"The game has changed… you’re either building a software company, or you’re losing to someone who is… you’re either building a learning organization or losing to someone who is." — Andrew Shafer (Little Idea)
Andrew Shafer’s low-ego approach under-asserts the power of his “little idea,” as he calls it, about how companies survive and win:
Research shows that learning organizations have advantages in productivity and quality and in attracting and retaining the best people, yet most organizations are reluctant to truly invest here. Why?
Two forces coalesce to create one big barrier to change. Shafer blames the mashup as “Pareto Inefficient-Nash Equilibrium" to explain that while it’s possible to make people better off, nobody will change their strategy unless the game changes.
But the game has changed.
"An organization’s culture is not some nectar to attract the best butterflies, it’s doctrine and values” — Stowe Boyd @stoweboyd
Values and culture are used interchangeably, but whatever we call our organization’s DNA know that it is determinant of who/what we are and will become.
In William Schneider’s conception, there are four main culture types. These determine if the people in the org are coached or cultivated by managers, or if the organization is learning or lagging.
Most of us, eager and educated, do professionally whatever we can for the companies who employed us, at the level that we are empowered to do so.
The question for individuals, founders, and managers at established companies is: how do we begin to recognize the greater organization’s operating system ((O)OS?) and its constraints and enabling features, and use this to cultivate learning?
"The real company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go." — Patty McCord (Netflix).
If success and failure are highly correlated with the degrees of organizational learning, we need to change 1) how we communicate and 2) what we do.
It follows that we have to put as much effort into designing our organization’s communications as we do designing our software.
2) There are seven dimensions of organizational learning: continuous learning, inquiry and dialogue, team learning, empowerment, embedded system, system connection, and strategic leadership.
This list implies an upending in current practices at most companies I’ve worked with.
So, what would lit look like? It might look like this: perfect democracy, absolute transparency; Accounting sharing numbers across the organization; everyone selling and managing relationships with customers; adoption of reverse business case where people ask why not — not just why.
It also might look like opening a dialogue with employees about job satisfaction, improving communications, setting goals, measuring gap-to-goal, and creating a strategic plan.
Getting started now is the most important step.
Photo cred: borrowed from singer songwriter (and good friend) Rosa Pullman of The Lovers.
I was asked recently by a CFO to help develop a RACI matrix to help his team implement a new strategy.
Simple tools can serve a higher purpose, beyond the program and project management level.
The financial crisis underscored how important it was for CEOs of financial institutions to conduct a quick check of the firm’s risk exposure — via a Value at Risk figure or simple dashboard. We’ve also learned how risk can come in many forms, across all stages of a project or strategy, and from within all layers of the organization.
A RACI matrix can act as a dashboard-view of any big endeavor. First, it helps strategists and managers break down a big idea into a many-staged plan, and assign multiple layers of ownership. Second, it helps monitor progress.
You can download a template here to help you and your team:
Just be sure to follow the rules of thumb:
- Each task/function/activity (row) should have ONE and only ONE Accountable (A).
- Each task/function/activity (row) should have at least one Responsible. In some cases, a task can have more than one role responsible with shared responsibility.
- If a task has more than one R then the task should be brainstormed further and see if it can be split into two tasks.
- The number of Consults should be minimized.
- Too many I’s is also not a good sign. Minimize the I’s so that only those who need to be Informed are informed.
- If a column has no empty spaces, that means that Role/Person is involved with all tasks. See if you can reduce C’s and I’s for this Role.
- If a column has many R’s – The role may have too much work to do. Try to break the task into small sections and delegate to other roles.
- If a column has no A’s or R’s, may be this role can be eliminated from this process.
- If a column has many A’s means this role be a bottleneck. Try to see if these tasks be shared.
The evolution of technology has brought us “Big Data,” with its emphasis on analytics and data visualization, and changing how companies think about technology.
Remember the VP of electricity? Yeah, me either. The point is that technology results in many macro- and micro-level changes, from the “end of average" to new conceptions of how the firm manages roles at the corporate center. It’s easy to foresee a future where there is an executive whose sole purpose is managing and analyzing the company’s information flows, and where teams and divisions are oriented around activities instead of functions.
Pic: Cornell University computing icon Richard Lesser at CPC in Rand Hall (Copyright: Cornell University)
BMW’s thinking about the future of mobility holds lessons for other companies (across industries) and all of us as consumers.
Wha-wha Washington, D.C.?!?
When the German automaker introduced the BMW i3 — the company’s pure electric vehicle (EV) — to the U.S. market this month, the company’s leaders didn’t go to New York or Silicon Valley and rub elbows with capitalists and venture capitalists. Instead, they convened a group in a downtown D.C. art gallery space that included a White House official, a Senator (not from Michigan), a grid expert from a large American energy company, and a professor of urban planning.
A quick scan of the room made clear that BMW is focused on selling an idea ecosystem as well as a car. Yes, there were cars on display, but the company also highlighted the tech companies it’s working with to enable mobility (e.g., an app that enables car sharing) and those it’s worked with on the i3’s development (e.g., a joint venture with SGL Group to make carbon fiber in Moses Lake, Washington).
Making an electric vehicle is a big bet for any car company. There isn’t a high degree of global demand for electric vehicles and the question of power supply is a significant one that relies on lots of players.
What’s clear is that car companies that are serious about electric vehicles need to build the ecosystem around electric vehicles, on top of building the cars themselves, and it’s interesting to see BMW taking the lead domestically, particularly when government involvement — both local and federal — is key.
Government as a Partner and Player
Car manufacturing is inextricably linked to politics, trade, regulations, subsidies and taxes, and mobility is a function of state and local government.
To build the ecosystem around electric vehicles, every level of government is needed, from agencies to zoning boards.
The federal government’s role is to look over the hill at future needs and support ubiquity and mass adoption of new technologies to serve those needs, enabling market viability and removing information asymmetry for consumers. For example, the U.S. Department of Energy helped develop an affordable lithium ion battery used in electric vehicles, and the National Highway Traffic Safety Administration (NHTSA) is responsible for those stickers that tell you how much energy your car will consume down the road.
State and local governments, on the other hand, are critical partners in electric mobility because they regulate HOV policies, allocate space for parking, bus, and bike lanes, as well as bike share stations.
Government at all levels cares about attracting foreign direct investment by international businesses that creates jobs for American workers. Foreign companies also bring with them the benefit of tech and knowledge spillover: technology developed in the plant and management techniques used there spread naturally across domestic industries.
Watch for Mega-trends Before They Hit
When companies think in terms of decades instead of quarters, they change the way they invest resources — seeking out an array of opportunities — in adjacent or new markets. Transportation is a long game.
Here’s the thing that most car companies know about electric vehicles: the internal rate of return is not immediately compelling. BMW’s executives noted that development of the BMW i3 took four years, and while the company has already absorbed the investment — the i3 will be profitable from day one, which was last week in Europe and spring of 2014 in U.S. — there’s uncertainty around when the global population will reach critical mass with the electric vehicle segment.
What sets companies up for success is thinking up products that align with current and future trends. Apple created technologies that are embedded into our lives by first making our music more accessible to us, and then giving us tools that help us manage our lives more efficiently. That’s how you achieve super-long growth streaks.
Currently the sharing economy is taking hold with early-adopter types in urban centers. While it’s not yet hitting the bottom line of most legacy brands, it may do so soon. BMW i is starting to play in this space, imagining ways its cars can facilitate car-sharing. Its executives note that they see this as a way to serve a new segment of consumers (e.g., former non-drivers).
Driving Factors of Sustainable Mobility
Mega-trends are those that hit broadly, and they affect the multiple facets of our lives. One that BMW is banking on is mass urbanization, which will affect most of the world’s population in the coming decades. The question for all companies becomes, how does that trend let you play from strength? How do you build your company’s strategy around it?
For car makers, what’s key is that there is an inherent antagonism between city culture and cars. New forms of infrastructure are needed to support burgeoning populations, and new types of transportation solutions will crop up. Cars may not be as big a part of an evolving urban landscape, but their relevance isn’t diminished when one considers that developed economies have aging populations.
In terms of the urban landscape, gas stations are a terrible use of urban space. So, car companies are smart to ask: how does it become more convenient to charge than pump gas? Similarly, looking for parking uses up too much energy (both in terms of gas and personal productivity), and car companies must offer solutions or risk being left behind, particularly if drivers are older and less mobile.
BMW assumes time, space, and energy are all constrained under the mass urbanization scenario. With this in mind, the company rethinks everything from its supply chain, to its users, to reducing the total cost of ownership (the cost of using and disposing of a good):
- The company’s manufacturing centers are powered by a mix of wind, solar, methane and conventional energy sources, and the i3 contains post-consumer recycled materials.
- The car is designed to manage its own energy intake and conservation — owners can indicate to the car when they’ll be ready to leave and the car will charge itself accordingly taking into account peak energy use and other factors.
- Additionally, the car helps drivers find charging stations, parking, and even enables car-sharing for occasional drivers.
- Finally, the company reuses batteries when upgrades become available to car owners, using them to collect and store energy generated from solar arrays, reducing the cost of recycling batteries by extending their useful lives.
Share the Risk/Share the Wealth
Beyond government, companies that are investing in inherently risky propositions like electric vehicles should look across industry lines for potential partners.
Since electric car makers must ensure that supply is there to meet demand, energy companies and utilities are obvious picks. But there are also opportunities for adjacent industries. For example, anyone who owns parking lot space can generate revenues by providing charging stations (e.g., sports teams with under-utilized complexes). Platforms like eBay can enable personal charging station rentals. These new ways of thinking can turn a depreciating asset into one that generates revenues. Thus, a recharging industry rises.
So, while the barriers to entry for electric vehicles remain high, companies that start us down the road of thinking differently about mobility are doing us all a favor — even their competitors. This is no “I drink your milkshake" scenario; what BMW builds and cultivates in the U.S. will benefit domestic auto makers and all of us, really.
Photo cred: auto evolution (more here)
Many more of us are cutting the cable cord, ditching paid subscriptions for television services.
While behavioral change is not in itself a mega-trend, it signals new habits are being created around emerging technologies. Considering how your company can align with new habits is key to business growth. One example we’ve heard recently was from a European car maker who told us that the prevalence of smartphones makes mass adoption of electric vehicles more feasible since people can find charging stations more easily.
Pick your poison.
Watch the trend line in terms of what investors are craving, and also balance what you’re team is best at (serving individuals, or serving big companies?). The trick is that you can only pick one.
Marc Andreessen agrees (heh!):
"The advantage of the consumer businesses is they tend to be much broader-based, much larger number of customers, that tend to over time be a lot more predictable. The advantage of the enterprise companies is they are not as subject to consumer trend, fad, behavior.
“It’s cyclical. It’s deeply cyclical. But we are in an environment right now, to your point, where there has been huge rotation out of the consumer companies into the enterprise companies.”
A few months ago, our company ran a thought experiment with a major media brand to consider new ways to engage readers.
An idea we had was to give readers more agency by putting a porthole in the “Chinese wall,” so to speak, whereby advocacy organizations could enable readers to do something with the information they read in an article by featuring messages on the very same page. GASP!
Before you freak out, hear me out on this.
Is it time for newspapers to adopt this principle?
The key to making this work is to create consistent rules that ensure an objective editorial model. For example. you say: anytime we write on fracking, these orgs — with whom we’ve established a relationship and defined what messages they can put out there to our readers — get to opt to have their pre-determined (read: non-responsive to the article) message played there. That way, there is some transparency and consistency for all parties.
When I’ve floated this idea to friends in journalism, it naturally draws ire. But I stand by it, and have even persuaded a few to admit it has merit.
And, I am not alone.
As Ross Douthat of NYTimes suggests ”the press’ efforts to remain neutral/balanced while also acting as a medium for surfacing underrepresented voices and investigating the powerful actually undermines good coverage of real issues as the two aren’t entirely compatible.”
Indeed, as the industry formerly known as the newspaper business evolves we’re seeing non-traditional editorial models surface that toe this line:
Christian Science Monitor is crafting a strategy that involves “building communities around intention and intentionality.”
Upworthy, a viral media site, is attracting attention for its dedication to social causes.
Still, it’s two steps forward, one back.
Most recently (and perhaps problematically) The Washington Post has launched “Sponsored Views,” a feature that lets organizations pay to have their responses to the Post’s Opinion content prominently displayed.
I think this one oversteps.
The Post’s approach seems like a regressive, pay-for-targeted-access concept, as an editor friend points out, and it implies that the most important communications work is going to come from corporations or associations and not journalists who parse these messages.
The natural pushback is that you can do journalism, or advocacy, or marketing, but trying to shade between them is still basically impossible. The key for these news organizations is to be consistent and transparent for readers and marketing partners.
A new editorial model could actually be empowering, as advertisers are currently demanding just about anything from struggling media organizations, in essence turning them into on-demand ad production houses. Of course, as my editor friend notes, relying on desperate publishers to float your marketing messages is not a long-term strategy.
Crowdfunding is not appropriate for every endeavor. Startups still can’t seek money from non-qualified investors (except for friends and family) until the SEC hammers out new rules for these types of investment to protect investors (largely from themselves) and loosen capital.
But despite the narrow definition of a qualified investor, and the fraught nature of giving and receiving, Kickstarter’s process of letting people validate ideas by asking for support fulfills a crucial part of the business development process.
Businesses and bands should front-load this step; it’s what all startups have to go through, and it’s the process by which you learn how stup[endous/id] the idea is.
Social network analysis tells us that the very best outcome is when a project gets funding from its immediate and extended or once-removed community, since these tiers represent the highest potential audience/customer base and the most likely scenario for “viral” or inter-network reach.
I recently gave to a Kickstarter that hit close to home, though I did not know it. I learned about the After School Project initiated by Old Boy Records — which, as it turns out, is in my real-life social network — from Andrew Zimmern — who is part of my online, loose-tie social network. In other words, my online life surfaced a real-world connection. There is strength in loose ties! (Thanks, Mark Granovetter.)
Art: social network analysis nodes: strong ties and weak ones.
Katya Andresen, who is COO at Network for Good, has this advice on improving communications that applies to your sales efforts as well.
"1. Make your goal action, not education…
…The job of communications isn’t to impart knowledge; it’s to connect. Instead of starting with information to communicate, begin with what’s getting in the way of action. Speak to that and solve for that.
2. Tie your topic to something that already has someone’s attention…
…If you really want to communicate, understand that attention scarcity by either 1) linking to the priorities people do have or 2.) becoming a solution to constraints by showing how your idea saves time or money or effort.
3. Remember they are not you…
…The messages that appeal to us aren’t the ones that necessarily resonate with others. I think it’s easy to forget that every assumption should be suspect until we understand what others do.
4. Be clear in what you’re asking…
… Be sure to be crystal clear what you are asking, how to get started, and what comes next. It may be people want to be on board - but aren’t sure how to climb on.”
For a marketplace to work, there has to be certainty, trust, and quality. This is particularly true in online exchanges.
The ability to meet these criteria is, of course, dependent on the size of the user base and the frequency with which they use your platforms and how companies manage the interactions on it. Creating a critical mass of trust-based exchanges, as Amazon, Etsy, Angie’s List, and eBay have done, requires attraction, valuable information, and trust-building.
Online marketplace Zaarly, pivoted away from a purely pull-based model where people log on to request services or stuff from others. They learned that people need prompting to use the platform because they oftentimes weren’t sure what to ask for. There seemed to be a lack of imagination (?) on the side of customers, and so Zaarly moved to a model where they actively promoted specific businesses/services via storefronts on their app/website, and they report they are seeing more engagement by the user base. This is a good reminder that marketing is more about cultivating a market (or market making) than simply a brand play.
Our team has been thinking a lot about what keeps users coming back as we developed our Gems platform. We are building it into existing (e.g., those developed by universities) and are building information layers (e.g., what’s for dinner at the dining hall; what are the campus risk hot spots). So, providing information that is valuable to people in their everyday lives creates stickiness and higher levels of engagement with an online platform.
Spotify/Facebook reminds us of the importance of integrating messages into the social platforms that people are already using and find valuable as a source of information — this approach ensures that they are getting the greatest value from your online resources.
Social Validation and Trust:
There are a couple common variables that are present in relationships that have a strong degree of trust. Consider building these into your platforms to engender a whole lot more trust between users/customers.
- Open personal profiles (self-declaration of skills)
- Shared conversation, activity stream, searchable (enabling independent verification)
- Recommendations, awards, certifications (independent, third-party opinion)
- Co-action, collaboration (the ability to co-create work products)
- Sharing successes (experiencing demand for work products, or admiration)
Finally, don’t simply focus on building your user base, but build metrics around certainty, trust, and quality and users will come.
There’s no room for profligacy at a startup. (For those of you who haven’t studied for GRE in a few years or read daily papers covering the financial sector — profligacy: the trait of spending extravagantly.)
Our year-old startup 4MeNU (a geo-local note-dropping platform) recently reorganized and refocused our marketing efforts. We looked at our revenue goals, our core strengths, and the realities around sales cycle time, and we determined that we would focus on a few big near-term wins instead of shallow, broad-based marketing efforts. It marked a significant shift in terms of how we view marketing.
If you watch the SV-VC-SXSW-guru startup scene it’s easy to convince yourself that splashy marketing campaigns, people wearing gorilla suits, and throwing around free t-shirts can create hype around your product/platform. The truth is that even groups like students don’t have the time, mental capacity, or energy to be your champions. Bloggers? Well, they want to get paid (in real or human capital), just like everyone else. Truth is, people are generally dragged kicking and screaming into trying something new.
We’re learning that it’s all about integration, not spending. We are thinking about ways to integrate our platform into existing networks, work with communities to help them meet their constituents’ needs. While not a splashy marketing campaign, this approach is actually closer to what marketing is in theory: creating a space in the market for your good and service.
That being said, anyone who wants a 4MeNU t-shirt, ping me. We have plenty of leftovers from our days of profligacy.
The work meeting gets a bad rap, but there are some benefits to sitting down face to face and thinking out loud as a team.
To overcome the droll nature of the traditional “meeting” format, consider a name change. Calling it a huddle, scrum, or jam session can change the feel and the collaborative nature of the interaction.
Whatever you call it, just be sure one person is responsible for creating an agenda, that everyone agrees to, and sets specific goals for the meeting (which can simply be “what we will accomplish today as a team”), and that it the meeting doesn’t run beyond its useful life.
Meetings that no longer make sense should cease, and meetings should be brought to a close as soon as they devolve or the group hits a roadblock or diverts from the set agenda; otherwise, you will find that your huddle becomes more of a muddle, and your scrum becomes glum.