Since I haven’t done a Friday Video post in a while I figured two videos were in order rather than a measly one.

The first is an old talk given by Steve Jobs introducing Apple’s “Think Different” campaign. After watching it I understand more why Jobs has been so successful and why the Apple brand has been able to stay ahead of its competition.

(h/t Ben Casnocha)

And for something humorous going into your Labor Day Weekend, a little North Korean propaganda edited to perfection.

(h/t Abu Muqawama)

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Daniel Pink, author of, “A Whole New Mind: Why Right-Brainers Will Rule the Future” and his latest, “Drive: The Surprising Truth About What Motivates Us” explains why the majority of what we know about motivation is wrong.

Citing many recent studies, Pink shows that traditional carrot-and-stick approaches to management, such as pay bonuses for good work, only apply jobs that are purely mechanical.  For jobs that require even a small amount of rudimentary cognitive skill, pay incentives actually led to worse performance.

In the following video, RSA (The Royal Society for the encouragement of Arts, Manufacturing and Commerce…whew) animates Pink’s ideas in real-time as he talks.  If it seems distracting at first, just give it a minute, the animation helps us visual learners digest Pink’s ideas and ends up adding some insight.

(definitely worth 10min of your time.)

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“The leader has more power over those who are more dependent.” – pg. 55, The 52nd Floor: Thinking Deeply About Leadership

Power is the ability to get something done.  It is “capacity that can be converted into control.“  And it is this control that often leaves a bad taste in people’s mouths as few enjoy the idea of being “controlled” by another.  We all like thinking of ourselves as free people.  However, power marches onward despite our feelings.

The authors of The 52nd Floor highlight an interesting way to view power — as a function of dependencies.  In other words, the people who have the most power over you are those upon whom you are most dependent.  Of course, the relationship works the opposite way as well.

You gain power within an organization or relationship when you, “…increase the dependencies others have on you or decrease the dependencies you have on others.”

To understand power, one must develop a deep knowledge of the various relationships at work within an organization.  To answer the question, “who has the most power?” one must first ask a more nuanced question, “who is dependent on whom?”  The answers may be surprising.

For a long time now power has tended to be viewed as something that is earned as one climbs his way up the greasy pole of an organization’s hierarchy, but the culture of the workplace and consequently its power structure have changed with the entering of the millennial generation into the workforce.

The authors offer this insight into the origins of power as created by virtue of need,

“The power others have over us is nothing more than a function of desire. By strongly desiring a relationship with someone, we often grant him or her the power to influence us. In this sense, power is not a possession, but rather our own compliance given onto someone else. Power is created by virtue of need. It is exchange within a relationship between the ‘needy’ and the ‘provider.’”

Part of the reason old CEOs and generals find managing millennials so difficult and frustrating is that we feel much less dependent on the company or organization to fulfill our needs, viewing life as something we can take into our own hands rather than waiting for it to be bestowed upon us in the form of a company car or fancy title.  Work is not our life.  We’ve seen the tattered hopes of our parents who tried to be good company men only to end up burnt out and unfulfilled…so we’re choosing a different route, one less dependent on the company to satisfy our hunger.  In a very literal sense, we’re out of control.

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Daniel H. Pink writes on why we do what we do when it comes to our work (h/t Delayed Echoes),

Business writers, myself included, have emptied many a toner cartridge opining on ‘management’. But rarely have we taken a step back to scrutinise the concept itself. We act as if it somehow emanated from nature or was delivered to us by God. In fact, management is something somebody invented. It is, as business thinker Gary Hamel says, a technology. And it’s a technology from the 1850s. British railways notwithstanding, there are very few technologies from the mid-19th century that we’re still using today.

Management is the ideal technology if you’re seeking compliance – getting people to do what you want them to do, the way you want them to do it. But in today’s workforce, which demands much more in the way of creative and conceptual capabilities, we don’t want compliance. We want engagement. And self-direction is a far better technology for engagement.

————–

This is one of the many aspects of our nature that separate us from donkeys. Yes, we do respond well to carrots and sticks in many circumstances. Yes, those second drive motivators are effective for certain tasks. But in the end, human beings are not simply smaller, slower, better-smelling donkeys. We have a third drive – the need to direct our own lives, to learn and create new things, and to do better by ourselves and our world. That’s what makes us human. And increasingly, it is our humanity that makes us effective.

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When high ranking officials seek to find out the “truth on the ground” they often discover the task much more difficult than expected.  It is usually not because the front-line personnel don’t know what is going on, but rather, few are willing to risk speaking candidly if they know the information will be viewed negatively by leadership.

This is unfortunate as it leaves leaders with a false sense of security.  “…but they said everything’s going great.”  It is something which goes on in many organizations, but the military rank system seems to exacerbate the issue.

There is an unnatural aura around the shiny pieces of medal on people’s shoulders that seem to act as a force-shield, blocking out reality and striking fear in subordinates.  Obviously not the intended effect (at least not most of the time), but one that exists nonetheless.

Tim Harford, author of The Undercover Economist recently wrote an article in the Financial Times admonishing us to “Listen to the Bearers of Bad News.”  Here’s a snippet:

One of Friedrich Hayek’s obvious-once-pointed-out observations is that society is full of local knowledge, often of a subtle nature and only fleetingly exploitable.  That is one reason why decentralised market processes tend to work well.  When a hierarchy has to exist, Hayek’s insight is the reason why bosses should want to receive truthful assessments of what is going on the shop floor (they don’t) and subordinates should be happy to provide them (they aren’t).

What makes matters worse for any organisation is that the same dynamic is taking place at every level.  Each middle manager is a fresh obstacle to the flow of truth up a hierarchy of wastebaskets.  Sensible managers try to let information flow freely, but many are happy to reinforce the barricades for their own peace of mind.

The results of barriers to communication can be catastrophic.  H.R. McMaster’s influential study of decision-making during the Vietnam war, Dereliction of Duty, is packed with examples.  The joint chiefs of staff were warned by their chairman, Maxwell Taylor, that Lyndon Johnson did not like “split advice”. Johnson’s defence secretary, Robert McNamara, argued that government would be ineffective if department chiefs were to “express disagreement” with the president.  Not disobey, but “express disagreement”.  Johnson trusted McNamara implicitly and relied too heavily on the advice of a man he praised as a “can-do fellow”.   Isolating himself from dissent, the president made a series of disastrous decisions.

The new television series, Undercover Boss, has made a name for itself by finding a creative way around this barrier to truth.  CEO’s of major corporations “dress-down” as low-level employees in their own companies to uncover the truths that would otherwise be relegated to talks around the water-cooler.

I posed the question on Twitter the other day,

“wondering what would happen if Generals pulled an ‘undercover boss’ and dressed up as civilian contractors working with the military?”

I think they might be surprised how different their military looks.

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An article in this morning’s Washington Post points out that many top employees of financial firms being targeted for pay cuts by the government have already left or are on their way.

“There’s no question people have left because of uncertainty of our ability to pay,” said an executive at one of the affected firms. “It’s a highly competitive market out there.”

I understand that people are frustrated with the economy, but it is foolish to think that cutting the pay of people within the financial industry will turn out well. Compensation is a drop in the bucket compared to the host of other problems plaguing our economy.

This is going to backfire and the evidence above shows that it already is. If you are an executive in a multi-billion dollar financial firm chances are strong to very strong that 1) You are highly skilled and educated and know how to create value in an organization  2) You can find another high-paying job at the drop of a hat, or the ring of a phone.

The people working at firms that the Pay Czar is going after are already leaving and those who haven’t yet, soon will. As Alex Tabarrok of Marginal Revolution commented the other day (emphasis mine),

There is no way this will work as advertised. If the administration actually follows through, most of these executives will quit and get higher paying jobs elsewhere. Executives not directly affected by the pay cuts will also quit when they see their prospects for future salary gains have been cut. Chaos will be created at these firms as top people leave in droves. Will the administration then order people back to work?

Ayn Rand fans are chuckling right now asking themselves, “Who is John Galt?”

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Editor’s Note: The following is a guest post by my friend Marc Marmino, defense analyst, coffee lover and resident of the beautiful Pacific Northwest.

Those of us fortunate enough to live near Seattle (if only for the coffee) have the opportunity to visit the original Starbucks in Pike Place Market. If you too live in Seattle, or are visiting sometime in the near future, I strongly recommend forgoing the opportunity to see the “original Starbucks” in the market. Instead, visit the nearby newly “de-branded” store caddy-corner to the market on 1st and Pike. It is a throwback to the original conception of Starbucks, and a concept that has a lot of merit in my eyes as to what the company should strive to return to.

Also, you may be disappointed after waiting in the long line and flustering amongst the impatient crowd at the “original Starbucks” only to learn that it was actually the 4th store built and operated by the company. Actually, you’d never learn that unless I told you, because its location simply lends to a feeling of originality. So Starbucks actually goes along with the white lie that it’s the company’s first storefront. It’s great for business as several thousands of visitors flock through the market daily after disembarking from their cruise ship in the Seattle Harbor.

Speaking of Starbucks, what’s going on with that company nowadays? Last I’d heard: Howard Schultz had returned to the company as CEO after the stock price was greatly diminished, stores were closing all over the globe, and employees were laid off in droves. It seems that regardless of these facts, I still loyally buy almost 3 cups of the best Joe on the planet per week from the store. So where are they now in the face of their recent challenges? I did some research to find out…

As a quick recap of the company’s woes: The company was a part of the massive boom in the coffee industry following the turn of the century when the US retail coffee market recorded a growth of 157% in value terms between 2000 ($3,258 million) and 2005 ($8,372 million). As a leading coffee retailer during this lucrative period for the industry, Starbucks accumulated a large amount capital at a rapid pace. Accordingly, the company began to offer outstanding salaries and benefits to their employees while opening new stores at a feverish-pace. Starbucks was expanding globally and the company’s stock price rose quickly up until FY2007. At that point in time, Starbucks ran into a series of difficult circumstances that ultimately led its financial performance into a downward spiral.

Starbucks Corporation faced several challenges in recent years including:

• intense competition
• low employee productivity
• changing consumer habits from the global economic downturn.

As a result of these challenges, “the company’s profit margin decreased nearly $500 million (an approximate 50% decline) during FY2008 in comparison to FY2007”.

Accompanying this fiscal crunch was the closing of many stores and the termination of thousands of jobs within the organization. Additionally, the anticipated growth of the company came to an abrupt halt in the face of diminished capital. The retained employees received massive cuts to their pensions and a seemingly hollow promise from the revived CEO Howard Schultz that the company would return to its once prominent spot atop the food and beverage industry. While it is apparent that recent results suggest that he is on the right track…some observers remain skeptical.

What has the company done to correct itself?

The coffee giant has taken several steps to address their current problems. First and foremost, it underwent a major restructuring effort that included downsizing the overall size of the company. To improve their balance sheet, Starbucks executives decided to cutout several liabilities in the form closing nearly 700 stores, both existing and under construction. In addition, the company made the difficult decision to lay off several thousand employees in the midst of a recession. The company has also attempted to shed their monopolistic-faux image by undergoing a “de-branding”.

The brand itself began as a local-niche-firm, one that was incredibly inviting and sparked the interest of millions of customers. Inevitably the firm grew quickly and eventually became a global brand that has lost its once niche appeal. According to one coffee advertiser, the relatively rapid success of the company “led to issues of brand depersonalization”. Now, in an attempt to return to its wildly successful roots, the company is de-branding in an effort to regain a community personality and the image of the neighborhood coffee shop.

There is an incredible urgency for this company to return to profitability. Mainly, competitors both small and large threaten to take over the majority of the market share in coffee retail and production. According to Data Monitor, “Starbucks faces intense competition in coffee beverage segment from other specialty coffee shops, restaurants, and doughnut shops”. Namely, McDonalds and Dunkin Donuts have increased their share of overall coffee sales worldwide.

In an effort to not miss out on the market of consumers thirsting for better quality coffee beans, grocery markets have adopted the practice of selling their company’s own higher-quality coffee-beans. In addition, coffee bean companies (i.e. Folgers) that have traditionally used lower-quality beans began offering a higher-quality bean choice to consumers. The urgency in this market shift deals with the risk associated with the recent economic downturn.

Consumers are now making more decisions based upon a cost-benefit analysis vice brand-name recognition. If an organization puts forth a product that is nearly equivalent to a traditionally higher-quality product for a lower price, the consumer is increasingly more inclined to choose the former product. In the case of Starbucks, competitors are doing just this, at a lower price. While the strong brand-name has seemingly protected Starbucks thus far, if they cannot fix their problems soon, many industry experts expect the company to fall further into irrelevancy in the eyes of the global consumer.

Motivation is one of the key elements towards positively changing the progress of the company. No one is more in tune with this concept than the resurrected Starbucks CEO Howard Schultz. Starbucks most recently dropped only 5% in year-on-year sales in the second quarter of 2009 compared to the same period in 2008 (beating analysts’ expectations).

Schultz sees hope in the progress made thus far, but is quick to not discount the work that lies ahead of the company and its employees. This sentiment was readily apparent in Schultz’s rhetoric when he recently stated that “There’s no victory lap going on at Starbucks here…We have a lot of work to do, one quarter [of improving sales] does not make a trend”. This cautious optimism that Schultz maintains is critical towards ensuring that the company does not become overly confident or complacent in its change effort.

If it fails to make the necessary changes, the coffee company will likely lose its majority stake in the marketplace to competitors, and ultimately lose money for its shareholders. A publicly-held company exists solely to make money for its shareholders, and a shrinking company fails to achieve its mission. Such an outcome would draw down levels of capital within the company from outside investors. Lower levels of capital equate to more job losses and store closings. In the worst case scenario, Starbucks would go bankrupt or even become obsolete. These reasons are indicative of why it is so important for Starbucks to make the necessary changes to ensure its viability for years to come.

In these times of financial uncertainty for so many companies, one thing is for certain…God they make great coffee…

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Have you seen the new Levi’s commercials? The first time I saw the one below I told Marelize that it was the single best piece of advertising I had seen in a long, long time. Following the link at the end of the ad I came to their website and was again thoroughly impressed. Below is the commercial followed by the text from a segment of the poem, “Pioneers! O Pioneers!” by Walt Whitman, the poem being read in the background of the film.  If this doesn’t move you a bit…

Come my tan-faced children,
Follow well in order, get your weapons ready,
Have you your pistols? have you your sharp-edged axes?
Pioneers! O pioneers!

For we cannot tarry here,
We must march my darlings, we must bear the brunt of danger,
We the youthful sinewy races, all the rest on us depend,
Pioneers! O pioneers!

O you youths, Western youths,
So impatient, full of action, full of manly pride and friendship,
Plain I see you Western youths, see you tramping with the foremost,
Pioneers! O pioneers!

Have the elder races halted?
Do they droop and end their lesson, wearied over there beyond the seas?
We take up the task eternal, and the burden and the lesson,
Pioneers! O pioneers!

All the past we leave behind,
We debouch upon a newer mightier world, varied world,
Fresh and strong the world we seize, world of labor and the march,
Pioneers! O pioneers!

-Walt Whitman

See the full poem here.

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First off, if you’re involved in any type of business or organizational leadership and you’re not reading Seth Godin, you are wrong. I have yet to read his books (shame on me), but I have been following his blog for about a year now and have been impressed. His posts are always short, memorable and packed with value.

Seth recently wrote a post called, “The Hierarchy of Success” where he said the following:

I think it looks like this:

1. Attitude
2. Approach
3. Goals
4. Strategy
5. Tactics
6. Execution

We spend all our time on execution. Use this word instead of that one. This web host. That color. This material or that frequency of mailing.

Big news: No one ever succeeded because of execution tactics learned from a Dummies book.

Tactics tell you what to execute. They’re important, but dwarfed by strategy. Strategy determines which tactics might work.

But what’s the point of a strategy if your goals aren’t clear, or contradict?

Which leads the first two, the two we almost never hear about.

Approach determines how you look at the project (or your career). Do you read a lot of books? Ask a lot of questions? Use science and testing or go with your hunches? Are you imperious? A lifehacker? When was the last time you admitted an error and made a dramatic course correction? Most everyone has a style, and if you pick the wrong one, then all the strategy, tactics and execution in the world won’t work nearly as well.

As far as I’m concerned, the most important of all, the top of the hierarchy is attitude. Why are you doing this at all? What’s your bias in dealing with people and problems?

As much as this is true for the business world, the military could take some cues from this hierarchy as well. Everyone loves talking tactics and execution because they’re immediate and tangible. Generals can be satisfied they’ve accomplished something as they watch a Predator feed showing a strike that they signed off on. But strategy? Goals? I don’t hear as much real conversation going on about these items and that worries me (I admit, they could be going on and just not making it all the way down the pile to little guys like me…but, I’m skeptical).

In the fog and friction of war it is very easy to become saturated in the day-to-day details and soon forget why we’re fighting in the first place, I see it ALL THE TIME. Since 4GW plays out at the moral level (a battle of ideas) understanding the reason we fight is of the utmost importance. Regarding Afghanistan, it is worrisome that, as a country, we are still unclear on the main objective(s) of a continued presence. As Andrew Exum, Abu Muqawama (of the Center for a New American Security) wrote last month,

Last week, I flew to Boston to give a talk on Afghanistan to a collection of senior-level government officials from the United States and abroad as part of the Kennedy School’s Executive Education Program. All credit goes to the excellent audience — which happily agreed to listen to a talk on strategy and operations from a 31-year old and peppered me with some great, thought-provoking questions. But without a doubt the most persistent questions I received were along the lines of “What are we doing in Afghanistan and why are we there in the first place?”

The fact that these are the questions that I am now receiving from career public servants in our nation’s departments and agencies should be a huge warning bell for the administration. And it means that Kagan is exactly right — this is now Obama’s war, and he and Stan McChrystal need to explain to the American people in non-IR-speak why we are in Afghanistan and what we are doing there. (Hint: if you cannot explain your policy to folks in the 3rd Congressional District of Tennessee in a way they can understand it, you might need to change your policy.)

Unclear goals and strategy lead to ineffective tactics and execution. It has to be goals and strategy before tactics and execution, not after….and we haven’t even touched on attitude or approach (discussions for another day).

Whether in the business world or the military Godin’s Hierarchy of Success is a great paradigm from which we can all learn a great deal. Thanks Mr. Godin!

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Chances are when you scan the menu at your local neighborhood restaurant and select an item, you do so with the belief that you arrived at your decision independently.  You probably listened to your stomach to see what sounded tasty and then listened to your wallet and checked to see where the best value for your money lay.  However, what you may not realize is that many of your decisions were made for you before you even stepped in the restaurant.

Greg Rapp is a menu engineer and in this Today Show piece he explains how restaurants design their menus in such a way to encourage specific decisions on the parts of their customers. For example, at a smart restaurant you will never see “$” sign anywhere on the menu. By pricing the fresh fish as 26 rather than $26, the price is softened in such a way that causes patrons to disassociate the number they are viewing with the actual dollars in their wallet. A number without a “$” is much less intimidating.

Next, rather than listing the prices in an organized fashion such as cheapest to most expensive or in a single column, Rapp designs menus with prices hidden in the text describing the food. In designing the menu this way the customer is less focused on how much the item costs and is more likely to spend money based on the food itself.

Finally, have you ever wondered who pays for those absurdly high-priced items on the menu? No one. They are just there to make you feel better about paying for something a little bit cheaper.  Most people would never pay $20 for a hamburger, but if it’s sitting just below a $120 seafood plate it sounds like a much more sensible decision.

This psychology of pricing doesn’t just apply to restaurants.  Supermarkets are masters of manipulating your decision-making process.  Check out this 2-min video.

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