Net neutrality has received surprisingly strong support from many Silicon Valley innovators, including Google. Given that the lack of regulation has enabled mind-blowing levels of innovation since the World Wide Web emerged in the early 1990s, why will imposing regulation to “protect innovation” help? If it ain’t broke, don’t fix it.”
Many industry veterans agree. Bob Metcalfe is co-inventor of Ethernet technology underlying the development of networks. Unlike Al Gore, his original work was instrumental in enabling use and growth of the internet. Opposed to net neutrality, he has often warned that government regulation could kill the open internet, a “golden goose” of economic development.
Are supporters of net neutrality Pie Chart thinkers or Venn diagram thinkers? A recent 20/20 Outlook post contrasted these two worldviews in an admittedly oversimple way. “Pie Chart thinking constrains your vision to that which already exists… Pie Charts constrain us to a finite perspective; Venn Diagrams encourage us to include more factors… Venn Diagram thinking enables you to break out of the box by forcing you to consider which of several circles you will include.”
Two possible reasons come to mind for why many in the technology sector support more government regulation: (1) lack of knowledge of history, and (2) Pie Chart thinking.
Supporters raise the specter that, if the largest providers are able to charge higher rates for faster service, small businesses and consumers would be harmed by being unable to access the faster service. These supporters must not be aware of how regulatory actions that have hurt innovation over the past century and a half in the U.S. Decades of government regulation in the telecom industry, for example, have on balance stifled rather than helped innovation. Instead of protecting consumers, the government became the protector of the status quo for the largest companies.
While limited historical vision is one cause, Pie Chart thinking seems like a bigger problem. Is it surprising that some politicians and large companies want to gain economic control over the fast-growing technology sector by imposing regulations? No. But is it surprising is that so many of the current and future innovators are supporting it? Yes! They apparently view one of the most explosive technological drivers of economic growth in our nation’s history as a bounded system with finite capabilities.
Rather than imposing regulations, protecting our freedom to act would benefit consumers. Instead of regulating a finite number of players to constrain pricing (Pie Chart), allowing significant ongoing demand from consumers for higher speed traffic to drive the formation of a whole new set of competitors would grow the economic pie and add to the U.S. economy (Venn Diagram).
My 2 cents. If you disagree, I’d like to hear about it.
Ben Horowitz recently published a post called “The Sad Truth about Developing Executives.” In it he details the realization that, when he transitioned into the CEO role, his penchant for developing people who worked for him was no longer an asset but a liability. How can this be?
Very early in my career as a software engineer I was continually pushed into management roles. Since I loved slamming code, I resisted each time but eventually gave in because the organization needed a leader. Without formal management training, I learned valuable lessons on my own. The folks reporting to me became my responsibility, and my leadership quickly morphed into serving them rather than vice versa. My modus operandi became creating an environment in which the best and highest skills of each individual could be applied to the task at hand, training them where I could, and then filling in the rest myself in the best way possible.
The model of developing staff members isn’t bad in general, but it can be disastrous for a CEO. Horowitz lists a number of reasons why CEOs shouldn’t pursue it. Here are a few:
- Lack of skill – no CEO understands every job well enough to teach it to direct reports.
- Impact on results – the demands of the market preclude both the CEO and management team members from spending significant time training rather than applying all their effort to achieving targeted outcomes.
- Not paid to do it – “Executives are compensated for their existing ability, and therefore should not be evaluated on their potential.”
- It doesn’t work – the rest of the team will see that you are working with an underperforming player and you will not take him or her seriously because of their lack of acumen.
A serially successful CEO friend has a succinct phrase for how to deal with this a bad hire: “Shoot the runt.” He learned early on that adapting an organization because of one individual harms the organization. The critical responsibility of any CEO is getting the right person into each position, and that may include rapidly correcting a hiring mistake.
After taking over as VP of support services in a turnaround company later in my career, I learned another valuable lesson. One individual in a helpdesk group, we’ll call him John, had been at the company twice as long as his colleagues yet seemed to know half as much. His team received a constant disorganized stream of support calls, so I asked John to act as the dispatcher, taking each initial call, answering simple questions quickly, then assigning more difficult questions to the others in a way that maintained a balance of the number of calls and minimized wait times. I stressed that he had to be available during regular business hours except for his lunch break.
My second week I met with customers all over the country, including both coasts. Each day when I called in to check on John, I heard an excuse for why he got in late or he had to leave early. When I returned, I agonized over the situation for about ten days. Finally one Friday in my first month there, I called John in to let him go. I anticipated that the extremely overworked group would not be happy about losing a hand, but when I told them later that day what I’d done, I almost got a standing ovation.
The next Monday, I was handed a note written by an employee from another part of the company. As I read it in front of my boss, the president, I saw that the author was calling me an ogre for having fired John before I’d even been there a month. When I slowly looked up to see the look on my boss’s face, he smiled as he reached out his hand to shake mine and said, “Welcome to senior management!”
“Innovation is the specific instrument of entrepreneurship, the act that endows resources with a new capacity to create wealth.” -Peter Drucker
“The only worse design than a pie chart is several of them.” -Edward Tufte
One of my favorite hobbies is oversimplifying the world, and I’ve decided to share my latest instance. Two very different kinds of thinkers exist; I call them Pie Charts and Venn Diagrams. How are they alike, how do they differ, and which one is your default thought process?
A Pie Chart is useful for gaining perspective on the distribution of a resource. It shows the relative percentage that each portion of a finite thing is allotted within the whole. While it can identify how large an opportunity is today relative to other parts, the universe could change tomorrow, e.g., the size of the pie may increase or diminish.
A Venn Diagram illustrates how two or more things are related. Are they separate? Do they overlap? If they overlap, then to what extent? The Diagram evolves as the size of each circle changes, as the degree to which they overlap grows or diminishes, or as a new circle is introduced.
How does using a Pie Chart versus a Venn Diagrams influence our imagination?
Pie Chart thinking constrains your vision to that which already exists. An everyday example is seen in political economics. Portraying the U.S. economy as a zero sum game (i.e. a pie chart) manipulates us into focusing on how someone is taking our piece of the scarce resources that constitute the pie. In business, the outcome of Pie Chart thinking is usually suboptimal. For example, when a company’s only growth option is “more of the same” or “sell harder,” a Pie Chart mindset is behind it.
Remember “think out of the box”? A Pie Chart is the box outside of which we need to think all the time, not just during brainstorming sessions at offsite retreats. Venn Diagram thinking enables you to break out of the box by forcing you to consider which of several circles you will include. The size of each circle is unbounded, and the overlap between them is dynamic. Venn Diagram thinking empowers us to envision how we can grow the pie, while Pie Chart thinking inhibits innovation by limiting our consideration of alternatives.
Understanding the difference between these two modes of thought elevates our vision. Consider the effect of Pie Chart thinking versus Venn Diagram thinking on what we choose to emphasize, on the perspective we bring, and on the outcome we experience:
Pie Charts emphasize how two things are different; Venn Diagrams encourage a search for synergy. Pie Charts constrain us to a finite perspective; Venn Diagrams encourage us to include more factors. Pie Charts divide the whole into its constituent parts; Venn Diagrams influence us to identify common interests and create unity.
How can we apply this heightened vision to lead our companies more effectively? Here are a few examples:
- Organizational Dynamics: Root out instances of narrow, self-interested departmental silos (Pie Chart) and replace them with improved collaboration and common commitment (Venn Diagram).
- Product Management: Notice when product managers focus very narrowly on their own product lines (Pie Chart) and encourage them to see consider whether the combination of their products with additional products and services can accelerate growth (Venn Diagram).
- Strategic Partnerships: When a manager is at an impasse trying to grow the business using available resources (Pie Chart), identify a compelling reason that a partnering company would share needed resources (Venn Diagram).
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February 2 was the fifth anniversary of 20/20 Outlook. It’s gone by quickly. Long-time friends have been very supportive, and I’ve made many new ones along the way.
I’ll continue to share my thoughts and those of others about how to discover growth ideas and create new revenue initiatives through partnerships.
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Of top director issues for 2015, cyber security is the No. 2 concern behind strategic planning.
– Kerry Berchem, Head of Corporate Governance practice, Akin Gump Strauss Hauer & Feld, based upon an extensive survey of corporate directors
If you’ve been paying any attention at all to business headlines, you’re aware of how critical a concern cybersecurity breaches have become. Home Depot, Adobe, Ebay, JP Morgan Chase, Target, Sony, and a host of lower profile organizations have suffered expensive losses during the past several years. If the threat of such losses weren’t putting pressure on businesses, recent comments by SEC Commissioner Luis Alvarez have set board rooms abuzz, e.g.:
Board members cannot expect to avoid personal responsibility for [cybersecurity] losses that might have been prevented by the application of “reasonable business judgment.”
— Luis Aguilar, SEC Commissioner, September 2014
Translation: for losses incurred due to cybersecurity breaches, corporate directors are no longer safe behind the “corporate veil” protecting their personal assets from shareholder lawsuits. Boards who can’t demonstrate that they’ve exercised considerable oversight (“reasonable business judgment”) to ensure that their companies are taking appropriate measures to protect their information from hackers are now exposed.
Does this mean directors must become internet security experts? Of course not, but they should become conversant enough to understand what their companies are doing to minimize the danger and impact of a breach. One place to start is a framework developed a couple of years ago by NIST (“Framework for Improving Critical Infrastructure Cybersecurity,” National Institute of Standards and Technology, February 12, 2012).
The framework comprises three major components:
- the Framework Core identifies “the key cybersecurity outcomes identified by industry as helpful in managing cybersecurity risk,”
- the Framework Implementation Tiers provide “context on how an organization views cybersecurity risk and the processes in place to manage that risk,” and
- the Framework Profile aligns the other elements with “the business requirements, risk tolerance, and resources of the organization.”
The Tiers illustrate how a company can grow its ability to deal with breaches by assessing its current state and upgrading its infrastructure and processes where appropriate in the context of the specific business. I’ve summarized the Tiers in the table below.
Companies can evaluate themselves in three key areas: (1) the risk management processes currently in place, (2) how integrated those processes are across the organization, and (3) the extent to which the company shares information and collaborates with its business partners and other external organizations. While NIST suggests using the framework to create a unique plan for improvement rather than employ it as a maturity model, it nonetheless offers a good way to assess a company’s readiness to deal with breaches.
The vertical scale outlines increasingly sophisticated stages of cybersecurity implementations, from Partial through Risk Informed and Repeatable to Adaptive. Examining each column reveals the relative strength within each of the three areas (Risk Management Process, Integrated Risk Management, External Participation). Viewing the company through the lens of these tiers empowers a board member to ask the right questions as they add “cybersecurity governance” to their responsibilities as a director.
People who wield more influence and impact than others always seem to have incredible networks. While they may not be wealthier or brighter than their friends, everyone leans in when they talk and remembers what they say. What’s their magic?
Having spent decades observing the most highly influential friends and acquaintances in my business network, here are 7 habits that grow your influence… [LinkedIn]
Every man must decide whether he will walk in the light of creative altruism or the darkness of destructive selfishness.
-Martin Luther King Jr.
In his recent bestselling book entitled Give and Take, organizational psychologist Adam Grant divides people into givers, takers, and matchers, then analyzes how each type defines and achieves success. His descriptions and rich examples provide critical insight for CEOs into how their leadership style impacts their organization and its success.
In ten years of studying reciprocity in organizations, Grant has identified three fundamental styles. While each of us may use all three styles on occasion, we tend to use one of these primary interaction styles:
- Takers like to get more than they give;
- Givers prefer to give more than they get, and
- Matchers seek an equal balance of giving and getting.
Examples of takers abound. Although most of us possess a kind of “justice radar” protecting us from predatory types, many takers are good at hiding their true nature. The Achilles heel for takers, however, is that they can’t help themselves and eventually display evidence of their true nature. The late Ken Lay of Enron is cited as a perfect example of a taker in giver’s clothing, often able to ingratiate himself to those in a position to help him. Eventually, though, public company taker CEOs expose their attitude that they are the “suns in their companies solar systems.” Useful unobtrusive measures cited by the author are the size of the CEO’s picture in the annual report, the CEO’s overuse of first person pronouns when describing the company’s progress, and the high degree of compensation the CEO receives relative to his direct reports. For example, taker CEOs tend to earn 3 times as much as the next highest paid executive, while the multiple averages 1.5 for givers.
CEOs who are givers can be harder to detect but refreshing to find. Grant describes a number of giver CEOs who have been very successful while giving much to those around them. Jon Huntsman and David Hornik are two of a number of business leaders mentioned who have succeeded through their unselfish support of those around them.
Matchers “operate on the principle of fairness: when they help others, they protect themselves by seeking reciprocity.” You can tell you’e a matcher if you continually seek to create an even exchange of favors, rather than looking for an advantage for yourself or not keeping score at all. Often, givers become matchers when they have to deal with takers, in order to protect their interests from being bulldozed.
Which style produces the least successful people? Which style is practiced by the most successful? Surprisingly, in both instances, it’s the givers. Two types of givers emerged: selfless givers and other-focused givers. Selfless givers have “high other-interest and low self-interest… and they pay a price for it. Selfless giving is a form of pathological altruism.” Giving without any getting eventually leads to burnout. The real winners are other-focused givers. As Grant puts it, “if takers are selfish and failed givers are selfless, successful givers are otherish: they care about benefiting others, but they also have ambitious goals for advancing their own interests.” Otherish is a term he uses to describe these winning givers who, while they aren’t selfless, they “help with no strings attached; they’re just careful not to overextend themselves along the way.”
Grant offers practical actions you can take to leverage the insight provided by the book. Here are a few:
Test Your Giver Quotient – He provides online self-assessment tools at www.giveandtake.com that you and people in your network can take to rate your reciprocity style.
Run a Reciprocity Ring – What would happen if groups of people in your organization met weekly for 20 minutes to make requests and help each other fulfill them?
Help Other People Craft Their Jobs to Incorporate More Giving – A VP at a large multinational retailers met one-on-one with each of his employees and asked them what they would enjoy doing that might also benefit other people.
Embrace the Five-Minute Favor – Ask people what they need and look for ways to help that are valuable to them but have minimal cost to you.
If you’re interested in moving your business forward using practical knowledge based upon social psychological research, you’ll find Give and Take highly thought-provoking and beneficial.
Paul Gillin’s recent post about the purpose and value of editing inspired me to share six core principles I’ve discovered that drive creation of content that CEOs will read.
1. Keep the ROI high.
More than other audiences, CEOs focus intently on using their time profitably. Content must provide a high return on investment. If you waste a CEO’s time, he/she stops reading. Even a minute away from the promise of ideas that promote growth will risk losing their attention.
2. Assume your audience is up to speed.
Don’t give lengthy explanations of terms you understand and are afraid your audience won’t. CEOs already have to keep up with current issues, so if they need more background, they know how to find it on their own.
3. Make every word count.
Every paragraph, even every word, must deliver value and encourage the reader to continue. To transfer a concept that helps readers become more successful may require ten or more edit passes. Emulate what Paul Gillin calls the Wall Street Journal’s “obsessive culture… with packing more information into less space.”
4. Watch your language.
It’s imperative to be candid and use direct, active language. TexasCEO publisher Pat Niekamp points out that “pieces ghost written for a CEO by someone who’s never had the experience of having to meet a payroll or pay the rent or determine a long term strategy, or deal with killer competition may contain words like they might, could, consider… CEOs use active words like do, are, will.”
5. Get to the point.
Getting high ROI content read requires getting to the point quickly. Someone thankfully taught me early on not to make the audience wait too long for the punch line. If a CEO doesn’t get it by the second slide in a prez, for example, he/she will page ahead if they have paper copies, or they’ll get impatient and completely lose interest. Apply the same principle to your writing.
6. Get in and get out.
Similarly, keep your posts short and give some idea up front of the value and outcome, i.e. what’s in this for me if I read it. Short means blog posts that are about 500-1000 words, with the average closer to 500.
Respect is due anyone who’s willing to take on the CEO role. While I’m happy that the “open rate” for my monthly newsletter hovers at 35-40%, it’s a constant struggle to create higher ROI content for them. Hopefully these principles will help you do the same.
Please leave a comment below or drop a line to email@example.com to share your thoughts.
[For a deeper understanding of social media, follow Paul Gillin's blog.]
The title of a popular business book years ago was All You Can Do Is All You Can Do. And it’s true, but sometimes choosing the right thing to do is all-important.
The dilemma for many CEOs is that they stay so busy running the business that they end up with too little time spent thinking about how to accelerate its growth. The old saying often applies: “It’s hard to remember that the original objective was to drain the swamp when you’re up to your ass in alligators.”
Speaking recently with a highly successful CEO who’s grown and sold several companies, he speculated on what determines how open a CEO is to coaching. His experience and mine perfectly aligned: a serially successful CEO will seek input and help from friends far more often than a first-time CEO and founder. Highly successful people learn how to choose advisors they trust in order to achieve the success they desire.
The stumbling block for many a founder and CEO of an established small company is that he or she comes to believe in his/her own abilities so much that they’re unable to accept the help that would take them to the next level. No matter how passionate they may be about accelerating growth, their complete reliance upon their own judgment closes their minds to innovative ideas, even if the source is someone they trust.
If you run an established business, test yourself with these questions:
- If an experienced CEO took a deep look at my company and told me I had to make big changes in order to grow, would I be open to changing?
- If a partnering expert offered to develop an alliance strategy that could double the growth rate of my company, would I listen to learn how?
If the answer to either of these questions is no, your company may already be decelerating or it’s about to hit a bump in the road. Once that happens, it will become even harder to carve out time to consider innovative ways to grow.
Are you focused on maintaining your role as chief problem-solver in your company, or are you passionate enough about growing your company to seek help trusted friends? Sometimes all you can do, by yourself, is not enough.
The Oxford Dictionary defines opportunity as “a set of circumstances that makes it possible to do something.” Although opportunities are generally thought of as spontaneous, serendipitous, and not amenable to process, is it possible to find them systematically?
In general, an opportunity is a chance to move from state A to state B; a business opportunity requires an interaction with another person or organization to create a desired outcome. Since a business opportunity implies a relationship, a thorough understanding of how and why relationships are created is the foundation of systematic opportunity discovery. Although some opportunities arise through original creative thought, even those are based on an understanding of relationships.
The exchange of money for goods and services is one type of business interaction, but it represents a desired outcome, not an opportunity. While the ultimate measure of success is revenue generation and profitability, value creation must precede it. An opportunity is created by an exchange of resources that enhance value. What classes of value-enhancing resources are there?
Five of the most common are:
1. new products and technology,
2. brand recognition,
3. additional staffing,
4. customer relationships, and
5. new markets and industries.
A majority of business opportunities arise from the recognition that one or more of these resources can be leveraged to add value to existing offerings. How can we intentionally and systematically identify and define opportunities based on this principle?
The process that leverages this knowledge comprises 4 steps:
1. Define your company’s value relative to others.
2. Define other companies’ value relative to yours.
3. Leverage individuals gifted in identifying and defining new opportunities.
4. Discover opportunity in the gaps.
Valuing Your Company
A crystal clear picture of your company’s value is a critical enabler of systematic opportunity discovery. What resources does your company have, and which ones does it need? Well-understood strategic positioning affects the bottom line positively. It minimizes investing in opportunities that deliver little or no return while enhancing the chance of finding richer opportunities.
Valuing Other Companies
The second step depends upon the first. Knowing clearly what your company offers, you can view other companies through this lens: if another company were to acquire mine, what would be the increase or decrease in the value of the combined companies? An exit strategy approach is a proven way to identify value in other companies, and you’ll learn what resources you may have that they need.
Leveraging Gifted Individuals
Some individuals are naturally gifted in identifying and defining opportunities. Harnessing this strength by including the right individuals in your company. If your team lacks this strength, augment your team with advisors who possess vital insight into opportunity discovery.
Opportunity in the Gaps
Opportunity is driven by accurate perceptions of value, so clarifying your understanding of what others find valuable versus what you find valuable leads to discovery. The gaps between companies represent potential opportunities.
To systematically discover opportunities, the CEO must to set the right tone. Leading your company to an opportunistic frame of mind is less tangible but vitally important. Set the right example by staying curious and remaining open to new possibilities, then follow this four-step process!