Find the Right Person in 6 Steps

The market has changed, but smart hiring strategies are timeless.
By Burton Goldfield

Hiring is more of a headache than ever, so say many companies who receive HR services from my firm. This might come as a surprise considering that there’s no longer an overheated talent market in which companies desperately compete for top talent. But instead, business owners are facing a down economy in which scores of job seekers clamber over each other in order to land scarce positions. The influx of new candidates into the marketplace makes it even more difficult for executives and hiring managers to find the perfect people for open, high-impact positions.

And yet, hiring the right person is more important than ever. A single bad hire can cost between $60,000 and $120,000--that’s not exactly the way you want to spend precious dollars in a difficult market.

For the most part, the way to make the right hire is the same as it’s always been:

1. Define the requirements carefully. This sounds ridiculously easy, but it’s amazing how many business owners will embark on a search without determining exactly whom they want to hire. It’s important to detail the specific job requirements and desired personal characteristics, creating a “hiring scorecard” that can be used in screenings and interviews to determine if a candidate can fulfill the requirements of the job. Needless to say, it’s also critical to determine if the candidate will be a cultural fit as well.
2. Look for repeated patterns of success. Don’t just look for tactical job responsibilities and skills--find the applicants who have repeatedly made a mark and exceeded expectations, time and time again. Drill down in the interview to ask those questions; find out how they measure their own success and whether their employment history tells a story of a superstar.
3. It’s the network. With so many resumes flooding in for each open position, you should rely on inbound candidates even less than you ever have. Your friends and their friends know the fantastic players who are searching for their next opportunity; tap into them and save yourself a lot of paper time.
4. Find a recruiting platform that allows for pre-screening. When you do need to wade through resumes, use a recruiting system with pre-screening questions and candidate rating capabilities. This allows you to focus on the exact capabilities you need and only review the candidates who have passed the initial screening, saving yourself massive amounts of time.
5. It’s still about the passive seekers. I personally recently hired a VP of Marketing for my company, but when I first came across him, he was already installed at another company. I courted him for months, persuaded him and eventually he came to work for me. In essence, I treated this executive search as though it was occurring during a gangbusters economy where talent is scarce. The reality is, the truly premium talent is still scarce, and always will be. If your bar for talent is as obscenely high as mine, passive seekers can make or break your search.
6. Don’t settle. Almost every tip I’ve provided works in both a good and lousy economy. But let’s be honest: When the good times roll, it’s easier to find someone and say “good enough.” But in a down economy, you should never do this. Take the time you need to find the right candidate, either active or passive, and make the right hire.
7. There’s no question this is a great time to hire people. But don’t make the mistake of thinking it’ll be easier. The exceptional hires are out there, but just as in the old days, you may need to do some detective work and actively seek out the people who will make your company great.

Burton M. Goldfield currently serves as president and chief executive officer of TriNet, an HR outsourcing company. In this role, Goldfield is responsible for setting TriNet’s overall corporate strategy and directing business operations; he also provides strategic guidance in regards to TriNet’s human capital offerings.

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How to Get Fired with Dignity

By: Rosabeth Moss Kanter

John Thain's resolute face popped off the front page of the Wall Street Journal recently. Fired from his post at the helm of Merrill Lynch by Bank of America, he now "fires back," the headline screamed. The Murdoch-era WSJ likes a good gun fight.

Fired, fire back, and fire again. I imagine that Thain, whom I met in Davos when he was still heading the New York Stock Exchange, has been seething ever since the short meeting a few months ago in which BofA CEO Ken Lewis asked him to resign. At first, WSJ reporter Susanne Craig writes, he was stoic, remaining silent. Now he is railing against being made a scapegoat, as he claims, for distributing billions of dollars in bonus money to Merrill executives, despite heavy losses, before the closing of BofA's takeover. Now he says that he was completely transparent about the losses and that paying the bonuses was part of the merger agreement.

But telling his side of the story many months later will not dampen the controversy surrounding him. To mix metaphors, he has moved out of the frying pan into the fire. The story is back in the public eye, and accusations of "he said/he said" are fanning the flames for another set of news cycles. Lewis or BofA executives won't leave the attacks unanswered, because their reputations are at stake, too. And Thain is back in the news without any new good news about a new accomplishment (except that he left Merrill in good shape, which is pretty good in this economy).

Who is right matters less than the fact that Thain has lost dignity and respect. A talented executive and, apparently, a good leader, Thain has been so tainted by a mess that gets messier that his prospects for further public leadership have diminished.

There's a lesson in this for anyone who is being fired for any reason in today's layoff-prone economy: Don't let this happen to you! Try to die with dignity (career-wise), because you will be resuscitated and rehabilitated faster if you do. Some principles:

Try to leave on good terms, even if it is means swallowing hard. If you can, leave doors open a crack. Make your public statements positive, to show that you always had the company's or organization's interests at heart. Reminisce about the good times rather than lashing out about feelings of unfair treatment.

If you are attacked for alleged misdeeds and there's another side to the story, get it out fast. Don't let it drag on. As John Kerry learned to his dismay (and loss of the 2004 presidential election), if you don't fight back when first attacked (e.g., the Swift Boat Veterans against Kerry), later defenses seem weak, and the controversy stays alive a lot longer. Having observed this, Barack Obama's campaign countered attacks at Internet speed, and negative publicity faded quickly.

Admit mistakes immediately and show that you have learned from them. Taking personal responsibility rather than blaming others can be disarming (back to those gun fight images again). You can always say that "if I knew then what I know now, I wouldn't have done it," whatever the "it" is.

Let your newest good accomplishments speak for themselves. To avoid bad stories about the past, create new stories. For example, if Thain had started a smart new anti-poverty program since leaving Merrill and Bank of America, he might be in the news for other reasons than executive bonuses.

Avoid burning bridges. I doubt that Thain will write a revenge book, the way Carly Fiorina did after being fired from Hewlett-Packard. But he made public accusations of mistreatment. The financial world is a small club, where people move from company to company, sit on the same Boards, and support the same charities. That's true in many sectors. The people you trashed when leaving in anger could pop up at the next company with job openings.

Of course, it's hard to get fired with dignity if those firing do it indiscriminately and painfully. And the fire-er can suffer along with the fire-ee, because other top people see the risks and flee the scene, draining talent and motivation. In the Thain/Lewis fight, Bank of America lost good Merrill people, and BofA took on a taint itself. Pulling out the big guns leaves casualties on all sides.

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I want to aplogize

By Peter Bregman

Why Should You Apologize?
One of the clearest ways President Obama has set himself apart from his predecessor is by demonstrating his willingness to apologize. He has apologized for using inappropriate language, making jokes in poor taste and even acting arrogantly toward Europe in the past few years.
What exactly is Obama doing? He is disarming his opponents and paving the path for reconciliation. Next time you are ready to defend your actions and play your part in a knockdown fight, consider apologizing first. Demonstrate empathy, concern, and willingness to change.
Ultimately, apologizing is not an admission of defeat but a humane gesture that can keep you out of a fight.

I was backing out of a space in a mall parking lot in New Jersey when, out of the corner of my eye, I saw movement and instinctively slammed on my brakes. Another car sped by, missing me by inches.

I was instantly furious. I pulled out fast to chase the other car, leaning on my horn and flashing my lights. Finally, the car stopped and I pulled up right behind him, still honking. We both got out of our cars.

"What the hell were you thinking? You almost hit me!" I screamed.

"I didn't see you!" he yelled back.

"Of course you didn't. You were driving way too fast!"

We yelled at each other for a few seconds and then he opened his arms wide and shouted:

"What do you want from me?"

An awkward silence hung between us for a moment. That was actually a great question. What did I want from him?

I knew he shouldn't have been driving recklessly and I was angry enough to drive recklessly behind him to tell him. What I really wanted was impossible; I wanted him not to have done what he did. Well, too late.

So what did I want now? Why was I screaming at him? The brief pause calmed us both down a little.

"I want you to apologize," I told him.

"I'm sorry," he said.

"Thanks," I said feeling strangely better, and we both got back into our cars and drove off without another word.

We have big problems in this country. Wall Street played recklessly with our money. Banks made bad loans. Insurance companies guaranteed stupid risks. People took out unrealistic mortgages and borrowed too much to buy things they couldn't afford. Companies are going out of business and laying off workers. And, the government is bailing people out and billing our kids.

It would be easy (and tempting) to go on. But we have one more, deeper problem that's making all these other problems worse.

No one is apologizing. No one is taking responsibility for what they did to contribute to our problems. They're all blaming someone or something else. We have a kindergartener's problem and it's tearing us apart.

A friend of mine, Paul Rosenfield, was skiing with his six-year-old son Yonah when Yonah fell. It was not a terrible fall, but the binding didn't release and Yonah broke his leg. After an emotionally wrenching day spent in the emergency room tending to his child, Paul went to the shop to return the skis and speak with the owner.

The owner of the shop immediately became defensive. He claimed the bindings were set within the normal acceptable range for Yonah's 40-pound weight (in fact one reading showed the binding set above 60 pounds). He claimed he used a special machine to calibrate the setting, a machine that had been used in several court cases. And he initially resisted Paul's request to see the printout from the machine's test.

Paul went into the shop to have a conversation and he left angry enough to sue.

I asked him what the shop owner could have said that would have given him a different feeling.

"If he had been more concerned with the injury than protecting himself, if he had apologized, if he hadn't tried to cover over the fact that the bindings were too tight, if he hadn't given me a hard time about asking for a copy of the measurement printout, if he hadn't mentioned how many times his machine was used in lawsuits, then I would have left feeling less angry."

We try so hard to protect ourselves from lawsuits that we bring on lawsuits. We forget that we are human beings dealing with other human beings. And what human beings want more than anything is empathy — to be cared for and treated with respect.

By avoiding responsibility, empathy, and apology, the shop owner became a target for all of Paul's anger about the accident.

In a study of medical malpractice lawsuits, the top five reasons people gave for initiating the lawsuit were:

1. So that it would not happen to anyone else
2. I wanted an explanation
3. I wanted the doctors to realize what they had done
4. To get an admission of negligence
5. So that the doctor would know how I felt

And the number one thing the doctor or hospital could have done to prevent the lawsuit? An explanation and apology.

When the University of Michigan Health System experimented with full disclosure, existing claims and lawsuits dropped from 262 in 2001 to 83 in 2007.

Apologies work. Real, heartfelt empathy between one person and another diffuses anger and builds relationships. Defensiveness and resistance to admit mistakes creates anger.

Whatever you think about President Bush, admitting mistakes was not his strong point. If you don't admit mistakes, you can't apologize for them. And if you don't apologize for them, you will generate anger and fighting.

President Obama has shown his ability to apologize for his own mistakes. One of his earliest apologies was during his campaign when he apologized to reporter Peggy Agar for calling her "Sweetie." Most recently he apologized for his joke in poor taste about the Special Olympics on the Jay Leno show.

And now he's apologizing for America's arrogance towards Europe in the past few years. He apologized for being "dismissive, even derisive" towards our allies. For failing "to appreciate Europe's leading role in the world."

And while he chastised Turkey for not coming to terms with their treatment of the Armenians, he admitted "our country still struggles with the legacy of our past treatment of Native Americans." And he reinforced our commitment to do better: "we recently ordered the prison at Guantanamo Bay closed, and prohibited — without exception or equivocation — any use of torture."

President Obama is being criticized by some for apologizing. Because, they say, apologizing will reduce America's standing in the world. I couldn't disagree more. The world needs less anger and more apologies. And President Obama is a great example, a role model, for how we can diffuse anger and repair relationships.

Apologizing is a humane gesture, a way to treat others with respect. And, not for nothing, it might just keep us out of a fight.

Source Harvard Business Blog

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3 Ways to Fail Cheap

By Scott Anthony

I had an interesting dialogue with an innovation practitioner in a large corporation the other day. We were talking about how the high rate of innovation failure can hamstring innovation.

"The failure rate is actually irrelevant," he said. "It's the risk associated with those failures that gets you into trouble."

In other words, failure would be fine, if it wasn't so darn expensive. Because failures cost money (and time), high failure rates can cause corporations to become very gun shy about innovation.

Of course, one way out of this problem is to increase the innovation success rate. A noble aspiration for sure. But be careful. Following that seemingly sensible path can lead to some perverse behavior.

For example, a company can almost always "succeed" by introducing "new and improved" products that cannibalize what they already sell. A company can confidently state that all of its revenue comes from products launched within the past two years, feel good about its innovation efforts, and actually be falling further behind competitors.

The real answer is to dramatically decrease the cost of failure. A leadership team seeking to achieve this aim has three levers at its disposal:

1. Lower the costs of experiments. Running experiments need not be expensive. There are tons of low cost ways to test critical assumptions (chapter 5 of The Innovator's Guide to Growth describes about 30 such approaches).

2. Change the order of experiments. Many companies spend a lot of money answering the wrong questions. They'll seek to perfect a technology without understanding whether there's a market need. Assess strategic risks first, because they are often what sink an idea.

3. Increase the pace of decision making. Entrepreneurs with clearly bad ideas typically don't have the luxury of spending money on those ideas for too long. Companies, however, can let bad ideas linger for inordinate amounts of time because of slow decision-making processes. Shutting down flawed projects early avoids needless spending — and focuses resources on the best ideas.

Pulling these levers requires embracing the notion of "good enough." Experiments are often expensive because companies seek perfection in their own eyes before they run any sort of test. Remember, the less you've spent, the more freedom you have to change your approach.

And finally, remember that failure is not a dirty word. The odds are pretty high that your first idea is wrong along some meaningful dimension. If you fail fast and fail cheap, you can accelerate discovering a winning idea. Successful innovation and fast-cycle iteration go hand in glove.

Of course, it's one thing for companies to say they embrace the right kind of failure. It's quite another thing to create a culture that rewards low-risk failures and savors surprises. Maybe companies could set up a failure target as part of each employee's annual review. Or create a repository of "failure case studies." Any further thoughts?

Source: Harvard Business Blog

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Time to Detox the Work Environment

STANFORD GRADUATE SCHOOL OF BUSINESS—Corporate practices are having effects not just on polar bears and wetlands, but also they may be killing human beings, says Professor Jeffrey Pfeffer. The concept of "sustainability" must be expanded to include consideration of whether workplaces are good not only for the environment but also for people.

What Pfeffer calls toxic workplace environments, particularly in the United States, raise rates of disease and mortality. He urges business, government, and the media to pay attention to what has been a shockingly neglected topic. In the present distressed economy, he says, "the problem is only going to get worse."

"The lack of attention to employee needs helps explain why the United States spends more on health care than other countries but gets worse outcomes," says Pfeffer, the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business. "We have no mandatory vacation or sick day requirements, and we do have chronic layoffs, overwork, and stress. Working in many organizations is simply hazardous to your health."

Specifically, he says, epidemiological studies show that holding a lower-level position where one does not have much control over job activities and decision making puts employees at a higher risk of having—or dying from—a heart attack. "There’s nothing more stressful than being in an environment in which you have a lot of pressure but relatively little power," Pfeffer says.

In addition, spotty or interrupted health care insurance—a typical consequence of layoffs and job changes—and the trend toward jobs that offer no health coverage at all, leads to a significant decrease in routine preventive medical screening procedures such as mammograms and cholesterol and blood pressure testing, and as a consequence, added risk to workers’ health.

Pfeffer cites research showing that overwork and job stress lead to increases in smoking, alcohol abuse, and high blood pressure, while layoffs contribute to depression, violence, and even lowered life expectancy. "There is evidence that people who experience a layoff live 1.5 years less than those who don’t," Pfeffer says.

The Stanford professor thus maintains that the concept of "sustainability" must be expanded to include not only whether corporations care for the environment and resource conservation, but also whether they are good for their employees.

As to why the serious question of worker well-being has been given scant attention by executives, regulators, and pundits, Pfeffer suggests it may have something to do with current mercenary cultural values. "There was a time when CEOs believed they had an obligation to all of their stakeholders, including employees," he says. "But over time, we've come to look at even the simplest things in financial terms. Childcare, for example, which used to be a matter between parents and children, is now a service to be traded on the New York Stock Exchange. This way of thinking is taking out the human factor."

The great irony, says Pfeffer, is that most workplace policies that are bad for employees are also bad for companies themselves. Organizations that are more "humane"––offering generous benefits, sick leave, vacation pay, health insurance, and so forth––are shown to be more profitable. Pfeffer points to companies such as Southwest Airlines, Kimberly-Clark in the Andean region, and kidney dialysis provider DaVita as exemplars. "I hope businesses will wake up to the fact that if they don't do well by their employees, chances are they’re not doing well, period," Pfeffer says.

In the current economic climate, he notes, more people will be laid off, work longer hours, become saddled with increasing work responsibilities, and operate without health insurance. The government, Pfeffer says, will almost certainly need to step in with regulation. If nothing else, with health care costs on the rise, government should be looking to the workplace as one culprit in the decline in the quality of workers' health.

—Marguerite Rigoglioso

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Seven Communication Mistakes Managers Make

By Stever Robbins

1. Making controversial announcements without doing groundwork first.
Any controversial decision can engender rumors, anxiety, and resistance. So rather than announcing a controversial decision to an entire group, prep people one-on-one. Learn who will object, and why.

Decisions about change are the most charged — reorganizations, changing goals, and the departure of key employees create uncertainty, and uncertainty generates anxiety.

To forestall anxiety, open a dialogue with the other person. Put a name to the problem: "This reorganization means we'll be doing some things differently, and that makes some people apprehensive." Then address the concerns raised in response to your statement:

* Is the other person uncertain about the future? Share the scenario you expect to unfold.
* Does the reorganization jeopardize a project? Share plans for keeping it afloat.
* Demonstrate that you get it, keeping in mind that you can address emotion better with body language than with words. Make sure yours conveys concern and empathy.

2. Lying
Some lies or partial truths are well-intentioned. Certain topics must remain confidential while they're under discussion. But be careful how you keep secrets. If people know you've lied, you will lose their trust forever. A start-up company's controller watched the CFO lie to members of other departments and subsequently began to doubt the CFO's sincerity. He began looking for a new job with a boss whose intentions he could trust. In that instance, lying cost the company a valuable employee.

Rather than lie, train yourself to respond, "I'm not free to comment" or "I can't answer that fully right now," when asked about confidential or sensitive topics. Consistency is important. Warren Buffett never discusses his investments, even with shareholders. As a result, his silence on a particular deal gives away nothing.

3. Ignoring the realities of power
Surprised that you never hear bad news until it's too late? Don't be. The more power you have, the less you'll hear about problems. It's human nature: problems are filtered and softened as they ascend the corporate hierarchy, with each messenger seeking to soften the blow. If you want an honest assessment of a problem, seek out bad news. Welcome it. And when it comes, show your appreciation.

Conversely, messages are magnified as they travel down the hierarchy. If you look pained during a presentation, everyone will "know" you hated the presentation (or worse — the presenter). No one will think to blame the pastrami sandwich you ate too fast before you came to the meeting. Jokes are especially dangerous. When the managing director of a consulting firm joked, "If you're not here Sunday, don't bother coming in Monday," his project team wasn't sure what to do. One said, "We were pretty sure he was joking, but. . ."

Put a lid on rumors by using plain, simple language. End meetings by reviewing your reactions and next steps. "I value your analysis, Chris. The sales trend is disturbing. Let's follow up on Wednesday."

4. Underestimating your audience's intelligence
It's tempting to gloss over issues because "people won't understand." Why explain a reorganization when you can simply say, "Here's the new org chart"? But that's a cop-out. Front-line employees may not be masters of organizational design, but they deserve to know the rationale behind changes that affect their lives. If you think your people won't understand something, remember it's your job to explain it to them.

Many managers like to gloss over problems when motivating their teams. But if things aren't going well, those teams are probably well aware of the problems. In fact, they've probably known about them longer than you have. Rather than avoiding the situation, enlist their skills in finding solutions.

5. Confusing process with outcome
In goal-setting, compensation, and evaluation, it's easy to confuse process with outcome. You promise your team a 7% raise, but then the board, concerned about the downturn, caps raises at 3%. You fight like mad to raise the number, and you compromise on 4%. But your people don't appreciate it. In fact, they're downright resentful. How could they be so insensitive to all your hard work?

Simple. Your hard work was process, and you promised them an outcome. You want them to appreciate how hard you tried, but they wanted a specific result. Since they didn't get it, they can't see past that fact. You want people to value you for your hard work. But when evaluating others, it's always easier to judge outcomes. Most organizations penalize employees for the wrong outcome, even if they follow the right process. Perversely, others are rewarded for the right outcome, even when they flout the rules about process.

6. Using inappropriate forms of communication
E-mail is great for conveying information, but don't use it for emotional issues; e-mail messages are too easy to misconstrue. If you're squirming while reading an e-mail, leave your computer and deal with the situation in person or by telephone.

At the same time, phone calls and face-to-face meetings are inefficient ways to disseminate information, but great for discussing nuanced issues. You can respond directly to the listener's reaction, and you can use your tone of voice and facial expressions to control your message. "I'm sure you did a great job" could be read sarcastically in an e-mail, but the same words can be delivered sincerely in person with the right tone of voice.

Furthermore, some people are listeners, while others are readers. Listeners won't focus on written memos but are great in conversation. Readers write great memos and are also glad to read them, but conversation sometimes fails to fully engage them. If you talk to a reader or write to a listener, your message might not get through. Don't be afraid to ask people how they prefer to receive information; most people know the answer. If they don't, a little attention on your part will reveal what works best. (And for some people, it's a combination of the two.)

7. Ignoring acts of omission
What you don't say may be sending as loud a message as what you do say. If you don't give praise, people get the message they're unappreciated. If you don't explain the rationale behind decisions, the message is that you don't trust them. And if you don't tell people where the company wants to go, they don't know how to help it get there.

When fundraising became the CEO's priority at a distance learning company, he stopped communicating his vision to employees. Since money was constantly on his mind, he did mention financial goals. Eventually, the company culture became money-focused, and the vision was lost. But when the CEO delivered a vision-oriented presentation at a conference, one of his employees approached him afterward to say that she had never felt so inspired. As a result, he changed his internal communication strategy to emphasize vision once more, and saw morale soar.

By their very nature, mistakes of omission are hard to uncover. Review your major goals and the communication that's needed to support those goals. Ask what message may have been sent by your silence so far. And be willing to ask people, "What messages are you getting from me?"

Stever Robbins is president of VentureCoach.com, a Cambridge, Mass. entrepreneurial coaching service.

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How to Lead When You're Not the Boss

By Christina Bielaszka-DuVernay

Real leadership is never a matter of mere formal authority. Leaders are effective when other people acknowledge them as such--by listening seriously to their ideas, valuing and following their suggestions for action, and turning to them for advice.

Opportunities to lead aren't limited to times when you have formal authority over a particular team or venture. When you step forward and demonstrate leadership, you will contribute value to the project or enterprise--and strengthen your leadership skills.

In their book Lateral Leadership: Getting Things Done When You're Not the Boss (2nd ed., Profile Books, 2004), Harvard negotiation specialist Roger Fisher and coauthor Alan Sharp lay out a useful five-step method for leading when you are not formally in charge. Its steps can be applied to virtually any project you're involved in or team or meeting you participate in.

1. Establish goals
People accomplish the most when they have a clear set of objectives. It follows that any group's first order of business is to write down exactly what it hopes to achieve. The person who asks the question "Can we start by clarifying our goals here?"--and who then assumes the lead in discussing and drafting those goals--is automatically taking a leadership role, whatever his or her position.

2. Think systematically
Observe your next meeting: people typically plunge right into the topic at hand and start arguing over what to do. Effective leaders, by contrast, learn to think systematically--that is, they gather and lay out the necessary data, analyze the causes of the situation, and propose actions based on this analysis. In a group, leaders help keep participants focused by asking appropriate questions. Do we have the information we need to analyze this situation? Can we focus on figuring out the causes of the problem we're trying to solve?

3. Learn from experience--while it's happening
Teams often plow ahead on a project, then conduct a review at the end to
figure out what they learned. But it's more effective for teams (or individuals) to learn as they go along.

Anyone who prompts the group to engage in regular minireviews and learn from them is playing a de facto leadership role. Why is this ongoing process more effective than an after-action review? The events are fresh in everyone's mind. And the team can use what they learn from each minireview to make needed adjustments to their work processes or their goals.

4. Engage others
A high-performing team engages the efforts of every member, and effective team leaders seek out the best fit possible between members' interests and the tasks that need doing. Suggest writing down a list of chores and matching them up with individuals or subgroups. If no one wants a particular task, brainstorm ways to make that task more interesting or challenging. Help draw out the group's quieter members so that everyone feels a part of the overall project.

5. Provide feedback
If you're not the boss, what kind of feedback can you provide? One thing that's always valued is simple appreciation--"I thought you did a great job in there." Sometimes, too, you'll be in a position to help people improve their performance through coaching. Effective coaches ask a lot of questions: "How did you feel you did on this part of the project?" They recognize that people may try hard and fail anyway: "What made it hard to accomplish your part of the task?" They offer thoughtful suggestions for improvement, being careful to explain the observation and reasoning that lie behind them.

Source: Harvard Blog

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Why Small Companies Will Win in This Economy

By Peter Bregman

I just heard a story from a client that's hard to believe but true.

In the worst economy we've seen in decades, Passlogix, a privately owned 100-person software development company, just received over a million dollars in prepaid commitments for the next three to five years of service. And they beat out several much larger more established companies, like CA (14,000 employees) and IBM (400,000 employees), to win those customers.

Now, how do you explain that? The bigger companies aren't getting similar deals. It's not standard in this industry to prepay contracts of that size and duration. And the clients received only a small reduction for their upfront payment, less than the cost of capital.

I think it's a trend. And understanding it might just be the difference between failing and thriving in this economy.

Yesterday morning I had breakfast with a good friend of mine, a mentor in the consulting industry. He's a senior partner in a large consulting company and has worked in one large company or another for the past 35 years. Really smart, really talented.

And now really depressed. He hasn't been having fun for some time but it's gotten worse. He's survived several rounds of layoffs but who knows, he tells me, he might be hit by the next one. And if he isn't, he might leave anyway because it's so miserable. He doesn't understand how his company is making decisions, including how they decide whom to let go. He is one of the most senior leaders in this company and even he doesn't trust it anymore.

This is not an isolated case. I've been hearing this from many of my large clients. People in senior positions don't trust the decisions being handed to them. And if you go one layer down, to middle managers, the distrust is palpable. I don't know a single person who works for a large company who feels confident they'll have a job in 6 months. Not one.

Now, imagine you're a client wanting to buy from one of these companies. You call up your client contact to talk about the sale. One of two things will happen:

1. You have a relationship with her and so you talk and get a sense of her insecurity, fear, and distrust.
2. You have no relationship with her because the company is so big and you talk to a different person each time you call.

Either way, you'll probably get the sense that your contact may not be there in the future to fulfill her commitments to you. And that won't make you comfortable committing long-term dollars (or any dollars) to the company?

Now compare that to Passlogix, whose clients know they can pick up the phone and speak with Marc Boroditsky, the CEO. He tells clients about his commitment to the company and to them, and they know exactly who to call if the work isn't done to their expectations. That personal relationship, that trust, is important to them. They're willing to invest in it long term — to the tune of millions of dollars, up front.

And it's not just the CEO. If clients speak with other employees in the company, they'll get the same feeling of trust. A small company gives its employees a sense of security and employees pass that feeling on to clients. Not that small companies don't go out of business. They do all the time. But each employee has much greater control over his own destiny. In a company of 30 employees, if you do a great job, there is a good chance you'll be recognized. But in a company of thousands? It's easy to be missed. And easy to be laid off.

The gap of confidence between small companies and big ones is growing. We used to rely on the security of big companies. That's why we worked for them. And hired them. And put our money in them.

But with the virtual collapse of AIG, Lehman, Citibank, GM, Chrysler, and many more — now even GE is in trouble — all that's changed. Now it's a risk to do business with the big ones.

We simply don't trust companies anymore. We trust people. And in big companies, it's hard to even find a person to trust as we scream "operator" into our telephones only to get transferred to another menu whose options have changed.

That gives small companies a huge advantage.

Just ask John Drummond, who started Unicycle.com after getting laid off from IBM during the last downturn. Once he got the hang of it, he started Banjo.com, his other childhood passion. Both are doing well and he's about to launch more sites.

Source Harvard Blog

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Hacker. Dropout. CEO.

By: Ellen McGirtWed

When Mark Zuckerberg showed up in Palo Alto three years ago, he had no car, no house, and no job. Today, he's at the helm of a smokin'-hot social-networking site, Facebook, and turning down billion-dollar offers. Can this kid be for real?

“I'm just lucky to be alive." Mark Zuckerberg, the 22-year-old founder and CEO of social-networking site Facebook, is talking about the time he came face-to-face with the barrel of a gun. It was the spring of 2005, and he was driving from Palo Alto to Berkeley.

Just a few hours earlier, he had signed documents that secured a heady $12.7 million in venture capital to finance his fledgling business. It was a coming-of-age moment, and he was on his way to celebrate with friends in the East Bay. But things turned weird when he pulled off the road for gas. As Zuckerberg got out of the car to fill the tank, a man appeared from the shadows, waving a gun and ranting. "He didn't say what he wanted," Zuckerberg says. "I figured he was on drugs." Keeping his eyes down, Zuckerberg said nothing, got back into his car, and drove off, unscathed.

Today, it is an episode that he talks about only reluctantly. (A former employee spilled the beans.) But it fits the road he has taken--an adventure with unexpected, sometimes harrowing, moments that has turned out better than anyone might have predicted.

Zuckerberg's life so far is like a movie script. A supersmart kid invents a tech phenomenon while attending an Ivy League school--let's say, Harvard--and launches it to rave reviews. Big shots circle his dorm to make his acquaintance; he drops out of college to grow his baby and Change The World As We Know It. Just three years in, what started as a networking site for college students has become a go-to tool for 19 million registered users, including employees of government agencies and Fortune 500 companies. More than half of the users visit every day. When a poorly explained new feature brought howls of protests from users--some 700,000--the media old and new jumped to cover the backlash. But Facebook emerged stronger than ever. According to comScore Media Metrix, which tracks Web activity, it is now the sixth most-trafficked site in the United States--1% of all Internet time is spent on Facebook. ComScore also rates it the number-one photo-sharing site on the Web, with 6 million pictures uploaded daily. And it is starting to compete with Google and other tech titans as a destination for top young engineering talent in Silicon Valley. Debra Aho Williamson, a senior analyst at eMarketer, says it is on track to bring in $100 million in revenue this year--serious money indeed.

Yet there is an undercurrent of controversy about whether Mark Zuckerberg is making the right decisions about the juggernaut he has created. Late last year, a blog called TechCrunch posted documents said to be a part of an internal valuation of Facebook by Yahoo. The documents projected that Facebook would generate $969 million in revenue, with 48 million users, by 2010. The New York Times and others reported that Yahoo had made a $1 billion offer to buy Facebook--and Zuckerberg and his partners had turned it down. This followed an earlier rumor of a $750 million offer from Viacom. Yahoo, Viacom, and Facebook would not comment on the deal talk (and they still won't). But Silicon Valley has been abuzz ever since.

"It's all been very interesting," deadpans Zuckerberg, sitting in a conference room in Facebook's Palo Alto headquarters. He looks every bit the geek in his zippered brown sweatshirt, baggy khakis, and Adidas sandals. He came into the room eating breakfast cereal from a paper bowl with a plastic spoon. He still lives in a rented apartment, with a mattress on the floor and only two chairs and a table for furniture. ("I cooked dinner for a girlfriend once," he admits at one point. "It didn't work well.") He walks or bikes to the office every day.

Zuckerberg's college-kid style reinforces the doubts of those who see the decision to keep Facebook independent as a lapse in judgment. In less than two years, the two reigning Web 2.0 titans have sold out to major corporations: MySpace accepted $580 million to join News Corp., and YouTube took $1.5 billion from Google. Surely any smart entrepreneur would jump at a chance to piggyback on those deals.

Looming over the Facebook talk is the specter of Friendster, the first significant social-networking site. It reportedly turned down a chance to sell out to Google in 2002 for $30 million, which if paid in stock, would be worth about $1 billion today. Now Friendster is struggling in the Web-o-sphere, having been swiftly eclipsed by the next generation of sites. The same thing could happen to Facebook. New social-networking sites are popping up every day. Cisco bought Five Across, which sells a software platform for social networking to corporate clients. Microsoft is beta-testing a site named Wallop. Even Reuters is planning to launch its own online face book, targeting fund managers and traders.

So is Zuckerberg being greedy--holding out for a bigger money buyout? If so, will that come back to haunt him? If not, what exactly is his game plan?

Zuckerberg's answer is that he's playing a different kind of game. "I'm here to build something for the long term," he says. "Anything else is a distraction." He and his compatriots at the helm of the company--cofounder and VP of engineering Dustin Moskovitz, 22, his roommate at Harvard, and chief technology officer Adam D'Angelo, 23, whom he met in prep school--are true believers. Their faith: that the openness, collaboration, and sharing of information epitomized by social networking can make the world work better. You might think they were naive, except that they're so damn smart and have succeeded in a way most people never do. From a ragtag operation run out of sublet crash pads in Palo Alto, they now have two buildings (soon to be three) of cool gray offices and employ 200 people who enjoy competitive salaries and grown-up benefit packages--not to mention three catered meals a day with free laundry and dry cleaning thrown in. And they continue to crank out improvements to a Web site that is in every meaningful way a technological marvel.

Right now, the folks who fronted Zuckerberg that $12.7 million back in the spring of 2005 and the other venture investors whose money and connections have helped juice Facebook's growth describe themselves as content. After all, since news of the Yahoo deal surfaced, the user base has continued to boom, arguably increasing Facebook's value. But when those money guys start agitating to realize a gain on their investment, can a sale--or more likely an IPO--be far behind?

"What most people think when they hear the word 'hacker' is breaking into things."

Zuckerberg admits to being a hacker--but only if he's sure you understand that the word means something different to him. To him, hacker culture is about using shared effort and knowledge to make something bigger, better, and faster than an individual can do alone. "There's an intense focus on openness, sharing information, as both an ideal and a practical strategy to get things done," he explains. He has even instituted what he calls "hackathons" at Facebook--what others might call brainstorming sessions for engineers.

But it was old-fashioned breaking-and-entering hacking that spawned Facebook--and Zuckerberg was the culprit. Zuckerberg grew up in the well-to-do New York suburb of Dobbs Ferry, the second of four kids and the only son of a dentist (he has no cavities) and a psychiatrist (insert your own mental-health joke here). He began messing around with computers early on, teaching himself how to program. As a high school senior, at Phillips Exeter Academy, he and D'Angelo built a plug-in for the MP3 player Winamp that would learn your music listening habits, then create a playlist to meet your taste. They posted it as a free download and major companies, including AOL and Microsoft, came calling. "It was basically, like, 'You can come work for us, and, oh, we'll also take this thing that you made,'" Zuckerberg recalls. The two decided to go to college instead, D'Angelo to Caltech and Zuckerberg to Harvard.

"I'm here to build something for the long term. Anything else is a distraction. "
-Mark Zuckerberg

That's where the hacking episode occurred. Harvard didn't offer a student directory with photos and basic information, known at most schools as a face book. Zuckerberg wanted to build an online version for Harvard, but the school "kept on saying that there were all these reasons why they couldn't aggregate this information," he says. "I just wanted to show that it could be done." So one night early in his sophomore year, he hacked into Harvard's student records. He then threw up a basic site called Facemash, which randomly paired photos of undergraduates and invited visitors to determine which one was "hotter" (not unlike the Web site Hot or Not). Four hours, 450 visitors, and 22,000 photo views later, Harvard yanked Zuckerberg's Internet connection. After a dressing-down from the administration and an uproar on campus chronicled by The Harvard Crimson, Zuckerberg politely apologized to his fellow students. But he remained convinced he'd done the right thing: "I thought that the information should be available." (Harvard declined to comment on the episode.)

The storm eventually passed, and Zuckerberg now claims News Feed has actually been a hit. "Once people had the controls and knew how to use them, they loved News Feed," he says, launching into some uncharacteristic hyperbole. "We're actually producing more news in a single day for our 19 million users than every other media outlet has in their entire existence." (Facebook has also been snared in a more lingering dispute: When the site first launched, four other Harvard students sued, claiming that Zuckerberg stole their idea. The Facebook defendants filed a countersuit. At press time, litigation is continuing.)

"We're private, and we just don't talk publicly about these types of things."

We're in the Facebook conference room at the end of the day, and Zuckerberg is politely ducking questions about the company's financials. Last spring, Facebook received another infusion of VC funding--$25 million led by Greylock Partners and Meritech Capital; Accel and Thiel also reinvested. But conversations with the executive team make it clear that Facebook isn't living on VC cash, at least not anymore. When I met with Cohler, who joined Facebook as the vice president of strategy and business operations, I asked bluntly whether a report in The New York Times that said the company was profitable was correct. At first, he hemmed and hawed. "It depends on how you look at GAAP accounting." But then he allowed: "We're growing very fast, and we're funding the growth of the company through revenue and the operations of the business as opposed to financing."

And the scale of those operations is significant. Beyond the 200 staffers and prime Valley office space, explains cofounder and chief of engineering Moskovitz, Facebook has multiple server facilities. The company is also about to invest what COO Van Natta says is "many millions of dollars" on more infrastructure.

So how does Facebook make its money? Advertising and sponsorships, mostly. Apple was an early backer, sponsoring a site for iTunes enthusiasts. JPMorgan Chase and Southwest, among others, pay for similar programs. "Flyers," the online version of the paper ads that students use to publicize events, also provide a very modest source of revenue. And there is a nascent-but-growing local advertising business. The big money, though, comes from an ad-placement alliance with Microsoft in which the software giant will place banner ads on the site through 2011. It mirrors a deal MySpace inked with Google last year. (MySpace reportedly got $900 million over three years. Facebook hasn't released the value of its program, and neither party will comment on the terms.) Facebook also just inked a deal with Comcast to create and Webcast an episodic show based on user-generated video content. Called "Facebook Diaries," the series will be shown on both Facebook and Ziddio.com, Comcast's video-uploading site, as well as through Comcast's video-on-demand service.

As everyone remembers from the heady sock-puppet days of Web 1.0, you hatch an idea, build it into a company, and concoct an exit strategy--that's the key to taking the business to the next level and rewarding early-stage investors for their money and employees for their hard work. And there are two basic formulas: Sell to a bigger company, or file an initial public offering. With all the talk about valuations and acquisitions, not to mention the pressure of investors and employees with stock options, exit has to be on Zuckerberg's mind, right?

"The word--it applies a certain frame to thinking about things," he says, decompressing after a long day of meetings. "If you sell your company, that is the exit. That's just not how we think about it."

He pauses, then says with a sigh, "Okay, you have a Viacom, News Corp., and Yahoo. So you compare and think, This [site] is social, sure, but we're a technology company. What's in it for us? How will this work?" The companywide focus is on innovation and engineering, and the commitment to optimizing the user experience, he says. The goal is not to create a media company. It is not about selling movies. "There are ways that you could do it, but right now, we're focused on building this. And if you look at the stats we have, it's been a good decision so far." But eventually? "At some point, it probably makes sense to do something. But we're in no rush."

Source FastCompany

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Appraising Employee Performance in a Downsized Organization

The experts call it "ghost work"; it's what's left for the survivors to do when layoffs have cut an organization's staff to a bare-bones minimum. Work that still has to get done is reassigned to people who may not have the skills — and certainly don't have the time — to do it.

The strain of "ghost work," the specter of more downsizing and restructuring, the disappointing news that raises and bonuses have been reduced or eliminated this year — they all can combine to make performance-appraisal season particularly stressful for employees and managers alike.

But even though managers may be tempted to avoid performance appraisals, it's no time to back away. Done right, performance appraisals can give employees a better understanding of the new and different demands of their jobs in the context of the company's changing needs. Don't duck the tough issues, say the experts, but don't overlook the opportunity to emphasize the future, either. The performance appraisal is a great opportunity to emphasize that employees have a stake in reengineering work processes and helping the company stay competitive in tough times.

"It's important in the appraisal process that we let employees know that our dreams for them and for the company aren't being abandoned; rather, they are being postponed until the company finds a way to adapt to the new circumstances it faces," says Dale Furtwengler, author of The 10-Minute Guide to Performance Appraisals (Macmillan, 2000) and president of the St. Louis-based consulting firm Furtwengler & Associates. That way, he says, "we can refocus their talents and energy toward finding solutions."

No matter what challenges confront the company or the business unit, a manager must avoid the temptation to give all her reports a good review. Malachi O'Connor, vice president of the Center for Applied Research (CFAR), a management consulting firm with offices in Philadelphia and Boston, believes that managers who give all their reports positive reviews just to avoid trouble are in fact creating it for themselves. Especially if the unit's results are average or worse, others in the company will know not to trust the consistently good assessments that manager gives.

"We know many cases where the evaluations in a person's file are filled with 'exceeds expectations,' but they're not being promoted. It's because of the more realistic conversation about that person that takes place outside of the evaluations," O'Connor says. "That does a disservice to everyone, especially the people not getting the feedback they deserve."

Performance appraisals strengthen the organization
In a downturn, employees' concern about their own performance is greater than ever, even among the star performers, says Lila Booth, a Philadelphia-area management consultant. In the face of silence about performance, she warns, people are apt to think, "I'm next in line for the ax." Employees need ongoing feedback on performance and on the financial state of the company, she says, to avoid "the fear and fury" such anxiety can cause.

Patty Hargrave, a human resources specialist at Administaff, in Kennesaw, Georgia, agrees. "Especially now during this economic crisis, businesses are scrutinizing what is important and what is not," she writes in a recent blog post. And, while companies may want to weigh the costs versus the benefits of employee performance appraisals, "when appraisals are done correctly — meaning fairly and consistently and for the right reasons — the benefits can be well worth the efforts." Hargrave stresses the importance of keeping the appraisal a two-way conversation. "Employees need to be considered as equal participants in the process, and managers need to place an emphasis on coaching or counseling in order to inspire improvements."

To make performance reviews more effective, experts offer the following advice:

Make the bottom line clear
Furtwengler stresses the need for managers to set expectations about raises and bonuses long before appraisal time. If a company's financial picture has darkened, he suggests senior management get a notification out as quickly as possible, describing the potential lost raises and bonuses. Establishing this context can make all the difference in how a high-performing employee interprets a below-average raise.

Say an employee typically has received 4% raises in years past, but this year is getting only a 2% raise. "An employee's interpretation of a 2% raise is going to be different with the information that most employees are getting no raises and only those doing very well get 2%," says Lynn Oppenheim, president of CFAR. Similarly, if employees hear that raises are being reduced so that jobs can be saved until demand in their industry increases, "no one will be happy about this, but it may serve to limit the damage."

Spend compensation dollars wisely
Judicious use of what money is available for raises is key, experts say. Some managers admit to giving all their people a standard raise just so they can avoid having to explain subpar pay increases to underachievers. While the approach may succeed as a strategy for avoiding conflict, think of the cost to an organization. Not only has the manager undermined the effectiveness of compensation as a means of rewarding and motivating, but he has probably stirred resentments among the high achievers, who are left to feel as through their initiative and hard work have been in vain.

"If I just give an underachiever the 'standard raise,' I am failing as a supervisor," says Booth. "Each person along the line must be held accountable with consequences, positive and negative, for meaningful assessment of performance — or the organization will fail."

Reshaping after downsizing
What about employees who are struggling with new work responsibilities in the wake of a layoff? How should managers answer those employees who protest, "This isn't what I signed up for"?

Furtwengler suggests that the manager and the employee evaluate the new responsibilities together to determine which aspects of the "new job" interest the employee and which do not, which work is a "must have" from the manager's perspective and which is just a "nice to have."

"Reevaluating work, especially if done jointly with the employee, will help [her] find effective ways to deal with the new workload," he says, and discover efficiencies. "Because we are all creatures of habit and comfort, we no longer question the usefulness of what we're doing or whether there are better ways to accomplish the task. That's why a joint reevaluation of the work will often diminish the workload and allow the employee to become more interested in the 'new job.'"

This conversation also "conveys your concern about the possibility of her becoming overwhelmed," he says.

A problem of skill or will?
And what happens with an employee who is in a "reshaped" job and not performing up to standard? Managers need to determine first if the poor performance is a "skill" or "will" issue. In the first case, the employee feels he doesn't have the skills needed: "I've got to maintain this database, but I don't have enough background." In the second case, the employee simply dislikes the new chore: "I hate all the detail work I have to do now."

Says Oppenheim: "Organizations still have an interest in keeping good people, but good is in part defined as able and willing to carry out roles and responsibilities that are needed. If you can reshape to align with skill and will, this should strengthen the connection. If you can remedy the will gap, the organization and the employee benefit."

With employees who resist change, Oppenheim urges managers to be sure the employee has a good sense of the company's current needs. "Listen closely to understand how the employee views his or her work world — and be prepared to understand that not everyone can change," she says.

"Reshaping of jobs is very common — the appraisal is an opportunity to listen if the particular shape of a job fits the employee," she says. Sometimes the performance appraisal forces the manager to face a harsh reality: that the employee just isn't a good match for the company anymore.

In a time of layoffs and restructuring, performance appraisals bring challenges to both parties in the conversation. The employee confronts the task of adapting to a changed role in a changed context. The manager has to determine how best to support the development and morale of the employee in that changed role, while recalibrating performance expectations.

Says Booth: "If the dimension of creativity is added to the performance assessment process, if the process is truly participative, new opportunities can be created to benefit the company and the associate."

Tom Krattenmaker is a freelance writer and associate vice president for public affairs and communication at Lewis & Clark College in Portland, Ore

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Selling Cost vs. Price

Find the price point that covers your costs and provides a profit margin.
By Barry Farber

I recently finished a keynote presentation for an industry that's getting hit hard by competitive pricing. Customers want the best price they can get, especially in a difficult economy. So what can you do to keep your price at a number that covers your cost and maintains your profit margin, without discounting? I have two options for you: Walk away from the customers who don't see the added value you provide, or figure out a way to communicate your key differentiators that warrant the additional investment.

Believe me, I've seen my share of customers who have wasted the salesperson's time and energy--the salesperson would have been much better off moving on to more qualified prospects. But there are customers worth working with, whom you can help understand the difference between price and cost. Price is what they pay for the product or service; cost is what the investment is over the lifetime of doing business. Can you help your customers grow their business in a way they never thought possible? Have you ever solved a critical problem for a customer where the end result was a lot of time and money saved?

On the other hand, if I'm spending money on promotional materials, and they're delivered late for a conference date or don't communicate the message that helps me achieve my goals, how much am I really losing? My time, my customers' time, lost opportunities--you get the point.

I asked the group during my presentation, "How many of you have had customers leave because of price but come back because the level of service they received from others was not what they got from you?" Eighty percent raised their hands.

So I told the 80 percent who raised their hands to ask those clients why they left for a better price and why they came back for better service. You can use this feedback when confronted with price objections. Also, find out what else they gained from spending a little more money with you--what are the long-term effects of doing business with you, and how does that offset the initial investment?

If price is one of your advantages, that's great. But remember, you need something that keeps the competition away and secures your relationships for the future. I remember seeing this statement above a local printer's office:

1. Price
2. Service
3. Quality

(Please pick two)
If you choose to lower your price, something else may suffer. No matter how tough the market gets, you'll have to stick to your principles to sell the value that differentiates you from your competition.

Barry Farber is rated as one of the top speakers of the year by Successful Meetings Magazine and is the bestselling author of 11 books on sales, management and personal achievement. He is also a black-belt weapons expert and a regular on QVC as the marketer and co-inventor of innovative products.

Source: Entrepreneur

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Why Ideals are the New Business Models

Take your pick: newspapers, autos, mobile, solar — across the zombieconomy, boardrooms are sweaty-browed with the task of business model redesign. It's the worst downturn for the better part of a century: business model redesign — lower costs, greater efficiency, choosing the most profitable customers and revenue streams — should be every boardroom's first priority, right?

Nothing could be more wrong. In fact, today's market leaders, from Google, to Apple, to Nintendo, are revolutionary for different reason altogether. Conversely, companies and investors focused on business models are simply applying yesterday's obsolete logic to today's novel problems.

Here's the score.

Business models aren't today's fundamental economic challenge. There's nothing wrong with simple, one-sided business models. In fact, the opposite is often true: business model innovation is exactly the wrong thing to focus on. Consider finance. Securitization was a breakthrough business model innovation for banks. Everything was remixed by everyone. Yet, toxic junk was mostly what was flowing through that new business model. Business model innovation amplified value destruction. Banks who didn't play the securitization game — and stuck to simple, one-sided deposit-taking business models — are today's survivors.

Creating something valuable in the first place is. Contrast banks with Threadless. Threadless has an age-old business model: selling T-shirts. The only minor-league innovation is compensating designers. Yet, Threadless is redrawing the boundaries of the possible in apparel. It is how production and consumption are organized — not merely how goods and services are bought and sold — that makes Threadless so radical.

When we can make valuable stuff, there are a plethora of business models to choose from, some old, some new, some untested, some tried and true. When we can't, no amount of business model innovation can save us from implosion.

"Monetizing" + "business models" = zombieconomy. The reason monetization is a dirty word is simple. It blinds us to value creation, at the expense of value capture. When we seek to monetize, we end up chasing the same old lame competitive advantage. I win, you (and you, and you) lose. Put another way: "monetizing" toxic junk — from CDOs, to Hummers, to McMansions, to Big Macs - is how we got into this mess.

It is by rediscovering how to make stuff that's not toxic junk in the first place that we'll get out of the mess lame, evil, brain-dead 20th century thinking has left us in. That's the challenge of a new generation of revolutionaries. And it's not about new business models: it's about reconceiving authentic, deep, value creation.

Forget business models. Focus on ideals. Reconceiving value creation depends on new ideals. Ideals shape what we wish to achieve in the first place: freedom, peace, fairness, justice — all are ideals vastly more powerful than mere business models. That's because they are what ensure the value we are creating is authentic, deep, meaningful value — not just the shabby, threadbare illusion of value.

Tomorrow's prosperity was stolen by yesterday's so-called leaders. In a world where people are becoming rapidly worse and worse off, there is nothing more revolutionary than an ideal. Here are five ideals that we think are changing business, economics, and the world.

So the next time you hear an old dude banging the business model drum, or worse, the sounding the "monetization" bullhorn, let him know the 20th century was yesterday. Today's challenge is building a better economy — not hawking the same old mass-produced, toxic, self-destructive junk slightly differently. Challenge him with this: you've got a business model. But do you have any ideals? Because without the latter, the former is worth about as much as Bear Stearns, Lehman Brothers, or Detroit.

By Umair Haque

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Unleash Your Inner Einstein

His accomplishments are inspiring, but it's his methods that are truly legendary.
By Justin Petruccelli

The parallels between Albert Einstein and modern entrepreneurs are almost as countless as the comparisons made about them: Imagination. Unconventional thinking. Love of the mysterious. But what really made Einstein tick? It's one thing to understand what Einstein did. It's entirely another to understand how he did it.

"One of the main things that was unique and particularly related to Einstein's imagination is that he was the king of 'thought problems,' where he would devise very visual problems that he would try to think out," says Karen Fox, veteran science journalist and co-author of the book "Einstein A to Z." "For example, early on he wondered what life would look like if you were riding on a light beam--since nothing else could reach you faster than the speed of light (including light that needs to hit your eyes to show you what the world looks like), would everything appear to have stopped still? The answer is yes. So his thought processes were very much about coming up with odd questions and visually thinking through their answers."

Einstein is widely credited with solving many of the universe's greatest mysteries, a quality any entrepreneur should admire. But Fox insists that Einstein's ability and courage to ask the questions were just as revolutionary as their answers.

"At a time when all scientists agreed that light was an electromagnetic wave, he just dismissed that in the face of the conviction of [his own] theories," she says. "He was up against a pretty serious cabal of scientists who believed that they had pretty much figured everything out, and Einstein's convictions that he knew better were part of the reason he couldn't get a science job post-university and instead went into the patent clerk's office. Now, there were a few other people who were investigating quantum mechanics fairly soon thereafter, too, so science was ripe for a revolution, but the idea that young upstarts could question the old guard was not really a conventional one."

But for Einstein, Fox says, it wasn't enough simply to question the establishment--it was the way he questioned it that allowed him to change the world.

"I am reminded of the Sherlock Holmes quote: When you have eliminated the impossible, whatever remains, however improbable, must be the truth," she says. "Einstein would start with simply the barest of axioms--the things he absolutely was sure were true--and didn't accept anything else. When he followed these axioms to their natural conclusions, he knew that they were right--no matter how improbable, or even if they contradicted standard dogma. So he questioned standard beliefs because they contradicted theories he had carefully worked out based on a few truths he had full faith in. He didn't question willy-nilly--he simply refused to accept theories that weren't borne out by work he had done himself."

When it comes to drawing inspiration from Albert Einstein, it doesn't take, well, an Einstein, to figure out that his habits are worth emulating. But it's the processes behind those habits that can truly propel an entrepreneur to new heights. He went beyond just questioning the establishment, creating entirely new ways to do so. He relished in the chance to swim upstream because he knew he was right, not out of arrogance or overconfidence, but because he had done the work. In the end, he didn't just resist the consensus--he created a whole new one.

Source: Entrepreneur

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Toxic Leader

By Patricia Wallington

Working for some leaders is as painful as taking a full dose of poison. Their behavior is so bad it is toxic to their organizations. You know the type: More of a despot than a leader, he pits employees against each other and paralyzes the organization with fear.

Sometime during your career you may have encountered such a toxic leader, or maybe you see signs now of one emerging in your company (hopefully you aren’t one yourself). Here’s how to spot one, how to protect yourself and your team from his venom, and how to nip an emerging toxic leader in the bud.

The Markings of a Toxic Boss
Toxic leaders share some common traits. They often have a rigid commitment to an idealized goal. They view challenges to their vision as akin to treason. Either you’re with such a leader, unquestioningly, 100 percent, or you’re the enemy.

The poisonous leader is arrogant; in her mind, she is always right, and she takes input only from a limited group of yes-men and -women. Her chosen few get information, but no one else does, and so there is no discussion about the work being done.

Retribution from such a leader is swift for those not aggressively supportive of his decisions. He treats employees coldly, even cruelly. He assigns blame without regard to responsibility, and takes all the credit for himself. I once had such a boss, and he gave me a new definition of shared risk: If something I did was successful, he took the credit. If it wasn’t, I got the blame. Painful as this was, I learned a lot during his short tenure. He was my first negative role model. Fortunately, I was able to move on, and he left the company.

Why leaders behave this way is the subject of much speculation. Some people attribute it to greed, not just for money but for power or recognition. Incompetence can also drive the toxic leader’s behavior, as his fear of being “found out” influences his interactions with others.

The Toll of Venomous Leadership
Poisonous leaders sap the strength of their organizations. Their demand for loyalty causes employees to fear whether they are doing something the leader will deem to be wrong. In this demoralizing and dehumanizing atmosphere, the toxic leader may drive the organization into paralysis.

Employees will stop thinking creatively; their productivity will decline, and they will miss their goals. In extreme cases, employees desperate to please their leader and keep their jobs will slide into unethical behavior or outright corruption.

One might question why such behavior is tolerated. First, it is not uncommon for toxic traits to be hidden behind a mask of charisma. Toxic leaders are actors, playing a role to achieve their self-styled goal. Second, in many companies business success tends to overshadow personal weaknesses.In one organization where I worked, a senior executive consistently bullied his employees, yet he was charming to those above him. Even after his superiors witnessed the behavior, nothing was done about it because he always delivered his profit goals. Only after his staff turned over significantly and he missed his goals did he face any consequences. He wasn’t fired. Instead, he worked with a coach and changed his leadership approach dramatically. This outcome suggests that an organization risks encouraging toxic leadership by rewarding results and ignoring how they were achieved.

A Survival Guide
If you’re faced with a toxic leader (whether or not he’s your boss), you can survive. But you will need a strategy to do so.

First, you have to decide whether to stay or leave. Your personal circumstances may require you to stay. If leaders are rotated frequently in your company, you could wait out the poison leader’s tenure. Or your own skills and reputation may be strong enough so that you’re not damaged by the abuse you get.

Once you decide to stay, you will need to decide whether to confront the behavior or lay low. Trying to counsel the boss is likely to work only if you’re already in the inner circle, and only if he decides to listen to you instead of cutting you off from the group. Joining with others to confront him carries similar risks. Only you can decide how far to go. If you decide to take on the leader, make sure you have all the relevant facts, pick an appropriate time and place for the confrontation, and have a plan for bringing the issues forward.

Meanwhile, you can find support from other executives in the organization by strengthening those relationships. Take steps to establish your independence. Never defend the ruthless behaviors. Outside of work, find uplifting activities to nurture your self-esteem.

Whatever you do, buffer your people from the toxic leader. Defend them against any hits that come from above. I once saw a manager sit quietly and allow a member of his staff to be pummeled by abusive questioning during a presentation. How cowardly was this manager that he couldn’t step in and deflect the criticism? Fear of retribution may tempt you to duck this responsibility, but good leaders do not abandon their people. Let integrity and courage lead you to the honorable thing.

Detoxifying the Next Generation
Toxic leaders aren’t born, they’re shaped by their experiences. If you have one emerging in your organization, you can turn him on a different path. You can recognize an emerging toxic leader by these signs:

Self-centeredness. An employee is willing to harm others in order to come out on top.

Messianic visions. The employee’s vision seems impossible to achieve, or she positions misguided actions as attempts to achieve a noble cause, and she won’t take advice.

Arrogance. He displays disdain for others.

Blame-shifting. I saw one executive order a “take no prisoners” approach to setting and enforcing a technology standard, then disavow the “noncollegial” style of his employee, leaving her to repair her reputation alone.

Redirect these rising leaders by making your expectations for behavior clear to everyone in your organization. Investigate low morale, and attack its causes. Ensure that performance reviews document toxic behavior, and make sure offenders know that mistreating others is going to short-circuit their careers. Promote and recognize those leaders who demonstrate nontoxic behaviors.

Finally, set an example. Most leaders are neither good nor bad always, in all things. Recognize your weaknesses and work on eliminating them. Be someone who is able to take advice. Demonstrate integrity. Work unfailingly for the benefit of your team. Toxic leaders’ victories are often short-lived. Avoiding and defending against toxic behaviors should lead you, and those who follow you, down the path to sustained success.

Source: CIO

Surviving Toxic Leaders: How to Work for Flawed People in Churches, Schools, and Christian Organizations

The Allure of Toxic Leaders: Why We Follow Destructive Bosses and Corrupt Politicians--and How We Can Survive Them

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It's Not Who Your Customers Are, It's How They Behave

By: Peter Merholz

Wow. I'm humbled by the commentary from my first post. I hope I can maintain such passionate interest!)

Businesses cannot exist without customers, so it's sadly ironic that many, if not most, businesses, actually understand so little about them. As a company grows, a smaller and smaller percentage of the staff interacts with the customers. In fact, those folks on the "front line" (think call centers, service counters, retail stores) are typically among the lowest-paid and have the least authority.

Meanwhile, back at headquarters fundamental decisions are made with extremely limited information about customers. There, understanding the customer is often considered someone else's responsibility, because, "we have a department for that." No department has a complete view of the customer, however, and so in place of true understanding are models and frameworks that attempt to describe the customer. Many companies don't go beyond demographics and market segmentation. While it's helpful to know how they break down by age, sex, income, region, and other easily measurable characteristics, there's actually very little you can actually do with that information. In order to become customer experience-driven, you need to go beyond who your customers are, and understand what they do.

When companies think of how their customers behave, it's typically in one of these four ways. See if any of these resonate with you:

1. "A gullet whose only purpose in life is to gulp products and crap cash"
That quote comes from The Cluetrain Manifesto, still one of the best books on how companies should embrace a new way of communicating with their customers. Very few companies would admit it, but you know that some still see their audience this way (I'm looking at you, broadcast media.)

2. Sheep
This view holds that with the right "messaging", you can guide people to behave in certain ways, because they're docile and gullible and respond only to emotional tugs. And while this might be fine in the world of packaged consumer goods, where there's not a lot of complexity in using (i.e., literally consuming) the product, it breaks down when your offering is more complex. During the first Web boom, I remember companies spending tens of millions of dollars on advertising, and a tenth (or even a hundredth) of that on the site experience. You can no longer simply hound people into buying your product.

3. Homo Economicus
If Sheep are one side of the behavioral coin, this is the other. This view argues that customers are highly rational beings who want to maximize the utility of their purchases. This leads to an assumption that what matters most is "bang for the buck," which in turn gives us products with bloated feature lists, because who wouldn't want to buy the item with 14 bullet points on the packaging over the item with just 10? Sadly, there's research that suggests that many customers do make just this purchase decision; however, there's also research that up to 50% of product returns are for items in perfectly good working order -- they're just too confounding to use.

4. Type A Personality
Perhaps the most sophisticated common view of customer behavior is the one that understands customers are completing tasks in the process of accomplishing a larger goal. This view comes out of the world of software and Web design, where the functionality can get quite complex. This perspective becomes problematic when taken to the extreme -- that people are some kind of flesh robot seeking to maximize productivity. This leads to offerings that work, but can be joyless and dull. Perhaps you've used some of Microsoft's products?

Now, these perspectives aren't wholly wrong (well, maybe the gullet), but clearly they're not quite right. In order for a company to deliver truly outstanding products and services, it must embrace the messy complexity of human life, and endeavor to understand its customers as people. In other words, understand your customer as you understand yourself.

This means going deeper than tasks and goals to appreciate behaviors and motivations. A few years ago, I worked with a large national bank to help them better understand how customers decide to purchase the bank's products and services. The bank had a sophisticated demographic model, but didn't understand what cinched the deal.

Our initial efforts focused on the "goal" of buying a product, and we were able to outline the steps that people took to achieve that goal. They researched banks online, then compared products within banks as well as across banks. They visited nearby branches, and spoke with representatives in person or on the phone. And once they amassed enough information, they committed.

In our analysis, we realized this was only part of the story. We asked the research participants to retrace their steps, focusing on the Web site, to walk us through their experience. And in doing so, we saw that while there was a set of discrete tasks that lead to achieving a larger goal. More importantly there was an underlying motivational layer of emotion that actually guided their decisions. Buying financial products is challenging, because unlike physical goods, it's hard to define what you want ahead of time. At Best Buy, you can point to a 52? television and say, "something like that." You can't do that with a loan or a line of credit.

So what happened was that while people appeared to engage in the appropriate steps to make a purchase decision, because they couldn't articulate an end state, they were simply going through the motions and would never commit. We realized that customers must satisfy three sets of requirements -- functional (does the product meet my basic needs); intellectual (through comparison, am I confident I'm getting the best deal); and, crucially, emotional (could I have a relationship with this bank?). The bank wanted to drive all applications for new products online, but the customer research analysis made clear the importance of maintaining a quality cross-channel experience. Potential customers often wanted to meet representatives, either in person or on the phone, before committing to an application, even if they've done all their research online.

In my following post, I'll discuss our approach for better understanding customers, and sharing that insight throughout your organization. In the meantime- does your company "have a department" for customer engagement? Or is customer understanding something that's infused across your organization?

Source: Havard Business Blog

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Crisis Management

by Donald E. Wetmore, Ph.D.
He is a speaker and productivity consultant (www.balancetime.com).

Crisis management, for the most part, is when a deadline has sneaked up behind you and robbed you of all choice. And crisis management commonly is poor time management. Why? You’re under pressure, maybe cutting corners. Things can slip through the cracks. Your stress level is increased. The quality of your performance may not be what it ought to be.

I have been amazed through the years when my college students would hand in term papers and inform me that they didn’t have enough time to do a good job. I would reply, “When in the future will you get more time to redo it because if it’s as bad as you suggest, I’m going to give it back to you to redo.” You don’t have the time to do it right; where will the time come from to fix it?

I would suggest that if you find yourself in crisis management a lot, it probably has less to do with your day-to-day responsibilities and more to do with a lack of anticipation, because most of the things that put you into crisis management are things that are capable of being anticipated.

Use a Crisis Management Log
A problem well defined is 95% solved. If you have an accurate accounting of your time crunching crises, you’ve gone a long way to reducing them in the future.

Here is a good exercise to help reduce crisis management. For the next two weeks, run a crisis management log. Nothing fancy about it at all. Simply take a pad of paper and entitle it "Crisis Management Log" and for the next two weeks when you encounter a crisis, log it in. Put down the date and time it occurs and a little detail, so that two weeks later when you go back to review, you will remember the particulars. After two weeks of accumulating these data, go back and review every crisis you encountered and ask yourself, "Which of these could have been avoided?"

Most people discover that about 20% of the crises they suffered through were unavoidable. “Stuff Happens”. We cannot eliminate all crises.

Usually, 80% of the crises could have been avoided with better anticipation and planning. After running your crisis management log, start taking corrective steps to reduce the frequency of crisis management events by, for example, starting items sooner or requesting needed information sooner rather than waiting until the last minute to receive it.

Source:Winston J. Brill & Associates

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Need to Find a Job? Stop Looking So Hard

by Peter Bregman

Do you know anyone who tried for years to have a baby but couldn't? Then, after giving up, maybe after adopting, suddenly, surprisingly, got pregnant?

Or someone who was dying to be in a relationship? Dated all the time, but never met the right person. Then, after accepting he would be alone, started focusing on other things and, lo and behold, met someone and got married?

How about someone who lost her job? Maybe she spent the next year working on her resumé, perusing job sites, devoting all her energy to getting work. All to no avail. Then, after deciding to stop looking so hard, out of the blue, came a great job offer?

What is that? A karmic journey? A miracle? Statistical aberration? Pure random chance? Perhaps it never really happens; perhaps we remember those stories precisely because they are so unusual?

Or, perhaps, it's a really great strategy.

I just heard a story from a friend of mine. She knows a guy who's been out of a job for over a year. He spent the year working on his resumé and sending it out. He's on Internet job sites every day. He tries to meet with people when there's the opportunity but there aren't a lot of opportunities these days. And he's getting more and more depressed. It's hard to get out of bed but he does. He puts on a suit and tie, sits at his computer, and looks. Eventually, he figures, he'll find a job. I'm sure he's right.

But probably no time soon. The sad truth is that there aren't many jobs out there. And, just last week in the U.S., 200,000 more people started looking for them. Call me a pessimist. But I don't know a single company who is hiring. (I'm in New York, where things are particularly bad.) If you're the kind of person who likes to play the odds, then you'll admit that, chances are, you'll be out of a job for a while.

The same applies to companies who have lost clients, whose revenues are down, who are scrambling for business. It's a scary economic environment out there.

I was talking about this with a close friend of mine who holds a senior position at a large consulting firm. He sounded down--not depressed--but uninspired. We were commiserating about the environment when he said, "We're going after anything that's out there. This is not the time to be choosy. It's not fun."

But I do think there's another way to go through these times with less pain and more success. A way to increase your chances of getting that job. Of winning a new client. And maybe even enjoying it.

Give up.

Not completely. But mostly. Stop trying so hard. At most, spend 1-2 hours a day on it. Here are a few rules:

* Write your resume quickly and efficiently. Get the basic point across and then let it go. Same with a cover letter. Your resumé is not going to get you a job. If you're a company, the same holds true for your marketing materials. I'm sure they're already good enough.

* Don't spend time on job sites. It's highly unlikely, with all the people who are looking, that someone will hire someone they don't already know (or someone they know doesn't already know). Same goes for companies: don't respond to RFPs unless you already have the relationship.

* Spend all your hunting time with people: at lunch, on the phone, going for walks. Finding a job or new clients is all about human relationships.

If you're only going to spend 1-2 hours a day on this, what should you do with your other 12 hours? If you aren't going to spend your days looking for work, how will you find it?

Here's my recipe:

1. Make a list of all the things you love doing or things that intrigue you that you'd like to try doing. This is brainstorming so don't limit the list or judge it; write down everything you can think of.

2. Separate the activities you do with people from the activities you do alone. For example, gardening, reading, meditating, and writing are alone activities. Volunteering to run a fundraiser is with people.

3. Look at the activities you do alone and figure out if you can (and want to) do them in a way that includes other people. For example, join a garden club. Or a reading or meditation group. Or write something that other people read (a blog counts). If you can (and want to) make them activities that include other people, keep them on the list. If not, then cross them off the list.

4. Now's the fun part: Spend 90% of your time doing things you love (or have always wanted to try) with other people who also love doing those things. If possible, take a leadership role.

A good friend of mine has recently gotten involved in a church she adores. She loves all the pastors; she came to our house for dinner the other day and couldn't stop talking about them. So she met with them and offered to help in whatever way they needed. She's now leading a monthly strategy breakfast with the pastors and lay leaders of the church. I've never seen her so excited.

Another friend is training for a triathalon with a group of 15 others. He's in the best shape of his life and can't stop talking about it.

A company I know is doing pro bono work for charities and the government. Everyone working on those projects is energized.

Another company I know has given all their people writing time; they've been told to put their ideas on paper and get them out there. Somewhere. Anywhere.

Why does this work? Woody Allen once said that eighty percent of success is just showing up. When I first started my business, a great mentor of mine told me to join the boards of not-for-profits and do what I do best for them. Other board members will then see the results and want to hire my company to do the same for them and their companies. That's the obvious reason.

Here's the more subtle reason this works. Nobody wants to hire someone (or a company) who needs to be hired to survive. Depressed is not attractive. People want to hire energized people who are passionate and excited about what they're doing. Jobs come from being engaged in the world and building human connections.

And an even more subtle reason. If you're passionate about what you're doing, and you're doing it with other people who are passionate about what they're doing, then chances are the work you eventually find will be more in line with the stuff you love to do. And then . . . then your life changes (not to be too dramatic but it's true). No longer are you, like my consulting friend said, "going after anything that's out there." You're using this crisis as an opportunity to do work you love, at which you excel, with people you enjoy. You can't help but succeed.

Now, I know what you're thinking. You're thinking: that's a fine strategy if you're independently wealthy, getting that nice fat trust fund check every week to pay for your gym membership (or mortgage or kid's tuition). But what about the rest of us? Our inability to pay the monthly bills might actually intrude on our ability to "enjoy" unemployment. I know how scary it is to be without an income.

And that fear is what you have to manage because here's the kicker. It won't take longer to find a job even though you're spending less time looking. It'll take you less time.

Pursuing things you love doing with people you enjoy will position you better to get a job; other people will notice your commitment, passion, skill, and personality and they'll want to either hire you or help you get hired.

Also, actively pursuing other activities while looking for a job will make you more qualified for a job--because you'll end up a more interesting person. When you finally get that job interview, you'll be able to recount all the many things you've been doing (and will probably have a good time relating them) instead of saying that the only thing you've been doing for the past three years is looking (unsuccessfully so far) for a job.

The same holds true if you're a company looking for business. Spend your time doing things that will make you a more interesting company to hire when the business comes back.

And even if it took the same amount of time to find a job, wouldn't you rather spend your time doing things that are interesting with people you enjoy?

I just heard the story of a woman who decided to do work she didn't enjoy for a few years in order to make a lot of money. Three years later the company went bankrupt. That could happen to anyone. Bad luck. But here's what she said that I found the most depressing: "It's as though I didn't work for the last three years--it's all gone. And what's worse, I worked like a dog and hated it. I just wasted three years of my life."

Don't waste this time. The job search. The client search. Do it. But do it in a way that excites you. That teaches you new things. That introduces you to new people who see you at your natural, most excited, most powerful best. Use and develop your strengths. The things at which you excel. The things you love.

It's well known that people have a harder time getting pregnant when they're stressed about getting pregnant. And it's unlikely you'll get into a relationship if all you think about is getting into a relationship. The same holds true for finding a job (or, for a company, finding new business). However hard it may be, force yourself to do things you love with other people. Let the work find you.

What do you think?

Source: Harvard Business Blog

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