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The Universal Success Formula

If you want to understand how something really works and what makes it successful, it’s not enough to break it down into its individual components. Instead, you need to look at how it operates as a system. By definition, a system is a series of interacting, interrelated, or interdependent elements forming a complex whole. And there’s absolutely nothing you can think of that is not a system. For example, you’re a system (specifically, a complex adaptive or living system). You have a body, which is a physical system comprised of other systems (immune, circulatory, digestive, etc.). If we were to look closely at any one of these, we’d see that they’re comprised of even smaller systems. And of course, your physical system is also an element in a larger system. You have a mental and an emotional system; you’re part of a family system, a community system, an economic system, a government system, an ecological and planetary system, and so on. Everything is a system.

When it comes to the study of what makes something successful, what we’re really asking is what causes a complex adaptive system to fail or succeed. Success simply means that the system (e.g., you, your family, your company, or whatever you choose to identify as the system) attains a desired goal. Failure means it does not. Winning the Super Bowl…being happy…earning a billion dollars – as long as you can measure it quantitatively or qualitatively, it’s a valid definition of success. And because everything, large or small, is a system, we can use the same universal principles to understand if it’s likely to fail or succeed. That’s pretty cool.

What actually does cause any system to fail or succeed? The answer is System Energy Management. This means just what it sounds like: System Energy Management defines how energy behaves within a system.

The Universal Success Formula

Entropy. It’s a bitch. Two laws of physics dictate how energy is used within a system. They’re called the first and second law of thermodynamics. Engineers use the laws of thermodynamics to design everything from buildings and bridges to microchips and spaceships. We can also use these same laws to understand how energy behaves within an organization.

The first law of thermodynamics is called “Conservation”. It tells us that, at any given point in time, the potential energy available to a system is finite. Whether we’re referring to your family or your business, this has a finite amount of potential energy available to it. In order to get new energy, the system must acquire it from the surrounding environment — just like you must get food from the refrigerator or your business must get sales from its customers.

The second law of thermodynamics is called “Entropy”. It […]

By |2021-05-18T05:50:30-07:00February 20th, 2012|Articles|2 Comments

The Misaligned Organization and What to Do About It

In 1993 I was a college student in St. Paul, Minnesota. I drove a twenty-year-old canary yellow Toyota Corolla with bald tires, a broken heater, and a misaligned chassis. Because my spending priorities then were the necessities of college life (pizza, beer, girls, and rent), I never invested in making the car safe to drive.

Navigating that car on the icy roads of thirty-below Minnesota winters required a certain ability to go with the flow. But eventually, my refusal to to replace the tires and align the chassis caught up with me. Driving late one winter night … it’s easy to guess what happened. Wipe out. Crash. Car totaled.

Thankfully, no one was hurt.

I share this story because it’s easy to tell when a car is misaligned. The car squeaks, there’s friction and a loss of power, and it’s difficult to steer where you want to go. Similarly, if you know what to look for, it’s easy to tell when your business is misaligned. If you act early on, you can avoid a crash and even improve performance fast.

What It Means to Have an Aligned Organization

Well after I had sold that old Toyota, I received some more equally important lessons on the value of organizational alignment. In my late twenties to mid-thirties, I personally led two companies into compound annual growth rates (CAGR) exceeding 5,0000% per year. From startup to $4M and $12M in two and four years respectively. While this may be chump change to some entrepreneurs, these periods of rapid growth were priceless learning for me. They also provide a valuable lesson that’s applicable to companies of all sizes and at all lifecycle stages.

The surprising thing is that, in order to get that kind of exponential growth, I didn’t have to fight, cajole, or struggle for years. Instead, the leadership team and I created the right internal and external alignment for growth to occur. Because we got the alignment right, the businesses executed extremely fast. The same lesson holds true for you. If you can get the internal and external alignment right for your business, you’ll dramatically increase its probability of thriving and executing very quickly. I’m not guaranteeing 5,000% CAGR. In fact, I’m not even recommending you try for that — it’s much wiser to shoot for more sustainable rates of growth. But the act of creating alignment is essential to every business. Get it right and your company can execute swiftly and powerfully. Get it wrong and you won’t get back on the growth curve until you do get it right. Alignment is the key.

At the most basic level, “external alignment” means that the company’s unique capabilities are well integrated with growing market opportunities. […]

By |2021-05-18T05:21:42-07:00February 10th, 2012|Articles|2 Comments

The Motivation Myth: Or, How to Get Your Employees to Work Harder, Faster, Smarter

I received a call the other day from a high tech CEO looking for advice. His company is seven years old, brings in about $10M in revenue, and serves a very narrow niche in silicon wafer manufacturing. During the past year, his company pre-sold a new product concept to one of their largest customers. This new product is very innovative and promises to open up a brand new market and transform the company into a $100M-a-year business in three years. The product is due for its beta implementation in six months and you can imagine that the CEO has a lot riding on the outcome.

The reason for his call was that he was feeling a lot of anxiety and frustration. His biggest area of concern was that his employees didn’t seem to “get it.” They weren’t working hard enough, didn’t seem truly motivated, took long lunch breaks, went home early, and were making bone-headed mistakes – mistakes that the CEO (who is very technically savvy himself) would have to constantly step in and fix. “What should I do?” he asked me. “What will motivate them to perform faster, better, and smarter? Should I offer more stock options? Cash bonuses? Fire some people and set an example?” “No,” I told him, “None of those things are going to really solve your problem. If you want higher performance, the solution is to quit trying to motivate your employees and find out what already motivates them.”

The Myth of Motivation

Quit trying to motivate people. There’s absolutely nothing you can do to motivate others. People are already intrinsically motivated, engaged, and interested. In fact, when you try to motivate people by offering incentives, threats, bribes, and rewards, you’re actually creating a disincentive to work and lowering job satisfaction and productivity.1.

If you doubt that people are naturally motivated, or perhaps you’re thinking of someone who doesn’t appear to be engaged, creative, or interested at all, I challenge you to look a little deeper. When you do, you’ll see that everyone is highly engaged, motivated, and proficient at something. Here’s one small example. I have a friend whose ten-year-old son is really struggling in school. He’s a sweet kid but at school he acts listless and disinterested and seems unable to keep up with his homework. Last year, the school principal called the parents in and explained that their son was going to be asked to leave the school unless some drastic changes took place. Based on the recommendation of the school counselors, the parents placed the child on medication, hired a tutor, put him into therapy, and created a series of incentives and punishments around his school work. So far, the boy […]

By |2021-05-18T05:22:29-07:00February 6th, 2012|Articles|2 Comments

Mastering Team-Based Decision Making

Every business has mass, which is a measure of its resistance to change. The challenge in getting an organization to change direction is the fact that its mass isn’t neatly self-contained. Rather, it’s scattered throughout its people, systems, structures, and processes – and the collective inertia causes resistance to change. In order to get the organization to execute on its strategy, you’ve got to get the mass contained and headed in one direction.

Having aligned vision and values, as well as an aligned organizational structure, is the first step. If you have misalignment in these areas, then no matter what, you’re not going to get very far. At the same time, alignment in vision, values, and structure alone won’t cause the business to move. They just help to hold the mass together and keep internal friction low. Making the organization come alive and move quickly in a chosen direction requires that two things be done well: making and implementing decisions. In fact, the secret to organizational momentum lies in continually making good decisions and implementing them quickly.

The Most Important Process in Your Business

Every business relies on multiple processes (sales, customer service, finance, product development, marketing, etc.). These can be highly visible or nearly invisible, organic, haphazard, detailed, flexible, constant, or changing and either a boon or a burden. When a process is performing well, it allows the work to get done better and faster. When it’s not, you feel like you’re swimming upstream.

While your business has many different processes – some working well and others maybe a total clusterf#@*k – it’s the process of decision making and implementation that’s most critical to your success. Why? Because at the most fundamental level, a business is simply a decision-making and implementation system. Think about it — every problem and opportunity require a decision to be made (and yes, deciding to do nothing is a decision too) and a solution to be implemented. If the business does this well — if it continually makes good decisions and implements them fast — then its momentum will increase and it will be successful. If it does the opposite — if it makes bad decisions, or if it makes good decisions but implements them slowly, or my personal favorite, makes bad decisions and implements them quickly — then it will fail. Just as a haphazard sales process results in lost sales, poor fulfillment, and an inability to scale, a poor decision-making and implementation process results in poor decisions, flawed implementations, and an inability to scale the business.

What’s ironic about the process of decision making and implementation is that most businesses don’t even think of it as a process. (In case you’re asking… decision making and implementation are not two distinct things. They’re […]

By |2021-05-18T05:23:17-07:00January 24th, 2012|Articles|Comments Off on Mastering Team-Based Decision Making

The 5 Classic Mistakes in Organizational Structure: Or, How to Design Your Organization the Right Way

Is your organization designed to be a rocket or a parachute? If I were to ask you a random and seemingly strange question, “Why does a rocket behave the way it does and how is it different from a parachute that behaves the way it does?” You’d probably say something like, “Well, duh, they’re designed differently. One is designed to go fast and far and the other is designed to cause drag and slow an objection in motion. Because they’re designed differently, they behave differently.” And you’d be correct. How something is designed controls how it behaves. (If you doubt this, just try attaching an engine directly to a parachute and see what happens).

But if I were to ask you a similar question about your business, “Why does your business behave the way it does and how can you make it behave differently?” would you answer “design?” Very few people — even management experts — would. But the fact is that how your organization is designed determines how it performs. If you want to improve organizational performance, you’ll need to change the organizational design. And the heart of organizational design is its structure.

Form Follows Function — The 3 Elements of Organizational Structure & Design

A good design supports its purpose. There’s a saying in architecture and design that “form follows function.” Put another way, the design of something should support its purpose. For example, take a minute and observe the environment you’re sitting in (the room, building, vehicle, etc.) as well as the objects in it (the computer, phone, chair, books, coffee mug, and so on). Notice how everything serves a particular purpose. The purpose of a chair is to support a sitting human being, which is why it’s designed the way it is. Great design means that something is structured in such a way that it allows it to serve its purpose very well. All of its parts are of the right type and placed exactly where they should be for their intended purpose. Poor design is just the opposite. Like a chair with an uncomfortable seat or an oddly measured leg, a poorly designed object just doesn’t perform like you want it to.

Even though your organization is a complex adaptive system and not static object, the same principles hold true. If the organization has a flawed design, it simply won’t perform well. It must be structured (or restructured) to create an design that supports its function or business strategy. Just like a chair, all of its parts or functions must be of the right type and placed in the right location so that the entire system works well together. What actually gives an organization its “shape” and controls how it performs are three […]

By |2021-05-18T05:25:49-07:00January 9th, 2012|Articles|16 Comments

The Physics of Fast Execution

Let’s do a thought experiment. Imagine that you’re standing in the middle of a racquetball court surrounded by four walls. At your feet is a basketball. First, notice how the basketball just tends to sit there. That’s called inertia. In order to get the ball to do something, you have to apply a force to it. In this case, you give it a kick and the ball rolls along the floor, bounces off the wall, and careens in another direction before coming to rest again. Next, you walk and retrieve the ball and bring it back to the center of the court, place it on the floor, and this time, you give it a really hard kick. What happens? The ball rolls even faster across the floor, bounces off the wall with more power, and travels further in a new direction than the first kick. In essence, you just experienced all three of Newton’s laws of motion.

Newton’s three laws of motion will shed light on the speed and direction of your organization. If you want to move your organization forward quickly in a chosen direction, you should understand these laws and how they apply to business execution. Put another way, if you want to be successful, work with – not against – the physics.

The First Law of Motion

Newton’s first law of motion is about inertia. Inertia is a recognition that an object will tend to do what it’s been doing, unless acted upon by an imbalanced or outside force. In our thought experiment, that’s why the ball tends to stay at rest in the middle of the floor until you do something, like give it a kick. Inertia works in both ways, however. Once the ball is in motion from the kick, it tends to stay in motion too, until an outside force such as gravity, friction, or a wall acts upon it. Once the ball comes to rest, it will remain at rest until it is acted upon by another force.

Obviously, an organization isn’t a simple object like a ball. But you can still use the lens of inertia and see how it impacts an organization. Basically, because of inertia, an organization will tend to continue to do what it’s been doing unless acted upon by another force. That is, if your organization is slowed, stymied, or stuck, it will continue to act that way unless you do something to change it. And the greater the inertia, the greater the effort required at getting it to move in a new direction. On the other hand, if your organization is currently experiencing a lot of momentum, then like a train roaring down the tracks, it will be hard to slow […]

By |2021-05-18T05:26:49-07:00December 13th, 2011|Articles|1,048 Comments

The Unifier Style


The Unifier is primarily focused on who is involved in a situation and the interpersonal dynamics of the group. To get an immediate sense of the Unifier’s qualities, think of a very likeable, gregarious, warm people person. That’s a Unifier. If you put this person in a rowboat and say “Row!,” what will they do? Well, they’ll want to know where everyone else is! You can’t expect them to row all by themselves. They’ll want a team of people, ideally their friends, to climb in the boat and row together.

Unifiers are excellent communicators and team builders and are especially good at listening and empathizing. They tend to make everyone feel uplifted, listened to, and respected, thus improving collaboration and loyalty in the workplace. They always have time for a chat and seem genuinely concerned with how you’re doing and how they can help you. They’re excellent at smoothing things over and intuiting how someone else is really feeling. For example, if a Producer and a Unifier went on a sales call together, the Producer would only interpret what the client was actually saying (the literal level) while the Unifier could tell exactly how the client was feeling beneath the words (the non-literal and emotive levels). 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 would not be able to act as a whole.

The Big U

When the Unifier trait is extreme, we call it a Big U. A Big U is like a politician who always seeks to curry favors and plays the political winds to his or her advantage. One the one hand, Big U’s value and leverage personal relationships; on the other, their words or actions can’t really be trusted because their loyalty will shift with the prevailing political winds. The Big U comes to work when expected and leaves when expected. If they have an office, it’s probably very warm and inviting. Big U’s love to have meetings because this gives them a chance to connect with others and gauge where they really stand on an issue. During a meeting, they prefer to sit and listen while others do the talking. Their biggest frustration is when others won’t engage with them in a dialogue, shut them out, or keep up a stoic guard. Their common complaint is that others aren’t working well together and thinking of the team.

The answer to most problems for a Big U is to gather input from others and process feelings – both their own and others’. This takes time and that’s why a Big U tends to […]

By |2021-05-18T05:30:11-07:00November 27th, 2011|Articles|1,017 Comments

The Four Styles of Management


What is your work style and how does it interact with other styles? Who’s on your team and how can you help them to reach a higher level of performance? And what about the style of your boss or your spouse – how can you best influence him or her so that you both get what you desire? These are all million-dollar questions. The answers can be found in understanding how the four forces — Producing, Stabilizing, Innovating, and Unifying — operate within each of us.

Each of us expresses a certain work style – understood in its broadest sense as a mode of operating in the world – that reflects our own unique combination of the Producing, Stabilizing, Innovating and Unifying Forces. All four forces are present in each of us in some form, but usually one or two of them come to us most naturally. In addition, when one force is relatively strong, one or more of the others forces will be relatively weak.

While we may modify our general style depending on circumstances, stepping out of our natural strengths costs us more energy than operating within them. For example, imagine a highly innovative entrepreneur who is forced to do bookkeeping for a week. Sure, she may be able to do it, but she’s also going to feel extreme tedium, effort, and a loss of energy as a result. It’s because of this energy cost that most of us express fairly consistent characteristics that reflect our usual way of managing. Effective management therefore requires understanding your own style and its relative strengths and weakness, as well as that of the people with whom you work and interact.

The chart below shows how each basic work style compares to the others. It compares the pace (slow to fast) of how a style tends to act, think, and speak; the time frame (short view to long view) of how a style tends to perceive a situation, trend, or idea; the orientation (process-oriented to results-oriented) of how a style tends to relate to people and situations; and the approach (structured to unstructured) of how a style tends to operate in daily tasks.

The 4 Styles. Each of us has some combination of the Producer, Stabilizer, Innovator, and Unifier styles (PSIU)

The Producer

The Producer (P) has a high drive to shape the environment and is focused on the parts that make up the system. Thus, this style moves at a fast pace, takes a short-term view, is results-oriented, and follows a […]

By |2021-05-18T05:33:27-07:00November 9th, 2011|Articles|1 Comment

The Stages of the Execution Lifecycle


Navigating your company up the execution lifecycle 1 and keeping it in optimum shape is a great challenge. This article will show you how to do it successfully.

The stages of the execution lifecycle become easier to understand with a little pattern recognition. Basically, every business must shape or respond to its environment and it must do so as a whole organization, including its parts and subparts. If it doesn’t do this, it will cease to exist. Recognizing this, we can call out four basic patterns or forces that give rise to individual and collective behavior within an organization. They are the Producing, Stabilizing, Innovating, and Unifying (PSIU) forces. Each of these expresses itself through a particular behavior pattern. The combination of these forces causes the organization to act in a certain way.

Just like the other lifecycles, the execution lifecycle exists within a dynamic between stability and development. The basic stages of the execution lifecycle are birth, early growth, growth, and maturity and, from there, things descend into decline, aging, and death. The focus within the execution lifecycle should be to have the right mix of organizational development and stability to support the stages of the product and market lifecycles. That is, the lifecycle stage of the surrounding organization should generally match the lifecycle stage of the products and markets. If it’s a startup, the surrounding organization is the entire company. If it’s a Fortune 500 company, this includes the business unit that is responsible for the success of the product as well as any aspects of the parent organization that influence, help, or hinder the success of the product.

The surrounding organization should act a certain way at each stage of the product/market lifecycle, as you’ll see below. Note that, when a force is or should be dominant, it will be referenced with a capital letter:

• When piloting the product for innovators, the company should be in birth mode and be highly innovative and future-oriented (psIu)
• When nailing the product for early adopters, the company should be in early growth mode and be producing verifiable results for its customers (Psiu)
• When beginning to scale the product for the early majority, the company should be standardized and operations streamlined for efficiency (PSiu)
• When fully scaling the product for the early majority, the company’s internal efficiencies should be harnessed, as well as the capability to launch new innovations and avoid the commodity trap (PSIu)
• When […]

By |2021-05-18T05:37:49-07:00October 28th, 2011|Articles|3,857 Comments

Lifecycle Strategy: Product, Market, Execution Fit

Everything has a lifecycle. It is born, it grows, it ages, and it ultimately dies. It’s easy to spot a lifecycle in action everywhere you look. A person is born, grows, ages, and dies. So does a star, a tree, a bee, or a civilization. So does a company, a product, or a market. Everything has a lifecycle.

All lifecycles exist within a dynamic between system development and system stability. When something is born, it’s early in its development and it also has low stability. As it grows, both its development and stability increase until it matures. After that, its ability to develop diminishes over time while its stability keeps increasing over time. Finally, it becomes so stable that it ultimately dies and, at that moment, loses all stability too.

That’s the basics of all lifecycles. We can try to optimize the path or slow the effects of aging, but ultimately every system makes this progression. Of course, not all systems follow a bell curve like the picture above. Some might die a premature death. Others are a flash in the pan. A few live long and prosper. But from insects to stars and everything in between, we can say that everything comes into being, grows, matures, ages, and ultimately fades away. Such is life.

What do the principles of adaptation and lifecycles have to do with your business strategy? Everything. Just as a parent wouldn’t treat her child the same way if she’s three or thirty years old, you must treat your strategy differently depending on the lifecycle stage. And when it comes to your business strategy, there are actually three lifecycles you must manage. They are the product, market, and execution lifecycles.

  • The product lifecycle refers to the assets you make available for sale.
  • The market lifecycle refers to the type of customers to whom you sell.
  • The execution lifecycle refers to your company’s ability to execute.

In order to execute on a successful strategy, the stages of all three lifecycles must be in close alignment with each other. If not, like a pyramid with one side out of balance, it will collapse on itself and your strategy will fail. Why? Because aligning the product, market, and execution lifecycles gives your business the greatest probability of getting new energy from the environment now and capitalizing on emerging growth opportunities in the future. (I discussed in a previous post that the goal of any strategy is to get new energy from the environment, now and in the future.) As you’ll see, aligning all three lifecycles also decreases your probability of making major strategic mistakes.

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By |2021-05-18T05:39:04-07:00October 18th, 2011|Articles|1,050 Comments

Success Goes to the Best Adapted

It’s not survival of the fittest. Success goes to the best adapted.

Every potential business strategy has the same ultimate aim. This is true whether you are trying to sell your business, go IPO, enter a new market, raise venture capital, hire top-notch talent, fend off competitors, manage increasing regulations, win an industry award, or create the next hot startup. It doesn’t matter what the strategy is — the goal is always the same. This goal is also independent of time or context. It’s just as true in recessionary times as it is in boom times. It was true one million years ago and it will be true one million years from now. So what is this goal of strategy?

The ultimate goal of any strategy is to acquire new energy from the surrounding environment now and in the future.

The evidence for this comes from the most fundamental tenet of evolution: adaptation. Before we continue, let me clear something up about evolution. When most people think of evolution they think of Darwin. And when people think of Darwin, they usually recall the term “survival of the fittest.” However, Darwin himself never used that term. Well, that’s mostly true … Darwin only used the term late in his life to refute the notion that success goes to those most fit. Instead, what Darwin made clear is that survival (and prosperity for that matter) goes to those most adapted to their environment. If there’s good adaption or integration with the environment, then the species will flourish. But if the environment changes and the species can’t adapt, it will fail. That’s why you’re reading this – and not some brontosaurus.

Why is adaptation with the environment so important? Because that’s where new energy comes from. Without new energy, a system will perish. For example, if a man is stranded on a desert island, unless he can find new sources of energy like food and water, he’s quickly going to die. Just like a business with no new sales will quickly die.

In Organizational Physics, “energy” is simply a measure of available or stored power. In a business this includes all forms of available or stored power including money, resources, and market clout. Basically, a good definition of energy is anything useful and desirable that can be made productive. In fact, begin to think of your business as an energy conversion system. For example:

Money is really just a form of stored energy. It’s used to make the exchange of products and services (other forms of stored energy) more efficient. But money is just a tool. If one business wanted to trade its pigs for some cows in barter, both the pigs and cows would be similar energy sources too.

Resources include power sources that the organization has available to […]

By |2021-05-18T05:40:15-07:00October 14th, 2011|Articles|1,063 Comments

Bam! Ninja surprise! – How to Win Friends and Influence People in the Social Media Era

Two weeks ago, I switched newsletter providers to MailChimp. MailChimp is known as a low-cost SOHO email provider with cheeky humor and copious references to Ninjas.

Over the past few years, they’ve been getting a lot of buzz and customer goodwill. Curious to give them a try, I signed up, dropped my old provider, and hoped for a smooth transition. Setting up my campaign was straighforward. It’s when I pressed “Send” that the trouble started. The MailChimp interface promptly said: “Sending: Started at Jan 30, 2011 10:57 pm” — and there it hung for over an hour.

I re-queued the campaign and tried again. Same problem. Frustrated, I emailed their customer service. A day later, I received a response. The customer service rep politely informed me that they weren’t sure what was causing the problem and the development team would have to investigate. Two days later, I received another email saying the development team wasn’t sure what the problem was either, that they canceled the email in the queue, and that I should try again. Like Groundhog Day, I tried again and got the same problem.

Now feeling very frustrated, I jumped on Twitter and broadcast to the world, “Anyone else think that MailChimp sucks? I’ve been stuck in queue for 72 hours. Is it growing pains?” About 3 minutes later, I received a reply via Twitter from MailChimp. We traded tweets back and forth and they provided some basic diagnostics — all over again. When the problem couldn’t be solved, they asked me to contact customer service using “online chat perhaps?” Now fuming, but deciding to give it one more try, I hopped onto a MailChimp online chat.

[…]

By |2021-05-18T05:45:18-07:00February 14th, 2011|Articles|Comments Off on Bam! Ninja surprise! – How to Win Friends and Influence People in the Social Media Era