Tag: Business

Leading with Care

“In the most dysfunctional organizations, signaling that work is being done becomes a better strategy for career advancement than actually doing work.”
— Peter Thiel

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An excerpt from The Moment of Clarity: Using the Human Sciences to Solve Your Toughest Business Problems:

Not long ago, we met an executive from a global pharmaceutical company. He had been participating all day in a workshop on the future of health care and was standing outside the hotel, catching some fresh air. We talked about how the health-care business was changing and what challenges the company was facing with rising health-care costs , low R& D productivity, and a broken sales model . We asked him his thoughts on the challenges ahead.

He looked at us with somewhat tired eyes, squinted up in the sky, and said, “Well, first, I am going to have myself a big, fat sushi dinner, and then I suppose I will get back to the office tomorrow and do the usual stuff— you know: hire some people, fire some people, and make some strategies.”

He was not being ironic. He was being brutally honest about a feeling that many executives feel from time to time: What does it matter, anyway? Over time, as management has become increasingly professionalized, you can sense a kind of nihilism or loss of meaning in the executive layers. This sense of nihilism is strongest in large corporate cultures where management is seen as a profession in and of itself with no strong connection to what the company actually makes or does. What happens when satisfaction from work comes from managing— reorganizing, optimizing the operation, hiring new people, and making strategies— and not from producing something meaningful? How do you feel when it doesn’t really matter whether you make beauty products, soft drinks, fast food, or musical instruments?

If you can’t relate to what you’re doing, ultimately you don’t care. If you don’t care, everything becomes properties. As a consumer you see the differences between businesses that care and those that don’t. Caring about what you do and your customers won’t make you successful, but not caring will almost certainly result in failure over time.

Philosopher Martin Heidegger claimed that care — what he called sorge — is what makes us human.

Peter Thiel: Zero To One

Peter Thiel’s book, Zero to One: Notes on Startups, or How to Build the Future, is about building companies that create new things. But more than that, there is a lot of wisdom in this book.

Heraclitus

We look to models of success — be they companies, prescriptions, or people and we attempt to blindly copy them without understanding the role of skill versus luck, the ecosystem in which they thrive, or why they work.

We want the shortcut. We want someone to give us the map without understanding the terrain.

I can’t tell you the number of times I’ve seen companies attempt to solve innovation — as if it were a mathematical formula — with a version of Dragon’s Den or 20% innovation time.

It doesn’t work.

Zero to One

Every moment happens only once.

The next Bill Gates will not build an operating system. The next Larry Page or Sergey Brin won’t make a search engine. And the next Mark Zuckerberg won’t create a social network. If you are copying these guys, you aren’t learning from them.

So why do we copy?

[I]t’s easier to copy a model than to make something new. Doing what we already know how to do takes the world from 1 to n, adding more of something familiar. But every time we create something new, we go from 0 to 1. The act of creation is singular, as is the moment of creation, and the result is something fresh and strange.

We are unique. We are the only animals that build by creating something new.

Other animals are instinctively driven to build things like dams or honeycombs, but we are the only ones that can invent new things and better ways of making them. Humans don’t decide what to build by making choices from some cosmic catalog of options given in advance; instead, by creating new technologies, we rewrite the plan of the world. These are the kind of elementary truths we teach to second graders, but they are easy to forget in a world where so much of what we do is repeat what has been done before.

We are all searching for the elusive formula — the things that if only we’d do them we’d become successful. This is why we flock to the bookstore to learn about how Google innovates only to find that blindly applying the same prescription results in no more success than taking a polar bear and putting it in the desert. There simply is no formula for success. Giving up that notion might be the most helpful thing you can do today.

The paradox of teaching entrepreneurship is that such a formula necessarily cannot exist; because every innovation is new and unique, no authority can prescribe in concrete terms how to be innovative. Indeed, the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.

In his wonderful book of Fragments, Heraclitus writes: “No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”

If every moment happens only once, where does this leave us? These are the questions we must explore.

Zero to One: Notes on Startups, or How to Build the Future is worth reading in its entirety.

The Reasons We Work

Why do you go to work? Chances are it’s got something to do with money. But as most of us know, it’s more complicated than that. “There is a spectrum of reasons why people do their jobs,” write Neel Doshi and Lindsay McGregor in Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation.

“Understanding that spectrum is the key to creating the highest levels of performance.”

The authors argue there are six reasons we do anything. The first three they call indirect motivations and the latter three are direct motivations.

The Reasons We Work

The Direct Motives

Play

You’re most likely to lose weight—or succeed in any other endeavor— when your motive is play. Play occurs when you’re engaging in an activity simply because you enjoy doing it. The work itself is its own reward. Scientists describe this motive as “intrinsic.”

Play is what compels you to take up hobbies, from solving crossword puzzles to making scrapbooks to mixing music. You may find play in weight loss by experimenting with healthy recipes or seeking out new restaurants that offer healthy options. Many of us are lucky enough to find play in the workplace too, when we do what we do simply because we enjoy doing it.

Curiosity and experimentation are at the heart of play. People intrinsically enjoy learning and adapting. We instinctively seek out opportunities to play.

[…]

Play at work should not be confused with your people playing Ping Pong or foosball in the break room. For your people to feel play at work, the motive must be fueled by the work itself, not the distraction. Because the play motive is created by the work itself, play is the most direct and most powerful driver of high performance.

Purpose

A step away from the work itself is the purpose motive. The purpose motive occurs when you do an activity because you value the outcome of the activity (versus the activity itself). You may or may not enjoy the work you do, but you value its impact. You may work as a nurse, for example, because you want to heal patients. You spend your career studying culture because you believe in the impact your work can have on others. Dieters may not enjoy preparing or eating healthy meals, but they deeply value their own health, an outcome of healthy eating.

You feel the purpose motive in the workplace when your values and beliefs align with the impact of the work. Apple creates products that inspire and empower its customers, a purpose that is compelling and credible. …

The purpose motive is one step removed from the work, because the motive isn’t the work itself but its outcome. While the purpose motive is a powerful driver of performance, the fact that it’s a step removed from the work typically makes it a less powerful motive than play.

Potential

The potential motive occurs when you find a second order outcome (versus a direct outcome) of the work that aligns with your values or beliefs. You do the work because it will eventually lead to something you believe is important, such as your personal goals.

Dieters motivated by potential eat healthfully to achieve other things they care about—the ability to run faster on the football field, for example, or to keep up with their kids. When a company describes a job as a good “stepping-stone,” they’re attempting to instill the potential motive.

These are the direct motives. Direct because they generally connect to the work itself.

As a result, they typically result in the highest levels of performance. If you remember only one thing from Primed to Perform, it should be that a culture that inspires people to do their jobs for play, purpose, and potential creates the highest and most sustainable performance.

Not all motives correlate with higher performance. Motives that don’t connect to the work itself typically reduce performance.

The Indirect Motives

Emotional Pressure

The first indirect motive, emotional pressure, occurs when emotions such as disappointment, guilt, or shame compel you to perform an activity. These emotions are related to your beliefs (your self- perception) and external forces (the judgments of other people). The work itself is no longer the reason you’re working.

You may practice the piano so you don’t disappoint your mother. You may stay in a job because its prestige boosts your self-esteem. A dieter may eat healthy meals because he’s embarrassed by how he looks, or because he feels guilty when his partner catches him with his hand in the cookie jar.

In each case, the motive is not directly connected to the work. It is indirect.

When your motive to work is emotional pressure, your performance tends to suffer. … High-performing cultures reduce emotional pressure. … [E]motional pressure is the weakest of the three indirect motives. The effects of economic pressure can be much worse.

Economic Pressure

Economic pressure is when you do an activity solely to win a reward or avoid punishment. The motive is separate from the work itself and separate from your own identity (see Figure 3 for an illustration of this separation). In business, this often occurs when you’re trying to gain a bonus or a promotion, avoid being fired, or escape the bullying of an angry boss. Economic pressure can occur outside the workplace, whenever you feel forced to do something.

[…]

The biggest misconception about the economic motive is that it is strictly a matter of money. In a study we conducted involving more than ten thousand workers, we looked to see how the economic motive changes with household income. We expected to find that the people with the least income experienced the highest economic pressure. Instead, we learned that income and the economic motive were statistically unrelated. People at any income level can feel economic pressure at work.

This is an important insight. Money alone does not cause the economic motive.

[…]

There are situations where money works, and situations where it doesn’t. It all depends on whether or not the reward or punishment is the motive behind the activity, and whether the activity would benefit from adaptive performance.

Inertia

The most indirect motive of all is inertia. With inertia, your motive for working is so distant from the work itself that you can no longer say where it comes from—you do what you do simply because you did it yesterday. This leads to the worst performance of all. … As destructive and insidious as it is, inertia is surprisingly common in the workplace.

I’ll have more to say about culture but needless to say, this is only one lens.

William McKnight: The Basic Rule of Management that Propelled 3M

In 1907 William L. McKnight joined Minnesota Mining and Manufacturing Co (3M) as an assistant bookkeeper. He rose quickly through the ranks and became president in 1929 and chairman of the board in 1949. His timeless management philosophy laid out below, encouraged 3M management to “delegate responsibility and encourage men and women to exercise their initiative.”

The Basic Rule of Management

As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women, to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way.

Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs.

Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.

“If you put fences around people, you get sheep. Give the people the room they need.”

— William L. McKnight

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Still curious? Pair with David Packard’s 11 Simple Rules For Getting Along With Others.

Source

Keeping Things Simple and Tuning out Folly

“We have a passion for keeping things simple.”

— Charlie Munger

This reminds me of me of how Einstein sifted the essential from the non-essential. And this from Charlie Munger: The Complete Investor:

Peter Bevelin’s book Seeking Wisdom: From Darwin to Munger has a section on the importance of simplicity.

Bevelin advised: “Turn complicated problems into simple ones. Break down a problem into its components, but look at the problem holistically.” Keeping things as simple as possible, but no more so, is a constant theme in Munger’s public statements. In a joint letter to shareholders, Munger and Buffett once wrote: “Simplicity has a way of improving performance through enabling us to better understand what we are doing.”

[…]

By focusing on finding decisions and bets that are easy, avoiding what is hard, and stripping away anything that is extraneous, Munger believes that an investor can make better decisions. By “tuning out folly” and swatting away unimportant things “so your mind isn’t cluttered with them … you’re better able to pick up a few sensible things to do,” said Munger. Focus enables both simplicity and clarity of thought, which in Munger’s view leads to a more positive investing result.

“If something is too hard, we move on to something else. What could be simpler than that?”

— Charlie Munger

There is a compelling advantage in life to be found in exploiting unrecognized simplicities, something Peter Thiel tries to tease out in interviews. Essential to recognizing simplicity is scheduling time to think.

“We have three baskets: in, out, and too tough… We have to have a special insight, or we’ll put it in the too tough basket.”

— Charlie Munger

Part of Simplicity is Filtering

William James said: “The art of being wise is the art of knowing what to overlook.” And there are no truer words that have been spoken.

In Arthur Conan Doyle’s The Reigate Puzzle, Sherlock Holmes says: “It is of the highest importance in the art of detection to be able to recognize, out of a number of facts, which are incidental and which vital.”

And part of filtering is understanding what you know and what you don’t know, that is, understanding your circle of competence.

In an interview with Jason Zweig, Munger said:

Confucius said that real knowledge is knowing the extent of one’s ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome. Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Think of somebody who’s been a professional tightrope walker for 20 years—and has survived. He couldn’t survive as a tightrope walker for 20 years unless he knows exactly what he knows and what he doesn’t know. He’s worked so hard at it, because he knows if he gets it wrong he won’t survive. The survivors know.

Another time he offered:

Part of that [having uncommon sense], I think, is being able to tune out folly, as distinguished from recognizing wisdom. You’ve got whole categories of things you just bat away so your brain isn’t cluttered with them. That way, you’re better able to pick up a few sensible things to do.

Warren Buffett, the CEO of Berkshire Hathaway agrees:

Yeah, we don’t consider many stupid things. I mean, we get rid of ’em fast.. Just getting rid of the nonsense — just figuring out that if people call you and say, “I’ve got this great, wonderful idea”, you don’t spend 10 minutes once you know in the first sentence that it isn’t a great, wonderful idea… Don’t be polite and go through the whole process.

And Peter Bevelin, writing in Seeking Wisdom, offers:

Often we try to get too much information, including misinformation, or information of no use to explain or predict. We also focus on details and what’s irrelevant or unknowable and overlook the obvious truths. Dealing with what’s important forces us to prioritize. There are often just a few actions that produce most of what we are trying to achieve. There are only a few decisions of real importance.

More information doesn’t equal more knowledge or better decisions. And remember that today we not only have access to more information, but also misinformation.

And the harder we work at something the more confident we become.

It’s worth pausing to reflect on three things at this point: 1) understanding and seeking simplicity; 2) dealing with the easy problems first; and 3) honing your skills by learning what to overlook and getting rid of bad ideas quickly (how many organizations do that!?)… this goes hand in hand with understanding your circle of competence.

The Books That Influenced C. Roland Christensen

C. Roland Christensen
I thought C Roland Christensen’s response in The Harvard Guide to Influential Books: 113 Distinguished Harvard Professors Discuss the Books That Have Helped to Shape Their Thinking was one of the more interesting. Christensen was a pioneer in the field of business strategy. We can also thank him for reviving the case method from the ancient Greeks.

In the preface to his response, he writes:

Here are the books—all old, dog-eared, reread and reread, little (no big fat volumes), most committed to memory—of my five-inch bookshelf. But they miss the greatest influence on this educator—Miss Adams, a seventh-grade teacher in Iowa City, Iowa. She introduced me to poetry, where the ultimate wisdom —the philosophy of life—is found. The first step in the development of an anthology was our study of “Miniver Cheevey” by Edwin Arlington Robinson. It is still exciting fifty-four years after that original encounter.

What Is History? by Edward H. Carr

Carr’s little book has a magnificent message—to live we must understand our historical roots. Carr gives us a way of
understanding the past so as to predict the future.

Can Man Be Modified? Jean Rostand

Rostand, a biologist, views man in a very human way, examines how science is impacting that basic humanness and then teases us with what he/she will be in future centuries.

How to Run a Bassoon Factory, or Business Explained by Mark Spade

Spade tickles the mind; with tongue in cheek, he describes business so that one laughs—even roars—at his chosen vocation.

The Insect World by J. Henri Fabre

Fabre looks at the smallest and lowest—insects—and shows us their great abilities—even wisdom. A constant reminder to look at the ordinary to see the extraordinary.

The Art of Scientific Investigation by William I. Beveridge

For the investigator, this little book is a gold mine of reflection and practical suggestion. He brings the power of scientific discipline to bear on everyday life.

Power Without Property by Adolph A. Berle, Jr.

The book raises fundamental questions about modern business organization and ownership. It outlines the quiet revolution which has changed the power bases of our industrial society.

Follow your curiosity, for more in this series check out the books that influenced E. O. Wilson, B. F. Skinner, Thomas C. Shelling, Michael J. Sandel, Jerome Kagan, Stephen Jay Gould, and John Kenneth Galbraith.