Are you looking for a recipe or a map?


Problems are like Puzzles, both I think are well named, because there’s no implied process.  No approach that everyone instinctively finds or consistently produces a quick result.

Most common approach to problem solving suggests that it gets broken into smaller pieces.  Why? Does a pattern emerge? Or, can you determine a relationship between the different pieces once separated? It sounds like a puzzle, doesn’t it?

A jigsaw puzzle, it turns out defies this process.  At an early stage of our process, after just a few attempts, we recognize that finding the edges first makes assembly of the puzzle easier.

rubrics cubeRubrics cube, or its predecessor the four cubed puzzle–Instant Insanity, and its multi-dimensions add degrees of difficulty. The individual variation in the blocks make the solution difficult. Conceptually the puzzle’s solution includes deciding on the pattern to produce, and then setting the sequence in the cube face to match.

Crossword puzzles, one of those things that people take great pride in their ability to be fast at completing.  This type of puzzle is multi-layered patterns.  One its’ the pattern of answer to match the clue, and there’s an insider advantage from practicing, the other is the words that fit the number of empty boxes, or has a particular letter in a particular place that allows it to leverage words it crosses.

Now look at a map.  It has edges that easily extend, if it’s a mobile dynamically linked map or not, or you know connects to a larger representation that’s known.  In other words, maps help you see a larger reality in a glance. It expands your view of a landscape or a system.  Maps and blueprints both lay out another perspective.  We apply many rules to create and understand the representation. For example, scale, the ratio of an object’s drawn size to the object’s size in reality helps us visualize the inter-relationships of objects from a different perspective. One inch can represent a mile, or a thousand meters.

Creating maps are more of a puzzle than reading them.  The same is true about a recipe. If you know what you want to make, then a recipe provides the list of necessary ingredients and the instructions for assembly.  It too incorporates a scale, so much of each ingredient when combined will create x number of servings.  Most recipes scale easily you can increase the number of servings by apply the same factor to each ingredient.  A recipe that serves 2, doubled now serves 4.  Retaining the proportions of scale allows us to zoom in or zoom out to see more or less mapped details.

Process, the method or approach that literally advances our thinking our understanding or activity turns out to be a bit of a puzzle.  It’s exactly why framing a problem matters.  As I learned last week, when asked to assemble into an 8×8 array 64 small tiles with white and black geometric patterns. There was one rule. Each edge of the tile must match the colors on its adjacent edge face. This was not a solitary task. My team effort comprised people who sat nearby but were strangers. We had 30 minutes. In addition, we were to estimate our progress at 15 minutes, and use the same estimation method at 30 if we were unable to complete the task.

The objective was clear as day. Our team of six suggested that the task sufficiently resourced to tackle 64 pieces. The thirty minute timetable sounded reasonable.

That was until we realized we had no methodology, no way to organize the six people and their skills, perspectives or background. We also lacked the means to identify what this particular challenge needed, and therefore we had no experience to assess the amount of time needed to complete the task.

Brave and trusting souls that we were, we didn’t waste any time before everyone began to move pieces in front of them. Each of us set out to understand the task by doing.  Quickly, suggestions began to spoken aloud. “We could assemble a small section, and then attempt to put the sections together.” Quickly, the group determined that approach too challenging. Instead, we opted to lay out one edge and build out the array.  Well we didn’t finish in the 30 minutes.

Did we fail? Not really, because each of us learned something new about process. More accurately, we paid attention to one aspect of process–one that generally we overlook, but proves essential to the solution. When breaking bigger challenges into smaller pieces, we don’t pay much attention to how those pieces once connected. These interfaces, or places and mechanisms that connect the pieces turn out to be essential to building on ideas, a recipe, a structure, a machine or even a city.

“How” different or even the same things fit together isn’t straightforward. It definitely helps to have an objective. Highly specified objectives make the solution easier to recognize and more difficult to achieve. Loosely specified, sparsely details objectives generate a greater number of solutions and may create a new problem, selection.

There’s an art to balancing the specificity of an objective and the skills and possibilities available. Each of us leans on our past experience and know-how to face new tasks and tackle new problems. For a new or unfamiliar task, we may find comfort in narrow specifications, easily achieved and successful solutions recognizable. Its part of why we often try what we know before trying something new.

Thankfully, we also get bored with too much repetition. We enjoy variety but also willingly engage in many routine tasks to save ourselves time and energy. Accepting the trade-off of early or later specification changes the difficulty of the task and our ability to solve it efficiently and effectively. It’s what differentiates innovation from improvement, learning from reacting and leading from managing.

Try it with different materials with your own team and discover more about your own internal how thinking and motivations. I encourage using play things—spaghetti and marshmallows with the instruction to build a tower, or small groupings of identical pieces like Lego that you invite everyone to build their own tower. Assign the open, but limited time task. Give people an opportunity to share what they did and engage a wider conversation about process dos and don’ts. It’s not just a great team building activity, it’s also great leadership and management development exercise. I’d love to hear back what you did and what happened as a result.

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The right message, or influence


Joe Fig, Jackson Pollock (2008) Copyright of the artist and Cristin Tierney Gallery.

“There is an alchemy of delivering the right message to the right person”, Maurice Levy (CEO of Publicis) suggested in his recent Bloomberg interview about Business Innovation.

Representation

Contrast Jackson Pollack’s Alchemy to anything you discover online. As the image above shows, Pollack’s aggressive style and posture shown above matches the work, and if like me, you had a visceral reaction to seeing it in person was that the message he had in mind? By contrast, the image shown online loses that quality, not because the photographic rendering was less than precise but because the online medium transformed our perceptions, placing it at a distance.

In person, our clothes reflect our personal style as often as the default expression on our face.  Think attitude and what if anything you do that distinguishes you when people meet you.  Is it a small gesture that you actively put forward, or the less overt  passive way you carry yourself that make people forget and fail to remember your name?

When you want to impress others, how much do you know about the person you wish to impress and does it affect your preparations? Similarly, does the setting dictate and direct the choice of clothes, accessories, hygiene etc?  The same questions, by the way,  apply to your representation online.

Professionally, it’s difficult to not have some online presence. A client, and well schooled friend whose PhD in sociology remains unaffiliated with an organization. He created an informal editing business for himself. He charges small sums to people who seek him out by reputation and word of mouth. In other words, his only clients are referrals from people with whom he worked before. Nothing wrong with organic growth, but he asked for my help to figure out how to scale what he did. His low level visibility online left me dumbfounded.

That’s what prompted this post.

I realize my strategy for online presence has not been well thought out too. I always considered PR to be a specialty and not something I needed to do for my business. Like my friend, I thought being me, would be enough, which is pure silliness or ego.

My investigations turned up plenty of marketing strategies that made my head spin. AT the end of the day, I wanted to understand how reputation gets built and grows, which happens to be the purview of marketing but not theirs exclusively. m

Actions have always been the singular make or break of a reputation.   If you don’t do as people expect, then that’s how you will be known–unpredictable, unreliable, or maybe unexpected.  I enjoy being unexpected, that’s what my efforts in framestretching has always been about.

The challenge, comes back to what Maurice Levy says, not every person seeks the unexpected. When you are hungry, or thirsty a great idea or a leaky water bottle that unexpectedly strands you is far from welcome.

Essence

If there’s any trick to effectively communicating, it’s about understanding your audience, and establishing an even representation of yourself. Naturally, people learn to expect that things or people don’t change, what we see is what we believe is all there is, even if that representation appears unconventional. Professional demeanor proves recognizable when our profession dictates our actions consistently, even if the profession may be less conventional.

The trick isn’t in how to be consistent, it’s in choosing what defines you. Once defined, committing to its use over time will slowly affect how others perceive you.  The actions you take are not embodied in words, or the design of your logo–though they definitely impress many of us on some level.

John Maeda, former Dean of Rhode Island School of Design, spends his time understanding differences between commerce, design and art, as well as the perceptions that make us differentiate so many things.

In his work, he has helped people recognize that regardless of the content, perceptions often cloud the meaning of what we see, dictate how we will feel and decide what we sense.

John Osborne, an artist did a take on Maeda by reshaping the written words in his book into a tree, and at the same time expressed making his own meaning and then reshaping it.  Word of mouth is in fact the internal translation of what we know and then share with others about people. It’s how story became a conventional mode of transmission.

As a little girl told me over the holidays, she recalled the questions I had asked her about Goldilocks a year earlier. The questions had made her stretch her frame of reference and think about possibilities that really stuck, which was my point and purpose. Her Dad, just grinned, after all he knows my reputation as a framestretcher and it thrilled him to see his 8-year-old thinking critically, considering the parts .

So what representation do you want others to share, what stories can you help them tell better?

When Technology doesn’t work


If like me, you have a fairly stable morning routine. The usual sequence of activities from the time you step out of bed until you step out the door, or in my case step into your home office. Each takes different amounts of time but nothing is too complicated that you need to do any active thinking. The result is your mind is free to wander in any direction, alight on any object or thought that it finds interesting.

Technology likely plays a supporting role, whether its the alarm that goes off to wake you, make your coffee, or the phone that connects you to the world through email or news sites. The support role isn’t supposed to hijack but rather simplify, and reduce unnecessary steps.

For example, I used to have an all in one grinder-coffeemaker. I merely added the beans and the water, and set the timer. Its automation saved me a little effort.  It spared me a few steps: hitting the button to grind the coffee ,empty the grounds into the coffee filter, press start. (Remember either way I added the water, and the beans.) It saved me maybe a minute or two, when it worked.

The key to support? It’s got to be reliable. In this case, more elaborate automation increased chances of breakdown as well as mechanisms that needed cleaning. When it didn’t work, the few minutes I saved daily, and some were taken back.

Worse I couldn’t anticipate when the breakdown would occur, and inevitably the disruption to the expected regularity of my routine proved intolerable. So, I changed back.

I’m at that point with MS Word and close to the edge with everything about Microsoft’s operating environment. I’ve not been an Apple user, until the iphone was part of an irresistibly good offer years ago.

Today, I am using an older version of an open source program called OpenOffice. Oracle bought them, but I never had to pay Oracle. The application sits on my desktop, it isn’t linked to the cloud and it doesn’t pop up with assistance when my fat, less accurate fingers hit the wrong keys. BEST of all it doesn’t stop my train of thought as I’m typing by doing me the favor of saving. Or if it does it still doesn’t stop me from continuing typing.

This past week I was very busily writing a rather complex article. Because I’m not that organized, I like to synthesize my ideas in real time using the blank page in front of me surrounded by lots of other open documents, and websites. After the first draft was out of my head , I saved it. Sounds simple enough, right? Saving, now becomes a more complicated choice than simply titling it and placing it in a folder for future retrieval. I had too many choices, partially my own fault—I did admit to disorganization right?

I have an account on DropBox that one of my client prefers I use because we share lots of big documents and images, and it’s just easier for version control.

Microsoft in its competitive wisdom, now offers its own cloud and that too becomes an open office option…presuming I remember the password or have the OS remember it for me, on every device I use.

Lest I forget there are the different drives on my computer, I could save to a portable thumb drive device? Or the hard drive on the computer or the home network that allows me to save to my home office desktop.

Of course the different options come with different advantages. At the moment none of them were relevant, as I was just in draft mode and operating under a self-imposed deadline to preserve my sanity.

So I decided save to the cloud, its safer and I won’t have to worry about what drive it’s on?

That turned out to be a bad move.

Remember the coffeemaker story and the trade-off on time savings that went upside down on me? The same happened with this project.

In full disclosure, the topic which had owned me for a few weeks was the notion of readiness and positioning with respect to technology advantages.

I don’t know of a single writer who doesn’t find themselves pausing every now and then to gather their thoughts before continuing to organize the words. I’m older and still use long hand and then transcribe my own scribbles, which means there are lots of fits and starts due to difficulty deciphering my own handwriting. Then again, I may also decide to put my typing skills to work as I’m doing now, looking at the screen while trying to organize my thoughts.

Again, it’s the natural fits and starts in the writing process that Microsoft’s engineers seeking to support the task, or simplify and anticipate got completely wrong.

Ok, I just saw open office do the same thing. It tried to anticipate what I wanted to type. Perhaps yo too have experienced these new features. I begin to spell a word only to have it suddenly appear in its full form highlighted in blue. I have no idea how to do something with this information. Am I supposed to use it to avoid spelling errors? Or (yep the system just corrected the o and capitalizing it for me) ignore it. If I’ve managed to describe the problem well at all you too should feel a bit irritated and frustrated, or at least empathize with mine.

You see I really want to focus on my own thoughts and getting them out. I don’t want more distractions or suggestions popping up at me. It’s why I still prefer long hand and the absence of automation. Sure I can save myself some time by typing my drafts directly into the computer, they may even be more readable. But I can’t afford the distraction or disruptions…even if as I just noticed the suggested words appear relevant.

Again, I’m not looking for a collaborator when I type. I’m merely trying to express myself. Did you get that? I want to express MY thoughts, MY ideas, MY word choices.

When I need an alternative I am happy to take the extra time to open up the thesaurus, or do a google Define to get other ideas. I want my dumb typewriter back, PLEASE.

WHEN I’m ready for your assistance, I’ll ask.

I Business I keep hearing the phrase to best to go ahead and ask to be forgiven later then to wait for permission.

The biggest offense Microsoft made, was having a ridiculous inefficiency set of tools. Rather than allowing me to type and save the document in the background, it froze the screen and swapped the cursor for its spinning wheel to tell me to hold on. So after fighting with this for a few days, I re-saved the document to my hard drive. Guess what it didn’t stop the problem. Worse the document would literally jump, when it was finished. The contents on the screen would shift sometimes a few pages.

How exactly they do that I don’t want to know, that it happens and that I can’t stop it, well that’s why I’m saying bye bye.

I have been typing continuously for a good hour and other than the few annoying word suggestions and auto grammar fixes, I’ve not been stopped once by a spinning cursor.

Thank you Oracle and Open Office. I’m grateful

Now I’m going to paste and post to word press. If something surprises me over there, I will let you know.

[PS, wordpress took the pasted text beautifully. Identified my spelling mistakes ad in a few minutes I was at the bottom of this input, ready  to post. SEE Technology can be well designed for the user.]

Refreshing Core Values


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Remember the  expression built to last? It was an expression that my grandparents used to differntiate value.  What I saw as an old tool, or piece of basic furniture or clothing they valued.  The phrase also describes capabilities and inherent qualities that stand up, endure over time surviving changing conditions.

The ups and downs of the stock market represent value differently. Analysts love to pounce on companies when they stumble. The bigger the company the better the blunder and the better for the Bears.  Retail food and department stores currently appear to be under heavy fire these days, even brands and companies that dominated their industry.

So what value should you seek? Investors seek returns but don’t always consider the long term costs, do they? Does sustainability really matter?

I suspect some of these thoughts  led Jim Collins and Jerry Porras to title their 1994 book Built to Last (BTL). Sure they may have thought to follow the example and success path set by Tom Peters and Robert Waterman  whose titled 1982 research project  In search of Excellence also became a best seller.

Sadly, in writing the book Collins and Porras did what other well-meaning authors do. They put a priority on pithy copy over substantive analysis. In short, they wrote great stories.  In fact they went so far as to feature the CEO as leader/hero.  Their research (see sidebar) to distill what made companies visionary  was refashioned into a great read.  Nothing wrong with a great read, unless the reader confuses the story for prescriptive advice and your analysis turns out to be a bit superficial.  If you think I’m being harsh, consider these comments:

Martin Maneker, Collins and Porras publisher put it this way in the Daily Beast in 2009

“the heart of the Good to Great philosophy is that disciplined people, engaged in disciplined thought and taking disciplined action, have the greatest chance at success.”

Or in Collins own words on his website  posted in May 2009 about his book Why the Mighty Fall :

“[Porras and I were ]discussing the possibility of a project on corporate decline, in part because some of the great companies we’d profiled in the books Good to Great and Built to Last had subsequently lost their positions of prominence. On one level this fact didn’t cause much angst; just because a company falls doesn’t invalidate what we can learn by studying that company when it was at its historical best.”

Or Consider  Fast Company’s look at BTL 10 years post publication written in 2004:

“ at least 7 of BTL‘s original 18 companies have stumbled (8 if you’re cynical about HP) — scarcely better than the results you’d get by flipping a coin.”

In other words, the fundamentals that stand the test of time more likely due to discipline or luck. Sorry that it’s not the five that Collins and Porras research efforts describe.

So why did Jennifer Reingold and Ryan Underwood in their Fast Company retrospective review of this highly influential business book try to salvage its essence? For the same reason that these books continue to inspire and continue to be best sellers.  The Fast Company authors looked beyond the company profiles and focused on the stated principles.

As pointed out earlier, Collins and Porras in later editions had to qualify their original findings in the preface. Collins’ later writing also back pedals with post mortems describing how his BTL companies had lost their way.

I’m not the first to question the relevance of the principles to demonstrate the thesis of the book. In fact Collins was well aware of the criticisms leveled at Peters research, and why they adopted matched pair design for their own research.

What bothers me is how story telling hijacked the writers’ judgment.  For example, why use distinctive new prose when citing the principles?  The better to make believers and best sellers, that’s why.

Long before social media, Collins understood the power of language. Catchy language could  impress the ideas on his reader but also fuel fan sales, and  “word of mouth.”  Consider one of his most famous original phrasings:

“A Big Hairy Audacious Goal, or BHAG, a long-term vision that is supposed to be so daring in its scope as to seem impossible. “

It’s in these language choices that I begin to feel the book tilt.  BHAGs  conjure really ugly images.  Who, other than a hero, would dare to take on something ugly? Personally, my criticisms side with Reingold and Underwood.  Even by 2004, the BTL principles seemed less relevant in the face of massive consolidation, global outsourcing or even disruption that shifted the business environment.  But the descriptive principles they coined failed to capture the essence of deeper qualities that underlay any organizations success, ones my grandparents would recognize.  I’m talking about  people believing in people.

Recently, I attended a local meeting of the Private Directors Association. I heard a panel of three CEOS talk about their 100 year old companies.

At the close, each of the CEOs identified factors they thought helped them survive. Profitability never made their list, nor did any pithy phrases tumble from their lips.  The single repeated understanding described their commitment to people and values.  Not only have these companies experienced low employee turnover over the life of the company, they shared unusual views about proper compensation and invested heavily in training.  For two of the three, visible diversity on their boards had been a conscious decision in the most recent period.

Another notable common thread described their recognition of business value–that goods and services they offered should always exceed the price customers paid.

Pride of ownership too dominated  and was demonstrably evident in each of these companies successes though  Mead&Hunt now employee owned and operated, and the other two remain family owned and operated.  Each and every company pointed out their expectation of modest returns and willing attitudes toward change and adaptation.

In other words, missing from the conversation was the idea that any of them expected to use the business as a vehicle for generating great wealth.

A friend pointed out that mid-market company values, at least evident in the mid-west,  don’t seem to match those of corporate America.  I wouldn’t go that far. Particularly since these companies were all privately owned, its difficult to measure them using the criteria that BTL employed– 10x returns on stock price.  Not a one would be considered leaders in their industry.  Even Mead & Hunt which is employee owned understands that returns on their own capital rely directly on production and interaction with customers and not financial shell games.

Kevin Boyle, the CEO of Schulze & Burch, “the biggest baker of toasted pastries in the US” typified the distinctive attitude of these companies.  Here’s how he answered an investment banker’s inquiry about how  growing valuations and M&A affected his business.   “Keep doing what you’re doing,” Boyle said, “it’s good for me and keeps my cost of capital down, and also minimizes my competition.”

Had to laugh at that.

If you are curious Wikipedia’s list of the oldest  surviving companies found many that began before 1300  and not surprisingly they were primarily service businesses, and remain small– as in less than 300 employees.  This list https://en.wikipedia.org/wiki/List_of_oldest_companies

Continuous transformation or a transitional approach, which path do you prefer?


Janet Yellen Testifies House Fniancial Services Committee

Earlier this week, Janet Yellen told the House Financial Services Committee that no decision has been made, but shared the Federal Reserve Bank‘s expectations via the Wall Street Journal.   “The economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term, and if the incoming information supports that expectation, then…December would be a live possibility. ”

Wow, lot’s of room in those statements.  Both US Stocks and bonds slipped following her remarks. It’s become commonplace to link Fed Chairpersons’ remarks to the rise and fall of the markets.  I’m not so willing.

Maybe because my thoughts of late were influenced by a conversation hosted by the Becker Friedman Institute I attended last week.  Entitled The Role and Impact of Monetary Policy in an Uncertain Economy  and included Charles Plosser of the Philadelphia Federal Reserve  and nobel laureate Lars Peter Hansen.

First, I’m with Plosser in sensing that it’s foolish to expect that  the Federal Reserve’s control of the money supply and interest rates can be used to effect both inflation and domestic employment.   Second, we need to be cognizant, as Hansen advises, that models can be very helpful but are not exactly the same as direct relationships.  Politico made a similar point. “The Fed and its staff, like any good economists, rely on past patterns as a guide to future outcomes. And now, those patterns are no longer working…:

In fact, it’s the latter thought the differentiation between modeled certainty and certainty deserves more attention.  I’ve been unpacking and exploring this in a variety of ways .  Here’s one:

I know with certainty the relationship between the gas pedal and the degree of pressure applied by my foot and the acceleration of my car.  Janet Yellen and the Fed no matter how experienced and accurate the input data, the econometric models relationship to the economy remain uncertain.  It’s why changes in pressure they apply to expand or contract interest rates have a fuzzier relationship to the economy, and the measurable results more complicated and less consistently understood when compared to my car’s observed speed when I hit the or lighten up on the gas.

Modeled certainty when it fails produces uncertainty but doesn’t mean stop, or does it?

I only watch the dashboard in my car.  I used to have a ticker list of stocks I followed, but no more.  I also rely on the weather app on my phone even though it’s not very accurate. Why? Well it’s useful to be prepared for forecasted conditions, even though several are beyond my control. Yes the weather is uncertain inspite of models who do their best to assure us.

I’m not alone in my struggle to understand and interpret the signals around us, especially the indicators of the health of the American economy and the global economy.  For one, its more complicated than the working of my car, which I also don’t fully understand. The dashboard guides me, it reminds me that the gas tank needs refilling or that in a particular area I may need to reduce my speed, or if the other lights go on I should get a mechanic to take a look.

Today the growing interconnections between sensors, and communications technology make makes it possible to funnel more information to me in real time than ever before.  So, what value do additional indicator really offer? What does knowing more change? The answer is it changes everything, but not necessarily in a predictable way.

Experience, does affect how we process information. Our brain uses experience to filter out commonplace or the “usual” details in our midst. Organizationally, experience used to model and plan the allocation of resources and assure us with forecasts based on different decisions.  The bigger the organization, the more careful and challenging the coordination and planning activities.

When I was a kid, I heard the expression “As goes General Motors, so goes the country.” I didn’t know the first thing about economic indicators, or inflation rates.  My family bought GM cars, so when my grandpa bought a new Buick, things were going well. Conversely, things were going less well when my father continued to drive his Pontiac long after a small hole in the floor board  appeared spurting water when we’d hit a puddle.

GM of course was until recently not just one of the world’s automakers, it’s activities were deeply embedded into the economy.  A report by US Auto Alliance , quantified the importance of the automotive industry in the U.S. economy  claiming:

  • more than seven million private sector jobs and $500 billion in compensation,
  • drew foreign direct investment (FDI) currently valued at $74 billion—approximately 3 percent of all FDI in the United States.
  • And collective investments of almost $46 billion that expanded and retooled U.S.‐based facilities since 2010.

It take a reasonably long time to build a car, but people don’t buy them very often, so supply can generally keep up with demand. If we use GM as a litmus test for the economy there’s some wise and prudent parallels becasue there’s a lot of interdependencies between larger sentiments and people’s financial capabilities.  In contrast, fast food offers a set of alternative indicators to measure the pulse of the economy. In May of 2015, US news speculated about the inverse relationship between the two in an article entitled “McDonald’s earnings slide could be a function of economics. Besides, McDonald’s is the 2nd  largest employer in the country, trailing WalMart. Not surprising given its 14,300 restaurants –4.6 outlets per county.  (I plan to explore this idea more fully in a post I’ve drafted called  McDonald’s a truly American Story).McDonald's Workforce, 2005-2014

See http://fortune.com/2015/06/13/fortune-500-most-employees/

I only point to these two companies becasue I think it’s important to notice the difference between government actions and companies responses to changes in external conditions.

BCG put it this way:

“To compound matters, the diversity of the business environments—in terms of growth, rate of change, and harshness—that global companies face is expanding in a multispeed world. So it is not surprising that many companies find their strategies and business models increasingly out of step with their environments.

Many companies get caught in a “boiling-frog trap,” where they fail to recognize the problem and delay efforts to remedy it, thus necessitating a painful and risky step-change transformation.”

Is that what you want the Federal Reserve Governors to do?  I hope not.  It’s why I don’t envy them nor am I ready to second guess them.  In reality no one should let uncertainty about monetary policy and interest rate hikes hold up your planning, I would encourage you to take a harder look at the relationship between the micro as well as the macro trends in your industry. You don’t need a data scientist per se to create an elaborate model, but it can’t hurt.  The trick is to merely face the realities.    Try to imagine how your customers adjust and see if these factors are included in your own models, you might fill in a few more gaps..a sustainable path is up to you.

Are you wired for growth?


https://i1.wp.com/cgamagazine.ca/wp-content/uploads/iStock_000020240421XLa_opt1-572x210.jpegI wanted to call this post, switched on  growth, but that didn’t fully capture the emerging idea in my head.

Upon waking I found myself wondering about two very different idea. What makes flowers in chicago bloom in November and why the internet never seem to run out of capacity? Since its not uncommon for my ideas to make sense to me but sound to others as if I’m hovering in the clouds at 30,000 feet, allow me to explain.

We distinguish two types of changes –transitional and transformational. I doubt caterpillars or tadpoles in their initial state can do anything that prepares them for their existence post their transformation into butterfilies and frogs? People in the course of their development do.  We have an uncanny ability to remember past experiences and in many cases it forms our thinking about the future. In other words, if we set our minds to it we can imagine our future in ways that I suspect is impossible for tadpoles and caterpillars.

Seeds don’t imagine flowering, instead they are merely wired for growth.  Something switches on when they find themselves in the right environment and as long as the conditions persist to sustain that signal they keep on growing.

Research into human development when combined with the neuroscientists understanding of our brain’s  growth reveals that humans bear a similarity to seeds.  From the conception moment, as long as the environmental conditions prove favorable, we manage to grow inside the womb, and then we do go through our own transformation as we emerge into the wider world at our birth.  Our sensititity and early instincts begin to form long before we experience our first breath of fresh air.

The different parts that we call the human brain just as the different body parts that comprise our stature do have limits. The internal instructions of DNA and RNA have some latitutde which is why environmental conditions do have an impact.  But it’s the same underlying code that turns some seeds eggs into tadpoles and some into humans.

The biggest advantage humans have over all other creatures and life forms seems to be their ability to alter their environment.  In other words, we can modify and then optimize the conditions in which we can thrive. Social tools like communicaions and today’s more advanced incarnations  realized through a combination of hardware and software offer amazing opportunities.

The motivation to transform our surroundings not unique to humans, as evident in nesting behaviors. Birds have been observed building rather elaborate nests, as do other creatures establishing protective and cozy environments that protect their young. Likewise learning or mimicry has been observed in the animal kingdom, and even to some degree plants who move with the sun.

The more distinctive qualities of humanity, such as fashioning materials with our hands has evolved to a much greater degree than in other animals. Unlike other animals, our internal wiring as refashioned and transformed our brain to be capable of a variety of higher functions one of which is manifest by this post.  The abilit to formulate ideas, conceive of connections without seeing them and then describing them in a manner thtat others can understand now or at some point in the future?  That’s pretty different from the tricks my favorite dog and plants can manage.

Ok, enough background.

Transitions the ability to adjust and assimilate new information depends on prior experience.  I’ve never met anyone who can remember their life in the womb, but again researchers studying human development know among all of our senses, vision is the last to develop.  In fact it takes babies months before their eyes  can hold focus while shifting their line of sight between objects near and far.  I mention sight becasue it’s an easy transition to understand.  Who hasn’t crossed a threshold and found themselves momentarily blind by the extreme difference in light levels.  It takes a few moments before your eyes acclimate, doesn’t it?

Transformations, as we described above are a wholly different experience.  Imagine walking only to find the next step plunges you into a deep hole filled with water?  your body responds in even less time than your eyes take to adjust.  If however you were on the edge of the water and had maken a conscious choice to go for a swim, your body knows exactly what to do. Again no transition or acclimation to the needed unless of course you want to open your eyes underwater.

Differentiating between conditions that require transitions and permit instant transformation is what I beleive separates an agile and flexible organization ever ready to grow.  Both benefit from planning but their response time to change varies dramatically.  If your organization desires to remain competitive learning and building the right capabilities and capacities matter.

I believe that like the human brain, an organization needs a flexible responsive platform to coordinate and integrate the exchange of signals. Why a platform? Simple answer is humans are only good at keeping in mind about two or three thoughts at once, the platform like the really capable personal assistant can track and pop up the right messages at the right time.

No, I don’t mean Siri.  Why?  becasue Siri may be able to talk to my calendar and figure out much of my personal peculiar turns of phrase and short hand names for things I need and use regularly.  Siri doesn’t yet fully take advantage of signals other than location, or the fixed notations.  Siri may help me, but  I haven’t seen the enterprise version, have you? When you do, let me know I’ve got several assignments for her.  I’m betting you do too.

Columbus didn’t close his learning loop, did you?


Maybe it’s time to rename Columbus day in America Discovery day.  I’m suggestng both for the sake of school children as well as to renew the american explorer spirit.  Why?

Becasuse unlike the time of Columbus, the opportunities for learning and connections are limitless while we continue to shrink rather than  address larger problems that I beleive learning differently would overcome.  I’m not merely suggesting more discovery learning, but a more nimble interactively supported blend of formal and informal, social and personal, guided and spontaneous,

In school I learned that Columbus had a distinct point of view. It’s true he did. But it wasn’t his belief in a round earth that made his views different, it was his calculations. Sure, in school I was taught that in Columbus time, many people believed the world was flat, a story Washington Irving’s embellished history put forward and that later writers supported.

Columbus believed that the globe was smaller and that the distance at the equator was smaller. Traveling by ship across the Atlantic was not a foolhardy proposition, but a short cut to Asia.

It’s harder to teach how a bad calculation could turn out so well.  The atmosphere of entrepreneurship today often extolls the virtues of failure.  Columbus could be taught this way but I would encourage a broader objective—a celebration in the process of discovery.

Process challenges

Texas Tech depicts their discovery process for students encircled by phases of exploration, research , investigation and confirmation.

Columbus took a slightly different path to discovery. He was self-taught and lacked the advantage of formal education which makes his calculation errors easier to imagine.  In spite of the generally held wisdom of the time, Columbus persuaded Spain to finally sponsor his voyage.  How? Perhaps he appealed to King and Queen’s natural curiosity about the world, expressed empathy for their desire for Asian pepper.  Somehow he managed to get them take his bet that the Court’s trusted advisors were the ones who had miscalculated.

Columbus didn’t doubt his convictions, and it’s unlikely that he presented his argument  as a formal hypothesis test. Let’s suppose it was.

Proof of the earth’s size had been known to respected astronomers of the time for centuries. Additional evidence of the folly included documented disaster that had befallen those who attempted to go west, including Columbus whose first boats were destroyed.  The available information made the voyage too daunting. No recorded knowledge of  anything other than the open western sea  separating Asia and Europe and the distance calculations suggested a crossing would take three years at current ship speeds.

I imagine Irving’s historical embellishment originated with evidence of the closed mindedness of  the inner circle around King Ferdinand and Isabella. Few at court were interested in taking seriously the ideas of a self-educated, foreigner.  This circle of knowledge didn’t appreciate the notions of discovery with our 21st century sensibilities.

God, King and country motivated many and the formally trained astronomers’ calculations eliminated any remaining doubt. Faith in the unknown was expressed as faith in higher powers of authority. This was true for Columbus too. Columbus stood by his calculations even if he didn’t frame them as a hypothesis.  Perhaps what persuaded the court to finance another voyage were the size of the opportunities, which were to large to miss were Columbus to be proved right.  A faster route to the riches that lay in Asia proved irresistable, especially if Columbus was daring enough to assume the risks of what many believed certain death. 

Circluar learning

Its not clear that 21st century thinking has any greater tolerance for the unknown,  Faith in God, King and country for many has been unquestioningly placed on technology.   

The sun, the moon both observable circles whose motion throughout history proved inspiring. Euclid took advantage of his observations in relation to his staionery  to establish geometry and the means to calculate distances. Today, GPS signal sensors do it automatically. These logical systems offer one avenue of discovery, and a path to see our way though in situations where solutions are not obvious or remain unknown to us.

Learning and problem solving activities both rely on relative understandings and may be synonomous. Both seek additional information,then  try to use that information and pause to see what happens.

  • Learning includes a reflection step which processes the experience in order to understand and file it for future use.
  • Problem Solving, often keeps going through the cycle of acquiring information, trying to use/apply information only to observe what happens.

The beauty of a formal hypothesis test appears in its record. Tested information also gets documented and proves out the hypothesis not merely giving results.  In reviewing the record we learn what works and can then formulate further questions to test.

The Columbus story could be taught as context to learning about the formation of hypotheses.  The Learning experience could include math and astronomy as a means to translate observable information into testing ideas and math skills. Columbus offers a story of continuing to question accepted views of the world within a framework. The challenges he faced along the journey and its success bears little if any relationship to the thinking and the knowledge circulating among the court advisors. Columbus leaned on what he knew, which he acquired almost exclusively through direct experience.  It’s why he died believing he had reached Asia.

It’s his grit, persistence and process of assimilating knowledge certainly bear celebrating.

Validated Learning

Eric Ries 2011 publication of the Lean Startup celebrates practical discovery.  He describes and outlines how a sure thought, an idea isn’t enough and why knowing doesn’t always give way to sure things.

The court advisors knew the distances better, their calculations were true and yet there was no way to discover the mass of continents that lay between Europe and Asia.  This falls into that category of unknown unknowns and if you are looking to grow, looking for answers sometimes you have to do something a little crazy.

Think about what you know, can you differentiate let alone defend it?  Does your knowledge come from believing, or from  trying and testing experiences that allowed you to discover what works, where and when?

Ries asks an appropriate question.   “How can we learn more quickly what works, and discard what doesn’t?”

The circular process he depicts summs up what so many people believe matters and will produces success.  The circle suggests an inevitability to learning that is synonomous to the inner advisory circle in the Spanish Court.  At the core, there’s an attraction that I’m not sure will keep the learning in motion or provide the feedback naturally that generates new ideas.

Among Columbus lesser known discoveries were the trade winds in the Atlantic. The multiple voyages allowed him to learn some things new but it never helped him to recognize what the advisors in the court learned from his voyage, the existence of additional lands on the globe.

Does the picture above match your own learning or problem solving experience? Formal learning tries to do this and marks its consistency and accountability.  What’s  measured specifies whether you learned the established outcomes.  In other words,beware of circular reasoning at work, another possible lesson to be gained studying the Columbus story as discovery.

Everyday experiences, or self-structured learning turn out to be messier and less consistent. Today information surrounds us. New technologies make it easier than ever to unlock and discover meaning and learn about our environment, interactions and sources of value.

The challenge is to keep the learning loop open revise the the image of learning circle  to inspire more continuos, dynamic possibilities.  Columbus should still be celebrated but let’s be clear its for the sake of further discovery.

Are you betting on the Relay or the Relationship?


TruckerOnCBRadio   UPS  made headlines July 31 with its decision to purchase Coyote Logistics for $1.8billion with an impact of  $100 to $150 million in estimated savings toward its annual operating costs.  On first glance, I viewed the decision as merely an attack strategy.  The big bad wolf UPS protecting its turf against aggressive competitors.

Maybe.  This story wasn’t the only merger news this summer.  Thomson Reuters reported in July that M&A activity or US Equity Capital Markets  increased 7% from last year. In this light, it makes sense to look harder for the underlying value multipliers Coyote offers UPS, especially since organic growth proves increasingly elusive. Several studies about third Party Logistics providers (3PL) suggest for example, that the provision of capable IT services increasingly matter to shippers in their choice of provider.

I’ve come to appreciate that market inefficiencies often prove themselves to be sources of great opportunity.  It seems that Erica E. Phillips, writing for the Wall Street Journal last week  agrees.  In her story examining the growing hunger in silicon valley for freight logistics companies  she asks and tries to answer the following question:

Whether the [Freight] Forwarding [business], is too complex and too dependent on longstanding relationships for new online entrants to compete.

Ms Phillips further reported that “Since the start of 2014, venture-capital firms have pumped over $1 billion into startup freight-forwarding companies, twice the amount invested in the five years before that, according to research firm Pitchbook Data.”

For some time I’d been stewing about relationships so her initial question caught my attention.  I too wondered what might business complexity or longstanding Relationships imply about competition and the growth prospects for any given company.  The significant level of capital entering the sector also prompted me to learn more.  Here’s what I learned.

Business Complements

Strategy, I’ve been taught, depends on a company fully understanding its strengths and then intentionally adjusting its capabilities and capacity  in order to insure its growth.  These same capabilities and capacities enable the organization to compete effectively whether it’s  entering new markets and/or developing  new services/products to sell to its existing and or expanding customer base.  In my experience as a consultant, upgrading infrastructure or investing in process improvements generally rank low among C-suite priorities.

I don’t know much of anything about the logistics and transportation sector so I had a lot to learn.  The Freight and logistics Carriers industry breaks down according to different capabilities and competencies.  Air, vs. water vs. Ground transportation operational differences, travel times naturally differentiate their cargo and pricing.  The US Census industry classifications differentiate freight by carrier type and 2014 revenue for Trucking Transportation totaled $261B, of which $172B or 66% was in general freight trucking.  But Third party logistics (3PL) revenues for the same period were $176.2 B.

This latter classification globally encompasses the reality of how stuff moves.  Between the different regulating bodies for customs in each country, and the multi-modal requirements to get product from origin to central distribution points and then to destination,  the playing field has been reduced to about 50 companies competing as 3PL. Armstrong Associates  in their 2015 financial report explains the distinction this way. “These third-party logistics providers have scale based on geographical coverage, IT and processes that create threshold levels which bar smaller rivals from overtaking them by organic growth alone.”

Now Ms Phillips’ statement began to make sense.

Coyote Logistics founded by Jeff Silver with his wife Marianne in 2006  entered  the Transportation and Distribution industry  focusing on the Full truck-load segment. Aided by capital from Warburg Pincus,  Coyote solidified relationships with independent carriers  and  pressed development of proprietary TMS-Transportation Management Systems to become a formidable player in this end of the Logistics/Transportation industry.  Coyote wasn’t the biggest but growth in the last 10 years landed it in position #39 among the top 50 3PL.

In contrast, UPS takes the #1 spot on Global 3PL.  Its history shows it chose a more vertical integration approach owning its own fleet in order to specialize local delivery or the last mile. It’s effective use of technology and innovations with sensors furthered its  industry leadership position and revenues.  That is until 2013, when leadership underestimated the volume of internet purchases and found themselves scrambling to find partners to help meet its delivery promises.  Enter Coyote, whose intelligent systems and on demand capabilities helped support UPS and sustain its commanding presence in  partial truckloads, a completely different end of the Freight carrier market.  I could make a bad pun about parcels to prove this point but UPS Chief Executive David Abney speaking to the Wall Street Journal summed up the rationale for the acquisition this way.

“The brokered full-truckload freight segment is a high growth market and we expect it will continue to outpace other transportation segments,”

More concretely, Armstrong Associates Research reported that Revenue for US third-party logistic companies rose 7.4% to $157.2billion , faster than the 2.8% growth in logistics spending overall.

Sense to Cents

UPS reportedly plans to allow Coyote to operate as an independent entity, which may be wise given the clash between the two cultures. Whatever cost savings they’ve  estimated, avoiding fully integrating the two businesses seems to insure they’ll be able to book them. Each company and their  proven innovation success begs the question of what’s the combined entity strategy?

Price Waterhouse Coopers  17th Annual CEO survey inquiry into innovation, I  hoped might offer some further insight into what might be next, but also I was hoping to uncover some data that might enlighten me further about relationships with respect to growth strategies.   I don’t know whether UPS or Coyote participated in the PwC survey. I do know however that  PwC cares about building relationships and I was able to use the  interaction tool on their website to explore the survey results.  Here are a couple of snap shots I found interesting and relevant.

PwC 17th CEO Study slide 1Slide 2CEOs, as shown on the left, are not prioritizing supply chain as an area for innovation. This surprised me especially in light of the UPS experiences and lessons learned working with Coyote that no doubt created further incentive to acquire them.  The second chart  on the left explores the value of external partners to a company innovation efforts.  Initially, I misread this survey question and interpreted the bars not as the proportion of new products and services developed but thought they represented the numbers of  innovation partners.  Once I recognized my error, I couldn’t help but wonder how many external partners firms engage, as more partners requires more coordination and introduces additional  complexity  that could either compromise or accelerate the innovation opportunity.  Missing that data, I merely aggregated the chart on the right

% Developed with external partners 0 1-10% 11%+
 of Respondents 12 31 57

Read another way, 57% of all surveyed CEOs use external partners to develop more than 11% of their total new products and or services.  12% go it alone.

These results vary by industry. In Banking  23% of CEOs do not engage with external partners to develop new products or services.  By contrast, 70% of Pharmaceutical companies partner in their development of more than 10% of its innovative goods and services.  In Logistics/ transportation , 7% of firms got it alone and another 37% use partners less than 10% of the time. These external partners support what Erica Phillips suggests, that relationships may prove more advantageous to the balance sheet than previously recognized.

Then again, it’s tough to generate organic growth. Disruptions hit every industry and increasingly come from everywhere. Finding appropriate, maybe complementary external partners offers more businesses a fighting chance.  But does the sector dependence on relationships deliver different returns? What about the innovation methods or modes, might they matter too?

PwC’s data contained little additional insight as shown in the pie chart to the right.innovation modes  Open Innovation (gray) proves to be overwhelming preference over other options. Again, I took a closer look into the different industry data to see what if any variation might reveal.

Insurance CEOS  prefer open innovation 41% of the time,  significantly more than other sectors, with Pharmaceuticals, following closely behind at 36%.   MedTech hedges its bets preferring investing in both Design Thinking (32%) and Open Innovation methods (32%).  Healthcare too divides its approach but chooses Open Innovation (40%) and Open Experimentation (28%)  with little investment in Incubators or Design Thinking.

I didn’t find any additional  data explaining  a firm’s choice of innovation to understand why the variation between sectors exists.  Perhaps it’s merely experience and timing  from start to finish that determines the methods chosen. Time pressures and management’s ability to maintain free cash flow  and/or dependence on external partners’ capital also affect a business growth strategies.  Would Coyote be as successful without the support of Warburg Pincus and its private vs. public status?

Thomson & Reuters reported that US M&A Deals  totaled $1,260.4B  as of July 30, 2015, a year over year increase of 66%.  77% of those deals were strategic M&A and the balance private equity M&A. Transportation Logistics is not a category Thomson Reuters breaks out, but when Silicon Valley becomes interested  as Ms. Philips reported private equity and venture capital are definitely seeing opportunity in this sector. Though, I suspect they don’t necessarily represent the only types of strategic partners, I don’t have the data to know.

PwC’s survey data below does show that CEOs plan to collaborate in order to deliver innovation, and rely heavily upon strategic partners to help them.  In fact 96% of Pharmaceutical CEOs expect to collaborate with strategic partners as will 92% of Insurance CEOs, with about 84% of other sectors pursuing similar plans.

slide 3

T

In other categories of collaboration PwC found that  83% of Med Tech CEOs expect to lean more on their suppliers while 51% of  Pharma companies expect to work more closely with their competitors–  which may also account for the  recent consolidations occurring in this sector too.

Data from Thomson and Reuters as of July 2015 reported significant increases in all sectors level of M&A Deal value this year over 2014.  The top values occurring in Energy and Power(15.4%) and Healthcare (15%), where as Retail had the greatest increase overall in activity– 82% more deals than in  2014.

Didn’t you say Collaboration?

Neither of these data sources satisfied my desire to understand the nature of these B2B  collaborations with external partners and its relative impact.  If strategic partners exclusively imply access to capital, then the value of these relationships’ impact narrows considerably.  It suggests a strong connection between purpose and category of collaborator and the choices that subsequently get made.

What does this imply with regards to the earlier reference to  Erica Phillips question.  What strategic advantages and their roots in complexity, if any might  longstanding relationships preserve?

Few people mistake digital transmissions of information for relationships and subsequently  most of what gets’ measured about relationships isn’t materially what matters. In other words, technologies permit  better relay of vast quantities of data.  Does the relay alter our understanding of value associated with different elements or even impact activity occurring along the logistics/transportation network? Historically, the capability to collect, transmit and evaluate the variety of contextual information and understand their effects on profitability were limited.  Thus companies who effectively marshaled human capabilities could command a premium for their foresight, planning etc.  Leadership valued those who could easily relate the significance of  different data from the field and/or share it in a timely manner as it allowed them to maintain command across the system. I don’t know if span of control is low in the logistics business but I imagine this to be true.

Today sensors and boosted transmission capabilities make it possible to collect  and  quantify relayed information and construct context that readily exceeds human’s capability to relate its significance. Both UPS and Coyote invested in developing these capabilities while also maintaining and nurturing interpersonal relationships with their field operators in order to maintain and grow their competitive advantage in both respects.

The merger grants the two organizations opportunities to deepen their collaboration,  learn from each other as well as from their longstanding relationships making them a formidable competitor indeed. If you thought that the relay of goods as well as data drives success in the freight and logistics business  maybe now you will appreciate the value they accrue through their relationships too.

Myths of the 21st century organization and the sad truth about enterprise collaboration


#hypertextual

IMG_4954

There have been 2 milestones in my story with online collaboration tools. First, at the turn of the century, these have helped me to get out of a very tricky professional situation. Then I was fascinated by the geek culture after I joined an innovative start-up in 2004, where everybody would use such tools while collaborating in a very efficient way. And I kept on telling myself : why on earth isn’t everyone working like this ? This is fun, exciting, engaging I need to tell the world this is the way to go.

I have been a very active supporter of these ever since, in particular during the 2009 – 2011 period during which I have blogged extensively on the topic. Looking back to this activism, I have realized that I was making some major misconceptions, the very same that people talking about future of work or hacker…

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Looking to Create Value, then Tinker, don’t Muddle EBITDA will follow.


Ebitda yields since 71Let me share with you a story that reflect reality of the US manufacturing sector circa…well you guess, the era.

The latest EBITDA <2%, obvious signs of  intense competition reducing this business value, as increasingly their buyers viewed  their products as commodities and looked to squeeze prices.  Many of the familiar management responses  broke out  into distinct  buyer segments.

  1. Residential market was hit the hardest as 80% of the demand was for a handful of products that the Asian markets overseas had instantly copied an then niched out a more cost effective production environment.
  2. OEMS , likewise were more cost conscious and still used pressure tactics such as purchase goods they needed at public auction.
  3. Finally the wholesalers, who demanded quality and quick response time.

When viewed this way it proved difficulty for the executive team to maneuver.  Their cushion of years past was significantly disproportionate to the risks they viewed would be necessary to take advantage of  new market opportunities.  Their zealousness attention to EBITDA made them keenly aware  that  needed more margin or room to improve in order to expand.  But that’s how they may have missed some easier more continuous improvements opportunities due to:

  • Inefficiencies in an existing process, existing industry system
  • Ineffectiveness noticeable with changes in external or internal expectations

It’s why tinkering versus muddling remains a more prudent attitude and provides any organization ongoing strategic advantage.

This is why paying attention to EBITDA may help, but also may obscure the focal point where improvement or advantages remain possible.  Sounds easy to align effort with delivery systems.  In earlier eras, your know-how, experience and relationships  also insulated you by creating formidable barriers for new entrants into your business.  Today, widespread digital connectivity levels the field of play and forces firms to behave more transparently and may make them more vulnerable than ever before.

Five classic Strategic shifts--IMD

…for each of the big moves, a related ego-trap often gets in the way of rational decision-making.

This is where the best defense proves its offensive value.

  • Is the business focused on outputs or on insuring business continuity?
  • Do the efforts of individuals align with the tools and systems that further enable their know-how and  extend their experience?

If you think I’m talking about employees, then think  about aligning tools and system for your customers? Your suppliers?

Consider mapping your Value stream.  These diagram materials and the information flow that inevitably occur with every task assignment associated with any product or service creation and its delivery.  Focusing your executive team focus and coordinating their activity around the value they are collectively creating and then mapping what’s needed changes their interactions and sets an example.  These efforts require leadership to challenge and then reward “What if?”  thinking and tinkering. Nip the muddling in the bud.  Internally, connect more people to processes and discover how much more effective they become.  By rooting out inefficiencies sooner and relaying information through improved channels, the organization and executive team gives permission to the right people in the right place at the right time to see and act on stuff that’s important.

Are you committed to protocol or driving value at every level in the organization?

Enabling more people throughout your business to understand what your business needs to accomplish to be successful unleashes their creativity and also insures cooperation if not a little bit of excitement.  These changes require new thinking to structure incentives that incorporate organizational performance and at the same time suspend judgments about what work looks like. It also goes a long way to capturing more value and cement your experienced advantage.