The Architecture of Innovation: A book review by Bob Morris

The Architecture of Innovation: The Economics of Creative Organizations
Joshua Lerner
Harvard Business Review Press (2012)

How to combine two traditional models “within a powerful system that consistently and efficiently produces new ideas”

By nature, books about innovation should contribute something new and/or something better to our understanding of what innovation is and isn’t while also explaining how to develop a mindset and skills that will enable us to (yes) contribute something new and/or something better. Josh Lerner makes such a contribution as he explain how to combine the best features of two traditional models – the corporate research laboratory and the venture-backed start-up — for innovation “within a powerful system that consistently and efficiently produces new ideas.” What he proposes is a “hybrid” model that ensures that the powerful motivations and focused goals associated with venture capital will be preserved, “while the limitations that circumscribe the effectiveness of this intermediary can be overcome. The path that led us to this hybrid is firmly laid out by economics.” More specifically, the power of appropriate rewards throughout the innovation process.

These are among the dozens of passages I found to be of greatest interest and value, also listed to suggest the range of subjects covered during the course of the book’s narrative:

o The Real Beginning (Pages 23-27)
o Away from the Center (39-43)
o The Appearance of Incentives (48-53)
o Milestone 3: Going Global (73-78)
o The Boom-Bust Venture Cycle (93-100)
o The Case for Corporate Venturing and What Can Go Wrong (110-125)
o A short list of potential steps than can improve the health of entrepreneurial firms (143-150)
o Lessons for Venture Capital (158-168)

As I worked my way through Lerner’s lively and eloquent narrative, I was again reminded of Jack Welch’s remarks years ago at a time when GE’s then chairman and CEO, and Jack Welch, explained why he admired small companies: “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.”

Welch could well have been describing the “hybrid” business model that Lerner proposes in this book. Indeed, Welch was preoccupied (obsessed?) with making certain that GE combined the best features of a large corporation with those of what he called a “small” company, one driven by a entrepreneurial spirit at all levels and in all areas.

Lerner concludes with an acknowledgement that new organizational models continue to be developed, with a few succeeding, others failing. “The corporate innovation model is changing as well, but more slowly. Embracing a rigorous trial and error concerning the ways in which innovation is pursued is likely to yield substantial benefits, both to the corporate experimenter and to society as a whole.” With rare exception, the best business books are research-driven and that is certainly true of Lerner’s book, as his heavily annotated “Notes” (on Pages 179-195) clearly indicate. The concept of a “hybrid” innovation model has obviously evolved and will continue to do so.

However, that said, no brief commentary such as mine can possibly do full justice to the scope of material that Josh Lerner provides in this volume but I hope that I have at least suggested why I think so highly of it. Also, I hope that those who read this commentary will be better prepared to determine whether or not they wish to read the book and, in that event, will have at least some idea of how to master the economics of creative organization, developing core competencies that would be of substantial benefit to their professional development as well as to the success of their organization.

To read my interview of Lerner, please click here.

Win-Win Partnerships: A book review by Bob Morris

Win-Win Partnerships: Be on the Cutting Edge with Synergistic Coaching
Steven J. Stowell and Matt M. Starcevich
CMOE Press (1996)

“Vision without execution is hallucination.” Thomas Edison

Do not be deterred by the fact that this book was first published in 1996. Long before that, one of Albert Einstein’s faculty colleagues at Princeton pointed out that he always asked the same questions each year on his final examination. “That’s quite true. Every year the answers are different.” Steven Stowell and Matt Starcevich are not — nor make any claim to be — Einstein’s intellectual peers but they have formulated a model for synergistic coaching that remains relevant almost two decades after they introduced in this book. Stowell and Starcevich help their reader to formulate the questions that need to be asked regularly because, as in quantum physics, the answers will change as dynamics and interelationships change.

Healthy organizations have effective communication, cooperation, and (especially) collaboration at all levels and in all areas of operation. In fact, in today’s global marketplace, the healthiest organizations have effective communication, cooperation, and collaboration between and among everyone involved. For individuals as well as for organizations, Stowell and Starcevich correctly suggest, effective partnerships – whose raison d’etre is collaboration — involve mutual respect and trust as well as shared responsibility, integrity, openness, and synergy.

We also know that the best coaches tend to be the best teachers and the best students. That was true of Socrates, Plato, and Aristotle as well as of John Wooden, Vince Lombardi, and Pat Summitt. In the business world, every day, there are supervisors — although perhaps known only to their associates — who are also great coaches. They establish and then nourish mutually beneficial (win-win) relationships with others. I agree with Stowell and Starcevich that C-level executives can learn at least as much from their direct reports as those direct reports learn from them. In healthy organizations, it is common practice for leaders to become followers, and vice versa, based on knowledge and competence. That is perhaps the best example of what Stowell and Starcevich characterize as “synergistic coaching.”

Its defining characteristics are best understood in terms of the values of mutual respect and trust, exemplified in three types of synergistic coaches’ relationships: with themselves, with each of those entrusted to their care, and with the relationship shared with them. Moreover, mutually beneficial relationships must be nourished constantly. In her brilliant book, Growing Great Employees, Erika Andersen suggests – and I agree – that the most effective leaders have a “green thumb” for “growing” people in the “gardens” of free enterprise. It is worth noting that, for example, GE’s senior-level executives – including CEOs such as Reggie Jones, Jack Welch, and Jeff Immelt — have devoted at least 20% of their time to coaching GE’s high-potential middle managers.

Stowell and Starcevich recommend an eight-step process and devote a chapter to explaining each, then conclude with eight “Wrap Up Points” to keep in mind when establishing and then building a learning relationship. They also insert dozens of insights throughout their narrative that are both thoughtful and thought-provoking. Yes, this book was published 17 years ago but, as I indicated earlier, the issues it addresses and the values it affirms are – if anything – more relevant now than they were in 1996.

All organizations need effective leadership at all levels and in all areas. Therefore, one of their most important strategic objectives must be to establish and then nourish a leadership development program such as the one that Steven Stowell and Matt Starcevich envision. In my view, it will require rock-solid and (key word) generous support from those in the C-suite but it must also offer a compelling vision that energizes, hopefully inspires wide and deep buy-in with both passion and a sense of urgency. Finally, it requires a LOT of sustained, collaborative, often boring, seldom easy work. I agree with Thomas Edison: “Vision without execution is hallucination.”

Donald N. Thompson: An interview by Bob Morris

Don Thompson is an economist and professor of marketing at the Schulich School of Business at York University in Toronto. He has taught at Harvard Business School and the London School of Economics. He is author of nine books, including The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art, which details his explorations in trying to understand the high end of the contemporary art market. Shark has been published in thirteen languages. His most recent book, Oracles: How Prediction Markets Turn Employees into Visionaries, was published by Harvard Business Review Press (June, 2012).

Here is an excerpt from my interview of him. To read the complete interview, please click here.

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Morris: Before discussing Oracles a few general questions. First, who has had the greatest influence on your personal growth? How so?

Thompson: A dozen brilliant people I encountered in grad school (at Berkeley) and later, in universities, businesses and government. From each I learned new things, but more important, new ways of looking at problems, and how to think outside the box.

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Thompson: My formal education included an MBA, which got me interested in problem solving, and a PhD, which furthered that interest but is also provided an essential entry point to an academic career. So the formal education part has been invaluable for my career path.

Morris: What do you know now about the business world that you wish you knew when you when to work full-time for the first time?

Thompson: The importance of the soft skills involved in communication, motivation and managing.

Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles?

Thompson: Citizen Kane. The explanation is in the eyes and mind of the viewer.

Morris: From which non-business book have you learned the most valuable lessons about business?

Thompson: I’ll suggest two: Michael Mauboussin’s More Than You Know: Finding Financial Wisdom in Unconventional Places (Columbia Business School Press 2008), and Cass Sunstein’s Going to Extremes: How Like Minds Unite and Divide (Oxford University Press, 2008). The Mauboussin book is about business, but more centrally, about making rational decisions. The Sunstein book is about how wrongheadedness gets worse when people get together in groups. Both are brilliant thinkers, I recommend anything with those names attached.

Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-Tzu’s Tao Te Ching:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know.”

Thompson: Right. None of us is as smart as all of us (which is also a Japanese proverb).

Morris: Next, from Voltaire: “Cherish those who seek the truth but beware of those who find it.”

Thompson: The prediction market equivalent is probably, “If you really are afraid of the answer, don’t ask the question.”

Morris:  And then, from Oscar Wilde: “Be yourself. Everyone else is taken.”

Thompson:  It never occurred to me that there was another option. Probably too late now.

Morris:Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Thompson: That is a great quote. I once was presented with its equivalent, by a Columbia marketing professor named Al Oxenfeldt, with whom I had co-authored a couple of articles and was proposing a new topic, which I had collected a lot of data on. Al said, “If something is not worth doing, it is not worth doing well.” Quite right.

Morris:In Tom Davenport’s latest book, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?

Thompson: That is exactly the philosophy of Jim Lavoie and Joe Marino, co-CEOs of my favorite prediction-market company, Rite-Solutions – which is the subject of the first chapter of Oracles.

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To read the complete interview, please click here.

Don cordially invites you to check out the resources at these websites:

Don’s faculty page, please click here

Amazon’s Oracles page, please click here.

Amazon’s The $12 Million Stuffed Shark page, please click here.

The Productivity Impact of Engaging Your Workforce

Here is a brief excerpt from an article written by Mike Marker and featured at the Organizational Excellence Journal‘s website. In it, he suggests “nine simple ways to positively affect engagement.” To read the complete article, check out others, learn more about the Journal’s resources and activities, and sign up for email updates, please click here.

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In every issue of the Organizational Excellence Journal, we answer a question one of our readers or our editor asks on an important topic. In this issue, Mike Marker, Senior Management Consultant in Sinclair Group’s Organizational Excellence Practice, answers the following question.

Q: How does engaging employees affect an organization’s productivity and profitability?

A: There are nine simple ways to positively affect engagement. But here’s a little background. Although the concept of employee engagement has been around for a while, it has taken on different forms, and people often refer to it by other names: “participation,” ”involvement” and “commitment” to describe a workplace culture that considers maximizing the talents of a work force for better job satisfaction and business performance. The terms and strategies have changed as companies have come to better understand what employee engagement is and how to achieve it. Likewise, the objectives and tactics have evolved.

In the early ’70s, the Procter & Gamble (P&G) company employed strategies to build “employee commitment” within its paper products division and held that the high performance work system concept used in their manufacturing plants gave them a competitive edge. This work system provided employees with a full range of communication on work unit performance, included them in operational decision making, and provided them with greatly broadened work roles and responsibilities. Years later, David Swanson, P&G’s Vice President of Manufacturing Operations, stated that their high commitment manufacturing plants were 30 to 40 percent more productive than their traditional counterparts.

In “Ideas the Welch Way: How Healthy is Your Company,” (in the September 29, 1986 issue of BusinessWeek) the magazine asked General Electric CEO Jack Welch to identify the three best measures of a company’s health. Welch cited employee engagement first, customer satisfaction second and free cash flow third.

All organizations are interested in tapping into their employees’ capabilities. Effective leaders have learned that traditional or control leadership practices don’t lead to high levels of performance. They have learned what is important isn’t what your people do while you’re supervising them but what they do when you are not there.

Effective leaders have also found that soft or laissez-faire practices do not produce consistently good results. What they found is that their organizations need leadership practices that promote accountability, initiative taking and ownership of the work. It’s also important that leaders communicate positive regard and respect to employees, that they appreciate and value subordinates’ skills, knowledge and ideas.

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To take a self-assessment survey and find out where you stand on a variety of crucial categories like change management, employee performance, knowledge management, employee relations, safety practices, energy level and more, please click here.

We will email you two reports — Your organizational profile and a Predictor of Success Scale. We’ll also send you our Leading From Commitment® White Paper and provide a consultant to share ideas for performance improvement based on the findings in your assessment reports. There is no charge or obligation for this meaningful analysis.

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To read the complete article, please click here.

Mike Marker is a Senior Management Consultant in Sinclair Group’s Organizational Excellence Practice.

 

Be•Know•Do: A book review by Bob Morris

Be•Know•Do: Leadership the Army Way: Adapted from the Official Army Leadership Manual
United States Army (Author); Frances Hesselbein  and Eric K. Shinseki (Introduction), and Richard E. Cavanagh (Foreword)
Jossey-Bass/Leader to Leader Institute; 1st edition (2004)

How to develop leaders who have character, competence, knowledge, and results-driven initiative

I recently re-read this book, curious to know to what extent its content remains relevant. My conclusion? It is even more relevant today than it was when first published in 2004. In Richard E. Cavanagh’s Foreword, he recalls a discussion during dinner with Peter Drucker and Jack Welch who shared the same opinion that the United States military services do the best job developing leaders. What we have in this volume is an adaptation by Frances Hesselbein and General Eric K. Shinseki (USA Ret.) of Field Manual 22-100, Army Leadership, with assistance from Alan Shrader. Hesselbein and Shinseki also wrote the Introduction. The material is carefully organized within seven chapters, followed by a Conclusion that reviews the most important points, correctly noting the unique and compelling role that the U.S. Army has played since June 14, 1775, when the Continental Congress authorized enlistment of riflemen to serve the United Colonies for one year.

With regard to the book’s title, “Army leadership begins with what the leader must Be, the values and attributes that shape a leader’s character…People want leaders who are honest, competent, forward-looking, and inspiring…People willingly follow only those who know what they are doing. One of the quickest ways for a leader to lose trust and commitment of followers is to demonstrate incompetence…Character and competence, the Be and the Know, underlie everything a leader does. But character and knowledge – while absolutely necessary – are not enough. Leaders act; they Do…They solve problems, overcome obstacles, strengthen teamwork, and achieve objectives. They use leadership to produce results.”

I realize that these concepts seem simple. In one sense they are. However, in this context, I am reminded of what Oliver Wendell Holmes once said: “I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.” The challenge to any organization when developing leaders is to guide those involved to the other side of complexity.” The composite of excerpts from Be•Know•Do identifies core concepts, to be sure, but it also describes the character, competence, knowledge, and results-driven initiative that the U.S. Army seeks to develop within every one of its soldiers, regardless of rank. “No one is only a leader; each person in an organization is also a follower and part of a team. In fact, the old distinction between leaders and followers has blurred; complex twenty-first-century organizations require individuals to move seamlessly from one role to another in an organization, from leadership to `followership,’ and back again.”

Hesselbein and Shinseki are to be commended for their skillful adaptation of Field Manual 22-100, Army Leadership, but also for the inclusion within the narrative of relevant material from sources outside the U.S. Army organization. For example, they quote prominent business thinkers throughout the narrative: James Kouzes and Barry Posner on leadership by example (page 24), John Gardner on the importance of a shared vision (page 30), Patrick Lencioni on teamwork (page 86), and John Kotter on a leader’s “quest for learning” (page 132). Readers will also appreciate the provision of various “Exhibits” such as 5.1 that provides a brilliant illustration of Team-Building Stages.

Those who share my high regard for this volume are urged to check out Frances Hesselbein’s other works and the wealth of resources available at the Leader to Leader Institute, a non-profit and tax exempt organization. Also, Warfighting: The U.S. Marine Corps Book of Strategy (Tactics for Managing Confrontation) published in 2004.

The Start-Up of YOU: A book review by Bob Morris

The Start-Up of YOU: Adapt to the Future, Invest in Yourself, and Transform Your Career
Reid Hoffman and Ben Casnocha
Crown Business (2012)

How and why start-up mind-sets and skill-sets are essential to achieving and then sustaining success…however defined

The basic premise in Reid Hoffman and Ben Casnocha’s book is that the same mind-sets and skill-sets that can help to ensure the success of a start-up company’s performance can also (with appropriate modification) help to ensure the success of an individual’s career. In fact, all companies should always be viewed – and managed – as a start-up. This what Jack Welch had in mind years ago when, during a GE annual meeting, he explained why he admired entrepreneurial companies:

“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.”

Hoffman and Casnocha assert, “To succeed professionally in today’s world, you need to adopt entrepreneurial strategies…In the same way, you need to stay young and agile; you need to forever be a italics] start-up.” Speaking for both of them (as he does throughout the book), Hoffman adds, “The business strategies employed by highly successful [begin italics] start-ups [end italics] and the career strategies employed by highly successful individuals are strikingly similar.” Readers are introduced to several “strategic frameworks” within which valuable (usually counterintuitive) insights are revealed by exemplary entrepreneurs such as Hoffman and Casnocha  (of course) as well as Marc Andreesen, Jeff Bezos, Benjamin Franklin, Reed Hastings, Steve Jobs, Mary Sue Milliken, Marc Pinkus, Joseph Priestley, and Sheryl Sandberg, with insights anchored in their real-world experience.

Although Hoffman and Casnocha carefully identify the “what” of what organizational and individual success requires, they focus most of their attention on how (and how not to) achieve it. For example:

o How to develop a YOUR COMPANY/YOU Mind-Set
o How to develop a YOUR COMPANY/YOU Skill-Set
o How to develop and then sustain a competitive advantage
o How to anticipate and prepare for contingencies with agility and resiliency
o How to bounce back from adversity
o How to establish and then strengthen a network of genuine and appropriate relationships
o How to identify and then pursue breakout opportunities
o How to identify and evaluate “intelligent” risks
o How to navigate professional challenges with network intelligence
o How to synthesize information into actionable intelligence

Each of the Fortune 500 companies was originally a start-up and each of their CEOs was once a career-entry employee.  My guess (only a guess) is that the most successful companies and their leaders understand, appreciate, and affirm the power and value of the start-up mind-sets and skill-sets that Hoffman and Casnocha examine in this book. For them, for all of us, “life is a permanent beta [and] the trick is never stop starting.”

 

The Lean Startup: A book review by Bob Morris

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
Eric Ries
Crown Business (2011)

“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.

 

 

What Hath Jack Welch Wrought? Maybe Differentiation Is Not All That Good After All – A Defense Of Mediocrity

“Ah, but we can’t,” goes the prayer. “We can’t because we have responsibility, a responsibility to our employees, to our community. What will happen to them?” I got two words for that: Who cares?
{The fictional Lawrence Garfield (Larry the Liquidator), Other People’s Money – see the clip here}

————

A few nights ago, I was talking to the chief information/technology officer for a major company, with locations all over the country (and beyond).  He told me that his job was this:  to reduce the workforce.  His goal is to cut every 100 workers down to 20.  With technological strategies and innovation, he can do that – he is doing that.  So, I asked him, but what about the 80 that are let go.  He said, “I don’t care.  That’s not my worry.  My job is to get the workforce down.”

I said, “You should care.  Because, ultimately, if every company does what you do, then your customer base will decrease – there will be no one to purchase your products.”  Though he seemed to get that in some macro sense (barely), his focus is clear.  He is doing what he was hired to do, overall economy be damned.

This problem is real, and big.  I fully understand the concept that we have to make every worker as productive as possible, and every company needs to maximize profits in every way.

Except…  the overall economy may have been healthier when companies “overpaid” for workers, letting “mediocre workers’ have a place to work, producing more income in the overall economy.  A worker who is not as productive as others still is a customer in the rest of the economy.  And if every company gets rid of those “bottom 10%,” then soon it becomes the “bottom 20%,” and the “bottom 30%,” and before you know it, your overall customer base for a functioning, growing economy shrivels up down to dangerous levels.

Welcome to 2011!

I don’t know who invented this “shrink the workforce” approach.  But Jack Welch is known for the way he championed “differentiation.”  It is an absolutely rational, good, smart approach.  Get rid of the bottom 10%, as you build the skill levels and capabilities of the rest of your folks.  Yes, get rid of the dead weight.  Get more work out of fewer workers; workers are so expensive, after all.  Your company will be better for it, your workers more productive.

This is from Winning by Welch:

Differentiation is about managers looking at the middle 70, identifying people with potential to move up, and cultivating them. Differentiation favors people who are energetic and extroverted and undervalues people who are shy and introverted, even if they are talented… The world generally favors people who are energetic and extroverted. In business, energetic and extroverted people generally do better, but results speak for themselves, loud and clear.
Differentiation – Cruel and Darwinian? Try fair and effective.

And this is from a column by Jack Welch (read the column here):

Bottom 10%
As for the bottom 10 percent in differentiation, there is no sugar coating this—they have to go. That’s more easily said than done; It’s awful to fire people—I even hate that word. But if you have a candid organization with clear performance expectations and a performance evaluation process—a big if, obviously, but that should be everyone’s goal—then people in the bottom 10 percent generally know who they are. When you tell them, they usually leave before you ask them to.
No one wants to be in an organization where they aren’t wanted. One of the best things about differentiation is that people in the bottom 10 percent of organizations very often go on to successful careers at companies and in pursuits where they truly belong and where they can excel.

I learned it on the playground
That’s how differentiation works in a nutshell. People sometimes ask where I came up with the idea. My answer is, I didn’t invent differentiation! I learned it on the playground when I was a kid.
When we were making a baseball team, the best players always got picked first, the fair players were put in the easy positions, usually second base or right field, and the least athletic ones had to watch from the sidelines. Everyone knew where he stood.

There may be times when I want Jack Welch to run my company.  But I’m not sure a world full of Jack Welches would be good for our economy.

Think back – over your whole life, you have had waiters/waitresses who were less than stellar, retail clerks who were a far cry from the best, and companies had so many workers who were not quite pulling their weight.  They were… mediocre.  And, yes, it drives me crazy when I receive “customer service” from a mediocre worker.  I have thought, “I would fire that person.”  But, what if all of those mediocre workers had nowhere to work?

Not every one was an “A” student (should we kick the “C” students, the bottom 10%, out of school?); not everyone was the starter on the football team; not everyone was the stand-out.

I think we ought to help everyone get “better” at their job.  But I think that an economy that only has jobs for the best has a shrinking pool of workers, and then, a shrinking pool of customers.  And then, you’ve got real trouble in river city.

If our economy does not give everyone a place to make some money, even those doing a less than stellar job, then we are destined to spiral down.  This may be the hidden price-tag of the search for excellence.

Maybe it’s time to, if not reward, at least make a place for, mediocrity.

Jennifer Prosek: An interview by Bob Morris

Jennifer Prosek

Jennifer Prosek is the founder and CEO of CJP Communications (CJP), where she leads many of the firm’s key accounts. Under her leadership, the firm has become a leading international public relations and financial communications consultancy with offices in New York, Connecticut and London. With more than 70 professionals, the firm ranks among the top 35 independent public relations firms in the US, and among the top five financial communications consultancies in the UK. The secret to CJP’s success has been Prosek’s ability to develop, motivate and deploy her employees to be more entrepreneurial within their own positions. This strategy is the premise of her first book, Army of Entrepreneurs: Create an Engaged and Empowered Workforce for Exceptional Business Growth, which is based on the unique business model of CJP and is now available from AMACOM, a division of the American Management Association.

Prosek received her MBA from Columbia and is a frequent lecturer at leading business schools, including Columbia, and entrepreneurial and business groups. Recent speaking engagements include the Yale Chief Executive Leadership Institute, Forté Foundation, The Royal Bank of Scotland Marketing Summit and British-American Business, Inc. She is on the board of directors of the New York City Partnership for the Homeless.

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Morris: Before discussing your book, a few general questions. First, when and by what process did you formulate the management strategy (i.e. Army of Entrepreneurs) based on a military model?  Was CJP Communications founded before or after that?  To what extent (if any) are the strategy and the firm related?

Prosek: CJP was founded before the Army Model was born.  The Army model was started after a few frustrating years of failing to grow the business at the desired pace, and coming to the realization that perhaps we had not tapped our employees to the greatest degree.

We asked ourselves whether we could teach our staff to think more like owners and encourage them to contribute to the business in new ways.

We started with the notion that, if they understood more about how the business ran and were included in idea generation and decision making at all levels, they could be more effective.  This premise led to the “Army of Entrepreneurs^TM” model, which helped us achieve the business growth we were seeking.

At this point, we have been engaged in the model for more than 10 years so it’s hard to separate the company from the model.  The company is the model.  I am a big fan of Malcolm Gladwell, who talks about something called the “talent myth.”  He says that it is important to make the system the star in a company; I couldn’t agree more.  This is what we have tried to do with the Army of Entrepreneurs^TM.

Morris: What are some of the most common – and perhaps dangerous – misconceptions about employee empowerment?

Prosek: Among the most dangerous misconceptions is that a program or model can empower all employees.  True empowerment is authentic and individual and is expressed differently by each employee.  Too many companies launch campaigns and slogans that are more “flavor of the month club” empowerment programs rather than true commitments.  Employees are smart, they will respond when employee empowerment efforts are real.

Morris: Much has been said and written in recent years about “followership.” My own opinion is that there are times when supervisors lead and other times when they defer to direct reports who then “take the lead.” What are your own thoughts about it?

Prosek: When people are confident and inspired enough to handle new tasks – whatever the level – they should be empowered to do that, with guidance from a supervisor. It’s tricky because you need supervisors, but those supervisors must be talented enough to know when to pull back and let someone run, and when to step in. As an entrepreneur I’d rather give them a long rope and if they trip, let it be a teachable moment. Great people almost always avoid tripping; they simply surprise themselves by being able to do things they never expected they’d be able to do.

Morris: Opinions are divided (sometimes sharply divided) about 360º feedback. Some want it to be transparent, others want it to be anonymous, and still others want to have nothing whatsoever to do with it. Your own thoughts?

Prosek: I think feedback is essential. We do like 360-degree feedback and generally keep it anonymous so that it is indeed authentic.

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To read the complete interview, please click here.

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7 Vastly Overrated Business Books

Here is an article written by Geoffrey James 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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Most business books are awful, some are mediocre and a (very) few are truly useful.   And then there are business books that aren’t exactly dreadful, but have reputations that have been bloated way out of proportion.

You see them on corporate shelves everywhere and they’re cited at meetings, conferences and seminars, but when you dig a little deeper, and think about their contents, you’re forced to wonder WTF the fuss is all about.

This post identifies some highly popular business books which, in my view, are absurdly overrated.  I’m sure there are many true believers out there who will disagree, but I can’t help but wonder whether somebody hasn’t been drinking some Kool-aid by the gallon.

[Here are the first two. To read the complete article, please click here.]

This book espouses the popular viewpoint that management is mostly a matter of common sense: specific goals, specific praising and and specific reprimands (as a comment below succinctly puts it.)

However, when people think common sense are sufficient for a particular task, they tend not to pay much attention to it, assuming that common sense alone will get them through.  In fact, management is a collection of highly-specialized skills including applied psychology, coaching, business acumen, and system analysis, not to mention an increasing amount of knowledge of computer technology, law and even international relations.

There is no panacea for good management, and it’s certainly not going to be contained in a book that essentially treats management as being easy-peasy.  The belief in common sense as a panacea is always the result of mental laziness. It’s wrongly assumed that a person with “common sense” will make good decisions, while people with real expertise will act like impractical egg-heads. That’s BS.

The result of the “management is just common sense” movement has been nothing less than a rampant epidemic of bad management.  What happens inside most companies (especially at the middle management level) is that the same problems keep coming up month after month, year after year, because managers are relying upon “common sense” to fix them.  It just doesn’t work.

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Back in the day, leaders waited until some kind of independent biographer decided that their accomplishments were worthy of being immortalized in a book.  Today, however, business leaders seem obligated to write self-congratulatory paeans that give new meaning to the word “vomitable.”

What’s even more annoying about this book (and indeed the entire genre) is that it reflects the diseased notion of the “heroic CEO” who singlehandedly causes a company to be successful.  Funny, but I thought that good managers were supposed to give credit to the team, not plaster their face on a book.

The kind of thinking reflected in this book is exactly what results in obscene pay packages for CEOs.  Indeed, Jack Welch was no welcher when it came to awarding himself a panoply of perks. Meanwhile, his vaunted business strategies consisted primarily of downsizing and outsourcing, regardless of the impact that it had on society at large. As for his legacy, he’s left a company where the senior management is evidently proud that the firm, due to lobbying and influence-peddling, didn’t pay any taxes.

It’s amazing to me that anybody takes this kind of self-interested hype seriously, but there’s no lack of imitators.  One wonders when business readers will finally conclude that enough is enough…

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Geoffrey James has sold and written hundreds of features, articles and columns for national publications including Wired, Men’s Health, Business 2.0, SellingPower, Brand World, Computer Gaming World, CIO, The New York Times and (of course) BNET. He is the author of seven books, including Business Wisdom of the Electronic Elite (translated into seven languages and selected by four book clubs), and The Tao of Programming (widely quoted on the Web as a “canonical book of computer humor”.) He was also co-host of Funny Business, a program on New England’s largest all-talk radio station and has given seminars and keynotes at numerous corporations, including Rackspace, Gartner, Lucent and Houston Industries.