Friday, February 26, 2010

All That Jazz

Back in January I wrote a post about American exceptionalism, the thesis offered by generations of American historians that their country was put on earth as a beacon to other nations, responsible for perfecting Western civilization.  It was summarized nicely by President Polk’s observation that America’s history lay ahead of it.    

Few American historians still subscribe to the theory of exceptionalism, and perhaps fewer Americans (openly, at least, kind of like not admitting to the Bee Gees songs hidden on our iPods).  In any event, my point wasn’t to try to prove or disprove the thesis.  I just wondered aloud--recognizing the incredible power generated by thinking you are exceptional--what the loss might mean to America in the future. 

It’s almost impossible, after all, to recover your mojo once you lose it.

My post on exceptionalism probably generated more email than any other I have written (except maybe for Running with Haruki Murakami) and it got me thinking. . .if Americans aren’t capital “E” Exceptional, are they at least small “e” exceptional in any way?

I remembered from the Ken Burns’ Jazz documentary, Gerald Early saying, “I think there are only three things America will be known for 2,000 years from now when they study this civilization: the Constitution, jazz music, and baseball.”  I was pondering what these three things might have in common when all of a sudden I stumbled into a bunch of recent Tea Party talk about the Tenth Amendment.  That’s the amendment that grants any power to the states (or the people) that is not specifically granted the federal government.  In other words, it’s a system that, by default, gives the greatest authority and responsibility to the smallest unit possible.

It’s what we mean in business when we sing the joys of decentralization.

If you’ve stuck with me this far, then, I owe you my theory about American “small e” exceptionalism:

We are a Tenth Amendment People.

Said another way, our national “core competency” is creating governance, systems, processes and art that optimize individual contributions without tearing the fabric of the whole.

(Of course, we do tear the fabric of the whole sometimes, which is probably why we're not big “E” Exceptional.) 

All of which brings me to a book by Wynton Marsalis and Geoffrey Ward (Ken Burns’ writing buddy) called Moving to Higher Ground: How Jazz Can Change Your Life.  I picked this Kindle book up on a lark, as part of some other research I was doing, and really enjoyed it.  It’s another kind of manifesto, like Harakami’s book about running, and Jaron Lanier’s book about the Web.  In all three cases, you don’t have to run, surf the Web or love jazz to appreciate the writing, though chances are you’ll want to do all three by the time you’re through reading.

More to my point, it seems to describe the music of a Tenth Amendment People.

Here are a handful of interesting quotes from Marsalis (designed to make you want to buy and read the book):
In this book I hope to deliver the positive message of America’s greatest music: how great musicians demonstrate a mutual respect and trust on the bandstand that can alter your outlook on the world and enrich every aspect of your life—from individual creativity and personal relationships to the way you conduct business and understand what it means to be a global citizen in the most modern sense.
The most prized possession in this music is your own unique sound.  Through sound, jazz leads you to the core of yourself and says “Express that.”  Through jazz we learn that people are never all one way. . .Jazz also reminds you that you can work things out with other people.  It’s hard, but it can be done.  When a group of people try to invent something together, there’s bound to be a lot of conflict.  Jazz urges you to accept the decisions of others.  Sometimes you lead, sometimes you follow—but you can’t give up, no matter what.  It is the art of negotiating change with style.  The aim of every performance is to make something out of whatever happens—to make something together and be together.
Jazz is the art of timing.  It teaches you when.  When to start, when to wait, when to step it up, and when to take your time—indispensable tools for making someone else happy.
The musician’s relationship to time can be of ultimate assistance to you in: 1) adjusting to changes without losing your equilibrium; 2) mastering moments of crisis with clear thinking; 3) living in the moment and accepting reality instead of tying to force everyone to do things your way; 4) concentrating on a collective goal even when your conception of the collective doesn’t dominate; 5) knowing how and when to expend your individual energy.  Being in time also gives you the confidence to take chances.
Jazz musicians have to listen and communicate.  You have absolutely no idea what the other musicians are going to improvise, so you’re forced to listen.
Swing demands three things.  It requires extreme coordination, because it is a dance with other people who are inventing steps as they go.  It requires intelligent decision-making, because what’s best for you is not necessarily best for the group or for the moment.  And it requires good intentions, because you have to trust that you and the other musicians are equally interested in making great music.
Sweets Edison told me the blues was the saddest sound you ever heard.  Horace Silver said it was the most joyous sound.  It’s perfectly designed to give form to what we feel at any time. . .The amen cadence in Christian church music—the blues.
You don’t have to earn your creativity—you’re born with it.  All you have to do is tend to it and unleash it.  Every human being on earth is given the gift to create, and that creativity manifests itself in trillions of ways.  There are no laws or rules.  Creativity is unruly.  Like a dream—you can’t control what comes to you.  You only control what portion you choose to tell.
Jazz—the music—is the collective aspirations of a group of musicians, shaped, given logic, and organized under the extreme pressure of time.  When we all work together, the music swings, and when we don’t, it doesn’t.  That’s why, although the perception of jazz is that we all get along, in actuality, we’re all always trying to get along.   It is the integrity of that process that determines the quality of the swing.

In other words, jazz emphasizes personal creativity and responsibility to a collective.  It believes in our ability to make reasonable choices, takes a chance on our decision-making skills, and emphasizes talent and the size of our hearts.  In fact, jazz encourages us to be as creative as we can be without destroying the fabric of the whole. 

Kind of like the Tenth Amendment intended.

By the way, here’s some of the exceptional music that was playing on my Ipod while I read Moving to Higher Ground:

West End Blues and Gut Bucket Blues, Louis Armstrong
Over the Rainbow, Keith Jarrett
Rosetta and Pocketful of Blues, John Hicks
Time After Time, Cedar Walton

I know, I know.  Exceptional but a little sappy.

C Jam Blues, Oscar Peterson
But Not For Me, Ahmad Jamal
New Orleans Blues, Marcus Roberts
Lonely Days, the Bee Gees

Ooops.

Only kidding about that last one. 

Maybe. :)

Wednesday, February 17, 2010

Strategy Distilled: The Best Chapters

Walter Kiechel III’s article, “Seven Chapters of Strategic Wisdom,” in the recent issue of strategy + business magazine notes that there were 74,000 books on business strategy on Amazon.com in October 2009, most of which would “work better as articles of, say, 3,000 words,” and all of which are designed to get managers to create strategy that is punchy enough that “an employee woken by flashlight at 2 a.m. and quizzed on the subject should be able to spell it out in a minute or two.”

74,000 books, 300 pages+ per book to teach us a process that is all about distillation, focus and impact.  Kiechel asks, “Why should anyone require 400 pages to explain what a strategy is or how to create one?” 

His solution is to take not the seven best books, but the seven best chapters from books about strategy and summarize their key teachings.

Here's a quick summary:

Chapter 1, from Alfred D. Chandler Jr.’s Strategy and Structure: Chapters in the History of the American Industrial Enterprise (1961).  Besides being the first to really define a working strategy (long-term, responsive to the environment, set by leaders), Chandler’s key teaching was:  Structure follows strategy.  Companies need to reorganize themselves to meet their strategic goals, not vice versa.  

Chapter 2, from Kenneth R. Andrews’ The Concept of Corporate Strategy (1971).  Key teaching: Strategy defines what business the company is in.   It indicates the company’s choice of markets, products, channels, financing and profit objectives.

Chapter 3, from Michael E. Porter’s Competitive Strategy: Techniques for Analyzing Industries and Competitors (1980).  Key teaching:  The main point of strategy is to achieve competitive advantage, and there are three ways to do this: overall cost leadership, differentiation and focus. This is what would be called a “positionist” view, followed closely by:

Chapter 4, from Peters’ and Waterman’s In Search of Excellence (1982).  Key teaching:  Strategy grows organically.  In other words, strategy is less about position than human energy and execution; you set a course, run into reality, make corrections and execute like heck.  (This is the "emergent" school vs. the "positionist" approach.)

Chapter 5, from Richard N. Foster’s Innovation: The Attacker’s Advantage (1986).  Key teaching: Behind many successful strategies is an exercise in pattern recognition.  Foster described the “S-curve” of emerging technology and posits that curves usually come in succession.  Kiechel says “Every strategist should have in her or his desk drawer a copy of Foster’s chart.”

Chapter 6, from Andy Grove’s Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company (1996).  Key teaching: Attack yourself.  Migrate to a new business, even if it means blowing up the old business.  Understand your competitive advantage and recognize when it is no more.

And finally, chapter 7, from Henry Mintzberg’s The Rise and Fall of Strategic Planning (1994).  Key teaching:  Don’t bother writing a plan.  Forecasts are nonsense, strategy cannot be isolated from the field, and detached, analytic processes cannot possibly capture a living, breathing strategy.

Mintzberg is an interesting read with very good warnings about the limits of planning, but--I don’t think so.  The act of planning is at least as important as the plan itself.  Mintzberg gets a footnote (in my edition), but not a chapter.

Kiechel finishes up his article with a discussion of some of the new trends in planning—making people and their talents a basis for strategy, incorporating network analysis (see here), and making strategy adaptive.

All good stuff but: No Drucker?  

Saturday, February 13, 2010

All Praise the Beloved Sausage (The First Miracle in New Orleans)

On December 20, 1803 the French tricolor was lowered and the Stars and Stripes raised in New Orleans, marking the official transfer of the Louisiana Territory from France to America. 

The Louisiana Purchase, a 909,000-square-mile region that doubled the size of the United States, cost just $15M, making it arguably the greatest real estate deal in history.  Conceived in early 1803 by Jefferson, the deal was signed in April and approved in October.

Whoosh.  Done.  Easy.  Why can’t government act like that today?  Healthcare.  Taxes.  The Deficit.  Global warming.  Global cooling.  TARP funds.  Bailouts.  Innovation.  Space exporation.  Just give us a little of that ol’ Louisiana Purchase magic.  See it.  Do it. Voila--good for the whole country!

But wait.  There’s an old saying (back when people used to eat luncheon meat) that advised against watching the sausage being made.  So, at the risk of a little blood and guts, here’s some sausage-making worth remembering.

The French had been ceded the Louisiana Territory by the Spanish in 1801, causing great heartburn in Washington, not to mention with residents of New Orleans who were Spanish one day, French the next, and still trying to deal with the strange “Kaintuck” rivermen that had begun arriving en masse aboard their flatboats over the prior decade. 

Suddenly, Jefferson knew, a powerful, belligerent nation could choke-off America’s access to the Gulf. 

Meanwhile, Napoleon was dancing with his own demons, reconsidering the cost of a strategic presence in the Gulf after having lost thousands of troops in Santo Domingo to slave revolts and disease.

When Jefferson sent Monroe and Livingston to Paris to gently inquire if the Louisiana Territory, or at least New Orleans, might one day be for sale, Monroe was stunned by the French response.  Not only were they interested in selling the city, they wanted to be rid of the whole très désagréable mess--at a rock-bottom price.
 
Monroe and his party were flabbergasted and, while they had no legal authority, accepted and signed a cession document anyway.  In other words, the deal was too good to worry about anything so pedestrian as the law.

The French were operating on a similar concept, as their sale of the Louisiana Territory violated the 1800 Treaty of San Ildefonso; neither Great Britain nor Spain would recognize the legality of the transfer.

Not to worry.  What’s a little bending of the Constitution and disregard of international law when the terms are so good?  A few hairs in the sausage never killed anyone (that we can prove, anyway).

A windfall (less than $.03 per acre) like this would, Monroe knew, be greeted with wild adulation back home.  In fact, the deal created an inferno when news broke in Washington, D.C.  Many Federalists opposed the purchase on the grounds that a country twice the size would be ungovernable and disintegrate.  Others opposed the deal over some of its fine print.  Jefferson himself believed the work of Monroe’s diplomatic group exceeded his Presidential authority and that the purchase would require a constitutional amendment. 

Good.  Back on track.  We’re going to do this right, by the book.  Give and take.  Making the sausage.

But almost immediately the pragmatic Jefferson appeared.  After all, he argued, the “laws of self-preservation overrule the laws of obligations.”  (Cool.  I’m using that line the next time I overstep my authority.)  Jefferson was worried that Napoleon might not be in power much longer, and did not want to miss out on the lopsidedness of the deal.  

Not long after, enough of the Senate was swayed as well.  In the end, the Purchase was approved 24-7.

Said another way, 29% of America’s elected officials would have voided the Louisiana Purchase—on what seemed like very sound legal and governance grounds. 

That’s how we get things done around this joint, I’m afraid (and most of the other joints I know about).  Only when all the ugliness of sausage-making is done, when the sausage survives a generation of two, when the sausage eventually becomes our tried-and-true, “beloved sausage” do we forget how messy it all was.  And then we remember only what true geniuses we really are.

Think about the auto industry.  The Japanese Miracle.  The Brooklyn Bridge.  The beginnings of our national parks.  Women’s suffrage.  American healthcare. The career of Steve Jobs.   The last product you brought to market.  The last happy, successful child you raised.

All praise the beloved sausage.

Thursday, February 11, 2010

The Secret to World Dominance

1960, Ted Levitt: "People don't want to buy a quarter-inch drill.  They want a quarter-inch hole!"

2010, Vanity Fair: "If you can become a ubiquitous, octopus-like, hydra-headed, chameleon-ish, integrated horizontal and vertical database and command center, it could be years before a new technology challenges your dominance."

Now go forth and conquer.  (And have a great weekend!)

Sunday, February 7, 2010

More Than Five and My Head Will Explode (In Praise of Peter Drucker)

Someday soon I’m planning to write a book called More Than Five and My Head Will Explode.  The hypothesis, loosely rendered, is that we are so inundated with choices that we can’t possibly keep more than five things straight in our heads for any reasonable period of time.  Give me six breakfast cereal choices in the supermarket aisle and you've wasted shelf space.  Tell me ten rules of time management and I'll likely remember half.  Show me the 15 rules of good salesmanship, or the 39 rules for CEOs to prosper, or 50 ways to find my piece of cheese, or 1,000 streams I should fly-fish before I die and my head wants to explode.

Thank goodness I don’t have six children.  (Wait--maybe I do have six children.)

My Men’s Health magazine landed this week and, besides the monster biceps it promises me, this issue offers “1,742 Ways to Get Better—At Everything.”  Honest to goodness.  For purposes of sanity, I would accept one way to get better at two things (maybe my biceps) and be happy.

My More Than Five idea originated as I was pulling articles about “innovation” off my Google reader the other day.  I subscribe to one site in particular that peppers me with posts about how to innovate products and services.  Each article has merit, but the cumulative effect over weeks and months is that I am so confused by all the advice that, as I said, my head threatens to explode.

All I really need is a simple, consistent, logical thought process for innovating my way out of a paper bag, so to speak.  And keep it to five points or less.

In times like that it’s good to have touchstones, and the one I keep returning to is Peter Drucker’s Innovation and Entrepreneurship.  Published in 1985, it has all the disadvantages of holding the somewhat dusty schema of a prickly egomaniac.  But, it has all the advantages of being thoughtful, straightforward, long on real history but easy-to-shuttle into the future tense, and—in my own limited world—capable of gelling into five logical themes.

(I wrote about the book first here in 2008, suggesting it be read and savored every couple of years, and again here when I was discussing my beloved Kindle.)

Before describing the themes, Drucker says, just make sure you know what innovation is and does.  Its proof “lies not in its novelty, its scientific content, or its cleverness.  It lies in its success in the marketplace.” 

If you’ve never read Drucker, that means creating customers.  Paying customers.  Giving away things for free is not innovation, something we all (once upon a time) used to know.

This simple truth—that innovation creates paying customers--will, I promise you, eliminate an awful lot of reading about what passes today as innovation.

Then, Drucker says, innovation is “organized, systematic, rational work.”  You know all the innovators you read about, the fabulously rich ones now drinking champagne on yachts?  It’s good to remember that most really, truly fine innovators go to work everyday with a lunchbox, worry about their mortgages and think about a Friday night beer.

Finally as warm-up, Drucker tells us, “Innovation is a specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service.”

That, to me, is a really critical point.  Innovation is more like Finance and Marketing and Operations, more like Investment Management, than it is like being struck by lightening and drinking champagne on a yacht.

Suppose, for example, I gave you $1,000,000 and said, “Go make some money on the stock market.”  You could certainly use the cash as seed money, write a business plan, raise more capital, launch a product, cross the chasm, raise more capital, build out global distribution, almost go broke, cross the next chasm, raise more capital, eventually go public and then cash in your stock.  That would be a high-risk strategy that could, in the best case, make you a billionaire.  It could land you on a yacht.  It could make you famous.  It’s one way to make some money “on the stock market.”

Conversely, you might study the financial markets, learn how to read the trends, look for inconsistencies and anomalies and inefficiencies, place some bets here and there with your million, make a little money now and then, make a lot of money once in a while, build your portfolio, and eventually—as requested—you will have made some money “on the stock market.”  

This is the essential difference, I think, in how Drucker thinks about innovation.  We often consider innovation to be like the first example: the individual entrepreneur with a brilliant idea as hero.  Drucker accepts that this might happen, but considers systematic innovation more powerful and more like example two: Put processes in place to watch the market closely, and take advantage of inefficiencies.

He highlights the modern university and hospital, GE’s use of commercial paper, the shipping container, insurance, the textbook and McDonald’s creation of a new market as forms of workmanlike innovation that took advantage of inefficiencies in the market.   Drucker goes on to say that so few high-tech entrepreneurs know what they are doing, and lack any methodology, that they violate elementary and well-known rules of innovation.  So, they set their Google reader on several innovation blogs and proceed to lose their minds. 

Ready, then, for Drucker's seven logical themes of innovation?  (Ready for me to turn them into five so that I can remember them and put them to work?)  They are based on the fact that most successful innovation doesn’t create change, it spots and exploits change in an organized, purposeful way.  It’s more like studying the market and placing bets on inefficiencies than building the company that goes public.

Herewith, Drucker's sources of innovative opportunity—in order of reliability and predictability:

a)      The unexpected success, failure and outside event (i.e.—when TV appeared book-buying unexpectedly soared, leading to new, powerful bookstore chains)
b)      The incongruity between what is and what ought to be (i.e.--a securities firm decided to offer “peace of mind” and not promises of fortunes)
c)      Process need (i.e.—Bell Telephone’s switchboard, linotype)
d)      Changes in industry or market structure (i.e.—FEDEX)
e)      Demographics (i.e.—FDR’s experts in 1938 missed the Baby Boom)
f)        Changes in perception, mood and meaning (i.e.—health magazines, exercise equipment, organic food)
g)      New knowledge, both scientific and non-scientific (i.e.—the “superstar” of innovation—but the longest lead times: chemotherapy, computer, automation, radio, penicillin, etc.)
Notice what Drucker did not list: The Bright Idea.  It is, he says, the riskiest and least successful innovation type of all, cannot be counted on, and “belongs in the appendix” of theory and practice of innovation.
Yet, sometimes that’s all we seem to focus on, all that seems to come off my Google reader.
Anyway, those are Drucker’s seven themes, and my re-jiggered five are: The Unexpected, Process Need, Industry or Market Structure, Demographics, and New Knowledge.  That’s all.  If a bright idea falls in my lap, I count it like my sixth child.  (Note to self: email wife about number of children in family.)

Here's a mindmap that might help (and I'm happy to send along an image or the Mindjet MM8 file--just write me at ericbschultz@gmail.com):



Scanning the market constantly for these kinds of fascinating inefficiencies is actually fun.  Here are some I’ve picked up in just the last week or so, while I was pondering this post:
·        The New Yorker reported that Gen X is not participating in classical music, the first generation not to “spike up” as it moves into middle age.  The first.  Weird.
·        A recent study found something called “normal weight obesity,” when thin people face health risks from fat.  As many as 30 million Americans may “suddenly” fall into this category.
·        Birth weights fell from 1990 to 2005.  Researchers cannot explain the two-ounce decline in the U.S. and worry the trend could lead to an increase in health problems.
·        Teens now think that Twitter is uncool.  They’ve also stopped reading blogs.  (If you are walking by a high school and someone mentions that you’re a blogger, you’ve been dissed.)
·        Strategic plans are losing favor in business.  (Again, you say?)
·        College-educated women are more likely to be married at age 40 than women without college, and more likely to say they are happy in their marriages.
·        The passing of every day adds 5 hours to the average American lifespan.   Some expect people to be living to 150-200 years old by the end of this century.
So, here’s the challenge: start a company to invent a new iPhone app, or a new social networking site, or a breakthrough in battery life, or a new drug.  Or, sit with me for a day and develop new products and services around the market “inefficiencies” above.  Fun.  Maybe even lucrative.
I promise you, we could fill a whiteboard with ideas, too.  That’s why I’m sticking with Drucker’s seven (and my five) ways to innovate. 
By the way, you’d best soon buy my book, More Than Five and My Head Will Explode, cause when I turn 60 I’m bringing out the new and updated More Than Three and My Head Will Explode.  At eighty years old (assuming I get there), I’ll be writing More Than One…

But first, I’ve gotta go check with my wife about that sixth child.  Or at least count the chairs around the dining room table and pretend I know what’s going on.  

Thursday, February 4, 2010

From the Waterwheel to the Pillars of Civilization

I was doing some research on the history of the computer and found this classic "Connections" by James Burke.  I'd forgotten how truly awesome this show was, and how well science historian Burke integrated concepts and made historical connections.

If you don't have time to watch the entire show, I have transcribed Burke's final sentence, which is Falkneresque in length and may suffice:
So, the trail has brought us from the waterwheel, to the loom and the linen it produced that made paper so cheap it spurred the development of printing of books that made people interested in things like automated organs whose pegged cylinders gave the French silk-weavers the opportunity to run their looms with perforated cards that Hollerith used to count Americans who had once passed through this hall on Ellis Island, gateway to the one country that more than any other would fall apart if it weren’t for Hollerith’s card—used to program the computers without whose help the entire massive structure of the modern world would fall down.
From the waterwheel through underwear to the punchcard and the pillars of civilization.  Only Burke.  Easier to understand than Lost, and something (else) fun to watch this weekend.