Reinventing Business
Discovering Your Best Organizational Structure

Monday, May 31, 2010

A Single Point of Failure

If one person has a vision and the desire and power to make that vision happen, it might work ... as long as that person can either inspire or compel everyone else to work towards that goal. If it's predominantly a mechanical goal like assembly-line manufacturing, then carrots and sticks work OK. If what you need is thinking and creativity, it turns out that carrots and sticks actually reduce productivity. They divert attention away from the real job and towards achieving carrots and avoiding sticks. The book Drive (which I reviewed) covers the demotivating influence of things we always thought were motivators, in entertaining detail.

At the top of the heap, we have the senior management team. The stockholders and the board would like to motivate this team to do the best it can. The only measure of "best" seems to be quarterly profit maximization (and if it isn't yet, market forces will eventually make sure that it is). The logical way to motivate the senior management team (who, in turn, tries to motivate everyone else) is by giving a portion of the product that the company manufactures -- which, from the point of view of the shareholders, is money. So a big salary is offered, with a big bonus tied to company profits.

Senior management seems like creative work to me (if it's mechanical work, why are we paying so much for it?). If extrinsic motivators reduce the performance of creative workers, then it seems to follow that bonuses reduce the performance of senior management.

That performance doesn't seem to me like it's been good enough to justify the massive salaries, bonuses and severance packages. That kind of extortion only seems appropriate for someone who can, for example, perform actual magic. However, I think that's more or less what's expected of a senior manager: nothing short of true magic in their decisions.

The CEOs of the middle ages were kings, who proclaimed that they were chosen by god. They often claimed to have a direct line to god, who personally guided the king's decision-making process -- making it, in effect, magical. How much has changed in a thousand years?

The biggest problem with this system is not just that you put all the power in the hands of one person, along with magical expectations and the incredible pressure from the superman salary and bonuses. It's that there is no fallback system if that person begins to fail. The board of directors exhibits a "sunk-cost" mentality once they choose a CEO. The company lives or dies on that one choice. If the choice is not a good one, it takes years of damage before the board is forced to replace the CEO, as a stop-loss move. This is much like the destruction that happens to a team because a poisonous person cannot be removed without corporate due-process. Everyone can see how much damage is being done, but because there is a "way these things must be handled," the destruction mindlessly continues.

The CEO represents a single point of failure. You choose a CEO, and if it's a mistake, you're stuck with them until they do so much damage that you are forced to remove them, millions and maybe billions of dollars later. And to add insult to injury, you often have to pay them incredible sums when you fire them (yet another disincentive to removing a CEO). It seems to me that, at those rates, you should be able to fire at will, with no penalty.

It's become easy, for example, to pick on Microsoft, but how much market share and money do they need to lose before the board realizes Ballmer is not the right one at the helm?  This is the man who said, right before the iPhone shipped: "There’s no chance that the iPhone is going to get any significant market share. No chance." (Exactly the kind of certainty and decider-ness you expect from your magician-king). That was three years ago, but Gates's college roommate is still driving Microsoft downhill. Surely it's been years since board members started thinking that this wasn't working out -- is it embarrassment that keeps them from making the change? Or are they helpless to do so? In the meantime, Microsoft's downhill slide accelerates and they are probably losing billions compared to what they could make if they were leading the markets instead of sitting on the sidelines, pronouncing that their competitors will fail.

I'm not sure how things got this bad, but I'm not just making an analogy when I talk about business structures being feudal. Is it so surprising that this structure could stick around for so long? After all, the college system -- lecturing -- was based on the same time period, when reproducing a book was something you did by hand. So the professor read from the (single) book, and the students took notes. Five hundred years after the printing press, everyone can have their own books and yet lecturing continues, regardless of the studies that show what a bad form of teaching it is. So it's entirely reasonable that the system of god-chosen, god-inspired kings should continue to exist in our business structures.

There are times when you need lighting-quick decisions. The military knows this, of course, but the military also pushes decisions down to where they are appropriate, rather than making all decisions at the top level as they used to do (apparently this change came from Washington during the Revolutionary War -- he was in a corner, but he was also a visionary). Most of the time, and despite the declarations of many business books, a business is not in a battlefield condition and does not require the quick decisions and associated absolute power that we give to a CEO. I think there might be other ways to make many of these decisions, rather than relying on CEO-magician-kings. Having been on committees, I shy away from that. But instead of making top-level decisions based on a single person's whim (and it's rare that the senior management team doesn't follow the CEO), I think there might be wisdom-of-crowds decision-making tools (I'm looking at you, social scientists) that could produce a new and better way of steering an organization.

Rewritten "Comments" Introduction

I've rewritten the "Comments" introduction which appears at the bottom of the page, in order to make it more clear what is acceptable, and what isn't, during discussions (any form of ridicule, no matter how vague or jokey, is particularly unacceptable).

Sunday, May 30, 2010

Where Would You Rather Work?

Reading the rest of chapter 3 of Hard Facts..., ("Is Work Fundamentally Different from the Rest of Life and Should it Be?"), I'm struck by the things that they say that make me say "duh!" Basically, observations to the effect of "if the environment is unpleasant, people are more likely to quit." I'm not saying they shouldn't make these observations, but it's amazing to me that they are forced to say them in the book. That the intended audience of the book, presumably managers, must be convinced that a pleasant workplace is better than a harsh one. And that "better" actually translates to "much more profitable."

Yet it seems to me that the world is still dominated by "get tough" businesses, command-and-control operations that look at their employees as adversaries that are trying to take from the company. And probably, with an attitude like that, the only employees that stick around are those that buy into that mentality. With a world view like that, a bullying mentality seems like a natural approach to take, like the CEO "chainsaw Al" Dunlap who supposedly cleaned up Sunbeam (but who was eventually fired for accounting fraud, not before he was praised by the business press has a hero and great leader). The man was a notorious abusive bully, but no doubt provided, for awhile, vindication for bullies everywhere.

When I read a book that says "you shouldn't allow any kind of bullying within a company" it makes me want to cry. One of the authors (Sutton) felt compelled to write a whole book about the topic: The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't. Why do we even have to say this? Why isn't there already a variation of the "golden rule" that says: "Build a workplace where you yourself would like to be?" (Perhaps that's what happened, but the workplace was created by the bullies, then imitated by everyone else).

I don't think I've ever visited a company that isn't some variation of this model. Sure, there are better and worse versions. One company felt like entering Orwell's 1984, including useless searches at the door and a rule that someone had to walk me to and from the bathroom (eventually people just told me to casually hold my hand over my badge so you couldn't tell I was a visitor). In the best working situations, the manager subverts the rules as much as possible to make it more pleasant, but you always know that the overarching environment was one of domination -- if something happens to that manager, be prepared to scurry for cover or leave the company.

A few years ago there was a brief moment where employees were hard to come by. Traditional companies were suddenly put in a position where they couldn't make demands just because they were in the driver's seat. For a short time, they were forced to think, "How can we make this into an attractive and pleasant work environment?" I'm sure it was very uncomfortable for many who were used to the "normal" situation of calling the shots.

The software industry has always been on the leading edge of scarcity when it comes to employees. Finding people at all has typically been difficult, and if you need the top 5%, you have to work hard indeed -- I equate programming to writing, and if you want novelists, they are few and far between. So I think I might have seen more leading indicators there than in the short burst of not-enough-people we experienced a few years ago. For some reason, the two things that left an indelible memory were: dogs at work, and someone who had set up their own espresso machine in their office. I think those two things said more about self-expression and making a comfortable space than anything else -- but I also think they were just the tip of the possibilities.

What if, when you joined a company, they said: "here's your space. We want you to make it an expression of yourself, and a place where you delight to be." And you could do anything the space would support, including putting up sound walls or other kinds of structures, or even bringing in your neighbors to build a broader space (like the theme camps at Burning Man). The goal is to create a space where you say (1) "Wow ... I get to go to work today ... I can't think of anything I'd rather do" (2) "Change jobs? Why would I even think about that?"

What would your space look like? 

Friday, May 28, 2010

Self-Scheduling Conferences

Ever since open spaces conferences made conference organization exceptionally easy, I've been trying to figure out what the equivalent approach might be for scheduling conferences. No matter what dates you choose, they don't work for someone.

How do you take the open-spaces idea ("here are the rooms and time slots, you fill in the discussion topics with post-its") and apply it to time? How do I make something that allows conference participants to decide when the best time is for them?

I've pondered many possible answers to the question "How do I put the conference participant in charge of scheduling?" Harrison Owen said that he had his back to the wall when he invented open spaces -- someone had tasked him to organize a conference but he was given no time or staff. I often find that having your back against the wall forces creativity, because you are pressed into dropping some of your preconceptions and you can discover that some of your "requirements" are not actually required.

This is a new venture and it seems ambitious to start having events so soon. But I want to do it anyway -- float a trial balloon and see what happens. So, with my back to the wall, I thought, "For much of the summer I'll be here in Crested Butte, which is a wonderful resort. Why not just allow people to schedule their own dates and see what happens?"

So here's how it works. We can have multiple conferences throughout the summer, on any dates that I'm available. You decide what dates you'd like to come (you can suggest more than one set). I post them, and that becomes a conference. Ideally, other people will want to come on those dates as well, but if we only get a small group, that's OK too (I've done this before with small groups, and there are advantages).

Because the hall I use requires a longer lead time (and also because, initially, I'm expecting smaller groups), we'll hold the indoor discussion sessions at a couple of the local coffee shops, and do the topic scheduling on the web. We'll have an indoor or patio discussion in the morning, an outdoor discussion (a.k.a. "hike")  as a second morning event, then go to lunch and have an afternoon break. We'll meet again in the early evening for a third discussion, then dinner (often just a do-it-yourself barbecue at my house). The schedule can be adapted as needed.

Sound like a vacation with interesting discussions? Yes! I've found that people do their best thinking when they are relaxed, and we often have some of the more amazing insights while hiking -- plus the exercise and change of scenery is stimulating (I start with very easy hikes, and they are all out-and-back so you can go at your own pace and turn around as it suits you). It's not like the serious "stuff-you-in-a-room-and-lecture-at-you" kinds of conferences, but most people come away feeling like they've learned more and are much more energized than those more traditional conferences. So it feels like a vacation, but you'll probably learn more and come back refreshed, and it's a legitimate business expense.

One of the best things is the flexibility, especially for a group that's initially this small. If we only get a few people coming, that's OK. But we may also get larger groups. For me, it's all discussions and hiking and hanging out -- I can't think of anything I'd rather do, so any way it works out is great for me. This makes it possible, even if it's small.

If you're interested, first join the discussion group if you haven't already. Then suggest dates you'd like to come and feel free to try to rally others to come on your dates (but don't worry if that doesn't happen; we'll have a good time no matter who shows up or doesn't ... as they say in open spaces, "whatever happens is the right thing").

You can learn more about Crested Butte by looking at photos here and here. Here are details about lodging and how to get to Crested Butte. And for more information, go to the Java Posse Roundup Page and go to the "Location and Lodging" section towards the bottom of the page.

Thursday, May 27, 2010

Results-Only Work Environment (ROWE)

This article by Dan Pink (author of Drive: The Surprising Truth About What Motivates Us -- I reviewed this book here) is a great introduction to the concept of the Results-Only Work Environment, where it doesn't matter when you show up to work or how many hours you put in. The only thing that matters is results (why do we actually have to say "the only thing that matters is results?" How did our thinking about management get so distorted that managers need to be told this?).

Highlights from the article:

"The freedom they have to do great work is more valuable, and harder to match, than a pay raise—and employee’s spouses, partners and families are among a ROWE’s staunchest advocates."

"The businesses that offered autonomy grew at four times the rate of the control-oriented firms and had one-third the employee turnover."

"Two employees struggled with the freedom and left." (I find this particularly interesting -- we can get so indoctrinated into systems of control that we become uncomfortable without it).

Three basic human needs (according to researchers Edward Deci and Richard Ryan):
  • Autonomy
  • Competence
  • Relatedness
"Management still revolves largely around supervision, 'if-then' rewards and other forms of control. That’s even true of the kinder, gentler Motivations 2.1 approach that whispers sweetly about things like 'empowerment' and 'flexibility.'

"Indeed, just consider the very notion of 'empowerment.' It presumes that the organization has the power and benevolently ladles some of it into the waiting bowls of grateful employees. But that’s not autonomy. That’s just a slightly more civilized form of control. Or take management’s embrace of 'flex time.' Ressler and Thompson call it a 'con game,' and they’re right. Flexibility simply widens the fences and occasionally opens the gates. It, too, is little more than control in sheep’s clothing. The words themselves reflect presumptions that run against both the texture of the times and the nature of the human condition. In short, management isn’t the solution; it’s the problem."

    Wednesday, May 26, 2010

    The Myth of Economic Man

    The concept of Economic Man is that of someone who acts more or less perfectly in his own self-interest. For economists, it is a convenient approximation because it allows equations to be written and "thus" turn economics into a science. For anyone who isn't an economist, this is a perfect example of the maxim "all models are wrong, some are useful."

    All you have to do is look around to see counterexamples in everyone, and the Wikipedia article above cites numerous criticisms of the idea. The "Elephant and Rider" model described in Switch produces a much more functional description of human behavior -- but it doesn't easily lend itself to mathematical modeling.

    We get so attached to producing answers (being "deciders") that we want everything to act like science. We take useful observations and push them so hard in our desire to create science that we destroy any value they might have had. In our desperate need for answers, we take good information and turn it into half-truths -- which is why the core of Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management is dedicated to the exposure of half-truths, and to discovering which half is worthwhile (and to teaching the reader how to do the same).

    The middle ground has the most promise: using science when we can, to produce helpful guidance, but not insisting that the results be a science that describes everything. If we can liberate ourselves from the deterministic mindset, we can benefit from what works best without demanding that it fit into our personal cosmology. What I find hopeful is that many of the leading books that I've been encountering seem to take this attitude -- there may even be a movement going on that is yet to be named, or whose name I have yet to encounter.

    Tuesday, May 25, 2010

    Article Sharing

    As I work on this blog, I've been exploring the options that Blogger (a.k.a. Google) has been offering as add-on widgets. Recently I've added a box of shared articles (it's on the right, you'll need to scroll down). I haven't really used the "sharing" feature in Google reader before because I couldn't figure out why I was doing it or who I was sharing with. But as a supplement to this blog, it makes sense, especially because I am specifically choosing articles to share that relate to reinventing business.

    Does It Matter What You Make?

    It appears that a lot of successful startups don't end up making what they set out to make. They try it, and either discover it doesn't work, or stumble across a better product in the process. A business plan that carefully maps out how they're going to do the first thing is a waste of time at best, and a liability (if it keeps them anchored to the original idea) at worst.

    I've started thinking of the new kind of business as a club. The core of a club is people you want to hang out with, so this business should start out as a way to create a good experience for the club members. Then they'll want to hang out together. That's the core concept, and everything else -- product, customers, profitability -- will follow (yes, right now that's an act of faith, but so is any startup, and I like a fun club better than a dreary profit-making dungeon).

    I think that if you're having a great time hanging out with people, you'll figure out some way to keep doing it.

    Monday, May 24, 2010

    Is Work Fundamentally Different from the Rest of Life and Should It Be?

    This is the title of chapter 3 of Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management, a book I like more and more as I make my way through it. The authors ask the questions that I used to ask, and got hushed up for. I always came across as a troublemaker back then, but this book makes me think that my questions were normal and healthy (so naturally, I like the book).

    One section in the chapter talks about the dress code that most companies have. I ran into this in a couple of places -- the first, at the company where I worked the longest ("only" 2.5 years but it seemed much longer). One day I came in wearing shorts and all hell broke loose. They pretended there wasn't a dress code at this company, or at least that it was very informal. So it was hard for them to admit that there was in fact a dress code and that I had violated it (my girlfriend at the time was asleep when I left, since later she said she would have stopped me. She had been raised in the military and knew the importance of uniforms).

    Later I shaved my head down to a burr cut except for one of those little, tiny pony tails (just slightly before they became horribly passe). That showed them.

    This was also the company that had the public address system which would interrupt everyone in the company, but especially the engineers, each time one of the sales people got a phone call. One evening after most people were gone I got up on my desk and the desks around me and cut the wires -- which dampened the interruptions but didn't eliminate them. I started coming in late and staying late (initially, to avoid traffic) -- and discovered that my productivity increased dramatically after 5 pm because most people left and the place got quiet.

    When you step across the threshold of most companies, you step back a thousand years into a feudal system. You become a serf to the company -- they own your time and your behavior, and they seem to have the right to control everything you do. The only difference is that, instead of protecting you from marauders, they give you a paycheck. No wonder someone like me couldn't fit in, even if family, friends, school and all other social institutions had explained to me "this is the way things work."

    After publishing a couple of C++ books and joining the standards committee when it started up, I was asked by Borland (look it up in Wikipedia, you youngsters ... it used to be a big deal) to do my first speaking tour wherein we went all over the world. I gave presentations about C++, Zack Urlocker talked about Delphi, and David Intersimone discussed management (a little weird, since he never fit the manager profile). We also had a marketing person with us, although we could never quite figure out what his role was supposed to be. He did insist that everyone wear suits. Zack and I were bright-eyed and bushy-tailed enough to go along with this, but David had been around long enough to just ostensibly conform to the dress code. Suspenders were in at the time, and Zack and I had formal ones. David, on the other hand, wore bright red suspenders and busy, loud ties with the likes of Mickey Mouse on them. The marketing guy ground his teeth but what could he do? David fit the letter of the dress code even if it definitely wasn't the spirit.

    I won't say the speaking tours were grueling or anything like that. They were fun, and massively educational, because I was immersed in lots of different cultures. Foreign travel has been an excellent part of my education.

    What I eventually learned was that the programming profession does have a dress code, but it's the bizarro-world dress code. If I showed up at a consulting client wearing a suit, I ended up working extra hard to prove that, despite the fact I was wearing a suit, I still knew what I was talking about. So, in short order, I began dressing casually for consulting work, and thus more quickly gaining the trust of the programmers I was working with. I probably alienated managers this way and reduced call-backs.

    The chapter talks a lot about crazy hours. If your boss works crazy hours, then so do you, to keep from looking bad. It's that simple: just do whatever your boss does and you'll succeed. Again, a perfect strategy when your boss is the lord of the keep and you're one of the men-at-arms. A lot of that job consisted of sitting around convincing other people you were valuable. The thing is, when the marauders came, you were valuable, and people were glad to have you sitting around, available to give your life in order to repel those who wanted to kill everyone in the castle, rape the women and take all your stuff (if you were the lord, you might be kept alive for ransom). The uniform was important so we could tell us vs. them.

    So that's the basic social structure for today's businesses. Except for the marauders and pillaging and the rest of it (sometimes people paint other companies as marauders, and this apparently justifies the way we run our businesses). Still, "we own you" in the same way as if you were a feudal serf, once you set foot inside the building (and we expect you to stay within the building and its thousand-year-ago alternate universe for all your waking hours except when you're commuting).

    What if work was a place where you want to spend time? You go there because you find the other people stimulating and you do interesting things together. Wouldn't that be something? Wouldn't it also make all the other workplaces look dreadful by comparison? To achieve this we'll have to turn things upside down -- not just get rid of rules and cultural mores, but create a space where such things don't even want to come into existence.

    Sunday, May 23, 2010

    A Rank Offense to B-Schools?

    Interesting Business Week article: A Rank Offense to B-Schools?

    At least business schools are doing some self-examination.

    I'd like to see Edupunk applied to the world of business schools.

    More "Reason" Micro-Essays

    (What people submit as "Reason" when signing up for the discussion group)
    • I'd like to see less focus on snowing the customer and more focus on delighting them. I'd like to see less focus on short term profit and growth at any cost, and more on sustained continuous value. I want "business" and "corporation" to stop being dirty words to J. Q. Public. More personally, I want to be able to answer "What do you do" with pride, not because of what I'm paid, but because of the total value of what I do. Not that I don't want to make gobs of money - I just want to receive that as part of a fair value trade.
    • Stockholders; most bad characteristics of companies come from delivering "value" based on arbitrary analysis.
    • I'd like to completely remove waste and bureaucracy, and create a workplace where people are the focus. It seems like any respectable company is a rule generating machine, and I am inspired by a future where the only rule is there are no rules.  The world is a complicated place and expecting humans to behave as if they are automatons is a reckless waste of potential.  We can do better than that. Lets see how we can get there.
    • I want to see a switch from static corporate policies to dynamic human judgment. The way corporations seem to scale is by conceiving of the world in a very static, rule-driven, predictable fashion. Event X happened last year and had outcome Y1. Behavior Z would have yielded better results, so we now make a permanent policy stating that event X must always be followed with behavior Z. While we need some of this thinking in order to scale, I think many large corporations have taken it past its usefulness and are substituting policy for intelligence, judgment, and experience. Fundamentally, I think the conception of the world and time as static and predictable is usually not as accurate as a model based on the world being dynamic and having a wide spectrum of possibilities. This contributes to corporations being slow to react compared to start-ups.
    • Commitment within teams; commitment to what you're doing, and the people it impacts.
    • Attention span. I think most companies suffer from an organisational equivalent of AD/HD.
    • I'm quitting my job and taking a year off starting May 28th. I've been at this job for 16 years, 11 of them at my current location. I have been the father, shepherd, and midwife for some really cool medical software. In the last 11 years, I watched my job morph from the best job I ever had, making great things, into a miserable drudgery - trying to make great things in spite of the overarching 'strategies' of my upper management. I'm taking time off to rekindle myself. I've witnessed an attitude of 'commoditization' of the employee at the leaf level of the organization that I find as ineffective as it is ethically repulsive. I've led teams to do great things. I've had great ideas and seen them realized. And the one thing I learned early on was that the people around me were the reason I succeeded - that I could not do this by myself. I was a catalyst, if anything. Sometimes I just felt like I talked a lot while other people made it happen. The results were great, at times. If there is one thing I would like to change in business, it is to see management understand that people are valuable, and good people are *really* valuable. How do you convince them, when all they can talk about is how cheap it is to hire someone overseas? Or they push around "FTE" (Full Time Equivalent) numbers in a spreadsheet to plan their projects? That's my personal, just-crawling-out-of-the-ditch reaction to what I'd like to see changed. I also really like what I heard the other day from Muhammad Yunus about Social Business, but I haven't gone deep enough into that to have a substantial opinion.
    • Companies should be owned by their employees, and not by faceless shareholders.
    • I would like to work for a business that doesn't have making money as it's primary (or sole) purpose. I want to feel I'm making a difference (even a small one) to the world.
    • My job has turned from being 'make awesome stuff' to 'decide who you can afford to disappoint today'. I need to find a way to create a framework where I can go back to making awesome stuff. Also, if I can stop hearing lectures about how things work in 'the real world', that would be gravy.
    • I'd like to change the focus being on only the initial numbers and not the long term costs. I'd like to change the way I *think* about business and hope that the change in my thoughts can lead to change in my work.
    • Hmmm... probably find some way to get people feel less like gears in a bigger machine and ... you know... more like people? :-p
    • The ownership structure. For a company with relatively low captial requirements, I'd arrange it so that profits were used for these two purposes only: ensuring the longevity of the organisation; and being shared out fairly between the current employees of the organisation. (Profit to shareholders/owners would not be a goal).
    • The perception that embracing change is hard. In software cos this is almost always strongest with the programmers, decreasing as you move up in management, but not disappearing completely. Continuous change - trying out new things, testing, discarding what does not work, embracing what does - does not lead to chaos but controlled improvements. This is something I took a lot of time to come to terms with, and something that I would like to share, even if I have limited experience.
    • The most important thing I'd like to explore is the perception that starting or running a business is any harder than being an employee in one. Maybe some people are not cut out to be a business starter, but I think that this is one of the best times to start because of the tools (social and technological) that we have now.
    • The hierarchy.
    • Increased use of web techniques, within the business itself. Corps could leverage their staff more effectively through crowd-sourcing, self-organization, and distributed control, creating a revolution of innovation and (paradoxically) quality, something they thirst for yet continually fall back on hierarchical, top-down, command-and-control methods. It's disheartening.
    • How costly it is to start and get running even a small tech-company.
    • I'm looking for a way to expand my consultancy work into a company, without losing all the things I love about self-employment.
    • I would like to change the orthodox, implied understanding of the nature of work and of people at work. I believe the orthodox understanding to be grossly wrong, and seriously damaging to mental health and (therefore) seriously limiting of productivity.
    • I'd like to get away from the need to always "out-compete" your peers just to stay where you are.
    • Treat employees as adults and professionals. Get out of their away and measure productivity with a personal SLA. A lot of management think they have to micro manage each and every project but what happens is that everyone waits for somebody else to make a decision and decide what the next step should be. Employees essentially become bodies without brains.
    • Business owners understanding of how to use technology in their businesses. There's far too much copycatting and few business owners have enough understanding to truly leverage technology for their benefit. Making things worse are the overabundance of under-skilled vendors that promise results and don't deliver. I would like to help business owners leverage internet technology in their business better. By the way, I've been following you for a long time. Your thinking in Java books originally changed the way I approached software development. Thanks! Daniel
    • Creating a sustainable culture that benefits the staff as much (more?) than the customers.
    • I'd like to see businesses that assume I'm an adult who enjoys making real contributions. I've worked on my own for decades because I don't see that kind of business around me. This group seems to be aimed at creating something I'd like to be a part of.
    • As a programmer, I'd like to be valued by my vision and capacity to simplify things and come up with simple and clean solutions, instead of being forced to "maintain" (ie hack) massive software programs (whose internal structure is impossible to navigate) with impossible deadlines just because they "have users" and "they work" (which is just a vicious cycle). I would like to raise the notion that anything with more than 50,000 lines of code should never be meant to be a single project and/or be run as a single process. Or at least I would like to force management out of the fantasy land in which they live in and speak in a manner in which their responsibility for all of this "invisible fiasco" is exposed. We have to redefine what "working software" means. Sorry, I'm sorta pissed today :-)
    • I would like to see business (specifically work) as an integral part of life. It should not be something which ends at 5 PM after which life begins. I would like to find ways and to promote ways where people can make their work an extension to what they are rather than just a mechanism to earn a livelihood.
    • To give an emotional answer: "I would like to change the notion that turnover generated by a person measures that persons value." But first of all I want to listen what is going on. I am doing that first and foremost in the company I 'm employed at. And it appears to me that education on one 's own responsibilty and knowledge sharing in an efficient and fun way with a team or rather the whole company is a great, rewarding and fun topic to examine.
    • Change business so that it is a place where employees manage collectively & yet productively and are happy and motivated to do so. In line with articles I could read in this inspiring blog, enlightened self-interest is a concept I feel approaching my idea of a business objective which could produce a better business.
    • How it deals with learning, both from a personal perspective and also from an organizational and domain perspective. Take for instance software development. All those different methodologies and the flame wars associated with them. Why can't we study or make some trials, like medicine does? Of course passion and personal preference is at play, but, we do need to learn as a whole and do less arguing. Thanks for sharing your ideas Bruce, I'm inspired by them.
    • I'd like to crush the hierarchy and replace it with more organic approach.

    Saturday, May 22, 2010

    Our Two Urges

    This was a comment made by Kit Davies in response to my review of Drive (published on my programming blog) which I found insightful:
    There was an educationalist in the 1920's in the UK called Thorold Coade who believed that all human beings are fundamentally motivated by 2 urges (he called them 'spiritual' urges, but not in a religious sense):
    1. Creating - building a product, service, even self-creating one's own career and talents.
    2. Serving - providing what you have created in service to others.
    I think (1) equates roughly to Autonomy and Mastery, and (2) equates very closely to Purpose.
    I believe that the popularity of open-source software and its development can be easily explained by either Pink's or Coade's theories. That is, autonomous creation away from corporate scrutiny, and close contact with end-users who provide feedback on the product/service you are providing for them.

    How Happy Are You?

    I think that a company designed first around the happiness of the employee will be the strongest organization that we've yet seen. That's the experiment I want to somehow help happen.

    Although the business-management business might agree that employee happiness is a good thing, they've also come up with the ridiculous mantra: "If you can't measure it, you can't manage it." Einstein, who was a real scientist, pointed out that "not everything that can be counted counts, and not everything that counts can be counted."

    We probably can't put happiness in a spreadsheet in any meaningful way. But instead of giving up, we can look at an example, a technique that Netflix apparently uses for employee evaluations. Instead of doing lots of measurements and questions and forms to generate that all-important "measured" number, the Netflix managers asked (or so I imagine) "what really matters here?" And answered: "how badly do we want to keep this employee?" So, instead of pretending they could turn it into a science, they just ask the team manager to imagine that the employee is going to leave, and how did they feel about that? If the feeling was deep concern or panic, then that employee is an important part of the team. But if the feeling is not very concerned, then the manager is encouraged to preemptively move the employee on to greener pastures (along with a generous severance package).

    This uses our capability to make decisions as described in Malcolm Gladwell's Blink -- your unconscious mind knows things that your conscious mind is unable to reason out (although it turns out decisions are actually made by some strange combination of reason and feeling). The trick is to do something that forces a decision without sending you into a tailspin of rational analysis.

    To find out how happy you are in your current job, some possible questions might be:
    • Can you imagine a job that would make you leave your current position?
    • Are there aspects of your current job that make you think about leaving? How often do these happen or how dominant are they? How likely is it that these aspects would ever change?
    • How much autonomy do you have in your job? Do you feel like you're growing in your profession?
    Please add other suggestions to the discussion group.

    Friday, May 21, 2010


    From this, you might now have a sense of where I'm going. I'm trying to discover fundamental changes that will not only make it much more pleasant for people to work within a business, but will also make the business itself far more effective and efficient. The kicker is that, by instituting these changes the desired results will happen by themselves (possibly with small occasional tweaks). The key is to do things that will unleash the natural desires and creativity of the participants in a business, as opposed to what we've been doing -- things that shut down creativity and make people resentful and unproductive.

    One of these "big change candidates" is transparency. Note that "pay everyone the same amount" has built-in transparency regarding salaries. It also requires some transparency in the company because everyone needs to see aspects of the books. Why not take it all the way and make all the books open? If the CEO feels the need to buy a jet to fly around in, and then later lays people off, everyone can see how much both things cost. If you end up with furniture police "saving money" by increasing population density, the books are open for more creative analysis -- which might discover a corresponding trend upward in employee departures. Even better, open books might allow more effective and creative solutions that everyone might discover -- including the reallocation of "furniture police" salaries to more useful and productive purposes.

    Full transparency is a foundational shift for a company. If everyone knows what's going on, then everyone can make better contributions to the company. There's no barrier between those who are "qualified to know" and those from whom things must be hidden. And this certainly supports a true "we're all in this together" environment.

    I think transparency might also produce a very important fundamental shift in the way the company works. On the discussion group, the topic of psychopaths has been coming up a fair bit. The book Snakes in Suits cites research showing that a disproportionately high percentage of people in upper management are psychopaths, and I think that it's possible that an environment of secrecy is important for those psychopaths to get into positions of power, and to maintain and develop that power. If this hypothesis is true, then an environment of transparency is going to discourage psychopaths from joining your company, and make it much harder for them to gain power and behave badly if they do. It will probably frustrate them out the door.

    Psychopaths aside, I think transparency tends to expose bad behavior at all levels, and also reveals good behavior. It can eliminate the need for whole "oversight" departments (accountants who check expenses, for example) and it changes the company's attitude from "big brother is watching you" to "you are accountable to your company-mates." 

    Once again, the world seems to be already moving in this direction. Here's a group that's dedicated to all aspects of openness (not just transparency). They recently had a meeting in Ann Arbor: Ann Arbor - Open Everything.

    Unintended Consequences

    Did Six-Sigma destroy Creativity at 3M? When someone comes in and applies a new technique, you typically see "improvements" (better profitability) in the short term but, as in this case, the cost-cutter is often gone by the time the downside impacts begin showing up. As long as you measure "the right things" then you can make yourself look really good.

    At 3M, A Struggle Between Efficiency And Creativity: "What's remarkable is how fast a culture can be torn apart." Cultural factors are fragile things, and don't usually show up on spreadsheets when you're doing quick fixes to the bottom line.

    Thursday, May 20, 2010

    What's Your Employee Turnover?

    I think managers feel helpless about this, and so even though it's an easily measurable (and more interestingly, plottable) number, they ignore it. But what other factor tells you more about the health of your company? One of the biggest disruptions that someone can have in their life is changing jobs, so if more people start choosing to leave your company, it means something about your company is driving them away.

    Managers probably also feel helpless in acknowledging how much is truly lost when an employee leaves. The accumulated knowledge that employee brought to the company, and what was added while he or she was there is all gone, not to mention the potential that the employee might have contributed with that combined knowledge and ability. It's a huge loss that ought to be mourned. If, as some companies like to claim, "we're a family," then one of the family members just died. The very fact that it's such a big loss (humans are wired to be loss-averse) might explain why we in general pretend that it's no big deal. What choice do you have? If you can't just find an equal cog to fill the spot, if you must acknowledge how big a failure it is to lose someone, then you could easily go into a tailspin of self-doubt. Easier to pretend it's just a small bump in the road.

    I've seen companies on the rise, places where everyone wants to work. I note their downswing based on employees leaving. It means the company is no longer the exciting place to be. When you start knowing people who have left, for example, Google because they were unhappy with how things ran (and they give you examples), then something's changed at Google (I also noted Google's random emails looking for employees -- nothing custom or specialized about it, just a cattle call. In particular, no flexibility -- you'd be going through boot camp to become a Google-clone).

    I saw this change happen at an unnamed consulting company. For awhile, it looked like the amazing golden place to be, where all the top thinkers were heading. Suddenly, those thinkers were jumping ship for various reasons, all to do with inflexibility in the company. Relentless hours and travel, and business practices that stopped serving either the customers or the consultant at the site -- probably things that were imagined to maximize company profit, except that they didn't take into account what would happen when their key people started leaving. Their reaction (or perhaps the inciting incident) was to try to move from a model where experts would go to sites, to an attempt at commoditizing this expertise. The unintended (I think) result was that they changed from a purveyor of expertise to a body shop. For awhile, the customers still believe that they're paying a premium for expertise, so there's a hysteresis of profitability. At some point, the customers will begin to understand they are hiring a body shop and will push back on price and go elsewhere. But the thinking right now is short-term so it appears they are making great profits but with cheaper employees.

    What amazes me is that the company -- especially the consulting company above -- doesn't panic when they start losing top talent. They've hit an artery but instead of saying "something's terribly wrong here; we need to make some fundamental changes," they appear to say "bloodletting -- they used to do that to heal people, right? Maybe it will make things better."

    In truth, by the time employees start leaving it's probably too late. Someone doesn't do that without getting pushed to the door again and again. For a company to keep from getting to this point, it needs to be self-balancing. When something small goes out of balance, the whole organism needs to make a small correcting move; you can't wait until the whole operation starts to tip over.

    To accomplish this requires both transparency and empowerment -- transparency so that everyone can see what's happening, and empowerment so that everyone feels the ability to make a change. The feudal system doesn't work here; for a company to be a self-correcting organism, everyone needs their feet on the ground so they can be aware of the need for change, make changes and immediately feel the effects of those changes. That way, everyone can maintain the company as a place they want to stay.

    Wednesday, May 19, 2010

    Five Ways to Ensure Mediocrity in Your Organization

    Five Ways to Ensure Mediocrity in Your Organization - BusinessWeek

    We could create volumes of stories about how to do things wrong, and my intent is to "follow the bright spots" as they suggest in Switch. But it's also good to see what people are saying.

    "Reason" Mini-Essays

    As you can read at the bottom of this page, to prevent scammers I ask for a reason when you sign up for the discussion group. What I didn't expect was how good these tiny essays are, and what frustration and hope they express. Unfortunately, I think Google Groups throws them away after the approval process, and I haven't thought to start capturing them and putting the up until just now.
    • The daily experience... I want to be excited about showing up, I don't want to feel used, I don't want to feel like I'm punching a clock, I don't want the political games, I want pro-active/positive teammates, I want it to be okay to enjoy and give time to the rest of life (work hard, play hard). And a lot of other aspects of the daily experience, without sacrificing financial viability and ending up homeless.
    • I'd like to completely remove waste and bureaucracy, and create a workplace where people are the focus.
    • Move focus away from profit maximization and on to ideals and quality. This might imply finding a way to avoid the stock market and shareholders. It might also imply avoiding any kind of bonus schemes. Profits should go back into realizing ideals and increasing quality, not increasing salaries.
    • The 9-5, Monday to Friday thinking. I know it's necessary for some businesses, but online could be any time... focused/specified to some degree rather than in a haphazard, slothful way. Or maybe this would be too 'unstructured'?
    • Businesses are run using approaches that we have come to accept as "the way it's done," though these approaches are dragging down the productivity and happiness of the people that work there. The hardest and most important challenge will be in identifying those harmful approaches that we have justified as important, and remove/replace them.
    • Trying to understand the true nature of the dynamics of engagement - with self, role, task organisation and community. Ponder the possible power of more (self) engaged individuals working together toward topics they are individually and collectively engaged with. The implications for structure, form and movement.
    • An end to stagnant hieratic organizations that stifle creativity and innovation.
    • I would like to see business make a stronger investment in management training in general, but especially if it means training in ways to foster employee participation and ownership.
    • 1) That workers consider their work important for their spiritual development, that the work constitutes Right Livelihood as it's referred to in the Noble Eightfold Path in Buddhism (but the concept is faith-independent, and Humanism would work fine); and 2) the workers should own the company and run it democratically -- in other words, companies should be worker cooperatives. I realize that this sounds extreme, but it's my vision for next work environment.
    • I think being obliged to work just to feed yourself and your family is the real problem. You should work because you want to create/produce something. I would change that if possible.
    • I'd like to bridge the gaps between the involved professions, to make teamwork possible again.
    • To alter how peopleware is perceived and handled. The business needs to admire the principle that people are the key for success! This is unfortunately not the case with most businesses today! Process-oriented, management-centric corporate ideologies needs to be transformed into people-oriented, basically managementless way of organizing businesses. Without such a transition there is no way to establish autonomy, trust and transparency for employees. These traits are on the other hand a prerequisite for building environments where people love their work!
    • I would like to see transforming the relationship between client and company. I would like to see them in a equation - as partners that are appreciating each other - All over the world. Most of the companies still don't get that crowd of voices can beat and hurt them. First at the Google and then spreading to other media and general public perception. And I would like to change general public view of freelancers like 'lazy guys who nobody wants to employ' to 'skilled professional that is selling his experience'.
    • Einstein said that `No problem can be solved from the same level of consciousness that created it.'[1] I interpret this to mean that a problem can't be solved at the same level of _abstraction_ that created it. I'd like to solve business problems at the right level of abstraction--over and over again I've seen people end up trying to put out fires caused by their current problem-solving approach, and in addition to wasting their time and energy, it just frustrates them. [1]
    • The internal operation of a business does not have to be a democracy - but senior executives, or direct customer-facing sales people do not have a monopoly on good ideas or on knowing The Right Thing To Do. Even the little people can have customer insights or simple good ideas. I'd like to change business so that having the courage to speak up or speak out is not simply rewarded, but recognised as strong evidence of a healthy business.
    • The belief that profit is the only aspect of value that a business should be measured by.
    • Most important is to change how we treat people, but this gets into some pretty fundamental changes how people deal with each other and the struggle for advantage (playing the game).
    • Nothing. I'd like to build my own business based on my own vision. Regarding social networking that vision is pretty close to Bruce's point of view.
    • Shorter TTM for new innovations, find ways to make good ideas economically viable and if need be go for disruptive changes.
    • i have zero understanding of business. so cant change what i dont understand can i ? but i think i have to start understanding business. so i am here ... bruce is the guy who taught me programming so i hope i can learn a thing or to more from him ;-)
    • The fact that some one pays for us has to change and everyone has to genuinely become owners and directors of their own fortune.
    • Make businesses accountable for non-financial human concerns in a meaningful way.
    • Businesses employ staff educated in public schools, do business with customers educated in public schools, transfer products through physical and broadcast means regulated by the government, design their contracts in light of legal precedent, and have the freedom to do business because of protection from criminals by police and protection from invaders by the military. While I strongly believe in the right to pursue profit, we have to stop viewing business as independent and owing nothing to society. Business obligation should extend first and foremost to society, second to the customers, third to the employees, and last and least to the owners. If the first three can't be satisfied, the fourth has no right to profit.
    • I would like to see an increase in the level of trust within business. Between companies and their customers, employees and between companies themselves. I think trust lies at the heart of more effective and fruitful collaboration and out of collaboration come nice things (see open-source).
    • My primary interest is in reinventing education. However, so much of what we do now in mainstream education is based around the idea, right or (usually) wrong, that we're preparing students for work. A new business paradigm is, in my view, necessarily entangled with our education paradigms, and vice-versa.
    • More part-time arrangements in various forms. See my blog for the full story (, here is an excerpt: I think it would be very desirable if different options, besides full-time, were available. In some cases, that might be simple part-time. A more interesting case, though, would be flexible part-time. I am thinking of an arrangement, for example, where an employee is guaranteed 20 hours per week, but will work as much as 30 hours per week if needed. That is just one example, there could be other variations. For organizations with significant seasonal variation, they might work 40+ hours during peak season. If done right, the flexibility could benefit both the employee and the orangization.
    • Id like to make business about giving people meaning in their lives. Instead of focusing on profits and selling more ads, we should focus on helping employees and customers live better lives.
    If you've already joined the group and remember something about what you said for your reason, please consider posting it to the group. Thanks.

    Tuesday, May 18, 2010

    A Modest Proposal

    In 1729, Jonathan Swift wrote a satirical essay of the same name, wherein he suggests population control by eating infants. What I am about to suggest here will produce, I suspect, the same amount of shock and outrage as Swift's essay.

    Let me assure you, gentle reader, that I am not proposing a revolution of existing companies. I think this proposal will only work for brand new companies, and probably only certain types of companies at that. In addition, I am only making arguments for an experiment, one which I think has never been done but which I think could produce remarkable results.

    We're All In This Together

    This is one of the most common arguments used when attempting to motivate an employee to give something up -- time, money, privileges, free soda pop -- without getting something in return. But if we really are all in this together, why is it necessary to work so hard to make a convincing argument? For that matter, to mention it at all?

    "We're all in this together" is an attempt to trigger enlightened self-interest mode. So, for that matter, is "you want to be a team player, don't you?" There are other versions but they all come down to the same thing.

    The problem is that humans are apparently hard-wired as fairness-detection engines. If something isn't fair -- even if it's not obvious or if someone succeeds in convincing us it is fair -- something very primal is triggered and we get an uncomfortable feeling that things aren't right.

    I suspect that fairness-detection comes from natural selection. There are great benefits in working together. A tribe survives by working towards a common interest. You could expand the concept of "tribe" to include, for example, an artisans guild within a city.

    Working towards a "greater goal" than your immediate needs requires faith that, if you work for this other thing, eventually you will also benefit. Let's call this the payoff gap.  If I say "let's all go hunt an animal and then we can eat," there's virtually no payoff gap. But if I say "you should vote (for/against) socialized medicine because it is (good/bad)," there are so many factors and steps between voting and the ultimate results that there's a very big payoff gap. On top of that, there can be layers of indirection to insulate the leaders (who convince you to follow them) from responsibility. By the time we find out whether something works or not (and that can also be obfuscated), the leader can be "too busy" on another crusade to take responsibility for past crusades (and can motivate you to let the past go by again citing a "higher goal," for example saying "let's not play the blame game").

    How do you get naturally deselected? Well, suppose a charismatic leader convinces you that "we're all in this together" and that everyone should work to build walls for a castle, so that we can all be protected from marauders. Sounds reasonable, so you do it. Next, we need food to feed our soldiers who have the full-time job of protecting us. Also sounds reasonable. In dire times, the soldiers must work quickly in concert, so we need a hierarchical command structure, and the logical person to be at the apex is that same charismatic leader. Now you've just put all your eggs in one basket -- albeit one logical step at a time -- and you hope that your charismatic leader still feels like "we're all in this together." And doesn't turn out to be too much of a psychopath, to the point where he says "now I'm in control, I can do anything I want." If that's not the case,  you've just become a slave and he works you to death in order to enrich himself -- boom, you're out of the gene pool. Left in are those who get suspicious faster.

    The idea that we are hard-wired for fairness keeps coming up in the books I'm reading; apparently this is the result of numerous experiments. I know that personally I have a very sensitive unfairness detector. I'm going to take fairness detection as a fundamental, unchangeable aspect of everyone who works in a company.

    Are Companies Fair?

    Consider the example of Hewlett-Packard. A place where, once, people left and then came back -- it was such a great environment to work that you missed it. One of the most important things they did, established by the founders, was to make sure no section got so large that everyone couldn't know each other. If it did, it was broken into two sections. There was also a fierce dedication to education and development of employees.

    I don't think any publicly-held company can resist the forces of quarterly profit maximization. No matter how committed you are to your principles, it's like being in a leaky submarine. The pressure of the water outside is constant and ready to take advantage of any pinhole. Once the submarine is submerged in the stock market, it can never surface or go into dry dock, so eventually you'll have leaks, and eventually you'll fill up with water (everything you do will serve quarterly profits). So it happened with HP, to the point where they decided that it was time for a merger with Compaq.

    I suspect that most people inside the company could see this was a bad idea. It was obviously bad from the outside; never for a moment did it make sense to me. But senior management decided it was going to happen, and they hired Carly Fiorina as CEO, primarily for the merger.

    It must have been just awful to work at HP and watch the company you love plow full steam ahead into the Compaq iceberg, after being told again and again that you shouldn't worry your pretty little head over things that only MBA royalty can really understand.

    What happened when the board finally fired Fiorina in 2005? She received $21 million in severance pay, and an additional $21 million when Hewlett Packard's board bought out her company stock options and pension benefits. Her compensation package sparked a lawsuit from shareholders.

    The fallout from this has gone on for years. HP has basically become every other company you don't want to work for. They have even apparently adopted "furniture police" to cram cubicles closer together -- this would never have happened at the HP I consulted for many years ago. How many jobs would Fiorina's 42 million paid for? But once she accepted the CEO position, it didn't matter what she did, she was set up for life.

    Now, if you're an HP employee and any manager gives you any variation of "we're all in this together," what do you think that will do to your fairness-detection circuits? For that matter, most senior managers in most companies are distant and excessively paid, so how can you go into any company and believe "we're all in this together?" So, when you hear it, you know it's wrong and you think "you're lying to me about this, what else are you lying to me about?"

    Discussions of excessive compensation are the rage right now, for good reason -- why are people getting all these crazy bonuses for doing such a bad job? It would be too easy to get lost in the money aspect, but that's not what this is about. Here's a statement[1] by James Barksdale, when he was CEO of Netscape: "If the decision is going to be made by the facts, [then] anyone's facts, as long as they are relevant, are equal. If the decision is going to be made on the basis of people's opinions, then mine counts for a lot more." He said it in a public forum, but I'll wager most CEOs think it. If you've seen the most recent incarnation of Robin Hood, you might be reminded of King John, after using the "we're all in this together" ploy to get his vassals (whom he has been mightily abusing) to fight off a French invasion, deciding at the end that he was chosen by God to be king and would not keep his promise (made before the battle) to treat them equally.

    I keep thinking that our companies resemble nothing so much as a feudal system.

    The Proposal

    Hold onto your crowns and helmets. What I'm about to suggest seems crazy, but I wonder if it isn't the same kind of "crazy" as open-spaces conferences, where the attendees spontaneously decide the session topics. That is, an inversion of organization that turns out to work better than anything we've tried before.

    What if everybody in a company got paid the same amount?

    I don't mean "capping the maximum pay at 5 times the minimum pay" as some organizations do. The book Drive was built on one piece of research, which has been tested again and again: for non-rote work, carrots and sticks are counterproductive. So if that's true, let's completely level the playing field, and remove pay from the equation.

    I admit this would create a very different world, since most likely we'd just take the profits from this quarter (or whatever time division you choose) and divide them up. Anyone working in this company would be forced into a savings mentality -- better stash most of it away because you don't know what the next pay period will be like (if you're self-employed, you already live in that world). On the other hand, if things go well, you benefit directly -- we really are all in this together.

    But how would you ever be able to hire one of those golden senior managers with an MBA that gives them the power to make magically-correct decisions? You know, like HP did? Or like Apple did when they ousted Steve Jobs and replaced him with the soda-pop salesman (an outstanding disproof of the "management is management" principle)? I'll suggest something else radical here: someone who understands the company and the business is far more valuable than someone who has specialized in "managing any kind of business" (or, more importantly, is not smart enough to know that isn't possible). More than one person who's been through an MBA program has pronounced that what they actually need to know could be learned in a few weeks.

    Why, indeed, is senior management any different than any other kind of job within the company? Who, other than senior managers, believes that the excessive power and compensation is essential for the job? The people who have rigged the system did so after gaining power -- and an excessively high proportion of them test positive for psychopathy. This produces what I consider a tremendous benefit: it turns away the people who want power. If the money and power is what you're all about, you should look elsewhere. But if you really want to work in a place where "we're all in this together" (it's a really good feeling) then that's how we do things here.

    At the other end of the spectrum, what about hiring a janitor? Well, if it's a problem for you to reduce the size of your share for such an unskilled job, then maybe we can all spend a little time cleaning up ourselves, maybe during the inevitable productive lulls. People often say that when you get stuck, it's really good to do something different. Plus, all that sitting around is killing us; getting up and cleaning the bathroom or the kitchen could be a great health benefit as well.

    Now, if upper management tries to use this approach in a conventional company, trying to convince me of the benefit to everyone, my fairness circuit will kick in and say "you're trying to save money so you can get a bonus." But if we are truly in this together, then I'm more than happy to participate -- in fact, it makes me feel connected.

    OK, so perhaps we are cleaning our own bathrooms but we still need some kind of facilities people to help out. What kind of person might you get by offering an equal share of the company proceeds? Someone who might even be able to do other jobs in the company? In startups, people often reminisce fondly about the early days when "everyone did everything" -- why does that have to change? Why should we create a system where people have a structure to justify saying "that's not my job?"

    I could go on with the "what if?" scenarios but I've laid out the basic idea. I'm sure you can think of lots of companies and structures where it seems like it wouldn't work, and that's fine (although I suspect it would work in many more cases than it seems). But I'm only interested in where it could work. You'd have to start a company from scratch, I think; it would be too awkward to do it to an existing company. And the best candidate for a first experiment would be something like an intellectual-services company -- a software development firm is a good example. The people that would want to work in such a system would be self-selecting. Those who must have salary differences, and those who must always know what they are going to be paid (and who believe in the certainty of a regular paycheck) will go elsewhere. The people who will work for your company will be the ones who are ready to do things differently.

    It's a start in defining the kind of company I want to work with.

    [1] From Hard Facts, Dangerous Half-Truths and Total Nonsense, Page 31.

    Sunday, May 16, 2010

    Over 70% of Mergers Fail

    (By some estimates). Mergers are tremendously destructive, throw people out of jobs, and reduce shareholder value. By all accounts, a very bad gamble. But if you have money in the bank, the siren call of "buy" instead of "build" in order to expand your company (which, for some reason, we are compelled to do) is apparently irresistible.

    Yet, in 2000, Fortune reported that Cisco had "digested 57 companies without heartburn," and it continues to do so at the rate of about 1 per quarter (at least to 2006). How? They systematically looked at what went right and what went wrong in other mergers, and found:
    • Mergers between similar-sized companies rarely work
    • Mergers work best when companies are geographically proximate
    • Cultural compatibility is important
    • The merger process should ensure that people stay with the acquired company
    Lessons like this, and those from unsuccessful acquisitions, have been written about extensively. Companies pay star senior managers excessive wages in order to get the best decisions, which, you would think, are based on the best evidence, experience, thought and analysis.

    Business decisions are, however, frequently based on "hope or fear, what others seem to be doing, what senior leaders have done and believe has worked in the past, and their dearly held ideologies -- in short, on lots of things other than the facts." This from the book I'm currently reading, Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management by Jeffrey Pfeffer and Robert I. Sutton. Even though I'm only in the second chapter, I've already put this on the "must read" section of my bookshelf -- there are some books that I can summarize well enough that you might not need to read them, but other books achieve that highest of goals: no matter how much I talk about it, the experience of reading the book itself is dense, special and unique and cannot be abridged.

    Evidence-based management is not as simple as saying "figure out what works, and do that." And it's more complicated than saying "also, figure out what doesn't work, and don't do that." A large part of the book is dedicated to understanding half-truths, and sorting through those using various techniques to discover which are illusions, and which are useful when applied in an appropriate situation. For some reason, I have a fascination for tools that help cut through shoddy thinking, probably because I've been tripped up so many times myself (but only, of course, in the past; certainly not now). I'm looking forward to internalizing some new techniques as I go through the book.

    There are practices that clearly work, which are consistently ignored. There are also practices that are bad ideas (most mergers, apparently) but which are consistently incorporated into mainstream business decisions. The software field is an excellent example. Once you understand the benefit of a build process (you can create the resulting product from beginning to end by pressing one button), automated testing (you build a collection of tests that are constantly run) and source-code control (using a repository tool so that all the code is stored in a single place where all the programmers have the ability to checkout the project and checkin their changes), it's the most obvious thing in the world -- why would you even try anything else before you have the most fundamental process-control tools in place? And yet, I would guess the majority of companies with software development departments do not incorporate these practices, even though you can virtually guarantee significant improvement using these tools.

    I had a direct experience with this when I wrote Thinking in C++, long before automated building. After observing an incredible number of programming language syntax errors in books, going through the book development process myself and discovering why those errors got there (basically, publishers don't care), I built a system to extract all the code examples from the book, then automatically generate and run a build of the code. This way, the language compiler would show that I had no syntax errors, and a source of embarrassment was removed. (This required that I also produce camera-ready copy, so that the publisher's typesetting process had no opportunity to add errors). I continued to develop and refine this system and used it for Thinking in Java. (Unfortunately it's very custom otherwise I would have considered open-sourcing what I did). My assumption was that, once other authors saw what I had done, everyone would naturally follow my lead (both books won multiple awards, which would, you might think, add even more incentive). But as far as I can tell, no one did. I know of one other author who did something like it, but he came my realization on his own (something I would expect of him). To me, the most fundamental feature of a programming book is "printed code should compile," because people try to learn language syntax. If it doesn't compile, you're doing your reader an essential disservice. But for the vast majority of programming books being published, the correctness of the printed code still depends on the dedication and ability of the author to visually identify errors.

    Of course, everyone has stories about people doing things that are obviously bad idea, but we do them anyway. Pfeffer and Sutton's previous book, The Knowing-Doing Gap sounds like it talks about this, and might in fact be a first edition of Hard Facts (publishers often try to guess whether a second edition or a new book will sell better). I'll be interested to find out whether Hard Facts is strictly interested in developing the ability to spot useful vs. bad practices (which is plenty, I think) or whether it will also attempt to show how to introduce change from bad to useful practices.

    Thursday, May 13, 2010


    This book by Jason Fried & David Heinemeier Hansson is apparently the company handbook for 37Signals, which they founded. It is a collection of pithy descriptions of how that business is run, punctuated by entertaining graphics. If you read fast, you can probably get through it in an hour or two. Although I vaguely recall having one or two speed-reading workshops, I tend to ponder what I'm reading. There was plenty to ponder in this book.

    I love that it's very in-your-face and constantly points out that the emperor has no clothes when it comes to most business practices. As you might have gathered, I like revolutionary thinking (well, when it works). As far as company handbooks go, this one has a vastly higher chance of being read, especially compared to the mega-binders that most companies have. I don't think I've ever met anyone who has actually read any part of those -- and ReWork correctly asks the question "what's the point of having it if no one is going to read it?" They suggest culling the company handbook to get rid of the silly stuff and to make it worthwhile; they (and other forward-thinking companies) advise this practice with company rules in general.

    I think this is a valuable book, but it preaches to the choir. You already work for 37Signals or you believe in their approach, so there is very little to explain why you want to do it this way, and virtually nothing about changing to this way (if it's even possible to do it any other way than from the ground up; that's apparently the way 37Signals did it so there's no way of knowing). Basically, it says, "here's how we do it." It describes one company, rather than a model for a certain type of company.

    If you are creating a company from scratch, you'll definitely want to read this, not so you can do it exactly the way 37Signals does, but so you can draw ideas from them and create your own world.

    There are many good ideas, each a subsection in a chapter, and it's worth listing them to give you a better idea of whether you want to read the book:

    • Ignore the real world
    • Learning from mistakes is overrated
    • Planning is guessing
    • Why grow?
    • Workaholism
    • Enough with "entrepreneurs"
    • Make a dent in the universe
    • Scratch your own itch
    • Start making something
    • No time is no excuse
    • Draw a line in the sand
    • Mission statement impossible
    • Outside money is Plan Z
    • You need less than you think
    • Start a business, not a startup
    • Building to flip is building to flop
    • Less mass
    • Embrace constraints
    • Build half a product, not a half-assed product
    • Start at the epicenter
    • Ignore the details early on
    • Making the call is making progress
    • Be a curator
    • Throw less at the problem
    • Focus on what won't change
    • Tone is in your fingers
    • Sell your by-products
    • Launch now
    • Illusions of agreement
    • Reasons to quit
    • Interruption is the enemy of productivity
    • Meetings are toxic
    • Good enough is fine
    • Quick wins
    • Don't be a hero
    • Go to sleep
    • Your estimates suck
    • Long lists don't get done
    • Make tiny decisions
    • Don't copy
    • Decommoditize your product
    • Pick a fight
    • Underdo your competition
    • Who cares what they're doing
    • Say no by default
    • Let your customers outgrow you
    • Don't confuse enthusiasm with priority
    • Be at-home good
    • Don't write it down
    • Welcome obscurity
    • Build an audience
    • Out-teach your competition
    • Emulate chefs
    • Go behind the scenes
    • Nobody likes plastic flowers
    • Press releases are spam
    • Forget about the Wall Street Journal
    • Drug dealers get it right
    • Marketing is not a department
    • The myth of the overnight sensation
    • Do it yourself first
    • Hire when it hurts
    • Pass on great people
    • Strangers at a cocktail party
    • Resumes are ridiculous
    • Years of irrelevance
    • Forget about formal education
    • Everybody works
    • Hire managers of one
    • Hire great writers
    • The best are everywhere
    • Test-drive employees
    • Own your bad news
    • Speed changes everything
    • How to say you're sorry
    • Put everyone on the front lines
    • Take a deep breath
    • You don't create a culture
    • Decisions are temporary
    • Skip the rock starts
    • They're not thirteen
    • Send people home at 5
    • Don't scar on the first cut
    • Sound like you
    • Four-letter words
    • ASAP is poison
    • Inspiration is perishable
    The topic titles are intriguing, and notice how many of them directly challenge established thinking.  But every once in awhile you stumble over something, like "learning from mistakes is overrated." They make the point that nature finds what works and builds on that, but I do think I learn a lot from my mistakes, and one of my biggest challenges has been to learn to wade fearlessly in where I'm almost certain to make mistakes, because I learn so much by doing the thing in spite of the mistakes. So that one is a bit confusing, and there are a few others. But in general I found the book to be stimulating, and I think it justifies repeat perusals.

    Wednesday, May 12, 2010

    Switch: How to Change Things When Change is Hard

    This book easily goes on the top of the list of books (so far) that I've read for this project. It goes right to the root of the biggest problem we have when trying to improve both ourselves and the systems we create. The book looks at the problem of change by applying as much science as possible to the issue (while acknowledging that there cannot be a "science of change").

    Even better, the authors (Chip & Dan Heath) take into account that even reading about change is hard, so the book appears to use its own techniques in order to keep you engaged and following through. These are not the tricks of the typical self-help book (all self-help books, at their core, are about change): start with testimonials and rah-rah stuff, then dance around the issue so that you can't quite find where the two pages of actual ideas are buried in the book (that way, you'll actually have to buy the book to find out, which is why publishers impose this formula on self-help authors). Instead, the Heath brothers give you value up front, in the first chapter, and then develop and add to the ideas as you go, throwing in stories (examples) and changing it up to keep you interested.

    They've also created a summary PDF, chapter 1 of the book, and podcasts which they encourage you to distribute. These are valuable but I think you'll still want to read the book.

    They use the parable (adapted from another researcher) of the Elephant, the Rider and the Path. The Elephant is your emotions, the Rider your thinking mind (including self-control), and the Path is the environment, the road on which the Rider passes through on the back of the Elephant. The brilliance in these characterizations becomes obvious once you start looking at problems: the Elephant is big and willful, and the rider is small and proportionally weak, and easily gets tired out fighting the Elephant for control. That one image changes everything, and is backed up with numerous experiments showing that "self-control is an exhaustible resource."

    When you think of it this way, many things become clear. Why is it that, every time you decide you're going to do something and try to just force it to happen, you fail? Easy: that attitude assumes that you have infinite reserves of self-control, and that it's only a matter of deciding how to use it. But if, on the contrary, discipline is actually a rare and precious commodity, then our failures become obvious: we think it's a fire hose with an infinite amount of water to douse our burning emotions, whereas it's actually a little tiny fire extinguisher which we exhaust by putting out the shrubbery in the front yard while the whole house is catching fire. But knowing that self-control is limited, we can try to use it on the most important things.

    The Elephant is also a brilliant image. Why can't we make stuff happen? Because the Rider is this little person riding on the back of this huge creature. Sometimes the Rider can tug at the ears of the Elephant and yell at it and cajole it, and maybe the Elephant will go where the Rider wants, for a little while. But in the end, the Elephant goes where the Elephant wants to go, carrying an (eventually) exhausted Rider on its back. When you know this, you are not only much more compassionate about your own failures to change, but you also realize what you're working with: big, headstrong Elephant, little Rider.

    Indeed, one of the most powerful ways to get things changing is to engage the Elephant. That's why stories are so powerful, because they create feelings (the political party of the Elephant knows this). Switch contains guidelines for how to do this (and how to recognize an Elephant problem).

    The Rider can easily get distracted. Too much choice sends it into a tailspin of pondering, as does a lack of clear direction. Both of these things can make the Rider use up its energy before it can even start convincing the Elephant to do anything. (Here's something even odder, learned from the "Choice" episode of RadioLab: the Elephant actually helps you make decisions, and people who've lost the emotional centers of their brains become unable to choose using logic alone).

    The key to change is not to force it, but instead to work within the limitations of what you have. You must keep from confusing and exhausting your Rider, by acknowledging that the Elephant is going to go where the Elephant feels like going, and you can't fight that -- but you can work with it. Indeed, when you can get the Elephant on your side, you'll definitely get where you want to go. It's also possible to modify the environment (the Path) in order to make change more likely to happen.

    One of my favorite take-aways from the book is to "follow the bright spots," finding situations where things are working, and then building on those. It's fascinating: once you change your mindset and start looking, you'll be surprised at how many bright spots there are and the usefulness of this technique. But apparently our brains tend to zero in on problems; "dwell on" is probably a more apt description. Notice this the next time you're hanging out with friends and they start talking about issues, their own or someone else's. See how the focus is on problems, and how negative things tend to get. Perhaps there is some kind of natural selection to focus on problems; the people that didn't got weeded. This is perfectly sensible when the problem is "will we have enough to eat this winter?" or "how are we going to defend against raiders?" Focusing on the bright side probably isn't too helpful in those cases, but that was several phase changes ago. Now our throwback tendency to dwell on problems makes us way too negative, and is likely responsible for all kinds of health problems. The change to positive thinking doesn't happen overnight; indeed, I think I've been working on it for years before reading the book. Realizing that there are practical treasures to be mined by doing so is an added bonus.

    Another excellent point is the difference between a "fixed mindset" and a "growth mindset." If you have a fixed mindset, you believe that somehow you have everything you're going to get: physical abilities, artistic talent, a knack for math, etc. It's fixed at birth -- genetics, or something like that. The problem, when you're trying to change, is that if you can't do something right away you say "well, I guess I can't do that," and give up. But with a growth mindset, you realize that "babies aren't born being able to walk," that everything is learned, and that it doesn't happen overnight. So when you don't get it right the first time, instead of giving up, you say "I am learning" and you keep trying. Now before you say "obviously, I know that I learn," it's not quite as simple as that. It's a subtle belief, and you discover your own only by seeing how you react: if you try something and give up quickly, you might have a hidden fixed mindset. I suspect I have mostly a fixed mindset with just enough of a change mindset to keep me trying things, but it's a battle. Change is exceptionally hard when people don't believe it's possible; in one story, elementary school students' math ability was completely turned around through a small amount of coaching so they realized that you weren't just "good at math," but you learned it. I'm still getting insights in math, and I took graduate courses in applied math.

    This is just the kind of book that I think should be part of the first year in a business school curriculum -- practical and helpful. It might be used at Stanford, where Chip Heath teaches, and that's a start, a bright spot, which could help spread this kind of thinking throughout business schools in general.