Zane Safrit

What’s It Worth to Keep Your Employees?

The CFO asked: What if we invest in our people and they leave?
To which the CEO responded: What if we don’t and they stay?

You’ve read that before.

I started wondering about the answer to the title of this post after I researched Tony Hsieh, the CEO of Zappos, for a post. His page on Wikipedia showed this:

In 1995, he graduated from Harvard University with a degree in computer science.[5] ...After college, Hsieh worked for Oracle Corporation.[7] After five months, Hsieh found himself dissatisfied with the corporate environment and quit to found LinkExchange.

Yeah, so what?

Here’s the kicker.

Hsieh co-founded and sold the internet advertising network LinkExchange to Microsoft in 1999 for $265 million.[3]

That was before he founded Zappos and sold it to Amazon for, ahem, $928 million give or take $80 million in 2009.

So, he graduates from Harvard with a degree in Computer Science and joins the hot, hot company Oracle. Works there five months and leaves. Starts his own company and four years later sells it for $265 million. That’s $65 million per year in value he created.

Do you wonder if anyone at Oracle noticed? Did Tony’s manager revisit with anyone those policies that inspired him to leave and take his value creating genius...elsewhere?

Ok, maybe he didn’t notice this news about the sale of Link Exchange.

However, who didn’t see the news about Amazon and Zappos? $928 million for a shoe company who invested their advertising dollars in creating outstanding experiences for their employees and customers?

Now, when Tony left Oracle he took his box of belongings and created $1.25 billion in corporate value...elsewhere.

Granted Oracle’s done just fine without Tony. Their stock split a couple of times since Tony left.

On the other hand, did anyone at Oracle ask:

Hey, ‘member that guy...Tony Hsieh...’member him? [No]. Yeah, he worked here and left because we were too bureaucratic, too cumbersome in our decision-making processes. And, uh, he built two companies from scratch and sold them for, I don’t know, ‘bout $1.2 Billion as in B...illlyuns.

What if someone had listened to Tony?

It’s hard to imagine anyone not listening to him now. But, what if someone had listened to Tony?

Asked him what he wanted to do and figured out how they could do it?

Or what if someone had asked him:

What’s holding you back, Tony? Let’s say we tasked you with adding $1 billion in value to our market cap. And you have 10 years to do it. How would you do it and what do you need from us?

You might say that’s crazy talk. I understand. Businesses have rules. Employees are supposed to follow your rules and politics policies and process flows and meeting agendas. Otherwise...who knows? You might have an employee create $1 billion in market cap within 10 years. Huh?

Not every employee is a Tony Hsieh. But, you don’t know that do you?

What if you sat down with your employees, one by one or even in a group, and asked them:

How fast do you want to grow this company? What do we need to do that? What are you willing to do that? What policies can we change, must we change to do that? What are you willing to do, to learn and change and grow...here’s what I’m willing to do.

You might find a Tony Hsieh, you might not. Maybe, you find a bunch of mini-Tony's...each of them with a good idea by themselves that upon hearing the others combine and refine themselves...into one half-sized Tony Hsieh worth $500 million in market cap for your company.

You might find a lot of good ideas that keep your employees with you.

You might find a list of politics policies and rules and meetings that at best interfere with making their company the kind of company that inspires them not only to stay but to bring some excitement and emotion and enthusiasm. A more clinical term is discretionary effort. You might find ideas that inspire a great...discretionary effort. 

You might find a new core of leaders, waiting for the chance to be asked to offer an idea and lead its execution.

You might find a lot of ideas that kick everyone’s excitement and engagement back to what it was that first day, like Tony’s first day at the cool company...gonna put his Harvard degree to use like they promised.

What's it worth to keep your employees?

 

Is 2014 The Year Your Disengagement Bubble Bursts?

A few bits of data on employee turnover caught my attention. They don’t answer those questions in the title. But they do highlight the challenge that any meaningful answers must address.

A vast majority of North American employees plan to pursue new job opportunities in 2014, according to a poll by Right Management, the talent and career management experts within ManpowerGroup. Eighty-three percent of the nearly 900 workers who participated in the online poll say they intend to actively seek a new position in the New Year. - Wall Street Journal, November 19, 2013.

Then in December I read this:

In 2013, 86 percent of people were in a job they didn’t like, and 55 percent planned to look for a new job that year alone.1 The cost to employers of shuffling those people around the economy is staggering. If only 10-15 percent of the workforce changes jobs (the annual estimate is 13 percent), it costs American businesses a mind-boggling US $2 trillion a year just to replace them.

It’s from Chuck Blakeman’s excellent book, Why Employees Are Always a Bad Idea, Page 48. Chuck cites sources for much of his data in the book. But I can't find it. I'll ask him. But, I trust Chuck and the figures in that paragraph sound right.

The numbers point to a huge bubble getting ready to burst.

13% of all workers will change jobs in 2014.

83% of American workers are looking to change jobs in 2014. However, that's based on a survey of only 900 employees.

86% of American workers last year said they didn't like their job. I doubt much has changed on that one in the first seven days of 2014. Don't you?

70% of American workers are sleep-walking through the day. The more clinical term is disengaged emotionally and intellectually with their work responsibilities.

Those figures show a bubble of discontent that's bound to burst some day. And when it does it will spew, ahem, disruption throughout the economy. Much of that spew will be in the form of costs: hiring, training and new desks and unhappy stakeholders.

You're an above average leader at an above average company. Right? But let's use the average percent of employees who are expected to change jobs. 13%. Can you afford 13% of your employees to leave?

Maybe you're thinking Let 'em go. If they're sleep-walking let them sleep-walk somewhere else. You might think you're holding aces in this gamble. Your peers and competitors offer nothing better. Just like you they chose to ignore their employees and their achievements in a meaningful manner. Your reviews emphasized weakness. Maybe you thought that’s the path to betterment or maybe you thought that’s good way to avoid bonuses or raises. You avoided investing in training and updated resources to help them reach their goals and showcase their strengths and accomplishments for their peers and even you.Their workforce is just as disengaged, you might say. Statistics are on your side you say. Your employees know they cant leave because the cubicles aren't any better in the other companies. So far, you've been right. The one thing keeping your employees at their desk is they know it's no better any where else.

Granted, withholding that investment is what’s inspired only  30% of your employees to care. It's why goals are rarely reached if anyone even knows about them. It’s why your bosses are always, well, impatient.

But, it's your company and your competitors do the same so hold on to those aces of disinterest and lack of investment. It’s worked so far and why mess with success, even its paler imitation, right? Your employees aren’t going anywhere, there's nowhere for them to go.

Someone once asked a boss, What if we train our employees and they leave? That very smart boss said What if we don’t and they stay? That's where you are, comfortable with middle-of-the pack results, deaf to your bosses demands and who cares about the employees. Cool.

But, what if you did invest in their training? Just, what if. This is just a blog post and I'm not wearing pajamas while I write it so have a little fun and consider the question. What if you recognized their achievements?

You clenched, didn't you, at that mental picture where you're...ewwww... recognizing someone for something good they did.  It’s change. Change makes everyone clench tight. But what if you discovered their strengths? Maybe even celebrated them?What if your employees then showed up for work engaged and excited? Who knows? It can happen. Their bar of expectations have been set so low it’s easy and inexpensive to exceed them. The big challenge is consistency. And the bigger challenge is that first step.

What if your revenues grew faster than your industry peers? Or your cash flows? What if your Earnings Per Share grew faster and your customer churn rates dropped? What if your sales conversion rates rose? That's what happens when you recognize your employees in ways that are meaningful to them. That's what happens when your employee engagement levels are superior to your competitors.

Now you’re in uncharted territory. Happy territory, but still uncharted. Now, they’ll stay because they want to not because they see no other options. Now, you’re out front, the leader of your industry pack. Their expectations of you just rose. For some people that’s distracting.

Would that be distracting for you? How disruptive to your comfort level would it be if everyday your employees barged into your office and said things like:

I'm so excited!

Another customer just gave us a testimonial!

We rolled out this new product in half the time it took us the last time! And there's no blowback from the customers!

We just had a great meeting with [that other department] and we've got a plan!

My close ratio went from 50% to 80%!

One day a new company who understands the power of employees will pierce that comfortable and warm little bubble of disengagement you've built. The sound of employees leaving and left will be deafening.

Why not be that company? No not the one with the sucking sound rushing through the hallways and overturning desks. Be the one the pierces the disengagement bubble of your competitors and let the sucking sound rip through their hallways and deliver the stars to you.

It's the new year. Make it a happy one.

Would your customers form a kickstarter community with you?

Consider a project like our DIY Spectrometry Kit, which was conceived of just after the Deepwater Horizon oil spill to attempt to identify petroleum contamination. In the summer of 2012, just a few dozen people had ever built one of our designs, let alone uploaded and shared their work. As the device's design matured to the point that anyone could easily build a basic version for less than $40, we set out to reach a much larger audience while identifying new design ideas, use cases, and contributors, through a Kickstarter project. Our theory was that many more people would get involved if we offered a simple set of parts in a box, with clear instructions for assembly and use.

By October 2012, more than 1,600 people had backed the project, raising over $110,000 -- and by the end of December, more than half of them had received a spectrometer kit. Many were up and running shortly after the holidays, and we began to see regular submissions of open spectral data at http://spectralworkbench.org, as well as new faces and strong opinions on Public Lab's spectrometry mailing list.

via MediaShift Idea Lab. How Public Lab Turned Kickstarter Crowdfunders Into a Community

What if you put a new idea or product or tool or resource you're considering for your company where DIY Spectrometry Kit is and you replaced Deepwater Horizon oil spill with the mistake of a major competitor.

And you put that idea out on Kickstarter.

Would 1,600 of your customers or employees...back the project with donations of time and money? 

You're rolling your eyes and thinking that's a crazy idea.

You're right. And that crazy idea just inspired 1600 people to cough up about $60-65 a piece to help make it real. So, the next time you need funding for a crazy idea...ask yourself if it's crazy enough to inspire people and are you crazy enough to ask.

CISPA, SOPA and...US

via luminconsulting.com

Check this out. I think it's a pretty good visual discussion of CISPA, SOPA and US.

That's one reason I shared it.

The other reason was its author, Spencer Belkofer, reached out to me via email, introduced himself, pointed to an embed link...That's cool. Not the vanity, but the smart use of digital resources by Spencer to note my Tweets in the past on CISPA, SOPA, and then when he was ready ping me with his related work. Nice work, Spencer.

Conversation with Jim Clifton, CEO of Gallup Organization: Part 1

From the site The Coming Jobs War:

What everyone in the world wants is a good job.

Today, this statement makes vivid sense.

In a provocative book for business and government leaders, Gallup Chairman Jim Clifton describes how this undeniable fact will affect all leadership decisions as countries wage war to produce the best jobs.

Mr. Clifton joined the show recently to talk about the book, his book, and what it means for us. You can listen here.

Mr. Clifton, thank you for being on the show.

Thank you for your interest in Gallup research.

Thank you for writing a great book. I thoroughly enjoyed it. It’s an important book and I hope lots of people buy it, read it.

The title in your book says this book is for every leader. I've said on this show that we're all leaders now in charge of creating our world, our community, our career and the jobs in those. But I think you have a tighter definition of leader. Describe the leader you had in mind as you wrote this book.

I’m not sure that people are focusing on exactly the right thing. I’m not sure they know how big this problem the problem is.

One of the things that Doctor George Gallup figured out was there was a pretty significant shift in the will of the United States. He referred to it as The Great American Dream. But it used to be to have peace, to have a family, to have independence, freedom, pray to the god you want and all that.

But, now it’s changed. There’s a huge sociological shift. Now, it’s changed to having a good job.

So, that means it’s your relationship with your family, your community, your country...all those things are driven more by a job than by anything else. That means we have to lead differently, not just you and me but the President of the US and everybody else.

The thing that’s interesting that we found in the World Poll was that now that the Great American Dream is now the Great Global Dream, as well. that’s why the book is called The Coming Jobs War.

There are 7 billion people in the world, 5 billion adults and when we poll those 5 billion adults 3 billoin of othem say they would like to have a good job, you know 30 hours ore more of interesting work. Now, of those 3 billion, when we ask them if they have one then only 1.2 million say that they do.

You see what I mean?

The need for a good job in the world is 3 billion. Yet, there’s only 1.2 billion good jobs. So, if you said describe mathematically or as specifically as you can how many more of these jobs do we need, then we need to find 1.8 billion.

The jobs problem here in the US is that it’s not just here. It’s exacerbated by the fact that the whole world wants a good job. It’s a global problem that we’re feeling here.

But the leadership issue is that we really got to develop the sciences and get a lot smarter. Otherwise, I think the whole world is going to come apart.

Coming back to that point you just brought up that there are 1.8 billion employable adults who want a good job and cannot find one. Your statistics here in the US show we have an under-employment rate of 18%. Now, if I’m looking at the math here the underemployment rate globally is 50+%.

When you see 9 point something unemployment, the way the US government counts that is in a very very limited way. Let’s say I come over and mow your yard and I’m an engineer. You pay me $20 and I work for 1 hour. The US government’s labor department counts me as employed. I’m not in the 9.1% unemployed.

Now, another thing is that if I’m so depressed, I’ve tried everywhere and I’ve knocked on doors everywhere and I can’t get a job and I give up? Then I’m not in that number either.

It would be a lot better if the US government would call unemployment what it is. It’s getting up around 20%. There’s about 150 million people who want work. You’ve got 20% of those, 30 million, it’s not that they want a better job or anything else, they don’t have full-time work.

By the way, out of that 30 million out of work when Gallup asked if they hoped to get a job 60% of them say ‘no’. That gets you 18 million. That gets you 18 million people that are in a state of mind that really the country’s never been in.

We’re really in a different state of mind than even in the Great Depression as well.

My friend, Erika Andersen coined a great phrase in her book Being Strategic. Her phrase is reasonable aspiration or hoped-for future. And she asks:

What is your reasonable aspiration or hoped-for future?

What was your reasonable aspiration or hoped-for future with writing this book?

Well, I think the US is a really dangerous situation. I think there are so few people who understand. Our picture of the US is going to change so much in the next 30 years from both job creation and GDP growth.

Right now, global GDP is right at $60 trillion. And we generate 15 of that. That means we generate 25% of the world’s good jobs. We really are the Roman Empire. The thing is our GDP is growing at such a tiny amount. Blended over the past 10 years it’s like 1.2%. China’s growing at a rate of 10%. Although we have 15 trillion of GDP, China only has 5 or 6, they will blow us away over the next 30 years.

And so, what most economists say is we’ll be at about $30 trillion in the next 30 years and they’ll be at $60-80 trillion. So, it means they’ll be the leaders of the free world and not the US.

That thought to me as an American and a lot of my friends is really quite overwhelming. And we can come back. We have in the past. That’s really what drove me to write this book.

Being the CEO of the Gallup organization, you know metrics are key. This next question shouldn't be difficult to answer. What metrics will you use to measure your progress towards this hoped-for future?

I would say GDP growth is really important. We really ned to get our GDP growth up above 4% fast, at least 3.5%. If you really want to win, it has to be above 5%. So, the single most important metric is to see GDP start growing.

But, here’s a really important one. For us to re-win leadership of the free world and I call it the playoff game of our lives then we have to export. We only export somewhere between $1.5 and $2 trillion a year depending on whose counting. But, that’s close. The only way that America can maintain its economic leadership of the world is to, we’ve gotta triple exports in the next 5 years. They need to go up 20 times in the next 30 years.

We need to have quality GDP growth. We can’t just sustain shovel jobs and those things like that. We need to have real entrepreneurs create real new businesses. GroupOn, Facebook are really good examples. But there are good manufacturing jobs, too. but they gotta have companies that sell stuff overseas or this isn’t going to work.

So, exports is a really important number to watch.

How and when did you reach this conclusion that we’re moving to The Coming Jobs War? At what point in your research did you see this?

We started right after 9/11. People didn’t know what was on the minds of 1.5 billion Muslims. So, we started doing polls in the middle east. We started to see that there was a hopelessness there that didn’t have to do with religion and hating American and hating our freedoms. You can find threads of that stuff in almost any society.

What we found was the desperateness economically. And then we started to wonder to scratch our heads and say:

“How come we’re just picking on these middle eastern, predominantly Muslim, countries? Why don’t we do all 160 countries? Why don’t we check with them all?”

I know that there are 200 countries. But we can get 98% of the population.

We all just stood around in silence. We were just sorta surprised. What the whole world wants is a good job. And that’s what really triggered this.

Fantastic.

What is the definition of a good job?

Well, a labor economist will say:

“30+ hours, with a paycheck from an organization for regular work.”

And they call it a ‘formal’ job; that’s a ‘good’ job. Now. And so, Gallup agrees with that.

We do think there is one step above that and that’s a ‘great’ job. that’s where it uses your strengths; it’s a place where your opinion counts; and where your boss actually cares about your development.

If you’ve got those going for you, then you have a ‘great’ job. And very few people in the world have that. that would be just 20% of the 1.2 billion or about 250 million people. It’s a very, very special life if you have a job that uses your talents and you have unlimited potential in how to do things and you have a boss that cares about your development...

Now, in listening to you and reading your book, you describe how in the next 30 years GDP could triple and our GDP rose 10% over the next 5 years then our unemployment problem would disappear. What am I missing?

No. Definitely. If we got, if we had GDP growing at 3.5% and we had exports doubling and tripling then we wouldn’t have a jobs problem.

But you also write that if the world's GDP were to triple there would be massive upheaval in the global economy. What would be some of that massive upheaval?

I don’t understand that question.

I think countries will be rocked if they don’t...the worlds’ GDP is $60 trillion. And if you average the best economist in the world, what we’re going to grow to over the next 30 years and that’s $200 trillion. So, what it means is $140 trillion in new equity, jobs, customers, markets coming into the world. Kinda like a rain that will fall across the whole planet. It’s going to fall disproportionately where entrepreneurs and job creators are.

Let’s take Egypt. Egypt thinks it has political problems. They don’t. They have a jobs problem. if they can’t that thing growing, you know where the whole country is participating in GDP growth then I think that they’ll have chaos and instability and revolution.

I don’t think any country is safe. I don’t think Great Britain is safe; I don’t think China is safe; I don’t think the US is safe, either. You gotta keep jobs growing or you’re going to have instability.

Now, where will these battlefields be in this coming jobs war? Where will the jobs be created and where will they be lost?

Let’s just stay with the US, right now. This is something very few people know. But all jobs are created in small businesses. I call them ‘startups’ and ‘shootups’. And startups, right now, we have about 400,000 startups a year; that needs to be a million.

There’s a lot of arguments about these numbers. People start up companies on paper without employees. We need, we need a million companies with one employee that start up every year. Right now, we’re cleaer down around 400,000.

Until people get up in the morning and say “Dammit. I’m going to start a company today.’ the US will not come back and we will lose our world leadership position.

There are 6 million companies with 500 employees or less. Those are called small and medium sized businesses. Of those, 5% of them shoot up. So, between ‘startups’ and ‘shootups’, the 5% in that 6 million group, that’s where all the jobs are created. There are no jobs created in big businesses.

By the way, of companies that have 10,000 or more employees, 10,000 isn’t very many, there are only 1000 of them in the US. There are very few big businesses. People are employed by small businesses. The general public, leaders in Washington, very few people know these facts.

So, when you say:

‘Where’s the battleground?'

The battleground is in small businesses. That’s why decisions have to be made by leaders, not just in federal government or state but also in city, that we’ve got to create an environment for small to medium-sized businesses.

If we’re not creating new companies, you have to have 100 start to get 2 or 3 Facebooks. But winning lies somewhere within that.

Beautiful. Thank you.

**********

Part Two of our conversation will be published Thursday, September 29.

Part Three of our conversation will be published Friday, September 30.

Google: Clean-energy innovation pays off

"Our model found a mere five-year delay (2010-2015) in accelerating technology innovation led to $2.3 trillion to $3.2 trillion in unrealized GDP, an aggregate 1.2-1.4 million net unrealized jobs, and 8-28 more gigatons of potential GHG (greenhouse gas) emissions by 2050," wrote Google's green energy czar Bill Weihl and Charles Baron from Google.org's Clean Energy Team.

via news.cnet.com

So....we're doing it, right? We're investing in green energy, as a nation, because it makes sense for our economy, our national security, our jobs...our communities, our health, our planet...Right?

Oh, right. We're not.

President Obama: 3 Tips to Avoid The Dangers of Being Overconnected

Bill Davidow has been a high-technology industry executive and a venture investor for more than 30 years. He continues to act as an active advisor to Mohr Davidow Ventures, a venture capital firm

In his latest book, Overconnected: The Promise and Threat of the Internet , he explains how the almost miraculous success of the Internet has also engendered a unique set of hazards and challenges for government, social institutions, business, and economies.

In Overconnected, Davidow meticulously — and counter-intuitively — anatomizes how overconnectivity can create systems with excessive amounts of positive feedback, making those systems extremely volatile, accident prone, and subject to contagion.

I loved the book. I found his presentation was...meticulous, concise loaded with examples of companies and even countries who suffered from excessive amounts of positive feedback...And while I initially disagreed with his premise, by the end of our conversation he showed me our common ground.

I asked him about the power and threat of being overconnected and its role in our nation's current challenges.

We’ve reached the imagination moment in the show. Being a venture capitalist you have been exposed to imaginative enterprises, so this may be the best part of the show.

Let's imagine President Obama calls you right after we finish. He says:

David, I'm sorry I missed you at my dinner out in Silicon Valley a few weeks ago. Mark and Steve are so pushy, I had to give them those seats next to me. But look, I got elected from the power of connections. But now in power, I'm a little ambivalent. Still, we're a fractured country. How do we realize the promise of the internet in being connected and avoid the dangers of being overconnected.

What are three things our country can do and come on up to DC and I'll take you to dinner next time your in DC.

And Bill answers:

I’m afraid President Obama wouldn’t like my answers. One of the things I would point out to him is that the internet enables you to arbitrage everything.

And of course that’s an exaggeration.

But a slight difference in wages and you can arbitrage it. A slight difference in policy and you can arbitrage it or taxes and you can arbitrage it. I don’t like the financial regulation in the US and I’ll go operate where they don’t have those regulations. I don’t like the labor laws in Iowa, I’ll go elsewhere.

I would say to President Obama that:

Suddenly we’ve gotten into a world where we have to be competitive in everything we do.

We cannot tolerate any inefficiencies whether it’s in government or business or education.

We can’t afford to run a grade-school system and then have the high-school act as a backup.

And connectivity is forcing us into an extremely competitive world where we’re all having to do our best every single day.

And, I don’t think the US has faced up to that today.

**********

Some may say this is inappropriate.

This is politics! And you never discuss politics at Thanksgiving Dinners, backyard barbecues and on a business radio show.

I disagree. As long as only politicians can discuss solutions for our country then those solutions and their interested audiences will remain off-limits, political, for those who make this brand, our country, run.

And only politicians, these days that's only career politicians, can discuss those ideas and spoon-feed solutions to the public.

I see our times as an all hands-on-deck opportunity and not a crisis. That opportunity is for each of us to lend our hands, our conversations, our ideas to find and share solutions. In our absence those challenges are left to ideologues, vested interests and politicians of all stripes and partisan persuasion. We...are the only ones with vested interests. And now we have, with social media and the urgency of today, the opportunity to reclaim our place at this table and discuss our ideas to solve our challenges. At the very least, we can listen to a discussion until we are ready to speak up.

Want More from Bill Davidow?

• Read transcripts of our conversation here.

• Listen to our conversation here.

• Follow him on Twitter

• Buy his books.

Great Minds Think Alike, Right?

Actually...no.

 

No. Great minds do not think alike.

View more presentations from joe gerstandt

Great writer, this Joe Gerstandt. Thanks Patti Blackstaffe for the tweet.

Just How Open Is Our Internet?

America, the champion of democracy and freedom, actually has more Internet censorship than some countries in Africa and South America according to an infographic based on Internet censorship research conducted by the OpenNet Initiative. via mashable.com

So. We're lagging in education, innovation, job creation, bandwidth, but growing in censored content.

I know there is a ratio hidden amongst the changes in these areas. Maybe someone with deeper research skills and data, better math skills, and time...can find them or share the link to where they are already discussed.

The theme of this ratio centers around...conversations, collaborations and communications.

Those who can...converse, collaborate, communicate will create the new products, services, and business models that create new companies that require new jobs and result in thriving communities of opportunities for now and the coming generations. Those that can't, won't.

Check out the article atmashable.com. It's excellent in its discussion and further data.

Highlights From My Conversation with Matt May, Author of The Shibumi Strategy

Matthew May joined the show recently to talk about his excellent new book: The Shibumi Strategy: A Powerful Way to Create Meaningful Change.

You can listen to our conversation here.

This is Matt's 2nd time on the show. Earlier we discussed his book In Pursuit of Elegance: Why the Best Ideas Have Something Missing.

When Matt's not writing great best-selling books, he's busy speaking with corporations, universities and governments around the world or writing for  national publications such as USAToday, Design Mind, and MIT/Sloan Management Review. He has been featured and quoted in The Wall Street Journal, the New Yorker Magazine, and on National Public Radio.

Matt, thank you for being on the show. How are you this early morning?

I’m great. Thank you.

I don’t encourage stalking but I do encourage following. Where can our listeners follow you on the web?

Sorta the big three. The website is www.matthewemay.com. Facebook it’s Shibumi Strategy and on Twitter it’s matthewemay.

What cool project are you working on?

A cool part of this book promotion I’m working on is the iPhone ap for the book. It’s a side project but integrated into the book project. It should be imminent.

Let’s talk about your newest book The Shibumi Strategy: A Powerful Way to Create Meaningful Change. Great book. Thoroughly enjoyed it.

You wrote it as a fable. Why a fable? What did that format offer?

This is sort of a personal story. I really believe that people resonate with characters and storylines. I wanted to tell a personal story. I don’t think any straight ahead non-fiction narrative would tell the story as well as a good old story that has the arc of a journey to it. I wanted to explore a small format and branch out my writing and do it in a smaller, shorter, more user-friendly way.

Who did you write this for? Describe the reader you had in mind as you wrote this.

Interestingly enough, I had a very specific person in mind as I wrote this. This fable is an amalgam of experiences and real people facing real-life challenges. The particular person that I wrote it for, it started off as a much smaller story of someone who had faced a setback and made a breakthrough in facing that challenge.

And I wrote it and low and behold my agent got a hold of it and decided to pitch it as a book.

The publisher wanted to publish it. We expanded it to include a few more principles But there was a specific person in mind that it was written for.

That’s important. When you have a real person in mind when you create anything it takes on a different tone and a different character. You’re actually able to touch more people at a different level, their hearts and minds, than when you try to write something for everyone.

You accomplish the ability to reach everyone when you think about one person.

It was a happy accident and something that was never intended to be a published book. But when you do something like that and connect with people then good things happen.

Why is it important for them to read it?

This book is important right now for a couple of reasons. It’s about a hard-working family man in the midwest who loses his job when his company closes. He’s in an idyllic setting and everything is going along hunky-dory when his company closes. And he has to face that challenge. He doesn’t want to uproot his family and he’s forced to take a job that really isn’t a job. He struggles mightily with it. He’s not very good at it. And through his struggles he discovers a way through that allows him to go through a personal transformation.

I think a lot of people right now are faced with that particular challenge. There’s a lot of displacement going on around the world right now. People are taking new directions not because they’ve chosen to but they have been forced upon them.

If you view those kinds of setbacks and crises as opportunities.There’s a zen concept called kiki. The characters are of two sets. One is danger and another is opportunity. If we can change our mindset to see opportunity to take new directions then good things can happen. It’s not easy especially when you’re trying to survive the day.

I believe there are a huge number of people in transition either involuntarily or voluntarily and they are looking for a little bit of hope and optimism to see a way through.

And this is what this book can deliver.

Erika Andersen, coined a phrase reasonable aspiration or hoped-for goal*, in her book Being Strategic. What was your reasonable aspiration or hoped-for goal with writing this book?

The hoped-for goal was ‘hope’. It’s one of hope and optimism. That’s an important sentiment right now.

With any luck people reading this will get a little lift and uplift.

But along with that optimism comes a couple of practical toe-holds or guide rails to go with that hope.

What are a couple of those practical toe-holds?

There are a lot. The notion that you mentioned I coach and practice kaizen. The notion that we allay our fears by taking small steps. By making smaller changes towards a goal of even if you’ve been radically moved from one position to another, moving forward with smaller steps that are pallatable with smaller measurable targets that allow us to move forward in a positive way without shaking up our existence too much.

It’s essentially an amalgam of Japanese practices combined with zen concepts which come from design, architecture and gardening, combined with a little bit of western neuroscience all delivered in the form of a character’s story who gets wisdom delivered from rather unlikely sources.

What metrics will show you are making progress?

The metrics here aren’t quantifiable ones. I’m looking for anecdotal ones, evidence that people are handing this book to others to read as a gift, a gesture, sharing those stories on Facebook or on my sight or Twitter.

I’m looking for the feedback, the resident core that people are getting back to me with feedback that says “Look I’m giving this book to someone who is going through the same kind of setbacks as Andy Harmon”, the main character in the book.

Those are the kinds of feedback I’m looking for.

You write:

The lessons of The Shibumi Strategy comes not in the form of answers but in the form of questions. It is in the process of how we address these questions that we awaken.

I loved it.

Most business leaders are less interested in process than in answers. Impatience, worried, anxious describe many. But you’re saying a process of meaningful change comes through a process of questions, how we form those questions and then how we address them. Why should an impatient, worried, anxious business leader invest the time in starting this process and making it a habit?

Let me answer it this way. When you’re frantic and impatient and in panic mode sometimes you end up doing things that worsen your situation.

I learned a very important lesson a couple of years ago from a gentleman named Boyd Matson. He’s an adventure journalist, photographer, with National Geographic. He taught me a very important lesson. That lesson is this:

• How to stand still when the hippos charge.

The point is doing something is not always better than doing nothing. For instance, the practical application here is you come up on a momma hippo at a watering hole with a calf and she decides she doesn’t like the way your hair’s falling that day and she decides to charge. If you run, you die.

All of us at a business level have a 2000 lb beast barreling down at us whether it’s a competitor or the economy. . If we are frantic and if we indulge in our flight or fight responses hard-wiring sometimes we can worsen things. If you stand still when the hippos charge you can survive.

16:00

That’s a metaphorical answer to your question of why should a leader decide to ‘don’t just do something, stand there.' And consider asking questions. It is when you’re in a dangerous business setting taht you do begin to ask yourself some questions.

• Why is this happening to us?

• Why is my business going under?

• Why is it happening to me?

• What am I going to do?

• Why isn’t my plan working?

Those are all relevant questions. And if you jump to the solution you can have end up happening to you what happens when you run from a charging hippo.

It’s the difference between playing whack-a-mole and chess. If you watch a chess tournament there’s not a lot of action going on. There’s a lot of thinking and strategizing for that. Do we have time for that? I don’t think we cannot have time for that.

What is the Shibumi process?

Let me explain a little bit. Let me unwrap Shibumi a bit. Shibumi is a word without definition or tanslation. It has come to mean the best of everything and nothing. There’s a zen-ness to the notion of Shibumi. Shibumi is effortless effectiveness, elegant simplicity, understated beauty.

I ran across the term when I read a novel titled Shibumi: A Novel, by the author Trevanian. It was a spy novel. The character in there was pursuing Shibumi which is the height of personal excellence with effortless effectiveness.

And that word always struck me as interesting. Because I did spend some time with a Japanese company, 8 years. I got indoctrinated into that Japanese and zen methods and ideals.

And the ability to achieve that state of effortless effectiveness you can actually unpack it and unravel. But it doesn’t happen easily or happen overnight. I bet at some point the listeners in your audience had that aha moment or that feeling of flow, if you will, which is sorta inadequate to describe the Shibumi experience or ‘being in the zone’.

But, the process of how you replicate that experience is like the hero’s journey. You commit to something. You prepare for it. You struggle greatly with it to the point that you are up against a wall, banging your head up against the wall. And you step back. You take a break.

And it’s generally speaking when you take a break , you shift your perspective and a tremor of breakthrough happens. And if you can continue with those little breakthroughs you can transform your life.

And that’s sorta the process of the heroic journey. Commit to something. Prepare for it. Your plan isn’t going to work. But you struggle with it anyway.

Take a break when it doesn’t work. Think about things in a different way. And low behold a breakthrough happens. Maybe you’re in the shower. Maybe you’re taking a shower. Maybe you’re taking a walk. It’s probably unrelated to the problem you’re struggling with when you get this aha moment or eureka moment and you try and unpack and unravel it and find the DNA to it and it transforms your whole way of thinking. That’s the Shibumi process.

There’s nothing straight ahead or linear about it. It’s what we all do in life. It’s just that we have to keep our radar screens open for our breakthrough tremors, our aha moments, and string them together and try and understand what led to it in the first place and try and repeat it. And follow that process.

If I'm hearing your correctly, what you’re offering is a systematic process to create a series of small heroic journeys throughout our lives so that we have a constant process of meaningful change and progress is more consistent and faster?

The goal isn’t to actively seek out a radical shift or turn the world upside down change. The words meaningful change, if you were to parse that phrase create and meaningful and change...create is putting out there something that wasn’t out there before, irrespective of magnitude or scale. Meaningful has to do with our purpose. It’s outwardly focused. It’s helping others. The notion of change is ongoing. It’s continuity by constantly moving forward. Not changing to be different but changing to move forward.

Yeah, it’s a constant moving forward with little ideas in a story fashion, in a journey fashion, that weave this arc that I call a leadership arc or heroic arc.

If you look back over it, the most powerful learning experiences or the times that have been most meaningful to you, they’re not necessarily big change the world things. Whether it’s with your son or your daughter or your teacher or coach. Little, little moments that are packed with meaning. And it’s the ability to reproduce those.

I don’t know that there’s necessarily the system to it. But there’s certainly an arc to it.

Clearly there are some who are able to go through this hero’s arc and we’re able to celebrate them and say Wow! I so appreciate those people.

And, we’re all going through this journey in our own way.

Where in this journey do most of us seem to stumble?

I think it’s when we try to do too much. When we try to hit the grand slam homerun when we should try to be getting on base. When we go for the hail mary pass when the situation calls for us to get the first down. Invariably what happens when we swing too far and wide without thinking about the impact when that happens. We end up with too many strikeouts and too many misses, turn the ball over to someone else and we’re out of control. We’re out of control because we decided to put ourselves out of control. That’s where the stumble happens.

The stumble happens not because we don’t know what we’re doing or we’re not smart people. It’s sometimes that things seem so radical, the situations seem so dire that the situations appear to call for a dire response. That’s where I think we fall down.

The challenge is calming down, quieting the mind. That’s actually one of the Shibumi dimensions of stillness or quietude. It is where our best creativity comes. When we have quieted our mind and quieted our bodies and given our selves a chance to take a breath and take a step, a single step.

That’s where we fall down. It’s when we try to create the world-shattering killer ap, change the world, boil the ocean, in a single master stroke.

I’m assuming then that since companies are a grouping of individuals that they stumble in much the same ways. They try to hit home runs, find a single solution for all their problems.

I think there’s the same stumble point. I think there’s a killer-ap mentality out there. Too often I work with organizations that don’t want to be bothered with the little ideas. They want to jump the curb. There is a time and place when you should jump the curb. But it happens when you find incrementally better ways to do something and there comes a point where the next leap, the step is the same size but the outcome is much greater.

I’ll share an experience. Toyota worked tirelessly for years getting better, getting better. And then they launched their luxury series, the Lexus. This was 21 years ago. It didn’t take very long before Lexus was the leading luxury name-plate.

Painting with a big broad brushstroke here but for the last 20-30 years our economy has focused on efficiency. It’s been all about lean operations, Six Sigma, cost cutting, off-shoring. All that’s been built on an organizational hierarchy of top-down, command and control, me-boss you - worker mentality. That’s entrenched deeply in companies from top to bottom now.

Interestingly enough that’s exactly the situations the main character is up against. The only option available for the main character really isn’t a job. It’s a desk and a phone. There’s no salary, no benefits. He has to make something happen in a top-down move the metal or your out mentality. He struggles with it.

He can’t fit within the situation very well. It goes against everything he’s been taught in his previous role in selling.

He’s got goals and best-laid plans. None of it works. None of it works in the system he faces.

And he’s forced to get perspective when his boss tells him to take a break, take a day off. And he does and when he does he finds a solution that allows him to work within that system but in a different way.

When you have a new idea you have two choices. Work within the system ‘cause that’s the box. Or step outside that box, change the system.

Most of us don’t have the power to change the system. So, we have to figure out how to work within the system. It’s not about a huge change. There’s a loophole, a niche, there’s a way that lets us work within the box, that allows us to have a great outcome.

32:00

The answer to your question is to change the mindset of your people to always thinking outside the box and thinking of those great big ideas to refocus their attention inside the box and look for little inroads.

The more there are these little inroads you can get, by team by department, there is an organic growth that happens inside that company.

I’ve seen it happen again and again with companies. They start small. They try it with a team as an experiment. Allow people to think a bit and to take charge and try it. Generally speaking they are shocked by the very low-cost ideas that actually change the outcome and the climate of the organization.

Talk about top-down! I worked for a long-time with the LA Police Department. Paramilitary org. Trust me, command-and-control is synonymous with the LA PD. Yet, we started very small, in an area of the operation, the jail and we grew from there.

It is possible. Did we change the system? No, But we found a lot of ideas in that rather target-rich environment to improve the system.

Fantastic. How long have you worked with the LA Police Department?

I worked with them from 2004 to 2006 under the banner of Toyota. I got to work all the factions. I worked with the detectives. I worked with narcotics. I worked with the jail operations. I worked with notorious internal affairs, bureau of standards, confidential informants. I learned to shoot a gun. I went on ride alongs and helicopter missions.

After I left Toyota I kept working with them for another 18 months. I spent a good chunk of time with that organization. And if you can make meaningful change there you can make meaningful change anywhere.

I was talking with a friend of mine who lives overseas. I described much of our country’s process of change as reflecting the lack of activity from our brain’s frontal lobes. I said I think historians will look back at these times and discover there was a shutdown of the frontal lobes on a near national level. You write a bit about this. You talk about our brain’s Amygdala. What is the Amygdala and why’s it important to a process of meaningful change.

Which stage of the Shibumi process stills the amygdala? How do we still it and allowing thinking and creativity to gain ground in our day?

Well, this sorta gets back to the whole what to do when the hippos charge thing. We are hard-wired, the amygdala is where the fight or flight response is contained. There’s this funny thing that happens when we try to change anything. It sets off the fear mechanism. It sets off that fight or flight mechanism.

If someone presents a new idea immediately this resistance sets in. Oh, that won’t work or We can’t do that. That’s just the brain’s resistance to change.

The smaller the change the less that gets set off. And it’s the big radical changes that ends up paralyzing us in terms of our creativity. Because it’s connected to our creative zone. When fear is present we generally are not as creative as we could be. It gets in the way of our creativity and our ingenuity.

We have to find ways to stem that, to temper that reaction. That’s why kaizen or change through small steps is so effective. You can be creative in small ways that it doesn’t set off that fear, fight or flight reaction.

Isn’t it interesting that it’s always our ideas that seem great to us when we come up with them? But when you present them to someone else they think of umpteen reasons, nine ways to Sunday, why that won’t work. That’s just the good ol’ resistance to change.

And the way around that is to think smaller, sometimes.

Where in the Shibumi process does the amygdala get stilled?

The ability to quiet the mind is an acquired skill. The process of kaizen helps.

But there comes a point on a personal level where we need to do two things. Quiet our minds and then take a break from routine.

The two concepts are tied together. One is our ability to take a mental break. One is our ability to take a physical break.

Boston Consulting Group did a 4-year experiment where each week they required these experimental teams to experiment with a new way of working. That new way of working wasn’t that radical. It was simply that they weren’t supposed to work. They weren’t allowed to work one evening of each week.

Management consultants work 80- 100 hours a week.

The big huge experiment was scheduled required time-off one evening a week. You cannot work past 6 PM.

That doesn’t seem so radical or that much a break. You weren’t allowed to talk to your co-workers, no email, no blackberry, no nothing. You had to just not work.

And it was extremely difficult for the consultants. That means I’m going to have to work harder on the weekend. Or I’m going to be left out of the loop on something. They didn’t like. It ran against everything they were about in their mad dash to move up the ladder.

But after 4 years of experimenting with a few teams, Boston Consulting Group is rolling it out on a firm-wide basis. That one little break from their routine to come up with more creative ideas, to work better as a team, to have better client results, to have better intra-team communications just from that little break. It allowed them to be better, to do more, by working less.

One of the most studied groups in neuroscience are Buddhist monks. They study the adepts those with over 10,000 hours of meditation practice. The reason they study them is they exhibit abnormally high levels of gamma brain waves.

Only recently have neuro-scientists figured out, you know the legendary eureka, the aha moments, that’s what scientists call the sudden insights way of solving a problem, there’s science to it. What is required for it is quiet mind.

Gamma brain waves are the brain waves that immediately precede that eureka moment. They’ve done study after study where they give people tough problems and then they give them a break. Some were allowed to sleep. Those that had the break came back and solved the problem with more accuracy, more frequency and do it quicker.

They study monks because they have abnormally high gamma brain waves.

Your brain needs quiet before its storm.

Another quick study. Tony Schwartz wrote a book called The Way We’re Working Isn’t Working. He did a little bit of work with the scientific community and found there’s a rhythm to our bodies. Go past 90 minutes and our efficiencies and effectiveness and creativity begin to wane. So he wrote his book in half the time using a 90-minute cycle. He would work for 90 minutes, take a break and then work for another 90 minutes. It took him half the time to write this book as it did his others.

That particular cycle I have worked into my own life and I highly recommend it. Try this. Work for 90 minutes even if you’re doing sports or learning to play tennis. After 90 minutes take a break. Go for a run or go for a walk. Listen to some music. Take a break even if you’re in the middle of something. Take that break.

You’ll be amazed at how much better you feel, how much more productive and energized you’ll feel at the end of the day. 4 90-minute cycles with breaks in - between far more productive than working 8 hours and taking a long break.

This takes us to our next question. The act of reflection and how to execute it within a business environment. I don’t know of many companies that have time for much reflection. For critiques, for performance evaluations, for comparing real vs projected. But reflection. How does a company begin to incorporate time for reflection into their daily routine?

46:00

Reflection meaning not staring off into space and considering the meaning of life, but having a purpose.

Generally speaking, here in the US we only reflect when things go bad oftentimes to place blame. But, there’s no real learning in that.

Children in Japan are taught reflection as soon as they begin school. It’s irrespective of what that outcome is.

It’s basically 3 questions:

1. What did you plan to happen?
2. What happened?
3. Why?

And let’s stay with that metaphor and let’s say here in the US your child comes home with 1 A’s, 2 B’s 2 C’s and a D. Generally speaking we high-five on the A’s. And don’t give it much thought. But, what happened on that D, man? Why did you get that D? What’s going on there? Well, get in your room and work harder.

And good job on the C’s and B’s, work harder and maybe bump up them up to be B’s and A’s.

There’s not a lot of reflection on that outcome.

The child in Japan is taught to reflect on the A. Did you intend to do that? What did you do different?

That’s a gap.

Here in the US when we exceed an expectation we do the end-zone dance. We don’t try to unpack. Why did we overshoot that mark? Shouldn’t we be meeting these expectations.

A number of companies do this. BP, believe it or not has a robust process for reflection and review. [I’m struggling with this] It’s patterned after the Armys After-Action-Review.

An after-action-review is a safe haven for learning. It’s a regular meeting that occurs after every milestone has occurred, not just at the end of a deployment. You’re just rying to answer those three questions:

1. What did you plan to happen?
2. What happened?
3. Why?

It’s about goals and tasks. It’s not about placing blame. It’s not an outside facilitated thing. It can’t happen without everyone present. You’re just trying to answer three questions.

The process of Kata or routine also requires 3 questions. What are they? Why are they important?

Kata is just routine. It comes from martial arts. Everybody remembers good ol’ Karate Kid when he’s learning wax-on, wax-off. The basic karate moves. When you have a routine, you create a standard, follow it and find a better way. That’s your basic routine.

But what any good kata or routine does is provide a framework and basis for action that allows us to be more creative, more innovative and more improvisational.

I’m at the point where I cannot think of a kata or idealoop. I go through 4 cycles:

• What’s the problem?

• Why did it exist?

• How can I solve it?

• How can I test it out?

A recent guest here was Dave Rendall, author of the Freak Factory. He talks about finding the right spot, the right fit where we can showcase our strengths. You talk about the inner person and the outer person and the need for harmony between the two. How does that, harmony of inner and outer, work in a business setting?

It’s the ability to make a strong connection to the core values of a system. You know when things aren’t right. The character in the book knows things aren’t right because all the values his boss displays go against his own. It causes a huge stress for him, in his life, in his work. He doesn’t believe in the same things. He doesn’t believe in treating people the same way.

It causes stress. And he’s outta synch. And what happens is one of two things. One: we grin and bear it because we think we have no choice. Or we de-select and leave and look for another opportunity.

One of the great things I’m reading right now is a great book. It’s called Peak: How Great Companies Get Their Mojo from Maslow. It’s by Chip Conley. Forward is by Tony Hsieh of Zappos.

Wonderful book in line with meaning and meaningful change. Intrinsic motivation and self-worth and the ability for us to create that inner and outer harmony. We belive in the task and the mission of the organization and what we’re working for and the people in the organization have divergent views, perhaps. But they’re aligned with the same basic values and principles.

Do you have an example of company that re-aligned with its core values after having become disconnected?

A great example is Toyota. I think everybody is aware of what happened with Toyota this year. Much of it media-driven. The Congressional hearings and irrespective that no one has been able to duplicate the problem of sudden acceleration, the leaders of Toyota say that they lost their way. They grew too fast. They took their eye off the basic things that got them here in the first place. And that’s the great danger in any organization. Toyota calls it big-company syndrome, big-company disease.

But they have righted the ship. They have re-doubled their efforts. They still to this day are digging to understand how even one instance have possibly occurred under their watch.

It happens to the best of us. But there are ways for us to get back on track.

You’re a leader. Leaders are readers. Jim Rohn said that. What are you reading for work or play?

I just finished reading a great book by Steven Shapiro, an innovation consultant. It’s called Personality Poker and it comes with a deck of cards.

Where Good Ideas Come From by Steven Johnson...by the way I review books on a weekly basis for Open Forum.

Resonate: Present Visual Stories that Transform Audiences, by Nancy Duarte. It’s about how you craft a story for presentation. Just a great book that everyone should read because all of us have to pitch an idea sometime.

I Live in the Future & Here's How It Works, by Nick Bilton, NY Times blogger.

Those are some of the books I’ve been reading that I get inspiration from.

Mr. Shapiro sent me a copy of his book. We’re coordinating a schedule with him for December. I agree, it’s an excellent book.

Where are you speaking where we can come hear you?

You can hear me do a little bit on my website: Matthew E May. I just spoke at a Ted Salon in London. It was hosted by Frog Design. Hopefully it will be online soon.

Let’s revisit where we can find you on the web?

The easiest way, the hub of everything is my website.

Thank you Matthew!

Who should be running our web?

I came across a few articles over a few days that describe maybe a different view of open-source systems, freeeconomics, world-wide web and digital media.

The first was from John C. Hagel III, co-author of The Power of Pull: How small moves smartly made can set big things in motion.

The article he shared was...Back to the Walled Wide Web Future. It describes the trend of our web to move from the open world-wide web to a walled world web, balkanized by corporate interests and the lack of a business model to more immediately support an open-source, open world-wide web.

The issue of course is The Money (or lack of it) in the World Wide Web World (as above Wired editor Chris Anderson, champion of FreeConomics, should know well) makes it hard to invest in improving the Open stuff quickly when new Closed stuff comes along. The problem in short is that as the new wave in the web emerges, it is more economical initially to build Walled Worlds - and worse, old standards start to come apart as they become redundant because...

(i) In any newly emerging technology where lots of things are not clear, it is easier to design your own end to end experience until standard "subcomponents" arrive.

(ii) Funders - especially early day ones - like Walled Worlds as it looks more like Protected IPR, it makes business cases easier (my Ad sales to my customers on my platforms).

"Open" requires a plethora of agreed standards, subcomponents, working practices and other collaborative things that takes time to arise.

I posted a bit here on this, particularly how Apple seems to be the king lately of innovative business models built on the foundation of their walled wide web, pay to enter, but only a buck or two...

Should we be interested and why?

Yes. Here’s why.

A walled wide web undermines all the collaborative, crowd-sourcing, speed of light means we need to innovate new products, services, solutions, skills, business models...jobs...knowledge and education independent of vested corporate interests. Apple’s Walled Wide Web will not allow investment of any resource that disrupts its very lucrative business model.

A walled wide web creates the same rigid silos of knowledge and resources on a global basis that have kept American companies lagging in innovation for the past decade. It’s one reason why ROA, return on assets, has dropped by over 75% in the last 40 years among publicly traded companies. Link

Rigid structures with rigid job descriptions fulfilled by rigid task assignments have reached their zenith. You can’t squeeze more return out of your most important assets if keep them locked inside your imposed walled-compound organization in order to maintain your command and control hierarchy.

Then along comes this article FCC Abandons Efforts at Net Neutrality Compromise:

The Federal Communications Commission on Thursday reaffirmed its commitment to an open Internet and scuttled a potentially embarrassing effort by Google and Verizon to propose rules that would enable Web providers to favor some services.

The FCC called off discussions that it was having with Internet services and providers to help develop new rules for the Web. They had not "generated a robust framework to preserve the openness and freedom of the Internet," chief of staff Edward Lazarus said in a statement. Still, "All options remain on the table as we continue to seek broad input," he said.

Publications including The New York Times and The Washington Post cited unnamed sources who said that Google would join with Verizon to propose rules that would enable companies like Google to pay for special treatment — for example, to have its services delivered faster than those from rivals. That would mean Google had abandoned its powerful support for net neutrality.

Yes. Secret deals among a select group of corporate players whose terms contradict in private what they pronounce in public is...embarrassing when revealed to that same public. Publicly it seems Google is the people's advocate. Privately...Google is Google's advocate especially if it's partner in granting its traffic first among equals status is a fierce competitor of ATT. That's the ATT who helps Apple feed its walled compound. That walled compound would be a separate enclave from Google's....And we know how well enclaves work in Iraq, the Balkans, even in our own cities.

Imagine how a net would remain neutral if the larger corporate players have private conversations and private deals to create most favored traffic status for their ideas on how to promote their use and benefit of the world wide web.

Then along comes Rita King, Muse of the New Digital Reality.

She is not the type to sit around waiting for someone to tell her what that new reality will look like or what her place will be. “Instead of going along the path that is circumstantially dished out to us, we should create a path,” she says.

King is widely recognized as someone who can help us cross the bridge from this world to the digital realm. And her imaginative perception of the future relies heavily on her fluid sense of boundaries.

Through her avatar, Eureka Dejavu, King moves through Second Life unencumbered by physical or social constraints, transcending her own body to explore a wide open and culturally diverse world. On a practical level, she calls it a “deep work environment” that enables on-the-spot exchanges of embedded media like Web pages, videos, and graphic simulations.

As an added bonus, she says, the virtual dimension fosters greater interpersonal understanding because it encourages people to drop their guard: “The subtler thing about Second Life is that some people are shy and they don’t speak up, but here, they don’t get physically uncomfortable. Second Life eliminates intimidation and heightens creativity. It’s really good for innovation.”

Walls come down; innovation goes up.

Walls come down; interpersonal understanding rises.

Diversity rises; innovation rises.

Guards drop; interpersonal understanding rises.

Interpersonal understanding rises; innovation goes up.

Guards drop; innovation goes up.

Does anyone see a need for walled compounds?

It's always the individual not the institutions that collapse the walls that institutions build to divide us.

Here's Tim Berners-Lee talking about the challenge back in the day of helping people imagine that that link could go to any document in the world'.

Now imagine What if that link could go to any conversation in the world....with anyone in the world?

Tim asks us to imagine a world where everyone puts a lot of data on the web. Data comes in lots and lots of forms. Government, enterprise, personal, weather, all kinds of stuff...Data is relationships.

Conversations are relationships. Conversations are data.

Tim asked the audience to shout: Give us the Raw Data. They did.

What if he'd asked them to chant: Give us the raw conversations...Give us the raw relationships.

What if we could connect with the raw conversations, with as Rita King says, a format that eliminates intimidation and heightens creativity?

Give us the raw conversations.

What if that format fostered interpersonal understandings?

Give us the raw relationships.

It's about people doing their little bit and it all connecting. Linked data is huge. You get power in a way that's really...huge.- Tim Berners-Lee

Now imagine that's possible.  Now imagine the raw data generating the raw conversations....the interpersonal relationships, the creativity, the innovations, the solutions, the community, the economy that's possible.

Now. Who should be running our web?

Highlights From My Conversation with Mark W. Johnson, author of Seizing the White Space

Mark W. Johnson, Chairman of Innosight and author of the great book Seizing the White Space: Business Model Innovation for Growth and Renewal, generously shared an hour from his busy day. We talked, well mostly I listened and that proved most useful, about the power of seizing white space or innovating a new business model, how companies can grab that power, what happens if they choose not to and his reasonable aspiration for writing this book.

Mark, I’ve been looking forward to talking with you about your book since it arrived. Let’s jump in.

My friend Erika Andersen coined the phrase Reasonable Aspiration or Hoped-For-Future in her book Being Strategic. What was your reasonable aspiration or hoped-for future when you began to write Seizing the White Space: Business Model Innovation for Growth and Renewal.

I had hoped that businesses could be more agile to reinvent themselves and get out of their own way. Very often we have heard the statement, stick to your core, don’t venture too far out and as you know with the financial crisis, I think companies have a responsibility to do new things that may not be about their core business. It may leverage some core assets but it is about doing some things that are a whole different way about operating and making money.

You used a word that caught my attention – responsibility. Is that a social responsibility one to their stakeholders or community our country? Can you elaborate on that?

I think it is all of those: responsibility to their shareholders and employees to make sure that they don’t become obsolete. The companies that have stayed around for a long time have reinvented themselves. They are now different corporations from when they started and from even 20 years ago.

I fear with the given change due to technology and global competition that if companies are too myopic, thinking only about the core business, they will be left by the wayside.

There is a responsibility for society as well, for the US economy to focus on those things that will help them through what they do. I

I also think it is a responsibility in general for continued improvement around the globe for consumers. If companies focus on what is the real job that consumers/customers are trying to get done, they will deliver real value. By delivering real value, they will continue to improve the economic condition around the world.

The real responsibility is to ensure growth, renewal and change as opposed to company traditions and original core.

Absolutely. Without that, any company is dead. The question is what is the best way to achieve that and I believe the best way is to deliver real value. Sometimes to do that, you must step out of the old ways.

One of my favorite artists is Bruce Springsteen. He sings each concert to one person in the audience who’s usually about 2/3 of the way back. He can see them or he pictures that person. As an author who in the global audience did you write this book for? Describe the person in your mind as you wrote.

I have written it for people whom I think can lead the charge for visionaries and game changers. It is for those people who can look to the future and see new and better opportunities. They are excited for new growth in new markets or existing markets.

It is meant for C-level audience as well as managers that feel the current way of doing things is not going to get the company where it needs to go, and it is meant for entrepreneurs who need further insight and structure for how they can develop and grow their business.

I also think it is for leaders within non-profits, industry leaders, or government leaders who can use a concept like seizing the white space business model for change. Help them to change how they do things.

What’s been their reaction of readers to your book?

It has been exclusively positive-giving a clear lens to navigate the unknown to do something new. It is a focused short read to make it tangible for the reader. I tried to give the book one foundational framework, letting the stories navigate through the challenges.

You write early in your book that if ever there was a time that a business could just execute year after year and achieve lasting success, it is long gone. There’s a lot of pain in that sentence. Pain from jobs lost, industries gone, and communities devastated. How do seizing the white space in general and your book in particular ease that pain?

I think the book is a book of hope, not fear and this eases the pain. It says to get up and get going. Even though there has been a lot of pain, there are still customers out there that need to get jobs done. We need to add value. If we focus on a customer who has a real job that is not getting done, and we follow a structured approach, then there is room for new inventions and strengths. The book says let’s change the focus and the lens to reinvent ourselves.

One of the common obstacles for any successful company pursuing a white space, a business model innovation, is their attachment to their current business model. There’s so many interests vested in their current structure. There are careers and incentives, prestige and routines and comfort zones.

How do companies manage that process?

How do they encourage, incentivize people to leave those shores for a long time in hopes of finding...the West Indies?

One is that the senior leadership has to have the vision. They must recognize that the core business isn’t going to deliver forever the growth that is needed. There needs to be sponsorship.

For those embarked on looking for new opportunities and leaving the shores, they have to think big and tell a story that this is a game changer. Ambition and drive creates the energy for doing something that is new. At the same time, the company needs to think small. It is not about trying to conquer the world all at once. You have to start with foothold market in order to test that you have addresses the important job for a customer and that you are testing the business model to make sure it truly addresses the customer’s job, delivers value for you and also makes money. Think big while acting small.

The final point is that the company has to get out of its own way. It needs to recognize that the existing business model may get in the way of the new efforts. Individuals really need to carve out time to focus on the business building effort.

If you do these three major things, you set the greatest opportunity for an existing corporation to leave the shores.

Do you have an example of success here?

One is very well known. That is Amazon who first sold books, and then multiple products on its website then it did a business model change by going into web services to help other companies get online. They did another biz model change by selling hardware. They had a new revenue model. They are basically a sequential biz model innovator.

Another example is Dow Corning. They created a separate business called Xiameter. They realized they had customers who need the basics of their products at a cheaper price. Dow saw this and realized they would need a different set of rules. They set it up as a biz portal and have the customers order right online-changing the specific rules of how silicone is purchased. They created net new growth.

The skill sets and talents that built Amazon as a book-retailer and Dow-Corning as high-end technology equipment provider were not the skill sets they needed for these new ventures.

Can the team that built a successful formula 1 racer be the team that builds a successful Baja-500 racer? How did these companies carve out these individuals requiring different skill sets to find that foothold? How do they find the talent and skills to carve that out?

Certainly some new people are needed, but what is more important to build a successful team is that you have to have people focused on one effort or the other. They must continue to do the core effort or they are separated to do the new.

It is about hiring a couple of new people and leveraging the existing team. You don’t want to lose the base of knowledge by hiring a whole new team and not leveraging the power of the core business in creating the new. That is exactly what Dow did in creating this low end business by not having these two companies connected together.

24:52

Failure is a part of this process of seizing the white space. How does a company culture recover from a white space failure?

I think the way the failure can be tolerable is to recognize the difference between a failure and a mistake.

A failure is really about engaging in an experiment that is not going the way you had hoped or planned, but you can extract the learnings to do something a different way.

A mistake is repeating the same thing twice.

Failure gets managed back to the point that you start small in a foothold. You have a transaction with a customer but it is small and it enables one to learn by that direct interaction.

The problem so many times that companies face when they go into white space, is that they do it in a bold and large scale effort. Because it was so bold and took so much effort, the impact of the failure is huge given the level of the investment.

If you start small, you are actually more capable of picking up the pieces and going in the right direction.

What are the 4 variables that determine a successful profit formula?

1. Revenue model
2. Cost structure
3. Margins
4. Resource velocity

This is not meant to be financial 101. I have pointed them out because I think they need to be thought about first and foremost.

A revenue model is how much money can be made in sales.

Cost structure is both direct and overhead costs.

Then I talk about margins and resource velocity meaning the speed by which inventory and assets and utilization happens to cover the cost structure.

The simplest example of these four variables is the retail industry. There was a business model innovation with the discounts stores. Traditional department stores marked up their inventory 40% and then they turned the inventory 3 times over the course of the year which equals 120% return.

Discount retailers changed the game. All they did was decided not to mark up their inventory as much. They turned their inventory faster through their system.

What I find as the biggest hurdle for companies trying to create new business: it is hard to think about new unit margins for their products and services. They are concerned changing the market metric will change their cost structure, but the reality is that they do need a new overhead structure.

The other thing that is difficult is to turn the inventory quickly.

Which one of these four is most often overlooked by businesses?

The fact that the fixed cost structure is often overlooked because it is taken as a given. The term resource velocity is also overlooked because it too is thought of as a fixed cost. The reality is you may have to change the fundamental elements of how you make money as well.

You quoted the former chairman and CEO of LockHeed Martin as saying:When it comes to diversification, the defense industry is unblemished by success. Can’t we apply this quote to a majority of industries in the US, right now?

I think so. In looking at the history of how companies achieve growth, I found there are similar challenges within industries – the challenges of diversification starting in the ‘60s, as being a venture into fool’s gold. They weren’t seeing the value in doing that.

What happened in the 80s and 90s was sticking to your knitting, profit from the core; don’t venture out beyond anything your core biz model.

The problem with their diversification is that companies were doing new things, but not changing the biz model. It would go into new areas with an ability to relax the rules, then diversification could happen.

Companies need to open up and not be afraid of failure.

Your graphic on page 57 shows there are bases 4 shifts in competition. What are those?

The four are:

• Performance
• reliability
• convenience
• cost.

It is a way of thinking how product performance changes over time:

• First it is about the basic product features and functions.
• Products move to be more competing on reliability.
• It moves towards convenience and customization.
• Over time, products become commoditized and become about cost.

The simplest example is personal computers. Apple and Compaq came in in the late 70s in terms of performance. Reliability steps in on the brand of Apple and Compaq. Then convenience moves in and Dell forced convenience with their Dell Direct model. Now we see PC move towards being a cost game. What happens to Dell who were based on convenience, is no longer relevant.

What this chart does is to explain that in the early stages of a market and the company is competing on performance and reliability, they will drive the way they out-compete based on product and innovation. When things start to move to making something more convenient or accessible, we often see we can’t do it just changing the product or the packaging. We must change the biz system as well. That is what Dell did in the 80s.

When you go to cost and delivering at the lowest cost, you must create a new model to do that.

41:09

It made laugh darkly. The 4 shifts showed the trendline from heaven on earth and business salvation with margins and market share to commodity hell with no margins and a dying market.

You pointed out those shifts occur sequentially. But can a business reverse them within either their business model or their industry?

Yes. The contrasting case study that I use is Hilti - They reversed the process of commoditization. They make high end power tools. They decided by understand their customer on construction sites, they needed to do something different. They decided to lease their tools. They sold these now to the CEO of the site vs the managers. They had to understand what was happening on the construction sites and set up a service model that was highly valued by these customers.

When do you as an investor say no more white space ventures?

The key componentry towards saying no is: the knowledge to assumption ratio.

Any effort to create a new biz model or system – we know for sure there is a high set of assumptions and a low amount of knowledge. What we are looking for when we invest in companies is to find out how to get those assumptions converted to knowledge.

When the knowledge gets built so we know the course of action won’t be successful then the trick is to shutdown things sooner than later.

You work with start-ups. We need a lot more start-ups in our economy. For the entrepreneurs and start-ups and small businesses listening what are three keys to insuring they can always venture into their own white space?

1. The first and foremost is to start with a real customer who has an important unsatisfied job to get done. Focus on real value.

2. It shouldn’t just be about developing the standard biz plan. The plan is best served on “how will I best learn. What assumptions should I test?” The first biz model that is formed is not quite right. They have to embrace learning.

3. Recognize that it will be about where you start and how fast you stage the effort. Companies that are starting up should not go to scale until they are clear about what they have learned. They are also confident on the knowledge side to overtake the assumption side so they can accelerate to become a large business.

49:11

Singapore as a nation ranks higher than the US in every survey for innovation resources and results. Is it a coincidence then that you consulted with the Singapore government on their innovation policies? What are they doing that we should be doing?

It has been about 5 yrs since that consulting effort, so I am not privy to all of the things they are doing now.

They leveraged our perspective about disruptive innovation and thinking from a business model perspective. They moved on to do their thing.

What I think has helped them, they recognized that they could not achieve their continued growth by having multi-nationals come over. They knew some of their own growth would have to come from their own entrepreneurs. How could they enable them to do things?

I think Singapore has embraced their own appropriate language what innovation means and how to both encourage and sponsor it.

We have to develop our own language that goes beyond product and process and we will be much better off.

Singapore tends to be strong sponsors and drivers of initiatives and that is an important element of success.

Does social media play a role in democratizing products and services? Does it expedite this, hinder, or have no impact. Do you have examples?

If you think about all of the non-consumers worldwide, I think it is a great opportunity for corporations who are trying to go global. The key is to recognize and deliver value, it may not be enough just to tweet the existing model. We do have an opportunity to democratize but we have to be more expansive.

I know you have a busy schedule. What have been the best 3 books you’ve read this year?

• The Big Switch by Nicholas Carr

• The Design of Business by Roger Martin

• The Lords of Strategy by Walter Keichel

Where can we find you on the web?

• Innosight website

• Seizing the White Space: Business Model Innovation for Growth and Renewal website

Thank you, Mark!

3 Steps to Avoid The Dark Side of Business

Adam Hartung, author of Create Marketplace Disruption: How to Stay Ahead of the Competition talked about the dark side of success in a recent conversation. ( You can listen here.) The dark side of success is when a company' strategy is built around D & E, Defend and Extend. Defend your current product line and Extend it.

I asked Adam:

What are three steps a business leader can take to avoid the dark side of success?

And here's what Adam answered:

1. Who do you have as your advisors that are willing to challenge the way you think?Who will advise them, not patronize them.

2.Start spending time on thinking about the future.

3.Talk about the competition.

Defending and Extending, an incremental approach to brand growth, makes 'intuitive' sense for me. You have a successful brand. You have a profitable brand. You have a dependable brand. You have a dependable means to deliver it. You have a dependable message for that brand. You have careers, perks and incentives, attached to that brand. You invested in that infrastructure of employees, buildings, equipment, routines, incentives, ad campaigns to build that brand.

Who wouldn't want to defend that and extend that?

Adam explains why and profiles companies who chose to and chose not to defend and extend. And he showcased their results.

Read his book. Read his blog. Listen to our conversation here. Or, read the highlights.

Closing Stores...Part of "Our Normal Operations"

Sears Holdings, the owner of K-Mart and Sears, announced the closing of another 21 stores today. These closings are in addition to 35 stores already closed.

Spokeswoman Kimberly Freely says the closings are part of Sears' normal operations.

Let's be fair to Ms. Freely. As spokeswoman for Sears Holdings she has a challenging job. Also, she is not quoted in the article.

On the other hand, to say anything that could be reasonably summarized by a reporter of a national media to say...56 store closings are part of Sears' normal operations...is not an error of omission or commission. And it's not her fault. She's doing the best with the story she has to offer.

My wife saw the article. We talked a bit about it. What happened to Sears?

As a kid Sears was the destination store. Everyone went to Sears to buy well everything. Sears was a treasured anchor tenant for mall developers.

Then it seems, times changed. And Sears didn't. Or wouldn't.

Our little town once had a Sears store. We shopped there for convenience. Lawnmowers, weed-eaters, hardware, tools.

Then they closed.

Our quick summary was...if you're not competing in the urban markets, if you're not wanted in the suburban markets and you abandoned the small towns where your convenience made you king....where do operate?

You don't. That's when store closings become part of your normal operations.

Adam Hartung has a far better post on this. His post is titled Sears, Sara Lee: Killing Me Softly.He cites a report that Sears has decided to boost its sales by offering its products through other retail outlets. Huh. Help your competitor by offering your products to bring more customers to their stores, not yours.

I predict Ms. Freely will have more opportunity to talk about Sears' normal operations in the coming months.

Adam is a guest on my radio show. You can listen to our conversation here.

Highlights from My Talk with Adam Hartung, Author of Create Marketplace Disruption

Our guest last week was Adam Hartung. Adam is the author of an excellent book titled Create Marketplace Disruption: How to Stay Ahead of the Competition. Adam is currently Managing Partner of Spark Partners, a strategy and transformation consultancy. And he blogs regularly and well at The Phoenix Principle. Prior to this he was an executive with DuPont where he built a new division from nothing to over $600 million revenue in less than 3 years. At Pepsi, Adam led the initiative to start Pizza Hut Home Delivery. He opened over 200 stores in under 2 years and also led the global expansion M&A initiative acquiring several hundred additional sites.

You can listen to our conversation here.

I don’t encourage stalking, but where are you, what are you doing, what marketplace have you recently disrupted?

I’m in Chicago today and it is beautiful snowy 35 degree day. We have been looking at a lot of markets lately and helping some people make changes in how they approach fields like education, manufacturing of consumer products and helping them to rethink the origination, creation and management of brands with all of the new technology and social networking.

You are working to disrupt education and manufacturing. One is the foundation of our country and the other is our future.

In both of those areas, we have developed an approach for how we think it needs to be done, but that was created decades ago in a completely different environment, with different technologies. So today, what was once the greatest educational system in the world is no where near producing the best output of students. In the other, we have let mfg dissipate and shift and go to foreign countries. The reason is other people are adopting new things...new processes and solutions and we are falling behind. Our management is still stuck in an old era of industrial thinking.

Let’s talk about your book. I love it. Your writing’s crisp with profiles and data, all organized to support the points. What was your reasonable aspiration or hoped-for goal* with writing this book?

My goal was not reasonable. I started this project about 15 years ago to get my hands around why there were so many business failures. You would think with the tremendous increase in the amount of MBAs we are producing that more businesses would be successful. By every measure businesses are failing more and more. I found that everything that I had been trained in did not hold merit with today’s businesses. The old way of management did not apply.

The basis of competition is different. The source of value is different and how we manage has to be different. We are seeing some role models for change in some businesses. I am on my own personal mission that if we don’t change the way we manage, our entire company is at economic risk. We have market shifts happening as fast as possible: we are all online all of the time now.

People get and share information in a more immediate basis. This is a market shift. In a matter of weeks, things can change and if companies are only focused on “core” they will not see this shift and aren’t able to act and react to the changes. It is about understanding what goes into the market and keeping yourself on the roadway and moving forwards.

How will you know when you have reached it?

We have to look at business failures of both companies large and small. When we see the failures stop; businesses engaging their employees, customers, suppliers and shifting with the market, this will be the change we need to see.

How does your book disrupt the market for books on innovation?

Can we generate ideas and things that are different? Bring them to the marketplace. All of the failure comes from lock-ins to keep us from implementing.

Lock-in: when you are set on doing something in a certain way and it becomes an assumption.

The struggle with innovation is not with ideas. It is when people say that is a great idea but it is not my business. We have to attack this: get people to recognize that it is their own blinders that stop them from going where they want to go. Get beyond your filters and limits.

The purpose of business is to deliver to customers what they want and when they want it. You don’t want to “small down” your businesses, then you only limit yourself.

Your book is about disruption. Your business is disruption, ok in nice company you might say innovation. But really you’re disrupting people’s routines and reward systems, careers and identities, markets and industries And you’re good at it judging by the results and your book.

But in that process you encounter a bit of resistance. Maybe, just a bit. What resistance have you met to the ideas in your book?

Yes- that is why I tell people The Phoenix Principle will keep you growing inevitably forever. To do this it is 4 steps:

1. We have to understand we need to look at the future through the past. How can you do anything if you are only looking at last year? You need to develop scenario plans. Get focused on that. You almost have to create a movie of what is in the future.
2.Pay attention to competition. We tend to only pay attention to ourselves. You have to know what the other guy is doing. You need a real understanding of what the competitors can do to you.
3. Disruption is good.
4. Get involved. Now what do I do? If we think about the traditional methods – it is a waste of time. All of that analysis is all wrong. Nothing works except participating. Get on the field and make a difference.

Whenever we take that 4th step and learning what is happening in the market, we are able to modify our processes, procedures and product lines.

Is this resistance different than the resistance you met with Pizza Hut and opening home delivery stores?

Back in the 80’s Dominos Pizza had been struggling and had filed for bankruptcy three times. They were the first to try home delivery – finding out what was important to the custome fast service was key. Their pizzas weren’t the best, but they were doing great. Pizza Hut was more concerned with doing what they have always done. They had spent a lot of money on being the red roof restaurant, a dine in experience and not willing to change. The owner of Dominos became a billionaire and even has a town in Florida named after him.

25:46

You quote the authors of another book whose research found that ‘Built to last” companies regularly and systematically underperform in the market. Looking at over 1000 of America’s largest companies including ATT, Bethlehem Steel Polaroid, Digital Equipment...from 1962 to 1998 only 16% of these companies remained in the top 1000.

What are we missing? That’s a lot of failure to communicate by a lot of people over a lot of time. What’s the one thing they all shared?

The biggest issue is that everybody starts their business approach with how do I defend and extend with what I already know what to do? The only message we have ever received is to define yourself into a narrow area and be excellent at it. All this does is to ignore the fact that we are in a marketplace with a bunch of competitors and while we are busy trying to be excellent, they are finding out whole new ways to compete. People forget how they are going to evolve with new technology and changes. They have to see what shifts are out there.

What is Schumpeter’s Creative Destruction and why should business’s care?

He said all businesses end up in failure. There are competitors out there that go head to head and destroy each other. Then as they destroy each other, you get down to a handful of competitors and then this locks them in: like Ford, GM and Chrysler. Then innovators come along and they don’t compete the same way. They come out with a different approach. They are more creative using new technologies and systems which destroys the value of the other competitors. If we didn’t have this, we would have a Soviet world of central planning.

What did the 16% of those largest companies see differently that let them stay in the top 1000?

Again one of the critical issues of how they managed their planning process, they were planning from the past. These companies thought about what the marketplace would look like in three years.

What would happen to make their markets go away?

What new markets are emerging that I don’t compete in?

They start with the future then it is: how do I get there?

What is the fallacy of the S-curve theory of business lifecycle and why is it now accepted as dogma.

The reality is that it comes from how viruses propagate. A couple of Harvard Business School professors said that you can grow your business if you merely launch variations and extensions of your products. This became innovation but it doesn’t work. We now can look back over the past 50 years, it just doesn’t work. It really drives margin down. To jump the curve you have to have different business opportunities and white space.

What are the 5 stages of a business lifecycle reality?

• Infancy (Wellspring)
  
• Adolescence (Rapids) The market that is growing. You are with the current. Growth Market shifts and then:
• Maturity (Flats)
• Decline (Swamp) You hit the flats. The current slows and you stall. You are defending and extending. There is no more current. You are going nowhere.
• Old Age (Whirlpool) you disappear.

This is what happened with GM. The vast majorities are in the swamp – fighting for survival.

43:33

Where is our economy, right now?

As an overall economy, we have to realize we just finished the worst economic decade in the history of America. Many people don’t understand that.

Most people are looking at the world through a very short term lens. This is a cyclical change. The competition has shifted: things are different now. It is about delivering value and meet people’s needs.

Our economy is definitely in the swamp. We are stuck. We might get short term improvements. The question becomes how long can we continue to hold us in place. We have to change the way we compete and pay attention to the companies that are doing well. They are thinking about the future; how markets are developing.

Let’s talk about identity and strategy. I’ve read and blogged links to those articles that report that 80% of employees don’t care, have no idea what their strategy is and if they do they think the tactics will fail.

Success formulas are about your identity, strategy and tactics.

Consultants are bad about this. The first thing a consultant will tell you is to change your tactics. Then they say to change your strategy. These don’t help the company grown.

The starting place was identity: what the business is and what they sell. When you find yourself in these shifting markets, you have to question your identity. You have to address identity and attack it. Be willing to disrupt it to make yourself into something new and different.

Do you agree? How does a company sustain itself much less disrupt a marketplace if 80% of their employees don’t care?

People start thinking that employees are the army and they have to do what the general tells them to do. So we build those cultures. People go to things that make them comfortable- things that work.

Engagement works when you ask the people what they want, what they need to know. You will change when you are attracted to change. We have to get people engaged.

At what stage of the lifecycle is lock-in an asset and at what stage is it a liability?

What are  signs that signal your company has begun moving from the former to the latter?

When you are in rapid growth you need to improve your execution. The winners in the high growth phase will demonstrate execution skills. Those lock-ins are good. It becomes a problem when you are making decisions to preserve it. Anytime you make decisions that are based on the short term to protect how you do business today, you have a lock-in problem because you are making decisions to preserve lock-ins and not what is happening in the market.

You write that the dark side of success, defend and extend management, is the practice of reacting to business challenges and threats through the lens of historical practices.

I know we have to look forward. But, how realistic is it to expect people to NOT review threats through their lens of experience?

It is realistic to do, but you have to change the way you do things. We take feedback from customers and sales people, marketing and product development, but all these people have a lens. What we don’t do well is have a strong support system of external inputs. Many companies are cutting back and saying they don’t have money. They have just taken those independent eyes and ears and removed them. You need someone on the outside who don’t wear your lens. You need honest feedback.

What are three steps a business leader can take to avoid the dark side of success?

1. Who do you have as your advisors that are willing to challenge the way you think? Who will advise them, not patronize them.

2. Start spending time on thinking about the future.

3. Talk about the competition.

What is the Phoenix Principle for Business Success?

Disrupting lock-ins and utilizing white space is the Phoenix Principle I’s not about a one-time re-engineering, or rebirth. It’s about creating an evergreen business model, with a culture of enthusiasm, engagement, creating great places to work and partner with customers and vendors.

If you follow the 4 steps of PP, it always works. It is about keeping you in the market, aware of competition and it is all about growth. If you are thinking of the future, the marketplace, being in the whitespace, you are going to win.

What are the 4 steps of the Phoenix Principle?

• Stop the Defend and Extend management
• Attack your competitors’ lock-in
• Implement disruptions that overturn lock-in
• Implement white space to create a new success formula.

I have this idea that Defend & Extend exists because of ill-conceived rewards.

How does a management team disrupt and change rewards that encourage D&E?

We do have to address executive compensation. It is hurting our companies. This whole explosion of giant bonuses needs to be realigned. There is not much you can tie the compensation to. You have to manage the inputs and get away from the bonuses.

Thank you for the book. It was an excellent book! Thank you for the time to talk about your book and your very important solutions.

You can find Adam on the web at:

Adam Hartung

Phoenix Principles

Twitter: Adam Hartung

Our Three Opportunities with The Responsibility Revolution

Tim Sanders, author of Saving the World at Work: What companies and Individuals Can Do to Go Beyond Making a Profit to Making a Difference, generously shared an hour of this time to talk about his book, how readers can use it to save their world at work...and more. We spoke a bit in detail about the first section in his book. Tim titled it The Responsibility Revolution. And here’s one question I asked:

Your book’s premise is a bit disruptive for some companies. Maybe even revolutionary. I see there could be push-back against it. Have you found obstacles in your presentation of The Responsibility Revolution, part 1 of your book?

The Responsibility Revolution says consumers, talent and young investors are starting to buy into a story, not a product or service. They want to know:

• the story behind the product or service...about how that company treats their employees.
• how that company is either a partner or a parasite in the communities where it makes money.
• whether that company is stealing from future generations or leaving some for later.

Do these sound like three opportunities?

Do these sound like three opportunities for any business, at any stage, in any industry, commoditized or not?

How do you see the roles of engaged employees, customer evangelists and word-of-mouth played out in The Responsibility Revolution?

Which comes first? Word-of-mouth or engaged employees?

I have this impression that word-of-mouth starts and grows (and never finishes) with something worth talking about. That’s the story. That’s the personal element. That always starts with how that company treats their employees.

Can you see a company mistreating its employees or organizing a command-and-control culture, with decisions mandated in a top-down manner...being able to create a story or even a product its customers find compelling? (Maybe, they can create an ad, but that’s the agency’s work.)

And without a compelling story, a story of inspiration and delight, a story of personal solutions and care, that their customers experience consistently...then can a company be anything other than a parasite in the communities where it makes money.

On the other hand, if a company takes care of their employees, inspires them, leads them, finds their strengths and engages them...that can only be shared with their customers then doesn't it make sense that this company then becomes a partner ...in the communities where it makes money.

And a partner, one who shares with its partners, is a partner that leaves some foundations and resources, legacies, for later.

That’s the who, the how, the when and the where that word-of-mouth starts and only grows (and never finishes).

And now with social media to accelerate the spread of this story...any business that realizes its people and their talents, dreams, passions and strengths are the elements of its story...can create a compelling story that consumers, communities, and stakeholders can...share. Quickly. Globally. Any time. Any where.

The Responsibility Revolution and its opportunities are...waiting.

Them's my thoughts and I'm sticking by 'em...unless you change them. What do you think?

If you want to find out more about what Tim shared, then:

• You can read highlights from our conversation here.

• You can listen to our full conversation here.

Tim Sanders' blog.

Tim Sanders on Twitter

Daily inspiration from Tim at SanderSays

Disclaimer:

I have a vested interest to encourage you to listen to the show.

But, you have a vested interest to listen to Tim Sanders, wherever he speaks, and read his books. It’s your world, our world, where he offers tips and resources on how we can save it. Today. Right now. And then each of us can share our tips and resources with each other and Tim, too!

Can you have sincerity in office politics?

Technically, yes. You can have a person or ( God forbid! ) persons who are very sincere in their efforts to manipulate office politics for the advantage of a few. That few is always their few.

Office politics thrives until someone introduces the outside element of sincerity, integrity, honesty. Sincerity dispels office politics like sunlight dispel darkness. No, that comparison is not too extreme.

One person courageous enough, innocent enough, encouraged enough to share a sincere motive, data, question, is enough to transform a politicized office environment into one that is united, engaged, focused.

It sounds so simple; it is.

It sounds so true; it is. (So, what’s happened to our national leaders? This is a bi-partisan question. I digress. )

The trick is where do you find this person or (God willing!) persons?

How do you support them?

Are you ready for a few bumps in the road if your office culture is best described as...political.

Lead Change Group posted on this topic. Sincerity and Office Politics. It starts with a great quote from a sincerely funny man: Groucho Marx. And it ends with 6 steps to restore sincerity.

Each of their six steps is excellent. To drive the right traffic and credit, read their post.

Their post hit home for me, personally and professionally. I wanted to add a few more thoughts, more than a comment's worth at their site.

1). Use a wiki. Wikis are powerful collaborative tools to foster engagement, participation, openness and transparency. This sentence could be re-written as Wikis are powerful collaborative tools to foster sincerity.

I have used Basecamp* from 37Signals for 3-4 years now. Now there are many more wiki options. Here’s a page to compare the many options.

How does a wiki foster sincerity? By putting it all down in writing for all to see. All down in writing is all of the conversations and debates, data and decisions, and timelines and to-do's. All to see is all who are involved, directly or indirectly, in a project, an idea, a strategy or tactic development, a hiring decision...

That is the essence of transparent and open communication. That eliminates the leverage points of those who indulge in political maneuverings. No secrets? No faux access to priviledge and power.

Wikis are not the only means to foster sincerity in your organization. But they do offer simple, easy-to-use, features which when used fosters collaboration, transparency and openness. The disappearance of office politics is the flip side of that coin.

2). Expect resistance. Changing your office culture from one of secrets and whispers to one of openness and transparency is a huge undertaking even with willing participants. But there will be unwilling participants whose behaviors and personal issues will be revealed.

What are the 4 stages of change?

• Denial

• Resistance

• Exploration

• Acceptance

You will experience each of those. How long you experience each stage depends on:

• you, the leader and your leadership skills

• the nature of your office culture

• the nature of your office culture as lived by each individual in your office

• your industry

• more

3). Transparent organization = Transparent individuals. You will become a transparent, open and collaborative organization to the extent each individual can allow transparent and open communications with themselves, with each other.

Mandates, tools and resources, information and preparation can all help smooth and speed this process of change. But, only if those involved are willing AND able to change.

You can help inspire change. You cannot force lasting change.

4). Expect turbulence. Consider a thunderstorm. It is warm air and coold air colliding. The change here is akin to a thunderstorm. It is secrets and openness colliding in an open space. You, the leader, are the pilot with your office-mates the passenger. And you are flying through this thunderstorm.

Some people are unwilling and unable emotionally to make that transition. They may be your friends, your best performers...to-date. What will you decide when they are unwilling or unable to help others rise in performance? What happens when the company changes but they cannot? Will they be allowed to interfere?

Unlike the pilot, you cannot make them sit down. Unlike the pilot you do not have to carry them to your destination.

You will very likely face those questions.

5). Preparation is key. Prepare yourself in order to help prepare your office-mates.

• Talk with leaders who have made this change. Find out what they learned, what worked, what failed.

• Talk with leaders who tried and failed to make this change.

• Research. Find out how you can prepare your office mates for this change. Find out the common reasons why they may resist those changes. (For a politicized environment, magnify the emotions and the impact of those with vested interests in your current environment.) Provide solutions. Share this conversation with them openly.

6) Follow the Steps 5 and 6 from the post of Lead Group Change

• Encourage patience and grace – authenticity is proven over time.

• Celebrate progress – Repeatable success over time builds confidence.

7). Resistance is futile. Transparent and open cultures are the ultimate competitive edge for a business of any size. Learn to be a leader in bringing this competitive edge to your organization. Now is the time.

Good luck.

* Basecamp. I am an affiliate with Basecamp. But the link above goes directly to their site without an affiliate reward.

Being There

( Did you see that movie? Being There? Peter Sellers, Shirley MacLaine, Melvyn Douglas. Great movie. See it if you haven’t.)

Being there may be social media’s greatest contribution to our ability to innovate our way out of this recession. And innovate our way out of our cubicles into a life of meaning, where work and home do blend, where ‘personal’ and ‘professional’ brands mesh smoothly, where our values align with and allow for us, individually and collectively, personally and professionally.

Hutch Carpenter, VP of Product at Spigit, tweeted this today.

He’s right.

Can you show me anything else that kills an idea faster than like lack of interest? This is not a rhetorical question. Can you? 

Passively or aggressively, an idea needs interest to grow. And it needs it...immediately, right from the start.

Beating a metaphor to death, you don’t plant a tree by just dropping it on top of the ground, do you? (Ok. Some may. ) You dig a hole, you throw some mulch or fertilizer, aka food, in that hole and you water it...and you do all this immediately.That is because you want it to grow. You want it to grow enough to do what's necessary to immediately provide it the attention and resources it needs to grow.

We all want ideas to grow. And up until recently, the means has been missing for being there when someone has an idea.

That has changed, will continue to change, now with social media. Social media’s instant reach, instant broadcast, globally, is a great first step in being able to give immediate attention to an idea. Any idea shared on social media like twitter or a blog or youtube or, maybe not facebook, a podcast or a wiki, is like the tree being planted on fertile soil, in a hole dug to proper depth, with proper food and watered properly. The follow-up conversations and collaborations made possible by social media, by its members around the globe, are like the water and mulch/fertilizer/food that grows this idea, sustains it, nurtures it.

(Ok, this is a riff, a rough draft.)

But, the bottomline is that now with social media’s tools and features we have a better chance of giving ideas the immediate attention they deserve, we deserve, our communities deserve. And any idea to improve this will find us all just...being there.

Thanks, Hutch.

Upcoming Radio Guest: Pam Slim, author of Escape from Cubicle Nation

Yes! Pam Slim, author of Escape from Cubicle Nation: From Corporate Prisoner to Thriving Entrepreneur, joins the show Wednesday, October 21, at 9:30 AM, Central.

There are any number of reasons for delight: mine and yours.

* Pam's a great speaker.

* Pam's a great writer.

* Pam's on a mission to help more people connect their passion, their strengths, their talents with a purpose that brings meaning to everyones lives they touch.

I met Pam last year at the Author's PowWow conference sponsored by 800CEORead. Todd Sattersten, the CEO for 800CEORead was the host, the great host I might add. And Pam and I were attendees. Pam and I spoke a little bit at an evening reception and then again at dinner the next night. I'd never read her blog, never heard of her. ( Full disclosure: she'd never heard of me, either.) I came away thinking...who is this person who is collected, focused, alert, with an incredible life journey, someone who can survive in corporate environs, but then be a rebel at heart and keep that heart alive so when it's time to break free...she can and has and now shares what's she learned on her journey.

Now, her book is hugely successful, as it should be. Her audience has gone global. Her workshops with the book generate rave reviews and evangelists for her message and resources.We'll talk about all that, her journey this past year and what you can do to plan your Escape from Cubicle Nation.

She joins us Wednesday, October 21, at 9:30 AM, Central.

You have two options to listen:

LIVE

1. Listen in streaming on-demand at this link.

2. Call in live. Call 646-915-9212 during the show 9:30 AM to 10:30 AM, Central.

ARCHIVED

1. Listen in streaming on-demand at this link.

Healthcare Costs: The Borg that swallowed our economy

According to the 2009 Employer Health Benefits Survey of the Kaiser Family Foundation, health care in America now costs $13,375 per family.

The figure was up 5% in a year where inflation was actually negative and wages rose just 3%.

At the present rate of inflation, by the way, health care will cost over $30,000 per year, per family, by the end of the next decade. So how long do you want the political dance to continue? Dana Blankenhorn, How health reform and health IT reform are linked.

That change reflects an increase of 125% over a period of 11 years.

Our economy must grow by the same amount, 125%, over the same 11 years, in order for healthcare costs to not absorb a greater share of our GDP.

How reasonable is that?

According to this graph from the IMF, our economy grew a little less than 60% from 1990 to 2006.

16 years, 60% total growth in GDP. With 5 more years our economy generated half as much real growth in GDP.

Can our economy grow 125% over the next 11 years?