hand. Those who search for sales advice find mostly tools and techniques for established companies. In a study of 120 entrepreneurs in six countries, more than half fully developed their products before getting feedback from potential buyers. Looking back, most said that was a mistake. Those who did start selling early did not spend enough time listening to prospects' reactions. Other mistakes included offering discounts to close initial deals, making early sales to family and friends, and failing to choose first customers strategically. When they did go on sales calls, the entrepreneurs fielded tough questions about the efficacy of their products, their credibility and experience, the size of their companies, their prices, and the cost of switching to an unproven offering. A sales model geared to entrepreneurs accounts for the fact that information gleaned during the sales process can be crucial in designing (or redesigning) the product itself. The model calls for meeting with prospects as soon as an idea is conceived to learn if it has broad appeal. The answer to that question determines whether the entrepreneurs jettison the idea, return to the drawing board, or proceed to prototype development and further testing with potential customers. INSET: Idea in Brief.

A diagram is presented with information about the role of the photo and content sharing website Pinterest in the steps consumers take in the process of making a purchase decision, based on a study of the showrooming phenomenon in the online and brick-and-mortar retail industry.

Competitive advantage today increasingly comes from the particular, hard-to-duplicate knowhow of a company's most-skilled knowledge workers: talented (and highly paid) engineers, salespeople, scientists, physicians, and other professionals. The problem is that in many industries there aren't enough of them to go around-and the situation promises to get worse. In this article, Dewhurst, Hancock, and Ellsworth of McKinsey & Company examine how companies can redefine the jobs of their experts, transferring some of their tasks to lower-skill people inside or outside their organizations and partnering with external providers for work that requires scarce skills but is not strategically important. Redesigning jobs so that prized experts are freed up to do the work that only they can do involves four basic steps: identifying the gaps between the talent your firm has and will need; creating narrower, competencies-based job descriptions in areas where talent is scarce; choosing from various options for filling the skills gap; and rewiring processes for talent and knowledge management to accommodate the new way of working. The authors' research and experience show that redesigning jobs in this way can help companies not only address skills shortages but also lower costs and increase job satisfaction.

An introduction is presented in which the editor discusses women in leadership and other gender-related aspects of business, which are the subjects of an interview with Sheryl Sandberg, chief operating officer (COO) of online social networking company Facebook, which appears in the issue.