In our book MarketBusters, my colleague Ian MacMillan and I encouraged companies to think about how adding an emotional appeal to their offerings can create massive differentiation in an otherwise crowded field.

We enjoyed hunting down examples of this type of competitive differentiation. For example, consider the ordinary light bulb - you wouldn't think there was much to get emotional about there, would you? And yet, pink-shaded bulbs for make-up mirrors (for those of us who are no longer in the first blush of youth), piercingly bright lights for security purposes, and lately of course the "feel green" appeal of compact fluorescents are all examples of adding a formerly emotional tag to a fairly mature product category.

Some companies of course have known this all along - after all, with one sneaker being pretty much like another, it's the feeling of a Nike swoosh that makes for major advantage. And the Kodak moment? At one stage those soppy commercials could bring me to tears.

We call positive emotional appeals "exciter" features in our book, and encourage companies to think about how they might leverage the potential of an emotional element. It seems that more and more organizations are finding that as technologies are copied instantly and the web levels the playing field on things like local pricing, emotions remain a strong differentiator. What made me think of this was a recent article in the Wall Street Journal entitled "For Olympic Marketers, Emotions Pay." The reporters note that unlike events such as say, the Super Bowl, or the World Cup, the Olympics are fertile ground for emotions. Surprising upsets, stunning victories, proud - if disappointed - losers are all delicious backdrops to the power of emotions.

So how do you get at the power of emotions in the things you offer?

First, think hard about your customer segments. Good segments reflect behaviors - remember that even customers who are demographically similar may have very different behaviors and preferences.

Second, you need to think deeply about the customers' situation as they are interacting with your offer. What's on their minds? What are they worried about? Looking forward to? Would they rather be doing something else than dealing with whatever issue you solve for them?

Third, consider what emotions you might legitimately play to - I'm definitely not advocating anything that is manipulative or inauthentic. Then do some brainstorming with members of your team - what could they come up with that might trigger that connective feeling.

Lastly, experiment - try the appeal out on representative members of your customer segment and observe how they behave. By the way, observation is absolutely key. Customers often won't - or can't - tell you what is really driving their behavior.

So what do you think? What are your favorite examples of a product that brings on an emotional appeal?

A recent piece in the Wall Street Journal -- “HR Departments Get New Star Power at Some Firms” -- noted that some forward-thinking companies are dramatically increasing the weight, importance, and strategic role of their HR departments. One way in which they are doing this is by putting business leaders, or non-HR professionals in the role of running the groups. It’s a refreshing development, and one that is long overdue. It’s also an area in which I believe many companies simply overlook a powerful potential source of competitive advantage.

What’s the HR/competitive advantage link? Well, think about it.

As environments become increasingly dynamic, is innovation more or less important? More, obviously. At least adaptation is essential, innovation even better. But we know that the most potent sources of innovation are often ideas that emerge from within the company – usually in connection with an insight that someone has in working with customers. So a strategically minded HR department can craft jobs, create networks among people, and provide the training that helps every person in the organization become part of its innovation engine.

As environments become increasingly dynamic, is it more or less important that your senior leaders are flexible, externally focused and well prepared? Well, obviously, more important.

But who is overseeing the long-run development of these key people? Who makes sure that over the course of a career they are exposed to the right experiences, get the right development opportunities through formal and informal executive education and mentoring, and are considered for the next job when it comes up? Often, these critical tasks aren’t actually done by anybody, or they are left to the vagaries of individual managers to handle the careers of the people reporting to them. A strategic HR focus, in contrast, really does look at the careers of highly talented people in a holistic way, and sees that depth, adaptiveness and engagement are being built into the way careers unfold.

HR people always complain that they aren’t viewed as strategic partners. But perhaps that argument is coming from the wrong angle. Perhaps rather than viewing themselves as HR professionals first, they should get some experience as business people first. For the company leaders running HR departments, it might be time to re-think the seriousness with which you take its role.

So what about your companies? What do you wish the HR folks would do to help develop your own careers? Do you think the HR group in your organization “gets it” with respect to building the right people to deliver on your company’s strategy? If you could whisper a word of advice to your CEO about his or her HR department, what would it be?

Executives often complain that politics, embedded systems, and processes make it hard for them to combat new competition that comes into their industry and competes with a different business model. Yet, there are plenty of examples of companies doing a great job innovating in their business models – changing what we call the “unit of business.” Consider these examples from financial services, an industry in which innovation is notoriously difficult.

Example #1: The photo-bearing credit card. In 1994, Citibank was the first financial services organization to offer its customers the opportunity to put their photographs on its credit cards, an offering that was marketed as the Citi® Photocard (Citibank Corporate Website, 2006). This was marketed primarily as a security technique, making it more difficult for criminals to falsely charge stolen credit cards. The cards proved unexpectedly popular in places like Florida, New York City, and Chicago. It turns out that in locations in which many people don’t carry a drivers’ license, the photo feature of the credit card was accepted by many merchants as an alternative.

Example #2: The VISA Buxx Card. Visa Buxx, launched in 2000, is a debit card developed for teenagers and their families. The idea is that someone who earns an income (i.e., mom & dad) transfers money from their own credit cards or bank accounts to the teen’s card (up to $1,000). The teen can then spend it on all of life’s essentials (or inessentials, say mom and dad), up to the limit of their budget. That alone is a terrific idea – parents can get their teens the convenience and flexibility of a credit card with some sensible limits built in. At the same time, the teens learn budgeting skills and can use the card when traveling, for instance, which is safer than carrying cash around.

It gets better. If the parent transfers money from a different bank than the one issuing the Buxx Card, a small transfer fee is assessed to the parents’ card. A desire to avoid the fee in turn leads some customers to open a new, no-annual-fee account with the sponsoring bank. It actually happened to me – I’m now the proud holder of a Wachovia VISA card because that’s the one that funds my kids’ BUXX card. A much better solution than sending them off to college with credit cards in hand.

Example #3: The “keep the change” debit card. Bank of America has come up with an imaginative twist on the conventional debit card. Here’s how it works: The customer uses a debit card to make a small purchase (say a cup of coffee). It costs $1.50. The bank will round the purchase cost up to the next dollar (in this case $2) and put the value of the rounded amount into the customers’ savings account. Moreover, the bank will put a bonus of 5% of the saved amount on top of the savings, up to a total of $250/year. As of this writing, the program has been credited with attracting 2.5 million customers in less than one year, to open more than 700,000 new checking accounts and one million new savings accounts. These customers also "churn" less than typical customers. BOA estimates their retention rate at 95 percent.

What’s the bottom line? Sometimes there is a lot to be gained by rethinking where you create value and what you sell.

On this blog, I’ve speculated on the factors that lead to highly talented women dropping out of their once-chosen careers and thus not being available to take the next step, leading to one consequence that these folks are not available in the pool of candidates for top jobs. With this as backdrop, it was fascinating to me to read a recent profile of Ann Livermore, one of the top people at Hewlett Packard, and her decision to remain at the company, despite a likely diminished role as HP pursues its acquisition and merger with EDS.

The merger will result in her giving up a substantial amount of her own authority as a portion of her responsibilities are shifted to the merged entity, which will be run by the former EDS CEO, who will report directly to Mark Hurd, HP’s CEO. Livermore explains her decision to remain at her current role in terms of what’s best for HP, what’s best for the team, and what she feels will ultimately be best for customers. Without second-guessing her choices, and recognizing that there are a lot of reasons to stay with such a great company, I just can’t help but wonder what a man would do.

When men get turned down for a top job (as she was twice, once when Carly Fiorina came in and again when the HP Board chose Mark Hurd), it seems to me to be far more typical that they would jump ship to take a higher profile position at another firm. So what do you think – is she making the right choice? Is it representative of the kind of logic that women bring to leadership roles? Or should she go for a top job where she can call the shots at another firm?

What do the career prospects of female scientists, the general chaos of the mid-career managers’ life, the failure to adequately develop new cadres of leaders internally, and escalating CEO compensation have in common? Let me suggest that these are interrelated phenomena whose connections with one another may be poorly understood.

Let’s start with female scientists. According to a carefully done and well-researched study, American companies have an abysmal track record at retaining female scientists, technological people, and engineers as they move into mid-career. Faced with hostile workplaces, few peers, daunting working hours, and poor prospects for promotion, talented women leave in droves. Although 41% of younger scientists, engineers, and technology people are female, their numbers collapse catastrophically. Rather than whine about not having enough H1-B visas to fill technical positions, the authors suggest that a better answer might be lying right under the noses of leaders in corporate America. Were just one quarter of women drop-outs to stay in their careers, they estimate that some 220,000 talented people might be retained in the science and technology workforce in the US.

What do we conclude from all this? For technology companies, the ranks of potential leaders are depleted disproportionately of female talent.

Turning now to the chaos of mid career, Louann Brizendine makes that case that embedded career patterns also disproportionately damage the prospects of women. While all managers with the potential to reach “C Suite” positions go into overdrive in their late 30’s and 40’s, women are more likely than men to have many other commitments to honor. Among these are pre-adolescent and teenage children, who need unpredictable and varying parental attention, much of which falls to women to cope with. Sports, activities, teen issues and other distractions at home mean that a lot of women’s mental capacity is chewed up by coping. Stepping forward to take on even more responsibility at work can seem overwhelming at that point, reports Brizendine.

What happens is that women as a group in their 40’s are far less likely to push themselves forward to the next level – they have enough on their plates. Again, they vanish from the pipeline simply because the window of consideration in many companies slams shut before they are ready to take that next leap. I’ve been talking about this for years, in the context of women and men having different life cycles, while organizations are built around men’s life cycles. So again, we have a lot of women who will never be considered for more senior leadership positions, a missing group of talent.

Then, map against this exodus of talent the fact that many companies have no systematic process for managing succession and building bench depth even when it comes to men! Further, the basics of developing and retaining talent seem to escape many companies. Where does all this leave us?

• Poor track records at keeping and promoting half the qualified management talent (assuming such talent is distributed across the population)
• Poor practices for developing people
• Poor practices for developing succession plans

So where does this leave many companies? At the end of the day, forced to look outside the organization for an external CEO "saviour" because they haven’t done the hard job of developing internal talent. So how does this fit into runaway CEO Compensation?

I was recently privileged to be at a conference at which Jack Welch, the former GE CEO, was present. He observed that both the succession crisis and higher CEO pay are related, noting that McInerney (hired at 3M) got a “Brinks truck” full of extra pay. Bob Nardelli (who went to Home Depot) got two Brinks trucks. Meanwhile Jeff Immelt, who got the internal promotion got "a pat on the head and 20%." His essential argument is that CEO talent commands a huge price premium when boards haven’t done their jobs to develop people and succession plans.

Which brings me to the last bit of data that ties all this together – John Cassidy of the magazine Portfolio notes the continuing escalation of CEO compensation, today reinforced by individual employment contracts which make it "almost impossible" for a Board to fire a CEO without paying him (or her) a kings’ ransom. His solution is for Boards of Directors to grow spines and start to demand more accountability for performance.

To me, spineless Board members are hardly going to solve this situation. Rather, developing significant pools of executive talent are more likely to be the answer. Imagine hundreds of thousands of highly qualified women who remain in the workforce with the potential to join the C-suite. Imagine if every company had an intelligent way to develop its leadership talent, using on the job training, executive education and enriching feedback. Imagine, as my colleague Linda Hill from Harvard has proposed, if you could find leaders in less conventional ways than the up or out hierarchies we traditionally rely upon? Guess what – fewer companies would have to rely on expensive outsiders, there would be more talent available and the ability of a few highly regarded players to demand extraordinary compensation could be diminished. Maybe that’s a more constructive plan than hoping for Board members to exercise discipline in the midst of a frenzied bidding war.

It was fascinating to read of HP’s plan to acquire services and consulting giant EDS. In a lot of ways, the idea makes eminent sense. EDS has formidable strengths in the kind of stem-to-stern solutions that many of HP’s corporate customers crave. And HP itself offers a broad array of complementary products that allow for leverage, consistent delivery, and reduction of overall system costs.

I can’t help but thinking, however, that the two companies are going to be in for quite a lot of “huh?” moments when it comes to the taken-for-granted assumptions each carries with it from their respective cultures. A framework I quite like to use in understanding corporate cultures comes from the The Reengineering Alternative: A Plan for Making Your Current Culture Work by Bill Schneider since picked up by my good friend and colleague Geoffrey Moore in Living on the Fault Line, Revised Edition: Managing for Shareholder Value in Any Economy.

Corporate cultures, they suggest, can be understood in terms of the basic assumptions about the way the world works that are then reflected in behavior. They simplify things into two dimensions: one, the extent to which the cultures operate on the premise of collective, or group, interaction. The other, the extent to which a culture is driven by "hard" facts and data, or by more subjective interpretations of information and what the world means. This gives us a framework that can prove quite useful in anticipating and dealing with cultural disconnects.

Creation cultures (like most startups) depend on individual brilliance and favor acts of creation. The people in such cultures thrive on "living the dream."

Competence cultures, similarly, look to individual, brilliant drivers of outcomes, but the people in them are motivated by competition – within the company and also with external players.

Collaboration cultures take teamwork for granted, and indeed, can’t conceive of doing anything without a team or group sensibility. At their best, they thrive on collaboration with customers to produce useful outcomes. Loose, informal structures suit people in collaboration cultures just fine.

Control cultures, while similarly group oriented, tend to drive things from well-planned activity and rely on hierarchies to get things done. Making plan and being orderly are big values in such cultures.

Which brings me back to HP and EDS. I’ve had the good fortune to work with HP and to interact with HP people. They are unfailingly collaborative. Even when introducing themselves in class, if there is more than one of them they will unfailingly acknowledge the other, and verbally give respect to one another's point of view. EDS, different story. Equally great people, equally strong performers, but boy oh boy is that a control culture. At classic HP, people sort of work together to figure things out. At classic EDS, you look in the book. If the answer isn’t in the book, you ask your supervisor. If your supervisor doesn’t know, there’s some process to sort things out. So I think we can anticipate some pretty hilarious (at best) and potentially distressing (at worst) moments when parties from the two cultures, each operating with their own view of the way the world works, try to come together.

What would I do if I were involved (and I’m not currently working with either firm, to give full disclosure)?

I think the first thing is to make the different cultural assumptions explicit, so that people from either side don’t misinterpret what are fundamentally cultural assumptions.

Next, I’d figure out where it matters that the cultures come together (in executive decision-making, customer service or complex, large engagements, for example) and where it doesn’t (in standalone units without a lot of interdependence).

Then I’d probably have some kind of facilitated process of helping the two interact until the two organizations find a way of working together.

Moore and Schneider anticipate that most companies will eventually settle on a dominant overall culture, although there will always be sub-cultures within the organization. My bet would be on the HP culture eventually holding sway – it’s a natural in a flat, networked world with an emphasis on total solutions and customer care. Let’s see if that’s what happens.

In the frantic buzz of most managerial lives, I see people running from meeting to meeting, consulting their BlackBerrys as though in prayer, desperately working into the night to cope with a deluge of emails and otherwise being busy, busy, busy. The dilemma of all this activity, however, is that it is for the most part what academics long ago termed “non value-added time."

Years ago, former Harvard Business School professors Steven Wheelwright and Kim Clark (who also served as Dean) documented a catastrophic decline in the amount of value-added time people bring to work once they are assigned to more than two projects. By the time the respondents in their study reported that they were working on 7 projects, their productive time at work dropped to about 15% (See attached chart). Ironically, the more "stuff" one takes on, the less one seems to accomplish.

So what can you do to get more value-added productivity into your days? A few suggestions:

Develop a set of screens or scorecards that can help you systematically winnow the attractive opportunities from the less attractive. I’ve got one that I use for considering new clients, and it helps to set priorities clearly.

• Try to bring old projects to some kind of closure before new ones get on the list.
• Make sure to book some time with yourself for those strategic, but non-urgent tasks (like thinking, or writing) that tend to get crowded out by urgent demands. I have one client who has a mythical person named “Joe” – meetings with Joe are for thinking, and it’s understood that they are not to be interrupted.
• Check email only twice a day (promise- it won’t kill you!)
• Try to make the consequences of your tradeoffs clear to those (like a boss or colleague) who may be creating excess work for you.
• Match your strategic priorities with how you spend your time – and question activities that don’t drive those priorities.
• And finally, do question the value of every activity – if it simply didn’t get done, what would happen?

A recent edition of Fortune describes innovations in computer gaming that are likely to be as disruptive to incumbent players like Electronic Arts and Activision as the move toward cloud computing is to providers of shrink-wrapped software. While the incumbents have been engaged in the innovation equivalent of an arms race – ever more powerful equipment to drive ever more powerful graphics to drive the addictions of armies of young, male, gamers – alternatives are springing up all around them.

Nexon and MapleStory
Nexon, a privately held Korean company, has introduced a free-to-play role-playing game called MapleStory here in the U.S. It apparently has over 5 million active players in the U.S. already, and far more internationally (some 83 million worldwide). The sweet spot that MapleStory goes for are young girls who spend hours developing their on-line characters and interacting with one another through the medium of the game. How does MapleStory make its money? Through a variant of the “Freemium” (as Wired’s Chris Anderson recently put it). You get the players hooked on the game, but charge them for add-ons that make the games more satisfying. In the case of MapleStory, it’s purchasing virtual fashions and accessories via pre-paid cards sold at Target. Amazingly, these little expenses are up to $1.6 million a MONTH!

WildTangent drives profits two ways
In the world of creating substitutes for player-based games, a company called WildTangent offers about 500 free-to-play titles that draw 12 million U.S. visitors to its website each month. Offering graphics that are far less than one might get on a videogame console, but which are probably acceptable to many kinds of casual users, the company makes its money in two interesting ways. First, by displaying ads. Second, by offering ways of avoiding the ads! The first way of avoiding the ads is to buy a $20 version of the otherwise free games. The second, and this is innovative, is to buy a prepaid card at (you guessed it) Target that allows you to turn off the ad displays during the games.

The Wii
And no mention of developments in the world of gaming would be complete without noting that the Nintendo Wii, a cheaper, less graphics intensive platform has been wildly popular since its introduction. A classic disruptive technology, the Wii meets more sophisticated players at acceptable levels on some dimensions (such as graphics) but introduces a new dimension of performance competition, the ability to physically interact with the machine, which also makes new types of games possible. Further, it took hold among entirely new groups of users (what Clayton Christensen famously calls “non-consumers”) such as girls and women who turned up their noses at the gory combat games favored by their male peers.

In our book, MarketBusters, we talked about how innovations such as these in gaming can either change the "unit of business" for an industry and/or change its "key metrics," which are the measures of how processes work that ultimately drive profitability. Clearly, in gaming, there are entirely new business models afoot which might drive the next generation of breakthrough growth.

The company and you have parted ways- now what?

In an uncertain economy, one of the things you can predict is that there will be people who lose their corporate affiliation – either through downsizing, or because they elect to take early retirement, or for some other reason – and decide explore the self-employment instead of joining a new organization. Many will become consultants (pretty typical) or go into real estate (not that I would advise that just at the moment) or otherwise start something entrepreneurial in retail. I’d suggest a couple of cautionary notes before making that big leap.

Losing the infrastructure

First, you need to be aware that the transition to working for yourself can be traumatic. When you run your own show, a lot of the support infrastructure of the big corporation is no longer available. Things like logistics, mail, travel arrangements, computer set up and so on can take a lot more time and cost much more than many newly self-employed people expect. It can be lonely – you’re no longer part of a work team. Working from home, which many do, is a whole lot different than working in an office on a schedule. It takes a lot of discipline to resist the distractions that can inevitably intrude on the home environment – not to mention the non-professional noises (crying babies, barking dogs) that don’t exactly go with the high profile image you may be trying to project.

Startups take time to develop

Secondly, remember that most of the time it’s going to take a while for your new venture to be self-sustaining. Don’t expect any new business to start throwing off cash immediately. That means you better have a source of income or savings to sustain you while you’re going through the start up phase. Loving spouses, savings, and an initial contract with your former employer that will pay the bills are all good. Throwing money on your credit cards is not.

The purpose of a business is to create a customer – nothing else matters nearly as much

Third, recognize that many newly self-employed people haven’t got the foggiest idea how to create a viable business. So they’ll invest money in brochures, business cards, fancy office equipment and so forth, but fail to recognize that these things don’t make you a viable business. Only customers willing to pay for your services make you a viable business! They often totally under-estimate how long it’s going to take to generate real new sales. If one can, a much better route is to try to replicate the services you performed for your old company for a new one, and ideally set that up before you are out on your own. I can’t tell you how many times I’ve watched in dismay as people sink the rewards of a lifetime of working into a "cute" retail concept, a restaurant, or some other fun-sounding business without realizing how much work and how long it’s going to take.

Resources that can help you

There are many of resources available to you as you think about going out on your own. Here are some that I often provide to would-be entrepreneurs:

Small Business Development Centers
Small Business Development Centers are usually associated with universities. These offer training and consulting services, courses, and sometimes contacts and connections to venture capitalists and angel investors. The main web page, including a location finder, can be found at: http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html

SCORE program
Score is a program also sponsored by the Small Business Administration that uses retired and experienced executives to counsel new entrepreneurs. Their main directory page is at: http://www.score.org/

Entrepreneurship programs at universities
Most universities have a program of study in the area of entrepreneurship, often in connection with their business schools. Look up the university web site to find whether your business might be suitable for a student project or for student consulting.

Angel Investor Groups
Here is a great guide to a number of angel investor groups who are interested in early stage technologies. Angels are often experienced entrepreneurs who can take an idea forward on an advisory/mentoring basis. http://www.gaebler.com/angel-investor-networks.htm

I would also recommend subscribing to Inc magazine – it’s intended for entrepreneurs, and often has some good tips and ideas.

Finally, don’t be unrealistic about how much enthusiasm you can generate from customers before you’ve tested the waters. A good idea is to allocate a ton of time to marketing and outreach – probably more than you expected, particularly in the early days. I of course would recommend that you build yourself a discovery driven plan that allows you to plan to test your assumptions. (See my personal blog and search on the topic “discovery driven planning.”)

Is your company unintentionally keeping your most senior people from getting the feedback they most need? It can easily happen as an unintended consequence of success. Consider these situations:

Senior executives at car companies drive only the newest models: For decades, the top executives at America's leading automobile manufacturers always drove models fresh from the factory. Not only that, but these cars were washed, maintained, and looked after by in-company employees. They never experienced quality breakdowns as the cars aged, rust problems, or issues with scheduling service calls at a snarly auto shop. Imagine their surprise at hearing people complain about problems that they don’t even know or think about!

Technology handouts: One of my telecommunications manufacturing clients used to routinely give the latest handsets and toys to its key executives, just before or along with commercial launch of the offers. As a result, these folks never had to go into a phone store, never had to deal with inefficient or even hostile distributors, and never had to compare their offerings with competing products. They only compared their own products to previous versions of their own products. It was only when the company radically changed this policy and forced its folks to go directly through the same channels customers had to use that they realized that their once-unassailable advantages with customers were starting to erode. This in turn prompted significant strategic changes, including relocating major operational centers to different markets and shifting the way customer segmentation was done – all stemming from the insights of direct experience.

The executives can hear, even if you can’t: One of our clients, a mobile telecommunications operator, routinely had its operations staff make sure that the cellular signals in the headquarters office, main travel routes and residential areas inhabited by senior executives were strong, reliable and consistent. Imagine the surprise these executives felt when friends and relations expressed their infuriation with spotty coverage, dropped calls or weak signals -- after all, this never happened to them! Even more astonishingly, the senior people didn’t know that they were experiencing the modern-day equivalent of a “Potemkin Village” – they thought their services were far better than consumers did. This in turn led them to dismiss quality, coverage and service level data that reflected how infuriated consumers were as ‘inaccurate’.

The message? Sometimes, buffering senior people from exposure to ordinary experiences unintentionally gives them a false sense of security with respect to the quality, reliability or convenience of your offerings. This in turn can breed dangerous complacency and a lack of urgency with respect to underlying problems. In best-practice companies, in contrast, there are mechanisms to make sure that direct contact with customers is a part of every executives' normal job.

A better approach. At Amazon.com executives routinely spend time on the phones with customers. At Ikea, a few times a year executives and line-level staff work together in what they call "anti-bureaucracy days." At Continental and Southwest airlines, it would not be unusual for executives to spend time at the ticket counter or handling baggage. Proctor and Gamble executives spend a lot of time following consumers around, watching how they do things, and looking for unmet needs. In a great recent story, Irene Rosenfeld, the CEO of Kraft Foods, was flabbergasted to be offered a drink made of their orange flavored mix, Tang, only to learn (to her discomfort) that in China it is served hot, like tea!

Time spent with customers in real-life situations can give you insight into your own offerings, competitive offerings and the changing marketplace in which you compete. Time buffered from reality can create dangerous blind spots.