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

Read more...

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

Read more...

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

Read more...

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

Read more...

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

Read more...

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

Read more...

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

Read more...

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

Read more...