Monday, August 31, 2009

Which Side Are You On, Part 2

"How did you go bankrupt?"
"Two ways, gradually and then suddenly."
The quote is from The Sun Also Rises, and it's worth remembering that before he was a novelist, Hemingway was a very careful reporter. He took notes and he remembered everything and everybody he met. His dialog on bankruptcy isn't something he made up; it's something he heard--it has the unmistakable ring of authenticity.
If you ask the people at GM how they went bankrupt, my guess is they'd say much the same thing. Or ask the higher-ups at Lehman Brothers what it felt like to vanish. Gradually, they'd say, and then suddenly.
What's true for companies is true for ideas as well.
How do ideas go bankrupt? Gradually and then suddenly.
These days when you hear the old refrain that "greed is good," you have to shake your head. Did we ever actually fall for that? When you hear someone describe the promises Madoff gave to his investors, the notion that year after year he'd deliver double-digit returns without a single year of failure or falter--did people actually fall for that?
What's next?
In a few years, will we look back at the notion that the job of a corporate manager is to create value for the shareholders and ask, did we ever really believe that?
Will we look at CEO compensation and shake our heads, as if it were just another version of a Ponzi scheme?
How do ideas go bankrupt?
Gradually and then suddenly.
But by the time they go bankrupt, it's too late.
The time to start writing your own new rules is before the old ones are officially bankrupt. Don't wait until the bankruptcy proceedings have gone from gradual to sudden.
Do it now.

Sunday, August 30, 2009

Which Side Are You On?

Here's where we are:
It looks now as if the economy has bottomed out. What appeared as a possible melt-down of capitalism has turned into a disastrous global financial crisis--as if averting the melt-down is enough reason to declare victory. And there are even some indicators that suggest that maybe, just maybe, things are starting to turn around. It may be a jobless recovery. It may be a long and slow recovery. But the collective sighs of recovery are enough for a world that is willing to take recovery on almost any terms.
At the same time, with recovery comes a new question--and how you answer the question tells you which side you're on.
Here's the question: Was the downturn just cyclical, and with recovery will come a return to business as usual?
Or was the downturn a sectoral change, the kind that happens when tectonic plates shift, the kind that signals a fundamental alteration of how business works, how organizations run, how careers develop, how we all behave as workers, consumers, and citizens?
Over the last month or so, I've heard voices on both sides of this divide. In the magazine industry, there are business leaders who're convinced that, once the recovery takes hold, we're all going back to the way it was before. Advertising will come back; readers will come back; the old business model will re-assert itself.
In the world of big-time corporate lawyers, there are many who see it the same way. Prior to the financial melt-down, law firms in the U.S. enjoyed 7 straight years of booming profits and lucrative earnings. Why shouldn't it all be that way again?
Leaders at ad agencies are making the same argument, as are people at the top of retailing, entertainment--even some at the U.S. Post Office.
And then there are those of us on the other side of the great divide.
We say the changes are deep, lasting, and unrelenting. We agree that there will be a recovery, and recovery always brings back some of the business-as-usual practices that worked before.
But the cracks that have emerged, the ruptures that have split old business and old industries--those will never be sealed, never be repaired.
We're seeing a whole generation of business leaders, government leaders, non-profit leaders who have been seared by this economic crisis. Old assumptions have been proven not to work. Even Alan Greenspan was forced to admit in front of Congress that business leaders made decisions that were not part of his old economic philosophy, that didn't fit his academic model.
But it's not just philosophy or academic models that need re-thinking. It's practices and methodologies, mental maps and personal values that need to undergo a deep and serious re-think.
It would be great if we had time to re-calibrate the teachings in the business schools across America--I'd welcome a longer conversation about what a new curriculum needs to look like.
But right now, we need to make our own changes, learn our own lessons, and come to new practices without the luxury of an MBA re-education camp. We need to ask new questions, sponsor new conversations, and challenge each other to new answers that respond to the new circumstances we're in today, circumstances that will last for the foreseeable future.
That's the reason I wrote Rules of Thumb. It's a field book for leaders who are being minted in the crucible of today's challenges. It's a work book that you can use to take your own notes, generate your own rules, and share them with me, your colleagues, and everyone else who's on our side of the great divide.
Here's the question: Which side are you on?
If you agree with me that things are not going back to the way they were, if you agree with me that we need to re-think, re-work, and re-write the rules of work, business, and life so this crisis is the last one we ever have to confront, let me hear from you.
Go to and give me your view, your insight, and your own Rule of Thumb.

Friday, August 28, 2009

Chris Brogan Meets Red Auerbach

I woke up at 6 am today to get ready for a 6:30 am radio interview. That's early for me. But it meant that I was at my computer at 6:15 am checking my email. The in-box was exploding with messages filled with exclamation points! (Like that one.)
The basic message was, Have you seen what Chris Brogan said about your book! Chris Brogan just wrote the most amazing post about your book! Chris Brogan absolutely hit a home run for your book!
So I went to see what Chris said. It was amazing. It was generous. It was off the charts. (I've put a link to Chris's blog at the bottom of this piece.) You can read it by clicking (here)
But what's really amazing is that Chris is in the throes of his own white-hot book launch. His book, "Trust Agents" is busting to the top of the charts, #1 on every relevant Amazon list, blasting onto the NYT best seller list, rocketing in demand in every market.
And he's got the time to write about my book?
Never mind the fact that we've never met. Never mind the fact that he's already reviewed it when it first came out. Here's a writer, thinker, speaker, blogger, you-name-it-he-does-it guy who has the mental and emotional bandwidth to reach out to me while he's at one of the hottest moments in his already hot career.
It makes me think of Rule #53, the Red Auerbach management principle: Loyalty is a two-way street.
We live in a world where trust, respect and reciprocity are all the coin of the realm.
We need to create an economy of increasing returns, an economy of gifts, as Lewis Hyde writes in his amazing book, "The Gift."
We need to look out for each other, build on each other, contribute to each other.
That's the way Red Auerbach built the Boston Celtics in their glory days. Loyalty, Red told me, is a two way street. If you want your team to be loyal to you, you have to be loyal to them. You have to reward contribution, not just the highest scorer.
The same thing applies to the message Chris is sending out--a message that's bigger and more important than anything he says specifically about my book. It's the way he is building his own work life, his career, and even more important, his community of friends, fans, and supporters.
I woke up this morning to learn a lesson from Chris that I'd already written in my own book.
It's always better when someone reads what you've written, and then plays it back to you.
Thanks, Chris! You not only wrote Trust Agents, you are one.
You can read Chris's post by clicking (here)

Thursday, August 27, 2009

Even In Japan, Change is a Math Formula

No one would ever accuse the Japanese of sudden, thoughtless, knee-jerk political change. Most experienced Japan watchers in the US would agree that throughout its post-war history while Japan has been a democracy, it's been a democracy with only one party, the LDP. Year after year, election after election, the question wasn't whether the LDP would maintain its rule--it's been in power for 53 out of the last 54 years. The only question was, which faction within the LDP would emerge on top.
Until now.
Sunday, Japan's voters go to the polls and if the reports play out as expected, the LDP will suffer a massive, unprecedented loss to something called the Democratic party of Japan, the DPJ. According to The Guardian newspaper of Britain, "Despite its dominance at the polls, the DPJ remains an unknown quantity." The party has made ambitious promises to the voters, raising spending on social programs while cutting taxes--without explaining how it intends to do any of it.
So why is Japan poised to take this momentous step?
Here's what The Guardian says: "As Japan grapples with rising unemployment, population decline and a creaking state pension, the certainties of the postwar era have disappeared, and with them the LDP's sense of entitlement as the natural party of government."
In other words, the cost of the status quo has gone up so much, that the Japanese electorate is ready to embrace the risk of change.
Rule #5 works, even in Japan.

Wednesday, August 26, 2009

Health Care, Homelessness, and 2 Rules of Thumb

I was listening to NPR the other day as I drove to my favorite coffee shop to pick up the New York Times. The report was yet another sad description of the seemingly endless loop we're stuck in these days, debating the question of health care--or actually not debating, but instead posturing and hurling angry accusations at each other.
But this report made a special connection: health care and the homeless. As a small back-story, I've been tracking the issue of homelessness for about 6 years now, ever since my friend Rosanne Haggerty, whom I admire enormously and wrote about in Rules, introduced me to her work in New York to end homelessness through Common Ground. Under her tutelage, I've served as moderator for a number of national gatherings of mayors and homeless advocates who are seeking not just to make a dent in the problem, but to end chronic homelessness in America's big cities.
So when the NPR turned to homeless and health care, I listened a little more carefully. What I heard was distressing and depressing.
A U.S. Senator was explaining in a town hall meeting why it made sense for us to extend Medicare benefits to homeless Americans--there's a bill before Congress right now to do this, and he was describing why it was good public policy and good human services. The angry crowd was booing and shouting him down.
Never mind the facts that 1 out of every 4 homeless Americans is a veteran and that there are almost 200,000 homeless veterans--men and women who we take care to honor in our words, but then neglect when they need help the most.
Think instead about the obvious benefits that would accrue to all of us if we also did the right thing for these homeless Americans.
Think first about the link between health and homelessness. It seems obvious that homeless people are likely to suffer serious health problems. What is less obvious is that often serious health problems are what make people homeless in the first place. Because they are sick and lack adequate health care coverage, many Americans who are working poor find they lose their jobs, lose their income, and then lose their homes--that's how they end up on the street in the first place.
Once they are homeless, living without shelter, they are more likely to suffer even worse health care problems, problems that land them in emergency rooms. The treatment there isn't designed to cure them--it's often just good enough to get them back out on the street.
We end up paying for the treatment, which isn't really adequate, and then we pay again when they're back out on the street but still sick. It's a depressing and expensive circle that Malcolm Gladwell chronicled a few years ago in a brilliant New Yorker article on homelessness called "Million-Dollar Murray." Malcolm explained how the good taxpayers of Arizona spent $1 million on a single homeless man--Murray--by paying for a system that only worked to keep Murray homeless!
There are two Rules of Thumb that I immediately thought of as I listened to NPR: Rule #4 says "Don't implement solutions. Prevent problems." How much money could we save and how much suffering could we avoid if we treated health care as a way of keeping people healthy rather than treating them after they get sick?
And Rule #7 says "The system is the solution." Health care and homelessness is so obviously an issue that needs to be addressed in a systemic way. The only way health care reform makes sense is to see it as a system, not a series of disaggregated choices or random unconnected episodes. Systems thinking saves money, devises solutions that are internally consistent, and avoids unintended consequences. Which is what the Senator was trying to explain to his voters.
If only we could find a way to listen to each other and learn from experience. We'd actually come up with compassionate solutions that make economic sense! Which takes me to Rule#52: "Stay alert! There are teachers everywhere."

Wednesday, August 5, 2009

Rule #28: Good design is table stakes. Great design wins.

I stopped by the office of one of my favorite consulting firms yesterday just for a quick check in. Sitting with one of the principals, I exchanged a little bit of chit-chat--favorite airlines, favorite hotels, favorite restaurants, the kinds of things consultants deal with on a day-to-day basis. In the middle of our visit, he stopped to offer a piece of mother-in-law research.
"I was on a plane last week," he said, "and I had to walk all the way from the front of the plane to the back to get to the rest room. As I walked down the aisle I looked at the people on the plane, row by row. I'm guessing that more than 60% of the people on that plane were using an Apple product! They had a MacBook or an iPod or an iPhone--something by Apple. And even if a lot of them were just iPods, that's a lot of iPods!"
Another consultant chimed in, "I still get people who tell me Apple is a challenger brand. Not any more!"
Go into any Apple store and you'll see what both of them were talking about. We're in the middle of a recession, the worst economic downturn since the Great Depression. Just don't tell that to the people working in the Apple stores or the people there to buy things!
What is it that Apple is selling?
It isn't price. Microsoft has made that pointedly clear in the series of ads they've run challenging shoppers to stretch their dollars and get a computer that does all the things they want it to do. Apple has even objected to these ads--with good reason.
No, what Apple is selling is great design. Great design with a capital "D".
It's not just good looks--although Apple has always had products that look great to the eye and feel great in the hand. And back when Steve Jobs briefly amazed the world with fruit-colored monitors, Apple had products that you imagined would taste great in the mouth!
But great design is more than look and feel. It's a sensibility, a way of looking at the product and the user and creating something that is fun to use, delightful to experience, and satisfying to own. Great design comes when you anticipate user's desires, and then give them something they never even thought to ask for. It comes with a cool factor that you really can't fake. It comes with a combination of icon thinking and flawlessly practical execution.
That's why more than 60% of the people on that plane were using an Apple product. And it's why my very sharp-eyed consultant friend noticed. Great design wins--and we all notice winners.

Sunday, August 2, 2009

What's the Big Idea?

It's in "Rules of Thumb": if you want to write a business plan, start by asking yourself, "What's the big idea?" It's a question that's come back to me as I've tried over the last few months to explain to people what the big idea is that's at the heart of Rules. What's the message?
Asking the question of myself has proved to be a useful exercise. Now that the book has been out for four months, now that I've done countless radio interviews, given speeches in front of audiences from New York to Seattle, from Vienna to Copenhagen, from Washington, DC to San Francisco, what exactly is the message that I embedded in those 52 rules? When you step back from what Seth Godin delightfully described as "nuggets" and Dan Pink compared to a batch of espressos, what's the take away?
You'd think an author would knew intuitively, instinctively what his book's message is. These days, you'd think an author would have mastered the answer to the question to sell the book in the first place. But my experience is a little different; I've found that usually the audience, readers, and fans tell you what your book is about, if you listen carefully enough.
That said, my first move wasn't to the comments that readers have shared on the Rule #53 space or on the comments readers have left or on the comments on the Amazon page, or even in the emails that have come to me from readers.
Instead, I went back to the foreward that Jim Collins wrote a few years ago for a collection of articles published in book form as "Fast Company's Greatest Hits"--the first 10 years of innovative business thinking in the magazine that Bill Taylor and I started.
What did Jim say about the early days of Fast Company?
Jim found 5 basic premises embedded in the magazine:
1. Work is not a means to an end; it is an end in itself.
2. If your competitive scorecard is money, you will always lose.
3. Business is a mechanism for social change--for good and ill.
4. Entrepreneurship is a life concept, not just a business concept.
5. Performance is the fundamental requirement.
Certainly those 5 premises are also baked into Rules of Thumb; no surprise there--I'm the same guy who was baking them in.
But there's something else, an overarching theme or premise that relates to the immediacy of the moment of now.
And for that I went back to the original business plan for Fast Company, to the first letter from the editors that laid out the magazine's philosophy. In it, we wrote, "The world is changing, and business is changing the world."
Only today, the circumstances are different. Look at the front page of the paper today and you'll find a story about a money manager who stands to make a $100 million bonus at the very moment that the financially driven economy is still stalled, at the very moment when the lives of millions of people around the world have been ruined by money speculation. The New York Times article raises the question of whether or not it makes sense for the man to get his $100 million; it doesn't ask the question of whether or not the system that produced the bonus in the first place is suffering from a fundamental flaw.
Ultimately the overarching message of Rules is a re-write of that business plan sentence from Fast Company. Today, the sentence reads, "The world needs to change, and business needs to change to make that larger change possible." We need a mental model for how we do business in the first place. The old play book keeps landing our economy, our companies, our social fabric, and the lives of too many of our citizens in the ditch. Every decade since I've been tracking business, management, and work, we've had at least one, and often more than one, serious crackup--a bubble, a scandal, a government-organized rescue. And at the same time, over those same decades, we've seen the beginnings of new practices and new principles that guide business people and companies in new and exciting directions. We are writing new Rules of Thumb because we desperately need them to create the future we want.
The Big Idea at the heart of Rules of Thumb?
The world needs us to change it, and we need new rules to change business to change the world.

Saturday, August 1, 2009

Rule #32: Content isn't king. Context is king.

Case in point: the New York Times, yesterday and today, on the way bankers have handled the economic recovery and their own just (or unjust) self-awarded rewards. The front page of the Times yesterday (July 31) has a lead story on the right hand column with the headline: "Bankers Reaped Lavish Bonuses During Bailouts/Cuomo Issues a Report/About 5,000 Got Over $1 Million--A Spur to Debate on Pay." That headline pretty much says what Louise Story and Eric Dash go on to report in the story. Banks were battered; bankers still go huge bonuses. That's the "news." But how should I think about it? What is the correlation between the behavior of the bankers and, say, the larger narrative of the national and global economic crisis?
For that you have to turn to the business section and read Floyd Norris' column. And there the headline tells you a different tale: "It May Be Outrageous, but Wall Street Pay Didn't Cause This Crisis." Norris' column is all about the context of the news. He brings in interesting connections, including one study that shows that the more CEOs held stock in their own companies, the worse the bank performed. Norris quotes the study: "Bank C.E.O. incentives cannot be blamed for the credit crisis or for the performance of banks during the crisis."
Then in today's paper, Joe Nocera takes the contextual discussion another step. In a column headed, "'Nice' Wasn't Part of the Deal," Nocera raises the question of whether banks and bankers should even be expected to behave differently than they have. "To ask them to put aside the profit motive, even temporarily, for the good of the country-it's not even in their frame of reference," he writes.I would have been ecstatic if Joe had taken another step, and questioned the unquestioned rule of publicly traded companies--that their one allegiance is to create shareholder value. But as always Joe is asking good questions, digging into the story behind the story, and challenging the easy emotional reaction that the first front page story in the Times could elicit.
But beyond the specifics of the banking pay argument, here's the point: If the New York Times were to disappear tomorrow, I wouldn't miss the front page; I'd miss Floyd Norris and Joe Nocera. I'd miss their informed point of view, their capacity to ask the right questions, their willingness to dig deeper and bring new insights into the conversation.
Content is a commodity. Context creates value.
It's not only true for newspapers, magazines, and the media industry; it's how each of us add value at work, every day. Information may be free, but knowledge, insight, and perspective are all things you can charge for.

All Rights Reserved 2009 (c) Alan Webber, Rules Of Thumb