July–August 2022

Two Cofounders of Xendit on Pioneering Fintech in Southeast Asia

The payments platform company Xendit came to life with a pivot. Its founders first built a product that would allow individuals to exchange funds—like Venmo but with more privacy—and then rolled out a simple business-to-consumer interface, similar to a pared-down version of Shopify. But they soon realized that such apps couldn’t be successful without an infrastructure for digital transactions and banking. They’d already built an internal system to ensure quick and seamless incoming and outgoing payments, so they decided to offer it externally to speed transactions from bank to business and business to business, easing a significant pain point for enterprises of all sizes in the region. In the years since, they’ve maintained month-over-month revenue growth of more than 10% and expanded from a few dozen employees to more than 1,000 distributed around the world. And in its latest funding round Xendit achieved a valuation of more than $1 billion. Its leaders are taking the lessons learned in the company’s earliest years—know your market, stay nimble, prioritize talent and culture—to overcome new challenges, from the Covid-19 pandemic to the war in Ukraine. Their ethos is to move fast but thoughtfully, working product by product and country by country, to build and strengthen Southeast Asia’s digital economy.

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The C-Suite Skills That Matter Most

Landing a job as a CEO today is no longer all about industry expertise and financial savvy. What companies are really seeking are leaders with strong social skills. That’s what the authors discovered after analyzing nearly 5,000 job descriptions for C-suite roles. Their explanation for this trend? Business operations are becoming more complex and tech-centered; workforce diversity is growing; and firms face greater public scrutiny than ever before. Those conditions call for leaders who are adept communicators, relationship builders, and people-oriented problem solvers. To succeed in the future, the authors argue, companies will need to focus on those skills when they evaluate CEO candidates and develop in-house talent.

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Is It Time to Consider Co-CEOs?

“Two heads are better than one.” It’s a familiar expression—and one that businesses might want to heed. The authors’ study of 87 companies led by co-CEOs showed that those firms tended to generate better returns than did peer companies with a sole CEO.

Successful power sharing at the top depends on multiple factors: strong commitment to the partnership by both leaders, complementary skill sets, clear responsibilities and decision rights, mechanisms for conflict resolution, the projection of unity, shared accountability, board support, and an exit strategy. The authors caution that the co-CEO model won’t work everywhere. But for large, multifaceted firms, those with agile-based management, and those engaged in technology transformations, it’s a promising option.

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When Hiring CEOs, Focus on Character

The author, an associate professor at Harvard Business School, has studied the ways in which the lifestyle behaviors of CEOs—in particular, materialism and a propensity for rule breaking—may spell trouble for a company. Her research, which includes looking at executives’ criminal records and the costs of their homes and automobiles, has found some intriguing links: Firms led by CEOs with even minor traffic tickets or excessive spending habits are disproportionately prone to fraud, insider trading, and other risky business activities. In this article Dey outlines the evolution of this work and suggests that boards should pay attention to executives’ off-the-job behavior.

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As the World Shifts, So Should Leaders

Two decades ago, extensive research led Nohria, the former dean of Harvard Business School, to conclude that the hallmark of great leadership is the ability to adapt to the times. Today, he says, we’re in a period of significant change, thanks to global events, governmental responses, technological changes, and shifts in demographics, social mores, and labor relationships. Here he discusses those developments and the skills that CEOs will need to successfully steer through them.

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Identifying Unmet Needs in a Digital Age

Innovation is all about finding and filling people’s unmet needs. But even innovators and organizations renowned for their scanning capabilities often have trouble perceiving and correctly interpreting those needs. Drawing on their work as researchers, teachers, and consultants, the authors outline a four-part framework to help innovators diversify how and where they look. It involves two main strategies: improving your vision (seeing in greater detail) and challenging your vision (looking at people other than mainstream users). Within each you can adopt a narrow focus or take a wider view. You can zoom in on individual mainstream users and their everyday experiences (what the authors call a microscope strategy) or pull back to discover patterns in their aggregate behavior (a panorama strategy). Likewise, you can take a look at users outside your core (a telescope strategy) or seek a broader view of the patterns they exhibit as a group (a kaleidoscope strategy). For each of the framework’s four parts, the authors describe how digital technologies can augment more-traditional ways of looking. Used together, the approaches they present will enable entrepreneurs to look further afield and on a larger scale than ever before.

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To Drive Diversity Efforts, Don’t Tiptoe Around Your Legal Risk

Many DEI initiatives are scuttled because DEI leaders and legal teams feel themselves to be at odds over questions of acceptable risk. DEI leaders see lawyers as guardians of the status quo, whereas legal experts, trained to anticipate the worst, believe they are protecting the company from legal risk.

However, as the authors point out, businesses routinely choose to accept significant legal risk. In most situations they’re confronted with a risk-reward calculus that’s easy to quantify. But with DEI that’s harder, because the only thing on the balance sheet is the cost. Absent a foundation of trust and support, lawyers are skittish about signing off on initiatives, and the business is more likely to waste resources on performative exercises. And bad DEI poses a greater risk than does good DEI.

When it comes to establishing a productive partnership between DEI leaders and legal counsel, the key is to collaborate early and often. In this article, the authors provide a framework to help you balance the nuances of legal risk with the need to implement effective initiatives.

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Private Equity Should Take the Lead in Sustainability

Despite their reputation in the 1980s as corporate raiders, most private equity firms attempt to improve the performance of their portfolio companies through better corporate governance. But while the G in ESG (environmental, social, and governance) has always been important in the industry, the E and the S have been virtually nonexistent. Private equity has been comfortable seeking returns with little concern for the long-term sustainability of portfolio companies or their wider impact on society. That needs to change, the authors write, because PE has grown so large that society’s most urgent challenges can’t be addressed without the industry’s active participation in the sustainability movement. Having interviewed a large sample of executives who run PE firms and the asset owners that fund them, the authors offer recommendations for how private equity can emerge as a leader in the ESG field—to benefit the wider world as well as its own long-term performance.

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What You’re Getting Wrong About Customer Journeys

Companies often believe they should make their customers’ experiences as effortless and predictable as possible. But the authors’ research shows that this approach is overly simplistic—and can even backfire. While in some instances (say, watching movies on Netflix) customers want their journeys to be easy and familiar, in others (working out on a Peloton bike or playing World of Warcraft) they want to be challenged or surprised.

This article outlines four kinds of journeys: Routines are effortless and predictable and are suited to utilitarian products. Joyrides are effortless and unpredictable and work with products that deliver an on-demand thrill. Treks are effortful and predictable and are associated with products that help people achieve challenging long-term goals. Odysseys are effortful and unpredictable and are perfect for products that facilitate customers’ passion projects.

Each type of journey has its own design principles. Routines should offer consistent touchpoints in familiar sequences; joyrides, endlessly varied moments of delight. Treks require goal-posting (breaking big objectives down into small ones), and odysseys, substantive variation and journey tracking.

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A Better Way to Put Your Data to Work

Most companies struggle to capture the enormous potential of their data. Typically, they launch massive programs that try to meet the needs of every data end user or have individual application-development teams set up customized data pipelines that can’t easily be repurposed. Firms instead need to figure out how to craft data strategies that deliver value in the near term and at the same time lay the foundations for future data use.

Successful companies do this by treating data like a commercial product. When a business develops a product, it tries to maximize sales by addressing the needs of as many kinds of customers as possible with it—often by creating a standard offering that can be tailored for different users. A data product works similarly. It delivers a high-quality, easy-to-use set of data that people across an organization can apply to various business challenges. It might, say, provide 360-degree views of customers, of employees, or of a channel.

Because they have many applications, data products can generate impressive returns. The customer data product at one large bank, for instance, has nearly 60 use cases, and those applications generate $60 million in incremental revenue and eliminate $40 million in losses annually.

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Leadership in a Politically Charged Age

Why are discussions of politically charged issues often so fraught in the workplace today? How can managers ensure that they aren’t caught flat-footed by the conflict these issues sometimes create among employees? Not long ago such questions lay at the periphery of corporate life. But today they’re central, according to the authors. In recent decades we’ve witnessed a surge in the proportion of people whose identities are deeply informed by their political allegiances and who believe they need to bring those identities to work. The result is often conflict that can spiral dangerously out of control. This is a new and rapidly evolving problem, and most leaders are ill-equipped to cope with it. The authors provide a framework to help managers understand when and how political conflict can become corrosive, and they explain how to navigate it more effectively and even harness its potential to strengthen the workplace.

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Why You Need an AI Ethics Committee

Artificial intelligence poses a lot of ethical risks to businesses: It may promote bias, lead to invasions of privacy, and in the case of self-driving cars, even cause deadly accidents. Because AI is built to operate at scale, when a problem occurs, the impact is huge. Consider the AI that many health systems were using to spot high-risk patients in need of follow-up care. Researchers found that only 18% of the patients identified by the AI were Black—even though Black people accounted for 46% of the sickest patients. And the discriminatory AI was applied to at least 100 million patients.

The sources of problems in AI are many. For starters, the data used to train it may reflect historical bias. The health systems’ AI was trained with data showing that Black people received fewer health care resources, leading the algorithm to infer that they needed less help. The data may undersample certain subpopulations. Or the wrong goal may be set for the AI. Such issues aren’t easy to address, and they can’t be remedied with a technical fix. You need a committee—comprising ethicists, lawyers, technologists, business strategists, and bias scouts—to review any AI your firm develops or buys to identify the ethical risks it presents and address how to mitigate them. This article describes how to set up such a committee effectively.

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How to Turn a Supply Chain Platform into an Innovation Engine

Most companies have digital platforms that support specific functions, such as supply chain management, product design, or operations, and they tightly regulate who may join the platform.

The Chinese appliance manufacturer Haier has extended its supply chain management platform to facilitate a broader range of collaborations from innovation and design to supplying materials and components to solving technical problems and providing new services.

The platform allows Haier to capitalize on the expertise and resources of its ecosystem, rapidly exploit new business opportunities, respond quickly to disruptions, and achieve efficiencies in a wide range of activities.

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How to Overcome Your Fear of the Unknown

For many of us, uncertainty can be nerve-racking. That reaction, however, obscures a crucial fact: Uncertainty and possibility are two sides of the same coin. Chances are, your biggest achievements and transformational moments all came after a period of uncertainty—one that probably felt stressful but that you pushed through to accomplish something great.

Uncertainty doesn’t have to be paralyzing. After studying innovators and changemakers who handle it well and reviewing research on resilience and tolerance for ambiguity, the authors have found that the following four principles can help: (1) Reframe your situation by focusing on the potential upside. (2) Prime yourself by taking small risks and reducing uncertainty in other areas of your life. (3) Take a series of modest actions instead of making bet-the-farm moves. And (4) sustain yourself by recasting setbacks and focusing on things that have true meaning for you.

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