Lessons learned through a discussion of the Amazon-Zappos deal

Last week as we heard the news of the Amazon-Zappos deal an on-line discussion started between a few of my fellow students at the AGSM MBA. We discussed whether it was a good idea, what will the effect of it on the culture of the two companies, etc.

Amazon has always been a company I admired (and had some very good customer service experience with), so I was glad that as part of the discussion and even more glad to come by this movie clip of Amazon CEO and founder (Thanks Amit). You never know how much of what the CEO is actually saying is happening in real life. But, there is no doubt that Amazon is a success story. And I think that the principals they stand for and Jeff Bezos is presenting in the video are very similar to things I write about a lot in this blog.

Obsess over customers (not over competitors) – I love this approach. First, because it takes the company out of the regular We (or I) culture. As humans we attribute to much importance to ourselves in the mind of others. And this translates to companies’ strategies and tactics that focus on the company and not on the customer. Nobody really cares about company X. People care about themselves. But the second part of this concept is even more important. We spend so much of our lives comparing ourselves to others, using benchmarks, thinking – I want to be like him/her. We forget to be ourselves. We forget to excel at what we do. We forget to exploit our comparative advantage. Instead of focusing on them, we should focus on us. And I know what you are thinking. Isn’t that a contradiction? You just said that we should stop with the culture of we. Well it isn’t. They can co-exist. And anyway, F. Scott Fitzgerald famously said that “the true test of a first-rate mind is the ability to hold two contradictory ideas at the same time”.

Invent – There is no doubt in my mind that the need (and ability) to invent is and will be the hallmark of successful people and companies and out changing world. Not only invention of new products but also of process, of business models, of ideas and of sharing mechanisms. A company that puts invention as its core belief represent, in my mind, a great manifestation of everything that is good in the capitalistic system.  

Think long term for customers not according to customers – Again, two very strong ideas. Long term. The financial crisis has proved, if any more proof was needed, how important the idea of long term thinking is. Again, it is a manifestation of a very basic human trait that is discussed a lot these days. The need for immediate gratification. I hear about the Gen Y phenomena and the fact that people today are looking for immediate gratification and I involuntary cringe. This is not something we should celebrate. This something we should avoid. I think mentioning the famous marshmallow experiment is enough to make my point. Patience and perseverance, in the business world are essential. The second part of this concept is about customers and that they don’t always know what they want. Listen to your customers, but don’t be entrapped by them.

And not less important: “it’s always day one”. There is always more to learn, discuss, improve and question.

Elad

Consistent choices

Photo by laffy4k

I was just reading this fascinating post about: “How Nintendo Delights Its Customers“. In it, the writer, Peter Merholz discusses the success of Nintendo’s Wii. Here is a short quote that caught my eye:

As it turns out, Nintendo’s Wii has been the runaway success. Since coming to market in November 2006, over 50,000,000 units have been sold, far surpassing the 30 million XBox 360s, and 23 million Playstation 3s. Instead of playing the faster-better-greater race, the technology in the Wii was essentially on par to the prior generation of consoles, apart from some common and inexpensive sensors in their “Wii-mote” controllers. Nintendo opted to differentiate on experience, providing innovative gameplay through these controllers that afforded immersive interaction. What’s widely known is how this move drove top-line growth, attracting new audiences to game playing, and thus moving more units. But an even more interesting financial story appears when you dig a little deeper. At launch, the XBox 360 Premium Edition was priced at $400, though cost $525 to produce. The Playstation 3 was priced at $600, costing $800 to produce. Wii cost closer to $158 to produce, and was priced at $250.

My thoughts:

1. I think Merholz makes a very valid claim. Costumer experience mind set is so important especially in today’s competitive environment. Doing more with less is a great way to create a competitive advantage. As Merholz says: “Too often, services firms try to solve problems by acquiring additional technologies”. Making more with what we have is the challenge. This is something you, as a manager can do to tomorrow morning – ask yourself what do I have that I am using? How can I enrich costumer experience with things I have but am not currently using?

2. And that brings me to my second thought. If there is one thing I feel I learned in the last few weeks of taking a strategy course is that strategy is about making consistent choices and tradeoffs and understanding that you cannot do everything at a remarkable level.  Nintendo’s decision to go with an inferior technology might seem risky, but coupled with its consistent approach to make more out of the inferior technology and to price the console at a lower price it all makes sense. It is interesting to look at one of the comments for the post:

While I agree that Nintendo has opened an untouched market (namely women and older gamers), I think that it has lost a lot of what used to make it great. While the controller was truly innovative, its games have been incredibly disappointing for traditional gamers. In this first round of interactive controlers I think that many traditional gamers bought the system because of its controller and the company’s catalogue of Nintendo only games. I do not believe gamers will make that mistake again, and while the Wii has sold a number of units, I would be interested in seeing how many games people actually bought. For myself, after initially purchasing a few games in the first few months of getting the console, I realized that the Wii seemed to be targeted at very young children or people who didn’t like video games in the traditional sense of the word. As a result after the first few months I have never bought another Wii game nor even used the system

This is exactly the point. Competing with Sony and Microsoft for the traditional gamer would have been much harder. Nintendo made a tradeoff, understanding that it can’t be everything for everybody. This is strategy at its best –consistent, tradeoff, not trying to do everything for everybody.

3. The third point I think this story illustrated is about how companies can redefine the market.  I think it is amazing that Nintendo succeeded in changing the customers for the console industry by creating a product that speaks to non traditional customers of the console industry.   Our non-customers are just, or maybe as important as our existing customers.

Elad

Surprise with your presentation, even using technology

 

Umair Haque at BRITE ‘09 conference from BRITE Conference on Vimeo.

I was watching this lecture by Umair Haque from the Brite Conference. It is a very interesting lecture where Haque claims that the creativity of the past is not good enough for the new economy and the new world. This is the second time this week I see an attack on the notion of creativity as we know it (link in Hebrew). I will not attempt to explain what Haque is saying because I am not sure I totally understand it (I really liked some of the examples and really disagree with some others). I will let you see and decide for yourselves. What I want to talk about is the way Haque gives his presentation.

Haque is not a very articulative presenter. The flow of the speech is not consistent. He does not capture the audience with good use of voice, movement or structure. But, one thing stood out -the visual aid he is using. Haque is not using regular PowerPoint presentation slides. Instead, he is using some kind of big flash or java sheet that allows him to “sail” (there is no other word I can think of to describe it) between the different points, magnifying on one point for a second and then moving to another. I never seen anything like it used in a presentation. The constant movement across this sheet, which represents linkage of different ideas, creates not only great repetition of the main ideas but a great sense of understanding of the connections between them.

This got me thinking. My training in presentations comes from the education background. I learned how to speak, present and structure according to the frameworks of education. I find myself struggling many times adapting this “bias” I have when I tried giving different kinds of presentations. When you teach, a lot of your concentration should go to structure and keeping consistency. You don’t use differences and surprises a lot, only when trying to make certain points. In other types of presentations, especially one time presentations, being different, surprising and inconsistent is a great and important tool that should be used throughout the presentation.

Haque’s presentation captivated me even though his regular public speaking skills were not remarkable. Because he used a new and different technological tool. That takes courage, but that also made him special, and made me pay attention closely. This shows that you don’t have to be a great speaker. You can use technology smartly in order to amplify your message. I hope to see more and more new tools that will allow us to create new visual aids that help improve our presentations.

Elad

If it isn’t broken – break it, if it is broken – ask somebody how to fix it

Yesterday I saw this video from 2006 of a lecture by Seth Godin (for better quality see here). It is a fascinating and highly entreating talk. In it, Godin describes how so many things are “broken”, and by “broken” he means just stupid, non-cooperative with the client or non efficient.

I don’t know about you, but the feeling he describes is something that I feel almost every day. You see something and you ask yourself – why is that? Why can’t they make it simpler? Or easier to use? Or just plain efficient? Now, you can cast doubt if all the examples are really “broken”. That is what the commenter’s on the Boing-Boing blog do. But I think doing that is missing the point.

I think two of the main points are:

1. “It is not my job” – Godin claims that many things are broken because the people who can fix it, say: “it is not my job”. I think this thinking is so common we don’t even notice it anymore. When we encounter it, it frustrates us, but it seems reasonable to us. We say to ourselves: “what can we do? It is probably not his job”. Why?

Ask yourself. If you think about a way to change something, to make it better, what do you do? Do you go to your manager? Do you put it in a suggestion box? Or do you just give up and say to yourself: “well, nobody is going to listen to me anyway”.

Now, wear the other hat. When is the last time you went to your employees or team members and asked them – “what would you change?”. These are the people who usually say “it is not my job”. They usually know already what is broken and how to change it. Go and ask them.

Some places are already doing that. Check out “My Starbuck Idea“. Think about all the sites that allow anybody to write an applet. “Hey, this site should allow you to do this. Maybe I will just write an applet for that” or “hey, I should be able to do this with my IPhone, I can write an applet for that”.

2. “Broken on purpose” – this is a point Godin makes all the time, especially in his book “purple cow“. In order for something to succussed, it needs to be remarkable, meaning that people will make a remark about that. You create it by creating an exceptional product, or you just make it plain different. Maybe it is time to break your product?

Elad

Iconoclast

Photo by Ilan Sharif

I just finished reading a very interesting book called “Iconoclast” (read more about the term iconoclasm), by Gregory Berns. The book describes what is unique about people who do things that others say can’t be done. By using case studies of remarkable people from all fields of society, sports to business, science and space flight  to human rights, and combining it with new research about the way the brain works, Berns makes a compelling argument about what makes these people so unique. This basic theory is that iconoclast can be distinguished by three traits: a perceptual system that allows him to see differently from other people, the ability to conquer fear of the unknown and social intelligence to sell ideas to other people.

As usual, a few thought about this book:

1. I think tis books amplifies two messages I deal a lot with here in this blog. The first one is the importance of the comparative advantage and use of the uniqueness of strengths. As it turns out, even those people who have one of the traits of an iconoclast don’t hold all three of them. This means, that they need to corporate. They need to find someone who can complete what they lack in order to do things that can’t be done. This means that one of the most important things you can do is concentrate on your strengths and find someone else to take care of your weaknesses.

2. The second one is the importance of leadership. I already mentioned that I strongly believe that the most important role of a leader is, as Markus Buckingham describes it, to create a clear picture of the future. Because most people are afraid of the future and afraid of the unknown. The people who succussed in doing things that other thought were impossible, were not deterred by the uncertainty the future holds. They managed to overcome their fear. As a leader, your role is to help people do just that. To complete the picture, check out item number one. Maybe your ability to as a leader to make the future less frightening will be just what others need in order to bring their iconoclast ability of perception to reality.

3. One of the biggest problems iconoclast face is the ability to persuade others of their ideas. We all know this. Great inventions and discoveries take a long time to come about, many times because the guy who thought about them just has to wait for the entire current community to die or leave. In the book, Berns says that an iconoclast has two options. Either try to persuade the early adopters, which means you have to find the right way to reach them, or make your idea more compatible with present ideas. This is a known trick in presentations – if you are having a hard time explaining something new, use something old. If any of you ever saw the TV show “Numbers” you recognize the great use of everyday concepts to explain complicated mathematical ideas. This is just the same. It is what the authors of “Made to stick” call: the curse of knowledge. Your own knowledge does not allow you to see how other people who don’t know what you know think. When you are presenting something, think what your audience already knows and use that concept to explain yours.

4. Finally, reading about so many people who took the current reality and just smashed it, is inspiring. These people disregarded what everybody said and changed most of our lives. Each and every one of you can do that every day. It is simple. Just like Tim Berners Lee says in his TED talk: it is time for you to become the sort of person who just does things which will be good if everybody else did them.

5. Even if you don’t do anything ground breaking, the ride a good enough reason.

Elad

The new challenges of measuring and evaluating people performance – a few non-personal lessons from prison

 Photo by aussiegal

A short story about prison

I don’t remember where exactly I read it. I think it was in one of Marcus Buckingham’s books. Anyway, the writer described an interview with a manager of the prison authority in England. That manager told the interviewer about the ways in which that organization became much more effective. Now, when you think of a prison, you would probably think about things in the lines of tightening security. But the most important activity that was described had to do with the way the prison authority measured its effectiveness. Instead of measuring how many people got out or escaped, which was the traditional way to measure the effectiveness of prisons, the manager changed the way that organization measured it success. They started measuring how many people who got out of prison legitimately, returned to prison. The manager said that he realized that the objective of a prison is to make sure prisoners who return to society don’t go back to the life of crime. In how many other places in life do we still measure the wrong thing because of habit or because of the available data?

From prison – to the basketball court

I was reminded of that story this week when I read this amazing article by Michael Lewis from the New York Times called: “The non-stat All-star”. In a nut shell, Lewis describes the story of Shane Battier, the NBA basketball player of the Huston Rockets. Battier, is the kind of player that his contribution to team does not show on the “regular” statistics usually measured during a basketball game. But if you look closely, you see that the effect he has on his team is amazing.

Now, I know what you are thinking. Because my E-book tries to draw conclusions about life from the basketball court to real life, and Lewis writes in the article that: “In its spirit of inquiry, this subculture inside professional basketball is no different from the subculture inside baseball or football or darts. The difference in basketball is that it happens to be the sport that is most like life”, I am discussing this article in this blog. But that is not the case. I bam discussing this article because of these quote:

There is a tension, peculiar to basketball, between the interests of the team and the interests of the individual. The game continually tempts the people who play it to do things that are not in the interest of the group… When I ask Morey if he can think of any basketball statistic that can’t benefit a player at the expense of his team, he has to think hard. “Offensive rebounding,” he says, then reverses himself. “But even that can be counterproductive to the team if your job is to get back on defense.” It turns out there is no statistic that a basketball player accumulates that cannot be amassed selfishly. “We think about this deeply whenever we’re talking about contractual incentives,” he says.

Isn’t this just like life in organizations?

Sounds familiar? Similar to basketball, where the interest of the individual player is to do things that benefit him, but hurt the team, the business world is a world where the individual has all the incentives to act for his own benefits even if it is not beneficial for the organization. In other words, the interest of the individual and organization are not in alignment. This is what is usually called, the agency problem or the principal-agent problem.   

After reading Lewis’s article Tom Davenport wrote in the Harvard Business blog that:

In business, we’ve all known managers whose units or companies perform better when they’re in charge. Unlike professional basketball, however, most companies haven’t yet begun to evaluate managers or employees systematically based on their individual and team contributions. No plus/minus statistics have been developed for a business context. The emerging field of human resource analytics has a lot to learn from the Houston Rockets

It is the measurement, stupid!

I think the story Lewis describes, although about basketball, actually represents some of the most urgent problems the world is facing today:

• 1. In order to create comparative advantage, new ways to make people more effective are in high demand. If we create a way to the get people to do the right thing for the organization where other employees of other organizations don’t, we create a comparative advantage.
• 2. Many of the incentives we have in the world today, measure the wrong things. Just read some of the explanations for the Global Financial Crisis.
• 3. Today it is much easier than it used to be to measure things. Basketball, off course is just an example. Think about companies which accumulate enormous amounts of data in ERP systems. The data is immense, and it is almost free to collect it. but still, although we have more data and statistics than we ever had, we still succussed at measuring the wrong thing. It is more than that. The more data we have, the tendency to measure the wrong thing only increases.  

What can we do? - let’s return to prison

Two things you can ask yourself:

1. Am I measuring the right thing? Think about the prison example and about the way they used to measure basketball players. The fact that we can measure or that we have a certain stat does not mean it is the right one to use.
2. What can that data I have tell me about the non obvious things. In Rudy Giuliani book “Leadership” he describes some of the process he implemented in order to improve New-York city. Most of them revolve around using statistics they had to measure different things. One story I remember vividly is again, about prison. They found out, that when sales in the prison cantina went up, it meant there are going to be prisoner riots. The prisoners were gathering food for the hard time after the riots. 

Vital signs

A few months ago, after reading a manifesto tilted: “Redeeming Sisyphus – Get Out of Control! Get More Done!” by I. Barry Goldberg of Entelechy Partners I wrote:  

Everybody knows saying by Peter Drucker that what isn’t measured does not get managed. But modern economics and behavioral economics, also shows us that if you decide on the wrong measures (or in Goldberg name: “vital signs”) you can create negative incentives. Books like “The Goal” by Eli Goldratt have been saying this for years. So, I believe the challenge of managers in the next few years, especially in the more subtle fields that are hard to measure will be to create the right vital signs

After reading Lewis’s article about Battier I think this is an understatement of the challenge. The challenge of managers today is to find the needle of right measures in the haystack of statistical data. The challenge is to re-think the way we measure our success. The challenge is to re-invent the way we interpret the actions of people.

Elad

Why do we have to ignore our past success while doing our current work?

Elizabeth Gilbert is a writer. She is the writer of many books. Her latest book, “Eat, Pray, Love” is #1 New York Times Bestselling memoir. She is now working on a new book. The problem is she is overwhelmed with fear that the new instalment could not exceed her last success.

From these feelings, Gilbert generalizes about the problem of creative people. In her talk in TED (I don’t why I can’t embed talks from ted to this blog, but press on the link to watch it), called: “Nurturing Creativity” she describes the problem creative people face. The problem is the fear that their next work would not be as good as their first one. The fear that their best work is behind them. Her claim is that taking this fear inherited into creative people’s lives, it is not surprising that many young creative people die young, many times by their own hand.

I could relate to that concept (not taking my own life, the fear). I am truly proud of my e-book, “Playing it to excellence and happiness in real life”. Even though it is not New York Times #1 bestseller, the responses I get from people who read it are great. I am currently working on a new e-book. But, will this one be as good as the next one? It is actually frightening to the point of paralyzing.

Gilbert advice (which is described in a very entraining way, I recommend watching this talk) is that you just do your job. You should just be proud of going out there and trying. She talks about the ancient Greeks believing that a spark of genius is a touch of an outside divine source, thus, not feeling guilty for not succeeding. She says we should try to implement that thinking into our creative process. I think I generally agree. Some complementing thoughts though:

1. You should really not care. If you are passionate about what you do, and enjoy doing it – just do it. If passion is there, results will follow, because people connect with passion. What you did in the past, people expectations, what other people think is right – all of these are not important. Go with your passion.
2. It is true that there are some people who created something and after that only lived on the reputation of that creation. But a lot of other people did not. There are numerous examples of writers whose second book was better than their first one. Who says you next creation would not be better than your last? Actually, usually creative people don’t reach the top immediately. They work and improve along the way. In some point of their career, there was a work worse than their last one. Look at Gilberts Bio. Not all her books became bestsellers. Who says that this time must be the peak? What you need to remember is that this time you have the experience you did not have when you created your last master piece. That experience is surely on your side.
3. There is no true way to know what will succeed. Not in art. Not in writing. Not in business. Don’t believe the experts – many times they are wrong. Don’t believe the surveys – people don’t know what they want. So there is actually no way to predict if your next work will be a success. If there in no way of knowing, the only option is to do your best. If you keep doing that and create something great, success will come. It does not work the other way around.
4. You cannot say that because something worked in the past, than a similar thing will work in the future. The only standard that matters is your own personal standard. Something that was unique and remarkable one day ceases to be so after a certain time. Your job is to find your true unique voice that you feel is right. If you keep doing that and create something great, success will come. If you keep pushing (or changing) the standards, you will improve.

 Elad

Hey – do you have an idea…?

 

Photo by a_whisper_of_unremittin g_demand

A few months ago, before I knew I got accepted to an MBA in AGSM , I decided to leave my job and entered a phase where most of what I did was job interviews. Most of us know this horrible drill, and for me, due to my characteristics, it was even harder. I feel really uncomfortable in situations where there is a need for artificial conversations and when it involves new people it extra difficult for me. So interviewing for new jobs is a really hard process for me.

However, one interview actually was a great lesson. It was an interview with a company called SIT (Systematic inventive Thinking). I think the interview was different than other interviews and was conducted in a much easier atmosphere, but the reason I remember it as lesson is to the fact that my preparation for it was different. If you click on the link and visit the site you will discover a very interesting website. I spent something like an hour there before the interview learning about the company and its methods.

As I explain in my E-book, “Playing It to Excellence and Happiness in Real Life – Five Concepts I Learned by Playing Basketball, Working and just Living”, I believe in the power of processes. I think that if you find good processes and stick to them, while improving them, you can reach excellent results. What I like in the SIT method is that it treats creativity and innovation not as a “eureka moment” but at as the result of a systematic process. By limiting the creativity using a process you actually create more creativity. This resembles Malcolm Gladwell’s Idea in his speech at the New Yorker conference, “Genius: 2012″ that “13 smart guys are better than one genius in dealing with modern problems”. Today’s great ideas and solutions are the result of a process of many people working together or one after another.

The great thing about the interview and the preparation is that I actually learned (although in a limited fashion) to think with some of the tools that SIT uses: Attribute Dependency, division, multiplication, subtraction, task unification. I actually used that thinking to offer improvements for my last employer.  I keep learning to do so by following the SIT blog.

That interview got me more interested in innovation and creativity. In the past I used to think that I was not a creative man. As time passed I understood that there are many ways to be creative and that I am creative in my own way and on my own areas of strength. Now, I keep looking for processes that foster innovation. This is why when I got the book called “The impossible – Possible!” by Yarin Kimor a present before coming to Australia, I was really excited. The book is filled with great stories about innovation and especially with great processes that help foster innovation.  

One story in the book got me thinking. It tells about a man who had no training but got to be the manager of a large supermarket which was losing half a million dollar. After a few months he created a profit of 3 million dollars. When the writer of the book asked him what he did, he told him that because he knew nothing about managing a supermarket he just went into every department and asked the person working there what was his ideas to improve the place were. After that person told him that, he told him or her: “just do it”. We can find ideas and creativity in many places. When was the last time you asked your team, in unbiased way – what do you think we should change around here? You would be surprised by the answers you will receive.

Elad