Creative Reaction

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.

It really bugs me when I see lists of how NOT to do things. Sure it’s an attention-getting device, but it is one with a completely negative undertone, requiring translation of all the negatives into positives. Besides, you can’t tell people to not do something negative. It doesn’t work. You can’t say to someone, “Whatever you do, don’t think about man-eating cows”; he is going to think about man-eating cows! Instruct people to do something positive, so they can do something positive!

So, I’m translating this otherwise excellent blog post into positives.

Ten Steps to Allow Creativity to Flourish:

1. Brainstorm constantly. Focus on one issue at a time for best results.
2. Praise new and unusual ideas. Even if they are incomplete or flawed, give them some breathing room.
3. Stress innovation, even with its inefficiencies. Innovation is supposed to be a little sloppy. (See below.)
4. Manage mistakes. Allow them to happen; in fact, encourage them. They are an inevitable part of pushing boundaries. Learn from them. Do not create rules to prevent them except in mission critical areas (or issues of public safety and medicine). Most importantly, teach mistake recovery.
5. Hold loosely onto plans. Better yet, build a prototype rapidly and cheaply, learn from its shortcomings. Reiterate, rinse & repeat.
6. Look to competitors, other industries, and academia for ideas. The buzzword for this is Open Innovation.
7. Find fresh brains! Recruit outsiders. People in an industry tend to think alike and to be blind in all the same ways.
8. Lead transparently. Share the business’ successes and problems. Work together to find solutions.
9. Stress health. Encourage breaks, adequate rest, exercise and socialization – both inside and outside of the workplace.
10. Train, train, train. Train people about your culture. Train them to lead. Train them to further your vision when you are gone.

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.)

Back on September 3rd, we covered a BBC article about Stanford University’s research on the myth of multitasking, and now Harvard Business Publishing has chimed in with their take on the same research.

“Despite starting the research on 100 college students with the hypothesis that multitaskers had some special abilities, the study found that multitaskers were actually quite ineffective at managing information, maintaining attention, and getting results. Compared to study participants who did things one task at a time, they were mediocre.”

There’s still a tendency to stand back and admire multitaskers for being able to do so many things at once. It’s like looking at a bunch of smokers out on the stoop, and catching yourself thinking “Oh, they’re SO cool“, then realizing, “What am I thinking? They are killing themselves and poisoning us!”

Multitaskers aren’t cool. They actually deserve a dope-slap. Especially when it’s you who are paying them.

The 99% has a good article entitled Reclaim Focus, One Day at a Time, which deals with a dilemma faced by most creatives and Professional Knowledge Workers (PKWs).

“Reacting to each request while setting aside time to proactively research and execute new programs is an unrealistic proposition at best, and flat-out unattainable at worst… A lack of focus is at the root of this problem. Constant shifts mean that no task receives the proper attention.”

The author’s solution was to set aside specific days for specific ares of focus, then adjust her own mindset, as well as that of her co-workers according to these tips:

1. Inform those around you that you’ll be switching to this workflow.
2. Stop thinking of yourself as “on-call.”
3. Do something to get yourself in the day’s mindset.
4. Allow a bit of flexibility.

Of course, this means her employer must be more interested in results than procedures.

Managers, how can we allow our employees to be more effective without getting in the way?

Much has been written about the transformation from an industrial/manufacturing economy to one of knowledge-based work, and yet many of our management practices cling to the past, especially in the way employees are motivated and compensated. In this TED Video, Daniel Pink discusses the “mismatch between what science knows and what business does”.

As it turns out, financial incentives are OK for mechanical and methodical tasks, but for for jobs where creativity and cognitive skills are required, such “extrinsic” motivators can actually dull creativity. For jobs where there are no clear methods and where every task requires a creative approach, the only worthwhile motivations are those that are intrinsic. Unless your employees understand their purpose, and work for a cause larger than themselves, it doesn’t matter how much money you pay for their talent; you won’t get their best.

(And boy did I grin when Pink mentioned “Results-Only Work Environments” and Google’s “20% Time”, both of which have been covered here at Creative Reaction.)

Managers and owners, your business’ survival depends upon you watching this 18:36 presentation. Schedule a time and a place to watch it. You’ll be glad you did.

I came across this zeldman.com post via Daring Fireball, and while it’s from the perspective of a writer and web designer, it applies to any creative-for-pay endeavor. It makes a powerful case for results-based work (the opposite of presenteeism). A must read for any manager of creative sorts.

For a metaphorical approach to this very topic, take a look at Coffee and Creativity.

And  since we’re kind of on a “you can’t rush art” theme here, take a look at Pixar’s “How We Do It“.

Behance Magazine has an excellent article on one of the consequences of Social Media; distraction. This ties in perfectly with one of my posts a few weeks back, “The Hidden Costs of Workplace Internet Usage“.

First off, I have to say that I take issue with their terminology. While they accurately discuss the root issue here, that of insecurity, they label the problem “Insecurity Work“. While constantly checking Facebook, Twitter, LinkedIn, e-Mail alerts, and Blog stats takes time and effort, it is the opposite of work/what you are paid to do/results.

That being said, check out the article: Tip: Reduce Your Level of Insecurity Work.

I have to admit that it’s a little painful to discover, or even worse, have someone point out, a weakness. The good news is that we have an opportunity to better ourselves and then help others. Isn’t that what management is about?

I came across this really interesting article on Boston.com today, entitled, How the city hurts your brain …And what you can do about it. Recent research is showing that the hustle and bustle of the city – traffic, retail signage, noise, crowds, people talking on cell phones and especially navigating (on foot) through all of the above - essentially overwhelms the brain, leaving little processing power for much else.

“While the modern city might be a haven for playwrights, poets, and physicists, it’s also a deeply unnatural and overwhelming place.”

“Scientists have begun to examine how the city affects the brain, and the results are chastening. Just being in an urban environment, they have found, impairs our basic mental processes. After spending a few minutes on a crowded city street, the brain is less able to hold things in memory, and suffers from reduced self-control.”

The cure for this urban-induced mental blight is nature, even in small amounts. Trees, plants, gardens and parks can have a significant, positive counter-effect. “Natural settings, in contrast, don’t require the same amount of cognitive effort.”

“While people have searched high and low for ways to improve cognitive performance, from doping themselves with Red Bull to redesigning the layout of offices, it appears that few of these treatments are as effective as simply taking a walk in a natural place.”

There are a number of considerations here for managers/owners of creative businesses, all of which affect attitude and creativity:

• Where are our businesses located?
• Should we consider relocating once our leases are up for renewal?
• Can we include plants and small trees in our workspace designs?
• Can we design our workspaces in a manner that allows outdoor views of greenery?
• How can we encourage our employees to spend more time outdoors during the workday and over the weekends?

I happen to spend quite a bit of time on Newbury Street in Boston, which is mentioned twice within the article, so I especially need to be aware of the dangers here! Looks like I should spend a little more time a block over on Commonwealth Ave., which has a mall. (The green kind; “a shady public walk or promenade”.)

Great article over at Harvard Business Publishing’s Discussion Leaders about the difficulties of leadership when morale is low, mentioning two issues in particular; a lack of faith in management and the high amount of workplace anxiety due to job cutting. For the middle manager, the challenges are doubly difficult – as you are managing your staff in difficult times, your own job may be at stake.

What to do? The article offers this advice:

• Make the most of the situation, focusing on what is positive.
• Communicate, separating facts from rumors.
• Collaborate, working together to solve issues creatively
• Focus on results; not presenteeism and busy work.

Ultimately, the challenge is to be stronger as your company works its way out of the current downturn, moving ahead of your competitors.

There’s an excellent, self-explanatory post over at Signal vs. Noise - Forbes misses the point of the 4-day work week. Largely due to 37Signals’ influence, I’ve blogged about the same issue here at CR, with the same conclusions; i.e. work is not about presenteeism - it’s about results. (Preventing Workweek Creep is a closely related issue.)

Reducing work hours with the same expectation of results forces us to use the time we have wisely and always think, “what is the most important thing I should be doing right now?” And with the added benefit of having an extra day off, it’s a huge quality of life issue as well. This should not be confused with urgency for the sake of urgency; this is creating within constraints for a higher purpose. (See another 37Signals post here.)

The Design Funnel, another great manifesto on ChangeThis, is not about design as a gift or a rare ability or spontaneous insight; it is the process of design. Our clients have messages – stories to tell – and in creative businesses we must interpret (more often than not) vague requests, from which we form “concrete goals and results which are satisfying to (us), and effective for (our) clients)”. In a business setting, we cannot simply sit around and wait to be inspired; we have deadlines and air dates. And so while the work we do is creative, we must have a framework upon which to build, in order to meet business demands as well. The Design Funnel is a process which will undoubtedly prevent much of the heartache and frustration in “dealing” with clients, as it involves listening, communicating and collaborating. Download it and read it. It should change the way you interact with your clients.

As information aggregator Kosmix grew to thirty employees, its team started suffering from e-mail overload and workweek creep; it was time to rethink its communications. Stop Email Overload and Break Silos Using Wikis, Blogs, and IM details their efforts.

It seems Kosmix was relying primarily on e-mail, even for things which e-mail is not well-suited for. (For a primer, look here.) This is sort of thing is often the case with startup companies, where, in my experience, off-the-shelf Macs, procedures and free services “work” without design or strategy, then suddenly buckle under the load as the company grows.

Now at Kosmix, Blogs and RSS feeds are being used for status updates (making many meetings unnecessary!), Wikis are being used for “persistent information”, and IM is being used for live communications from diverse locations.

My second favorite thing is that employees are allowed to set their IM “status” to “Do Not Disturb” when interruptions are especially unwelcome. My favorite thing is that technology being used smartly and is aligned with business needs.

(My only concern as an IT professional is that they are using Yahoo for IM, which is likely not the most secure choice, and there’s no mention of using a VPN to connect to the office.)

I like that there’s a healthy realization that “Kosmix is certainly not the first company to use internal blogs, wikis, and IM for corporate communication” and that “as Kosmix grows further, even this model will break down at some point and (they) will have to look for new communication models.”

The results “have been immediate and very visible. They include a lot less email and almost none on weekends; better communication among people; and 360 degree visibility for every member of the Kosmix team. After we instituted these changes, everyone on the team feels more productive, more knowledgeable about the company, has more spare time to spend on things outside of work.”

Now who wouldn’t want that?!

A book I’ve been meaning to mention has been burning up the blogosphere. I haven’t seen a post about it befitting Creative Reaction until a revolutionary business think tank reviewed the book, putting the book’s premise into perspective.

The book is Why Work Sucks and How to Fix It.

The review is written by Verasage Institute founder Ron Baker.

The way to fix work is to establish a “Results-Only Work Environment” or “ROWE” (both coined by the Why Work Sucks authors), which is an environment where employees have complete autonomy to work wherever and whenever they want, as long as their work gets done.

Ron Baker frames this perfectly; “Firms are struggling with work/life balance, flextime, time management, etc.  But all these are a joke… Work/life balance is not up to firms to define, but rather their team members… they need control over their time.  They need to be trusted to do their work.  They need to be judged on results, not putting in time… After all, if a team member isn’t performing, working longer hours is not going to make a difference.”

Baker asks, “Isn’t this how we all worked in college?  We were responsible for our own schedules, getting our work done, studying for exams, etc.  What makes firms think they need to treat knowledge workers like children after they graduate?” What an apt analogy!

Baker’s own mission, banishing the Marxian “time equals money” fallacy, dovetails perfectly with the premise of ROWE. Again quoting Baker, “Work is what you do, not where you go, or where you are.” Spending hours and hours at work is not the same thing as producing results. (Creative Reaction has touched upon this here and here and here.)

So, read the full review, consider buying the book, reward those who are engaged in their work and show results, let the slackers go, and enable your business to be more creative and more focused on its customers.

I know, I know – I just wrote about 37Signals yesterday. Yet their business philosophy continues to challenge and provoke. Yesterday I mentioned their recent move to a four-day workweek and its good results. Today I’d like to commend them for their other “Workplace Experiments“.

Creating a work environment where the employees are “allowed” to have lives, and yes, even encouraged to do so, is a recurring theme here at Creative Reaction, and so 37Signal’s experiment to “fund people’s passions” resonates with me. If their employees want to attend flight school or learn to cook, the company encourages its employees to do so by subsidizing or paying for the lessons.

Another recurring theme here at CR is that of educating and training employees. 37Signals encourages this by giving its employees company credit cards and discretionary spending accounts for books, software, or conferences.

As far as I’m concerned, I think these guys have a shot at replacing Pixar as the coolest-place-to-work-EVER! Bravo 37Signals!

Of course, many of you, dear readers, are in a position to make your own companies just as great. Will you one day unseat Pixar or 37Signals, earning my accolades? You can’t afford not to!