Naturally for me, part of this time was spent with a couple of books borrowed from the growing office library – a couple others much harder going than this one here:

The Book	What we thought
“Great by Choice Uncertainty, Chaos, and Luck–Why Some Thrive Despite Them All” by Jim Collins and Morten Hansen	More food for thought

Having previously read “Built to Last”, “Good to Great” and “How the Mighty Fall” by Jim (and others) I was not disappointed with a few more points of insight the authors have added with this latest piece of analysis.

In this book, the authors:

“… set out to find companies that started from a position of vulnerability, rose to become great companies with spectacular performance, and did so in unstable environments characterised by big forces (out of their control, fast moving, uncertain and potentially harmful)” (p2)

These factors do seem to apply to our situation (except for the “rising to become great”, which is a work in progress).  Hence I was keen to read more.

Their research helped to dispel a few myths about greatness (see p8-10), and presented some new findings.

Firstly, their research did highlight that one must choose to start the journey towards becoming great – it’s also implied, in what they write, that these other factors previously discussed factors were also necessary.

So what exactly did they find?

They authors note that companies in this “10X” category:

“10Xers reject the idea that forces outside of their control or chance events will determine their results; they accept full responsibility for their fate”

They say that they do this by bringing to life a triad of core behaviour animated by a central motivating force:

Behaviour 1 = Fanatic Discipline

The authors use the term “20 Mile March” to highlight the consistently intensive focus on discipline that the successful companies have seemed to be able to maintain for decades on end.

It seemed to me that they did NOT find that “slow and steady wins the race” – rather, it seemed that they more settled on an “it’s a marathon, not a sprint” approach.

Key to this seems to be that the 10X companies have adopted both a lower bound, and an upper bound, to their ambitions for any given period.

Thinking through this now, I see that we have performed poorly in this respect, consistently through our history.  Whilst it may be that we have been Fanatical at times, on other occasions we have lost Discipline – leading us to be more frenetic than was wise.

See p48-49 for a checklist of “Elements of a Good 20 Mile March”. Reading these again now, they do remind me of the elements discussed in various places about Deliberate Practice.

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PS - it also occurs to me that a terminology of “Twenty Mile March” is perhaps also a more effective descriptor than labeling our second core value “Relentless Improvement“.

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Behaviour 2 = Empirical Creativity

The authors use the term “Fire Bullets, then Cannonballs” to illustrate the process they have seen the 10X companies have collectively applied over many decades.

The authors note (p27):

“The 10Xers don’t favour analysis over action – they favour empiricism as the foundation for decisive action”.

In our own 12-year history, we’ve passed through three distinct phases of our productivity:
1)  In the early start-up years our small team shared an “all hands on deck” approach.  In these years we experienced some lucky breaks with products that sold relatively broadly within our narrow vertical market segment (NEM-Watch and the Market Maps were two of these).
2)  In our middle, wilderness years, we basically just lost our way – any creativity we had was misdirected and poorly implemented as a result.  A time in which I learnt a lot, but don’t want to repeat any time soon.
3)  Over the past 24 months or so, we’ve been re-building the company on a much surer foundation (starting with “first who, then where”) and instilling an approach something like what the authors talk about in terms of Empirical Creativity.  However it’s early days yet…

After realising that we could not return to the initial “seat of the pants” approach through which we got the company off the ground, I’ve invested a significant amount of time in thinking this through – and have found a large amount of material has helped over the years, spanning “10 Rules of Strategic Innovators”, and “Ready, Fire Aim” several years ago, through the Agile Manifesto and much more,  to “Little Bets” more recently.

Where this new book particularly helped me was in highlighting how the 10X companies successfully combined creativity and discipline, which is something we have struggled with in the past…

Mental note – return to p96-97 and review later!

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Behaviour 3 = Productive Paranoia

The authors note (p29):

“By embracing the myriad of possible dangers, they put themselves in a superior position to overcome danger”.

The authors conclude that it’s maintaining the two in balance that is the especially difficult thing to do – and hence the most valuable tension to master.

In our own history, we’ve experienced the extremes on either side:
1)  The pessimists who just take the approach of “here’s 10 reasons that won’t work” without balancing this with the “… and never lose faith” that Jim wrote about earlier in “Good to Great”
2)  The people with their heads in the clouds, oblivious to the train steaming down the tracks.

We know that it’s a difficult approach to get right (and to maintain – in spite of our growing successes, and despite our many failures).

As we continue to expand our team into the future, we’ll be continuing to look for people who possess this balance.

As a memory jogger, p121-123 provides a summary of the key findings (including the 3 key behaviours).

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… driven by “Level 5” Ambition

The authors note (p31):

“10Xers channel their ego and intensity into something larger and more enduring than themselves.  They’re ambitious, to be sure, but for a purpose beyond themselves, …”.

By giving examples of (and contrasting) the diverse range of personalities that steered the 10X companies to their successes, the authors make the point that it’s not a particular personality type that led to the success – but moreso that the personality of the individual was wholly congruent with what the company needed, to succeed (based on where they chose to head).

Here, they introduce another acronym, SMAC (for Specific, Methodical and Consistent) to describe the underlying principles that are used to guide the company over the years.  With reference to earlier work, the authors note (p186) that:

“A SMAC recipe is the code for translating a high-level Hedgehog Concept into a specific action and for keeping an organisation focused in the same direction, thereby building flywheel momentum”.

(apologies for the cryptic terminology for those who have not read Jim’s work before – we have to expect some of this, I guess, from a management consultant).

Whilst some elements of what might look like a “SMAC recipe” might have existed in my head for years, it was only relatively recently that I learned of the necessity of communicating this clearly (not just in deeds) as part of the process of getting the right people on the bus..

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Of course, there’s plenty more valuable detail in the book, for those who wish to invest the time…

Maintaining a high retention rate is critical to our business, and something we’ve done reasonably well over the past 12 years – but there’s always room for improvement (it’s not 100%).

These 8 pointers will be another useful reference in the months ahead…

Though 2 very busy years has elapsed, not much has changed (in that respect) from when I drew this diagram back in early 2010:

It was obvious to us, then, that we first needed to overhaul our department for “Discerning, Developing and Delivering what the customer wants”.

This took some time, but we have done so (as such, that side of the organogram looks very different now). As alluded to here, we’re starting to see early signs that clients are being delighted with product upgrades again.

Given that we’re now gearing up to make our first hire at the top of our department for Sales & Marketing, it was a good coincidence that I happened upon the article “Ending the war between Sales and Marketing” published in HBR back in 2006.

In particular, I had to chuckle (and cringe a bit at some memories) when I read the following:

“When sales are disappointing, Marketing blames the sales force for its poor execution of an otherwise brilliant roll-out plan.”
[sounds like the situation Roger writes about]

“… The Sales team, in turn, claims that Marketing sets prices too high and uses too much of the budget, which instead should go towards hiring more salespeople or paying the sales reps higher commissions.”

… and it goes on…

I guess most of us have been there.

The authors go on to suggest that the “solution” will vary, depending on a number of factors – including the age of the firm, the industry, and the level of tension.

The solution for us?

We’re at too early a stage in our company’s growth for there to be a fully fledged war going on between Sales and Marketing (given non-existent staffing), and we won’t grow our staffing levels at such a rapid pace that this will happen any time soon.

However it does seem that we can put a few things in place, first up, to reduce the risk of this happening at any stage – including the following:

1)  Structure

The authors describe various approaches to resolving this potential conflict – with one option being integrating the two functions under a single person (they coin the term “Chief Revenue Officer”).

This is essentially what we’re going to do, though I had been thinking of the position as more General Manager for Sales & Marketing.

Interestingly, the article provides some words to explain what we have already done in creating Derrick’s department for Discerning, Developing and Delivering** what the customer wants:

** no, we did not hire Derrick for alliteration!

“There’s a strong case for splitting marketing into upstream (strategic) and downstream (tactical) groups:
Downstream marketers develop advertising and promotion campaigns, collateral material, case histories and sales tools.  They help sales people develop and qualify leads….
Upstream marketers engage in customer sensing.  That is, they monitor the voice of the customer and develop a long view of the company’s business opportunities and threats…”

In essence, then, what we have already done is:
(a)  Split marketing into these two groups; and
(b)  Embedded aspects of “upstream marketing” within the Product Development team.
(c)  What we have left to do now is embed “downstream marketing” within the Sales team.

Of course, the Devils Advocate will note that this then just creates the potential for conflict between our teams for Product Development and Sales.  This is something we’ll have to proactively manage, moving forwards…

2)  The right metrics

The authors also note that it is vitally important (within this joint structure) to ensure that the right metrics are in place.

It currently seems to me that there are two key metrics that we need to be measuring the company-wide performance on the basis of both:

(a)  Growth in annual recurrent revenues, with a big focus being on ensuring that the revenues are recurrent; and

(b)  Some form of Customer Happiness Indicator that’s specifically tailored to our situation.

(c)  In addition, I’ve also recently made a note about the need for an additional leading indicator – something to think about further…

3)  The right compensation structure

Again, the authors stress that this is important.

I have been giving this a deal of thought over a long time period, with reference to our situation – and the way forward is still not 100% clear.

For a number of reasons, I would take a lot of convincing that we ever should be paying anyone (salespeople included) predominantly (or even significantly) on a commission-basis.  Given our business model focuses on maintaining recurrent revenue, and reinvesting this in ongoing development, we need everyone focused on the same objective.

This is something I’ll look forward to progressing once we have our GM Sales & (downstream) Marketing onboard, and ready to start filling out their team.

This recent article from the Economist about the contrast between Kodak and Fuji presents some thoughts worth pondering about.

Brings to mind both:
(a)  the Andy Grove message that “only the paranoid survive”.
(b)  the Jim Collins statement about “confronting the brutal facts but never giving up”

I’m not familiar enough with either company (or the industry) to really know about the truth of some of the conclusions drawn in the article.  Leaving that to one side, for the moment, there are a number of thoughts that occurred to me that are relevant to us.

1)  100 years of history can mean nothing

Even with its 100+ years of history, it seems that the writing is on the wall for Kodak.

If this is the case for a company 100+ years old, it’s even more the case for us (having just clocked over 12 years of existence, with enough scary times to fill a scrapbook).

Interesting that some companies (like IBM, discussed here) can manage to turn around a battleship.

Interesting, also, that the authors note that Kodak also suffered from a culture of complacency – which had evolved as a result of its long monopoly.  This is something we’ve also suffered from in our much more limited history, and something we do not want to repeat.

2)  Being prescient is not enough

The authors make it clear that both Kodak and Fuji saw the writing on the wall, in plenty of time.

Just because we can see the iceberg ahead does not mean that we’re able to avoid it.  Indeed, in most cases it’s probably true that you’d have to be blind to not notice the iceberg.

This reminds me of what Roger Martin has written, in terms of the real quality of a strategy being measured in the success of the turnaround (in this case).

3)  The role of luck

In every business case, there is an element of luck required in achieving any goal.  Sometimes it seems that the significance of this luck is downplayed, to simplify the story.

4)  Reframing the problem

The author makes points about how both Fuji and Kodak reframed “the problem” (or the Mission of the company) in order to chart their  new courses.

The author (and some of the commentators on the article) seem to imply that this act of reframing plays a significant role in the success, or otherwise, of the change initiative.

Internally, we’ve invested some time in framing our Mission such that it should continue to guide us some time into the future.

5)  The problem with “perfect products”

Well, for a start, the obvious – they don’t exist.

The authors note that this was one other aspect of the Kodak culture which made it harder to change the course of the battleship.  Rather than iterate through small bets (which we need to do) the pursuit of a perfect product made it so much harder for the company to change its business model, its product line, and its focus.

6)  Historical perspective

In reading this (and many other) case studies, we are provided with a voyeur’s luxury of a historical perspective – which makes everything seem clearer.

How much less certain does the situation appear when you’re in the thick of things, “fighting the alligators” – and how much more valuable those who can both:
(a)  Maintain a broader perspective; whilst
(b)  Getting the important things done.

7)  A multi-pronged approach

It seems that one of the common errors in compiling a case study (and lessons learnt) is that we tend to simplify the solution to be“well, they just did…”

Sometimes it seems that the promoters of such arguments select the initiative that paints the best light on whatever barrow they want to push (e.g. consultants and the latest buzzwords).

8)  Revenue and profit are lagging indicators

The article seemed (to me) to bring home the point this point.

We’ve experienced a similar thing, first hand, in seeing that revenues continued to climb for a period of time despite that we effectively fell asleep at the wheel, in terms of developing new products (or upgrading existing ones) to meet changing customer needs.  Thankfully we’ve started to reverse this trend, as noted here.

Moving forward, we do need to develop and promote (at least internally) leading indicators, to give us more advanced notice of how we’re doing against where we need to be.

Yes, Creative Destruction will continue to be a threat to any commercial enterprise.

The other side of the coin, however, is that it’s also a major ongoing opportunity.

We started that year very wet, and with a few jitters as well (with floodwaters from the Brisbane river threatening our offices).

At the end of the day, our office escaped any inundation (whew!), though we lost quite a bit of productive time waiting for power to be reconnected, and sorting through everything that had been hurriedly packed for the evacuation (still not finished unpacking, to tell the truth).

The important point to note here, however, is that through it all we continued to (seamlessly) supply data feed to hundreds of people around Australia, and across a number of continents – testament to the numerous layers of redundancy built into our processes, and the resilience of our people.

Despite the hiccup early in 2011, Derrick and his Development Team managed to gather up considerable momentum in the release of numerous upgrades to our ez2view product for traders in Australia’s National Electricity Market (using our Agile development methodology):

One of the things we’ve not had time to do is significantly revamp the information online about this product – but there is something here.

In addition to this primary focus, we also managed to complete a number of other projects, including:

(a)  the release of NEM-Review 6.3 (providing our clients a way to analyse the output of a broader range of wind farms, amongst other things);

(b)  the release of an upgrade to our deSide® product, focused on further enhancing the reliability and timeliness of the data feed;

(c)  the long-awaited update of the “Power Supply Schematic” and “Power Trading Schematic” Market Map wall charts (which were happily snapped up by a broad array of clients); and

(d)  A couple of other new initiatives that it’s a little too early to speak about, yet.

To complete all this, we added a number of people to our Development Team, which is really starting to hum (thanks, guys!).

As a result of our efforts, we welcomed a significant number of new clients to our customer base, and were (as always) delighted to be able to renew scores of our existing clients.  We thank you all for giving us the opportunity to serve!

Additionally, we were also able to initiate a number of other initiatives with 3rd parties where we found our interests in common – and we look forward to seeing these deliver benefits to clients (in making the market more understandable) in the weeks and months ahead.

It wasn’t all wine and roses this year, though:

(a)  we’ve continue to sing “The Bootstrapper’s Blues” on occasions, and

(b) have been reminded that “right people on the bus” will always be a challenge, but one we need to continue getting right.

(c)  some of our initiatives have not cleared the boundary rope (indeed, some did not get out of the starters gate) – though I don’t know how any other approach will work, other than iterating through little bets.

All-in-all, though, the year was a pretty good one (perhaps more half-full than half-empty).

So I turned off numerous electronic devices in December to take a break … and I return to find our semi-regular competition has taken a different turn!

Of my greatest areas of learning has been with respect to others within in the company.  I have struggled, at times, due to my lack of prior experience and preparation.

For some time I’ve been pondering the apparent paradoxes across a variety of books and other materials I’ve read – with respect to the concept of Strengths and Weaknesses.

Where I have read this, it has been with respect to an individual’s own strengths and weaknesses – however I believe that the pointers that I’ve learnt are also applicable at an organisational level (where a strength is more commonly termed “competitive advantage”).

After quite a bit of reflection, it currently* seems that to be truly strong, an individual (or a company) needs to have the right combination of all three of the following factors:

* I say “currently”, as it seems that the learning journey I am on almost guarantees that my view will become even more nuanced in future.

1)  What are the three factors?

It is my view that all three factors are needed – just one, or even two, is not enough.

Factor A)  Alignment

In my view, this is where it all starts.

For a company such as ours, it starts with our customers.  If we don’t understand, and deliver, what they really need, then what we have is certainly not a strength.  This is why Customers First is our primary core value.

Individuals within our organisation who are not aligned with where our bus is headed just generate anarchy.

For an individual, I believe that the situation is the same.  Every individual has their own customers – we each need to understand what our customers want and need.  Identifying one’s own Life Mission was the most memorable part of “7 habits” for me.

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Factor B)  Predisposition

In my view, what the Gallup Organisation (and Marcus Buckingham) describes as “talents” would be more generally understood if they were called “predispositions”.

In our own company, we’ve experienced the dramas that unfold when a “Fixed Intelligence” mindset is turned towards a prescriptive view of “talents”.

Whether they are by nature or nurture is irrelevant.  These predispositions are ways of behaving that we currently feel most comfortable with – and changing these behaviours incorporates a degree of discomfort (sometimes severe), which is one reason why people avoid change.

For greatest efficiency, we should be seeking to maximise each individual’s use of their predispositions.

In a bootstrapped company, this desire must be moderated by the fact that resources, and time, are limited - hence we all end up doing some things we don’t prefer.

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Factor C)  Deliberate Practice

As this book title says, talent is over-rated.

People with an internalised mindset of “Malleable Intelligence” understand this.

To really develop something into a strength, it requires a great many hours of concentrated effort, with particular focus on the 5 key elements of Deliberate Practice:
i.  Designed specifically to improve performance
ii.  Repeated a lot
iii.  Feedback continuous available
iv.  Highly demanding mentally
v.  Can be not much fun (which is why it’s much easier if it is in an area of your predisposition).

People who don’t pursue this dedicated practice are (at best) sub-optimal or (at worst) just incompetent.  For enterprises in this position, in a market that keeps evolving, they risk becoming outdated as customer demands change.

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2)  What does this mean, in practical terms?

I’ve been reflecting on this message since our first business autopsy several years ago.  Even at that time, we had a “half full, half empty” report card.

It’s become increasingly clear to me that (because we need all three factors working for us) some other things are vitally important:

(A)  Determine what’s Core and what’s Context

Geoffrey Moore explained this very well in this presentation.

For us at work, “Core” is code for what the customer wants/needs.  Our customers are those operating with reference to the energy sector.

Very few of us can decide, unilaterally, what’s Core.  However, those who are successful do play a role in shaping what is Core.

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(B)  Focus on what’s Core

Understanding the difference between what’s core and what’s context allows us to choose what our approach should be:

i.  In areas that are “Core”

We simply need to be the best.

It’s in these areas that it may be our weaknesses that are holding us back the most – as discussed in “What got you here, won’t get you there” and ”Don’t be that boss”.

If this is the case, then (despite the fact that we may not like it, and it might be hard) we simply must improve.

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ii.  In areas that are “Context”

This is where we can settle for being just good enough.

It’s in this area that the school of thought that says “don’t worry about your weaknesses” holds true – as discussed in books such as the “Focus on your Strengths” series, and the “Four Hour Work Week”.

These non-core areas are those that we can delegate, or outsource, or (perhaps) stop doing altogether.

Buckingham (p163 of Book 3) quotes Peter Drucker in stating that:

“the most effective organisations ‘get their strengths together and make their weaknesses irrelevant’ ”

In my view there is a big difference between making weaknesses irrelevant and just overlooking or ignoring them.

In other words, we need to improve to the point where we are just “good enough”.

Yes, they may never be an area of competitive advantage for us, but they should be seen as a “ticket to the game”.

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For everyone to understand what’s core, and what’s context, within an organisation – that’s where alignment with mission, vision and values come in.

(C)  Predispositions help

In this context, it is helpful to understand that predispositions certainly help – just as a current lack of predispositions can hinder.

They can tell us whether we’re going to have the staying power to last out the times that are not so rosy – when the dedicated practice is draining, and the grass is greener.

Hence we should certainly be aware of what they are for each of us.

However on their own the predispositions have not much value, and certainly aren’t a strength.

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(D)  Patterning can be changed

I’m not saying that it’s easy – just that it can be done.  There’s an emerging amount of medical research that points to this fact.

For us as an enterprise, it means that (if our customers demand it strongly enough, and if the opportunity is large enough), then it’s possible for us to change what we’re patterned to do – be that our business model, or something else – to adjust to the new reality.

For each of us as individuals, it does mean that our predispositions can be changed, if we want to enough – and we’re prepared to put in the hard yards.

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3)  Other factors not discussed above

Of course, this is not the whole story (reality is always more complex than any model – though models are useful at times, so long as one keeps that paradox in mind).

There are a number of other factors that are important in ensuring that people can deliver results for us.  These include:

(A)  Integrity

Integrity is the foundation to any performance.

This was best discussed in “The Speed of Trust” – so well, in fact, that I’ve taken to giving a copy of this book to all new employees.

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(B)  Drive

Daniel Pink talks about this here.

It should go without saying that being able to sustain significant energy to focus on the task at hand is essential to achieving “success” (however each individual chooses to define that for themselves).

However, in numerous companies over 4 continents and 20+ years, I have seen plenty of people just plodding through their working week (or worse) due to a variety of different factors.  This is disappointing for me, in a number of ways:

i.  Economically, it’s clearly not maximising the outcome possible, and this approach also can’t help but negatively influence those around them.

ii.  At a deeper level, it’s disappointing because it also cheats that person of the intrinsic rewards that come from operating in a state of what Mihaly Cziksentmihalyi called “flow”.

For us, our race is a marathon, not a sprint – hence the people we’re looking for are those who are able to maintain a good, steady pace, day-after-day.

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(C)  Resilience

A person’s overall ability to bounce back from adversity can be measured (sort of), and it certainly can be improved – as was discussed in “The Adversity Quotient” (reviewed by one of our former employees here).

This is another factor that’s important enough (at work and at home) to warrant providing a copy of this book to each employee.

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4)  Looking forward into 2012

We’re currently involved in one recruitment initiative.

As we look forward into 2012, and the efforts we’ll be investing to ensure we find (and attract) the other key people we’ll need on the bus, all of these principles will be at the front of our mind.

Read it back then, and have re-read recently as I’ve been casting my mind forward to the next recruitment initiatives.

The Book	What we thought
“Drive – the surprising truth about what motivates us” by Daniel Pink	Well worth it for us

.

The content of this book is very much along the lines of the talk at TED – which  means that, if you are not aligned with the belief that Intrinsic Motivation is more important than Extrinsic Motivation (after watching the lecture), then the book will probably do nothing further for you.

However if you have been a believer in Intrinsic Motivation all along, then the book is worth the money, because of the added depth provided..

1)   Basic principles

In the first part of the book, Daniel gives an quick fly-through the work of several of the leading thinkers of their day, identifying the progression of management thinking.

1a)  Theory X (Type E) and Theory Y (Type I)

The author points out that the Taylorist prescription for the working world evolved in an age which was very much in the industrial age, and that these views don’t sit well in the new age of information and creativity (I’ve previously noted how there has always seemed, to me, to be more to life than a Taylorist view).

He references the book by Douglas McGregor “The human side of enterprise” (published back in 1960) in which that author advocating management focus moving from a paradigm of:

Theory X (in which employees feared responsibility, craved security, and badly needed direction) to

Theory Y (in which work is as natural as play and rest – that creativity and ingenuity are widespread, and that – in the right conditions – people will accept, and even seek, responsibility).

In my own experience, I’ve seen how employees can themselves switch from Theory X to Theory Y (or even the reverse) in what is referred to as transitions such as “warm to cold to hot” and “warm to cold to exit” here.  Sort of like up and down Maslow’s pyramid.

Daniel Pink coins his own terminology in mapping employees or managers in a “Theory X” space as needing to focus on Extrinsic Motivators (Type E - i.e. carrots and sticks), whereas the “Theory Y” paradigm lends itself to a focus on Intrinsic Motivators (Type I).

I have learned the hard way that it’s necessary for both the employee and the manager to share the Theory Y paradigm as one prerequisite to achieving sustained high performance.  Indeed, it’s probably essential that it’s part of the culture of the enterprise.

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1b)  Carrots and Sticks can get in the way

Continuing from this, the author cautions against the use of “if, then” rewards when working in many modern environments – with a possible exception being for rule-based, routine tasks (i.e. with not much in the way of intrinsic motivation).

However he points out that “now, that” rewards (non-contingent rewards given after a task is complete) can sometimes be ok for more creative work – especially if there is useful information provided about performance.

I found this particularly thought provoking, reading again now, in thinking through the type of remuneration structure to use in the recruitment of our GM for Sales & Marketing next year.

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2)   Three core elements of Intrinsic Motivation:

I already spoilt the punch-line with this post about Daniel Pink’s presentation at TEDx – where he talked about Autonomy, Mastery and Purpose being the three key ingredients to Intrinsic Motivation.

Understandably, authoring a book allows him to go into more depth on each of these factors – reason enough alone to grab a copy and read.

Here are some things that left an impression for me.

2a)  Autonomy

On p207 he summarises his main points here about the four facets over which people (when operating under Theory Y themselves) yearn for autonomy:

“People need autonomy over task (what they do), time (when they do it), team (who they do it with), and technique (how they do it).”

In our own experience, we’ve learnt (the hard way) of the downsides of providing autonomy to people who don’t have the requisite mastery, or alignment with purpose.

I’ve never been keen on a “command and control” type of structure, but have learnt that instilling Autonomy as one of our core values is not as easy as I first thought.

It should go without saying (though in our case needed learning) that all three operate together.

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2b)  Mastery

Here the author traces back to the works of Anders Ericson that has lead to books such as “Talent is overrated”, “Outliers” and “The talent code” – all of  which focus on two essential elements:
(a)  What Carol Dweck calls a paradigm of “Malleable Intelligence” and
(b)  A regime of Dedicated Practice.

He notes that mastery begins with “flow”, but that there’s much more to it (some of it not as attractive).  It’s a mindset, it’s a pain, and its an asymptote.

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2c)  Purpose

Finally (or perhaps initially) he notes that Intrinsic Motivation needs to stem from an alignment to a core purpose of an organisation with whom one is involved – in whatever role – as a stakeholder.

Without this alignment, the relationship becomes purely transactional – whether it be purely SVA-focused for shareholders (discussed here), or remuneration-focused for employees, or commodity-focused for customers.

I’ve learnt enough to know we should seek to be avoiding all three.

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3)   What’s in the Toolkit?

There’s also a valuable toolkit at the end of the book that we’ll return to at times ahead.

3a)  Books and References

There are plenty of books referenced at the back, some of which we have read before and some others which we’ve since had delivered on the slow boat from Amazon.

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3b)  Tips for Type I

There are a number of tips at the end of the book specific for people operating in different capacities – as individuals, as educators, as managers, as parents, etc…

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3c)  Leading minds

It’s also worth noting, specifically, that Daniel recommends we consider the work of the following 6 business thinkers who (he says) “get it” in terms of Type I:

1)  Douglas McGregor, mentioned above

2)  Peter Drucker,

3)  Jim Collins, through “Good to Great” and “Built to Last” + other recent books.

4+5)  Cali Ressler and Jody Thompson, who wrote “Why work sucks and how to fix it”

6)  Gary Hamel, through “The Future of Management”

Note that these are only some of the many works referenced through the book, and particularly in the Toolkit.

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Not that I mind, because it’s an approach that’s close to our heart.

The Book	What we thought
“Little Bets – How Breakthrough Ideas Emerge From Small Discoveries” by Peter Sims	Worth reading

.

1)   Two basic types of innovators

The author references studies completed by David Galvenson, who (the author says) identifies two different types of innovators:

(a)  Conceptual innovators

The author says (p7) that “conceptual innovators … tend to pursue bold new ideas and often achieve their greatest breakthroughs early in life”.

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(b)  Experimental innovators

The author also says (p7) that “these creators use experimental, iterative, trial-and-error approaches to gradually build up breakthroughs”

It is this second type of innovator that is the focus of the book – he also defines this paradigm (p64) as:

“placing an emphasis on doing to be able to think, rather than thinking in order to do”.

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The more I have puzzled about this, though, the more I have begun to wonder how many true “conceptual innovators” there actually are.  Maybe just people who started experimenting early?

However, being in a company that developed several products in the early days of the National Electricity Market (conceptual innovations in their own modest ways), we can now understand a different method we’re now working through to refine products such as ez2viewAustralia.

2)   Defining Innovation

The author uses contrast to define what he sees as innovation:

(a)  Managers –vs– entrepreneurs

The author highlights (p10) how the discipline of “Management” traditionally strives to reduce uncertainty and increase the predictability of results – whereas the entrepreneur does not seek to avoid errors, and instead try to learn from them.

He sums up that “when much is known, procedural planning approaches work perfectly well.  When much is unknown, they do not.”

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(b)  It’s not anarchy, though

He cautions (p13) “these methods are decidedly not ways of just trying a lot of things to see what sticks… The most product creative teams and people are rigorous, highly analytical, strategic, and pragmatic”

[For internal discussion, will add more here]

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3)   Prerequisites of Innovation

I’d suggest you read the book for the full picture – here are some short notes, intended as appetisers before the main meal:

(a)  A growth mindset

I’ve already posted, in relation to this book, about how a Growth Mindset (as opposed to a Fixed Mindset) is essential.

For those who don’t have that, not much point looking further until that has been rectified.  I believe it can be, though it’s not easy!

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(b)  Patterns of action

The author cites (p107) a research project by Dyer and Gregerson as revealing that creative people, and executives, displayed similar “patterns of actions” or “discovery skills” as follows:

i.  Experimenting

ii.  Observing

iii.  Questioning

iv.  Networking with people from diverse backgrounds.

He includes the quote “You might summarise all of the skills we’ve noted in one word: ‘inquisitiveness’”
– which is aligned with one of the main messages in “The Design of Business” that Design Thinkers are “first class noticers”
– it also reminded me of this post on the “5 discovery skills” for innovation.

The author believes that these skills can be developed – and I agree (though it’s not to say that it’s easy – I believe that focus &  persistence are necessary).

There’s a quote from Steve Jobs on p108 in my copy that sums up, I believe, the necessity:

“Creativity is just connecting things … A lot of people in our industry haven’t had very diverse experiences.  So they don’t have enough dots to connect, and they end up with very linear solutions without a broad perspective of the problem”

Certainly we have suffered, in the past, by being overweight with people with very few experiences from which to draw – coupled with a fixed mindset that stunted their ability to learn more.

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(c)  Playfulness

The author dedicates a chapter (#4) to this topic.

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(d)  About Luck

He quotes (p123) studies completed by Dr Richard Wiseman who noted that:

“lucky people tend to be open to opportunities (or insights) that come along spontaneously, whereas unlucky people tend to be creatures of routine, fixated on specific outcomes”

He says that this was Wiseman’s core finding – quoting Wiseman as saying:

“I discovered that being in the right place at the right time is actually all about being in the right state of mind”

To me, this is the true meaning behind what Jim Collins says when he notes we should “confront the brutal facts – but never lose faith”. It’s also part of what I mean by noting Openness as one of our core values.

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(e)  Eternal Vigilance

The author starts the book not where one might think he should start (i.e. at the beginning).

Instead, he starts with a mature company, and looks at what he quotes as “the tyranny of large numbers” – indicating the tendency for companies to abandon the focus on small bets that helped them to grow in the first place.

This is also the core message that sticks in my mind from “The Innovators Dilemma”.

As our company grows, we have also felt these temptations.

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“Once students adopt a theory of intelligence, it affects what they value, how they approach intellectual tasks, and how they interpret and respond to what happens to them.

A belief in Fixed Intelligence raises student’s concerns about how smart they are, it creates anxiety about challenges, and it makes failures into a measure of their fixed intelligence.  It can therefore create disorganised, defensive and helpless behaviour.

A belief in Malleable Intelligence creates a desire for challenge and learning.  In fact, some incremental theorists tell us that they worry a task will be too easy for them and, essentially, not worth their while.  Setbacks in this framework become an expected part of long-term learning and mastery and are therefore not really failures.  Instead they are cues for renewed effort and new strategies.”

For anyone who’s been following our company as we grow and mature, you’ll appreciate that I’ve been grappling with really understanding both:

1)  what the mindset of “Fixed Intelligence” actually means to a person who subscribes to it (as it is foreign to me, I find it difficult to get inside that mindset)

2)  whether it’s possible to influence another person’s self-theory such that they become aware of, and then adopt, a theory of “malleable intelligence”.

As our children progress in school, as well, I’m taking a keener interest in what can be done to ensure an appropriate mindset is strengthened.

1)  Back in September 2009, when Carol was quoted in the AFR coincident with the release of another of her books.

2)  In July this year, when I found Carol’s work referenced in a book by Peter Sims.

3)  Earlier this month, when a colleague of Carol’s (Heidi Grant Halvorson) wrote in the HBR about similar findings.