Innovation « 800 CEO Read

November 14, 2011

Thoughts on “Generation Sell”

Filed under: Careers,Current Events,Finance and Economics,General Business,Innovation — dylan @ 9:09 pm

“The characteristic art form of our age may be the business plan.”

That quote comes from an intriguing opinion piece called Generation Sell that was published in the New York Times this weekend. It is a piece about a generation just coming of age and today’s youth culture. It really deserves to be read in its entirety, but I think that if one passage can sum up the basic argument of the article, it is this:

Today’s ideal social form is not the commune or the movement or even the individual creator as such; it’s the small business. Every artistic or moral aspiration—music, food, good works, what have you—is expressed in those terms.

Call it Generation Sell.

The piece was written by William Deresiewicz, and there is so much I agree with and so much I disagree with in it—and it’s all wound tightly together in a wonderful and entertaining piece of writing. I’m a member of the generation he’s writing about, “people born between the late ’70s and the mid-’90s, more or less,” so I probably took it more personally than others, more personally indeed than I should, but I do take issue with some of Deresiewicz’s characterizations.

The first issue I ran into was in what I think was an unnecessary or misguided attempt to say something about hip-hop, which has undoubtedly had an affect on the generation and merits mention, but the sentence Deresiewicz offers doesn’t do it justice. After describing the (counter)cultural characteristics of the beatniks, hippies and punks, he briefly offers this:

Hip-hop, punk’s younger brother, was all about rage and nihilism, too, at least until it turned to a vision of individual aggrandizement.

Because that’s all he offers us on the subject, I feel it would have been better to have left it out altogether. Because hip-hop, like jazz or rock-and-roll, shouldn’t be defined as a “youth-culture” in and of itself, but as an art form that influenced youth culture. And while some of its currents may have been “all about rage and nihilism,” it began as party music more predominantly wrapped up in a social conscience and commentary, cultural irreverence, and the urban art forms of dance, painting and poetry. There may have been a decent amount of rage there, but I don’t get the nihilism. To “punk’s younger brother” seems to miss its roots and how it ended up as part of the youth culture he’s critiquing. It would be more accurate to define it as a part of the millennial generation in the way he did with jazz and beatniks, of which he wrote:

Theirs was a culture of jazz, with its spontaneity; … of flight, on the road, to the West; of the quest for the perfect moment.

Something like this might have been more accurate:

Theirs was a culture of hip-hop, with its social conscience and cultural irreverence (and confusion); of finding a voice, of the city street; of the quest for personal invention and aggrandizement.

But, of course, that doesn’t ring true either, because it isn’t a culture defined solely by rap. The generation wasn’t defined by any single movement in music as much as previous generations have been—movements that the major record labels could latch onto and push out into the wider consciousness to become the soundtracks of their generations. I think, if anything, this generation was shaped by the demise of the major labels’ cultural influence, the proliferation of independent labels, and all the noise, cross-pollination, creativity and confusion that has spawned from that. The last real uprising or rebellious “movement” in popular music was the rise of grunge music in the ’90s. Since then, the only movement I can detect is one toward ever smaller, more focused independent labels. It is, as the author rightly notes, a movement to a new business model, and he’s right that “selling out” has largely left our lexicon since then:

It’s striking. Forty years ago, even 20 years ago, a young person’s first thought, or even second or third thought, was certainly not to start a business. That was selling out—an idea that has rather tellingly disappeared from our vocabulary.

But I think there’s a more important reason for that. “Selling out” used to mean that a band was abandoning one of the little labels so many cherished for a major. People were passionate about those labels—Dischord, Matador, Thrill Jockey, Touch & Go, etc.—and a move like that felt like an abandonment of something just on the verge of exploding and choosing a paycheck over principle. “Selling out” was also applied to those who sold a song for use in advertising, a move I don’t think many begrudge bands for anymore due to the paradigm shifts in the music industry. And I think the larger idea that starting a business 20 years ago was considered selling out is a misnomer. I doubt anyone accused Fugazi’s Ian MacKaye of selling out when he started Dischord in 1980, or told Aaron Rose he was selling out when he opened Alleged Gallery in the early ’90s. Selling out would have been signing with a major label or taking a job curating art at the The Met.

And this leads me to a the generalized character at the heart of the article—the “hipster” that the author feels is “a lot more representative [of the Millennial Generation] than most of them care to admit.” The definition is bandied about and applied to many people, but I’m still not sure what exactly a “hipster” is (though perhaps n+1‘s What Was the Hipster could help), and putting it in the same category as the counterculture figures that preceded it seems problematic to me. Beatniks, hippies and punks were all actively participating in larger countercultures, and defined themselves with those movements. The one predominant characteristic of a “hipster” is that nobody self-identifies with it. It’s always a label attached to others, and usually with a heavy dose of derision. As such, it’s not really a counterculture that anybody’s participating in or defining themselves with as much as it’s, if anything, an alternative lifestyle loosely defined. I do agree with the author that this lifestyle and its bohemian values were heavily influenced by the baby boomers and “Bobo in Paradise” parents that David Brooks wrote about a decade ago.

But outside of the skinny pants and fixed gear bicycles, the irony and the vanity, the defining character traits of the so-called “hipster” lifestyle—being young, urban, fashionable, artistic, and entrepreneurial—are mostly seen as positives. And I think the aversion to the label “hipster” is an aversion to labels and definitions in general. This generation hasn’t fully defined itself and doesn’t want to be defined by others—even their peers. Statistically, it’s more likely to switch jobs many times, move to new cities, to freelance, start a business of the their own or work for themselves. I don’t think of this as the end of history of counterculture in any major way, but as the rise of many independent yet interconnected subcultures that are entering the popular culture in a way that mirrors how previous countercultures were absorbed and watered down—except that today’s subcultures seem to be entering it with more artistic and economic control and largely on their own terms.

The characteristic art form of our age is not the business plan; it is do-it-yourself, independent local production, scale and control. Most people I know didn’t start with a business plan and still don’t have one. They started with a vision and are working every day to realize it. They made the decision to strike out on their own and practice their art, craft or trade—and hope people value their vision enough to pay for it. My wife, a self-employed photographer, began Ellagraph Studios. My friend dwellephant is a working artist. My friends Daniel and Maria run Ball & Biscuit, the best catering company in Milwaukee. My neighbors run Orchard Street Press, an eco-friendly printing company. I could go on and on, and wouldn’t be able to find a “hipster” in the bunch—just a lot of hard-working, creative and passionate people.

If I could sum up the generation, it would be with the once annoying labels “indie” or “underground” (which became so annoying simply by virtue of being such ubiquitous labels). The indie rock and the underground dance music and hip-hop that grew up in the ’80s and ’90s dominated the subcultures that we ourselves grew up in, and have since turned into more codified and sustainable (though possibly not very profitable) small business models. That simple yet profound change in how we learn about, purchase and consume (in the best sense of that word) the music that so shaped us during our formative years has fundamentally altered the cultural landscape. The “rockstars” of our generation were closer to us, more accessible, usually a part of our artistic communities. And alongside the independent music sprang up independent labels, music venues, galleries, coffee shops, screen printing operations, skate shops, DIY arts and crafts fairs. The internet then came along and kicked it all into overdrive.

The author says “the hipster ethos contains no element of rebellion, rejection or dissent.” But I think that that is what so defines the generation. It’s a rebellion of production, a commercial rejection and inner dissent. It’s a rejection of corporate principles and a simple consumer choice for the alternative. It’s a generation not fundamentally different in attitude than its predecessors, but in the solutions it offers. The heretics of today saw previous generations’ protests and rebellions crushed in the street, so they rented the abandoned buildings beside it and started trying to build something new inside them. It’s in some ways a return to mom-and-pop capitalism.

Sure, you can call it “generation sell,” but I think “selling” is a dirty word rather deliberately used. It could easily be called “generation create” or “generation present.” It does often seem as if everyone nowadays has something to present, advertise, market or “sell,” but by-and-large I think it was and is being done with good art, the right intention and decent manners. And if one of the results of that shift is that people fault this generation for being polite and pleasant, well… being the affable generation it is, I think they’d be okay with that.

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October 13, 2011

Innovate

Filed under: Blog,Innovation — Jon @ 10:25 am

Readers of this blog might be familiar with books on innovation by authors like Steven Johnson, Stephen Shapiro, Clay Christensen, and others. How do the ideas we read in these books get put to use? Are they just words on pages or screens, or do they translate to our activities?

UK publisher Visual Editions are not a business imprint, but they are certainly innovators. This morning, I received a copy of their latest publication, Composition No. 1 by Marc Saporta. The book is a series of unbound pages, housed in a hard box. The idea is that the reader mixes the pages and reads the story however it unfolds. This, of course, allows any number of ‘books’ to emerge. A note inside the box mentions that the instinct against this process is “almost overwhelming.” And that made me think about not only innovation, but the reaction to it.

It is challenging enough to think of how to change something, how to better a process, and how to revolutionize an industry, let alone convince people not to expect the same thing they’ve always received, or follow the steps they’ve always followed.

Change, or innovation, is about more than just making something new, it’s about leading people to a different place. How will you get them to follow you?

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September 28, 2011

Is Your Idea Crazy Enough? An Excerpt from Creative Thinkering

Filed under: Big Ideas,Excerpts and Essays,Innovation,Uncategorized — Sally @ 12:42 pm

IS YOUR IDEA CRAZY ENOUGH?
An Excerpt from Creative Thinkering: Putting Your Imagination to Work
by Michael Michalko

The playful openness of creative geniuses is what allows them to explore unthinkable ideas. Once Wolfgang Pauli, the discoverer of electron spin, was presenting a new theory of elementary particles before a professional audience. An extended discussion followed. Niels Bohr summarized it for Pauli’s benefit by saying that everyone had agreed his theory was crazy. The question that divided them, he claimed, was whether it was crazy enough to have a chance of being correct. Bohr said his own feeling was that it wasn’t crazy enough.

Logic hides in Bohr’s illogic. In genius, there is a tolerance for unpredictable avenues of thought. The result of unpredictable thinking may be just what is needed to shift the context and lead to a new perspective.

Here is what one marketing agency did. As reported on PSFK.com, it persuaded the “Unilever corporation to place GPS devices in selected boxes of its Omo brand detergent in Brazil. This enabled the agency to track the purchasers right to their doorsteps and surprise them with gifts. As soon as any one of the fifty Omo boxes bearing GPS devices was removed from the store shelf, one of its teams swooped into action and reached the shopper’s home within hours.”

The playful freedom that accompanies a “bizarre” idea permitted the agency to juxtapose possibilities that would not otherwise have been available, and to construct a sequence of events that would otherwise not have been constructed.

In another example, Spencer Silver, a 3M chemist who liked to play around with chemicals, tried mixing together different ones just to see what would happen. One of the things that happened was his invention of the special adhesive that made Post-it notes possible, a product that had accounted for over $300 million in business by 2002.

Spencer Silver is quoted as saying, “If I had thought about it, I wouldn’t have done the experiment. The literature was full of examples that said you can’t do this.” If he had studied the literature, he would have stopped his work. The key was not knowing what the experts believed, and experimenting to see what he could do. Silver, in a “Eureka” moment, realized he had developed an adhesive that created an impermanent bond.

But the problem was how to use his discovery. The company climate permitted Silver to continue with his efforts, but no one could develop it into a useful product. Silver had found a solution, but he hadn’t found a problem to solve it with. The breakthrough came when another 3M employee, Arthur Fry, got his inspiration. Art was a member of a church choir and used paper slips as bookmarks in the songbooks to identify the songs to be sung. Sometimes the paper would fly off and create problems. The idea of using Silver’s adhesive to make a better bookmark came to him while singing in the choir.

The bookmark inspired him to think of other paper-to-paper applications in which only one of the sheets of paper was coated with the glue. The problem was that 3M did not have the equipment to do this, so management was not enthusiastic about Fry’s application. Consequently Fry designed and built his own machine in his basement to manufacture the forerunner of the Post-it note. The machine was too large to get through his basement door, so he blasted a hole in the wall to get the machine to 3M. He then demonstrated the machine to management, engineers, salespeople, and production managers. His demonstration generated the enthusiasm to get management behind the project.

THINKING OUTSIDE YOUR CONE OF EXPECTATIONS

Thought is a process of fitting new situations into existing slots and pigeonholes in the mind. Just as you cannot put a physical thing into more than one physical pigeonhole at once, the processes of thought prevent you from putting a mental construct into more than one mental category at once. This is because the mind has a basic intolerance for ambiguity, and its first function is to reduce the complexity of its experiences.

When you come up with crazy or fantastical ideas, you step outside your cone of expectations and intentions — which is what happened to a manufacturer of dinner plates who had a problem with packaging. The plates were wrapped in old newspapers and packed in boxes. Every packer would eventually slow down to read the papers and look at the pictures. Most employees would drop to about 30 percent efficiency after a few weeks on the job.

The manufacturer tried using other material for packing, but that proved too expensive; the newspapers had been free. They tried using newspapers in different languages, but these were hard to obtain. They even offered incentives to workers to increase the number of plates wrapped, but without great success. Finally, one day in a meeting an exasperated supervisor said they should tape the workers’ eyes shut so they couldn’t read. This absurd comment created a lot of laughter as the others joked about his comment. But the supervisor had an “Aha!” moment: he got the idea to hire blind people to do the packing. The company not only greatly increased its packing efficiency but also received tax benefits for hiring the disabled.

MICHAEL MICHALKO is the author of Creative Thinkering, Thinkertoys, Cracking Creativity, and ThinkPak. While an army officer, he organized a team of NATO intelligence specialists and international academics to find the best inventive thinking method. He has expanded and taught these techniques to numerous Fortune 500 companies and organizations. He lives in Rochester, New York. Visit him online at http://www.CreativeThinking.net.

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September 1, 2011

What’s Your Plan B?

Filed under: Blog,Innovation — Jon @ 9:11 am

When we have an idea, or work on a project, it can get absorbed into us. We dream of what it will be like when realized, and imagine all the great things that will happen because of its creation. Eventually, it can be hard to separate our imagination from the unknown variables of reality.

Nonetheless, reality wins. The idea launches, and the results might not be what we expected. No problem, we’ll just fire up Plan B. Wait, do we have a Plan B?

I’ve been a big fan of David Kord Murray since reading his book Borrowing Brilliance, and meeting him in person when he spoke at our LeaveSmarter event during the time of that book’s launch. He’s an incredibly smart guy (yes, an actual rocket scientist!), and also human enough to have experienced a rollercoaster ride of life’s curve balls, finding simply effective ways to deal with them along the way.

Now, he shares his insight with us again in his new book, Plan B: How to Hatch a Second Plan That’s Always Better Than Your First.

Murray states that most strategic plans fail. Look again at the beginning of this post. Sound familiar? Usually, we get so wrapped up in the perceived quality of our ideas and plans that we don’t see that we might need an alternative. With the speed of change in our lives, based on technology, the economy, and social forces, we have to be more flexible than ever, while still maintaining strong footing in whatever discipline we operate from.

This book helps you find that balance.

Murray states, “Business models, put simply, are solutions to problems. And business are created and evolve by solving new problems or finding new ways to solve existing problems…Taking the time to understand the nature of the problem you’ve identified is like laying the footings for a foundation. The footings for a large skyscraper are concrete and steel pilings that are driven deep into the soil so that the building rests on solid bedrock, far beneath the surface, and not on the less stable topsoil that may buckle under the weight of a large structure. Finding the root cause of the problem you want to solve acts the same way for a business plan.”

By identifying the root cause, and fully understanding why it exists, how it might change, and how you can help solve it, will create a stronger Plan A. Recognizing the need for flexibility and analyzing areas of change within that plan is what Murray refers to as the Plan B.

Filled with many case studies of large corporations, social media startups, and even rock climbers, Murray takes us on a thorough investigation about our purpose, intent, and understanding of what we’re trying to accomplish in our business, ideas, and life.

Read this book!

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August 31, 2011

To Be or Not to Be…Creative

Filed under: 100 Best,Big Ideas,Innovation — Sally @ 10:31 am

A friend posted on Facebook a link to this article, with the somewhat obvious title, “People are biased against creative ideas, studies find,” and it’s contents have stuck with me all week. It comes from a website called PhysOrg which I’ve never heard of despite having a science geek for a husband. PhysOrg’s mission as described on it’s website is “to provide the most complete and comprehensive daily coverage of the full sweep of science, technology, and medicine news.” And with a goal of 100 new articles posted a day on “physics, earth science, medicine, nanotechnology, electronics, space, biology, chemistry, computer sciences, engineering, mathematics and other sciences and technologies,” and a membership of 1.75 million scientists, researchers and engineers, PhysOrg is an impressive ~~sight~~ site.

While I joked that the title of the article is somewhat obvious–we certainly know that there is a percentage of the population who disdain creative ideas, or defensively discredit them, and sometimes we excuse them as being left-brained–but the article (and the study it is based on) itself is making an additional more provocative point. In addition to bias against creative ideas, the research (from a forthcoming article in Psychological Science) shows that some people don’t know a creative idea from a hole in the ground, that some people can’t actually see a creative idea.

In addition to a sort of creativity blindness, another point that the research highlights is: “Objective evidence shoring up the validity of a creative proposal does not motivate people to accept it.” Considering the number of PowerPoint presentations that are often crafted to defuse any skepticism of the overall “big idea,” this is perspective-changing stuff. In fact, the authors of the study suggest that the only way to rid organizations, even those whose intentions are deeply rooted in innovation and creativity, of this bias or blindness could even be this drastic: “The field of creativity may need to shift its current focus from identifying how to generate more creative ideas to identify how to help innovative institutions recognize and accept creativity.”

That’s a pretty big task, and how exactly can it happen? Perhaps we can look to Micheal Michalko for help. Michalko is the author of Thinkertoys, one of our The 100 Best Business Books of All Time.

While readying The 100 Best for it’s updated paperback release this fall, we spent some extra time with the books we featured briefly in our Takeaway chapter of the book, expanding the reviews to include more detail. It was especially fun for us to revisit Thinkertoys not only because some of the content is reminiscent of those variety puzzle magazines found in drugstores that we all secretly and not-so-secretly love, but because of it’s applicability. Just as the subtitle–A Handbook of Creative-Thinking Techniques–says, Thinkertoys can help those aforementioned folks who aren’t the creative type learn how to be creative. That’s the important word here: learn. No, not everyone is creative. But creativity, according to Michalko, can be self-taught, cultivated, discovered. You can choose to BE creative.

And Michalko knows a thing or two about getting creativity-resistant organizations to change. His website bio explains:

As an officer in the United States Army, Michael organized a team of NATO intelligence specialists and international academics in Frankfurt, Germany, to research, collect, and categorize all known inventive-thinking methods. His international team applied those methods to various NATO military, political, and social problems and in doing so it produced a variety of breakthrough ideas and creative solutions to new and old problems. After leaving the military, Michael facilitated CIA think tanks using his creative thinking techniques.

Just a visit to his website, not unlike PhysOrg in its wealth of references, which yields an absolutely stunning assortment of articles, interviews, resources: a veritable practicum. You can also follow Michalko via his blog on Psychology Today. But perhaps his work is best appreciated in book form, where you can scribble in the margins, and bend the pages, and carry it over to your coworker’s cubicle to test them on one of his thought experiments. Yes, make sure you have a pen when you are opening up one of Michalko’s books, and we are all very lucky that he has a new one available for us to learn from, titled Creative Thinkering.

In Creative Thinkering, Michalko challenges us to put our imaginations to work and believes with a great passion that everyone is creative. Or should be. Or can be. It is as though we’ve unlearned creativity. “We’ve been educated to process information based on what has happened in the past, what past thinkers thought, what exists now. Once we think we know how to get the answer, based on what we have been taught, we stop thinking,” he explains in the Introduction, and then immediately proceeds to challenge the way you think with some mind-bending games.

In this new book, Michalko wants to teach us conceptual blending, “which is the act of combining, or relating, unrelated items in order to solve problems, create new ideas, and even rework old ideas….It is no coincidence that the most creative and innovative people throughout history have been experts at forcing new mental connections via the conceptual blending of unrelated objects.” And once again, the material he presents throughout the book is entertaining but also so very do-able. Through the exercises and insights in his books, Michalko provides the material to train even the most creatively-blind how to open his or her eyes to their own and others’ creative ideas.

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May 26, 2011

LeaveSmarter with Peter Sims

Filed under: Events,Innovation — dylan @ 2:43 pm

We were overjoyed to have Peter Sims in town earlier this week for our LeaveSmarter* series. We first became aware of Peter when he coauthored True North with Bill George, which was a favorite of ours when it came out, and one of our bestsellers in 2007 and 2008 (and, coincidentally, Bill was in town to speak about True North at a previous LeaveSmarter event). So, we were really excited when we saw Mr. Sims had a book of his own coming out. That book is Little Bets: How Breakthrough Ideas Emerge from Small Discoveries, released last month by Free Press. The book is based the idea that you don’t need a big idea to get into or change your business; you simply need to take small, experimental steps to see what works and consolidate small victories. Or, as Peter puts it in the introduction to the book:

Little Bets is based on the proposition that we can use a lot of little bets and certain creative methods to identify possibilities and build up to great outcomes. At the core of this experimental approach, little bets are concrete actions taken to discover, test, and develop ideas that are achievable and affordable. They begin as creative possibilities that get iterated and refined over time, and they are particularly valuable when trying to navigate amid uncertainty, create something new, or attend to open-ended problems. When we can’t know what’s going to happen, little bets help us learn about the factors that can’t be understood beforehand. The important thing to remember is that while prodigies are exceptionally rare, anyone can use little bets to unlock creative ideas.

As you can see from the pictures below, the event was held in lovely environs, amongst the “Man at Work” collection in The Milwaukee School of Engineering’s Grohmann Museum . I took video of the event, but I am no video expert, so we’ll have to wait until Jon gets back from BEA next week to see if it’s up to par and get it on the site. In the meantime, you should check out Peter’s Little Bets manifesto at ChangeThis.

*We began our LeaveSmarter series in 2006 to bring nationally recognized business thinkers and their books to our hometown. M&I Bank approached us soon after the first event to discuss partnering with us on the series and, along with local law firm Whyte Hirschboeck Dudek, they have been the series sponsor ever since. If you’re interested in partnering with us to create a future event, let’s talk. You can contact me at dylan[at]800ceoread[dot]com.

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November 23, 2010

The Mesh Holiday Gift Guide

Filed under: Big Ideas,Information Technology,Innovation,Social Responsibilty — dylan @ 12:59 pm

Not sure what to get that special someone for the Holidays this year?

I keep telling my friends in business that Lisa Gansky’s book, The Mesh: Why the Future of Business is Sharing, is one of the most important reads of the year. It does more than document a trend. It explains a movement in business—a movement away from selling products and services outright to selling access to them, an emerging model she calls “The Mesh.” As Gansky explains:

Fundamentally, the Mesh is based on network-enabled sharing—on access rather than ownership. The central strategy is, in effect, to “sell” the same product multiple times. Multiple sales multiply profits, and customer contact. Multiple contacts multlipy opportunity—for additional sales, for strengthening a brand, for improving a competitive service, and for deepening and extending the relationship with customers.

The book itself would make an outstanding gift, but now, just in time for the holiday season, Lisa Gansky has developed something beside it—The Mesh Holiday Gift Guide—for a “different kind of holiday giving.” It profiles Mesh companies that you can sign your loved ones up for—”no boxes, no gift wrap, no batterries required.”

The advantage for customers are many. We don’t have to buy and clutter our homes with all the DVDs we want to watch anymore… we can just get them from Netflix. We don’t have to buy a car and worry about the high costs of insurance and parking in our urban centers… we can simply sign up for Zipcar and use one of the many shared cars they offer when we need to. And we don’t have to buy brand new clothes for our growing infants every three weeks… we can log onto peace. love. swap and exchange the clothes our children have outgrown for gently used clothes from other families online. Basically, it is a way to have access to everything we need and want without taking on the mental and physical clutter that owning them entails.

So, instead of giving your loved ones more stuff to clutter up their lives (and landfills) this holiday season, why not free them of it by giving them an experience that keeps on giving? I know that one of the gifts I’m most grateful for was the free months of Netflix I received from a coworker years ago (thanks again, Meg!). Head on over to the Mesh Holiday Gift Guide to explore similar options. Your family and friends will be thanking you for for years to come.

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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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October 22, 2010

Hacking Work

Filed under: Big Ideas,Book Reviews,Information Technology,Innovation,New Releases — dylan @ 1:36 pm

Does the infrastructure your company set up to help you get your work done actually get in the way of you doing it? Does it slow you down, or even create extra work instead of streamlining it? Well then, it’s time to start hacking work. In fact, you may be doing so already.

Are you using online tools to move information amongst your team to get around your corporate firewalls? Did you start a ladies night out to strengthen relationships at work and break down hierarchical divisions? Did you use your social network to help solve problems at work your boss couldn’t, or wouldn’t, address? If so, then you have been hacking work.

As Bill Jensen and Josh Klein explain in Hacking Work: Breaking Stupid Rules for Smart Results, hacking work, like (ethical) computer hacking, is all about “taking the usual ways of doing things and work[ing] around them to produce improved results.” And, like any great idea, the implications range from the micro to macro—from an individual using Gmail to get around their IT department’s storage constraints, to Barack Obama going straight to individuals for $25 donations to work around the monied interests of traditional political fundraising. One of the more interesting examples is the Diaspora Project‘s work to build the first open-source social network to be owned by the individuals using it, with the goal of putting users back in control of how their information and content is used, accessed, and seen online.

Jensen and Klein describe themselves as “just two guys who have dedicated [their] professional lives to finding work-arounds to corporate bullshit,” and their book is about breaking rules for the greater good. As they write at the beginning of Section 2:

Stupid rules shift the costs of work from the company onto you without delivering equal or better value back to you.

This means you pay the price for someone else’s bureaucracy or, worse, for their bad decisions.

Breaking stupid rules means getting smarter results: for you, your team and your company.

That last point is key. Hacking work is not done with malicious intent, but to “save business from itself.” It is done not only to help make your work easier, but to protect your company from its own inefficiencies by working around them—whether they be technical or relational inefficiencies, firewalls or power structures. When done right, it can fix a system that is broken and foster creativity among workers where there were once only obstacles. When done right, you’re working better, faster and smarter, which in turn makes the company around you work better, faster and smarter.

And as we’ve seen from the examples above, your “company” can be much bigger than the where you go to work everyday. It can be an online community or, even a country. The authors also use the example of Iranians using Twitter and Facebook to document protests in their country as an instance of hacking work. But they don’t stop there. Hacking work might just have been the kick in our collective evolutionary pants.

Agriculture was most likely a work hack: Instead of always roaming over the next hill every time the clan needed grain, someone cleverly figured out they could grow it closer to camp. Gronk, their leader, neither asked for nor approved this change. And his head of manufacturing—Club and Spear Guy—most certainly felt threatened. The clan’s operations would have to change to meet the needs of of its new farmers.

Harvard Business Review has called the book “one of the top ten breakthrough ideas for 2010,” but as the authors note above, humans have been hacking work long before this year. And it all begins with three motives:

Curiosity: “I wonder what would happen if…”
Imagination: “Gee, wouldn’t it be cool if…”
Drive: “I will not accept ‘no.’ There has got to be a better way!”

No one expects you to change the foundations of human social organization, but there is always a better way close at hand. So… how are you hacking work?

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October 7, 2009

Show Chaos Who's Boss

Filed under: Blog,General Business,Innovation,Jack Covert Selects,Leadership — Jon @ 7:51 am

Last month, Jeremy Gutsche’s exciting book, Exploiting Chaos launched. I had a chance to pick it up after reading the Jack Covert Selects post on it, and was pretty blown away. And today it makes a stop at our blog as it travels on the Virtual Book Tour.

As Jack mentioned in his review, one of the first things you notice about the book is the design and layout. Indeed, it is different than most books. On one hand, I thought, “whoah, this is a business book?” but on the other, I felt myself starting to read it like a web site – scanning the headlines and grabbing bits of info and looking at pictures and humorous commentary. It’s an interesting experience to have with a book, and thus a huge testimony to the message the author preaches: In times of chaos, do something remarkable. In this case, if digital is attracting eyes, make something that appeals to that audience without doing the same old thing. It works.

Recognizing this situation, I dug deeper into Gutsche’s ideas, to see how the rest stood up, and like the book itself, the ideas not only ring true, they are shown in practice with successful results. From Apple to Sun, Gutsche points out how companies have begun and flourished in times of chaos. How did they pull this off? I’ve given some hints at that in my description so far, but check out the book. Trust me, you’ll have an amazing time with this one, and learn some things to make a difference in your world despite all sorts of adversity.

Here’s a TV clip of Gutsche talking more about the book and the ideas within:

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