Thinking Faster

Stop thinking and start listening

Jeffrey Phillips — 2009-11-10T10:47:54-05:00

Last week I led a workshop on generating ideas for a new product for a financial services firm. I described research that indicated that customers of the firm had certain needs. Rather than delving deeper into the needs and understanding the root causes that kept the customers from complete satisfaction with the current offerings, several of the people in attendance asked why the customers didn't simply use the products and services on offer already, and went on to list all of the features and benefits of the existing products and services. It's as if I don't need to listen to your needs and requirements as long as I can produce a long list of features that you might find interesting. Rather than understanding what you need, let me tell you what we've got and let you, the customer, figure out if that's valuable.

There's a huge deficiency in our ability to listen to our customers, and I blame that on a couple of management and leadership mantras. The first is "active listening", which was supposed to be a panacea for not listening. Now we are supposed to listen and repeat back what we've heard from the customer, but mostly we are just queuing up what we want to say in response. The second reason we don't listen well is overconfidence based on misguided market research. Many firms have tremendous reams of data about customer satisfaction with existing products, but don't survey prospects about why they don't uptake existing products, and have no insight into new products or services. We are overly confident based on a reasonable grasp of about one third of the problem. Third, we often simply assume our customers are misguided or don't understand. It can't be our fault, so clearly the customer doesn't understand our offerings or products. The problem here is that it is likely that they don't understand since we didn't communicate it well, or simply didn't communicate the offering at all.

Businesses and individuals who comprise those businesses need to shut up, sit down and start interacting with customers and prospects on a much more basic level. As competition heats up and the pace of change increases, small mistakes are compounded and make it much more difficult to catch up. Put aside the "active" listening and the certainty that you are right and listen to the needs, wants and aspirations of your customers and prospects. Ask them questions rather than providing solutions. Get down to the root causes of their needs. Then, ascertain whether or not the products and services you offer meet their needs and the challenge is a lack of understanding or communication, or if your products and services are missing key features that will make the offering more compelling.

The problem isn't with the customer, it's with the business. Stop talking, stop thinking and start listening. Then, once you've listened, start thinking, start changing, and then start talking to your customer.

Humor Me

Jeffrey Phillips — 2009-10-30T10:51:24-04:00

Here's an interesting question: can making something that most people refuse to do, that might be "good" for them, interesting or fun encourage behavioral change? Rather than lecturing you to eat your vegetables, could turning the situation around and making it fun or rewarding encourage you to do things that are good for yourself, or your community, or the planet?

Of course this is the carrot and sticks argument. I can sternly warn you to do what's good, or right, in my opinion and threaten you with punishment. In this regard I am using coercion to force you to adapt your behavior to what I wish, or what I believe is correct. Your reactions are self-evident. You unwillingly adopt the behavior when observed, but probably revert to old behaviors when not observed, and attempt to subvert the system whenever possible.

However, if I can change your thoughts or behaviors by engaging you in something rewarding or fun, you have made a conscious choice without threats. You are more likely to repeat that behavior and retain that behavior over time, and model that behavior for others. So, if this model is so much better, why isn't a carrots model used more frequently? I don't yet know, but I'm forming some opinions.

A new Volkswagen initiative sparked my interest in this topic. You can see it at The Fun Theory, a new website that supports a program to encourage people to modify their behavior through fun and rewards, rather than sticks and threats. My favorite is a set of steps that mimic piano keys and allow people who use the steps rather than an escalator to play a tune.

What if your health insurer placed stickers on apples and other fresh fruits and vegetables. If you purchased one of these at the supermarket you could enter a contest to win an award for healty eating. It would seem any behavioral change we might desire could be influenced through fun, amusement and games or rewards. Imagine a trash can that returns a ticket to a lottery each time you place trash in the can. There'd be little to no litter if people had an incentive to clean up their own litter, much less an incentive to pick up the litter of others.

This kind of thinking is important because we face an array of demographic and societal challenges, in addition to all the challenges in the business world. New thinking and new methods to encourage the best behavior and modify behaviors over time is welcome, and I think can be rapidly implemented.

"normal times"

Jeffrey Phillips — 2009-10-27T16:54:56-04:00

I read a recent survey of leading executives in "innovative" firms that was conducted by Booz Allen. The results weren't surprising to me. Many of the leading innovators are actually accelerating their innovation efforts in the recession, betting that customers will demand new products and services as we come out of the downturn.

But that wasn't the only thing that interested me about the survey. What was really interesting was the professed mindset by one of the executives they interviewed. A gentleman from IBM suggested that in a recession or downturn "...that really drives a need for innovation and a level of creativity that you might no otherwise have in normal times." My question is: what is "normal times"?

Executives in business seem to be no less likely to have the "up and to the right" concept of market advancement that the rest of us have. That is, we expect each year that the markets will rise and the economy will grow. We never anticipate or plan for a slowdown, a downturn or a recession. These periods are considered "not normal". Yet if we look back over any reasonable period of history we can find plenty of slowdowns, downturns and recessions.

Less than ten years ago we were coming out of the "dot com" bubble, where the economy slowed and jobs were scarce. In the early 1990s the economy was very slow, which led to the ouster of the first Bush and the presidency of the first Clinton. There was a dramatic slowdown in the economy in the late 70s and early eighties that coined the phrase "Stagflation" and led to the presidency of Reagan. The oil embargo of the early 70s also sent price shocks through the market. This list is just off the top of my head - evidence that the market doesn't constantly rise (remember the 500+ point market drop in 1987?) and the economy doesn't promise an endless stream of new jobs.

So, what is this IBM executive expecting when he pines away for "normal times"? He's probably recalling a short period of time (2003-2007 for example) when the market grew rapidly. That time period has been bracketed by the dot com bust and the financial meltdown, both of which impacted the economy and job growth. Why aren't these considered "normal" times as well?

And, rather than expect the market to consistently rise and the economy to grow, why aren't executives better at predicting where the economy is heading and the implications for their business. As Wall Street watchers like to say, the most common word in any analyst call is the word "surprise", as in "we, the management team, were surprised by the (Fill in the blank) that happened to the market". Why do the executives get the big bucks if they are constantly surprised that the environment does not provide continuous "normal times"?

The economy has the ability to lull you to sleep, secure in a comfortable cocoon, safe in your assumptions that the economy will continue to perform the way you are comfortable with, and then rapidly shift and force your firm to think differently. Perhaps we should be a little less intellectually lazy and constantly test our assumptions about the economy.

Cheap, Fast and good enough

Jeffrey Phillips — 2009-10-23T16:39:22-04:00

As you know, in today's society, one data point is cause for discussion and two data points are a full on trend. I mention that because I have a sense that many consumers and the cognoscenti as well are beginning to get fed up with intricate, highly finished products that have too many features and bells and whistles that don't seem to add much value to a consumer. Yes, I'm looking at you Windows Vista.

What got me thinking about this was an article in September 2009 Wired magazine entitled the Good Enough Revolution, which is an article describing how the Flip Video camera zigged while the rest of the digital video providers zagged, and why Flip won. Basically, it recognized that people wanted video that they could quickly share and was simply "good enough" for replay or perhaps Youtube. They didn't need 999 megapixels with sophisticated lighting options and radical zoom, since they weren't going to Hollywood with the footage. The Flip was a stripped down, simple, small, pocket video camera that was limited to about an hour of video recoding, had no interchangable battery but was so simple my 9 year old can use it (and does on a regular basis).

The second data point was also provided by Wired magazine, which wrote in the November 2009 edition about Demand Media. Demand Media uses algorithms to assess what people want to learn about and then seeks independent writers and film producers to develop the content. Demand Media is the leading content provider to YouTube. The videos and writeups about how to change a lightbulb or how to eliminate unwanted facial hair are developed by amateurs who write, script and film videos or simple writeups for less than $20. Again, the concept is all about speed, low cost and "good enough" advice. We all know that if you are really going to remove difficult facial hair, you can either get cheap and "good enough" advice, or you can go see your dematologist for $400. So why not start on the cheap side?

Both of these articles point out that too often product and service firms fail to understand that for the most part we are "satisficing" agents. Other than hobbyists or perfectionists, most of us want to gain just enough insight or knowledge to get the job done. We don't want to be experts and don't have the mental capacity or time to become experts. Microsoft Word has thousands of features that may be important to some small minority of the population, but I'll never use them, and really can't be bothered to learn them. It might be interesting to see if Demand Media creates How To guides for software applications since the help functions are so ridiculously poor to begin with.

Further, most product developers overemphasize features. The Flip example goes on to note the "pixel" wars in digital cameras. At some point it didn't make sense to compete on the number of pixels anymore, but that's all the camera guys had in their arsenal. Flip countered with what appeared to be a weakness - limited pixels, but triumphed because of simplicity and low cost.

As Christensen and others have pointed out, many disruptions occur when the incumbent becomes too complacent and adds features (and costs) that its customers don't value and don't need. Disrupters spot the opportunities and provide products and services with less functionality and less cost, which the incumbent laughs off or ignores. Yes, I'm looking at you, 1970s GM. You and the other "Big Three" laughed off the imports until they ate your lunch. Why are we always surprised when history repeats itself?

Book Review: The Design of Business

Jeffrey Phillips — 2009-10-21T08:33:48-04:00

It's unfair that some individuals can write so well about topics that can be a bit esoteric. Roger Martin, who is dean of the Rotman School of Management at the University of Toronto, has produced yet another good book about thinking differently. His first book, The Opposable Mind, captured how good business leaders can see past the traditional "either-or" alternatives to create "both-and" options.

In The Design of Business, Martin offers a view that suggests that design should be the centerpiece or the starting point for much of the work we do in business, and why design is so important. He's not the first to suggest the importance of design, and a number of firms, such as IDEO, have been in the vanguard of the design-led forces. What Martin does well is to describe why design led thinking is important, and give examples of how to do it well.

Martin argues that all knowledge moves through three stages - a mystery, a heuristic and an algorithm. Mysteries are about discovery of new opportunities or research into solving intractable problems. Heuristics are rules of thumb that narrow the size and scope of mysteries and make them more manageable. Algorithms reduce the heuristics into repeatable processes.

This leads to two schools of thought in most businesses: exploration and exploitation, according to Martin. Most businesses are structured to exploit the algorithms, refining the way they do business and becoming highly effective and efficient, while neglecting the exploration of mysteries. Martin calls this the reliability-validity tradeoff. The vast majority of businesses want "reliability" - clearly defined processes that are easily repeatable and produce the same results. What he argues they need is more "validity" - creating the right and best outcomes through more exploration and less reliance on reliability. Three powerful forces emphasize reliability over validity: the demand for proof of the correctness of a new idea, an aversion to bias and time/resource constraints. These factors reinforce the bias toward reliability and repeatability over exploration and validity.

Once Martin has described his ideas, he then proceeds to use a few good examples to demonstrate the transition from a reliability driven organization to a validity and design driven organization. One chapter is devoted to the transition Lafley and Kotchka made at P&G, well documented in other places. Another chapter is devoted to Herman-Miller and the development of the Aeron chair. One of my favorite quotes from that chapter came from the Chairman of Herman Miller. He quizzed the design team about who they interviewed and received feedback from about the Aeron chair. When told they had not asked the sales force for feedback, the chairman said "That is right. You never ask the sales force what they think of a design. Their job is to sell it." Note that the designers spent hundreds of hours with actual customers, watching them work at their desks and understanding the strengths and weaknesses of existing seating options.

The book offers up a few more examples, ones that unfortunately have been used by others to demonstrate innovation and design, including Apple, RIM, Target and Cirque de Soleil. The weakness of many books about innovation and design is that they either have too few examples and must return to the same well, or that design thinking simply isn't widespread, so the same examples are used over and over. What's not clear is whether or not these firms are bellwethers or just happy accidents.

On the whole, this is a well-conceived and well-written book. In what could be a very esoteric topic, Martin keeps the concepts moving and introduces a lot of examples. He puts his finger on many of the challenges that those of us in the innovation and design space constantly face: too much short term thinking, too much demand for proof of an idea based on historical norms, too little time and too few resources for innovation and design.

This is a great book, and an easy read. It belongs on the desk of any executive or manager who is tasked with introducing more design thinking into an organization.

Social Media - Blessing or Curse?

Jeffrey Phillips — 2009-10-20T09:36:06-04:00

To be a bit contrarian is just in my genes, so I thought I'd take a minute to consider the value proposition and the challenges of social media. Right now it appears that most people who are active on Twitter or Facebook or other social networking and social media sites think that for the most part these are good and valuable services. I am beginning to wonder if that is true.

For those of us who are relatively active on blogs, and who use social networks like Linkedin, and who ocassionally tweet when the spirit moves us, there is a lot going on in social media that ought to be paid attention to. Many points of view, many perspectives and many voices. I can use Twitter as a trend spotting mechanism on just about any topic. I can seamlessly connect with colleagues and friends across so many different interaction media that sometimes just choosing the right way to connect can be a challenge.

Yet in a time when we need the methodologies created by David Allen to "Get Things Done" and a new book called the Tyranny of Email has just been published, doesn't it strike you that we are almost under assault by all the means of connection and networking? I regularly have people connect with me on Twitter I don't know and am relatively sure don't understand my point of view. I am regularly asked to "link" with people on LinkedIn or other social networks, and I don't know these folks. It could be they are the best in their fields, but I don't want to create links with people I don't know and don't share significant interests with.

Are we really better off with Twitter, Facebook, LinkedIn, Instant Messaging, email and a host of other interaction tools and technologies? Certainly there's no lack of content. In a given day thousands of tweets are tagged with innovation as an example, so clearly a lot of people believe they have a lot to say or contribute. But how do we discern value in all of this firehose of communication? Is being more connected but less engaged really valuable? If many people struggle to respond appropriately to email, what are all the other communication vehicles doing to an attention starved populace? Is it really all that important to know what Ashton Kutcher thinks about Demi Moore or what he is doing right now?

We've become a population that is afraid to be "left out" - we need to know stuff that really has no value and to a certain extent we are at risk of filling our lives and brains with meaningless information at the expense of meaningful dialog and interactions. It's probably time for a careful analysis of all of the social networking tools and their places in our work lives and private lives, to ensure a balance between communication, understanding and engagement. If people are too busy and feel too interrupted by email to think effectively, what will layering on all the other demands for your time from products like Twitter, Facebook, IM and other tools do? Can you live and work successfully in constant interrupt mode?

Knowledge, ability, nimbleness

Jeffrey Phillips — 2009-10-14T08:25:45-04:00

It struck me recently that the "too big to fail" crowd has it all wrong. In most cases, the companies that are too big to fail are simply too awkward to change.

Think about an entrepreneur or a small firm. The firm may have a some knowledge or insight that is valuable, and is very nimble, but lacks the scale and ability to reach a wide audience. Ony the advent of the internet has changed this dynamic, meaning we can now have very small companies provide services and information to a wide audience.

Over time, small companies grow larger and gain more insight and knowledge, yet they increasingly become less nimble, to the point where changing the focus or intent of the firm, or how value is delivered is difficult if not impossible. Bureaucracy, organization and process add value as you grow the firm until those things become barriers to change and agility. Many of our largest firms really struggle to get anything new or interesting accomplished, since change requires a different set of skills.

Perhaps the best operating model is to achieve the best of all three components - knowledge, ability and nimbleness. That would mean gaining enough skill and insight to be really differentiated, the ability and scale to deliver that value effectively and the nimbleness to adapt to change and market conditions. Most likely this organization would be a holding company, made up of a lot of small to mid-sized companies or lines of business that are large enough to create learning curve scale but small enough to remain nimble and agile.

Historically only two of these criteria appeared important - knowledge and ability to scale. Once a firm demonstrated insights or knowledge that was valuable, and the ability to scale, the sky was the limit. That thinking was predicated on a relatively stable environment where change happened slowly or not at all. This was true from the end of World War 2 to about 1990, when globalization and increased competition changed things. These changes were exacerbated by the rise of the internet, which allowed many small but smart companies to "scale" rapidly.

Right now the banking firms are excellent examples of knowledgable, scaled organizations that are locked into traditional models and slow to change. Many banks are still only open 8-4 and only Monday through Friday. They seem to think the financial world came to a screeching halt in 1950. Meanwhile a significant number of smaller disrupters and competitors, much more agile and facing far smaller scaling costs (see Mint) are chipping away at the customer base of the larger financial institutions. And like good bureaucracies with something to protect, the larger banks are fighting change and resisting new legislation, rather than accept the fact that the world has changed. Large and smart but rigid isn't an operating model anymore.

Removing the Blinkers

Jeffrey Phillips — 2009-10-12T09:00:27-04:00

As a consultant, I have the opportunity to interact with people in a range of industries. Since I work primarily in the innovation and product/process improvement space, I don't claim to be an expert in any particular industries. My value add is bringing new tools and new perspectives, plus the experience of knowing what works, and what doesn't work, to my clients.

I like, however, to be informed about what is going on in the industries I happen to be working in, so I usually set up a Google Alert with key words about the industies where I am working. I also follow blogs that seem interesting or influential, and track the twitter-rati in the specific spaces where I am actively working. This helps me understand the current issues and new ideas in the markets where my customers live every day.

So it comes as a real shock to me almost every time I speak with my customers that they have very little knowledge of their own industries outside of a very narrowly framed perspective. If I interact with a senior product manager, he or she may know a great deal about the immediate competitors, but virtually nothing about new startups or firms in adjacent industries that are seeking to enter the space. Recently I held a training session with a number of bankers. Over 70% of the people we talked to were unfamiliar with Mint.com, the fastest growing financial website on the web, and just recently acquired in a major acquisition by Intuit. That wasn't difficult information to find, and the trends demonstrated by Mint and other web-based financial management tools have a huge impact on the bankers. Yet they were blissfully unaware. However, this lack of foresight and exploration isn't limited to bankers, I've found it to be the case in just about every industry I work in.

Most people in an organization do a good job of reading the trade rags for the industry - the "approved" voices. In banking that's American Banker, and every industry has it's own Gray Lady. However, for most people that's where the reading and scanning ends. There's little reading in contrarian magazines or blogs, and very little interaction with social media. Reading about issues and emerging threats in adjacent industries or market spaces is apparently as common as reading Beowulf in the original. Yet most competitive threats come from adjacent markets or new entrants to existing spaces.

Why is there such a lack of interest in what's happening in the market? I don't understand if it is a lack of interest or passion, or a helplessness that's brought on by the feeling that one couldn't do anything about a new discovery anyway. Some of the easiest market intelligence and evidence of trends is developed and presented to you every day. How are you using it? Do you have your blinkers tightly adjusted, or can you pick your head up and see what's going on all around you?

Defining Transparency and why it is important

Jeffrey Phillips — 2009-10-05T15:51:24-04:00

In my last post I asked for more transparency. It occurred to me that, much like pornography, it's hard to define but we know it when we see it. So, rather than talk about abstract concepts like transparency, let's describe what we mean.

Currently in the banking space, there is very little transparency. When you open a bank account, there's a ton of legal gibberish thrown at you and you are simply expected to sign it. Transparency in this case would be a simple document that calls out the important rights and obligations - for you, and for the bank. When you are denied credit or turned down for a loan, there is often little transparency. In this case transparency would be a clear indication about why you were denied, and perhaps some guidance on how to correct the problem. Recently I was charged an overlimit fee by a credit card company. When I called to ask to have it waived, I was told that wasn't possible. I asked about how to escalate the issue and was told there was no escalation procedure. Tough luck! I just continued to press the issue and it was finally resolved. I am uncertain whether or not to keep the card. There was a complete failure of transparency in the support process. I would have preferred a simple progression with clear communication about the next steps. First I was told there were none, then it turns out perhaps there is some escalation possible.

Beyond the banking industry, I'd like more transparency in government. The Obama administration entered and promised more transparency. Remember when Obama promised to post any bill at least 72 hours before a vote? This administration is as opaque as the Bush administration, and neither seemed to understand the importance of transparency when it comes to trust. We have an engaged, active electorate that wants to see the fine print, and wants some sunshine on the sausage making. If Charlie Rangel has ethics problems, let's bring them to light NOW. Hiding behind obfuscations, whether that's executive branch decision making or 1000 page bills that don't get read before a vote don't create transparency, and create even more corrosive distrust.

Someone recently described transparency this way:

"Transparency is also about what you ask people- not just what you tell them." Jennie Bledsoe, Dir. Internal Comm, ServiceMaster.

Partially correct. True transparency would be to do as much of your work in the open, so people don't even have to ask why you do what you do. Trust comes from believing that your partner, your supplier, your government has your best interests and outcomes at heart and works to fulfill them.

Reagan said "Trust, but verify". I don't need to verify the things I can see and experience. Transparency provides visibility and answers questions before they are asked.

In a world full of bloggers, Tweeters, socially connected Facebookers and friends, it may be hard but it is rarely impossible to find out what is going on. The more difficult a firm makes it to understand its inner machinations and decisions, the less people will believe in it and the more they will drill in to find out what's going on. A decade ago it took several years to prove Enron was corrupt, but it was outside analysts that discovered the truth. More recently it took several years to discover Madoff's deceits, but it was uncovered as well. The Obama administration is facing calls for more transparency, from troop levels in Afghanistan (already leaked) to decisions about health care.

The banks haven't yet figured it out, but they will, or they'll go the way of the dodo.

We, the consumers, are too engaged, too smart and too connected to ignore the walls of obfuscation and the deliberate attempts to impugn our knowledge and ability to interpret. Make it easy on yourself, design your business for transparency and customer engagement, rather than building walls and keeping secrets.

More transparency please

Jeffrey Phillips — 2009-09-28T17:38:29-04:00

I wrote in my last post about three facets of competition that I think are becoming more important - speed, collaboration and transparency. The first two are relatively obvious. We need to move faster, make faster decisions and deliver products and services more quickly to a world that has moved from 33 1/3 to 78. If you don't know the reference, ask your grandpa. He will.

Collaboration is a given as well. If none of us is as smart as all of us, then eventually we'll only get work done in distributed teams, some of whom are my employees and some of whom are contractors or just trusted partners. We can see the need and desire for collaboration growing in front of us, namely social media.

However, the concept of transparency threw a few people for a loop. I tossed out these three competitive facets in a discussion with a conference organizer and she said: speed, yep. Collaboration, yes. Transparency. What's that?

Simply put, transparency is the notion that how you do what you do is as important as what you do. Transparency builds engagement and trust, not something you can buy. Today, more than ever before, consumers want to understand the rules that govern the relationships. They want those rules to be clearly spelled out, simple to understand and in their face, not easy to ignore. Don't believe it? The US House of Representatives just pulled a provision out of the bill that will dictate how financial firms are managed that would have mandated a plain, simple, english language document to accompany all financial products, rather than the gobbledygook we get now. If the US Congress came within a hair of mandating transparency on banking, traditionally one of the most opaque industries around, what demands do you think consumers are placing on other industries?

Collaboration via Facebook is nice, but when firms have Facebook pages we begin to get a glimpse inside the organization. Shortly I believe that many firms will have ombudsmen, just as the major newspapers do, to explain their successes and shortcomings to consumers in the way a newspaper ombudsman will take his or her newspaper to task for failing to cover a story. But beyond mere interpreters of organizations we as consumers need to be able to peer in and understand what's happening. One of the biggest complaints about the financial institution meltdown was that consumers could not get straight answers, or find anyone to give them answers, about how decisions were being made. The financial meltdown will cause us all to flee not necessarily to quality, but to transparency. If someone is going to lose my money, at least I better be able to understand how they plan to use it.

With the increase in educational levels and access to professional insight through bloggers and analysts, we can understand the interactions and decisions of most businesses now. I may not fully understand a CDO, but I can find someone who will dissect it for me inexpensively or for free. It may as well be the firm that is trying to use the tool. At least in that case they can make the case as to the tool's usefulness and the rationale behind it.

People have less trust in most institutions than ever. One reason that trust runs so low for the US Congress is that the representatives and senators appear unwilling to allow us to watch how the laws are made, and to read and understand the legislation before rushing to take a vote. If the old "back room" days are over, then prove it. Make this the most open and transparent administration and Congress. Otherwise, prepare to lose even more respect and trust.

In life, in business and in government, we need, and are ready for, more transparency. At a time when traditional media (newspapers, television) is failing to give us the insights we need, these organizations can choose to become more transparent, or they can lose us by blocking our vision about how they do what they do. The more transparent, the more trust. The more trust, the more risks you can take. Right now, our government and most businesses fail to understand this.

The New Iron Triangle - cheap, fast and reliable

Jeffrey Phillips — 2009-09-23T16:51:18-04:00

As an engineer by training (I got out as quickly as I could, to the more esoteric world of marketing) I learned the engineering iron triangle. There are always three demands on any product - make it:

Cheap
Fast
Reliable

And the real kicker, the real sidesplitter that engineers really enjoy, is that they add you can choose any two of these, and the third one is dictated to you. In other words, you can have something fast and cheap, but probably not reliable, or something cheap and reliable, but not quickly. This thinking was implanted in our brains and formed the tradeoffs when creating a new product, or project.

I'd like to suggest that there's a new iron triangle - the focus on how we need to work today. The great thing about the new triangle is that all three legs are valid, all the time, and the more we rely on each leg, the more value is generated. Sort of a virtuous cycle, as far as triangles are concerned.

My new triangle is composed of three attributes or features that dictate how we ought to work:

Speed
Transparency
Collaboration

Note that many of you will say, "well, the old rule of pick any two still applies". Can you have speed and transparency, without sacrificing collaboration? Can you have rapid collaboration and transparency? I believe the answer is that all three are important, and when taken together, create a completely new way of working.

Let's look at each in turn. Why do we need "speed"? Given the pace of change in our products, services and general environment, speed is of the essence. Even fast followers have to be fast when product lifecycles and market trends get shorter all the time. Taking a slow and methodical approach is fine if you have a clear market leadership position and a significant lead over your competitors. Otherwise, get faster. Learn how to make decisions under less than ideal conditions. Don't wait for information, seek it out or have it seek you.

Why do we need transparency? In today's market, anyone and everyone is an analyst and a critic. Firms that close themselves up and don't engage the market are held in suspicion, while firms that embrace their customers and prospects are held in high regard. The more transparent your processes, intents and methods, and the more easily understood, the better. We all may be smarter, and have more information available, but that doesn't mean it's easily understood and digested. Complexity is out, transparency is in.

Collaboration is the final point, and it is the recognition that there are many more smart people in your customer base and your partner base than in your firm alone. Anyone still "going it alone" anymore is banking on the fact that their organization is smarter than the competition, and also the customer base, the partner base and the potential entrants. If P&G does not believe it can create all of its products and services in house, and turns to customers and partners for advice, what makes you think you can "go it alone"?

Now, the thinking is that collaboration may enhance transparency but diminish speed. That's true only if there's no trust involved. If, beyond mere collaboration there's trust established, the speed of the work can be increased as well.

To my way of thinking, these concepts - speed, transparency, collaboration - are the key building blocks for successful work in the future, building on what the market expects and changing radically from constraint based thinking (choose any two), and opening up to a completely integrated and engaged community.

Comparing Health Insurance to Auto Insurance

Jeffrey Phillips — 2009-09-22T16:56:12-04:00

I've heard recently the President and members of Congress compare Health Insurance to Auto insurance. After all, most states require that a driver carry auto insurance, and if we can require insurance for drivers, why can't we require health insurance for individuals. There's a couple of fallacies in this argument, it seems to me.

First, driving is a privilege not a right. Your rights to drive can be suspended or revoked. I guess one could say that life is a privilege and not a right, but once you are here, at least in the US, you are guaranteed Life, Liberty and the Pursuit of Happiness. No mention of a right to health care, or the right to drive a car. So, for those who desire to create a new mandate or moral obligation for health care, comparing that to driving or auto insurance is a specious argument. Everyone has a right to live, but not everyone has the right to drive. I think a "moral" case can be made that everyone should have reasonable access to decent health care, but that's not a corollary to auto insurance.

Even more so, the reason people carry insurance and that the states require it is to protect the other guy. Most auto insurance protects the second party, not the primary holder. The states are stepping in to ensure that everyone has some level of coverage, but most of any individual's coverage applies to the second and third parties, not the individual themselves. Additionally, since most cars are purchased with loans, insurance is required by a bank to protect the asset which was used to secure the loan, namely, the car. Therefore there is a vested interest from an organization providing funds to an individual to purchase a car to ensure that the payments on the loan can be completed even if the vehicle is totaled. No such actively involved third party exists for most adults, unless the government is going to become more like a parent.

As individuals, we receive a corollary to this kind of insurance from our parents, until we reach the age of majority. Our parents (or more specifically their employers) provide health insurance for children. Parents have a vested interest in their kids and their healthy upbringing, until the children become adults in their own right (similar to the point you complete payments on your auto loan). At that point (the completion of the auto loan or the age of majority), things change dramatically. Kids are responsible for their own insurance, and you can radically change your auto insurance. No legal actor has a financial investment in you, or your car, at this point.

Finally, there's no concept of community rating or guaranteed issue in auto insurance. A person who has had a number of accidents or drunk driving offenses will find it difficult to get auto insurance, and will pay a lot for it, much more than a careful driver. Auto insurance firms rate drivers on a number of factors, as any person who pays for the insurance for a teenaged male driver can attest. The same corollary holds today for health insurance. People who are healthier tend to demand fewer services and cost less, so their insurance costs are lower. There's been no push by Congress to demand that auto insurers bill everyone at the same rate, and, if they tried to do that, all the "good" drivers would demand a discount for their safe driving. Additionally, auto insurance firms don't have to accept a potential customer. If they believe the prospective driver is dangerous, they will simply reject them. According to legislation working through Congress, the health insurers may not have the ability to reject someone who has poor habits or poor eating habits or does not exercise. There's simply got to be consideration of personal responsibility, both in health care and in driving.

The comparison between auto insurance and health insurance is a notable one in the only area the proponents don't want it to be: when it comes to those who avoid insurance. In health care, usually only the young and very healthy actively avoid insurance, since they believe they won't need it. Unfortunately, these are the folks who would subsidize sick people if the healthy ones acquired insurance. Conversely, the folks who avoid auto insurance are usually the scofflaws who cannot afford insurance or who cannot obtain insurance due to poor driving habits. These folks drive up liability insurance costs for everyone, and would do so with insurance or without. People actively avoid insurance even when it is required, as evidenced by auto insurance. The same would be true under a personal mandate for health insurance.

Whoever dreamed up the concept of comparing auto insurance (since it is required) with health insurance didn't really think it through. There are so many differences that trying to compare the two concepts is like comparing vegetables and auto parts. Non sequitur, totally.

The faster we go, the tighter we cling

Jeffrey Phillips — 2009-09-08T10:50:23-04:00

I don't know about you, but I've practically given up riding the lastest roller coasters. Some of the new "amusement" rides at major theme parks seem more like astronaut training vehicles rather than my concept of "fun". It seems the faster the rides go, and the more twists, turns and g-forces that are placed on my spine, the more tightly I cling to the safety bars.

I was thinking about this analogy and how well it aligns to modern management. Every management theorist will tell you the pace of change is accelerating. I had the opportunity to hear Gary Hamel speak recently, and he is always enlightening and entertaining. He focuses much of his talks on the rate of change in our businesses, and how poorly suited the existing hierarchical management structure of most businesses are to rapid change. I believe it's not only the organizational structures that resist change, it is also the individuals within the structure. As the speed increases and the risks and uncertainties grow, I suspect we cling very tightly to the things we think we can control and assume are givens. In fact, we probably overly emphasize structures and processes because so much else is changing.

Think about it - if your market, your customers and your competitors are changing - and changing quickly - then you really don't have much control over those factors of your business. As humans we are comfortable when we have "control" over the situation and are uncomfortable when we don't. Therefore, we often will work to control the things we think we can control, which leads to my "cling" theory. Right now many businesses are clinging to things they think they can control, while many of the most important aspects of their business are changing rapidly. All focus is placed on internal, process oriented programs that don't add value to the customer and his/her experience or value, while all opportunities to make changes that do benefit the customer are shunned because we can't or won't attempt to control them.

There's an element of safety, of comfort, of security in clinging and focusing on the things we know best. We often joke about "arranging the deck chairs on the Titantic" but if that's all you could control in that situation, perhaps you'd be out there with the deck chairs as well. We tend to turn away or ignore rapid change hoping that it will fail or pass us by unscathed. Often, by the time we understand the implications of the change, it's too late to respond. Perhaps we need to untether ourselves from our safety harnesses and rev up our organizations and our cultures to not merely meet the speed of change, but accelerate beyond the speed of change - to the point where everything else seems to move in slow motion. Or, we can cling tightly to our treasured norms and processes and hope that the change doesn't affect us. Here's hoping!

The organization of the future

Jeffrey Phillips — 2009-09-02T17:28:39-04:00

All good ideas spring from original thought or careful synthesis. I say that because I think I have a good idea, but it is the result of synthesis not original thought by yours truly. I've been thinking about the organization of the future, after reading and hearing Hamel and Dan Pink, and reading and listening to Seth Godin. The material that informed the following discussion is based on The Future of Management, Pink's discussions at TED and Seth Godin's concepts on Tribes.

Here goes. The characteristics of an organization of the future are:

Nimbleness
Adaptiveness
Ability to partner
Speed (in decision making and in action)
Decisiveness
Flexibility
Clear definition of purpose
Places value on human knowledge and capital
Communication

Why are these factors important?

Nimbleness is important because of the pace of change, which is accelerating. A long lived product today may last six to 12 months, whereas only a few years ago product lifecycles were several years or more. Whole industries change, rise and are eliminated in a period of a decade now. The same is true for adaptiveness. Firms must understand and communicate what they do well, but must understand that as markets and demands change, they must adapt to the market. Firms that fail to do that effectively (GM/Chrysler as examples) won't often be propped up by the government.

The ability to partner is critical going forward. Few firms will be able to "go it alone". They won't have access to new technologies, or markets, or knowledge. Firms that understand how to partner and build communities (and platforms like the Apps for iPhone) will succeed.

Speed in decision making is important due to the pace of change and the increasing number of competitors and substitutes. While you are pondering and thinking, and waiting for the decision to work its way up through 10 levels of management, the competition is testing alternatives and prototypes and is releasing its second or third version of a product or service. Who wins? The firms with the most insight, experience and knowledge. You don't gain knowledge by waiting for decisions.

Next let's consider purpose. Hamel and Pink argue that people want to work where they are engaged and on topics where their passion lies. A firm that has a clearly defined purpose and communicates that purpose effectively will attract people who have passion for their work. In the future, human capital, intelligence, knowledge and the sheer desire to create new and interesting things will win over efficiency and process. Note that we placed communication on the list - not just communication to customers, but to employees. The firm that has the best communication about its strategies, goals and outcomes will attract and retain the best people, and has less work to do to attract customers and partners. We don't need broadcast marketing anymore, social media will help us determine which firms are true to their goals and deliver the products and services we want and need.

If you are still with me, then which firms today have these attributes? Few that I've seen, but I'd like to hear your thoughts. It will take a tremendous amount of work to transition the existing firms to align to these goals and attributes, but they must start now or get left behind by the new entrants and disrupters that are gearing up and have these attributes as part of their DNA.

The leveling power of best practices

Jeffrey Phillips — 2009-08-28T14:16:17-04:00

Enough! I think I've finally had my fill of "best practices". Everywhere I turn someone is talking about "best practices" as if that's the mantra for perfection. I think it's time we turn the concept of best practices on its head, for several reasons.

First, best practices should matter if they are important and relevant. If another firm demonstrates that it has the best practices at navel gazing and lint collecting, do we necessarily want to understand or match those practices? We need to improve practices and processes that are important. Do you know which ones those are?

Second, best practices are, at best, leveling. What I mean by that is that what we call best practices are really just well documented practices capably delivered. They are usually efficient and flawlessly executed, but that doesn't mean they add value or will necessarily improve our value proposition. At best we achieve what others have already achieved.

Third, best practices by definition are copied, so there's really not a "best practice" for very long. There's a "common" practice that we've all agreed seems to work well and we've all adopted. This also means that my firm, by adopting another firm's best practice, has eliminated another area of differentiation and made it more difficult for individuals to ascertain differences.

What I think we should do is decide what factors or capabilities in our business need to be "best practices", which need to be "best in class" and which capabilities or factors we believe we practice the best. Note that I am turning the phrase around on purpose. Too often we simply want to achieve "best practices" but we don't stop to consider what we do best and focus on that. I guess I'd rather be really good at one or two things and just ok otherwise rather than completely average and completely similar to everyone else.

So, here's the test: What processes or capabilities within your organization are:

below best practices
at best practices
best in class

and what capabilities, attributes or knowledge does your firm have that it "practices the best?" In other words, what do you do that no one else can even come close to doing as well?

Let's use retailers as an example. I'm going to guess that most of Wal-Mart's processes and cost management are best in class, if not the practice they do best, but they don't have the best customer service or experience. I doubt that Nordstrom's is best in class at purchasing or inventory control, but they excel at customer service and customer experience. These two firms have chosen to focus on specific capabilities and reinforce those in their work. I doubt that Wal-Mart cares what JC Penney's best practices are, and neither does Nordstroms.

Instead of trying to reach some industry average and "blend in" - why not reverse the question. Rather than align to best practices, why not describe and reinforce the practices where you are the best?

First, do no harm

Jeffrey Phillips — 2009-08-26T08:19:38-04:00

It struck me recently that many firms that provide products and services to me seem to succeed when I fail, or at least don't have any interest in providing me with a consistently high quality outcome. Evidence in the first case is probably best seen in the financial services sector, where fees and penalties apply in so many different cases. Most banks make money when I bounce a check or go over my limit on my credit card. This is an intentional business model for revenue generation. In the second case, terrible to non-existent customer service, is an intentional cost saving approach. I believe many firms make it as difficult as possible to find and receive decent customer service as a money saving device. Both of these business models violate the Hippocratic oath, and while I understand it is usually applied to the medical profession, perhaps we should investigate the business models of the companies we work with to understand their philosophies.

Winning when a customer loses is probably the worst possible business model if your headquarters isn't in Las Vegas. People will willingly play the slots and craps because they get entertainment value from the experience. They know the tables and slots are rigged against them. However, it is asinine and just short of criminal to expect customers to have any loyalty to firms that profit when a customer makes a mistake or to provide a product or service that your firm has no intention of supporting. Today I read Paul Williams Think for a Change blog and he was discussing the same topic, and used several examples to make his point. Delta and his bank both stood to profit from changes or mistakes that Paul could make. In the case of his bank, they were charging him a fee for access to money he didn't need, in case he made a mistake!

Offering a product or service and then failing to provide decent customer service is also a terrible business model. If you are interested in the revenue and profits generated by your product, then understand as well that there are customers ("users") of your product who may need help. Strangely, some of the best customer service I receive is on small web apps where there is little margin or revenue, while I have documented previously my issues with ATT phone and DSL service. That ATT cannot provide decent person to person service for phone and DSL is simply beyond me. It can't be a lack of capability - ATT is one of the dominant and largest telecommunications firms. In this case it has to be a decision to minimize customer support.

Well, perhaps we need to find new firms with new perspectives that have business models aligned with customer success rather than with customer failure. In this market, where information flows freely and I can shift assets from one bank to another, one telecommunications provider to another, how long before the firms that "win when I lose" will see a shift of customers? Paul uses the shift from legacy carriers to Southwest. How about the movement from ATT and other legacy carriers to Skype?

I'd like a firm that structured itself to win when I win, but I'd settle for just doing no harm.

The most valuable asset in your firm

Jeffrey Phillips — 2009-08-24T08:00:00-04:00

What's the most valuable asset in your firm? It should be relatively easy to identify. It will be the item or capability or information that people hoard, or argue over. It could be that your firm thinks knowledge is an asset, or certain individuals are the most important assets, or that money is the most important asset. I am here today to tell you those are all secondary. The most important asset you have is employee engagement. If your employees are fully engaged and excited about what they do, and why they do it, everything else falls into place.

Why would I say that? Many people think they want the smartest people, or the best processes. However, if I hire Einstein to work for me but he finds the work uninteresting or isn't engaged and motivated, I lose in two counts. One, I have a highly paid person who is underperforming, and two, he or she is taking space for someone who might have been more engaged in the work and the outcomes. Perhaps we should blame this on our hiring processes. We are constantly seeking the "best" person for a job, which usually translates to the person with the most experience or knowledge. But that doesn't mean the job will be engaging for that person. Perhaps we should first present the goals of the company and the expected outcomes of the work, and then ask the potential employee - does that make you excited? Will this be engaging for you? Because if we hire people that simply aren't engaged, what's the point?

Studies show that, across industries, approximately 20% of the people in any organization are relatively or fully engaged by their work. Over 60% aren't engaged and the remainder is actually working against you. This means that approximately 80% of your workforce, on average, is simply clocking time, doing the minimum expected and nothing more, at best! They reserve their passions and interests for things other than their 8 to 5 job. People who don't have excitement and passion about their work don't necessarily perform worse than others, but they have little incentive to do more than what's required.

Why is engagement so low? First, we treat people as expendable commodities. We think that we can always get another purchasing clerk or legal counsel. And in many cases those beliefs are correct, as long as we don't care if they are engaged or not. Second, people need to believe in something in order to be engaged. They need to care about their work or its outcomes. Most people can't see the results of their efforts on a day to day basis, and get very fuzzy guidance and direction from their executives. So there's little that's reinforced. Third, most businesses are a bit suspicious of people who are excited about their work. That seems a bit weird. We prefer dispassionate dialog to cheerleading. Fourth, we overly emphasize the size of a paycheck over the rewards of a job. Sitting in on my daughters' high school orientation, I realized that their English teacher was truly engaged. He loves what he does, and probably earns a lot less than he could otherwise. Perhaps if we all were better at working at what engaged us, the dollars would follow.

If your firm is like most firms, approximately three fourths of the employees are unengaged or actively disengaged. That's a failure of leadership, vision and communication from the executives. You need to create a compelling vision and demonstrate the clear value of what the work your firm creates. Once you've done that, if they are still disengaged, then they aren't working in jobs where their passion lies, and the employee should move jobs, firms, or careers.

No matter how smart, how capable or how valuable, if your people aren't engaged, your firm is losing value.

Book Review: Oops!

Jeffrey Phillips — 2009-08-21T09:43:21-04:00

On occasion I am asked to read and review new books that are just about to be published. I enjoy doing this and often learn a lot about management topics. Recently I was asked to read and review Oops! 13 Management Practices that Waste Time and Money by Aubrey Daniels.

The simplistic review of this book would be to point out that just about everything we do as managers is poorly thought out, or even distracting to our goals, from employee of the month awards to how we review and rank employees. Daniels looks at most of the management tools and techniques that we use on a day to day basis and describes why many of them actually inhibit the behaviors and outcomes we want.

From Employee of the Month to Jack Welch's "rank and yank" to promotions, many "tried and true" programs that we use are not valuable. I think that Daniels often overstates his case, but you'll get the point from one of my favorite examples in chapter 5, entitled Rewarding things a dead man can do. His point is that we often expect or reward things that a dead person can do. For example: are you at work a lot? Did you avoid having accidents? While these are things we reward and value, Daniels argues quite successfully that a dead man can spend many hours in an office, and never has an accident. Rather than reward for avoidance, reward for specific accomplishment.

His investigation into the "rank and yank" philosophies of Jack Welch are also insightful. Many organizations that employ this approach have simply "assigned" rankings to employees and ensured that low rankings get passed around, so no one is ultimately hurt by one low ranking. Additionally, the concept is based on the expectation that the employee pool is a normal distribution. What if your team has successfully hired an employee pool skewed for success? That means your "lowest" performers are probably better than what you'll find in the prospect pool!

Daniels looks at 13 management practices that he thinks should be changed or avoided all together, and I think he is on point with many of them. His examples and focus seem to be more valuable for mid level managers and for managers who work in discrete, measurable tasks. Given that many white collar jobs are difficult to measure or to define specific, valuable outcomes, some of his suggestions don't seem to align to a knowledge worker, white collar workforce.

However, it is good to question the managerial tools and techniques that we use. Too frequently we simply adopt tools that have been used before, rather than question their effectiveness and the outcomes we are trying to achieve. Daniels does a good job breaking down the risks and consequences of a number of very heavily used management techniques, and any manager can learn from this book.

Asking the right questions

Jeffrey Phillips — 2009-08-20T14:56:58-04:00

Just a thought - but I'd rather work with people who ask good questions rather than have them assume they know the answers, or worse, have them assume that others have the right answers.

There's an old saying that you should judge a man's wisdom by his questions and not by his answers, and I believe that's true. Too often in most businesses asking questions seems intrusive, as if you are trying to catch someone off guard or perhaps suspect they haven't done their homework. That's too bad, because far too many questions go unasked, and because of that far too many assumptions go unchallenged and far too many half-baked ideas are implemented.

In the current environment we praise people who quickly arrive at an answer rather than working with people to ensure their perspectives and understandings are accurate, relevant and complete. Asking questions about an approach does not have to be antagonistic, and should be valuable for both the asker and the askee, if that's a word. However, many view this as simply slowing down the process. People who ask questions are considered difficult to work with. I think in many cases we have become comfortable with the elephant in the room, and would rather everyone agree to ignore it than to bring it up.

How do you evaluate the people you work with, and work for? Do you seek out people who ask good questions to learn and to uncover new information, or do you prefer people with the "answers" at the ready? If you have a bias towards one approach or the other, are you conscious of your blind spots?

How not to talk to your customers

Jeffrey Phillips — 2009-08-17T11:14:03-04:00

OK I've finally had it up to here with ATT and now I am going to vent my spleen. How a firm that is in the communications and information industry can be so terrible at communicating with its customers and interacting with its customers is simply beyond me.

Simple things first. I finally broke down and purchased an iPhone, which obviously makes me an ATT customer for Wireless service. I have, for many years, had an ATT email account. On my previous cellphone I had no problem receiving my corporate email and my ATT email. Guess which email doesn't seem to work well on the iPhone? I've called both Apple and ATT and neither can make the ATT email work on the iPhone. No biggie, but who thought this through?

Bigger issue. My home phone line was struck by lightning and I lost my DSL and my home phone line, as well as having my phones fried. ATT took a tremendously long time to restore the basic phone service, and even longer to restore a modem for our DSL. Then, they told us we'd have to pay for the DSL modem, then we wouldn't, and so on. My patient spouse was on the phone to a call center in the Philippines for 2 hours, talking to people who could not make decisions and who were obviously reading from prompts. More than once my wife was offered a chance to upgrade to a package that allows connections and networking for more than 10 PCs. Since ATT had been informed we only have 3, they are either ignoring what we tell them or they are oblivious to our needs.

I finally received a wireless gateway in the mail, with no instructions on installing it or using it. I checked out the ATT site and found that they encouraged the use of live chat. After five minutes on live chat, the agent suggested I consult an ATT support page, which had no mention of setting up or configuring the gateway. He eventually ended the chat by suggesting that I contact the customer support line. I called the line and was connected to a call service agent who told me that I needed to speak to someone in another team and offered to transfer me. Before I allowed him to transfer me I asked if there were people actually available in the other team, as this was Sunday evening. After researching their availability, his answer was "no". Why would he transfer an obviously upset customers to a team that was not available?

I hung up and called back and found another person who offered to walk me through the installation of the gateway. We finally got it working, and I asked her to help me find an email address where I could send a complaint. On the ATT site, especially for internet issues you are directed to use either the call centers or live chat. On ATT's site they specifically tell you they won't accept emails about these topics. In fact it is almost impossible to find an email to use to complain, and most of the customer forums have little or no activity and it's not clear they are read or watched by ATT personnel. On the Contact Us page, where it asks if you are an existing customer and would like to send an email, the site redirects you to the home page.

Here's the link to the routers and modems community forum. As far as I can tell there are no posts associated with this community.

OK, for a firm that is in the communications and information business, I can tell you so far that it has failed on both counts. The telephone support is spotty and offers wildly different advice in several calls on the same day and is often staffed by people who either don't understand our needs or don't seem to relate or care. There is limited interaction available and no clear follow up. I did manage to get an email address from one of the people I spoke to, and will wait to see if ATT responds to the email, in which I documented my dissatisfaction with the events as described above, and many other failures of customer service and customer interaction.

In an age where social media is ever present, and interacting with customers is ever more important, you'd think a COMMUNICATIONS company would understand the importance of interacting with customers in a way that's respectful, courteous and engaging, and offer a means to interact in a way that the customer chooses, not the company. ATT seems to be walling itself off from its customers and unable to recognize good, valuable, loyal customers who have many of its products.

I have ATT email, ATT Wireless service, ATT Broadband and ATT home phone service. I think very quickly unless things change I won't have anything over than ATT cellular.