The Chicken and the Egg – Influence and Motivation

A couple of days ago I wrote an entry called Consider Your Influence . The idea being that we are influenced by not only people, but by other sources such as art. In the piece I mentioned Tim O’Reilly and Steve Jobs as two prominent thinkers in the technology world. Each of them is very wealthy, but neither of them does it for the money. They are motivated by something beyond a pay check. Dan Pink in his book Drive: The Surprising Truth Behind What Motivates Us , which I reviewed expands on why people behave a certain way. What influences behavior? This PBS video helps:

 

The Next 10 Years a Leadership Change will Occur

Have you ever had one of those moments where you are leaned over a bowl of cereal with a spoon in one hand and your coffee in the other and time is standing still? The moment is frozen because you remembered why you were doing something in the first place. I recently had that moment with this blog. I didn’t intend on it to be a daily account of the machinations of the job market. The global meltdown helped foster that view of mine, but really it was a lack of creativity.

Seven years ago a guy by the name of Paul Kaihla wrote an article in Business 2.0, a defunct business magazine, called The Coming Job Boom . It was a dark time for technology employment as the tech bubble had collapsed two years earlier. But the premise of the article is sound: Baby Boomers are getting old.

Here we are in 2010 coming off a severe economic reckoning. 18 months ago retirement portfolios were wrecked by the decline in the markets. They’ve rebounded, but scars remain. What does this mean to the business community and industry in general? The answer is that the next ten years will determine the fate of the US. Wow that’s a hyperbolic statement, but hear me out.

The demographics of the Baby Boomers are unmistakable. They are the largest group of people this country has ever experienced, both from a total count and as a percentage of the population. They also were the benefactors of two major US innovations: a free market method to war enablement and the public education system. Both are taken for granted now, but each one propelled the US during the middle portion of the 1900s. Because of this, the Baby Boomers have led this country in one way or another since the mid 1960s. That’s fifty years of leadership experience and problem solving set to retire. The graph below shows a generalization of the different populations segments.

As depicted, the crest of the Baby Boomers begins in 1951 – 60 years ago. For the next ten years, that crest is going to, in mass, think about things that aren’t work. Things like grand kids, travel, cooking, and golf. As I hinted before, I think the economic situation has delayed the great exit for a few years. And many older workers were laid off as well, so a job to bridge to retirement, whenever that is, is sought by many. However, the allure of retirement is a strong pull and fluctuations in the past haven’t disrupted it, so we shall see. If the numbers hold, the three groupings should look like this, resulting in about 14 million boomers retired by 2020.

So the question is, who will replace the Baby Boomers in business and industry? The answer is multifaceted. First is the sheer volume of people. Gen X and Gen Y aren’t big enough and they don’t have an educational advantage. The US is still the greatest innovator on the planet, so creativity and problem solving are assets. But it begs the question as to how these skills are distributed across the generations. I’m fairly optimistic about this one, but it could very well be concentrated in the senior bracket.

Here is a picture showing the proportion of the population by age grouping over the next 10 years. Some time in 2013-2014 the balance between Gen X and the Boomers will tip.

What I see happening is a combination of several factors. Gen X is already at an age of prime leadership responsibility, but many are blocked by the boomers preventing valuable learning opportunities. This can, and I think has, create resentment and a lack of trust by the two populations. Another aspect about Gen X is that they are very much technologically savvy and yet they are weighed down by a legacy culture, which was implemented by the Boomers. Things like Thursday night comedy on TV and face to face meetings. Gen Y is not burdened by these norms and is headed in another direction altogether. The Baby Boomers have recognized this and have partnered with Gen Y in a kind of mentor style relationship. This is accelerating the learning curve for those in that demographic and plucking a few more lead roles from Gen X. So although this looks like doom and gloom for Gen X, I can’t completely buy that Gen Y will leap frog them. So the chart will probably look like this:

The change is a bit subtle, but instead of Gen X completely filling the vacancies, I see it being the vast majority with the Boomers and Gen Y supplementing them. The Baby Boomers will redefine flexible work, especially those in the upper middle class, and work until 70. Gen Y will see the weaknesses in Gen X and go their own way. This means further partnering with India, Brazil, and especially China.

It also means that talent will very much be at a premium. And education is still a separator, but in a negative way, if you don’t have it, you are out. Now is the time to identify the individuals in the different groupings who work well together and foster some sort of cluster which pushes each person to be creative and allows for learning to occur.

I hope one day this week, you’ll have a cereal moment and think about your current job and how it help you over the next pivotal 10 years.

Google and China: A Social Take

Google is led by three individuals: Sergey Brin, Larry Page, and Eric Schmidt. They set up a stock structure which allows them to maintain real power over the company. The reason they installed such caution is for situations like what recently occurred with China.

China, as a communist country, maintains tight control over the flow of information inside their borders. Information is power, so these type of decisions aren’t to preserve the innocence of children. Google for about three and half years (2006 ’til early 2010) operated in China under the authority of the state. This manifested itself as censored results on searches. In January of 2010 it was reported that Chinese operatives hacked Google’s servers and specifically went after human rights activists. One method for the intrusion was to replace computer source code with compromised source code, which has back doors coded in. This subverts the usual way intrusions are detected with IP addresses. Google, Sergey Brin specifically, said they had enough and basically pulled out of China.

From a business stand point this is a shocker. China has well over a billion people and many of those people are recent members of the middle class. The advertising revenue potential of China is immense to Google and any other company.

This is why it’s important for Brin to have huge numbers of voting shares, because just about any other shareholder group wouldn’t let this happen. But the move has many positives for Google.

For starters, Google’s algorithm and feedback loop can’t have biased noise coming back in. It pollutes the relevancy part of their model. If searches are constrained to only certain sites or types of data it begins to undermine what is really being looked for and what isn’t. The integrity of the search is eventually out the window.

Secondarily, and possibly more important, it’s generalized that generation Y is socially prioritized. They ask about topics like green energy, pollution, and human rights. They don’t want to work for companies that are seen as evil and Google preaches “Don’t be evil.”

Just earlier this year 60 Minutes ran a story about a company producing something called the Bloom Box. The story is about an invention that produces energy more efficiently and with less transmission loss than local power stations. It isn’t cost competitive yet, but the angle the early adopters are taking is that this type of investment allows them to tell talented 20 somethings that they are socially responsible. This person can work for Union Carbide or Google. Google wants to recruit them and losing a few dollars on energy production is a cost worth absorbing.

The question is: Is 36 year old Sergey Brin, as a leader of Google, really foregoing the potential profits of China or is he protecting the image and brand of Google within the US? Is this about the prospective labor pool needed to sustain Google as an innovative company in an industry where 5 years is a long time.

Open-Book Management, Motivation, and Progress

For the last three months I’ve really been focused on motivation in the workplace. I’ve settled on a few main themes with particular emphasis on the ability to make progress. When people are committed to a goal, every step toward that goal is rewarding. It’s kinda like football. For every offensive possession the goal is to score a touchdown. Those six points are an emotional revelation.

However, the path to a touchdown is rarely one play. Usually, the score is a series of plays, gobbling up portions of the field chunks at a time resulting in first downs. It could be a running play, a pass play, or a creative trick play. These first down benchmarks are rewarding as well. They show progress to the overall goal of a touchdown.

On nytimes.com is a blog in the entrepreneur blog called You’re the Boss. Today I read an entry by Jack Stack titled Starting Over in Lexington: Turning the Plant on Its Head which describes the success of an implementation of something called Open-Book Management. I probably should have heard about it prior to now, but I’m fascinated by the idea, especially as it pertains to motivation.

Open-Book Management is a management style where the financial aspects of the company – costs of good sold, revenue, profit, cash flow, and so on – are made available to the employees of a company for consideration as they perform their tasks. The theory is that when people know how what they are doing affects the bottom line of a company, they will become more invested in changing the bottom line: they won’t be simple hired hands. The referenced blog post provides some great anecdotal evidence of this.

As Rob and I walked the shop floor, he told me story after story of how people in the plant — not the management team – were making the biggest difference. Because managing the cost of parts and materials is so central to the success of a re-manufacturing business, the associates were completely rethinking how they went about their jobs on a daily basis. They kept coming up with new ways to save and reuse materials – a savings that goes right to their bottom line.

Tony Johnson, a machinist, after learning how much it cost to outsource the machining of engine blocks, found a way to do it himself. Rick Draper, another machinist, figured out a way to use scrap material from used engine cylinder liners to make sleeves used in repairing transmission parts — rather than buying new sleeves.

In fact, the employees figured out so many ways to avoid using new parts that they created a whole new problem: They were buying and returning too many new parts, which was becoming a big hassle for the planners and parts-handling team. Through the efforts of assemblers like Paul Carrico, who cut his returns down to two or fewer per job, overall returns have now been cut by 70 percent over the last three months – reducing costs, increasing efficiency and improving cash flow.

The Apple Brand

If you are a technologist you are excited about what Apple is going to announce next week. Most presume it is a tablet computer – Apple style. But there are probably some other surprises as well. If it is a tablet, I’m not sure how it can be so great? Perhaps my imagination isn’t as free as it should be. I hope it is a game changer, but I’m skeptical. Does the market really need this device? Will there be demand beyond the cool?

Here is a copyrighted video from Stanford of Steve Jobs doing a commencement address.

Rules of Thumb – A Review

Rules of Thumb: 52 Truths for Winning at Business Without Losing Your Self

                                             Alan M. Webber

I can’t remember what turned me on to this book. I think it was a review in a magazine I glanced through. However, what sold me on it was the ability to see how large the font is. I tend to be realistic about the type of book I can consume. If the font is too small I usually don’t get involved – just too much of a commitment. That isn’t to say it’s huge, it’s normal size. You just never know what’s going to put you over the edge and buy a book.

My summary review of this book is that it’s the perfect 15 minutes at a time read. Each chapter, or rule, is insightful, but also articulate and concise enough to get through when you only have a smidgen of time. I recommend this to anyone who needs an enterprise perspective or business philosophy book. It pulls from the author’s experiences (Harvard Business Review and Fast Company) as well as his idea sharing with other thought leaders (Jim Collins and Dan Pink for instance). The other part I like is that it is very much an applied book – the ideas happened, they aren’t theoretical. It’s very much a “here’s what happened to me” recollection.

rules of thumb book cover

Here are some pull outs I really enjoyed (some with my thoughts added):

Rule # 6 If You Want to See With Fresh Eyes, Reframe the Picture – Pg 28: Another way to learn: add different points of view. What would a an anthropologist say about your company culture? If you invited a cartoonist to draw your business, what would the picture look like? When you invite outsiders in to look at your business you get the benefit of seeing what is all too familiar to you with their new-to-the-scene eyes. I like how he references a cartoonist. Something I wouldn’t consider, but the visualization this person would bring would be eye opening (pun intended).

Rule #14 You Don’t Know If You Don’t Go – Pg 64: Toyota practices Genchi Genbutsu“Go and See”

Rule #14 You Don’t Know If You Don’t GoPg 66: But the problem isn’t too much information. It’s too much insulation. Get out of the bubble that acts as an echo chamber. The echo chamber is something I fear. I get comfortable with my sources and return to them practically out of habit.

Rule #18 Knowing It Ain’t The Same As Doing It – Pg 86: There are two ways to knowing. One way comes from the head. It’s the kind of knowing that comes from reading and thinking – it’s the land of theorizing that experts excel at. The other way of knowing comes from doing. Unlike the first form of knowing, which starts in the head and stays there, this form of knowing starts in the hands and moves up to the head and then moves back down again in a knowing-doing loop. This becomes a main theme of the rules: seeing an idea through.

Rule #19 Memo To Leaders: Focus On The Signal-To-Noise Ration – Pg 90: If you’re a leader, your people need three things: clarity about purpose, honesty about values, and focus about metrics.

Rule #24 If You Want To Change The Game, Change The Economics Of How The Game Is Played – Pg 116: If you want to change the game, change the economics of how the game is played. This is always true. We often talk of innovation and putting in a system where the economies change is the perfect example of innovating. This part of innovation is often overlooked, but it is critical for many ideas to survive.

Rule #30 The Likeliest Sources of Great Ideas Are In The Most Unlikely Places – Pg 150: Third, like money, not all great ideas are created equal. Like children, if they’re yours, you may love them all equally. But unlike your children, you’re allowed to rank your ideas by their feasibility, likelihood of success, return on investment, and other market-based measures. It’s fun to come up with great ideas; implementing them is hard work. Use your discretion. Fourth, great ideas really are the coin of the realm – if you can implement them. Otherwise they’re fool’s gold. Most companies have people who are nothing but idea people and others who are only implementers. You need them both. Great idea people are rare – and also frequently hard to live with. They see things the rest of us can’t see, which is their gift. They can’t see what you and I can see easily, which is their burden. Still, you need them and they need a home where they can contribute… Your job is to build a bridge the great ideas can walk across, from those who have them to those who make them real. I know a guy like this and I tend to be the translator between him and the implementers.

Rule #31 Everything Communicates – Pg 154: “Small gestures send big signals.” – great line

Rule #31 Everything CommunicatesPg 155: How you communicate communicates. Some people think they need to “speak business” to prove they belong in business. They think a compulsive use of consulting buzzwords and MBA jargon makes them sound like they’ve learned the secret code. Unfortunately, that kind of acronym laced talk doesn’t demonstrate a business – smart brand; it comes across as “the brand called insecure.” A far better strategy is to know all the right jargon but to translate it into words and ideas that ordinary people can understand. I notice this quite a bit. There is no need to over complicate the message.

Rule #32 Content Isn’t King. Context Is King – Pg 161: No matter how many raw facts you know, they’re only as valuable as the context within which you put them. That’s why context is more important than content and always will be, pipes or no pipes.
Have the mental inventory to connect dots that others don’t see.

Rule #33 Everything Is A Performance – Pg 165: Conviction, for one thing. If people feel you genuinely care – about the work you’re doing , about them, of about the theme of the talk you’re giving – they are much more willing to enter into your performance with you.

Rule #34 Simplicity Is The New Currency – Pg 168: 1) Simple is hard
. The reason simplicity looks simple is that someone has done the hard work of removing all the complexity. Simplicity takes hours of concentrated effort.

Rule #36 Message To Entrepreneurs: Managing Your Emotional Flow Is More Critical Than Managing Your Cash Flow – Pg 180: regarding entrepreneurism:
If you can’t manage the stress of uncertainty, ambiguity, and doubt your skill at managing cash flow won’t matter.

Rule #43 Don’t Confuse Credentials With Talent – Pg 219: Ask yourself, if you could own 10% of the future earnings of any of your classmates, who would you pick?
You’d pick the person with the personal qualities you admire: generous, honest, and attracted by others to work with you.

Rule #44 When It Comes To Business, It Helps If You Actually Know Something About Something – Pg 228: Silicon Valley is one of the few places in the world where venture capitalists go to work everyday expecting a sizable percentage of their investments to fail. Not only that but  they check the resources of the entrepreneurs who send them business plans to see if they’ve failed in the past – to punish them for failing but to reward them for it.

Rule #51 Take Your Work Seriously. Yourself, Not So Much – Pg 258: We all want to work for people who take their work seriously – and themselves not so much. Who leave room for laughter. Who have time to tell stories. Who relish the mix of ideas that only an energized group can elicit. We want to work for people who are confident enough of who they are to be able to delight in making jokes at their own expense. Who bring others into the circle to make it larger, brighter, and a little lighter.

Plus this entry from over the summer:
C(SQ)>R(c)

Using a Multiple as a Compensation Distribution Model

The US Federal Government has a person called the Pay Czar. In the wake of the financial turmoil of the last 18 months, there has been a justified interest in making compensation fair. How is it possible for companies that needed a bailout to survive are able to pay a bonus? Tax payer money shouldn’t be used for compensation. As a result, the Pay Czar has capped pay at the firms that needed bail out money.

I don’t agree with this tactic. The obvious recourse is that if you want these companies to rebound then you need good people to make that happen. By capping their pay, you are signaling to the talented employee to leave the industry. This could create a vacuum of talent. Another aspect to this discussion is the idea of “bonus.” A bonus to most people is the extra left over after a good period. But in banking, the term “bonus” is really a stand in for variable pay. It isn’t the extra left over at all.

What I was hoping to see come from this was a compensation distribution model where the top tier couldn’t make a certain multiple more than the lowest employee. I find this important because the current model makes it seem like certain performers are doing it single handedly. Just about all people who are successful are that way because of a great support structure. When you take someone out of a situation where they excelled and drop them into another situation, rarely do they achieve the same heights.

For the sake of the US economy, having a compensation distribution model of something like a 150 multiple cap would be great. Suppose someone at the bottom of the company makes a yearly income of $24,000. If you cap the highest person at a 150 times that number then that means they are paid $3,600,000. That is still a lot of money, but if they want to make more then they have to raise the tide for everyone. For instance, if this same executive wanted to make $4,000,000 then the lowest paid employee would have to earn $26,666. As the pay at the top is slowed, the pay in the middle and bottom swells. This is because of the sheer number of people at a slightly higher pay grade. These same people would buy more goods and services, as well as be taxed on this improved income.

Unfortunately, what we got was a knee jerk reaction. And the people being punished are the same people we want to lead. We should have focused on broad reform and not a bullying.

Working Thoughts 10/23/08
Privilege is a distinction that each of us can decide to enjoy or not

Working Thoughts 10/23/07
Does College have a Future?

Netflix does Personnel Strategy

Occasionally someone assembles a set of ideas that you wish you put together. The thoughts are crisp, relevant, and different. Well, that’s what the team at Netflix has done (the CEO Reed Hastings mainly). They have a 128 page slide deck that explains their salaried personnel strategy. And I have to say that its really good. They took a Blue Ocean approach and defined their own rules. I would call it blunt and fair. My only criticism is that I could see their internal work environment getting very competitive.

But this reminds me of a few years ago (2004) , the CEO of Raytheon, William Swanson,  published a booklet called “Swanson’s Unwritten Rules of Management.” In it are 33 rules that are both straight forward and useful i.e. “If you are not criticized you might not be doing much.” Unfortunately for Swanson, he lifted these rules from an engineering book. I don’t anticipate that happening with this, just that it will create the same amount of buzz.

Here are some blurbs I pulled out (slide show below):

Seven Aspect to Our Culture:

  • Values are What We Value
  • High Performance
  • Freedom and Responsibility
  • Context, Not Control
  • Highly Aligned, Loosely Coupled
  • Pay Top of Market
  • Promotions and Development

But unlike many companies, we practice “adequate performance gets a generous severance package.”

The Keeper Test Managers Use:

Which of my people if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix

Insightful Interview Done by Tony Tjan with Dick Harrington

Anthony Tjan is one of favorite bloggers over to HBR.com. His entries are usually to the point and insightful. Recently he did an interview with a partner of his Dick Harrington. Oh yeah, Dick used to be the CEO of Thomson Reuters too. I excerpted a few segments of the exchange:

Tony Tjan (TT): Dick- attempt the impossible and give us the top three business lessons learned over three decades!

Dick Harrington (DH): First, you have to have an
“approximately correct” strategy — you have to know where you are
going, but directionally correct is the key. Two, you have to be highly
focused and intensely execute that strategy by motivating and aligning
the troops you have. And three, it always comes back to the customers
and the fact that you have to manically know your customers and drive
everything from that.

TT: Nicely done. So let’s start with the first point. People
often worry about architecting a perfect business plan or strategy and
then get lost in the minutia. How do you know when you are
“approximately correct,” as you say?

DH: You want to be approximately correct instead of
precisely incorrect. There is a point at which additional information
or research will not change the basics of your strategy. When you get
your strategy there, you have to “Nike it” – you just do it. If you
continue to refine and refine, you’ll never get into action, and the
incremental value of research just won’t be worth the time and money.
Schedule time frames and be religious about them to launch, get
feedback, and see if the strategy is acceptable to the customer or if
you need to adjust.

TT: Your second point is about execution focus. What’s the best way to rally people and spread that intensity?

DH: First, you have to communicate what you are
trying to accomplish. And you need to know the team members who are
going to make it happen and those who are going to keep it from
happening. It’s important to have time with them so they have an
opportunity to discuss and debate what’s critical.

At the same time, you have to draw the line at some point and say
“Okay, we have everyone’s input. These are the five most important
things we need to accomplish and they are the only things we are going
to work on.” You want everyone – probably 4-5 key people, maybe 10-15
at larger organizations — in the same boat so you can accomplish those
things on a timely basis.

TT: Can you use operating metrics or dashboards to help imbue people with a sense of ownership?

DH: Absolutely. When you think about executing a
strategy, you need operating metrics to see how you are doing. But keep
them simple, so folks can easily see if they are being successful and
adjust along the way as needed. This is the key, the dashboards or
metrics a company uses should be simple and frequent enough so that all
key members on the team can use them to keep score and see how their
actions translate into performance (or not). Most companies don’t
internally communicate their metrics frequent enough, or if they do
they are often measuring too many things or, even worse, the wrong
things.

Job Losses and the Self Employed

The July 2009 Jobs Report was relatively positive. That means the job losses, although still huge, are subsiding. I checked the U-4, U-5, and U-6 reports as well – both season adjusted and not adjusted – and there wasn’t anything there that stuck out.

So now it is time to look at the oddities that can be pulled from numbers. The NY Times has a guy named Scott A Shane who did some research earlier this year and recently about the self employed segment. He compared their job loss rate against the corporate job loss rate. Here is his chart, taken from his post called Job Loss Abating Among the Self-Employed:

                      

What this graph is showing is a year over year growth/loss comparison for the Self Employed and the Wage Employed. In other words, in the July/August 2008 time frame the Self Employed segment was 102% larger than it was in July/August of 2007.

What I find most interesting about this is how the dramatic decline for red (self employed) coincides with the months of September, October, November, and December of 2009. These were anxious months for just about everyone. What I surmise happened is that the consumer quit spending (ok, we know they did) and many self employed people looked to the credit markets to finance this slump, but they were frozen, and still pretty much are. Without any type of income coming in many self employed people lost their jobs.

But now things appear to be leveling off. The special skills or niche abilities of the self employed are sought after. But why? Well, if the tide has changed then it is probably because of comments like this from Jeffrey Immelt:

“I don’t need that to be part of your presentation,” he told them. “I already know the market’s slow.” As Immelt puts it, “The presentations had to go from ‘The market’s slow’ to ‘There’s an 80-locomotive order in Egypt — let’s go get it.'”

This was taken from The new (recovery) play book and article in Fortune. Good leaders don’t throw up their hands in defeat. They keep looking. They fundamentally believe there is a market for goods and services of value. And that is why the self employed statistic has flattened. Next month I expect it to turn up slightly.

Working Thoughts 8/17/07
At What Point Does It Stop Being Education?