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8 posts from March 2019

How loyalty can hold back innovation

I'm an innovator first, and a loyalist second. For the past few years I've been studying loyalty and wondering why it's such an under-esteemed trait among innovators. Now the work of Charles Duhhig and Amy Edmondson have made it clear to me. 

Loyal behavior tends to depress the natural friction required in making changes. This realization has brought it home to me that I see loyalty in a different way than most people. For me, loyalty is about a commitment to support someone or some institution, but not about following. I can imagine trusting someone enough to do something their way, especially if I didn't have enough experience and information to disagree. But I would still question them. On the other hand, without some loyalty in my life, all the choices and opportunities overwhelm me and create chaos. Loyalty allows me to make some decisions less often and have more continuity in my life. 

Amy Edmondson, now a professor of leadership at Harvard Business School, was a Harvard PhD student in 1991, studying health workers in hospitals to understand the interplay between teamwork and medical outcomes. She found that the more highly prized loyalty was among the team members, the less likely they were to catch each others' errors. Since then she has been studying how great teams drive innovation and developed the concept of 'psychological safety' to explain how they can work together with confidence and still critique each others' ideas.  She's done two short TED talks, has a new book called The Fearless Organization, and was recently interviewed here

I was introduced to this idea by the second chapter in Charles Duhhig's book Smarter Better Faster, and I wished I had known about it many teams ago. 

How to turn a group of strangers into a team, TED talk on October 2017 (13 minutes) by Amy Edmondson: 

Abraham Lincoln said once, "I don't like that man very much. I must get to know him better." Think about that -- I don't like him, that means I don't know him well enough. It's extraordinary. This is the mindset, I have to say, this is the mindset you need for effective teaming. In our silos, we can get things done. But when we step back and reach out and reach across, miracles can happen. Miners can be rescued, patients can be saved, beautiful films can be created.

To get there, I think there's no better advice than this: look to your left, look to your right. How quickly can you find the unique talents, skills and hopes of your neighbor, and how quickly, in turn, can you convey what you bring? Because for us to team up to build the future we know we can create that none of us can do alone, that's the mindset we need.

Building a psychologically safe workspace at TEDxHGSE on May 4, 2014, by Amy Edmondson

Smarter Faster Better: "Teams -- Psychological Safety at Google and Saturday Night Live," 2016-Mar-8 by Charles Duhigg

When Edmondson started working on her dissertation, she visited technology companies and factory floors, and asked people about the unwritten rules that shaped how their teammates behaved. “People would say things like, ‘This is one of the best teams I’ve ever been on, because I don’t have to wear a work face here,’ or ‘We aren’t afraid to share crazy ideas,’ ” Edmondson told me. On those teams, norms of enthusiasm and support had taken hold and everyone felt empowered to voice opinions and take risks. “And other teams would tell me, ‘My group is really dedicated to each other and so I try not to go outside my department without checking with my supervisor first’ or ‘We’re all in this together, so I don’t like to bring up an idea unless I know it will work.’ ” Within those teams, a norm of loyalty held sway—and it undermined people’s willingness to make suggestions or take chances.

Both enthusiasm and loyalty are admirable norms. It wasn’t clear to managers that they would have such different impacts on people’s behaviors. And yet they did. In that setting, enthusiastic norms made teams better. Loyalty norms made them less effective. “Managers never intend to create unhealthy norms,” Edmondson said. “Sometimes, though, they make choices that seem logical, like encouraging people to flesh out their ideas before presenting them, that ultimately undermine a team’s ability to work together.” 

As her research continued, Edmondson found a handful of good norms that seemed to be consistently associated with higher productivity. On the best teams, for instance, leaders encouraged people to speak up; teammates felt like they could expose their vulnerabilities to one another; people said they could suggest ideas without fear of retribution; the culture discouraged people from making harsh judgments. As Edmondson’s list of good norms grew, she began to notice that everything shared a common attribute: They were all behaviors that created a sense of togetherness while also encouraging people to take a chance.

“We call it ‘psychological safety,’ ” she said. Psychological safety is a “shared belief, held by members of a team, that the group is a safe place for taking risks.” It is “a sense of confidence that the team will not embarrass, reject, or punish someone for speaking up,” Edmondson wrote in a 1999 paper. “It describes a team climate characterized by interpersonal trust and mutual respect in which people are comfortable being themselves." 


How can we be fair if we don't understand the role of luck?

I've never been a poker player, but I recently started using a computer game that frequently deals me new playing pieces on a supposedly random basis. Playing that game has made me very sensitive to the fact that, no matter my skill level, I can't go very far in the game unless the right pieces appear at the right time. 

In life, persistence will pay off provided that bad luck doesn't disable or derail us. Unfortunately it often does, and then we are often further punished by society. If we are committed to being fair to those around us, then we have to always be conscious of the random events in life that bat people around. 

Vox: The radical moral implications of luck in human life, 2019-Mar-5 by David Roberts

These recent controversies reminded me of the fuss around a book that came out a few years ago: Success and Luck: Good Fortune and the Myth of Meritocracy, by economist Robert Frank. (Vox’s Sean Illing interviewed Frank last year.) It argued that luck plays a large role in every human success and failure, which ought to be a rather banal and uncontroversial point, but the reaction of many commentators was gobsmacked outrage. On Fox Business, Stuart Varney sputtered at Frank: “Do you know how insulting that was, when I read that?”

It’s not difficult to see why many people take offense when reminded of their luck, especially those who have received the most. Allowing for luck can dent our self-conception. It can diminish our sense of control. It opens up all kinds of uncomfortable questions about obligations to other, less fortunate people.

Nonetheless, this is a battle that cannot be bypassed. There can be no ceasefire. Individually, coming to terms with luck is the secular equivalent of religious awakening, the first step in building any coherent universalist moral perspective. Socially, acknowledging the role of luck lays a moral foundation for humane economic, housing, and carceral [incarceration] policy.

Building a more compassionate society means reminding ourselves of luck, and of the gratitude and obligations it entails, against inevitable resistance.


Building our companies around people vs. data

As we build our companies from the ground up, different processes and IT systems are installed to handle different tasks. It's becoming increasingly clear that customers will not tolerate these silos. If our customer marketing system is not integrated with our customer service system, we will drive customers away. They now expect us to recognize every way they've ever intersected with our company, and change our behavior accordingly. 

In order to have a good and growing base of customers who appreciate our company, we have to create a single IT system to take care of these people. That's why the author of the article below works for Oracle. I'm not sure they can make systems affordable to startups, though. 

VentureBeat: Your company’s secret weapon is its post-sale data, 2019-Mar-17 by Shawn Myers

Today, companies are attempting to harness the power of data to predict their customers’ desires with new precision. In fact, research shows that companies plan to nearly triple spending on analytics within the next three years.

While I applaud this, the reality is that most organizations lack the data expertise and technology to make it happen. Although plenty of marketers are eager to use data to improve customer experience, many describe their current technology as “fragmented” and “inconsistent.” Throwing more money at the problem won’t change anything unless marketers become more adept at understanding the data they collect.

That was certainly the case for the food delivery app. Over the weeks that followed my delivery disaster, the gaps in their use of the data they have on me became glaringly clear. I received relentless emails asking me to rate and review my experience — even though I had already provided negative feedback to customer service. I had clearly been added to a list of past customers but not to a list of people with customer service complaints.


How to build loyalty by showing customers and employees to one another

According to Ryan Buell, operational transparency is "the deliberate design of windows into and out of the organization’s operations to help customers and employees alike understand and appreciate the value being created." 

Every startup should be considering how to bake transparency into their business. If you facing the challenges, do read Buell's article. He covers the dangers as well as the benefits. 

Harvard Business Review: Operational Transparency , 2019-Mar/Apr by Ryan W. Buell

Customers are, as a researcher in the 1960s boldly called them, “environmental disturbances.” As the argument goes, separating customers from internal processes through physical distance, time, or the introduction of technology enables companies to perform more efficiently and, in turn, create more value for consumers. But my research shows that the pendulum can swing too far. When customers are cordoned off from a company’s operation, they are less likely to fully understand and appreciate the value being created. As a result, they are less satisfied, less willing to pay, less trusting, and less loyal to the company over time. Employees also suffer when they are cut off from the business’s front lines, as they lose the motivation and enjoyment that comes from making a difference in people’s lives and are denied the opportunities to learn and improve that arise from interaction with customers.... 

In contexts in which designing a face-to-face connection between employees and customers is impractical, technology can be used to successfully facilitate operational transparency. In 2013, Domino’s piloted a feature called Domino’s Live in one of its Salt Lake City locations, installing web cameras in the kitchen. Building on its Pizza Tracker app, customers ordering pizzas in Salt Lake could log on and watch a live feed of their pizzas being made. As it turned out, tens of thousands of people from around the country logged on to watch other people’s pizzas get made. Recognizing the potential, Domino’s promoted Domino’s Live on Facebook, and anytime someone clicked the “Like” button, a “Like Light” in the kitchen went on. This gave the pizza makers a signal that someone looking on appreciated the work they were doing. Although Domino’s discontinued Domino’s Live, the company added a feature to Pizza Tracker that enables customers to send notes of encouragement through the app to the people who are preparing their pizzas—prespecified messages such as “I don’t know what I’d do without you” and “You are my pizza-making heroes.”



Can 'gated offers' protect consumers' data?

A company called SheerID is promoting this 'respectful' method of collecting personal information. This system certainly protects companies from abuse of their offers, but it remains to be seen if it can protect consumers. Nice promise, we'll see. 

Diginomica: Gated offers--a different approach to personalization that gives consumers control, 2019-Mar-4 by Barb Mosher Zinck

A gated offer works like this:

  • A brand targets a specific segment of its market, such as small business, military, teachers and so on with a special offer across their channels.
  • Someone goes to the offer and has to verify they are a part of that segment by providing information about themselves.
  • The visitor is verified and gets the offer.

A couple of examples: Spotify offers a 50% discount to students, T-mobile provides discounts for members of the military and their families, and Target offers a discount for teachers.... 

According to SheerID, gated offers see higher conversion rates. Schneider said a brand could see three times the conversion rate compared to other tactics, and get a return on investment of 18-1 and 20-1.

A gated offer also works well with privacy regulations because it requires explicit consent. Consumers self-identify and proactively choose to provide their information in exchange for a good deal. Another benefit is that consumers who are part of a group (tribe) are more likely to share the offer with others in their community, bringing even more customers to the brand.


Look at ways to influence the buying process instead of the buyer

Gartner has found three steps universal in the business buying process. They usually occur in the following order, but not always. 

  • Interest is aroused by discussions with colleagues
  • Research is done using independent experts
  • Vendor information is gathered. 

Advertising doesn't make much of a difference unless it's newsworthy and spurs discussion. 

Gartner Blog Network: The First Three Steps in B2B Buying, 2019-Feb-26 by Hank Barnes

As a vendor, you can not control the buying process. Even if you generate the initial interest, the buying team will be doing lots of other activities, independent of you. But there are things you can do:

  1. Provide ways to facilitate sharing information among the buying team. And look at your content from the perspective of the ease of sharing (and really conveying the information) across the buying team.
  2. Help teams discover influencers that follow your space. And encourage them to seek them out (and yes, you should guide them to independent influencers that have a favorable view of your company and your products/services–when the customer situation fits.
  3. Finally, provide a mix of ways for prospects to discover you to kick off their process. Provide compelling insights that get them to think about things in new ways. Then encourage them to validate with an influencer or discuss internally. 


Learning how to leverage status-seeking behavior for Creative Houston

Thanks to Eugene Wei for explaining it all so that I finally understand Instagram, among many other things. 

As I develop the business plan for Creative Houston, I have to try and anticipate how Houstonians will react to this platform that is about them, but not targeted to them. Creative Houston is targeted to creative professionals who do NOT occupy or know the Houston area well. Yet, if it's successful, many Houstonians will know and possibly revile Creative Houston. Well, most Houstonians will probably appreciate it even though I don't have a goal of being popular with them. Certainly not all of them. 

I've learned many things by following, a forum where Houstonians are often representing Houston to out-of-towners. This Reddit community includes a very diverse array of people, many of whom are not 'creative professionals.' Many of these Redditors seek status by ridiculing Houston, and they claim they want to drive people away. Whew. Loyalty can cause people to do weird things. 

Anyway, by reading through Eugene Wei's very long and excellent review of status-seeking behavior online, I've gained a much better understanding of how Creative Houston will impact status-seeking Houstonians. We will be highlighting artists, entrepreneurs, and city resources that will make Houston appealing as a destination for creative professionals. We will have curated, community-driven, and commercial components to the business. And we will no doubt earn a few trolls. But I hope that if we structure the business properly, we can help more Houstonians to notoriety, power, and success as creatives. 

Remains of the Day blog: Status as a Service, 2019-Feb-26 by Eugene Wei

IMDb and Wikipedia are two companies which built up entire valuable databases almost entirely by building mechanisms to harness the equal mix of status-seeking and altruism of domain experts. As with Reddit, accumulating a certain amount of reputation on these services unlocked additional abilities, and both companies built massive databases of information with very low production and editorial costs.

You can think of social capital accumulation incentives like these as ways to transform the potential energy of status into whatever form of kinetic energy your venture needs.