Leaders Are Made, Not Born

Image credit: Steelforge.com

 

(A.K.A. The 1% Investor Challenge)

I often hear from CEO’s and Investors that one of their strategic guidelines is to “invest in the team” and that talent and culture are strategic differentiators. Based on my experience, I think they mean to find “ready-made” leaders and executive teams and give them money to succeed in their plans. In the past 25 years, I’ve worked with thousands of leaders from front line supervisors to middle managers, and from senior executives to entrepreneurs, founders and board members. Not one of them was a “born” leader.

Successful leaders have many stories about how their experience has shaped their approach to business, people, and customers. Many are “self-made” leaders, having learned quickly from their mistakes, adapted to unforeseen circumstances, or demonstrated relentless curiosity. All great leaders are made over time, with dedicated focus and effort toward personal and professional effectiveness. If you look closely, there is sufficient evidence in someone’s life to inspect and evaluate if he or she is effective in key aspects of “scalable” leadership, but this is too often left unexamined by investors.

Having worked side-by-side, in the trenches at dozens of start-ups, I can tell you the demands on company executives are tremendous. They face high speed, complex, ambiguous, uncertain conditions all day, every day. It strikes me as odd that investors don’t actually “invest” in the leaders of their companies. They hand over millions of dollars to the Founder/CEO to build a company, but they rarely spend any of it on the leaders themselves. I think this is an incredible oversight in diligence, and a gapping hole in fiduciary responsibility. Hope is not a strategy.

It seems unreasonable to assume a CEO (even a serial entrepreneur) will be successful leading a fast-growing, 100+ person organization with no attention to his or her personal effectiveness. Their very nature makes it more likely they will end up like Travis Kalanick than Bob Iger. Leading a complex organization (anything over 40 people) requires a well-honed set of interpersonal skills, professional presence and strategic talent planning (see Facebook and Google) to be successful. Yet most investors stand by passively while CEO’s and executive teams struggle with leadership basics and burn their money. The failure rate of start-ups is very high… conventional wisdom says 9 out of 10 don’t make it. There is much agreement that leadership and management mistakes are often the main cause of failure.

Recently I’ve approached dozens of venture capitalists and private equity investors with a proposal to invest in their executives through proven leadership tools and programs. Nearly all of them have responded with some form of “that’s nice to consider some day, but we don’t have enough money right now.”

Huh?

What they’re really saying is, we don’t care about the actual people in the company. We make a bunch of investments and hope like hell at least 1 pays back enough to carry the fund. This is called spreading the risk, but is essentially gambling. All that people stuff is too messy and soft to address so they just ignore it.

I think it’s time for investors to start owning the outcomes of their lack of attention to leadership and talent. If you want to make a difference in the world by building companies, you should conduct diligence on your executives, not just the company finances, addressable market and customer traction. If you think talent and culture are strategic differentiators, ensure that proper efforts are being made to develop the CEO and the executive team. Otherwise you’re just hoping some whip-smart founder will somehow figure out how to transfer zero experience working in groups to high impact organizational leadership.

I’m here to tell you that execution matters,
and execution is all about people.

The average Series A deal size in 2016 was $5M. Series B average was $12M, and later stage deals average over $25M. I’ve heard more than one CEO say they put their money on advertising and engineers, not HR. That might get you traction, but it won’t get you sustainable high performance. If you are in the game for a quick flip, I get it. But if you are really trying to build a high performing company, leadership is not “nice to do,” it’s an essential catalyst that unlocks sustainable growth.

Here’s my challenge to any investor willing to test it:

Earmark 1% of your next investment for executive development. If you’re putting in $1M make sure $10K is spent on development for the CEO and the leadership team. If you lay down $10M, certainly a $100K investment in the top team will improve your chances of success. Even better, consider investing 1% of your total fund in the proper resources to support leadership development in the full portfolio. You can achieve much better economies of scale and cross pollination in that approach. You can even develop a unique portfolio advantage by doing this better than other investors. It’s a true value add for your money. And it will pay you back with better performing companies and a pool of talent you can tap over the long haul.

I understand that not all development is worth it, and that some efforts are a complete waste of time. Run your 1% investment like any other A/B test. Identify the intervention and track the progress. If you have any questions about what kind of leadership development works best, feel free to contact me or check in with an executive development specialist you already know.

If just one more of the companies in your portfolio steers clear of the failures of executive leadership your fund will be twice as good. That’s smart money.

Customer Centered Leadership

Ladies and Gentleman, The Beatles!

If ever there was one best Business Guru, it would have to be Peter Drucker. His work emerged during the height of the Industrial Age and serves as the foundation of management practice in most businesses today. Just like picking your favorite Beatles song (A Day In The Life), it’s kind of hard to boil his work down to one statement. But here’s mine:

Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business (The Practice of Management, 1954).

There is one word in this quote that might need to be modernized, but only because we can assume Mr. Drucker was naturally influenced by his era, and not yet hip to the power of design and the more recent practices of customer empathy. To make the most sense in today’s world, I propose we change the word “create” to “discover” as it better underscores the idea of providing something for a customer versus selling them some new widget. We’ve certainly learned by now that the world will NOT beat a path to your door if you build a better mousetrap (Ralph Waldo Emerson). Customers will flock to your company only if you are solving a problem or fulfilling a need, even if they aren’t aware they have it yet.

Marketing is responsible for discovering customer needs and innovation is responsible for solving them. Hand and glove. Many innovators have an initial customer insight and design a solution for that. Often this is “design for self” where the solution feels right to the one inventing it. I’d say most early stage businesses created only a minimum viable product or have no sustainable advantage, so quickly burn through early stage growth and stall. In today’s Internet fueled, flat world, companies can go through this initial growth stage in a matter of months. In the good ‘ol days of Henry Ford, it could take years to run out of the initial growth stage (perhaps 125, if they don’t get busy quickly at Ford).

The only way out of this problem is to understand your customer intimately, and adapt to the continual pace of change around you. This requires a new kind of corporate framework. The pace of business technology is moving so fast that people are now able to see the real impact of robots, machine learning, and computing power as human jobs are replaced by automation and artificial intelligence. Left to the Industrial model of organization, people are essentially machines who can be replaced with technological advancement. To function in our high tech, rapid change world companies need to build human centered organizations or risk losing all ability to market and innovate. This would be a very bad state for businesses because they would soon be without customers with no human insight, synthesis, or creativity operating within their organization.

Human Centered Organizations

Traditional businesses are built in a hierarchical model that works well in a predictable, stable business environment. In the past several decades, as uncertainty and change increase, there have been plenty of replacement designs proposed (e.g. Holacracy, Heterarchy, etc.). But these distinctions are missing the point, and therefore don’t solve the problem. A human centered organization isn’t a different way to decide or control, it’s purpose-built to enable creativity and collaboration. These are the two essential capabilities underlying the best marketing and innovation functions. Under the dominant hierarchical world, we’re stuck searching for Purple Squirrels to build Unicorns. Wait, What? We’ve designed companies that need extremely rare people to achieve what is now the expected standard of venture capital investments. Sorry, but I can’t help myself, here’s my other favorite Druckerism as it relates to organization design: (Beatles #2=Love Me Do)

No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under a leadership composed of average human beings.

To be successful in today’s world, and achieve the purpose described by Drucker, businesses must enable average human beings to perform at their best. To perform at their best, people need to be well. I’ve covered this part before so I won’t re-hash it here. I will suggest a new label for human-centered organization design for those seeking a simple way to net this out: reciprocity.

Reciprocity

Reciprocity is the organizing principle of a human-centered organization. It is built on the seminal economic theory called the Prisoner’s Dilemma. The essence is that cooperation is the better rational choice than selfishness. That is, it leads to better outcomes… proven by Math! The problem is that people are not always rational and often behave selfishly (Duh!). So, many organizations are designed to control for that and become disengaging. A reciprocal organization empathizes with human failings and offers support and resources to encourage wellness and higher order behavior in three ways:

1. Growth Mindset
2. Increasing Self Awareness
3. Everyday Presence

When organizations are designed to support employees in these three (natural) human traits they are far more creative and collaborative. Therefore, they are better able to market and innovate, which is to discover and solve customer problems. The practice of designing, building and managing a reciprocal organization is called Customer Centered Leadership.

Moving from Performance Management to Performance Dialogue

I just finished reading Let’s Not Kill Performance Evaluations Yet by Lori Goler, Janelle Gale and Adam Grant. I am in full agreement with the premise of their article: that performance evaluations can have real value to employees. I think it’s clear that understanding “where you stand” is better than having judgments hidden in a black box, only to surprise you when it’s time to discuss a salary increase. After all, open sharing is a natural aspect of constructive human relationships, so it’s destructive to have a secret evaluation going on behind your back.

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Throughout the article they made excellent points, using research to show how most employees would rather have an evaluation than not. I’m not a fan of “killing” reviews, so I am happy to have a solid piece of writing to show that’s not a great idea. Most people would agree that something is better than nothing, and if you’re going to do traditional performance management, I think the approach described at Facebook would be called “best practice.” Best as they point out (among others like Jeffrey Pfeffer) means you gather input from multiple perspectives, evaluate performance over time, and attempt to remove bias from the written discourse (BTW, I love that they are so committed to removing bias, but have to say that most companies I know simply don’t have a “team of analysts” available to conduct that step). Best also includes translating performance ratings into compensation.

Despite the clarity of their points, I still don’t think “best practice” is good enough to make traditional performance reviews worthwhile. Even when done with as much care and diligence as described by Facebook, it’s still a very time consuming, expensive, and unsatisfying process for most participants. It’s still a dreaded, necessary evil that people must suffer through in order to be considered for a raise. I’m not sure how satisfied Facebook employees are with the reviews process, but other research on performance appraisals shows satisfaction levels are well below an acceptable level we’d apply to any other business process. Can you imagine if you accepted a 65% CSAT score as “good enough” in your customer contact center or any kind of product quality standard?

So while something is better than nothing, I think it’s unacceptable that such an expensive investment would be “okay” at anything less than 90% satisfaction for participants.
The trend to “kill reviews” is misguided, but understandable. I think the real problem with performance reviews is more fundamental than the issues of transparency, perspective, and bias. Fixing these issues assumes a paradigm about people and work that is functionally out of date and misaligned with what high performance people need to be successful. Ask one successful entrepreneur when a performance review helped them improve (actually ask them all!). I think that’s um, never. That persona couldn’t even stand getting through school, let alone have a boss give them a rating. Isn’t that a really interesting conundrum? It makes me wonder if there might be other dynamics underlying high performance that we don’t fully understand in the HR and OD bubble.

original-faxTo me, using performance reviews is like using a fax to send information to your insurance company. They need paperwork to justify their actions because their processes and tools are built around audits that review PAPER. Their well-designed controls don’t allow their agents to have email addresses or a printer, so you can’t send an attachment for them to print and file. Because of their sunk costs in legacy systems, customers have to print, sign, scan and fax so their agents have something physical to file. Despite the fact the paper actually originated in some “newfangled” digital transaction. Pretty crazy, huh?
Solving the problems with performance reviews is not about how to deliver them better, it’s about taking a step back to wonder, “What’s the best way to help people perform at their best?”

This might seem like a tangent, but in order to truly fix performance reviews, we need to dig deeper into today’s relevant human performance dynamics and create an entirely new design paradigm. Here are some warm up questions to stretch your thinking and start looking at this problem from other angles:

How do we know if people are doing good work?
How do we know if people are doing the right work?
Why do we care about the answers to those questions?
Why do entrepreneurs achieve so much without getting reviewed?
Why do entrepreneurs succeed without having a boss?
Why do some sports teams overachieve while others don’t?
Outside of business, what are other situations where work quality matters?
What do we know about evaluation in school versus evaluation at work?
What do we know about evaluation in families?
What motivates people to do good work?
How do you measure human output?
Who should measure human output?
What information do people need to perform at their best?
How do salaries get set?
Do bonuses motivate people?
What is performance? How do you know when it’s effective?
When have you experienced a performance insight? How did you get it?
When you have you done your best work?
What makes you call that “your best work”?
Why is the sky blue? (Just kidding!)
What’s the difference between effort and output? Do both matter?
Where have you observed “high performance” in action?
What are the conditions that create high performance?
What kinds of relationships exist in high performance situations?
What kinds of relationships exist in low performance situations?
Are relationships an important factor in high performance?
How does the human brain react to threats? What does it do to our body?
How does the human brain react to challenges? To rewards? To compliments?
What is the language of high performance? Are some words better than others?
Where did the term feedback originate?
What’s different about work today versus work 25–50–100–1000 years ago?

I’m sure you could come up with dozens more questions as you pick apart the situation and begin to wonder with a “beginner’s mind” what performance reviews are all about. The next step is to define a clear problem statement that motivates us to persist in this now completely messy process. This is about finding satisfying answers to these questions:

What problem are you trying to solve?
How do you know you have this problem?

To move us forward more quickly here, I’ll share some of the work I’ve been doing over the past decade while struggling with this persistent and complex challenge so many companies face. It took me several attempts at making performance reviews better before I decided to zoom out and rethink the whole concept. I built “best practice” processes at Citibank, Levi Strauss, and Mercury Interactive before arriving at IDEO, where implementing a best practice review system was abhorrent to even consider. Since I was forced into finding a different way, I adopted IDEO design thinking techniques (When in Rome…) to help me create something that would work there.

I interviewed dozens of IDEO designers and support staff to hear their stories about performance reviews, feedback, and other related topics. I did a review of the literature and conducted benchmarking conversations. Not surprisingly my anecdotal discovery netted strong negative feelings about “being reviewed” but thankfully provided all kinds of cool ideas for making improvements.

Well into the process, I asked a sharp young designer in Boston what he thought of 360 reviews. Instead of answering about his experience receiving a review, he flipped the question and answered about giving them saying, “I don’t have time to give feedback to others!”

Given the supportive and collaborative nature of IDEO folk in general, I was taken aback. I asked him to explain a little more, and he gave me the spark that would fuel my approach from then until today. He described how he didn’t think it fair to give someone half-assed, quick snippets of feedback, and that doing a good job of giving helpful, high quality suggestions is a huge burden in addition to his regular work. In his opinion, it was an extreme disservice to provide feedback that was not well thought out and thorough. People would be counting on that information to learn and grow, and providing anything less than would be damaging and wrong.

I had to steep in those comments among the hundreds of other Post-its I had gathered until I found a pattern to guide my design process. The big insight is to recognize that the person who benefits most from feedback is the person receiving it. Sounds simple, but with closer consideration, it reverses the feedback dynamic from giving to gathering. In my experience, most performance management systems are designed from the perspective of the manager or the company. Seeking to “manage” limited financial resources by differentiating people based on their performance is a controlling paradigm that negates the value of feedback from the git-go.

If instead, we start from the perspective of the individual, the problem statement becomes How can I find out if I’m doing my work properly? and a separate issue of Am I getting paid fairly for the work I produce?

So while performance management is about evaluating performance over time, performance dialogue is about discussing the focus and quality of work.
Over time, I’ve clarified this into to 2 separate conversations people need to conduct at work, each with 2 driving questions:

Conversation 1: Evaluating my performance:
Is this the right work for me to do?
Is this work I’m doing good enough?

Conversation 2: Navigating my career:
Do I have the capabilities necessary to succeed in this job?
What capabilities do I need to progress in my career?

Once divided into these 2 conversations and 4 questions, building a process, tools, and procedures to help answer them looks much different than the performance review we all know and hate today. The associated design questions in the new paradigm might look like this:

Who can help me answer this question?
(Satisfies a need to identify key stakeholders like manager, peers, clients)
What are good ways to gather input from others?
(Based on deep understanding of predictable human dynamics)
How can I make giving input/perspective easy for my stakeholders?
(Places the burden on me not them)
How do a make sense of their answers?
(Leads to tools like a survey I can use to increase my skill/efficiency)
How often should I ask these questions?
(Helps me define the nature of my work)

In its most recent iteration at Thrive Market, I’ve started using a technology platform called 15Five to enable Performance Dialogue and make it scalable and efficient. 15Five provides the organizational reporting framework, a bundle of great question-building tools, and modern ways (like social media) to engage others in collaborative discussions about the focus and quality of work. But technology alone is not sufficient to make this fly. The “self-directing, self-correcting” behaviors we need to achieve personal and professional growth require refined interpersonal skills and attitudes, so we provide a basic training workshop and coaching to help people understand and engage in the process effectively.

So, How Do I Get a Raise?

Compensation is an agreement between an organization and an individual to pay a certain amount of money for a certain amount/type/scope of work. Performance Dialogue has no direct connection to compensation. Zero. Zilch. Nada.

Performance Dialogue ensures work focus and work quality because it is a discussion about work not an evaluation of it.

If you want to have high performance, creativity or innovation in your organization then people need to take risks. If you tie performance conversations to compensation they get corrupted because nobody will share a mistake or challenge under the fear they will get dinged in their rating.

To determine someone’s compensation, you need to evaluate her capabilities against the market. It is a completely different conversation that you have once or twice a year, and is essentially the same process you use when you interview someone for a job in the first place. What does their experience indicate they are the able to do? What job responsibilities can they reliable accomplish? What is the evidence that they are capable of doing the job (and at what level of scope/responsibility/impact)? People with more capabilities generally earn more, so if someone grows in her capabilities, she should get a raise in accordance with what the market would pay her. The fundamental switch here is moving from evaluating performance against goals to evaluating capabilities growth. To clearly distinguish it from Performance Dialogue, I call this process Career Navigation.

Wait, what about poor performers?

Basic performance is a binary problem. Either someone is putting in the effort and making progress or she/he is not. If you determine that someone is no longer interested in putting in the effort, or is substantially unable to do the work, it’s time to part ways. This should be discovered over time via Performance Dialogue and handled long before you engage in Career Navigation discussions. Keeping someone on your team who is not able to do the work is a disservice to everyone involved. Act with care and compassion, but follow through nonetheless.

This is really different

The paradigm shift from manager-led to individual-driven, should not be underestimated as a radical change for most people. In order to engage in Performance Dialogue and Career Navigation successfully, people involved have to operate from a growth mindset, not a fixed one and use inquiry and curiosity (not fear) as the motivation to participate. They also must interact with colleagues, supervisors and clients in a reciprocal partnership and avoid the paternalistic tendencies in most manager-employee relationships.

Behaving with reciprocity does not mean turning the dialogue into a consensus or compromised endeavor that makes everybody feel good. Managers still maintain decision making authority and have the responsibility to ensure goals and standards are met. Employees gain more explicit control over their career options.

The big difference in a reciprocal relationship is the use of questions and agreements, not directives and mandates. It rests on the power of an unconditional, positive question not a passive-aggressive statement disguised as a question. In a Performance Dialogue world, nobody should walk away feeling “tasked” to do something… that’s the old paradigm creeping back. It might take more time up front, but I think it’s better to invest in core development and enable people to become self-directing and self-correcting “creators” over designing a high control system that assumes people are pawns.

Ode to the Karate Kid

I just saw a  funny Facebook video of my good friend Phil leading what looks like a wedding party in a group “dance” called “Shake Your Foot.”

 

Strangely, I had started this post yesterday, having had some weird dreams about the very same dance the night before… call it coincidence, but I think it’s a deep universal connection that forms between anyone who has ever participated in this whacky ritual.

I’ve used this as an icebreaker or warm up during group leadership events and have shared it with hundreds, nay thousands of people over the years, including a large group of Microsoft executives on retreat in Alaska. More recently I even incorporated it into my “welcome” presentation on my first day at a new job (but that’s another story!).

I credit the great Joe Pounds of YMCA Storer Camps fame for introducing, and perhaps inventing Shake Your Foot. Phil and I learned it about the same time when we were working in the Adolescent Leadership program there. While delivered with the gusto that only Phil can muster, one thing missing from his recent wedding video is the portion fondly known by devotees as the Karate Kid Interlude.

As you may recall from the movie, young Daniel (played by Ralph Macchio) is schooled by martial arts master Miyagi (played by Pat Morita) in an effort to overcome bullying at school. Perhaps the most memorable moment in the movie is the “wax on, wax off” scene, but I digress. We found the “crane kick” in the penultimate fighting scene more inspiring and worthy of endless mimicry, and so it was inserted into Shake Your Foot in lieu of the finger snapping “too cool for school” interlude.

Karate Kid Crane Kick

Standing on one foot with my arms spread wide, crowing like a rooster came pretty easily to me, so I must say I really didn’t get why it was both funny and challenging to most of the people we engaged in this effort. That is until recently, when I was dealing with intense shoulder pain due to a small rotator cuff tear. Suddenly I could barely lift my arm, let alone hold it steady in the uplifted crane position.

Now, feeling a bit ashamed of my lack of empathy for those who struggled with this, I do daily stretches just to stand straight up without pain. I am happy to report that I’m nearing full motion in both arms and am starting to regain some of my former flexibility. Thus my recent re-discovery of the Karate Kid Interlude… it’s nearly impossible for me to stretch my arms up without the catchy Shake Your Foot song invading my focus. It brings a smile to an otherwise arduous exercise so I just go for it… all by myself.

Now if only someone can explain why I’m standing in my bedroom on one foot, crowing like a rooster to my kids…

Innovation or hubris?

I just finished reading a great article by Austin Carr in Fast Company. He tells the long and sordid story of a multiyear, billion dollar effort by Disney to “overhaul the digital infrastructure” and “change the fundamental nature of Disney’s park experience” for customers. Now that’s an ambitious and exciting call to action! The article struck a chord for me because I just got back from a 5 day vacation at Disney World with my family for our Spring Break.

Disney Crowd

I’ve been to Disney parks more than a handful of times since my kids have been around, starting about 15 years ago. I have to say that I did not experience any appreciable change in this last visit that I would classify as an “overhaul” or certainly not a shift in the “fundamental nature” of the experience. I did notice a few new things here and there and was quite curious about the effort it took to replace paper tickets with an electronic pass. I saw people entering with wrist bands, but my family had little plastic cards like you find in most hotels. I found out you have to be staying in a Disney hotel to get one of the bands. Oh well. They didn’t seem to do anything different than the cards and I didn’t have the kids bugging me to buy yet another little Disney item to stick on them.

The dominant aspect of my experience was waiting. Waiting in lines for rides, waiting for the crowd to move so I could get where I wanted to go. Waiting for the Park Attendant to re-set our cards because the Fast Pass names didn’t align with the fingerprint names recorded within. We discovered this problem when we tried to split up on two different rides and we all got blue signals when we tried to get through the Fast Pass gate. We had three great ride entry experiences each day where the Fast Pass shortened our waiting by as much as an hour (down from 90 minutes to something like 30). We also had to wait for transportation… wait for the Monorail, wait for a bus, wait for a boat. All the waiting made my Disney experience something I had to tolerate on behalf of my 4-year old niece who is currently in the Princess Sweet Spot. But it did not really make me happy.

It was very fun to watch my niece’s eyes light up with all the magic, and my daughters really enjoyed taking their little cousin around and experiencing her joy together. I wonder about princesses as role models, and have some vague concerns with the Disney gender stereotypes, but I’ll leave that for another time. Mostly, Disney is good clean fun and overall I’d say I’m a Disney fan, but I was very glad when the trip was over.

cinderella_laugh

The Reinventing Happiness article made me recall many observations and thoughts I had about how Disney World seems to be falling behind, or appears out of sync with today’s ideas of entertainment. It’s quaint, it’s cute, but it’s aging drastically. In Tomorrow Land I rode gasoline powered cars on the Speedway and experienced a traffic jam as the ride ended (more waiting). My son and I sat there breathing in the gas fumes and listening to the “lawnmower” engines revving and I thought, “This is not Tomorrow, this is Yesterday! Maybe they should partner with Tesla to create a driving experience that’s ahead of our time, showing how solar power can be converted to a quiet, smooth, and exciting new driving experience. That would be cool.

I liked the Disney World mobile app for the map showing ride wait times, and a way to keep track of my Fast Passes, but noticed there was no “digital layer” where I could interact with the rides. Now that I’ve read they recently overhauled their digital infrastructure, this is actually startling. While in line (waiting) with my daughter for the Expedition Everest ride, we used Google to look up “tallest coasters” to see just how scary this might be for us. In the line for Thunder Mountain, we Googled a story on the Chilean miners who were trapped for a month, and talked about why there was a canary in the tubes. These were both interesting discussions to help pass the time while we were in line and both digital (Google) experiences were triggered by the rides themselves. I remember thinking that someone should use the Disney story telling prowess to create a companion experience. I’ve been around app building enough to know it wouldn’t cost that much to make something really cool.

At the Animal Kingdom we discovered the “Up” inspired Wilderness Explorers program. It took some searching, but we found a place to get the book and my younger kids got fully engaged in “earning” the badges. I like workbooks as a learning device, and it was cool to see them with pencils stuck over their ears meeting the various “ambassadors” who shared interesting tidbits with them. But again, I started to imagine many ways a digital companion experience could be designed to make the program more powerful and to connect beyond the Park. I even thought a start-up could have a cool partnership with Disney around storytelling and animal conservation… perhaps linking to Kiva or another micro-financing service to put wells in South Sudan. Could they connect with Salva Dut? That would be really cool!

Lastly, I found it humorous and a bit sad that you can purchase a “chip enabled” mug at Blizzard Beach so you can get an “endless soda” for the day. We tested the machines with our water bottles and found that only an activated cup will make the soda flow. I enjoy a corn dog, an ice cream bar Mickey, and a churro as much as the next guy, but endless soda is simply out of sync with public health and basic wellness. A cool digital experience, but completely wrong from a family entertainment standpoint. Maybe they could do a partnership with Fit Bit or Withings or JawBone or Nike…

Unlimited Soda 2

I did experience Test Track, and even without a Magic Band I could use my “magic” card at the touch points of that ride. It was a good ride and the shortening effect on the line was real for me too. A nice step in the right direction. But I don’t think Disney can claim victory on “reinvention” or “transformation” or “fundamental change” from their billion dollar initiative. Not even close. It’s even worse hearing that they think they are leading with creativity and innovation. They are clearly not. That’s why they had to buy Pixar. They do have a great marketing engine though.

I think they demonstrated many of the reasons why many companies fail at innovation. In fact this would be a great case study article (thanks Austin!) on what NOT to do if you want to address transformation. Starting with a leader who mandates “This better work!” and then puts executives in a “bake off” to see who will win the future CEO job, and ending with a bevy of “back up” consultants costing $100 Million.

From my cheap seats on the sidelines, I think the MyMagic+ team attached to the bracelet idea too early and then set about hammering it in to place. This was not innovation, it was a desperate attempt to remain relevant. So they bounced around with a million ideas from every direction and got overwhelmed by internal politics. Innovation requires a compelling vision to overcome that kind of resistance. Innovation is driven from the “outside in” starting with deep insights into the customer experience and emerging via a disciplined process involving intimate collaboration. I’ve talked about innovation many times before, so I won’t go into it further now.

Waiting in lines and messing with paper tickets are pain points for Disney customers, so you could call that a customer insight. But removing an obvious pain point with solutions that are found everywhere, does not qualify as innovation. It is simply keeping up.

Culture is a capability

A culture defines the normal way people behave in a particular group. It provides the cues, boundaries, guidelines and encouragement that help individual members of a group know what is right and what is wrong. Culture guides decisions that result in actions. The best way to understand a culture is to pay attention to actual behavior and study evidence created by the people of a particular group. It’s also great to compare groups in order to discover similarities and differences in their cultures, which is what the field of Anthropology is all about.

Image by David Rowan

Image by David Rowan

Get Specific

In the context of a company, I often hear people say things like, “We have a winning culture here,” or “We’re building a culture of innovation,” or “Our culture is defined by our values,” etc. These could all be true statements, but they are not very useful as descriptions of their particular cultures.

To describe a culture you need to identify specific, notable ways that people interact and find evidence that these ways are useful by the members of that particular group. If a company has a culture of innovation, we should be able to observe characteristics and behaviors by the people there that result in innovative outcomes. We should find artifacts of that behavior that are cherished and celebrated as the great examples of what the call innovation.

If the culture is strong there should be stories about how a certain leader did something unusual or even strange to other companies that resulted in a great outcome. This is why “founder stories” are so important to young companies. They describe the key insight or heroic behavior of the people who start a company and allow others to act in similar ways to get similar outcomes… resulting in a consistent pattern of behavior (culture!).

There is no “best” culture

I’ve had the great privilege of working in some of the world’s most innovative companies (as defined by Fast Company magazine) including IDEO, Charles Schwab, Levi Strauss, and Hulu. One thing I can say about all of them is that leaders there believe their cultures are a significant reason for their success. Another thing I can say, having been up close and personal in all of them, is that they are each distinctly different from the others. So while they may all have “winning” or “innovative” cultures, there is not a common culture across them. Behaving one way at Levi Strauss could actually get you fired at Hulu and vice-versa.

To understand what is innovative at IDEO, you just have to listen to the stories they tell each other about great moments in the company’s history. In fact, so many people ask IDEO about their culture, nearly any person who works there can point to examples of their innovative behavior that resulted in breakthrough product designs like the first Apple mouse or the Crest Neat Squeeze toothpaste tube.

What every leader should know about culture is that it has to be defined, built and actively managed if you want it to help your business succeed. In most cases, culture should be defined in response to a business problem, not in advance of one. I don’t believe there’s such a thing as “the best” culture that could be built first and then applied to any business problem. So just like a supply chain for making shoes would be different than a supply chain for making cars, each culture should be constructed to address the unique challenges of the business at hand.

Culture is not a statement of ideals

Culture should not necessarily be a reflection of the founder, CEO or executive team—although leaders must behave in accordance with the culture or it is unlikely that others will follow. Lip service to a value like customer service, followed by actions that don’t treat customers well will not build a customer-centered culture. All of the advertising dollars in the world will not make airline customers feel treated with respect if they are dumped from flights for unexplained reasons even if there’s a video of the CEO pronouncing that he personally cares for every customer who flies with them. A founder is often an architect of the cultural blueprint, but cultures are dynamic and change over time. What worked for the original 20 team members may not scale and should be adjusted to the demands of the business over time. Retain the essence but refine the whole.

Culture is not simply a values statement or a manifesto. Culture is a capability that provides direction and support to every member of an organization in order to achieve a strategic objective. Great leaders understand that culture  should be carefully managed to achieve their organization’s full potential.

[This post also appears in the Bulldog Drummond blog Uncommon Sense]

Grow or die

This is the irrefutable lesson of open systems, and an important key to understanding trends in your life.

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Open systems

First let’s establish the basic parts of an open system so I can easily refer to them throughout this post. An open system is any complex thing like a plant, animal, or organization. In each of these systems, there are sub-systems that interact among themselves (like breathing and blood flow, the sub-systems have components that do stuff (like lungs pulling oxygen from air), inputs to the system (like air), and outputs of the system (like bad breath). Inputs frequently have an impact on the outputs (like eating garlic), but sometimes are unrelated.

It’s important to remember that the environment surrounding a system changes over time, causing the system to deal with those changes by either adapting or ceasing to work. This circumstance is the basis of the statement, “grow or die.” Other words for growth might be adapt or evolve, but growth has the nice connotation of positive change and forward progress, so I like it better. What might be a good source of supply to a system today could totally disappear tomorrow, causing a complete breakdown of the system (like how jumping into a pool removes access to air for your lungs).

Or perhaps the inputs contain elements that are good and necessary (like oxygen) but also contain things that are harmful (like cigarette smoke or asbestos). Our lungs are able to process the good things and keep our bodies functioning well, but gradually the bad things reduce that capacity or grow into negative subsystems like cancer. Oxygen helps our bodies grow in size and capacity, but the negative elements reduce or limit that growth in trade-offs between good and bad.

So now let’s consider the idea of growth over time and science (i.e. the study of millions of open systems) gives us the S curve.

Growth curve of a bacteria colonyThe S-Curve is often referred to as the Growth Curve because the vertical axis represents the change in size, volume, or some other capacity as time moves forward on the horizontal axis. Consider this chart showing the growth of bacteria in several phases. In many open systems the stationary and decline stages stretch out over a long period of time and look more like a wave. There are alternating periods of growth and decline as the system adjusts to environmental changes like food or some other important input.

Humans can grow in so many different ways it’s hard to keep track of them all.  Our bodies grow physically from birth to adult maturity and ultimately death.  Our relationships grow from inception (did she just wink at me?) to maturity or demise.  Our understanding of the world grows from simple pattern recognition as babies begin to understand speech to complex reasoning and philosophical imagination as graduate students or senior researchers.  Together these aspects of being human combine to indicate our growth as a person.  A simple way to group them all is Mind, Body, and Spirit, remembering that these categories are interdependent, not operating on separate tracks.

Learning is growing

It’s pretty easy to understand how the growth curve applies to the Body aspects of our lives.  As babies, we start out tiny and grow exponentially, rather quickly until we get adult sized.  Then most of us alternate between being fatter and skinnier for the rest of our lives as we struggle with our food intake and exercise (output).  It might be harder to notice, but this same scenario plays out in our Mind and Spirit aspects as well.

The learning sub-system of us humans has components like your brain, your senses, and your emotions.  It has inputs like data, knowledge, information, advice, opinions, and sensory stimuli (like heat, texture, etc.).  And it has outputs like behavior, action, habit, opinion, advice and insight.  None of these examples is a complete list, but hopefully you get the point.

As babies and children we learn rapidly by taking in billions of data points and bits of information through their eyes and ears.  Then as students we read and listen and study to take in facts and information to deepen our understanding of the world.  Even as young professionals we still have to learn quickly to develop practical skills and insights about our chosen area of work.  Then after decades of constant learning we start to stabilize and gradually decline as our experience gets stale and the world around us starts to move on to new ideas and practices that we haven’t kept up with along the way.  We even call this aging process being “over the hill” which I think aptly describes tipping over to decline phase on the curve.

For nearly 800 generations of human history (about 60,000 years), our lifetime learning curve mapped pretty well to our lifetime body curve.   As we got older and started to decline physically, we could also retire and decline mentally.  The world around us wasn’t changing all that much so we didn’t really have to “relearn” anything in order to be at the top of the curve in a relatively stable phase.

But not any more!

According to Alvin Toffler in his seminal book, Future Shock we passed an inflection point in the rate of change in human culture towards the end of the last century.  At that point, people had to start relearning things and adapting to changes in our world or start falling behind rapidly.  Past the inflection point of technological change, we can no longer count on things we learned in childhood being true anymore.  We have to recheck things as science and technology advance human understanding and practices to new levels at an increasing rate of speed.

When my grandmother was born, people couldn’t fly.  When she died, there had been men on the moon.  When I was a kid, there was a planet called Pluto.  Now it’s not a planet.  The periodic table I memorized in high school had 106 elements, now it has 118.  My own kids have already seen unbelievable environmental changes in their lives resulting from mobile phones morphing into powerful computers with cameras.  My mom has an iPad and is the most active person on Facebook I know.  It makes her life better to connect with friends and family scattered all over world.  She doesn’t have to sit in her kitchen and wait for people to stop by, they can play Words With Friends together in different time zones and she can dial them up on video chat to see their smiling faces.  Instead of wishing for the “old times” and falling behind, she has learned new ways to interact and grown healthier as a result.

Toffler called the problem of relearning “shock” because adults were not prepared for rapid change and felt we would suffer in our reactions to it.  The adults of the Baby Boom may have been shocked, but I think people coming of age today are ready for constant change.  Our great ability to understand the world is a natural and agile open system.  The inputs may have changed, but our ability to process them into creative outputs is very resilient.

Breathe!

When you jump in a pool you have to hold your breath while you are under water or else you will drown. But if you realize you are stuck in the pool you come up for air and start to swim (or quickly learn how!).  This sink or swim reaction is a perfect example of grow or die.  So don’t hold your breath and hope the world will stop changing, take a breath and engage with all that is new around you so you can move up the curve not down it.

Sink or swim!

photo from Flickr: TX Erickson Family

 

 

Being Successfully Controversial

In a recent social media frenzy, I stumbled upon a great insight: the link between controversy and innovation. I had just finished my post about how innovation is a natural result of being human, and Lisa Kaye tweeted a quote from actress Eva Le Gallienne, stating that “Innovators are inevitably controversial.”  When I think of controversy, I immediately think of courage.

That same day, innovation guru Diego Rodriguez posted a TED talk by Bryan Stevenson encouraging us all to be courageous.  In his talk, Bryan touches on how we are all inspired by people who are the first to stand up, speak up, lead the way, draw a line, or refuse to budge on principle.  Rosa Parks was an icon of courage for civic innovation and equal rights.  John F. Kennedy was an icon of courage that spurred innovation in science and technology.  Ronald Reagan was an icon of courage for global unity.

Kennedy Space Center (Photo from Smalling Studios)

To make change, it is essential that we stand up for what we believe is right. Courage is one part vision of what could be and one part frustration with what is. Courage is the spark that ignites change and inspires others to join the process and tip from old to new.

Linking controversy and innovation makes it sound like innovation is a struggle against resistance.  Which gets me thinking about resistance as a strengthener.  People do push-ups, lift weights, carry medicine balls, or use elastic bands to build muscle.  You push against gravity to improve yourself.  So it makes sense that pushing against normal is a great way to improve the world.

Courage is only half of the equation

I’ve learned through many, many, many failed attempts, that courage is necessary, but not sufficient in successful innovation.  Courage is only half of the equation.  With only courage, you can come off as righteous, contrarian, or antagonistic.  A thorn in the side.  You face immediate rejection by the established way.  Succeeding only at creating more resistance. It’s really something to speak up, but not enough to leave it at that.  Controversy can end with polarization and gridlock (take the U.S. Congress… please!).  Or controversy can be the beginning of a better world.

The other half of the innovation equation is creativity.  By creativity, I’m not talking about the Crayola-artsy-black-turtle-neck type of creativity.  I’m talking about the well-that-didn’t-work-so-let’s-try-this type of creativity.  Lateral thinking that produces a never-ending stream of ideas and alternatives to test and explore until the right thing happens.  The way Thomas Edison tried hundreds of filament-gas-tube combinations to get the light bulb.  The way Abraham Lincoln tried running for office multiple times before finding his way to the Presidency.  They were successful innovators because they had both courage and creativity.

Against means together?

For most big problems, there is no silver bullet. No single invention.  Innovation is an unfolding, iterative, extended effort that takes place against the normal way of doing things.  So innovation is inevitably controversial, requiring us to act with both courage and creativity to achieve success.

As you may already know, “contra” is a Latin root meaning against.  And “verse” means turn. Literally, “turning against.”  Being interested in linguistics and natural human behavior, I poked around the origins of contra and found that the prefix con- is a variant of com– which means together.  This makes sense if you consider against in this usage: The ball is resting against the wall (they are sharing the same space together).

So perhaps controversial really means, “turning together.” And we humans are designed to work together and constantly improve our condition.

Bottom line: to be successfully controversial, consider your mission as a strengthening exercise you do with a bunch of other people, not a war against the other side you must win (or else!).

 

 

 

Confessions of a good father

It’s time for a revolution in my house. I determined this recently on Father’s Day, which to me is largely a Hallmark holiday, so I have no real expectations for special treatment. Nonetheless, I woke to my two daughters arguing over something like, “Who’s better Justin Bieber or Taylor Swift?”  And it got me thinking about our life and what it means to be a father.  First, let me say that my kids are great. They are mostly kind and generous to each other, well mannered and respectful, and they pitch in to do their part to keep our family on track.  So let me be clear that I’m not in any way implicating them in this idea.

I think by most standards, my wife and I would be judged as a good parents.  Our kids behave as well or better than other kids we know (most of the time).  We know about sibling rivalry and we have some pretty good coping skills in place.  We’ve seen Babies and know that kids will fight over rocks and sticks even if they don’t have the abundant array of things we have.  Our kids get plenty of sleep and have a well balanced diet full of super foods (but ice cream is more a rule than an exception).  We’re not as strict as the Tiger Mom, but we’re pretty tough with our family rules and deliver consequences at least as well as Mike and Carol Brady.  We certainly don’t have parenting all figured out, but our family journey has brought my wife and I closer together, as we are totally outnumbered by the kids.

That’s so seductive.  Really seductive.  I can pat myself on the back and feel great because I do so much for my kids.  But you know the old joke about how fast you have to run to get away from a bear?  (Faster than the other guy!).  This is an absolute problem, not a relative one.

How fast do you have to run to escape the bear?

My wife and I have worked diligently to provide a safe, stable, and stimulating environment for our kids.  But in doing so, I fear we’ve removed too much adversity and created a bubble in reality.  I worry that my kids are not sufficiently aware of how things work for the overwhelming majority of people in the world.  I hear constantly that great people are made by overcoming difficulties in their lives, yet when I look around our lives I don’t see any real difficulties.  That said, I certainly can’t say I grew up under tough circumstances.  My first 20 years were spent in a place akin to the town in Caddyshack,where I was more of a Danny than a Spaulding, but certainly not wanting for much.

My next 10 years were spent largely working in non-profit organizations, providing leadership and social skill building programs to “at risk” kids.  These kids were “at risk” of things like teenage pregnancy, drug and alcohol abuse and not finishing school.  During that time, I learned to see the world through their eyes and I came to understand how lucky I was to have the privilege of a safe comfortable home with resourceful parents taking care of me.  When I met my wife we both agreed it was our top priority to create a happy home where our children could thrive, but now I’m struggling to make sense of the competing commitments of stability and adversity.

We can fabricate adversity. I played sports and went on outdoor adventures to test my limits.  I recently watched Lucky Ducks, where wealthy New York City mom Tracey Jackson feels much as I’ve described above, and decides to make amends.  She decides to create a film of her intervention, which consists of sending her daughter to India to teach street children instead of going to the beach for Spring Break.  Great premise, but in my opinion, she gets lost in her desire to create a hit indie film and comes off looking worse than when she started.  My least favorite scene is when she jets off to Montana to gather advice from a self described “Kid Whisperer” psychologist about how to help her daughter.  Ugh.

You can’t use the same thinking or resources that got you into the mess to get you out of it.  What got you here won’t get you there.  Etc. etc. This is not about fixing the kids or the family.  This revolution is about me.  What am I willing to change about my life to help my children get more grounded in reality?

The afternoon of Father’s Day, my daughter was sent to her room for somethingoranother and yelled back, “What am I supposed to do for food?”  I replied that she could go to bed without dinner.  Her response: “Fine, I’ll just starve to death!” (insert door slam here).  That was the last straw for me.  We waste more food at one meal in our house (and we’re pretty good at cleaning plates and managing portions) than some kids get in a whole day.

So this is my question… how can I create experiences where my kids will grow to see themselves in the context of the world and know better how to respect and appreciate their circumstances?

I don’t want drive-by, tourist observation experiences, I want something natural, reciprocal, and sustainable.  I don’t want this to be the kid’s problem (it’s mine).  I know this will be uncomfortable for me and my wife.  We have to adjust our own lives to make this happen.  It will mean we have to miss out on other things we’ve got built into our lives… perhaps sports, or Brownies, or a family vacation.  What a luxurious problem to have.

Your advice is welcome, I’ll keep you posted on our journey.

 

 

Is that innovation or invention?

While closely related, invention and innovation are distinct concepts. Invention is a technology driven breakthrough, bringing something new to the world, that acts like a doorway for innovation to occur. Innovation is an iterative process of improvement that either sustains or disrupts a consumer market.

Wright brothers first flight at Kittyhawk

A great example of this distinction is the invention of flight allowing for the innovation of air transport into a major industry.  The Wright brothers are largely credited with inventing the airplane, but what they really invented was a steering device, which allowed them to make the first “controlled, powered and sustained, heavier-than-air human flight.”

Among the early innovators of air transport were Donald Douglas, who created the DC-3, a robust aircraft capable of carrying things and people, and Henry Ford who was instrumental in the development of paved runways, passenger terminals, hangars, and radio navigation.  Without these innovations, airplanes were an interesting novelty, but they didn’t fulfill a real customer need (like traveling or shipping packages over long distances).

The Ford Trimotor is an example of innovation

Simply put: Invention is driven by technology and innovation is driven by consumer need.

Another example:

At Hulu we are focused on the consumer experience of video entertainment, and innovation is one of our primary goals as a business.  What drives our forward progress is an obsession over our customer’s needs, and a commitment to delivering better and better services to meet their demands.

Innovation in digital media requires deep expertise in software and communications technologies, and along the way Hulu has been awarded many patents for inventions that push the consumer experience to even higher levels.  But we didn’t invent most of the technology we use, or create most of the content viewed on the service; rather we are assembling existing components in new ways that are transforming the media business for users, advertisers, and  content owners.

Is that innovation or invention?

Many popular web-based services are breaking ground in the way people communicate, connect, and work with each other.  Sometimes it’s hard to tell if these things are novel inventions or early stages of innovation that will shift markets or generate new ones.

I wonder if Facebook, Twitter, and LinkedIn are inventions or innovations.  They are all valued with great potential to disrupt and transform, but to me they appear more like inventions in their current forms.  They are very cool, novel ways to interact, but that is by definition, invention.  What consumer markets have they created or disrupted?

I think it’s going to be very exciting to walk through the doorways they have created and see what innovation on the other side will produce!