Guest Post « 800 CEO Read

January 2, 2013

Megaupload: Crooks or Corsairs?

Filed under: Big Ideas,Finance and Economics,Guest Post,Innovation,Uncategorized — 800-CEO-READ @ 4:57 pm


Rodolphe Durand	Jean-Philippe Vergne

by Rodolphe Durand & Jean-Philippe Vergne

Kim Dotcom and his company Megaupload have just crossed over to the dark side. What can we learn from this contemporary pirate’s tale? Once a hard-working employee for well-established companies, Kim Dotcom became a crook, stealing for his own good whilst the State desperately tried to make new legislations to prevent file sharing from proliferating. Just like in a regular TV series, in the end the FBI stepped in to forcibly question Pirate Dotcom on the island where he had found refuge. The FBI also stopped to lay up the vessels of his computer-geek fleet. After Napster did it for music, Megaupload stirred things up with the diffusion of TV programs and films, posing questions about laws regarding intellectual property and the exchange of cultural contents. Indeed, recent events are beginning to show signs of a recurring motif in economic history.

With each great capitalist revolution—orchestrated by States that impose their norms on property and exchange in the name of their sovereignty—we see a new corresponding form of organized piracy emerge, whether it is in the sea, via radio waves, or on the internet. This constitutes a historical motif that is essential to capitalist dynamics and that penetrates a whole collection of peripheral, dissenting and innovative organizations at the heart of State-Company relations. In effect, the actions of pirate organizations highlight the evolution of capitalist societies ever since the Americans made their very first discoveries. Indeed, with every industrial revolution, sovereign States have either granted or passively allowed monopolies to bloom in order to control the economic flux generated at the heart of new capitalist territories (e.g. the monopoly of Western Companies in the Indian Ocean, of AT&T in telecoms, of Microsoft and Google in new technologies). Pirate organizations are consistently challenging this state of affairs. In the latest movement, certain “pirates” have chosen to return to the legal spheres, finding jobs at the heart of the very States or companies that they once threatened. They have become “corsairs.”

This “corsairisation” of pirates is one of the most powerful sources of economic and social change. The pirates of the seas in the 17^th Century fought against the monopolization of the companies of the Indies and yet every country in Europe warmly welcomed pirates that had become corsairs in order to thwart the exchanges of their rivals. Pirate radio stations at the start of the 20^th Century were transmitted over the airwaves evading all state authorization, but after the war they were swiftly incorporated onto the radio broadcasting scene. Hackers and computer pirates on telephone networks and on the internet are constantly challenging program censors operated by the giants of the sector. However, the best hackers in fine either succeed in creating their companies or end up being hired by Microsoft and Google. Kim Dotcom pushed the boundaries of the law several times. Perhaps this time definitively as he seems to have sunk to the depths of robbery, rather than rising to the spirit of piracy.

Thus, there can be no capitalism without sovereignty and without rules. But equally, if we allow the regulation of territories and the normalization of exchanges to continue to surface, then even more spaces will be created for pirate organizations to nestle into. Some pillage and plunder, others radically innovate, and some even do both at the same time. The challenge lies therefore in unearthing and “corsairising” the initiators of radical innovations by fighting the thieves. Of course, this is a difficult decision to make, but recent cases have shown that sometimes even companies and States can miss the mark and reject the very innovations that are most in line with society.

The Megaupload affair highlights the importance of rethinking laws on intellectual property and on the creation and distribution of cultural goods. Another key issue lies in our incapacity to think of economic evolution in a more inclusive way. Perhaps one way of resolving this could be by actually trying to work with the pirates who push the limits of capitalism with their radical innovations that promote new modes of exchange and embody new values?

Rodolphe Durand is the GDF-Suez Professor of Strategy at HEC Paris. In 2010 he received the European Academy of Management’s Imagination Lab Foundation Award for Innovative Scholarship. His work has been published widely in academic journals.

Jean-Philippe Vergne is an assistant professor of strategy at the Richard Ivey School of Business at the University of Western Ontario. His ongoing research on the global arms industry received the inaugural Grigor McClelland Doctoral Dissertation Award in 2011.

Rodolphe and Jean-Philippe recently published The Pirate Organization: Lessons from the Fringes of Capitalism on Harvard Business Review Press.

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June 24, 2011

Bursting the The Filter Bubble with Phil Gerbyshak

Filed under: Book Reviews,Guest Post — dylan @ 1:48 pm

We exist under a mountain of books here at 800-CEO-READ, so we share them fairly regularly with our friends. And there’s one friend in particular that always returns the favor—not by giving us more books (that would be somewhat cruel), but by giving us reviews of the books that we give him. And Phil Gerbyshak has come through again. Last Friday, I received a message from him with the following review of a great book on how personalized search is controlling what we see on the Internet—Eli Pariser’s The Filter Bubble.

Hey! Your Google Search Isn’t the Same as My Google Search
BY PHIL GERBYSHAK

The Filter Bubble is a fascinating book that explains the secrets of social search and unlocks the real reason Google and Facebook are worth billions. Don’t worry if the term “social search” is new to you. I didn’t understand it very well either, but reading this book helped me get it much more. A quick and not too complicated explanation is that social search takes who you’re connected to, plus all the things your computer has collected surfing the Internet, and creates a customized result whenever you search on Google, Facebook, and other Internet companies.

From Google’s click signals to Facebook’s customizing your news feed based on what you click most often, this book taught me a lot about search I didn’t know. And if you’re curious why your search results are different than your neighbor’s (and how this filters your world), this is the book for you.

Thankfully there are ways to prevent the filter bubble from shaping your world too much. And there are also positive implications to personalized search, and The Filter Bubble is full of stories and explanations that will help you understand how your business could benefit and hopefully capitalize on social search.

This was a fascinating read, and one I recommend for anyone looking for a deeper understanding of the technology behind Google, Facebook and the other data collection companies out there.

ABOUT THE AUTHOR

Phil Gerbyshak is Marketing Technology Strategist for Turning Minds. He works with small businesses to increase employee & customer engagement (and profits) by teaching them to tell their stories more clearly inside and outside their organization, using the right tools to the right audience. It’s really not about the tools; it’s all about the conversations you participate in and the connections you create and cultivate.

Phil stopped by the office today and left three books happier, so hopefully we’ll hear from him again soon. If you’d like to learn more about The Filter Bubble, check out Eli Pariser’s talk at this year’s TED Conference.

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June 1, 2011

Content Rules Interview with Phil Gerbyshak

Filed under: Guest Post,Interviews — dylan @ 10:06 am

Earlier this year, I passed on a copy of Content Rules to friend of the company and all-around awesome fellow Phil Gerbyshak. And, being the good friend that he is—and proving that content does, in fact, rule—he returned the favor by giving us a review of the book when he was done with it. But Phil didn’t stop there, he went out and got an interview with the authors and gave that to us, too.

I’d like to thank the authors for doing it and Phil himself for passing it on, and without further ado, here is that interview with Ann Handley and C.C. Chapman, authors of Content Rules: How to Create Killer Blogs, Podcasts, Videos, eBooks, Webinars (and More) That Engage Customers and Ignite Your Busine.

Phil: Why does “content rule?”

Ann: There are lots of reasons…. like:

1. The “rules” of Marketing and PR have changed, and
2. Technology has enabled all of us to easily publish web sites and webinars and videos and blogs and so on on the web; and
3. Your customers are looking for you online. They are Googling their purchases; they are surveying their social networks before they make
buying decisions.

But the key thing is this: Content is the best thing a brand, company, individual, church, rock band or any organization can use to tell their story. Why is that? Because what you say and how you say it is a key way to differentiate yourself. You aren’t like everyone else, right? So why sound like everyone else in the way you communicate your core value to your potential audience?

C.C.: This isn’t something new even though I feel like our book has reminded people of the fact. Since the first caveman drew on the walls of the cave people have been excited by content. Anyone can create content for their company, but the challenge is creating compelling content that stands out from the masses.

Let’s face it, the Internet is a constant fire hose of information unlike we’ve ever seen. Add to that newspapers, magazines, television and every other input we get during the day and we are buried in content. The trick is somehow making your content break through that and reach the people you hope to turn into customers.

Phil: How much time does it take to do content right?

Ann: I wish I could offer something definitive here, and say YOU CAN CREATE AMAZING CONTENT IN 30 MINUTES A DAY! (But wait – there’s more! If you act now I’ll throw in a SECOND Ginsu knife… absolutely free!)

I’m kidding.. of course. That’s a hard question—there’s no magic answer to that question. I’d say “how much time on a regular basis can you commit sustainably?” Because content is not a one-off; you’ll need to make a long-term commitment. So what can you spare on a consistent, regular basis?

C.C.: If only it was as easy as punching a time clock. The truth is that it takes longer than you think. Most people skip right to the creating without thinking about the strategy or the “why” of creating the content. That part can take longer than most people think. After that it depends on what you are creating. A simple blog post could be done over your morning coffee, but a how to video is going to take much longer.

Your level of perfectionism will have the greatest effect on your time table. If you are constantly nitpicking and editing something you’ve
written it is going to take much longer than if you just post it and see what comes.

Phil: Is there anyone who can’t benefit from a strong content strategy?

Ann: Hmm. I would say no. But then again, I don’t believe in absolutes (except perhaps when it comes to love). ; )

C.C. Absolutely no one.

Phil: What’s the one thing people don’t realize about content?

Ann: That quality matters way more than quantity. So often I see blogs that are updated regularly, but they are boring pabulum without any joy in them. That’s a crying shame to me, because it’s a missed opportunity. I’d rather see a really great piece of blog that’s updated irregularly than I would a blog fed daily with the equivalent of Marketing Gruel.

C.C. That it isn’t a numbers game. Yes, the bigger your audience the better in some cases, but I’d argue that I’d rather have 100 people read my eBook that have a high chance of buying my product than 1,000 casual readers who will never come back. It is the age old quality over quantity argument.

The other thing that everyone seems to forget is that this is a long term play. Content is something you need to be creating and keep on creating. We talk about “stoking the campfire” and it is so true. You might have something flame up in a blaze of glory attention, but it is going to burn out and fade away just as fast. You have to keep creating and be smart about it so that it integrates into all other aspects of your business. This isn’t something that sits off on the side and is done on it’s own.

Phil: Who are your favorite examples of companies who do content right?

Ann: Open View Ventures—a VC company right here in Boston (where C.C. and I live) has an amazing blog with really good, insightful content.

Also great: Workshifiting, which is published by Citrix.

Also amazing: ChineseDrywallProblem.com, a site published by Roberts & Durkee, a Florida law firm, to help people struggling with health issues resulting from living in houses with toxic imported drywall.

All of these examples are particularly good because they focus on one of our key content rules: Share or solve, don’t shill. They share resources and solve problems for their customers and would-be clients, they don’t sell. They put Content Before Contact.

C.C.: The one that just this week caught my attention again is Google. Most people don’t know that they have a speakers series called Talks@Google and they always video tape them and put them online. But, in March Lady GaGa spoke there and this introduction video they made for her talk really blew me away because it takes all the things that make Google what it is and reimagined it into this great introduction. I showed it to my kids and while rocking out they said, “I didn’t know Google did all of this.”

At the other end of the budget spectrum is Heyday Footwear here in Boston. They are a small business, but they don’t look it and have been active on Twitter and producing an ongoing video series with the owner as the host. They are a shining example of how a small business can and should be leveraging content.

Phil: If someone wants to get started doing content, what’s the FIRST thing they need to understand?

Ann: WHY they are doing it. What’s the purpose? What are you hoping to achieve? Content for content’s sake is awesome if you are a novelist; not so great if you are business.

C.C.: That they can’t do it all. Figure out what you are good at and enjoying creating and then play to that strength. Get as good as you can at that and focus on that. You can always expand later, but if you try to do everything at once it is not going to work. Plus, PLEASE
answer the question of why you are wanting to do this? Just going out blind is not going to help your bottom line.

Phil: What are 3 things a business needs to ask themselves about creating their content strategy?

Ann: 1. Again, first and foremost: WHY are you—as a business—doing what you are doing? Why are you publishing what you want to publish? What goal are you trying to achieve?

2. Then: WHO are you trying to reach? Where are they? Are they online? Are they on Facebook? LinkedIn? Or are they primarily offline?

3. And finally: WHAT can we publish that they will find both useful and enjoyable? What problems can we solve for them? What resources can
we share? And how should we go about that? How do we create stuff they’ve love and appreciate in a sustainable manner?

C.C.: Why do we want to do this?

How is this going to save us money or make us more money?

Are we committed to this for the long term?

Phil: Anything else that you want to share?

Ann: Final thought: When it comes to content, play to your strengths. Don’t try to be all things to all people, but pick your niche and audience, pick how to communicate with that niche, and build your Content from there. You have to love what you are creating—otherwise it’ll fail.

And also: A personal plea: I started my career as a journalist, and those who are trained in journalism often make awesome content creators, and a lot of them are looking for jobs right now. Some companies—like Eloqua, here in Boston—have hired Corporate Journalists to create content for them. And I encourage any company who can afford it to follow a similar route, even on a contract or part-time basis. Journalists know how to write, they have a passion for creating content, and (more importantly) they have a nose for a story. So if you feel like you need help—try your local college journalism program graduates, or former journalists.

C.C. Never forget to have fun with this. People forget that it is fun to create content and I always like to remind people. You are not Spielberg or Hemingway and probably never will be so stop getting stressed over if what you created is perfect.

ABOUT THE AUTHORS

Ann Handley is the Chief Content Officer of Marketing Profs, a rich and trusted resource that offers actionable know-how to its 365,000 subscribers. As a thought leader and writer with a passion for good content, she writes and blogs extensively about online business, marketing, and sometimes just life.

C.C. Chapman is a media creator, entrepreneur, and online marketing expert. He recently launched DigitalDads.com—a site where a dad can be a guy—to serve as a cornerstone of the online parenting space.

You can learn more at ContentRulesBook.com.

ABOUT THE INTERVIEWER

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April 19, 2011

Content Rules, Oh Yes It Does! – A Guest Post from Phil Gerbyshak

Filed under: Book Reviews,Guest Post — dylan @ 2:20 am

I was pretty annoyed when RadioShack started calling themselves “The Shack.”* Do they really think that it will make them hip and relevant to people trying to make sense of the digital world. Why not just try to resolve the very real issues in the organization and try to communicate better with customers (something they are notoriously bad at)?

*Don’t even get me started on the nonsense of National Geographic being convinced by someone, somewhere that it would be a good idea to call themselves Nat Geo. Next thing you know, text books will begin referring to George Washington as G-Wash.

Besides, when I think of “The Shack” I think of someone who is already hip and relevant to people trying to make sense of the digital world—his name is Phil Gerbyshak. Phil is a friend of the company and the author of 10 Ways to Make It Great! and #Twitterworks. As of today, he is also officially a part of the team at Turning Minds. Phil asked me some time ago if I’d send him a copy of Content Rules to review, and was kind enough to turn in a review for the blog over the weekend. Oddly enough, Phil and the book he reviews would probably be a great help to the folks over at “The Shack.”

Content Rules, Oh Yes It Does! BY PHIL GERBYSHAK

Unless you’ve been living in a cave, you know content marketing is important for your business. Writing articles about your business that appeal to your customer helps your company’s bottom line by making your business more findable online when people search for what they are looking for. But what should you write about it, and how can you keep up with the endless need for content and balance that against the need to actually RUN your business?

Enter the book Content Rules by Ann Handley and C.C. Chapman. It’s a brilliant book, and it offers you all you need to keep your business website up-to-date with current information that engages your customers, and (better yet) compels them to share it with others online and offline.

As someone who teaches businesses about content, I’ve been looking for an all-in-one book that I can give to my clients to read and learn from about content marketing. This is that book! Content Rules helps you produce the RIGHT kind of content that your customers and potential customers will love… and share with their friends, creating big business for you.

Content Rules walks you through all the basics, teaching you how to create interesting stories, videos, and blog posts. Of course, that’s only the first part, and thankfully, this book doesn’t stop there. It teaches you the next, and often overlooked step of sharing the content as widely as possible online to engage your existing customers, intrigue new folks, and ultimately, grow your business.

If I had one bone to pick, it’s that it doesn’t offer a perfect blue print for creating viral content. And then I remembered: that’s because there’s no such thing.

I really can’t say enough good things about this book, and I recommend business owners and marketers of all shapes and sizes pick up this book.

ABOUT THE AUTHOR

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November 29, 2010

(Only) You Can Do It!

Filed under: Guest Post,Leadership — dylan @ 6:10 pm

As the economy recovers, as it surely must, there are going to be a lot of workers being tapped for executive positions for the first time—and hopefully many others that reenter the workforce in leadership roles. And, for those workers, Scott Eblin’s newly revised and expanded edition of The Next Level: What Insiders Know About Executive Success, released last month by Nicholas Brealey Publishing, has come at a fortuitous time.

This book is akin to Michael Watkin’s classic, The First 90 Days, offering practical steps to succeed in one of the most grueling shifts you’ll ever face in professional life. The post below is an expanded version of one of Eblin’s nineteen “Coachable Moment” sidebars, which are a highlight of the new edition. In it, Scott quickly reminds us that as we enter that “next level,” it’s not always our personal greatness that matters most to the organization, but the indispensability of the role we play and how that can free others to go great work.

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What Is It That Only You Can Do? BY SCOTT EBLIN

One of the typical challenges that leaders have when they take on a bigger job is figuring out what they need to let go of and what they need to pick up in terms of where they spend their time and attention. There’s a simple question I like to ask executives to consider as they sort this out: What is it that only I can do?

When I’m coaching people through this question, I’m quick to point out what the question isn’t about. It’s not about personal indispensability. As the founder of modern France, Charles deGaulle said, “The cemeteries are full of indispensable men.” Yeah, as special and wonderful as each of us are in our own unique ways, none of us are indispensable. If we get hit by a bus, it’s likely that the bus is carrying someone who can step into our role.

But, for now, you are the only person filling your role. So, it’s important to ask that simple question in a slightly different way: What is it, given the role that I’m in and all of the unique resources and opportunities that come with it, that only I can do?

If you think about it, there’s probably a pretty short but very high impact list of things that only you can do as the person filling your role. What is it that comes with your role that enables you to get things done that others can’t? It could be any number of things including:

Decision making authority
Participation in leadership conversations
Access to key people
Ability to get the meetings you need
Budget
Visibility

With characteristics like that, your list of the things that only you can might include knocking down barriers for your team, securing resources, building alliances, setting goals or energizing others around a vision. Your list probably shouldn’t include activities just because you could do them or are good at doing them. Those likely aren’t the list of things that only you can do in your role. Focus on the things that will really leverage the unique opportunities of your role.

Here’s an example of how it plays out in real life. One of my clients was the president of the Federal business unit of his company. He’s a talented guy with a lot of experience and capabilities. In a conversation with his team about the “What is it that only I can do?” question, someone said to him:

I’ll tell you what only you can do – be the president. When I’m making that final call on a deputy undersecretary of a federal agency to sell a big contract, I need you to show up as our president. I need you to show your interest, that you’re well informed and say that you’ll make sure we deliver for them. I don’t need you to work with us on the third draft of the proposal or run the numbers for the fifth time. We’ve got other people who can do that. I need you to show up as the president because you’re the only president we’ve got.

The same is true for you. Whatever role you’re filling for your team and organization, approach it like you’re the only they’ve got. What is it, given your role, that only you can do?

ABOUT THE AUTHOR
Scott Eblin is the co-founder and president of The Eblin Group, Inc., a leadership development and strategy firm that supports organizations in ensuring the success of their executive level leaders. Featured on ABC News and in Investor’s Business Daily, the Washington Post and Harvard Management Update, Scott is a former Fortune 500 executive, with a leadership development client list that runs the gamut from Astra Zeneca to the U.S. Navy. Scott is a graduate of Davidson College and holds a masters degree in public administration from Harvard University. Scott has a certificate in leadership coaching from Georgetown University and is a member of the faculty for that program. He blogs regularly on leadership at the Next Level Blog at www.scotteblin.com.

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November 18, 2010

A Guest Post from Pinkett and Robinson

Filed under: Guest Post — dylan @ 12:34 pm

Randall Pinkett was the winner of season four of The Apprentice, and the show’s first minority winner. Rather awkwardly, after he was “hired,” he was also the only winner ever asked by “The Donald” to share his victory with the runner-up. Not a fan of the show, I didn’t know of those events until I picked up Dr. Pinkett’s recently released Black Faces in White Places, but I became a quick fan of Pinkett the first time I sat down with his book. It was coauthored by Jeffrey Robinson (with editor Philana Patterson) and published by Amacon (the imprint of the American Management Association), and it quickly begins tackling the issue(s) of race in America—straightforwardly and without flinching.

But that is not the what the book is really about. It is a book about success. The authors take on the issue of race because it still is an issue—and it’s of central importance to accurately determine how the dynamics differ for African-Americans as they move throughout a career, and how that affects their possible success. By approaching the topic openly and honestly, Pinkett and Robinson are able to discuss how to achieve greatness and create a powerful, lasting legacy by learning, playing, mastering and redefining “the game.” In doing so, they uncover and describe (as the subtitle of the book suggests) “10 game-changing strategies,” which they were kind enough to summarize and share with us in the post below.

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Ten Game-Changing Strategies to Achieve Success and Find Greatness
BY RANDALL PINKETT & JEFFREY ROBINSON

1. Establish a strong identity and purpose. Your ethnic and cultural identity is a great asset. Amplify it as a competitive advantage. A strong identity reflects an appreciation of your uniqueness and its value. A strong identity grounds you; a well-defined purpose gives you the self-confidence to know you can choose your own path, rather than follow society. Start by asking yourself, “What does it mean to be Black or African American?”

2. Obtain broad exposure. Seek out different experiences, perspectives, places, and people that bring about a healthy level of discomfort. Moving beyond your comfort zone will expand your worldview and sense of possibilities, contribute to how you construct your identity and define your purpose, and enable you to develop and grow.

3. Demonstrate excellence. Being good at what you do is not enough. You must be excellent. Achieving excellence takes combining the gifts and passion you naturally possess with discipline (the time, effort, and hard work you are willing to put forth) and your beliefs (the translation of your thoughts into empowering actions and outcomes).

4. Build diverse and solid relationships. Historically, African Americans have had to adapt to the codes of the white majority. But in a global marketplace and a United States where minorities are the majority, code switching encompasses a wide array of standards and norms. Reach out and network with the aim of creating a culture where everyone sees the value in learning more about one another.

5. Seek the wisdom of others. There is always something you can learn from others, whether younger, older, less experienced, or more capable. Learn from others’ mistakes as well as their successes. When you seek the wisdom of others, you develop your own. Learn from your peers. Find a mentor, and be one, too. The best way to learn is to teach.

6. Find strength in numbers. Surround yourself with people who share your perspective, affirm your values, and support your goals. Cultivate an inner circle whose members are all comfortable with each other, trust each other, and watch out for each other. (The key isn’t necessarily ethnicity, but compatibility.) Get involved in collaborative organizations, which range from Black Greek-lettered fraternities and sororities to the NAACP.

7. Think and act intrapreneurially. Apply an entrepreneurial mindset within an established organization to effect institutional change. You must maintain a strong sense of self-determination and work within the system to make a big impact.

8. Think and act entrepreneurially. You must take control of your career; you must dare to be in the driver’s seat of your destiny; and you must be in a position to pursue your economic prosperity. The entrepreneurial mindset of passion, creativity, resourcefulness, courage, and resilience is mandatory for success in the twenty-first century. Work outside the system to build wealth for yourself and the community as a whole.

9. Synergize and reach scale. To redefine the game you must create mutually beneficial connections between people and between organizations to fulfill their collective purpose — and then amplify their collaborative actions to have the broadest or deepest possible impact in a way that levels the playing field for everyone.

10. Give back generously. Each and every one of us represents the continuation of a countless number of legacies and we can blaze trails for others to follow. Today, African-American giving is no longer only about survival or even helping each other; it is about empowerment and collective self-determination. To address the many challenges in our community, we must leverage our combined efforts through organizations and businesses to reach as many people as possible.

AUTHOR BIOS
Randal Pinkett, Ph.D., was the winner of season four of The Apprentice and the show’s first minority winner. He is the co-founder, chairman, and CEO of BCT Partners, an information technology and management consulting firm. Dr. Pinkett is based in Somerset, New Jersey.

For more information please visit www.randalpinkett.com and follow the author on Facebook and Twitter.

Jeffrey Robinson, Ph.D., is a leading business scholar at Rutgers Business School and lives in Piscataway, New Jersey.

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November 8, 2010

Explaining Goat Economics by Vikram Akula

Filed under: Global Business,Guest Post,Innovation,Thought Leaders — dylan @ 3:53 pm

Vikram Akula, founder and chairperson of the SKS Microfinance, was kind enough to provide a post for us this week. In it, he tells the story of how he ended up meeting with some of the richest men Earth to explain to them how the poor make money.

His new book, A Fistful of Rice, Is being released tomorrow by Harvard Business Review Press.

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Explaining Goat Economics BY VIKRAM AKULA

Today SKS Microfinance is the largest microfinance institution (MFI) in India. But it wasn’t so long ago that SKS was just an upstart idea. When SKS finally did gain traction, I found myself in the surreal position of explaining our model to the world’s biggest business and philanthropic leaders who wanted to learn more about harnessing microfinance to alleviate poverty.

In early 1997 the first-ever Microfinance Summit was held in Washington DC. Hillary Clinton, then First Lady, gave the keynote address to an audience of 3,000 people from all over the world. I was in the process of raising seed capital for SKS through ‘tea and samosa’ parties that relatives and family friends hosted for me. But I was a PhD graduate student at the University of Chicago and had no money myself. I got into the Summit for free by volunteering as an official timekeeper for the sessions.

It was hard to approach panelists when they saw me as just a student volunteer but I still took every chance to tell them about my project. I approached the ‘Who’s Who’ list of microfinance: the heads of Grameen Foundation, the Self-Employed Women’s Association (SEWA), Cashpor and Share Microfin. I hustled and talked and introduced myself to anyone interested in my plan. Unfortunately, no one would take a chance on the idea of a for-profit microfinance institution. I hadn’t planned on starting my own organization, but there was no other choice. I believed too strongly in the idea to let it slip away.

Fast forward seven years to 2006. After lots of hard work, help and guidance from early donors and supporters, along with plenty of trial and error, SKS was really taking off. In March 2006, SKS counted 200,000 poor women borrowers in India. I announced an ambitious “7 by 7” goal of reaching 700,000 members by March 2007.

In 2006, SKS was fortunate enough to get some favorable media attention. Others far away from India took notice too. The Gates Foundation was considering launching a microfinance funding program and Bill and Melinda Gates had set out to learn everything they could about microfinance. Melinda Gates had already come to India to see microfinance at work in villages. Their next step was to invite eight MFI practitioners to a roundtable in Seattle. We met in a conference room in a nondescript (but, as I was later told, bulletproof) building. Bill Gates Sr. would be joining Bill and Melinda, along with another “friend” of theirs. When they walked into the room, we saw that the friend was Warren Buffett.

We had a wide-ranging discussion on the basics of microfinance and how it was practiced in various parts of the world. Then Bill suddenly asked, “Hold on. What are people possibly doing where they can pay 28% interest on a loan and still make money?” I took a deep breath and started explaining what I call “goat economics.”

I described how a landless agricultural worker might use a 2,000 rupee loan (about $40) to buy a goat. She continues with her daily work and takes the goat along with her to the fields. The goat eats grass and virtually anything else, so there is no investment from her end. A goat gives birth to one or two kids a year and the value of the offspring is about 50% of the mother, or about 1,000 rupees. Even if a borrower took a 28% loan, she makes a return of about 70% on invested capital.
An interest rate of 28% might seem high, but demand for SKS loans was exploding. We had almost no defaults among borrowers, and re-payment rates were about 99.4%, higher than re-payment rates in the west. Clearly, the system worked for the poor.

There are four other reasons why microenterprises yield very high returns. First, borrowers tend to draw on family to help with microenterprises, which is far more productive than hiring wage laborers. Think of your classic immigrant-owned grocery story in the US where sons and daughters help out. Second, in the informal economy, the poor make too little to pay taxes (they typically make less than $2 a day when they join SKS.) Third, poor entrepreneurs have little infrastructure and overhead costs. A village grocery is a homefront shop, not a separate rental property. And fourth, for the first three reasons, capital is only a small percentage of a new micro-venture’s input. What’s far more important for a micro-entrepreneur is timely access to capital.

As I finished my explanation of “goat economics” I watched Bill Gates scribble on his note pad. A thought popped into my head: “I’m explaining to the richest man in the world how poor people make money on goats.” It was an amazing and affirming moment.

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ABOUT THE AUTHOR

Vikram Akula is the founder and chair of SKS Microfinance. In 2006, TIME magazine named him one of the world’s 100 most influential people. He has received several awards, including the World Economic Young Global Leader (2008), the Schwab Social Entrepreneur of the Year in India (2006), and the Ernst & Young Start-Up Entrepreneur of the Year in India (2006). He has been profiled in media ranging from CNN to the front page of The Wall Street Journal. The author of A Fistful of Rice (Harvard Business Review Press, 2010), he lives in Hyderabad, India.

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June 29, 2010

The Doorbell is Dead: A Guest Post from Ed Muzio

Filed under: Guest Post — dylan @ 9:00 am

“I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived. I did not wish to live what was not life, living is so dear, nor did I wish to practice resignation, unless it was quite necessary. I wanted to live deep and suck out all the marrow of life … ”

—Henry David Thoreau

I’ve always loved Thoreau. But, if not an outright misanthrope, he was certainly not what you would call a “team player.” Instead of working to change the culture he was so uncomfortable living in and opposed to (as his essay on non-violent Civil Disobedience would later influence Mohandas K. Gandhi and Martin Luther King Jr. to do) he escaped into the woods. His influence on the world was through his writing, not his actions.

It may be a bit pretentious of me to use a Thoreau quote to introduce an article from Ed Muzio, author of Make Work Great: Supercharge Your Team, Reinvent the Culture, and Gain Influence—One Person at a Time, but I found myself thinking about the idea of “living deliberately” a lot while reading Muzio’s chapter on “Overtness About Task.”

Just as Thoreau desired to “live deliberately,” Muzio counsels us to work overtly. And, instead of documenting the ills of the culture we work in (otherwise known as complaining), he teaches us to use overt purpose and action to change it. To understand Muzio, you can take the Thoreau quote above and change it to “I did not wish to undertake what was not work, time is so dear, nor did I wish to practice resignation, unless it was quite necessary.” And it is never necessary.

Muzio describes six specific types of overtness, beginning his section on overt purpose by asking “What are trying to do? It’s amazing how difficult it can be to answer that question in a meaningful way … We often overlook this question because we mistakenly assume that the answer is self-evident. It rarely is.”

Now, without further digression, here is Ed Muzio.

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The Doorbell is Dead by ED MUZIO

Literally, my doorbell is dead. It’s one of those battery operated wireless ones. I think it got some water in it, and it doesn’t work. Plus, my front door is fifteen feet behind a locked gate, so there’s no way to knock. Conventional wisdom says, if you drop by my house unannounced, you’re not getting in. It’s been this way for over a year and it has yet to be a problem.

I should perhaps be embarrassed by this, but I recently realized why it really doesn’t matter, while giving a friend a ride across town. When my car stopped in front of our destination—a relative’s house—my friend stepped out of the car, thanked me, and immediately initiated a cell phone call. As she was putting her phone away, the front door cracked open and she strolled in, carefree user of the new-age doorbell.

That’s why nobody has yet complained about mine: nobody uses it anyway! Figuratively as well, the doorbell is dead. And its death has bigger implications to our daily lives than many of us care to consider.

There’s a reason we call this the information age, and it’s not because we’re all so much smarter. It’s because we all have access to so much information, at our fingertips, all the time. I can track my package, check the status of my flight, and monitor my stock portfolio or my company’s financial status, all in a second, all with a click. I’m more informed than anyone in my position in history has ever been. And yet, being so informed has not made my life easier. If anything, I think I’m probably busier than a counterpart in my position would have been 20 years ago.

For one thing, I’m constantly doing things like checking the status of my packages and my flights! That didn’t used to be an option, but now that it is, it seems foolish not to avail myself of it. Why in the world would I choose to be uninformed, when it’s so easy to rectify my ignorance by learning exactly which city my all-important box is traversing at the moment?

Worse yet, everyone now has the expectation of immediacy. At times it feels like I’m fielding client questions and queries day and night, all of whom expect an instant answer. I pride myself on customer service, but it can be a challenge! If you supplement “client” with “customer,” “manager,” or “stockholder,” I’ve probably described your job too.

And it’s not just business contacts. Some loved ones have also come to expect an instantaneous reply when they call. I vividly recall a time when I returned calls to friends and family after I got home for the evening, or if it was a particularly long day, the following evening. Now, the calls come into my cell phone at all hours. If I don’t respond within a few hours, I end up on the receiving end of a concerned and vaguely annoyed follow-up call: “didn’t you get my message? I thought you would call me back over lunch.”

The problem is, my capacity for handling information has not expanded commensurately with the information explosion. I still have only two hands, only two ears, only two eyes, and only one brain. I may read a few hundred more emails per day than I used to, but I don’t read them a few hundred times faster. And my decision-making capacities still have limits as to how much information they can incorporate. For better or worse, I’m still just human.

And you, my friend, are in the same boat as I am. Admit it! You haven’t grown four extra hands or two extra brains either. That’s why it’s crucial for all of us to walk around with a well rehearsed script of what’s we’re trying to do, what I call a Verbalized Summary Objective Statement, or VSO. The VSO is a script that you play to others, and to yourself, as a reminder of what you’re working on. It’s also a filter that helps you turn on—or turn off—your most important sources of information. And, it’s a statement of your output that you can use at the end of the day to check that you’re making progress. If you are, you can feel satisfaction. If you’re not, you can make an adjustment. Either of those options is preferable to just going home exhausted, vaguely wondering when you started working so hard, and why you can’t seem to stop.

Tomorrow morning, when you first get to your desk and before you start doing anything, see if you can articulate your purpose for the day, or maybe the week, in about 90 seconds. Try writing it down, or better yet, say it to yourself a few times until you’ve memorized it. Then, use your little infomercial as your blueprint for the day. Whenever you’re about to engage with information — either a source of it, or a request for it — first check the contents of your VSO, and see how that source or request aligns with what you really want to be doing. In other words, pay attention to where you invest your mental and physical effort.

Probably, like me, you’ll find that not all of what is clamoring for your attention is in line with your own priorities. Although saying “no” is never easy, it is much easier when you have a burning “yes” to focus upon instead. Now that you know where you’re trying to head, you can begin to make the difficult decisions about what not to do. From here, the rest is up to you.

Actually, I do have one more suggestion. As you go through the day sorting through information, take a moment to check your calendar. If your evening plans include a visit to my house, be sure to take my cell phone number with you.

ABOUT THE AUTHOR
Edward G. Muzio, CEO of Group Harmonics, is the author of the award winning books Make Work Great: Supercharge Your Team, Reinvent the Culture, and Gain Influence—One Person at a Time and Four Secrets to Liking Your Work: You May Not Need to Quit to Get the Job You Want. An expert in workplace improvement and its relationship to individual enjoyment, Muzio has been featured on Fox Business Network, CBS, and other national media, and he has been cited in many publications including the New York Post, the Austin American Statesman, and Spirit magazine. He lives in Albuquerque, NM.

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