How to avoid getting screwed by bad advisors
Balazs, a talented engineer approached me back in 2007 with an idea he had for outsourcing funding to the crowd, as an alternative to angel investors – 2 years before Kickstarter took the crowdfunding model mainstream.
I didn’t like the idea, because I couldn’t image that I would pitch in $20 together with hundreds or thousands of others to help launch something… I always imagined(!) that when it comes to funding I am more like a VC than a … whatever.
So I did a thorough analysis proving beyond the shadow of the doubt that it’s a logical impossibility (my expression of choice at the time) that this model would EVER work. Not only did I not help Balazs launch the initiative, I persuaded him that he should not do it at all!
What happened in simple but significant terms was that I projected my own limitations onto somebody else’s life and then simply rationalized them: rationalized my limitations!
True story – unbelievable.
Now that we are at the topic of limitations I can throw in here that when Ebay already proved beyond the shadow of the doubt that auctions work for pretty much everything, I still couldn’t believe it and thought that they will surely fail. Why? Probably because I just don’t get auctions.
I have more of such stories but I stop embarrassing myself for now.
So here are a couple of considerations / reflections about advising and using input for decision making in so called “highly uncertain environments” which is another word for life:
1. Be aware: We are what we are not and there is a lot more of what we are not than of what we are (not bad, eh?)! The individual IS limitation. Everybody’s limited! People can express only their limitations. Always – unless they are aware! So when you’re considering feedback or giving feedback, be aware of whom it’s coming from or whom you’re giving it to. Know the guy. Know his patterns! This is more important than what he’s rationalizing. Same thing is true about you! Chances are you don’t know the guy or – be honest! – yourself – so forget about the concept of “your opinion” and keep an open mind.
2. If they ask you for advise about ideas, do not focus on why it won’t happen! You simply don’t know if it’ll happen or not irrespective of identified risks, constrains and perceived realities! Focus on how, in your limited opinion, it may happen! Same if you ask others for ideas: “this may sound stupid, but what do you think it would take to make it work?” So if for instance a guy who can’t draw an Audi logo wants to launch a product design company, don’t shot him off, introduce him to designers!
3. Forget (abstract) mathematical or statistical logic! Seriously! The world works on a different logic – the kind that helps for example the con artist and the victims always find each other. There is a large element of stuff in this logic which from a sterile mathematical point of view will SEEM stupid.
So don’t forget the Stupidity Quotient (SQ)! You must count with it, especially in b2c! Assume that when it comes to anything “mass”, the more stupid something appears to the personality, the more chances it has for success. Think about consumer behavor! Look at twitter! Look at the sharing craze! These are high SQ industries. Quick: did skype emerge when the amount of nonsense conversations globally reached a critical mass, or skype caused a critical mass of non-sense conversations? Did music become free (“illegally” or otherwise) after it became crap (I am aware of exceptions!), or it became crap because the publishers were cut out? The key is always in patterns!
How I didn’t manage to launch startups in the middle of the dotcom boom
Sometime in the summer of 1999, late at night in my apartment in Toronto I spent hours with my friend Zar discussing an incredible idea: let’s say you watch Matrix (came out that year) on DVD, you like Neo’s shades, you click on it with the remote control and voila: you can buy it. I know: you also thought about this idea back then. Everybody did!!!
We of course didn’t stop there: we wanted to expand the range to the big screen and to television as well.
As we were analyzing how we could solve this on television ( our goal was to start with DVD, then television then the big screen by which time our smart phone dreams would sure become realities) we realized that we would need an additional device for the TV. I won’t bore you with the business model we came up with. The bottom line is that we also came up with the set top box idea. When I saw (still in ’99) that “they” launched Tivo I was freaking out: we’re running out of time!!!
We had to stop these discussions a couple of times: Zar had to go and do a gig somewhere in the world -back then he typically picked his assignment based on the proximity of ski resorts or surfing paradises – nowadays it’s all golfing, but that’s a completely different and even more interesting story.
I also had a business to run.
We never even made it to the fund raising process. Tivo made it. Tons of others made it in 1999. It was a magical year… for those guys. For us: just another one. And for that year: we were just another one of the million: two guys fantasizing about great things.
Less than year later and two weeks before the crash in 2000 when we were schmoozing at one of those parties with free drinks and fancy food in San Francisco where all you have to say is that “ I am from the VentureOne conference” and nobody asks you for any proof just lets you in, one guy from the Canadian trade development agency whose job was to schmooze professionally described us as: sex, drugs and rock&roll. He clearly referred to the sex appeal of the lady (also a good friend) who was our professional schmoozer as sex and he made it very clear that he means Zar when he says rock&roll. The crazy idea we were pitching at the time (a different one which also never made it!) probably really qualified me for the drugs part. So let’s just say we thought we had it all.
In retrospective we missed only one thing: GRAVITY. We failed to attract top people around our ideas from our own circles. If I assume that the tv / cinema commerce idea was good (and I don’t see this thing happening yet, so maybe it was a bad idea), it was simply not meant to happen through us. We had to move on to the next thing.
OR: maybe the idea was too far off for us to draw us into its field of gravity: I was doing poetry (consulting on leadership and strategy issues), Zar was doing prose (building enterprise software architecture): there was no irresistible pull towards this idea for us to dedicate ENOUGH time away from what we were doing to build a prototype.
As for Zar: he went on to build great things for the Fortune 50, while he also wrote a book to change how golf is played and another one that basically revolutionized the game of bridge.
The Gravity Problem, when good people don’t see big opportunities to be close enough to their perceived reality, is pervasive, I see it all the time in all imaginable situations:
- people not getting excited about great job offers because they perceive it to be too high for them
- guys not making moves for certain women because they perceive them to be out of their league
- companies unable to reach break-through because of the patterns that dominate their organization
- people not quitting their unfulfilling jobs because the gravitational pull of their CONDITIONS (good salary, kids, mortgage, lifestyle, whatever) is too strong
This is absolutely fine! The nature of conditions is that they don’t want you to leave, they pull you back: without you they are nothing.
We just need to be clear about this problem and work with it: organizing ourselves accordingly…and how to organize is incredibly interesting; coming up next.
Why CEOs leave
Depending on how much press we read, we can come across headlines that follow this pattern on a weakly basis:
XYZ has left his post after only x months due to differences of opinion on the strategy of the organization.
While we know that in most of the cases this is just a bullshit way to say that people didn’t keep promises, didn’t get along, new interests emerged that the new guy was crossing etc., sometimes this is really the reason why the new CEO leaves….and when this happens, it raises the following question:
How did the board decide exactly by this CEO?
Truth is in most cases the board doesn’t have a solid case for selection. Considering experiences, track records and chemistry is not enough; even ideas about strategy are not enough: how can the board decide if these ideas are good? Based on what?
The board MUST have a CONCEPT based on which a strategy maybe built before they start talking to candidates.
This concept should be discussed with the candidate who -if he’s good- can credibly add to it, modify it, etc. If the board hires the candidate, he’d present a strategy that complies with the concept and the board can approve it, or -if it’s a well functioning board- credibly add to it, modify it, etc.
In lack of this the typical schema goes something like this:
“can you increase profitability by 20% in the next 3 years?” “yes!” “how?”
“I see chances of reducing operational costs by introducing the following best practices and to increase revenues by cross selling, better marketing, expanding into new markets, etc.”
The schema is basically kept on the level of cliches which means communications is meaningless, which in turn means nobody knows anything.
Sure: in some industries it’s more difficult to come up with such a concept than in others. Being a 3rd tier supplier in automotive manufacturing SEEMINGLY leaves much less room for new/improved concepts that could serve as a base for strategy than in industries that cry out for new concepts, like media for example.
The common denominator across all industries is that only a handful of players have a concept, the rest operates on cliches….like the headlines they produce.
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How to implement gender quotas – Deutsche Telekom
The debate is on about the recent change in the board of Deutsche Telekom.
Claudia Nemat (42, from Mckinsey) will lead Europe (excluding Germany) from September, Marion Schick (52, ex minister of education and culture) will be responsible for HR from January 2012.
René Obermann announced plans last March that by 2015, 30% of all middle and upper level management roles should be filled by women, becoming the first DAX listed company to introduce gender quotes; since then approximately 200 women moved into management positions at the concern.
Overall it seems the transition is handled as a regular project project delegated to people on the lower echelons of the organization, not as a significant transformation that requires a well articulated integration approach.
Since the concept is missing for the transformation, no appropriate approach can be developed and in lack of a clearly articulated approach people are unavoidably set up for failure; the press already covered the first “victims”, quite intensively.
As more companies will follow suit and the competition for competent female leaders will increase, in order to ensure a leadership position in being able to attract the best, it is advisable to
- develop a defendable concept: why are we doing this? “…having more women in senior positions would make life “more colourful and also prettier” as Josef Ackermann, the head of Deutsche Bank said, is not exactly a concept; such statements typically signify that there is absolutely no concept behind the gender quotas besides simply the equality question which Obermann for example is trying to downplay. I’d go as far as saying that if you don’t have a defendable concept, don’t do the initiative!
- integrate this into the concept that already serves as the foundation for corporate strategy
- re-design the organization accordingly
These steps must serve as a foundation for successful implementation of any alignment initiatives, including those related to the implementation of gender quotas.
Without this, the whole initiative will lack any trace of qualitative consideration and will remain comparable to projects like: “let’s make sure that 30% of our switches come from Siemens”… that would be a disgrace for everybody involved…nothing against Siemens of course!
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Originality
It would be flat out crazy to discredit the originals just because there are much more copycats; yet this happens all the time: think about the startup scene, the investment scene (vc, pe), management theories and practices or if we want to go a little deeper, about philosophies and arts.
The problem is complex but it is worth addressing it for the benefit of those who are paid to make decisions that make a difference.
First off: there is no such thing as original! More precisely: originality cannot be attributed to an individual. An individual always thinks in frames determined by the era, the geography, social milieu, all that stuff which manifest sub and supra individualistic “currents”/tendencies which are much bigger than the individual. Looking into these in detail would lead too far; we have partially addressed them when talking about the emergence of identities.
Second: one of the main such currents of our era is precisely individualism: celebrating the limited, the small and confusing it with greatness. This has birthed a fascination with bigness in terms of size and numbers (quantity replacing quality); this confusion is the context for judging originality based on who is obeying actual/current trends and tendencies more blindly. Good examples are Warhol and more recently Hirst in the “art” domain and just about any rock/pop/musical/whatever sensation in the music domain for the past 60 years or so. Here the trends are clearly sub-individual: the pre-requisite for success is giving up the remaining integrative factors in the personality to PASSIVELY give room for the above mentioned disintegrative tendencies, fostering undifferentiation while complying with the already undifferentiated mass.
What about business?
A keen observer may easily recognize analogies between business and the examples above. Intellectual PASSIVITY has become the main style element in business as well that never goes beyond questioning what is popularly referred to as facts: academia gathers and organizes experiences (what has worked in practice), management consultants create “easily applicable” methodologies and management buys them and tries to implement them with the least amount of pain possible. Challenging all this typically result in the kind of hostility only the fearful may exhibit.
The same goes on in the startup and investment domain: module mentality. “We buy ready made stuff”. The tendency is social, green, whatever: within this we pick teams who already did it (most likely in a previous trend) and depending on our geography we try not to be the 5th, 10th, 20th player in the domain. This is what we do, this is what we don’t do. Simple. Best is if nobody questions the fundamentals in the whole process: not the founders/owners, not the advisers, not the facilitators (the limited partners never do and we comply with them).
To be absolutely fair: yes, most of the people who question the fundamentals do so because they don’t understand them, not because they do and see the inefficiencies. And this brings us back to our opening point: just because a lot of people don’t get the fundamentals, don’t assume that neither of them do (for example the whole concept of elevator pitch competitions is based on this assumption).
So what the hell is originality?
Like in everything else, there are two types: pseudo originality and real one.
Pseudo originality is all of the above mentioned music and arts examples. Let’s pick a popular one in the business domain too:
A significant tendency today in the Western hemisphere is the elimination of differences; one current of this tendency is sharing. Anything that has to do with sharing is going to succeed among the masses.
Original is whoever pursues this more aggressively. From this point of view facebook is more original than myspace or friendster was (both too specialized in music and dates respectively, thus not allowing maximum sharing) or linkedin is (also too specialized).
More original because it’s closer to the current, but only pseudo original from the point of view that it doesn’t capture the concept (of disintegration in this case) consciously but does so blindly and passively.
Somebody MUST be aware! Ideally it’s the decision makers: the investors, the chairman, the CEO.
Awareness is a key element of originality or authenticity; awareness of fundamental (original) concepts! These concepts have nothing to do with business.
The better one captures fundamental concepts (in other words principle based concepts) the more original and authentic one is.
Some fundamental concepts whose capture may result in authenticity: independence, differentiation, integration, loyalty, control, power, dominance, intelligence; they all have their negative pole that results in pseudo originality: dependence, uniformity, selfishness, manipulation, aggression, cynicism and arrogance, street smarts.
These are the ones that should be relatively easy to translate to the business domain, yet there is great confusion about them in business.
Without being aware of principle based concepts, nobody understands dominating tendencies; without truly understanding current tendencies, nobody can judge either people or business propositions and without this vantage point nobody leads anything.
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Corporate sabotage
It’s a cliche that organizations and people resist change. This cliche is nicely embedded into change management initiatives to “manage resistance” – although way less frequently than you may think. When it happens it is done politely, in a civilized way, usually by cheerful facilitators.
I think this whole thing is comical.
Reality is much more brutal. A good analogy is if we thing about the organization as a body whose most vital functions we can’t control directly and quickly.
If we work on the execution of ideals that force the body out of inertia it will brutally pull us back. Marathon runners, long distance swimmers, perl divers experience this at critical milestones and martial artists understand how important it is to maintain form when the body already gave up: the (control over) form brings the body back.
Before we set out to execute our plans we must address the somatic reflexes: we must be aware of them and brutally repress them until they are transformed and obey us; yes: this will often result in nausea, dizziness, fainting or worse; if you are serious be prepared and follow through.
I have witnessed several corporate transformation initiatives both in mature and young organizations, where the concept and the strategy was beautiful, the management team was talented and capable but the somatic reflex of the organization sabotaged the efforts… and in the worst case scenarios leadership simply gave up.
The most typical scenario: we have become slow, we miss opportunities, the markets change way faster than we do. We MUST become nimble in our decision making process, in product launches, we must redefine how we reach our customers, we must hear and respond to their needs at light speed. We must transform the organization.
The company comes up with a new strategy, brings in a new leader or both and then starts executing as it’s usually done, following best practices, etc.; promises and commitments are made in context of the desired changes!
Then, very often quite early in the process, the Organization, including the project owners, the project sponsors, the very people who launched the initiatives, literally shows the middle finger. These are the moments when you realize that the organization does have an identity that integrates everybody after all!
Promises are broken, commitments are withdrawn, incredibly creative excuses are invented, the conditions that were so ideal at launch ALWAYS deteriorate and the person who is responsible for seeing it through is left alone, often isolated and literally suffocated. The body wants to be left alone.
In such instance the person responsible finds himself in a career defining moment (corporate transformations don’t come along that often…yet):
Maintain form or succumb to the body.
If the person simply gives up, it will be easy to rationalize the failure: it was a complex issue with many stakeholders involved, the challenge was bigger than expected, unforeseen circumstances forced management to reshuffle the budget, etc. The person will get great references (he didn’t step on toes after all) and move on.
IF the person decides to fight and the company actually completes the transformation most of the participants will be heros and the project will definitely decorate many resumes for years to come, contributing to stellar careers and everything that goes with it.
But the truth is: the person may easily die fighting (get fired, buried/demoted, etc.) even if he’s smart and does the basics right.
So if you find yourself in the driving seat of corporate transformation AND you are ready to fight the fight no matter what, don’t forget to address the somatic reflex of the organization:
- clearly articulate the patterns you want to change that currently define the organization; make everybody aware! Re-enforce their commitment. Get their permission to push them. Ask them to push you. Pick a team that is also ready to make sacrifices.
- clearly articulate what it means in practical terms to break the identified patterns; make everybody aware! Re-enforce their commitment. Get permission to push them! Ask them to push you! Have confidence that your team is also ready to make sacrifices.
- put the taboos on the board for everybody to see: doing the following (that pulls us back) is forbidden: it’s simply not an option for anybody and we will hold each other accountable.
It’ll be still a tough fight, taboos will be broken, you may still get fired, transferred, replaced, whatever: but you’ll know you have fought a good fight and fighting a good fight and loosing is much preferable in the leadership domain than fighting a bad fight and not getting hurt: nobody wins in a bad fight in the long run.
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Widening perception gap at RIM
Most perception gaps I’ve encountered exist between the C team and the staff. It’s much rarer when a perception gap develops between the whole organization and the market, which seems to be the case with RIM.
Sure: it happens often that the organization thinks it’s perceived very positively by its customers when in fact they score very low on various surveys that actually ask the customers…but in most of these cases the perception gap is still there between the c-team and the staff, since most of the staff, especially the customer facing ones are highly aware of customer problems.
RIM’s an iconic organization in Canada with a mutual dedication and loyalty between the employees and the company which probably ranks way higher than the industry average; this is just an assumption I developed from having numerous conversations with RIM employees and employees of other companies.
I think the employees want to believe in the future, in management, and this is what blinds them. Recent reshuffling of responsibilities in marketing and consequent departures talk about a different picture at the helm… maybe the co-CEOs want to remain blind leaving no room for marketing guys who should be and want to be responsible for closing the perception gap between the company and the markets.
This way an avalanche is developing starting with marketing spreading over all the way to operations (the COO is on medical leave right now).
Operations is focused on product development and launches for now (rather unsuccessfully we must add) but without marketing, operations will be less and less aligned to the “world out there”… and make no mistake about it: appealing as it may seem, you can’t align the world to your operations…not long term anyways!
Message to the investors:
DON’T DEMAND HEADS (YET), DEMAND A CONCEPT!
Message to Jim and Mike: FIND SOMEBODY WHO HELPS YOU DEVELOP A CONCEPT!
And now a side note which should not be taken too seriously; it’s a cheap shot that I did for my own morning entertainment:
I looked at departing VP digital marketing & media (he’s going to Samsumg), Brian Wallance on linkedin ( http://linkd.in/lbhY1F ):
11 years at RIM; started at the good times although I don’t know in what role or capacity. So he probably wasn’t brought in to his role to bring perspective or thinking (the two is closely related).
he was the “social” guy who is supposed to know what people want…if he’s leaving as a result of his own decision, he may know something;
looked at his tweets, though (http://twitter.com/#!/bdwallace): pretty polite and boring stuff, nothing that resembles an opinion or a concept of any kind. Here’s an interesting one though from April 18 : “”Blah blah blah Brian, blah blah blah Brian” – what I am hearing on this conf call…”
Clicked on his “blog” link, I got twitter again…
And finally: looked at his picture: he has the same glasses as all marketing guys I have met in the past 10 years 
. The guy knows how to pose though
Draw your conclusions.
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Corporate slaves
The pervasive view on leadership is situational (a better but uglier word would be positional), thus completely false.
The assumption is that guys in leadership roles “develop” or “grow”; they are reflective, analyzing mistakes and learn from it (some of them do, sure!). I guess some people (mostly 20 something consultants with fresh academic memory, who never have been in the driver seat themselves) even think that leaders spend a certain % of their time away from budgets, KPIs, pricing, conflicts, egos, and other mundane things in order to think about strategy, concepts and similar stuff. If they have good ideas that serve the common good, they can eloquently sell these to key people in their organization, to key suppliers and investors and together with them they happily continue their quest for world domination…
…of course; there must be a reason why made it to the top!
Most guys reporting to the CEO have a different opinion about this.
The problem is with the position. Positions are determined by conditions, much stronger than the CEO, whose activities are…highly conditioned; not the other way around, at least not in the overwhelming majority of the cases!!!
It’s important to note that this is especially true for so called “career leaders” who build their career by complying to conditions as much as humanly possible…or more.
The higher the role, the more restricted is the freedom to move. This is independent of market size since there is more competition in bigger markets while there aren’t enough positions available in smaller markets so in addition to market conditions, career leaders are also enslaved to their own ambitions. Make no mistake about it: these guys are going to serve their own (rather dull) ambitions, no matter what.
It’s obvious that such slaves cannot be trusted. This cowardice, which is often backed up by such sinister excuses like ” I am doing it for my family” results in enron, aig, goldman sachs on the higher end or mediocre machines, also run by well paid schizophrenics on the lower end.
It’s obvious (or it should be) that the essence of leadership lies in the ability to rise above conditions, which from another aspect is analogous with the will to real (as opposed to positional) power; it’s a poise that considers and evaluates conditions but aligns them to higher principles, very often against conditions and odds, creating new ones if necessary.
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Nokia, RIM, Yahoo, HP: executives shooting in the dark
You are chairing a board and/or are the CEO of a company that has a brutal problem at hand, the kind that Nokia, RIM, Yahoo or to some degree HP faces in the technology arena nowadays: new players better understand the concept behind your business and consistently eat away your share of the pie; since you are stuck in the very pattern that made you successful or worst yet your patterns have been causing your troubles for years, time is not on your side.
What do you do?
If you take Yahoo’s, HP’s and Nokia’s example you try to solve this by hiring a new CEO (not sure if yahoo’s looking for a new CEO or a buyer right now. This point applies to when they hired Carol Bartz). If you follow RIM’s example, you’ll try to…. stick it out I guess.
Both hiring and sticking it out may work if you do it based on the right foundation. This foundation is painfully missing in most cases so fundamental questions are not being answered or worst yet, they are not being asked; questions that apply equally to hiring (leadership) and strategy.
When this foundation is not set up the context may very well be wrong for all your initiatives; when the context is wrong, the smartest people will inevitably fail or if they’re really smart they do everything in their power to create this context BEFORE they do anything at all. Step Zero!
What happened at Yahoo was that this foundation was simply missing; a clueless board brought in a (good) CEO to act like in a typical turnaround situation: cut cost, get rid of unprofitable businesses, focus on what’s supposed to be (arguable) strengths, etc. Yahoo’s situation was NOT a turnaround situation! When a company faces a strategic inflection point it’s more than turnaround: a new concept needs to be developed for a new strategy.
HP’s board is similar in that they have absolutely no concept moving forward. They just replaced one pure operations guy without the slightest trace of vision (Apotheker) with another (Whitman) to “lead HP”. Is that her mandate? …based on what exactly?? An important question to investors, employees and the new CEO.
If you do decide you will hire a new CEO, you must create your OWN concept so the CEO can develop the appropriate strategy.
If you can’t develop the concept, you’d better choose your next CEO based on whether (s)he can provide you with a convincing one. I don’t know how the hiring of Stephen Elop took place at Nokia, maybe it fell under this category, maybe not. Right now the company is not communicating anything that may hint at a concept behind the Windows 7 decision, which by itself doesn’t seem to be a long term strategy to me; if there isn’t any, Elop (just like Apotheker recently and Whitman soon at HP or Bartz at yahoo) will not stay longer than 3 years, but this is another story.
RIM is also making moves based on a strategy that seem to be lacking a foundation. Too much focus on competitive moves, too much reacting, bitter and stubborn fear lingering above the heads of the co-CEOs, not one initiative launched that’s based on a concept the company owns (unlike in their prime).
Doing anything without articulating the concept behind your strategy is like shooting in the dark: it smells like panic, it doesn’t look good and it’s flat out irresponsible!
Don’t mess with the herd!
One guy says Zuckerberg is totally wrong about identity (for whatever reason); then tons of other guys say: how could he be wrong with $75B (or whatever it maybe at this time) valuation?…or: I wish I could be so wrong, etc.
This pattern is pervasive: leveraging success against all objections. It’s one thing that this reaction / reasoning is simply idiotic. It’s another thing that it is very dangerous: short term herd mentality always is.
The whole thing becomes grotesque when somebody’s success is based on the stupidity/passivity/lack of thinking of a large number of people (let’s call it the mass). Inevitably such “leaders” represent the lowest common denominator in the mass and develop a (false) sense of superiority from this with the corresponding style elements, be it gold chains, private jets, trophy wives/husbands, diamond studded cell phones, etc.: in other words they become clowns.
People with intelligence (which is more than just street smarts) inevitably have integrity: it’s impossible to get involved in acts of stupidity for financial gain. Their voice may not be that loud, their style may not be obnoxious and as such their influence may certainly not be that strong in the herd…
We must choose where we operate (in the herd or outside of it), in what capacity and in what fashion. Going against the herd is no child’s play and one thing is for sure: those outside of the herd have no choice but to change things and they must do it together.