Creative Reaction

I was reading an interview with a newly appointed ad agency CEO in a business newspaper, and was honestly excited about the changes he would bring to the company as well as its impact on the local creative economy. It was a short interview, and unfortunately the interviewer started playing “mind association”. For one of the questions, the interviewer asked, “What is your greatest fear?” He responded, “Failure”.

The answer sucker punched any hope I had.

I was stunned. What kind of pressure is the parent company (Cough!Havas!Cough!) putting on this guy? What kind of culture shapes such a response? Clearly he was hired to make big improvements; there’s a stated goal of doubling business in five years’ time. He’s not going to accomplish this following the same trajectory of his predecessors. He will need to take the company in a bold, new direction, but apparently he’s expected to do so by playing it safe!

Contrast that with a blog post by a rival agency’s Chief Creative Officer, Mullen’s Edward Boches. In The fastest way to success might be to fail first, he mentions how refreshing it was to have a conversation with a company president who was transparent about the mistakes his company made.

“Yet each anecdote about what didn’t work was immediately followed with, ‘But here’s what we learned.”

Quoting Boches:

We live in an age where there is so much pressure to succeed.  Every proposal and idea gets scrutinized, analyzed, and too often paralyzed. But there’s a real value in trying things, in experimenting, in taking a calculated chance.

At Creative Reaction, we are not fans of “mistake avoidance”. We are fans of “mistake recovery”. Success requires taking risks. Rather than having a culture that avoids mistakes using the blunt mallet of bureaucracy, mistake recovery values a culture where mistakes can be made, then quickly corrected.

Nobody has all the answers. Even the most well-thought-out plans fail. Mistakes will be made. Just be sure to learn from them and let them vault you to success.

(Click to search for “failure” or “mistake” to see related posts.)

This really interesting article by CCL popped up in the newsreader today, explaining the hidden costs of companies which insist on over-managing their employees. These are the companies which feel they need to tell their employees (grown adults, mostly) exactly how their jobs should be performed. While “process” plays an important role in certain industries, not leveraging the experience of employees is shortsighted.

Anybody who does a job eight hours a day is going to see ways in which that job could be improved or simplified…

This is particularly true for Professional Knowledge Workers, where the costs are huge:

At best, it limits growth and innovation. At worse, it solidifies inefficiencies, undermines company goals and creates an environment where employees are unmotivated and disengaged.

So be sure to give some thought to employee engagement and motivation. It is far better for everyone to be working together toward the same vision. It could very well mean the difference between success and failure.

When leaders give people control over their work, stop telling them how to do their jobs and focus on the goals, the hidden costs are replaced with numerous benefits. Employee stress goes down, absenteeism decreases and engagement goes up. Productivity improves and innovation is possible.

There’s a fair amount of debate to the question, “which offers the best learning opportunities; successes or mistakes?”

Those who say, “successes” always seem to point to “stupid” mistakes, not honest ones, to discredit the learning opportunities of failures. Create a Culture of Successful Failure at Blogging Innovation puts mistakes in context and is careful to differentiate between “honorable” failure and “incompetent” failure.

Amongst many examples, the article points to Honda’s mistakes in bringing low-powered motorcycles to the U.S. in 1959, quoting Soichiro Honda, the company’s founder:

“Many people dream of success. Success can only be achieved through repeated failure and introspection. Success represents the 1 percent of your work that results from the 99 percent that is called failure.”

Are we being so risk-averse that we are loosing ground to our competitors? Are we giving our teams the opportunities and “space” to make mistakes and to learn? Are we commending “honorable” failures? There’s plenty to think about in the article.

Back in August, I wrote that Netflix’s HR Guidelines Could be a Covert Recruitment Pitch when I read TechCrunch’s commentary on the slides and browsed through them myself. (“Reference Guide on our Freedom & Responsibility Culture” can be found here.)

Over the past weeks, not only did I read all 128 slides, I also transcribed them because I found them to be so inspiring. I then edited the resulting text quite a bit so it would make better sense to me, made some of the grammar a little more consistent, and added a few notes of my own, especially in the “Development” section, with which I have some issues. It was quite a project and it really opened my eyes. I’m a fan of Netflix and admire the company, but until now I did not realize what an outstanding culture they have.

The slides were intentionally uploaded by Netflix and contain no copyright. One important purpose of codifying a company’s culture is to attract talent which can self-identify with a company, so it is my hope that Netflix  continues to attract high-performance talent by posting my edited  and notated transcription below.

(PLEASE NOTE: Many of the notes are my interpretation. They clearly do NOT represent official Netflix policies, OK? Links to the original slide deck are above.)

—————————————————————————–

A Reference Guide for our Culture of Freedom & Responsibility

This Guide is for our salaried employees, as hourly workers have more structured jobs.

Q:
What gives Netflix the best chance of continuous success for many generations of technology and people?

A:
Culture.

Culture is how a firm operates.

Culture gives Netflix the best chance of continuous success for many generations of technology and people

For Netflix, continuous success = continuous growth in revenue, profits, and reputation.

Netflix needs a culture that supports rapid innovation and excellent execution, which are both required for our continuous growth.

There is often tension between rapid innovation and excellent execution, similar to the tension between creativity and discipline.

The culture must support effective teamwork of high-performance people, which can also provide tension, as high-performance people are very passionate.

The culture must avoid the rigidity, politics, mediocrity, and complacency that infects most organizations as they grow.

7 aspects of Netflix’s culture (a work in progress as we continue to refine it)

1. Emphasis on Values
2. High-performance (Employees)
3. Freedom & Responsibility
4. Context, not Control
5. Highly aligned, Loosely Coupled model of organization
6. Top of the market Salaries
7. Promotion & Development

VALUES
Nine behaviors and skills we value in fellow employees.

Judgement:

• Making wise decisions despite ambiguity
• Identifying root causes
• Thinking strategically and articulating what you are and are NOT trying to do.
• Knowing what must be done well now
• Knowing what can be improved later

Communication

• Listening to better understand, and not immediately reacting
• Being concise and articulate in speech and writing
• Treating people with respect regardless of status or agreement.
• Showing poise in stressful situations

Impact

• Accomplishing amazing amounts of important work
• Performing in a consistently strong manner so that others can rely on you
• Focusing on results (rather than process)
• Showing bias-to-action (rather than over-analyzing)

Curiosity

• Learning eagerly and rapidly
• Understanding our strategy, market, subscribers and suppliers
• Being broadly knowledgeable about business, technology and entertainment
• Contributing effectively outside of your specialty

Innovation

• Re-conceptualizing issues to discover practical solutions to difficult problems
• Challenging the prevailing assumptions when warranted and suggesting better approaches
• Creating new ideas that prove useful
• Keeping us nimble by minimizing complexity and finding time to simplify.

Courage

• Saying what you think even when it is controversial
• Making tough decisions without excessive agonizing
• Taking smart risks
• Questioning actions inconsistent with our values.

Passion

• Inspiring others with your thirst for excellence
• Caring intently about our success
• Celebrating wins
• Being tenacious

Honesty

• Being known for candor and directness
• Not being political when you disagree with others
• Only saying things about others that you would say to their faces
• Being quick to admit mistakes.

Selflessness

• Seeking what is best for the company, rather than yourself or the group
• Putting your ego aside when searching for the best ideas
• Making time to help colleagues
• Sharing information openly and proactively

Judgement. Communication. Impact. Curiosity. Innovation. Courage. Passion. Honesty. Selflessness.

We want every employee to embody these nine values.

A characteristic of Courage:
Questioning actions inconsistent with our values.

This one is especially important.
Akin to the honor code pledge, “I will not lie, nor cheat, nor steal, nor tolerate those who do.”

We are all responsible for consistency in our values.

Values are reinforced in our rewards, promotions and even how we fire.

HIGH PERFORMANCE
Imagine if every person you work with was someone you respect and learn from…
Imagine if all of your colleagues were stunning.

This is how we define a Great Workplace.

We do not define a Great Workplace by having benefits such as day-care, espresso, health care, sushi lunches, nice offices, or big compensation. We only do what efficiently attracts and keeps stunning colleagues.

We practice the art of hiring well.

We also have another practice:
(Merely) Adequate performance results in a generous severance package.

We are like a professional sports team (not a family).

Like a Professional Sports coach, managers must recruit, hire, develop and cut smartly to have excellent players in every position.

Who makes the cut?

This is the Keeper Test:
“Which of my people, if they told me they were leaving in two months for a competitor, would I fight to keep?”

Any people who you would not fight hard to keep need to be offered a generous severance package to make room for an excellent colleague.

You are responsible for your job security.
Ask your manager from time to time, “If I told you I were leaving, how hard would you work to change my mind?”

Q:
“Isn’t Loyalty good?”

A:
Loyalty is good; it is a stabilizer. As individuals and as a company, we will all hit rough patches. Star employees will be given an opportunity to prove themselves again. Loyalty however must have its limits.

Q:
“What about Hard Workers?”

A:
Hard work is about effectiveness, not effort. It is not about working long hours. Measurements can be based on how much, how quickly, and how well work is done, especially under a deadline.

Q:
“How do we handle brilliant jerks?”

A:
Some companies tolerate them; not us. The cost to teamwork is too high. Everyone must embody all nine values, and being a brilliant jerk contradicts many of them.

Q:
Why do we place such a premium on high performance?

A1:
For procedural work, the best perform at 2x average.
For creative work (“knowledge work”) the best perform at 10x average.

Q:
Why do we place such a premium on high performance?

A2:
We define a Great Workplace as having stunning colleagues.

FREEDOM AND RESPONSIBILITY
Characteristics of the rare responsible person:

• Self-motivated
• Self-aware
• Self-disciplined
• Self-improving
• Behaves like a leader
• Proactive
• Considers everything “his job”
• Picks up trash
• Behaves like an owner

Responsible people thrive on freedom and are therefore worthy of freedom.

Our model is to increase employee freedom, rather than limit it, to continue to attract and nourish innovative people, to have a better chance of continued long-term success. (Most companies restrict freedom as they grow.)

The relationship between growth, chaos, and restrictions:
Growth increases complexity and shrinks talent density, which leads to errors and chaos. Often rules and procedures (process) are created to avoid chaos. Procedures drive the talent away. Process inhibits innovation.

A better option.

• Ever-increasing performance, rather than rules, to fight chaos.
• Ever-increasing performance, which outpaces complexity.
• Running informally, utilizing self-discipline to fight chaos.
• Minimizing complexity.
• Valuing simplicity.
• Enabling and attracting creative talent by running informally, high compensation, and offering the freedom to make a difference.

Two types of necessary Rules;
Those that prevent disaster

• e.g. Incorrect financials
• e.g. Hackers steal CC data

Those that spell out immoral, unethical, and illegal behavior

In a safety-critical or manufacturing industry, preventing errors through procedures is mission-critical (or at the very least the most cost-effective)

In knowledge work/creative environments, “rapid recovery” is the best model.
Besides, high-performers make fewer mistakes.
If mistakes happen, high-performers fix them quickly!

Is a Process Good or Bad?
Good processes help talented people get more done.

• Updating a web site at regular intervals instead of randomly
• Keeping spending within budget
• Having regularly scheduled strategy meetings

Bad processes try to prevent mistakes which are easily recoverable.

• Pre-approvals for spending
• Multiple required sign-offs, projects
• Permission needed to hang a poster

Bad processes tend to creep in because preventing errors is so attractive.
(They often result from knee-jerk reactions to embarrassing mistakes)

Rules and procedures should be questioned and eliminated whenever possible.

Our culture is Results-Oriented

• No 9-5 work days.
• No vacation policy.

Netflix’s Expensing, Entertainment, Gift & Travel Policy is five words long.
“Act in Netflix’s Best Interests”

This generally means:

• Expense only what you would otherwise not spend, and is worthwhile for work.
• Travel as you would if it were your money.
• Disclose non-trivial vendor gifts.
• Take from Netflix only when it is inefficient and inconsequential to not take.
• To avoid using the company phone for personal reasons may be an inefficient use of time.
• To avoid using the company printer for personal reasons may be an inefficient use of time.

Summary:

• Minimize Rules while growing.
• Fight chaos with ever more high-performance people.
• Stress flexibility more than efficiency for long-tern success.

CONTEXT. NOT CONTROL
High-performance people will do better work when they understand the context.

The best managers set the context, rather than resorting to control.

Control-driven means:

• Top-down decision-making
• Management approval
• Committees
• Planning and process are valued instead of results
• (Do it because I say so.)

Context-driven means:

• Strategy
• Metrics
• Assumptions
• Objectives
• Clearly-defined roles
• Communication of what is at stake
• Transparent decision-making
• (Do this because it aligns with company objectives)

Control can be important under the following circumstances:

• In an emergency (procedures and commands must be followed.)
• When someone is in training (they need to learn context)
• When a colleague is temporarily in a position that is ill-suited.

If a talented employee does something dumb, a good manger will question the context (conditions) he set.

Instead of giving into the temptation to control, a good manger will put the desired results in context.

Managers must articulate goals and strategies.
Managers must inspire people to meet goals and follow strategies.

Proper context involves:
- Linking to functional and company goals
- Articulating importance and time-sensitivity
- Describing the desired level of precision and completeness

• No errors are permissible
• Errors can be corrected later
• Draft quality

- Pointing out the key stakeholders
- Explaining the metrics
- Defining a successful outcome

Investing in context is exemplified in:

• Training
• Openness to better strategies
• Focus on results

HIGHLY ALIGNED, LOOSELY COUPLED MODEL OF CORPORATE TEAMWORK

This is contrasted with the following models:
1) Tightly-coupled, Monolithic Model, where

• Sr. Mgt reviews and approves most tactics
• There are lots of cross-departmental buy-in meetings
• Keeping groups in agreement becomes as important as pleasing customers
• (which is dangerous and inefficient)
• Mavericks burn out
• Centralization allows for high degrees of coordination at the expense of agility

2) Independent Silo Model, where

• Each group executes its objectives with little central coordination
• Work requiring coordination suffers
• Alienation and suspicion between departments takes root
• Success occurs only when a conglomerate has companies in disparate markets

The Highly Aligned, Loosely Coupled Model

Goal: to be big, yet fast and flexible.

Teamwork effectiveness is dependent upon
1) high-performance people and
2) proper (good) context

Highly Aligned

• Strategy and goals are clear, specific, and broadly understood
• Team interactions are about strategy and goals rather than tactics.
• A large investment in management time is required to be transparent, articulate, perceptive and open

Loosely coupled

• Minimal cross-functional meetings except to get aligned on goals and strategy
• Trust between groups on tactics without previewing/approving each one – groups can move fast
• Leaders reaching out proactively for ad-hoc coordination and perspective as appropriate.
• Occasional post-mortems on tactics necessary to increase alignment

TOP-MARKET COMPENSATION
A core value of a high-performance culture.

Financial incentive from an Accounting perspective:
One outstanding employee gets more done and costs less than two adequate employees.

Instead of only making the hiring process market-based, Netflix also applies the same principles to its “Annual Compensation Review” (essentially re-hiring each high-performance employee for another year for the purposes of compensation.)

Top-Market Compensation Goals:
1) Every employee is an outstanding employee.
2) Every employee is paid his or her top-market rate.

(By the way, titles are not helpful when determining compensation.
Not every “Major League Pitcher” is equally effective or equally compensated.)

Three-part Compensation Test for an outstanding employee
1) How much would this employee be paid elsewhere?
2) How much would we have to pay to replace this person?
3) How much would we pay to keep this person if another company was “head-hunting”?

Three Corollaries:
1) Pay him more than anyone else likely would
2) Pay him (at least) as much as a replacement would cost
3) Pay him as much as we would pay if another company was “head-hunting”

Corporate Guidelines:

• There are no centrally-administered budgets.
• Each manager must use the above guidelines to align each team member’s compensation to “top-market” for his market and for his area each year
• Compensation is based on market value, not Netflix’s Success
• Managers should not use “fairness” or formulas such as percentiles or across the board raises

Therefore:

• Some team members’ compensation could rise dramatically based on their value in the marketplace (Also driven by their skills)
• Some team members’ compensation could remain flat or even decrease, while still remaining top-market

If managers use the three-part Compensation Test accurately, the following will be true:
1) Any employee leaving Netflix for another company will not be compensated as well
2) We will rarely need to counter an offer from another company for one of our high-performance employees
3) Employees will know they are being paid well relative to other options.

This compensation model is better than the traditional model, where employees automatically receive a raise each year based on good performance, for the following reasons:
1) Employees can become grossly over- or under-paid over time
2) Under-paid otherwise satisfied employees will seek employment elsewhere
3) Overpaid, unsatisfied employees become trapped.

(These conditions also contribute to low morale and “poisonous” employees)

In our model, employee success is a major factor in compensation because it influences an employee’s market value.

(This also motivates an employee to improve his skill set and grow personally in ways that increase his value)

By the way, Netflix considers it to be a healthy idea, and not a traitorous one, for an employee to understand his value in the marketplace, by talking to peers at other companies and even interviewing with them. (An important exception is interviewing with direct competitors who may be trying to gather information that is confidential.)

Additional information about our compensation model:

Netflix focuses it’s compensation on the highest possible salary in the following ways:

• No free stock options
• No bonuses
• Great Health Plan options with intentionally higher Co-Pays (to keep the premiums lower)
• No company matching of specific benefits

This compensation model is most efficient the following reasons:

• Salary offers the highest motivation of any other form of compensation
• It simplified by not offering bonuses (saving the company labor)
• Paying for stock options (with pre-tax salary) is another form of motivating an employee to participate in the company’s future success.

In addition, the employee has more freedom to spend his salary as he sees fit.

• The mix of stock (or Stock options) is the employee’s choice
• Since there is no company matching of specific benefits, the employee is not pressured into a means of compensation he does not want or need.
• Since there is no company matching of specific benefits, the employee does not feel that others who want or need those benefits are better compensated

(On the other hand, the employees may want benefits that are not offered. Pre-tax medical accounts and pre-tax retirement accounts, for example, offer financial advantages that an employee could not otherwise obtain on his own, negating a top-market salary. In this case, his peers at another company would have a financial advantage.)

(It might also be that the health and financial stability of employees, conditions that improve physical and mental well-being, are possibly not being encouraged by offering benefits. A lack of physical and mental well-being will adversely affect a person’s work and the company. It is in the company’s interest to promote physical and mental health.)

Employees choose the degree to which they want to link their financial future to Netflix’s success or failure by choosing for themselves the amount of Netflix stock (or stock options) they would like as a component of their compensation.

PROMOTIONS AND DEVELOPMENT

Promotions
At times, and within certain groups,there will be opportunities and growth. Some people, due to timing and talent, will have the opportunity for extraordinary career growth.

Baseball Analogy: Minor & Major Leagues

• Only the very talented play in The Show. (The Majors.)
• Even the most talented are subject to timing and opportunities
• Some players move to other teams when opportunities arise.
• Some Minor League players keep playing because they love the game.

There may not be enough growth opportunities for everyone who deserves a promotion, in which case we should celebrate when someone leaves the company for a bigger opportunity elsewhere.

Two conditions necessary for promotion:
1) The job has to be big enough
2) The person has to be a superstar in the current role and talented enough for the new position

If a talented employee meeting the above criteria needs to be promoted to keep them from leaving, the manager should look for opportunities to promote him now, rather than wait.

Development
We develop people by giving them the opportunity to develop themselves, by surrounding them with stunning colleagues and giving them the opportunity to work on big challenges.

Mediocre colleagues and unchallenging work kills the progress of a person’s skills (as well as his morale)

Because formalized development is rarely effective, we do not pursue it. No courses, mentors, working in multiple depts.

(Sorry. I’m not going along with this! Any broadening of skills, better understanding of others’ roles, personal development is completely helpful, enriching all of a person’s life, not just his career! Take a look at Pixar University, as an example.)

High-performance people are generally self-improving through experience, observation, introspection, reading and discussion, as long as they have stunning colleagues. (OK, but give them some opportunities to do this at work, too!)

Individuals should manage their own career paths, and not rely on a corporation for planning their careers. Similar to retirement planning – largely a matter of individual responsibility. (Still, both should be encouraged)

(Yet many people would benefit greatly from career planning, mentoring, financial planning, marital counseling, first baby counseling, all of which would make for better employees and many of which would reduce health care costs and absenteeism. Read Brain Rules by John Medina)

An Individual’s economic security is based upon his skills and reputation. We try hard to consistently provide opportunities to grow both. (Maybe these opportunities should be listed. The above statements seem to contradict this.)

Matt Heinz at Blogging Innovation: “I love the idea of employees… thinking of themselves like entrepreneurs.” I couldn’t agree more.

He asks rhetorically, “What constitutes a set of entrepreneurial attributes that employees could emulate?” then answers his own question. I’ve paraphrased (somewhat).

1. Customer-centric thinking.
2. Frugality
3. Creative problem-solving
4. Immunity to fear
5. Acceptance of failure

Imagine having an entire company of people with these qualities. Wow. That’s an engaged workforce.

The Heart of Innovation features this brainstorming primer. A post with two LONG lists; twenty-six brainstorming failures, then twenty-six antidotes/opposites.

Life is too short for negatives. Skip down to the positives. Creativity will flourish given constraints, focus, ground rules and conditions.

Just yesterday, I posted about the fallacy of trying to control the future by predicting it, and now I’ve come across this. Matt at Signal vs. Noise  summarizes a long book-launching interview, in three simple points:

1. Conventional approaches and planning don’t work when you’re trying to get into new spaces
2. Assumptions are what get most companies into trouble, and
3. It’s not failure that companies need to avoid, but rather “failing expensively”

If I could add a fourth point it would be this:

4. A company’s best ideas will fall through the cracks unless there is a way to capture and process them 

So harness the collective insights of your employees. Move ahead quickly and get new products or services in front of people. Plan in such a way that when things do not go exactly as planned, you can quickly recover and move in a better direction.

Small businesses, you can take these cutting-edge insights which some of the more innovative corporations are implementing, and use them to your advantage within days, not months!

“I make more mistakes than anyone I know. And eventually I patent them.”
-Thomas Edison

Harvard Business Publishing’s Discussion Leader Blog has a post about the value of learning from mistakes, which is an ongoing theme here at CR. (See here, here, and here.) The post is framed by current political discussion of choosing leaders, so for those of you who need a break, I’ve excised the good stuff and brought it here.

In choosing leaders “most people seek a litany of accomplishments that demonstrate sound judgment, and failure is considered radioactive.” This is a shame, as “the character and worldview of leaders are shaped not via their accomplishments but by their setbacks in the crucibles of challenge”.

Shifting gears slightly to look at “mistakes” in a business context, the post points to a Business Week cover story, saying that “breakthroughs depend on failure, and the best companies leverage their mistakes” and that “according to that article, ‘breakthrough innovation… requires well-honed organizations built for efficiency and speed to do that what feels unnatural: Explore. Experiment. Foul up, sometimes. Then repeat.’” (italics mine) This is a business principal known as “intelligent fast failure.”

So experimentation and honest mistakes should be expected and encouraged as many creative breakthroughs are happy accidents. Are we encouraging creativity and innovation in our workplaces through experimentation and fast failure? Or are we stifling creativity by quashing mistakes?

“You need to have muscles. You need to have muscles on your muscles! You need to have muscles on your eyeballs!”
-Reg, Bouncer for the Salty Spitoon

Three Traits of a Tough Leader is a brief post on leadership traits on Harvard Business Publishing’s Blog, and despite the above SpongeBob quote, the traits all have to do with inner strength.

Toughness, defined by the author as inner resilience and character, is often overlooked, and yet is an essential leadership quality.

“Toughness matters because you need a leader who has the wherewithal to stand up for what she believes in, as well as stand up to others to achieve team and organizational goals.”

(I find humor in that the author apparently lacks the toughness to stand up to the politically-correct grammar-rewriting Nazis. Counting skills come into question as well, since there are actully four traits listed, in boldface type, no less. But I digress; I really like the post.)

Anyways, the four traits common to tough leaders are that they:

1. Defuse tension
2. Get up off the floor (when knocked down)
3. Let off some steam (in a good way) and
4. Are humble (which seems to be counter-intuitive)

It take a tough man to make a tender chicken. Likewise, being humble and “owning up to failure, is not a weakness; it’s a measure of strength.”

(I’ve written about the freedom to make mistakes in Making Mistakes Must Be Corporate Policy  and Making Mistakes Must Be Corporate Policy II)

Good reading. Check it out, then see where you might stand some toughening up.

*if you are to deliver a breakthrough product or service.

I am not talking about a culture of sloppiness or irresponsibility, but one of difference, change, and creativity. Our society, our educational systems and our workplaces stress rewarding what we do correctly, yet it is experience, and, yes, making mistakes, which allow for the biggest opportunities for personal growth and innovation.

Two items I recently read support the above statements. The first is a ChangeThis manifesto, Turning Learning Right Side Up, a free .pdf report and an excellent read for “students” of any age. The second is an NYT article (free subscription required) explaining the importance of being “growth-minded”; the mindset of lifelong learners and entrepreneurs. If You’re Open to Growth, You Tend to Grow, talks of managers who hire the “best & brightest”, only to hamstring them by placing them in an environment of high expectations and fear (of failure).

The best part of the article details how Scott Forstall, an SVP at Apple, put together the team which developed the iPhone’s software. First, Forstall “identified a number of superstars within various departments at Apple and asked them in for a chat.” During the subsequent interview he explained that though he could not reveal the details of the project, he said to each recruit, “(we may) make mistakes and struggle, but eventually we may do something that we’ll remember the rest of our lives”. It is important to note that these people would be walking away from their previous successes and positions. Those who jumped at the opportunity made the team; Forstall was looking for people willing to stretch themselves, rather than rest on previous successes.

A post I wrote about Google back in September ’06 also addresses this way of thinking. And 10 Ways to Foster Innovation in Your Company ties the room together.

So… Be great! Encourage greatness!

Harvard Business School Working Knowledge has an article today on creativity within business, featuring HBS professor Teresa Amabile, whose research we mentioned in September 2006.

The article largely focuses on the environment created by managers, and its effect on employees’ “inner work lives” – “thoughts, perceptions, emotions, and motivations”. This inner work life “directly influences creativity and other aspects of performance.”

Quoting professor Amabile, ”managers are not in tune with the inner work lives of their employees; nor do they appreciate how pervasive the effects of inner work life can be on performance.” Ouch.

So what should managers do? ”Support employees’ progress in their work every day. Set clear and meaningful goals for them; provide direct help, versus hindrance; offer adequate resources and time; respond to successes and failures by drawing on the experience as a learning opportunity, not just a moment to praise or reprimand; and establish a culture where people are treated with respect.”

There’s quite a list there; perhaps one thing to work on each day or week or month. Clearly, sharpening these skills is well worth the effort, as this kind of culture provides what may be the best work incentive available, “the desire to do something because (the employee) find(s) it deeply satisfying and personally challenging” which “inspires the highest levels of creativity, whether it’s in the arts, sciences, or business”

Lots of meat here. Digest it slowly.

In a short, worthwhile article, Fast Company explains how nearly-bankrupt Puma retooled itself.

Instead of waging an uphill battle against Reebok, Nike, and Adidas, Puma flipped it’s priorities, emphasizing style over performance to become the fourth-largest athletic apparel company in the world.

After some drastic business changes to become more efficient, the CEO of Puma did something unbusinesslike – putting an “unrestrained 21-year-old skateboarder named Antonio Bertone in charge of a new division called “sport lifestyle” to incubate experimental fashion projects”. There were plenty of skeptics, yet the risk paid big dividends, ultimately saving the company.

The risk of failure is small compared to the risk of irrelevency. How are we encouraging our staff and co-workers to take chances and risk “failing”. Do we encourage them for making a best effort? We should – we learn far more from our failures than our successes.