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G100 Network Notebook | August 2015

How Many Direct Reports Can CEOs Manage?

That question motivates an analysis of Apple CEO Tim Cook’s executive team, the size of which has nearly doubled in four years to 17. While some experts view this expansion of CEO supervision as potentially stifling to talent development and engagement, others see it as a sign of strength. For example, Jeffrey Pfeffer at Stanford Business School says in Business Insider:

“If you have smart people, a strong organizational culture, and a well-defined and articulated strategy that everyone understands, you can [have] numerous direct reports because your job isn’t to tell people what to do,” he wrote in an email. … Pfeffer pointed out that Jim Goodnight, founder and CEO of the software company SAS, at one point had 25 direct reports.

Real-time Performance Development

There is an app for that, under pilot at General Electric, says a vivid portrait of how Crotonville has evolved to “connect and inspire” a mobile-first generation. For GE, this means embracing constant feedback and preserving differentiation. Quartz explains the app, dubbed PD&GE, this way:

There’s an emphasis on coaching throughout, and the tone is unrelentingly positive. The app forces users to categorize feedback in one of two forms: To continue doing something, or to consider changing something.

Revisiting Assumptions About Mobile

On the subject of apps, a fascinating profile of WeChat reveals what is possible with mobile technology when apps behave more like multi-functional platforms. Andreessen Horowitz partner Connie Chan explains how the revolutionary yet little understood app serves as a model for others. For example:

When people talk about mobile, they often throw concepts like “context-aware”, “sensor-enabled”, “personalized”, “interactive”, and other terms around. But in the U.S., these concepts remain either buzzwords or solo features in individual apps. We just don’t see the level of integration and frictionless mobile-first experiences we see in places like China through WeChat.

What Drives Transformation at PepsiCo?

Design thinking, says this wide-ranging interview with PepsiCo. CEO Indra Nooyi, who describes the early days of her company’s innovation journey, which has already paid off in terms of top-line growth. One of several good observations Nooyi makes in this month’s Harvard Business Review:

There’s a fine line between innovation and design. Ideally, design leads to innovation and innovation demands design.

Understanding the Value of China’s Currency

Ignore market observers who find the RMB overvalued after China’s surprising devaluation, economist Michael Pettis says in a blog post before “Black Monday.” In the larger context of economic rebalancing, the RMB is undervalued, argues Pettis, who suspects that an SDR designation from the IMF motivates China’s intervention:

Beijing…believes this will result in significant foreign inflows that will help reverse China’s very large and potentially destabilizing capital account deficit. Its strategy may be working. On Wednesday the IMF described the new pricing mechanism as “a welcome step as it should allow market forces to have a greater role in determining the exchange rate.”

What the Times Gets Wrong About Jeff Bezos

Stunning details from a front-page New York Times profile on Amazon – the result of six months of investigative work – may offer a glimpse into the future of work. From the provocative report:

Amazon employees are held accountable for a staggering array of metrics, a process that unfolds in what can be anxiety-provoking sessions called business reviews, held weekly or monthly among various teams. A day or two before the meetings, employees receive printouts, sometimes up to 50 or 60 pages long, several workers said. At the reviews, employees are cold-called and pop-quizzed on any one of those thousands of numbers.

Panned by critics as lacking proper context of startup culture, the report paints CEO Jeff Bezos as unforgivingly meritocratic. Few have noted, however, that this caricature is based in part on a misread of a formative experience Bezos references in a Princeton commencement speech. In his address, adopted by TedTalks, Bezos explains the difference between gifts and choices in character development:

Cleverness is a gift. Kindness is a choice. Gifts are easy; they are given, after all. Choices can be hard. You can seduce yourself with your gifts, if you are not careful. And if you do, it will probably be at the detriment of your choices.

Is it Time to End Quarterly Reporting?

Martin Lipton broke new ground this month in his crusade against short-termism, calling for SEC reform that discontinues quarterly reporting requirements. He makes the case based on a recent push by Legal & General, a manager of more than £700 billion in global investments that he cites in a blog on Harvard Law School Forum on Corporate Governance and Financial Regulation. An excerpt:

Providing the market with quarterly updates adds little value for companies that are operating in long-term business cycles. On the other hand, industries with shorter market cycles and companies in a highly competitive global market environment may choose to report more than twice a year.