How One CEO Grows Her Business with Feeling

What do you think causes millions of people to miss work and school in developing economies? Illness? Lack of childcare? Minimal professional training? Insufficient infrastructure? While all of those certainly play a role, I'm guessing that what Elizabeth Scharpf stumbled across as a critical factor in absenteeism wasn't on your radar. While interning in Mozambique in 2005 for the one-person (!) private-sector development division of the World Bank — studying how small and medium-sized businesses can play a role in developing economies — Scharpf, now a 34 year-old graduate of Harvard's graduate schools of business and government, happened to overhear a local colleague complaining that her employees often missed work because they were menstruating.

Elizabeth Scharpf

Seriously?

Perplexed and intrigued, Scharpf thought this might represent a business opportunity, and decided to dig deeper.

A study fielded by the Council on Foreign Relations, "Addressing the Special Needs of Girls," underscores why missing school matters in a big, long-term way. The research found that each extra year of secondary education increases a woman's potential earnings by 25% on average. In South Asia and sub-Saharan Africa, another long-term study found that "more equal education between men and women could have led to nearly 1 percent higher annual per capita GDP growth" in each country. Beyond the humiliating difficulties for millions of impoverished individual women trying to improve themselves and support their families, this is a global issue with significant consequences for the economies of developing countries.

Scharpf was passionately determined to find a solution, tackling the problem the way she always does — by talking with people. "And when you talk to people," she says, "you discover what's missing. It's that simple." Those conversations revealed that it was the economy, stupid. A study found that 18% of school age girls in Rwanda, for instance, miss school because menstrual pads are too expensive. In countries like Mozambique and Rwanda, where the per capita GDP is under $1,000, the average annual cost of $33 (12 months x 5 days x 5 pad/day x .11/pad) for the cheapest imported sanitary pad can often be simply unaffordable. Because the "unmentionable" subject of menstruation is taboo, the market failure — supplying cheaper pads — had never received the attention it deserved.

Scharpf found that absorbent wood pulp was the biggest raw material manufacturing expense for pads, and wondered if cheaper indigenous materials could be used for local production, and if also coupled with a more efficient distribution network, there might be a real business opportunity given the huge underserved populations.

Successful Social Entrepreneurship Combines Mind and Heart

Scharpf did all the traditional MBA number-crunching and analyses, but recognized that tapping into emotion — the incredulity, outrage and fellow-feeling aroused in industrialized countries by the discovery that 21st century working women are routinely reduced to sometimes using ineffective rags, or even bark or mud in rural areas, for feminine hygiene — would be essential if a fledging enterprise were to succeed. "I have empathy with these women," she told me, "because I don't think where you are born should be the biggest indicator of your potential for health, wealth and happiness. I want to change that dynamic."

Rwanda was a good place for Scharpf to launch her first initiative because local female entrepreneurs had already established their integral role to the economic renewal of the country in the years since the genocidal 1994 civil war. In 2009, with $60,000 in seed money from the not-for-profit VC organization Echoing Green, and with the Harvard Business School's first social entrepreneur fellowship, Scharpf founded Sustainable Health Enterprises (SHE).

Instead of simply raising charity cash to import finished pads, Scharpf and her organization are inventing a whole new system of community-based education, business training, manufacture and distribution from locally-sourced banana fiber — that is, solving this serious problem and creating a sustainable regional business. SHE has created a franchise model — providing business skill training, technical expertise, and co-investment — to partner with women in Rwanda and other developing-country communities to distribute and ultimately manufacture and launch their own SHE LaunchPads franchises. As product is sold, some of the initial working capital that SHE puts up is paid back, with the entrepreneurs eventually owning their local franchises. In turn, SHE reinvests its profits in new geographies or other disruptive enterprises.

Emotion Creates a Common Language

Scharpf says her challenge in dealing with scientists, academics, businesspeople, community activists and policy wonks "is always, 'How do I speak in the same language to each of these different constituencies each with their unique language and objectives?'"

Scharpf and the SHE team, for example, first identified in banana-plants a local agro-waste fiber, and after experimenting, concluded that it had the potential to be an absorbent, cheap, safe material. They then approached MIT to partner on enhancing the process to make it more absorbent. She didn't initiate the conversations by tugging on the professors' heartstrings, highlighting SHE's efforts to improve girl's and women's lives, but rather by challenging the scientists to help her solve a complicated new chemical engineering problem. But she realizes that it was the practical need to pioneer new materials technology under strict cost constraints in tandem with improving lives that really accelerated the innovation process. "I've found," says Scharpf, "that the common language is the one of emotion."

Emotion Attracts Good People

Scharpf told me she recently ran an ad for SHE's first job opening in New York. "If you read the job description," she said, "beside the intro and stuff about the need to financially analyze the potential to grow a business in x y and z ways, it was very dry stuff, but when we added the emotional elements around that factual description — that we are trying to basically change the paradigm of how international development is done, that we're trying to work with communities to help improve lives, that we want to be disruptors — all those good things — well, the response was overwhelming."

Scharpf has experienced firsthand that what inspires people — a mission to improve lives — is also good for business. This elusive component is something that behavioral economists are beginning to document. As Gretchen Spreitzer and Christine Porath reported in a recent issue of HBR, for organizations to prosper today, their employees need to feel as if they are "engaged in creating the future — the company's and their own." Research is also demonstrating that basing performance purely on beating the competition or making money can actually decrease employees' intrinsic motivations to pursue a goal. In her book Rapt: Attention and the Focused Life, Winifred Gallagher cited a study in which "college students who were paid to do a puzzle were significantly less motivated than those who worked for free."

Emotion Inspires Ongoing Development and Builds Community

Scharpf intends for Rwanda to be just a phase-one proving ground. "We're looking at Costa Rica and India to explore how we can technologically and operationally increase distribution either through new natural fiber based lines and/or by distributing other sorts of products via our network." She was recently contacted by entrepreneurs from Zambia and Zimbabwe who were interested in starting SHE franchises. While doing a typical needs assessment, the first question Scharpf asks is "who is the person and what is driving them" — and then she explores the local raw materials and local business conditions. Scharpf ardently believes that SHE's performance is influenced not only by the through-put of their machines and the efficiency of their distribution network, but by their ability to align people's interests and passions with their roles.

Managing Emotion Effectively Keeps Business On Track

Scharpf says being attuned to the emotional aspect of work keeps her sensitive to issues that otherwise might not be immediately obvious — allowing her to pre-emptively deal with challenges before they grow disruptive. "The biggest challenges I have on a daily basis are with regard to human emotions," she says. "They should have a psychology class at the business school because I am finding I am most effective when I understand what drives people to do what they do, whether it's what they are passionate about, or what makes them feel insecure, or what makes them feel good about themselves, or what makes them have confidence, or what they can be proud of — keeping in mind all of those things."

The bottom line is that empathy without rigorous, rational analysis solves no important problems — but rationality without empathy simply misses plenty of important and soluble problems. To be a responsible human and to be a successful entrepreneur requires both, working in tandem.

Workers, Take Off Your Headphones

Technology, for a free-lancer like me, creates a powerful and not entirely mad illusion that we work in a peopled environment of rich diversity and experience. As I sit to write each morning, I draw upon the vast network of people (many in active chat windows) with whom I've worked in the trenches over the course of a 35-year career, while also having the benefit of opinions and insight by expert strangers a click away. I sometimes even wear earplugs that allow me to immerse more deeply into my subject matter, creating a bubble that blunts distractions and sharpens my focus. For me, it's the best of both worlds. Alone, and yet truly interacting with people, even if they are across town or in a different country.

But what about younger people just entering a traditional office environment? The necessary and artful tango between inner-directed and outward-focused, first chronicled in David Reisman's landmark 1950 book The Lonely Crowd, has been problematically transformed by technology. There's a new lonely crowd in the workplace.

My informal survey of a dozen people I know under the age of 35, working in a range of desk jobs, all in the U.S. — law firms, big entertainment companies, small start-ups, publishing houses — revealed that whatever the design of their office spaces, most younger people in our increasingly post-telephonic office world wear headphones about half of the time they're working. And all but one of those I interviewed said that they had at least one G-chat or Skype window open throughout the day, every day — some of them checking in with as many as five non-work friends or family members every hour. And the majority of these young workers said that they felt far more connected moment to moment with people outside their workplaces than with any co-workers — the nearby colleagues, including bosses, with whom they communicate primarily through e-mails or chat programs.

This is very much a new world with myriad legal and security issues for both employer and employees, which are beyond the scope of this post. My focus, rather, is on the profound impact these new 21st century forms of divided attentions and isolation have on the psychology of individuals and company cultures, how they make people more than ever all alone among a group of nominal comrades.

Missing out on opportunities to contribute and advance

One person with whom I spoke told me that "wearing headphones actually makes me feel anxious a lot of the time, because I'm always worried that someone might ask me a question or say something to me and I'll miss it." This person is right to be concerned. Over the course of my earlier professional incarnations I worked in mission-driven organizations with more or less open office plans — Sesame Street, SPY magazine, Nickelodeon — where much of our successes were driven by the invisible but powerful sense of shared purpose generated by the news and information that was simply overheard. If I'd had headphones on, exclusively aware of the work in front of me, I would have missed out on important details, let alone the collective high that was experienced when a good piece of news rippled through. The more I participated in the ambient, informal life of the office, the more committed I became to the work of the company. A company spirit formed and evolved, and I shared in it unconsciously and consciously.

These days, by contrast, as one young interviewee put it, "usually whoever is talking to me will make sure they get my attention if I didn't seem to hear the first time. I've never missed something urgent, usually just part of a conversation that was going on in the office." Precisely. It's just that kind of loss of daily osmotic information exchange and collaborative bonding that ought to concern 21st century employees and employers. It's about information exchange, resource exchange, idea generation and on and on. If an employee is glued to her desk with headphones on, immersed in music and G-chatting with her best buddy, she is missing the opportunity to create relationships with people on the job who might be launching a project for which she'd be perfect, or who's kicking around the idea to launch a new firm that needs precisely her talents. It's a huge and real loss in terms of career development.

Companies also lose some of the opportunity to have employees contribute new ideas that might be percolating within the larger culture but under the radar of the organization. Because actionable cultural knowledge is now so diffuse, to remain competitive companies need all employees to bring fresh thinking into the workplace. Imagine an employee who happened, say, to be the roommate of someone launching a startup in 2010, and missed out on overhearing a colleague ask if "anyone knows anything about this new app that colorizes photographs so they look old-fashioned" — extreme, yes, but even short of missing out on an early partnership with Instagram, every company must be configured to into tap a workforce's collective informal knowledge base as much as possible.

Eroding employee loyalty

The image of legions of headphone-wearing employees sitting silently at their workstations, oblivious to the flesh-and-blood community around them but actively engaged with a virtual world, seems like a dystopian future envisioned in movies like Minority Report. But that future is here. A Wall Street Journal piece on the "officeless office" had a sidebar with six new rules for office etiquette which included #1, no sneaking up; #5, limit chit-chat; and #6 use headphones. That may increase a certain kind of productivity, but at what cost?

Management professors Sigal Barsade at Wharton and Hakan Ozcelik at Cal State Sacramento are among the pioneers in studying how employee isolation correlates with organizational outcomes. In a recent study, they found "because they feel more estranged and less connected to coworkers, lonelier employees will be more likely to experience a lack of belongingness at work, thus decreasing their affective commitment to their organizations." Something to think about before you decide to limit social chit-chat or put those headphones back on.

A drain on innovation

Isaac Kohane, co-director of the Center for Biomedical Informatics at Harvard Medical School, has studied if and how scientists benefit from close physical adjacencies at work.

Even though scientific research obviously has been enhanced by internet connectedness (the web, after all, began 23 years ago as a vehicle for scientific collaboration), Kohane and his researchers found "striking evidence for the role of physical proximity as a predictor of the impact of collaborations." As Kyungjoon Lee, a research assistant on the study put it, "science is all about communicating your ideas so others can build on them." It seems obvious to me that not just science but most professional pursuits significantly benefit from this kind of perpetual accidental physical-world collaboration. But as my interviews revealed, when we put on our headphones and fire up our messenger client of choice, we effectively make ourselves remote telecommuters even when we are physically present.

Is there an upside?

Headphones can operate as a visual "do not disturb, I'm working" signal for employees who, in open-plan offices, need solitude in order to execute their work. As one interviewee told me, her headphones "put me in a 'get stuff done' frame of mind" and others reported that headphones made them "more focused" and that work was "more fun." Being able to achieve that sense of solitude when necessary is clearly important.

Organizational psychologists such as K. Anders Ericsson at Florida State and Adrian Furnham at University College London have studied the phenomenon. "If you have talented and motivated people," Furnham says, "they should be encouraged to work alone when creativity or efficiency is the highest priority."

And instant messaging at work can have its uses. As my editor at HBR says, "I instant-message with colleagues who sit next to me. It seems the best way to brainstorm headlines." IM can also cut down on the number of time-consuming emails sent and received, and help employees who are actually physically remote communicate more easily with people in the office.

But organizations need to develop protocols that avoid making isolation the universal default office norm, and that encourage face-to-face interaction. Some personal-bubbledom is necessary. But too much creates a lonely crowd.

How can you find the right balance? Accept the reality of our electronically networked workplaces and private digital media consumption. The new workforce, raised on perpetual multi-screen multi-tasking, would not be able to function well in a closed, 20th-century-style environment. Rather than creating unenforceable rules, employees and organizations should be helped to understand what's being lost in the process of mindless, unplanned mass capitulation to the machines. Create working environments that encourage physical interaction; have small lunches that cut across hierarchical levels; include people who tend to shy away from group activities to participate in the softball team or fantasy football or Oscar pools. And keep managing by walking around, even though text-messaging and email seem to make real-world encounters unnecessary. As Rachel Silverman and Robin Sidel reported in their piece on the officeless office, GlaxoSmithKline, which has saved $10 million in annual real estate costs by shifting 1,200 employees at one New Jersey site to unassigned seating, found that decision-making among their staff had risen by 25% primarily because e-mail exchanges had been replaced by good old-fashioned face-to-face conversations — conversations that never would've happened had all their employees been wearing headphones.

Why You Really Shouldn't Curse at Work (Much)

The media brouhaha over Carol Bartz's coarse language in the wake of her firing was telling. Rather than responsibly assessing her merits as the chief executive of Yahoo!, the conversation instantly devolved into what kind of woman swears on the job. That, to me, is so twentieth century. When we've reached a point in our anything-goes culture that the anchors of the most important newscasts (Jon Stewart and Stephen Colbert) curse nightly, and public figures like prime-time teenage role model Lea Michele, the actress who plays a goody-goody(ish) character on Glee, talks (as we used to say) like a stevedore in interviews, it strikes me that managers and executives need to seriously rethink the words they choose to communicate displeasure.

In fact, we're now so inured to vulgarity that it takes something really over-the-top — say, the baby doll being sold this holiday season that apparently curses — to make us stop and take notice. Taboo words, with a couple of true taboo exceptions, have always been used sparingly to communicate powerful emotions, but when swearing becomes simply reflexive and ubiquitous — as it is today — those words cease to have much power or meaning. And when crude words do shock, the language deflects our focus from the serious issues at hand.

Take, for instance, the internal Goldman Sachs e-mail that Senator Carl Levin read aloud last year during a Congressional hearing: "Boy, that Timberwolf was one shitty deal.'" Hard to tell without more context whether the guy who wrote that e-mail (now a Bank of America division president) was proud of the group for pulling the wool over the public's eyes, or just candidly stating the facts. But one thing became clear pretty quickly — to the American public, the language made what looked like double-dealing cynicism more memorably rotten. And the immediate consequence? Rather than suggest to their employees that they not sell bad deals to their clients, Goldman Sachs chose to focus on the language and its potential for embarrassment, instructing their employees to stop using profanity in e-mails. The emotionally laden words that communicate our more powerful feelings are particularly slippery at work, where we spend the majority of our waking hours and where our livelihoods hang in the balance.

How we choose to interpret hyper-charged no-longer-taboo words changes from moment to moment and office to hallway, according to permutations of status, gender, ethnicity, education, age and the particular setting — one person's obscenity is another's spicy punctuation. "In-house" language is often at odds with public norms. I was talking with a female partner in a New York corporate communications company that advises companies on critical communications challenges. "I think of swearing," she told me, "the way I think of Yiddish. It's very expressive." But she also asked to be quoted anonymously, perhaps anxious that her cheerful acceptance of workplace swearing might be seen as an endorsement — and might offend clients, current or prospective. And yet many of the people I spoke with about this subject, men as well as women, suggested that swearing was a strategic part of the lexicon they developed to be taken seriously as potential alphas of their organizations. I can relate. My first jobs were in banking and then media sales — businesses at the time completely dominated by men and fueled by a backslapping, crude-joke-telling camaraderie. Swearing definitely helped me come across as one of the guys, and thereby granted me access to the kind of casual gossiping and information-trading upon which deals are sometimes built. "Swearing," as one senior female attorney told me, "gives others, men and women, reciprocal permission to let their hair down and feel comfortable sharing revelations." This approach — swearing as an effective social tool that can enhance work relationships and allow women in particular to present an equal-to-men or even crypto-masculine identity — has been documented by psychology and linguistics researchers.

But not all swearing is equal. Take swearing in anger. Swearing is positively correlated with extraversion and Type A hostility and many scholarly studies (Jennifer Coates, 1993, Vivian de Klerk, 1991, 1997) identify swearing as intrinsically aggressive. Take Dick Cheney's unapologetic snarling at Senator Patrick Leahy on the Senate floor, or Serena Williams's outburst to a ref about a foot-fault call. Their curses were meant to take charge, to intimidate. And swearing men and swearing women are perceived differently. De Klerk discovered that women risk being viewed more negatively than men when using obscenities. Elizabeth Gordon, who studies speech and gender stereotypes at the University of Canterbury in New Zealand, has found in her research that women who were "non-standard" speakers — that is, foul-mouthed — were judged to be of lower social and moral strata. We've seen this play out in public. Cheney refused to apologize for his f-bomb and reported that he felt "better" after his exchange with Senator Leahy, whereas at Serena Williams's next press conference, she was subdued and entirely contrite. These days, it's practically meaningless and way too easy to say something "sucks," or (much) worse. And the rough waters in which we all now work makes it increasingly important to be clear and precise about what is going on emotionally inside and around us — not to be milquetoasty, but to be calibrated. As a person who allowed (and, I confess, still occasionally allows) herself to resort to default swearing, it seems to me that in this laissez faire age, and as we start a new year with new intentions, that it's a good idea — indeed, a damn fine notion — for business leaders to get more truly creative about their language and use the various linguistic bombs only sparingly.

A Female-Dominated Workplace Won't Fix Everything

From the Harvard Business Review.

Men on the job must feel besieged. Two seismic shifts are underway that are irrevocably changing the ways in which we've believed work works.

On the one hand, new technologies have enabled neuroscience to discover that men and women tend to be wired differently in ways that incline men — can it be? — to behave more emotionally and irrationally in certain work situations, exploding the myth that women are the only emotional creatures in the workplace. Recent research, like that led by Cambridge University neuroscientist John Coates, suggests that surges in male financial traders' testosterone produce states of euphoria that cause them to understate risk, thus contributing to the overleveraged global financial crash. Since men naturally produce ten times as much testosterone as women, it's being suggested that a more gender-balanced financial workforce could be stabilizing for firms and for the system as a whole.

On the other hand, the metrics of 21st century female professional and economic empowerment have become a tide. As of the last two years, more American workers are female than male, and the postindustrial occupations in which women predominate — health and education, among others — are the growth sectors. Women today account for 57% of college undergraduates, 62% of graduate students, and majorities of those graduating from medical and law schools. Despite the continuing rarity of women at the very tops of large corporations (which will inexorably shift as the cohort of overwhelmingly male CEOs retires during the next decade) and in finance, a 2004 study by the women's group Catalyst, The Bottom Line: Connecting Corporate Performance and Gender Diversity, concluded that companies with the highest percentages of women in their executive ranks achieved 35% higher returns on average. What's more, according to the Center for Women's Business Research, women today own 40% of the private businesses in the United States and a study released last year found that (the relatively few) high-tech start-ups led by women fail less frequently than those led by men. After 40 years of feminist-era dues paying, women's moment has come. Hear us roar.

As a woman who came of age in the late 1970s and who has worked in sometimes unproductively male-dominated workplaces, I'm with the program so far. Two-income families are the new normal. Economic parity for women is a good thing. But I don't think we should rush into simplistically thinking that a female-dominated workplace will change everything and overnight make the world perfect. The bigger opportunity, and indeed an essential rethink if we are to reboot our economy, is finally to move beyond circa-1970s gender-centric ideology into a larger, more constructive conversation about how to reinvent workplace norms.

We humans, women and men alike, are hobbled by a gigantic evolutionary time lag. We have no clue how to handle 21st century cognitive threats, real life in the modern workplace. We evolved, survived, through our ability to respond to physical threat — is that a snake on the trail or a stick? Our bodies' stress hormones, adrenaline, cortisol and testosterone, among others, which raise blood pressure and send more blood to our muscles, historically made us more alert in preparation to fight or flee imminent physical threats. Whether I'm fleeing a charging lion or cowering before a screaming boss, the amygdala responds, on a basic level, in a very similar way. Deep inside we are all irredeemably super-old-school. But the reality is that emotion is far more complicated in a modern work setting than it was for our prehistoric ancestors on the savanna. Is the person in the next cubicle gunning for my job? How will I get my work done when the babysitter calls in sick? And this disconnect — this evolutionary delay in the development of more emotionally nuanced or sophisticated responses to psychological challenges — is a huge contributor to what makes navigating modern work/life so incredibly hard.

In a 2008 paper on gender differences, five psychologists — Kateri McRae and James Gross of Stanford, Kevin Ochsner of Columbia, Iris Mauss of the University of Denver, and John Gabrieli of MIT — reported that while men and women don't really differ in their basic "reactivity" to emotional provocation, they are quite different in the ways in which they respond. Based on both subsequent questioning and neural responses to aversive photos as measured by fMRI brain scans, the authors discovered no significant differences between the genders in the speed of their reactions to stimuli. But there are gender-based distinctions in how men and women were able to regulate and manage their emotional response to these stimuli. The amygdala was less activated in men's brains than in women's, and portions of the women's prefrontal cortex, the cognitive control center, were more active than those of the men. The relatively new science of emotion is beginning to pinpoint precisely the neurochemical differences between the ways women and men tend to approach and deal with emotion, and it is important neither to let PC feminist ideology or neo-Victorian "Ooh, ick" squeamishness blind us to the findings. A too-reductive men-are-from-mars-women-are-from-venus perspective serves no one.

Rather than stigmatize the characteristic emotional biologies of one gender or the other, it should be the goal of any person or organization to allow all emotion at work, in all of its gendered nuances, its full due. Understanding the truths that neuroscience is revealing will allow us greater awareness and thus control of the emotions that shape our decisions and behavior at work. Learning and paying attention to the emotions that motivate and/or hobble us and in what measure — anger, anxiety, fear, joy — can help us learn to manage and use those emotions more effectively. I'd like to think that today, with U.S. women irrevocably at work and the economy in such dire straits, that we can safely raise all kinds of questions without endangering progress. When it comes to emotions and work, we should start being more unflinchingly analytical and empirical than ever before. As science discovers, confirms, and refines new understandings of gender-based aspects of emotion, let's try not to react to them too emotionally.