Marrying “Out of Sight, Out of Mind” & “You Can’t Manage What You Can’t Measure”

I’ll be the first to admit that I have limited mental abilities. I can only take in and comprehend so much at a time. As the saying goes, out of sight, out of mind.

The business community about 25 years ago started to change how it operates. A similar saying arose: you can’t manage what you can’t measure. Programs like Six Sigma and other statistical methodologies evolved to handle the numbers associated with tracking current states and the subsequent change.

So now pops a guy by the name of Jesse Schell. He is a CEO of a company called Schell Games. He is also a professor at Carnegie Mellon. He aims to marry the two cliches I mentioned before: “Out of Sight, Out of Mind” and “You Can’t Manage What You Can’t Measure.” To do this you have to imagine a world where you constantly interact with your environment. This is the measure part. He talks about disposable technology that tracks what is happening. If you brush your teeth for 2 minutes, it is recorded. If you eat chips and not a banana, it’s known. Now be creative and consider a game or games where your behavior is scored, not as good or bad, but as it is. If the game is fun, you’ll change your behavior to accomplish some sort of goal. This is the “… Out of Mind” and “… Manage…” part of the sayings.

Of course, this begs the statement – I don’t care about the length of time I brushed my teeth. Schell is confident his games will make me care. But I can’t help but to revert to my original position on this – I have limited mental abilities 🙂

The Last Mile is a Land of Opportunity

It’s practically cliche to say these day, but we live in an knowledge economy. Other parts of the economy are commoditized. This places a premium on smart ways to look at business problems and most often the toughest nut to crack is the human element of it. We all approach problems from different points of view and that makes it hard for us to accept the reality of others. To us, the answer is always obvious.The TED talk below, is about the last mile. We can have the system, the supply chain to the technology, completely figured out but that doesn’t mean the consumer is going to understand it, see value in it, and buy it. There are people out there that overcome these situations. They seem to get the people side. They seem to know when and how to nudge.

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:

Education, Games, and Peer Learning

I was on this weekend looking at some reading material and in my recommendation area pops up Drive: The Surprising Truth About What Motivates Us from Dan Pink. It’s out toward the end of December. That visual prompt made me bop over to Dan Pink’s website, just to see what’s up. There are several good entries on the blog but one really pulled me in. It’s a video of James Paul Gee, a professor at Arizona State.

A program called Edutopia asked him to speak on several topics on the future of education. He describes many of the ideas that I run through this blog: kids aren’t necessarily falling behind in education, reading and writing are increasing, and adjustments can reap huge returns (the kids are ready for it). But Edutopia was new to me. It’s a George Lucas (Star Wars fame) foundation which provides many great resources to teachers and students. I’ll check it some more and share any unique ideas. In the interim, check out this video of James Paul Gee.

President Obama, Leverage, and Energy Decisions

The US energy policies that get the most attention tend to be the ones related to the auto industry. There are others, but it makes sense because everyone can relate to paying for gas. I mean, who hasn’t coasted down a hill with their gas tank indicator well past E?

Energy is one of the four areas I see as the future of the US economy (Health Care, Information, and People are the others) so I pay attention to different developments that occur. President Obama during the campaign to be elected was a big proponent of renewable energy and improving the market for such technologies. Since the election though, he’s been deal making to get health care reform passed. The biproduct of this deal making is satisfying states with many coal ties. Coal, as much as oil, has a lot to loose with renewables becoming a market force.

I was delighted to see an article on called Will Obama bypass Congress on climate rules? by Maha Atal. The President has been acting as if he’s still a Senator with limited leverage. As the President he’s in a position of power for negotiations. What he needs to think about is how to not take advantage of that position. President Bush (43) did a great job of getting his ideas through and he didn’t enjoy the advantages that President Obama has.

Back to the article, President Obama has indicated to Congress that he will use his agencies, specifically the EPA, to institute regulation standards if Congress isn’t able to get their act together. Here’s an excerpt about how the EPA will handle Green House gases:

The agency’s first target as it moves towards that future? Detroit.Under the new guidelines, by 2016 automakers must reduce their fleet’s average emissions-per-mile to 250 grams. This is in addition to the familiar fuel-mileage standards set by the National Highway Safety and Transportation Authority (NHTSA).

Since there are about 9,000grams of CO2 produced by burning each gallon of gas, automakers will be able to hit the EPA’s requirements in 2016 simply by raising fuel economy to the 35 miles per gallon levels NHTSA has already ordered for the same time period.

So meeting that 2016 deadline won’t be too challenging. But after 2016 something interesting happens. With conventional gasoline technology, improvements in fuel economy move in lockstep with drops in emissions.

But conventional technology maxes out 35 mpg, which means getting lower CO2 emissions beyond thatpoint will require new technologies like electrics, hydrogen fuel cells or biofuels.

If I’m an auto industry engineer and an innovator, these last two lines are where I see $$, a new market for products and more importantly services. These areas will require knowledge workers as well as blue collar workers. If Congress wants to protect coal and oil, it is losing a great opportunity to develop markets. And it isn’t an either/or proposition.

Working Thoughts 10/14/08
Waiting in Line will Prevent another Great Depression

The Vanishing of Okun’s Law and the Usefulness of the Education System

Last week the Jobs Report came out and although it had elements of
promise in it, it was pretty bad. Since its been a week there are
revelations coming out. One such idea is that the US has moved away
from Okun’s Law.

Back in the 1960s Arthur Melvin Okun
noticed a correlation between the business cycle (growth and recession)
and the number of jobs created or lost. The two marched fairly closely
in step with each other. However, the recession in 1990-1991 time frame
was considered a jobless recovery.

As a writing in called Jobless in America: Is Double-Digit Unemployment Here to Stay?
by Joshua Cooper Ramo talks about, this move away from Okun’s Law could
be a real shift in the way the US works. The article talks about how
the Obama administration needs to focus on job retraining since people
need to learn new skills, especially skills that are more than just
button pushing.

For the most part I agree, but since I’ve been
blogging about similar concepts for over two years I have some further
depth on the subject. The first is that there is a need for the middle class to be educated beyond what other nations are doing. For instance,
early in the 1900s the US dedicated vast sums of resources to create a
public education system. This ensured almost all individuals had the
chance to be educated. At the time, that was remarkable. It created a
large grouping of people that had skills that from a volume
perspective, no one else in the world could match. This resulted in a
middle class in the US with a buying power unlike any other.

the public education system in the US is largely the same as it was 100
years ago. That to me is just strange. We live in a hyper competitive
nation and yet our education system is almost the same as its ever
been. This is where the rot in the US is. Kids today are taught to pass
tests. No Child Left Behind is a policy that motivates everyone to that
one goal. The problem is that in the real world there are no tests. no
multiple choice questions, or True and False. Kids need to learn how to
solve diverse problems. The focus for schools should be less on tests
and more on accomplishments. Students should be pushed to build car engines or write software programs or pen a musical. The learning will
come in two dimensions: the straight forward what makes an engine work
and the more subtle realization that you need others to help you in one
way or another. So you learn persuasion, negotiation, trade, patience,
self confidence, and resourcefulness. These attributes of education
somewhere along the way were forgotten. And places like China, Russia,
and India have their students learning math and science beyond what the
US teaches. We can differentiate on creativity, ambition, leadership,
and problem solving.

The article also mentions that there is a
possibility that 8% – 11% unemployment might be the new norm. I agree
in a classical sense, but also think that what it means to be employed
could change. Freelance work or self employment is a very real
alternative to what people are used to today. Mini entrepreneurship
could take hold where collective networks assemble and separate fairly
frequently depending on what projects are underway. This requires a
flexible skillset and a willingness to accept ambiguous pay schedules.
There are people who already thoroughly enjoy this freedom. But many
others might have to come to accept it as a possible future.

As I’ve stated before, the future is four areas: Energy, Health Care, Information, and People. Each of these will generate so many employment opportunities, I’m now thinking that leadership for them will come from outside the US.

Forest Fire Analogy

Adam Werbach over at Harvard Business Review wrote up a blog entry titled Surviving a Recession – And a Wildfire. It is along the same lines as an entry of mine from April called Recessions Can Clear the Dubris. Opportunities are There.

Both hit on how even though the method is devasting in its process, its great for those that can survive the ordeal.

Here are a few excerpts from his piece that I agree with:

A recession is like a forest fire — a rush of destruction that affects everything in its path. Andfor about the last hundred years, nations and companies have sought toprotect themselves from these catastrophic meltdowns through fiscal andmonetary policy at the national level, with similar effort at thecorporate level. The results have been unimpressive at best, andcatastrophic at worst. The U.S. and the world today face the worstrecession since the Great Depression, the equivalent of a super-firethat threatens the entire forest and the people in and around it. Atthe corporate level, the U.S. is experiencing an alarming three hundred and fifty commercial bankruptcies a day, including familiar names like GM and Crabtree & Evelyn.

1. Let fires burn regularly.

The U.S. economy never felt the full effects of the bursting of thedotcom boom because we were soon swept up in the housing boom, whichwas similarly propped up by the easy credit boom. Central banks need tobecome more practiced at letting economies take small dips regularlyrather than allowing a confluence of conditions that can create a deeprecession.

2. Be prepared to survive a fire.

Trees that are prepared to survive fires have some commoncharacteristics. They’re self-pruning; that is, their lower branchesfall off regularly. They also grow thick bark and deep roots. Companiescan hone these skills as well. The first rule is to be self-pruning, toconstantly readjust your staffing to ensure that you have the rightlevels of capacity and that you’re letting go of the dead weight. Manybusiness leaders find that the first round of cuts in a downturn areones that they should have made in happy times.

3. Require change — rather than resisting it.

Through the years, the most effective change guarantor is providingvalue-pricing. McDonald’s has thrived during this recession by usingefficiencies in their operations and supply chain to lower prices whenconsumers need it most. They have also used the opportunity toaccelerate their local sourcing of foods in preparation for emergingconsumer preferences. Another emerging model follows the thirdprinciple of natural capitalism,moving to a service-and-flow business model. In this model companiessell computing power rather than servers, light rather than lightbulbs, and, in the case of Shai Agassi’s “Better Place” and car-sharingcompanies like ZipCar, miles driven rather than cars. The ongoingrelationship with the consumer prepares these new service companies tochange rapidly as consumers change. When the traditional auto-industrystumbles, they stand ready to accelerate.

Your Job Just Got a lot More Complex – Now Make a Decision

The layoffs are still occurring, but the reckoning has arrived. There is all this work to do, but only a hand full of people to do it. In addition to the higher volume of it, is the fact that most people actually know very little about what it takes to do the job their laid off coworkers were doing.

This brings me to Dan Ariely. He authored a book called Predictable Irrational which dives into why people make the decisions they do. It is in the space of Behavior Economics. One of the key concepts is that when you make things more complex, people stop thinking it through.

This hits me over the head because we now have a bunch of people whose jobs just got a whole lot more complex. And not only that, they don’t have the leeway to figure it out because they have to prove they can execute. So they are motivated to simply make decisions regardless of if they are the right decisions for the long run.

The optimist in me thinks this will eventually have a great impact on the US. Why? Real leaders will emerge. They will take a step back, breathe deep, realize what is important, adopt time horizons that are realistic, and deliver real change.

Being a Good Boss During a Down Economy

My last post, called Happiness is Making the Best of It, is about how uncertainty is really more of a mental factor than things like the poor economy. Why is this? Because once you come to terms with bad situations you make the best of it. When you don’t know what the bad situation fully is, you can’t begin to deal with it. This leaves the person in an ongoing state of anxiety.

I got my latest Harvard Business Review magazine in the mail the other day and it is mainly about trust. This is right up my ally. One article in it is called How to be a Good Boss in a Bad Economy by Robert I. Sutton. He highlights four areas for bosses to be aware of:

  1. Predictability
  2. Understanding
  3. Control
  4. Compassion

Predictability and Understanding really jumped out at me because it talks about uncertainty:

If predictability is about what will happen and when,
understanding is about why and how. The chief advice here is to
accompany any major change with an explanation of what makes it
necessary and what effect it will have—in as much detail as possible.
This advice, too, is rooted in psychological research: Human beings
consistently react negatively to unexplained events. The effect is so
strong that it is better to give an explanation they dislike than no
explanation at all, provided the
explanation is credible.

The days of hiring someone for life are long gone, so everyone understands that layoffs are going to happen. What people need is to understand why they happened and when they are over. This allows the employees to drop their level of anxiety and get back to work. Here is an example of a good strategy cited in the article:

Seligman observed that when a stressful event can be predicted, the
absence of a stressful event can also be predicted. Thus a person knows
when he or she need not maintain a state of vigilance or anxiety.
Seligman cites the function of air-raid sirens during the bombing of
London in World War II. They were so reliable a signal that people felt
free to go about their business when the sirens were silent. The
hypothesis was bolstered by studies in which some animals and not others
were given a warning in advance of a shock. Those that were never warned
lived in a constant state of anxiety.

The same holds true for organizational shocks like layoffs. If
you give people as much information as you can about what will happen
(to them as individuals, to their work groups, and to the organization
as a whole) and when it will happen, they will prepare to the extent
they can and suffer less. Just as important, they can learn to relax in
the absence of such a warning. This was the thinking behind one CEO’s
decision to issue a heads-up memo to the staff of his nonprofit
organization. In it he laid out in detail the worst-case scenario that
would result if the stock market and donations failed to rebound over a
certain time period. But while preparing people for a future that might
well involve job losses, he also made a firm commitment: No one would be
asked to leave for at least three months. At another company I know,
managers opted for a deeper staff cut than was immediately necessary,
because they were determined not to inflict a second one right away and
thus create a distracting fear of still more to come. They followed that
cut with the message that although more might be needed in the future,
none would be made for at least six months.

Here is a video of Robert Sutton talking about these situations:

Shai Agassi Explains the Bold Plan – A Car and a Battery

A month and a half ago I was intrigued by a business model and a guy I had not ever heard of before. The business model is the one of Better Place and the guy is Shai Agassi. My post then was called A Viable Electric Car Business Model? I’m very skeptical of this working, but some form can. The path its taking is also encouraging. Here are two newer resources explaining what is possible through Better Place:

An excerpt from a HBR article called Energy CEO Shai Agassi on recognizing a “sliding-doors” moment:

How did you go from global corporate executive to energy

I had a sliding-doors moment in 2006—a moment when if you turned one way,
your life and career would go in one direction, and if you turned another way, you
would go off on a completely different track. I was in Paris, and I was pondering
whether to continue on and become co-CEO at SAP. It was a job I had been groomed
for, and I was ready to lead. But I was also fascinated by the idea of powering
vehicles with wind- and solar-charged batteries. At that point, Better Place
didn’t even have a business plan—it was just an idea. And the moment could have
passed me by quite easily.

I remember walking down the Champs-Élysées, so that I could think. I
paced it one way, imagining myself at 50 years old having decided to stay at SAP.
I imagined not only that SAP had succeeded under my leadership but that we had
beaten Microsoft—we were number one. Then I walked the other way, picturing myself
at 50 but having left SAP and pursued my dream. I pictured the worst-case
scenario—that Better Place had been a failure. At five o’clock in the morning,
after walking all night, I said to myself: “This is the sliding-doors moment, and
there’s no question which path I should take. I’d rather fail at Better Place than
succeed at SAP because no other job could compare to trying to save the

And here is a presentation from TED: