Creative Reaction

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)

This Fast Company article asks, “…what happens when rivals become so numerous, when markets become so unpredictable, when technologies move so quickly, that no individual leader, no matter how inspired, can possibly think of everything?”

Then answers itself, “ …it becomes necessary to invent a new model of innovation… a world in which ‘nobody is as smart as everybody.’”

Translation:
No matter how brilliant a company’s leader is, he or she can’t be the sole source of ideas. In the age of the Internet, ideas are plentiful and cheap.

Again quoting, “the companies that are most likely to dominate their business are the ones most adept at harnessing the collective intelligence of everyone with whom they do business.”

Especially, I might add, their own employees.

You are standing over an “idea reserve”, not far below the soil. What are you doing to tap it?

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.

(Full disclosure – I am an IT Pro. I wrote this essay some time back because time after time I am brought in to a business to untangle IT messes which could have been avoided. The point is that the importance of networks and servers, especially in a creative setting, is often underestimated and managers tend to think of infrastructure as an expense, and not as a tool for success. On numerous occasions, I myself have chosen the “cheap” option, only to have it come back to bite me in the, uh, hinter regions, as they say.)

The Delta family wanted more space in their home. All the toys they bought their children could no longer fit in the bedrooms and there was little room to play. They decided they couldn’t afford to spend too much money, and they wanted a solution before Christmas, because they knew they would be buying more toys. They hired a carpenter who converted their garage into a family room just in time for the holiday. It wasn’t much, but the kids seemed to like it – for a few months, after which, it became another storage space. The family’s vehicles remained outdoors.

The Alpha family was also looking for more space. A relative strongly suggested hiring an architect, an idea which they initially fought because it seemed expensive. After making little headway with their own ideas, they relented and hired an architect.

The architect observed how they lived, and after asking scores of questions, made some wonderful suggestions. With some creative thinking, the Alpha family found that the proposed renovation qualified them for a loan. Once the project was complete, the renovation enhanced their lives so much, they could not imagine how they lived without it. Adding to their enjoyment was the fact that the increased value of their home exceeded the cost of the renovation by thousands of dollars.

Five years later, both homes, which initially were identical designs in similar neighborhoods, went up for sale. The Alpha family’s home, enhanced by the renovation, quickly sold. The Delta family’s home was on the market for some time, and eventually sold – once they re-converted the family room back into a garage – at their expense. Although the real estate values had increased 50% in both neighborhoods over the years, the Alpha family had a net gain of 80%, while the Delta family had a net gain of 30% – technically a loss.

Information Technology works the same way. Fast, cheap, or DIY solutions usually come at a cost in terms of lost time and unexpected problems, which make IT an expense. If on the other hand, you hire a consultant who will start with your business goals, form a strategy, guide your purchases, and provide expert installation, you are making choices that will allow IT to be an investment in your business.

So instead of thinking, “I cannot afford a consultant”, ask, “how can I afford a consultant?”

“I cannot afford” is an excuse; it’s a dead end. “How can I afford?” makes you think creatively. “How can I afford?” forces you to weed the wants from the needs. You will have to determine your business’ priorities. You will have to think how you might reallocate existing resources. You will have to think how investing money in one area could provide big returns in another area. Yes, creative business manager, now you are thinking creatively. If you spend wisely, not only will IT save you money, it will also bring in more money in the form of happier clients, new revenue streams, and competitive advantage.