Tag Archives for " Management "
@@@@ (4 out of 5)
Bloomberg reports that 8 out of 10 new businesses fail within the first 18 months — and most big, established companies have trouble generating truly innovative new products. So, the process of introducing innovation to the market is pretty much hit or miss, whether the engine is a startup or a Fortune 100 company.
Eric Ries wants to take the guesswork out of innovation. His method, featured in his seminal 2011 book, The Lean Startup, and in his website and consulting practice, is built around a technique well known to direct marketers: the A/B split test. In marketing, a mailer will test two variations of a mailing package, an offer or suggested gift, or two market segments, keeping all other variables constant. If the rules of statistics are carefully observed, the result, favoring either A or B, will in theory be replicable when mailing in larger quantities. Ries applies this approach, which he calls “experimenting,” in what appears to be a loosey-goosey fashion. (At one point in his book, he clearly implies that the tests he runs, comparing product features, market segments, positioning, or other testable elements, are less than statistically rigorous. Somehow, though, the companies he’s helped to start or advised seem to have made a lot of money with this approach, so he must be doing something right.)
In fairness, Ries’ Lean Startup method involves a great deal more than testing. He advocates a complete rethinking of the way business is organized and managed and the ways it collects and interprets data. Small, cross-functional teams formed to build and sell innovative products use testing on “small batches” of prospective customers to determine which tweaks on the product or its marketing will optimize sales — or whether the product itself or its use must be entirely re-thought. Systematic testing produces “validated learning” that enables each team to avoid waste such as the hundreds of work-hours that might be involved in producing a finished product by instead testing a “Minimum Viable Product” that will only be finished on the basis of repeated testing. In other words, Ries maps out his own route to the “learning organization” described by Peter Senge in his own seminal book, The Fifth Discipline, more than two decades ago.
Ries’ cross-functional teams are not modeled on the “skunk works” familiar to students of business history. Unlike the original unit of Lockheed that was sequestered in a secret location to design aircraft such as the U-2 spy plane and the F-22 Raptor, the cross-functional teams in a startup company — or themselves constituted as “startups” within a big business — are neither secretive nor elitist. What they have in common with Lockheed’s Skunk Works is independence, as they’re empowered to make all decisions on their own without consulting management.
The core concept behind the Lean Startup approach is that a newly launched enterprise exists only “to learn how to build a sustainable business. This learning can be validated scientifically by running frequent experiments [i.e., tests] that allow entrepreneurs to test each element of their vision. . . The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.” A pivot, in Ries’ lexicon, is a shift of course away from the entrepreneur’s original vision — for example, deciding that a company’s core strengths can be more productively and profitably employed in a business-to-business enterprise rather than marketing directly to consumers.
The Lean Startup (the book) is, in a fundamental sense, an introductory guide to Ries’ thinking. However, his prescriptions are often vague — for instance, he writes about the importance of testing in “small batches” but never specifies how small, which is a significant question in statistics — so a real-world entrepreneur would be hard-pressed to apply this method without help. That, it appears, is the function of the many meetups, blogs, online communities, and a wiki that have sprung up around the world for entrepreneurs to share their experiences with the Lean Startup approach. Of course, if you can afford him, you may be able to hire Eric Ries himself.
Ries draws much of his inspiration from the Japanese Lean Manufacturing method pioneered at Toyota — if anything, the “secret” of Toyota’s successful rise from a small company to the world’s largest automobile manufacturer. He has also read widely in the management literature, delving into the work of Frederick Winslow Taylor (The Principles of Scientific Management), W. Edwards Deming (quality control), Alfred Sloan (My Years with General Motors), and Peter Drucker (The Practice of Management) as well as contemporary writers such as Steve Blank (customer development) and Clayton Christensen (The Innovator’s Dilemma).
The Lean Startup is strong on content but weak on presentation. The author appears to be too much in love with his own jargon — there seem to be dozens of proprietary words and phrases he repeats over and over — and his writing style is less than compelling. He even makes occasional grammatical errors. Nonetheless, I recommend this book to anyone who is starting, or even thinking of starting, a new business. The Lean Startup contains a great deal of wisdom.
@@@@@ (5 out of 5)
At his best, Christopher Buckley writes breathtakingly hilarious novels. God Is My Broker is one of them.
However, if you’re a devotee of Deepak Chopra, Tony Robbins, Stephen Covey, Dale Carnegie, or one of the many other high-profile self-help gurus who have streaked across the American firmament over the past century, you may not laugh. But who knows? Since Buckley (born a Catholic) takes on the Catholic Church with equal verve, you might enjoy the book, anyway.
In God Is My Broker, a certain Brother Ty has chucked a career on Wall Street — a singularly unsuccessful one, if the truth be told — and become a monk in an upstate New York monastery called Cana dedicated to the teachings of a masochistic saint. Unfortunately, Cana is on the ropes. Its source of revenue — sales of a uniquely awful wine called Cana Nouveau — has, shall we say, dried up. (Cana Nouveau is so bad that the Vatican blames a serious setback to the health of the Pope to a sampling of the stuff sent as a gift from Cana.) To reverse the monastery’s desperate financial troubles, Brother Ty decides to let God be his broker, looking for buy and sell signs in his breviary in combination with current business rumors. Meanwhile, the Abbot turns to Deepak Chopra, Tony Robbins, and their brethren for guidance. The result of these twin devotional habits are the 7-1/2 Laws of Spiritual and Financial Growth, which are conveniently spelled out as the story is told.
OK, so, you’ve gotta read it to make any sense of this proposition. And, unless you’re in thrall to a latter-day guru, you’ll probably enjoy it. A lot.
I’ve previously reviewed Buckley’s Little Green Men, Florence in Arabia, The White House Mess, and They Eat Puppies, Don’t They?, which I regard as a true classic of political satire. Before starting this blog, I also read and enjoyed immensely two other Christopher Buckley novels: Boomsday and Thank You For Smoking, which is probably his best-known work because of the movie of the same name.
You might also be interested in My 15 favorite funny novels.
@@@@@ (5 out of 5)
One of my most vivid memories of the dozens of Social Venture Network (SVN) conferences I’ve attended over the years was seeing Ben Cohen walking into the dining hall in 2000, in tears over the sale of Ben & Jerry’s to Unilever. I went over to hug him — that’s the sort of thing you do at SVN conferences — and as he sobbed I said something stupid like “Look at it this way, Ben. You walked away with a s**tload of money.” ($41 million, actually.) Ben was not consoled.
As I recall, I first saw Ben Cohen sitting in a circle at an SVN conference in 1991. (Anita Roddick was sitting next to me, literally bouncing up and down, impatient to speak.) Not to put too fine an edge on it, I was star-struck. We didn’t speak then, but within short order I found opportunities to ask Ben about some of the innovations he’d introduced to Ben & Jerry’s to advance social justice. I learned a great deal from him, with profound results for my company when I later put those lessons into action.
In the ensuing years — SVN’s four-day conferences were held twice annually — I got to know Ben as a person rather than a star. He invited me to join him on the board of his organization, One Percent for Peace, and I became engaged in the negotiations to merge that small venture into Business for Social Responsibility, of which we’d both been co-founders in 1992 (along with a cast of dozens). At one point, believe it or not, this marketing genius even hired me to do some marketing work for his company’s huge nationwide campaign in support of the Children’s Defense Fund. Much later, I felt comfortable enough with Ben that I was able to talk him into putting his name as my coauthor on a book I was writing for SVN, published in 2006 as Values-Driven Business: How to Change the World, Make Money, and Have Fun.
Despite this unusual degree of access to Ben, and strong relationships with a number of mutual friends, I wasn’t aware of what had really happened in the tumultuous days leading up to the sale of the company, much less in the thirteen years that followed. None of the several books I’d read about Ben & Jerry’s had helped at all. Now I believe I know . . . well, a lot, though certainly not everything, thanks to Brad Edmondson’s excellent new book, Ice Cream Social. Edmondson’s subtitle, The Struggle for the Soul of Ben & Jerry’s, is right on target, melodramatic though it may seem at first glance.
Much of the author’s information and contacts came from Jeff Furman, who, little known outside, was effectively Ben and Jerry’s third partner in founding the company. In fact, factoring in both Ben’s and Jerry’s long absences — Jerry through several years in the 1980s, and both of them through most of the 2000s — Jeff is in all likelihood the only person (at least at a senior level) who has stayed with Ben & Jerry’s throughout its history. A board member for many years now, he has served as chair since 2010. Jeff is fiercely dedicated to social and economic justice — and a nice guy to boot.
Ice Cream Social details Ben, Jeff, and Jerry’s halting journey through the 1980s toward shaping the three-part mission that the company has been known for since 1988: making the best ice cream in the world; supporting causes that promote economic, social, and environmental change; and taking into account all the company’s stakeholders when making business decisions. Ben publicly called this the “double bottom line.” Within the company, and in Ice Cream Social, the concept is termed “shared prosperity.”
For a quarter-century, Ben & Jerry’s has been an icon of socially responsible business — a movement that the company was a leading factor in creating — but through much of the decade following its sale in 2000 the company fell far short of its exemplary performance in the last century. Clueless executives placed in charge by Unilever progressively whittled away at all three pillars of the mission, deliberately lowering product quality, getting in the way of the social mission, and shoveling economic benefits toward the outsiders brought in as executives. Ice Cream Social is most compelling when telling the story of how Jeff Furman and his allies on the company’s board started fighting back against Unilever in 2007.
Aggressively holding the parent company to the precise terms of the extraordinary sales agreement Ben and his colleagues had negotiated, and holding the threat of a major lawsuit over their heads, the Ben & Jerry’s board ultimately succeeded in winning over Unilever’s top management — and, in the process, embedding some aspects of its uniquely progressive mission into the priorities of a $68 billion global conglomerate, the world’s third largest food company (after Nestle and Pepsico). Today, Ben & Jerry’s is once again a sparkling example of how a company under brilliant and visionary management can realize big profits not despite an aggressive social and environmental mission but because of it.
Though every company is unique, and the Ben & Jerry’s story is far more unusual than most, there are lessons to be learned from the company’s experience.
For starters, the differences in perspective between social entrepreneurs like Ben Cohen and Jerry Greenfield on the one hand and top executives at most large public corporations are profound. They can’t be bridged simply by briefings, educational sessions, or show-and-tell exercises. The differences lie on the level of values. B Corporations like Ben & Jerry’s express the personal values of their founders. Most big companies are still mired in the narrow-minded focus of Wall Street on short-term financial performance.
The hard bargaining between Ben & Jerry’s and Unilever, and the rocky relationship between the two companies after the sale, makes clear that good intentions are far from enough to preserve the unique character of a socially responsible company. The extraordinary sales agreement — a year and a half in the making — contained tough, enforceable provisions that made it a legal requirement for Unilever to operate Ben & Jerry’s in a manner that would maintain its unique and quirky character. Even so, the company was nearly driven into the ground over its first seven years as a subsidiary of Unilever, and it took extraordinary courage and disciplined action by Jeff Furman and others on the Ben & Jerry’s board to confront the reality and hold Unilever’s feet to the fire: genuine corporate responsibility doesn’t come easily in a classical corporate environment.
This book is included in my list of 29 good books about business history.
@@@ (3 out of 5)
Daniel Goleman returned to Berkeley not long ago to speak to a large and enthusiastic audience at International House about the themes in his new book, Focus. Though he’d spent only his junior year as an undergraduate at Cal, his quips and asides quickly showed him to be fully in synch with Berkeley’s humane values. Though he never stated the point explicitly, it was also clear that Goleman saw the roots of the community’s concerns in the chemistry of our brains.
You may remember Goleman as the author of the huge 1995 bestseller, Emotional Intelligence, which taught us all that psychological factors other than IQ were better predictors of success on the job and in life. Goleman was trained as a psychologist but soon after his post-doctoral studies turned his hand to science journalism, writing about new developments in brain science and related topics for The New York Times for a dozen years and later turning to writing independently. Over the years, he has shifted back and forth from teaching and research to science writing and back again. To date, he has produced ten books. Focus is the most recent.
I vividly remember devouring Emotional Intelligence much as I would a compelling murder mystery. The book was a revelation. Focus falls far short of it. To begin with, the book’s central theme — that focused attention improves outcomes in daily life, in work, in sports, and in leadership — is no surprise at all. Many others have delivered this message over the millennia, from the yoga masters of India to Mihály Csíkszentmihályi, who introduced us to the concept of “flow” — the single-minded immersion that, like Goleman’s focus, enables peak performance. No doubt, Goleman’s new book updates the brain science underlying these concepts, but his repeated overuse of the anatomical labels for obscure regions of the brain would have been better suited for a professional audience rather than the general reader.
The author’s academic posturing aside, I found Focus fascinating when Goleman described the application of contemporary psychological tools to pre-school and primary education. (Parents with children in school today may find this subject all too familiar; I didn’t.) The extraordinary improvement in school performance brought about by exercises in mindfulness was startling news. And the application of similar training methods in various aspects of emotional intelligence yielded similarly impressive results in the workplace, boosting job performance, job satisfaction, and workforce morale. Clearly, there’s something truly significant going on here. I just wish Goleman had found a way to report it in a more accessible and congenial way.
@@@ (3 out of 5)
Chances are, you’re reading this review on an example of disruptive technology. An iPhone or other smartphone. An iPad or a notebook computer. Or simply a laptop. Every one of these devices turned its industry upside down when it was introduced, driving established companies to the brink of insolvency, or even into oblivion, and paving the way for new actors to enter the landscape.
Today, almost instinctively, we understand the concept of disruptive technology. But it wasn’t until after the publication in 1995 of an article by Clayton Christensen in the Harvard Business Review entitled “Disruptive technologies: catching the wave” that the term entered the language. That seminal article was followed in 1997 by Christensen’s pathfinding book, The Innovator’s Dilemma — one of the most influential business books of all time.
Christensen, a long-time professor of business administration at the Harvard Business School, had found an answer to a question that had long mystified the business community: why had such iconic, well-managed firms as Digital Equipment Corporation, Xerox, and dozens of others that had long led their industries fallen by the wayside? The professor’s answer was not that they had simply gotten behind technologically but that they had done everything right — listening carefully to their best customers and catering to their needs by investing in sustaining technologies that offered customers added value. The problem was that the dictates of prudent business practice prevented them from investing in the sort of innovation that could turn their own industries upside down: disruptive technologies. In fact, Christensen wrote, “the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms’ managers set up an autonomous organization charged with building a new and independent business around the disruptive technology . . . There is something about the way decisions get made in successful organizations that sows the seeds of eventual failure.”
A decade and a half ago this was a shattering insight and it explains the acclaim that Christensen’s work has received throughout the world of business. However, if you turn to his book, The Innovator’s Dilemma, in search of deeper understanding of these concepts, you may be disappointed. I was.
Sadly, this book is organized and written in a style that reeks of old-fashioned academia. Chapter One, an introduction of sorts, sums up the book as a whole — in 26 tedious pages, explaining in detail what the reader will find, chapter by chapter. First, Chapter One briefly outlines what the book will reveal, then proceeds to repeat each point in detail. Then, as though that isn’t enough, each chapter repeats the same points, adding considerably more detail. The final chapter repeats each of the major points — again. The repetition is maddening. And so is the overuse of the passive tense, which abounds throughout. Compounding the problem are the long-winded explanations of such things as how disk drives work and the distinction between thin-film technology and ferrite-oxide technology in disk drives’ read/write heads. All this material, no doubt necessary to “prove” Christensen’s thesis to his academic peers (some of whom are still not convinced), gives the book the charm and box-office appeal of a PhD dissertation about the influence of the Greek concept of the soul in 13th Century French literature.
If all you want is to get to the meat of this book and avoid slogging through endless detail about matters only an engineer could love, read the first chapter and the last one. Forget the rest. You’ll thank me.
Of the dozens of books about business that I’ve read during the three-and-a-half years since I launched this blog, five books stand out. They remain fresh in my mind, and the lessons they teach continue to illuminate the path as I make my way through the thickets of the business world in all its dimensions, inside and out, variously as a social entrepreneur, impact investor, board member, adviser, and manager.
In alphabetical order by author’s last name
The Power of Unreasonable People ranks with David Bornstein’s seminal work, How to Change the World, as a point of entry into the fascinating, and increasingly important, realm of social entrepreneurship. Written by two of the field’s leading voices, this excellent book covers the landscape, describing examples from virtually every area of interest in development, from healthcare to education to poverty eradication. In fact, the book is most rewarding in its presentation of vignettes of individual social enterprises, including interviews with many of their principals.
Two extraordinary men — William S. Knudsen and Henry Kaiser — are the stars of this story, business impresarios who marshaled the stupendous numbers of men and women and the unprecedented mountains of raw materials that supplied the U.S. and its Allies with the weapons of war.
This is the astonishing story of Aravind Eye Care, a nonprofit, family-run opthalmological empire based in South India that exceeds the standards of eye care in Britain and the US, pioneers in advanced opthalmology, trains eye surgeons from dozens of other countries — and consistently turns a profit. The book is beautifully written.
The Self-Made Myth goes straight to the heart of the conservative argument that favors limited government and coddling the rich, striking at the movement’s fundamental values and assumptions with their origins in the work of novelist Ayn Rand.
An intimate, inside look at the people of Lehman Brothers, the venerable Wall Street investment bank whose record-setting bankruptcy is widely credited with triggering the meltdown of 2008. Like the close-up portraits of the rich and famous that often appear in the pages of Vanity Fair, the magazine that employs the author, this book is nothing more, and nothing less, than a character study of homo sapiens wallstreetianus. Read it for an understanding of how greed — for money, for power, and for the power that money can buy — truly was the central factor at the root of the Great Recession.
Arranged in no particular order. Linked to reviews.
Freedom’s Forge: How American Business Produced Victory in World War II by Arthur Herman
@@@@@ (5 out of 5)
Since I was born six months before the U.S. entry into World War II, I grew up familiar with a long list of names — little-heard now, more than half a century later — that were associated with the U.S. role in the war that seized hold of Planet Earth for a half-dozen years and set America’s course as a superpower for the balance of the 20th Century. Jimmy Doolittle, Henry Kaiser, George Marshall, Hap Arnold, Curtis LeMay, Paul Tibbetts, and a host of others — every one of whom figures in the epic story so skillfully told in Freedom’s Forge.
As the book’s subtitle suggests, Freedom’s Forge focuses on the role that America’s business community, and especially Big Business, played in the monumental effort that resulted in the unconditional surrender of Germany and Japan just months apart in 1945. Two extraordinary men — William S. Knudsen and Henry Kaiser — are the stars of this story, business impresarios who marshaled the stupendous numbers of men and women and the unprecedented mountains of raw materials that supplied the U.S. and its Allies with the weapons of war.
Nothing since — not the Apollo moon landings, not the war in Vietnam, not even America’s protracted wars in Afghanistan and the Middle East — has come even remotely close to the magnitude of World War II. Over the five-year period from July 1940, when the U.S. began to rearm, until August 1945, when Japan surrendered, “America’s shipyards had launched 141 aircraft carriers, eight battleships, 807 cruisers, destroyers, and destroyer escorts, 203 submarines, and . . . almost 52 million tons of merchant shipping. Its factories turned out 88,410 tanks and self-propelled guns, 257,000 artillery pieces, 2.4 million trucks, 2.6 million machine guns — and 41 billion rounds of ammunition. As for aircraft, the United States had produced 324,750, averaging 170 a day since 1942.”
Can the human mind today even comprehend what must have been involved in manufacturing 300,000 airplanes and 100 aircraft carriers?
This staggering output of weapons came as a result of a profound transformation of the American economy, engineered in significant part by Bill Knudsen and Henry Kaiser. The two could hardly have been more different, and they didn’t like each other. Knudsen was a modest and unassuming Danish immigrant who worked closely with Henry Ford on the Model T and later built and ran General Motors into the world’s largest industrial corporation, dwarfing Ford’s output. Kaiser, a West Coast construction magnate who was the son of German immigrants, was flashy, outgoing, and immoderately persuasive — a model of self-promotion. Together with a host of others in and out of government, these two men led the conversion of the U.S. economy to unparalleled heights as the “arsenal of freedom.” Nonetheless, “[i]n 1945 Americans ate more meat, bought more shoes and gasoline, and used more electricity than they had before Hitler invaded France.”
Though I thoroughly enjoyed reading Freedom’s Forge, there was one discordant note. Author Arthur Herman, a free-market conservative who wrote this book as a visiting scholar at the right-wing American Enterprise Institute, advanced a political message throughout. That message could be summed up as “FDR, the New Deal, labor unions — bad. Business, businessmen, military leaders — good.” He could hardly have been more blatant. But the man writes well, and he did a stellar job of telling this unimaginably complex story between the covers of a single volume.
In the conclusion, Herman quotes Josef Stalin when he first met at Tehran with Roosevelt and Churchill in 1943: he “raised his glass in a toast ‘to American production, without which this war would have been lost.'” There could be no higher praise for capitalism, coming as it did from the dictator of the Communist Soviet Union.
Drive: The Surprising Truth About What Motivates Us by Daniel H. Pink
@@@@@ (5 out 0f 5)
Revealing “The Surprising Truth About What Motivates Us,” contrarian Dan Pink delves into decades of long-neglected psychological research to demonstrate what generations of corporate and nonprofit managers have been doing wrong. Pink shows how the research proves traditional carrot-and-stick incentives may work well in a world of rote learning and assembly-line production but can easily be counterproductive in a new world that demands creativity and self-reliance — the right-brain thinking about which Pink wrote so cogently in his earlier book, “A Whole New Mind.” If you lead or manage an organization of any sort, this is must reading.