Did he notice me? On perceptions, noticing, management and education

Photo by takomabibelot

I am constantly amazed how my interest subjects are overlapping. I wrote in this blog a few times about how I find management lessons in reading epic fantasy. Another subject that correlates with my interest in managing people is the subject of education. Lately, I started following an interesting blog dealing with education by Angela Maiers. Yesterday she wrote a post called: “Two powerful words: I notice” about the importance of noticing students in the classroom. In the post she referred to a quote from the movie Shall We Dance uttered by Susan Sarandon character, Beverly Clark:

We need a witness to our lives. There’s a billion people on the planet… I mean, what does any one life really mean? But in a marriage, you’re promising to care about everything. The good things, the bad things, the terrible things, the mundane things… all of it, all of the time, every day. You’re saying ‘Your life will not go unnoticed because I will notice it. Your life will not go un-witnessed because I will be your witness’.

And I think this approach is not only important in marriage or as a teacher in the classroom but also as a manager of people. I am a passionate person and usually I do my job as best as I can. And I know from my own experience that there is a high correlation between whether I felt noticed and my motivation. Actually, over the years I discovered how much I yearn for recognition and how frustrated I feel when I am not noticed. In my e-book, I described this story:

After 8 months of internship, my boss took me to lunch, and offered me to stay at that firm as a full time lawyer once I pass the bar exam. I told him that what troubles me is that I did not get any feedback. I only learned by trial and error and a little by watching what others do, and not by direct feedback. I said I would like that to change if I was to stay. He was genuinely surprised. He said to me: “Well, if I were not happy with you, you would have already known”. When I think about it, I still can’t quite grasp that reaction. But it really stands for how people usually feel. If there is nothing wrong, there is no need to say anything. Frightening!

While I know it is dangerous to extrapolate from my own experience to a general rule, I found that while not everybody feels the same, many people do. When I teach motivation in the Israeli Air-Force I talk about the expectancy theory of motivation by Victor Vroom.  One of the main concepts in this theory is that there needs to be a clear connection between the effort people put in and the optional reward. According to the theory, one question people ask themselves before they act is “will somebody notice what I do?”. The theory is not straightforward but when I talk about this part and ask for an example, almost all the students in the class have one. Too many of us go unnoticed.

Just yesterday I wrote about the unpredictability of rewards and its importance.  In order to be really unpredictable but also create an effective response to our rewards, we need to notice our employees.  And it is not enough to notice, it is also important to let them that you notice. Most business people will tell you that marketing is all about perception. The qualities of your product are not as important as how people perceive you r product. I think we should employ similar thinking to our employees. Noticing our employees is important but making sure that they know we are noticing them is just as important.

Elad

A segment of one

Photo by Son Of Groucho

During the last week I heard the expression “a segment of one” a number of times. The idea is that with the tools of computerized customization many companies can actually understand the needs of each and every customer. For example, a company can send thousands of different emails to its customers, so each customer will get a personalized e-mail message. Sounds promising? It is. New technology creates an abundance of possibilities to do things that were once very hard to do. And I am sure that as time goes by, the ability to use it more effectively will enhance.

But, just because we can, does not immediately mean that we should!

Technology allows us to do many things today. It makes things that were once very hard, a lot easier. However that does not mean that we should do them. If it was not smart to do when it was hard, the fact that it is easy should not matter.

The “segment of one” example is a simple one. Segmentation is about going after the right customers. It takes into account the fact that there are some inherent tradeoffs because a company cannot be everything to everybody. The fact that we can understand all of our customers, does not mean we should try to satisfy all of them. Not all customers are born equal. Some are more important. Some are a liability more than an asset. Don’t invest time and money, even if it is a small amount of time and money, on these customers.

Don’t let the fact that there is a simple answer to the question: “how?” blind you from asking the question “why?”

Elad

Which do your prefer – happiness or trust?

Photo by yewenyi

Today in our marketing class we talked about customer’s happiness and trust. If you create a simple 2 by 2 matrix you can allocate your customers to 4 groups. Then you need to think about how you treat each group and what the reasons for the existence and size of each group are.

And that got me thinking about transferring the same kind of measurement and thinking process to other arenas. Let’s think about politics. If you are a president or a prime minster, what is more important – that the citizens trust you or that they are happy with what you are doing? Or think about being a manager – do you want your employees to trust you or do you want them to be happy?

I know that trust and happiness are interrelated. I also know that the definitions are not completely clear. But life (and leadership and management) is about making decisions in a scarce and uncertain environment. And when your resources are limited you are faced with the choice of what to concertante on.

If I was a marketer, I think I will concentrate mainly on happiness. But as a leader and a manager of people, I would go with trust every time. In the marketplace of the consumers – happiness will generally lead to trust. In the leadership sense, happiness is important – but doing the right things and making the right decisions is a way that will lead to trust, is even more important. The trust will lead to happiness.

Leaders and managers need to make tough choices even though their followers will not always like it. In a book I am currently reading called: “The last argument of kings” one of the characters uses the phrase: “One cannot be a great leader without a certain … Ruthlessness”. I believe this is true. First create trust in your vision, in your cause, in your decision making. First create respect. Happiness will come.

What do you think is more important? Happiness or trust?

Elad

Revisiting averages…

I was listening today to a podcast from the Mckinsey Quarterly titled “The Granularity of Growth“. The basic idea is that in an industry, not all companies, segments and products have the same growth rate. Which is off course, obvious. But when so many times we use the term “average growth rate of an industry” in the decision mechanism, this realization holds many implications. Not only does the range of the growth in the industry vary, but it is also internally skewed across the segments, a fact that could lead to different decision regarding acquisitions and new ventures & products.

That made me think – where have I heard this concept before? And it immediately came to me – Hans Rosling’s amazing talk about statistics, where he takes Africa’s average GDP and breaks it into different countries that are so varied and different from each another, that just talking about “the problems of Africa” becomes immediately inaccurate. And again, this has many practical implications.

And this led me to what companies do all the time. Look for the average customer. I already discussed some of the implications of such thinking. But a few of the discussions in our latest marketing classes and a case we are working on, crystallized it even further for me. “Our average customer”. “The average satisfaction rate”. Very dangerous concepts. Because by responding to the average, we are missing the different groups that have different characteristics.

Average is easy and convenient to use. It is intuitive for us to grasp. But whenever you see an average, you should be suspicious. You should ask yourself – does it really represent the full picture or does it create a middle category that does not really exist.

Beware of the average, I know I started to.

Elad

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

Seth is wrong

Photo by Daquella Manera

Well, maybe it is not very creative. Maybe I am an imitator. But some of the most successful people in the world built their careers on imitation. What am I talking about? The title of this post, is a spinoff of Seth Godin’s post titled: “Malcolm is wrong“. In that post Godin said that it doesn’t happen to him a lot. For those of you who follow this blog, you might know that this does not happen to me a lot too…

But I really think he is wrong. What I am talking about. Godin’s post: “Wining on the uphills“. Here is the gist of it:

The best time to do great customer service is when a customer is upset. The moment you earn your keep as a public speaker is when the room isn’t just right or the plane is late or the projector doesn’t work or the audience is tired or distracted. The best time to engage with an employee is when everything falls apart, not when you’re hitting every milestone. And everyone now knows that the best time to start a project is when the economy is lousy. Most of your competition spend their days looking forward to those rare moments when everything goes right. Imagine how much leverage you have if you spend your time maximizing those common moments when it doesn’t.

This is not a sustainable strategy. If all we do is try and concentrate on trying to fix something that we have broken, even if we do the best fixing job possible, in the end – the customer will give up. If you get me upset once and fix it – you will buy my loyalty. If you constantly make me upset and then fix it, I will go somewhere else. I am willing to settle for a little less to avoid the trouble.

The focus should not be on the rare moments that things when everything goes right. It also shouldn’t be on maximizing those common moments when it doesn’t. It should be on making sure that those rare moments when everything goes right are not rare. That they are the standard. This, off course does not mean that a recovery plan in case things go wrong is a bad idea. But each and every such occasion should be directed to making sure you won’t have to go to your back up plans. To making sure the systematic failure is fixed. To making sure that the moments everything goes right are not rare.

 Don’t fix problems, prevent them.

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

Why you should go and observe someone else’s work?

Photo by Timothy Valentine

Last week in our strategy class we were talking about competitive advantages. We learned about the two main ways you can create competitive advantage – cost advantage and differentiation. Then, as an answer to a student’s question (I don’t remember what it was exactly) the professor said something like this: if you are looking for how to create cost advantages – you need to look for answers in the operations class. If you want to create differentiation advantage – you need to look for answers is the marketing class.

I can’t say I agree.

I think one of the major problems companies are facing today is to create ways disengage from this kind of thinking. To create synergies between operations and marketing. And finance, accounting and HR for that matter. The thought that the advantage of the company, whatever that is, lies in one aspect or one discipline of the business is counterproductive and for me, counterintuitive. With everything we know about the importance of diversity in the creation of innovation, about the effects of social capital derived from interaction between different parts of the business, even thinking about competitive advantage as being the responsibility of one part of the business is dangerous.

I am sure our professor acknowledges that as well. All the examples of successful companies we keep seeing are examples of companies which succeeded to do both cost and differentiation advantages. Doing both requires coordination.

More than that. In the operations class we learn about things like TQM and Six-Sigma. These are concepts that not only reduce cost, but also increase quality and can create differentiation. Marketing decisions can have cost implications. The fact the Apple chooses (or choose) to create the I-pod with a very limited user interface (which I find terrible) is a marketing decision. But I am sure it has operations and cost implications. Design of the product can be a competitive advantage – who does it? Marketing or operations.

In the words of Guy Kawasaki:

The separation of engineering and marketing is artificial. It presumes that engineers build feature-laden crap that no one cares about but engineers. Maybe mediocre engineers do this. Great engineers create with a customer in mind. Fantastic engineers create with themselves in mind as the customer. Every Nokia engineer should give their prototypes to their mothers, fathers, and kids. That would fix everything. The user interface of almost every phone is unintelligible. Anyone could have done an iPhone—it’s not like Apple has a monopoly on design.

I understand the need to simplify concepts for MBAs. But the fact that we study each and every one of the courses separately is enough to create silos of thinking instead of integrative thinking. I think all disciplines, and especially strategy, should embrace an integrative look.

No matter where you work and what is your pre-defined role in your company, you should try to schedule an hour, a day, a week – with another department – to understand their work, their needs and their problems. What you will learn will be invaluable to your work.

Elad

The Continuum

I was watching Nancy Etcoff talk on TED about happiness. The subject is, for obvious reasons, of interest to me, and I found it quite entreating. But one part of the talk really spiked my interest.

During the 7^th minute of the talk, Etcoff talks about the fact that contrary to common belief, happiness and unhappiness are not on the endpoints of a single continuum. They are not on the same scale. Happiness is not simply absence of misery. There are actually two different continuums for each of these categories. Or as Etcoff says it, as you get less miserable you don’t become happy, you become less miserable.

This is a simple yet very powerful idea. But then I said to myself, haven’t I heard this idea before? Off course I have.

According to the Two-factor theory (also known as Herzberg’s motivation-hygiene theory) job satisfaction and job dissatisfaction act independently of each other. Two Factor Theory states that there are certain factors in the workplace that cause job satisfaction (Motivators, e.g. challenging work, recognition, responsibility which give positive satisfaction, arising from intrinsic conditions of the job itself, such as recognition, achievement, or personal growth), while a separate set of factors cause dissatisfaction (Hygiene factors,e.g. status, job security, salary and fringe benefits, which do not give positive satisfaction, although dissatisfaction results from their absence. These are extrinsic to the work itself, and include aspects such as company policies, supervisory practices, or wages/salary).

In the book “First, Break all the rules“, Marcus Buckingham and Curt Coffman explain what Gallup found about costumer’s satisfaction and dissatisfaction. You guessed it. They are different. Granted, here they are not on a different continuum, but according to the book, costumers have two expectations that determine their level of dissatisfaction: accuracy and availability, and two different expectations that determine their satisfaction: partnership and advice.

The implications of each if these separately are profound in each field by itself. But put together, they produce something even bigger. Our tendency to think about phenomena as a continuum. This tendency might actually be wrong. And I ask you – what other tendencies do we have that our wrong? How many mistakes we do every day, because of our underlining assumptions? When is the last time that you conducted an exercise with the sole purpose of challenging your assumptions?  It is a difficult exercise, but it is worth it.

Elad

What can mangers learn from the Milgram Experiment?

Photo by Festeban

The Milgram Experiment was a series of social psychology experiments conducted by Yale University psychologist Stanley Milgram, which measured the willingness of study participants to obey an authority figure who instructed them to perform acts that conflicted with their personal conscience (in this case, giving a lethal electric shock to another person).In layman terms, Milgram showed in his experiment people’s tendency to conform to an authority figure.

This experiment was mentioned in our Marketing class a week ago as a reminder of the power we, as managers, will have over people, meaning, especially consumers. If people will generally do what over you tell them and will easily believe whatever you tell them, that means you have a power and responsibility.

I especially enjoyed the discussion in class because just a few days before that I watched a Law & Order: SVU episode that dealt with the same experiment, featuring Robin Williams. In it, Williams plays a man who lost his wife because he listened quietly to his doctor even though he knew the doctor was wrong. This drives him mad and he starts calling people claiming to be Detective Milgram and convincing them to do terrible things. He starts a movement calling people to: “Stop being sheep”. This video is the end of this great episode:

Both of these mentions of the Milgram Experiment got me to think on the implications of that experiment to people in managerial positions. The fact that we have the power of authority is a given. The fact that this power comes with responsibility is also a given. But most of the time managers don’t use this power to bring people to perform acts that conflict with their personal conscience. They just use that power to ignore people. And by that, they lose some much.

Most people will conform to authority. As managers we should discourage that. We should recognize does who challenge our authority in a constructive ways. We should encourage institutionalized devil advocacy. The responsibility lies with us as managers.

And off course, the coin has two sides. As employees, how do we treat our managers? Are we behaving like sheep? Do we stand up for what we believe in?

I will finish with a quote by Hugh Macleod from Gapinvoid, that is not directly linked to this subject, but which I find invigorating to think about from time to time.

The price of being a sheep is boredom. The price of being a wolf is loneliness. Choose one or the other with great care.

So, what is your personal takeaway from the Milgram Experiment?

Elad