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11 posts from February 2019

The new function of hierarchy

Be careful that your 'self-starters' don't start off in different directions. If we have competent, empathetic leaders, we don't need too many of them, but we do need a few. 

diginomica: Flat hierarchies--progressive organizational thinking or digital's 'flat earth' theory? 2019-Feb-22 by Cath Everett

Robert Ordever, Managing Director of culture consultancy OC Tanner Europe, is not convinced that an apparent desire to remove hierarchies from the business is actually about people wanting to eradicate leaders at all. Instead he believes it is more about a certain tiredness of what they have become. He explains:

Much about leadership has evolved to where it’s unhealthy, so control-and-command, lack of respect and transparency etc. Leadership has got itself a bad name and what people crave is a better form of it – and if they’re not happy with what they’ve got, it’s human nature to go to the extreme when thinking about alternatives.

For him, in both the workplace and the animal kingdom, there will always be natural leaders and followers. But a key aim across businesses of all stripes at the moment is to find expressions of leadership that are not based on title and privilege or on traditional characteristics, such as being ‘strong’, all-knowing and having to take tough decisions. Ordever explains:

The new style of leadership is about building a great team by bringing talent together, empowering them, enabling them, helping them grow and then getting out of the way. So it’s about involving people in decision-making, respecting the individual, enabling innovation and constantly learning. But even in a hierarchy-free organisation, there will always be strong leaders that come to the surface because without leaders, it’s difficult to keep people moving in the same direction. 


Taking the emotional rewards out of loyalty

Loyalty programs developed to reward customer behavior. The idea of a basing rewards on a paid subscription was not invented by Amazon, but many people think Amazon has now 'redefined loyalty.' What they have done is make loyalty a financial relationship. Now we have to evaluate the cost-benefit ratio before we sign up. But more disheartening now, we, the consumers, pay upfront then feel pressured to spend more in order to maximize our reward. That's not customer love. I resent people calling Amazon Prime a loyalty program. 

Loyalty360: The Scoop on Premium Customer Loyalty Programs, 2019-Feb-11 by Duy Nguyen

More retailers are providing membership plans and betting that you’ll pay a fee for the privilege of shopping with them. For example, Amazon charges $119 per year for Amazon Prime and has more than 100 million members who make the e-commerce giant their first stop when they go shopping. In exchange for that loyalty, Prime members get lots of benefits, including same-day and free one-day delivery on millions of items, free streaming movies and music, and discounts on groceries at Whole Foods Market. At least a dozen other chain retailers now offer membership plans, and that’s likely to grow.

“We anticipate more paid loyalty programs will launch in the next few years, including programs at grocery stores and gas stations,” says Scott Robinson, Vice President of Design and Strategy at Bond Brand Loyalty, a marketing and consulting firm.

As more membership plans become available, consumers need to carefully weigh the pros and cons. In addition to the perks these plans offer, the cost of membership and the risk that you’ll turn into a spendthrift could outweigh any benefits.... 

Among the membership plans that may now be vying for your business are Bed Bath & Beyond’s Beyond Plus, which you can join for $29 per year. For that, you get 20 percent off every time you make a purchase online or at the store. You also get free shipping. Others, including Sephora,, Restoration Hardware, and Wayfair, have rolled out or are testing membership programs, charging fees up to $100 per year.

When you sign up, these retailers offer online and in-store discounts, deals on shipping, dedicated customer service, and financing deals with lower interest rates. Depending on the retailer, membership comes with other perks, too, such as access to exclusive events, discounts on furniture-assembly help (Wayfair) or even free fitness classes (Lululemon).

To help figure out whether a membership will be worth the cost, ask yourself these questions.

  • Will the discounts really save you money?

At $15 per year, the PowerUp Pro membership at GameStop, for example, will get you 10 percent off all pre-owned games, so you’d have to buy about six pre-owned games in a year to offset that cost. A $100 membership to Restoration Hardware gets you 25 percent off any full-priced item, an amount you could likely offset with just one piece of furniture....

  • Will a membership cause you to spend more than you should?

Amazon Prime customers spend an average of $1,400 per year on the site, compared with just $600 spent on Amazon by non-Prime members, according to CIRP....

    • Will you use the extra perks?

    • Do you know how the retailer might use your data?

    • Is it simple to end a membership?


Replace walls and safety nets with bridges and launch pads, says John Hagel

Recently John Hagel, Co-Chairman of the Deloitte Center for Edge Innovation, recommended we stop talking about walls and safety nets, and instead focus on bridges and launch pads. So here goes!

Here are some places to learn more about bridges: 

U.S. State Department's web page on U.S. Relations with Mexico

University of Texas at El Paso Department of Sociology and Anthropology (border studies)

Border Cantos art exhibition by Richard Misrach and Guillermo Galindo at the Crystal Bridges Museum of American Art (site from closed exhibit)

Learn about different kinds of Launch Pads: 

Event Tech Live's Launchpad platform for start-ups and new technology

LaunchPad teaching platform for child development

LaunchPad Houston self-development program

LaunchPad residential program for addiction recovery

Edge Perspectives: Images Matter - Shaping Our Current Social and Political Discourse, 2019-Feb-11 by John Hagel

If we hold a fixed mindset about ourselves, we’re likely to hold a fixed mindset about society and the resources that are available to it. On the other hand, if we hold a growth mindset, we’re more likely to see the opportunity to create more and more impact and value as we cultivate the resources available to us and find ways to expand them.... 

Here’s where images matter. Walls and safety nets focus on the threat and the need to protect what we already have. What’s the alternative? I suggested above that perhaps we should shift our attention to bridges and launch pads.

What do these images suggest? Bridges are about connecting areas that were previously separated – they’re about bringing people together. The underlying belief in building bridges is that we’ll benefit from connecting with others that we couldn’t previously reach. They focus on the opportunity created by connecting people.... 

The mindset when confronting adversity should be how to use it as a growth opportunity to accomplish even more, rather than simply going back to where one was. Imagine what we could accomplish if our programs and initiatives to help people in trouble were designed to help them get to even higher ground rather than just returning them to where they were.

Another benefit of the launch pad image is that it doesn’t just wait for people to fall and then catch them. Launch pads could be for everyone, especially the marginalized people in our population who never had the opportunity to begin with. They haven’t fallen – they never had the opportunity to get up in the first place. What would happen if we were committed to create launchpads for everyone? 


Sustainable scaling: the growth pattern for the rest of us

The idea that profits fund growth did not used to be so unusual. At its heart, sustainable growth in based on a deep understanding of customers and how to help them succeed. Successful customers invest in the suppliers who got them there. 

Quartz: The fundamental problem with Silicon Valley’s favorite growth strategy, 2019-Feb-5 by Tim O'Reilly’s search for profit-seeking rather than exit-seeking companies has also led to a far more diverse venture portfolio, with more than half of the companies led by women and 20% by people of color. (This is in stark contrast to traditional venture capital, where 98% of venture dollars go to men.) Many are from outside the Bay Area or other traditional venture hotbeds.The 2019 tour, in which Roberts looks for startups to join the program, hosts stops in Kansas City, Boise, Detroit, Denver, and Salt Lake City, as well as the obligatory San Francisco, Seattle, New York, and Boston.

Where conventional startup wisdom would suggest that aiming for profits, not rounds of funding, will lead to plodding growth, many of our companies are growing just as fast as those from the early-stage portfolios in our previous OATV funds.

Nice Healthcare is a good example. Its founder, Thompson Aderinkomi, had been down the traditional blitzscaling path with his prior venture, and wanted to take a decidedly different approach to funding and scaling his new business. Seven months post-investment by, Nice was able to achieve 400% revenue growth, over $1 million in annual recurring revenue, and is now profitable. All while being run by a black founder in Minneapolis. Now that’s a real unicorn! Some of the other fast-growing companies in the Indie.VC portfolio include The Shade Room, Fohr, Storq, re:3d, and Chopshop.

OATV has invested in its share of companies that have gone on to raise massive amounts of capital—Foursquare, Planet, Fastly, Acquia, Signal Sciences, Figma, and Devoted Health for example—but we’ve also funded companies that were geared toward steady growth, profitability, and positive cash flow from operations, like Instructables, SeeClickFix, PeerJ, and OpenSignal. In our earlier funds, though, we were trying to shoehorn these companies into a traditional venture model when what we really needed was a new approach to financing. So many VCs throw companies like these away when they discover they aren’t going to hit the hockey stick. But Roberts kept working on the problem, and now his approach to venture capital is turning into a movement. 


Short-term goals keep killing long-term goals

"Opportunity costs are invisible," notes Rory Sutherland. That phrase is going to get taped to the top of my computer screen. The audience we want to reach with our startup, Creative Houston, has to be reached before it arrives online. We are going to be forced to reach out and form partnerships with out-of-town schools and cities and companies. And we need to figure out a way to trade benefits instead of purchasing visibility with cash. I have been very inspired by Tim O'Reilly's essay on "sustainable scalability." I hope he's putting out a book about it. 

Campaign: Advertising in in crisis, but it's not because it doesn't work, 2019-Jan-24 by Rory Sutherland

Online visitors to the site convert at about 0.3%. People who telephone convert at 33%. Maybe the website should have a phone number on every page."

Now obviously I am not claiming that the telephone is 100 times more effective than the web; prospects who call are warmer than those who browse. But it does raise a serious question – perhaps the most efficient way to sell travel is not the most effective way to sell travel? What, in short, is the opportunity cost of being efficient?

Nobody ever asks this question. Opportunity costs are invisible; short-term savings earn you a bonus. That’s the efficiency bubble at work again....

Why try to identify your target audience in advance when the right creative gets them to identify themselves? In mass media, the targeting takes place in the mind. And to suggest that the ad is wasteful because lots of people see it is dumb. Efficient advertising identifies potential customers; effective advertising can create them. 


Tenant loyalty and experience apps are good news

Office real estate is roiling, and keeping office workers happy and excited about their work place is becoming increasingly important. Good news for companies that benefit from creative energy at the workplace. 

NY Times: Seeking an Edge, U.S. Landlords Turn to Tenant Experience Apps, 2019-Feb-8 by Reuters

The software can create a brand for property owners, drive loyalty among tenants and ultimately lead them to renew their office leases, said McMillan, who moved to New York from Australia last year to supervise the firm's U.S. expansion.


How to inspire loyalty from service professionals

Very little is written about how customers can improve their own experience and inspire loyalty. In research handled by Jing Zhou, a professor at Rice University's graduate business school, evidence showed that customers should not only encourage service professionals to make recommendations, but to take those recommendations seriously, and complement the service person for their input. In the end, service improves as well as customer satisfaction. 

We customers can influence the quality of service we receive by sharing control and treating everyone who serves us, from cashier to hair stylist, as an expert in their own job. 

Rice Business Wisdom: What Happens When The Person Providing Your Service Gets Inspired? 2017-Apr-17, based on Jing Zhou

When the hairdresser suggests a little purple highlight on the bangs, and you listen attentively and take her advice, you may actually get a better haircut. Though few people view a salon chair as the seat of power, researchers are learning that client decisions can make a big difference in employee performance. When customers give workers more power, the workers perform better. So do their organizations.

...A recent paper coauthored by Jing Zhou, a management professor at the business school, suggests that when customers listen to employees, respect them and allow them the freedom to do their jobs, the creativity of those providing the service leaps—and so does the quality of that service.... 

Zhou’s research shows that customers and service personnel can be co-creators. It’s a departure from the hoary idea that formal leaders in an organizational hierarchy are the standard-bearers of the quality of customer service. In fact, Zhou maintains, customer service ought to begin not with management, but with the customer herself.