A new social contract for work – Tom Kochan and Lee Dyer

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From Boston Review

This Labor Day we could join those speaking out against Donald Trump’s many hypocrisies, chief among them the preposterous notion that he represents the American worker. We could point out that he is further dividing an already divided country, turning to Wall Street tycoons as his key economic advisors, advocating for the elimination of health insurance coverage for the poor in favor of tax cuts for the rich, rolling back overtime regulations, abandoning requirements that investment agents focus on the interests of the retirees that hire them, and appointing a Education Secretary who attacks public education, teachers, and their unions.

We could go on, but a better approach is to lay the foundation for what will need to be done in the post-Trump era, whenever that arrives, to repair the damage, regain the trust of workers, and unify employers, unions, government leaders, and all who share the responsibility for shaping the future of work. We can do so by laying out a positive vision and strategy built around a simple narrative: a new social contract for work capable of meeting the expectations and obligations that workers, employers, and society in general hold for work and employment.

A new and fresh approach is long overdue. It is now all too apparent that America is paying a severe penalty for failing to address several decades of growing income inequality and stagnant wages and deep social and political divisions between the winners and losers from globalization.

And things could get worse. If we don’t turn the digital revolution into an opportunity to increase the number of good new jobs it could offer, the gap between the haves and have-nots will grow. If we let this happen, the legacy we will leave for our children and grandchildren is a lower standing of living and the prospect of more violence.

The good news is thanks to innovations happening around the country we can see how a new and more inclusive social contract might be built.

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“Taken for granted” is not the new customer service norm – Lou Shipley

MIT Sloan Lecturer Lou Shipley

MIT Sloan Lecturer Lou Shipley

It’s been an extremely rough 30 days for three of the US airline industry’s largest carriers – United, American and Delta – whose rude and brutish treatment of customers was captured in smart phone videos that not surprisingly went viral.

In United’s case, the damage control was anything but as CEO Oscar Munoz immediately delivered a tone deaf, blame-the-victim response. His belated apology for United’s execrable behavior was of little help.

Friendly skies? Not so much.

The three high-profile airline debacles are stark examples of ham-fisted customer disregard and have given rise to the question: In an increasingly automated and technology-driven world, is being taken for granted the new customer-service norm?

Emphatically, no.  In fact, there’s ample evidence that it’s quite the opposite.

Savvy companies – global industry brands around the world – are investing in, listening to, and learning from customers because they realize that a relentless focus on their customers drives success and growth.

There are many excellent examples of companies that are putting a premium on delivering a consistently great customer experience to increase both revenue and customer loyalty.

Good examples of businesses that are both highly successful and customer-experience focused include Amazon, Netflix, UPS, Trader Joe’s, and the giant insurance provider USAA.

These thriving enterprises are in highly competitive markets and all of them are using customer service as a differentiator.

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Building 2000 units of a product, part 1: sourcing COTS parts – Elaine Chen

MIT Sloan Senior Lecturer Elaine Chen

From Dragon Innovation Blog

There are many phases of engineering development before you get to a looks-like, works-like prototype. At this phase, the product looks like and works like a final product. Hopefully it has been designed with the final manufacturing techniques in mind.  Like many modern day hardware companies, you probably went the extra mile in validating your market before scaling up your operation. You have probably run a successful crowdfunding campaign. You now have a 1000-2000 unit preorder that you now need to fulfill.  How do you go from the prototyping techniques you have been using to date to sourcing and building a small lot of this scale?

At 1000-2000 units, this is considered a low volume production run. This is a very tricky quantity to build, especially for consumer electronics products with a low cost-of-goods-sold (COGS). In fact, Ben Einstein of Bolt VC famously calls this quantity the “uncanny valley of manufacturing” in his awesome talk about prototyping (see Slide 41).

What’s involved in a 2000-unit build?

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Is this the new class every student should take? – Dimitris Bertsimas

MIT Sloan Prof. Dimitris Bertsimas

From eSchool News

With the high-school graduation season over, it’s time for grads and parents alike to celebrate and relax a bit – and maybe enjoy a long summer before recently minted graduates start college or a new job.

But here is something to contemplate (hopefully not too strenuously) over the coming summer weeks and months: What is the next learning step in the graduate’s preparation for a future career?

Whether a recent graduate plans to study 18th Century English literature in college or jump right into the workforce in any number of jobs, I have a one-word suggestion for them: Data.

Specifically, start learning about the analysis of data.

As seemingly odd as that might sound – perhaps even odder than the elder gentleman who recommends “plastics” to the young Dustin Hoffman character in the classic movie “The Graduate” – the simple fact is that our lives and careers, moving forward, will be increasingly influenced and determined by data analytics in just about every field, from what consumer products we buy to the type of medical treatments our doctors prescribe.

The data analytics era is already here. We see it every time we surf the web and those same pesky advertisements keep following us around, from site to site, no matter how much we try to lose them. Those ads are the result of data-analytic computations by Google and others designed to specifically figure out, mathematically, our consumer interests based on past purchases and web browsing histories.

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Whole Foods CEO’s poor excuse for poor performance – Jose Alvarez and Zeynep Ton

Harvard Business School Senior Lecturer Jose Alvarez

At a town hall meeting announcing Amazon’s purchase of Whole Foods, a Whole Foods employee had this question for CEO John Mackey:

“I have a question about Whole Foods’s commitment to those win-win-win-win partnerships with our suppliers, with our team members— and how that’s going to live on once this merger is complete.”

Mackey’s response was curious, to say the least:

MIT Sloan Adjunct Associate Professor Zeynep Ton

MIT Sloan Adjunct Associate Professor Zeynep Ton

“I think, sometimes, our company’s gone a little bit too much team-member focus at the expense of our customers. And that’s one definite evolution that’s gonna happen. I love the passion these guys [Amazon] have around the customer. They put the customer first in everything they do and think backwards. And— we— we’re gonna be the same way.”

If Mackey thinks that investing in people is part of the reason for Whole Foods’s poor performance, he’s wrong. From what we see, the real problem is a lack of operational excellence. Whole Foods may be paying its employees more than competitors do, but it has not created an operating system that leverages that investment. You can’t put premium gas in a clogged-up engine and expect to win a race.

Whole Foods strikes us as an organization that doesn’t standardize where it needs to and doesn’t empower where it needs to. Five stores within a city may have five different people purchasing from the same local farm in five different ways. Their information systems are mediocre at best.  John Mackey’s own words about Whole Foods technology are useful here: “So I think that we can expect that we’ll go to the front of the class, eventually, in the grocery business, from … the class dunce to… the class valedictorian.”

Poor systems and lack of appropriate standardization mean lower labor productivity and higher costs. At the same time, frontline team members appear to have little empowerment to satisfy customers. One of us recently wanted to return a $3 Whole Foods reusable shopping bag that had broken the first time it was used.  You would expect the cashier to just exchange the bag for a new one.  Instead, she called for her manager to resolve the problem.  It was a waste of time for all, including the other customers waiting in line. Paying team members more than competitors do won’t pay off if you don’t empower them to make a $3 decision! Lack of empowerment reduces not only motivation but also customer service.

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