The biggest challenge of modern managers – managing smart people

photo by GIHE

The last few weeks I have been interviewing for a job. I went to different firms and met different interviewers. As I am interviewing for a position in the middle of an organization, one that will demand the handling of a team, the discussion included questions around teamwork, leadership and management. Those are all things that I love talking about, as those of you who have been following this blog know very well. However, the interviews themselves, and my mental preparation for them, made me think about some of my beliefs, in an attempt to articulate them better.

I wrote here many times that I believe that a manager’s main challenge is helping his team excel, each person in a different way. I talked about the fact that I believe that the best way to manage is by outcome management and by resisting the temptation to give answers. I also talked about the humility that must be part of a manager’s attitude, and off course about MBWA.

But the more I think about it, the biggest challenge managers in modern organizations face today, one that encompasses most of the above challenges is that of managing smart people. Because in today’s environment a manager is not necessarily the best professional. These days are over. He no longer has the ultimate knowledge and the ability to understand all issues of the business, department , division or sometimes, even the team. The people he works with, most of the times know more about specific things then he does and have skills that he doesn’t.  And they are smart. Not only smart in terms of pure intelligence (IQ)  but smart in terms of emotional intelligence (EQ) and social intelligence (SQ).

Malcolm Gladwell, one of my favorite authors gave an amazing speech at the New Yorker conference labeled: “Genius: 2012″. In it, he  compares Michael Ventris, the decipherer of Linear B, with Andrew Wiles, the solver of Fermat’s Last Theorem and concludes:

“Modern problems require persistence more than they require genius and we ought to value quantity over quality when it comes to intelligence”.

One of his main claims in the speech is that 13 smart guys are better than one genius in dealing with modern problems. And this is the essence of what a manager needs to do. He needs to coordinate 13 smart guys to solve modern day problems. And those of you who worked with smart people, know how big a challenge it is.

The more our society advances the smarter people will get. They will get more specialized. Most problems today can’t be covered by one individual so each team members must know only part of the problem very well. And the manager needs to coordinate all of that. He needs to make sure that each team member has the ability to excel with his specific knowledge and skills; has to ability to use his strength for the good of the team; to create a synergy from the separate members of the team.

What do you think the biggest challenge of modern managers is?

Elad

The resistance to free is futile

Photo by Kalandrakas

The notion of Free is becoming more and more prominent in our economy and in business thinking. More services are becoming free and some things, like information, are starting to be free as a standard. I discussed this phenomenon a while back here on my blog, especially the validity of business models that rely on advertising.  

I started thinking about this again after reading Malcolm Gladwell review of Chris Anderson’s new book, “Free: The Future of a Radical Price” and Seth Godin’s take on the two. This is the gist of Godin’s view:

The first argument that makes no sense is, “should we want free to be the future?” Who cares if we want it? It is. The second argument that makes no sense is, “how will this new business model support the world as we know it today?” Who cares if it does? It is. It’s happening. The world will change around it, because the world has no choice. I’m sorry if that’s inconvenient, but it’s true.

While I do agree with Godin that free changes a lot I am not sure that his take is fully accurate. You have to agree with Gladwell’s take on the example of Youtube:

YouTube is a great example of Free, except that Free technology ends up not being Free because of the way consumers respond to Free, fatally compromising YouTube’s ability to make money around Free, and forcing it to retreat from the “abundance thinking” that lies at the heart of Free. Credit Suisse estimates that YouTube will lose close to half a billion dollars this year. If it were a bank, it would be eligible for TARP funds

I was just reading an article for the strategy course I am currently taking at my AGSM MBA and in it the writers describe how E-bay reacted to the public auction initiative that was started by Yahoo!. Yahoo!’s product was free and E-bay originally thought that was going to be a problem. But it turned out, like in the Youtube case, the free attracts, as Anderson and Gladwell call it: “Crap”. If it is free to post an auction, you start auctioning stuff that their possibility to sell is close to 0. Even though in E-bay, the payment was about 25 cents, this payment still held barriers that made their service better. It turned out, free was the wrong way to go.

So, what is the lesson here? Gladwell says that:

The only iron law here is the one too obvious to write a book about, which is that the digital age has so transformed the ways in which things are made and sold that there are no iron laws.

Godin, says something similar:

In a world of free, everyone can play.

My personal take is that the rules are changing. On one hand, you have to realize that some industries will have to remodel their business to a world of free. Like newspapers, book publishers, and probably even the music industry. On the other hand, you cannot ignore the physiological effect of free (research shows that when people pay for something, they enjoy it more). And you cannot ignore the fact that even if there are things for free in the industry people will still not be willing to pay for special, unique and scarce. As Godin puts it:

People will pay for content if it is so unique they can’t get it anywhere else, so fast they benefit from getting it before anyone else, or so related to their tribe that paying for it brings them closer to other people. We’ll always be willing to pay for souvenirs of news, as well, things to go on a shelf or badges of honor to share

This means we should be careful. We should not ignore free. But we should not fall for the trap it represents. Free has advantages and disadvantages. We need to further study how free works because it works for certain industries and it does not for others. One thing we can’t do. We can’t allow the past to control our future. Fighting free, where it is relevant, will not work. Resistance is futile.

Elad

David and Goliath

Photo by Alaskan Dude

I love the story of David and Goliath since I was a little kid. You must admit, it is the basic story of the underdog. Lately, as I was reading other interpretations of it, I understood how loaded with ideas and morals this story is. Then, Last week I read this fascinating article by one of my favorite writers, Malcolm Gladwell, called: “How David Beats Goliath“. And took another spin on the ideas I have already been exploring. In it, Gladwell makes two very interesting points. This is the first one:

When underdogs choose not to play by Goliath’s rules, they win. David can beat Goliath by substituting effort for ability—and substituting effort for ability turns out to be a winning formula for underdogs in all walks of life.

There are so many implications for this idea and many of them are mentioned in the article itself and I don’t want to ruin the read for you. One thing that I thought about immediately is companies’ strategy and some of things I learned and wrote about in the last few weeks.

From all the cases I have been reading lately in my strategy class, one thing is clear. In order to win against the big ones, you cannot try to be like them. You got to be different. You got to create a comparative advantage and then exploit it. Dell, Southwest, SAS, Airborne. All examples of companies who went against the big guys and won. Not because they tried to be better than the big guys. But because they were different. They came up with something new.

This is what I wrote just a few weeks ago:

But this also creates temptations. To imitate and not innovate. To be like somebody else, because it is safe. Because it is easy. This is a temptation we should be careful off.  Do you want to out-Apple Apple? Is that possible? Companies tried to out-Southwest Southwest and failed.

The same logic goes the other way. If you are the big guy, watching the little guy get bigger, your reaction should not be imitating him. You are a big guy. Little guy’s strategies will not work for you. When Dell started with the direct selling model, HP, Compaq and IBM tried it as well and failed. Their structure was not suitable for direct marketing.

The second point is about real time. To fully understand it, you should really read the article, but here is the gist of it. When talking about the Federal Reserve setting interests, one of the interviewees in the article says:

The world runs in real time, but government runs in batch. Every few months, it adjusts. Its mission is to keep the temperature comfortable in the economy, and, if you were to do things the government’s way in your house, then every few months you’d turn the heater either on or off, overheating or under heating your house.

Two thoughts on this point:

The first is a something I have been lately thinking about a lot. It is one of the most prominent things every manager should do. Investigate the information he already has. There is an abundance of information in every organization just lying there because people gather it anyway. You can make a lot out of it.

The second thought is about the challenges facing governments in the future. I think three concepts are important here: real time, transparency and aggregation of information. Governmental bodies which will be able to harness the power of real time and aggregation while keeping and improving transparency will be the most successful bodies for our society.

Elad

What to do with feedback?

photo by Shadowalker

Today on the Freakonomics blog, Stephen J. Dubner writes a very interesting post titled:  ”The Downside of Feedback“. As somebody who is very interested in feedback, I was immediately drawn to it. What? Is there a downside for feedback?

But when I started reading it, I realized, Dubner was not dealing with the kind of feedback I was thinking about. His post was inspired by an article in The Washington Post written by Hank Stuever dealing with the effects fans have on movie production, in this case the new Star-Trek movie. Here is the main idea:

Has our quibbling worked? Yes, if you believe in the collective force of fans and the “wiki” social ideal — that group input only improves the result, guiding by peer pressure if nothing else. No, if you think filmmakers are too beholden to fans. Quibbling does not produce a Heath Ledger-style Joker; that is the result of an actor and a writer and a director coming unhinged from the original material. Quibbling produces a Watchmen movie, which tenderly reproduced the 1988 graphic novel panel-for-panel and still failed — pleasing fans, perhaps, but excluding newcomers.

And Dunber adds:

It’s an interesting and timeless point that Stuever raises. Creators who wish to honor the fans’ concerns may wring out the originality that can make art compelling; and creators who ignore the fans’ concerns risk alienating them

This made me think about feedback in general:

1. We should never ignore feedback. We should always try to get some. Feedback is just a mirror. You look in the mirror almost every day. Why? Because it is the best way to know how you and what your state is. And because you see things in the mirror that you would never be able to see otherwise. In a business, professional or even a personal setting, these mirrors don’t always exist. This is what feedback is for.

 2. If we think about costumer feedback we need to think about what our customers want and listen to them. This is a given. But we need not forget two things. One:  the costumers don’t always know what they want. As Malcolm Gladwell tries to claim in his famous Sgpagethi Sauce talk at TED, we sometime need to create the market for costumers, one that they did not even think about asking for. Second: our non- customers are just, or maybe as important as our existing customers. A short quote from a manifesto called: “Uncovering Business Breakthroughs: Are you Tuned In or Tuned Out?“:

Existing customers represent a small percentage of the market opportunity for most businesses, so basing a product development strategy solely on what your existing customers want is flawed. Worse, existing customers have different market problems than noncustomers (buyers who don’t yet do business with you), and only frame their view of your future based on incremental improvements to their past experiences.

3. In business feedback, as in personal feedback, it is ultimately up to you to decide what you change and what you don’t change. Sometime, the feedback just isn’t suitable for you. Some time, the feedback does not understand your message. And sometime, the givers of the feedback just don’t know what they are talking about. But all of this does not mean that you do not have to listen, assess and re-examine your assumptions. It is up to you to use your judgment. Don’t forget that feedback is a tool.

So, how have you used feedback that you have been getting lately?

Elad

Framing, marketing, spaghetti sauce and Iphones

Yesterday I got the chance to see the above lecture by Malcolm Gladwell (here is a link to it, in case the embedded video does not work). I really recommend it. It is well worth the ~20 minutes.

1. A few after thoughts: Today in class we talked about Decision Making, Bounded Rationality and Framing. I think the story in the lecture is a great illustration of Framing and the inertia of our current thoughts. Instead of thinking about the best product that will satisfy everybody we should be looking for the best product that will satisfy groups of everybody (the last sentence is not a mistake. You need to see the lecture to understand it).
2.  People don’t always know what they want. So much of marketing thinking is built on the premises that if we only ask our customers what they want, they will tell us. What the story behind the lecture teaches us is that although asking the customers what they want might be a good idea, sometimes we just need to create something that they will want. I don’t know about you, but if a few years ago somebody would have asked me what do I want my cell phone to do, there is no way I would have said: “Oh, you know what, I want it to react to movements when I move it around so I can play games with it”. I don’t know it for a fact, but I think the people at apple just put that quality into the iphone without people telling them that is what they want. And that is a one great quality for a product. That is a way to make it a purple cow.
3.  We should always remember – people are unique. They want different things. They have different thoughts. It is true for marketing and it is true for management. If we treat people the same by giving them the average we get average results. The future is in the extremes. Going for the average is not safe. It is the riskiest business there could be.
4.  People talk a lot about the fact that globalization leads to standardization. I don’t think so. What we discover is that there are no universal answers. We discover that standardization does not always work. Because people are different. They can be clustered into groups, but they cannot be standardized. Think about the music industry. Has the global network created more or less music? It is true that globalization does help some of the big players, but the internet makes diversity flourish (just check myspace if you don’t believe me).

Elad

Outliers

Photo by shashiBellamkonda

 A few days ago I finished reading “Outliers” by Malcolm Gladwell. Usually, the day I finish a book is the day I start to write (and usually publish) something about it in my blog. But this book was so overwhelmingly new and interesting that I guess it took me a few days to digest everything. I am still doing it.

I really don’t want to ruin it for you, because no matter what your field is, this one is a must read. And if you are in business or education and/or are parents to young children, you should do everything you can to read it.

The main thesis of the book is that the way we measure success is totally wrong. Gladwell tries to explain that the glorified story of the man (or woman) that came from nowhere and did it on his own is false. We are actually deriving the wrong lessons from these stories.  Great successes are usually a result of two things – opportunities and social legacies. Not that Gladwell is trying to say that talent or hard-work are not important for people’s success. Quite the opposite. What he tries to say is that we put too much importance on these factors and totally ignore other important factors – especially, opportunities and cultural heritage.

As usual, just a number of my thoughts after reading:

1. Education – It is amazing to learn how much our education systems are a result of old habits and inertia. I already mentioned here that I think schools are not doing enough in order to tap into the strengths of students. What I discovered after reading the book is that in the US and it is the same in Israel, the education system is built in a way that actually hampers successes. Gladwell puts a lot of the blame for the failure of these systems on the long vacations. I humbly agree and think that the stories in the book illustrate that our schools are teaching our kids the wrong process (and something I had as hunch turned out to be true after reading the book – check out my post in Hebrew – the effect the home environment has on our education is profound). But it is more than that. Our education systems is so focused on developing analytical thinking (OR IQ) that they neglect to teach the kids practical intelligence (or what some call EQ) – how to communicate, how to speak to authority, how to imagine, how to speak publicly, how our day to day economies work (Hebrew link) and much much more. In Israel and in Australia there are worries these days about the scores of children in the Standardized tests. I think the problems lie much deeper.
2. Are you recruiting only from the best schools? – One of the messages in the book is that you don’t have to be the smartest in order to succussed. You just have to be smart enough. In contrary to what we think, Harvard and Yale graduates, even though they are much smarter IQ wise, don’t succussed more than graduates off other good and sometimes even mediocre schools. I think that coming from a university which is not the best in Israel I can vouch for that. My friends, most of which were not able to get into the good faculties (because of money or just childhood neglect of their studies) are doing just a good as any group form any university, and even more so. What does that say for business recruitment? Where should the hireling come from? How much should a company insist on recruiting from the best schools? Maybe a better strategy is to find the people that are just smart enough, but have better complimentary skills, including people skills, in order to really succeed.
3. Processes – If you are a regular reader of this blog, you know I am firm believer in processes. One of the chapters of my e-book is dedicated to the importance of processes. The book just reaffirms my view. I think one of the most powerful chapters in the book is the chapter where Gladwell explains why ignoring the cultural differences and heritages intertwined into people behaviour is so dangerous that it can actually make plains crush. We don’t all work the same and it is important to understand that people from different countries act differently just because they are from a different country. The example is of Korean air which was one the most dangerous air companies until it acknowledged that only by making their pilots act in opposite to their culture will improve the rate of its air collisions. The ways to achieve that are by creating processes that hinder the effects of these cultural heritages. The same is true about creating greater pools of talent. One amazing example in the book is that all the best hockey players in Canada were born between January and March. All of them. By recognizing this pattern and creating a process that will give a chance to more talent, we can actually quadruple the talent pool. It is all in the process.
4. Don’t be too polite. We are different – One last thing. Next month I will be starting an MBA program. This MBA gathers people from more the 40 nationalities. My intuitive, polite, politicly correct approach was to treat them all the same. Now, because of the book, I am thinking a little differently. What are the cultural heritages these people bring with them to the table? This is something that should be discussed. If someone is giving an example from his/her country, shouldn’t it be analysed taking into account the characteristics/cultural heritage of that country. Carefully, politely, but it should be on the table. Not only of individual people different, but the world’s peoples are different and we should recognize it.

 Elad