Friday, July 31, 2009

Rule #19: Memo to leaders: Focus on the signal to noise ratio

The Beer Summit Meets Rules of Thumb
I picked up the paper this morning and there was a photo of President Obama, Vice-President Biden, Henry Gates, and James Crowley having a beer together, eating some pretzels, and talking things over. To the media, it was "the beer summit." To me, it was another example of how this President gets the essential act of leadership. By bringing together the principles in a national story about police and race in America, and demonstrating that there is more to learn than what happened that night in Cambridge, Massachusetts, President Obama is focusing all of our attention on the signal and not the noise. Imagine if he had done otherwise; imagine if he had simply let things stand with a comment that the police in Cambridge acted "stupidly"--or he had said and done nothing at all. The noise would continue to rage. Radio talk shows would generate great heat and little light. The Daily Show would generate great laughs and little teaching. As President and leader, President Obama used the bully pulpit to make a larger point--and to add more signal and less noise. That one photo of the four men sitting together, two black, two white, showed that the ugly event in Cambridge could find a more peaceful and understanding resolution. The signal that President Obama sent said that we can and should always be able to sit down together and reason about things, that it's not over until we do that, in fact. If all we do is retreat to opposite corners and insist that we were right and the other person wrong--or that we were wronged and our rights abused--then we have nothing positive to show for the emotions that were spent. But by bring signal to the noise, President Obama has demonstrated at least two important lessons: he's showed us what real leadership looks like, and he's found a way to bring something constructive out of an otherwise unhappy moment. And he's illustrated how a rule of thumb can serve as a guide in even the most difficult situation.

Monday, July 27, 2009

Health Care Reform Needs Rule #5!

Change is a Math Formula

If President Obama succeeds in his quest to reform America’s health care system—an “if” that gets if-ier every day—it will be because the administration finally embraces the fundamental rule of change: Change is a math formula—C=Co(SQ)>R(C). The formula reads: Change happens when the cost of the status quo is greater than the risk of change. The way to win the debate on health care reform is to drive up the perceived cost of the status quo.
It may be that the Administration is starting to do the math. In his recent health care reform press conference President Obama embraced the change formula. “If somebody told you that there is a plan out there that is guaranteed to double your health care costs over the next 10 years, that’s guaranteed to result in more Americans losing their health care, and that is by far the biggest contributor to our federal deficit, I think most people would be opposed to that,” President Obama said. “Well, that’s the status quo.”
It was a nod in the right direction, but no more than a nod. As soon as the President was done with that passage, he went back to explaining how his health care plan would work. Back, in other words, to the wrong side of the equation. As long as the debate focuses on the perceived risk of change, change loses. For change to win, every answer to every question about health care has to begin with a precise calculation of the high cost of the status quo.
The simple reason for that is that, for the most part, Americans with health care coverage operating within the accepted norms of the existing system don’t feel that system failing. If there is a “health care crisis” it isn’t their health care crisis. What they need—what we all need—is a detailed, understandable explanation of the high cost of the status quo. We need it in economic terms, and we need it in human terms. Then and only then, after we’ve come to appreciate the high cost of the status quo will we be ready to accept the risk of change. In fact, if the President and his team do their jobs right, we’ll welcome the risk of change as an improvement over the current unworkable system. We’ll finally be confronted by its unsustainable economic costs and its unimaginable human costs.
Take the economic side of the status quo first. There’s a simple reason why corporate America has embraced health care reform: companies are tired of bearing the high cost of a system that saps their ability to compete in the marketplace. At GM, the sick joke used to be that the company made and sold cars to be able to pay for its employees’ health care costs. Starbucks, long regarded an exemplary employer in the convenience food and beverage industry, routinely pays more for health care benefits for its workers than it spends on coffee beans. Anyone who’s worried that health care reform could cost American jobs needs to take a hard look at the jobs we routinely lose now because our companies have to absorb health care costs that our global competitors simply don’t have to pay.
At the individual level, the economic burden of the U.S. health system is also untenable: Americans spend about $6,500 per person per year on a health care system that now takes up 16% of the U.S. economy. But when it comes to results, all that spending doesn’t measure up. The United States ranks #41 in the world in life expectancy, below Cuba, Costa Rica, the U.K., and Germany, among others. When it comes to the category of child well-being, the U.S. ranks #20 in the world, behind such nations as Greece, Poland, and the Czech Republic. We’re paying a lot and we’re not getting much for our money. And it’s only going to get worse.
At the same time, we need to hear stories of the human costs. Americans will listen to their wallets and pocketbooks first, but as a people we’re not immune to chilling stories of human tragedy. Take the story of a 12-year old boy named Deamonte Driver who lived in Prince George’s Country, Maryland, a few miles from the nation’s capitol. As reported in the Washington Post by Mary Otto, in 2007 Deamonte Driver died of a toothache. Here’s what she wrote: “A routine $80 tooth extraction might have saved him. If his mother had been insured. If his family had not lost its Medicaid. If Medicaid dentists weren’t so hard to find. If his mother hadn’t been focused on getting a dentist for his brother, who had six rotted teeth.”
Instead the bacteria from the abscess in Deamonte’s tooth spread to his brain and killed him. That’s just one human story about the high costs of the status quo. It makes the same point as the economic data. The current system is broken. It is only getting worse. It costs too much and delivers too little. It undermines our nation’s companies. It allows 12-year olds to die of tooth disease. It is a national crisis.
All of a sudden the risk of change looks a lot better.

Thanks, Slalom Consulting

One of the best parts of what happens after you write a book is that it becomes an excuse to go out and meet people. The book, as my friend Seth Godin reminds me, is simply an occasion--it's what provides the opportunity for the interaction. What's always fun and surprising are the people you meet and the experiences that happen as a consequence of the book. Last week my friends at Kim Ricketts Book Events in Seattle arranged a chance for me to speak at the quarterly meeting of Slalom Consulting. I had a phone call to chat before I went to Seattle, a chance to sit down before the talk and visit with the leaders of the firm, and then I gave a talk to about 200+ very bright, very talented, very energetic consultants from Slalom. This is a firm that is out to do consulting differently: they get the idea that "the soft stuff is the hard stuff." By making work-life conditions for the consultants a top priority, the firm attracts talented men and women who want to do good work and have a good life--and don't see why they have to give up one to get the other. I spoke for about 40 minutes, talking about some of the lessons from Rules of Thumb, answered questions for another 20 minutes or so, and then signed books--and got to chat with Slalom folks as they brought up their books for me to sign.
I had a fantastic time, met great people, and came away thinking that there are places where the sub-title of Rules is already being practiced: they know how to win at business without losing themselves!
Thanks, Slalom!

Wednesday, July 15, 2009

"If I had a bottomless piggybank . . ."

says the most generous Laurel Delaney in her comments on Rules of Thumb, "I would gift this book to everyone I know . . ." Wow! What a review! Laurel has instructed me to "go tear up the Web with the news" of her take on Rules--so this is where I'm starting! Please do read her comments, and then pass along what she has to say. You can find her take (here):

Saturday, July 11, 2009

"Tom Peters Re-Mix"?

File it under "you can't win'em all." Since Rules came out, I've been gratified by the feedback I've gotten (This is a good time to say "thank you" to the bloggers, tweeters, emailers, and others who've gotten in touch to tell me that they really like the book. Consider yourselves thanked!) In fact, the response has been so uniform that I began to take it for granted--big mistake! Yesterday I got a review of the book that is, at best, luke-warm. It's a "Tom Peters re-mix" and only worth a handful of yellow stickies marking new and interesting points raised in the book. Not enough aha's, said the review. And the writing, well, it's far from brilliant--mostly serviceable.
Fair enough. I appreciate the time spent reading it, even if it wasn't this reviewers cup of tea. And since I posted all the positive reviews, I figured, fair is fair, I'll post this one. You can read it (here):

Friday, July 10, 2009

Generations and Leadership

Yesterday I had the great pleasure of spending a good hour on the phone with my old friend and mentor, Warren Bennis. Warren, as most folks in the world of management know, is the pre-eminent voice on issues of leadership, having practically invented the field as one worthy of study. The reason for the call was a brief exchange on this blog about the changing nature of leadership over the years: Did an earlier generation of leaders have a different set of values than those currently occupying positions of responsibility? Were business leaders 50 or 60 years ago more likely to take responsibility for their decisions and their actions; did they hold themselves and their organizations more accountable; did they have a greater sense of commitment to the community? Warren, as you might expect, had a list of leaders from "the old days"--but at the end of our phone call we left the question still open. What do you think?

Wednesday, July 8, 2009

Malcolm in the Muddle

If you’re as big a Malcolm Gladwell fan as I am, then his recent essay/review of Chris Anderson’s new book, “Free,” in The New Yorker probably left you as confused as me. What I’ve always admired most about Malcolm is his ability—his gift, really—for decoding our time. He tells us a story with great specificity, detail, and charm, and then, after we think we know what the story is about, he tells us what it’s really about. Like a journalist/semiotician, he looks through the facts as they appear to see what is behind them, what is more true than the facts themselves. Or at least that’s what he does in his own essays in The New Yorker and in his three best-selling books.
But his review of Chris Anderson’s book is almost the opposite: he is stunningly, stubbornly literal. He takes Chris to task for his writing style, calling him out for paragraphs that offer a “. . . reassuring arc from ‘bloodbath’ to ‘salvation.’” He makes fun of the fact that Chris capitalizes the word “Free”—saying parenthetically “(Anderson honors it with a capital”) as if that were a cheap writerly trick Chris is trying to pull. And perhaps strangest of all, he argues against the notion of free by pointing out that electrical utilities will always have “plants and power lines.” Information doesn’t want to be free, Malcolm argues: look at the success that the Wall Street Journal is having charging for its online version--as if that were the defining case in the rapidly failing world of newspapers. All in all, Malcolm concludes, there’s not much of value in a book called “Free.”
Now unlike my friend Seth Godin, I can’t say categorically that Malcolm is “wrong.” For one thing, I haven’t read Chris’ book; for another, I don’t think the debate we’re in right now between the emerging economy of the web and ideas, and the mainstream economy of print and things is about right or wrong. I think it’s more of a Rubik’s Cube of a puzzle that challenges us to think creatively about business, management, value creation, risk, reward, and a host of questions we used to think we knew the answers to. As we think outloud, we're looking for a new way to click these pieces together so companies can make money and consumers can have delightful products and services--without clinging to the rapidly failing models of the past. The game is afoot,and it's up to nimble-minded writers and thinkers to try to figure it out.
Which is what troubles me about Malcolm’s review. He doesn’t seem to be dealing with a very interesting question in an interesting way—and that seems very un-Malcolm-like.
A few elements of Chris’ argument, as presented by Malcolm (since I confess again that I haven’t yet read the book) seem hard to deny. We are dealing with an economy in which it is now commonplace to charge, not for the thing itself, but for the ideas or attributes that surround the thing—whether it’s an experience, a relationship, an ancillary product, or a memory. We are witnessing a transition from a business environment where there was a clear link between price and value to one where that linkage is much more tenuous and open to negotiation. We are seeing a de-coupling of what used to be a clear connection between the price of something and the true cost of something--not to mention the real value of the thing. It seems almost obtuse not to recognize that the old time-honored relationships are eroding and something new, different, and as yet not completely formed is emerging. To hear Malcolm think out loud about that in the form of a review of Chris’ book would be worth, well, a lot more than free. There are serious questions that need grappling with:
Where are we in this transition? Who’s managing it well, and who poorly? Where are there signs of more evolved economic creatures that give us a sense of the shape of the future? What will happen to the magazines, newspapers, radio stations, music producers, banks, airlines, retailers, that fail to make the necessary adaptive moves? How soon and how inevitably will it happen--and what, if anything, needs to be done in anticipation? Where’s the line for consumers: if “free” goes away once the old enterprises go away, will we see consumers agree to pay for what used to be free? Or will we end up in an economy of cross-subsidies and transfer payments? Who will create the next version of transactions—consumers or producers? And how will that negotiation be structured? Rather than simply denying its existence, where can we catch of glimpse of this future as it emerges, and what rules can we imagine that will help make the transition more manageable?
Finding the deep questions that lie behind the facts in any situation is what Malcolm does better than anyone. Fads aren’t just fads, he tells us—they happen because phenomena have tipping points, and we can learn how to manipulate them. So it is with “Blink” and “Outliers”: things aren’t what they seem—there’s a deeper, smarter, more fascinating way to look at things than what appears on the surface. I think that’s also Chris’ message: price points, transactions, economic and business principles aren’t what’s happening when money does or doesn’t change hands. Something else is changing, and it goes even deeper than the price point: “free” isn’t a price—it’s a way of thinking. "Free" isn't a number--it's an emerging economic concept. It’s actually a very Malcolm-like argument, or so it would seem.
So why the literal-minded review?
Maybe Chris has simply written a not-very-good book. I don’t know. Malcolm didn’t care much for it; neither did the New York Times reviewer. So maybe Malcolm’s literal-minded review is just a polite way of saying, “Sorry, this book didn’t work for me.”
Or maybe Malcolm’s just getting tired of other writers doing less well what he does so well: after all, he did pioneer a whole genre of sociological business books that have catchy one-word titles (I think if he had it to do again, he’d have named “The Tipping Point” simply “Tip!”). But as a recent piece in The New York Times pointed out, successful book titles inevitably spawn imitators, and we’ve seen a spate of one word titles in the business/sociology category. And Malcolm is a master—if not the master—at catching the moment in a bottle and then deciphering it for us. If his review is simply a way of firing a warning shot at others who want to play on this field, a signal that he’s going to maintain his position and enforce his standards, well, that’s fair enough for me.
I just wish he’d given us a more Malcolm-like take on the whole category of the emerging threads of business and the economy. For my money, the debate over how the Web will shake out across industries and businesses is still one of the most interesting ones around; what we will do to hang on to what works of the old rule book while writing a new one is a huge unknown; how we will manage to step out of the "either/or" past into the "both/and" future is a new category for business discussion. Right now, the field is open and the thoughts are, well, free.

Tuesday, July 7, 2009

Ideas Without Borders

In the last few days I've gotten postings from two places I never particularly expected to hear from. The first came from a teacher in Canada (followed by a second teacher in Pennsylvania) describing to me how he thought Rules could be used as a template for reform of the public education system. In a follow-up email he told me that, unlike many in his field, he loves to read books that aren't, strictly speaking, about education. Reading across boundaries, he said, opens up his mind to new ideas and new possibilities that wouldn't occur to him if he stayed inside the boundaries of traditional books written by fellow educators. Then today I got a link to a post written by a doctor. He was using Rules to make a point that he found inside his profession--the growing disparity between those in medicine who know it, and those who do it. When I wrote that rule, having learned it from my friend and mentor Larry Smith, I was thinking of its application to business and politics, where experts often make pronouncements that are at great odds from the actual experience of practitioners on the ground. But once I read the good doctor's post, I knew that, just as there are physicians without borders, there are ideas without borders--and that Rules is apparently traveling quite well, finding readers in education, medicine, and other parts and places in the world where change is the everyday diagnosis and new rules the only reasonable prescription. You can read the doctor's post (here).

Saturday, July 4, 2009

The Art of Reframing--Right Church, Wrong Pew

Newspapers and the blogosphere are full of reports and comments criticizing the Washington Post; the publisher of the Post, trying to come up with a new answer to the question "what business are you in?" came up with a fresh answer: the salon business. So far so good. She then proceeded (or someone on her behalf, it's a little unclear who did what exactly) to offer access to Washington Post reporters and editorialists at her home over dinner--for a very high price: the kind of price that suggests that lobbyists, for example, would be the ones who'd pony up the bucks and then seek to peddle their stories and points of view over the steaming plates of food.
Ouch! All of a sudden the publisher starts to look like just another influence peddler. And the Washington Post gets a black eye.
It didn't have to be this way. The publisher was in the right church, just the wrong pew. If she'd opened up a new category for any and all readers of the Post--call it "members" rather than "subscribers"--and then held a lottery for a series of informal gatherings, not a full-blown linen table cloth dinner, but a wine and cheese reception, say, with a Q&A session with Post writers, starting, say, with the sports section, just for fun (a section with some amazingly talented writers, it should be said), she could have eased into the experiment. The Post would have gotten some practice reframing its business model, the whole thing could have been fun and entertaining, with a populist flavor, and a new revenue model could have been tested.
Now the whole thing looks cheesy.
Reminds me of another Rule of Thumb: Knowing it ain't the same as doing it.

Friday, July 3, 2009

Rules for Schools

Over the past few days, I've gotten two emails from readers of Rules of Thumb who come from the world of education, looking to apply the idea of rules to the world of schools.
One of the things I'm most troubled about and most interested in is the state of public education in America--I live in Santa Fe, New Mexico, for instance, where 50% of the kids who enter high school do not graduate from high school. Could a new set of "rules of thumb" provide guidelines and templates for new thinking about what really does work in public education? Here's one blog that got me thinking--see if it kick-starts your own ideas on public education and new rules. You can find it (here).

Wednesday, July 1, 2009

The Best Business Book This Year?

If you believe Justin R. Levy, that's exactly what Rules of Thumb is! He's a devoted blogger and a serious reader of business books--for reasons that escape me, he took Rules with him on his honeymoon to St. Maarten. (Memo to Justin: did you check with your bride before making this choice? Oh, well!) When he got back, he filed a video book review that puts Rules at the top of his book chart. Many thanks, Justin! You can watch his review (here).

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