Market-free zones in market societies

Blog post at Valve

A long, fascinating post about what corporations are, how they arose, what their role is, and how they could change in the future.

As mentioned in the post, reading the Valve survival manual is critical for comprehension of what Dr. Varoufakis is talking about.

Some highlights:

• Valve differs in that it insists that its employees allocate 100% of their time on projects of their choosing. 100% is a radical number! It means that Valve operates without a system of command. In other words, it seeks to achieve order not via fiat, command or hierarchy but, instead, spontaneously. [This is followed by some history regarding Hume vs Hobbes, with further reference to Smith and Hayek]
• Capitalist corporations are on the way to certain extinction. Replete with hierarchies that are exceedingly wasteful of human talent and energies, intertwined with toxic finance, co-dependent with political structures that are losing democratic legitimacy fast, a form of post-capitalist, decentralised corporation will, sooner or later, emerge. The eradication of distribution and marginal costs, the capacity of producers to have direct access to billions of customers instantaneously, the advances of open source communities and mentalities, all these fascinating developments are bound to turn the autocratic Soviet-like megaliths of today into curiosities that students of political economy, business studies et al will marvel at in the future, just like school children marvel at dinosaur skeletons at the Natural History museum.

Well worth a full read, particularly by those who've worked in a corporation.

The Overjustification Effect

Blog post at You Are Not So Smart
Related to intrinsic versus extrinsic motivation

According to the research, in modern America the average income required to be happy day-to-day, to experience “emotional well being” is about $75,000 a year. According to the researchers, past that point adding more to your income “does nothing for happiness, enjoyment, sadness, or stress.”


In 1980, David Rosenfield, Robert Folger and Harold Adelman at Southern Methodist University revealed a way you can defeat the overjustification effect. Seek employers who dole out reward – paychecks, bonuses, promotions, etc. – based not on quotas or task completions but instead based on competence.

The results of the study suggested when you get rewarded based on how well you perform a task, as long as those reasons are made perfectly clear, rewards will generate that electric exuberance of intrinsic validation, and the higher the reward, the better the feeling and the more likely you will try harder in the future. On the other hand, if you are getting rewarded just for being a warm body, no matter how well you do your job, no matter what you achieve, the electric feeling is absent. In those conditions greater rewards don’t lead to more output, don’t encourage you to strive for greatness. Overall, the study suggested rewards don’t have motivational power unless they make you feel competent. Money alone doesn’t do that.

W.L. Gore Case Study

Article at Management Exchange

It’s hard to talk about management innovation without tipping your hat to W.L. Gore, the venerable maker of Gore-Tex and a host of other pioneering materials and products as diverse as synthetic vascular grafts, Elixir guitar strings, and Glide dental floss. Lauded as "the world's most innovative company" time and time again, Gore's wholly original (and endlessly inspirational) model for creating a true democracy of innovation is firmly rooted in the story of founder Bill Gore.

Bill Gore conceived of W.L. Gore as a kind of experiment in management innovation—one that is still ongoing. The questions that drove him at founding are crucial questions managers everywhere must grapple with today: Was it possible to build a company with no hierarchy—where everyone was free to talk with everyone else? How about a company where there were no bosses, no supervisors, no managers and no vice presidents?  Could W. L. Gore preserve a sense of family and collegiality even as it scaled?  Could you create a company with no “core” business, one that was as focused on creating the future as on preserving the past? The answers to each of these questions was an emphatic "Yes!"

Google's Project Oxygen

New York Times article

retyped from the NYT article's image

Google's Rules
To engineer better managers, Google pored over performance reviews, feedback surveys and award nominations, correlating words and phrases as only a data-driven company like it can do. Here is an edited list of the directives it produced - in order of importance - as well as a few management pitfalls it found.

Eight Good Behaviors

• Be a good coach
• Provide specific constructive feedback, balancing the negative and the positive.
• Have regular one-on-ones, presenting solutions to problems tailored to your employees' specific strengths.
• Empower your team and don't micromanage
• Balance giving freedom to your employees, while still being available for advice. Make "stretch" assignments to help the team tackle big problems.
• Express interest in team members' success and personal well-being
• Get to know your employees as people, with lives outside of work.
• Make new members of your team feel welcome and help ease their transition.
• Don't be a sissy: Be productive and results-oriented
  • Focus on what employees want the team to achieve and how they can help achieve it.
  • Help the team prioritize work and use seniority to remove roadblocks.
• Be a good communicator and listen to your team
• Communication is two-way: you both listen and share information.
• Hold all-hands meetings and be straightforward about the messages and goals of the team. Help the team connect the dots.
• Encourage open dialogue and listen to the issue and concerns of your employees.
• Help your employees with career development
• Have a clear vision and strategy for the team
• Even in the midst of turmoil, keep the team focused on goals and strategy.
• Involve the team in setting and evolving the team's vision and making progress toward it.
• Have key technical skills so you can help advise the team
• Roll up your sleeves and conduct work side by side with the team, when needed.
• Understand the specific challenges of the work.

Three Pitfalls of Managers

• Have trouble making a transition to the team
• Sometimes, fantastic individual contributors are promoted to managers without the necessary skills to lead people.
• People hired from outside the organization don't always understand the unique aspects of managing at Google.
• Lack a consistent approach to performance management and career development
• Don't help employees understand how these work at Google and doesn't coach them on their options to develop and stretch.
• Not proactive, waits for the employee to come to them.
• Spend too little time managing and communicating

A Linchpin Hierarchy

Blog post by Seth Godin

1. Do exactly what the boss says.
2. Ask the boss hard questions.
3. Tell the boss what your best choice among the available options is. Insist.
4. Have co-workers and bosses ask you hard questions.
5. Invent a whole new way to do things, something that wasn't on the list.
6. Push and encourage and lead your co-workers to do ever better work.
7. Insist that they push and encourage you.

I might quibble with the ranking for #6 - I think it's difficult to rank compared with #5. Perhaps Seth is thinking of #5 as only benefiting yourself, whereas #6 benefits the group? Still, pushing for incremental improvement in many  people versus a revolutionary improvement that can be spread...

How Great Entrepreneurs Think

Article at Inc.com

Sarasvathy likes to compare expert entrepreneurs to Iron Chefs: at their best when presented with an assortment of motley ingredients and challenged to whip up whatever dish expediency and imagination suggest. Corporate leaders, by contrast, decide they are going to make Swedish meatballs. They then proceed to shop, measure, mix, and cook Swedish meatballs in the most efficient, cost-effective manner possible.

Turning data into money

Blog post at PeteSearch

Here's my hierarchy showing the stages from raw data to cold, hard cash:

1. Data
2. Charts
3. Reports
4. Recommendations

You're offering them direct ways to meet their business goals, which is incredibly valuable. This is the Nirvana of data startups, you've turned into an essential business tool that your customers know is helping them make money, so they're willing to pay a lot.

My rephrasing of Pete's post: Showing people information is usually not enough. You often have to recommend what to DO with that information.

Using capitalism, for good

Blog post by Seth Godin

Part 1: The bottom is important.
Almost a third of the world's population earns $2.50 or less a day. The enormity of this disparity takes my breath away, but there's an interesting flip side to it: That's a market of more than five billion dollars a day. Add the next segment ($5 a day) and it's easy to see that every single day, the poorest people in the world spend more than ten billion dollars to live their lives.

Part 2: The bottom is an opportunity (for both buyer or seller).

Part 3: It's not as easy as it looks
So you see the paradox. A new product and approach and innovation could dramatically improve the life and income of a billion people, but those people have been conditioned to ignore the very tools that are a reflex of marketers that might sell it to them. Fear of loss is greater than fear of gain. Advertising is inefficient and ineffective. And the worldview of the shopper is that they're not a shopper. They're in search of refills.
The answer, it turns out, is in connecting and leading Tribes. It lies in engaging directly and experientially with individuals, not getting distribution in front of markets. Figure out how to use direct selling in just one village, and then do it in ten, and then in a hundred. The broad, mass market approach of a Western marketer is foolish because there is no mass market in places where villages are the market.

Part 4: The (eventual) power of the early adopter
Just because it is going to take longer than it should doesn't mean we should walk away. There are big opportunities here, for all of us. It's going to take some time, but it's worth it.

Seth Godin's blog post relates to the mission of the Acumen Fund, "Investing in businesses to end global poverty"

Simplicity is highly overrated

(in mass-market consumer goods)

Blog post by Don Norman

If a company spent more money to design and build an appliance that worked so well, so automatically, that all it needed was an on-off switch, people would reject it. “This simple looking thing costs more?” They would complain. “What is that company thinking of? I’ll buy the cheaper one with all those extra features – after all, it’s better, right? And I save money.”

Logic and reason, I have to keep explaining, are wonderful virtues, but they are irrelevant in describing human behavior. Trying to prove a point through intelligent, reasonable argumentation is what I call the “engineer’s fallacy.” (Also, the economist’s fallacy.”)  We have to design for the way people really behave [emphasis added], not as engineers or economists would prefer them to behave.

Should managers know how to code?

Blog post by Scott Berkun

A great analysis of the question, with two answers depending on your heritage - technical or business. My favorite line:

Once you are the boss, your primary job is to do all the things that individual programmers can not do.

Trust, epiphany, and say vs do

Rough transcript of a speech by Scott Berkun

Trust
Think of most of your peers  – how many do you trust? How many would you trust with a special, dangerous, or brilliant idea?  I’d say, based on my experiences at many organizations, only one of every three teams, in all of the universe, has a culture of trust. Without trust, there is no collaboration. Without trust, ideas do not go anywhere even if someone finds the courage to mention them at all.

Epiphany
Next, we need to get past our obsession with epiphany. You won’t find any flash of insight in history that wasn’t followed, or proceeded, by years of hard work. Ideas are easy. They are cheap. Any creativity book or course will help you find more ideas. What’s rare is the willingness to bet you reputation, career, or finances on your ideas. To commit fully to pursuing them.

Say vs Do
Words like radical, game-changing, breakthrough, and disruptive are similarly used to suggest something in lieu of actually being it. You can say innovative as many times as you want, but it won’t make you an innovator, nor  make inventions, patents or profits magically appear in your hands.

Building Trust

Blog post at Rands in Repose

My belief is that a team built on trust and respect is vastly more productive and efficient than the one where managers are distant supervisors and co-workers are 9-to-5 people you occasionally see in meetings. You’re not striving to be everyone’s pal; that’s not the goal. The goal is a set of relationships where there is a mutual belief in each other’s reliability, truth, ability, and strengths.

And I've never heard this definition of trash-talking, but it makes so much sense:

Trash talking is improvisational critical thinking — it’s the art of building comedy in the moment with only the immediate materials provided.

Key thing I took from this post isn't the rules for B.A.B. - substitute the tool that best fits your own situation. For us (this week), that might be Lego Star Wars on the GameCube. It explicitly requires teamwork and the sense of shared accomplishment is a great way to build/maintain trust.

"Good" Beats "Innovative" Nearly Every Time

Article at BusinessWeek by Scott Berkun

But it's clear most companies fail not because of their lack of inventiveness; it's their lack of basic competence. Most leaders fail to prevent bureaucracy, hubris, and too many cooks from killing good ideas before they ever get a chance to make it out the door, resulting in the mediocrity we know too well.

Most projects aimed at innovation fail because creators become distracted by their egos from the true goal: to solve real problems for real people. (emphasis added)

The Way [Paul English] Works

Article at Inc.com

It's like hot potato. Except I take it seriously. When the phone rings, I literally jump over the desks just so I can get to the phone before anyone else. I love talking to customers, even angry ones. I learn a lot from them about how to make the site easier to use. When the call's over, I'll say, "If you have any follow-up questions, my name is Paul English; I'm the co-founder of the company." I'll give out my personal cell-phone number. Only one out of 20 people might actually call, but they're blown away when I do that.

I'm not attempting to excerpt-summarize this article - I think the above excerpt gives a flavor of the Paul English's approach. The article is well worth reading in its entirety.

Does Slow Growth Equal Slow Death?

Joel Spolsky article at Inc.com

If real life is anything like the Civilization series by Sid Meier, I would argue - "Yes!" This one quote from a Civ4 strategy guide sums it up best:
And in this, you’ll see a hint of what’s necessary to win on higher difficulties: more aggression.

Back to Joel Spolsky:
I have always believed that there is a natural, organic rate at which a business should grow, and that if we expanded too fast, the wheels would come flying off.

Uh-oh. Are we actually losing our market leadership position because we're careful?

It's entirely possible. Think of it this way: If you're growing at 50 percent a year, and your competitor is growing at 100 percent a year, it takes only eight years before your competitor is 10 times bigger than you. And when it's 10 times bigger than you, it can buy 10 times as much advertising and do 10 times as many projects and have meetings with 10 times as many customers. And you begin to disappear.

Cultivate Teams, Not Ideas

Blog post at CodingHorror

I wouldn't call ideas worthless, per se, but it's clear that ideas alone are a hollow sort of currency. Success is rarely determined by the quality of your ideas. But it is frequently determined by the quality of your execution. So instead of worrying about whether the Next Big Idea you're all working on is sufficiently brilliant, worry about how well you're executing.

This is all your app is: a collection of tiny details.
- Wil Shipley

If you give a good idea to a mediocre group, they'll screw it up. If you give a mediocre idea to a good group, they'll fix it. Or they'll throw it away and come up with something else.
- Edwin Catmull (Pixar)

Slime Mold vs Traffic Planners

Freakonomics article
MSNBC article

A very elegant experimental setup:

The scientists placed food deposits (oat flakes) in a pattern that mimicked the distribution of population in the greater Tokyo area. They also discouraged mold growth in areas corresponding to obstacles like ocean and mountains by placing light sources (mold’s sworn enemy) in these spots. The researchers then introduced a single deposit of the mold on their mock central Tokyo and let the slime do its thing.

The result? The mold formed a network that closely mimicked the actual Tokyo railway map. In terms of efficiency and fault tolerance, the mold performed about the same as the real Tokyo system, and it did so at a slightly lower cost.

Conclusion?

Organic development can complement the planning efforts of a central intelligence. Planners see the big picture, but may have limited information about the small details. Organic planning accumulates the collective wisdom of myriad individuals who each know only a very small part of the picture, but know their part very well.

An interesting thought experiment: think about how this describes how a company functions. Are there any lessons that companies (or any other group effort) can learn from slime molds?

Think Different

Boston.com article

The problem isn't usually - or at least isn't only - too little information, but too much, most of it ambiguous, contradictory, or misleading.

If there are flaws in the way that we think, then gathering more and more information isn't a solution. What our intelligence system really needs is ways to avoid becoming trapped by the natural tendency to leap to conclusions and stick with them.

Suggestions:

• They [Organizations] can systematically solicit the views of people with different perspectives, for example, or use devil's advocates who will challenge established views.
• To compensate for the tendency to rely on implicit understandings, intelligence analysts can be pushed to fully explain their reasoning, allowing others if not themselves to probe the assumptions that often play a large and unacknowledged role in their conclusions.
• To better recognize the significance of absences, analysts can learn to think explicitly about what evidence should be appearing if their beliefs are correct.
• Analysts can also be trained to consider, explicitly, what evidence could lead them to change their minds - not only alerting themselves to the possibility that the necessary information might be missing, but also providing an avenue for others to find evidence that might overturn established views.

Striking a balance between communication and inefficiency

A Little Less Conversation

I think this is a fascinating article because while I firmly believe in Brook's Law, I also have a strong desire to "keep everybody on the same page". I think this article is an excellent reminder to myself - go easy on the CC's.

When you started your company, you probably did a great job of communicating. Everybody told one another everything. And your customers loved it, because when they called in to ask about their purchase order, everybody knew where it was. But as you get bigger, you can't keep telling everybody about every purchase order, so you have to invent specific communications systems so that exactly the right people find out and nobody else. Not because it's confidential. Because it's a waste of time.

I firmly believe in this as well, as a general rule. Every action item should be assigned to a single person. Emailed questions should be directed at a single person. Once you email two people asking for information, they each think the other is going to respond and no one responds. This is not to say that people can't work as teams, but every team should have a specific person who is ultimately responsible - this is the only way to ensure accountability.

And on every project, assign one person to make sure that communication happens -- but only the right communication. Otherwise the team will just start having long meetings with everyone there and, frankly, people will socialize, and bloviate, and speechify, and argue about things they don't really care about just to hear their own voices.

Show and Sell: The Secret to Apple's Magic

Article at Gizmodo.com

Yet when Jobs reveals the company's next product, there's a critical difference: It exists. When possible, it is available for retail purchase the same day. There are few maybes or eventuallys tempering the presentation: "Here is the tiny miracle we've created. We want to sell it to you today."

I'm not a huge fan of Apple products - prefer an open ecosystem rather than one that is locked down - but you can't deny that they've had a huge impact on consumers (or that others could use a bit of Apple's fanatical approach to design).