A sense of progress

I was listening this morning to an interesting HBR Ideacast where Daniel Pink was talking about the findings in his new book Drive: The Surprising Truth About What Motivates Us. You know it’s good when you start trying to scribble down notes in a moving train!

Anyway, a few of the key points I took away from the podcast were:

1. Traditional “carrots & sticks” (i.e. incentives & punishments) work really well in routine, focused, clearly defined tasks. But they work quite poorly in the sort of creative, fluid, less defined tasks that are typical of knowledge work today.

2. The #1 motivator in the work context is a sense of progress. In other words, we all feel a strong need to get better at things, to improve, maybe even to develop mastery. Finding ways to give people a sense of progress is critical if you seek to get the best out of them in the work environment …or to get the best out of yourself, particularly if you’re self-employed.

3. Contribution is another under-rated but powerful motivator of human behaviour. We want to make a difference, and contribute to something greater than ourselves. Interestingly, it’s important not to layer monetary incentives on top of this …because it can backfire. A classic example is open source software – paying contributors would arguably destroy the fabric that binds so many disparate people in a collaborative effort.

Reflecting on my own efforts in launching and promoting Software Shortlist, I can see the power of this ‘sense of progress’. There’s nothing quite like positive feedback from the market (in the form of sales) or the satisfaction of hitting a major milestone to encourage further efforts. And conversely, the toughest times are those when you’re working hard but don’t feel like you’re getting anywhere. Finding ways to give yourself a sense of progress seems like a powerful antidote in those challenging situations – for example, highlighting some of the lessons learned along the journey.

To find out more, listen to HBR Ideacast #183 or check out the book at Amazon:

"Drive" by Daniel H. Pink

The great start-up experiment

Yesterday I had the pleasure of hearing Professor Jeffrey Pfeffer speak on “Profiting from Evidence Based Management”.”What is that?” you may ask. Put simply, evidence based management is the mindset of striving for fact-based decisions and actions. And I’d contend that it’s particularly critical for start-ups!

Doesn’t everyone use evidence in making decisions?

Actually, no! It turns out that fact-based decision-making is surprisingly rare. Most organisations and people make decisions using practices such as:

  • Casual benchmarking:  Company XYZ does this, therefore we should.
  • Belief:  Obviously, ABC is the most effective way to _______
  • Experience:  Trust me, I’ve seen this before and ____ is the way to go

What’s the problem with the status quo?

What’s wrong? Nothing less than low regard for management and a poor track record of results.

Research by various HR consultancies globally shows a staggeringly high level of employee disengagement, distrust of management, and even active sabotage within organisations. Anyone who has worked within an organisation has seen this in action, but systematic research confirms your experience.

Many industries also show a huge level of wealth destruction or foregone profits from poor decisions, including some errors that almost all competitors are making consistently. The airline industry is a classic example cited by Professor Pfeffer, with its unbundled pricing – i.e. charge extra for luggage, for a drink, for booking by phone, etc etc – which goes against a host of research into consumer behaviour that shows that lots of small costs are perceived to be worse than a one-off cost of the same amount.

Take an experimental mindset

The best firms, according to Professor Pfeffer, view their business decisions as experiments. Rather than just acting on their belief, prior experience, or some casual benchmarking – they ask themselves what assumptions they have about the situation, and then try to collect some evidence on the subject.

Often there is a wealth of data freely available on the internet. But even if there isn’t, or it’s unclear how it applies to your situation, the best thing is to do is run a series of experiments.  Try something! Then measure what happened and check what it means for your assumptions. Repeating this behaviour – and building a mindset of ongoing experiments – enables you to consistently focus your limited resources to greatest effect.

The great start-up experiment

Startups operate in an environment of relatively high uncertainty. Finding ways to systematically reduce that uncertainty and achieve greater bang for your buck can be a huge competitive advantage.

My time in startups has taught me that this experimental mindset can pay real dividends. Sure, it takes guts and you have to be brutally honest about what you don’t know. But it keeps your mind open to opportunities, enables you to learn and adapt quickly, and can make the difference between being a success or an also-ran.

For more on evidence-based management, check out www.evidence-basedmanagement.com or Professor Pfeffer’s book Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management

The Creative Side of Business

 "The entrepreneur is like an artist,
only business is the means of his expression"

I’m a big fan of this quote from Bernie Goldhirsh in Bo Burlingham’s book Small Giants: Companies that Choose to be Great Instead of Big because I think it captures the essence of entrepreneurship so well.

Entrepreneurship is a blend of creativity and rationality. Creative, in that it’s about seeing possibilities, painting a picture of a different future, inspiring and motivating others and, ultimately, producing something tangible that gets people interested. Emotion plays an important role – whether you call it passion, drive, fun, or something else.

The conventional view of business emphasises rationality, particularly the more quantitative disciplines like finance, economics, operations, and strategy. Think about activities like collecting data, analysing alternatives, modelling the effect of changes, and making decisions which maximise shareholder value. The role of emotion is limited – in fact, it’s often seen as a disruptive influence on what should otherwise be an objective or dispassionate exercise.

The reality is that business needs a balance of creativity and rationality.

If a business is entirely creative and artistic, chances are it will go bust – because without good disciplines and the rational consideration of decisions, the firm will probably get blindsided by financial realities.

But if a business is entirely rational and objective, it may become soulless, uninspiring and stand for nothing other than making money. Without a spark of creativity, it will struggle to connect with and retain its employees and customers.

What is true for business in general is even more true for entrepreneurship. This is because rational decisions are difficult in an environment of high uncertainty, and because a new venture only gets off the ground if it can draw upon the energy and passion of early employees, partners and customers. To go from an idea and a blank canvas to a thriving enterprise – that is the entrepreneurial challenge.

Society needs that creative energy of new businesses because, as Bernie Goldhirsh puts it, "this is so fantastic that one person can do so much in terms of creating a business, creating an enterprise, creating jobs, increasing the tax base. So much good comes out of this one person and his idea and his willingness to go ahead and start a business".

Bring on 2008.

Image:  "Getting started…" by  Petra on Flickr