This weekend, I finally got round to reading Michael Hill’s book “Toughen Up.”  For those who don’t know him (US and UK, I’d guess), Michael Hill is the founder of Michael Hill International,  the publicly-listed mid-market jewellery retailer which grew from a single store in small-town Whangarei to a multinational chain spanning New Zealand, Australia, Canada and (recently) the USA. Hill’s story is an inspiration to those who think they’ve left it too late to strike out on their own.  Hill didn’t do well at school, and he wasn’t talented enough to pursue a career in music or architecture, his early passions. When he was 17, his parents arranged a job in his uncle’s jewellery store where, learning from his salesman father who also worked there, Hill discovered he was good at selling jewellery.  For 23 years, he drifted along, eventually running the store despite his uncle’s disdain and repeated refusals to let Hill buy into the business. Everything changed when Hill’s house burned down.  Watching the flames, he had an epiphany, resolving to buy his uncle’s business. When Uncle Arthur again refused Hill’s very generous price, Hill announced he would set up in competition; he was ordered to clear out there and then.  The rest, as they say, is history.

Michael Hill’s book (co-written with Claire Harvey and already in its third print) is a deceptively simple read.  With a light, self-deprecating and chatty manner, he expounds his business insights through his personal and company history. I found myself nodding vigorously at several points, particularly learning not to fight on too many fronts at the same time, keeping things simple, keeping focused on big goals, and being prepared to make mistakes. Several chapters feel like something I might have written myself when explaining business ideas to staff.

Hill’s narrative is interspersed with adoring short notes from some of his staff; some readers may find that it feels too much like a company indoctrination manual.  Even so, persevere. There are some golden nuggets of business wisdom in there. And the title?  It goes back to Hill’s house fire epiphany at age 40.  Times may be tough now, but there is no better time to start something new.

Seth Godin has a knack for capturing a complex idea in a few words.  With his permission, here’s what he has to say on those banes of progress, the trolls:

Lots of things about work are hard. Dealing with trolls is one of them. Trolls are critics who gain perverse pleasure in relentlessly tearing you and your ideas down. Here’s the thing(s):
1. trolls will always be trolling
2. critics rarely create
3. they live in a tiny echo chamber, ignored by everyone except the trolled and the other trolls
4. professionals (that’s you) get paid to ignore them. It’s part of your job.

“Can’t please everyone,” isn’t just an aphorism, it’s the secret of being remarkable.

That last point is critical.  I’ve said many times that good strategy requires making choices and meaning it.  That includes deciding who you want to please and who not.   As my Vista pal Mark Di Somma says, “make enemies.”  Sure, you want to listen to others - that’s one way to improve - but it’s very easy to get distracted by naysayers, white ants, and stick-in-the-muds who offer little constructive criticism. If you believe in yourself and what you’re doing,  stop being so polite, stop listening to the trolls, stop giving them credence. Do it your way.

Need an extra PC? Time to replace the older clunkers in the company car fleet?  An extra workstation because you’ve hired someone?  Who gets the latest stuff?  The best office or workstation? In many firms, seniority rules. Even avowedly egalitarian meritocracies often revert to pecking order when it comes to handing out the goodies. The boss gets first pick, and a team-wide shuffle passes everything down.

That may not be intentional.  Staff often take it on themselves to equip the boss with the best stuff.

To understand what your staff have to put up with, maybe you should have the oldest PC, the worst car, the dingiest workstation.  It may make you realise that you need to improve things, or give you the knowledge  to resist unnecessary lily-gilding. Let the people with the greatest work requirement have the pick of the crop. If you believe in egalitarianism, it will show you stand by your avowed principles.

I’m not advocating equality of reward; I believe in rewards going to those who earn them, and that everyone with the ability and aptitude can have a shot at those opportunities.  I just don’t believe in obvious displays of  the baubles of office.  I call it egalitarian elitism.

“Loose cannon” originates from naval parlance.  Until the mid 19th century, naval cannon were very heavy discrete objects, mounted on wheels, and secured by ropes to hold them in place and drag them back into position after being fired. (This wasn’t a design flaw; basic physics required it).  If a cannon escaped its securing ropes, especially in rough weather or manoeuvring, it would roll around the ship and cause immense internal damage.  There were only two things to do.  Tie the cannon down quickly; failing that, use its momentum to quickly push it overboard. No procrastination; secure or jettison, now!

You’ll come across loose cannon in business too: someone nominally on the team (operational, management or governance), but who causes a lot of internal mayhem and strife. Unfortunately, many leaders dither and hand-wring while the loose cannon continues wrecking their team’s ship. Your choice is the same as the sailors’.  No procrastination: secure or jettison, now!

The falling birthrate in developed countries has long been a source of concern for economic thinkers.  The reasons for that seem clear - better education of women, increased opportunities for female employment, better access and use of contraception, pensions and healthcare for the aged releasing women from that task, et cetera.  In 1975, birthrates in the most developed countries were falling below replacement levels. Well, only up to a point, it seems. New research published in Nature (behind a subscription wall, but also reported by The Economist), confirms that, yes, the birthrate does fall  below replacement rates as societies improve living standards.  But in the most developed countries (as measured by the UN’s HDI human development index , combining life expectancy, education and income), as living standards improve still further, the birth rate kicks back up again, implying that the most developed societies will soon return to a self-sustaining birthrate.

The researchers speculate on why that might be, and suggest that the most developed societies have in the ensuing 30 years also adopted family support mechanisms such as widespread childcare, early childhood education and family-friendly workplaces.  Correlation and causation debates will no doubt ensue. However, I suspect the speculation will be taken as reasonable and strengthen the argument for more family-friendly workplaces, something I favour for my own economic self-interest.

Who should pay for those family support mechanisms - user, taxpayer or employer - is a vexed political question. Every country seems to have a slightly different mix. The usual compromise seems to be that employers should provide family-supportive workplaces, taxpayers support education plus some parental benefits, and users are the primary childcare purchasers with the greatest stake in the quality of service, the greatest direct benefit economically (and the least waste through government agency costs).

Personally, I’d rather see the purchase power entirely in the hands of users, with lower taxes (and less bureaucratic cost), but I’m not likely to be elected on such a platform.  People seem to forget that they pay one way or the other, unlike me.  But then I think some tax-funded services are just Ponzi schemes.

Countries with a 2005 HDI  above 0.9 include  Australia (0.966), Norway (0.961), Iceland (0.956), Ireland (0.95), Luxembourg (0.949), Sweden (0.947), Canada (0.946), Finland (0.945), France (0.945), the Netherlands (0.945), the United States (0.944), Denmark (0.943), Japan (0.943), Switzerland (0.942), Belgium (0.94), New Zealand (0.938), Spain (0.938), the United Kingdom (0.936), Austria (0.934), Italy (0.934), Israel (0.922), Greece (0.918), Germany (0.916), Slovenia (0.913) and South Korea (0.911). Only Canada and Japan did not demonstrate the uptick effect.

No, I’m not writing about interpersonal bad manners.  Pew Research has published the results of a US survey which looked at what proportion of income earners were taking naps during the day (amongst other questions):

• Income < US$30k 42%
• Income US$30k-50k 35%
• Income US$50k-75k 31%
• Income US$75k-100k 21%
• Income > US$100k 33%

So apparently low-earning Americans nap more, but nap less and less as they move up the ladder, until they reach the top where they start napping again.  Unsurprisingly, this news has encouraged someone to write a guide to power-napping.

One thing I’ve particularly enjoyed about the 40th anniversary of the Apollo Moon landing has been watching reruns of the Tom Hanks-produced docudrama series “From the Earth to the Moon“.  When I saw the series for the first time in 1998, I was enthralled.  My particular favourite is the episode on the development of the lunar lander.  The day after I saw it, I got one of my staff to beg, steal or borrow a videotape copy from the local TV broadcaster (it hadn’t been released for sale).  We showed it to all our development staff as part of a training day. Everyone who aspires to a career in engineering (of any kind), product development, or project management should watch these programmes.  If you’ve got a teenager in your family who’s thinking about a career along these lines,  the DVD set would make a great and inexpensive gift (just make sure you get the right regional format or have a multi-region capable player).

Ever wondered what colour you are? Rick Smith, author of career-planning book “The Leap“, has made an online personality testing tool available.  It explores 3 facets of your persona - leadership, curiosity and execution - and plots them on a 3-sided chart with different shades of green, red and blue. You’re placed in a colour zone, which is “your primary colour”. There’s a further set of questions to test if your current role fits your personality.

I’m not convinced that the questions are discriminating enough to give accurate and consistent interpretations - I could have made equally valid different responses to several questions - but it seems harmless enough, and could be fun to do at home or with your mates. Before you ask, I was assessed as “blue velvet” (top line, centre right). Make what you will of that.

I thought the debate about open-plan offices was long over (if you’re going open-plan, you’d have done it by now), but apparently not. Thanks to Bernard Hickey, I read that the CEO of National Australia Bank is advocating it, and suggesting that other banks which have yet to move to open-plan are probably hide-bound in other ways.

I’m a big fan of open-plan, with executives in amongst everyone else.  Obviously you have to get the house rules right, and provide private space for private conversations and thinking, but the increase in information flow, collegiality, unity of purpose and general buzz is very palpable.  When we were planning the radical transformation of Electra from stuffy, hierarchical power board to dynamic, lean, efficient and empowered customer service organisation, we discussed what changes we needed in culture and operating style.  I then went away to the beach for a holiday, only to return and find that the staff had literally torn down all the internal walls one weekend.  It was a spur-of-the-moment unauthorised initiative, and afterwards there was high trepidation concerning my reaction.  There was only one thing I could say when I walked into the building and saw all these worried faces looking at me: “Brilliant! Where do I sit?” Anything else would have destroyed the very changes I wanted to bring about. That wall demolition weekend was the start of a truly amazing transformation.

Getting product engineers to move into  an open plan environment at Deltec proved more tricky, with great protestations about dedicated personal offices for deep thought.  Moving buildings was the catalyst this time, with the engineers going into a new, high-vaulted, attractive and airy space.  There was still the odd gripe about needing personal offices from one or two designers, but inter-team interaction lifted noticeably, and led to some great cross-product innovation.

Conversely, in Fronde’s already existent open-plan environment, it eventually proved necessary for me to move into an office.  I was doing a lot of confidential business, but having an adjacent meeting room would have sufficed for that. However, and more importantly, I wanted to strengthen the position of the local leaders, to be seen to run their business units. That’s possibly more an argument for keeping head office out of a branch location.

Open-plan is a tool of organisational ethos and culture; it may not suit every situation. However, any reason to not go open-plan needs to be very profound to make up for the lost benefits.

Which renowned retailer once had the following mission statement?

“The subversion of the class structure of … England by making available to the working and lower-middle classes, upper-class quality at prices the working and lower-middle classes could well afford.”

Mission statements can be the most dreary and uninspiring committee compromise. Some leaders (and not a few employees) think they are meaningless window-dressing, not worth the effort, insincere, hypocritical and sometimes downright lying.  Others think that their business is too lowly or mundane - a mission statement would be putting lipstick on a pig. However, we all know that people do respond to inspiring leadership rhetoric.

Sometimes mission statements talk about a result: “Achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” (NASA, hence the term ‘mission statement’). Sometimes they talk of a way of doing things, like Johnson & Johnson’s Credo.  Sometimes they are unabashedly about making money; DuPont considered itself successful “only if we return to our shareholders a long-term financial reward comparable to the better performing large industrial companies”.  Some mission statements spell out what a field a company is in (and what it is not).  Deltec’s was “Helping people to communicate, by taking Teletilt to the world“. Societal good, industry, product field, and global ambition all expressed in ten words.  You’d be amazed at how we could apply them - business processes, design, quality, product range management, people development, culture, shareholder value - you name it, we could use our mission statement to lift our game.

A powerful mission statement  encapsulates the aims and modus operandi of an organisation, lived and breathed by its leaders and staff.  It can be short or long. It needs to avoid compromise, timidity and insincerity. Above all, it must be believable, not only in its aim, but also its execution.

The Economist has  a short web-only article on mission statements (from which I borrowed these ones) and suggestions for further reading. And the retailer? That epitome of the middle class establishment, Britain’s Marks & Spencer!

Recent financial, automotive and other sector failures has seen anti-business commentators ascribe the failures of a relatively few business people to all business people.  For example, I’ve read and heard some outrageous generalisations about MBA graduates and the universities that produce them, because senior people in recently failed companies often held MBA,:

• MBA graduates are idiots or crooks.
• MBAs lack ethics and morals.
• MBA teachers are complicit because they must encourage this immoral result.

These are vile calumnies.  They are akin to saying that all Irish are feckless because a few Irish are feckless; or that because some Muslims are terrorists, one can portray all Muslims as terrorists.  Too extreme? You see how you like having your chosen vocation unfairly and aggressively reviled in the media, on the street and in the pub because of the actions of a few.

In reaction, MBA students at Harvard made a public oath:

THE MBA OATH

As a manager, my purpose is to serve the greater good by bringing people and resources together to create value that no single individual can create alone. Therefore I will seek a course that enhances the value my enterprise can create for society over the long term. I recognize my decisions can have far-reaching consequences that affect the well-being of individuals inside and outside my enterprise, today and in the future. As I reconcile the interests of different constituencies, I will face choices that are not easy for me and others.

Therefore I promise:

• I will act with utmost integrity and pursue my work in an ethical manner.
• I will safeguard the interests of my shareholders, co-workers, customers and the society in which we operate.
• I will manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.
• I will understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct and that of my enterprise.
• I will take responsibility for my actions, and I will represent the performance and risks of my enterprise accurately and honestly.
• I will develop both myself and other managers under my supervision so that the profession continues to grow and contribute to the well-being of society.
• I will strive to create sustainable economic, social, and environmental prosperity worldwide.
• I will be accountable to my peers and they will be accountable to me for living by this oath.

This oath I make freely, and upon my honor.

A very laudable affirmation, I’m sure you’ll all agree.  There is nothing wrong with this oath.  It’s reflective of values to which business people should (and mostly do) aspire.  What’s wrong is the nastiness that compelled the Harvard students to make it.

PS. I don’t have an MBA, I am not a Muslim, but I do have Irish antecedents (the surname’s a bit of a giveaway).

HSBC, one of Britain’s leading banks, has published a special report, “The Future of Business” (executive summary .pdf)“. Commissioned from The Future Laboratory, it is based on TFL’s own desk research, a 10-question survey of 500 business leaders, and interviews with 18 experts on business, economics, technology and youth culture.

The executive summary (the only part of the report that I could find online) gives a simple introduction to what’s hot or at least trendy in British business thinking and social evolution. The main themes:

• The rising importance of major new industries - robotics, cybernetics, nanotech, computer gaming, biotech, stem cell research, nutriceuticals, renewable energy.
• Increasing focus on cities rather than regions, including more intensively clustered industries and the emergence of knowledge-based super-cities.
• New business economics linked to philanthropy, high human interaction and greater attention to emotional needs. Increased incidence of micro-multinationals (NZ readers know all about them), “collaborateering” (a new version of “coopertition”?) and crowd-sourcing.
• Key social trends: multi-jobbing or portfolio careers and the blurring of private and business networks and channels.

Without the main report, it’s hard to see what serious data and analysis lie behind these soundbites.  Some of them are plausible, but I’m sceptical of “pop” surveys. They typically lack scientific rigour, are very prone to “flavour of the month” bias in both design and conclusion, and they frequently assume enthusiasts and elite groups are representative of the whole economy and population (they’re not alone in that). Twee jargon and concepts such as Brighton being a super-city of “the alternative economy” only inflame my prejudices.  The report’s worth a read, it gives you a sense of some of what’s changing in Britain, but I won’t be basing any serious business decisions on it.

If you’ve thought much about why your business exists, you’ve probably come up with some worthy statement of business purpose.  Good; but what about making money? I’m not denigrating high ideals of business purpose, but a business that doesn’t make money can’t achieve those ideals.  Some business leaders seem ashamed to explain this fact of life to their staff.  Indeed, in many companies, most staff do not understand how the company makes money or their responsibility and role in that.  That’s madness.  If your people don’t understand your business model and its key metrics, any targets you set may seem capricious or arbitrary.  That can mean wrong operating decisions and a high probability of staff not taking responsibility for their own contribution (or lack of it) to the viability of the business.

Let’s look at a very simple business - hourly-billed services (basic labour or top-end professional services):

• You pay people for 52 weeks of 5 days = 260 days a year.  At 8 hours per day, that’s 2080 hours of costs.
• Let’s allow for, say, 20 days annual leave, 10 days public holidays, 5 days technical training, 2 days on company process training and 3 days off sick.  That’s 40 days your people are not on the job.
• That leaves 220 days or 1760 hours to do the job.
• Assuming good productivity at say 80% (allowing for time on internal non-client stuff, proposals, waiting for new jobs to start, etc.) that’s ~1400 hours of billable work a year.
• Spread over the 220 days, that’s ~6.5 hours billable every day.

I assume that you are in a competitive industry, but your pricing of those 1400 billable hours hopefully  reflects your actual 2080 hour costs (don’t forget training, insurance, office rental, IT costs, sales, management, administration, etc, etc, etc.) plus a reasonable profit. That 6.5 hours a day is the minimum required daily billable time from your staff.  Importantly, if someone has a quiet day, the shortfall has to be made up quickly - there aren’t enough spare hours in the year to catch up a long period of low billable activity. Yet many of the people who work in hourly-billed services (and even some who run them) don’t understand these relentless numbers and their responsibility for achieving them.

Some business leaders don’t share their business metrics with their staff, perhaps because of unnecessary embarrassment about the profit motive or a concern that staff won’t understand. My experience is that people respond well to knowing these things.  I once explained the company’s cost of capital to a group of electricity contractor labourers, several of them barely functionally literate or numerate.  But simple examples in terms that were relevant to them got across the idea of relating risk and return.  That, together with an explanation of depreciation, maintenance and operating costs, saw them volunteering many suggestions for simpler line maintenance vehicles - the most dramatic being a change from their ubiquitous standard $250k line truck with HIAB (onboard hydraulic lifting arm) to more $30k utility vehicles!

Everyone who works for you needs at least a rudimentary understanding of:

• Your business purpose, market offer and modus operandi
• Your business processes
• Your revenue model
• Your cost structure (operating and capital)
• The rationale behind them
• Your people’s individual roles and responsibilities in making the business work.

PS. If your pricing doesn’t cover your costs and a reasonable return on capital, you have to change something (your price, your product, your operations, your promotion, your tough-mindedness in customer negotiations, something) to ensure that it does.  Otherwise you have to somehow get out of the business, or you’ll go broke. As the US auto industry is learning, harsh realities must be faced and overcome.

Every evening when my father came home, the first things he would do were to undress in the kitchen, press his uniform (he was a soldier), hang it up properly, and then clean and polish his boots.  I remember him standing in his boxers and shirt in the kitchen, ironing his trousers, and telling us that a clean and tidy appearance was essential for respect - of oneself and by other people.  It didn’t matter how expensive or cheap your clothes were, if you looked scruffy.  As a manager and as a mentor, I’ve passed on the same advice many times:

1. Keep yourself clean and well-groomed -  no body odour, no bad breath, no dirty nails, no unkempt hair and no rat’s-nest beard.  Use deodorant and breath freshener if you have problems (or been out on the town the night before). Display your designer stubble only on your own time (and even then, only if you have the good looks to carry it off).
2. Keep your clothing clean, repaired and PRESSED. There’s nothing more effective than a pair of shiny, over-used, dirty and unpressed trousers to say “Loser.”
3. Likewise, clean and polish your shoes regularly - and maintain them.  Wearers of down-at-heel, scuffed and cracked shoes - see previous entry.

Changing the explicit or implied dress standard can be a subtle, yet powerful tool in revitalising a moribund organisation.  The first place to start is grooming, and you as the leader set the standard through your own example.

PS As I comment below: I didn’t specify here what the style of dress should be - only the standard of grooming. I’ve moved organisations from suits to smart casual, and grey shoes & cardigans to suits; whatever works for the business change needed. But whatever your personal or organisational style, be clean and tidy if you want to be taken seriously as a leader.

I opined several weeks ago about the absence of women in boardrooms and executive leadership positions, prompted by Tim Harford writing in The Financial Times about a US study of the career tracks of a large group of high-flying MBA graduates:

The outstanding feature of this research is the very detailed data available on this group: their pre-MBA experience, the courses they took and the grades they earned, their career progression afterwards, and the timing of their families… the differences were tiny. Far more important was what happened when children came along. If you look only at promotions and earnings, childless women are all but indistinguishable from men. The moment children arrive on the scene, a big gap opens up.

Paul Walker has alerted me to some corroborating evidence in the UK looking at people in similar occupations, cited in The Telegraph:

Based on the New Earnings Survey panel data, in 1975 there was a pay gap from the age of 18 onwards, but in 2006 no such gap existed until age 34. Why? In 1975 women tended to have children in their 20s and by 2006 it was more common to have them in their 30s. As the average age of child-rearing increased so too did the age at which the pay gap kicked in.

Babies substantially reduce the talent pool just at the time when the true high-flyers are getting their most important work experience equipping them for the highest levels of leadership. Having babies does not preclude women from returning to a high-flying career path, but undoubtedly a substantial portion choose to not do so, even in family-friendly firms. That reduces the available cadre of future leaders with the skills, experience and desire to reach the top, and it skews the gender make-up of that group.

Notwithstanding the current economic downturn, the baby-boomer exodus from the executive suite and boardroom  continues to build, and there is an increasing shortage of people to fill the gaps.  Businesses and other large organisations need to be more creative in how to attract, develop and retain such future talent.

(The “Babes” in the headline refers to children, of course. Or did you think I meant something else?)

I love working with  a good design team - when they’re on a roll, the buzz spreads out to infect everyone around them.  Their chosen field doesn’t seem to matter; information systems, electronics, automotive, office furniture, graphics - good designers all seem to have this ability to excite.  But how do you assemble a great design team? US designer Michael Roller describes the essential personality traits needed.

• The Evangelist - “… The Evangelist focuses on design at the highest level, developing strategies and processes that push the limits of design and business as a whole. Contextual thinking helps him understand how design fits into a larger business plan… he loves to push the boundaries and question assumptions of the products and categories he leads. The Evangelist … may even lead activities that feel counterproductive to more analytical thinkers…“
• The Conductor - “… The Conductor’s analytical mind helps her to ensure that no detail goes unconsidered. Like directing an orchestra, she brings together all the little details into harmony, making sure everything has been figured out and nothing taken for granted. She probably has the highest standards of any designer in the office and ensures that every project is top quality. Often the team doing the first 95% of the work is exhausted or checked out by the end, and the Conductor plays a key role in making the final push to finish the project right. In more corporate roles, she shepherds projects through to production and defends key design details that might otherwise be lost…”
• The Dreamer - “When analytical minds struggle with paradoxical design constraints, the Dreamer cuts through it all to offer a surprisingly fresh attitude. He avoids the technical boundaries of a project in favor of contextual experimentation. A great design team deploys Dreamers to brainstorms where blue sky thinking is necessary, and keeps them involved when the end product must push category boundaries or create brand new ones. The Dreamer becomes easily frustrated when not allowed to exercise fantasies, so don’t expect him to handle detail-oriented work or anything that is heavily constrained by technical requirements. The wild ideas he contributes won’t always become part of the final product, but the Dreamer is essential in setting the stage for innovation as well as offering an entertainment value to novelty-seeking design managers”.
• The Surgeon - “Whether it comes down to aesthetic or ergonomic excellence, so many great pieces of design rely on details… the Surgeon – an analytical thinker who cuts up and dissects design problems to find the best solutions. By definition, she breaks down a product into its components, considering the pieces of design and then reuniting them into a cohesive whole. The Surgeon isn’t always the best decision maker, because she can end up thinking in circles or frustrated by a project’s lack of clarity. When it comes to making sense of complex design problems, a Surgeon is your best bet to make sure nothing falls through the cracks“.
• The Jack of All Trades (Master of None?) - “… the Jack of All Trades might be the most talented person in your office because he can truly do everything. He leads a range of projects, solves tricky problems, and dreams up big ideas. Recent graduates make great ‘Junior Jacks’, because they can contribute on a variety of levels while they gain experience and become more aware of their greatest strengths. Don’t confuse a real Jack with someone whose strengths are not prevalent or ambiguous. In reality, the rare Jack of All Trades might not be essential to have, but will feel essential to any team that has one“.

Roller’s team profiles might easily apply to any team doing new things.  They remind me of the Myers-Briggs profiling I’ve frequently applied in recruitment and executive team assessments. I use profiling to help me and the other person(s) gain insights into their personality.  Profiling should never give you a reason to hire someone, but, along with tests of numeracy, literacy and reasoning, it may give you a reason to not hire them. (I am an ENTJ, which is just as well, given my chosen career path - or is that the other way round).
PS: Michael Roller’s website is well worth a visit, especially if you’re interested in design.

People (and organisations) talk a lot about innovation, but often do so in very narrow terms such as product innovation. This is very limiting.  In reality there are many dimensions for innovation, eg:

• Product
• Service
• Market
• Promotion
• Process
• Information
• People
• Business

Most innovative thinking only explores one or two dimensions, while assuming the others are fixed. There are enormous opportunities when you start innovating in multiple dimensions at once.  Unfortunately, responsibility for innovation in these separate dimensions is usually fragmented between functional silos, with little joined-up thinking.  What new opportunities could open up for you, if you brought these dimensions together?

In March, The Economist published a special report on entrepreneurship. I meant to write about it sooner, but forgot (an increasingly common trait in my behaviour, complains SWMBO).  Anyway, I read the article again this morning while browsing an old copy at my gym during a session on a cycling machine (note references to worthy reading, exercise and multitasking). It lists 5 myths about entrepreneurs:

1. Entrepreneurs are outcasts or social misfits:  In reality, while most entrepreneurs have high independence of spirit, they also have excellent social skills - selling their idea to others, leading a team, and generally building networks of relationships.
2. Entrepreneurs are young:  While some entrepreneurs start young in software and web businesses, Harland Sanders started franchising Kentucky Fried Chicken when he was 65; and Gary Burrell was 52 when he left Allied Signal to help start hi-tech GPS company Garmin. “The Kauffman Foundation examined 652 American-born bosses of technology companies set up in 1995-2005 and found that the average boss was 39 when he or she started. The number of founders over 50 was twice as large as that under 25.“
3. Entrepreneurs rely mainly on venture capital  In reality, most entrepreneurs start out with minimal funding, mortgaging their own homes, raising funds from “friends, family and fools”, and bootstrapping business growth. Angel investors play the next most prominent role in funding growth, while VCs invest in relatively few businesses, and usually in very narrow fields such as high-tech.
4. Entrepreneurs succeed by inventing world-changing new products:  While occasionally someone does invent a better mousetrap completely new product or service, most entrepreneurs succeed through better ways of doing existing things (better mousetraps or new ways of making and selling old-style mousetraps), or simply executing better.
5. Entrepreneurs cannot succeed in big companies:  While many entrepreneurs achieve success by setting up their own operations, there are numerous large organisations who provide supportive environments to grow dozens and even hundreds of entrepreneurs in-house: 3M, GE under Jack Welch, Johnson & Johnson, to name but a few.

The article closes with this further encouragement:

Microsoft, Genentech, Gap and The Limited were all founded during recessions. Hewlett-Packard, Geophysical Service (now Texas Instruments), United Technologies, Polaroid and Revlon started in the Depression. Opinion polls suggest that entrepreneurs see a good as well as a bad side to the recession. In a survey carried out in eight emerging markets last November …, 85% of the entrepreneurs questioned said they had already felt the impact of the crisis and 88% thought that worse was yet to come. But they also predicted, on average, that their businesses would grow by 31% and their workforces by 12% this year. Half of them thought they would be able to hire better people and 39% said there would be less competition.

How many companies employ less than 10 people, less than 20, 50, 100, 200, 500, 1000, 5000, etc? Look at most countries’ industry statistics and you’ll see a common pattern.  There’s a pyramid - lots of micro-businesses, tapering up through mid-sized businesses to a few large businesses.

Putting aside companies used for administrative purposes and the myriad of small businesses which won’t ever grow, why don’t more companies with good market offers grow larger?

• Some market offers have limited appeal.
• Some business models simply won’t scale.
• Sometimes the business is too risky or unpredictable, so funding growth is difficult (especially now that we’ve seen the downside of risky investment!)
• Some owners and managers reach a point where they have achieved what they want - a good income and a solid business.  I can’t criticise them for wanting an easier life enjoying the fruits of their earlier risk-taking and hard-work.

But assuming none of those are a factor, what holds growing companies back?  In two words - executive skills. Many small and mid-size companies can’t grow because their owners/managers don’t have the skills to build and operate a bigger business. There’s a naiveté in business thinking and an unfortunate tendency to under- or over-bureaucratize. I’ve seen many promising businesses plateau for those reasons, plus one other factor. I have a pet theory - the biggest problem is that many previously-successful small and mid-size business leaders simply don’t know how to manage managers.

• 10 people = 1 layer of management = you. You call the shots, you know everything, you direct everything.
• 10-50 people = 2 layers of management = you plus team leaders (say development, sales, fulfilment, business support). You still drive the ship and your team leaders take care of operational detail within your control. The first plateau point - can you manage through team leaders?
• 50-100 = 3 layers of management = you plus a team of specialist and regional managers plus their team leaders.  You’re still the hands-on leader, but you’re likely to be constrained by the skills of your managers and the unsophistication of your business processes.
• 100 -200 people = still 3 layers of management, but with more highly skilled managers and more complex processes. This is often an inescapable plateau point, maybe with several stops as you re-design your business and your team to handle growth.  And you have to achieve unity of purpose and action through intermediaries who have initiative, brains and minds of their own (that’s why they’re in the role).
• 200-500 people =  4 layers of management, with your executive team capable of developing and driving their divisions strategically and operationally, and indeed of doing your job.  Yout businesses model is working, but the business is much more complex and the challenge of achieving unity of purpose and action has gone up another order of magnitude,
• After that it starts to get easier - the issues are the same, but you’ve learnt how to deal with them.  You’ll continue to be challenged by competitive and economic pressures, multiple lines of business, multinational operations and so on, but you’ll know how to manage managers.

That 200 person barrier seems to be especially challenging.  Many companies do well until they reach that scale, but then seem to bounce around at 150-250, never quite breaking out, falling back in tough times, then growing again only to repeat the cycle. Given all the complexity, risk and frustrations of running a bigger business, it’s no wonder many businesses owners decide to stay where they are.

I’ve been writing En Avant for 2 years and, by coincidence, yesterday someone asked me what was my top post on this blog.  (I was being interviewed as part of a PhD research project on business blogs; more on that next week).  Unfortunately, it’s not something I can take credit for. I got it from Rowan Simpson, who got it from Scott Hanselman, who got it from someone unknown. Every 6 months or so, web recommendation site StumbleUpon rediscovers my version and I get an enormous spike in readership.

Anyway, the most read post on En Avant is (drum roll please):

The sweet spot - what more needs to be said?

Posted by Jim in Other stuff at August 21st, 2007

Cheers, Scott and Rowan.