Creative Reaction

The more I read about George Gilder, the more I love this guy. In an article he wrote last month for Forbes Magazine, he states, “The crucial conflict in every economy… is not between rich and poor, Main Street and Wall Street, or even government and the private sector. It is between the established system and the new forms of wealth rising up to displace it”. (Italics mine)

“The real source of all growth is human creativity and entrepreneurship, which always comes as a surprise to us, especially in the worst of times”.

It’s not so much that difficulties lead to creativity, but that those who persevere (as opposed to those who scale back and hunker down) are the ones who think all the more creatively until they have a breakthrough.

“Because the U.S. remains the world’s largest economy and still leads the world in business and technological creativity, the current crisis is mostly confined to boondoggles of finance. It will pass rapidly and evolve into a new boom”.

(The remainder of the article will only be of interest to Tech investors.)

I share in this outlook and in Gilder’s optimism. During the last bubble-burst, while its competitors were cutting back and laying people off, Apple (then “Apple Computer”) publicly stated that its strategy would be to innovate to carry itself through difficult times. Think about where they are now.

In an NYT article entitled Even the Giants Can Learn to Think Small (free subscription required - don’t bother) we see another nail in the coffin of the “if you’re not growing, you’re dying” mantra.

Part of the “thinking smaller” movement is a desire to provide better service through personalization, and part of it is the need to be leaner in an increasingly global marketplace. In the Times article, Professor Thomas W. Malone of MIT’s Sloan School of Management offers another reason - employees’ “noneconomic goals” like freedom, personal satisfaction and fulfillment. “How much energy and creativity might be unlocked if all the members of an organization felt in control?” he asks. Thinking back, this ties in perfectly to other times we’ve mentioned globalization making good talent harder to attract and keep.

Being smaller and agile has competitive advantages as well; companies as a whole tend to be more entrepreneurial. Philip Rosedale, founder and chairman of Linden Lab (Second Life), says optimizing a company for creativity involves helping all employees regardless of position develop an entrepreneurial spirit. “Most companies erroneously focus on competition and on differentiation from their competitors…the business opportunity lies in turning creativity into productivity.” And as most entrepreneurs know, ideas are worthless unless they are executed.

(If you do read the article, you may pick up on some similarities between Linden Lab’s and Pixar’s philosophies. And if have a really good memory, you’ll remember some similar posts on company and team size here, here, and here)

So, focus on fostering a collaborative, entrepreneurial spirit company-wide, and not growth for the sake of growth, for your business’ success.

In  The Perfectly-Designed Office, we contrasted offices that foster creativity and those which portray the idea of creativity. The pristine, image-conscious agencies want to look creative, yet what better way is there to woo new clients than to let them see your (often messy) creative process at work?

From Leland Maschmeyer (in this morning’s linked-to post), “Imagine being a prospective client walking into an agency… As you tour the office you’re inundated with ideas wherever you look. The energy of the agency being so vibrant and intoxicating that you feel the need to jump in on a project. And as you marvel at the prolific thinking swirling around you, you can’t shake the notion that maybe – just maybe - you are standing in the womb of creativity… Wow – what a great feeling to leave a prospective client with.”

Which brings us to our segue quote from earlier, “Clients who value your designs are good. Clients who also value your design process are better”.

The essay from which the above quote comes, details how Tupperware choose Frog Design to create Tupperware’s FlatOut! line of storage containers. “Tupperware liked what Frog had created for other clients (in other industries), but they also recognized that Frog’s design process was at the core of all those great designs. And most important, Tupperware understood how that process would benefit them.”

“Many clients don’t fully understand how designers create. And if your clients don’t understand it, or even know about it, then they won’t value it.”

Likewise, many clients do not fully understand how advertising agencies and production companies create.

Those who don’t, need to be taught. Those who do are more likely to trust agencies with their business without rounds of reviews and business pitches.

*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!

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.

Australian online business magazine Smart Company has a great article on company-wide innovation, based on the research of RMIT University in Melbourne. The researchers studied 92 fast growing companies, finding 10 common characteristics which promote innovative business cultures.

The first finding: innovation starts with the leadership qualities of the CEOs or founders. “They were passionate about their work, had a positive and optimistic outlook, do not allow setbacks to hinder their drive and vision, are forward thinkers, determined, thrive on difference and change; surround themselves with like-minded individuals, concentrate on team culture, learn from their mistakes, and aim to resolve problems quickly.”

Not surprisingly, many of the other characteristics had to do with the work environments, made possible by savvy management; an emphasis on training and learning, collaboration, and open communication.

A few other things we’ve recently mentioned include investing in technology and recruiting (and rewarding) innovative people; it’s good to see some common themes here within Creative Reaction’s pages.

One characteristic I found interesting was making sure that vendors, suppliers, and even bankers understand the company’s vision, which makes sense as they all play supporting roles.

The article covers a lot of ground in four pages. Worth reading.

Following up on an earlier post on Business Productivity, taking into consideration the often unmeasured and therefore under-accounted benefits of productivity. The first point was to buy Macs. The next was buying employees larger monitors or second monitors.

In the post that eventually led to this post, Jason Calacanis, CEO of Mahalo.com does some math for us:

“(each employee) will save at least 30 minutes a day, which is 100 hours a year… which is at least $2,000 a year…. which is $6,000 over three years. A second monitor cost $300-500 depending on which one you get. That means you’re getting 10-20x return on your investment… and you’ve got a happy team member”

Also worth mentioning are studies by monitor manufacturer NEC (.pdf summary here) and Pfeiffer Consulting for Apple (.pdf summary here) which indicate even larger returns on investment.

NEC’s study has two findings which I find very interesting. First, if your employees are using a single 19″  (or smaller) monitor, you are adversely affecting productivity and “worker well-being”. Second, equipping employees who are less technically savvy with second or larger monitors, gives them an ever greater productivity boost than their co-workers.

As for the “best” size, it varies slightly according to the tasks, though for most, a single monitor of 24″ - 26″, or a dual monitor set-up with a pair of 20″ monitors is what the study finds offering the greatest productivity gains for typical office tasks; word processing and spreadsheets.

In my experience, for video editors and SFX artists, two 23″ monitors is assumed to be the bare minimum, and it’s clear that for other creative tasks, this would be a good starting point as well. So the next time your creatives ask for 30″ Apple Cinema HD Displays, buy them with barely an afterthought; the $1,799 monitors will pay for themselves many times over. In fact, the Pfeiffer Consulting report calculates a ROI of $5,875 - $23,500  within a year (!) depending on the salary of the creative professional.

Why, it was just a few days ago when I mentioned a company which had adopted a four-day workweek, and today I read in eWeek (print) magazine about Google’s version of this.

(Interestingly, eWeek’s own  - always frustrating  - search engine could not find the online version of the article, even though I typed three very specific phrase in quotes; It was the top result using Google. I always feel lucky.)

Google’s version, as you may already know, is “20 per cent time” - Google’s technical employees are encouraged to spend 20% of their time on projects that interest them. (Yes, they measure it. Google measures everything.)

What I did not know was that cash prizes can be involved. Now some of us might be able to imagine a $10,000 bonus for making some sort of amazing increase to a company’s bottom line. Well how about a $350,000 bonus?! For someone low on the totem pole! As Keanu Reeves is fond of saying, “WHOA!”

Of course, Google has a bigger bottom line; everything is proportional. And, as I’ve mentioned before, Google’s “crazy ideas” make good business sense. This is how they came up with Google News, Gmail, and Adsense.

On our scale, at our companies, what are we doing to encourage BIG thinking? Cash prizes as a tool for creativity? Why not? It’s actually not so crazy.

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!

There’s a “green” angle to this Fast Company article, entitled All in a Day’s work, yet there’s no mistaking its message that overworking will also have a negative impact on productivity and long-term health/happiness/social life/family life of employees.

“It’s a myth of modern hypercapitalism that an overworked, sleep-deprived, stressed-out workforce is a necessity. Studies have consistently shown that longer workweeks increase productivity only in the very short term.”

This article connects nicely with this “Urgency is Poisonous” (Signal vs. Noise) post (which I blogged about here) where Jason of 37Signals briefly describes the productivity gains from the company’s four-day work week experiment. The best ideas are often counter-intuitive.

What is the fixation with Google and money?! In this train wreck of an article, which is hard enough to follow without its questionable math and numerous corrections, the author, as well as about half of the readers leaving comments, seem to miss the fact that Google is an innovative business which treats its employees well. Who cares what the cost is?! It’s all proportional! Certainly, Google must be weighing the cost of feeding its numerous employees excellent food, and deciding that the benefits outweigh the expense. Commenter “Dave” jumps all over this and applies the proper perspective, “Seems like a small price to pay to keep your employees well fed and happy. Not to mention there are probably productivity gains to be had by not having the workforce filter out of the building each day for an hour.” I like to compare Google to Thomas Edison’s labs. All the more reason to encourage mealtime collaboration, offering brilliant people the opportunity to interact with other brilliant people. How can you put a price on that?

Creative Cow magazine has a very astute article on the traits of great clients pages 40-41 of its Dec. ‘06 - Feb. ‘07 issue, which was later repackaged and posted here.

Clients are defined as those who pay well and expect excellent work and with whom relationships are based on mutual trust. They value expertise, they appreciate your attention to detail and they rarely second-guess you.

“Grinders” are at the opposite end of the spectrum. The are suspicious, highly demanding and they micro-manage at every opportunity. They are highly protective of their own money, yet they do not seem to understand that your company needs to make a profit in order to keep providing great service; they haggle, make excuses, and pay late, if at all.

(FWIW, I wish the author could think of a better term for “bad clients”. “Grinders” makes me shudder almost as much as an Olive Garden commercial.)

The author puts everyone else - about 70% of the market (!) - in middle, somewhere along the continuum.

After advising us on how to spot the grinders, we are shown how we can make our relationships with the other groups more profitable, largely based on their perception of quality.

Honestly, I don’t think I’ve come across an article which so clearly shows us the key to a successful creative services business.

After reading the article, you will probably agree heartily with it; in fact, you will probably look back at your career, identifying the grinders in your past. But before you start feeling too good about yourself, having compared yourself to a grinder, take a few moments to think about how you’ve treated your vendors, suppliers, and service providers. Where do you lie along the continuum?

Bob Kodzis knocks another one out of the park in this article written for Create Magazine, where he reviews the best-selling creativity book, “The Medici Effect”.

“By intersecting diverse fields, cultures and disciplines we approach our creative challenges from a surprising variety of directions, making the possibilities almost limitless.”

Download a .pdf of the article here.

A recent study by Gartner Research finds that only 20% of IT money is helping businesses grow or gain a competitive advantage. They call the other 80% “dead money” since all it does is keep things running; in other words, it’s an expense.

Personally, I think their methodology is wrong, since there’s no attempt to measure the value of the systems in place, which may *already* be leveraging IT for success. It is possible that these systems already bring value to a business in terms of efficiency and service marketing.

The study, however, brings up some great points:

• IT managers must understand businesses.

• IT should take the lead, providing a strategy for a business.

• IT must demonstrate the value it brings to an organization.

The takeaway:
Everything IT Departments/IT Managers do must add value to a business, first in terms of a dependable infrastructure, then in terms of simplifying business (efficiency), and finally, in terms of providing a competitive advantage. (For creative businesses, this usually means better creative, faster.) Otherwise, you have something worse than “dead money”; you have dead weight, *dragging the business down*.

If you don’t know much about Seth Godin, (and shame on you if you don’t!) here’s a 60 second summary. Five common cliches (done wrong)