A 21st century version of Plato’s Allegory of the Cave
In his comments in the “Editor’s Note” section that precedes the Introduction, Warren Bennis acknowledges that he was fascinated by Steve Zaffron and Dave Logan’s “gutsy aspiration to integrate an interdisciplinary slew of disciplines as disparate as brain science, linguistics, organizational theory, and complex adaptive systems with a few fundamental laws of human and organization behavior that could lead to palpable and profound change in both domains.” Frankly, I had no idea what to expect when I began to read this book but soon realized that Steve Zaffron and Dave Logan would be focusing on an especially serious challenge that most people face every day: How to develop the ability to “rewrite the future”? That is, “rewrite what people know will happen.” In this brilliant book, they explain how Three Laws of Performance can help their reader to complete a natural shift “from disengaged to proactive, from resigned to inspired, from frustrated to innovative.” Part I (Chapters 1-3) “takes these laws one at a time, and shows how to apply them” and answers the question “Why do people do what they do?; then Part II (Chapters 4 and 5) “looks at leadership in light of the Three Laws” and answers the question “What are the interrelationships between language and occurrence?”; and finally, Part 3 (Chapters 6-8), “is about the personal face of leadership” and answers the question “How does future-based language transform how situations occur to people?”
Note: “What exactly does [the word] occur mean? We mean something beyond perception and descriptive experience. We mean the reality that arises within and from your perspective on the situation. In fact, your perspective is itself part of the way in which the world occurs to you. `How a situation occurs’ includes your view of the past (why things are the way they are) and the future (where all this is going”). Indeed, they assert, “None of us sees how things are. We see how things occur to us.”
Throughout their narrative, Zaffron and Logan urge their reader to keep in mind that the Three Laws of Performance really are laws, not rules, tips, stages, or steps. Each of the three “distinguishes the moving parts at play behind an observable phenomenon. A law is invariable. Whether you believe in gravity or not doesn’t lessen its effect on you.” Nor does any of the three lessen its effect on performance. The challenge is to understand them, to understand how there are interactions and even interdependences between and among them, and most important of all, how to apply them effectively, productively, and consistently.
Bennis and the others have their own reasons for thinking so highly of this book. Here are two of mine. First, Zaffron and Logan’s ideas about “rewriting the future” may at first seem (as Bennis’ suggests) “astonishing” but not after understanding exactly what they mean by it. Specifically, to “rewrite” is to overcome the quite normal tendencies of not seeing and hearing what is but, rather, only what we expect based on past “occurrences”; of protecting and defending what James O’Toole so aptly describes as “the ideology of comfort and the tyranny of custom;” of encouraging and, if necessary, forcing others to accept our determinations of what is and is not real; and of using descriptive language (i.e. that which accurately depicts the world as it once was or is now) rather than future-based language (also called generative language) to “craft vision, and to eliminate the blinders that are preventing people from seeing possibilities.” In essence, “rewriting the future” involves using future-based language that projects a new future that replaces what conventional thinking predicts, once a process of “blanking the canvas” has been completed. Zaffron and Logan explain that process on Pages 74-81. I also suggest re-reading the discussion of “Rackets” on Pages 45-47.
Another reason why I think so highly of this book is that, in Chapter 6 (“Who or What Is Leading Your Life?”) Zaffron and Logan share some especially interesting insights about “taking on some deep work – the kind of work that needs to be done for us to be leaders in our lives. And we really mean being a leader in all respects of our lives, including at work, in relationships, with family, with community, even with all of society.” As I worked my way through this chapter, much of the material resonated with material in another book that I also highly admire, Alan Watts’s The Book: On the Taboo Against Knowing Who You Are. With regard to the subtitle, Watts explains that there is no need for a new religion or a new bible. “We need a new experience — a new feeling of what it is to be `I.’ The lowdown (which is, of course, the secret and profound view) on life is that our normal sensation of self is a hoax, or, at best, a temporary role that we are playing, or have been conned into playing — with our own tacit consent, just as every hypnotized person is basically willing to be hypnotized. The most strongly enforced of all known taboos is the taboo against knowing who or what you really are behind the mask of your apparently separate, independent, and isolated ego.”
This is precisely what Zaffron and Logan have in mind when stressing that each individual must first understand and then be guided and informed by the Three Laws before attempting to transform others. In the final chapter, they urge their readers to take on and then sustain seven commitments that, when made with integrity, will break the “performance barrier” in various conversation, first with one’s self and then with others. For example, commit to creating a new game by declaring that something is important. “That is what you are putting at stake, and it is what you are holding yourself accountable to. When others commit to the [new] game with you, they join you on the field.”
This what Jim Collins and Jerry Porras have in mind when advocating that an organization commit to what they call a Big Hairy Audacious Goal. As they explain in Built to Last, it is “a huge and daunting goal — like a big mountain to climb. It is clear, compelling, and people `get it’ right away. A BHAG serves as a unifying focal point, galvanizing people and creating team spirit as people strive toward a finish line…a BHAG captures the imagination and grabs people in the gut…Indeed, when you combine quiet understanding of the three circles with the audacity of a BHAG, you get a powerful, almost magical mix.”
Steve Zaffron and Dave Logan are world-class pragmatists. They have no illusions or delusions about how difficult the challenges will be for those who make the seven commitments. However, they offer this strong reassurance to their reader: “There are no circumstances in business or in life that you can’t handle with the Three Laws. No matter what hurdles you have to jump, challenges have to face, unfamiliar territory you have to cross, you’re ready for it. Play the game passionately, intensely, and fearlessly. But don’t make it significant. It’s just a game.”
“There is surely nothing quite so useless as doing with great efficiency what should not be done at all.” Peter Drucker
I selected this observation by Drucker (1963) because it continues to suggest caution when deciding what to do, how and when to do it, etc. Michael Porter also offers a helpful reminder: “The essence of strategy is choosing what not to do.” This is especially true of those who are either planning to launch a start-up or have only recently done so. Given the number of Four and Five Star reviews of this book featured by Amazon as of this moment (136 of a total of 153), Eric Ries has clearly attracted and rewarded the attention of those who share his determination to “improve the success rate of new innovative products worldwide.” He offers a method by which to achieve that objective, based on five separate but interdependent principles best revealed within the book’s narrative, in context.
Ries suggests two primary reasons for the failure of most startups. One is trusting indicators of likely success that are either inappropriate or unreliable such as a good business plan, a solid strategy, and thorough market research. A startup is by nature and unknown quantity, Ries points out, as are its prospects. Also, many entrepreneurs and their investors become impatient, then frustrated, and abandon traditional management practices. I agree with him that all startups must be managed and only those that are managed well have a chance to survive. It is also important to keep in mind that, at one time, each of the “Fortune 500” was a startup, launched by one or more entrepreneurs who would not be denied.
Credit Ries with pursuing what Jim Collins and Jerry Porras characterize in Built to Last as a Big Hairy Audacious Goal or BHAG: To provide “a new discipline for entrepreneurial management” that takes into full account “the chaos and uncertainty that startups must face…I believe that entrepreneurship requires a managerial discipline to harness the entrepreneurial opportunity we have been given.” Here’s the BHAG: “change the entire ecosystem of entrepreneurship.”
The Lean Startup movement’s size and impact seem to be rapidly increasing as entrepreneurs worldwide embrace the tenets of a manufacturing revolution that Taiichi Ohno and Shigeo Shingo are credited with developing at Toyota. These tenets by no means preclude traditional functions such as vision and concept, product development, marketing and sales, etc. Rather, what Ries advocates (if I understand him correctly) is a new way of looking at the development of innovative new products by accepting a new way of looking at the management process by which that will be accomplished.
As I re-read this book, I realized that despite all the attention that Ries devotes to startups, much (if not most) of the material in his book is directly relevant to almost all organizations, whatever their size, nature, and birth date may be. This is what Jack Welch had in mind when explaining his reasons for admiring small companies. Here is a brief excerpt from his remarks at a GE annual meeting about 20 years ago:
“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”
As Eric Ries concludes his book, he wonders what an organization would look like “if all of its employees were armed with Lean Startup superpowers.” What indeed.
How to increase sustainable fulfillment of human potentialities, one’s own as well as those of others
Many years ago, I read a book written by David J. Schwartz, The Magic of Thinking Big, that helped me to widen and deepen my perspective when exploring possibilities. I was reminded of that book as I began to read The 10X Rule in which Grant Cardone also urges his reader to keep in mind that most human limits are self-imposed. Long before Schwartz’s book was published (my copy was published in 1987), Henry Ford observed, “Whether you think you can or think you can’t, you’re right.” More recently, in Built to Last, Jim Collins and Jerry Porras urge business leaders to select what they call a BHAG, a Big Hairy Audacious Goal, for their organization. Cardone brings valuable insights to an important discussion of how to increase sustainable fulfillment of human potentialities.
In other words, many (most?) people become committed to a negative self-fulfilling prophecy: consciously and/or unconsciously, their self-defeating attitude ensures that they will either fail or fall far short of what they could have achieved. And more often than not, they see themselves as victims of circumstances over which they have little (if any) control. In striking contrast, peak performers are committed to a positive self-fulfilling prophecy: consciously and unconsciously, they consistently achieve great success because they are absolutely convinced they not only can but WILL. It is not a matter of “if,” only “when.”
In Chapter 1, Cardone lists the basic series of mistakes people make when setting out to achieve goals:
1. Selecting objectives that are too low, too easy, etc. that will not excite, inspire, and motivate people
2. Severely underestimating what is necessary to achieve a goal
3. Spending too much time competing, not enough time succeeding
4. Underestimating the resistance and adversity that must be overcome to achieve the goal
In essence, as Cardone explains, the 10X Rule is based on two separate but interdependent assumptions: First, if you set (let’s call it) a 1X goal or target and then increase it by a factor of ten, you may not reach that but you will achieve far more than you originally intended. Also, if you set a 10X goal or target, you will make a corresponding investment of resources (especially time, energy, and focus) far greater than you would have invested to achieve a 1X goal or target. The place to be, therefore, is at the 10X level both in terms of setting a goal and efforts to achieve it.
After carefully reading and then (hopefully) re-reading this book, many people will ask, “What now? Where to begin?” Cardone offers excellent advice in the 23rd and final chapter, “Getting Started with 10X.” (Actually, a reader has already gotten started by reading the book and probably gained – as I certainly did -an increased awareness of self-imposed, self-defeating limits.) There are six specific suggestions (on Pages 188-189) that are best revealed within the narrative, in context, but I feel comfortable revealing a few of Cardone’s key points. First, getting to and then operating on a 10X level is a journey, not a destination. Like failure, success tends to feed upon itself and thus one must be prepared to increase the level of difficulty of a given goal that will then increase the degree of success when achieving it. Finally, the aforementioned journey can and should include the involvement of those who can provide support and encouragement to the “pilgrim” who, in turn, must be not only willing and able but also eager, indeed committed to provide the same support and encouragement to others during their own journey.
In fact, what could be more satisfying than applying the 10X Rule to making a positive difference in the lives of others? If there is a higher goal in life than that, I would very much like to know about it.
Jim Collins is a student and teacher of enduring great companies — how they grow, how they attain superior performance, and how good companies can become great companies. Having invested nearly a quarter of a century of research into the topic, Jim has authored or co-authored six books that have sold more than ten million copies worldwide. They include Built to Last, Good to Great, and How the Mighty Fall. His most recent book is Great by Choice: Uncertainty, Chaos, and Luck—Why Some Thrive Despite Them All, co-authored with Morten Hansen. Based on nine years of research, it answers the question: Why do some companies thrive in uncertainty, even chaos, and others do not? Great by Choice distinguishes itself from Jim’s prior books by its focus not just on performance, but also on the type of unstable environments faced by leaders today. Driven by a relentless curiosity, Jim began his research and teaching career on the faculty at Stanford Graduate School of Business, where he received the Distinguished Teaching Award in 1992. In 1995, he founded a management laboratory in Boulder, Colorado, where he now conducts research and consults with executives from the corporate and social sectors. He holds degrees in business administration and mathematical sciences from Stanford University, and honorary doctoral degrees from the University of Colorado and the Peter F. Drucker Graduate School of Management at Claremont Graduate University.
Morten T. Hansen is a management professor at the University of California, Berkeley (School of Information) and at INSEAD, France. Formerly a professor at the Harvard Business School, he holds a Ph.D. from the Graduate School of Business at Stanford University, where he was a Fulbright scholar and received the Jaedicke award for outstanding academic performance. His award-winning research has been published in leading academic journals, and he is the winner of the Administrative Science Quarterly award for having made exceptional contributions to the field of organization studies. Hansen has published several best-selling articles in the Harvard Business Review and is the author of the management book, Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results. A native of Norway and a former silver medalist in the Norwegian junior track and field championship, he lives in the San Francisco Bay Area with his wife and two daughters, and enjoys running, hiking and traveling.
Here is an excerpt. To read the complete interview, please click here.
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Morris: When and why did you two decide to write Great by Choice and how was the division of labor determined?
Hansen: Around 2001, during the time of the dot.com boom and bust and 9/11, the world turned unstable and uncertain. People, including our students, kept asking us, how do you manage in unstable times? How do you prevail? How do you become great in a world out of control? Finally, this topic grabbed us so completely that we both decided that we had to pursue it.
Morris: Were there any head-snapping revelations while you and your associates conducted the research over a period of nine years, 2002-2011?
Hansen: During this period, we experienced a recession (2001-02), a huge boom (2003-07), the great recession (2008-10) and the great uncertainty (2010-probably forever). These shifting circumstances just reinforced to us that we don’t live in stable times. In fact, we came to the conclusion that the past 50 years have been an abnormal period of stability and that what we will be experiencing going forward is a permanent state of instability, uncertainty, disruption, and even chaos.
Morris: To what extent (if any) does the book in final form differ from the one you originally envisioned?
Collins: We started the project with the idea that it would just be an article. But the question and findings proved so fascinating, that we decided to shift gears into a full-blown multi-year research effort that could be a book.
Morris: To what extent does it differ significantly from those earlier works?
Collins: First, there are some important similarities across the four studies. They all use the historical matched-pair research method. They all proceed with a “let the data speak” approach, following the evidence rather than our own preconceptions. They all have powerful conceptual frameworks. They all use vivid stories as a pedagogical method for teaching the concepts.
There are three main differences between this study and the others. First, is the question itself: why do some companies thrive in uncertainty, even chaos, and others don’t? Unlike any of the prior books, we deliberately selected on the severity and instability of the environment, not just on performance. Second, this study deliberately examined small, vulnerable enterprises that rose to greatness, giving us insight into entrepreneurial leadership that we did not have in the prior works. And finally—although we did not plan this—it has some of the most directly useful ideas that apply not just to building companies, but also to navigating a life in an uncertain and chaotic world.
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To read the complete interview, please click here.
Jim and Morten cordially invite you to check out the resources at these websites:
Additional and even more valuable revelations about “the principles that distinguish great organizations from good ones”
For as long as I can remember, Jim Collins has been a research-driven business thinker. In each of his prior books, he and his associates (usually Morten Hansen among them) share what was revealed during many years of research to learn the answer to an especially important question. For Built to Last, it was “Why are some companies able to achieve and sustain success through multiple generations of leaders, across decades and even centuries?”; in Good to Great, “Why do some companies make the leap from good to great… and others don’t?”; then in How the Mighty Fall, “How and why do some once great companies fall and other companies never give in to the same challenges, problems, and setbacks?”; and now in Great by Choice, “Why do some companies thrive in uncertainty, even chaos, and others do not?”
Collins, Hansen, and their colleagues conducted a nine-year study (2002-2011) and share what they learned. Here are the findings that caught my eye:
1. For reasons best revealed within the book’s narrative, in context, some companies and leaders thrive in chaos. Those on whom the book focuses have out-performed their industry’s index by at least 10 times and (key point) under the same extreme conditions with which others in the same industry must also contend.
2. Characterized as “10X” companies, those selected were paired in a “near-perfect match” — for purposes of both comparison and contrast – with companies during “eras of dynastic performance that ended in 2002, not the companies as they are today. It’s entirely possible that by the time you read these words, one or two of the companies on the list [i.e. Amgen, Biomet, Intel, Microsoft, Progressive Insurance, Southwest Airlines, and Stryker] has stumbled, falling from greatness.”
3. The research invalidates well-entrenched myths (see Pages 9-10) with regard to the 10X companies and their leaders. For example, “the evidence does not support the premise that 10X companies will necessarily be more innovative than their less successful comparisons [during the same timeframe]; and in some cases, the 10X cases were less innovative.”
4. Leaders of 10X companies display three core behaviors that, in combination, distinguish them from the leaders of less successful comparison companies. They also call to mind the behaviors of Level 5 leadership, examined in detail in Good to Great. Specifically, 10Xers exemplify fanatic discipline (“utterly relentless, monomaniacal, unbending in their focus on their quests”), empirical creativity (reliance on “direct observation, practical experimentation, and direct engagement with tangible evidence”), and productive paranoia (channeling their fear and worry into action, preparing, developing contingency plans, building buffers, and maintaining large margins of safety”).
5. In the Epilogue, Collins and his associates acknowledge their sense that “a dangerous disease” is infecting today’s culture, one that incorrectly suggests that greatness “owes more to circumstance, even luck, than to action and discipline.” Yes, they agree, good or bad luck plays a role for everyone, including 10Xers and Level Fivers. However, they offer an eloquent reassurance that many of us need to hear: “The greatest leaders we’ve studied throughout all our research cared as much about values as victory, as much about purpose as profit. As much about being useful as being successful. Their drive and stamina are ultimately internal, rising from where deep inside.”
Organizations do not make choices, their leaders do, and the fate of each of those organizations depends on the quality of the choices its leaders make, especially amidst uncertainty, chaos, and luck…three realities that even the best leaders can only manage rather than control. That is the challenge but also the opportunity to which the book’s title refers. The single most important difference between the 10X companies that Collins and Hansen discuss and those with which they are compared/contrasted is that those who lead them make better choices as they build and then sustain a culture within which everyone else does.
In his own words….
I’ve had a long career as a journalist and author. Lately, I’ve added a new hat: I’ve joined VSA Partners as its Editorial Director. The plan is to marry business to big-think journalism in a way that hopefully helps both prosper. The first example of that is the book commissioned by IBM and co-authored by me, Steve Hamm and Jeff O’Brien — Making the World Work Better.
My latest book, co-authored with Vivek Ranadivé, is The Two-Second Advantage: How We Succeed by Anticipating the Future…Just Enough (September, 2011).
Last year, I had another book out: Trade-Off: Why Some Things Catch On, and Others Don’t. The hardcover was published in the fall of 2009 by Broadway Books; the paperback, in August 2010.
I contribute occasionally to Fortune, The Atlantic, Fast Company and other magazines. I had been a contributing editor at the ill-fated Condé Nast Portfolio, joining the magazine prior to its launch in 2007 and hanging on until its demise in April 2009.
Before all this, I worked at USA Today for 22 years, much of it as the newspaper’s technology columnist. The job gave me the privilege of interviewing most of the biggest names in the industry. Here and there, I end up on television and radio. I’ve appeared on PBS, NPR, CNBC, and other media outlets, and I’ve frequently been a keynote speaker and on-stage interviewer at events and conferences.
On the music side, in 2008 I worked with a group of terrific Bay Area musicians and recorded a CD of songs of wry commentary about business and technology. It’s called “Privacy,” by Kevin Maney & His Briefs. You can actually buy it on iTunes. I’ve also played in a DC-area band, Not Dead Yet, which at the moment is dormant, if not actually dead. My shining moment was getting my song “Found It On Google” played on Mitch Albom’s radio show.
I graduated from Rutgers University, grew up in Binghamton, N.Y., and now live outside Washington, DC, while spending a lot of time in New York.
[Here is an excerpt from my second interview of Kevin. To read the complete interview, please click here.]
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Morris: Before discussing The Two-Second Advantage, a few general questions. First, of all the people with whom you have been closely associated, which has had the greatest influence on your personal development? How so?
Maney: Over the very long run, I guess it’s been my brothers. I’m the oldest of three, and the next one is Dave, and then Scott. (I also have a stepbrother, Mark.) Dave, Scott and I have always been close, but it’s more than that. I think our opinions of each other carry great weight, and that’s pushed each of us to be better people, be more ambitious, be wittier, raise better kids, and whole lot of other things like that. And it’s a supportive competitiveness. We’ve always boosted each other, and at times even done business together. Right now, I’m working at a firm, VSA Partners, that Scott introduced me to, and playing a role in Dave’s start-up, Economaney. Fortunately for me, I’m the least smart and savvy of the three of us, so I think I get to learn more from them than they do from me.
Morris: On your professional development?
Maney: There are two people. When I was 25, Hal Ritter just became editor of USA Today’s Money section, and he hired me. I think I was his first hire. I’d say we had a respectful but sometimes contentious relationship. He could be a hard guy to work for — demanding and harsh. But he was also maybe the smartest editor I ever worked for. He knew his audience and drove us to write for it with clear, lean prose. He taught me to have standards and never settle for less, and to have the discipline to always think of the reader. I worked for Hal for the first decade of my career. Whatever kind of writer I am today, it’s because of those 10 years. Hal is now an editor at the Associated Press. We nominally keep in touch.
The other important person is Jim Collins. While Hal taught me to pay attention to the details, Jim played a significant role in helping me think big and broadly. The two of us met well before Jim got famous for his books Built to Last and Good to Great. I was working on a story for USA Today, and talked to a publicist at Stanford, where Jim was a professor at the time, about it. The publicist told me that I should talk to Jim — that Jim was working on a book about a similar topic. That book ended up being Built to Last, but it was then a half-finished manuscript. Jim and I talked and hit it off. He sent me the manuscript, and I thought it was one of the most important business documents I’d ever read. When Built to Last was finally published, I jumped on it and wrote a cover story for USA Today, which in turn was the spark that sent the book up the bestseller list.
Anyway, Jim and I became friends, and I can’t tell you the number of big, analyze-the-universe conversations he and I have had. I love the way he makes me think. His ideas about corporations had a huge impact on the way I analyzed Thomas Watson in The Maverick and His Machine. I wouldn’t be the same kind of author if not for Jim’s friendship.
Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.
Maney: I knew I wanted to be a writer from as far back as I can remember. That was my talent. Lord knows it wasn’t math. If there was an epiphany, it came when I went to Rutgers and got involved in the journalism program. I reluctantly signed up for a journalism major, thinking I needed a fall-back way to make money should my career as a novelist fail to take off. As I started to try on journalism, including doing internships and working at the campus paper, I found I actually liked it. So I started to want to be a journalist.
And then there was another epiphany when I discovered the great old New York Times columnist Russell Baker. I realized there could be a way to be a newspaper journalist and write funny yarns in a column. Then I wanted to be Russell Baker. I kind of half achieved it — writing a column for USA Today that often involved funny yarns about technology.
Morris: To what extent has your formal education been invaluable to what you have since achieved thus far?
Maney: Well, with all due respect to Rutgers, I’m not sure the value of my time there was in what I learned academically. It was more about the fact that Rutgers introduced me to journalism and diverted my path into newspapers.
Morris: You are a serious musician. To what extent has your significant involvement with music proven to be highly valuable in ways and to any extent you had not anticipated? Please explain.
Maney: I’m not sure how much the word serious applies! I write songs like “Wouldn’t Want to Be Bill Gates” and “Little Tattoo and All Over Tan.” But I certainly have pursued music in general and songwriting in particular.
What’s it done for me? I think it’s become part of my personal brand — in a field where having a personal brand is an asset. It’s helped me stand out a bit in the minds of a lot of people in the tech industry. I’m that tech writer who gets on stage and plays funny tech songs. I wouldn’t want that to be all I’m known for, but it’s a bit of a differentiator.
Morris: In your opinion, what will be the single greatest challenge that business leaders (especially CEOs) will face during the 3-5 years?
Maney: This gets a bit into what I’m doing with my brother Dave. He and I and other people we’re working with believe that the disruptions and difficulties in the economy the past few years aren’t just a bump in the road — they’re part of a massive change in very big forces, brought on by the Internet, globalization, and the flood of data. It’s changing the very nature of what a company is, the nature of what a job is, the value that proximity has or doesn’t have. Economaney is kind of a new age think tank for tossing these ideas around and trying to make sense of them. All in all, the next three to five years are going to be among the most challenging in history to be a CEO in America — or for that matter, President of the country.
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To read the complete interview, please click here.
Kevin Maney cordially invites you to check out the resources at these websites:
Here is another lively and informative article from the folks at the Drucker Exchange (Dx). It is a platform for bettering society through effective management and responsible leadership. It is sponsored and supported by the Drucker Institute, a think tank and action tank based at Claremont Graduate University that was established to advance the ideas and ideals of Peter F. Drucker, the father of modern management.
To check out a wealth of resources and subscribe to its online newsletter, please click here.
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Google shook up the tech world this week with its proposed acquisition of Motorola Mobility for a cool $12.5 billion. This means that Internet search company would begin to manufacture cellphones and tablets, among other things, allowing it to take on Apple even more aggressively.
Google is no stranger to acquisitions, having bought up more than 100 companies during the past decade (though none of those deals comes close in size to Motorola). In a recent interview with McKinsey Quarterly, Google Chief Financial Officer Patrick Pichette offered some thoughts on mergers and acquisitions. “The best way to portray M&A is as an accelerator,” he said. “For M&A, the mind-set is to comb the world constantly, given our agenda of development. If we find a piece that fits what we’re going to do in eight to 12 months—for example, we have a team of six and we know we need a team of 15—then M&A is an accelerator because it fits into a very clear plan of what we’re trying to achieve.”
The offer to buy Motorola has struck some observers as overly expensive, but Peter Drucker cautioned against focusing too heavily on financials when making an acquisition. The idea of a “piece that fits,” as Pichette described Google’s acquisition targets, is much more important. “Successful acquisitions are based upon business plans, not financial analyses,” Drucker wrote. “Acquisition targets must fit the business strategies of the acquiring company; otherwise, the acquisition is likely to fail.”
Drucker had much else to say about acquisitions, and he compiled a list of five rules to follow for anyone looking to take over a company successfully. But the simple notion of focusing on business plans rather than money alone is crucial and all too often ignored.
“Executives, of acquirers and targets alike, still largely ignore the rules, as do the banks when they decide to finance an acquisition bid,” Drucker wrote in the Frontiers of Management. “But history amply teaches that . . . [they] will come to grief if they do judge an acquisition financially instead of by business principles.”
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History: In May 2006, more than 100 leading Drucker-like thinkers and practitioners gathered in Claremont, Calif., to help answer one question: What is Peter Drucker’s legacy?
Attendees included Jim Collins, best-selling author of Good to Great and Built to Last; Paul H. O’Neill, former U.S. Secretary of the Treasury and former chairman of Alcoa; A.G. Lafley, chairman and CEO of Procter & Gamble; Nobuhiro Iijima, CEO of the multi-billion dollar Yamazaki Baking Co.; and Masatoshi Ito, the founder and honorary chairman of the Ito-Yokado Group, Asia’s largest retail chain.
To learn more, please click here.
Organizational transformation is not — repeat not – a zero-sum game
One of the most self-defeating mindsets is suggested by the admonition, “You can’t have your cake and eat it too.” Obviously there are situations when there are two options that are mutually-exclusive. However, most of the time, when facing a choice, it is a mistake to select only one and dismiss all others. Inder Sidhu does not advocate “a balanced compromise between two objectives, but [rather] a mutually reinforcing multiplier in which each side makes the other better.” He cites comments included in Built to Last (1994) co-authored by Jim Collins and Jerry Porras when discussing a highly visionary company “that doesn’t want to blend yin and yang into a gray indistinguishable circle that is neither highly yin nor highly yang; it aims to be distinctly yin and distinctly yang – both at the same time, all the time. Irrational? Perhaps. Rare? Yes. Difficult? Absolutely.”
Sidhu devotes the bulk of his lively narrative to explaining how exemplar companies such as Apple, BYD, Cisco, GE, Google, IBM, and Procter & Gamble achieve these strategic objectives:
• Improving the core business while conducting disruptive innovation
• Strengthening current account relationships while adding new ones
• Fine-tuning what is done well while transforming or eliminating what isn’t
• Creating customer evangelists while creating steadfast partners
• Thriving on “Main Street” while exploring “the road less traveled”
• Doing it right and doing what is right (i.e. what matters)
Obviously, doing both (of whatever) is not always possible or, when possible, advisable. Also, any lessons learned from the exemplar companies such as those Sidhu examines (especially Cisco) must be modified to accommodate the specific needs and resources of much smaller organizations.
With all due respect to the value of these lessons, I think the single greatest benefit of this book is the mindset it can help its reader to develop. Although Sidhu does not cite them and their books, he has clearly been influenced (albeit indirectly) by business thinkers such as Henry Chesbrough (Open Innovation and Open Business Models) and Roger Martin (The Opposable Mind) as well as Venkat Ramaswamy and Francis Gouilllart (The Power of Co-Creation). The most effective executives an open mind in combination with insatiable curiosity, emotional intelligence, and highly-developed skills for integrative thinking. Organizations as well as individuals must never play a zero-sum game. Long-term growth and short-term profitability are NOT mutually exclusive.
The authors’ recommendations in the aforementioned books track almost seamlessly with Sudhu’s own:
1. Be open-minded to possibilities, whenever/wherever they occur
2. Respect and examine those that are plausible, especially if unorthodox
3. Seek out collaborations that are mutually-beneficial
4. Welcome each “failure” as a precious learning opportunity
5. Juxtapose (for rigorous scrutiny) contradictory ideas and options
6. Embrace change as an ally, not as a threat
7. Achieve constant improvement with a discovery-driven process
8. Welcome and support principled dissent
9. Cultivate and nourish an insatiable appetite for learning
10. Constantly challenge what James O’Toole characterizes as “the ideology of comfort and the tyranny of custom”
I highly recommend all of the aforementioned books as well as Dean Spitzer’s Transforming Performance Measurement; also Enterprise Architecture as Strategy co-authored by Jeanne Ross, Peter Weill, and David Robertson.
Here is an article written by Dave Logan for BNET, The CBS Interactive Business Network. To check out an abundance of valuable resources and obtain a free subscription to one or more of the BNET newsletters, please click here.
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“The problem with most organizations is that they are governed by mediocre ideas.” So says retired Hanover Insurance CEO Bill O’Brien in Dance of Change.
In my almost 20 years of studying and consulting to organizations, as well as teaching their executives, I’m astonished at how bad ideas keep flowing into companies — and how resistant most people are to letting them die. These ideas make companies weak, encourage employees to “quit and stay,” crush innovation, and create cultures of despair. Like weeds, bad ideas crowd out actual thinking and need to pulled up from the roots. What follows are the 10 ideas I’ve found to be the worst for the health of an organization. Do any of them sound familiar?
[Logan discusses ten. Here are five:]
I have enormous respect for Jim Collins and Jerry Porras, the authors of Built to Last.
That said, studies my colleague and I have conducted found that companies set on the “great” path did not stay great forever. Instead, greatness today predicts nothing about tomorrow.
Companies are composed of groups of people talking — in person, over email, in meetings, and in formal documents. This chatter isn’t something the company has, it’s what the company is. The discussion in a company can change in a very short period of time, and often does when: (1) tyrants take over, (2) the market hands the firm a shellacking, or (3) any mediocre ideas take hold.
A better analogy for companies is that of body builder. Ripped today? Eat donuts (the equivalent of embracing mediocre ideas for a few weeks) and you’ll be falling toward average. Out of shape today? Work out, eat right, and it will change. No one checks off “worked out” and then is done with it — except for future candidates of the lap-band.
5. Think that systems and checklists are the key to high performance.
This one isn’t that hard, but it’s amazing to me that many companies are flopping around caught in this net of several bad ideas at once. I’m talking about the difference between management and leadership.
Management is about systems, processes, checklists, and formulas. It produces, as John Kotter noted, predictability and order. If you want more predictability and order, then don’t let a leader around your company.
Leadership is about alignment, vision, setting direction (again, thanks to John Kotter here), and it produces change, often to a dramatic degree.
High performance requires reinventing what the company does (leadership and change) with great management (steps, milestones, deliverables). Management alone produces a wasteland of despair where people chase the numbers and try to make plan — and burn themselves and everyone else out. Management without leadership never produces high performance, at least not for long.
The problem here is that most management books provide simplistic solutions; content that are not up to the complex challenges of running a company. What’s needed is thought, debate, and reflection, leading to a collective understanding of what to focus on, and then relentless execution. Replace the “thought, debate and reflection” part with what’s in the latest management book, and you might as well post your resume on monster.com now, to avoid the rush.
7 . Incentivize people to perform.
“Do x and I’ll give you y” doesn’t make people do “x,” as least not for long. Adding more “y” only gives people a bigger badge of honor for not doing it. Some groups (like most salespeople) will respond to the “x” and then “y” formula, but that’s because the system plays to their values.
And that’s the point. Instead of approaching employees like hamsters who want more and more food, you have to get to know the people you work with as individuals and discover what they value. Build jobs around their core commitments and pay them so that its fair, and you’ll get good performance. Ask them to work against their values for lots of extra cash, and you’ll make them feel like prostitutes.
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Dave Logan is a USC faculty member, management consultant, and the best-selling author of four books including Tribal Leadership and The Three Laws of Performance. He has served on the USC faculty since 1996, and teaches leadership and management at the Marshall School of Business. From 2001-2004, he was Associate Dean of Executive Education. He is also Senior Partner of CultureSync, a management consulting firm, which he co-founded in 1997. The firm consults with dozens of Fortune 500 companies, major nonprofits, and governments worldwide. He has a Ph.D. from the Annenberg School at USC.
Learn more about Tribal Leadership.
We are All Mercenaries in a Shorter-Term World
Not Built to Last, but Built to Transform: What is Successful Today is “short obedience in a temporary direction”
Introduction number one:
I purchased my first stereo from Montgomery Wards. The company that created the catalog. With a loan from my bank specifically for that purchase. I think it was $190.00 (no guarantee on that price memory). By the way, it was a barely acceptable stereo. (Note to young readers – a stereo played records. That is an ancient technology for listening to music).
The times, they are a-changing.
Introduction number two, a quote from Nietzche:
“The essential thing “in heaven and earth” is…that there should be a long obedience in the same direction; there thereby results, and has always resulted in the long run, something which has made life worth living.” – Friedrich Nietzche, Beyond Good and Evil
Here is an intriguing opening, and some excerpts, from an article in Business Week about Amazon, Amazon’s Smart Innovation Strategy: Amazon shows how it is possible to build a business with the capability to transform itself, by Mark Johnson:
Building a great business and operating it well no longer guarantees you’ll be around in 100 years, or even 20. In 1958, the average length of time a company remained on the S&P 500 was 57 years; by 1983, it had dropped to 30 years; in 2008, it was just 18.
Shorter business life cycles require a new sort of management discipline capable of leading an organization through an ongoing process of transformation and renewal. To thrive in today’s marketplace, to be built to last, every business now must be built to transform.
Amazon at its roots is built to transform. When it finds opportunities to serve new customers, or existing customers in new ways, it conceives and builds new business models to exploit them. Amazon has the unique ability to launch and run entirely new types of businesses while simultaneously extracting value from existing businesses.
In built-to-transform companies, managers recognize that becoming is part of being, and that the road to the next big thing can be traveled only by those with open minds.
It is this phrase that grabs me – not “built to last,” but “built to transform.” Creativity, innovation, new business models, perpetual change… It is a world of shorter connections, shorter careers, shorter jobs, (shorter marriages). More and more people are earning their college degrees by attending multiple colleges. Richard Florida implies that we have shorter relationships with our houses. Quick: tell me a young adult who expects to live in one house long enough to pay off a thirty year mortgage.
The current need seems to be “short obedience in a temporary direction.” We have serial careers, serial connections (“more “connections” than “relationships/friendships”), serial this, serial that… little lasts very long these days. We have become not long-term employees, but short-term mercenaries, looking for the latest fight/task/project. More and more jobs are short-term assignments – projects, if you will.
I’m not sure I like this change. But it doesn’t matter if I like it – it is here to stay, it looks like.
A blog post afterword:
Here is something remarkable that does stand out in this era: Karl and I have presented book presentations every month at the First Friday Book Synopsis for over 12 years. How do I say this? – This is pretty impressive, and a little rare, in this day and age…