By Mike DuBose and Blake DuBose
Nearly every organizational failure is due, in at least some part, to human error. Natural disasters, market crashes, and other circumstances beyond human control are often contributing factors, but people are responsible for the decisions that shape every company. Whether these decisions are foolish or wise depends on the leader who is making them, and intelligence is certainly a factor—but not the only factor. Brilliant leaders can propel their organizations to the heights of success…but, when lacking other important traits, can also drive them into the ground.
Recent history has seen plenty of companies fail, especially during or shortly after the period known as the “Great Recession” (2007-2009, in the United States). Some examples include investment firms Bear Stearns and Lehman Brothers, entertainment company Blockbuster, and electronics giant Circuit City. Even the well-respected Wells Fargo bank, which once held nearly $2 trillion in assets, has recently faltered!
It’s safe to say that the empty suites of most failed businesses once held a few—if not many—very smart executives. But while intelligence is certainly a helpful trait for businesspeople to have, it’s not the end-all, be-all of business success. Truly outstanding leadership requires a number of skills and traits, including (but not limited to) strong doses of humility, vision, execution, and compassion.
Because so many high-stakes business failures have been so public and devastating, many experts have studied their leaders, qualities, and conditions in an attempt to define why they failed and help others avoid the same fate. Sydney Finkelstein of the Center for Leadership at Dartmouth College’s Tuck School of business wrote a book called Why Smart Executives Fail based onmore than 50 major business failures. He and his research team interviewed hundreds of insiders at companies across many industries, searching for common trends amongst the failed organizations. Jim Collins, author of the bestseller Good to Great, dedicated an entire book, How the Mighty Fall, to the stages of decline undergone by many once-successful organizations. Countless others have also conducted studies and written articles on the topic of business failure as well.
Based on these writings and others dealing with business success, the flip side of the coin, (particularly, from works by business experts Peter Drucker, Jack Welch, Sydney Finkelstein, and Jim Collins), as well as experience within our own family of companies, we believe that the following are the most common missteps that smart leaders make:
Neglecting to create—and share—a comprehensive strategic plan. No one reaches greatness—or stays there—by accident. Success is usually the result of extensive research, deliberation, learning from mistakes, and effort, channeled into a well-thought-out and detailed plan. Business success is no exception. As Drucker noted in his bestseller Management, strategic planning “prepares today’s business for the future” and “requires that the work to be done to produce the desired future be clearly defined and clearly assigned.” Businesses without a plan will find themselves lost, struggling to keep afloat, while those with a great strategic plan carried out by passionate staff will glide confidently into the future!
Yet many leaders invest too little time and effort into their strategic planning process—or none at all! Some get so bogged down in the daily details that they mistakenly fail to set aside time to plan for the future. Others create inadequate plans driven solely by greed and profit, which falter when they are handed down to staff to implement. They have not solicited input, nor inspired a connection with the plan by aspiring to a higher purpose with it, and so employees just “go through the motions!”
Despite the minimal effort that some leaders apply to it, envisioning and sharing the strategic plan is one of the major duties of an organization’s leadership. A strategic plan will only work if the people within the organization truly believe in it, and it’s up to those at the helm to lead the charge, from its inception to implementation. Leaders shouldn’t create the plan unilaterally, however. They must solicit input, explain the plan and its steps to staff at all levels of the organization, and then define how employees fit into the vision.
One of the major benefits of a solid strategic plan is that it clearly lays out expectations for every staff member. If employees don’t know what they’re working toward, how can they know if they’re doing a good job? When leaders fail to explain their expectations, staff will try to find their own way, which decreases efficiency and increases the likelihood of mistakes and conflict. Giving employees guidance and coaching, however, allows them to excel at their jobs and reduces the need for micromanagement—freeing up leaders to focus on the “big picture” years down the road. It also allows the business to continue on the right track in the future as leaders die, retire, or leave.
As Larry Bossidy and Ram Charan noted in their bestseller Execution, “The leader of a business has to own the strategy development. He doesn’t have a strategic planner do all the work, then come in and introduce himself to the subject the day it’s being presented. He takes responsibility for the construction of the plan and gets some help, and then—once everyone agrees with the strategy—takes responsibility for developing action plans.” When people throughout the organization are engaged and passionate about the plan, they will move toward realizing the goals and ideals set out in it!
An organization’s strategic plan should tell everyone within it—from the newest entry-level employees to the top executives—where the business is going and how it will get there, which ensures that everyone is rowing in the same direction. Each organization’s strategic plan is unique, but every plan will serve the following important roles:
The components of a good strategic plan include:
Another important factor is execution, the ability to implement the flexible strategy successfully as a team. Although it’s not a written component of the plan itself, the ability to implement a strategic plan hinges on the company’s ability to execute—to get things done. Otherwise, the plan will simply sit on a shelf, gathering dust!
Being overly confident—or not confident enough.As part of the research for our book The Art of Building a Great Business, we spoke to a number of local and national businesspeople about strategy, teams, leadership, and other topics. One person we interviewed was the human resources director of a large Columbia, SC-based company who had worked there for over three decades. According to this experienced professional, the main problem that he witnessed over those 30 years was “big egos” exhibited by the 10 presidents he worked with over that time period! We heard similar sentiments echoed time and time again over the course of our interviews.
Other business writers and researchers have reached similar conclusions on how dangerous self-absorbed leaders can prove to a company. In Good to Great, Collins and his team found that, in more than two-thirds of the “comparison cases” they studied (as foils to great companies), there was “the presence of a gargantuan personal ego that contributed to the demise or continued mediocrity of the company.”Likewise, in a recent Business Insider article, Vivian Giang reported, “It doesn't matter how smart you are. Having too much ego isn't good for you or anyone around you.” And in their book The Wisdom of Failure, Laurence Weinzimmer and Jim McConoughey point to “self-absorption” (manifested as narcissism, hubris, and arrogance) as the biggest problem behavior that leaders can exhibit.
During the interviews of high-profile executives that Weinzimmer and McConoughey conducted as the basis for their book, “almost 70 percent of the leaders we talked with believed that self-absorption was the most damning mistake a leader can make.” According to them, there are eight signs that indicate that a leader is exhibiting this problematic personality type:
On the other side of the coin, the greatest leaders are humble and give credit and acknowledgement to their teams rather than taking it for themselves. Collins and his team identified “Level 5” leaders as a factor in propelling companies to greatness, explaining: “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great company. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious—but their ambition is first and foremost for the institution, not themselves.”
However, many of those who strive to obtain leadership roles may have vastly different objectives. Often, individuals who want to boost their own egos seek out positions of power so they can gain the recognition and attention they crave. Such leaders will put their own interests in front of those of the business, making potentially disastrous mistakes when the right paths conflict with their egos or personal goals. Typically, they will also surround themselves with people who think and work like them—or “yes” men and women who agree with everything they say—so they are not faced with anyone who questions their ideas or actions. As most good leaders know, weighing different viewpoints and having healthy debates brings a wide variety of fresh ideas to the business and is extremely beneficial—so operating under one person’s self-absorbed belief system can have severe consequences for the business, its employees, and customers!
Many smart people are complimented on their intelligence all of their lives. Having received good grades, test scores, awards, and accolades throughout their academic and business careers, they may become convinced that their ways and ideas are the best. Strong leadership, however, demands a questioning mind that examines a number of options before choosing the wisest. Even a genius can’t have the best ideas every time.
However, as Weinzimmer and McConoughey noted, “Every self-absorbed leader believes he knows it all….and because he believes he knows it all, he is not receptive to alternative points of view, which amount to nothing more than challenges and threats to his ideas and to his sense of being.” If a leader is unwilling to consider that others’ thoughts might indeed be better than his or hers, that person will lose out on a wealth of potentially game-changing concepts. They can also underestimate major problems because they simply can’t imagine that their ideas or projects might fail, resulting in lost time, productivity, and money spent fixing the issue.
Although not quite as lethal as an out-of-control ego, at the other end of the humility spectrum, too little confidence in one’s self is also a potential problem. Columnist Francisco Dao described the importance of self-confidence to successful leadership thusly in an Inc. article: “Self-confidence is the fundamental basis from which leadership grows. Trying to teach leadership without first building confidence is like building a house on a foundation of sand. It may have a nice coat of paint, but it is ultimately shaky at best.”
Leaders who lack self-confidence can be too nervous or insecure to make big decisions, leaving their companies treading water while they panic over potential paths to take. They’re not secure enough in their own judgment (or their staff’s abilities) to trust that they’ve made the right choice, which doesn’t exactly inspire confidence and passion in staff, either. Of course, it’s smart not to pursue a bunch of crazy risks, but leaders must also be willing to heed the old adage “nothing ventured, nothing gained” and take some well-researched chances as well if they truly want to maximize their company’s success.
Fostering a negative culture. A company’s culture is the DNA that defines the business. According to Terrence Deal and Alan Kennedy, creators of one of the first organizational culture models, culture consists of key beliefs, concepts, and values shared amongst an organization’s employees. It outlines what the people within value and promote and defines the way that employees and leaders behave toward one another, their customers, and their vendors.
Too often, culture is an overlooked factor in business success (or failure). Although it’s not as easy to define as hard facts like profits and losses, culture has a pervasive importance throughout the organization. As John Miller wrote in Outstanding! 47 Ways to Make Your Organization Exceptional, “The cultural tone has an impact on how problems are solved, the way people speak to one another, the levels of innovation and creativity, the trust between employees and management, and the risks individuals are willing to take.”
In most organizations, culture isn’t explicitly stated or explained, but it is inherently understood by staff as they interact with other employees and witness others’ interactions in the workplace. Edgar H. Schein defines an organization’s culture as “a pattern of shared basic assumptions that the group learned as it solved its problems.” Whether this pattern reinforces positivity or negativity depends on the tone that leaders have set—how they treat mistakes and failure, what kind of behaviors they allow, and how they treat others during their dealings with them.
Unfortunately, even smart leaders can foster a negative culture. Mental intelligence is not the same thing as emotional intelligence; even geniuses can be clueless when it comes to treating others with civility and respect. Weinzimmer and McConoughey describe how some leaders “bully” their employees, with their behavior “leading to employee absenteeism, turnover, and low morale.” The bullying, they note, can be either overt (yelling, berating, and insulting others) or covert (“projecting blame, increasing workload, guilt-tripping, excessively monitoring an employee’s time, using sarcasm, and socially isolating employees”). Such negativity radiates out from the leader, poisoning the entire organization.
When an organization’s culture is negative, staff members are often too scared or wary to communicate with each other, making even the smallest interactions difficult. Understandably, this has a negative impact on productivity, not to mention bigger, more far-reaching objectives like working toward the mission laid out in the strategic plan. Negative cultures also take a toll on customer relationships, as unhappy employees are more likely to be rude to customers (or at least apathetic about meeting their needs). After all, what’s the point of employees “working hard and smart” if their efforts aren’t appreciated and valued, and they hate coming to work each day?
One important thing to note is that conflict isn’t always bad, nor do occasional conflicts mean that an organization has an unhealthy culture. As long as disagreements are resolved respectfully and in a professional manner that meshes with the company’s best interests, they can actually be valuable learning experiences (and it’s very important to resolve conflicts, rather than let them fester and impede progress). Leaders can’t always avoid conflict; in fact, they will sometimes have to make unpopular decisions for the good of the organization. AsWeinzimmer and McConougheyexplained, “By doing what is necessary, you will sometimes make some people angry. That’s okay. It’s part of the job. If you are in a leadership role and you try to be liked by everyone all of the time, you will inevitably create drama and undercut your own authority and effectiveness.” The key is dealing with conflicts and disagreements head on, holding everyone (even top performers) to the same standards, and making it clear that such respect is required when disagreements occur between any people and within any part of the organization.
When writing their book First, Break All the Rules,Marcus Buckingham and Curt Coffman conducted in-depth studies of 25,000 small and large businesses over long periods of time and discovered that, in order to attract and keep happy, talented staff, twelve questions must be addressed satisfactorily (in the context of the employees’ relationship with their work environment):
Staff members who can mostly answer “yes” to these questions work within a positive culture. They tend to be happy with their jobs and excited to come to work most days, which makes them more likely to go out of their way to provide outstanding service. In addition to the listed factors, we suggest incorporating fun into the workday whenever possible. For example, at the DuBose Family of Companies, we fund an “Employee Liaison Committee” that organizes events for employees every four to six weeks. Every “Surprise Cupcake Day” or employee happy hour reminds our staff that we care about their happiness and, in turn, inspires them to work harder to pass that joy along to our customers.
The type of culture an organization has must be defined by its leadership. However, many intelligent executives see culture as one of their bottom priorities behind “harder” factors like sales numbers, profits, and market strategies. They don’t give this important issue the attention it deserves, and it shows in their listless, passionless workforces.
Failing to learn from mistakes, both outside and within the company. People make hundreds of decisions each day, and not all of them are rational or logical. Leaders are often left to clean up the mess after their choices (or another person’s) have unexpected negative consequences for a business—but fortunately, business errors do not have to spell the end of a leader’s career.
To a wise leader, mistakes and failures are gifts, even if going through them is painful. When openly examined and discussed, they allow members of the organization to learn priceless lessons and prevent the problems from reoccurring. As Tom Rieger explained in his book The Fear Barrier, “There is learning in failure. If an idea fails, that failure can be used to help others come up with a better way, trigger a training opportunity, or otherwise identify what is or isn’t effective.”
In fact, some of the most lauded and respected leaders of all time have failed and come out of it wiser (and probably humbler) than before! Here are just a few famous leaders and innovators who stumbled before reaching immense success:
There are countless more examples from business and other sectors of people who initially failed but later became wildly successful. Clearly, a person’s ability to succeed is due in large part to his or her determination to figure out what doesn’t work, overcome these failures and mistakes, and apply the lessons learned.However, some leaders (whether for fear of being disciplined by higher-ups or to protect their fragile egos) refuse to bring their teams’ failures out into the open. Instead, they sweep them under the rug, losing valuable learning experiences.
Everyone can learn from mistakes, not just those who make them. Therefore, it’s important for leaders to create a culture where mistakes aren’t punished, but rather are brought into the open and dissected without judgment—where, as Collins put it in Good to Great, they “conduct autopsies, without blame.” If leaders ridicule or punish their staffs for making mistakes or failing, the employees will try to hide future mistakes, leading to problems further down the road. Not only are the mistakes likely to reoccur, but staff members afraid to take risks, stifling the possibility of innovation and leaving potentially great ideas unexplored!
Leaders should also note the failures of other organizations within their industry and compare them to their companies. They should ask themselves, “Are we making the same mistakes? How can we ensure we don’t follow this same path?” In his book Why Smart Executives Fail, Finkelstein says, “Avoiding other companies’ missteps can be just as important as emulating their successes.” Competitors typically have similar goals, so their mistakes can teach leaders helpful lessons—but only if they’re willing to learn. Leaders who are too proud to look to their competition’s stumbles and failures are likely to make the same missteps themselves.
Stifling communication within—and from outside—the organization. Every day, we’re all faced with countless decisions ranging from trivial to serious. Business leaders have even more decisions to make, plus the added knowledge that their choices can have repercussions traveling throughout the whole company. For some decisions, people’s livelihood may be at stake!
The more knowledge a person has, the more factors he or she can consider before making a decision. The best decisions come after careful examination of unbiased input from a variety of sources. Therefore, no matter what the industry, communication is a key component to success. Leaders need a steady flow of relevant information coming in so they are aware of all options and potential courses of action, the differing factors at play in their market, and potential results of their decisions before making them. But where do they get this information? Often, it’s right in front of them…in the form of their staffs.
Employees are the most valuable source of information that any leader can have. Those on the “front lines” are the first to experience or hear of customer problems with products and services because they deal with them in their daily work. Finkelstein notesthat it’s“extremely worthwhile to reward any employee who finds flaws or potential problems in the company’s policies and procedures” (if done in the right, productive context: so that these issues are identified and improved).
When employees share information about potential trouble spots with leaders, the leaders can take action to stop the issues before they blossom into larger problems. However, if a leader has reacted negatively to bad news in the past, team members will hesitate to bring up other problems that arise. Who wants to be berated or punished when they’re just trying to help keep a mistake from happening again? As Weinzimmer and McConoughey explained, “If a bully reigns, staff will fear speaking up about errors, thus missing out on opportunities to receive help and get a project back on track.”
One of a good leader’s foremost duties is to truly listen to their staff—and as Hans Finzel advises in The Top Ten Mistakes Leaders Make, “The more people you lead, the more you must listen.”In fact, leaders should not only accept employee feedback; they should welcome it. When their feedback is solicited and they are comfortable being honest, staff members can also bring organizational culture problems to light well before leaders might notice them. This can save the company significant time and money by heading off the cultural negativity before it can harm productivity and employee happiness.
Leaders who listen to their staff also reap the benefits of increased employee engagement. When individuals believe that their input matters, they’re willing to work harder for the company that is taking their thoughts and feedback into consideration. As Rieger explained, “Leaders and managers must be able to quickly act on an employee’s innovative suggestion to solve a problem. If they do act on the employee’s suggestion, not only can they solve the problem, but they can also increase employee engagement.” Egotistical leaders, however, don’t enjoy this perk, because they veto any ideas that don’t come from their own minds—or those of their cronies, who simply parrot their opinions back to them.
Customers are also a valuable source of information that is surprisingly underutilized. Client feedback gives companies clear examples of where their products and services succeed and where they fail. There are many opportunities to solicit feedback from customers during and after they interact with a company, such as verbally at the time of service or following the interaction via e-mail. Some companies even offer online surveys where customers can rate their experiences for a coupon or a chance at winning a prize. Jack Welch once told us that, when he was serving as CEO of General Electric, he would occasionally answer the company’s 800 number to hear directly from customers!
At our Columbia Conference Center, we mail a one-page survey with a self-addressed stamped envelope to clients after every event. Company president Mike DuBose personally opens and reads each response. From these customer comments, we learn where our teams are excelling and the areas that could do with some refining. As Dubose explained, “We use client feedback as a gift to improve our operations with a goal of giving customers what they want, when they want it, and in an outstanding way.”
Soliciting feedback requires little effort, but brings big rewards. The comments and suggestions customers share can be applied to improve an organization’s products and services, making that client and new customers happier with its offerings in the future. And just as soliciting input indicates to employees that their opinions matter, building engagement, it also sends the clear signal to customers that the company cares about their needs, fostering loyalty. It’s surprising that more companies don’t take the simple step of asking for feedback! Worse, some even erect such massive barriers to customer communication (such as endless automated phone trees or websites with hidden contact information) that customers couldn’t report a problem even if they tried!
Sometimes, leaders fail to solicit staff and customer input due to a simple lack of initiative. But many leaders—even intelligent ones—respond negatively to any perceived criticism of how they or the company perform. They are overly emotionally invested in their products and services, and they simply don’t want to hear anything suggesting they’re less than perfect! While it’s good to take pride in one’s organization, this attitude stifles open communication and creates a hostile environment where staff members are afraid to raise concerns. Growing problems experienced by staff and customers are hidden from leadership to avoid trouble, and executives are left in the dark. By the time the issues are too big to disguise, the company may be failing!
Resisting change and discouraging innovation. Change is a natural part of life—and of business.All over the world, brilliant minds are at work cooking up new concepts, and technology is rapidly advancing. Sometimes, once-successful ideas, products, and trends naturally become obsolete over time as new offerings enter the marketplace. Companies who aren’t ready to promptly pivot and reinvent themselves will end up in the graveyard like others who have failed!
It’s an extremely important component of a leader’s job to guide their organizations safely through today’s constantly changing landscape toward the future. As we were told by Jack Welch, former CEO of General Electric and co-author of the bestselling book Winning, “Leaders need to be flexible to turn on a dime when opportunities present themselves.” Leaders should regularly study their competitors and business sector, staying vigilant for any danger signs or changes that can spell trouble for their company. They must also keep track of their organizations’ strengths and weaknesses and how they play into the “big picture” (set out in their comprehensive strategic plan, as mentioned earlier).
A company may be able to “tread water” for a time doing the things that it’s always done, in the way it’s always done them, but eventually the waters of change will rise over its head. In an interconnected world that is constantly evolving, this sort of complacency can be deadly to businesses—and leaders’ careers. As Glen Llopis noted in a 2015 Forbes article, “companies that fail to grow and compete are led by operations-driven leaders that rarely change and believe that they are not vulnerable to new marketplace conditions. They lack the vision to see beyond the obvious and easily grow complacent.” Leaders that focus solely on continuing the status quo, rather than seeking out new avenues for growth, will eventually find themselves—and their companies—left behind.
Leaders must be looking out years into the future—not just at the day-to-day operations—to ensure the security of their organizations as they move forward. One of the most valuable tools in the leader’s toolbox is a solid strategic plan. When the plan, which contains both short-term objectives and long-term goals, has been developed with the input of staff and shared with everyone, the entire organization should know the steps it must take to succeed. As old products and services become outdated and new ones are developed, they must be held up to the strategic plan to ensure that they work with the principles laid out therein. Then, the entire organization must move together as one unit to incorporate the new offerings while staying true to its purpose and values.
Another way to promote future success is to foster a culture of innovation, where new ideas are rewarded and employees (and customers) are given avenues to share their thoughts and ideas. Companies that actively promote this type of environment tend to be on the “cutting edge” of their industries! A great example is 3M, a company that has been awarded the National Medal of Technology, America’s highest award recognizing innovation. According to Harvard Business Review, “One of 3M’s strengths is how it treats promising employees: give them opportunities, support them, and watch them learn and thrive.” 3M practices what is called the “15% Rule,” where employees “can spend up to 15% of their time pursuing projects of their own choice, free to look for unexpected, unscripted opportunities, for breakthrough innovations that have the potential to expand the pie.” The Post-It note, one of the brand’s iconic products, was invented during an employee’s “15%” time! By encouraging innovation so heartily, 3M’s leaders have ensured that the company has many new avenues in which it can grow and thrive, regardless of the changes that come to its industry.
It’s not enough just to discover the need for change, however. There must be a culture of execution in place that allows the business to quickly and thoroughly adapt. In Execution, Bossidy and Charan explain that, “unless you translate big thoughts into concrete steps for action, they’re pointless. Without execution, the breakthrough thinking breaks down, learning adds no value, people don’t meet their stretch goals, and the revolution stops dead in its tracks. What you get is change for the worse, because failure drains the energy from your organization. Repeated failure destroys it.” Great leaders not only recognize when their organization needs to pivot, but also have the ability to motivate and guide their staff to execute those changes!
Unfortunately, no matter how intelligent some leaders may be, when it becomes apparent that changes are needed, they may refuse to accept the new reality. Often, they’re holding on to pet projects or outdated ideas that were brilliant in the beginning, but have since lost their ingenuity. They may be afraid of what the future may hold and irrationally trying to bury their heads in the sand. Or they may have failed to foster a company culture of innovation by encouraging reasonable risks and experimentation. Finkelstein wrote, “Innovation is not a ‘thing’ that just happens. It’s a natural outgrowth of a culture of open-mindedness, and a CEO who is not a central player in that game will find the innovation challenge much more difficult.” Whatever the case, leaders who are unable or unwilling to provide the outstanding products and services customers want will soon find “Closed for Business” signs on their front doors!
The bottom line: There are many factors that contribute to business success, and even geniuses can fail as leaders if they fall into the common traps we have discussed. Likewise, you don’t have to be a wunderkind to propel your organization to success. As Finkelstein noted, “Celebrity CEOs and dream teams are no replacement for the basics of business: a logical business model, attention to real customers, development of valued capabilities, and effective competitive strategy.” With hard work, humility, and a firm grounding in reality, you’ll be well on your way to leadership success!
About the Authors: Our corporate and personal purpose is to “create opportunities to improve lives” by sharing our knowledge, research, experiences, successes, and mistakes. You can e-mail us at firstname.lastname@example.org.
Mike DuBose received his graduate degree from the University of South Carolina and is the author of The Art of Building a Great Business. He has been in business since 1981 and is the owner of Research Associates, The Evaluation Group, Columbia Conference Center, and DuBose Fitness Center. Visit his nonprofit website www.mikedubose.com for a free copy of his book and additional business, travel, and personal articles, as well as health articles written with Dr. Surb Guram, MD.
Blake DuBose graduated from Newberry College’s Schools of Business and Psychology and is president of DuBose Web Group (www.duboseweb.com).
Katie Beck serves as Director of Communications for the DuBose family of companies. She graduated from the USC School of Journalism and Honors College.
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