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How to Build Your Buyer Persona: 10 Questions Marketing Should Ask Sales

Sales vs. Marketing

Sales vs. Marketing. Who’s the Ape?

Does your head of sales think your head of marketing is an imbecile — that they just don’t “get it” and aren’t doing the right things to drive qualified leads for the sales team? Or perhaps your head of marketing looks down his nose at those “apes” in the sales department who constantly demand more results but don’t understand the strategic aspects of real marketing, not to mention the time and money it costs. Sheeezh.

You may not be surprised to hear that this tension between sales and marketing is common. The truth is that, by nature, their functions will always be in tension or conflict. One is short-range-focused, with a drive to close qualified leads NOW. The other should be long-range oriented, developing the brand and product offering to meet evolving customer needs in the future – not just this quarter’s targets. That conflict is never going to go away. And the point I’m going to make in this article is that it can be harnessed.

There is an easy way to address the conflict between sales and marketing and make it constructive for both growing sales and building the brand. It does, however, take awareness and discipline to do it well. The solution is to refocus and get alignment between sales and marketing on the most important question every business must answer: Who is your primary customer? You might think this is obvious, yet a surprising number of B2B marketing companies overlook this step. Or don’t do it adequately.

Who is Your Buyer Persona?

A “buyer persona” is a semi-fictional representation of your ideal customer — the real buyers who influence or make decisions about the products, services or solutions you market. The buyer persona sits at the nexus between sales and marketing. Defining or redefining the buyer persona is a high-leverage activity that takes the strengths and insights of both marketing and sales. It allows them to come together, focus on what’s most important, drop what isn’t, and then get busy driving sales and building the brand.

Why is this? Well, if you can get alignment between sales and marketing on who the primary customer is, then everything else is tactics. The tactics refer to the best approach to reaching this primary customer, and this is open for trial, error, and team learning. The tactics may change, the shared goal remains the same.

If you don’t have clarity and alignment on who the primary customer is, however, there will be rampant disagreement across the board. The sales and marketing teams will fight about the little things because there’s no alignment on the big thing. And even if your current marketing tactics are working relatively well, they won’t be seen as successful because there’s still no true alignment on the real goal: continuing to reach the primary customer while evolving the product to meet their changing needs.

The primary purpose of defining your buyer persona is to “tune” group empathy towards the needs, wants, and aspirations of the customer. If the persona doesn’t help to tune group empathy, then it’s not fulfilling its purpose. It’s just a useless exercise. This isn’t just true for marketing and sales. It’s true for every function in the business. Who do we serve? What is their primary unmet need? How can we delight our customers? A good persona will take an abstract concept and make it easy for everyone to relate to and create a deeper sense of meaning and purpose throughout the entire organization.

If Marketing Has Questions, Sales Has Answers

Top-performing salespeople understand their customers’ conscious and unconscious unmet needs as well as their spending priorities, decision-making processes, and aspirations. Too often average-performing marketing departments will discount sales leaders’ firsthand knowledge of their customers. They erroneously think, “Awww, that’s just sales. What do they know anyway?” Big mistake. A top-performing marketer, on the other hand, takes a different approach. They recognize that top sales people are already spending a lot of time interacting with the same customers that marketing is trying to reach. Duh!

When developing a buyer persona or type, marketing can help sales to clarify who is the primary customer (the one with ultimate authority) as well as the key influencers and gatekeepers in the buying process and how to reach them. Each of these can be a different buyer persona and requires a different approach and collateral than the others. The balancing act in this collaboration is that marketing must meet both the short-term needs of sales and the long-range development needs of the rest of the business.

The specific perspectives that sales can bring to the discussion on the buyer persona are the stated and unstated or unconscious reasons customers buy. The conscious reasons are good to know but the unconscious reasons are priceless. That’s what a good sales team is intimately familiar with.

For instance, let’s say that your business is selling a b2b marketing platform. If you were to ask a customer, “Why did you buy from us?” you might hear the conscious reasons such as “We have a goal to increase leads by 25% and conversion by 10% this year and your customer testimonials were the deciding factor. We liked this widget feature. Your customer support is outstanding…” And so on.

OK, that’s easy enough. But what about the unconscious needs of this buyer – what were those? Was it job security? Confidence? To be part of the in-club? To be able to justify their decision to their peers? To be seen as an innovator? These unconscious or unstated needs are the real reason sales happen.

A great sales person will intuit what a buyer’s unmet needs are and sell to those. A great marketer will incorporate solutions to the unconscious unmet needs in their marketing message and collateral.
Additionally, sales can bring to the table a deep understanding of the buying cycle, customer spending priorities, the competitor’s offerings, your unique differentiator, the customers’ requests and frustrations, and firsthand anecdotes from the trenches.

The 10 Questions Marketing Should Ask Sales

There are 10 basic questions that every great marketer should ask the sales team:

1) Who is the primary customer type?

2) What can you tell me about this primary customer? (e.g., position, age range, educational background, management style, industry experience, information sources, trade shows attended, etc.)

3) What are the customer’s unmet conscious needs? (i.e., what do they say they want?)

4) What are the customer’s unmet unconscious needs? (i.e. what do they really want?)

5) Who are the key influencers within and outside the customer’s organization that impact the buying decision?

6) What is the customer’s typical buying process and how long does it take?

7) What do we do differently or better than anyone else from our customer’s perspective? What do our customers say makes us unique?

8) What do our top competitors do differently or better than us? What makes them unique?

9) What are some of your best stories about when different customers were thrilled with our product or service?

10) What are the top 3 deliverables I can provide you to make your job easier, more fun, or more successful?

Why are these 10 questions important? Because they help a marketer tune his or her own empathy to the needs of the customer and the needs of the sales team. Great marketers understand that it’s not just about “marketing.” It’s really about meeting the needs of those you serve – in this case the end customer and the sales team.

The 3 Things Sales Can Do To Get More Out of Marketing

Harmony between sales and marketing is not just a one-way street. There are three simple things a sales leader can do to help ensure that marketing is supporting your team:

1) Share your customer knowledge. Make sure that marketing has the answers to the top ten questions and do it proactively. You don’t have to wait for marketing to interview you. Take initiative and start the dialogue with marketing. To be effective in sales, you need information transparency with marketing and vice-versa.

2) Bring Data. Great marketers love data, so the more and better data you have to support your reasoning, the more persuasive you will be. Where do you get the data? Industry publications, customer surveys, web site analytics. The data is there. The challenge is turning it into actionable insights. You can help this process by keeping the primary customer’s needs in the forefront of the discussions.

3) Advocate for your customer. Jeff Bezos leaves an empty seat in the Amazon conference room. This empty seat represents the Amazon customer. “Remember,” Jeff is known to say to the management team, “this is why we exist. To meet the needs of this customer.” How can you create a similar awareness and reverence for delighting customers in your own company?

Now, chances are that when sales and marketing attempt to answer questions about who the primary buyer really is, one or more people will say, “I wish we had the data to answer that question. We just don’t (have it, have access to it, know how to make sense of it, etc.)” Don’t fall into this trap! There will never be enough good, clean, accurate data. That’s not an excuse to not make your best effort at defining and creating alignment around the primary buyer persona.

In a well run sales force automation (SFA) system, for example, there’s a ton of available valuable data: Job title of the primary buyer, job title of the initial inquirer, job titles of key influencers, length of time from inquiry to purchase, how they heard about you, customer satisfaction scores, top feature requests, and recorded anecdotes from sales. Similarly, there’s a wealth of data in a well-run website and social media analytics platform.

So by all means, use the data if you’ve got it. Use it to improve your understanding of the primary buyer persona. But don’t use the lack of good data as an excuse to put off the exercise of defining the buyer persona in the first place. Start with what you’ve got. Build on it from there.

The Art is the Discipline

It’s pretty straightforward for sales and marketing to schedule a meeting or two to define the buyer persona. The real breakthroughs occur when you build in the organizational discipline to consistently define and redefine personas, and therefore find ways to improve the effectiveness of both sales and marketing. It’s the classic dynamic between working on the business versus in the business. Crafting the structures, processes, and discipline to step out of the daily work pressures to think strategically about the work itself is what separates the great companies from the average.

A simple best practice is to set a quarterly or bi-annual meeting with marketing and sales and other stakeholders to review the current primary buyer persona, take a fresh look at the top 10 questions, and make adjustments based on new data and new anecdotes from the field.

If everyone in your organization is clear on who you serve and the group empathy is tuned into the needs and aspirations of your customers, sales and marketing can cease viewing each other with suspicion and collaborate to solve your customer’s core business problem. The process always starts with and circles back to the buyer persona.

The Culture System: Or, How to Integrate Values in Your Company

theculturesystem

Key Takeaways:

  • You don’t build a great culture through intention alone. You build it through a culture system.
  • You can’t dictate culture. But you can design for it. A strong culture system is designed around four key elements: Values, Rituals, Stories, and Consequences.
  • To build a better organizational culture, use the culture system framework to focus your energies on improving the weakest element, then improve the next and so on.

When Intention Isn’t Enough

It’s 9am on Monday morning at ACME Widget Corp. The management team is gathered in the 1st floor conference room waiting for CEO Jack Ryan to arrive. A rumor is buzzing around that Jack has spent the past weekend at Culture Summit 2.0, some sort of “interactive experience” where business leaders learn from culture gurus how to build a thriving organization.

A few minutes after 9, Jack, calm and present as always, enters the conference room and gives his hellos. As he is taking his seat, Sally in Marketing says, “Jack, there’s a rumor going around that you attended a corporate culture workshop this weekend? How was it? We’re all curious to know…”

Jack doesn’t answer right away and instead takes time to visually connect and smile at everyone around the table. Finally he speaks. “This was one of the most transformative weekends of my life. It really reinforced for me the importance of values-based leadership and I’ve got a lot of new ideas to try. But the main thing is this: going forward my #1 commitment is to ensure that we truly become a values-based organization. That’s what I’m most committed to and excited about as a result of this weekend.”

Now imagine you’re in that circle and you hear Jack say this. How do you respond? I imagine that outwardly you might nod your head and even give a verbal “right on!” But inwardly? Might you have some skepticism that any CEO might succeed at this — despite a personal commitment to personal growth and values-based leadership?

“C’mon,” you might think to yourself, “What about Marie in accounting? Wasn’t she just a nightmare who ate away at the company culture for 6 years? What’s going to be different this time? We’re swamped and who has time to really focus on and enforce values? There’s no question I’d like to be part of a great culture; the hard part is actually making it happen.”

At the same time, try to imagine being Jack. Can you empathize with his desire to truly lead by values? To build a transcendent organization that makes a positive impact on the world, kicks ass in the marketplace, and has the culture you’ve always wanted to build — one you’re truly proud of?

Intuitively we all understand that building a truly values-based organization can be a life-changing experience for everyone involved. It creates tremendous organizational resilience, inspires the best in its people and customers, and builds a sustained advantage that’s hard for competitors to duplicate. So there’s no question that Jack is sincere in his desire to build such a culture. But how is that done?

If you read most popular books on building a values-based culture, the focus is usually on what personal characteristics are required in a values-based leader and how to develop them. For instance, in his best-selling book From Values to Action, Kellogg School of Management professor Harry M. Jansen Kraemer Jr. codifies the 4 principles of values-based leadership: self reflection (know yourself to lead yourself and others), balance (ability to see situations from multiple perspectives and differing viewpoints), self-confidence (accepting yourself as you are and playing to your strengths), humility (valuing each person you encounter and treating everyone respectfully).

That’s all well and good. You can’t have a values-based organization without a values-driven leader. After all, if the head is rotten, it affects the whole body. But clearly that’s not enough. Let’s give Jack the credit he deserves and say that he is highly self-aware, compassionate, and has great integrity. If you were to compare his personality to all of the stated requirements, it would be positive check marks all across the board.

So if Jack is an aspiring conscious leader with awareness, compassion, and integrity, then what is the cause of subtle doubt on the team? Well, as you have certainly experienced firsthand in your own career, building a values-based culture is really fricking hard. It takes tremendous effort and energy to get it right and one small or unconscious misstep by an organizational leader can quickly undo years of positive work. It’s a lot like playing Tetris – mistakes pile up and accomplishments disappear.

If the leader’s intention and values alone aren’t enough to build a better culture, what is? When it comes to building a reinforcing a values-based culture, you need a simple system that defines, reinforces, and defends the desired organizational values. Put another way, while your own intention and personal values are important, what’s just as important is the cultural system you develop.

The Four Elements of an Effective Culture

Culture can be systematized. In fact, every successful and durable culture is built on four basic elements: Values, Rituals, Stories, and Consequences. Once you’re familiar with this basic cultural framework, you can train your focus on each element to build a thriving culture in your organization:

thesystemofvalues

  • Values are the qualities of expression that the culture considers most important.
  • Rituals are the formal and informal procedures and celebrations that the culture adheres to.
  • Stories are the formal and informal lore that describe the culture’s values in action.
  • Consequences are what happen to members of the culture when they violate the values.

You can see these four elements at work in every strong culture, whether it’s a family, a tribe, a community, a Fortune 100 firm, or a national identity. Take the U.S. Armed Forces, for example. Now, whether you’re a pacifist or a war-hawk, you will probably agree that the U.S. Armed Forces have a very strong culture, right? That’s because they rely on the four elements of a successful culture:

  • They have a clearly defined set of values: duty, honor, respect for authority, sacrifice, courage under fire, etc.
  • Those values get expressed in rituals. The salutes, ranks, badges, and ribbons are all forms of ritual. So are the elaborate ceremonies for career advancement; the historical celebrations for Memorial Day, D-Day, and the 4th of July; and the solemn bereavement and 21-gun salute for those lost in battle.
  • Stories of values in action are spread and reinforced during those rituals (like when the General shares a story about a famous battle or a particular soldier’s heroics); through the armed forces media; in history books and historical re-enactments; and the informal mess-hall chatter of great exploits and total clusterfucks that happen out in the field.
  • The consequences of not adhering to values are clear and reinforced. If you’re in the armed forces and you don’t adhere to the values, then you’ll get a dishonorable discharge, a sentence to Leavenworth prison, or even get a Code Red (you’ll know what this is if you’ve ever seen the movie A Few Good Men.

The U.S. Armed Forces have an intense culture, don’t they? They have to! If the Armed Forces didn’t invest considerable time, energy, and resources in building and reinforcing their culture, they could not be effective. As they say in the most gung-ho units — “HOOAH!” And of course if the U.S. Armed Forces lost their culture, or if their culture was no longer in synch with the values of the broader environment in which it operates, it would cease to be effective.

Even if your organization isn’t dealing with life and death, or war and peace, the elements of building a strong and resilient culture are the same. As a leader, you need to be clear and committed to a set of core values that are reflective of the best your organization can be; you need a series of rituals, small and large, the reinforce the expression of those values; the values must “travel well” through effective formal and informal storytelling; and you must enforce the consequences on yourself and others for failing to live by those values. By breaking the elements of a strong culture down, you’ll better know where to focus your energy and attention so you can help to build a thriving culture.

Values

Values are running the show in your organization; you just don’t know it. You can tap into the organization’s existing values by observing a meeting like a fly on the wall. What is considered of higher importance than anything else? Does this company value profits over people? Efficiency over service? Self-glorification over the needs of the group?

Because values guide decision making and behavior, it goes without saying that, in order to build a thriving culture, the culture needs to be clear on what its core values are and those values must be supportive of the organization’s purpose. If your organization isn’t clear on its values, or its current values no longer support the organization’s purpose, then you’ll need to guide the organization through a values definition process.

Just as with any good decision-making and implementation process, you’ll want to gather in a critical mass of leaders from all levels of the organization to help clarify and build commitment to the right set of core values. You’ll know you have the right set of core values when you and the team can answer an emphatic “Yes!” to each question below:

  1. Do these core values support our larger organizational purpose?1
  2. Do these core values reflect our culture when it’s operating at its very best?
  3. Will these core values attract the “right” people and repel the “wrong” people?
  4. Can we clearly identify when someone is not living up to these core values?
  5. Would we fire someone for not expressing these core values?

When you can answer “Yes!” to each question above, write down each core value using complete sentences, each one starting with a verb. For example: “Build open and honest relationships through communication.” “Empathize with customers by walking in their shoes.” “Pursue excellence by getting it right the first time.” “Work smart by being disciplined in your thoughts and actions.” “Play hard by having fun together.”

When the values are defined it’s time to bring them alive…

Key Question: Do we have the right set of organizational core values to support our purpose now?

Rituals

It’s not enough for core values to be known and understood in your culture. They must be experienced. What do I mean? Well, try to recall all of the knowledge you gained back in college. You can’t do it, right? Now think back to all the memorable experiences you had in college. The parties, the crushes, the dates, the trips, the project teams… Those are easier to recall. That’s the difference between knowledge and experience.

Rituals create experiences and it’s memorable experiences that really impact your culture. Rituals run the gamut from small to big and you’ll want to choose those that best activate your desired organizational culture. Here are some examples of small, effective rituals I’ve seen over the years. I’m not sharing them to create an exhaustive list, only to highlight that there’s a lot of room for creativity in the rituals you do embrace…

Quarterly Celebrations. It’s easy to celebrate when times are good. But what about when times are bad? Great cultures schedule their celebrations in advance and follow through no matter what happened that quarter. What did we learn as a culture? What heroic efforts were made? Celebrate the journey, not just the destination.

Steam Whistle. I once ran a sales team where after every sale, the rep would stroll over to the wall and blow a super-loud steam whistle. It would rattle windows and shake doors. The bankers on the floor above us absolutely hated us but that made it all the more fun. That whistle became known as the sound of success.

Pistachio Nuts. Back when Hewlett-Packard was a great company, it was known for… pistachio nuts. Yep. If someone did something special, like solve a complex bug in software or win a big contract, they’d soon find a silver bag of pistachios on their desk with an anonymous note telling them what a great job they did. I’ve read that if you worked at HP, you soon coveted receiving a bag. When you did, it meant more than gold. That’s a ritual.

Coffee Walk. Last week I spoke at an all-company meeting for GumGum, a fast growing advertising network in Santa Monica. During my interactions with the team, I learned that GumGum has a daily ritual “coffee walk” where the entire company goes for coffee at 3:30pm. They stroll the block, take time out to gaze at the Pacific ocean, have some laughs, and even enjoy some trivia. A fun little ritual.

Build Your Own Desk. Amazon is famous (infamous?) for having its office workers build their own desk using a door and saw horses. It’s a ritual that reminds new hires of Amazon’s roots and creates a shared sense of experience. I can just imagine the savvy old veterans watching the newbie put his or her desk together and having a good-natured laugh about it.

Parking Lot Sessions. Where I live in Santa Barbara, there’s a cool shoe company called Seavees that celebrates its California roots by having a monthly get-together in its parking lot. Called “Parking Lot Sessions,” Seavees invites a cool band, provides a BBQ and drinks, and revels in the vibes. That’s a ritual.

Appreciation Fridays. Every Friday at my kid’s school, the children gather together and share appreciations for one another and the teachers. “I appreciate Reid for helping me solve a math problem.” “I’m thankful to Alexa for telling me that she liked my new shoes.” It’s precious sweet but you can see the same positive cultural impact in a gathering of adults at work: “I want to thank Linda for helping me to get my article published this week. It was awesome and she went above and beyond.” A powerful ritual.

The bottom line is this: A ritual can be just about anything that creates a shared memorable experience and that supports the essence of the core values. Rituals don’t have to take a lot of time or cost a lot of money. If your core values feel more like words and less like a shared experience, it’s a sure sign that you should put your focus on creating more or better rituals, small and large, in your organization.

Key Question: What are the rituals we have in place now in our organization and what new rituals should we develop?

Stories

The more the culture is shared, the stronger it becomes. The best way to share a culture is through stories of core values in action. Stories, positive or negative, are incredibly powerful. Human beings are storytelling creatures. We’re attracted to stories, we remember them, and they define the world in which we live.

Max De Pree, the founder of Hermann Miller Chairs wrote in his book Leadership is An Art that “The #1 job of a leader is to define reality.” That’s true. What was left unsaid is that reality is subjective. For instance, do you feel that the U.S. Armed Forces, to continue with the example, are a belligerent bully corrupted by corporate greed and nefarious politics, or an honorable institution driven by self-sacrifice, honor, and courage? The answer depends on the stories being told within and without the organization, and which ones you believe.

Here’s the thing to keep in mind. If negative stories run unchecked – gossip, rumors, tirades – they eat away at the culture from the inside out. Pretty soon all anyone can think and speak about is how bad things are, how the leaders are hypocrites, who’s sleeping with who, and how the business is soon going under.

As a leader, in order to define and craft a new reality, you need to create an environment where it’s safe and encouraged to share positive stories of core values in action. If you can create this positive storytelling environment, then pretty soon all anyone can think and speak about is how good things are, how the leaders strive to walk the talk, who’s helping who, and how the business is going to survive and thrive, no matter what.

Rituals and stories go hand in hand together. One of my favorite practices is to create a ritual where company meetings end with each person sharing a story of when they saw a core value being expressed in the past week. For example: “To close this meeting I’d like each of you to share a story of when you saw a colleague express a core value in the past week. I’ll start: Last week I saw Susan go above and beyond to help our client Frank. She truly expressed the value of ‘above-and-beyond customer service’ and it was awesome to witness. Molly, what did you see last week?”

The first time you ask this question, you might get some blank stares: “Ah, what are our values again?” Remind them. The second time you ask the question, people will be more prepared. By the third time you ask that question, people will be paying attention for when they see a core value being expressed throughout the week. The stories reinforce what it means to express a core value. Pretty soon, those stories of values in action begin to travel around the organization. We get more of whatever we focus our attention on.

You can contrast this with a company that has core values that remain dead on the wall, meaning, they are aspirational statements that have no life to them. They’re viewed by the culture as vague, abstract statements that stand for hypocrisy rather than reality. It is stories of values in action that bring those values alive in the organization. The more you share them, the more believable and powerful they get.

One aspect of storytelling to keep in mind is the use of photos and video to capture, share, and archive the culture in action. For instance, at the recent GumGum all-hands meeting, they paid to have a professional photographer shoot the 3-day event. Then the photos were placed on Dropbox and sent to all participants. Simple? Yes. Smart. Very. It’s cultural storytelling in action. Remember, the more you share it, the more powerful it becomes.

Key Question: How and when can we share more stories of core values in action in our culture?

Consequences

Values without consequences aren’t values at all. They’re idle wishes. Consequences are both really simple and really hard. The bottom line is this: If someone in your culture isn’t living by the core values, they must go. Values are non-negotiable. The minute you accept behavior that isn’t in alignment with the core values is the minute that your culture starts to get flushed down the toilet.

A common theme I see in average cultures is that they tolerate behavior that’s not in alignment with their stated core values. “Sure, George can be a real asshole, but he’s the only one who knows our marketing engine/technology platform/key client/etc. We simply can’t afford to fire him right now. After we make it through this quarter/product release/fund raising period/etc., we’ll try to find a replacement.”

I call bullshit.

A core principle of Organizational Physics is to eliminate entropy from the system. Nothing is more entropic to a thriving culture than when someone in a leadership position isn’t living by the core values. And one of the highest-leverage decisions you can make as a leader is to fire someone who doesn’t match values.

For instance, I have a CEO friend who is an awesome guy. He’s kind, smart, and thoughtful. He truly wants the best for his people and strives to build a great corporate culture. However, precisely because he’s so caring and generous, he often bends over backward to try to help someone who is a poor cultural match fit in. Several months ago he was dealing with one senior team member who was causing a lot of turmoil for him personally and for the company. This employee was very me-focused, caused constant fights between departments, and generally cost everyone much more energy than the employee actually contributed back.

Finally, my friend reached a breaking point, owned up to the cultural mismatch, and fired this senior leader. At the time, it felt like a very hard thing to do. It wasn’t clear how the company would cover the gap created by the absence, how and when they would find a replacement, and what kind of impact it would place on the CEO’s personal workload, which was already severe. I spoke with my friend a month or so after the termination. What do you think he said? “I should have fired that person months ago. I can’t believe the positive impact it’s had on our culture. Everyone is in a good mood, there’s low BS, and we’re kicking ass on all the projects we were struggling with before. Hire slowly. Fire quickly. Lesson learned.”

A key attribute of great organizational leaders is that they tolerate no bullshit when it comes to defending values. There’s a reason that, when the President of the United States is sworn in, he must state that he will “protect and defend” the Constitution of the United States. The Constitution is a values document. It’s easy to aspire to values. It’s hard, but necessary, to protect and defend them. That’s the real work of leadership. Otherwise all is lost. When it comes to building your own organization, hire by values and fire by values. You already know this to be true. So what’s holding you back?

Key Question: Are you tolerating behavior that isn’t in alignment with the core values? If so, what are you going to do about it?

Summary

Building a winning culture requires more than just intention. It requires a systematic approach to transformation. The Culture System allows you to identify where you need to focus your energy and attention to build a thriving values-based culture. Right now do you need to focus on values definition? Rituals? Stories? Consequences? Break it down so you can build it up.

Got some good rituals or stories of values in action? I’d love to hear them. Please share in the comments.


1.Note that there will come a time in your organization’s life when it’s necessary to evolve the organization’s values to better reflect its evolving purpose. That is, while core values remain relatively constant over the years, they don’t remain absolutely constant over decades. Winning organizations and cultures evolve their values over time in interplay with the surrounding and changing environment.

The best evolutionary values model I’ve studied in depth is Spiral Dynamics, taught by Don Beck. Spiral Dynamics is not widely known in the mainstream but it is the underlying framework for very popular values-based theories including Integral Theory, Tribal Leadership, Conscious Business, and many other next-generation values frameworks. If you get the chance, take a workshop with Don Beck. It will forever change how you think about values in individuals and groups.

How NOT to Interview

how not to interviewSometimes the best way to understand what NOT to do in an interview is to go through a bad one yourself. I’ve definitely had this experience. It occurred when I was interviewing for an entry-level sales position with a fast-growing telecom company in Minneapolis, Minnesota. At the time, I was 26 years old, had just shut down my first startup, had burned through all my savings, and was in desperate need of a job.

A friend of mine told me about the firm one night over beers: “Hey Lex, I know you just shut down your startup. Sorry it didn’t work out, man. If you need a job to pay the bills, they’re always hiring where I work. It’s not the best job in the world but the money can be good if you work hard at it.”

The notion of hard work and good money sounded like a pretty good opportunity. I needed something I could throw myself into until I found my footing again. So I called the company the next day, told them I was referred by one of their existing reps, and set an appointment for an interview. To prepare, I practiced my spiel about why I’d be a good fit for their organization, polished up my resume, put on a suit, and went in with a mix of hope, anxiety, and chutzpah.

how not to interviewI arrived at their offices and approached the front desk. The receptionist, middle-aged and blurry-eyed, looked me up and down skeptically and, with a hint of exasperation at having to deal with me, said, “May I help you?”

“Ah yes, I’m here for an interview for a sales position. My name is Lex Sisney.”

She glanced down at her calendar and shook her head: “There’s no interview today. You first need to take the written test.” She reached into her file drawer and handed me a 50-question fill-in-the-oval-and-make-damn-sure-you-stay-in-the-circle scantron test. “If you pass the written test, then you’ll be invited back in for an actual interview.”

I thought to myself, “Really? Why didn’t they tell me this on the phone? I’ve got to take some psychobabble test before even speaking with someone? And is this the kind of place I want to work for? WTF. Well, I guess I need the money so I better play along.” Out loud I said, “OK, let’s take the test.”

“See the clock over there on the wall?” she said. “You have 30 minutes to complete the test. Have a seat under the clock and the time will begin. Do you have a #2 pencil?”

“Uh, no, I’ll need a pencil please. Do you have one?” She rolled her eyes and reluctantly handed one over like it was her last meal. I took the pencil, turned on my heel, and walked back to my assigned seat under the clock.

The test asked me questions about what I’d do in hypothetical situations like the following:

You see a co-worker take a company coffee mug from the storage closet and put it in his briefcase. You should:

a) report the theft to HR

b) ask him what he’s doing

c) take a mug for yourself

d) tell him to put the mug back

I snickered under my breath but played along anyway. I finished quickly and turned it in with 15 minutes to spare.

The receptionist scanned it over with a raised eyebrow to make sure I stayed within the circles and didn’t miss any questions. “OK,” she said, “someone will call you if there’s a possible fit,” and I left. (Note: Psychometric tests like this one have transitioned from #2 pencil to the web, but they can still be just as asinine.)

About a week later, the company called me in for the interview. I was told that this time, I’d actually get the chance to speak with the hiring manager.

I arrived early and re-greeted the receptionist. She seemed in a somewhat better mood this time: “Have a seat Mr. Sisney and Mr. Johnson will see you when he’s ready.”

After waiting for 20 minutes past the scheduled time (is this a doctor’s office?), a new voice spoke from the receptionist area. “Mr. Sisney? I’m Lidia, Mr. Johnson’s assistant. He’s ready to see you now.”

how not to interviewLidia led me back through the cubicles and telemarketers to a large windowed office. There, at a small, round conference table sat “the Man.” As I was ushered into the office, he didn’t actually look up or greet me but sat leafing through some papers, extended a limp-fish handshake, pointed to a chair across the table, and sternly said, “Have a seat.”

After what seemed like five minutes of just sitting there, he finally looked up from his reading, made eye contact for the first time, and with pursed lips told me, “I’m concerned about your ability to conform.”

“Excuse me?” I asked trying to mentally process what he had just said. He placed one of the pages he was reading on the table and with two fingers slowly twisted it towards me so I could read it.

“You see this chart? This fourth column is conformance. Your scores in these other three areas are very high but you have the lowest conformance score of anyone I’ve ever seen.”

I said, “Hey, that’s pretty cool. Can I have a copy of that?”

“No,” he frowned. “But tell me, why should I believe that you can conform to our way of doing things here?”

I tried to dance and weave and sell him on the idea that non-conformity really meant “creativity” but I didn’t think he really bought it. The interview lasted about 10 minutes total and I left thinking it had all been a big waste of time.

Surprisingly, they called me a few weeks later and offered me the job.

“No, thanks,” I said. “It seems like you’re looking for drones for your empire. That’s not really me.”

So what did this company do wrong in the hiring process? Alas, let me count the ways…

First, they were focused on the wrong things. It’s clear that this company was suffering from high turnover in the sales team so they tried to fix the problem by weeding out risky candidates (like me) using a psychometric profile test early in the hiring process.

In effect they were saying, “Turnover is costing us a lot of money. We must control for it by only hiring reps who can conform to our process.” Did it work for them? No! They still had high turnover in their sales team; those they did attract were of the lowest common denominator; and their entire recruiting process became a bureaucratic numbers game.

You don’t want to strive for conformity in your employees or in the candidates you select in the hiring process. Conformity is like monocultures. Easy to plant and hard to maintain—in addition to making the system brittle, stagnant, and tired over time.

What you do want in your organization is diversity—a diversity of styles and perspectives built around a common vision and values. Diversity is harder to design for than conformity but it ultimately makes things alive, vibrant, and adaptive over time. The right hiring process won’t reinforce conformity. It will support the selection of a diversity of styles and approaches that complement the surrounding team and environment.

Second, they treated people like discardable cogs. Every interview is a significant sunk cost. If you’re going to have one, you better make the most of it. Treat everyone you interview with dignity and respect, and use the interview as an opportunity to win hearts and minds. You never know—that lowly job candidate may one day be very important to your organization’s success.

In the personal story I just told you, soon after I turned down the company’s job offer, I started another company that went on to be hugely successful. Early in our growth stage, I needed a telecom partner to build and manage a complex phone system. In fact, I ended up spending several million dollars on our phone system over the coming years.

Which vendor do you think I didn’t call? Why would I call them? I got a chance to peek behind the curtain of their organization and I didn’t like what I saw. The process was haphazard and the people were rude. I wanted nothing to do with them—not even as a vendor.

It would have been a different story if this company had actually taken the time to treat me and other candidates like real people, not cogs in a machine to be used or discarded. People forget what you tell them but they always remember how you made them feel. In this era of social media transparency, that’s especially critical to remember. Treat everyone, especially potential job candidates, as a potential future customer.

Third, they lacked a strong foundation. Didn’t you get a sense of how crappy this entire organizational culture really was? Even the most amazing hiring process in the world won’t cover up a pile of shit. Your organization must have a strong foundation in place. It must have the right growth strategy as well as the structure, vision and values, processes, and team to support that strategy and adapt to changing conditions.

There’s a saying that how you do anything is how you do everything. It’s no surprise that this company went public a few years after my interview and then went bankrupt a few years after that. Why? They initially grew on market demand for their existing products but when the market demand shifted, they couldn’t adapt. They had conformed to the past and lacked a strong foundation to adapt to the future. Building a strong organizational foundation is outside of the scope of this work but if you’re interested in the principles, I encourage you to check out my book Organizational Physics: The Science of Growing a Business.

Fourth, they treated the interview like a competition, not a collaboration. A job interview shouldn’t be viewed as a competition where the winner tries to guess what the company really requires and the loser gets sent home. Instead, it should be viewed as a collaboration between a qualified candidate and the company to see if there’s a mutual fit.

Think about it. As the candidate, I want to know if this job is a natural fit for my skills, vision, values, style, ambitions, and desired compensation. If not, I don’t want to work here any more than you want me to. The company wants to know the same information about me.

The purpose of interviewing, therefore, is to allow both sides to determine if there’s a mutual fit. The “collaboration, not competition” mindset is a heck of a lot more fun for both the hiring manager and the candidates. Of course it requires having a really solid framework and hiring process in place that allows that to happen. Otherwise, you put yourself at risk of being “gamed” by candidates who just want a paycheck, rather than a mission.

HIRING_LexSisneyIf you’re interested in learning the steps to a breakthrough interview process, then you may want to check out my newest book, How to Think About Hiring: Play Smarter To Win the Talent Game, from which this article is an excerpt. But in any case, do these four things as you approach the interviewing process and you’ll set the stage for better results:

1. Seek diversity, not conformity.

2. Treat everyone with respect.

3. Hire from a strong foundation.

4. Make it a collaboration, not a competition.

When Co-founders Fight — And What To Do About It

why cofounders fight
Being business partners is a lot like being married. When the relationship is thriving, it’s awesome. But when it isn’t, it really sucks. In fact, few things can destroy organizational momentum like two co-founders in a bad relationship. I have a friend in a successful business partnership who puts it like this, “I have two wives. One at home and one at work. I’ve got to invest time and energy to make sure that both stay happy, otherwise, it all goes to s#*&t!”

Not all partner conflict is bad. You actually want constructive conflict in your partnership. Constructive conflict means that you and your partner share the same vision and values; there’s give-and-take; you fiercely debate potential decisions but without attacking each other’s character; there’s a sense of mutual trust and respect; and your individual strengths and styles complement each other. You are both better because of the other.

Destructive conflict, on the other hand, is like a toxic marriage. It eats away at the system from the inside and doesn’t work for anybody. Just as divorcing adults impacts their kids, two co-founders in a toxic relationship impact everyone else in the organization.

If you’re navigating a bad business partnership, or you just want to make sure that your current great partnership remains so, then it can be eye-opening to understand that any destructive partnership conflict falls into just three types. Once you know what type of conflict you’re dealing with, then you can know how to address it.

As you read about each category of destructive conflict below, see if you can recognize where your partnership is experiencing the most strain today. That will tell you where to focus your energy and attention to help the partnership be great again, if that’s possible, or to walk away if it isn’t.

Category 1: Conflict of Vision and Values

I’m just going to come right out and say it. If you are having a true conflict of vision and values between you and your business partner, you only have one option: get a divorce. In this case a “divorce” means that one partner needs to effectively buy the other out or, if not, to shut the business down and go your separate ways.

Why? Because nothing is more destructive to organizational momentum and potential than a conflict of vision and values. Vision is the destination or ultimate outcome you want the business to reach. Values are expressed in the behavior you deem desirable and acceptable during the journey. If the co-founders no longer want to end up in the same location or don’t abide by the same core values, how can they possibly work effectively together? They simply can’t.

As an example, imagine a married couple in counseling. One partner desires to live in Manhattan and spend their days shopping on 5th Avenue while sleeping around with other people. The other wants to live off the grid in an organic commune and work the land in meditation and celibacy. Is there anything that a marriage counselor can do to help the couple? No! They have different life visions and values. No amount of counseling or therapy is going to change that fact. It’s time to split the marriage and allow each person the freedom and autonomy to follow their own path.

The same is true in your business. What’s your vision? Does it align with your partners? Do you want to grow big but he or she wants to stay small? Do you both have the same set of core values? Do you authentically trust and respect one another? If you can’t agree on where you want to end up, or how you’re going to behave on the journey, then it doesn’t make any sense to try to travel together. But if you do, then all other conflicts are negotiable.

Thankfully, the remaining two types of conflict aren’t nearly as destructive and severe as a conflict of vision and values. In fact, they can be harnessed to form more constructive partnerships and to create a better, stronger, and more dynamic relationships.

Category #2: Conflict of Interests

A conflict of interests means that what’s good for one partner is not seen as necessarily good for the other. For instance, perhaps you feel your position is worth more in salary and equity than your partner’s but you know that broaching the subject will create hard feelings. It’s good for you, not so good for your partner. Or maybe you feel like your partner can no longer carry his or her own weight — in other words, the needs of the business have outgrown their capabilities. Continuing to work together seems good for them but not so good for you. How do you navigate a conflict like this?

In Michael Eisner’s thoughtful book about partnerships, Working Together: Why Great Partnerships Succeed, he tells a story about how to navigate a conflict of interest. It requires shared vision and values and a willingness for both partners to give and take.

Eisner begins the book with a story of how he met Frank Wells, a former Warner Brothers executive and free-spirited thrill-seeker, who once checked out of Hollywood for a few years to climb the tallest peaks in six different continents.

At the time, both Eisner and Wells were being courted by Disney to be Co-CEOs – a classic conflict of interest if ever there was one. But rather than duking it out in a battle of wills and egos, Wells realized that Eisner was the better Chairman and CEO for Disney and he, in turn, could thrive in the President and COO role, supporting Eisner, filling in the blanks, and helping the team reach its potential.

Their partnership thrived for a decade before Wells died in a tragic helicopter crash and, by that time, they had transformed Disney into a multimedia empire. This only happened because Frank Wells was able to put his own ego aside, trusting that if he supported Eisner to flourish in the CEO role, it would come back to him in spades. Eisner describes other instances of give and take from both partners in the book and wrote, “We learned that one plus one adds up to a lot more than two.”

Of course in order to put your own interests temporarily aside in the interests of your partner, you need to have absolute trust in your partner. If there isn’t mutual trust, then there’s no way to navigate a conflict of interests. So a key question is this, “do you trust your partner and does he or she trust you?” If so, and if you share the same vision and values, then you can find creative ways to navigate a conflict of interests. If not, and if trust can’t be restored, it’s a clear indicator that it’s time to get a business divorce.

Category #3: Conflict of Styles

The last major category of partner conflict is a conflict of styles. This conflict occurs when the style of one partner rubs the other the wrong way. Think of it like this — in order to have a good relationship, it’s not enough to trust your partner, you also have to like and respect your partner and they also have to like and respect you.

For instance, if one partner is highly creative and all over the map with their ideas but the other is very focused and methodical, can each one appreciate and respect the gifts of the other? If so, then that’s the sign of a strong partnership. If not, if there’s condemnation and scorn between the partners on their respective styles, then that’s a sign of a bad partnership.

There’s no one right style. A highly effective partnership requires complementary styles, where one partner is naturally stronger where the other is weaker. For example, I once had a partnership with a person who was a lot like me. At first I really enjoyed it. We moved at the same pace, saw things the same way, could do the same things very well, etc. But after a time, the similarities between us became more of a curse than a blessing. We’d fight for control of the vision; we both lacked attention to detail and process; we’d each struggle to do the things we weren’t very good at but that the business needed to get done. It became a real grind and the partnership failed.

After that experience, I began to really appreciate talented people who had a different style than mine – styles that complemented my strengths and interest versus replicating them. In my book Organizational Physics I make the recognition and appreciation of different styles really easy through a simple pattern language called PSIU. If you’d like to better understand your partner’s style, its strengths and stressors, gifts and blind spots, and how to manage your relationship better, you may want to start with the World’s Fastest Personality test here.

The Three A’s: Or, How to Energize Any Partnership

What I find most interesting about the three sources of destructive conflict is that a conflict of interest and styles (assuming there’s alignment of vision and values) ultimately leads to better, more creative decisions. Basically, you don’t want a partner who agrees with you on everything and lets your ego run rampant while you fall prey to your own blind spots. You want a partner who challenges you, who is strong where you are weak, and who helps you to see the complete picture. Then, when you join minds together to solve problems, you come up with better solutions.

In my coaching practice, I’ve found that there are three things every partnership can do to re-energize itself. These three things are simple to do but take concerted energy and effort to practice. However, if you put them into play, you’ll find that your partnership will improve, often dramatically.

Acceptance

People are who they are. The #1 thing you can do to improve your partnership (really, your relationship with anyone) is to accept the person for who they are. That is, quit wishing for them to be different. Nothing is going to change who they are unless and until they want to change themselves.

Is your partner a selfish, myopic, primadonna? Well, congratulations! If you are committed to be in that partnership then you get to practice patience, sacrifice, and compassion. Accept it. You’ll save yourself a lot of time and energy when compared to wishing things were different.

One thing I’ve noticed time and again in my own life and relationships is that if I stop wanting someone to be different than they are and I give them the respect and autonomy to be themselves, they magically seem to change into a new person. If I’m subtly or overtly holding an energy pattern of “You suck. You should be different than you are,” then they seem to exacerbate those negative behaviors that are driving me crazy in the first place.

Acceptance is a subtle, challenging thing. It’s also the surest route to happiness in your life and work and to thriving relationships. Accept others for who and how they are, not how you feel they should be.

Appreciation

Appreciation is the twin of acceptance. What you accept “as is” is what you can appreciate. What do you sincerely appreciate about your partner? Don’t underestimate the power of sincere expressions of gratitude and appreciation for yourself and others. We all want to feel accepted and acknowledged, and that we’re adding value to the lives of others. Take some time right now to think of the things you really appreciate about your partner and go and tell him or her.

I have a friend who is really in despair right now. For the past several months he’s been volunteering for a non-profit with a dwindling following. At first he was really excited to help them because their cause really resonated with his passion for social justice and his creativity. He was so enthralled with their potential that he volunteered all his free time for weeks rebuilding their brand architecture, web site, and social media presence, all at no cost. I saw his work and results and they are awesome.

I just got off the phone with him and I’m sad to say that, rather than being elated about a job well done, he feels devastated about what seems like a huge let-down. Why? Not one member of their board reached out to say, “Thank you. I appreciate how awesome this looks, the effort that must have gone into it, and what a great job you did.” No wonder that non-profit is struggling!

This little anecdote made me realize how many working relationships and partnerships must be on the rocks because no one took the time to sincerely appreciate someone. Man, what wasted potential and opportunity – and all for want of a little acknowledgement and appreciation! Appreciation is a currency that you must spend for it to do any good. Go and spend some now.

Accountability

The last “A” that can turn a struggling partnership around is accountability. Often there’s partnership conflict because both partners are “in each other’s business,” and not in a good way. When it’s unclear who’s accountable for what business functions and decisions, this leads to confusion and wasted time and effort.

A thriving partnership is a combination of radical transparency and unarguable accountability. Radical transparency means that there are no secrets. There’s a free flow of information across business functions. Unarguable accountability means that one role is authorized to say “yes” and “no” to a decision in each business function.

For instance, if your strength is in marketing and sales and your partner’s strength is in technology and product, then you both need to understand what’s happening in all areas. But when it comes time to make a decision in sales or marketing, you take it. And when it comes to a decision in technology or product, your partner takes it. Do you and your partner (and others) influence those decisions? Absolutely. But the success or failure of the implementation falls to the person with accountability in that function.

In a growing organization, roles change all the time. In my coaching practice with expansion-stage companies around the world, what transforms a once-thriving partnership that has been struggling is the creation of a new structure with unarguable role accountability.

Prior to the new structure, both partners are struggling with questions like, “What is my accountability and what is my partner’s? When do I involve others in a decision and when do I just take action and get it done? How should the performance of different functions be measured? And generally, how do we get out of this cycle of second-guessing one another?”

Once the new structure is created and the partners have mutually accepted their own roles and accountabilities in that structure, all those nagging questions go away. There’s radical transparency fused with unarguable accountability where both partners, and the surrounding team, play to their respective strengths and passions. As my daughter’s preschool class used to say, “good boundaries make good buddies.”

Summary

In summary, constructive conflict is highly desirable. After all, “if both of us agree, one of us is useless.” Highly effective partnerships invest in developing and maintaining the partnership. If not, that formerly constructive conflict will turn destructive. You can avoid a turn for the worse in your partnerships by remembering these three things:

  • The most destructive type of conflict occurs when there is no longer shared vision and values. If that’s the case, you can only divorce.
  • The next, more manageable type of conflict is a conflict of interest. You can successfully navigate a conflict of interest by tapping into the bigger shared vision and values, and with give-and-take and mutual trust between parties.
  • The last, and generally the easiest type of conflict to navigate, is a conflict of styles. You can shift this conflict by practicing acceptance and appreciation and by creating unarguable role clarity, where each partner plays to his or her respective strengths and passions in their area of expertise.

Thanks for reading. I hope you find this to be a helpful way to think about your partnerships and how to improve them.

Want to Dent the Future? You Should Probably Get a Coach

My friend and client Russell Benaroya, CEO at Everymove.com spoke this weekend at the second annual Dent the Future conference in Sun Valley.

Russell’s topic was “Entrepreneurs Need Coaches” and I thought he had some great insights that every entrepreneur can benefit from. If you click the link you can read his full commentary on the right hand side of the slides. I’ve also captured some of my favorite highlights from his talk below.


Created with Haiku Deck, the free presentation app

“We are all capable of being champions, in making the impact we want to make. Why not us? Practice! Practice! Practice! But how do you “practice” being an entrepreneur. The plane is in the air. For me, I need ground control, someone that can see the big picture when I’m just focused on the next waypoint. For me, it’s been about surrounding myself with the best coaches I can find.

The only lens that we see of the performers is the result of their practice. The problem is that there is not much of an opportunity to see that lens into ourselves and have it reflected back so that we can learn, grow, and make smarter decisions.

The road of entrepreneurship is just lonely. I did not fully appreciate that I was going to lose so many friends, that I would test my marriage and that I would question my sanity. What saved me? The acknowledgement that I am not alone, that what I am dealing with is a well worn path, that the path is the greatest gift, both the ups and downs. How I stayed on the road? By building a team of coaches that are there for me at the aid stations.

One of my greatest gifts has been actually having a 1:1 coach, someone who is committed to helping me navigate the tumultuous waters of entrepreneurship. My coach is guy named Lex Sisney. He has taught me a lot about myself, my skills, my blind spots, and my gifts. I am cheap and I have always dismissed the expense of a coach. It was a big mistake. I know that I have to keep investing in myself and I can’t do it alone, especially when everyone around me expects me to “have it together.” Lex has passed on a number of great learnings, but here are my top 6…

#1: Control the Belief Bubbles Lots of forces try to undermine your confidence as an entrepreneur. It takes great fortitude to withstand the naysayers, the “no’s”. It’s easy as a start-up to be the scapegoat if something doesn’t go well. We can either choose to take on those projected beliefs or resist them and grab hold of perceptions that advance our cause. This is not about rose colored glasses but it is about conviction.

#2: Success = Energy / Entropy Everything for me comes down to a core principal that an organizations is a system, one that has and needs to acquire energy to survive and one that needs to eliminate or mitigate entropy, that which is destroying a structure over time. In a finite system, maximize energy. To grow the system, get more. Entropy comes from many place — your family life, personnel issues, conflicting strategies. For me, it was such a simple model. I know when I have entropy — I feel it in my gut. Own it. Understand it. Take action.

#3: Find Your Genius Zone My genius zone is at the vector of happiness and productivity — how I am, how I want to be, and how others want me to be — If perfectly aligned, I’m in my zone. It is that place where I have a unique ability to perform at a high level and I get energy — I need to spend 80% of my time in my zone. For me, that’s doing deals — I love the art of the deal, the thrill of the hunt, the close and the satisfaction.

#4: Nail It B4 U Scale It A mantra I hear all the time from my coach and a huge challenge for entrepreneurs. Nail it is getting referencable validation that you’ve built a product that a customer is willing to pay for because you have solved a problem. Only then should you scale. Too many companies scale prematurely, haven’t validated the product and then lose control.

#5: Be Aware of the Force: PSIU Be aware of the leadership forces required in your organization at different times. 4 Forces at work are Producer (What), Stabilizer (How), Unifier (Who), and Innovator (Why Not?). Early stage is High innovator. Scaling/growth requires a stabilizer. Weighting your organization too heavily in one area will lead to sub-optimal results.

#6: The Early Customer Be very careful about the early customers you work with. These early customers become your launchpad or your demise. They need to be ready to take a leap with you. If they are not, but you sold them well, they are going to create too much entropy. You need a customer that wants to collaborate with you, not dictate your product for their unique circumstance. Being very aware of where interests align and diverge is critical.”

Great job, Russell. I love working with super-solid, passionate, and smart leaders like you. The best way to learn anything is to teach it. Not only are you helping others by reflecting and sharing your insights, you’re deepening your own awareness and capabilities too. Onward. Upward.

The Magic Spot in Product Development

What’s more important… following the “Four Steps” or experiencing the genuine epiphany?

It’s the epiphany, right? Right!

I bring this up because I continue to run across product development teams that are so enamored with following a sound lean startup process that they have lost sight of the ultimate objective: building something magical.

Where’s the magic? The magic happens at the nexus between what’s possible, what you’re capable of, and what the client is willing to pay for:

ProductDevelopmentMagic
When you get so consumed by following the right process that you lose sight of the real goal — finding the magic in the middle — you can make yourself look like a bad dog…

wetdream
Don’t purse the wet dream trying to build something that you’re incapable of delivering. It’s a fantasy that will ultimately leave you feeling alone and ashamed.

yawn
Don’t make your clients yawn, only building what they ask for but missing what they’d really love once they experience it.

slowclap
Don’t build for the slow clap, a product that only you are excited by.

Your real objective is always to find the epiphany that reveals the magic in the middle…

puppies
DO build something magical. You know, like puppies. Puppies bring delight. Plus they’re capable of growing through their own lifecycle stages and one day… giving birth to something new and magical themselves.

So the next time you’re in the heat of a product development process, don’t be a bad dog. Keep your eyes on the prize and find the magic in the middle.

An Inside Look at Holacracy

Zappos-3-MashableThe headlines rolled across my feed like the credits on a blockbuster movie. Something big seemed to be happening but I wasn’t quite sure what to make of it. It seemed that Zappos—the popular business management poster child for happy employees and customers—just announced it was adopting some new-fangled “boss-less,” “hierarchy-less,” “structure-less” management system called Holacracy.

“Hola-what?” I said to myself as I started clicking links. Aimee Groth at Quartz wrote: “Zappos is going holacratic: no job titles, no managers, no hierarchy,” while the Washington Post headlined with, “Zappos Says Goodbye To Bosses,” and the Canadian Broadcast Company led with “Holacracy management style eliminates all bosses, titles.”

I’ve been around long enough to know that what the media was reporting would be far removed from the truth. I also had the inkling that the level of publicity that Zappos generates made it likely that Holacracy would become the next buzzword in management in 2014. Paul Herbert captured it well: “A new word crept into HR’s vernacular last week: holacracy. Better get used to seeing it.”

Each year I attend two personal/professional development workshops for my own education and growth. After trying to make sense of Holacracy through their website materials and recorded webinars, in the spirit of exploration I decided to dive deeper and make Holacracy one of my annual workshops. I signed up for their 1/2-day Taster Workshop followed by a 5-day Practitioner Certification Training in Las Vegas hosted by Holacracy founder Brian Robertson.

A few weeks later I hopped in my car to make the trek from my home in Santa Barbara across the desert to Vegas. The seminar turned out to be located just down the block from the Gold and Silver Pawn Shop of History Channel fame. As I drove by their shop at 1pm on a Friday, there was a line of people down the entire block. “Note to self,” I murmured while rubber necking the crowd, “this is what a reality TV can do for your small business.”

I parked and found my way to the seminar, located on the third floor of a secured building. I buzzed the intercom, walked up three flights of stairs, and entered the room where I’d spend the next week. I noted there were about 25+/- people gathered around circular conference tables and a standard lecture area at the front. I found a spot, put down my stuff and, with a mixture of curiosity and anticipation, made small talk with my fellow attendees, a surprising number of whom were French nationals, while waiting for the seminar to start.

Little did I know then what a struggle that entire week — and even several weeks after digesting my experience — would be for me. What did I struggle with? First, I found it really hard to try to unlearn what I’ve spent decades mastering and greet Holacracy with a Zen-like beginner’s mind. What could they teach me, really? Is the founder just using different terminology or is there a real difference in philosophy? And how do I maintain an anchor point in the real world and not get swept down a rabbit’s hole of theory?

The other struggle was that Holacracy is not an easy practice to learn. In fact, the nuances are such a challenge to master that a handful of the participants in my course were on their third or fourth attempt at the same training. At one-week long and $4K a pop, that’s quite an investment. As one of my fellow participants poignantly put it, “Holacracy is like a religion for dedicated monks to practice,” adding, “I wonder what the layman’s version will turn out to be?” I think this is an excellent question that time will reveal.

I’ve been home for several weeks now and I’ve had sufficient time to reflect on my total experience. In retrospect, there are several things I really admire about Holacracy. There are also key elements that, if I was an entrepreneur or CEO considering deploying Holacracy in my organization, I would supplement around the standard Holacracy script. While you don’t need Holacracy to create sustainable business transformation, I believe that these adaptations are necessary to get the most out of your investment and increase your probability of success should you choose to deploy it as a management framework.

What Is Holacracy, Exactly?

Before I explain what Holacracy is, let me first clear up some of the more blatant misconceptions in the media. Holacracy does indeed have de facto bosses or managers, albeit ones with circumscribed power. These roles are called “lead links” and they set the priorities and control resources in an organization. Holacracy also does have an explicitly defined hierarchical structure. It’s not one big kumbaya free-for-all. And when it comes to titles, well, Holacracy can either support or not support the use of titles. The key point here (with which I agree wholeheartedly) is that individual roles in an organization can and should shift over time and, as a result, job titles more often cause harm than good.

In my book Organizational Physics, I explain that all business and management theory — past, present, and future — can be reduced to some key driving principles. That is, while supposedly “new” theories and strategies come and go depending on the cultural zeitgeist, they’re all trying to provide solutions to the same core underlying problems. In some sense, these countless methods can be boiled down to a handful of approaches

If you’re already familiar with the principles of Organizational Physics, you can easily understand this explanation: Holacracy is an attempt to increase system integration and decrease system entropy by aligning Structure and Process (the bottom left and right sides of the Execution Diamond shown at the bottom of the map below) by applying a very high Stabilizing force (the S in PSIU):

Everything you need to know about management is captured in the Organizational Physics map. Holacracy is an attempt to address the bottom of the Execution Diamond (structure and process).

Everything you need to know about management is captured in the Organizational Physics map. Holacracy is an attempt to address the bottom of the Execution Diamond (M): Structure and Process.

If you’re not yet familiar with Organizational Physics, this definition probably won’t help you much, but the rest of this article will. And though of course I’m partial, I firmly believe that if you read my book Organizational Physics: The Science of Growing a Business, you’ll find it much easier to put the barrage of “new” trends in perspective.

In any case, in order to understand Holacracy it’s helpful to realize that you’re already living and working in a system that uses many of the core Holacratic principles. It’s the United States of America. Wait… what??? Yep, this cutting-edge management theory is actually built on some of the core principles of our government:

  • The U.S. government has a constitution, and so does Holacracy. (In fact, one of the first tasks of a CEO when adopting Holacracy is to cede his or her authority to a Holacratic-based constitution).
  • The U.S. government has a set of explicit laws or rules that attempt to govern individual and collective behavior, as well as a detailed process to change an existing “law” or create a new one, and so does Holacracy – very detailed.
  • The U.S. government relies on a nested hierarchical structure of governing bodies (i.e., The Office of the President, Congress, the Supreme Court, the Military, States, Counties, Cities, City services, etc.) that act mostly autonomously within their own spheres. And so does Holacracy.
  • We, the people, elect representatives to perform defined roles in our local, state, and federal governments. The members of a Holacracy-based organization also elect individuals to perform defined roles at different hierarchical levels or “circles” of the organization.

Holacracy’s approach to managing an organization is also very similar in ambition to the founding vision of the U.S government. The founding fathers tried to create a structure, processes, and checks and balances so that the government wouldn’t meddle in the affairs of law-abiding citizens but would instead allow people the autonomy to pursue their individual and collective interests.

For example, when you got up this morning, did you call President Obama and ask him for permission to buy groceries? Or did you call the mayor of your town and ask for the right to binge-watch House of Cards? Nope. You just did what was in your own interest, while staying within the system of rules and processes that have been adopted by your local, state, and federal government.

So Holacracy asks this question: If you don’t need a ruler to govern your financial and social life, then wouldn’t it be superior to design a business around a set of rules so there’s no need for rulers? What if an organization acted more like a modern city and less like a top-down feudal monarchy? As Holacracy founder Brian Robertson puts it, “Order doesn’t require rulers. And if you give one individual monarch-like authority, then it’s only a matter of time before they make a royal screw up.”

It may seem counterintuitive to compare the core operating principles of a supposed next-generation management theory to the operating principles of the U.S government. After all, doesn’t the U.S. government of recent decades seem to be more incompetent, and sometimes even nefarious, than innovative?

Look at it this way. We can all agree that the design of the U.S. government has the potential to create a competent and wise system of governance as well as a happy, well-educated, prosperous, and productive population of citizens. But a lot depends on its lifecycle stage (the U.S. is aging), its sense of shared vision and values (it’s fragmented), its resources (it’s broke), and most importantly the quality and caliber of the leaders who perform roles in the system over time (The U.S. now has an entire party of leaders like this guy). So we know that things can and do go wrong despite our best design intentions.

The same is true for Holacracy. It has the potential to be transformative but a lot depends on the organizational lifecycle stage of the business, the embodiment of shared vision and values, the organization’s resources and capabilities, and the quality and caliber of the people who inhabit the roles in the organization. In theory, Holacracy is a compelling and very thorough framework for managing structure and process in an organization. In practice, a lot can go wrong, just as with any framework.

To sum this all up, Holacracy is an attempt to bring a rigid but evolving set of rules, structure, and processes to how an organization is managed so that individuals have more clarity and autonomy to do their work (what Holacracy calls “energizing their roles”) in pursuit of the organizational purpose, without undue meddling from those above or below them in the organizational hierarchy.

How Does Holacracy Work?

To accomplish its purpose, Holacracy focuses on five key elements, what it calls the Holacracy Operating System:

  1. The Holacracy Constitution
  2. Holacracy works by first having the CEO cede all legal authority to a new organizational Constitution. Holacracy provides a blueprint for the Constitution that the organization can modify for its particular needs and situation. This is where I warn you that you should not try to understand Holacracy by reading the Constitution. That would be like trying to learn a very complicated board game by reading the rule book. Instead, Holacracy encourages you to attend their trainings to learn how to “play the game” and then refer to the rule book when you have questions.

  3. Organizational Structure
  4. The organizational structure in Holacracy is constantly evolving. It’s created and reinforced through a series of special meetings called the Governance Process. The key organizing element of a Holacracy structure is a circle that is made up of one or more organizational roles. The highest-level circle is the General Company Circle (GCC), which consists of all of the main roles or functions being performed in the company. For instance, an initial GCC might consist of roles from Sales, Operations, Finance, Accounting, Engineering, Marketing, and Product Management, as well as the former CEO role. From the GCC, sub-circles are created for each role. For example, Sales is part of the GCC but also has its own Sales Circle.

  5. Governance Meeting Process
  6. Governance is where the organizational structure is created and evolved. Here the intent is to distribute authority and create organizational clarity about which roles are accountable for what. Holacracy doesn’t dictate what the structure should look like. It only stipulates how a role should be defined in the structure and how the members of a circle can adapt or change the roles within that circle to better serve the organization’s purpose. Most of the practitioner training is spent learning to navigate the nuances of the Governance meeting process. It starts out easy enough but the more you scratch the surface, the deeper it goes. If Holacracy was a board game, this is the stage when the players would get out the rule book (in this case the Constitution) and start interpreting and debating the rules. (This reminds me of Bismarck’s comment, “If you like laws and sausages, you should never watch either one being made”).

  7. Operations Meeting Process
  8. Operations is how the day-to-day work of an organization is managed. In Holacracy, the focus of Operations meetings is to synchronize information flow and quickly triage what it calls “tensions.” A tension is a perceived gap between what is and what could be. Any member of the circle can bring a tension to the table and have it addressed. What’s peculiar to the Holacracy approach is that the circle doesn’t try to find the best way solve an issue, nor does it attempt to do so holistically by gathering data on all the issues related to that tension. It simply tries to resolve that one particular tension, in isolation, for that one role in the circle. This is done through a series of rigid steps that the circle must follow before it can reach a decision. In other words, it follows a process focusing on micro-level issue after micro-level issue, until, theoretically, all issues are resolved…ad infinitum.

  9. Glass Frog Software
  10. Glass Frog is like a corporate wiki designed specifically for Holacracy. Glass Frog contains the organization’s constitution, a description of all roles, and the output of all governance and operations meetings. A Holacracy purist would argue that Glass Frog is not part of its core operating system and that a company could deploy Holacracy without it. I disagree. There is an overwhelming level of detail within Holacracy. There’s no way to track and manage it without a good system in place to do so, especially in a distributed environment.

Now that you’ve gotten the basics, the main question you should be asking is, “So what?” Or, “What is the real problem that Holacracy is trying to solve?” It’s the question I’m most commonly asked about Holacracy, and probably the best one of all. So let’s address it.

What is the Real Problem Holacracy is Trying to Solve?

In Holacracy webinars and trainings, the first thing participants learn is what’s wrong with the traditional, top-down org chart. Brian Robertson will put up this image below and ask the class, “What are some of the challenges created by the traditional, top-down organizational hierarchy?”

real-org-chart-530px

The class or group will offer up answers like, “painful meetings,” “difficulty to change,” “overwhelm,” “unclear objectives,” “misalignment,” “lack of engagement,” “rigidity,” “politics,” “analysis paralysis,” “bureaucracy,” “fear,” “communication issues,” and so on. All common issues that people are faced with in poorly-run organizations.

Once the top-down hierarchy is defined as the core problem of most organizations today, the Holacracy trainer will propose that rather than “bugs,” these failings are actually “features” of top-down organizational design. That is, no matter how much restructuring, leadership training, agile development methodologies, or other tactics we deploy, they are ultimately doomed to fail because of the inherent problems of the surrounding structure.

Holacracy claims to design out these “features” by changing the concept of organizational structure from one that is autocratic and top-down to one that is decentralized, organic, and bottom-up. Ultimately, the vision of Holacracy is to allow the emergent, creative properties of the individuals playing roles within an organization to self-organize and flourish, much like human cells are organized into organs, which in turn are organized into bodies and minds, which in turn go forth into the world to express their purpose as humans.

If all this sounds very theoretical and far-fetched to you, especially in the midst of the chaos and battle of growing your own business, I understand. Still, several aspects of the Holacratic approach are impressive…

What I Admire About Holacracy

There are several things that I admire about Holacracy. There is a clear sense of “we’re changing the world” that emanates from Holacracy insiders. Brian Robertson is a very smart, charismatic, and articulate founder, even though he discounts his own role in the formation, evolution, and operation of Holacracy and attributes these to Holacracy itself. (On this last point, I strongly disagree. All founders are mission-critical to the success and growth of their organizations into and through Scale It mode).

When I boil it all down, here are three of my favorite things about Holacracy:

A Relentless Focus on Roles vs. People
Holacracy does an outstanding job of distinguishing and reinforcing the difference between roles and people, which is a core principle of any good structure. In fact, Holacracy does NOT manage people. It governs roles. Every role has a clearly defined purpose and accountabilities that are maintained and defined in its GlassFrog software.

Naturally, one person could play any number of different roles in the organization. Companies that deploy Holacracy are constantly checking and updating GlassFrog to see what a role’s purpose is and what it is accountable for. If there seems to be a breakdown in how a circle is being run, that circle can call a Governance meeting and change or add a new role, thus changing the structure of the organization on the fly.

Separation of Working In vs. On the Business
Holacracy does a phenomenal job of distinguishing between tactical/triage issues that are handled in Operations meetings and structural/role issues that are handled in separate Governance meetings. This is also a core principle of any good management process. It’s crucial to strike a balance between the demands of today and the needs of tomorrow, and a sound process will enforce a regular rhythm of long-range development and short-range execution. Holacracy accomplishes this by not allowing a circle to discuss Operational issues in Governance meetings and vice versa. The result is that there’s a clear and regular focus between working in the business and working on the business. Awesome.

An Operating System vs. Apps
Holacracy envisions itself like the Apple iOS platform. Apple builds and maintains the iOS platform while millions of independent developers build individual apps that run on that platform. Holacracy clearly distinguishes itself as the core operating system for Structure and Process ONLY. It does not try to tackle “app development” in the areas of strategy, people or cultural development, hiring, finance management, marketing, budgeting, sales tactics, etc. Instead, it encourages others to develop apps that are designed to run on the Holacratic platform.

Note that this separation of “OS” and “Apps” has caused some confusion in the marketplace. For instance, a guru like Steve Denning will look for a relentless focus on delighting customers within the OS and he won’t like it unless it has that, or until he understands the purpose of Holacracy is to be applicable to any organizational purpose.

On the other hand, I’ll look for a relentless focus on lifecycle management in the OS, believing that the operating system must manage differently at different lifecycle stages. To me, that’s not an App; it’s part of the OS. A culture guru like Robbe Richman, who was also at my training, will look for alignment of vision and values and organizational buy-in in the OS itself and not consider that an App either, etc. So there will be differences of opinion on where the OS should start and end. However, I appreciate the discipline Holacracy has embraced by clearly sticking to what it defines as the OS: structure and process.

Should You Deploy Holacracy?

When it comes to making a decision whether to deploy Holacracy in your organization, the real question you should be asking is this: “Where is my business in its lifecycle development and what is the management operating system I need for its next stage of evolution?” The solution you choose will depend a lot on your personal philosophies as well as the cost to integrate, maintain, and evolve the new system.

I indicated earlier that Holacracy is not an easy solution to deploy. There were parts of the training I really enjoyed but much of it I found exhausting, unnatural, and frustrating to practice. I am not alone. I’m told by Holacracy insiders that the norm is for a new circle to experience serious levels frustration, condemnation, and aggravation when deploying Holacracy. Then, almost by magic, around the three-month mark something shifts: Holacracy begins to feels natural to circle members and starts to work as designed.

Personally, I like systems that feel natural and intuitive, so I spent much of the training trying to think through how to adopt the “good” parts of Holacracy and design out the “bad” parts. My conclusion? A half deployment will backfire. Each element of Holacracy feeds into and supports the rest. It needs to be a full commitment from the Constitution on down. It’s all entwined and you can’t make up a “light” version and expect the organization to respond differently than it already is. So if you’re going to deploy it, prepare for months of push-back, resistance, and aggravation before you find the breakthroughs you’re seeking.

Upon reflection, I think this difficulty in deploying Holacracy may be one of its strengths. Its full commitment “forces” the organization, from the CEO on down, to adopt and practice decentralized management and self-organization. That is, while you could likely get equivalent organizational benefits by running a Management By Objectives (MBO) system or Objectives and Key Results (OKRs) or the latest flavor of MBO, what you wouldn’t get from these systems is the constant reinforcement of the new social structures that Holacracy is designed to create.

Naturally, you’ll want to test out Holacracy in the senior level GCC circle before going company-wide. If you get this far, stick with it. I’m confident that, with a full commitment, Holacracy can help your organization rise to the next level, just as any good approach would when backed by a full commitment. The adaptions that I’m suggesting below still work within a full Holacracy deployment – meaning, that you are still deploying the complete Holacracy implementation for process and structure, without sacrificing some important principles in leadership, long-range planning, and organizational design. I believe that these adaptations will allow you to get the most out of a Holacracy implementation.

Adaptation #1: Don’t Abdicate the Master Structural Design
My experience growing businesses and coaching dozens of other successful growth businesses is that structure is about 85% of the game. That is, get your structural design right and you can create massive organizational transformation. Get it wrong and you don’t have a chance.

Holacracy allows for an organizational structure to be designed from the bottom up. Not only does this “organic” approach take a long time and is prone to egregious errors; it also allows for chaos where you need order and order where you need chaos.

For example, every city planner and architect knows that there are principles to good structural design. If you were to allow individuals to design whatever style of home or building they wanted, wherever they wanted it, it wouldn’t take long until you had fracking wells next to schools and a shanty towns next to city hall. There’s a great example of a leader, the Mayor of Oklahoma City Mick Cornett, who understands this and took charge of a poor city experience with haphazard future direction and redesigned it for prosperity, health, and success. Well-designed organizational structures, just like well-designed cities, are a boon to everyone who inhabits them.

I think that Holacracy adopted its bottom-up approach to structure because it confuses what are really problems with poor strategy, misaligned vision and values, ass-backwards decision-making processes, and poor leadership with problems with structure.

If you go back to the Holacracy critique of the top-down hierarchical “structure” (in which they really mean to say “org chart”), you’ll see that very few items actually relate to structure and none of them to structure alone: painful meetings (accountabilities and process), difficulty to change (accountabilities and process), overwhelm (process and strategy), unclear objectives (process and strategy), misalignment (strategy, vision and values, structure and process), lack of engagement (process and people), rigidity (strategy, structure, and process), politics (process and people), analysis paralysis (process), bureaucracy (process), fear (strategy, process, people), and communication issues (process).

A sound management system will address all of the issues raised by Holacracy and leverage, rather than discard, the principles of sound organizational design. Think about it. The purpose behind a top-down organizational design is not to command and control or to dictate, as its harshest critics would claim. It’s to clarify accountabilities, thus decentralizing authority, and allocate resources. It’s about getting the right style of people in the right roles with the right metrics and providing them the autonomy to flourish. It’s also about allowing new business units to innovate because of — not in spite of — a sound overall design.

So even if you do choose to implement Holacracy, I’d make damn sure that you have the right initial structure in place and that, as the leader, you keep an eye on it to make sure it’s not going katty-whampus and headed off a cliff. You need a structure that supports the strategy and current lifecycle stage, and clearly identifies the metrics, key performance indicators, and style of leader most suitable for each role. This is in addition to the purpose and accountabilities of each role that Holacracy will definitely help you to define.

One way to conceptualize this is for you, the entrepreneur or CEO (GCC Lead Link in Holacracy terms) to maintain control of the overall strategy as well as the master structure to support the execution of that strategy. You could accomplish this as an accountability within the GCC or even create a separate Strategy and Structure circle with those specific accountabilities. This approach would allow for self-organizing circles but within the master design. It’s kind of like being a master planner for a community garden. You lay out the plots (the functions) in the optimal way to take advantage of the terrain and climate and invite the community members to plant whatever they want, while still being accountable to produce results. JUST DON’T LET GO OF THE MASTER DESIGN OR YOU’LL SOON HAVE A PLOT OF CRAP INSTEAD OF A VIBRANT ECOSYSTEM.

If you’d like to understand the basics of designing a structure from the Organizational Physics perspective, read The 5 Classic Mistakes in Organizational Structure: Or, How to Design Your Organization the Right Way.

Adaptation #2: Don’t Confuse the Tensions for the Cause
Holacracy Governance and Operations meetings have a relentless focus on solving tensions held by any role in the circle. So if you were the VP of Sales and had a tension with how Marketing was allocating its resource dollars to lead generation, you could bring that tension to the circle and have it processed.

In order to process the tension, the Holacracy trained facilitator would guide the circle through a series of prescribed steps to resolve the issue in such a way that your tension is satisfied (hopefully) but without harming the autonomy of any other role in the circle. How rigid are these steps? Very. There’s no discussion allowed of issues that might be related. There is only a focus on processing one tension at a time for the role that brought it to the circle. There is a set of rules about who speaks when and what is allowed or not allowed as a valid objection to any proposal. It’s a lot like practicing law in a courtroom.

Processing tensions is important. There’s always a gap between what is and what could be. However, the way the decision-making process is structured in Holacracy actually reverses what’s required for rapid execution. As I describe in Organizational Physics, organizational mass (resistance to change) is a real thing. In order to execute fast, you need a process that slows down enough up front (in the decision-making phase) to gather a diversity of opinions and sufficient data so that you make a good decision with full commitment. Then you can go fast on implementation. Holacracy reverses this model. It focuses on rapid decision making at the cost of rapid implementation. Exactly the opposite of what, in my opinion, a well-run decision making process should do.

To clarify, I’m not condoning pushing off making decisions. I’m also not condoning a poor decision-making process that allows for a free-for-all. The structure and process of meetings is critical to good management. But the right structure and process will support making sound, well-thought decisions that afterward get implemented quickly rather than rushed, half-baked decisions that fail on implementation. (If you’d like to learn more about the basics of a good-decision making process, read The Most Important Process in Your Business: Or, How to Make Good Decisions and Implement Them Fast.

In many later-stage, bureaucratic-heavy institutions like large businesses, governments, schools, and non-profits, I think that Holacracy could be a productive change. In these settings, there’s already a bias towards not making a decision, following the political winds, and covering your ass in the face of a stolid bureaucracy.

In short, these settings already have a high-Stabilizing force at work within them. Holacracy will match the Stabilizing force within these institutions well and, if executed correctly, it will shift the culture towards decision making, accountability, and action — any action. Because the risk of making a bad decision is low in these settings, versus the risk of not making a decision at all, it could be a helpful management practice to adopt.

However, in most expansion-stage companies (the area where I specialize), there’s actually a bias in the other direction. Here, companies usually confuse making rapid decisions with making rapid progress. Rather than speeding through to a one-off decision, they need to cultivate the muscle to find the underlying cause of every challenge. In short, they need to slow down in order to go fast. So be mindful of this if you adopt Holacracy. You’ll need to supplement it with long-range strategic development practices so that once or twice a year you pattern up all the tensions, identify their underlying causation, and put in place efforts to solve them at the root level.

Adaptation #3: You Can Renounce Your Authority But Don’t Cede Your Leadership
If you’re going to truly adopt Holacracy then you, as the CEO, will be asked to sign over your authority to a Holacratic-based Constitution, much as the President of the United States takes an oath to defend the U.S. Constitution.

Is this ceremony? Yes. Is it necessary? If you’re going to make a full commitment, then yes. But even if you do choose to sign over authority, make sure that you’re not also forgoing your own authentic leadership.

Let me put it this way. According to Holacracy, if the CEO just cedes authority to the Constitution up front, then the Holacractic system will take over and the organization will transform. It’s not a requirement for an organization to have great leadership, it’s only a requirement that they adopt Holacracy. Then, by virtue of its “exquisite design,” the organization will begin to transform.

This principle reminds me of Communism, which reads well in theory but utterly fails in implementation. The fact is that bad leaders make bad systems. A poor leader will attempt to execute on the wrong strategy, will allow misaligned vision and values, will disregard the principles of structure and process, or will place the wrong style of people in the right roles. If this is the case, then that business is going to fail anyway and Holacracy, or any other management system, is not going to prevent disaster.

On the other hand, a great leader builds sustainable systems. He or she will take what they’ve got and make any system work well, Holacratic or not. If you look at the most successful businesses in history, the ones that assume almost transcendent, iconic status — IBM, Apple, Ford, Disney, Walmart, Standard Oil, HP, Intel, Coca-Cola, Microsoft, Google, Amazon, Virgin, etc. — you’ll see that while each founder had his own unique approach and management methodology, each also designed their business to be symbiotic with his or her own innate genius.

These visionary founding leaders did what only they could do in the early stages of their business growth and beyond. They consciously designed their businesses around their own innate ability to innovate and made conscious design choices to offset their weaknesses. They influenced the most important things without getting bogged down in the details. They delegated, but with visibility and control. They surrounded themselves with complementary teams and structures. They ensured that good decisions got made and implemented quickly time and again, not by micro-managing details but through systems thinking. These same principles hold true for you.

Can you use Holacracy to create this kind of sustainable business growth over time? Absolutely. Do you need Holacracy to do so? Absolutely not. If you look again to the Organizational Physics map, you’ll see that there are many methods to manage your business, and they all come back to the basics. Set the right innovation strategy. Define the vision and defend the right values. Craft and realign the structure to support the evolving strategy. Use this structure to clearly distribute authority and accountability. Follow a sound decision-making process. Design for self-organizing teams with the freedom and autonomy to execute and backed with clear metrics. Get the right people in the right roles. Work on the long range and execute on the short range. Know the forces at play. You know — do the basics right.

Time will tell the fate of Holacracy in the changing winds of the marketplace. However that goes, I want to give kudos to the entire Holacracy team for their commitment to a big vision and for pushing the envelope. They’ve clearly chosen to do what they feel is right versus what is easy or expedient. As anthropologist Margaret Mead said, “Never doubt that a small group of thoughtful, committed people can change the world; indeed, it’s the only thing that ever has.” I look forward to learning more as Holacracy continues to develop.

How to Hire Like the NFL’s Best Teams

NFLShield The NFL is the most popular professional sports league in the United States. In fact, it’s bigger than the next three largest professional sports leagues combined. But when it comes to the field of talent management, what makes the NFL such an interesting case study for businesses of all types and sizes is not its popularity but its parity.

Each season, all 32 NFL teams begin with the same basic chance to be competitive. All teams have a roughly equal amount of money to spend and the same numbers of players to a roster, and the worst teams from last season get higher draft picks and an easier schedule this season. If a team gets “harmed” during free agency, the league will assign it compensatory draft picks to help it stay even.

Parity in the NFL has worked. On any given Sunday, one team can beat another. However, a few teams — despite parity — have been able to win consistently over time. In fact, over the past 13 NFL seasons from 1999 to 2012, just 6 teams out of 32 have achieved a 60% or better winning percentage: the Patriots, Colts, Steelers, Packers, Ravens, and Eagles, with only one team achieving a 70% winning percentage: the Patriots.

Clearly, if everything else is held nearly equal, then these winning teams have cultivated an edge in how they go about managing their business and developing their front office and on-field staff. Is there something you can learn from these consistent winners? And if there is something you can take away, can you actually apply it in growing your own business — a business that probably has just a fraction of the money and assessment resources that an NFL team can throw at the hiring problem? And can you teach it to your own team?

These are smart questions to ask. Even if you don’t follow the NFL or understand the rules of the game, anyone can appreciate the dedication it takes to thrive over time in a highly competitive setting. True, the NFL has its problems and its detractors. It’s violent beyond belief. It’s hypocritical when it comes to player safety. Its locker rooms and rosters are filled with some great men and some giant a@*!#$. That said, the NFL absolutely provides some critical insights for how to think about and approach the hiring process for every business, not just a professional sports team.

While you may not have considered the similarities between your business and an NFL team before, there are many. First, you too are faced with intense competition for great talent. Second, you can’t just throw money at the problem. You have finite time, energy, and resources to make great hires and avoid bad ones. Third, when an athlete is drafted and signed to a professional contract, they’re effectively being hired to do a job just as you hire an employee or independent contractor to do a job. So while your “draft picks” don’t get interviewed on ESPN, the fundamentals of getting the right talent at the right price are the same. Fourth, and most important, you’re not just looking to hire individual talent; you’re looking to build a winning team.

How Should You Solve the Hiring Puzzle?

Seattle Seahawks coach Pete Carroll and GM John Schneider  working together in the Seahawks "war room." Source Q13fox.com.

Seattle Seahawks coach Pete Carroll and GM John Schneider working to solve the hiring puzzle in the Seahawks “war room.” Source Q13fox.com.

Just as the NFL pours millions of dollars into how it assesses and hires potential draft picks, businesses of all types and sizes do the same when it comes to hiring. In fact, according to a recent IDC report, businesses actually spend over $85B each year trying to make the hiring process more efficient and effective. They invest in recruiting services, comparative profiling, psychometric tests, research, training, and other ways to try to get an edge in hiring and make it a little less painful.

Despite these massive investments, hiring is still a messy, expensive, convoluted process. For instance, in a recent Career Builder Survey of over 6,000 hiring managers from the world’s ten largest economies, more than half report making a bad hire that caused significant harm to revenues, productivity, client relations, or morale costing more than $50,000 per bad hire.

If you’ve been in the business world for more than a year, then you don’t need these stats to tell you how painful it is to make a bad hire and how challenging it is to get the hiring process right. If you can solve the hiring puzzle, then you can transform your business. If you can’t, and you make a string of bad hires, then you’re soon going to be out of business.

So what can you learn from the NFL winningest teams that hasn’t yet been captured by one of these tools, services, or recruiting firms? Why do businesses pour so many resources into it and still come up short? And can the hiring process ever be truly improved or will it always be an expensive crapshoot?

If you were to ask today’s HR experts on how to improve the hiring process, they’ll tell you that answer lies in having more technology and more data. For instance, there’s a fast-growing startup where I live in Santa Barbara, California, that helps companies scan a candidate’s Facebook page so they can know what that person is really like at home and avoid hiring some whacko. It’s all perfectly legal and EEOC compliant.

There’s yet another company nearby that will do a personality profile on your top performers and then compare them to new job applicants. Supposedly, this approach will weed out the riff raff to help find candidates who mirror the thought patterns and behavior of your existing “A Players.” It’s too bad that this company’s clients haven’t yet understood that high performers actually work best in teams when they are surrounded by complementary, not similar styles of colleagues.

Or perhaps you’ll hear that poor hiring is actually a supply side problem that occurs from a lack of adequately trained candidates coming out of colleges, universities, and trade schools. The solution therefore lies in how we prepare young people to enter the workforce and older people to transition their skills. If you believe this, then I know a few politicians who’d love to speak with you. Bring your checkbook.

The fact is that technology and training can play a part in improving the hiring process. But most NFL teams have near-equal technical capabilities and near-equal training regimes. Sure, every few seasons one team might develop an innovative technical or training edge, but that edge is quickly wiped out when other teams copy it. (The NFL is notorious as a copy-cat league. If something seems to be working, teams will quickly adopt it for their own use).

And if you were to ask the common fan why some teams perform consistently better than the rest, they’d tell you it’s because those teams have a great coach and a great quarterback. “Why have the Patriots won 70%? Easy. They have Belichick and Brady. ‘Nough said.”

Is that true? There’s some truth to it. Would the 2013 Broncos be who they are without Peyton Manning? Nope. Special players like Manning are hard to find and if you get one, you can build a dynasty around them while they last.

But it’s just as true that stars are developed, not born. We’re all shaped by the systems we inhabit and the NFL is rife with stars who were once rejects on their former teams but were fortunate enough to sign on with another team where their style, values, and talents were a better match – and that’s how they became stars (see Wes Welker or James Harrison).

It’s also true that great players get hurt (just like when a top performer at your company quits unexpectedly or no longer performs like they used to) and when this happens, the teams that don’t consistently win at a high level tend to implode. Those that do win consistently, however, tend to keep on winning, even without those former stars. New players enter the scene but the victories keep piling up.

Finally, two objections I often hear from executives when I tell them that the NFL can teach them about hiring is this: “That’s not applicable to us,” one struggling startup founder told me recently. “The NFL can try out players before hiring them. I wish we could do that. If we could try out staff members before hiring them, we’d do a better job too.” I’ve also heard, “The NFL has tons of standardized data to work with and a common hiring pool to compare players through the draft. If we had that level of standardized data, we’d be world-class at hiring too.”

It’s irksome to me that I hear these objections because executives like these just aren’t getting it. Yes, the NFL can try players out and then decide to keep them or cut them. So what? Your business can do the same. In fact, you should always try to structure your new hire arrangements so that you can date before getting married. It’s called a trial period and it’s easy to do and perfectly appropriate.

And yes, the NFL has lots of standardized data to work with. Team management knows the height, weight, 40-yard dash time, Wonderlic score (an “intelligence” test), and playing history of every prospective and future player.

While most of corporate America and Silicon Valley startups are driving hard to get more and more standardized and relevant information through big data, social gaming, and assessments on potential recruits, again, so what? The consistently winning teams use the same data set and have the same opportunities in the draft (or to recruit outside the draft using free agency) as every other team. Yet they consistently outperform their peers. How?

What the Best NFL Teams Do Differently

Parity in the NFL. Every team beat the team to the clockwise direction. Yet some teams consistently outperform. Why? Source: Business Insider.

Parity in the NFL. Every team beat the team to the clockwise direction. Yet some teams consistently outperform. Why? Source: Business Insider.

Clearly, there’s something beyond technology, data, training, individual talent, and luck that the winningest NFL teams do differently than the rest over time. So what is it?

The answer is both simple and profound: Consistently great teams don’t scout and hire for talent. They scout and hire for talent that is a supreme fit for their system. They always think about building a team with a strong collective identity at a fair price instead of just collecting individual talent at any price.

In addition, great teams tend to develop through the draft rather than relying heavily on expensive free agents. They also have a system for recognizing when to unload an existing player to another team and they manage their payroll (their biggest expense) in such a way so that the organization is healthy in the short and long run.

You too need to hire and develop top-notch managers and players. You too are under intense pressure and competition. And unlike the Yankees or Manchester United, you can’t just throw money at the problem. You’ve got to play “moneyball” instead and find the right mix of skills for your system and at a good value to market rates. You need to build a team, not a collection of mercenaries.

Put another way, the hiring process can be improved in your business by modeling what the NFL’s best teams do – but this doesn’t come from new technology, more training, or getting lucky. It starts with rethinking how you think about the hiring process itself. Unless you and your team have the right paradigm to think about hiring in the first place, then no matter what tools, resources, and processes you deploy, your hiring process is still going to be flawed. Until you think differently, you can’t act differently.

Belichick’s Epiphany

New England Patriots head coach and defacto GM Bill Belichick with quarterback Tom Brady.

New England Patriots head coach and defacto GM Bill Belichick with quarterback Tom Brady.

Today, you may know Bill Belichick as the head coach and de facto GM of the New England Patriots and one of the most successful coaches of all time. But 25 years ago, he got his first head coaching start with the lowly Cleveland Browns.

According to the book War Room: The Legacy of Bill Belichick and the Art of Building the Perfect Team, when Belichick took the helm at Cleveland, he was already crystal clear on the type of team he wanted to build — a big, strong, fast team that was capable of playing in any weather, in loud and hostile Rust Belt stadiums, and was smart enough to adjust their schemes each week to take away the biggest strengths of their opponents.

But during his first days on the job he quickly noticed that the Browns’ pro and college scouts, coaches, and administrative staff were not thinking about the hiring process in a smart and unified way. Because they weren’t thinking about it in the right way, they weren’t going about it in the right way, and they certainly wouldn’t be able to create a sustained competitive edge until they changed their thinking:

“[The Browns staff] were not speaking the same language when it came to personnel. There was one grading scale for evaluating the pros and an entirely different one for analyzing collegians. Even worse, in his opinion, there was no organizational identity. After all the scouting, who were the Browns trying to be?

It seemed to him that there wasn’t a good systematic answer to the question, so that became one of his missions: Build one player-evaluation system, for pro and college players alike, that always provided an instant snapshot of who a player was and whether he was capable of helping the Cleveland Browns. When the system was perfected, the coach imagined, everyone in the organization would be able to glance at a couple of numbers and letters on a scouting report and know exactly what type of player was being discussed.”

Belichick was never able to complete such a system for the Browns. A few years after taking the job in Cleveland, the team was moved to Baltimore and Belichick was fired. But the vision was set and years later, when Belichick became the head coach of the New England Patriots, he was able to put such a talent evaluation system in place and, with a few notable exceptions (no Aaron Hernandez jokes here, please), the results have been outstanding.

What Belichick recognized when he started with the Cleveland Browns is that hiring and development of both front office and on-field staff was critical to the organization’s success, but the organization lacked the framework to transform it into a competitive edge to wield against the competition.

It took Belichick years to refine his talent evaluation system. Once he got it going and cascaded it throughout the Patriot scouting teams and front office, however, it transformed a haphazard process into one that is much more accurate, scalable, and powerful.

I’m not saying the Patriots and other top performing teams have been perfect in their drafting and team development (they haven’t) but that the way they think about hiring and the approach they use gives them a slight edge over the other teams. And in a highly competitive setting, a slight edge makes a significant difference.

To drive this point home, I’d like you to reflect for a moment about how exactly you think about the hiring process in your business today. Are you searching for a particular personality? A salary range? Past experience? Education or credentials? A personal referral? Commitment to a vision? Job skills? Upside potential? Cultural fit? Avoiding a future liability? All of the above? And if you are clear on the above, how do you go about determining it? What tradeoffs are you willing to accept and why? Finally, how do you — and your team — actually know it when you see it in a way that everyone can agree on?

Chances are that you don’t have a unified answer to these questions nor a systematic way to find answers. And if you should happen to have an answer personally, does the rest of your company’s hiring team know the answer too? Probably not. In order to create a unified and systematic approach to hiring, one that guides you and your team to find the right candidates and avoid the wrong ones, you need a framework to follow.

The New Hire Draft Board: The Ultimate Talent Management Framework

Every season the NFL has a draft for new players. There’s a lot of organizational focus and media attention on the draft. It gets NFL fans in a tizzy of excitement too. “Who will our team draft this year?” “Will they botch it up again?” “Is there hope for the Browns finally?”

Before and during the draft, each team creates its own version of a draft board. The draft board helps team management to think about where they believe the relative value of a prospective player is compared to the “market demand” and the team’s needs.

If you’ve ever heard an NFL GM tell the media, “we worked our draft board perfectly this year,” what he’s really saying is that he believes the team got the players it wanted for the price they wanted to pay.

Even though your organization doesn’t hire employees all at once during a certain time of year like the draft or recruit employees in a hierarchy of rounds, but rather by pressing organizational need, you still need your own version of a “draft board” that allows you to think clearly and accurately about who to hire and why (and who not to hire and why) and where the value of a particular candidate lies.

If you had such a system, then you could place any prospective new hire on the draft board and see if they’re a fit or not, what the trade offs are for each candidate, and how candidates compare to existing staff and even glean insights into how to best recruit, manage, and develop them. In a word, the draft board brings clarity.

The right draft board will not only apply to prospective new hires but also to existing staff. That is, if you were to place an existing staff member on the draft board, it would tell you if they need a raise, if they’re suitable for a new position or are ready to be promoted into a leadership position, or if it’s time to let them go and find someone new.

Below is just such a draft board. It’s based on the team leadership framework created by legendary San Francisco 49ers football coach and GM Bill Walsh who was the architect of the 49ers football dynasty in the 1980s. There’s a richness of detail here, but for now just scan it quickly to get a sense for what a blank new hire draft board looks like:

The New Hire Draft Board. The ultimate framework for making smart hiring decisions.

The New Hire Draft Board. The simple framework for making smart hiring decisions.

Like most great things in life, this draft board is both simple and powerful. It groups all of an organization’s current staff and/or potential job candidates into one of four quadrants:

  • The Team Leaders in quadrant 1 demonstrate high skills and fit for this position or role, they have shared vision and values, and they demand fair compensation (defined as at or below market rates for your industry and corporate lifecycle stage) for this position. That is, they could get more money elsewhere but they choose to take less because they intrinsically value being part of the team and opportunity in a role that is well suited to their strengths and interests.
    Team Leaders define “the way” of your organization much like Peyton Manning or Tom Brady are team leaders who define the way of their respective teams. “Hey rookie, see how Peyton Manning studies film every morning at 6am? That’s the kind of player we want around here. Prepare like he does and you’ll do just fine.”

    Think of your Team Leaders as stars, starters, or captains. You want to reward and retain them for as long as possible. Give them ownership opportunities, career paths, autonomy, and support them as role models for the rest of the company.

  • The Team Players in quadrant 2 don’t have the same technical skills, fit, or experience as a Team Leader but they share the same desired vision and values and don’t cost an arm and a leg relative to market price.
    Team Players are valuable to your success and you definitely want them around. It’s very hard to find people who share the same vision and values and embody “the way” of your organization. If they have the raw talent, it’s much easier to develop their technical capabilities over time to become Team Leaders or if not, to remain as valuable role players. It may also be that, as they develop their capabilities and acumen, a role in the organization opens up that is a very strong fit for their style.

    Think of your Team Players as your role players or bench. You need to coach them to develop their technical proficiency and groom them into the right role while still celebrating them as key contributors to the team’s success.

  • The Specialists in quadrant 3 have high technical skills and are a strong style fit for the job, but they don’t share the same vision and values and/or may be very expensive compared to market rates.
    Specialists are viewed as highly capable experts that don’t fit into the desired organizational culture. While specialists can get the job done, great organizations rely on them sparingly and never place them in core leadership positions because the specialist doesn’t share the desired vision and values. Much like having a primadonna wide receiver like “Ocho Cinco” in an NFL locker room can shift the focus from the collective “we” of the team to the “me” of the individual ego, a specialist in a leadership position who doesn’t embody the desired vision and values can quickly turn a once winning organizational culture into one that is toxic and self-defeating.

    Think of Specialists like mercenaries or free agents who get paid well to perform a specific function well. If you do choose to use them to fill in some talent gaps, keep them on the periphery of the organizational core and pay them cash on the barrelhead for a job well done.

    The biggest mistake you can make when hiring a specialist is to delude yourself into thinking that you can mold them into a Team Leader with the proper incentives and motivation. Don’t do it! They are who they are, and no amount of incentives is going to change that fact unless they themselves want to change.

    Even with a strong individual commitment to change, personal character development can take a long time and can easily be tripped up. Therefore, if you do hire a Specialist, avoid putting them in a leadership position but allow them to express their high level of skills and acumen outside of the organizational leadership core.

  • The Waivers in quadrant 4 do not have the skills and fit and do not buy into the desired vision and values. Or, they simply demand way too much compensation beyond market rates for a company of your size and industry.
    Waivers are who you’re trying to avoid hiring in the first place. The easiest time to make a waiver is before they even get hired! So if in the interviewing process you notice the signals of a quadrant 4, it’s straightforward: DO NOT HIRE.

    The next hardest waiver to make is an employee who sneaked through the hiring process and turned out to be a poor fit that now sucks everyone’s time and energy. They don’t perform at a high level and they don’t embody the desired cultural traits. So why do you have them around? Now that you’ve recognized the mistake, fix it. Fire ‘em or trade ‘em to the competition. Fast.

    By far, the hardest waivers to make are those former Team Leaders and Team Players who just no longer have the high level of technical skills or fit within the evolving organization, or who are just demanding too much compensation relative to market rates for a company of your size and industry.

    While it’s hard to say goodbye to these once valued team members, it’s even harder to be burdened with excessive overhead and a diminishing skill set. (Just ask the Raiders who have been mired in trying to work themselves out of expensive and underperforming contracts for the past five years).

That’s the four main quadrants of the draft board: #1 Team Leaders, #2 Team Players, #3 Specialists, and #4 Waivers. You should notice immediately that this framework provides a strong foundation for how to think about who’s on your team now and who you want on your team in the future. It tells you that:

  • You need a strong core of #1 Team Leaders who are extremely talented at what they do, are a great fit for your system, share the desired vision and values, and will work at a fair price relative to market rates.
  • You need a deep bench of #2 Team Players who aren’t yet as talented as the starters (or there’s not the same level of job fit) but buy into the desired organizational culture at also do so at fair market price.
  • For the most part, you want to avoid using #3 Specialists who, if placed in a leadership position, can quickly turn the organizational culture toxic or tip the payroll balance by demanding exorbitant fees to be part of the core team.
  • You must avoid hiring and retaining #4 Waivers who don’t have the skills, aren’t a fit, don’t buy into the vision and values, or make it too expensive in time, energy, and/or money to keep them around.

As you can see, the draft board framework provides a very strong foundation for how to think about the type of players you want on your team. It’s pretty straightforward to master the basic concept and it’s simple for everyone involved in the hiring process to understand.

The PSIU Code: A Common Language for Hiring Success

The draft board framework also sets the stage to create a powerful common language within your company. A common language, or code, promotes rapid communication and instant understanding. Having such a code is incredibly important to not only the hiring process but also to overall communication and organizational performance.

The winningest teams in the NFL understand this. Each one uses their own proprietary written code or shorthand to define players’ skills and fit within their system. The Patriots, for instance, use an intricate upper- and lower-case letter and numbered grading system that compares a potential draft pick or free agent against existing players on the Patriot’s roster.

Patriot scouts are required to rank a player using this internal code to describe not only physical characteristics, but also how those players play the game and fit within the Patriots’ system. (Is this player aggressive? Smart? Instinctual? Observant? Tough? Passionate? Studious? etc.).

Using a code to identify and communicate the kind of player the team needs for any particular position is brilliant. Because once you know the language, this allows a near-instantaneous understanding of an existing player or potential draft picks. It also forces the entire organization to get on the same page when it comes to knowing what an ideal player represents – e.g., What does a starting Patriot linebacker look like and how should they go about their job? The code tells it.

Your business needs a similar code – and the draft board framework provides it. The code needs to be able to answer this question: “What are the desired characteristics for this role and is there a match with this employee or job candidate?” The code must be simple, fast to use, and easily understandable by everyone involved in the hiring process.

Here is an example of the start of an active draft board with a simple code. This draft board is for a new Head of Operations role for an expansion-stage healthcare technology company. It includes the new shorthand code that you will soon master.

The target represents the ideal candidate for a given position.

The target represents the ideal candidate for a given position. An effective recruiting and interviewing process will allow you to quickly and accurately place candidates in their correct locations on the draft board. The best candidate will be the one closest to the target.

Learning a new language takes a bit of practice but already you should have an initial grasp of the type of candidate this company wants just by glancing at the draft board target. What can we tell?

The company is seeking a #1 Team Leader who demonstrates high job skills and high style fit for the role, who shares the desired vision and values, and who demands fair compensation compared to market. In addition, we can tell that the right candidate is a Producer/Stabilizer style (PSiu) in their approach — meaning that he or she will thrive when working to accomplish the daily/weekly work and to bring order or efficiency out of chaos.

PSIU stands for the Producing, Stabilizing, Innovating, and Unifying forces (think “PS. I love U” to remember them) and is a form of management shorthand that tells you what kind of style, strengths, and approach you require from any given position. As I explain in my book Organizational Physics: The Science of Growing a Business, these four forces show up in individual management styles as a result of how we learn to drive and respond to change and to focus on the parts or the whole of the system we’re in.

“OK,” I can almost hear you saying. Seems simple enough. But how do I determine where each candidate is on the draft board?” Well, that’s the purpose of your recruitment and interviewing process! That is, a good recruitment and interview process will quickly and cost-effectively identify where a candidate is on the draft board. A poor recruitment and interview process won’t provide that level of insight or it will take too long and cost too much to find the answers.

Before you start diving into how you’ll build a new recruiting and interviewing process to support the draft board framework, I’d like you to pause and reflect for a moment. Remember earlier when I asked you how exactly you think about the hiring process in your business today?

”Are you searching for a particular personality? A salary range? Past experience? Education or credentials? A personal referral? Commitment to a vision? Job skills? Upside potential? Cultural fit? Avoiding a future liability? All of the above? And if you are clear on the above, how do you go about determining it? What tradeoffs are you willing to accept and why? Finally, how do you — and your team — actually know it when you see it in a way that everyone can agree on?”

Well, guess what? Now that you are starting to get an initial feel for the draft board framework, can you see that you’re already well on your way to answering those questions now and forever? No matter how you slice it, from now on when you think about the hiring process, you’ll know what to think about:

Are you in search of a “#1 Team Leader” and will you only accept a “#1 Team Leader” because this is a critical leadership position and you must have captain who walks the talk and demonstrates a high level of skill and fit?

Or will you accept a “#3 Specialist” for this position because it is outside the company core and you just need a high level of technical skill and role fit to get the job done?

Perhaps you are in the market for a “#2 Team Player” but you’ll expand the scope to a “#1 Team Leader” if you stumble across the right candidate? Or is this purely a “#2 Team Player” hire because that’s all that’s really required for this role?

And what is the style of candidate who will naturally thrive in this role based on the job requirements and the complementary skills and gaps in the team? Do you need a high Producer/Innovator who thrives at winning and coming up with creative solutions to complex problems? Or would it be a Stabilizer/Unifier style who brings order out of chaos while keeping the team and clients on the same page? Or a different style altogether?

There are still a lot of details to answer and those answers will come soon enough. But what’s really important (and valuable) is having a framework to ask the right questions in the first place! And that’s exactly what the draft board framework gives you: A new way to think about hiring, along with the right questions to ask.

Now that you have a snapshot of the draft board framework, the next step is to understand how to put it into action. Once you know the how, then you can tackle the when to hire and who to hire. But right now, don’t rush past small victories. Take a moment to savor them. You now have a seriously powerful framework for how to think about the hiring process.

HIRING_LexSisneyPlease note: this post is an excerpt from How to Think About Hiring: Play Smarter to Win the Talent Game.

Africa Rising: An Amazing Story of Sustainable Business Doing Social Good

The image of a dark Africa is going to change radically in the coming years.

The image of a dark Africa is going to change radically in the coming years.

If you’re a person who likes to hear about momentous progress happening in the world, then you’re going to like the story that about I’m to share. However, if you’re an entrepreneur who appreciates ingenious solutions to complicated problems, then you’re going to absolutely love it.

It’s the story of one of the most innovative business models I’ve seen in some time. It’s also a story of confluence – an almost magical combination of technology, market timing, and business strategy that leads to greater social good.

The centerpiece of the story is M-KOPA, a fast-growing startup based in Nairobi, Kenya. M-KOPA has a compelling vision: to bring solar panel lighting and electricity to the African continent. M-KOPA doesn’t build solar panels. It provides consumer financing for them. And even though it went into service just a year and a half ago, it already has over 35,000 customers and is growing rapidly.

M-KOPA has created an ingenious solution to bring solar panel financing to Africa.

M-KOPA has created an ingenious solution to bring solar panel financing to Africa.

You probably know already that much of sub-Saharan Africa still uses kerosene-based lighting. Kerosene is not only antiquated, it’s also dangerous and unhealthy. If Kenya alone switched from kerosene to solar electricity, it would not only provide superior lighting and energy, according to Luminanet.org, it would also save the average Kenyan household $105 USD per year, eliminate 2.3 million tons of carbon dioxide from the atmosphere (equivalent to about 500,000 mid-sized cars), and save millions of children and families from exposure to toxic fumes (62% of all child poisonings in Kenya come from kerosene).

But wait a minute… haven’t you heard this story before? Haven’t you heard the big dreams and opportunities that Africa presents for both energy and economic transformation? And haven’t most of those dreams been shattered like a wooden boat thrown against the rocks of Cape Hope?

I know. I get it. I can almost hear you saying, “Wait a minute, what makes M-KOPA different from the dozens of other companies that have traveled this route before? Why are they growing so quickly? Are they some kind of pyramid scheme? And how can they provide financing to consumers who don’t have a credit score, a credit card, or collateral to take out a loan? Sounds like a fine African fairy tale.”

This is where confluence comes in. In 2007, Kenya adopted a mobile phone payments system called M-Pesa. M-Pesa has grown astoundingly quickly since the moment it was launched and, according to Wikipedia, by 2011 it had more than 17 million subscribers. Today, M-PESA is effectively at or near universal market penetration. Put another way, while we in the US suffer from shitty cell reception (“Can you hear me now?”) and legacy bank transfer systems, almost everyone in Kenya has a mobile phone with constant reception and the ability to do instant cash transfers!

On the back of this universal payment network M-KOPA, was conceived: a company designed from the ground up to do mobile phone payment transfers for solar financing. Without M-Pesa, M-KOPA could never exist. So one of the things that’s different this time around in Africa is timing. And as my granddad used to say, timing is everything.

“But wait a minute,” you’re probably thinking, “just because someone can pay for financing via mobile phone doesn’t mean they actually will pay. How does M-KOPA check for credit scores? Deal with non-payments and defaults? Collateralize their loans? What, do they have a fleet of bicycle-based repo men? Doesn’t sound very efficient to me…” The answer is No, No, and No. And this is what makes the M-KOPA business model so ingenious and scalable.

Here’s how it works: M-KOPA charges an up-front deposit of about $30 USD. This fee is high enough so that consumers value their investment but low enough that most Kenyan households can save up for a few months to afford it.

M-KOPA then finances the balance of the panels to their customers at a very affordable fee of $.50 (USD) per day. The program is designed to pay off the panels in one year, after which the customer owns the system outright.

That’s pretty basic. Now here’s the secret sauce: M-KOPA installs a secured SIM card on the solar panels themselves. In the event that a consumer doesn’t pay the 50-cent per day fee, then voila’, those solar panels get shut off through the mobile network! Once a customer shores up their balance, the panels are turned back on via the mobile network. No need for credit scores, credit checks, a fleet of repo men, or bank references (which don’t exist).

Isn’t that brilliant? M-KOPA’s loan repayment rates are astoundingly high. Once consumers shift from kerosene to solar electricity and lighting, they definitely don’t want to go back. Not only is it a sustainable business model, it’s the kind of approach that will allow Africa to quickly adopt clean, green, energy and all the benefits that entails.

As Chad Larson, co-founder and finance director of M-KOPA and an Oxford graduate put it to me, “Our loan repayment rates at M-KOPA are on par with those of loans to the highest credit score borrowers in the West. But what is more meaningful is that there’s huge demand for this kind of power in Africa, and it’s now possible for us to meet that need in a sustainable way.”

I love this story. I admire the combination of clean energy and social good combined with a sustainable business model. I tip my hat to the team at M-KOPA and wish everyone involved a brighter future.

If you’re interested in the new emergence of Africa, here are some interesting TED Talks I’ve seen recently that describe Africa at a tipping point towards a more prosperous future:

“I’m concerned about your ability to conform.”

Office_Space_Bill_Lumbergh_Gary_Cole When I was 26, I had a job interview that I’ll never forget. It was for an entry-level sales position with a fast-growing telecom company in Minneapolis, Minnesota.

At the time, I had just shut down my first startup, had burned through all my savings, and was in desperate need of a job.

A friend of mine told me about the firm one night over beers: “Hey Lex, I know that you just shut down your startup. Sorry it didn’t work out, man. But hey, if you need a job to pay the bills, they’re hiring where I work. It’s not the best job in the world but the money can be good if you work hard at it.”

The notion of hard work and good money sounded like a pretty good opportunity. I needed something I could throw myself into until I found my footing again. So I called the company the next day, told them I was referred by one of their existing reps, and set an appointment for an interview.

To prepare for the interview, I practiced my spiel about why I’d be a good fit for their organization, polished up my resume, put on a suit, and went in with a mix of hope, anxiety, and chutzpah.

600full I arrived at their offices and approached the receptionist’s desk. The receptionist, middle-aged and blurry-eyed, looked me up and down skeptically and, with a hint of exasperation at having to deal with me, said, “May I help you?”

“Ah yes, I’m here for an interview for a sales position. My name is Lex Sisney.”

She glanced down at her calendar and shook here head: “There’s no interview today. You first need to take the written test.” She reached into her file drawer and handed me a 50-question fill-in-the-oval-and-make-damn-sure-you-stay-in-the-circle-scantron-test. “If you pass the written test, then you’ll be invited back in for an actual interview.”

I thought to myself, “Really? Why didn’t they tell me this on the phone? I’ve got to take some psycho-babble test before even speaking with somebody? And is this the kind of place I want to work for? WTF. Oh well, I guess I do need the money so I better just play along.”

So out loud I said, “OK, let’s take the test.”

“See the clock over there on the wall?” she said. “You have 30 minutes to complete the test. Have a seat under the clock and the time will begin. Do you have a #2 pencil?”

“Ahh, no, I’ll need a pencil please, do you have one?” She rolled her eyes and reluctantly handed one over like it was her last meal. I took the pencil, turned on my heel and walked back to my assigned seat under the clock.

The test asked me questions about what I’d do in hypothetical situations like the following:

“You see a co-worker take a company coffee mug from the storage closet and put it in his briefcase. You should:
A) report the theft to HR.
B) ask him what he’s doing.
C) take a mug for yourself.
D) tell him to put the mug back.”

I snickered under my breath but played along anyway. I finished quickly and turned it in with 15 minutes to spare.

The receptionist scanned it over with a raised eyebrow to make sure I stayed within the circles and didn’t miss any questions. “OK,” she said, “someone will call you if there’s a possible fit,” and I left. (Note: psychometric tests like this one have transitioned from #2 pencil to the web but they can still be just as asinine.)

About a week later the company called me in for the actual interview. And I was told that this time, I’d actually get the chance to speak with the hiring manager.

I arrived early and re-greeted the receptionist. She seemed in a somewhat better mood this time: “Have a seat Mr. Sisney and Mr. Johson will see you when he’s ready.”

After waiting for 20 minutes past the scheduled time (is this a doctor’s office?), a new voice spoke from the receptionist area. “Mr. Sisney? I’m Lidia, Mr. Johnson’s assistant. He’s ready to see you now.”

TOM SMYKOWSKI Lidia led me back through the cubicles and telemarketers to a large windowed office. There at a small, round conference table sat “the Man.” As I was ushered into the office, he didn’t actually look up or greet me but sat leafing through some papers, extended a limp-fish handshake, pointed to a chair across the table and sternly said, “Have a seat.”

After what seemed like five minutes of just sitting there waiting, he finally looked up from his reading, made eye contact, and with pursed lips told me, “I’m concerned about your ability to conform.”

“Excuse me?” I asked trying to mentally process what he just said. He placed one of the pages he was reading on the table and with two fingers slowly twisted it towards me so I could read it.

“You see this chart? This fourth column is conformance. Your scores in these other three areas are very high but you have the lowest conformance score of anyone I’ve ever seen.”

I said, “Hey, that’s pretty cool. Can I have a copy of that?”

“No,” he frowned. “But tell me why should I believe that you can conform to our way of doing things here?”

I tried to dance and weave and sell him on the idea that non-conformity really meant “creativity” but I didn’t think he really bought it. The interview lasted about 10 minutes total and I left thinking it was all a big waste of time.

Surprisingly, they called me a few weeks later and offered me the job.

“No, thanks,” I said. “It seems like you’re looking for drones for your empire. That’s not really me.”

Conformity vs Community

pesticides1 I share this story because the push towards conformity is relentless. If you’re not careful, it will insidiously work its way into your culture and eat it away from the inside.

Just think about this interview I had. It’s clear that this company was suffering from high turnover in the sales team so they tried to fix the problem by weeding out risky candidates (like me) using a psychometric profile test early in the hiring process.

In effect they were saying, “Turnover is costing us a lot of money. We must control for it by only hiring reps who can conform to our process.”

Did it work for them? No! They still had high turnover in their sales team; those they did attract were of the lowest common denominator; and their entire recruiting process became a bureaucratic numbers game.

It’s no coincidence that this company went public a few years after my interview and went bankrupt a few years after that. Why? The market no longer demanded their products and they couldn’t adapt because they had conformed to the past.

Wise leaders build their businesses on a different principle. Rather than allowing for conformity, they design for community.

  • Conformity gives the illusion of control but, in the end, its focus on “monocultures” makes the system brittle, stagnant, and tired.
  • Community takes more time and courage to build but its focus on diversity ultimately makes things alive, vibrant, and adaptive over time.

The tricky thing to manage when designing for community is that community requires some conformity!

How to Design Your Culture for Community, Not Conformity

foodforest1 Imagine a community where no one speaks the same language or shares the same ideals, where there’s not a clear structure or decision-making process, and where the systems don’t interoperate (all of these things require some level of conformity). What do you get? Anarchy. Inefficiency. Exhaustion. Failure.

So how do you balance that? Or, how and where do you require some conformity but keep its relentless advance in check so that individual diversity can flourish, adapt, and up-level the entire system over time?

The answer is that every situation is unique but the underlying patterns remain the same. The secret to spotting those patterns and managing them more astutely is to understand the four forces of Organizational Physics: Producing, Stabilizing, Innovating, Unifying (PSIU). If you’re new to the concept of the four forces and how they show up in every system, read Part II in my book Organizational Physics – The Science of Growing a Business.

Take a look at the PSIU matrix below because it reveals the secret to balancing community vs. conformity:

The behavior of every complex adaptive system can be understood through a drive to shape and respond to the environment.

The behavior of every complex adaptive system can be understood through a drive to shape and respond to the environment.

On the left side are the Stabilizing and Unifying forces. The Stabilizing force creates Conformity. It makes things efficient, repeatable, and scalable. The Unifying force allows for Community. It makes things harmonious, congruent, and working well together as a complete whole.

On the right side are the Producing and Innovating forces. The Producing force is about getting things done and producing results for clients. The Innovating force is about adapting to changing conditions.

In order to be successful over time, the left side (Stabilizing and Unifying) of your organization must always be harnessed to support the right side (Producing and Innovating). I say “harnessed” because, like horses run amok, if left to their own devices, the Stabilizing and Unifying forces will creep, control, and condemn the rest of the system to failure.

For instance, if the Stabilizing force is out of whack, there will be too much bureaucracy, rules, standards, and efficiency in the system. The organization shows up like a shit factory. It produces the wrong thing very efficiently.

But the Unifying force can get out of whack too. If it is out of balance, the culture becomes all-consumed by politics, infighting, and the “drama in here” versus the “needs out there.” In this case, the organization shows up like a bad soap opera or a community at war with itself.

To repeat: the secret to designing a business that leverages diversity to become strong and vibrant over time is this: the left side must support the right side! If the Stabilizing and Unifying forces are NOT supporting the Producing and Innovating forces, then they are cancerous and must be ripped out/changed/healed/improved. That’s your job as a manager.

Why must the left side always be in support of the right side of the matrix? Because the purpose of the business is to produce results for its clients, now and over time. If you’re focused on meeting the changing needs of the external market, then everything else is open for reinvention.

  • Is a process slowing us down in our ability to meet customer needs? Replace it.
  • Is our culture too focused on what’s going on in here? Get out of the office and go meet with customers.
  • Are we too staid in how we’ve always done things and the market is changing rapidly? Better get busy on blowing things up.
  • Is our recruiting process bringing in the right candidates to meet client needs now and over time? No? Better go change that process.
  • Etc., etc…

So as a leader, how do you know what to do and when to create community and not fall prey to simple-minded conformance? You need to create a framework for success. Equipping you with such a framework is outside of the scope of this article because it would require a book

But a short answer is this:

  1. You need to define and defend the Vision and Values of the community. And yes, Vision and Values must be defended, just like the Constitution of the United States must be defended. If you don’t defend it, you’ll soon lose it.
  2. You must put in place a sound structure of accountability and have key metrics in place to track performance.
  3. You must enforce a sound team-based decision making process that allows for diversity of perspectives in the decision and ensures rapid implementation post-decision.
  4. You must create space for others who buy into the desired vision and values to have a place in the organization where they can express their individual genius in service to something larger than themselves (i.e., the clients).

Once you have these elements in place, that’s enough “conformance” to create a vibrant community. Your task as a manager is to now help keep the community focused on what’s happening out there in the world: being in service and producing results for clients and adapting to changing conditions over time. That’s sacred. Everything else in the community is open for reinvention.

Walk Across the Valley

Have you ever wanted something only to rue the day you actually got it?

Recently, I had a simple but profound lesson that really taught me the value of “be careful what you wish for.” I’m really lucky to live in a beautiful place. Take a look. Here’s the view from our deck:

Before you make a decision, walk across the valley and see what the view's really like from that new angle.

Before you make a decision, walk across the valley and see what the view’s really like from that new angle.

It’s an awesome view right? Well, when my family and I first moved here, I certainly noticed that it was a beautiful view. Almost immediately, though, my internal monkey mind started telling a story that that the view from across the valley must be even grander.

“Wow,” I thought, “the view from here is pretty spectacular but the view from that beautiful house across the valley must really be great!” I even felt inferior in some sense, as if we had ended up on the “wrong” side of the valley. The truly good stuff was clearly over there.

Well, I’m an idiot. One day my wife and I took a hike across the way. When we got to the other side and looked back, what do you think we saw? A really mediocre view compared to our side of the valley. The mountain ranges and textures that made our own view so spectacular were missing on the other side. Duh!

I realized in that moment that I had spent much of my life assuming things were always better on the other side. From afar, they looked more beautiful or interesting or desirable “over there.” I often focused blindly on simply getting “there” even if “here” was actually better.

I know I’m not alone in this error. Many highly driven people make the mistake of focusing on getting something new, even if it doesn’t make any sense to do so.

For instance, I have a friend who built up a successful company over the past decade. He worked hard, lived a nice lifestyle, and seemed to authentically enjoy the industry, clients, and his employees. Basically, he had a really good thing going and he knew it.

But my friend’s vision had always been to sell his company. The story he told himself was that if he’d work hard to build up his business, then one day he could find a strategic acquirer, sell it, and do something new. He didn’t give too much thought to what he would do after the sale. He was exclusively focused on making the exit happen. He told himself that he’d figure out what to do once he had the time, money, and freedom to really think about it.

You can probably guess what happened. He actually did sell the company, but it turned out to be a disaster. He signed a three-year workout clause with the acquiring company. They made promises to keep the existing staff and give his business complete autonomy within their portfolio. That lasted for about 60 days before the new owner decided to change strategic directions. They made a call to shut down his business (now theirs), fire the staff, and sell off the assets.

Today, my friend has a little bit of money in the bank but he’s miserable. He’s cut off from the work he enjoyed, the team he built and thrived with, and the clients he used to serve. More than that, he’s really, really pissed off at how things went down. He feels cheated by the acquirer and blames himself for wrecking a really good thing.

I can contrast this story with another friend of mine who’s also successful entrepreneur. This friend had made his fortune in the commodities business and moved to Santa Barbara to “retire” at 40. He quickly got bored and decided that he wanted to get into the restaurant business. A dream that he always wanted to pursue.

But this friend did something really, really smart. He found a restaurant for sale that seemed like it might be a great purchase. But he didn’t go to the owner and make an offer. Instead, he dressed down and went to the owner and got a job as a busboy! I asked my friend why, being independently wealthy and with a world of options at his fingertips, he would waste his time being a busboy?

My friend responded, “Because I want to try on the restaurant business before I commit to it.” He worked at the restaurant for about a month. He learned the ins and outs of that business by doing the work, getting a firsthand account of the operation, and befriending the owner to get more inside information.

Ultimately, he decided that the restaurant business wasn’t his game. The margins were too thin and the hours too long. But isn’t that perfect? He only risked his ego and some time to suss out what his new reality would be like after the potential decision was made. The value he got of NOT buying a restaurant is priceless. Otherwise, he would have gotten stuck owning an asset he didn’t really want to own. His kind of methodical thinking and willingness to “try on” the future before making a commitment is certainly one of the reasons this friend is so successful.

I’ve tried to take this lesson to heart by slowing down my own decision-making process long enough to really investigate (or even intuit) what life would be like after I make a certain decision. In essence, I try to walk across the valley and see what life over there is really like before wishing I had it any different. How about you? Are you wishing you had it different when what you’ve got right now is perfect? How can you tell if you’re too focused on just getting it done versus making the right decision?

Leading From Your Genius Zone

While few people are intellectual geniuses, each of us has an area of outstanding ability that allows us to perform at a high level and adds to our overall energy and satisfaction. This zone of activity is what I call your Genius Zone. What is your own Genius Zone? You can identify it using a simple formula:

YourGeniusZone

  • Your Talents are those activities that you are naturally exceptional at and that add to your energy, joy, and satisfaction.
  • Your Purpose is the why of your life that brings meaning and focus to your endeavors.
  • Your Genius is a fusion of both those things: talents with purpose.

When you’re operating from within your Genius Zone, you experience high energy gains. You tend to feel deep engagement, high personal satisfaction, and elevated productivity. You also produce outstanding work. When you’re operating outside of your Genius Zone, you experience the exact opposite.

Leading from your Genius Zone means that you design your activities in such a way so that you spend most of your time and energy engaged in those that add to your energy, joy, and satisfaction and at the same time, create the most enterprise value for your business.

If you’re struggling right now to grow your business, manage your team, find the right strategy, and to do it all quickly, then this concept might seem pretty far fetched. You don’t have enough time and energy to do all the crap you DON’T want to do, so how can you find the time and energy to do the stuff you WANT to do?

I hear you. But the fact is that you want breakthrough levels of performance in your life or work then leading from your Genius Zone is not a luxury but a necessity. For instance, if you look at the most successful businesses in history, the ones that assume almost transcendent, iconic status — IBM, Apple, Ford, Disney, Walmart, Standard Oil, HP, Intel, Coca-Cola, Microsoft, Google, Amazon, Virgin, etc. — you’ll see that while each founder had his own unique approach and management methodology, each also designed their business to be symbiotic with his or her own innate genius.

Many people erroneously believe that these world-changing entrepreneurs were just born special. Not true. We’re all shaped by the environments we inhabit. What’s truly special about these entrepreneurs is that they designed their time, relationships, and management structures so that they could spend most of their time and energy working form their respective strengths and passions.

Finding Your Genius Zone

The first step in leading from your Genius Zone is to know what you are really at genius at! If you’re constantly running from one mini-crisis to another in your work, then it may take a bit of introspection to get a sense of what activities actually represent your Genius Zone and how to shift them. If you’d like to explore this further, you can do it easily by completing this free interactive exercise: Finding Your Genius Zone. Enjoy :-).

It should be intuitive that if you’re going to work from your Genius Zone then you’ll need to surround yourself with others who are a genius where you are not. In addition, you’ll need the right structure, approach, framework, and guidance to stay on top of your game. One of the best ways to learn how to do this is to mirror others who are already expressing a high-level of genius. One of my favorite examples is Phil Jackson.

Phil_Jackson_3_croppedAs you know already, Phil is a living basketball and coaching legend. Here’s a snapshot of his career from Wikipedia:

  • Head coach of the Chicago Bulls from 1989 until 1998, during which Chicago won six NBA titles.
  • His next team, the Los Angeles Lakers, won five NBA titles from 2000 until 2010.
  • He also won two championships as a player and holds the NBA record for the most combined championships (13) as a player and a head coach.
  • He also has the highest winning percentage of any NBA coach (.704).

When someone has won at every level like Phil, he probably has something valuable to teach. Here are the top 4 things that I took away from his book that are applicable to how you think about growing your business…

#1 Have a System

Source: Canishoopus.com

Source: Canishoopus.com

Phil is famous for being a disciple and a champion of the Triangle Offense (Phil learned the triangle from Tex Winter, who was a long-time assistant to Phil and who, in turn, learned the system from Hall of Fame coach Sam Barry).

The goal of the Triangle is to create a base structure on the floor (guess what? it looks like a triangle!) so that good spacing between the players is maintained and allows them to make adjustments on the fly, based on what the defense is doing. When the triangle offense is working well, it’s simultaneously hard to stop and a beautiful thing to watch:

Your business needs a system and philosophy you believe in too. There are many systems you can choose from but any good management architecture will at a minimum have these characteristics:

  1. It creates a common lens so the team sees the same thing on the floor. That makes sense, right? If the team isn’t seeing the same thing, they can’t act in concert. Like the proverbial five blind men and the elephant, if marketing sees one thing, sales another, and engineering something else entirely, then you’re going to drop a lot of passes.
  2. It creates a common language so that players instantly understand one another. When one player says, “Run X175B,” what in the heck does that mean? Similarly, if the CEO says, “We need to hire a VP of Sales,” what in the heck does that mean? Is it a VP of Sales type who can build a sales system and manage a team? Is it a VP of Sales type who can open new markets? Trust me, the title may be the same but the style of player is radically different. You need a language in your business that promotes instant understanding of what’s happening and what’s needed.
  3. It creates a common sequence so that the team knows what to do in a given situation. In the Triangle offense, if the defense takes a certain position, the offense knows what sequence of steps to take next. It becomes a fluid dance built on strong fundamentals. In your business, the sequence needs to be clear based on where you are, what is the right next set of priorities to solve, and in what sequence they need to be handled.
  4. It creates the right balance between the competing needs for flexibility and control. One of the coaching gems I got from the book is this: “Give players the freedom to find their destiny within the team structure” (293). I love this passage because it’s exactly what I strive for in my coaching practice. Design the system to scale and then allow tremendous autonomy for individuals to find their groove within that structure.

When you’re implementing your system, be prepared for some resistance. Much of 11 Rings is about how a leader can instill buy-in into a system, even when dealing with monstrous egos (like Michael Jordan and Kobe Bryant), that ultimately allows the players to flourish as a team.

#2 Lead to the Next Stage of Development. Then Lead Again.

Obviously, you can’t just show up at work tomorrow and declare, “I’m a genius! This is what I’m doing from now on! Suck it!!” Disaster. Instead, you need to meet the environment where it’s at now, and then lead it to the next stage of development. All the while you’re letting go of activities that the tribe is better at than you while embracing those activities that you’re a genius at.

This would be an impossible task unless you also had a universal framework that reveals the underlying patterns at work at each stage of development. Phil’s favorite approach to understand the stages of team development is a book called Tribal Leadership. It’s a good framework to understand how the language of the tribe reflects its current stage of evolution.

I would say that in addition to understanding the current values-state of your tribe, you also need a framework that reveals the stages of development in all aspects of your business including the products, markets, and execution lifecycle stages of your business. I’ve spent the past decade developing such a framework that I distill in my book Organizational Physics: The Science of Growing a Business. Check it out if its of interest to you.

Transitioning to your Genius Zone can seem overwhelming and complex. And if you’re trying to do too much too soon or are overlooking a glaring hole in the organization, it is. But if you have the right framework, then what once seemed complex is now much simpler and even a lot of fun. If you get it right, then it’s not only the path to greater satisfaction, it’s the path to building a transcendent business too.

#3 Time Your Rhythm to the Stage of the Season

A favorite insight I took away from 11 Rings is that early in the season Phil would coach really hard in practice but be mostly laissez-faire during the games. His goal was to get the team to rely on and trust their teammates on the floor rather than looking to the sidelines for help. They had to learn to work their way out of their own problems on the court. The goal was to sacrifice some possible early season wins in order to build greater resiliency and self-reliance for the championship season down the road. Good advice for every leader.

In business we have it much tougher. We’re under constant pressure to go-go-go. One quarter blends into the next and one year into the next. It’s easy to lose sight of the stage of the season, confuse activity for effectiveness, and waste our time and energy on the wrong things at the wrong stage. Over time, this leads to burnout and disengagement.

A great practice for every business leader is to think and structure the business calendar like a sports season. When do you get off site to reflect and renew and plan for the long range? When and how do you roll out a quarterly game plan? When do you assess the structure key hires? When do you celebrate success and when do you learn from failure? When and where do you take more control and when do you allow for more autonomy?

The key point is that there is a rhythm and pace to business just like there is a rhythm to nature. It can’t be go-go-go all the time. You must consciously design the right rhythm into your business practices or you’ll end up winning the preseason but failing to win a championship.

#4 Be Yourself

In addition to the Triangle Offense, Phil is also known for taking a holistic approach to coaching that is influenced by Eastern philosophy, earning him the nickname “Zen Master.” In the book, Phil talks about how it was challenging early in his career to feel like he could really be himself with other players and coaches. Would they accept a tofu-eating, meditating, philosophizing hippie? But once he embraced his uniqueness fully out in the world, he developed a powerful coaching style that was impossible for other coaches to emulate.

The same is true for you. In my coaching practice, one of the first tasks I always undertake is to identify your Genius Zone. What is it that you are uniquely gifted to do that adds to your energy and joy? How can those genius-like qualities come forward more in your life and work? Once we’re clear on your genius, then we design everything in the business — the strategy, structure, team, and management rhythm — to support your being in that zone as much as possible. Then a funny thing happens. When you do what you’re a genius at — and if things are designed correctly — then the company scales too.

It’s not so crazy. Just look at Phil Jackson. His genius is understanding the subtle nuances of behavior and teaching others how to be relaxed and unified as a team in high-pressure situations. The Triangle Offense supported his genius. So did the assistant coaches who were strong in areas where he was weaker. Phil looked for and coached players to buy into his system while simultaneously expressing their own individual genius on and off the court. When it all comes together, it’s quite a ride.

If you’re in search of a system that allows you to manage your business more like a champion and scale in a sustainable way, then this summer I highly recommend you also read my book Organizational Physics: The Science of Growing a Business. It brings together all four of these aspects – #1 Have a System. #2. Lead to the Next Lifecycle Stage. Then Lead Again. #3. Time Your Rhythm to the Stage of the Season. #4 Be Yourself — into a singular meta-level framework that tells you exactly what to do next and makes the complex simple.

Back to Tutorials.

How to Use Yammer to Improve Employee Productivity

the-social-enterprise


“Men more frequently require to be reminded than informed.”
― Samuel Johnson

If you don’t know about Yammer yet, you should. Simply, it’s an “enterprise social network” for businesses. Microsoft purchased it in 2012 for $1.2B in cash. The goal of Yammer (and similar tools like Salesforce’s Work.com) is to help employees collaborate, stay connected, and improve company-wide communication.

Yammer’s approach is to leverage the same type of social media experience that employees are using in their personal lives — like Facebook and Twitter — to be more productive in their jobs. According to Yammer, companies who use the service reduce email use by 40%.

I think this trend of “enterprise socialization” is here to stay. As with a lot of trends, though, there’s the hype and then there’s the reality. I’ve had the chance to sit in on a few companies’ Yammer channels over the past year and here’s what I discovered:

  • The ratio of noise to signal seems (unscientifically) worse than the classic 80/20 rule. That is, for every really useful piece of actionable information, there’s a hell of a lot more useless noise/fluff/chatter filling up the airwaves. Some might argue that that’s the real benefit of these tools — they sort of capture an organization’s collective stream of consciousness. I would argue that it’s more indicative of people not being focused on or caring about what’s most important.
  • Employees seem to really like and use the tools. There’s value in that for sure. The risk is that, just as email killed the face-to-face meeting and enterprise socialization is killing email, you end up with a lot of data but little cohesiveness and actionable insight. Often, the fastest route to creating a breakthrough is to communicate less frequently but have a regular (weekly or bi-weekly) process where team leaders can meet face to face to really dive into and solve the issues at hand.
  • These tools don’t cut down on information fatigue. It can take just as long to get through a Yammer channel as it does to wade through your email inbox. So my sense is that the medium may have shifted but the feeling of information overload for most employees probably hasn’t. I overheard a woman in Accounts Receivable say, “I’ve got to start participating in Yammer or people will think I’m not working.” As Homer Simpson would say, “D’OH!”

There’s a simple practice you can implement immediately in your company that harnesses the best of what social enterprise has to offer and helps mitigate the bad. Here’s how it works:

At the start of each day, no later than, say, 9 a.m., have everyone log on to a set Yammer channel and state what their #1 priority is for the day, as well as any obstacles they need help in overcoming.

“Sam – My #1 priority is fixing the XYZ bug. Need help in getting the client to call me back.”

“Jane – My #1 priority is getting ABC Co. to sign the contract. No blockers. Let’s rumble.”

“Luke – My #1 priority is to make 3 outbound sales calls and follow up on the Rodriguez contract. If anyone has a sales lead, please send it my way.”

The benefit of this approach is that it begins to focus the organizational culture on achieving the most important things each day. It can have the additional advantage of improving visibility, teamwork, and accountability.

As a leader, you can scan the channel and get a sense of whether your staff is focused on the right things and better understand the pattern of obstacles presenting themselves, as well as who may be sandbagging, playing hero, or needing some coaching.

It’s a very simple process that takes little overhead to manage for the staff or for management. If done correctly, it begins to focus the conversations towards accomplishing short-term, daily wins. Those daily wins build up over time and pretty soon the train is roaring down the tracks.

Of course, this presupposes that your organization already has a strong and healthy foundation on which it can deploy a social enterprise tool. One with an aligned culture, structure, processes, strategy, and team. If not, then using Yammer, or any other social enterprise tool, is like trying to cover up body odor with cheap perfume. No matter how much you use, you’re still going to stink.

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How to Navigate a Crisis in 3 Courageous Steps

This article is for leaders who seek an edge in navigating a personal or organizational crisis.

dogstuckinhammock

You’re either on top of events or events are on top of you.
- Pat Riley

A good warrior must always assess his present position, evaluate his losses and assets, and move forward.
- Tim O’Shea

Shit happens.

When you’re in a crisis, there are three things you can do to get out of it. These three things will not only create distance from the current crisis; they’ll make you stronger and more resilient, as well as help you avoid a similar crisis in the future.

These three steps aren’t easy. They take great courage. But they work for just about any type of crisis: financial hardship, poor health or disease, a deteriorating relationship, or a business failure.

Follow these three steps whenever you’re feeling stuck, afraid, or trapped by circumstances and you’ll break through to greater freedom, perspective, and new opportunities – usually much faster than you could have imagined. The three steps are:

  1. Stick to your strengths and core values
  2. Do what you’ve been resisting doing
  3. Trust and follow one expert or method until the crisis has passed

HG Wells said, “The crisis of today is the joke of tomorrow.” Putting these three elements into practice will transform your crisis of today into something you can laugh at in the near future.

Stick to Your Strengths and Core Values

If you’re in a crisis, chances are that you stopped playing to your strengths or stopped living by the real values in your heart some time ago. Is this true for you? If so, then this crisis is your wake-up call.

Now is the time to get back into your strengths and double-down on your core values. Say “no” to everything that’s not in your wheel house. Say “yes” to everything that is. Play to your strengths. Stick to your core values. They’re non-negotiable.

The risk here is that, in the fear and uncertainty of the crisis, rather than doubling down on what you do singularly well and sticking to your core values, you freak out and do something drastic or foolish that isn’t in alignment at all.

If you do, an ordinary crisis can quickly turn into a catastrophe. For example, about a decade ago, Martha Stewart was at the top of her fame and power. Her strengths were media and communications and the core values she expressed were beauty, elegance, and fine entertainment. Then Martha got off track. She got caught up in an insider trading scandal. Then she lied about it, got busted for it, and was sent to prison – only to watch her empire crumble.

While we all get off track from our core mission and make mistakes, when we get a wake up call (like from the Feds), it’s like a smack across the face to get back to basics and return to our strengths and core values. If we don’t, if we panic and go in the opposite direction, this usually leads to calamity.

So don’t panic. Calm down. Take a look at the facts. Identify your core values and don’t compromise them. Identify your true strengths and begin to play from there. When you do, even the scariest situation will begin to resolve itself into clarity of purpose.

Key Question to Ask Yourself: What are your strengths and core values?

Do What You’ve Been Resisting Doing

I have an unprovable theory that we create crisis in our life because we’ve been resisting doing what we know we’re supposed to be doing in our heart. “Fate leads him who follows it and drags him who resists,” said Plutarch.

There’s something liberating about a really good crisis. It forces you to cut away those things that are no longer serving you and probably haven’t been serving you for a while. What should you cut out? It could be anything — an old mindset, a self-limiting behavior, a toxic relationship, an underperforming business unit, a job you hate. You name it.

When you cut out the old, you give space for the new to emerge. This takes real courage. For instance, at 45 years old, Mary Jones was diagnosed with terminal cancer and she was given only a few months to live by her doctors. A true crisis.

Mary’s life dream was to work with orphans in Southeast Asia but she had never found the time or money to take a sabbatical from her job as a corporate controller. Having a prognosis of just a few months to live sent Mary into action. She quit her job, sold her house, and dedicated her remaining days to helping kids while her health allowed her.

Basically, Mary cut out everything except what was truly important to her — what she knew in her heart she should have been doing all along. You won’t be surprised to learn that Mary’s cancer “miraculously” went into remission and ten years later, she has a clean bill of health. Why? In my opinion, the crisis showed up because Mary’s career choices were fighting against her true desires. The crisis went away when she owned up to what she was resisting doing and took action to actually do it.

To be clear, I’m not saying you need to leave your CEO job and go work with orphans. I’m saying that, when in crisis, you need to take action on whatever it is that you’ve been resisting so that the new thing can emerge.

Key Question to Ask Yourself: What have you been resisting doing?

Trust and Follow One Expert or Method Until the Crisis Has Passed

There’s a time to explore options, teachers, and methods. A crisis is not the time. If you need help in navigating a particular crisis, then choose and commit to only one expert or method that you trust. Cut out any other sources of advice or guidance until you’re re-integrated on the other side of the crisis and you have the energy and capability to explore new options once again.

In a recent Ted Talk, Baba Shiv explains that having too many options, or too much conflicting advice, actually makes it less likely that you’ll achieve success.

Here’s an example. About a decade ago, I had a coaching client and he was making great initial progress. He seemed on the verge of creating a breakthrough in his life and business.

Then unbeknownst to me, he started seeing an energy healer/psychic to help him with a health condition. This “psychic” said something to him that made him question our entire approach and method together.

While we did talk it through afterward, all the momentum we had built up in this early critical phase was gone and we never got it back. We soon ended our coaching collaboration. The sad thing is that he was never able to recover and, although we remained friends, he’s still stuck in that same issue today.

I recognize that blindly trusting the wrong method or guru can also be a recipe for disaster. But the solution during a crisis isn’t to dabble. The solution is to go “all in” with the method you believe in and stick it out for a reasonable time frame. If a reasonable time has passed, and if you’re still not getting the results you’re seeking, then change to a new expert or approach. But don’t trade horses mid-race.

Key Question to Ask Yourself: Who is the one person you trust to help you across to the other side?

Summary

In his book, The Winner Within, Pat Riley writes: “Renewal always begins with destruction. The key is guiding the pain of destruction in the direction of renewal. Otherwise, the pain is useless and self-defeating.” I couldn’t agree more.

A crisis is a form of destruction of the old to make way for the new. You channel the pain of the crisis by playing to your strengths, sticking to your core values, owning up to what you’ve been resisting doing, and trusting in a worthy mentor or guide to help you get across the hard parts. If you do those things, then a crisis becomes truly liberating.

What do you think? How have you successfully navigated a crisis before?

How to Be a Genius

Last week, I was invited to speak to a group of college students at the Next Generation Summit at UCSB. I knew that most of them were probably under extreme pressure from their parents, peers, and society to go forth and “get a fricking job,” so I thought it would be fun (and helpful) to tell them the exact opposite: “Don’t get a job. Get in your Genius Zone!”

My core message is that everyone is a genius at something. If you don’t know what that is, and if you want a life with greater success, meaning, and happiness, then your mission is to go forth and find that “thing.” Once you’ve found it, then you must sacrifice to design everything in your life around it.

When someone hears this message for the first time, the typical reaction is, “OK, but what am I a genius at?” I answer this question in the talk with a simple formula: Talents + Purpose = Genius and then I give several examples of college students living this formula right now who are showing up as geniuses within their niche and making a positive impact on the world.

I, too, benefitted from giving this talk. My personal key takeaway is that there are committed and talented people in every generation. While the media often portrays “Millenials” as a spoiled, over-parented, unaware, and texting- and Ritalin-addicted bunch, I found this group to be incredibly insightful, passionate, engaged, and sincerely committed – not just to having a job, but to making a real difference. It was inspiring and reaffirming that humans are indeed very cool beings.

How about you? What do you think of the talk?