Connections, piracy, change and business models

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It is funny how sometimes ideas comes from different directions and connect in ways you could not have guessed they will before.

A few months ago I went to have dinner with two colleagues of mine from my AGSM MBA class. We had a wonderful dinner and an even better intellectual discussion. I don’t really remember how we got to the subject by I mentioned Larry Lessig’s talk on TED about User Generated Content (how the law is choking creativity) where he claims that our society is turning kids into criminal by illegalizing activities that are natural to them.

A few days ago I gave a session to a number of people from our Public Speaking & Debating Club about modern techniques in presentation delivery. One of the examples I used to illustrate my point and stimulate the discussion was the same lecture by Lessig from TED which brought the ideas back to my mind.

This morning, as I was going over my Google Reader reading list, I came by Seth Godin’s post titled: “Teaching the market a lesson“. Here is a small sample:

Some book publishers don’t like the Kindle. Either they’re afraid of it or they’ve crunched the numbers and they don’t like what they see. (Some days, 95% of the top selling Kindle titles are free… demonstrating that digital goods with zero marginal cost and plentiful substitutes tend to move to zero in price).

Worried about the medium, they hold back, delay or even refuse to support it.

A few minutes after that, I got an e-mail from my dear friends Ajaya, one of my   colleagues from the dinner a few months ago. This is what he wrote in the e-mail:

Remember talking about illegal downloads and what the fact that almost all kids break the law means to society. Finally, it seems the music industry is figuring it out.

And the email had a link to an article from The Economist titled: “How to sink pirates“. The article describes how the music industry is finally starting to relinquish its fight against piracy, starting to use a model of streaming music, gaining money from advertisements. And it ends with this conclusion:

All of this offers a lesson for other types of media, such as films and video games. Piracy thrives because it satisfies an unmet demand. The best way to discourage it is to offer a diverse range of attractive, legal alternatives. The music industry has taken a decade to work this out, but it has now done so. Other industries should benefit from its experience—and follow its example.

Suddenly, it dawned on me. The points just seemed to connect. These lessons keep repeating themselves:

1. The world is changing. You can jump on the boat. But you cannot stop it. The past will always try to stop the future. Be it the music industry, the book publishing industry or shop owners in 19^th century France. They will fail. The answer to change is change and not more of the same.
2. Peter Drucker wrote that you can never know how a product that was created in one field could be used in another field. Products and technologies will continue to move across industries destroying business models. The answer will not be found in barricading industries and business models, but in inventing new business models.
3. “Free” is changing the world in more ways than we can imagine.
4. Law, legal proceedings and fear can only take you so far. Options, Transparency and self fulfillment will win eventfully. It might take time, but it will happen.

You think that the smart people running some of these industries would have learned these lessons by now.

Elad

Managing meetings

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I have been thinking about writing this post for a long time now, ever since I read this post by Karlyn Morissette a few weeks ago. One thing I hoped to learn more about in my MBA is about how to run meetings. This something I have been struggling for a long time now and even once tried to help somebody prepare a lecture about.

These are five of my top ideas (rules?) for running effective meetings.:

1. Everybody must come prepared. And when I say prepared I mean totally and utterly prepared. When you get to the meeting you already: read everything; made the preparations; calculated the numbers; came up with your own ideas. I spent so many meetings where people come unprepared and as a consequence half of the meeting is spent on just understanding the issue or on doing things that should have been done earlier without wasting everybody else’s time. Too many people believe that they perform the best under pressure and rationalize their way into procrastination. This trend extends itself into the meetings and people say to themselves – “hey, I learn the subject while the meeting takes place”. I even got constructive feedback about the fact that I turn up to meetings too prepared. My main challenge with this rule is that it is hard to enforce and hard to create an atmosphere where preparation is the norm and the exception.

2. Have an agenda. I think this is where Karlyn’s post makes the point better than I can:  

How many meetings do you attend actually have an agenda? Better yet, a stated purpose? I learned this technique from a lady much smarter than I, Dr. Pamela Skyrme.  Pamela is a brilliant organizational coach.  She also happens to be the Director of Professional Development in my office at Dartmouth, where I’ve had the privilege of being coached by her for the last several months.  The tactic goes like this: At the beginning of each meeting make sure the group as a whole knows what they are seeking to accomplish in that meeting (if you don’t have something you’re seeking to accomplish, then you probably shouldn’t be meeting in the first place). At the end of the meeting, assess whether or not you accomplished your initial stated goals. Do this consistently and it will keep people on track and focused, since there will be some level of accountability (however minor) for not accomplishing a stated goal.

The only thing I would add is that if possible send the agenda before the meeting. The main issue I find challenging here is what happens if the group does not agree on the agenda. You can spend more time discussing the agenda then the issue.

3. Everybody speaks. If someone is at the meeting and does not talk then it is a waste of his time to have him there. Everybody has an opinion and every opinion matters. Don’t let the meeting become a shouting contest where the one who has the loudest voice or the most confidence win. There is an added bonus to this. The more people are a part of the process, the more inclined they will be to follow the decision of the group. Any challenges with this one?

4. Respect people’s time. People have short attention span. They also have busy schedule. It is important not only to start and finish a meeting on time but also to be aware of the limitations of people. If need be, take a break. If it you realize it will have to go over time, stop, acknowledge the fact out loud and discuss how you are going to approach the fact that the meeting is going to go over time and allow people to make the needed arrangements.

5. Have a clear, actionable summary. Whatever happens, you need to spend the last few minutes of the meeting assessing the conclusions, decisions and action items that are the result of the meeting. If somebody is responsible for an action item, have him write it down (it has a psychological effect). In any case, have somebody send the details to all of the relevant parties and ask them to acknowledge it was received.

Any other ideas (rules)? Any important lessons from past meetings? Thoughts about the ideas (rules) I offered? About the challenges associated with them? Waiting to hear your thoughts…

Elad

Obliquity and management

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As part of a “Business Ethics” course I am taking at my AGSM MBA I came across this fascinating article by John Kay titled:  ”The role of business in society”. It deals with the long lasting debate surrounding the role of business – to make profits or to be a good corporate citizen. It is an interesting look at the debate and I think it makes some valid points, even though I think in its essence it does not contribute something very new to the discussion. However, one concept in the article made me reach a revelation, the principle of obliquity:

I call this paradox the principle of obliquity. It says that some objectives are best pursued indirectly… We are all familiar with one application of the principle of obliquity. While Americans, characteristically, talk of the pursuit of happiness, happiness is rarely best achieved when it is pursued. Research in social psychology confirms our intuition and experience. Happy people are not, in the main, those who selfishly promote their own interests: in fact happy people are most often characterized by a kind of uncalculating and outgoing generosity

In a later article, titled: “The oblique approach”, Kay writes the following things:

With maturity – personal or corporate – comes the principle of obliquity. Goals are often best achieved indirectly. Many people have noted the paradox that the most profitable companies are not necessarily the most profit oriented

It is so inspiring to read something that actually makes you feel: “wow”. And that is the way I felt when I was reading about this concept. So many times during my life I was told that the first thing we should do is concentrate on the goals and try to align ourselves with them. Why, I taught it myself a number of times. And it is true. And useful. And effective.

But not always. Because sometimes the best way to reach a goal is to reach it indirectly. We all know that sometime we are so obsessed with something that we hurt our chances of actually gaining it. When we let go, it somehow comes naturally. And I know it sounds very Hollywood-Movie like. But it actually happens.  

Think about it. When do you learn the most? When you are sitting in class actually trying to learn or when you are doing something and the learning comes as a side effect? Most people say that the most they learned it from the indirect learning – from other people, from doing, from watching – and not in formal courses. Or from failing. Could you imagine that? Those of us who learned how to drive know that the best teacher of driving is the road. Once you start driving, it actually teaches you about how to drive.

And this concept is so true in so many business settings. And it explains why many of the conventional wisdoms are just wrong! Would the manager help his flowers more by solving their problems or by letting them reach the answers by themselves? If you want to improve the performance of your team do you focus your managerial attention on your strongest people or on your weakest people? The answer to both of these questions is the indirect answer. Don’t give answers and the strongest people. or just think about Judo Strategy, and its claim that sometimes we don’t need to attack by pushing, but by pulling. Or by substituting effort for ability.

I am not saying that the answer to each and every problem is the indirect approach. But when we realize that the direct approach is not working, why not try to attack the challenges we face indirectly. It could be a powerful tool. After all, as Abraham Maslow said: “When your only tool is a hammer every problem looks like a nail“.

Elad

Re-thinking tradeoffs

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During the last few weeks, as part of our AGSM MBA integrative experience, we participated in a simulation with a software called Markstrat. The simulation allowed us to run companies in teams as part of a competitive environment, making decisions about operations, marketing, strategy and more. In the end of the two weeks experience we each had to write a short essay about what we learned from the experience.  Here is a short part of what I handed in:

As future managers we should be aware of that and think carefully about the implications each decision has on our cognitive resources. Attention and time are the scarcest resources a manager can allocate, even more then money. Thus, they should be considered in a decision like any other scarce resource.

This relates to an idea I have been writing and thinking about a lot lately. Tradeoffs. I think as human beings we have the immediate tendency to want everything. To try and be everything. To try and be the best at everything. Maybe instead we should focus our attention on being the best at something. Just one thing that will make us stand out. Not because being good at everything is bad. It is because it is so hard to achieve all at once. Because success is so many times the result of tradeoffs. Of actively deciding not to be good at something, because we put all our resources on something else.

Maybe, in our multi-tasking world, we need to re-learn what our forefathers, the hunters, knew how to do so good – focus on one thing. Become your prey. Follow it enough and you will understand it, start to think like it and finally hunt it.

I was reminded of this concept yesterday while I was reading Seth Godin’s post: “Spare no expense!“. Godin, makes the same point about tradeoffs in a different setting. The resources companies put into making one customer happy. A short excerpt:

The reason we get trapped by (c) is that, “I’m doing the best I can” is always much easier than, “we need to be disciplined and help more people, even if that means that some special cases will fall through the cracks. The internet makes this even more difficult because people who fall through the cracks are able to amplify their complaints ever louder.

The way around it, I think, is to set expectations early and often. If you’re going to give me your phone number, you better answer it. If you’re going to offer a warranty, you better honor it. If you position yourself as a company with real people eager to make every single person happy–you better deliver.

No matter what, you should decide. In advance. How much do you want to spend on ad hoc emergencies, how much do you want to reserve on design and helping the masses improve their experience?

The hard part is making the decision and sticking to it. We see many companies saying things like – “we put our people first” – but when it comes to making the actual choice, the actual tradeoffs, they don’t. It is not only about not fulfilling your promises; it is about not making the right tradeoffs even though you decided to make them.

So, what are your actively chosen tradeoffs? And what do you to keep them?

Elad

Getting down from the ladder

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Our integrative experience in the AGSM MBA this week included a big chapter on adaptive leadership. One of the concepts that were mentioned time and time again was that of rank. How we perceive our and other people’s rank and what effect it has on our assumptions and behaviours.

One sentence that one of our facilitators mentioned (he actually quoted someone else, whose name I don’t remember) struck me as especially interesting. He was talking about rank in organizations and about people “going up the ladder”, being promoted. Then he said:

“When we go up the ladder, we look down and see a lot of shiny happy faces. When they look up, they see…”

Well, he did not finish, so I don’t feel I need to. But that reminded me of the “Toxic Tandem“. People in positions of power tend to be oblivious to the needs and actions of the people who have less power than them. Or in other words, as we described it in class: “managers are usually blind to their rank”. As a manager, it is easy to forget that you are there on the ladder. That means that the focus of all eyes is on you. And it also means that you are in a different position than everybody else is. Which means it is harder for you to understand them.

Too many managers get to a management position and continue to do what they always did. Their work. Which is good, but not great. The problem is that now their work is being a manager. And that is a totally different job. A job you cannot do without leaving your desk. With our being active about it. without a little, MBWA.

So, the fact that you went up the ladder does not mean you have to stay there all the time. From time to time, you can climb down from the ladder and let the people see your happy shiny face, instead of your…

Elad

Silence, “I don’t know” and problems & solutions

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This week we had workshop on Adaptive Leadership as part of our integrative experience in the AGSM MBA. Part of the workshop entailed peer consultation regarding dilemmas the students are facing. We formed grouped of five people and in the group we had a very specific process that we had to follow. First, the person presenting the dilemma had five minutes to present without anybody interfering. Then the group had ten minutes to ask open-ended questions. Then, for 15 minutes, the group had to discuss the problem. At this point, two rules were put in place. The first is that the presenter should be absolutely silent. The second is that the discussion of the dilemma should not be about solutions, but only an attempt to understand the situation and what is the dilemma made of. The next stage was a ten minute discussion regarding possible courses of action. And finally, the presenter had five minutes to recap what he found useful.

As someone who likes to focus on the process and its importance, this exercise defiantly appealed to me. I think some bigger insights can be gained from it:

The importance of silence – I think that this is a great reminder to the importance of silence. When you sit silently while other are discussing you become attuned and aware of other things that you usually miss. Your mind is focused on listening and not on the next sentence you will try to push into the discussion. Silence and listening are important tools for communication that are usually underused. I just finished reading the book: “The McKinsey Mind” where one of the tips the writers prescribe is: “we have one mouth and two ears”. This is especially important in feedback sessions and in today’s managerial setting where the manager usually is not the content expert. Listen as twice as much as you talk. This relates to a concept I really believe in: “MBWA – management by walking around”. Go around the office, firm, plant, company. Be silent and listen. What do people say? What do they do? What do the customers say? I grantee, you will learn plenty.

Don’t accept “I don’t know” as an answer – in the same book the authors talked about not accepting “I don’t know” as an answer. They claim that if you go and interview somebody, let’s say, about the causes of a certain problem, many times he will answer: “I don’t know”. But people do know. Maybe they don’t have the entire answer, but they always have opinions, knowledge and theories. And theses sometimes might be more valuable than they think. I believe that the silence is important here is as well. Try this next time you interview someone or give feedback to someone. Ask a question. Listen to the answer. Then wait. Don’t go to the next question. In high percentage of the cases, that person will, after a short uncomfortable silence, will continue talking. People don’t like being silent. You would be surprised how much they will tell you just to avoid being silent.

Problems and solutions – people in the business world tend to be practical. They want to see and reach the bottom line. They ask: “So what?” all the time. But in our race to be active and create an impact we sometime bark up the wrong tree. We miss focusing on the real problem and create solutions which don’t really solve it. We keep trying to deal with fires and don’t ask ourselves how they were caused and why. I mentioned here in this blog that I believe we should be more focused on preventing problems then on solving them. Understanding the real problems is an important part of that. In order to do that, it could be beneficial to limit the discussion to the problem without talking about solutions. It allows us to talk about concepts. To take the balcony view. To think about the underlining rationale. Then, the discussion of the solutions will be much more effective.

Elad

Resisting the temptation to give answers

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There are lessons you learn and that you need to be constantly reminded of. A few months ago, I wrote this:

The conventional wisdom that a manager needs to say to its employees how to do their work is already intertwined into people’s expectations. Just the same way people think that there is one best way to write a speech, give a presentation, use notes or get the audience attention, while there isn’t, people expect their manager to tell them how to do their work.

Today, in class, as a part of a workshop dealing with adaptive leadership, we read an article by Ronald A. Heifetz and Donald L. Laurie, which had this sentence in it:

We all – superiors and subordinates alike – have to change our expectations for dispensing and receiving definitive answers.

As someone who used to spend a lot of time teaching, I know how big the temptation is. Someone asks a question. You know the answer. Actually, you know three times what is needed to give the answer. And you are tempted to immediately give that answer. The problem is, if you want a good process of teaching, you should (in many cases) divert the question back to asker or to the entire class and creates a process of self learning.

Management (or as many people call it, leadership, but I won’t go there in this post) is exactly the same. Your employee comes to you with a problem. He expects you to solve it for him, to tell him what to do. That is the conventional wisdom. But, that is exactly what you should not do in most cases. The famous creed: “don’t give a hungry man a fish, teach him how to fish” is right and not implemented enough. We need to resist the temptation and try to give solution and answers and move to letting people find their own ways. So they will be able to do the job when you are not there. Tell him what the desired outcome is and let him find the solution. Give him the support and help, but not the solution. Resist the temptation.

So, are you able to resist the temptation?

Elad

Making a difference

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A few days ago I was reading a very interesting post titled: “The One Thing Every Manager Must Learn” by the “Incentive Intelligence” blog.  This is the main idea:

But the bottom line is that you only need to train your Managers to do one thing…

Ready?

Train Managers to say this to every employee at least once a week (if it is true of course)…

You made a difference by ____________ .

I like it. It really crystallizes what a manager should do. Focus on making his employees excel at what they do. And treat each and everyone differently because everybody is different. One of the most important ways to do that is by recognition and validation of their actions. But in order to excel, they need more than just recognition, they need to find their strength, or what they can excel at.

Last week we had an exam in operations management. One of the questions in the exam asked us to compare the Japanese principal of Poke Yoke with the idea of control charts that are used monitor quality. The main idea of the answer (or at least I hope it is…) is that there is a difference between preventing the problem before it occurs and with monitoring it after it occurs. Albert Einstein said: “Intellectuals solve problems, geniuses prevent them”.

A manager’s job is to help each individual find the right way for him to make a difference. To find his strength. And then help push him to use it. The “you made a difference sentence” is like the control chart. It is the way we check the results each week. But we cannot allow ourselves as managers to be passive. A manager’s job is an active one.

So yes, I agree that this is the most important thing you need to know as a manager. But, we need to understand that this weekly saying must have substance behind it all through the week. Then, you will be able to complete the sentence not only for you employees, but for yourself as well.

So, how did you make a difference this week?

Elad

Setting your priorities straight

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When I was an instructor in the Israeli Air-force I used to give a workshop about time-management. The concept “time-management” is a little misleading. It gives us the illusion that time can actually be managed, when in fact, it can’t. Time is given. It will pass if we want it or not. And it will do it at the same pace it always did, no matter what will do. So, we need to manage our decisions given that time.

Every time I gave that workshop there was a least one person who would come up to me and tell me: “Look, I am swamped. I just have too many things to do and not enough time”. I always gave those people the same response: “You don’t have a time problem, you have a priorities problem”.

Because time-management is about choosing your priorities, being consistent with them over time and accepting that this process will inherently include some tradeoffs. There will be things you will not be able to do. But until you get your priorities straight you will face problems.

I like to take principals like the time-management-priorities one and see where I can apply them in other facets of life. Now, after almost completing two session of my MBA program, I think that I can confidently say that “getting your priorities straight” is the key concept that describes my learning this session. Because all the courses I studied this session, had this one concept in common. You have to make choices. And you have to be consistent about them. Or in other words, you have to set your priorities straight.

In finance you can see it in the choice between risks and returns. Do you want higher risk or higher possible returns? What is the level of returns you are seeking for? You have to make a choice. And until you set your priorities, your goals, your preferences, be them as they may, you cannot make the right choice. And in order to deliver real value, you need to make consistent decision over time.

Operations management – does my company need to cooperate with others in the supply chain or not? Do I need a pull or a push based production line? Is responsiveness or effectiveness more important? Well, it depends on your priorities. But whatever you do – you have to make sure, that all other parts of your organization and even you suppliers and buyers, are in tune with the same priorities and are consistent with the same decision.

How do you determine your IMC (integrated marketing communication)? Or how do you decide if you are going to concentrate on growth or retaining current customers? You guessed it – decide what your priorities are and make consistent decisions about them. And most importantly – as in time-management – you make choices that lead to tradeoffs that are inherent to the decision making process.

Finally strategy, the mother of all priory decision disciplines. To quote our strategy professor:

“Strategy is Making choices… since you have limited resources, you cannot do everything (and expect to do them well)… that are genuine… ‘real choices’ that are ‘difficult’ and consistent. A ’set of choices’ that different elements strengthen and reinforce each other”

And for me, all of this is the essence of another great idea I believe in. The idea of the comparative advantage. Because comparative advantage is not only about actual competition, but it is more about recognizing what is more important, where can I make the biggest contribution – to myself and to society – and going with it all the way. That is why I try, once in a while, to assess what my priorities are and what my comparative advantage is.

When is the last time you sat with yourself and asked your self – in a personal or professional setting – what are your priorities?

Elad

The service economy, kaizen, bear shaving and standards

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I was studying for an exam in operations management today. I don’t know if this is commonplace for courses on this subject, but it sure feels like we concentrated a lot on manufacturing ideas. As most western states are becoming more service dependent, and as my own experience lies in more service like organizations, I am constantly trying to think about how to apply concepts from the manufacturing world to service world.

One of the most interesting concepts is we discussed is kaizen, the Japanese philosophy that focuses on continuous improvement throughout all aspects of life. In the business sense, kaizen means continuous improvement of all functions of a business, from manufacturing to management and from the CEO to the assembly line workers. This concept is off course very transferable to service as it is to life. I actually think that without knowing the concept I wrote about something similar in my e-book. But, the fact that it is easy transferable, does not mean it is practiced. Hence, bear shaving.

One important part of kaizen is the concept of standardization. Because kaizen is about improvement, a lot of effort is dedicated into standardizing the improvement to keep it in place.  Because an improvement by itself will not contribute to kaizen unless in the end it can be maintained when the people directly involved leave. Moreover what can be continually improved if there are no strong standards for how things are carried out? Without standardised work kaizen becomes something practiced by the individual employee and not by the company as a whole.

And that got me thinking. I remember when I was a course leader in the Israeli Air-force. After every course we de-briefed the course and came up with all kinds of recommendations for improvement. The problem was we had trouble making sure that the instructors who will come after us will learn from our mistakes and implement our recommendations. Because some of the lessons we learned were about day to day activities, course planning or just small thoughts about how to make the course more effective. We wrote in a manual, but, if the people who come after us don’t read the manual, guess what happens. Because I later served as a reserve duty soldier in the same place, I saw in my own eyes, how lessons disappear and every generation of instructors have to learn things from the beginning or come up with ideas, that we already came up with five, six or seven years before.

In a service environment, the reliance on people is even greater than in a manufacturing environment. But creating standards for service is harder. However, harder does not mean impossible. It just means that you have to be more creative about the ways you change the process. In service environment it might even be a good idea to remind people about things they already know on a regular basis. And today, in contrast to my situation in the Israel Air-force more than ten years ago, you have technology to help you. After all, we do leave in a period of “combinatorial innovation“.

So, let’s try an invent ways to standardize service kaizen.

Elad