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“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 […]

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

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 […]

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?

This article is for leaders who are seeking an edge in maximizing the talents and performance of their teams.

Adam Grant, author of Give and Take: A Revolutionary Approach to Success (a must read book!), recently published a great LinkedIn article called “What’s the Common Ingredient for Team Success in Surgery, Banking, Software, Airlines, and Basketball?” I want to share it with you, along with my comments, because it’s a great illustration that success has more to do with the surrounding environment (i.e., vision and values, structure, process, and team) than with individual talent.

To get important work done, most leaders organize people into teams. They believe that when people collaborate toward a common goal, great things can happen. Yet in reality, the whole is often much less than the sum of the parts.

Many teams fail because they lack the requisite experience. If you want to perform a successful cardiac surgery, you need to bring in surgeons who have mastered the techniques. If your aim is to make good stock recommendations to investors, it would be wise to hire analysts with a long track record of star performance. If your goal is to produce high-quality software, land an airplane safely, or win basketball games, you’d be smart to rely on people who have done it before. As Jim Collins put it, we need to get the right people on the bus. But what if work experience is overrated?

How many times have you interviewed in the past year looking for “past experience” as one of the primary drivers of job fit? This is a fallacy, which I’ve written about before in “What Warren Buffet Can Teach You About Hiring”, that needs to end. Yesterday. And here’s where this gets interesting:

In a brilliant study, researchers Robert Huckman and Gary Pisano tracked more than 200 cardiac surgeons at 43 hospitals. After analyzing more than 38,000 procedures, it turned out that the surgeons didn’t get better with practice. Their patient mortality rates were no better after 100 surgeries than after the first few.

A closer look at the data revealed a fascinating pattern. The surgeons did get better as they gained more experience at a particular hospital. Each procedure performed at one hospital decreased patient mortality rates by an average of 1%. But the benefits of experience didn’t carry over to other hospitals.

The technologies weren’t any different from one hospital to another; the people were. When the surgeons left their teams behind, it was as if they were starting over from scratch without any of the benefits of practice. Practice wasn’t an individual act; it was a team process. As the surgeons worked with a core team of nurses and anesthesiologists at one hospital, they developed effective routines that leveraged the unique talents of each member.

There’s a growing movement within […]

It takes just 15 seconds to understand the basics of someone’s personality style (including your own).

Ars Technica published a great article this week “The rise and fall of AMD: How an underdog stuck it to Intel.”

The article follows the rise and fall of AMD over the years in its attempt to wrest a market leadership position from Intel (a war it was never able to win) and gives many anecdotes about the leadership style of the company founder and CEO Jerry Sanders. I want to share this article because it’s a good read and because it captures the essence of how a company behaves when a Big Innovator is at the helm.

As you might know if you’re familiar with my work, the Innovator style is one of four management styles that we all possess to some degree. You can read more about these styles (Producer, Stabilizer, Innovator, and Unifier) in Part II of my book Organizational Physics: The Science of Growing a Business.

Our best Innovator qualities are our ability to anticipate change and to be imaginative, charismatic, and inventive. Without the Innovator force, we would have no ability to adapt to changes in our environment and we would quickly become irrelevant or extinct.

When the Innovator force is really high, we call it a “Big Innovator” or “Big I.” The Big I shows up in some predictable and telling ways, and this description of Sanders is a perfect example:

On June 10, 2000, Advanced Micro Devices (AMD) wanted to party—and party big. The company’s CEO, Jerry Sanders, arranged to rent out the entire San Jose Arena (now called the HP Pavilion) and then paid big bucks to bring in Faith Hill and Tim McGraw, the husband-and-wife country music superstars.

Employees “could bring anybody, your wife, your kids, your friends—it was big doings. There were celebrations, gifts and awards,” recalled Fran Barton, who served as AMD’s chief financial officer from 1998 to 2001. The boss even got in on the fun. “[Sanders] was on a high wire, he did a unicycle ride. It was totally Hollywood. He could really put on a show when he wanted to put on a show.”

And why not celebrate in style? AMD’s successful Athlon chips—Ars named the Athlon its “CPU of the Year” in 1999—had finally put the screws to archrival Intel, and in 2000 the company earned nearly $1 billion in profits.

By 2005, years of solid chip design and technological execution had the company walking with a swagger, as seen in marketing stunts which challenged Intel’s then-current server processors to a “dual-core duel.” Nowhere was this attitude more apparent than AMD’s 2005 lawsuit against Intel for anti-competitive business practices.

When a Big Innovator feels momentum, there is no greater joy to them than rallying people to […]

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

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

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

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

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

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

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

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

A great example of this principle in action is Square, a great disruptive force in the mobile payments space. Notice that Square DID NOT go to Visa, Mastercard, and Paypal to find the initial product market fit. They went to taco truck vendors, independent artists, and others SOHO’s who were NOT served by the status quo. If CEO Jack Dorsey did go to Visa or Pay Pal to practice the Lean Startup methodology and find the product market fit, he would have […]

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

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

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

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

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

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

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

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

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

He believed deeply in singing. His players sang before games, after games. Sometimes they sang to the mock direction of the coach’s cane. Always they learned to sing without embarrassment, for it had become uncool to refrain from the refrains. For his 300th win in September 2003, an offensive lineman led the team in James Taylor’s “Steamroller.” During warmups for the NCAA Division III national championship game […]

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

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

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

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

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

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

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

Health is a function of vitality over entropy.

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

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

Good fuels are those that the body/mind can easily convert into new energy and that don’t increase entropy in the system. Bad fuels are those that the body and mind can’t convert easily, increasing entropy over time. […]

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

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

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

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

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

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

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

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

How do I know? Two reasons:

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

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

2) Leading with Who is what also allows the business to successfully navigate what in his Ted Talk Sinek calls the “Law of Innovation Diffusion.” This law is a term used to describe how innovations spread in the marketplace through a series of […]

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

B = f(P,E)

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

Makes sense, right?

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

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

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

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

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

The Stanford Prison Experiment

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

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

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

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

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

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

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

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

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

The four forces of Organizational Physics: PSIU.

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

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

In a nutshell:

• Sniff is an Innovator style. He’s got the ability to sense and respond to changes happening in the environment much more quickly than the other […]
  

Every time you issue an order to someone, you deplete your reserve of authority and you also deplete their reserve of power. How should you give an order to your subordinates? It’s pretty easy actually. Don’t.

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

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

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

Fast? Yes. Effective? No.

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

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

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

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

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

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

Here’s an example. Think of the last time you were issued an order by an authority figure. Your reaction might have easily been something like, “What a jerk! He’s not even seeing the situation […]

Don’t measure yourself for golden handcuffs or you might just get stuck wearing them. A Little Book of f-laws is a free collection of 13 common sins of management by management consultants Ackoff, Addison, and Bibb.

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

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

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

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

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

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

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

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

She asked how he would know when he was successful. He couldn’t answer. He just kept on striving without knowing what he was striving for. But I agree that, if they get as far as measuring, the measurement is usually quantitative and limited to how much they earn. […]

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

Two things that I love about this chart:

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

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

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

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