IdeaEconomy.Net

Dirty Profits – The Problems with Profit Maximization

John — Sun, 13 May 2012 06:31:41 +0000

Big Ideas:

Dirty profits are extorted out of consumers at moments when they have little alternative.
While most business pay lip service quality and customer service, their actions say otherwise.
Try giving more than you promise. The marketing benefits will out way the increased costs in the long run.

For the most part, capitalism and free markets do a pretty good job of keeping corporations in check. Charge too much money, fail to innovate or offer lousy service and someone else will take away your market share. The problem is that markets are not quite that free. As the economic crisis has proven, greed, corruption, government bailouts and a whole host of barriers interfere with the free flow of most markets. Those are all huge problems in their own rights, but I want to focus on smaller problems with individual firms.

Dirty Profits

There are far too many companies that, once they have a captive consumer, will try to gouge as much as they possibly can. It is not about creating value for the consumer, maximizing profits at all costs is clearly the priority.

I have stayed in nicer hotels that charge $30 per day for internet access, exorbitant rates for long distance calls and have mini bar prices that would embarrass Wall Street fraudsters. While at the same time I have stayed in $25 per day hotels that offer free internet, free bottled water and complimentary buffet breakfasts. How much good will is a hotel building by charging $30 per day for Internet access that costs them almost nothing?

Imagine the pleasant surprise if your $120 a night hotel, were to offer a couple of dollars of free snacks or had free Internet access. Wouldn’t that be a hotel you recommend to others?

How about the “convenience charge” that companies like TicketMaster charge you for booking online. They get away with this because of their monopoly on the ticket sales, but it’s not right.

Another company that annoys me is NetFlix. I love the on-demand movies and TV programs but when you cancel your subscription, the service cuts off immediately, not when the month you paid for ends. I suspect NetFlix has that policy just because they know some customers will forget to cancel and will automatically be billed another month. Why not provide the service for the full period customers have paid for? It is not that hard.

Then there are the discount airlines that have practically built a business model on dirty profits. Sure you get a great deal on the airfare but try to check in an additional bag at the airport, when you have no other alternative, and the total costs of your trip can more than double. They also know how to get you with the $4 bottles of water on flights that don’t serve food or beverages.

The Good Corporation

Most people expect to be cheated when dealing with any larger company and therefore are always on their guard. Does it have to be that way? Wouldn’t it be nice to be treated fairly and get what you pay for? How much goodwill would be created if customers were pleasantly surprised with extra service they didn’t expect?

Action Items

Is your business model based on misrepresenting your service and ripping off customers? Shame on you. Are your profits worth more than your trust and dignity? Stop cheating and deliver value instead.
Giving more doesn’t cost much. A couple of chocolate bars, two bags of chips and a couple of soft drinks might cost a hotel $3 or $4. If you are afraid of losing profits, raise your prices by a few dollars and still offer the ‘free’ bonuses. The extra surprise will most certainly provide more marketing value than the lost sales due to the marginally higher prices. Competing on price is a race to the bottom any way.
Focus on giving more, that is how you can charge and earn more. Apple, Inc. has the most expensive products and the highest profit margins in the industry. It can get away with this because of the fantastic service at its stores, beautiful designs, and the fact that they retain complete control of all hardware and software so the products work as promised. Apple has proven that consumers are willing to pay double for something they love and trust.

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The Art of Business – Ristr8tto Cafe in Thailand

John — Mon, 30 Apr 2012 17:56:55 +0000

Big Ideas:

Most businesses do a pretty lousy job of serving customers. The Ristr8tto Cafe in Thailand is an example of company that clearly gets it.
Great businesses can’t be built on efficiency and administration alone, any longer. Success is dependent on delivering a great customer experience.
Business can be art if you really care.

Most Businesses Offer Mediocre Products with Even Worse Customer Service

I’ll be blunt. Most businesses suck. Owners only seem to care about profits. Employees often do as little as possible to keep their jobs and all stakeholders blame everyone else for the sad state of affairs. It happens in government, large corporations, chain stores and even small businesses. There are exceptions, but they are so rare that I am going to start a new series this blog to hi-light amazing businesses around the world. These are companies that care about delivering exceptional experiences above all else. Everything they do is art. Unsurprisingly, exceptional companies also seem to generate higher sales and income.

Ristr8tto – Chiang Mai, Thailand.

On my first visit to Thailand more than 15 years ago, good coffee was pretty hard to come by. Not any longer. There are decent cafes all over the country. You might guess from this post that I like good coffee.

Ristr8tto is a relatively unassuming cafe on the trendy Nimmanhaeman Street frequented more by locals than the backpacker scene. My wife and I walked by several times and noticed that it was always packed with customers, even though many neighboring cafes were quiet. One day we finally gave it a try.

Focus

Immediately upon entering, your eyes will be drawn to the large flowchart type menu explaining exactly how to order. Your first choice is hot or cold coffee. If you choose cold, you are once again directed with “Why not hot coffee?” The owner admonishes you to not ruin a great espresso drink with ice and syrup before you even order.

The next choice is what type of espresso drink you want, followed by the origin of beans. If you really want to get fancy you can also choose the type of latte art you would like to finish up with.

As a side note, I once asked a Starbucks Barista why they don’t do latte art. She said she could make butterflies and many other designs but it would take too long in this busy cafe. I was the only customer at the time.

Fortunately, Anon, the owner is never too busy for latte art. Every cappuccino and latte is finished to perfection every time without exception. You don’t take short cuts when you are an artist.

Ristr8tto doesn’t sell much else other than coffee either. There are a couple of desserts to compliment your beverage, but make no mistake, you are there to enjoy a damn good cup of coffee.

Story

The young Thai owner of Ristr8tto, spent several years in Australia where he had an opportunity to study the art of coffee, opened and sold his own cafe, won the world latte art championship in the Netherlands and returned to Thailand to open another cafe. This is clearly a person that lives for coffee. I love the fact that several pages of the menu are dedicated to telling his story.

He is perfectly happy to explain the nuances of each bean, talk about exactly what makes the perfect espresso and personally decorates your drink with virtually any latte art design you want. The owner is an artist. Coffee aficionados definitely appreciate his talent and knowledge of his craft.

Competition

There is no shortage of chain cafes in Chiang Mai, including Doi Chiang and the ubiquitous Starbucks, however, for any respectable Ristr8tto customer, it would be blasphemous to go to any other establishment. How can you not patronage a business that clearly loves their work so much? There is no competition when you operate at this level.

My wife and I went out of our way to visit this small little cafe because it was good and the owner cared. Do you care that much about the service and quality you offer the customers you serve?

Could Ristr8tto Improve?

Overall the cafe is doing a fantastic job, but I would offer a couple of suggestions to be even better. First, a second espresso machine would shorten wait times and increase throughput during busier times. Space is limited and this is a large capital expense, so perhaps this might have to wait for a new location, but it would definitely increase sales if it were possible.

The second suggestion would be to install a small oven in the back to offer fresh baked pastries. The smell of freshly baked croissants would be too hard to resist for any customer. While coffee purists, like the owner Anon, would argue that they don’t want to mask the aroma of the coffee, a good croissant and a latte are just too good of a combination to pass up. I suspect sales could be increased by 50% or more, if they have the capital for the equipment and can make better use of the back space of the cafe.

Action Items:

What experience do you offer your customers? What can be improved? I am constantly astonished at how little business owners care about their craft. Don’t be one of those people.
Go into an Apple store and closely examine every part of the customer experience. (Lots of knowledgable staff. All staff have devices to sell you right on the spot without lining up at a cash register. All products are simply displayed with ample space for you to test them out. iPads are used for sales information. The packaging is beautiful.) Everything is perfect from beginning to end.
Search out other companies that offer exemplary service and learn from them. Great companies are hard to find but they do exist.
Do you care so much about your job or your business that you treat it as art? If not, maybe it is time to change careers?
What is your art? Make that your business and do it so well that people rave about your work.
Do you know of an amazing company? Let me know in the comments below.

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Vegie Bar Melbourne – Lessons in Customer Service from Australia’s Worst Restaurant

John — Sat, 07 Apr 2012 07:26:14 +0000

Big Ideas:

Effectively dealing with complaints can be a great marketing opportunity.
Negative experiences spread much more than positive ones.
Create an effective procedure to make customers happy, it costs much less than what you have to potentially lose.

Vegie Bar, Melbourne

Note from John: This is not a restaurant review. I am providing the background information to offer some lessons in customer service. I generally don’t waste time dwelling on low quality service, I prefer to write about positive experiences. I am starting a new series called The Art of Business, where I will celebrate great businesses around the world. Until then, I think there are some good lessons to learn from my visit to Vegie Bar.

Vegie Bar looks like a great restaurant from the outside. It is a very busy place in the trendy Fitzroy district of Melbourne, Australia.

Unfortunately, the food and service didn’t match our expectations. The first warning sign should have been the inability of our server to recommend anything from the menu. When going to a new restaurant, I generally ask the staff to recommend something that is a “must try” item. Our server, said she didn’t know but could recommend something “popular.” Two dishes she suggested were the lentil burger and the grilled mushroom with quinoa. I asked her if these are “amazing dishes with great flavour.” She again said she didn’t know but said they were popular. Not exactly an inspiring introduction to the restaurant.

I thought the idea of beet root on a lentil burger was good, unfortunately the curry sauce drowned out the flavour of everything. I wish I could have tasted the burger, because it’s probably good on it’s own. The worst part was the bun which was definitely stale. It was inedible and certainly was more than a couple of days old.

My wife’s dish was okay, but again the key ingredient of the dish, grilled mushrooms, was drowned out by the pickled olives in the sauce. The food seems to be a big mishmash of trendy ingredients without much thought to how they combine.

I would have ignored the whole experience, but on the way out of the restaurant, our waitress asked us how our meal was. I told her it wasn’t so good, so she suggested we tell the manager because he would help us.

As I was paying the bill, the manager (at least I think he was the manager) didn’t ask, but I mentioned that the food was disappointing.

He inquired why, and I told him that the old bread of the lentil burger crumbled in my hand. His response was, “Yeah, that is a difficult burger to eat.” I clarified that the bread was stale. His response was that I should have mentioned it earlier, he could have done something if I complained in time.

I then told him that none of the servers, bothered to check how our food was. His excuse was that it was a really busy restaurant. I said that I can see how busy it is, while gesturing to show that the restaurant was 80% empty because it was late in the afternoon. The manager, didn’t have a response for that.

He then suggested that the next time we come to the restaurant, we should complain about the food earlier.

To clarify, I had a bad experience that he was not willing to do anything about, and he was asking me to come back again so that I could get another opportunity to complain.

I assured him there wouldn’t be a next time and thanked him for being so helpful.

Again, if the waitress hadn’t asked us to complain to the manager, I wouldn’t have. I would have left and completely ignored the experience. However, after talking to the manager I was incensed. He made me feel stupid and cheated.

What could the restaurant have done better?

Food costs in a restaurant are typically 30% of sales. If Vegie Bar had comped my $10 lentil burger, it would have only been a $3 cost. Alternatively, they could have offered us a free dessert or coffee at an even lower food cost. Basically, for a dollar or two they could have made a dissatisfied customer into a loyal fan. We would have probably returned the next night as well if the manager made any gesture to rectify the situation.

How do you deal with complaints?

Is the customer always wrong in your view? Do you care what customers think?

People with bad experiences are much more likely to share them that those with positive ones. Finding a way to satisfy unhappy customers is generally not that difficult and rarely costs as much as you can potentially lose. Consider how much money the United Breaks Guitars video has cost United Airlines. The video now has almost 12 million views.

The best defense against bad reviews is a good offense; don’t give mediocre service in the first place. However, there are people that will always complain regardless of what you do. Often, all you need to do is sympathize and acknowledge the problem.

If the manager of Vegie Bar had said, “I’m sorry you had a bad experience, can I get you another entree?”, I probably would have declined because we were finished eating and on the way out of the restaurant anyway. However, that gesture would have meant a lot and would have definitely encouraged me to come back again. Giving us a couple of free coffees, would have definitely cost the restaurant less than a dollar and would probably have encouraged me to leave some positive reviews. Instead, I am writing this post.

The problem with United, is much deeper. I have personally witnessed the disrespect and utter callousness of United Airline’s employees several times. That ingrained attitude comes from a culture of mistrust and abuse right from the top levels of the organization. However, I am sure that a couple of free air tickets to anywhere United flies would have done a lot to appease musician Dave Carroll, at very little cost to the company. Unfortunately, the airline would never trust it’s employees that much to allow them to solve customer problems of that nature.

Does your business have a service or efficiency focus?

Every business talks about how important quality and service are, yet most only really care about the bottom line. The manager at Vegie Bar likely has food and labour cost percentages that dominate his thinking. Sadly, the focus of most businesses is on how to cut back staffing or costs a little more, hoping the customer won’t notice. That is the type of thinking that created offshore call centers, complicated voice mail answering systems and large box stores where you can never seem to find any staff.

What if businesses reversed that idea? Instead saving 10 cents on a business class passenger by cutting an olive from martinis, how about giving a little more to every customer. For example, the cost to give every passenger an ice cream on a discount airline, might be $1. In the aggregate this will be a huge expense, hundreds of dollars on each flight and potentially hundreds of thousands of dollars every year. However, that is an accountant’s mindset. Accountants don’t grow businesses, they manage businesses. You can’t shrink your way to greatness.

What would the marketing benefit and overall customer good will that could be created from just a $1 per person ice cream? I suspect the costs to acquire a new customer for a discount airline would be in the tens of dollars. Instead of having a large marketing budget to acquire new customers, why not spend a little more to make your current customers happy. That word of mouth might just prove to be invaluable. Unexpected positive surprises leave a lasting impression. Give your customers a little more than they expected and you will have all the business you can handle.

It doesn’t have to cost much either.

Why not make a sales call a month after the initial purchase to see if everything is okay?
How about making a sales call just before the warranty expires to see if the product needs to be repaired?
Mail a hand written thank you note after the sale of a major product. Few companies give that personal service anymore.
For bloggers, why not email every one who comments on a post to personally thank them?
Bulk purchases can make a valuable gift very inexpensive. The value to the customer can be much greater than the cost to the company.

Action Items:

Create an effective policy to deal with customer complaints. It doesn’t have to be complex, just make sure that everyone in your organization knows that quality customer service is more than bullshit marketing speak.
Set a reasonable budget and let front line employees solve customer problems immediately, without management intervention. In a restaurant, it might be $20. Any server has the ability to give out $20 of product to a dissatisfied customer, without retribution. Management can ask about why there was a complaint and discuss ways to avoid charges like that in the future, but why not give your staff the power to make customers happy? Empowered staff are happier staff.
Instead of trying to minimize costs at any cost, spend some time thinking about the effects of your efficiency efforts on staff morale and customer satisfaction. Allowing some slack in your budget by not look good on today’s income statement, but you will see the results over the longer run.
Remember that the product is the marketing. Create amazing products with a great user experience and you don’t need to sell so hard. Apple doesn’t just sell electronics. It has created fantastic experiences from it’s amazing stores with helpful staff, to the beautiful packaging, to the design and ease of use of all it’s products. There is no other electronics company that comes close.

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The Creativity Lie

John — Mon, 02 Apr 2012 09:09:58 +0000

Big Ideas:

Everyone wants to be more creative and innovative, however, they are too afraid of doing something different because it might lead to failure.
Try the Question Framework Exercise to help you discover new business models.

The Creativity Lie

Everyone wants to be innovative, creative and forward thinking. Of course, we all do. It is obvious that the the opposite is boring, safe and easier. Why would we choose a path that we know is inferior? The reason is that we don’t really want to change. Change is hard. It is much easier to lie. We tell everyone how creative and special we are. Perhaps if we say it often enough we might actually believe it.

That is a problem with all this positive psychology and motivational garbage we consume. There is this prevailing belief that if tell ourselves how smart, happy, rich and creative we are, then it will come true. That is like never practicing a musical instrument, yet calling yourself a talented musician while expecting to be a rock star one day.

In my experiences, people who are searching for innovative ideas to help propel their art or business, almost always reject new ideas as being too crazy. I hear things like, “our industry is different,” “our clients are not like that,” “that won’t work” or “that is not the way others do it.”If you say anything to that effect, you don’t really want to be creative. You want to play it safe, avoid risks and any chance of failure.

When you are looking to do something unique and special, it is hypocritical to outright reject an idea because it is extreme or different from your way of thinking.

Not all ideas are good, but how will you know which are good, unless you try something new and substantially different from what you have ever done before?

How to Become More Creative

When you hear a radical idea, your first reaction should never be to discard it. The more radical the better, because it helps you think in a different way. Extremes help you question your assumptions and come up with solutions that you would have never thought of with the old constraints.

When you don’t understand an idea, you should work extra hard to understand the thought process and assumptions that lead up to that insight. Surrounding yourself with people that agree with you will only lead to more of the same course of action. You want the heretics on your side, so don’t be afraid to listen to them.

Here are some crazy ideas.

Sell computers more expensively than everyone else and form a virtual monopoly by restricting resellers and not licensing production to other companies. That is what Apple Computers did, going against every other company in the industry.
Get airfare costs down to less than 20% of competitors. Discount airlines from EasyJet to JetStar have done this all around the world.
Remember back when everyone was saying that advertising doesn’t work online. Google’s billions of dollars of revenues prove the pundits wrong.
Free telephone calls. Skype anyone.
Unlimited storage space. My first computer had 16 kilobytes of RAM and I had to save files to a cassette tape. You can get terabyte harddrives for a $100 now. That is a lot of bytes!
Fred Smith got a C in business school for his FedEx idea. Perhaps his professor should have invested instead?

Questions to come up with creative ideas.

What if you gave your products away for free?
What other ways could you make money? For example, bands give free songs online to build an audience for their concerts.

What if you doubled the price?
People place higher value on more expensive things. Selling cheaply might actually hurt sales and profits. What would you have to change about the product to double the price? Often marginal expenditures on the service and delivery of the product can command premium prices.

Can you change the format?
Most people won’t pay anything to see a live band in a grungy bar play cover songs. However, there are thousands in every major city in the world that will happily pay $50 or more to see musicals, live theater or comedies. If I had a band, I would focus on creating a visual show. People want to ‘see’ bands, not ‘hear’ them.

Could you turn your product into a service?
IBM famously realized that the profits were in IT services not in computers, so it got rid of its hardware business. Most car companies make more money from financing then they do from automobiles.

What if you made your product much smaller?
You can get guitar effects processors and mixing console apps on your iPhone. Small creates new industries.

What is the best way to sell your product?
Selling through an established distribution channel is much easier than trying to create your own. It is hard to sell software from a website, but most people have little hesitation buying through the Apple Apps Store.

What are people searching for?
Solving problems your customers already have is much easier than mass advertising to a general audience. Become an expert on Google keyword research.

Action Items

Ask yourself if you really want to be creative or you just want to keep doing what you have always done. Don’t waste your time thinking about creative solutions if you and your company are unwilling to implement them. It is okay to be risk averse and play it safe. It is likely that the market will force you to react sooner or later, so just keep some financial reserves for when that day comes.
The next time someone comes up with a completely crazy and unrealistic idea, give it some thought. What conditions would have to happen for that crazy idea to work? Can you foster those conditions? Is the idea so crazy that it actually might work. How can you do a minimally viable test project to evaluate the idea in the marketplace?
Do you seek advice from people that disagree with you? You can’t get good ideas from those that feel they must always support you.
Try the Question Framework Exercise to question what your business is about. If you don’t invest time in re-inventing your business model, you most certainly won’t.

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Every Business is Becoming a Coffee Shop

John — Mon, 05 Mar 2012 05:33:04 +0000

Big Ideas:

Connecting and collaborating are essential to most businesses. The best physical location for collaboration may very well be coffee shops.
Universities, bookstores, retail stores and offices will become more like coffee shops in the future.

Digital Nomad Unconference - Thailand

In the idea economy, our social connections (social capital), and effectiveness in collaboration are critical success factors. Historically, there has been no better location for the creative classes to work, connect and share ideas than coffee shops.

Starting with intellectuals gathering in European cafes of the 18th century, modern day cafes have become extended offices for sales people, freelancers, artists, and virtually anyone looking for a dynamic, socially rich place to work, talk and relax. Forward thinking businesses and co-working spaces are expanding on the water cooler gathering place to create full fledged cafes to foster serendipitous encounters, networking and collaboration. This is only the beginning.

Futurist Stephen Gordon, predicts that In the Future, Everything will be a Coffee Shop. (via GigaOM) Here is a quick overview of Gordon’s observations:

Universities Will Become Coffee Shops

With rising tuition costs and the birth of free online programs like MITx, it is likely that students will seek to reclaim some of the university experience in cafe like settings to socialize, study and network.

Book Stores Will Shrink to Coffee Shops

“Between ebooks and print-on-demand, Barnes and Nobel sized stores shrink down to just their coffee shops – or maybe Starbucks takes over their business. Either way, customers keep the experience of reading with coffee and those big comfortable chairs.”

The Coffee Shop Will Displace Most Retail Shops

“Which is more enjoyable: Starbucks or Walmart? For the sane: Starbucks. So if you can accomplish your Walmart shopping at Starbucks, why do it any other way?”

Offices Become Coffee Shops… Again

The need for offices grew as the equipment for mental work was developed starting in the late 19th centuries. That need appears to have peaked about 1980. It was a rare person who could afford the computers, printers, fax machines, and mailing/shipping equipment of that time.

Now a single person with $500 can duplicate most of those functions with a single laptop computer. So the remaining function of the office is to be that place that clients know to find you… and that kids and the other distractions of home can’t.

Action Items

Here are some questions to think about?

Can your business become more like a coffee shop?
What would your company look like, if it were more of a meeting place for like minded people?
Can you benefit from working in a co-working space to share resources, network, and collaborate?
Do you need university with free online tutorials and academic programs?
Do you use coffee shops as creative places to meet and discuss ideas? If not, why not?

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The End of the Middle Class

John — Thu, 23 Feb 2012 05:52:52 +0000

Big Ideas:

Technology is leading to more automation and outsourcing of work, increasing rates of unemployment are the inevitable result.
The middle class is bearing the brunt of these job losses.
Developed societies must change their fundamental social pact to cope with massively higher rates of structural unemployment.

We are automating, outsourcing, crowdsourcing and off-shoring more work than ever. It is not going to stop. After World War II, middle class families enjoyed fantastic improvements in their living standards. Great jobs in manufacturing, service and later technology industries brought comfortable incomes and low cost products to purchase. Life was good. Those times are over.

Here is an excerpt of what Thomas Friedman wrote in the New York Times:

Why now? It starts with the fact that globalization and the information technology revolution have gone to a whole new level. Thanks to cloud computing, robotics, 3G wireless connectivity, Skype, Facebook, Google, LinkedIn, Twitter, the iPad, and cheap Internet-enabled smartphones, the world has gone from connected to hyper-connected.

This is the single most important trend in the world today. And it is a critical reason why, to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before. All this technology and globalization are eliminating more and more “routine” work — the sort of work that once sustained a lot of middle-class lifestyles.

The merger of globalization and I.T. is driving huge productivity gains, especially in recessionary times, where employers are finding it easier, cheaper and more necessary than ever to replace labor with machines, computers, robots and talented foreign workers. It used to be that only cheap foreign manual labor was easily available; now cheap foreign genius is easily available. This explains why corporations are getting richer and middle-skilled workers poorer. Good jobs do exist, but they require more education or technical skills. Unemployment today still remains relatively low for people with college degrees. But to get one of those degrees and to leverage it for a good job requires everyone to raise their game. It’s hard.

Jeremy Rifkin predicted the End of Work back in 1995 with his book of the same name. The Wikipedia page offers this summary:

Worldwide unemployment would increase as information technology eliminates tens of millions of jobs in the manufacturing, agricultural and service sectors. He traced the devastating impact of automation on blue-collar, retail and wholesale employees. While a small elite of corporate managers and knowledge workers reap the benefits of the high-tech world economy, the American middle class continues to shrink and the workplace becomes ever more stressful.

Economies are thought to be in devastating depressions when unemployment approaches ten percent, what will happen once we reach structural unemployment of 15 or even 25%? Rifkin showed that it happened to farm workers with the productivity improvements of the agricultural revolution. It happened in Detroit, with the decimation of the automobile industry. Where are jobs going to come from in the future?

Economists and politicians will naturally focus on job growth. After all, that is the problem, unemployment getting higher so we must need more jobs. What if the Friedmans and Rifkins are right and high unemployment is here to stay? Perhaps it is time to start asking ourselves different questions.

Some of those questions might be:

Is unimpeded economic growth good for civilization?
Why do we need to keep growing GDP at 2 or 3% per year to be successful. We are polluting our air, contaminating our water supply, killing wildlife, and countless other problems. Maybe growth at all costs, is no longer the ultimate goal?

Why do we need to work 40 plus hours a week?
With less consumption, individuals can start cutting back on work hours. Perhaps we all shift to a 25 or 30 hour work week? France has led the way with a 35 hour work week.

How do we limit social unrest when potential a quarter of the population will be unemployed?
Are access to adequate food, clothing, shelter, education and medical care only for the privileged classes, or are these basic human rights that government must provide to all. Northern European countries have been doing a pretty decent job of taking care of all of their citizens, maybe it is time the US followed suit.

How do we pay for social services?
Jeremy Rifkin says that non-profits and volunteers will start filling the gap where government fails. Perhaps the time is coming for a mass renaissance of civic and community engagement?

What do we do with the freed up time from lower hour work weeks and higher employment?
We could watch TV, we can commit crimes, or we can get involved in our communities and government. What does it mean to be a citizen anyway? Is it about working 40 hours a week and spending as much money as we can to keep the economy growing? Could it be possible that a good citizen volunteers in their community and connects with their neighbors?

It is not all bad news

The smartest and highest skilled in society will always be in demand. We will need more doctors, computer programmers, engineers and countless other professionals for whom jobs are not even invented yet. However, the real winners will be the rising middle class of the developing world.

Those lost automobile jobs in the U.S. and Japan are being done by $500 per month Indians who are ecstatic about their rise in living standards. While factories like Apple’s FoxConn in China are suffering from worker suicides, there is no denying that conditions in the developing world are improving. $2 per hour might sound like slave wages to a westerner, but for many in the third world, it means food, shelter and an opportunity for a better life.

Action Items

Financial rewards will flow to the highest skilled and most connected. What are you doing to increase your value in the Idea Economy of the future?
Could you survive on a 20 hour work week at your current salary? What would you have to give up?
Why not start making those consumption sacrifices now and save your salary surplus for the future? Not only will you have much more savings, but you will also have the time to enjoy it.
Work can be more than making a salary. Start volunteering in your community and giving back. You might find that giving provides a greater reward than consuming.

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Forget Collaboration – Individuals are More Creative than Groups

John — Mon, 06 Feb 2012 16:07:10 +0000

Big Ideas:

Individuals perform better than groups in quantity and quality of ideas.
The larger the group, the more they are susceptible to group think.

Shared work environments and collaboration are all the rage, but are they helping or harming business creativity?

I have written recently about why collaboration fails, but it turns out we may actually be more creative individually than in groups. Here are a couple of quotes from the fascinating New York Times article, The Rise of the New Group Think.

Research strongly suggests that people are more creative when they enjoy privacy and freedom from interruption. And the most spectacularly creative people in many fields are often introverted, according to studies by the psychologists Mihaly Csikszentmihalyi and Gregory Feist. They’re extroverted enough to exchange and advance ideas, but see themselves as independent and individualistic.

… decades of research show that individuals almost always perform better than groups in both quality and quantity, and group performance gets worse as group size increases. The “evidence from science suggests that business people must be insane to use brainstorming groups,” wrote the organizational psychologist Adrian Furnham. “If you have talented and motivated people, they should be encouraged to work alone when creativity or efficiency is the highest priority.”

Action Items

Give yourself and your employees quiet time alone with no interruptions to get complex work done or come up with new ideas.
Open concept offices can be great for collaboration, but also have quiet work spaces where staff can get away and think.
Forget your next group brainstorming session. Have people come up with ideas on their own and then present them all anonymously to the group later.

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33 Social Entrepreneurs Who Make This World A Better Place

John — Sat, 14 Jan 2012 03:35:13 +0000

Big Ideas:

Social Entrepreneurs focus on doing good in the world, not only profits.
IdeaMensch summarizes the work of 33 social entrepreneurs making a difference.

IdeaMensch has a great post providing examples of 33 social entrepreneurs. These social entrepreneurs are proof that talented individuals can indeed make a substantial difference to the world.

Some of my favourite examples are:

Emile Cureau and Rachel Cope are developing a charitable web app called LazyAngel that allows Internet users to fight child malnutrition for free.

Print a Forest, aims to plant 75 trees for every tree used for printing on paper.

Matt Flannery is the co-founder of Kiva, the original global microfinance platform. Kiva benefits low-income entrepreneurs by offering microloans from people like you and me.

Kendra Stitt Robins is the founder and executive director of Project Night Night, a nonprofit organization dedicated to providing care packages for homeless and transient children living in shelters across the country.

Take a moment now to read about all the social entrepreneurs on IdeaMensch.

Action Items

Get some inspiration and read about the 33 social entrepreneurs.
Think about how you can shift your business or job to doing a little more good in the world?
Profits are not enough for a meaningful life, plan on how you are going to make a difference.

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Why Collaboration Often Fails and What to Do About It.

John — Sun, 08 Jan 2012 21:32:23 +0000

Big Ideas:

Collaboration and creativity are big buzz words now but most businesses don’t really know how to collaborate or be creative.
Collaborative efforts often produce mediocre results because ego gets in the way.
A great team can produce amazing results, but finding those team members is not an easy task.

There is no question that the Internet has changed the way we work and connect with others. From a few people working on a shared Google document to thousands contributing to projects like Wikipedia or Linux, we are collaborating in unprecedented ways. When it works, collaboration is synergistic and amazing. The problem is that too often, real, meaningful collaboration is thwarted by an ugly thing called people.

As much as we talk about creativity and collaboration, most people don’t really know what those things mean. We are all human, so egos get in the way. We want to own, control and dominate. It happens with children playing together, in office politics and in volunteer or non-profit settings. Too often, it is more important to be right than to do the right thing. That is where collaboration fails.

Intuitively, we understand the benefits of co-working, crowdsourcing, crowdfunding or a great business team on our collaborative efforts, but most of us also have many negative experiences where team efforts get mired in bureaucracy and territorial silo building. It is pretty hard to create something amazing when team members are jockeying for control and recognition.

At least from my experiences, I believe that most businesses don’t understand collaboration. How many of your colleagues or customers are still emailing Word and Excel documents as attachments? If you are over 30 years old, chances are your business processes are still heavily influenced from the Microsoft dominated days of installed software more than two decades ago. The world is a different place now. There are plenty of examples of dynamic companies prospering even when the partners are global dispersed, but they are still the exception.

For real collaboration to work, many elements need to be in place:

Trust. Great relationships take time to build. With the exception of old schoolmates or childhood friends, most of us don’t have those deep social connections anymore.
Talent. Each person has to bring some unique skill to the team. Partnerships quickly fall apart when there is even the appearance of a less than equal contribution.
Personality. There are some people you just can’t work with regardless of their skills. Finding people that you like AND are good is not easy.
Shared vision. All members of the team have to be pulling in the same direction for the collaboration to be successful.
Technological savvy. Everyone needs to buy into the tools to work together. There are talented geniuses who can seclude themselves from the rest of the world, but you need to embrace technology if you expect to really collaborate with a good team, regardless of where they are located.
Communicate. Information hoarding is a remnant of the industrial age. Remove all bottlenecks to effective and direct communication. Social capital is more valuable than financial capital.

Collaboration is Still King

Amazing things can happen if you build the right team. The problem is that you have to sort through many less than optimal candidates on your way. It is all a numbers game, work with as many people as you can to find the right talent. Results will be mediocre most of the time, but every once in a while you will find that diamond in the rough. Do everything you can to work with the diamonds and throw the coal back in the ground for someone else to deal with.

Action Items

If you haven’t already, move your business to the cloud. Everything from shared documents, online workspaces, project management and customer relationship management software can be done much better online where everyone has access to the same information in real time.
Deliberately start and join new projects with new team members. The only way to find great people to work with is to work with a lot of people.
Get really good at something. Talented people are not going to want to work with you if you don’t bring anything to the table.
Personality counts. You need to play nice with others if you want them to stick around.
Great businesses are built on great processes. Get organized and anal about how you do business, communicate and serve your employees and customers. Creative breakthroughs do not come from some unorganized eureaka moment. Real innovation is systematic and deliberate, and almost always the result of hard work, rich collaborative efforts and insights from outside sources.

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Introductory Guide to Social Entrepreneurship

John — Wed, 04 Jan 2012 21:10:01 +0000

Big Ideas:

Social Entrepreneurship is about focusing on making the world a better place, not just profit maximization.
Entrepreneurs have a choice of socially good versus socially destructive business activity. We are either part of the problem or part of the solution.

There are many ways to make a living. You could sell gourmet pet food to rich yuppies. You can market $97 get rich quick schemes on the Internet. You can promote the latest abdominal exercise machine on TV promising 6-pack abs with only 5 minutes a day. Maybe you could start a cup cake business selling $5 sugar highs. There are far too many businesses that are a net drain on society, but it doesn’t have to be that way.

It is possible to do good AND earn a profit. Unfortunately, economics has put the goal of profit maximization above everything else. Imagine a world where businesses maximized social good instead. Profits are important, if you lose money for too long you will go out of business, but no one needs private jets, luxury yachts and $200,000 cars – levels of profits, particularly when so much of the world lacks basic access to food, health care and education.

It doesn’t necessarily follow that you have to forsake profits for social good either. What if you could get rich doing good in the world? Money can pervert incentives to create real societal value, but there are businesses prospering with a heavy social good focus. That is what social entrepreneurship is about, using entrepreneurial and business skills towards making the world a better place.

Social Entrepreneurship Links

Social Entrepreneurship on Wikipedia.

A social entrepreneur recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change (a social venture). While a business entrepreneur typically measures performance in profit and return, a social entrepreneur focuses on creating social capital. Thus, the main aim of social entrepreneurship is to further social and environmental goals.

Grameen Bank
Noble Peace Prize winner, Muhammad Yunus’s micro loan bank funding rural poor. One of the most famous examples of social entrepreneurship.

Social entrepreneurship on PBS.org.
Examples of social entrepreneurs, lesson plans for teachers, and many great links for further research.

Center for the Advancement of Social Entrepreneurship at The Duke Fuqua School of Business.
Social entrepreneurship case studies, academic research and other resources.

Skoll Foundation
Leading social entrepreneurship foundation with over $250 million in funding for social entrepreneurs. Many examples of social entrepreneurs.

Ashoka.org
One of the largest and most famous organizations that invests in social entrepreneurs around the world.

Acumen Fund
Invests in entrepreneurial approaches to solving global poverty.

Umair Haque
Harvard Business School professor and leading thinker on the need for socially productive business and economic activity.

SocialEdge.org (A Skoll Foundation program.)
Great articles on social entrepreneurship and related topics.

Canadian Social Entrepreneurship Foundation
Provides funding, resources, and mentorship for social entrepreneurs under 40 years old in Canada.

Social Entrepreneurship on Alltop.com
Links to the latest posts from many leading social entrepreneurship blogs and websites.

GreenMarketing.tv
Articles, interviews with social entrepreneurs, marketing tutorials and more. Very comprehensive site.

School for Social Entrepreneurs
UK based training programs for social entrepreneurs.

Public Radio International Social Entrepreneurship Podcast

Social Innovation Conversations
Large selection of podcasts on social entrepreneurship.

Action Items

Ask yourself, is your business making the world a better place or are you selling toxic products and services that are a net drain to society and the environment?
If you are not happy with that first answer, what can you do to change it?
Read about social entrepreneurs in the links above to see what is possible if you put your mind to it. You might just make the world a little better place.

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