The sound you heard a few weeks ago was the largest Ponzi scheme in history crashing down on the heads of investors around the world.
As with the banks and auto companies there were plenty of warning signs, but people ignored or rationalized them—trust does funny things to usually savvy people.
But who is Bernard L. Madoff, other than being a crook? What’s he like? Why was he so trusted?
I found this video, which gave me a much better understanding of why people gave him their money—he seems far more of a cuddly, smart, financial grandpa than the crook who’s been in the headlines.
Another Saturday and another collection of useful links for you.
Just remember to disregard anything you find that suggests that the skills and attitudes discussed are only for the anointed few and not for all of you to use as appropriate.
First up is a new site from the Washington Post and Harvard Business called The Intelligent Leader. It has some great content, including a diverse group of video interview opinions and commentary on leadership.
Next is something I’ve never heard of, which means I’m more out of the loop than I often think I am or the organization really is a bit obscure. It’s called the Foundation for Enterprise Development (FED) and says that it’s dedicated to “Fostering Science, Technology and Free Enterprise.” What I found interesting is that it has excellent information and links to studies on the effects of enterprise employee ownership.
Third is McKinsey; I frequently referred to articles and studies they’ve done. The couple of minutes required for free registration pays big dividends in the quality and quantity of information that’s available. Additionally, you can customize the kind of information that you want delivered by email. Although it’s a year old, this survey the role that CEOs believe that they should play as public leaders vs. the role they do play—a lot more talk than walk.
Lastly, is another offering from Harvard Business School that many of you already know. It’s the Working Knowledge newsletter, and you can customize it for your interests. One of my favorite researchers there is Jim Heskett, who poses thought provoking topics that draw fascinating responses from his readers. Here are two of my favorites, the first is “Is There Too Little “Know Why” In Business?” and the second is “Why Don’t Managers Think Deeply?”
So grab a cup of coffee, settle down and dig through the links and, whatever you do, don’t skip the comments to see what other people think—then take away the best of the intel for your own use.
Yesterday Al Hulvey, my guest poster, talked about the VCs who saw the current economic situation as one of opportunity and I strongly agree with them.
Perhaps it’s because I can draw a clear parallel between their view and my 20+ years as a headhunter. Anyone can make deals when times are good, but it’s the cyclical downturns that separate the best from the rest and that applies not just to recruiters, but to companies—especially startups.
Today’s four Bits offer some useful lessons for gutsy entrepreneurs as well as those in established businesses.
First we start with basics. John Osher’s famous 17 Mistakes Start-ups Make. Osher identified them after selling his company, then did another startup making sure to avoid them and sold it for nearly four times as much.
Continuing right along, if you’re starting a company it worth real dollars to pay attention to the really important parts of your corporate culture right from the start—such as ethics. Sharon Allen, Deloitte & Touche USA chairman of the board, says, “…ethics are what guide our actions when no one else is watching.”
Finally, a short, but fascinating, look at Campbell’s that illustrates not just superb communications, but also a great branding story.
My lousy hearing prevented me from attending the AlwaysOn Venture Summit Silicon Valley 2008 personally, so I arranged for Al Hulvey to go as my surrogate. Al way a great choice considering his experience as a CEO of several startups. (Bio at the end of this post.)
By Al Hulvey
Survival or opportunity were the warring perspectives and I found the two distinct camps well represented at the Summit in Half Moon Bay (CA).
Most everyone has seen the “R.I.P. Good Times” slide presentation from Sequoia Capital to its portfolio company CEOs—it went viral in major and new media in a heartbeat. (In case you missed it, it’s at the end of this post.) It outlines a rational and pragmatic approach to reacting in the current economic crises. The tombstone on the title slide clearly defines the lens through which Mike Mortiz and the other Sequoia partners expect their CEOs to view the world—hunker down and survive.
I wondered if survival was the prevalent attitude among VCs or if some would view the economic tumult as a time of opportunity.
I found that view represented by Tim Draper of Draper Fisher Jurvetson in his keynote presentation at the Summit when he said, “For the next three or four years, venture capital is going to be a fantastic place to be, because we are going to be able to invest in companies that are starting the next great revolution.”
Based on panel discussions and comments, I found the VCs divided between the two camps, but what was most interesting to me was that, in general, similar sized VCs fell in the same camp.
The large venture capital firms were generally on the ‘hunker down’ side. This was the consensus view from a panel including Atlas Venture, Accel Partners, and Venrock Israel.
‘Opportunity’ was where many of the smaller venture capital firms lined up, especially those partial to seed funding. They included Alsop Louie Partners, Claremont Creek Ventures, Formative Ventures and First Round Capital.
What definitely surprised me was the attitude of the corporate venture funds, such as HP, QUALCOMM, Cisco Systems and NVIDIA, because they definitely were on the side of opportunity. Very encouraging.
It will be interesting to watch this play out. The portfolio companies of both firms are operating in the same economic environment, with essentially the same resources and facing the same challenges and collectively may achieve similar results.
But one set of CEOs will be looking over their shoulders, while the others will be looking over the horizon.
Al Hulvey is a C-Level executive with 30 years experience turning startups and divisions of major corporations into profitable businesses and attractive acquisition targets. The businesses included Silicon Valley startups, namely Touchpoint (ecommerce), I/PRO, iLux, Predictx (Internet advertising); and also Fortune 500 companies, namely ADVO (advertising services), Heublein and KFC (consumer products).
I found a wonderful treat for you on this Friday before Christmas courtesy of Bruce Nussbaum.
It’s a video of Steve Jobs’ 2005 Stanford Commencement address in which he says,
“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living with the results of other people’s thinking.”
Nussbaum says he watches this video every year and I plan to also. I hope it becomes a yearly tradition for you, too, and that you share it with your colleagues, friends and kids.
The level of accountability finger-pointing in the fiscal world accelerated steeply with the crash of the giant, 20 year-old Ponzi scheme orchestrated by Bernard Madoff. Financial experts are seeking to lay the blame/responsibility for this current financial crisis on regulators, but, as with derivatives, there were warning signs that could—should—have been read by the financially savvy.
Unlike other Wall Street wizards, it is almost certain that Madoff will be jailed, but most will walk away to plum new jobs far richer than they were and accelerate their status as role models to our youth.
Excuses will be made for them; those embarrassed by association will seek to bury their deeds in oblivion, and in a few short years people will forget.
And it gets more blatant with each passing year; witness Illinois Governor Rod Blagojevich alleged effort to sell Obama’s Senate seat.
Danny Schechter discusses the acceleration in a fascinating Media Channel column.
“The latest cases are staggering in their audacity in a corporate culture where an illegal act becomes a crime only when you get caught.”
In a recent TV show, the lead character comments, “It’s counter-productive to raise children in a world without consequences,” yet that is what we’re doing.
Kids see that lack of consequences in politics, business, athletics and religion throughout the media and much closer to home in their own lives.
Little by little those charged with educating kids are eliminating accountability, often at the instigation of the parents. If kids complain that a teacher is too tough the solution is to fire the teacher, rather than doing their job as a parent by setting boundaries and standards and then making sure kids are held accountable.
Monday we focused on Jakob Nielsen’s Lurker Rule as described by Des Walsh; I commented that I thought it applied as much to the real world as to the online one and asked what you thought. Sadly, no one offered up any comments, but I did say that I would share mine today.
If you want to see my attitude towards lurkers, take a look at yesterday’s Wordless Wednesday. That says it all.
Still not clear? OK, here’s the long version.
Lurkers are the folks who complete the picture. They’re the ones who make the projects happen; keep things running smoothly and innovate in small, quiet ways that improve companies by an order of magnitude.
In terms of the 1/9/90 rule, 1% always get the credit they deserve—and sometimes credit that they don’t—and 9% also receive recognition, but the 90%—the lurkers—who often carry the bulk of the work on their shoulders—labor in obscurity.
Because they aren’t splashy and often fly under the radar you may not even realize what or how much they’re doing—and that’s a major error.
As a manager, you should be aware of the contributions of all your people, that’s one of the most important parts of your job, but especially those of the lurkers. One of the top three reasons that people leave a job is lack of recognition and appreciation.
The reality is that you often don’t really know the value of a worker until she is gone and you find out how big a hole in your organization she left. Many managers find that the hole left by a lurker is harder to plug than one left by either the 9% or even the 1%.
Focus on, and get to know, your lurkers; value them, offer them the recognition they deserve and I’m willing to bet that you’ll be amazed at how the value they add will increase exponentially.
There’s good news evolution-wise for emerging companies.
When the environment is stable, evolutionary selection rewards small, incremental changes that optimize survival within that stable environment.
But in times of rapid environmental change, evolutionary selection rewards large, swift changes that track the environmental shifts.
If you work in a small or emerging company, your timing is excellent.
Change is global; it’s accelerating; and it is disrupting every aspect of business. Change is creating opportunities everywhere, from finance to automobiles, from communication to housing.
You are witnessing the greatest opportunities in a generation. Evolution points the way to success, and the playing field is tilted in favor of small, nimble players.
Smaller Species Learn Faster
Evolutionary history demonstrates that change favors the small and nimble species. Times of climatic stability have seen the growth and dominance of a few species. Dinosaurs, those staples of evolutionary discussions, grew and thrived during the Paleozoic era. Few new species emerged, and successful species changed little.
But when the climate changed suddenly around 251 million years BC, probably due to a huge meteor that impacted the earth in the area of the Yucatan peninsula, the dust cloud from the impact rapidly cooled the earth and the dinosaurs could not adapt quickly.
A new type of animal, one with the ability to control its body temperature, emerged. This animal, the ancestor of all mammals, exploded into many rapidly environmental niches. Very quickly many new species of mammals evolved to fill a wide range of ecological niches.
Evolution favoritism stems from one fundamental reason: they adapt faster to new conditions. Evolution gives smaller, species powerful competitive advantages in changing environments:
Better Focus: Smaller species have fewer contact points with the environment. Therefore they can adapt faster. (Click here for more in-depth information.)
Faster Testing (Fail fast): With fewer organisms in the species and a smaller overall environmental footprint, each individual organism tests a larger area of the environment. Each test covers more ground. (Click here for more)
Faster Learning: Smaller species learn faster because the adaptations (knowledge of the environment) travel faster through the species. Communication lines are shorter.
These three advantages combine to give smaller species one single overwhelming advantage:
They have no choice. The structure of evolution is rigged in their favor in times of significant change.
Axiom of Evolution: Smaller species learn faster.
Do Emerging Companies Learn Faster?
Emerging companies can learn faster than larger companies, but there is one big caveat here.
Smaller species have no central planning, no hierarchical structure of managers, and no CEO to direct their evolution—whereas emerging companies have all three of these handicaps. This is of critical import and worth repeating, the potential major roadblocks to success for emerging companies are:
Central planning
Hierarchical structure
CEO
These three factors do not exist in evolution; however, it is likely that your emerging company has all three. Moreover, you cannot imagine how your company, or any company, can operate without any of them.
Given humanities addiction to these structural handicaps, how can you and your emerging company apply the lessons of evolution to learn faster?
Better Focus: this simply means that there are fewer contact points with the environment. Each contact point creates a little drag, or inertia. Each contact point is one more interest group or constituency that must be considered and consulted before moving forward. Create enough contact points and the drag can stop your company cold.
Witness most governmental organizations, especially the US Congress and state legislatures, which have so many constituencies that they no longer make any progress at all. Loss of focus is such a common problem that it has earned many nicknames – scope creep, bells and whistles, death by committee, Christmas tree.
To help your organization focus, consider following another evolutionary axiom:
Evolutionary Axiom of Survival: A variation must survive immediately, in the next generation.
Use this approach to tighten your focus: Ask this single question of every extra feature or function: Does it improve survival immediately, for the next generation? Evolution does not keep a detailed priority list of ideas for future exploration. It has a brutally simple priority ranking—now or not now.
Test Fast, Fail Fast
As a business manager, your role here is simply to drive rapid generational testing, not to pick winners among the variations proposed. Let your customers do the selection. Your role is to run generations as quickly as possible.
Driving rapid generations in your service development process:
Software projects: compile a functional module every day. Each compilation must show something functional and something improved over yesterday.
Other products: drive for some measurable result and some tangible demonstration every day. Use the failures to map the environment.
Build on these failures to point the direction of possible success.
Evolutionary Axioms of Failure: Fail fast. Fail forward.
Learn Fast
Disseminate failures rapidly throughout your organization. Post them on a blog, a wiki, even on the office walls. Drive your teams to learn fast.
Next time we will discuss the other two facets of this issue: How to overcome the human organizational handicap vs. evolution’s attitude of “It’s not personal, it’s just survival.”
Entrepreneurs face difficulties that are hard for most people to imagine, let alone understand. You can find anonymous help and connections that do understand at 7 cups of tea.
Crises never end.
$10 really does make a difference and you’ll never miss it,
Another Saturday and another collection of useful links for you.
The level of accountability finger-pointing in the fiscal world accelerated steeply with the crash of the giant, 20 year-old Ponzi scheme orchestrated by 
