Tag: Business

The Single Best Interview Question You Can Ask

In Peter Thiel’s book, Zero to One: Notes on Startups, or How to Build the Future — more of an exercise in thinking about the questions you must ask to move from zero to one — there is a great section on the single best interview question you can ask someone.

Whenever Peter Thiel interviews someone he likes to ask the following question: “What important truth do very few people agree with you on?

This question sounds easy because it’s straightforward. Actually, it’s very hard to answer. It’s intellectually difficult because the knowledge that everyone is taught in school is by definition agreed upon. And it’s psychologically difficult because anyone trying to answer must say something she knows to be unpopular. Brilliant thinking is rare, but courage is in even shorter supply than genius.

The most common answers, according to Thiel, are “Our educational system is broken and urgently needs to be fixed.” “America is exceptional.” “There is no God.”

These are bad answers.

The first and the second statements might be true, but many people already agree with them. The third statement simply takes one side in a familiar debate. A good answer takes the following form: “Most people believe in x, but the truth is the opposite of x.”

[…]

What does this contrarian question have to do with the future? In the most minimal sense, the future is simply the set of all moments yet to come.

We hope for progress when we think about the future. To Thiel, that progress takes place in two ways.

Horizontal or extensive progress means copying things that work— going from 1 to n. Horizontal progress is easy to imagine because we already know what it looks like. Vertical or intensive progress means doing new things— going from 0 to 1. Vertical progress is harder to imagine because it requires doing something nobody else has ever done. If you take one typewriter and build 100, you have made horizontal progress. If you have a typewriter and build a word processor, you have made vertical progress.

best interview question peter thiel

At the macro level, the single word for horizontal progress is globalization— taking things that work somewhere and making them work everywhere. … The single word for vertical, 0 to 1 progress, is technology. … Because globalization and technology are different modes of progress, it’s possible to have both, either, or neither at the same time.

Peter Thiel
Here is Thiel’s answer to his own question:

My own answer to the contrarian question is that most people think the future of the world will be defined by globalization, but the truth is that technology matters more. Without technological change, if China doubles its energy production over the next two decades, it will also double its air pollution. If every one of India’s hundreds of millions of households were to live the way Americans already do— using only today’s tools— the result would be environmentally catastrophic. Spreading old ways to create wealth around the world will result in devastation, not riches. In a world of scarce resources, globalization without new technology is unsustainable.

Why Early Decisions Have the Greatest Impact and Why Growing too Much is a Bad Thing

I never went to Engineering school. My undergrad is Computer Science. Despite that I’ve always wanted to learn more about Engineering.

John Kuprenas and Matthew Frederick have put together a book, 101 Things I Learned in Engineering School, which contains some of the big ideas.

In the author’s note, Kuprenas writes:

(This book) introduces engineering largely through its context, by emphasizing the common sense behind some of its fundamental concepts, the themes intertwined among its many specialities, and the simple abstract principles that can be derived from real-world circumstances. It presents, I believe, some clear glimpses of the forest as well as the trees within it.

Here are three (of the many) things I noted in the book.

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#8 An object receives a force, experiences stress, and exhibits strain.

force-stress-strain

Force, stress, and strain are used somewhat interchangeably in the lay world and may even be used with less than ideal rigor by engineers. However, they have different meanings.

A force, sometimes called “load,” exists external to and acts upon a body, causing it to change speed, direction, or shape. Examples of forces include water pressure on a submarine hull, snow loads on a bridge, and wind loads on the sides of a skyscraper.

Stress is the “Experience” of a body—its internal resistance to an external force acting on it. Stress is force divided by unit area, and is expressed in units such as pounds per square inch.

Strain is a product of stress. It is the measurable percentage of deformation or change in an object such as a change in length.

#48 Early decisions have the greatest impact.

Early Decisions Have Greater Impact

Decisions made just days or weeks into a project—assumptions of end-user needs, commitments to a schedule, the size and shape of a building footprint, and so on—have the most significant impact on design, feasibility, and cost. As decisions are made later and later in the design process, their influence decreases. Minor cost savings sometimes can be realized through value engineering in the later stages of design, but the biggest cost factors are embedded at the outset in a project’s DNA.

Everyone seems to understand this point on the surface and yet few people consider the implications. I know a lot of people who make their career on cleaning up their own mess. That is, they make a poor initial decision and then work extra hours while running around with stress and panic as they clean up their own mess. In the worst organizations these people are promoted for doing an exceptional job.

Proper management of early decisions produces more free time and lower stress.

#75 A successful system won’t necessarily work at a different scale.

Systems Scale

An imaginary team of engineers sought to build a “super-horse” that would be twice as tall as a normal horse. When they created it, they discovered it to be a troubled, inefficient beast. Not only was it two times the height of a normal horse, it was twice as wide and twice as long, resulting in an overall mass eight times greater than normal. But the cross sectional area of its veins and arteries was only four times that of a normal horse calling for its heart to work twice as hard. The surface area of its feed was four times that of a normal horse, but each foot had to support twice the weight per unit of surface area compared to a normal horse. Ultimately, the sickly animal had to be put down.

This becomes interesting when you think of the ideal size for things and how we, as well intentioned humans, often make things worse. This has a name. It’s called iatrogenics.

Let us briefly put an organizational lens on this. Inside organizations resources are scarce. Generally the more people you have under you the more influence and authority you have inside the organization. Unless there is a proper culture and incentive system in place, your incentive is to grow and not shrink. In fact, in all the meetings I’ve ever been in with senior management, I can’t recall anyone who ran a division saying I have too many resources. It’s a derivative of Parkinson’s Law — only work isn’t expanding to fill the time available. Instead, work is expanding to fill the number of people.

Contrast that with Berkshire Hathaway, run by Warren Buffett. In a 2010 letter to shareholders he wrote:

Our flexibility in respect to capital allocation has accounted for much of our progress to date. We have been able to take money we earn from, say, See’s Candies or Business Wire (two of our best-run businesses, but also two offering limited reinvestment opportunities) and use it as part of the stake we needed to buy BNSF.

In the 2014 letter he wrote:

To date, See’s has earned $1.9 billion pre-tax, with its growth having required added investment of only $40 million. See’s has thus been able to distribute huge sums that have helped Berkshire buy other businesses that, in turn, have themselves produced large distributable profits. (Envision rabbits breeding.) Additionally, through watching See’s in action, I gained a business education about the value of powerful brands that opened my eyes to many other profitable investments.

There is an optimal size to See’s. Had they retained that $1.9 billion in earnings they distributed to Berkshire, the CEO and management team might have a claim to bigger pay checks, they’d be managing ~$2 billion in assets instead of $40 million, but the result would have been very sub-optimal.

Our pursuit of growth beyond a certain point often ensures that one of the biggest forces in the world, time, is working against us. “What is missing,” writes Jeff Stibel in BreakPoint, “is that the unit of measure for progress isn’t size, it’s time.”

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Other books in the series:
101 Things I Learned in Culinary School
101 Things I Learned in Business School
101 Things I Learned in Law School
101 Things I Learned in Film School

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.

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