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The theme at Davos this year was "The Great Transformation: Shaping New Models." One of the models up for discussion was leadership. Panels with titles like "Leading Under Pressure" and "New Leadership Models from China" abounded. While speaking at a private dinner hosted by PwC on the topic of leadership and values in a volatile world, the questions put to me were, "What leadership traits will be paramount in the future?" and "What are the new expectations the public has for business leaders?"

On reflection, it struck me that the conversation this year was very different than in years past. We were no longer talking about reinventing leadership but about adding new elements to the old model. An additive operation in the algebra of change, as my colleague Stuart Albert would put it, not a subtractive or transformative process.

On the opening morning at Davos, I attended a session entitled, "The New Context for Leadership." Up for discussion were purpose-driven leadership, collaborating across organizational boundaries, and inspiring the younger generation. Peter Grauer, the Chairman of Bloomberg, talked about the results of a study to identify what leadership competencies were most valued in his company. The top performers had contradictory attributes, what he called the "and" factor: They had future vision but were tactically strong; they provided strong guidance but were open to challenge; they relied on extensive networks but were also capable of moving fast (i.e., unilaterally); they were hands-on but also empowering.

A similar idea was advanced at the Women Leader's dinner on Friday night. Michelle Bachelet, the former Chilean president, said that in changing times the best leaders are those who can be generals one day and consensus-builders the next. Josette Sheeran, U.N. World Food Program Executive Director, agreed, stating that today's leadership still needs to be hierarchical but also needs to be flexible.

Since the 2008 economic crisis, two very different "rhetorics" about leadership have coexisted. One, the traditional rhetoric, says that our perpetually shifting environment calls for leadership that is more decisive and crisis-oriented than the slow and consensual style that we might prefer in more munificent times. The second, more "politically correct" rhetoric says that the old, command and control model is responsible for many of the problems of the recent years and that only with a more collaborative and inclusive leadership will we get the flexibility, innovation, and new thinking that we need to prosper in a fast-changing and hyper-connected world.

Now it seems that we have settled on a solution — not "either/or," but "yes/and." Like Janus, the Greek god depicted as a man with two heads, each facing in opposite directions, our new leader can and must have it both ways: command and collaborate.

There is obvious practical benefit to this kind ambidexterity. But does it exist, and does it inspire? Or is it just a theoretical model? The people who come to mind when I ask my students about a leader they admire fit the "command rhetoric" (e.g., Steve Jobs) or the "collaborate rhetoric" (e.g., Gandhi), but not both. Never in 23 years of teaching MBA and executive courses have I heard someone cited because of his or her capacity to "code-switch" their leadership style. In fact, when we see leaders who do this effectively, we question their authenticity.

But my questions are not rhetorical, for these are clearly complex and volatile times. Are we looking for leaders who can supplement the traditional tool kit, or do we want leaders who will transform it?

The record-breaking Facebook IPO proves a number of things. But one thing it won't prove is that investors who buy now will get wealthy.

Facebook's success confirms these ideas:

The value of networks. Networks become more valuable as the number of users increases. As the largest undifferentiated network that anyone can join, Facebook's value comes from the fact that anyone can join. As numbers climbed into the millions and now close to a billion users, Facebook becomes mandatory, not optional, for those who wish to reach their friends or their potential customers.

The power of platforms. Launching "Platform" in 2007 enabled developers to build apps for the Facebook website. And of course Facebook itself is simply a way for others to create content and share it however they wish — with strangers or with intimates.

The importance of partners. Attracting Zynga and other social game developers who could sell virtual goods arguably helps Facebook with another way to make money besides advertising revenue.

The huge human hunger for connections. Facebook offers intimacy and a feeling of belonging in an increasingly impersonal world. It helps like-minded people sort through the crowd and communicate with peers, with sometimes revolutionary effects.

Now back to the IPO. The gargantuan valuation of $100 billion proves another truth:

The triumph of hope over experience. Facebook could indeed exceed expectations — anything is possible in this world of constant surprises — but history offers a different perspective. To be the next Apple on a sustainable basis will require another wave or two of major innovation. Simply mining the current platform and data won't be enough.

Before Facebook was born, in the distant past of a dozen-plus years ago, there was a dotcom bubble accompanied by proclamations that the Internet changed the laws of business, that business cycles were over, and that cyberspace knew no limits. Valuations soared, until the crash dashed hopes and lost billions. Now social networks are supposed to be different and change the rules. Facebook is certainly a force for enormous change in many social institutions, as Mark Zuckerberg says. He will be a mega-billionaire after the IPO. But that doesn't mean that ordinary investors can bet their financial futures on friending Facebook.

The reality of web marketing is that almost all of it happens on platforms that are owned by others. Platform owners, such as Facebook or Google, have provided environments where some things are easy to do, some things are much harder to do, and some things simply can't be done. Even tougher for marketers is that these systems are constantly changing as the platforms evolve and grow. The best way to keep attention and stay up to date is to appeal to the philosophy of each platform's users.

In the last few years, Facebook has gone through major growth — from businesses using Groups and Profiles to Pages, which are still changing on their own. This evolution was met by a lot of complaining and foot-dragging by the marketers who were responsible for converting their Group to a Page, or similar issues on other sites. Google+ even launched without support for business features and a rule that any business on the website would be taken off until business features were actually launched.

While there is no escaping the changing systems for these platforms, there are ways that you can be better prepared. Marketers who ask themselves the following questions will rarely get caught off guard because their marketing actually speaks to their audience and doesn't hinge on a specific feature or method of outreach.

Why did the platform come about?
Each marketing platform, whether digital or not, came together with an original purpose or goal: sharing content, keeping in touch, spreading news, and so on. Facebook started so that people could share things they like and keep in touch. While Facebook changes its functionality from time to time, they have stayed true to their core philosophy and tried to make it easier and safer for their users to do more. Other platforms are the same way. Start your plans by looking at how and why the platform began to exist. For example, Google started the AdWords platform, in part, because they could serve ads similar to the keywords users searched.

Google often updates the Terms of Service for their AdWords product. Instead of getting bitten every time this happens, look at Google's goals for the AdWords product and make sure that your ads match where Google is trying to go by writing relevant, useful advertisements. Google even gives incentives to people who write strong, successful ads with lower prices and better placements since that benefits them on every angle. It's also critical to Google that people trust AdWords ads and find them useful, or Google risks losing their main profit center.

What is the killer feature for the platform's audience?
Instead of planting your ads on the edges of what's acceptable or re-using the same strategy on many sites, optimize your work for long-term success by working with customer interest. Create a buyer persona for the people who use each platform, and then use that to develop your strategy. When you've figured out exactly what the perfect item is for that audience, you can create something that has a chance at being really successful.

Zynga, a game company that makes social games primarily for Facebook, has appealed to their customers through the culture of sharing. Their games incorporate the sharing atmosphere very well by encouraging users to share their progress and favorite games with their friends as they play. By aligning their product's marketing with Facebook's culture of sharing, Zynga gets their top users to do their marketing for them, and is unlikely to be disrupted by any platform changes that Facebook makes.

Where else is your audience active online?
As you develop a strategy and methodology for each platform that you are on, continue to research and track what other sites or systems your customers are using. These are all additional opportunities to capture the attention of your audience. If you're not sure what those other platforms are, conduct a survey or ask a few of your current customers where else they're active online. This is valuable intelligence about where to spread your marketing content. Creating customer interaction on multiple platforms will allow you to build a deeper and stronger relationship with your audience. Just be sure that instead of just copying the same strategy and hoping it works somewhere else, you use what you've learned to create something new.

An interview with Frances Frei and Anne Morriss, authors of Uncommon Service: How to Win by Putting Customers at the Core of Your Business.

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By order of the Her Majesty, the Queen, Sir Fred Goodwin — aka "Fred the Shred" — suffered an unprecedented clawback. The disgraced former Royal Bank of Scotland CEO was stripped of his knighthood "for services to banking." Barely four years after Goodwin's elevation, his bank — Great Britain's wealthiest — effectively collapsed and was nationalized. "The scale and severity of the impact of his actions as CEO of RBS made this an exceptional case," the Honors Forfeiture Committee mandarins concluded. Goodwin had brought the honors systems into disrepute; his award was thus annulled.

The controversial action — Britain's Institute of Directors warned of "anti-business hysteria" while Prime Minister David Cameron declared it "the right decision" — invites exactly the sort of "best practice" debate serious business leaders should have about honest compensation and perverse incentives. People respond to incentives. Poorly designed and/or cavalierly monitored incentives frequently lead to horrendous outcomes.

The behaviors may not be criminal or even unethical but they undeniably lead to decisions where individuals maximize their own compensation at the expense of their organization in potentially destructive ways. This typically holds true for the highest-ranking and most dynamic slices of industry, whether financial services, professional sports, health care or high tech. While Goodwin may no longer be a knight, he got to keep a not ungenerous severance and pension.

The fundamental asymmetry, of course, is the presence of bonuses and an absence of clawbacks. That is, individuals and teams may receive impressively large and ostensibly "performance-based" bonuses if they hit their numbers. However, they typically need not worry about forfeiture if, upon review, those numbers require restatement, revision or repair. Misleadingly-gotten gains are not "clawed back." Or, colloquially, heads, they win; tails, they don't lose.

This status quo is unacceptable: any organization that invests more time and thought into designing performance bonuses than considering clawbacks is guilty of bad behavioral economics and even worse management. Clawbacks shouldn't be punishment for flawed decisions or bad luck; they're deterrents and insurance policies for organizations that fear that talented individuals may take inappropriate and unsustainable shortcuts to get the bonus. Clawbacks are an essential technique for balancing long-term business health against short-term bonus wealth.

Otherwise institutionalized imbalances in compensation encourage too many people to "game the system." Traders are notorious for developing schemes that sync with how their compensation and bonuses will be paid out. Their defenders argue that consistent losers will, of course, get fired — so what's the long-term point of clawbacks? But that ignores the (obvious) behavioral reality that traders who know that their greatest risk is losing their job — instead of their money — might be prone to making even larger bets to win comparably larger bonuses. The upside potential overwhelms the downside exposure. That's a proven recipe for disaster.

For example, I've seen software development teams get a cash bonus and stock options for delivering their code early and under budget. But what became disturbingly clear less than six months later is that the team withheld useful information it learned in testing that would have made the software much more robust and scalable because the revision would have blown the bonus deadline by a month. Developing better software would have paid less. Similarly, there's been no shortage of savvy salespeople I've observed who close large, bonus-winning contracts that have artfully phrased "service level agreement" clauses that end up annihilating margins. A few of the larger contracts even led to "rev rec" (revenue recognition) restatements that triggered audit committee reviews. Yes, the sales team was (ultimately) fired. Yes, they kept their bonus money. Yes, the sales people who played by the rules got nothing.

In America, incentive-based compensation excess, egregiousness and economic dysfunction has led to clawbacks being enshrined first in the Sarbanes-Oxley and, more recently, in the controversial Dodd-Frank financial reform legislation. But it's far too early to meaningfully assess the future of "clawback cultures" in OECD countries, let alone the BRICs.

But clawbacks represent one of those rare mechanisms which represent a convergence between populist concerns and better incenting high performance outcomes. The public wants assurances that executive compensation is not determined by crony capitalists; investors seek greater confidence that incentive schemes don't lead to expensively perverse outcomes; and play-by-the-rules employees who invest more effort in creating value than gaming the bonus pool appreciate efforts that don't reward colleagues and bosses who are too clever by half.

Healthy conversations around clawbacks are as important to risk-management and employee morale as well-designed incentive-based compensation programs and a generous bonus pool. I'd argue there's no such thing as well-designed incentive compensation programs that don't have a carefully calibrated clawback component. Emphasizing bonuses at the expense of clawbacks is bad for everyone.

Have you had a constructive clawback conversation with your pay-for-performance people?

As a Davos novice, I was fascinated to observe how entrepreneurship was reflected in the dialog among the world's movers and shakers at the World Economic Forum. The term "entrepreneurship" has achieved cult status in policy speeches, yet I was disappointed at our leaders' superficiality and wrongheadedness, as well as the topic's de facto low priority here. I suppose I shouldn't be surprised. Though the Forum has been working diligently in recent years to address the issue with sessions such as "Education-Entrepreneurship-Employment," "Innovation Ecosystems 2.0," and "Fostering Entrepreneurship Ecosystems," it will take time to elevate entrepreneurship to its rightful status — alongside, for example, the environment and corporate governance — as a crucial global policy issue.

It will also require overcoming a few major misconceptions:

Entrepreneurship is confused with self-employment. Whether it's this decade's declared 100 million MENA job deficit or the 400 million world job deficit, the implicit assumption in the Davos dialog was that the brute force of self-employment and small business will somehow turn the tide. Why? One reason is the deeply ingrained belief that "idleness is the root of mischief" and that self-employment will get the idle, incendiary youth off the streets. This obviously reflects the conflicting views of youth movements as agents of change versus youthful mobs as threats to the status quo. The second is what I call the "Large Numbers Fallacy": the idea that millions of self-employed hair dressers and delivery wagon vendors and hawkers (not that there's anything wrong with these) will naturally evolve into tens of thousands of high growth and high employment-creating ventures. No one I spoke with has a realistic plan for how entrepreneurship will breach this employment gap.

At present there is scant rationale for either assumption, although the jury is still out. Every country indeed has its example of the cell phone kiosk owner who made it big. But in fact, experience and research show that the mindsets and skills, as well as social and economic implications, of high growth entrepreneurship and self-employment are cut from different cloth. In many cases attitudes of the self-employed are anti-entrepreneurial ("If only we had real jobs..."). But the jury has ruled that it is high growth entrepreneurship that creates the employment and most of the other social benefits.

Entrepreneurship is conflated with innovation. Davos leaders who recognize that entrepreneurship is distinct from self-employment and small business, often fall into the trap of equating entrepreneurship with innovation and, by default, technology. Although innovation and entrepreneurship often co-occur, and some of that is technology-based, neither is a prerequisite for the other, and again, they are conceptually and practically distinct. In fact, most entrepreneurship is based on what I have called "minnovation," small tweaks and excellent execution. Many prospective entrepreneurs are deterred by intimidating messages that they need to have big innovations, otherwise forget it.

Entrepreneurship ecosystems are not checklists. Several other misleading assumptions were embedded in the Davos dialog, such as that young people are better entrepreneurs, despite evidence to the contrary. However the most surprising to me was that despite the new popularity of the catch phrase "entrepreneurship ecosystems," (for which I am partly to blame) the term is broadly misunderstood as simply a collection of diverse entities: if there are universities, venture capitalists, an incubator or two, as well as some government funding, voila, there is an entrepreneurship ecosystem. Thus, designing one is an engineering task. The term ecosystem actually refers to a self-organizing and self-regulating interaction of independent organisms; it is not a checklist of the local flora and fauna. And in nature, biological ecosystems are usually not designed, they evolve naturally.

But at the other extreme, some of the Davos delegates viewed entrepreneurship ecosystems as completely impervious to intentional influence, and when dysfunctional, actually are the entrepreneur's "enemy": i.e., entrepreneurs are responsible for all the good things that happen despite the hostile environment; the bad things are because of the government and its errors of commission or omission.

Leaders can indeed impact ecosystem evolution, but this requires both a mindset and a methodology. The mindset reflects an understanding of how the visible and invisible hands of the market can work, interacting with a plan for leaders to become less interventionist, as the elements of the ecosystem take root. The methodology, which we have been developing at Babson, is a set of processes for meaningful engagement of all of the relevant stakeholders, and the facilitation and acceleration of the self-organizing process.

The good news is that many changes in reality start with changes in terminology. The corporate giants and public leaders at Davos have indeed been paying sincere attention to entrepreneurship and its social and economic impacts. Hopefully, this is a harbinger of actions and new realities that are just around the corner.

The softly drifting snowflakes that greeted me every morning at the World Economic Forum in Davos this year were an inadequate warm-up for the cold blast of reality I felt in session after session during this five day Congress on the "state of the world."

As I participated, one theme seemed omnipresent — that while events are unfolding in the world at an accelerating pace, increasingly complex institutions are less and less able to deal with them.

I heard it in the opening remarks of WEF founder Klaus Schwab who talked about a growing phenomenon of "burn-out" among world leaders with finite energy and time to put against seemingly bottomless complexity. An example was a discussion session of tired-looking European finance ministers, defensive and elusive about the speed of acting on the Euro crisis.

I heard it in a session led by Professor Michael Porter and Dean Nitin Nohria of the Harvard Business School who were sharing a research project on declining American Competitiveness. The presentation to 50 people was followed by a discussion of antidotes to the dangerous trends they showed. The problem seemed not so much identifying what needed to be done as the lack of a plan for making the changes quickly enough.

I also heard it in an amazing dinner session led by Daniel Goleman (father of the concept of "Emotional Intelligence") that probed the attributes that great leaders in the future would need to be successful in complex organizations. Three attributes stood out: 1) authenticity and sharp clarity of purpose, 2) empathy (EQ) and the ability to relate to people at the "front line" levels, and 3) self-awareness and humility to constantly question and adapt.

Government is the most visible crucible for this clash of speed versus complexity, yet businesses are not far behind. Today, only 9% of businesses in the world have achieved even a modest level of sustained, profitable growth over the past decade on average (5.5%, earning cost of capital) and that is declining — even though virtually all the businesses aspire to something like this or more. Yet, when we ask executives — as we did recently at Bain & Company to 377 across the world — they say that they do not face inadequate opportunities. Rather, their biggest barrier by far (about 85% of the time) relates to the internal complexity of their organizations and the management of their energy against that.

We just completed a multi-year study of the root causes of enduring success. We found an increasing premium to simplicity in the world of today — not just simplicity of organization, but more fundamentally to an essential simplicity at the heart of strategy itself. In every industry, we discovered companies that were enjoying an inherent advantage in dealing with the increasing tension of faster moving markets and increased internal complexity due to this ability to keep things simpler and more transparent than their rivals.

Today, complexity has become the silent killer of profitable growth in business, and sometimes of CEO careers.

We defined the three design principles of the companies who seemed best at creating enduring competitive advantage in a three year study at Bain & Company (Reported in the new book my colleague James Allen and I have just written: "Repeatability"). We called them "Great Repeatable Model" companies and found that they seemed to be able to maintain a simplicity at their core (think of companies like IKEA, Nike, or Vanguard for instance — very large in size, but with a clarity of strategy and purpose that jumps out at you) and turn it into a growing competitive advantage in the world of today — each of which has its own parallel in the three attributes of great leaders of the future. (That is a topic for a future blog.)

However, my question and message for today, after marinating for a week in the issues of Davos:

Is it time to raise the pursuit of simplification to a higher level of importance in most companies?

Letting go takes courage and is not a natural act for most humans, or management teams. But, given the trends of speed and complexity, maybe ask yourself: is this the year for more companies to take the chance of "zero basing" what they do? Will the ability to keep it simple (think of the fact that Apple has only about 60 products still!) be a mantra for competitive durability in the world of the future?

The Financial Services Roundtable, the lobbying group for the biggest financial companies in the U.S., has a new "white paper" out with the rah rah title, "Financial Services: Safer & Stronger in 2012." A few of the bullet points:

• Banks insured by the Federal Deposit Insurance Corporation have $1.5 trillion in capital — the highest capital levels in the history of American banking.

• The largest U.S. banks have increased Tier 1 capital — the core measure of a bank's financial strength from a regulator's point of view — by nearly 50 percent over the last four years.
• Executive compensation has been reformed significantly to align with long-term performance.
• Banks have developed fortress balance sheets, improving credit quality by 54 percent, increasing net income and, restoring aggregate lending to pre-crisis levels of nearly $7 trillion.

Why you're very welcome, Financial Services Roundtable! You see, almost all of the positive indicators above were enabled by or forced on banks by people working for us the taxpayers (by which I mean Congress, the Federal Reserve, and financial regulators). Most of them — increased capital, executive compensation changes, higher credit quality, fortress balance sheets — would have been fought tooth and nail by the Financial Services Roundtable before the financial crisis. (Because Jamie Dimon always gets bent out of shape when people tar all bankers with the same brush, it should be noted that JP Morgan Chase and a few other institutions were improving credit quality and building up capital before 2007. But the industry as a whole was not. If it had been, there wouldn't have been a financial crisis.)

There's a lesson here. If you let the financial services industry do exactly what it wants, the financial services industry will eventually get itself — and by extension the economy — into staggering amounts of trouble. If you force it to behave, it might just thrive.

The question is who that "you" ought to be. Relying on regulators or central bankers doesn't always work because during good times they have a habit of getting caught up in the same idiocy as the financiers do. And so historically, attempts at controlling the industry's bad habits have also involved restricting what different institutions can do, and how they are organized. Sometimes these have been imposed by government — the Glass-Steagall division between commercial banks and investment banks, for example — but often they have arisen organically. Investment banks used to all be partnerships. Savings and insurance institutions were usually organized as mutuals.

In recent decades, though, the trend has been to allow old barriers to fall and encourage the creation of the for-profit, shareholder-owned, boundary crossing financial juggernauts that make up the membership of the Financial Services Roundtable. Which hasn't worked out super well.

I thought about this while listening Tuesday to David Swensen, the legendary manager of Yale University's endowment, arguing that acting as a fiduciary for other people's money and maximizing profits are incompatible activities. "A fiduciary would offer low-volatility funds and encourage investors to stay the course," he said. "But the for-profit mutual fund industry benefits by offering high-volatility funds."

Swensen said this at a Bloomberg Link conference held in honor of that great fiduciary, Vanguard founder Jack Bogle. It was an event packed with prominent people who work (or worked) in finance, but seem to come from a different, more genteel world than the bulk of modern Wall Street: Bogle, Swensen, former Fed chairman Paul Volcker, former TIAA-CREF CEO John Biggs. One distinguishing characteristic: All of these guys are wealthy. None of them are, by modern Wall Street standards, rich.

For Bogle, that's because the company where he spent his peak earning years was structured as a mutual — owned by its customers and operated on their behalf. All mutual funds are legally organized along these lines. But all the major mutual fund families except Vanguard are now dominated by a for-profit investment "adviser." Some of these for-profit advisers (Capital Group and T. Rowe Price spring to mind) have built a reputation for looking out for investors's interests. But, to follow Swensen's reasoning, the incentives are all wrong.

A lot of investors seem to get this — which helps explain why Vanguard has grown to account for 17% of mutual fund assets in the U.S., leaving long-time archrival Fidelity in the dust. But Vanguard only became a mutual because of a strange confluence of events in the 1970s, when Bogle was kicked out of the presidency of the for-profit Wellington Management Company, and organized a rebellion among the directors of Wellington's funds. The organization that had created the mutual fund industry, Massachusetts Investors Trust, had switched from a mutual into for-profit Massachusetts Financial Services a few years before. No firm since has followed in Vanguard's footsteps.

"Why not?"> somebody asked Tuesday. "The profit motive," replied Burton Malkiel — the Princeton economist, Vanguard board member, and author of A Random Walk Down Wall Street. Or as Bogle told me once: If he hadn't been forced out of his Wellington job, he probably wouldn't have done anything to shake up the mutual fund industry, and would have retired "rich as Croesus."

The profit motive is generally a good thing. It drives hard work, innovation, and the success of the capitalist system. But in financial markets, it's problematic. That's partly because of the zero-sum nature of most financial intermediation: Every penny in fees is that much less in investor returns. It's also the fact that most investors are incapable of judging whether their money manager or broker is doing right by them. And then there's the issue of risk, as illustrated by the recent financial crisis. You can make a lot of money in finance doing things that are bound blow up in someone's face a few years down the road. There's a good chance you'll have changed employers by then, after all. Plus, if your bank is so big that its failure might bring financial panic, taxpayers will bail it out.

The untempered pursuit of profit, then, is almost never good for the customers of the financial sector. Over the long run, it may not be good for the financial sector, either. So I'm hoping that this new white paper is an indication that the Financial Services Roundtable finally realizes all this, and is about to start lobbying for tougher regulation, a return to true mutual status for the mutual fund industry, a return to partnerships for investment banks, and a breakup of big, complicated financial institutions. That is the plan, right?

In 2012, the leadership successions of greatest significance will likely not take place as the result of presidential elections in the U.S., France, or Mexico, but rather as the result of events in emerging economies. In October, China's 18th Party Congress will meet to anoint the country's next generation of leaders (PDF). Looking beyond 2012, the current generation of political leaders in the Middle East, Central Asia, and Africa are aging, bringing the issue of succession to the fore. In Saudi Arabia and Kuwait, both the Ruler and Crown Prince are in their 70s and 80s. Kazakhstan, Uzbekistan, Uganda, Cambodia, and Cameroon have all had the same leader for over 20 years.

The succession process is a crossroads in a country's development trajectory. For governments, particularly those in emerging economies, smooth successions play an outsized role in the continuity of reform agendas, the confidence of key stakeholders, and the stability of investment regimes. Disorderly successions, in contrast, can trigger damaging battles for control, an exodus of both financial and human capital, and even a shift toward the failure of the state.

These emerging economies have a pivotal role to play in the future of the global economy. The Gulf states, for instance, hold over 40% of the world's known oil reserves and over $2 trillion in foreign assets. The next generation of public sector leaders in many of these countries cut their teeth in the business world. On their return, they often take up key roles in legislatures, executives, and bureaucracies. These leaders should look to the private sector for guidance when it comes to ensuring smooth leadership successions. Why?

First, the political succession process in many emerging economies — from parliamentary democracies with dominant parties, such as Singapore and South Africa, to nondemocratic polities, such as China — often closely resembles the process of selecting a new CEO within a business. A small group of senior leaders, not dissimilar to a board of directors, selects a new leader to govern on their behalf in consultation and with the tacit approval of key stakeholders. As a result, succession planning techniques developed in the private sector are often applicable to public sector institutions.

Second, businesses are acutely aware of the problems associated with disorderly successions. Reliance Group, India's largest private company, was split into two in 2005 following a power struggle between the Ambani brothers after their late father, Dhirubhai Ambani, died without leaving a will. In the U.S., Yahoo has struggled to convince investors that it has a clear strategy or a long-term CEO to implement that strategy since Carol Bartz's sudden departure last fall. Businesses can provide public sector leaders with a much broader range of case studies of both well-managed and poorly-executed succession events.

Third, as a result of the reduction in average CEO tenure over the past decade — in 2011 a CEO of a global company could expect to stay in post for just six years (PDF) — many large public companies have professionalized the succession planning process. P&G, for example, takes a holistic approach to developing a roster of future leaders, rotating its senior executives every three to five years in order to ensure broad exposure and encourage leaders to develop a cross-functional skillset. At GE, succession planning and clear selection processes are institutionalized throughout the company. In the annual "Session C" reviews, the CEO meets with leaders from across GE's business units to understand the future leadership pipeline. In contrast to these companies, governments in most emerging economies have not invested time in succession planning as their current leaders have aged. However, the recent focus on succession planning in the C-suite has meant that businesses have developed a number of best practices which can be adapted and adopted by these governments.

Effective succession planning alone is certainly no panacea to the challenges facing the governments and citizens of economies in transition. But every emerging economy has a crop of talented leaders passionate about making a difference to their home countries, and proper preparation is imperative. The next generation of public sector leaders need to immerse themselves in the techniques of the private sector if they are to learn to succeed at succession and secure a place in tomorrow's global economy.

This post is part of the HBR Insight Center, The Next Generation of Global Leaders.

The automotive press has been relentlessly critical of Chrysler CEO Sergio Marcchione — savior of Chrysler and Italy's auto industry — about Fiat's return to the United States. The company's initial foray, the Fiat 500, sold only about 26,000 units in its first year, far short of Marcchione's 50,000 unit goal. Yet the carping misses the conundrum faced by companies planning market entry — for Fiat to get big in the U.S. market, it had to start tiny.

Much of the pique stems from how Fiat built a stand-alone dealer network for a single, mid-priced car. This was expensive, with many dealers spending $3 million to create showrooms outfitted with espresso machines and other costly efforts to evoke Italian style. Conventional wisdom argued for launching the 500 through Chrysler dealers, which could have leveraged both physical infrastructure and the dealers' flow of customers. Similarly, Fiat could have piggybacked on Chrysler's service departments rather than create its own. Eventually, once the brand had become established, separate dealers could have sprouted.

This would have been a great way to strangle an excellent idea. If the 500 had been a run-of-the-mill car (like much of Chrysler's recent line-up), then leveraging Chrysler would have made sense. But Fiat aimed to create a new market — a highly stylish vehicle (that even comes in a Gucci version) appealing to young, independent-minded buyers. That's not exactly who comes to a Chrysler dealer shopping for a Dodge Caravan. (The B-52's lyric "I've got me a Chrysler and it seats about 20" says it all.) Moreover, at $16,000 for the base model, the 500 costs considerably more than comparably-sized competitors such as the Nissan Versa or Toyota Yaris. Showing the car in a setting similar to its rivals would have fostered unfavorable apples-to-apples comparisons and downplayed the car's distinctiveness. In a world of low-priced apples, Fiat is striving to be an orange.

Many big markets get their start in small footholds like the one Fiat has targeted. Red Bull first gained traction with young club-goers seeking a mixer. Smartphones began as two-way pagers (no voice capability) aimed at e-mail addicted executives. Once a new idea has captured the attention of the foothold market, the concept can be revised for scale-up, and the early customers can demonstrate to fence-sitters that the product is a good one. It is very doubtful that the 500's foothold market was lurking in Chrysler showrooms, just waiting for the company to launch a stylish small car.

Other criticism has focused on the initially modest advertising budget. This also misses the point of a foothold approach. Perhaps Fiat could have goosed sales by spraying ad dollars around, but it also would have wasted money by communicating with irrelevant consumers. Many people don't fit Fiat's mold, and even individuals well-targeted by demographic criteria (which is how media is bought) might not be early adopters of a new brand. If a car company is trumpeting a modest extension to an existing category, advertising can increase the number of people considering the vehicle. But for a new category, many consumers are going to want to see others driving the car first. Inherently, these categories aren't going to burst to life but rather germinate and grow.

I'm not saying the launch was perfect. Some dealers were in decidedly unstylish locations. Urban chic goes only so far when it's set amid fast food restaurants and strip malls. The launch would have been stronger had it been coupled with other Fiat cars or the Alfa Romeo line, which will appear in the U.S. in the next two years. Perhaps service appointments could have been directed elsewhere, although this is where many auto dealers make the bulk of their profits. Marcchione has taken some blame for execution issues, but he doesn't sound too sorry about the basic strategy. And he shouldn't be.

Foothold strategies are counter-intuitive. They enable a concept to get big by intentionally starting small, in a channel dedicated to making the proposition stand out. They often target small sets of customers who are can be reached inexpensively. Because the customer is so well-defined, initial versions of the product don't need to be all things to all people, so the concept can come to market relatively quickly and inexpensively. Feedback from initial customers can lead to rapid revisions of the idea. Even in the automotive industry, with its long development cycles and high upfront costs, Fiat could have held back on some vehicle options for its initial launch, and it could quickly revise the presentation of the 500 in its dealers and customer communications.

A foothold approach wouldn't have been appropriate for a new Dodge minivan. But for a product attracting a new customer type, carving out a new market position, and highly reliant on image rather than pure function, it can be critical. Fiat's initial U.S. launch may have disappointed, but the company is now set up well for long-term success.

After several high school and college courses, a few classes at Berlitz, and numerous trips to France and Italy, I have developed enough facility in their languages to get by in their restaurants, hotels, and shops, but not nearly enough to have full conversations. However, I have also developed a taste for French and Italian cinema, and so my Netflix queue is populated primarily by such films. Of course, when I watch them, I have to rely on the subtitles for translation and drop my eyes to the bottom of the screen every time they change. As I do, my ears pick out some of the spoken words but, because the actors are natives, they speak too quickly for me to follow them — except for the words at the ends of their sentences.

Therein lies a lesson for presenters.

Whenever actors, public speakers, clergy, or people in conversation, end a sentence or a phrase, they usually pause. The pause gives the listeners — the audience — time to absorb the words. But when a presenter stands up in front of an audience, the stress of the situation triggers an adrenaline rush which produces time warp that causes the presenter to speak faster and rush past the pauses.

Watch any Woody Allen film and you'll see the effect of stress on speech tempo. Most of his characters — as reflections of his own public persona — are neurotic people who get into complicated situations. As soon as the plot thickens, the characters' words accelerate like a Ferrari on the open road. This is amusing in a Woody Allen film, but it can damage a presentation because the rapid pace not only makes a presenter appear harried; it garbles the presenter's words. The latter problem is heightened when — in our globalized world — presenters speak to audiences for whom English is a second language.

That is where we come full circle to the lesson from foreign films. Professional actors pay as much attention to the cadence of their speech as they do to the tone of their voices; and so, when actors end their sentences, they pause to punctuate the meaning of an idea. Presenters are not actors, but their ideas do fall into logical phrases.

Presenters would do well to give their audiences — whether native English speakers or English-as-a-second-language speakers — a moment to absorb their information by pausing at the ends of their phrases. The best way to create a pause is to drop your voice at the ends of your phrases. Sadly, many presenters today do the opposite; they let their voices rise at the ends of their phrases, producing the dreaded "Valley Girl" effect. If you concentrate on dropping your voice, you will not only sound more authoritative, you will add those valuable pauses.

I attended a presentation given by a Frenchman who started his pitch as fast as a racehorse bolting out of the gate. In the first moments, I heard him say "zee ontairpreez," and didn't understand. But later on in the presentation, when he settled down and began pausing (if nothing else than to breathe) he spoke the words again. Only then did I realize that he had said, "the enterprise."

Learn a lesson from foreign films and from the classic Coca-Cola slogan, and take "the pause that refreshes."

A few weeks ago, I wrote up some of the trends that I'm going to be watching in 2012. One was the interesting phenomena of access to assets replacing ownership of assets in more and more realms. Car-sharing services such as ZipCar, room-sharing services such as AirBnB, and project-based programming services from companies like odesk are upending a lot of our assumptions about what it takes to run a business. Indeed, owning anything may soon be seen as an industrial-age relic in a lot of cases.

The trouble with assets is that owning them creates inflexibility that can cause problems when things change. And, as "things changing" starts to be more of the norm, figuring out how to unload assets — and people — becomes a significant problem. In addition, we often don't need an asset on a permanent basis: being able to borrow it for as long as we need it is good enough. Which brings us to the interesting question of when an employer would hire someone rather than simply pay for the services used on an as-needed basis.

I was intrigued, therefore, to see the Wall Street Journal featuring the use of crowdsourced, as opposed to dedicated, resources by AOL to get jobs done. This is similar to traditional outsourcing, but also different in significant ways: the labor of thousands of people on teeny, tiny little tasks can be combined to accomplish jobs that machines can't do. The employer doesn't need to make a commitment even to a temporary project team, much less to permanent employees.

While this obviously has downsides for the workforce — work that employees used to do can now be farmed out on the open market — it also has surprising positives. For some workers, it's desirable to earn a little pin money, work when it is physically difficult or undesirable to get to a fixed job, and pick one's hours.

Indeed, a lot of "regular" jobs aren't all that attractive. Consider a study published by the New York Times which found that, even though they are regular employees, retail workers tend to have unstable, unpredictable work schedules, making it difficult to plan child care, enroll in school, or handle other responsibilities. Perhaps those workers are in a transitional stage — their work is not yet crowdsourced or outsourced, but the stability and predictability that conventional jobs once offered them is long gone.

Which of course raises the issue: Many of the assumptions about society that we take for granted are based on the notion that relatively stable employment relationships are the norm. When will our thinking catch up with the new reality?

The public is up in arms about some of the big bonuses being paid to the CEOs of big bailed-out banks. The boss of Britain's RBS, one of the biggest casualties of the banking crash, has felt obliged to turn down a $1.5 million bonus in the face of mounting anger and the threat of legislation.

It all used to be very different. Al Dunlap, the former Sunbeam CEO, and once handsomely rewarded corporate icon, was fond of reminding his investors that "the best bargain is an expensive CEO." Great managers, the argument went, deserve the big bucks because of the tremendous wealth they create.

According to this logic, expecting RBS to pay its CEO, Stephen Hester, less is analogous to asking that it pay less for any other necessary business commodity. If executive talent has a price, a firm will get only that which it pays for. So if Stephen Hester were not paid his bonus, another firm would bid away his services and RBS would not be able to attract and retain similar talent at more modest pay levels.

This notion that there is an open and competitive market for highly talented executives is at the heart of the process by which CEO pay is set. Board compensation committees rely almost exclusively on comparisons to CEO compensation at companies of similar size and in similar industries.

This practice, known as peer benchmarking, is used to approximate the next best employment option for that executive in the labor-market, the reservation wage. Pay is typically targeted at the 50th, 75th, or 90th percentile of this group. The implicit assumption is that a talented manager is interchangeable between firms, and thus should be paid very nearly what other executives are paid.

But although the notion that talent is a competitive market is both attractive and plausible, it is highly questionable. Executive talent is not fully transferable between companies. Scholars have long recognized a distinction between firm-specific and general skills. It is quite apparent that successful CEOs leverage not only their intrinsic talents but also, and more importantly, a vast accumulation of firm-specific knowledge developed over a multi-year career. Whether it is deep knowledge of an organization's personnel or the processes specific to a particular operation, this skill set is learned carefully over a long tenure with a company and not easily capable of quick replication at other firms. In fact, when "superstar" executives change companies, the result is usually disappointing.

If this is true, then the CEO labor market is less competitive than CEO compensation committees implicitly assume. Executives are in fact to a great extent captive to their companies, which ought to provide boards with scope for negotiating actively on compensation rather than relying on peer comparisons. The best bargain in corporate America, then, is not Al Dunlap's superstar CEO, but rather the home-grown executive, with whom fair and modest pay is negotiated, often less than suggested by peer comparisons.

Bottom line, a compensation setting process that is reliant on peer comparisons is misguided. So while shareholder activists and recent regulations have sought sharper peer group comparisons as a means of rationalizing pay, we believe what is needed is not better peer groups, but rather less reliance on peer group analyses, and more emphasis on encouraging directors to use their discretion in paying only that which is merited.

The notion of the superstar CEO has been a fixture of business life for at least two decades and it is at the heart of the compensation problem that continues to vex the public. It's time we consigned the myth to the dustbin.

To get a glimpse of what tomorrow's young global managers might be like as leaders, take a look at how today's young people think about communications.

For one thing, they are devoted to connectivity. In a recent survey of more than 2,800 college students and young professionals in 14 countries, Cisco found that more than half said they could not live without the internet, and if forced to choose, two-thirds would opt to have an internet rather than a car. This intense desire to be connected leads to a demand for greater flexibility: Two out of five people said they'd accept a lower-paying job if the position offered greater flexibility on access to social media, the ability to work from where they chose, and choice on the mobile devices they could use on the job. Tomorrow's young managers will share these attitudes, and workplaces will inevitably become more flexible.

For another thing, social media is quickly overtaking phones and email and becoming the dominant form of communication. Young people are driving this change, with the one-to-one mode of interacting giving way to a one-to-many mind-set. Young leaders will use social media to create a running dialog with their employees and colleagues, issuing constant updates about their projects and ideas. Employees will use it to provide instantaneous input and feedback. Workers, via this medium, will insist on having a voice in shaping the company's vision and strategy.

The demand for increased connectivity and flexibility and greater use of social media will shape and change companies from the inside out. Companies will need to think hard about these questions:

• What is the appropriate level of openness? Should employees be prevented from slamming their bosses' ideas, for example? Should managers be restricted in the kinds of things they can say to or about employees?

• How much blurring of public and private life is too much? Social media encourages people to mix work- and nonwork-related communication, but some workers prefer to keep their social lives strictly off-limits.

• How can the company prevent abuse of social media? Things can get ugly quickly — all it takes is one thoughtless comment. Employees and managers need to know that there will be serious consequences for any misuse of this potentially combustible form of communication.

• When employees from VPs to interns are sharing company information on Twitter, on Facebook, and in blogs while your competition is watching, how do you ensure that your employees understand what information is confidential and what is public?

As companies resolve these issues, management styles will evolve. The days when a leader can confidently say "I know best" will come to an end. Managers will no longer be able to communicate with just a small circle of trusted advisers — they'll be expected to interact digitally with a much broader range of people both inside and outside the company.

Not every company will be pleased by this turn of events, of course, but those that embrace it will have new competitive opportunities. With knowledge flowing more freely throughout the organization and decisions being made more quickly, the company will be able to react more nimbly to the ever-increasing pace of change.

This post is part of the HBR Insight Center, The Next Generation of Global Leaders.

Everywhere I go, executive suites are being reconfigured so that the entire top team can have their offices together. To fit everyone a single floor, companies are ripping out large private offices and dedicated conference rooms and building smaller, glass-walled offices, flexible conference rooms, self-service kitchens, and informal huddle spaces.

Leaders naturally want their teams sitting close to them and to one another. Frequent, informal coordination helps smooth the way to organizational effectiveness, and the personal bonds formed by working nearby can enhance a management team's working relationships. Formal analysis proves that this positive correlation is real and quite large.

Zak Kohane, for instance, took time out from his work in computational genomics to resolve a debate on the subject with his dean at Harvard Medical School. The resulting paper measuring the correlation of distance with the effectiveness of team collaboration is, ironically, one of his most widely discussed. It offers quantitative support for the claim that office proximity significantly affects the quality of collaboration. Essentially, Zak and his collaborators showed, the closer coauthors sat to one another, the more effective the papers were that they jointly produced (as measured by how frequently the studies were cited in later articles). This was so whether the comparison was made between offices within a single building, within buildings on a single campus, or across the three Harvard Medical School campuses in Boston. "If you want people to work together effectively," Zak concluded in a recent New Yorker article, "these findings reinforce the need to create architectures that support frequent, physical, spontaneous interactions. Even in the era of big science, when researchers spend so much time on the Internet, it's still important to create intimate spaces."

But each time I see a building crew ripping out another old-style executive suite, I can't help asking the CEO this question: "If sitting together increases the effectiveness of your team, doesn't it decrease the effectiveness of the teams those executives themselves lead?"

The typical response I get from the CEOs is, "Interesting question, Bob. I hadn't really thought about that."

The response I get from their top team members is this: "It's tough — either I or my direct reports spend the day running back and forth. It's good to sit with my boss and my peers on the executive team, but it's murder on my direct reports."

I'm not advocating reversing the tide of office design or the trend toward top team collaboration. But I can suggest a few steps CEOs should take to minimize the drawbacks of the move.

Don't be oblivious to the problem, since subordinates are unlikely to bring it up. It wasn't just two or three of the CEOs I talked with who seemed surprised that efficiency at the top might cause a cascade of inefficiency elsewhere — virtually all of them did. And team members aren't likely to bring up the issue with the boss, and risk sounding like their complaining and possibly lose their perch in the executive suite. So it falls to you to raise the issue. It's worth having an open conversation about the likely impact of such a move on the whole organization and about preventive measures.

Provide team members with two offices — one with the boss and one with their own teams. Although executives with dual offices would tell you that a set of roller skates should be standard issue along with two locations, it's vital that they maintain a physical link with their teams. What's more, in many cases I've seen executives keep their mementos and personal effects back where their teams sit — signaling subordinates that it is their "real" office and that the one on the executive floor is merely a convenience.

Have executives block out unscheduled time when sitting with their own teams. It might be one day a week, or the days when the CEO is traveling, but whatever it is, they should make an effort to schedule uncommitted time back in their departmental offices. Spending that time locked in meetings doesn't allow for those "Hey — have you got a minute" opportunities that are lost with relocation.

Allocate space near the executive suite for subordinates waiting to see their bosses. One thing is certain: Top team members' direct reports — well-paid, important executives with busy schedules of their own — are going to be spending a lot of their time in or near the executive suite waiting for meetings with their bosses to begin or resume This waste isn't usually visible. The direct reports aren't typically sitting in chairs right outside their bosses' offices. But they are there — in an empty conference room, camped out in a vacant office on the floor above or below — just waiting. It's an incredible waste of valuable corporate resources. The best companies create a separate work space nearby -- individual offices, workstations, conference rooms — so that these subordinates can remain productive while waiting.

Furnish executives with administrative support at both locations. The question naturally arises: If executives have two offices, where do their administrative assistants sit? I've seen teams take all three possible tacks: moving the assistants to the executive suite, having them stay back with the departments, spending the day wherever their bosses are sitting. There are pros and cons to each. But whichever approach you take bear in mind that whenever executives are without their assistants they will likely end up piggybacking on someone else's administrative support to take care of basic needs like room scheduling, copying, call management, and coordination with subordinates. Instead, consider having an additional administrative assistant available in the executive suite to just help support these part-time executives on days when they're with the top team, so that they can more freely leave their administrative support back in their other offices.

The most important thing is to recognize that an effort has to be made to minimize the negative impact of physically removing top executives from their own teams. Providing dual offices, workspace for the subordinates who will inevitably be spending parts of their days hanging around the new executive suites, and dual administrative support are among the most successful tactics I've seen for minimizing the downside of co-location.

What has your experience been with co-locating executive teams? Have you found the impact to be underconsidered and underestimated, as I have? What are some tactics you've seen work to diminish the effect? Your comments are welcome.

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Doug Conant, former president and CEO of the Campbell Soup Company, explains how to improve staff morale.

When I began writing Passion & Purpose in 2009, I met Susan, a young woman on the brink of quitting her investment banking job to pursue her lifelong passion of starting a nonprofit. A year later, when I asked how her new venture was going, I was surprised to hear that she "couldn't bring herself to quit" in the first place. And when we bumped into each other last week, I found her toiling away in exactly the same role, still dreaming of her nonprofit venture, but now more depressed than ever.

Why can't Susan just leave the job she despises? More generally, what powerful forces are pulling us back toward the "devil we know"?

As job dissatisfaction rates climb up towards 80%, it's pretty safe to conclude that many of you reading this would rather be doing something else professionally. But in my interviews, I was surprised to find that people's inability to quit their current jobs had nothing to do with the perceived riskiness of their new professions, the fear of unemployment if job options fell through, or even how well they had defined their proposed new career step. An overworked lawyer was hesitant to pursue his dream of regaining balance in a comparatively safe nine-to-five corporate job, despite given numerous opportunities to do so. A marketing professional who dreaded the thought of planning the next strategic campaign couldn't bring herself to move into management consulting, a move which she acknowledged would be both exciting and a much-needed change. And the many young men and women I met who hated their jobs but didn't know what to do instead? Most of them are in the exact same place today.

As I've found out, throwing in the towel on a dead-end job is actually quite difficult, even when you really want to. Here's why:

You've been conditioned. Scientists know that the best way to train someone to perform a behavior is to reward them for doing so at random intervals. In the famous Skinner experiment, one group of rats earned a food pellet after pressing a lever a random number of times, and another group of rats earned the pellet after a fixed number of lever presses. When the rewards ceased, the rats under the fixed schedule stopped working almost immediately, but those under the variable schedules kept working for a very long time.

What's the link? If you look closely enough, you'll find that the corporate world is littered with hundreds of these variable reinforcement schedules. Spontaneous recognition from our bosses, an unexpected bonus or promotion, and landing a big new client are all professional "pellets" subconsciously conditioning us to keep working that lever. Whoever called it a "rat race" wasn't joking.

Your losses are more visible than ever. Ubiquitous connectivity plus social media equals high virality. In other words, news now travels fast. So when your early-stage venture fails, your friends are going to know about it.

Why does this matter? It's generally accepted that most people are risk-averse (PDF) — they'll take the sure thing over a potentially higher, but uncertain, payoff. In the age of high virality, your personal and professional losses are amplified and more visible than ever before, effectively increasing the downside of quitting your known but undesired path. This means that most people, already extremely cautious, are finding it more difficult than ever to jump ship.

You suffer from premature optimization. Teresa Amabile and Steven Kramer's The Progress Principle argues that by accumulating small wins we can achieve big results. But I've found that a sharp focus on incremental gains could also lead to "premature optimization." Instead of surveying the landscape and climbing the highest mountain possible, we're too busy scaling the first peak we happen to stumble upon.

Many of the individuals I interviewed displayed a sharp tendency to prematurely optimize, rather than to explore their options and start the climb to higher heights. One stated, "I'll figure it out after I get promoted." Another said, "one more month," for eleven months in a row (and counting). As a whole, the group displayed a distinct preference for hitting just another small milestone, rather than starting from the bottom of a different (but potentially more lucrative) mountain altogether. This strong human bias toward accumulating small wins is what we call progress, but paradoxically, it seems to be inhibiting many individuals from reaching their true potential.

So often in life, you want — or need — to move on from your job. But it's a pretty good bet that you won't. Why won't you quit?

This post is part of a series of blog posts by and about the new generation of purpose-driven leaders.

This post was co-authored with my colleague Holly Newman.

Have you ever questioned the guidance of a GPS navigation system? The calm and definitive voice tells you to turn right — but your knowledge of the area makes you want to veer left. Now you have to choose: Should you trust the electronic authority, or trust your own expertise?

In business today, many situations cause us to question authoritative voices: A manager asks you to spend time on a drawn-out analytical project that you know will produce little value; a customer insists on a delivery schedule that is likely to produce inventory gaps; a client asks for shortsighted solutions when you know that alternate approaches will produce more significant, long term results. All of these situations present a choice between following a prescribed path, or your own instincts.

It's a tough choice, because most of us are programmed from an early age to defer to authority even if we don't understand or agree with the instructions. As a result, we tend to disregard our internal compass and follow along, even when the data tells us otherwise. For example, most people do not question a physician's diagnosis. Yet studies of autopsies have shown that doctors misdiagnose fatal illnesses about 20 percent of the time.

Not long ago we talked with a CEO who was frustrated by this pattern of deference. Despite his numerous communications about empowerment, people throughout his organization rarely raised questions or challenged their bosses about the nature of their work. What this CEO didn't fully understand is that empowerment to challenge authority is not something simply granted from above; it also needs to be grasped from below. People have to empower themselves — which requires a significant psychological and emotional shift contrary to most people's upbringing.

So how can you counter your conditioning and question authority? Here are some ways to start:

Stop and listen to your inner voice. Give yourself a moment to take a deep breath and consider what is going on. Ask yourself, "Are there other ways to approach this task or assignment?" Do your instincts and experience suggest alternatives to doing what you've been told? Is there data to support your position or is it just a hunch?

Constructively question. If you think that doing things another way would make a material difference, talk to your boss (or customer or client). Why do we do it this way? Would you be open to different ways? What would be the payoff and the risk? Can we experiment with an alternative? Would it be worth doing some further analysis?

If the result of this dialogue is permission to proceed, that's great. If not, you might consider whether you've picked the right battle or presented your case effectively. You also could consider whether you have the courage to change course anyway and deal with the consequences later. In some cases it's better to ask for forgiveness rather than beg for permission.

Reflect. Finally, no matter what you've done, take some time to reflect on the experience. Remember the sensations and triggers that prompted you to push back against authority. How did it feel? What thoughts crossed your mind? Then, think about how you proceeded. What can you learn from the situation? How might you handle it differently in the future?

When trusting your instincts, often you'll make the right choice, and at other times you won't. But if you keep at it, you'll learn to more accurately read your internal compass and come up with effective means to act on it. But if you don't empower yourself to do this, who will?

How do you access the expert within you?

Is there such a thing as too much profit? A disciple of Milton Friedman would say "never." The idea that companies should only maximize shareholder value has had a stranglehold on the business world for decades. It's time to rethink this assumption.

Last week, Apple reported breathtaking earnings. In the fourth calendar quarter of 2011, Christmas shoppers snapped up 15 million iPads and 37 million iPhone 4Ss. The world's most innovative company brought in $46 billion in revenues, $13 billion in profit, and an eye-popping $17.5 billion in cash flow. Apple is the only company competing with, and now beating, Exxon for the title of "most profitable company ever."

But last week the New York Times also hit us with two powerful articles about Apple's supply chain that revealed some deeply troubling issues for the company's business model. The first, "How the U.S. Lost Out on iPhone Work," painted a dim picture of U.S. competitiveness by demonstrating what Chinese suppliers are willing to do to get Apple's business. But the second article, "In China, Human Costs are Built Into an iPad," shows us the enormous human cost of getting work for cheap. It's a horrifying picture of life at the now infamous Foxconn facilities.

Combine Apple's incredible earnings with the reality of life in its supply chain, and it's clear that the tech giant could afford to do much better by workers. It's not sustainable for any company to continue relying on people with such limited rights and life prospects.

But is it fair to pick on Apple? Yes, to some degree, since other companies with deep connections to China have done better on working conditions (a Times source name checks HP, Intel, and Nike for example). In the spirit of being balanced, a few points: (1) even with a few good actors, worker treatment is a systemic challenge common to electronics, apparel, and any other sector with complex, worldwide supply chains; (2) Apple has put some effort into improving supplier conditions and CEO Tim Cook replied last week to the concerns; (3) Consumers also take on some responsibility-we should be demanding more transparency and information about how our products are made (I'm targeting myself here as well since I'm typing this on a MacBook Pro).

But Apple too should be doing far more.

We'll only fix the problem if the largest, most profitable, and most powerful brands demand better treatment for all people who work on a product. The most damning quotes in the Times piece come from former Apple execs: "Noncompliance is tolerated...If we meant business, core violations would disappear" and "Suppliers would change everything tomorrow if Apple told them they didn't have another choice."

So am I suggesting companies pursue unprofitable paths? Hardly. These labor challenges are complicated, but any argument that it would be too expensive to pay people better and give them much better working conditions is absurd.

Some reasonable estimates from The Atlantic place the cost of materials (of a mid-level 32GB $600 iPad) at about $325. Labor is a whopping $10. If we assume, very conservatively, that iPhone assembly costs the same, then in the fourth quarter, Apple spent about $500 million assembling iPhones and iPads.

Let's imagine that Apple tripled expense on assembly to ensure better pay and worker treatment. The total additional cost: $1 billion The cost of an iPad or iPhone would go up $20 or — and here's a radical thought — Apple would make a little bit less money. I'm not remotely saying Apple shouldn't be profitable.

But would anybody in their right mind be disappointed with $16.5 billion in quarterly cash flow instead of $17.5 billion?

Am I making a complex issue too simple? To check my thinking, I spoke with a former Nike exec with deep experience in supply chains and China. Here's his view:

"Someone needs to break the cycle...why not Nike — or Apple? I don't see that as an oversimplification at all. The current "low cost" business model is not really low cost. Isn't one purpose of business to create the prosperity needed to increase the number of consumers capable of buying the goods we make? In fact, I would argue that what Apple is doing now is against the best interests of the shareholders...I've never heard a lucid explanation of what I'm missing."

This is about what we value in the world. Consider IKEA, one of the most sustainability-minded large companies in the world. The Swedish furniture giant has its own challenges (some history of labor issues as well and concerns about the sustainability of its short-lived products, for example), but the company has stated clearly that it's about "low prices...but not at any price."

Why is that a radical idea? I refuse the notion that maintaining a moral compass is anti-business, anti-competitive, or naïve in some way. Smart, innovative, lean companies can make plenty of money and do the right thing. And, frankly, since companies have an awful lot of the rights of humans, they should share some of the moral responsibility as well.

Our system of competition yields amazing results — incredible technological innovation provided in massive quantities very quickly. But these marvels often rely on very real human costs. The whole system has some deep flaws that we must fix.

Apple prides itself on changing the game. So just imagine a world where the company applied its staggering innovation and design skills to create the iSupplyChain or iWorkingConditions. Everyone, including this fan of Apple products, would be a lot iHappier.

A German client of mine was complaining this week about a survey she received from the country's leading newspaper. As the Head of Diversity at a large German multinational, she is the natural recipient of surveys asking how German companies are going to meet the 35% gender balance quotas that DAX 30 companies self-imposed in 2011.

It's not the objective of the survey she objected to, it's the assumption of solutions aimed at 'fixing women'. "They are asking all the wrong questions", she said looking at her options: a list of initiatives aimed at women: Did they have a women's network? Did they offer coaching and mentoring to women? Were they sending women to leadership programs? Did they send their female employees to women's conferences?

This is what the media considers "benchmarking best practices," and they're largely what American companies have been doing for the past 15 years. It's implicitly assumed that they are the best way to achieve any kind of gender balancing in Europe as well, where companies are trying to figure out how to address the growing pressure for gender balance. From the DAX 30 in Germany, the Lord Davies report in the UK to the gender quotas on corporate boards in France, the Netherlands or Italy, the issue of gender balance is being taken seriously in Europe for the first time.

Yet as companies look at the combined impact of how women outnumber men in university degrees and the rising consumer and earning power of women, they're increasingly finding that the traditional approach does little to help them realize the full business opportunities that gender balance can offer their bottom lines. In fact, because the surveys affect companies' rankings on gender, which then impacts companies' ability to recruit and their overall corporate image, the surveys may actually be preventing companies from realizing those opportunities.

Gender balancing a company ought to be a lever for performance, not compliance. If a company is to really get a strategic payoff from encouraging women in the workplace it needs to stop looking for ways to empower women so that they succeed in helping further leadership and HR practices largely predicated on a male mindset and culture.

Instead, companies should position 'gender balance' as a business issue requiring change management strategies led by the CEO. And it should make male and female leaders accountable for change, rather than blaming women for not getting promoted. This may not please the papers, but it will do a much better job of gender balancing your company.

So drop the women's programs — and maybe drop the word 'women' altogether...