Connections, piracy, change and business models

Photo by Toobydoo

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

Is money equals motivation a conventional wisdom we have to break?

The last few days I have been reading the book Predictably Irrational, by Dan Ariely. It describes many experiments done over the years that illustrate how people behave in irrational ways when we – and when I say we I mean traditional economics – expect them to act like rational people. While I don’t agree with some of the conclusions Ariely makes in his book, I find the questions fascinating. Thus, I am going to dedicate my next few posts to relevant lessons for managing people the book.

Chapter 4 of the book is called: “the cost of social norms – why we are happy to do things, but not when we are paid to do them”. In it, Ariely describes a number of experiments that show how when people are paid to do things, they do them with less enthusiasm and effectiveness. It reminded me of the above fascinating TED talk by Dan Pink that talks about similar experiments that led to similar (but a little different) conclusions. Both Ariely and Pink conclude that we need to rethink the effectiveness of money as a motivator for work.

So, is money being the best motivator another conventional wisdom that needs breaking.  Well, I will let my past as lawyer get the better of me and say – yes and no.

Yes, because we need to realize that the world is changing. That some things that we thought were true are not true anymore. There is a growing tendency of people to seek out work that not only gives them money, but also gives them joy, a sense of impact and work life balance. People look to use their strengths more and attempt to reach a state of flow. And we need to understand that money creates problems, because it is easy to compare (link in Hebrew). I would direct you to Ariely’s first chapter in the book about relativity.

But the answer is also no. in some situations, monetary rewards work. And when we think about these experiments we need to remember a few things. First, the experiments described in Ariley’s book and in Pink’s lecture are experiments, done in a lab, on students and not in a real work environment. Real life is different and we need to be careful in applying the lessons learned in the lab without thinking about the differences between students in the lab and real life work environment. Second, these experiments are social science experiments. They don’t have one result. They check for averages. And averages are sometimes dangerous. The experiments show trends. They show tendencies. But they don’t show how all people behave in all situations. And we know that monetary rewards do work in certain circumstances. As Paul Hebert from I2I explains, although there are some accurate things in Dan Pinks’s lecture, we must be careful when taking it as saying all monetary rewards are bad. Below is his presentation on how to look at incentive reward strategies within the context of how business operates:

From all the theories of motivation I encountered to date, the one I like the most is Vroom’s expectancy theory.  The reason I like it so much is that it talks about personalization. About understanding each employee specific motivation and about customizing the right rewards, invectives, and recognition, in order to motivate him. And I think this is the most important lesson from the science and experiments. We should be careful from applying one approach. We should doubt and check if what we are doing actually works. And the most important thing of all, we should not assume what motivates people, we should find out.

Elad

Lessons from conductors – musings about modern managers

Modern managers deal with a challenge. Mangers have to manage people who know more than they do. In the past, the manager was someone who did the job and was promoted to the management role. That meant that he usually had superior professional knowledge and could teach his employees how to practice the profession.

In many of today’s jobs, that is not the case anymore. Specialization and specific knowledge are commonplace and even if a manager knows about a specific profession, the speed in which profession change and evolve do not allow managers to keep this advantage for long. That is why managers need to learn how to manage people who are more proficient in doing their job then they are. And there are many professions from which mangers can learn how to do that. The profession of a conductor is one of them.

A conductor manages an orchestra to do a task. Create music. He knows and understands music. Perhaps he can play a few instruments. But he cannot do what the musicians in his orchestra are doing. I doubt that every conductor can play every instrument in the orchestra. And like a modern manager, even if he did, he could not do complete the task, the music, alone. He has to rely on his team. He has to facilitate the creation of music.

That is why I think the above TED talk by Itay Talgam is so insightful to modern mangers. By giving examples from famous conductors, Talgam exposes us to different method of management for modern team. As usual, I don’t want to ruin the entire talk for you, as it is a magnificent talk. I just want to point out a few messages I especially liked:

If you are a manger and you wake up every day depressed to go to work you should know something is wrong. If you don’t find joy in working with people, in trying to help them excel, then you are probably in the wrong role. The joy in management is found in enabling others to feel the joy of work all the time. How can you enable them to feel joy? Help them find flow; help them use their strengths a higher percentage of the day. Help them develop personally.  

A manger leads his team, not by control or authority, but by being there a 100% of the time, full in awareness and with a passion to help and enable learning and development. It does not mean that authority is not useful. When it is needed authority is there and should be used, but it is not enough to make the members of your team into partners.

And making your employees your partners is what modern management is all about. The task could not be completed alone. It is a shared journey. Many people today are not satisfied with getting their wages and doing what they are told. People spend a high percentage of their day at work and they want to enjoy it. They want to feel that it is about them. That they are part of the story. And a manager has to remember that. It is not about the manager’s story; it is about the team’s story. The part of the manager is facilitating the building of a shared story for the team.

They way to create a shared story is not using your employees as instruments, but treating them as partners. And if you treat them as partners, the results will follow. It is more than making sure the job gets done. In order to get the job done, you can put processes in place. But a manager needs to think beyond getting the job done and beyond the process. A manager, as a facilitator, needs to create the conditions in which these processes take place. Conditions that lead to flow, joy and happiness.

Authority is not about telling people what to do either. The worst damage you can do is giving clear instructions because it prevents the communication inside the team and prevents the development of people. It means that there is a big chance the team will fail when you would not be there. And it is not about you, it is about your team. It is about completing the task together.

Elad

Intuitive Vs. Analytical

I was watching Mae Jemison’s TED talk today about the connection between science and art. In this interesting talk she explains why she thinks the perception of many people that science is analytical while art is intuitive is wrong. Actually, she claims, they are both a manifestation of the same idea. You can find analytical thinking in art and you can find intuitiveness in science.

That made me think. This debate is relevant to business as well. How should businesses be run? According to intuition or analysis? The answer, of course, is both.

 In the last few weeks I have been preparing for interviews with management consulting firms. One thing you understand when you practice solving business cases and reading about how these firms operate, is that there is a tremendous importance to analytics. You are expected to be structured in the way you approach each problem, you are expected to think about all the problems while at the same time paying attention to the little details. But at the same time you see how important intuition in their work and thinking process is. You are also expected to hypostasise and prioritise. Go with your basic logic, gut feeling and intuition.

I heard many people in the past say: “I am a numbers guy” or “I am a big picture – go with my gut – kind of guy”. Hell, I said it myself a few times. And I think knowing what you are is an important part of success. At the same time, it is also important to understand that the fact that you have a certain point of view, a bias if you will, does not make the other way wrong. It means that we should actively try to seek out the other way.

It seems to me that success, in art, science or business, comes out from integrating intuition and analytics. That is one of the reasons diverse teams have trouble working in the short term (they speak different languages – one of intuition while the other analytics) but in the long term, they tend to outperform homogeneous teams (which do not take the full picture).

Thus, if we are unable to use both (and most people will struggle doing it consistently) we need to complete our own biased point of view, with the opposite point of view. Or just remind ourselves to re-check the other point of view every once in a while.

So, how do you integrate both intuition and analytics in your everyday work?

Elad

People’s tendency to cheat and the implication on business and national leadership

Today I watched Dan Ariely’s talk at TED about why people sometimes think it is OK to cheat or steal. As usual, I will leave you the pleasure of watching it yourselves, but I will comment about it with a few of my thoughts:

1. I generally believe in people. I think they can be trusted and that most people mean only good. I know it is a little naïve, and maybe that is why I had a hard time as a lawyer, but this is how I try to live my life. Ariely’s talk made me rethink my basic premise. If we all have a tendency to cheat because of the way we perceive our surroundings, maybe I should not trust people so much. But after thinking about it some more, I decided that although many people have a tendency’s to steal and cheat, this talk actually proves, that they should be trusted. Because that trust begets good behaviour.

2. A few years ago I was working as a research assistant for one of my professors, Dr. Eli Bukspan. Dr. Bukspan was writing an article with Professor Asa Kasher, called “Ethic in Business Corporations: Legal and Moral Consideration“. The article deals with the emergence of ethical codes of conduct in corporations and the legal implications of these codes. I won’t bore you with the legal detail, but surely the research Ariley is presenting in his talk back up the notion that companies will benefit by introducing a code of conduct and by building activities around it. But it also means that this code should not be a lip service but something real that should be used daily in order to remain in the minds of the people. This is where leadership comes into play, but this research surely makes it easier to justify the spending.

3. As a leader you need to be a manifestation of the code. The research Ariely presents leads to the conclusion that even without a formal code, the culture that the leader will create in his company may have a big effect on employees’ tendency to steal and cheat. I think the relationship of an employee to his leader/manager can be as powerful as the Ten Commandments or swearing on the bible in Ariely’s examples.

4. This makes even more sense when you take into account the effect of socialization on the tendency to cheat. As Ariely shows, if someone from “our” group is doing it, we tend to do it to. The leaders and managers have a symbolic role in this regard. They should set the tone for who “we” are and how “we” act.

5. The last point is wider. If we have a tendency to cheat when we see others cheating than what does that mean about society as a whole? Every corruption we hear about in the news is devastating because it has ripple effects. If that guy did it, how did he influence others around him? What are the moral implications? In his TED talk, Larry Lessig talks about the fact he is afraid that our children are living in a world that makes them into violators of the law all the time. He says that this will have an effect on the way the precise the law. Lessig talks about copyright laws, but I think there is a bigger point here. In modern society we have so many laws that are not enforced. What are the implications of every law that is not enforced? If we take Ariely’s point of view – the ripple effects should be disastrous. It becomes OK not the follow the law. As a society we should fear that. I would personally like to see less laws and more enforcement in the lines of the “Broken Windows Theory“.

Elad