About Lex Sisney

Lex Sisney is an expert at creating breakthroughs in individuals and organizations. He's grown from co-founder and CEO of the world's largest affiliate marketing company to follow his passion as CEO Coach to the world's next generation of expansion-stage companies.

The Lean Startup Goes Mainstream: Here’s What You Need to Know

Entrepreneurial guru Steve Blank (awesome systems thinker) has an article coming out on the cover of Harvard Business Review this month: “Why the Lean Startup Changes Everything.”

I really appreciate the framework of the Lean Startup approach and I’m a big fan of the movement. One thing I notice that’s missing from it is a discussion on the lifecycle stages of the customers that the lean startup should be targeting/getting feedback from. Here’s what I mean:

The Product Lifecycle goes like this: Pilot it, Nail it, Scale it, Milk it, Kill it.

The Market Lifecycle of customer types goes like this: Innovators, Early Adopters, Early Majority, Late Majority/Laggards.

In order to navigate from the temporary organization of a startup, find the business model, and scale it, the disruptive entrepreneur should seek to align this sequence of steps together. I.e., Pilot it for Innovator Customers. Nail it for Early Adopters. Scale it for the Early Majority, and Milk it for the Late Majority/Laggards like this:

Align the product and market lifecycles with the execution lifecycle (not shown).

Align the product and market lifecycles with the execution lifecycle (not shown).


Put another way, you DON’T want to be Piloting a project for a Late Majority/Laggard clients or misaligning the other stages. Why not? Because those Late Majority/Laggard clients are old and stable. They are outstanding at telling the entrepreneur what the market needs now (or 5 years ago) but tend to be incapable of identifying where it’s going to be 5 years from now. To find that out, you have to go to the fringe — those Innovator and Early Adopter Clients that aren’t currently served by the status quo. That’s where the true disruption lies.

Late Majority/Laggard clients also have a vested interest in maintaing the status quo. So even if the entrepreneur has a visionary champion within that Late Majority/Laggard client, he or she is going to be blocked by the surrounding inertia within that large, stable organization. The Late Majority/Laggard client is also subjected to broad market forces and quarterly financial targets that may require it to shift directions. So even promises of “yes, build this for us at this price and we’ll roll it out to our distribution network” aren’t worth the email they were written on when market forces change.

A great example of this principle in action is Square, a great disruptive force in the mobile payments space. Notice that Square DID NOT go to Visa, Mastercard, and Paypal to find the initial product market fit. They went to taco truck vendors, independent artists, and others SOHO’s who were NOT served by the status quo. If CEO Jack Dorsey did go to Visa or Pay Pal to practice the Lean Startup methodology and find the product market fit, he would have gotten great product specs to support the current payments model — but not to disrupt it. I’ve written about this in detail here.

The Real Purpose of the Lean Startup Methodology

Those of you who have read my Part III of my book Organizational Physics — The Science of Growing a Business already know that what the Lean Startup or customer-driven development approaches are really trying to do is to help the entrepreneur and the start-up business unit go as far as possible from the start of quadrant 1 (Pilot it for Innovators) to the top of quadrant 2 (Nail it for Early Adopters) by interviewing, researching, and selling customers in advance before the product development process begins.

The purpose of the Lean Startup / Customer Driven Development methodologies is to take you as accurately and quickly/cost effectively as possible from the Pilot It stage through the Nail It stage of business development.

The purpose of the Lean Startup / Customer Driven Development methodologies is to take you as accurately and quickly/cost effectively as possible from the Pilot It stage through the Nail It stage of business development.

In other words, customer-driven development tries to limit the cost, risk, and time investment of making poor product or market decisions between the Pilot It and Nail It stages. They are looking for a good product/market fit before the development process begins. If they can discover what the thought leaders really value and what the early adopters’ true spending priorities are before development begins, this lowers the risk and increases the probability of meeting those needs. Development can become more focused and demand is established before any real money is spent on development.

Agile software development is a product development method that aligns very closely with a customer-driven philosophy. Agile, or iterative, development is a process of taking real-time data from actual use of the product and quickly iterating changes using short release cycles to develop a better product that meets the needs of target customers. Fundamentally, agile is a product development method that attempts to better manage changing requirements; avoid long release cycles; and produce live, working, tested software that has real business value. In an early-stage startup, using an agile approach can help a company quickly and cost-effectively navigate the Pilot It to Nail It stages by eliminating the guesswork, long product release cycles, and overhead involved in trying to do a big product design up front. In larger companies with existing products in scale mode, using agile is an attempt to better meet user requirements, based on data and customer feedback, and to turn that knowledge more quickly into new product features and extensions.

Having built several successful high-tech products and run agile development teams, I can say that I am a big fan and believer in both approaches. They go hand in hand. Their real but unstated goal is to help a company navigate up the path to prosperity more quickly and cost-effectively. These approaches can help verify that your thinking is sound, that demand is there and you’ve uncovered a proven market opportunity. Additionally, having evidence that your entrepreneurial vision is baked in the cold, hard light of reality can make all the difference in raising the capital you need. These are sound methods and they fit perfectly well into the strategy lifecycle scheme.

The truth is that there are many other methods that can also help you quickly navigate the path to prosperity. Customer-driven can work. So can vision-driven. For example, I don’t believe Steve Jobs had ever done a day of interviewing customers in his entire life. Instead, he had that rare ability to envision something entirely new, intuitively understand the needs of his target customers even before they did, and bring his vision to the world in surprising and beautiful ways. No external customer-driven development of the iPad would have worked because customers would have had no frame of reference for it. Walt Disney was the same way. He had a powerful vision and followed his own instincts about what families really valued that wasn’t being provided by other amusement parks at the time. He created magical experiences that no one was expecting. The point is that there are many ways to develop a product but the fundamentals of strategy should always the same: You must go the long way around the path and create the product/market fit in the right sequence.

I hope this helps with your thinking as you contemplate how the Lean Startup meme will play out in your own organization.

A Beautiful Portrait of a Unifier Leader

Pacific Lutheran football coach Frosty Westering in his office in Tacoma, Wash. in 2001. (AP Images)

Pacific Lutheran football coach Frosty Westering in his office in Tacoma, Wash. in 2001. (AP Images)

I came across a phenomenal obituary written for Frosty Westering by Chuck Culpepper at Sports on Earth today.

Frosty was the football coach for the Division III Pacific Lutheran football team and he was remarkable. He coached for over 32 seasons without a losing record in any. He never mentioned playoffs or titles to his players but won four national championships and four runner-up finishes on two levels. He died on Friday at age 85 surrounded by a loving family.

Tears welled up in my eyes and my throat got caught when I read it. I want to share this story about Frosty for that reason alone. But I also want to share it because it’s a wonderful portrait of a strong Unifier leadership style in action.

The Unifier style is one of four management style dimensions that we all possess to one degree or another. You can read more about these styles: Producer, Stabilizer, Innovator, and Unifier in Part II of my book Organizational Physics: The Science of Growing a Business.

Our best Unifier qualities are our ability to create rapport, understand and motivate others, build cohesive teams, and create sound organizational cultures based on caring, empathy, and loyalty. Without the Unifier force, we would have no ability to respond to change efficiently because the organization couldn’t act as a whole.

Let’s see how the Unifier force shows up in coach Frosty’s leadership style so that you can learn to recognize it, develop it, and manage it in your own life and work:

His players implored him to belly-flop into a California hotel pool, and he complied – at age 75. He once took a running plunge into the mud during a soppy game in Oregon. He adored when players pulled pranks on him, insisted players use his first name – Frosty! – and corrected them if they used “Coach.”

He sometimes halted practice to have players spend five minutes gazing beyond the giant evergreens to Mount Rainier. He sometimes halted practice to have players go to other sporting fields and cheer on, say, the soccer team. He always halted two-a-day practices in August and instructed players to go help freshmen move into dormitories.

He believed deeply in singing. His players sang before games, after games. Sometimes they sang to the mock direction of the coach’s cane. Always they learned to sing without embarrassment, for it had become uncool to refrain from the refrains. For his 300th win in September 2003, an offensive lineman led the team in James Taylor’s “Steamroller.” During warmups for the NCAA Division III national championship game in December 1999, right there on the field in Virginia, his players sang “The Twelve Days of Christmas,” then proceeded to win 42-13.

Can you imagine warming up on the other side, then losing 42-13 to that?

During three of the best days of my career — those in his company, in Tacoma, Wash., in 2003 — he requested that I join his players for supper in their dining hall. Three of them drove me, in a pickup truck, back to my car. Along the way, they sang “Leaving on a Jet Plane.”

“Why singing?” I asked the coach.

“When you sing,” he said, “your consciousness is raised.”

The Unifier style loves to laugh, have a great time, create “story” moments, and keep the group structure flat and inclusive. I love the focus on singing as a form of culture reinforcement. It’s brilliant.

And lest you think this guy some Left Coast flake, let me hurl at you this biographical detail: former drill instructor, United States Marine Corps.

What this tells me is that Frosty was indoctrinated in a Producer/Stabilizer style in the Marine Corps. Most likely, he found this lacking in the development of full human potential and therefore embodied a leadership style that transcended that. I have no doubt that Frosty could turn on the Producer/Stabilizer hard-ass if he needed to but that he found an alternative way to coach a football team and develop young leaders.

An airline pilot wrote to the university president. He wrote because the Pacific Lutheran presence on his airplane had taken a routine day and whipped it up into memorable. He wrote because Westering insisted his players respect other people’s work. He wrote because that respect included rapt attention to the flight attendants, which in turn included a phenomenal sound that came when the players clicked their seat belts in unison.

He wrote because at the destination gate, the college football players had held back and lined up on two sides in a “go” tunnel so they could give high-fives to disembarking crew.

A janitor wrote to the university president. He wrote because when he came upon Pacific Lutheran’s visiting locker room one postgame in Portland, he found the chairs lined up in impeccable order. He wrote because he found the floors and lockers completely free of the normal detritus. He found the place just about spotless.

He wrote because, when he arrived in the room, he found a note on the whiteboard suggesting he go home and join his wife by the Christmas tree.

Wow. The focus on empathizing and respecting others is a true Unifier trait. I love how Frosty’s consistency in message and tone unlocked the creativity of the team in how that gets expressed. Can you imagine what a positively memorable experience the flight attendants and the janitor had? Amazing.

A man in a wheelchair came to the “Afterglow,” a Westering postgame concoction where a few hundred players, coaches and fans would gather in the bleachers. They might discuss the game. Players might thank the fans for support. Fans might thank the players for inspiration. Everyone would sing “Happy Birthday” to anyone with a birthday nigh. The “Afterglow” would happen after wins, but — oh yes — the “Afterglow” would happen also after losses, because in Westering’s mind, losing meant you had just completed the privilege of playing.

On a weekday after the “Afterglow,” Westering happened upon the man in the wheelchair and invited him to practice. Soon after that, he made the man an assistant coach, and so John Nelson, a quadriplegic Singaporean-American born with a debilitating condition and spinal-cord problems, came to head up the freshmen players. And they, in turn, had to take on responsibilities for his care: dressing him, helping him eat, helping him go to the bathroom. Do you suppose that taught them anything?

By 2003, Nelson had lost count of the times he had appeared as a groomsman in the weddings of former players, reckoning the number beyond 10. He told of a road trip stop at Disneyland when the players determined he should take a ride, so one player hugged him all the way through. During those three days I spent with the team in 2003 Nelson said to me, “There’s a reason for this, a reason for the guys coming out to this program, to see somebody who’s different. Hopefully, it inspires them. If someone in public needs help, I’m sure they will be comfortable with helping them.”

Doctors thought Nelson would have trouble making 30. By 2003, he had made 38. By his death in 2009, he had made 44. At his memorial service, Frosty placed a jersey on his wheelchair.

Notice the Unifier’s focus and pride on being part of the team vs. the focus on winning at all costs? Notice too that the Unifier extends the definition of “team” out to all the stakeholders?

Westering had such stern rules. His players had to help up opponents during games on the premise that the privilege of playing could not occur without opponents. Troublemakers didn’t have to run sprints; no, they were denied the “honor” of running. He knew fear could motivate but thought love could motivate for longer, so players badly in need of upbraiding – of putdowns – would receive what Frosty called “put-ups,” and he mandated six put-ups per day.

One put-up, “Attaway” – a configuration of “That a way” – became a staple. He had players use it prolifically, including toward hotel clerks, short-order cooks, fast-food clerks, custodial staffs, flight crews. They used it one day at practice after Frosty had some women’s volleyball players address the team about their recent and difficult victory over Puget Sound.

The reason Frosty’s Unifier style can be effective is that he backs it up with the Stabilizing force. Rules, norms, and expectations are set, clear, and reinforced. If Frosty didn’t have these elements in place, he’d be all talk, and without resulting in corresponding action in the team. Instead of being a highly successful football coach, he’d be out of a job.

In a football world chockablock with practices planned to the minute if not the second, Frosty’s practices carried a decided imprecision. His son and coaching successor Scott said that, to his knowledge, his father had never written a practice plan. One day he had me address the team, impromptu. Sometimes he’d serve popsicles, with root beer one flavor during my visit. Wet days might enable frolicsome sliding contests. Meetings never started on time, and Frosty’s penchant for hazy punctuality proved so entrenched that Donna, his wife and the mother of their five children, found an “ish” clock with the suffix “ish” beside each number and placed it on their kitchen wall.

Said Donna, one day on the phone, “In fact, it’s five after 2-ish right now.”

Classic Unifier again. No real plan. Go with the flow. Time is flexible. But keep it fun. Mix it up.

Players never wore full gear until game days, then would suit up on Saturdays, sing (of course), maybe even listen to some music professor Frosty had invited to play drums for them on an upside-down bowl and plastic pitcher. Then the whistle would blow, the kickoff would go up, and players would tell of this astonishing transformation into hard, hard hitting — replete with helping up the people they’d hit.

Then again, one day in September 2003 the quarterback came to the sideline on fourth-and-12 and said, “Let’s go for it,” whereupon Frosty said, “You’re kidding,” whereupon a small gaggle of players agreed with the quarterback, whereupon Frosty said, “Let’s do it, then,” whereupon Pacific Lutheran converted the first.

Football players by nature thrive on physical challenges and hard hits. That cultural trait is there. Frosty knew that and didn’t have to coach it much. Unifiers also don’t mind when others make decisions, as long as it doesn’t threaten the harmony of the group.

Seasons would begin with a three-day getaway in which players bonded, played games but not football, apologized for any insufficient effort the prior season and sang, sang, sang, the freshmen standing on chairs and singing their high school fight songs unless they could not remember them, in which case they got stuck with “Twinkle, Twinkle Little Star.” Seasons would end the way almost all seasons everywhere end, with a loss, but with a way almost no seasons end, with an “Afterglow.” Or they ended with a win and an “Afterglow.”

Notice that the harmony of the group and respect for the individual transcends all else. That’s a Unifier.

And when players’ careers ended, the graduates sprinkled over much of the Northwest, some in coaching. One helped run a car dealership where they took time to behold Mount Rainier and they declined an applicant after a job interview in which the applicant told of being a No. 1 salesman, because they thought he had missed the point of it all.

Their former coach always bought used cars, so he drove me to the dining hall in his 1993 blue Oldsmobile. When he left one day for a speaking engagement, he offered me the use of his small office, which surely meant he wasn’t cheating. And when I returned to New York, a dear friend who does not follow college football but who read my story said something simple, but said it with an inflection that made it ring in my head for good.

“He’s a great man,” my friend said. A great man died on Friday. A great man also lived from 1927 until Friday, and while he lived, oh boy, was he alive.

I couldn’t agree more. You can apply the lessons of this article in a number of ways.

1) Learn to spot and identify Unifier characteristics. Even if these characteristics aren’t really your style, you still want to have strong Unifiers on your teams. Unifiers help bring the group together, resolve conflicts, and lighten things up. Who are the Unifiers in your culture and how can you place them into positions where they thrive?

2) Winning is a byproduct of many things, not least of which is the feeling of transcendence that results from being a part of something larger than yourself. Coach Frosty really demonstrated this powerfully. How can you create the experience of transcendence in your own culture?

3) It’s not the destination but the journey. Don’t you love how Frosty frequently took time out from the daily grind to look at the beauty of the mountains, to visit other teams and cheer them on, and to bask in the Afterglow? How can you show enough confidence in your own team and progress to do the same?

I never met Frosty but I sure wish I had the chance to play for him. I’m confident that the lessons would have served me really well in my life and work.

Blessings to the Westering family during this transition.

How to Think About Your Health & Diet

I lost 35 pounds and several sizes in three months. I didn’t do it by dieting. I did it by changing the way I eat. There’s a difference.

What led me to this was thinking about my health in a whole new way. After trying to navigate large amounts of conflicting nutritional information and trying on new diets over the years (many of you can relate), I had an insight based on the Organizational Physics principles I teach every day.

I took the Universal Success Formula from Chapter 1 of my book Organizational Physics: The Science of Growing a Business and made a slight modification to the terms. The original formula looks like this:

The Universal Success Formula explains why any system in the universe will fail or succeed.

The Universal Success Formula explains why any system will fail or succeed.

If you’re new to the Universal Success Formula, all you need to know is that any system is acted upon by entropy and will eventually fail unless new energy is added to the system. Once you decrease entropy, the energy available for integration and success increases.

For example, imagine that you have a friend in the hospital. He can’t go out in the world and be successful (high integration) because most of his available energy has to go towards healing his illness (entropy). Once he recovers, entropy will be lower and he’ll have more energy to re-integrate into the world and thrive.

Applying the same concepts to health and diet, the Universal Success Formula can be worded like this:

Health is a function of vitality over entropy.

Health is a function of vitality over entropy.

Think of your health as a highly organized system — body and mind — which is acted upon by entropy over time and fails unless it continues to have new energy sources that you can assimilate. Entropy, in this case, can mean inflammation, congestion, and any other state of less-than-optimal functioning in the body. Vitality is synonymous with integration. It is a state of high energy in which you are thriving in relationship with your environment, continuing to obtain energy from it. When inflammation-related entropy is high, for example, it’s harder to convert new energy sources and vitality is naturally lower.

Put another way, at any given point in time, the body/mind has a finite amount of energy. It must get new energy or fuel from external sources. Food is fuel. Water is fuel. Thought is fuel. Relationships are fuel.

Good fuels are those that the body/mind can easily convert into new energy and that don’t increase entropy in the system. Bad fuels are those that the body and mind can’t convert easily, increasing entropy over time. Like a car with too much gunk in the fuel lines, your body just can’t drive as efficiently. The bottom line is that you want to utilize good fuel sources that don’t cause systemic harm (i.e., increase entropy) and are easy to convert into new energy.

Using this formula as a metaphor, I simply began to assess how foods impacted my energy level and which ones seemed to be contributing to inflammation in my body. When did my blood sugar shoot up or bottom out? When did allergies seem to strike? When did I feel more moody or unusually tired? In this process of trial and error, I also relied on expert opinions about which foods cause inflammation and which ones don’t, using these opinions as suggestions for exploring what works best for me.

I made a 30-day commitment to cut out inflammatory foods. For me, this meant eliminating all grains, sugar, and refined anything. Please note I’m not saying that’s what you should do. Health and diet are a very personal thing. There’s no one-size-fits-all. What I’m saying is that, if you want better health and fitness, you’ll want to eliminate any sources of high entropy from the system and increase your body’s access to good fuels. Period. You can start with expert opinions, but you’ll want to closely observe, first-hand, what works and doesn’t work for you.

In my own journey, after 30 days, I felt great. I had lost some weight and especially a lot of puffiness in my face and waist. I decided to keep going, continuing to pay attention to those things that cause inflammation and eliminating them. It’s now been 5 months and I’m still going strong. It no longer feels like a diet but a new way of living that has increased my vitality and become second nature to me.

I hope this perspective helps you tune in and amp up your own personal journey to health and wellness as well, wherever that path may lead you.

~~~~~~~

There is a growing body of evidence that points to chronic, low-grade inflammation as a kind of a “unified field” explanation of disease. That is, some researchers now believe that low-grade inflammation is associated with everything from Alzheimer’s and arthritis to diabetes and heart disease, and may even be the cause of most chronic diseases.

If you’re interested in supporting evidence that inflammation is the enemy of good health, you might take a look some sources that I found helpful:

Why You Get Fat (3-minute video and I’m ashamed to admit I didn’t know this 30 years ago)
Genetic Roulette (documentary on how GMOs cause increased inflammation).
The No-Grain Diet (I read this book 4 or 5 years ago but didn’t have the wherewithal to follow it. Making the connection between entropy and inflammation finally helped me commit to change and it was surprisingly easy. Go figure.)

What’s Wrong with the Golden Circle?

Simon Sinek is the author of Start with Why and the creator of concept he calls “The Golden Circle.” The Ted Talk he gave on the topic is incredibly popular, almost 10 million views as I write this.

The concept of the Golden Circle is simple. It looks like this:

Sinek's Golden Circle hits on some core truths and is almost right.

Sinek’s Golden Circle hits on some core truths and is almost right.

Sinek purports that great organizations seem to create their foundation by first addressing Why they exist, then How they go about their mission, and then finally, What they do. 

Let me say first that I really appreciate what Sinek is doing — inspiring leaders to think about the soulful calling of their organizations and to rally others to a bigger cause beyond just selling widgets. And he does a masterful job of calling out that people don’t buy what you do, they buy why you do it, and that it’s critical to attract customers who believe what you believe. Awesome.

However, the truth is that great organizations build their core ideology by first defining and reinforcing Who they serve and the customer problem or need that they solve in the marketplace. Then they address and reinforce Why they exist, then How they go about their mission, and finally What they do.

So a modified more accurate Golden Circle should really be drawn like this:

Great organizations really begin with Who they serve, then Why, How, and What.

Great organizations really begin with Who they serve, then Why, How, and What.

How do I know? Two reasons:

1) A business doesn’t exist to promote its beliefs. It exists to produce results for its customers (Who it serves). Understanding who your customer really is and the problem or pain they seek to solve is what differentiates a company in the marketplace and keeps it focused on the highest goal — creating customers.

It’s an easy trap to fall into. You get so caught up in your own beliefs — how you think the world should be versus how it really is — that you lose sight of who your customer is and the pain point that they really want solved. That’s why you exist. To solve a need in the marketplace. If you’re not solving needs, then you’re quickly going to go out of business regardless of how inspiring your vision statement is.

2) Leading with Who is what also allows the business to successfully navigate what in his Ted Talk Sinek calls the “Law of Innovation Diffusion.” This law is a term used to describe how innovations spread in the marketplace through a series of unique stages of customer groups. It tends to be depicted in a bell curve like this:

The pattern and chasm of innovation diffusion.

The pattern and chasm of innovation diffusion.

Here again Who is most important. By focusing on the Who you serve, it allows you to understand which customer segment you’re selling to at any given time and to refine/adapt your solutions to meet those customer needs over time.

Knowing which type of customer to pay attention to, and when, also allows you to anticipate and respond to changes in the marketplace and successfully drive new innovations forward. I explain how to do this in detail in Part III of my book: Organizational Physics – The Science of Growing a Business.)

I think Sinek realizes that great organizations begin with Who too. For example, when he says that Tivo should have led their branding with this, “If you’re a person who values having total control of your life, then you’ll love our product”. He’s really calling out the power of starting with Who. Also, his example of Martin Luther King also supports the notion of leading with Who. “I have a dream that all men are created equal.” Dr. King is also focusing on the Who first. Finally, the ultimate point Sinek is trying to make is that people buy what they believe (Who), not what you believe.

To sum up: The reason that your organization should build its foundation on Who is that every business exist to serve the needs of other individuals and organizations in the marketplace, who. Bring “who you serve and the problem or need that you solve” to the forefront of your organization’s consciousness. By doing so, you focus organizational efforts on the most important thing – meeting customer needs – and by monitoring and adapting to those needs, you cause the organization to adapt and innovate over time. And as Sinek points out so well, you must marry the Who with a powerful Why — a set of internal beliefs that all of your marketing and communications flow from within the organization to outside in the world. Think Who. Then Why, How, and What.

The Forgotten Formula of Performance Management

The right formula is pretty damn valuable. Especially for Krabby Patties.

The right formula is pretty damn valuable. Especially for Krabby Patties.

Way back in 1936, the founder of social psychology, Kurt Lewin, came up with a formula to explain individual behavior. I’m going to share it with you…but don’t go running off because it looks complicated. It’s not.

B = f(P,E)

It means this: An individual’s Behavior is a function of that Person’s personality, capabilities, training, experience, etc. and his/her existing Environment.

Makes sense, right?

So what’s the problem? The problem is that most management thinking today seems to have totally forgotten the critical importance of the surrounding environment when it comes to performance management.

Businesses measure and invest tons of money in individual training and skill development. They study and implement crafty new performance incentive programs. They run personality profile tests — all that crap.

But what great organizations do differently compared to the rest is they give equal attention to the inner structure, processes, and core ideology (i.e., the environment) of the organization itself.

The truth is that each of us is governed by the environment in which we live and work. If the surrounding environment is designed well, then a C player is going to look and perform like a B+ player. And if the surrounding environment and opportunity is top-notch, then A players are going to flock to that organization to apply their talents. The corollary is that if the surrounding environment is designed poorly, then even A players are going to show up like C players.

Let me give two examples to drive this point home. One from a famous and controversial study at Stanford and the other from the NFL.

The Stanford Prison Experiment

Environment controls behavior.

Environment controls behavior.

This famous study conducted at Stanford University in 1971 tried to answer the question, “what happens when you put good people in an evil place? Does humanity win over evil, or does evil triumph?” by designing a mock prison experience.

The answer they found is that the environment controls behavior. In fact, the planned two-week investigation into the psychology of prison life had to be ended prematurely after only six days because of what the situation was doing to the college students who participated. In only a few days, the guards became sadistic and the prisoners became depressed and showed signs of extreme stress.

This study is controversial due to a lack of controls and an accused generalization of the results. When the BBC tried to partially replicate the same study, what they found was the importance of leadership in acting as a counterweight against the force of tyranny. That is, a strong and noble leader can make the surrounding environment less destructive.

From my perspective, leadership is critical in setting the right environment. In fact, the entire purpose of leadership is to design the system so that it works well for all concerned and is resilient against tyranny and bureaucracy. Leaders create the environment and the environment shapes the people.

The New England Patriots

If you invest in the system, then you can spot and integrate players who match it.

If you invest in the system, then you can spot and integrate players who match it.

On the lighter side, my favorite football team is the New England Patriots. Why? Because under head coach Bill Belichick, they’ve embodied what it means to create and reinforce a system of performance by focusing equally on player development and creating the right surrounding environment. In fact, if you want to read a great book on a systematic approach to management, read War Room: The Legacy of Bill Belichick and the Art of Building the Perfect Team.

Just notice how most unsuccessful NFL teams seem to jump from one big free agent signing after the other but fail to make the leap to the next level. Using Kurt Lewin’s formula above, these loser teams confuse the P with the E. But teams like the Patriots, on the other hand, are always first designing and redesigning their system and philosophy and then look for players who can fill a role within that system and philosophy. It’s an equal recognition of the importance of both P and E.

The same is true for your business. Spend as much time in designing the right environment as you do in recruiting and developing the right people and you’ll double your chances of success.

Who Moved My Cheese and the Four Forces

Truth is truth at any age. This article is for managers who want a better grasp of personality styles and how to quickly read and understand them in themselves and others.

I read Who Moved My Cheese for Kids to my 9-year-old son recently. It’s a fun little book, based on the eponymous bestseller, about four characters who live in a ‘maze’ and look for ‘cheese’ to nourish them and make them happy. You probably know how the story goes already (it was a bestseller) but if not, or you’ve forgotten, here’s a quick synopsis:

Two of the characters are mice named Sniff and Scurry and two are little people – beings the size of mice who look and act a lot like people. Their names are Hem and Haw. The ‘cheese’ is a metaphor for what you want to have in life – whether it’s a good job, a loving relationship, money, possessions, health, or peace of mind. The ‘maze’ is where you look for what you want – the organization you work in, or the family or community you live in.

In the story, the characters are faced with unexpected change. Eventually, one of the little people deals with it successfully, and writes what he has learned from his experience on the maze walls. When you come to see the handwriting on the wall you can discover for yourself how to deal with change, so that you enjoy less stress and more success (however you define it) in your work and life.

There’s a lot of truth in the book and I thought it would be fun to relate the four characters to the four PSIU forces of Organizational Physics. That way, the next time you’re managing a Hem, Haw, Sniff, or Scurry, you’ll have a better sense for how to handle it.

As a refresher, here’s a matrix that shows the traits of the four universal PSIU forces. If this concept is new to you, you can quickly get a sense of it using the world’s fastest personality test (it takes less than 15 seconds to get a good sense of someone’s style).

The four forces of Organizational Physics: PSIU.

The four forces of Organizational Physics: PSIU.

And here are the four Who Moved My Cheese characters mapped to each force:

The characters of Who Moved My Cheese mapped to the four PSIU forces of Organizational Physics.

The characters of Who Moved My Cheese mapped to the four PSIU forces of Organizational Physics.

In a nutshell:

  • Sniff is an Innovator style. He’s got the ability to sense and respond to changes happening in the environment much more quickly than the other styles. He gets excited about creating new things and likes you to get excited with him.
  • Scurry is a Producer style. He’s got the ability to run, run, run and do the work from early to late. He gets frustrated when there are obstacles in his path and seeks to run around them or punch through them.
  • Hem is a Stabilizer style. He’s got the ability to make things systematized and controllable. In the story, it is Hem who gets left behind because change can be seen as a really big threat to someone who excels at control and stability.
  • Haw is a Unifier style. He’s got the ability to empathize and connect well with others. In the story, it is Haw who follows Sniff and Scurry but all the while is concerned about where Hem is and how Hem is doing. Ultimately, Haw leaves the writing on the wall for others like Hem to follow.

Key Takeaways

The main thing I want you to take away is that the four PSIU forces of Organizational Physics are universal. That means they show up in good children’s books and the board room alike. When you learn to spot and understand them, you exponentially increase your own capabilities as a communicator and manager.

The second thing that I want you to take away is that, just as in the story Who Moved My Cheese, the correct approach to managing change is to be on the right side of the matrix above. The Producer and Innovator are both lean-forward styles who excel at sniffing out change and scurrying to make it work in their favor. You too should lean into change rather than lean away from it.

The third thing that I want you to take away isn’t in the story. It’s that the left side of the matrix, the Stabilizer and Unifier, also bring incredible value to the table. They help to make things systematized and efficient and care for others while helping to keep everyone working well as a team.

It takes a complementary team to manage and respond to change. One side without the other is doomed to fail. In other words, all sides — all forces — working in concert towards a common goal are what makes “finding the cheese” truly fun and sustainable over time.

How to Give an Order

Because every time you issue an order to someone you deplete your reserve of authority and you also deplete their reserve of power.

Every time you issue an order to someone, you deplete your reserve of authority and you also deplete their reserve of power.

How should you give an order to your subordinates? It’s pretty easy actually. Don’t.

Instead of thinking that your leadership role means having power over others, think instead of having power with others. Put another way, the order shouldn’t be given by you to them but should come from a shared awareness of the situation itself.

For example, let’s say that you just got word that your company is about to lose a big deal in NYC. You’re the CEO and you’ve called a meeting with the VP of Sales.

The VP of Sales comes into your office and you bark out an order, “Get on a plane to NYC and save that deal. Go!!”

Fast? Yes. Effective? No.

Why isn’t that effective? Because every time you issue an order to someone, you deplete your reserve of authority and you also deplete their reserve of power. Let me explain.

Authority is the authorized right to say “yes” and “no” to something. Clearly, a boss has more authority than their subordinates. But like an artesian well with a fixed amount of water, each time the boss draws upon his or her authority, they take some water from the well. If they keep being “bossy” and playing the authority card, that well will soon run dry and they won’t have any authority left at all.

For example, I have authority over my kids. But if I were to over-play the authority card and issue orders like, “Clean up your room because I’m in charge,” then I’m already doomed. My kids might listen to that once, maybe twice, but soon their reaction is going to be, “So what? You can’t make me. In fact, I think you’re an idiot.”

If I try to revert to even more authority, our relationship will deteriorate faster. I will be constantly issuing orders, following up, and feeling frustrated that those orders are not instantly followed. Thank you, but I prefer being happy and highly effective over being exhausted and unhappy.

Remember, each time you draw on authority, you lose a finite resource. So use it sparingly and only in emergencies.

The other thing that happens when orders get issued is the “orderee” feels a loss of power. Power is the ability to exercise self-determination and creativity, and to help or hinder a situation.

Here’s an example. Think of the last time you were issued an order by an authority figure. Your reaction might have easily been something like, “What a jerk! He’s not even seeing the situation clearly. If I were in charge…then I’d show him.”

Now whether you or the authority figure was right, or the orders were right, is not the point at all. The point is that, instead of thinking creatively and objectively about the problem and finding breakthrough solutions, you reacted negatively to the simple act of being given an order. You felt less powerful and, if you did follow through on the order, didn’t you do just enough to meet the letter of the law, without exercising your full creative power? I would venture to bet so.

Each time an order is given, both the order-giver and the order-taker lose. The order-giver loses authority and the order-taker loses power.

The right way to give an order is not to give an order at all. Instead, make sure that respective accountabilities are clear and then draw out the facts and viewpoints on the situation itself so that the former “order-taker” naturally creates and accepts his/her own order and follows through with self-determination and creativity.

Let’s go back to the pending loss of a big deal in NYC. Instead of an order like, “Get on a plane now!”, here is a mutually-respectful dialogue on the situation itself:

CEO: “I heard that we’re about to lose the big NYC deal. Is that true?”
VP Sales: “It’s 50/50. I just put in a call to our champion and she says it’s down to pricing.”
CEO: “What do you think we need to do to win the deal?”
VP Sales: “I’m not sure yet. I’m on a flight to NYC tonight to meet with them and figure out if it’s really a pricing issue or if that’s a red herring. I’ve got a meeting scheduled tomorrow morning with their decision makers.”
CEO: “Anything I can do to support you?”
VP Sales: “Yeah, can you put in a call to their Chairman and let them now how important this account is for us and how we’ll go the extra mile?”
CEO: “You got it. I’ll call him right after this and will let you know how it goes. Anything else?”
VP Sales: “No, just trust that I’m on it and will do my very best.”
CEO: “I know it. Keep me posted.”

It’s obviously a simple dialogue but the right spirit is there. Will they get the deal? Who knows. But their chances of getting the deal are significantly higher than if the CEO was barking orders. The VP of Sales feels her power intact and is thinking and acting in a creative and self-determined way, and the CEO isn’t depleting her authority to get it done.

Mary Parker Follett, one of the world’s pioneering management thinkers, said it perfectly back in 1924: “Leadership is not defined by the exercise of power, but by the capacity to increase the sense of power among those led.” It’s just as true now as it was then.

The next time you find yourself about to give an order, stop yourself. Instead, ensure that accountabilities are clear, assess the facts and viewpoints together, and allow the right order to flow from the situation itself.

Don’t Measure Your Wrists for Golden Handcuffs

Don't measure yourself for golden handcuffs or you might just get stuck wearing them.

Don’t measure yourself for golden handcuffs or you might just get stuck wearing them.

A Little Book of f-laws is a free collection of 13 common sins of management by management consultants Ackoff, Addison, and Bibb.

One f-law in particular stands out for me as something that’s all too true. It’s about the tendency to measure and focus on the wrong things because they are easy to track.

Instead, what we should focus on — in business and in life — is identifying what it is that we truly do want, even if it’s hard to measure.

In a society that seems to excel at measuring and celebrating empty accomplishments, it’s a great f-law to keep top of mind:

“Managers who don’t know how to measure what they want settle for wanting what they can measure.

For example, those who want a high quality of work life but don’t know how to measure it, often settle for wanting a high standard of living because they can measure it. The tragedy is that they come to believe that quality of life and standard of living are the same thing. The fact is that further increases to an already high standard of living often reduce quality of life.

Unfortunately and similarly, the (unmeasurable) quality of products or services is taken to be proportional to their (measurable) price. The price of a product or service, however, is usually proportional to the cost of producing it, not to its quality; and this cost tends to be proportional to the relative incompetence of the organization that produces it.

Like economists, managers place no value on work they do not pay for because they can’t measure it. Work that has no quantifiable output includes some of the most important work that is done, for example, raising children and maintaining a home. On the other hand, economists place a high value on work that destroys value, because the cost of such work can be measured. Hence the paradox: a prolonged war is a very good way of raising gross national product but reducing quality of life.

When it comes to life goals it’s even more basic than that. Managers don’t know what they want because they never think about it. One executive told his psychotherapist he was depressed because he felt he wasn’t successful. To the therapist he looked successful: good job, great salary, lovely family and beautiful home.

She asked how he would know when he was successful. He couldn’t answer. He just kept on striving without knowing what he was striving for. But I agree that, if they get as far as measuring, the measurement is usually quantitative and limited to how much they earn. Certainly the more they earn and the more their standard of living rises the more their quality of life drops. They become trapped by golden handcuffs.

In the workplace it’s also true that managers will measure anything that can be quantified in order to be able to set targets. Training is a great example. Many companies measure numbers of days training and numbers of people trained. If the goal is to do lots of training then that’s a good measurement. But the goal ought to be to develop the workforce to become more skilled.

The best organizations explicitly develop employees to fulfil their potential and even advise them on finding jobs outside the organization, if that’s what it takes. Measuring skills is harder. It takes time and commitment and, often, the value of training cannot be quantified. How astonishing that such ‘input’ measures continue to be accepted as valid even though they are value-less.”

Apple: Where the Money Goes in One Awesome Chart

applewherethemoneygoes
Data is for Q4 2012. See Asmyco.com for source and notes.

Two things that I love about this chart:

  1. First, it’s just a great visual representation. All data should be so beautiful.
  2. It reflects how Apple truly is an ecosystem company. Note that even though the revenue of hardware sales dwarfs the combined sales of digital services (i.e., music, apps, and software sales which are still huge in their own right), it is these digital services that extend the Apple ecosystem and make it large and vibrant. And of course, the larger and more vibrant the ecosystem, the more value it creates.

You can see the same “ecosystem economics” in another great brand — Amazon. Both Amazon and Apple are in the business of getting customers into their ecosystem by creating value to customers, and then consistently reducing the friction for new transactions to occur.

Once you buy a Kindle, or sign up for Amazon Prime, there’s very low friction for you to make future purchases (i.e, it’s easy for Amazon to extract new energy in the form of money, brand clout, and capabilities from its surrounding ecosystem). And just like a Lion prefers hunting grounds with lots of Antelope, the more digital services each brand offers, the more consumers desire to be a part of that ecosystem.

Keep this concept in the front of your mind when you’re scaling your own business — think in terms of creating ecosystem economics around a core value proposition where there’s low transaction friction and high customer engagement over time. Don’t be a product company. Be a systems company.

Greening the Deserts: Systems Thinking for Climate Change and Business Growth

“It’s possible to rehabilitate large-scale damaged ecosystems.”
– John D. Liu

“Green Gold” is a film documentary about how farming cultures in Africa, Asia, and South America are reclaiming once fertile land from the desert. I’m inspired to share it for three very important reasons:

It’s a great synopsis of systems thinking in action. Small changes have big repercussions. Every action has an equal and opposite reaction… even continents away. And every part of the global system is interconnected and interdependent with the rest. Once you set up the ecosystem the right way, it organically grows, prospers, and flourishes over time. In the words of an expert interviewed in the film, “The world gets more and more complicated all the time, but the solutions to fix the world’s ecosystems remains relatively simple.” The same thing is true for your business growth. If it seems complicated, the solutions are simple. Be a systems thinker, eliminate entropy, apply the right force of change, know what steps to take next. Design your system or business so that it can scale organically…even without your direct involvement.

It’s a wonderful example of an individual leveraging his strengths and passions to solve a big problem in the world. The filmaker, John D. Liu, is one of the world’s foremost experts on ecosystem reconstruction. But guess what? By background, he’s just a contract documentary filmmaker. John has no formal training in ecology, biology, farming, or permaculture. He stumbled across a solution to the complex global problem of desertification. Seeing solutions that work and inspired to take action, he learned what he needed to learn while leveraging his talents of filmmaking and curiosity. This is a very powerful example of Your Genius Zone in action.

It inspires positive, concrete action in the face of accelerating climate change. According to the UN, some two billion people depend on ecosystems in dry land areas, 90% of whom live in developing countries. The scientific consensus is that the rate of desertification is increasing around the world. As this map shows, it’s a pretty big fucking deal:

Desertification_map1

So doesn’t it make sense to invest in restoring once vibrant ecosystems? The techniques are simple. The dividends are long-term and catalyze a positive impact on every aspect of society — food and water availability, renewed harmony with the land, quality of life – and act as a powerful counterweight to climate change. As they ask in the film, “If it’s possible to restore large-scale damaged ecosystems, then why don’t we do just that?”

Quit Being So Hard On Yourself

If you’re feeling like your business will never scale, quit it. Just look at the humble beginnings of some of the world’s most iconic brands below. Then remind yourself that nothing is more powerful than consistency of vision and action sustained over time.

The 1st Disneyland

The original Disneyland.

The 1st Google

firstgoogle

The 1st Walmart

walmart-sam-walton-first-store

The 1st Apple

firstapplecomputer

The 1st Coke Bottling Plan

firstcokebottlingplant

The 1st Nike

firstnike

The 1st Kinkos

firstkinkos

The secret to scaling your business is to design it so that you play to your personal strengths and passions. Doing so allows you to be naturally consistent in your vision and actions over time, even against seemingly impossible odds. Then, when others look at what you’ve created over the past 10, 20 or 30 years, it’s hard for them to even conceive of the humble beginnings in which you began.

In this regard, be like Walt Disney, Larry Page, Sam Walton, Steve Jobs, John Pemberton, Phil Knight, and Paul Orfela. Don’t fight against yourself. Be true to yourself and design a business model to support it.

When Ted Lost Control of Its Crowd

Nilofer Merchant speaking at Ted.

Nilofer Merchant speaking at Ted.

Nilofer Merchant (who I think is a smart and savvy systems thinker) wrote a piece for HBR recently titled When Ted Lost Control of Its Crowd.

It’s a good synopsis of how Ted diluted it’s brand by creating licensed TedX events around the world with little or no control as to the quality and content of the speakers at those events. Then she explains the steps Ted took to address it.

You can avoid this same mistake in your own business by thinking through how to manage/engage “with the crowd” without causing a catastrophe failure to the brand (as almost happened and could still happen to Ted).

The goal of the model I’m going to share is to clarify what should remain “closed” and proprietary to the system and what should be “open” and have more freedom and autonomy.

Here’s what you do. Draw a horizontal arrow with the words “open/autonomy” on the left and “close/protect” on the right:

“Open/Autonomy” <-------------------------------------------------------------> “Close/Protect”

Next, list the functions of your organization (i.e., sales, engineering, marketing, strategy, product development, finance, admin, operations, etc.) and place those functions on a continuum following these rules:

1) Functions that can cause systemic harm should be placed on the right side of the arrow. I.e., the greater the systemic risk, the farther to the right they get placed and the more centralized control is placed on them.

2) Functions that are closest to the customer and require flexibility/adaptability to thrive should be placed on the left side of the arrow. I.e., the “closer” to the customer, the farther left they get placed and the more decentralized autonomy they have.

For example, the function of Strategic Marketing (the act developing new markets, and developing and protecting the brand) should be placed more to the right. That’s easy to understand because if a company was to choose the wrong market strategy or engage in activities that harm it’s brand, it’s a systemic risk. The business can quickly lose everything.

But a function like Community Engagement (the act of engaging with and listening to it’s brand constituents) should be placed more to the left. Why? Because this function is very close to the customer. If you try to control this messaging, you get Corporate PR Gobbleygook that doesn’t serve the brand. You put up to many obstacles that prevent the company from actively listening and responding to the market in an authentic way. Different functions. Different placement on the continuum of control vs openness.

Now to TedX. Where TedX got off track is that it treated Strategic Marketing like an open/autonomous function when it should be treated like a closed/protected function. Then, to compensate, it treated Community Engagement like a closed/protected function (blathering PR corporate speak) when it should be an open/autonomous function.

As Nilofer’s article points out, Ted finally got ahead of the problem when they started to treat Strategic Marketing like the closed/protected function it should be (i.e., they rolled out a manifesto and rules to protect the brand) and they started treating Community Engagement like the open/autonomous function it should be (i.e, they allowed a voice of authority to speak authentically with the community and “listen loudly.”)

However, unless Ted wants to have more brand diffusion in the future, they’ll want to put a more structured vetting process in place on all Ted events, including TedX. Otherwise, the same brand diffusion will begin to occur after the current dust storm as settled.

This doesn’t have to be onerous, and if it’s designed right, it could be a catalyst for a new energy and a revitalized Ted brand. For example, The Ted vetting process could be done by crowd sourcing from active Ted/Tedx participants (further engaging the community) but with final approval from centralized Ted Marketing Strategy function. I.e., the crowd votes on the topics and speakers they want to hear from at TedX and Ted, while Ted has ultimate veto power but would use it only judiciously and to defend the brand or to guide its strategic direction.

In any case, you can avoid these problems in your own business by taking the time to think through which functions should have more openness/autonomy and which functions should have more control/protection.

There are other rules to follow of organizational structure and design and if you’re interested in learning them, you can do so here: “The 5 Classic Mistakes in Organizational Structure; Or, How to Design Your Organization the Right Way.

Quietly Appreciate Others Strengths

yourockyourule

There are few things that will bring as much power and benefit to your personal and professional life as the practice of quietly appreciating the strengths of others.

To drive this point home, I’d like you to recall a time in your past when you weren’t accepted for who you are. Maybe this was within your family of origin, in a work setting, at school, or even on a sports team. C’mon, I know you have at least one period in your life like this. When was it?

From your vantage point today, wasn’t that experience exhausting? Didn’t you spend more time and energy worrying if you’d ever fit in than you did on working towards your goal? Didn’t that period in your life pretty much suck?

You’re not alone. A recent Gallup Research poll shows that employees who feel accepted by their managers and peers feel highly engaged in their jobs while those who get negative feedback (or even worse — are ignored all together) are actively disengaged:

Source: Gallup Research.

Source: Gallup Research.

It doesn’t take a genius to realize that higher engagement leads to higher productivity, creativity, and job performance. When we don’t feel accepted for who we are and we don’t have the opportunity to play to our strengths, it costs us a tremendous amount of energy and saps our productivity and morale.

By the way, I think this experience is pretty common for entrepreneurs. Many of us felt like we didn’t fit into the existing structures and so we create our own. But that’s for another story.

Now I’d like you to imagine something different. You’re a fly on the wall at ACME Corp. ACME is an average-performing company with an average culture.

From your vantage point on the wall, you observe that, while everyone is professional and polite on the surface, they seem more focused on what’s happening within the company itself than in how to kick ass in the marketplace.

Specifically, you notice an undercurrent of subtle “shoulds” that the colleagues at ACME hold towards each other. True, nothing really damaging is said outright. It’s usually couched in language like this:

  • “Sure, Sam is a visionary but he can’t manage his way out of a paper bag. He should be more detail-focused and a little less erratic.”
  • “Sarah is a great programmer but she’s moody as hell and only works on what she wants to work on. She should be more of a team player.”
  • “Yes, Mark is a good project manager but he’s not really in tune with where the market is headed. What we really need is break-out thinking.”
  • “Linda is smart as a whip but she’s a bulldozer. I wish she were more aware of how she impacts those around her.”

Can you spot the “shoulds” in this dialogue? This occurs anytime we want or expect someone to be different than they are. Obviously, this mindset is NOT unique to companies like our fictional ACME.

When was the last time you heard yourself say something like the above about someone you work with, either silently to yourself or in conversation with others? I bet it was pretty recent. I do it. We all do it. In fact, we’ve been so conditioned to find and focus on others’ weaknesses or what they don’t do well enough that it’s hard to even see anything wrong with it.

So what is wrong with it exactly? It’s that wanting others to be different than they are is a colossal waste of energy. We all know that people are who they are! No amount of wishing or complaining is going to change that fact. The only thing that can change another person is that person.

If we wish, prod, cajole, expect, demand, incentivize, or “should” another person into being different than they are, this just creates resistance. We all crave acceptance – and acceptance lowers resistance. When we feel accepted, we feel empowered to focus on our goals, to develop and evolve, and to contribute the maximum to the shared cause. Not because we have to, but because we want to.

Have you ever been in a partnership or on a team without “shoulds”? Where each member recognizes and accepts the others strengths and each plays to their respective strengths? It’s pretty damn fantastic. The communication is smooth, the work is outstanding, and the experience is fulfilling.

You can unlock that same experience by committing to practicing the full acceptance of others and appreciating their strengths. You might be saying, “OK, great, how do I do that?” The model I like a lot is called PSIU or “PS I love U.” It’s a powerful and pervasive approach to quickly identifying and appreciating another’s strengths and you can quickly learn it here.

But what I really want you to do is just hear me on this: When you notice yourself judging or “shoulding” someone else, just STOP. Simply recognize that they are who they are. They have strengths. Emerson said it so well: “In my walks, every man I meet is my superior in some way, and in that I learn from him.” What are this person’s strengths? What are they naturally exceptional at? Just quietly notice and appreciate those strengths.

Why quietly? You don’t need to run around out there in the world all pollyanna-ish, complimenting people left and right like a wind-up toy. Just quietly hold the space that everyone you meet has strengths. Learn to spot them. Be open to them. People will respond in surprising and positive ways. They’ll act differently and think differently. Why? Because you’re giving them the energetic space to be comfortable in their own skin.

When you put this into practice, it not only greatly adds to the richness and enjoyment of your own life, it also improves the performance, productivity, and teamwork of everyone you work with. In fact, if just a few of your co-workers embodied this mindset with you, it could be the catalyst for reducing internal friction and increasing market performance.

The bottom line: Appreciate others strengths! Make it a mantra. Make it a mind set. Teach it to your co-workers. Teach it to your kids. Maya Angelou had it right when she said, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Get started right now. Go find someone — anyone — and just quietly appreciate their strengths for 15 seconds. You’ll be amazed at the change in you and in them. Onward. Upward.

If you’ve got questions or comments on how to apply this concept, just ask away in the comments section and I’m happy to answer.

Reading Tea Leaves: The Most Important Question to Ask When Doing Strategic Planning

tealeafreading1

“Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.”
– Peter Drucker

When was the last time you got away from the office to take a good, long look at the trends that will likely impact your business, customers, and suppliers in the next five years?

I’m willing to bet that it’s been too long. With so many pressing demands on your time, energy, and focus right now, it can feel nearly impossible to step away from the day-to-day and invest some serious thought cycles in what might happen over the long term.

Of course, you already know that the best leaders and executives do actually invest the time and energy in thinking about and anticipating the future, and they do so on a regular basis. You also know from experience that, when you do step away from the day-to-day to really think, it turns out to be time very well spent indeed.

So what should you be thinking about when you’re doing strategic planning? MBA programs have something called a PESTEL analysis for strategic planning. With it, you look at what’s happening in the Political, Economic, Social, Technological, Environmental, and Legal environments and how anticipated changes will impact your business, customers, and suppliers. I can’t argue that these are reasonable sectors to examine and reflect on when thinking about your strategy. However, the PESTEL analysis also totally misses the most important factor to address!

When doing strategic planning, the most important question to ask is this: “DEMAND: Will there be more or less demand for what we do five years from now?” This is the most important question because, as I explain in detail in the book Organizational Physics: The Science of Growing a Business the goal of every business is to align unique capabilities with growing market opportunities (you want to be in top right “Happy” quadrant below):

opportunitiescapabilities

(If you want to learn more about this diagram and how to integrate it into your planning, see Part III, Chapter 9 of my book: Organizational Physics: The Science of Growing a Business).

Never Misread the Environment

The greatest mistake a leader can make is to misread the environment. The reasons are self-evident. If, in the future, there’s going to be less demand for what you do now, then you need to be acting on this now to steer yourself into a growing sector. If you can’t find a growth sector, it’s just a matter of time until there’s no business at all. Or, if the environment zigs to a new growth opportunity, but you’ve zagged the company in the other direction, you’re pretty much out of luck. The environment trumps all, so you’ve got to pay attention and read it correctly.

Of course, there other important questions to ask when scanning the environment. To have a holistic, full-picture view of the environment, there are seven factors in all – including the most important one, Demand – that you need to examine when doing strategic planning:

Demand What changes are occuring within the market today that could siginificantly impact demand for your products and services, as well as how they are marketed and delivered, in the future? Are you weakly or strongly positioned to capitalize on these trends?
Competition The competitive factors to consider are the number and capabilities of the perceived practical alternatives of the future. Will there be more or fewer competitors? Will they be stronger or weaker? How will your company differentiate itself in a crowded marketplace?
Economic Economic factors to consider include consumers’ level of disposable income and overall economic confidence. Also consider the economic growth rate, the exchange rate, the inflation rate, and the unemployment rate. Will labor costs be higher or lower? What about the labor supply?
Regulatory Some Regulatory factors to consider are laws relating to the environment, health and safety, antitrust, and labor. Also consider changes in the type of government, the level of political change vs. stability, and the amount of regulation/deregulation. How will tariffs, tax policy, and trade restrictions impact your business? Will there be more corruption or less? Will there be more bureaucracy and red tape or less?
Technological Will the rate of technological change continue to increase? What emerging technologies now will radically shape the future? Will there be more automation or less? More complexity or less? More integration or less? How will these trends impact your business?
Ecological The ecological environment is literally the planet that we all rely on for our sustenance and livelihoods. Will there be increasing or decreasing stress on the ecological environment in the future, and how will this impact your business?
Social How will the population growth rate change? What about the age distribution in the markets in which you operate? What about health and community consciousness? Feelings of fear or safety? Societal infrastructures like healthcare and education? What about attitudes towards work and employment patterns? Attitudes towards certain companies or industries? Will any cultural taboos emerge or go away?

Instant Strategic Planning

The hard part of strategic planning is that the needs of today always overpower the needs of tomorrow, so finding the time and energy to do strategic planning can feel like a luxury. The best way to do it is with a coach or someone outside the business who has an independent perspective and can reinforce a rhythm for doing it consistently.

Still, there will come crisis situations in your career when you need to instantly focus on the big picture. And guess what? The factor of Demand allows you to do a 1-question strategic assessment. Everything else can be considered a luxury.

For example, many years ago I was part of a board of directors that was trying to navigate an online advertising business through a stock market collapse. The company had just reached cash flow profitability and had a long and growing list of satisfied customers. At the same time, the stock market implosion was causing the entire country to feel panic and question the future. There was a low-ball offer on the table from a strategic acquirer. The board felt like the right thing to do was to take the offer.

When there’s panic and fear, it’s hard to see things clearly. I wish then that I had had the awareness to pierce the veil of fear and simply ask: “Hey guys, wait a minute. Sure, the stock market is collapsing but let me ask you this: Is there going to be more demand or less demand for online advertising in the future? If there’s going to be less demand, let’s exit this business. If there’s going to be more demand, then we should say ‘no’ to this offer and leverage our unique position and capture it.” I didn’t have that awareness then and we sold the business prematurely. But hey, at least I got some good learning and a blog post out of it.

You can learn from my mistakes and, the next time panic sets in, just take a moment to look at the long view and ask that one question: “Will there be more or less demand for what we’re doing in the future?” It will serve you well.