Internet Economy

A new employer-employee compact

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The old “job for life” certainties have gone but the laissez-faire approach which has replaced them is neither good for companies, nor good for employees argue Reid Hoffman, Ben Casnocha and Chris Yeh in the Harvard Business Review.

For most of the 20th century, the compact between employers and employees in the developed world was all about stability…..careers progressed along an escalator of sorts, offering predictable advancement to employees who followed the rules. Corporations, for their part, enjoyed employee loyalty and low turnover.

The arrival of globalisation and the information destroyed all that, they argue. Adaptability and entrepreneurship became the key to achieving and sustaining success.

These changes demolished the traditional employer-employee compact and its accompanying career escalator in the U.S. private sector; they are in varying degrees of disarray elsewhere.

The result is a break-down of trust between companies and their employees with a “winner-take-all economy that may strike top management as fair but generates widespread disillusionment among the rest of the workforce.”

The answer, they argue, is to build a new kind of compact between employer and employee based on three things:

Hiring employees for explicit “tours of duty”
“A tour of duty serves as a personalised retention plan that gives a valued employee concrete compelling reasons to finish her tour and that establishes a clear time frame for discussing the future of the relationship. ” These typically would be between two and four years and the end of the “tour” needn’t necessarily lead to the employee leaving the company (though that could be the outcome) but it would mean signing up to a further two or four year “tour”.

“Work with employees to establish terms of their tours of duty, developing firm but time-limited mutual commitments with focussed goals and clear expectations. Ask ‘in this alliance how will both parties benefit and progress?'”

Encouraging employees to build networks and expertise outside the organisation
“To maximize diversity and thus innovation you need networks both inside and outside your company. Therefore, employers should encourage employees to build and maintain professional networks that involve the outside world. Essentially, you want to tell your workers, ‘We will provide you with time to build your network and will pay for you to attend events where you can extend it. In exchange, we ask that you leverage that network to help the company.’ “

Establishing active alumni networks to maintain career-long relationships
“The first thing you should do when a valuable employee tells you he is leaving is try to change his mind. The second is congratulate him on the new job and welcome him to your company’s alumni network.”The authors argue that having an extensive and active alumni network is extremely powerful.

“One obvious benefit of alumni networks is the opportunity to rehire former employees….They can share competitive information, effective business practices, emerging industry trends, and more. They understand how your organization works and are generally inclined to help you if they can.”

They recognise that this may sound counter-intuitive to many firms. “You might fear that running an alumni network is an admission of failure—a sign that your company can’t retain its best people. But your alumni are likely to form a network anyway; the only real question is whether your company will have a voice in it.”

They sum up:

The key to the new employer-employee compact we envision is that although it’s not based on loyalty, it’s not purely transactional, either. It’s an alliance between an organization and an individual that’s aimed at helping both succeed.

In the war for talent, such a pact can be the secret weapon that helps you fill your ranks with the creative, adaptive superstars everyone wants. These are the entrepreneurial employees who drive business success—and business success makes you even more attractive to entrepreneurial employees. 

 

Internet Economy

Sharing health data – safely

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In principle I think this is a great idea. Big data is transforming industry after industry as well as scientific enquiry and bringing this power to bear on the health of the nation is a noble goal.

Unfortunately, the implementation of the scheme was a disaster – it was poorly communicated and many of the details of how privacy was to be safeguarded were simply not there and concerns were brushed aside in a patronising and dismissive manor.

The consequence was a backlash from the privacy lobby – hardly surprising in the aftermath of the Snowden revelations on NSA and GCHQ (although perhaps the absence of a public outcry to these revelations emboldened the NHS data planners).

Now the scheme has been put on hold for six months while the NHS regroups and decides how to avoid a mass opt-out. Writing in The Guardian this morning Ben Goldacre argues strongly that idea of data sharing is a powerful force for good, but the safeguards need to be much better. He called on people not to opt out – yet.

Personally I opted out several weeks ago but I always intended to reconsider if the privacy safeguards were improved. I sincerely hope that happens because I believe strongly in the ideal.

Climate Change

Making hay while the snow melts

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Three articles in this morning’s Observer illustrate perfectly the paradoxes surrounding the climate change debate. 

First we had this piece on England’s wettest January for 250 years. The culprit is identified as global warming:

Flooding has been identified as the most dangerous impact of climate change for the UK and is hitting harder and faster than expected, according to scientists. Thousands of homes have been flooded since December, and much of the low-lying Somerset Levels remains under water.

It went on to detail the price to be paid both in flood defence expenditures and annual flood damage which will result from increasingly erratic weather patterns.

Then there was a piece in the Observer’s New York Times supplement entitled Industry Awakens to Threat of Climate Change which detailed the concerns that large US corporates like Coca-Cola and Nike are now expressing about the adverse effects of climate change on their businesses. 

“Increased droughts, more unpredictable variability, 100-year floods every two years,” said Jeffrey Seabright, Coke’s vice president for environment and water resources, listing the problems that he said were also disrupting the company’s supply of sugar cane and sugar beets, as well as citrus for its fruit juices. “When we look at our most essential ingredients, we see those events as threats.”

Finally, back in the main paper, this piece on the exciting opportunities which the melting of the polar icecap are opening up for the energy and shipping industries. The effects of climate change are being felt faster in the northern pole than elsewhere on the planet with the prospects that a northern sea route will open up and swathes of the arctic can be explored for oil, gas and minerals.

Confidence that the Arctic will become economically important is seen in the rush of countries and companies to claim a stake. Eleven countries, including Poland and Singapore, have appointed Arctic ambassadors to promote their national interests.

It is splendidly ironic that the burning of fossil fuels causes the planet to warm up so that the north pole melts and we can find more fossil fuels to burn, thus continuing the cycle. There is a wonderful comment in the comments thread of the article online which sums it up perfectly….

 And the New Yorker cartoon (above) earlier this week illustrated the short-termism appositely.

One thing is clear, until we price carbon correctly and align short term economic interests to the long term interests of the planet (and the human species) we will see more and more of this schizophrenic behaviour.

Product Management

How to tell if design thinking has taken hold in your organisation

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I am now on the fifth week of my Design Thinking course being run online by Dr Jeanne Liedtka. She summed up with some great advice for implementing design thinking:

  1. Pick the right challenge. Figure out who in the organisation cares about the problem you are thinking about. Pick a problem with urgency behind it. Frame your goals so they gel with what the organisation cares about.
  2. Think small. It’s easier to start small and scale over time that start big and risk a big failure
  3. Select and manage your team carefully. Diversity is the key. What you are after is collective wisdom and the more points of view you have, the better. You need all kinds of people – you need starters and you need finishers. 
  4. Manage your momentum. Speed is the number one momentum builder. Momentum runs on emotional highs. Speed doesn’t mean rushing a solution to the market before it is ready. What you are after is speed of learning – shortening the cycle times. 
  5. Be ready to ride the roller coaster of emotion (see above)
After all that, how can you tell if you have succeeded in creating a successful design thinking organisation? This was her answer…..
How to tell in design thinking has taken hold in your organisation
People talking about envisioning new possibilities together
or
 Still debating their individual recommendations
Listening to understand other people’s perspectives and build on them
or
 Listening for weaknesses in their opponents’ arguments
Sharing deep primary data gathered from those they wish to serve and mining this for new insights together
or
 Compiling web-based surveys that reveal only superficial attitudes and opinions
Spending time in meetings figuring out how to start small and learn as they go
or
 Trying to create the perfect plan before any action can be taken
Talking about designing marketplace experiments
or
 Arguing theory in conference rooms
Actively searching for disconfirming data
or
 Latching on to whatever data points supports their point of view
Internet Economy, Product Management

The boom in innovation

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I’ve spent the past couple of hours going through my feed reader catching up on all the stories I’ve missed over the past week or so and I was struck by the enormous number and inventiveness of the new apps and hardware being reported on.

It strikes me there are several things happening at once which have come together to create this explosion of creativity:

  • The emergence and ubiquity of powerful smartphone platforms – mainly IOS and Android at the moment, it has to be said – packed with sensors
  • Cheap and scaleable cloud computing platforms which makes initial costs low and encourages experimentation and lowers the financial bar
  • The coming of age of funding platforms like Kickstarter which combine easy access to crowd-sourced funding coupled with the rapid feedback of a social network (if you don’t get to the target amount, it’s a powerful message from the market)
  • The emergence of cheap 3D printing which makes prototyping much, much simpler and cheaper. (You can buy 3D printers in Maplin, a sure sign the technology has arrived!)
It may feel a bit like the bubble in 2000, but these enablers make things very, very different this time.
Internet Economy

The death of a business model

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A man came to the door last night to try to sell me a framed photograph of my house taken from his light plane.

Fifteen years ago, a couple of years after we moved in, the same thing happened. That time I was fascinated to see the image – I had never seen my house from that perspective before. I can’t remember what I paid, but it wasn’t cheap, and I was happy to pay.

This time I declined. I am now so used to seeing my house from the air there is no novelty anymore. What’s more, I’m confident that the image on the web will be updated regularly – not the case with the picture on the wall.

The doorstep seller argued that his photograph was much better quality and seemed a little cross that I wasn’t buying. I can only guess that is because he got the same reaction at every door. This is the innovators dilemma at work; web imagery is already good enough for most of us, and they will get better and better, that much we can be confident of.

 One more business model bites the dust….

Internet Economy

Why large organisations find it hard to innovate

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Large organisations find it so hard to innovate, according to Dr. Jeanne M. Liedtka, because of the “physics of growth”. Dr Liedtka, who is currently running an MOOC on Design Thinking which I am taking, says there are critical differences in the way VCs and large corporates approach innovation. VCs understand that their ability to predict success is poor (success rates of one or two ventures in 10 are typical). Therefore they adopt some key practices to improve their odds:

  1. Betting heavily on individuals with good experience of both success and failure 
  2. Keeping bets small and affordable until they have better data
  3. Making sure if they don’t succeed that they fail quickly
In contrast large organisations are optimised for execution. This means, she says, they love big ideas which makes sense from their perspective: focus and control are key and concentrating on one or two big things is much easier than on many small things.
But there are some terrible side-effects with this approach when in comes to encouraging genuine innovation:
  1. Big ideas, by their nature, tend to have been found by other competitors already
  2. Customers are terrible at envisioning things which don’t exist
  3. “If you insist on home runs you won’t get many singles, let alone home runs”
  4. When the ratio of resources invested gets too far ahead of knowledge possessed “bad things happen”
All of this discourages learning in managers – and learning is the key mindset for innovation. After all, she says, you don’t learn to juggle with flaming torches but with bean bags!
Large companies also thrive on analysis. But we don’t have enough data on genuinely new things to do any coherent analysis on. When managers are challenged to support a new big idea with past data the temptation is to make it up. 
All this leads, she says, to trapped managers in a kind of growth gridlock. 
The chart below summarises the two approaches. “Geoff’s” cycle (the VC or entrepreneur perspective) starts from an open mindset and is strong on varied experience and customer empathy – which means being deeply interested in the lives of customers are people. 
In contrast “George’s” cycle (the large corporate perspective) starts from a fixed mindset (aka deep expertise which is so successful in an execution setting) and relies on customer data. You can read the results for yourselves. 
This is one of the best descriptions of the fundamental mechanics of the innovation process that I have yet seen. The good news, according the Dr Liedtka, is that all of this can be taught and there are many examples of large corporates making innovation work in exactly this way. I’m looking forward to the rest of the syllabus. 
Internet Economy

Lingering is bad for business

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The FT ran an article last month which resonated considerably with me. The thrust of the piece was that lengthy goodbyes are not good for business.

What is the point of these lengthy handovers? Once your departure is announced, your authority leaves with it. Your mind, however hard you try, is surely turning to what you do next.

It went on to cite three examples: Angela Ahrendts who is leaving Burberry, Steve Ballmer who is stepping down as chief executive of Microsoft and Sir Nicholas Hytner who is retiring as director of Britain’s National Theatre.

In each case there is a lengthy gap – up to 18 months – before the departees actually depart.

My recent experience of retiring after 30 years at RBI has taught me that the less time between the announcement and the departure the better. In my case we informed the company at the end of September and my actual agreed leaving date was today – quite a short period, it seems, in senior business circles.

Even so, I could see the problems of an extended stay. The process of announcing your departure follows a pretty set pattern. The announcement goes out and there are (hopefully) general expressions of shock and dismay. Shortly afterwards, though, people’s attention turns to what and who comes next. Then the emails get less frequent and there are slightly fewer meetings. You can see the calculation in people’s minds as they work out whether you are going to be around for the conclusion of whatever project you are being asked to validate or comment on. Quite quickly the organisation heals around your future absence. So the faster you get out the better for everybody.

This reaction is entirely healthy: companies exist for what they can do in the present and the future and not what they have done in the past. Once a departure date has been announced you become part of the past – better to acknowledge it and move along gracefully. I agree with the FT: no good can come of the lengthy goodbyes.

Uncategorised

Climate change stories

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There was an interesting juxtaposition of articles in the Observer this morning. The leader set the tone with a strong call for action in the face of the IPCC report. 

Last week, the Intergovernmental Panel on Climate Change published its fifth assessment report on the physical science of global warming and made it clear that the continued burning of fossil fuels to run our cars, factories and electricity plants is now virtually certain to induce serious alterations to our climate. 

Then there was the piece by David King and Richard Layard calling for a world sunpower programme:

The goal would be by 2025 to deliver solar electricity at scale to the grid at a cost below the cost of fossil fuel. All countries would be invited to participate. Those who did would commit, in their own countries, to major new programmes of research, internationally co-ordinated, and to share their findings for the benefit of the world.

 In contrast, however, were two of the (very few) articles in the New York Times Observer supplement, presumably hand picked from the raft of stories which the NYT covers. The first focussed on the economic difficulties faced by Germany’s green energy policies.

German families are being hit by rapidly increasing electricity rates, to the point where growing numbers of them can no longer afford to pay the bill. Businesses are more and more worried that their energy costs will put them at a disadvantage to competitors in nations with lower energy costs, and some energy-intensive industries have begun to shun the country because they fear steeper costs ahead.

The second was a piece explaining the potential of unlocking frozen hydrates as a potential new (carbon) fuel source. 

If they can be tapped safely and economically, they could be an abundant source of fuel, especially for countries like Japan that have few energy reserves of their own.

There in the Observer (and supplements) this morning the complexity of the climate change issue was laid out. 

  1. We have a serious problem with CO2; 
  2. We know that we have to reduce hydrocarbons in favour of renewables; 
  3. But the infrastructure and economics of the oil and gas industries have the advantage and the momentum; 
  4. Renewables are costly and going it alone is fraught with perils (see Germany);
  5. A “moonshot” is therefore required.

What are the chances of this happening? The Observer leader I started with sums it up: 

What Britain urgently needs is an unambiguous statement from our government that it recognises very serious changes are now affecting our planet; that we have the will to tackle a growing global catastrophe; and that we are prepared to address difficult, unpopular truths. To date, we have heard nothing. 

Uncategorised

Has Apple lost its innovation mojo?

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Has Apple has lost its innovation mojo? Yes, according to many pundits who weighed in immediately following last Tuesday’s announcements of the iPhone 5S and 5C. 

Comments from The Guardian were typical: “Once a company renowned for breaking new ground, Apple is turning into a typical American corporation” says the sub-head. 

treading water is what Apple has done ever since, sadly, it lost Jobs. Under the turtlenecked-one, we got the iPod, the iPhone and the iPad, one after another. Since Cook took over as boss in 2011, there has been reiteration rather than innovation. The iPad, except smaller. Now with a sharper screen. In pink. Ho hum. 

Tech site CNET took a very similar line. The “5 disappointing things about hte iPhone 5S” are listed out: the screen remains the same; a faster processor – it’s only just a phone!; no improvement in battery life; still no 128GB model; a little catch up, no innovation.

The iPhone 5S has exactly what was expected: a faster processor and a better camera (one that merely catches up to the cameras in some other phones). Those features aren’t “wow” — they’re “meh.”

And news network CNN concurred. “Underwhelmed. That, in a word, was the response in many quarters to Apple’s rollout of two new iPhones on Tuesday,” its piece began. However, what followed was a more balanced round up of views. On the one hand: 

“Much-hyped iPhone announcements from the tech giant did little to stop (Apple’s) year-long descent into stagnation,” wrote Marcus Wohlsen in Wired, a CNN.com content partner. “Though the faster, sleeker, more powerful phone is unarguably cool, the steps forward are still incremental. And incremental isn’t what the world expects from Apple.”

One the other, however, 

“In most cases Apple does not walk on others’ paths,” she said. “They create their own and stick to it. This is not necessarily the easy way to do it in the short term, but assures that they remain in control.”,

quoting Carolina Milanesi, a tech analyst with Gartner Research.

And there were still others with a more subtle interpretation of innovation, such as the Innovation Excellence blog which wrote: 

I truly believe that the kinds of things that will come out of the BLE technology built into the new iPhone 5S in combination with the new fingerprint authentication will represent a quantum leap in the value we extract from our smartphones in much the same way that the AppStore that came along a year after the launch of the original iPhone.

And another Wired article with a more positive take:

The bottom line is that there’s a lot more to the iPhone switching to a 64-bit processor than hype. While the applications for it might be limited right now, Apple is paving the way for improvements that we’ll see trickle into the iPhone over the next few years. 

Forbes summed it up best for me with “7 reasons the new iPhones are starting to look good” (5 plays 7!). The bottom line for Forbes:

Innovation is unquestionably becoming less glitzy but that’s because Cook is updating Apple at the platform level. In place of Jobs’ charismatic feature, design and miniaturization-led innovation, he is giving his team space to build the boat: a device platform that is powerful enough to integrate many more services, gives developers more scope; allows the iPhone to interact with more devices around the body and in nearby locations. 

In the end this more subtle interpretation of the Apple strategy sounds to me more convincing. 

by Jim Muttram