Category Archives: Business

Why Maximizing the Efficiency of the Startup Ecosystem Is Essential for Society’s Transition to an Information Economy

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This post is a revision of http://maxmarmer.com/2010/02/maximizing-startup-ecosystem-efficiency/ written for emergent fool.

Right now the tech industry is the most innovative industry on the planet. Its success is in large part due to it being the first information age innovation ecosystem, which has implications for the future of the world, as we transition to an information economy.

This emerging information age is just the latest epochal shift of organized society as we have already progressed through tribal, agrarian and industrial societies. Now, on the cusp of this transition, the tech industry is pioneering the movement forward. (For more on this transition see Arthur Brock’s fantastic Prezi). Many of the methodologies and organizational structures that enhance a startup’s success will be relevant not just for startups but universal to the entire information age, because much of what works for tech startups will apply to emerging industries in the information economy. This is because innovation ecosystems that operate in the information age, are likely to operate in very similar ways, regardless of sector. The tech industry is just the first to inhabit space in the information economy and therefore is a harbinger for future industries.

The startup ecosystem is now creating the blueprint for the future of the information economy because much of the startup ecosystem replicated across emerging industries in sectors diverse as social change, health, biotech, molecular manufacturing and government, as soon as these industries begin their transition into the information age. Since the startup ecosystem will be replicated, it’s important to begin focusing on maximizing the efficiency now, both to increase the output of startups today, and to figure out how a more complete system works, so that we transfer a more stable, well-understood system. And since efficiencies realized in the tech ecosystem now will cascade over into the emerging industries, every further increase in efficiency will be amplified enormously and echo for generations, as it affects not just current startups, but all future copies of information age innovation ecosystems. The cheapest and therefore by definition, best place to experiment with improving innovation ecosystems for the entire information age is right here, right now in startup world. We must attempt to make our information age innovation ecosystems as robust as possible, because they represent the foundation of the future of the world’s economy.

If companies in these emerging industries want to maximize the scalability and impact of their solutions they will not only to need imitate the structure of the startup ecosystem but they will also need to draw heavily on the rules of the information economy that startups have begun to uncover. Their war chest will need to include tools and methods such as: social networks, crowdsourcing, the cloud, virtual collaboration, lean methodology, metrics and conversion funnels, customer development, rapid iteration, handling uncertainty and many other ideas now fundamental to a startup’s success.

You can already see some early signals of people and organizations in other sectors achieving great success by cross fertilizing principles and methdology from the startup world.

The Obama campaign changed political campaigns forever with their revolutionary level of citizen engagement. This was achieved by drawing heavily on Silicon Valley credo, with the campaign spearheaded by Chris Hughes, one of the co-founders of Facebook.

Kiva brought microfinance to the masses and has raised and distributed in an unprecedented amount of money by bridging the social sector with the operating principles of a Silicon Valley startup.

Government 2.0 is essentially an experiment asking the question, what happens if we mix Sillicon Valley with Government on a larger scale than campaigns, and use the power of data, transparency and API’s to increase the effectiveness of government? Health Care, Biotech and a slew of other industries are asking similar questions.

Hello Health is attempting to turn one aspect of the health care industry upside down by cutting insurance companies out of the doctor-patient relationship, simply by applying a few Silicon Valley startup principles to health care.

The tech industry has already changed the world, but as new industries adopt similar organizational principles society will experience multiplicative networks effects that will be utterly mind blowing. When people talk about accelerating change and the singularity and you don’t know what to expect, this it: when Silicon Valley leaves the valley and sweeps across the other industries of the world and transforms them into information age innovation ecosystems.

Information Age Innovation Ecosystems

If you look at the startup ecosystem’s output compared to all other industries over the last 30 years, you might dismiss it as an anomaly that will fade with time. But the industry’s incredibly fast wealth creation is not hype that will peter out, it’s a sign of what’s to come. The tech industry is just is the first of many information age innovation ecosystems, that will also be able to create a flurry of progress at an exponential rate.

The first requirement for an innovation ecosystem is that the core practice of an industry becomes an information technology. This is key because its information technology’s inherent scalability and replicability that enables exponential progress. The second critical requirement for an industry to become an innovation ecosystems is a large number of people freely experimenting. In the startup ecosystem, this was triggered by the personal computer and the mass amateurization of computing it allowed. When using a computer was incredibly complex and expensive the industry had a huge bottle neck. When that barrier was broken down and costs fell far enough that anyone could experiment in their bedroom or garage, the creativity of the masses was unleashed and amazing breakthroughs began to happen. That was the birth of the startup ecosystem.

I believe the birth of future innovation ecosystems, will occur the moment information technology can be used in the garage. Currently the startup ecosystem is the only scalable garage industry around, but imagine the creativity that will be unleashed as the costs fall far enough to allow other industries to enter garage territory. As soon as the garage threshold for biotech is crossed, an ecosystem similar to the startup ecosystem will begin to emerge. There will be firms dedicated to investing capital at various stages of the lifecycle of the company, communities of practice will emerge, formal conferences and informal meetups will spring up everywhere, databases of knowledge will be abundant, and open source infrastructure will be created that gives people even more leverage. Imagine people playing with atoms just as easily as they play with bits. Imagine biotech companies being born out of bedrooms and garages. The moment biotech becomes a fully functioning garage industry, with an efficient supporting ecosystem, the world is in for a crazy ride.

Again, this evolutionary process will apply not just to biotech but every industry with potential in an information economy. The 4 pillars of any innovation ecosystem I believe are Capital, Community, Information, and Tools.

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Maximizing the Efficiency of the Startup Ecosystem

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This post is a revision of http://maxmarmer.com/2010/02/maximizing-startup-ecosystem-efficiency/ written for emergent fool.

Over the last 3 decades the technology entrepreneurship sector has been the primary sector driving economic growth. The sector initiated the information economy and has given life to thousands of innovative companies, four of which are ten of the biggest companies in the United States, including Google, Apple, Microsoft and IBM. By any metric the sector has been wildly successful, but it’s possible to make the ecosystem even more efficient and realize an even greater number of opportunities.

Currently, projects that succeed are squeezing through a very tight bottle neck, and only the right combination of personality, skill and luck can breakthrough. Better infrastructure widens that bottle neck, so potential impact can be realized at a greater rate.

This post will look at how we can increase efficiency in the entrepreneurship ecosystem, but the significance of this effort may extend beyond the tech sector to the future of the information economy. My post on that topic is here.

Systems Perspective on Entrepreneurship

To increase efficiency further requires looking at the entrepreneurship ecosystem as a system in order to find the holes and the greatest points of leverage. But before we focus on improving the efficiency of system we need to understand the difference between the primary and secondary causes that drive innovation. There is nearly unanimous agreement that the most important players in the startup ecosystem are the founders and CEO’s who start from nothing and go on to create and control billion dollar markets. Society can’t stop glorifying entrepreneurs like Steve Jobs, Bill Gates and Richard Branson. But while they deserve immense praise and adulation the impact they are able to have has more to do with the surrounding innovation ecosystem than their individual ability and vision.

Something new and innovative can only be created and scaled if a confluence of forces come together— market, team, systems that allow you to find your team, capital, advice, cost of production, cost of distribution and culture (whether people are ready for it) etc. Breakthroughs are the result of way more than an individual with insight; they emerge from the last iteration of the system, building on top of existing tools and a huge history of knowledge.

Products and companies do make a huge impact but their success has more to do with the state and incentives of the system than the entrepreneur. It’s not the company that changes the world, it’s the system that creates the right incentives to make the creation of world changing breakthroughs extremely probable.

As the startup ecosystem has been fine tuned it has made the existence of certain products and companies almost inevitable, because the system exerts so much pressure to make opportunities come about once the timing is right. In Apple’s and Microsoft’s case there was immense pressure exerted on bringing about computer hardware and software companies.

If you are looking to bet on an individual company than a great entrepreneur is certainly the centerpiece. But if you want to maximize the innovation of a certain sector then you must look at the system, in this case the startup ecosystem. From the system perspective you just want a need to be filled and you don’t care who fills it. Thus the individual matters less, because there’s enough talent out there that if the incentives are strong enough someone will capitalize. But taking the system perspective far from trivializes the entrepreneur. In fact, talent development, which must have a very humanistic lens to be effective, is a critical part of an efficient startup ecosystem because potential talent needs to be actualized at a high rate.

The startup ecosystem is already extremely effective, just look around at the mark it has already left on the world in only a few decades, but if we want to make the system even more efficient and increase both the quality and quantity of innovative breakthroughs and great companies, we must identify places where friction is reducing the possibility of successful ventures and create solutions to remove this friction.

How The Startup Ecosystem Works Now

If we look at the rise of 3 of Silicon Valley’s fastest growing companies: Google, Facebook, and Twitter, in the context of the startup ecosystem it’s possible to see the existence of a category leader as almost inevitable, and the eventual winner as extremely unlikely. This matters because as long as someone can seize the opportunity and fill the market need, the battle from a macroeconomic perspective has already been won, it’s just a matter of which individual player will earn the spoils and how long they can maintain relevance before a new competitor overtakes them or the market becomes mature and commoditized.

Google, Facebook and Twitter now each dominate a category: Search, Social Networks and Microblogging, but there was plenty of competition and uncertainty at one point (remember Altavista, Yahoo, Myspace and Friendster? With better execution these companies could have also won). Once these categories were identified either consciously or by accident, the startup ecosystem was effective enough to support the formation of many teams, supplying them with capital, services, people, and advisors in hopes of capitalizing on a billion dollar market opportunity. And the team that executed the best won. The individual winner was unpredictable but the system was good enough to make sure someone won. That humans’ evolved a system that can create many competitors and then naturally select the winner based on merit or “fitness” is a tremendous accomplishment for this industry and for the world, and it is what makes tech the most innovative industry on the planet.

The success of these companies had a lot more to do the size of the market, the timing for when it was ready to be capitalized on and the resources in the startup ecosystem that supported effective scaling than the founders or the idea. The markets they operated in were big enough that inevitably an industry giant would emerge who would be able to use the lucrativeness of the market to generate a runaway positive feedback loop up until saturation, using their momentum to continually take market share and capture the best talent.

This evolutionary competitive process continues even after an industry giant has saturated a market, because there are always new markets emerging. While it would be very hard for Facebook and Google to screw up and concede supremacy in their primary markets, it is probable a new company will beat them in the new markets that they try to extend to that fall outside of their core competencies. (For more on why the market is the most important factor for a startup’s success check out this Marc Andressen’s post).

In summary, once the timing and conditions are ripe there will be enough people trying to tackle the clear billion dollar markets that somebody will get the execution right. The startup ecosystem is that good at providing all the puzzle pieces to make sure this happens!

Future billion dollar companies will ride trends such as the move to the cloud, mobile information, the real-time web, extreme personalization, and new kinds of data enabled by smaller and cheaper sensors.

The Evolving Startup Ecosystem

The tech industry has cracked the nut for how to tackle billion dollar market opportunities, making it better than any other industry at capitalizing on opportunity. But there is still a lot of room for growth. Increasing the effectiveness of the startup ecosystem matters as long as their are markets to be filled. The faster we can fill unmet with greater effectiveness the better off the world will be.

The tech ecosystem is now well tuned to hit the home run in billion dollar markets, but there is a shift happening as people began to realize there’s more opportunity and less risk to be had in aiming for singles and doubles, and hitting them consistently. The home runs of the previous era have created a new playing field and there is now a wealth of opportunities on the long tail with all kinds of business and consumer needs waiting to be met.

As the information economy has developed and become more complex, an increasing number of lucrative niches now make market sense to pursue. Whereas previously the opportunities either weren’t there (you couldn’t have a million dollar facebook app before facebook) or the costs were too high to have certain opportunities make sense (startups needed venture capitalists and VC’s only wanted to play in markets bigger than 100 million). But in recent years startups have become disentangled from their dependence on VC’s as the costs of starting a startup have continued to fall due to cheaper hardware and services moving to the cloud. This is driving a growing seed stage ecology where the primary actors are startup accelerators, angel investors and seed stage venture capitalists.

The focus now is on startups attacking smaller opportunities (though still in the 10′s of millions) with less investment capital. There will be an abundance of lucrative, unserved niches for startups to tackle. This coincides well with a number of trends:

- Science will be injected into the art of running a startup

Structure and methodology will be experimented with to increase the success rate of startups and startups will fail less because of self-destruction and more because of getting beat by competitors. As the overall number of startups in the ecosystem increase over the next few years, many of the startups in big markets will fail due to competitors, but in the huge number of opportunities in smaller markets startups will be more dispersed and there will be few direct competitors. In these markets startups that use a more scientific approach should be able to figure out how to hit the 10-100 million dollar markets with great consistency.

This consistency will enable the funding ecosystem to make sense for these smaller opportunities. When many investments are made in these smaller markets (<500 Million) the venture community’s approach of haphazardly throwing money at many petri dishes won’t work, because the upside potential is capped. Home run hitters can afford to strike out a lot, singles hitters can’t.

Even startups that lose to competitors in niche markets will find it easier to pivot, than pack it in and start from scratch, because the farther down the long tail you go the closer the adjacent verticals.

A fractal tree is a good analogy for why it’s easier to pivot in <100 million niches vs. billion dollar markets, if you consider the thickness of the branch equal to the size of the market. The core branches are very far apart. If your startup is set up to tackle a billion dollar opportunity it’s hard to pivot all the way over to another one, or shift gears and attack a smaller opportunity. But if you follow the analogy and you’re a startup attacking a niche as the tree branches further away from the trunk the twigs become closer together. The larger branches are too far away from each other to pivot from one to the other, but the small branches just require a little back tracking and a slight change in direction.

Creating a startup where the goal is to make something people want will still be a chaotic, iterative process but it’s possible to induce predictability and stability into chaotic systems.

- The potential for more collaboration horizontally and vertically across markets to create a more seamless experiences for the customer and more leverage for the startup. (I’ve started exploring this process, naming it the lego model)

- An increased demand for entrepreneurs due to clear ~10 million dollar opportunities just waiting to be tackled. This demand in the ecosystem for entrepreneurs coincides perfectly with changing cultural values about work, which will drive huge increase in the number of people pursuing entrepreneurship. And that in combination with a more entrepreneur friendly ecosystem evolving, will unleash a new golden age of entrepreneurship.

Here are two good posts on the changing seed stage ecology: Dave Mcclure’s presentation on the evolution of the startup ecosystem and Nathaniel Whittemore’s take on the seed stage ecology in the social sector..

New Efficiencies in the Startup Ecosystem

The startup ecosystem is certainly past its infancy, but it is still evolving rapidly and there are many more efficiencies to be unlocked that increase the success of startups further and support the long tail of innovation. Here’s my opinion on where we have opportunities to improve the system:

- Talent development

- Better conversion rate of people with ideas for companies, to entrepreneurs actually starting companies

- Pushing world’s brightest to choose entrepreneurship over other industries (college students starting companies instead of becoming an investment banker. Creating incentives for experienced execs to take risks starting something new instead of languishing in the rungs of the corporate ladder)

- Reducing friction in team formation, and better “deal flow” by interacting with more potential co-founders

- Aggregating startup services and service providers in order to remove distractions and allow startup teams to focus fully on the new innovation they’re trying to create

- Networks becoming more efficient in sharing assets (knowledge, people, code, strategy)

- More fluid and less cumbersome funding rounds, all the way from idea to scalable profitability

- Collaboration amongst startups to attack new verticals and interlink their advances to create networked impact— where success exists behind an activation energy only realizable by coordinated efforts of multiple startups

- Connecting entrepreneurs to the people and information at the time they need to support maximization of potential— time and energy will consistently be put in highest leverage places

- Better filters by injecting personalization and social graph into many tools

- Systems that use psychology and persuasion to nudge people to act in their own long term self interest, mitigating human kind’s insidious propensity for short term thinking

And what I’m personally targeting right now with Founders First: accelerated just in time learning.

Finally, a few projects and trends I think are very important:

Rise of startup accelerators and therefore an emerging market for post-startup accelerators and pre-startup accelerators. (I’m working on the post startup accelerator phase with Founders First. See all the new startup accelerators here and many of the companies here)

Venture Hacks Angel List and Startup List to reduce friction in the funding of startups.

Right Side Capital Management— A new kind of investment fund trying to dramatically increase deal flow to 100-200 investments a year. This will support faster expansion into niches.

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The Connecting Thread: The Innovation Landscape

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One of the primary stitches running across my life cloak:

The primary engine driving economic growth is innovation. And we are in the midst of transitioning to a new innovation landscape as corporations are dying and the startup ecosystem matures. The innovation landscape is the overlapping theme for most of what I’m thinking about and working on. I’m interested in how we can increase collaboration, access more capital, push the interconnectivity and support systems a step further and increase the overall size of the ecosystem by getting more aspiring entrepreneurs across the chasm of commitment.

The innovation landscape is intimately related to what I believe is the world’s biggest problem and the approach we need to solve it. I discuss that in the 5 stages post, linked below.

A few of my frameworks for thinking about the innovation space: (Posts will soon be written for all of these)

Pre-Accelerator. Accelerator. Post Accelerator.

5 stages of the entrepreneurial journey

Startups engaging collaboratively in complex value chains to achieve the scale of corporations, called the Lego Model and described here.

The 4 Pillars of Innovation Landscape: Community, Information, Tools, Capital. Most projects are different proportions of these 4 elements.

The innovation space is incredibly complex requiring a variety of different perspectives and knowledge on a wide array of subjects. This overarching theme connects my many interests: (I find the “I, it, we, its” a helpful organizing framework) I: talent development, psychology, learning, education, mental technologies; It: Personal productivity, food, athletic, health, energy management; We: community, social interaction, culture, collaboration; Its: geopolitics, interconnectedness, foresight, accelerating technological change, startups, behavioral economics, environmental sustainability, systems thinking;

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The Lego Model

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Original post can be found here.

Picture 1

There are two types of organizations that are driving a majority of our economic growth: the startup and the large corporation.

On one hand, we have startups, which are where the innovation is happening and on the other hand, we have corporations, which have the advantages of scale and abundant resources. We need a new kind of organizational structure that can bridge the gap, combining the strengths they each possess.

I’ve come up with a model that explains how startups can gain the advantages of scale and have access to greater resources while staying agile and preserving their penchant for innovation. This model is called the lego model.

In this model you can think of a startup like a rectangular block and a large corporation like a tower. Startups can create a tower by collaborating with other startups. When enough startups are seamlessly working together they have created a tower that is functionally equivalent to the towers of corporations that can take advantage of the efficiencies at scale. But the tower startups create is not a single indivisible entity, it’s more like a tower made of lego pieces. And that has a lot of advantages the indivisible tower doesn’t. It is more resilient, more flexible, more modular and can quickly be assembled and disassembled. This process incorporates principles from both evolution and nature selection. It enables unlimited experimentation and also fast replication for the stuff that works. (This is good that it mirrors nature, because we know nature works, because it created us). The modularity also gives much greater control over optimization, because it’s much easier to isolate and test particular variables. Best practices can easily move across the ecosystem because as things get increasingly quantized, they are easier to replicate. If one lego piece is shown to be particularly versatile or adaptive it can be plugged into many existing towers. If a particular lego piece is poorly constructed and not doing its job very well, there are plenty of pieces waiting in the wings that can replace this ineffective lego piece. That provides great resiliency because while you’re still only as strong as your weakest link, the chain isn’t fixed anymore.

Towers only have to live as long as they are still creating increasing value for the customer. As the vertical the tower is operating in begins becoming saturated, essential pieces can shift their focus from growth, to becoming as lean as possible— doing the same job with many fewer employees and much greater efficiency. The pieces that are no longer essential  as the vertical matures can leave while still highly profitable, and move into an area where they are still adaptive or regroup and plan to start from scratch with the resources they’ve gained.

What we don’t want are companies trying to milk past innovations for all they are worth, through monopolies and legal manuerving. This is terrible for customers because it closes down the space and prevents further innovation. It’s terrible for companies too, because as soon as they stop innovating, a death knell has been sounded, and they are now fighting an uphill batter that will only get steeper. All utters have a limited amount of milk.

Why do large companies stop innovating? There are many reasons, a few are because: they become too large and innovation requires being flexible. The people in the organization age and become tired and complacent. It’s easier and more certain to incrementally improve existing products and services than venture into the uncertain waters of innovation.

What we want to have happen is to have successful organizations in a mature market release both their financial and human resources back into the ecosystem to begin creating more innovative lego pieces that will eventually be formed into more lego towers that serve new verticals.

But why can’t startups form these lego towers currently? Because currently they are just rectangular blocks without the knobs and holes. If the pieces are just flat rectangular blocks, the structure is more akin to a disjointed Jenga tower, which certainly isn’t adaptable or sustainable.

If theory is to be taken seriously, what does it mean practically for how we should be organizing startups?

In order to start building lego-like structures startups need to have greater interconnectivity and more standardization for interoperability. To achieve either requires a more mature startup ecosystem which will need to evolve to encompass many new things including: more transparency, more portable data, a more collaborative culture that focuses more on creating value than capturing it (meaning share more and worry less about protecting IP or being ripped off); a tighter community with more fluid relationships between first time entrepreneurs, entrepreneurial veterans and mentors. Startups also need better information including: roadmaps, templates, and organized, actionable guides. And the ecosystem needs more startups for startups—companies creating tools designed specifically to help other startups grow their businesses. We want to be one of them.

As these tools develop and the ecosystem matures achieving lego like startups will begin becoming feasible, but the culture must evolve in parallel, too.

What we’re trying to look at and understand is what the innovation landscape might look like in the future, I think the lego model is a step in the right direction. Let us know what you think. We’ll be sharing more implications of the lego model and complimentary ideas that could shape the innovation landscape.

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Crowdsourcing Pitfalls for Productive People

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On Thursday I attended Crowdsourcing for Social Good a great panel, with great attendees who I witnessed cook up some great things the mixer time surrounding the panel. Here I’ve written up one cautionary note about crowdsourcing for people who are engaged in their work, and a few notes from the evening.

I don’t think that for most high level people crowdsourced work is the highest leverage way for them to give back.

Crowdsourcing is undervaluing the importance of focus and in the importance of thinking about something for a long time to do anything innovative. Advising, consulting and mentoring I think are higher leverage uses of spare time. Productive, engaged workers shouldn’t consider spare time, spare processor cycles. Most people do mindnumbing work the whole day so it’s okay to tap their spare time for spare brain cycles. But people who are really engaged in their work need these little respites to recharge. Anyone who understands that the currency of productivity is energy will intuitively make the decision to use spare time to recharge but the majority of people ascribe to the theory that time is the currency of productivity and will underestimate the negative impact of using their spare time to crowdsource worthy projects.

Of course, I’m only warning a small minority not to spend their energy crowdsourcing and by and large I think crowdsourcing combined with social networks will do tremendously positive things for society moving forward.

So many people have spare cycles. But that’s because most people don’t have engaging work. It’s true that if productive people feel like they are really doing good it could have energizing effects by satisfying their need for meaning but finding meaning in microtasks even if it’s for good cause would be like spiritual junk food. What if we had billionaires who instead of becoming philanthropists, just decided to do some microtasks and it satisfied that desire or need to give back. A lot of philanthropy, for better not worse, is motivated by the emotional benefit of giving for the benefactor, but what if they could derive benefit much easier from microtasks, without the same positive effect on society?


A few more notes on crowdsourcing:

What kinds of things can outsourced successfully?

Work that can be systematized and isn’t mission critical and it’s simple to train someone to do.

There’s so much untapped labor potential in the developing world.

Crowdsourcing removes the friction of matching supply and demand in the labor market. Elance and Odesk make that a lot easier, they reduce friction. Lower and lower barriers and more fluidity is huge.

Crowdsourcing and the media is really exciting. Social news is the future

Game dynamics are important, so that people have a self-interest and can stroke ego and do well at the same time.

We have a billion more people coming into the labor market and due to unemployment many they turn to illegal enterprises. Train them to create their own companies, social entrepreneurship instead of relying on finite number of jobs in current job market. Plenty of good ideas worth working on.

Mechanical Turk — It has become more mainstream due to recent obsession with lean startups.

If edufire wants to test a new feature they use mechanical turk to have people to test out a page and run through features and say what works and what doesn’t. And all the permutations get tested because you have 1000 people testing it.

People love the creativity involved in critiquing edufire’s page because they get to think, and say things like, “wouldn’t it be cool if you used this tagline.”

How big is the market for crowdsourcing? There is a limit to how much knowledge can be broken into tiny bits and still be useful. Almost all innovation is dependent on synergistic design thinking. But certainly the crowdsourced market isn’t even close to being saturated.

Mechanical turk has 51,000 tasks.

ODesk has done 87 Million . 200,000 people

Elance 211 Million — 200,000 people

Crowdsourced, outsourced, opensourced often get conflated.

74% of U.S. citizens don’t volunteer.

If you have american volunteers do stuff for free because it’s embedded in social games that takes work away from refugees who could get paid to do crowdsourced work.

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Upward Market Pressure on Creativity

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I recently followed a link to this article on Wired profiling the first scientific discovery made by a machine with no human intervention.

This doesn’t signal the end of the role human scientists. Instead it puts increasing upward pressure on scientists developing their creative faculties. And this trend is not prevalent just in science. Everything that can be automated will be. Automation squeezes all jobs out of the marketplace except the ones that require creativity. On the flip side, these automated tools also enhance human creativity for those who choose to embrace it.

If robotic scientists made their way into other labs, their human counterparts would not be out of a job anytime soon. If anything, they may find their work more exciting.

“There may be teams of humans and machines,” says King. “Robots will be doing more and more of actual experimental work and simple cycles of hypothesis generation. Humans would migrate to more strategic and creative positions. How can we waste trained post-docs by making them pipette things in labs? It’s crazy.

The run of the mill engineering student who can solve known problems is no longer safe. It is a necessity both for the innovative progress of the world and the scientist’s ability to find work that he be able to break new ground, not just incrementally improve on existing innovations.

At a panel at Singularity University I attended in early August, Scott Hassan of Willow Garage, who worked closely with Larry Page and Sergey Brin at Stanford, told the story of how they built the first prototype of Google. He recounted how they coded every evening for about 6 weeks. Only 6 weeks. And now they have thousands of engineers just working on improving that small piece of code they churned out in 6 weeks. “What we have found is that it’s very easy to find someone who can improve something just a little bit, but it’s very rare to find someone who can create even just a prototype of something completely new.”

Recommended Reading: Dan Pink’s A Whole New Mind. Richard Florida’s The Rise of The Creative Class (which admittedly I haven’t read yet but it’s on my list. But I have heard Florida’s thesis expressed many times.)

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If You’re Successful Once, Please Don’t Check Out

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Most people are going to disagree with me here, but I find it sad that Seth Berger checked out after finishing with AND1.  I think having kids was the culprit for the decrease in desire, and this case isn’t the exception.

“Knowledge@Wharton: Clearly you have experienced a lot of success in a very competitive industry. If you were to start another company today, what would it be?

Berger:  [laughs]. I don’t know. I really don’t think I would do that actually. We sold the business in 2005. I’ve got three young kids. I have been coaching high school basketball. I’ve had three or four opportunities to do really cool things; each time I have decided that the time with my kids and the time that I am spending with the kids from my high school, because I coach them six months during the year, are more valuable than starting another business.”

Someone with that kind of innovative spirit and proven ability to make things happen needs to be in the business of making things happen for a lifetime, with a few long vacations interspersed between projects.  What caused him to check out was having kids. I’ve heard having kids triggers some biological mechanism to slow down and stop thinking big. I would urge successful people to be weary of having kids. I honestly don’t know if you can both raise a family and make something big happen. If decide to you, you must be ready to model other people who have made it work. Especially if you consider the fact that if they don’t continue to try to make a difference in the world we might not have a world where any humans can have kids soon because we won’t exist. Wozniak checked out too.

Do you consider yourself an entrepreneur?
Not now. I’m not trying to do that because I wouldn’t put 20 hours a day into anything. And I wouldn’t go back to the engineering. The way I did it, every job was A+. I worked with such concentration and focus and I had hundreds of obscure engineering or programming things in my head. I was just real exceptional in that way. It was so intense you could not do that for very long—only when you’re young. I’m on the board of a couple of companies that you could say are start-ups, so I certainly support it, but I don’t live it. The older I get the more I like to take it easy.

It all comes down to mindset. If you don’t want to do it anymore you won’t. And maybe Energy Management, if you feel you don’t have any gas in the tank anymore. But if you had once, you can do it again, the human body was made to recharge. Just get in shape, maintain a circle of friends and get back in touch with your purpose. The ones who die early are those who retire and check out. Those who live longest stay engaged.

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Making Sense of the Big Shift – Corporations Are Failing At Talent Development and Universities Are Doing No Better

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I attended the San Francisco Supernova Mixer Tuesday night, where John Hagel and John Seely Brown from Deloitte’s Center for the Edge presented their research on the Big Shift– “a major new effort to track the real impacts of what we call the Network Age. ” My copious notes on their talk are posted here.

Corporate America Doesn’t Know How To Succeed In The 21st Century – And Now It’s Hitting Their Pocketbooks

The basic message was that Corporate America is broken because it is not adapted to utilizing the powerful technologies of the digital age. Pinpointing with precise metrics exactly what corporations are doing wrong and providing prescriptive solutions proved very difficult. All they could show was a million and 1 correlations that in aggregate mapped the overall downward trend of Corporate America. While untangling the problem was like untangling a geek’s rat’s nest behind his computer, the solution was quite clear: talent development. The future of business is dependent on developing people, in many cases your employees, to be leaders and innovators in their respective fields. To do that they need to be able to participate in knowledge flows and have built-in structures and habits to absorb our increasingly exponential pool of tacit knowledge. Corporations are doing a terrible job of talent development.  Don’t get lost in complex economic theories and financial manipulation, focus on you developing people. We are a culture now, that is dependent on innovation, not over optimizing and over leveraging paradigms past their expiration date.

In the digital those who are successful are lean, nimble, fast learners, who utilize increases in knowledge flow to amplify creativity, collaboration and innovation.

And passion is more important than ever. Because only those with passion are able to keep up with the pace of change.

The way I see it big centralized corporations are dead. Meaning nearly all of the Fortune 500. The startup atmosphere, with small teams of innovative, highly driven people, for now is king. But eventually we’ll find ways to scale our structures back up to take advantage of increased size and more brain cycles, without the bureaucratic inefficiencies of today.  But the new kind of corporation will look radically different than anything we know today. It will a new kind of institution re-imagined from the ground up built upon the fundamentally new set of rules of the digital era.

Universities Are Stuck In Old Paradigms, Too. They Are Failing At Their Core Purpose

Since my focus for the last year has been understanding what it takes to be successful in the context of how we educate ourselves, this prompted me to ask the question, if corporations are doing a terrible job of talent development  how our universities doing? The institution accepted worldwide as the format by which we should develop our young people. And as you might expect the answer I got from everyone I asked at the event, was that universities are just like corporations: well adapted for old paradigms, and woefully inadequate for the rapidly changing digitally dominated world.

Two seats away from me I met a student who is a junior at Stanford. Perfect I thought, “Here’s a guy who is at the university credited with perhaps the most entrepreneurial spirit of any university in the world. This will be a great way to get some feedback and test out some of my hypotheses.” And as you might have expected he confirmed my hypotheses, leaving me both dismayed and excited at the same time. Dismayed because one of the best universities in the world is failing at its core purpose, and excited because the necessity of the organization I’m creating has increased drastically.

The Best Way To Make An Impact and Learn At The Same Time. Why Do Very Few Do It?

I asked the student what the startup culture was like for undergrads at Stanford. He said that Stanford didn’t really want to invest in their undergrads, because the value proposition was much higher for the graduate and Ph.D. students because most undergraduate startups fail to make any money. I think that’s a big load of crap. How can you not invest undergrads? The biggest technology companies in the world today were started predominately by people who dropped out of their undergraduate education in order to pursue a start up. Think Apple, Microsoft, Dell, Oracle, in fact I think Google is the exception.  How can you not nurture the entrepreneurial spirit of undergraduates at Stanford? My friend Jeff Seibert who graduated from Stanford last year and is the cofounder of DFJ backed startup Increo Solutions, said they were just one of maybe four or five startups that came out of their graduating class, and he wasn’t even sure if all of those could be taken seriously.

I then told the Stanford student I was talking with that Stanford should invest in its undergrads to undertake startups for the learning opportunities alone. Most of the people who I’ve talked to who have been involved in the founding of startup organizations almost unanimously agree it has been the most exciting and intensive learning experience of their entire life. The student agreed with me, “Oh yes, the learning experience is great, I mean, that’s all there is with the first startup, because you’re probably going to fail anyway, if it’s your first.”

That’s a very dangerous statement to believe. Yes you have to logically acknowledge that the facts say that most startups will fail. If you go into the start up experience expecting it to fail but knowing it will be a great learning experience, it will fail and it won’t be a great learning experience. The concentrated learning only happens as a result of the intense focus that occurs when you have 100% commitment and the resolve to never give up until you make it work. The learning can only happen as a byproduct of your desire to succeed. If you go after the learning experience, you will have neither a great learning experience nor a successful venture. I’ve heard the equation that Understanding= Knowledge + Action. And that makes sense to me. That is why the best way to learn is by doing. Happiness is the same way, the more you go after it directly, the more elusive it is. This is probably because when people go after happiness they go after the pleasures instead of the gratifications. Pleasures make you feel good in the moment but have no lasting effect on your happiness. Gratifications trigger no feeling in the moment but make you lastingly happy. Think Flow. For more on this read Martin Seligman and Mihaly Csikszentmihalyi.

You have to emotionally believe you going to succeed but logically know that it’s very difficult. It’s this kind of Orwellian doublespeak, of holding contradictory truths in your mind, that is essential for people who dare to be different, and dare to change the world.

Stanford should fund its students based on the value of learning experience alone. They need to get them on a trajectory to solving the world’s important problems now, because if they get sucked into the corporate world, and get used to the comfortable wage, they will never be able to turn back, and another potentially innovative soul is lost. And boy, does the world need every innovative soul it can get right now.

Seth Berger who founded AND1 while he was in college expresses the sentiment well that the time to start your first business is while you’re young. I linked to the quote in another draft I’m writing right now, so don’t be surprised if you see it again.

Berger:  Start a business before you go get a job. Here is the reason. If you go get a job, you are going to succeed…. If you come out and work, what are you going to make? 50K to start? You tell me.

So let’s say you are 21 and you get out of school making $60,000. You do real well and three years later they say, “I am going to send you back to grad school. I am going to pay for you. Then, come back to work. When you come back you are making $175,000.” Five years after that, you are going to be making a half million bucks. You are going to have a husband or a wife, two kids, nice car, summer home, country club. At what point are you going to say, “I am going to go start my own company.”? The answer is never.

What you will do is work until you have made enough money, somewhere in your 50s, to go do something you really want to do, instead of now, when you are broke…. When I got out of graduate school and I drove a Honda Civic Hatchback. I was broke. I didn’t care. It just didn’t matter. But once you get used to the good life, you won’t go back. So if you are thinking about starting a business, start the day you graduate. You don’t need experience. You don’t need money. You don’t need someone else to tell you that you can do it. Just go start it before you get used to making all that money.

Succeeding Isn’t Complicated. Just Commit.

You have to believe with all your heart, with complete emotional congruence that the startup you are working on is going to make it BIG. In the early 1900′s Andrew Carnegie commissioned Napoleon Hill to interview the world’s 100 most successful people, an impressive undertaking that included the likes of Thomas Edison, Henry Ford, and Charles Schwab. This book is the oft quoted Think and Grow Rich. What Napoleon Hill discovered was that there is a basic process that every successful person went through with little variation. The foundation of any successful venture is a visionary who has a definite purpose and a burning desire to succeed. He also has faith that no matter what happens, no matter what challenges are thrown his way, he will be able to overcome them. He has 100% believe that he will succeed, even when he is teetering on complete collapse. And it is that kind of conviction that ends up being the difference between success and failure.  The 3rd thing all the people he interviewed did, was create definite plans of action and begin carrying them out immediately. Many times their initial plans were wildly off the mark. But that’s to be expected, it’s very rare that you will strike gold on your first attempt. The point of that first attempt is to get the feedback to make your second and third attempts successful. Thomas Edison is famous for finding 10,000 ways a lightbulb wouldn’t work before he found one way it would, and he completely revolutionized the world as a result of his determination. That that same dogged persistence, not coincidentally, is possessed by every other successful person that Napoleon Hill interviewed. What they all had was incredible ability to persevere through failures, regroup and create new updated definite plans of action based on their lessons learned until they found one that worked. Now there are other things that you need along the way in order to accelerate your growth, this includes things like mastermind groups learning how to be decisive, and specialized knowledge, but these complimentary skills will fall into place naturally if you pursue the process of burning desire + faith + organizing a definite plans of action + persistence in the right order.  You will notice interestingly that most success stories are very similar to one another and that’s because there are certain rules of success that work. The challenge isn’t to find new ways to be successful it’s to find new ideas you want to be successful with.

In Made to Stick the Heath Brothers also noted that most successful, or as they call it, sticky ideas also followed a similar pattern. “We will give you suggestions for tailoring your ideas in a way that makes them more creative and more effective with your audience. We’ve created our checklist of six principles for precisely this purpose. But isn’t the use of a template or checklist confining? Surely were not arguing that a “color by numbers” approach will yield more creative work than a blank-canvas approach? Actually, yes, that’s exactly what we’re saying. If you want to spread your ideas to other people, you should work within the confines of the rules that have allowed other ideas to succeed over time. You want to invent new ideas, not new rules.”

People think that they need to have mastered a huge laundry list of skills before they even begin. You don’t. You just need to begin at square one with a burning desire to do something, anything. Seth Godin in his recent TEDTalk on Tribes describes this phenomena as well, “It’s fascinating [that] all tribe leaders have charisma. But you don’t need charisma to become a leader. Being a leader gives you charisma. If you look and study the leaders who have succeeded, that’s where charisma comes from, from the leading. Finally, they commit. They commit to the cause. They commit to the tribe. They commit to the people who are there.”

The Power of Purpose and Knowing What You Want

Purpose is incredibly powerful. When you have purpose the right opportunities seem to flow magnetically to you. This isn’t some bullsh*t metaphysical phenomena like the Secret or the Law of Attraction where the universe just gives you whatever you asked for. Scientifically, it is probably explainable by understanding parts of the brain like the Reticular Activating System, which basically controls what you focus on. And when you can control what you focus on you begin finding possibilities all over the place. When you don’t control what you focus on you end up just satisfying your Maslow’s hierarchy of needs, sex, food, comfort, rinse repeat. Here are two examples to illustrate the power of purpose the first is from Colonel Colditz, the second is about understanding the flight path of an aircraft that knows its destination.

“When people know their desired destination, they’re free to improvise as needed and arriving. Suppose I’m commanding an artillery battalion and I say we’re going to pass this infantry unit through our lines forward. That means something different to different groups. The mechanics know that they’ll need lots of repair support along the roads, because if a tank breaks down the bridge the whole operation will come to a screeching halt. The artillery knows they’ll need to fire smoke or have engineers generate smoke in the breach area where the infantry unit moves forward, so it won’t get shot up as it passes through. As a commander, I could spend a lot of time enumerating every specific task, but as soon as possible know what the intent is they begin generating their own solutions.”

“When an airplane takes off it has a flight plan. However during the course of the flight wind, rain, turbulence, aircraft, human error, and other factors keep knocking the plane off course. In fact the plane is off course about 90% of the time. The key is that the pilots keep making small course corrections by reading their instruments and talking to the control tower. As a result a plane reaches its destination.”This is the power of knowing where you want to end up and making continual adjustments along the way, while staying true to your values.

Let me again return to my observation of Stanford’s ineffectual culture. If Stanford’s culture fails to encourage most of its students to be entrepreneurial, then why does it have a reputation as such an entrepreneurial institution? It gets its reputation from a few very successful startups that are by and large outliers in the community. I’m willing to bet the culture is not very different from your average, stodgy, nose-to-the-sky Ivy League institution, but it does have one key difference: proximity to the innovative and vastly more creative corporate culture of Silicon Valley, which a student with strong initiative and motivation can easily tap into, and use as a launching pad. But the culture does not directly encourage this, and it seems as if it directly discourages this type of behavior, impregnating students with the feeling that they must have lengthy resumes and many degrees before they can do anything of importance. I think an educational institution should be measured more on how many students even try, then on how many succeed. To put it another way, if we want to judge how entrepreneurial a culture is, we should look at how many students are attempting to start entrepreneurial ventures in Boolean fashion — did they try to start one or not, not how successful the most successful startups are.

Leave Your Nest

Another thing that this student said that really surprised me, was that this was the first entrepreneurial event he had attended that was not on campus. That’s astounding. How can you not take advantage of the incredible opportunities to meet amazingly creative people, that come to public gatherings in the Bay Area every day. I don’t blame him, I blame the culture. Some people end up making an impact because they naturally pursue the goals in the right way. But those who don’t focus on the right things on their own, yet still have a desire to make an impact, should be pointed in the right direction by the talent development institutions, today known as universities, that they are a part of.

After the event was over, I waited for my turn to talk to John Seely Brown, and asked him how he thought universities were doing as far as talent development goes. He agreed that they are making the same mistakes as corporations. I asked Kevin Werbach, a renowned professor at Wharton the same question and he gave me the same answer as well . But of course, he doesn’t think universities will die, he thinks the middle of the road certainly are in fact headed towards the gutter, but people still need to be certified, and the top universities will still be able to capture value if the best faculty stick around. But what if the faculty leave because they have higher leverage environments to place their energy? I think this is a likely possibility. But more on that in a future post.

Even though Stanford brings amazing events on campus, it’s incredibly important to go to events like the one we were at off-campus. The best part of the event was the questioning and networking afterward. I can get the information and lecture online, from the web stream on my couch at home. But I can’t get the on-the-fly introductions, the rapid feedback based on the same lecture we all witnessed, the rekindling with familiar faces, and the chance to meet exciting new people I’ve never met before. I made new contacts and got new leads and I exposed myself to more positive randomness than any sheltered event on campus can produce. This is certainly not to say that on-campus events are not valuable, they can be very valuable, but I find it amazing that so many students have never walked out the back door, to participate in the very beneficial activity of attending events in Silicon Valley.

In this post I have used Stanford as an example of the failure of Universities to develop the next generation of young leaders.  In a future post I will go on talk more broadly about why the current educational model isn’t well adapted for the 21st century and why entrepreneurship is the process uniquely suited to remake the world in the 21st century. While you’re waiting, I’ve described many of my thoughts on this here in the 12 minute speech I gave at the World Future Society in mid-July.

Other ideas inspired while writing this post, but didn’t make it into the post:

- Almost everything that is valuable that has been created by humans began first as an idea in someone’s mind.

- I got tons of great feedback tonight, I am now ready to go to more networking events. There’s a natural rhythm to putting your head down and moving projects forward, and going out to a lot of events, meeting people, networking your ass off and getting feedback.

- I wrote the foundations of this blog post on my cell phone while walking to BART.


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The Big Shift: An Evening with John Seely Brown and John Hagel

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From Eventbrite:

We’re delighted to launch our first 2009 Supernova Mixer event at Wharton Ι SF Campus on Tuesday, August 11, 5:30pm – 7:30pm. Please join us for a lively conversation with Deloitte’s John Hagel and John Seely Brown (Center for the Edge) on The Shift Index — a major new effort to track the real impacts of what we call the Network Age.

In their initial report, they address why most companies fail to harness the “Real Time Web”  and connected knowledge flows for competitive advantage ∙ Return on Assets of US firms is falling even as productivity increases, the gap between winners and losers in business keeps growing ∙ and, big companies are losing their leadership positions faster than ever.

Here is my blow by blow with occasional commentary in italics and insights that resonated with me in bold.

We’ve become completely fixated on short term measures of our economy.

What are the indexes that business leaders and policy makers look to?

All of the major indexes are short term focused, like unemployment.

We are in the middle of a long term economic shift, there aren’t many indexes to measure how are we doing on the long term shift.

Everyone said this is an interesting project but you’re crazy to take it on.

The Big shift  just looks at the US economy — We look over decades not just quarter to quarter –

What are the dimensions of the big shift? They have 25 indexes. Impact index is the bottom line. I like that — impact is the entrepreneur’s drug of choice.

Corporate performance is measured primarily by return on assets. We wanted a measure that went beyond income statements. We didn’t want to go to return on equity because you can play games on the capital structure to fudge those numbers.

Return on assets has gone down dramatically over the last 40 years.

Labor productivity has increased at a significant and sustained rate. Why aren’t companies able to capture the value of increased labor productivity?

But this is an average and there are big winners and big losers in an average.

So let’s look at how the top quartile has done and how the lower quartile as done.

The “winners” have just struggled to stay the same.

The bottom quartile has gone down a lot.

The topple rate (number of companies in the top quartile who have fallen into lower performance) has increased.

People are so focused on the short term that they’ve never bothered to look at this over the long time. And the conclusion is that business is broken. Public companies in the US are doing worse and worse over time.

If you can make it into the S&P 500 now you can expect to stay 15 years. 1938 you could expect to stay for 75 years. That’s a big change. Isn’t one answer that it’s just time compression? The pace of change, i.e. everything, has increased therefore everything is on a compressed time scale?

Cause: Emergence and proliferation of digital infrastructure.

Barriers to entry are systematically coming down. Competitive intensity increases.

Market is becoming more efficient.

Companies may not be benefitting but customers are benefitting.

Creative Talent: Richard Florida — or knowledge workers — their cash compensation as gone up greatly over the last few years. Anyone who isn’t in that group their return has been going down significantly.

Customers are pulling margins out of business and creative talents are squeezing more capital out and companies are caught in the middle and losing profits.

Knowledge spreads really rapidly. Anything innovative you do inside company walls flows out pretty quickly. The same knowledge flows provide all of us the ability to learn and improve faster.

Public companies haven’t figure out how to take advantage of these knowledge flows to improve at more acceptable levels.

Right now the story is largely bad news for companies and good news for customers. Basically Corporate America is dying and in is ashes startups in bunches will rise, who with 10 people can do what 500 people did before and do it faster and in leaner, more innovative ways.

This is the tip of the iceberg on the kind of analysis that can be done with the work they started with the Big Shift Index.

Shift index is going to be an annual event so they can keep score and see if things change.

They want to start to do comparisons between industries and internationally across countries.

20th century companies became preoccupied with stocks. The shift to the 21st century is away from the notion of the firm that preserves and protects assets and scalable efficiency, and towards scalable learning and participation in knowledge flows.

Very little of the architecture of our firms are structured right.

Q: Could part of this downward trend be because the definition of assets have changed over time

A: Things have pretty much balanced right –

Q: Could you say this is the end of Branding or the end of American Manufacturing?

A: All the elements you have talked about are elements — manufacturing is being sent overseas and branding have less premium than ever before. Companies are investing more and more in branding and their performance is getting worse

Toyota is obsessed with continual learning. There is no reason we couldn’t take Toyota’s strengths for utilizing knowledge flows in manufacturing and apply it to every other dying industry and reinvigorate it. There’s no reason we couldn’t reinvent manufacturing if everyone did that.

How do you move from knowledge creation to knowledge flow? With knowledge creation going faster and faster that increases the rate of tacit knowledge creation. We don’t know much about how tacit knowledge flows, we only know how explicit knowledge flows.

There’s a human element here. One of the indexes is worker passion, not worker satisfaction. A number of the metrics were original survey work.


They wanted to define a logic structure for the big shift: what are the enablers, amplifiers, barriers etc.

They found passion is a really important factor for how we participate in knowledge flows.

People who are passionate are much more active in knowledge flows.


A key in making this big shift is that we have to make our passions our professions. If we don’t we are going to get more and more stressed. If we are passionate it’s only going to get better.


An interesting twist: People who are passionate are not the employees who are the most satisfied. They are the ones who leave.


By far the self-employed are the most passionate about their work. Passionate people are leaving corporations.

The big wild card in all of this is the public policy shift towards economic liberalization. We could go into a period of increasing protectionism. These trends are at least dampened or reversed overall if that happens.

In 20th century the big advances were in communication and transportation. Scalable manufacturing and marketing was for the first time possible. It led to a different set of institutions that captured the economic value of that century.

Similarly, due to digital infrastructure we’re going to see a new set of institutions capture today’s economic value.

As the world gets flatter and flatter in terms of connectivity. Talent density in cities is increasing. Why is business travel actually increasing?

A lot of it has to do with enhancing face to face interaction because that how tacit knowledge flows.


The world can both get flatter and spikier. How do you find the spikes and connect them? That’s what startups try to do?

Hypothesis: So basically we need more passionate young people working on startups that are tacking big problems?

We are basically going to see big companies decrease in effectiveness and startups increase in effectiveness and that trend will only continue with the flow of passionate people into the startup world. So we should encourage this trend by having more startup companies?

What kind of public policies are necessary to facilitate more creative talents?

In any high growth economic situation you’re going to see a lot of inequality. But it’s fluid in equality because the growth is happening as a result of disruption.

Toyota has taken raw assembly line manufacturing job and made it incredibly creative. Anybody can be a creative worker given the right rules and management settings.

Technology has focused more on automation and standardization and scalable efficiency and not on creating scalable peer learning environments were creativity can be harnessed.

We are not going to go completely towards a free agent nation. Because institutions have the potential to dramatically increasing learning and effectiveness. People are fleeing because these institutions aren’t efficient. But you’re going to start to see a trend back towards institutions once these institutions begin to master new dynamics of knowledge flows.

The big shift index doesn’t measure knowledge flow directly it looks for proxies that get a sense of whether knowledge is flowing or not. are people moving, are people connecting with each other?

They want to take this index down to an individual level so that a company can address how they are doing in the 21st century and where their gaps are?

What does it mean to build a talent driven firm? That may be the purpose of the future of our institutions. That’s an approach that may turn out to be more relevant for institutions in the 21st century. (And everyone is a talent).

Great — that’s what F3′s goal is: talent capitalization – more on that in upcoming post.

Leverage in the U.S. is about financial leverage — we all know what that produced in the U.S.

But corporate leverage was different in China. Companies focus on capability leverage — they say is there anybody out there that has assets that are complementary to ours — they did this because they didn’t have a solid financial sector.

Because china didn’t have any IP protection, they had a different mindset about innovation, where what ever they had today they had to get to the next stage because they weren’t safe. While we certainly don’t support abolishing intellectual property laws, we believe this is a more productive mindset for innovation in today’s world.

Q: What advice to you have Obama

Every public policy question should be reframed as a talent development question. Once you do that things start to fall in place.

If corporations suck at talent development how is the university doing? Are they doing a good job of talent capitalization and if they do try to adapt modern methodology  for utilizing knowledge flows are they going to be able to do that faster than new kinds of institutions with less historical baggage?

(Obviously that’s a leading question)

Talent development is performance improvement over time. US companies have recently been increasing performance by squeezing and not developing talent and that’s not sustainable.

There is exponential learning in World of Warcraft.

Talent isn’t something you can do in a quarter.

When John Hagel talks to talks to executives about talent development they ask what training program should they use? They worry if they train them that they will leave.

But if you are training people faster than anybody else why would they ever leave?`


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Lessons from Sports: Focusing On The Right Things

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I’ve written about sports frequently because I think the lessons are incredibly transferable. Athletics are extremely competitive with a long history of results-oriented focus. It’s a huge business, with a lot of attention, money and science aimed at maximizing results. While transferring lessons from a game can be dangerous, because any game is an over simplification of the complexity of the real world,  closed environments are great testing grounds for honing narrow theories, skills and practices.

During Halftime of the NBA Finals there was a great segment where Dwight Howard, a future great, was spending time learning from Bill Russel, the greatest winner of all time — 11 championships.  Michael Wilbon talked about the importance of listening and its tendency to be underrated. Wilbon praised Howard’s willingness to listen to Bill Russell.

They were discussing how you become great and Russell told Howard that when the season ended he should take a month off and not even look at a basketball. This violated Howard’s worldview — “That’s time others could be working,” he replied incredulous.  Intuition says Howard is right: maximize time working. But I’m inclined to trust the greatest winner of all time. It fits with the current paradigm of the productivity-obsessed that the correct paradigm is to focus on energy management not time management.

High achievers who strive to be the best seem to undervalue the long term benefit of taking time off. Growth requires focus and intensity and you simply can’t do that 24/7/365. Stepping away, recharging, and revitalizing is crucial for long term growth. And think long term growth whenever possible.

Jeff Van Gundy made another astute point on a common error most people make. Van Gundy was addressing criticism other people had of Kobe Byrant, that he should shoot more or pass more. Van Gundy said focusing on passing more or shooting more was flat out wrong. Instead he said, just focus on making the right decision. Let the situation dictate your decision making. If they go single coverage go 1 on 1, if they try and double team, find the open man. This lesson struck me as very universal. So many times we can get zeroed on doing something regardless of the situation, like deciding we should pass more or shoot more. Instead focus on the right thing: being flexible, assessing the situation and adapting. “Mind like Water” as they say.

If you’re trying to write a popular blog don’t focus on the wrong metrics like “driving more traffic” to your site. Instead focus on better content first. If you’re in a conversation with someone important or beautiful and you’re nervous, don’t focus on saying the perfect thing instead just focus on having 100% belief in what ever comes to mind. If you’re trying to get the ear of someone who is incredibly busy and you see them at an event, don’t make a pact that you’re going to get him to help you no matter what, instead if you do enter in conversation just go with the flow, make a good impression and follow up later.


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