Don’t worry, I didn’t get it the first time either.  There is a story about Zappos that makes it simpler.

‘Sometimes, it may seem that new problems crop up as fast as we solve the old ones (sometimes faster!), but that just means that we’re moving — that we’re getting better and stronger. Anyone who wants to compete with us has to learn the same things, so problems are just mile markers. Each one we pass means we’ve gotten better.

Yet no matter how much better we get, we’ll always have hard work to do, we’ll never be done, and we’ll never “get it right.”

That may seem negative, but it’s not: we’ll do our best to “get it right,” and then do it again when we find out that things have changed. That is the cycle of growth, and like it or not, that cycle won’t stop.

It’s hard… but if we weren’t doing something hard, then we’d have no business. The only reason we aren’t swamped by our competition is because what we do is hard, and we do it better than anyone else. If it ever gets too easy, then start looking for a tidal wave of competition to wash us away.

It may seem sometimes like we don’t know what we’re doing. And it’s true: we don’t. That’s a bit scary, but you can take comfort in knowing that nobody else knows how to do what we’re doing either. If they did, then they’d be the web’s most popular shoe store. Sure, people have done parts of what we do before, but what we’ve learned over the years at Zappos is that the devil is in the details. And that’s where we’re breaking new ground.

So there are no experts in what we’re doing. Except for us: we are becoming experts as we do this. And for anyone we bring on board, the best expertise they can bring is expertise at learning and adapting and figuring new things out — helping the company grow, and in the process, they will also be growing themselves.” (Zappos 2010)

The master plan, then, is to continue to become experts at what you do, by hiring talent with expertise at learning, adapting and figuring new things out. 

You don’t have to know what you are doing, because no one else does either; if they did, they would have already done it.  Knowledge is not your competitive advantage.

Competitive advantage results from choosing the hard path and doing it right.  If it ever gets too easy, you will become a commodity.

 What do we do?

First, know that you can do it.

Second, be aware of the chaos, change and  transformation around you.  You have to be at the right place, the right time, with the knowledge, ability and resources to act on the opportunity.

Third, choose the hard opportunities, and do it right.

Fourth, you will never get it right.  Do you best, and then do it again when you become aware that things have changed.  [Repeat steps 2, 3 and 4]

Fifth, if you suddenly have competition, or the game changes, then you are on the easy path.  Go back to step one.

Zappos (2010).  Zappos Core Value #5:  Pursue Growth and Learning. Retrieved 02/12/2010 from http://about.zappos.com/our-unique-culture/zappos-core-values/pursue-growth-and-learning .

Currently, I am passionately interested in the organizational structure and culture of open source projects and communities. The Linux story is held by many to be the next stage of human organization.

If you haven’t seen it, here is the link to Open-source economics: Yochai Benkler on TED.com

http://blog.ted.com/2008/04/yochai_benkler_1.php

As a law professor, he looks at [Wikipedia] and Linux. [don't get started on Wikipedia until you listen to the video].

A few quotes:

“So, essentially what we’re seeing is the emergence of a fourth transactional framework. It used to be that there were two primary dimensions along which you could divide things. They could be market based, or non-market based; they could be decentralized, or centralized. The price system was a market based and decentralized system. If things worked better,because you actually had somebody organizing them, you had firms, if you wanted to be in the market — or you had governments or sometimes larger non-profits in the non-market. It was too expensive to have decentralized social production, to have decentralized action in society — that was not about society itself. It was in fact economic.

This is the basis of economic organizational systems, and used to serve as the level playing field for the organizational approaches we know and love.

However, he continues:

‘But what we’re seeing now is the emergence of this fourth system, of social sharing and exchange. Not that it’s the first time that we do nice things to each other, or for each other, as social beings. We do it all the time. It’s that it’s the first time that it’s having major economic impact.

What characterizes them is decentralized authority. You don’t have to ask permission, as you do in a property based system. May I do this? It’s open for anyone to create and innovate and share, if they want to, by themselves or with others, because property is one mechanism of coordination. But it’s not the only one.

Instead, what we see are social frameworks for all of the critical things that we use property and contract in the market. Information flows to decide what are interesting problems, who’s available and good for something, motivation structures — remember, money isn’t always the best motivator.

It also requires certain new organizational approaches. And in particular what we’ve seen is task organization — you have to hire people who know what they’re doing. You have to hire them to spend a lot of time. Now, take the same problem, chunk it into little modules, and motivations become trivial.’

So, this post is already long, but while you are on TED, Dan Pink gave a great talk at TED about the ‘Failure of Pay for Performance‘. [TEDGlobal 2009, filmed July 2009]

The summary reads: “Career analyst Dan Pink examines the puzzle of motivation, starting with a fact that social scientists know but most managers don’t: Traditional rewards aren’t always as effective as we think. “…….

“If you want people to perform better, you reward them. Right? Bonuses, commissions, their own reality show. Incentivize them. That’s how business works. But that’s not happening here [in the experiment]. You’ve got an incentive designed to sharpen thinking and accelerate creativity. And it does just the opposite. It dulls thinking and blocks creativity.

And what’s interesting about this experiment is that it’s not an aberration. This has been replicated over and over and over again, for nearly 40 years.

…..when you look at the science of human motivation, particularly the dynamics of extrinsic motivators and intrinsic motivators, it’s not even close. If you look at the science, there is a mismatch between what science knows and what business does. And what’s alarming here is that our business operating system – think of the set of assumptions and protocols beneath our businesses, how we motivate people, how we apply our human resources – it’s built entirely around these extrinsic motivators, around carrots and sticks. That’s actually fine for many kinds of 20th century tasks. But for 21st century tasks, that mechanistic, reward-and-punishment approach doesn’t work, and often does harm.

]]> http://innovativeknowledge.wordpress.com/2010/01/23/leadership-and-motivation-in-open-source-organizations/feed/ 0 Boyd Schalnat http://innovativeknowledge.wordpress.com/2010/01/23/talent-capitalization-and-organizational-structures/ http://innovativeknowledge.wordpress.com/2010/01/23/talent-capitalization-and-organizational-structures/#comments Sat, 23 Jan 2010 15:40:29 +0000 Boyd http://innovativeknowledge.wordpress.com/?p=9 ]]>

So, let’s go deeper into the niche of Talent Capitalization. A few great stories, books, videos, and blog posts come to mind.

Proctor and Gamble’s [ now legendary ] use of crowdsourcing, integrative thinking and outsourcing, which P&G called Connect & Develop, is a great example. [For a great commentary and description of this, refer to The Opposable Mind/Roger Martin c2007 pgs. 56-61].

Malcom Gladwell’s commentary on the Talent Myth provides an interesting insight at the end of section 4:

“The talent myth assumes that people make organizations smart. More often than not, it’s the other way around.”

What does this mean for organizational systems? The Organization makes people smart? Of course.

And from Malcolm Gladwell’s conversation with Bill Simmons and from a presentation at Poptech [which should also be famous as his first use of powerpoint]:

“What we’re talking about is what are called capitalization rates, which refers to how efficiently any group makes use of its talent. So, for example, sub-Saharan Africa is radically undercapitalized when it comes to, say, physics: There are a large number of people who live there who have the ability to be physicists but never get the chance to develop that talent. Canada, by contrast, is highly capitalized when it comes to hockey players: If you can play hockey in Canada, trust me, we will find you. One of my favorite psychologists, James Flynn, has looked at capitalization rates in the U.S. for various occupations: For example, what percentage of American men who are intellectually capable of holding the top tier of managerial/professional jobs actually end up getting a job like that. The number is surprisingly low, like 60 percent or so. That suggests we have a lot of room for improvement.

However, what I can envision is this:

The organizational structures purpose is to capitalize on it’s talent – the organization makes the talent smart because it provides a context, culture, resources, and most importantly, removes the barriers impeding success. It is impossible to determine the organizational structure without visualizing and understanding the talent the organizational wishes to capitalize on. If you were using, say, a spreadsheet, this would generate a ‘circular reference’ error.

Now, the talent and the barriers to success are, by definition, constantly changing. Organizations can maximize their CAP rate by doing what? Could it be changing the organizational structure in a way that parallels, leads and follows the talent development?

Again, I say, this is the billion dollar challenge facing leadership and organizational structure in this decade.

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In our experience, the most successful businesses maintain a balance between innovating and executing.  In fact, they are constantly flowing between innvovation and execution, never resting for long on their success.  Success comes from the “Win+Win” of integrating the opposing trends of innovating and executing.  We call this the success of “both+and” solutions.

In times of crisis, businesses tend to favor one and exclude the other.  ”Either-or” solutions may be good, but “both+and” solutions take you from Good to Great.

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