Shyam's shared items in Google Reader

That Top 1% Thing

2011-10-24T06:00:01Z

I'm a big fan of the Occupy Wall Street movement. And what I like most about it is the ambiguity of their demands. There's a deep honesty to that. It is okay to say the system is broken while also saying you don't know how to fix it. I'd feel uncomfortable if the protesters had specific demands. I don't want my economic policy coming from "guy in tent."

But I worry that the media needs specificity in order pit pundits against each other. It's no fun having two people agree that unemployment is too high. You need one pundit to recommend a specific solution so the other can say he's crazy. Ideally, you also need a villain for your story. That's the standard media model.

So I've been watching in horror as the media tries to transmogrify the honest ambiguity of the Occupy Wall Street movement into a sort of tortured logic with convenient villains. Everyone starts with the same facts:

Some CEOs are overpaid
Some banks take advantage of the system (while others fail)
Some billionaires pay a lower tax rate than other people
Some CEOs, some bankers, and all billionaires are part of the top 1%
The top 1% are getting richer while the 99% are getting poorer
Unemployment rates are obscene.
Corporate profits are up.

From that set of facts, the illogical conclusion I'm starting to see is that the top 1% are stealing the nation's wealth. Villains! But how many people in the top 1% are engaged in some sort of evil? Is it 1% of the 1%? That's my best guess. I know a lot of people in the top 1%, and all they do is go to work. They hardly ever perpetrate evil. But they do create jobs for the 99%.

One problem with the top 1% simplification is that people who have college degrees aren't experiencing high unemployment. So it would be equally fair - and by that I mean equally illogical - to conclude that highly educated people are stealing the nation's wealth from less educated people. That's a bumper sticker you won't see.

I would also be willing to bet that the average math skills of the people who are doing well in this economy are better than the average math skills of the people who are suffering. In other words, the Occupy Wall Street protesters are probably comprised of more psychology majors than engineering majors. But no one is suggesting that people who are good at math are stealing the nation's wealth from people who are not. That's not a catchy slogan.

Some people believe the problem with our economy is that social programs are sucking all of the money out of the system. If you have that view, you might conclude that the poor, the sick, and the elderly are stealing from everyone else. But that doesn't look good on a protest sign.

And what the hell does it mean to steal the national wealth anyway? If my flower shop does well, but your donuts shop doesn't, did I steal some national wealth from you? It might look that way on paper, but it doesn't tell you anything about what's going on.

The most objective explanation of our problem is that the economy is changing faster than humans can adapt. We have more high-end jobs and fewer unskilled opportunities. That's not anyone's fault. And obviously we have a smattering of rich crooks and rich people taking advantage of the system. That has to be addressed, but it's not the underlying problem.

Some say the government is the problem. But I think it is more accurate to say the government is failing to offer a solution. And that's because the government has also evolved more slowly than the world in general. It's an anchor on the economy. What we need is a form of government that is more nimble, and designed from scratch to support the economy.

And for that we need a constitutional convention. The genius of our constitution is that it has a big red button labeled "evolve." We just need to push it.

How to Overcome Writer’s Block

2011-10-05T16:23:38Z

What many of you really need….

Used with permission, © Jim Hines 2011 (www.jimchines.com).

Ten Clues It's Time to Replace Your Head of HR

2011-09-27T19:30:16Z

If you're a CEO, can the wrong head of HR cause you to lose your job? Absolutely. Ask the ex-CEO of Pfizer or the ex-CEO of Schwab, who both were fired by their boards in part for poor judgment regarding the head of HR. Astonishingly, it was the same woman, Mary McLeod. Called "Neutron Mary" at Pfizer, she had a reputation for excessive personal use of the Pfizer helicopter, tight control of relationships with the CEO at both companies, and harshness with her staff.

Done well, the practice of HR can be one of the most important relationships in ensuring strategy becomes real throughout an organization. Done poorly, not only can it put a leader in peril, it can result in alienated employees and resultant losses in customer satisfaction and shareholder value.

How do you know you have the right person? Perhaps it's easier to start by discussing the pathologies of a dysfunctional Chief of Human Resources Officer (CHRO). Here are ten clues that it's time to replace him or her. Although any one of these could indicate it's time to replace your CHRO, a pattern consisting of several of these means you should also examine whether your own judgment is under scrutiny.

The last time your CHRO had an employee roundtable discussion was before the economic downturn. One of the most valuable roles the CHRO plays is taking the pulse of your workforce. Face time with employees is essential. If your CHRO travels only to accompany you, or keeps in touch with staff primarily through email or one-way communication such as videocasts, you've got a problem. The tougher the times, the more important it is to ensure employees are motivated.
The language of business is a foreign language. If he or she can't name your top 10 customers, your top five competitors, or describe the basic business model, then aligning people to the business will be impossible. When the staff conversation turns to operating margins, cash flow, inventory, or revenue, does the CHRO tune out? You should be able to expect your CHRO to offer solutions for improving any of your business metrics through employee alignment and engagement.
Your CHRO thinks of email as modern technology. Increasingly the way to reach the next generation of employees is through social media, both to recruit them and to engage them. Already 35% of the workforce is comprised of Millennials, born after 1977, and they will comprise nearly 50% of the workforce by 2015. If your CHRO can't navigate the tools they are using, it's unlikely you will have platforms to engage and retain those employees. Does your CHRO blog, tweet, have RSS feeds, and know what cloud computing, SaaS, and YouTube are? (Last year I was at an HR conference where someone asked "What is YouTube?") Does your CHRO use a smart phone? Or is your CHRO having his/her assistant print out emails to take home at night? Communicating with employees requires using the means that employees use to communicate, not necessarily the ones the CHRO is comfortable using.
Change is a four-letter word. Could change your strategic direction in nine months or less? In this volatile climate, the new watchword for business is "agility." Your CHRO is your key resource to ensure you can achieve your strategic directions through a leadership team and employees that are aligned and executing along common goals.
Your head of HR is hesitant to be accountable for meaningful metrics. The ability to track and analyze meaningful metrics in the HR space has changed significantly in the past five years. Is your CHRO abreast of those changes? Can you answer yes to the following questions: Does HR add value to the business through workforce analytics? Do you know what the cost of HR is per employee? Does your CHRO take ownership for improving employee engagement? Do you know the ROI you receive from investing in salaries, bonuses, or development? Do you know the impact attrition has on your customer satisfaction and your ability to grow? You should be able to get these answers.
The vision for HR is murky, generic, or even unstated. Does your CHRO have a clear vision of how HR enables the people in your organization to achieve extraordinary performance? Or is HR focused primarily on budget cuts and streamlining administration? Operating as efficiently as possible is a minimum expectation. Ask to look at the vision and mission for your HR function. If those are realized, will it make a difference to the business? How? Is there a plan to ensure the vision and mission will be realized?
Your CHRO knows how to lavish out perquisites, especially to the CHRO. The CHRO sets the tone for the executive team in terms of focus on special perks, and if your CHRO is focused on themselves and their need for creative pay solutions, you're in trouble. Another clue that your CHRO is more focused on style than substance is when the content of their business card, such as long listings of certifications, takes up more of their first few weeks on the job than getting to know the business.
Your CHRO has effectively alienated you from your staff. Although it's extremely important for your CHRO to be a trusted advisor, a healthy relationship includes encouragement of your direct reports to have relationships with you as well. If the access of other executives is managed through the CHRO, a dysfunctional leadership team is not far behind. If your CHRO acts as a gatekeeper, subtly threatens your staff if thwarted, or brags about having the CEO under her thumb, as McLeod reportedly did at Schwab, you will become isolated from the direct communication that keeps you in touch with the pulse of the business. A CHRO should be helping you spread a wide net of information coming into you — not acting as a severe funnel on your behalf. Having a CHRO who sees as their main job the care and feeding of the CEO is seductive and enticing. Resist the temptation.
The CHRO has difficult and strained relationships with his or her direct reports. A new head of HR might take six months or a year to align and shift their direct reports, but after that period, you should be able to observe a highly functional team at work. Does the CHRO pick staff who are excellent in their fields, and complement the CHRO's own skills? Does the CHRO have in place a solid lineup of successors? What does the 360-assessment of the CHRO look like? If HR itself is dysfunctional, it's hard for them to have credibility when advising others on building strong teams and employee engagement.
Your CHRO has a nickname such as Neutron Mary (at Pfizer), Chainsaw Charles, Dolores Umbridge — or worse. If your CHRO has lost the support and respect of your workforce, your ability to motivate and align your employees behind your strategy has been compromised. Yes, the CHRO may have had to implement strong actions at times to ensure the survival of the business, but these should be balanced with actions that build loyalty and engagement. If 60 percent of your workforce would consider a job change when the economy recovers, how likely is it you'll out-compete others?

Some of these behaviors can be changed via expectation-setting, coaching, or feedback. But if your CHRO exhibits many of these pathologies, it's likely you need to make a change. The bottom line is that you can and should expect excellence from your CHRO. Do you?

Run your own race

2011-09-26T09:52:00Z

The rear view mirror is one of the most effective motivational tools ever created.

There's no doubt that many people speed up in the face of competition. We ask, "how'd the rest of the class do?" We listen for someone breathing down our necks. And we discover that competition sometimes brings out our best.

There's a downside, though. Years ago, during my last long-distance swim (across Long Island Sound... cold water, jellyfish, the whole nine yards), the competitiveness was pretty thick. On the boat to the starting line, there were hundreds of swimmers, stretching, bragging, prancing and working themselves up. By the time we hit the water, everyone was swimming someone else's race. The start was an explosion of ego and adrenaline. Twenty minutes later, half the field was exhausted, with three hours left to go.

If you're going to count on the competition to bring out your best work, you've surrendered control over your most important asset. Real achievement comes from racing ahead when no one else sees a path--and holding back when the rush isn't going where you want to go.

If you're dependent on competition then you're counting on the quality of those that show up to determine how well you'll do. Worse, you've signed up for a career of faux death matches as the only way to do your best work.

Self motivation is and always will be the most important form of motivation. Driving with your eyes on the rear view mirror is exhausting. It's easier than ever to measure your performance against others, but if it's not helping you with your mission, stop.

The Revolution Will Not Be Televised. But It Will Be Tweeted

2011-09-07T13:35:21Z

A new paper from Chris Edmond at the University of Melbourne examines how the quantity and quality of information impacts regime change. This is particularly timely in light of the Arab Spring taking place across the Middle East, and the current goose chase for Muammar Gaddafi. As demonstrated by the disruption of Google during the uprisings in Egypt and Libya (shown below), a regime will go to great lengths to shut down the proliferation of non state-controlled media.

An Egyptian protester waves his national flag as tens of thousands gather for a demonstration at Cairo's Tahrir Square on April 8, 2011, two months after president Hosni Mubarak was ousted, to demand that former regime officials including the veteran strongman be purged and tried. AFP PHOTO/MISAM SALEH (Photo credit should read MISAM SALEH/AFP/Getty Images)

Edmond constructs a simple model to study how a regime’s chances of survival are affected by changes in information technology. He finds that information alone does not destabilize an oppressive regime. In fact, more information (and the control of that information) is a major source of political strength for any ruling party. The state controlled media of North Korea is a current example of the power of propaganda, much as it was in the Soviet Union and Nazi Germany, where the state heavily subsidized the diffusion of radios during the 1930s to help spread Nazi propaganda.

Also, changes in technology do not by themselves weaken the state. While Twitter played a role in the Iranian protests in 2009, the medium was used effectively by the Iranian regime to spread rumors and disinformation. But, if information becomes not just more widespread but more reliable, the regime’s chances of survival are significantly diminished. In this sense, though social media like Twitter and Facebook appear to be a scattered mess, they are more reliable than state controlled messages. The abstract states:

If the quantity of information available to citizens is sufficiently high, then the regime has a better chance of surviving. However, an increase in the reliability of information can reduce the regime’s chances. These two effects are always in tension: a regime benefits from an increase in information quantity if and only if an increase in information reliability reduces its chances. The model allows for two kinds of information revolutions. In the first, associated with radio and mass newspapers under the totalitarian regimes of the early twentieth century, an increase in information quantity coincides with a shift towards media institutions more accommodative of the regime and, in this sense, a decrease in information reliability. In this case, both effects help the regime. In the second kind, associated with diffuse technologies like modern social media, an increase in information quantity coincides with a shift towards sources of information less accommodative of the regime and an increase in information reliability. This makes the quantity and reliability effects work against each other.

Edmond further explores the tension between quantity and reliability of information by creating a formula that measures how much of each will affect a regime change or maintain the status quo. Though more information supports an oppressive regime, reliable information is twice as powerful, and acts against the existing power structure.

The model predicts that a given percentage increase in information reliability has exactly twice as large an effect on the regime’s chances as the same percentage increase in information quantity, so, overall, an information revolution that leads to roughly equal-sized percentage increases in both these characteristics will reduce a regime’s chances of surviving.-

"Do it tomorrow"

2011-09-09T09:16:00Z

Stupid advice, certainly. But free. I didn't charge you anything for it.

There are very few categories where there is less correlation between price and quality than advice. You can buy a million dollars worth of consulting, a thousand dollars worth of coaching or read a few tweets for free--your choice.

This widespread variety of pricing leads to two interesting questions:

Are you confusing what you pay with what you get? (Does expensive advice feel more valuable than the free stuff?)

and

Are you more likely to take action because you've paid a lot?

One of the most effective ways to get your ideas implemented is to charge a lot for them. It increases the perception of value and creates an impulse to execute so that the investment won't be wasted.

Of course, I said that for free...

Yahoo: An exit presages the end

2011-09-09T08:30:53Z

Well, as I predicted in July 2009, Carol Bartz couldn't stop Yahoo's slide into The Big Rut.

Now Yahoo has done what any self-respecting Big Rut organization would do - thrown out the last remaining Visionary.

Neither party - Yahoo's board or Ms Bartz - emerged with much dignity from the exit process, but that's the least of the Yahoo shareholders' worries.

As I explain in Chapter 7 of "Predictable Success: Getting Your Organization On the Growth Track - and Keeping It There", companies don't get out of The Big Rut - there's no going back to Predictable Success from there.

And as I forecast in my next book, "The Synergist: Leading Your Team to Predictable Success", watch for Yahoo turning to a Processor as a replacement for the Visionary Ms Bartz (their interim choice? The CFO, Tim Morse. A Processor, you think?).

Next up for Yahoo: Breakup and sale.

Predictable Success is a registered trademark of EVNA Inc.

The Mayfly Question

2011-09-06T16:18:03Z

I’m too often asked the same question by the same person, often within the life span of a Mayfly. One of the more useless of the mindless bromides is, “There is no such thing as a stupid question.”

Or course there is, and most are questions already answered but ignored.

There is a profound difference between coaching or mentoring and co-dependency (and enabling it). A healthy individual should be able to listen to the response to a question and integrate it into one’s knowledge and performance base.

The person responding to the question should make the attempt to “test for understanding”: Ask how the answer will be utilized and applied. (Example: I’ve just answered your question about how to apply value-based fees. Now I’m going to ask you, “What will you say differently to your next prospect about your fee basis?”) Very few of my college professors EVER attempted to test for understanding. They were simply testing for memory or study habits once or twice a semester. (When I ran an interactive class for grad students at the University of Rhode Island for several semesters, it was so popular and effective that an assistant dean told me I was not to continue after five semesters because the full-time faculty was complaining.)

How does one integrate learning, and how does one help someone else to do so? Without delving into the synapses and psychologically arcane, here is what I’ve observed:

Make sure you understand the question’s intent by asking why it’s important. Many people have a legitimate need but ask the wrong question. Find out what the need is and don’t simply accept the question at face value.
Ask what they think the answer is. Find out what thought they’ve given it.
Provide your response and ask the other person to provide an example of use and/or to repeat it in different words (testing understanding).
If you’re asked the same question again within a short time frame, ask the person to repeat the prior discussion, and ask why they need more help.
If you’re asked again over a longer time frame, the probability is that the answer isn’t juxtaposed to the actual need, and you’ll need to provide some reinforcement or reference for the situations when the answer is needed.
If you’re asked repeatedly despite the above remedies, refuse to answer. You’re simply enabling dysfunctional behavior.

It’s been said that if you “use a word three times, it’s yours,” in terms of building vocabulary. I have observed that if new knowledge or new behaviors are immediately implemented, they become reinforced much more quickly. You can’t wait “for the right opportunity,” you have to create the opportunity. If you’re trying to master new influencing skills, don’t wait for a moment requiring influencing, go to a meeting and try to influence the discussion.

If something is really important, why don’t you learn how to do it instead of relying on others every time?

Steve Jobs, Tim Cook, and Apple's Innovation Premium

2011-08-31T17:33:32Z

As Steve Jobs steps down as Apple's CEO — and Tim Cook takes over — many folks are wondering whether Apple can keep its innovation engine humming. This is not the first time, of course, that Jobs has left the helm at Apple. He was first shown the door when John Scully and other marketing folks led the charge at Apple — a charge that quickly took a nosedive. During Jobs' absence from 1986-1998, Apple's innovation premium dropped from 37% to negative 31% as the company quit innovating and its investors lost confidence. When Jobs returned in 1998 he restructured his team with senior managers who possessed a rich mix of strong discovery- and delivery-driven skills, and as a result the company churned out hit after hit, from the iMac and iTunes to the iPad, iPhone, and iPad. It took a few years to get things back on track, but from 2005-2010 Apple's innovation premium jumped to 52%.

With Jobs' unexpected exit in 2011, Cook's key task is to not only keep Apple humming but to deliver something surprising. Can he do it?

History suggests Cook's task will be difficult, but not impossible. Any company would face an uphill marathon trying to sustain a streak like Apple's recent run, so we shouldn't be surprised if Apple's innovation track slows down a click or two. But if Cook wants to keep Apple's capacity for innovation going, our analysis of the world's most innovative companies suggests a few things Cook should consider:

Keep Apple populated with people — including senior managers — who excel at the five skills of disruptive innovators: questioning, observing, networking, experimenting, and associational thinking
Keep processes that encourage employees to question the status quo, to engage in observations in all types of environments, to network far and wide for ideas, and to experiment on a regular basis.
Keep encouraging everyone at Apple to "think different" and reward those who do.

But the key question is whether Cook can sniff out technology and market opportunities while knowing intuitively (or with the help of others) what risks to take. Jobs did this when he saw the mouse and graphical user interface (GUI) at PARC. He did this when he saw the computer animation technology at George Lucas' Industrial Light & Magic division, bought the key technology and players from it, and transformed it into Pixar. He did this with the string of Apple "iProducts." Disruptors like Jobs are simply better at "seeing" potential industry innovations, in part, because they apply questioning, observing, networking, experimenting skills, and most important, associational thinking to uncover insights that leap across industries. Most acknowledge Cook as exceptional at execution, but we know little about whether he has the innovator's DNA to "see what's next," the way Jobs did consistently. Apple's innovative future hinges on these critical senior-leadership skills.

It is also unclear whether Cook is capable of attracting innovators. Innovators like to work for other innovators — with people who get it. Can Cook do this? Close colleagues and friends vouch that he can. But a lack of public data calls their conclusion into question. Time will tell whether Cook and his team will actually catch the front edge of the next disruptive innovation.

Apple's transition is not without precedent. When co-founder Akio Morita ran Sony in the 1980s, the company was humming along with a consistent innovation premium above 30%, the same as Apple's during Jobs' initial tenure. With Morita's departure — and Apple's arrival — Sony's innovation premium plummeted to zero. Staying at the top of the innovation heap is not easy but it is possible. Before A.G. Lafley took over in 2001, Proctor & Gamble delivered a solid innovation premium — 20% on average — but when Lafley took the helm P&G's premium jumped to 35%.

CEOs can take a good company and make it better, but it's tough to take a great company and make it better. Clearly, Cook's challenge is daunting. Steve Jobs once said: "Innovation distinguishes between a leader and a follower." We'll soon see whether Cook really is a true innovation leader, or whether he was just a Jobs follower.

Google: Hobbled by genius

2011-08-31T08:30:14Z

On Monday we saw how Steve Jobs genius is clearly an important element of Apple's success. Recent developments elsewhere in Silicon Valley indicate that for one of their neighbors the opposite is the case: for Google, Larry Page and Sergey Brin's genius is highly problematic.

The reason is simple, but fundamental: Steve Jobs is a Visionary, while Page and Brin are both Processors. This means that Jobs' genius makes landfall as an all-embracing vision - aesthetically, functionally and emotionally appealing, while the Google founders' genius produces a system, a process, something intellectually-correct but emotionally null.

Nothing wrong with either approach of course, except for one thing: While processes scale, only visions procreate. Google can grow its search revenues to almost unimaginable amounts, but fail again and again and again and again to replicate that success in other areas.

Can you imagine Apple failing that often, successively, with new products? Instead it has birthed new idea after new idea after new idea.

Brin and Page are hobbled by the curse of genius - they need to be the smartest guys in the room. And you can be smart forever without once repeating your early success.

Problematically, things are about to get much, much worse for Google. Processor-dominated organizations slide quickly out of Predictable Success and into Treadmill. The only way to stop from falling catastrophically into The Big Rut is to fill the place with strong Visionaries and give them their head. Instead, Google has just doubled down on its Processor culture - flooding the organization with more than twice as many P's as they already have.

The result? Say goodbye to the few true Visionaries clinging on by their fingertips - watch for a growth in the already-happening mini-exodus of maverick long-timers in the next few months - and with it any residue of true vision.

Google is about to become the organizational equivalent of prematurely arthritic: hobbled by genius.

Predictable Success is a registered trademark of EVNA Inc.

Reflecting on Steve Jobs' Words of Wisdom

2011-08-26T14:46:23Z

On June 12, 2005, in his commencement address to Stanford's graduating class, Steve Jobs revealed:

"When I was 17, I read a quote that went something like: 'If you live each day as if it was your last, someday you'll most certainly be right.' It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: 'If today were the last day of my life, would I want to do what I am about to do today?' And whenever the answer has been "No" for too many days in a row, I know I need to change something."

Obviously, the answer has changed. On August 24, 2011 Jobs woke up to a very different tune. He not only knows how to think different, but showed the courage to act different as well. He walked away from the hands-on role of CEO to settle in as Chairman of the Board at arguably the most valuable company in the world. Why?

The obvious answer is that these may well be the last years and days of Jobs' life. We, as millions of others, certainly hope with all our hearts that it's not. But if so, Jobs no doubt knew that something needed to change. Perhaps it really is time for Jobs to go home, as he put it, to a "wonderful family" and an "amazing woman" and re-reflect on a few of the provocative questions (slightly altered) that he posed to the world in his 2005 commencement address:

Have you found "what you love" to do in life?
Are you wasting your life "living someone else's?"
Do you "have the courage to follow your heart and intuition?"
Are you nurturing a "great relationship," one that "just gets better and better as the years roll on?"
Do you tell "your kids everything you thought you'd have the next 10 years to tell them in just a few months" or days?
Do you make "sure everything is buttoned up so that it will be as easy as possible for your family" when "the single best invention of Life" takes its toll?
Do you say "your goodbyes" before it's too late to say them?

For almost four decades Steve Jobs has certainly tried his best to "put a ding in the universe." There is little doubt that he's done just that on planet earth through Apple Inc. Now we hope that the world will give Jobs enough time and space to let him put a different ding in the most important part of his universe, relationships at home. Indeed, if he's decided that it's time to go home, not in heaven, but on earth, then we hope that he stays "hungry" and "foolish" with those he loves most. If Jobs does, let's "trust that the dots will somehow connect in the future" while he continues to live each day as if it were his last.

If you were living today as if it were your last, would you be doing what you're doing right now? If not, then what are you going to do about it?

When ideas become powerful

2011-08-21T09:03:00Z

Why are we surprised that governments and organizations are lining up to control ideas and the way they spread?

When power resided in property, governments and corporations became focused on the ownership, regulation and control of property.

When power shifted to machines and interstate commerce, no surprise, the attention shifted as well.

Now, we see that the predictions have come true, and it's ideas and connections and permission and data that truly matter.

So gifted inventors shift gears and become patent trolls, suing instead of merely creating. So government agencies rush to turn off cell phone towers. So corporations work to extend and reinvent the very notion of copyright protection.

Here's what we ought to demand:

Are copyright rules being played with as a way to encourage creation of art (which was the original intent) or are they now a tool for maximizing corporate profit?

Are patents (particularly software patents) being used to encourage new inventions, or have they turned into a tax that all of us have to pay whenever we use a computer or a phone? (Hint: if you can draw your patent on an index card, it's an idea, not a patentable process worthy of protection).

Is disconnecting a cell phone or a social network any different from trashing a printing press?

When organizations seek to control widgets and hammers and land, it seems right--that property is clearly private, and sharing it doesn't scale. When two people both try to eat a marshmallow, there's less for both.

Controlling ideas and connections and data... that's a fundamentally different deal, partly because it's so personal (that idea in your head might or might not have been inspired by the idea I wrote down, but it feels wrong for me to tell you that you can't have your idea) and partly because in fact, shared ideas do scale, they don't usually diminish.

Ideas are going to continue to become more valuable, which means that the urge to control and patrol them is going to get greater.

Ideas that spread, win
Networks in which ideas flow are worth more than networks without
Great ideas are amplified when others build on them
Just because an idea spreads doesn't mean it's good for us
Locking down ideas makes them worth less
Those in power will try to keep outsiders from bringing new ideas forward

[Update: Rick asked for my distinction between an idea and an invention. Here goes:

I think an idea is something you can write about in a science fiction book.

An invention is when you build something that people who read about it in the science fiction book said was impossible.]

Short-term capitalism

2011-08-22T09:36:00Z

There are a few reasons why one might not care what happens in the long run:

You don't intend to be around
You're going to make so much money in the short run it doesn't matter
You figure you won't get caught

Short-term marketing involves using deception to make a quick sale, or using aggressive promises to get a quick hit. Having a price war counts as well. Linkbait is on that list as well.

Short-term architecture means putting up a cheap building, a local eyesore, something that saves money now instead for building something for the long haul. The guys who put up the Pantheon in Rome weren't doing short-term anything. Hard to say that about a big box store.

Short-term manufacturing ignores the side effects of pollution, bad design and worker impact because it's faster money in the short run to merely make the product (and the sale) in the most direct way possible.

Short-term investment banking invests in transactions that are unsustainable and eventually blow up (after commissions are paid).

Short-term sales involve spamming as many people as you can, as fast as you can.

Short-term hiring requires you to hire cheap, train as little as possible and live with turnover.

Bernie Madoff was a short-term capitalist, of course.

Left to their own devices, (particularly during difficult economic times) too many people misunderstand the essence of capitalism, and rationalize a do what it takes mindset that is ultimately self-defeating. The reason we need the SEC, the EPA, transparent operations, a free press that cares about its mission and people willing and able to speak up is that they make it expensive to choose the short-term option.

The short-term capitalist is betting that someone else will clean it up.

One of the worst things you can call a business person, I think, is a short-term capitalist. He selfishly takes for now and fails to contribute in return.

The internet has opened two doors. First, it's easier than ever to do the short-term thing, anonymously if you choose, with a big splash, internet ads, eBay scams and more. On the other hand, since there's a revolution going on, it's also easier than ever to build something that matters, something that lasts.

The thing to remember about the short-term is that we'll almost certainly be around when the long-term shows up.

Finally, Someone to Run Against Wall Street

2011-08-19T09:40:36Z

Enter Elizabeth Warren.

Success Comes From Better Data, Not Better Analysis

2011-08-08T17:14:15Z

One of the maxims of being a leader is to make yourself replaceable. I can't remember what business guru said it, likely because they lost their job before becoming famous.

Like a lot of people, working to make myself replaceable is not an easy concept for me. I have spent the majority of my life trying to make myself irreplaceable as an analyst/decision maker since spending all of 2nd grade analyzing the optimal All Star Baseball spin card lineup (hint: leading off George Sisler was the key).

As much as I don't want to admit it, however, the age of the irreplaceable analyst no longer exists, if it ever did. From my vantage point as GM of the Houston Rockets and the co-chair of the MIT Sloan Sports Analytics Conference, I see a world teeming with really good analysts. Fresh analytical faces are minted each year and sports teams are hiring them in larger numbers. If talented analysts are becoming plentiful, however, then it follows that analysts cannot be the key to creating a consistent winner, as a sustainable competitive edge requires that you have something valuable AND irreplaceable. If better analysts won't create an edge, however, what will?

The answer is better data. Yep, that's right. Raw numbers, not the people and programs that attempt to make sense of them. Many organizations have spent the last few years hiring top analysts based on the belief that they create differentiation. Smart companies such as Google believe they need savants to crunch those numbers and find the connections that regular humans could not. But my experience, and what I'm hearing from more organizations (sports and non), shows that real advantage comes from unique data that no one else has.

Here's an example from my world. Many teams in the NBA track data for their own team such as how often a player on defense challenges shots. When tracked for your own team, this information can be useful to add accountability to the important things a coach is trying to emphasize to win games and to improve players on the margin by increasing their effort on challenging shots. The data does not offer significant competitive leverage, however, until you track the data for the entire league. Only with the league-wide data can you tell if your players are creating an advantage relative to others in the league on shot challenges (higher leverage) or even more important, identify players you may want to acquire who challenge shots extremely well (highest leverage).

Without the context of the entire league, it is very hard to use data in any meaningfully competitive way. Tracking data for the whole league across multiple dimensions is a significant task but very worth it. For obvious reasons, I cannot reveal what data the Houston Rockets track but to track the significant data we gather we use a very large set of temporary labor that helps us develop these data sets that we hope will create an advantage over time. To be sure, you need strong analysts (and we have many) to then work with this data, but the leverage comes not from the analysis but from having the data that others do not.

With the Moneyball movie set to open next month, the world will once again be gaga over the power of smart analytics to drive success. While you are watching the movie, however, think about the fact that the high revenue teams, such as the Red Sox, went out and hired smart analysts and quickly eroded any advantage the Oakland A's had. If there had been a proprietary data set that Oakland could have built to better value players than the competition, their edge may have been sustainable.

One non-sports company that has known the importance of data to create an advantage for some time and has continued to outpace growth estimates every year because of it is Amazon. Their ability to use unique customer purchase data to drive customized product sales and pricing decisions across a product line with unprecedented breadth has been its key edge over time vs the intense competition from numerous retailers and e-retailers.

While I may not have convinced everyone that data is the key edge (especially the analysts reading this), people in the workforce everywhere should think about what key data you could gather that no one has or even what new product or service you could start that would give you access to data that no one has. That's the way to create an edge today.

"I'm your singer..."

2011-08-18T09:41:00Z

Keith Richards tells a great story about Charlie Watts, legendary drummer for the Stones.

After a night of drinking, Mick saw Charlie asleep and yelled, "Is that my drummer? Why don't you get your arse down here?"

Richards continues, "Charlie got dressed in a Savile Row suit, tie, shoes, shaved, came down, grabbed him and went boom! Don't ever call me "your drummer" again. You're my ... singer."

No drums, no Stones.

Who's playing the drums in your shop?

The Irony of the S&P Downgrade

2011-08-09T14:09:10Z

At Columbia last year I took a class called “Modern Political Economy” from Ray Horton. One of Horton’s favorite things to say was that sooner or later, if the U.S. didn’t solve its debt issues through the political process, the world’s capitalists would do it for us — as in the debt markets would punish us for our profligate ways, and raise the cost of borrowing.

(Hemera)

And yet, here we are: a ratings agency has downgraded our credit for the first time ever. But on the first day of trading, rather than going up, rates on our government debt fell to near record lows as money poured out of riskier assets in a flight for safety. When the markets closed last Friday, and the U.S. still had a AAA rating from S&P, the yield on the 10-year Treasury was 2.55%. It ended Monday down to 2.34%. The same thing happened during the stock market sell-off in the fall of 2008, when the rate on the 10-year Treasury went from around 4% to less than 2.5%. U.S. government debt is still the safest, most liquid market in the world. The S&P downgrade doesn’t change that. In fact, the immediate effect has been to make it safer. How strange.

Also worth noting, as Nate Silver pointed out on Twitter Monday afternoon, is that prices on U.S. credit default swaps barely budged on Monday, up just .3%. A credit default swap is essentially an insurance contract to protect against a company or a nation defaulting on its debt. If the market truly believed S&P’s downgrade was deserved, prices for CDS contracts on U.S. debt would have gone up significantly yesterday.

Finally, a quote in a Reuters story from a credit analyst caught my eye:

“The CDS market has been pricing the U.S. credit as an AA credit for some time,” said Otis Casey, director of credit research at Markit in New York.

U.S. CDS had traded below 2 basis points until late 2007, when concerns about the need for government spending to bail out financial institutions began. Fears over the rising debt burdens of governments have increased since this time.

“There is not a concept anymore of a risk-free rate,” Casey added.

I find this silly. U.S. T-bonds and bills have been a proxy for the risk-free rate for decades. Without a risk-free rate, modern finance essentially falls apart, since it is the building block of most financial models. People use it for determining everything from the value of a company, to the price of an option or a bond.

Of course, the very concept of a risk-free rate has always been relative. It assumes a zero chance of default. If you want to get technical, there isn’t a zero chance of anything really. But still, as the market proved on Monday, U.S. treasuries are still the least risky place to put your money in the whole world. So there you go: AA is the new AAA. Proceed.

The Problem with Perfection

2011-08-16T17:44:00Z

If you're not familiar with the law of diminishing returns, it states that at a certain point adding more effort will not produce significantly more gains. The challenge is knowing when you've reached that point. For many managers this is an important question: How far do I keep going on a project before I declare that it's "good enough" — and that further effort will not significantly change the outcome?

Several years ago I worked with a project team charged with increasing sales to its large corporate customers. At the first meeting the team brainstormed ways to drive up sales, but before moving ahead decided to collect data about current sales and survey sales managers and customers. Since it wasn't clear which ideas might work, this seemed like a logical next step — until the data analysis work dragged on for months as the team tried to reach the perfect answer.

I've seen this pattern in many organizations where, instead of moving into action, managers insist on doing more analysis. In some cases this is part of a company-wide "paralysis by analysis" culture, while in others it is a personal tendency of the manager or team involved. Either way this oft-repeated pattern results not only in wasted effort, but significant delays in moving forward.

From my experience, there are two often-unconscious reasons for this unproductive quest for perfection. The first is the fear of failing. In many organizations, coming up with a recommendation that doesn't ultimately succeed can be career limiting. So to avoid this fate, managers put in extra effort to get the "right" answer, and back it up with as much data and justification as possible. Then, if it doesn't work, nobody can say that they didn't do their homework.

The second driver of unproductive perfection is the anxiety about taking action. Studying problems and coming up with recommendations is safe territory; while changing processes, procedures, incentives, systems, or anything else is much higher risk. Action forces managers and teams out of their comfort zones, driving them to sell ideas, deal with resistance, orchestrate work plans, and potentially disrupt work processes for colleagues and even customers. So one way to avoid dealing with these messy issues is to keep the study going as long as possible, thus delaying any action.

Because of these psychological dynamics, breaking free of unproductive perfection is not easy. But if you are a project sponsor, leader, or team member, and want to move into action more quickly, here's an approach you can try: Instead of viewing "action" as something that follows research, think about how action can occur parallel to research. In other words, rather than coming up with perfect recommendations and then flipping the switch months later, start by testing some of your initial ideas on a small scale immediately — while collecting more data. Then you can feed the lessons from these experiments into the research process, while continuing to implement and scale additional ideas.

For example, in the sales case described above, the team shifted its patterns by selecting three corporate customers where they could quickly test some of their ideas, in a low-risk way, in collaboration with the sales teams. With one customer, the sales leader experimented with selling products and services together, rather than having services as an after-sell. A second sales leader added a paid advisory service to his offering. The third worked on building relationships higher up in the C-suite. The lessons from these experiments were then incorporated into the team's recommendations, which were then tested with several more customers and so on. Within a year, most of the corporate sales teams were working differently and increasing their overall sales.

Clearly the ideas that first emerge through this iterative approach are not going to be perfect, but by sharpening them through field-testing rather than theoretical analysis they will eventually become good enough to deliver results. Working in this way also reduces the risk of recommending the "wrong" ideas and the anxiety about managing change, since small-scale tests provide rapid feedback and engage others in the organization right from the beginning.

Perfection certainly makes sense when designing an airplane or an office building. But if the search for perfection is leading you to diminishing returns and an avoidance of action, it might be worth taking a different path.

Does your organization have a problem with perfection?

How to Sustain Front Line Process Improvement Activities

2011-08-05T12:34:29Z

Even though it's what keeps companies operationally in shape, front-line process improvement is hard to sustain. Why? Consider the story of Technicolor.

The manufacturer of DVDs was featured in a book on front-line suggestion system, All You Gotta Do Is Ask by Norman Bodek and Chuck Yorke (which I mentioned in a previous post on Toyota's approach to front line improvement). They described how each Technicolor employee had a target of suggesting two process improvements per month. That sounded like a great way to keep a process improvement program going. So I contacted the authors and several people who were at Technicolor to see where they are now. Their answer? The program is pretty much dead.

What happened?

In 2002 Norman Bodek, "the godfather of Lean," came to Technicolor's Michigan facility to teach its leaders about how to implement a front-line suggestion process. Managers spent a great deal of time on the plant floor watching Norman draw suggestions from the employees while asking questions about the jobs that they were performing. The top management team learned how to structure their time on the factory floor and how to listen.

After Bodek left, the suggestion system was led by Yorke, Technicolor's manager of organizational development. But there wasn't much activity until six months later when Mike Karol, vice president of operations, told his managers to make it their responsibility. Some departments started trying it and some developed a few sharp ideas, which generated excitement. To keep up the enthusiasm, departmental heads staged contests, threw pizza parties, and initiated other rewards. Some of the managers underscored the importance of the ideas to surviving the video technology change from VHS to DVD and losing work to other plants. In addition, the firm's new employee orientation program incorporated Lean and the Technicolor Improvement Process, the moniker of the suggestion system.

The results — at least in the number of suggestions employees offered — were spectacular. In 2003, the first year of the program, 5,000 ideas were volunteered. Three years later, the number was 20,000. Clearly, the Technicolor Improvement Process was critical to getting employees engaged in improving their work. And the Michigan operations received awards from their parent company for this program.

If we stopped the story here, we'd have a classic success story of front-line engagement. Employees could suggest and implement small changes in their work. It made their jobs better, reduced costs, and improved customer satisfaction. Two deeper benefits were even more important: The organization got in the habit of improvement and employee satisfaction went way up. Technicolor had followed the proven path to highly committed, motivated, and productive employees who loved to come to work. Attrition declined, saving on retraining.

Yet Technicolor didn't maintain the momentum. After 2006 it reduced its attention and energy on the front-line improvement. It might have been due to getting over the hump of the technology transition from VHS to DVD. Or perhaps it was because key advocates like Chuck Yorke left. More fundamentally, it could have been the attitude of Technicolor's corporate management, which looked to automation and sending work to Mexico to remain competitive, rather than engaging and developing their people in Michigan.

In talking with Jamie Flinchbaugh, a Lean coach at Technicolor, we arrived at another explanation. The front line always has lots of ideas for improving their work. The critical ingredient for sustaining attention on improvement is managers. A firm depends on managers taking the time to ask front-line employees for their ideas and helping them make the changes they suggest. Managers need to hold meetings to gather and respond to workers' complaints, questions, and suggestions. And managers need to wander around the workplace and ask workers what they can do for them to make their job better. At Technicolor the front-line people loved it, but only a few of the managers felt it was theirs. Many of the managers did it because Mike Kolar had them do it and felt it was extra work.

Therefore, whether front-line improvement sticks depends on what else is competing for managers' scarce time. Managers need to believe that spending time on nurturing front-line process improvement is worth it. Doing their own work — not helping the front line — will almost always have more incentives and be the more natural thing to do. It's easier for managers to stay in their offices. Managers were raised as individual contributors, where they added value by solving problems themselves. Most stood out by doing things better and faster than their peers, commanding and controlling, not by coaching and helping others to solve problems.

The natural tendency in the long term is for improvement activities to lose out to the day-to-day pressure for delivering work. To maintain their attention, managers must see the savings and efficiencies that the improvements provide. Front-line improvement activities can be rejuvenated by mechanisms that encourage managers to carve out time to talk to workers about process improvement. I've seen mechanisms such as scoreboards that track results, daily huddles to discuss improvement, and weekly meetings actually work.

Question: What approaches have you seen that have sustained front-line process improvement?

The Boss Effect: Study Shows Chinese Recognize Their Boss’s Face Before Their Own

2011-08-12T15:55:07Z

(Photos.com)

A small study published in the journal PLoS One, titled “Who’s Afraid of the Boss,” reveals key cultural differences in the way people react to their superiors. The study notes a particularly stark difference between Chinese and Americans. Researchers in both countries showed subjects a rapid series of photographs, asking them to press a button either when they recognized themselves or their boss. The abstract states:

Human adults typically respond faster to their own face than to the faces of others. However, in Chinese participants, this self-face advantage is lost in the presence of one’s supervisor, and they respond faster to their supervisor’s face than to their own.

Americans, on the other hand, are predictably different in light of a cultural emphasis on independence rather than collectivism.

We found that European Americans, unlike Chinese participants, did not show a “boss effect” and maintained the self-face advantage even in the presence of their supervisor’s face. Interestingly, however, their self-face advantage decreased as their ratings of their boss’s perceived social status increased, suggesting that self-processing in Americans is influenced more by one’s social status than by one’s hierarchical position as a social superior.

The study concludes with some thoughts on the nature of power and hierarchy:

Specifically, we suggest that the concept of a “boss” may hold vastly different meanings for individuals from East Asian versus Western cultures, representing a personal social threat in the former and general social dominance in the latter.