There are two types of progress – Vertical progress – doing new things (technology = 0..1) Horizontal progress – coping things that work (globalisation = 0..n)
Dogma form the dot-com burst:
Make incremental advances
Stay lean and flexible
Improve on the competition
Focus on product, not sales
The opposite are likely more correct:
It is better to risk boldness than triviality
A bad plan is better than no plan
Competitive market destroy profits
Sales matters just as much as product
What valuable company is nobody building?
A company can create a lot of value, but not be valuable in itself – how do you capture some of that value?
Perfect competition and monopolies – companies are closer to one than it may seem. Companies want to be monopolies and spin this in whichever way is useful for them – e.g. Google saying that they are a small fraction of the advertising market but in reality are nearly a monopoly of the online search advertising market. For start ups it might be finding the small niche to say that no one else is covering. Monopolies can afford to think about things which are not money, non-monopolies can’t afford to.
Competition is an ideology, but the more we compete the less we gain. Microsoft and Google were competing while Apple came along and supposed both of them.
Characteristics of a monopoly
Proprietary technology
Network effects
Economies of scale
Branding
Building a monopoly
Start small and monopolise
Scale up
Don’t disrupt
How will the future be?
Definite
Indefinite
Optimistic
The future is certain and good (US 50s/60s)
The future is random but good (US post 1982)
Pessimistic
The future is certain and bad (China)
The future is random but bad (Europe)
Indefinite – promotes “a little bit of everything” and ends up with mediocrity Definite – promotes certainty resulting in striving to be the best at one thing
Conventions – easy
Secrets – hard
Mysteries – impossible
Secrets are the things we need to find. Some secrets in the past have been sign posted e.g. the globe with missing countries or the periodic table with missing elements but right now the secrets are less obvious. There are two types of secrets
Nature – to find them someone must study aspects of the undiscovered world
People – things which people don’t know or that they are trying to hide
Foundational company concepts
Ownership – who legally owns a company’s equity?
Possession – who actually runs the company on a day-to-day basis?
Control – who formally governs the company’s affairs?
Sales is key and tends to be under appreciated, specially by “nerds”. How to sell?
CAC
Target
Viral marketing
$1
Consumers
Marketing
$100
Small Business
Sales
$10,000
Small Business
Complex sales
$10 m
Big Business or government
Key questions every business must answer
Engineering – can you create breakthrough technology instead of incremental improvements?
Timing – is now the right time to start your particular business?
Monopoly – are you starting with a big share of a small market?
People – do you have the right team?
Distribution – do you have a way to not just create but deliver your product?
Durability – will your market position be defensible 10 and 20 years into the future?
Secret – have you identified a unique opportunity that others don’t see?
The “total motivation factor” provides a way to measure the culture and can be used to correlate with other bussiness metrics e.g. customer satisfaction. This provides a way to measure the return on the investment of focusing on culture.
Employee satisfaction on performance are different. Even people with positive satisfaction might have low performance.
Why you do something is fundamentally important to your performance. Your why/motives can be:
Direct Motives (positive)
Play – when you are engaged because you enjoy the work. The work is it’s own reward. This is work as play not play as work (e.g. ping-pong or table tennis).
Purpose – Where you value the outcome of the activity. The purpose needs to be authentic, if it is not credible it won’t improve motivation.
Potential – This is a second order outcome which aligns with your values or beliefs. The work will eventually lead to something you believe to be important e.g. personal growth.
Indirect Motives (negative)
Emotional Pressure – such as disappointment, guilt or shame compel you to do something. The work is not longer the reason you are working. The result is your performance tends to suffer.
Economic Pressure – when you do an activity solely to win a reward or avoid punishment. The motive is separate to the work and identify. If money is the only reason you are performing an activity it will diminish performance, where as if you are working for other reasons money won’t be a problem.
Inertia – you do what you do simply because you did it yesterday. This leads to the worst performance of all.
The tension
Tactical performance – how well a person executes a plan. Every job requires specific action to be done a specific way. How well you execute the plan. Comes from strategy. Adaptive performance – how well a person or organisation can diverge from the plan. Companies in VUCA environments need to adapt as the situation evolves. How well you diverge from the plan. Comes from culture.
Companies tend to optimise for tactical performance. Since adaptive is the opposite this optimisation tends to result in organisations killing the creativity adaptive performance requires.
Managers don’t kill creativity on purpose. Yet in the pursuit of productivity, efficiency and control – all worthy bussiness imperatives – they undermine creativity.
Distraction effect – economic pressure cause people to focus on the money, not on the task Cancellation effect – where a persons motivation is reduced solely to doing the tactical work and the person no longer acts as a citizenship supporting others in the organisation Cobra effect – where you incentivise something only to get more of what you wanted to stop
Citizenship – teach and help one another, spread new ideas and share innovations
Blame bias – people have a tendency to blame and blame rolls down hill. People tend to blame individuals for system problems. Not only does blame cause us to use indirect motivators, but it make us justify the choice. The antidote is to assume positive intent by the other person.
ToMo calculation: from 1 strongly disagree to 7 strongly agree
I continue to work at my current job because the work itself is fun to do
I continue to work at my current job because I believe this work has an important purpose
I continue to work at my current job because this type of work will help me to reach my personal goals
I continue to work at my current job because if I didn’t I would disappoint myself or people I care about
I continue to work at my current job because without this job, I would be worried I couldn’t meet my financial objectives
There is no go reason why I continue to work at my current job
ToMo = #1 X 10 + #2 X 5 + #3 X 1.66 – #4 X 1.66 – #5 X 5 – #6 X10
ToMo is a diagnostic tool, not a report card. This is just a factor, not a score.
Four leadership styles
Quid pro quo – giving rewards and punishments. Designed to be a meritocracy but produces high emotional pressure, economic pressure and inertia. This is the worst style in ToMo.
Hands-off – only get involved when there is a problem. Designed to give the team space but this is in effective.
Enthusiast – using direct and indirect motivation which ends up cancelling each other out.
Fire starter – encouraging direct motivators and discouraging indirect.
Fire starters
Provides you with time, space and encouragement to experiment and learn
Makes it clear what it means to be performing well
Challenges you to solve problems yourself
Helps you see that your work is important and meaningful
Role models and expects you to live by positive, consistent values and a common sense of purpose
Puts the customer’s interest first
Actively links the work with your personal goals
Helps you to develop and focus your time on your strengths rather than your weaknesses
Provides you with more responsibility as your skills grow
Ensures targets and goals are fair and reasonable
Is fair, honest and transparent
Enables friendship at work
Ensures you are evaluated holistically
Makes it easy to get things done and ensures you don’t waste effort
Tactical vs adaptive growth
Tactical
Adaptive
Increase the number of customers buying two of our products by 5%
Find three new ways to describe how two of our products create value together
Reduce operating costs within this unit from 80% of revenue to 75%
Find three new ways to make our process less complicated
Increase customer satisfaction from 75% to 80%
Find four new ways to proactively address customer complaints on the first call
Ask in huddles:
What did we learn this week?
How did we progress against our purpose this week?
What do we need to learn next week?
Behavioural code
How do we expect people to solve problems?
How should people prioritise competing objectives?
How should people deal with issues and decisions that fall in the “grey area”?
How do you expect your leaders to lead and motivate?
What symbols, practices or rituals are sacred?
Job design
Impact
Does the role allow you to see enough of the end-to-end experience to enable you to fully connect cause and effect for VUCA and your own adaptive performance?
Inspiration
Does the role give you ways to source new ideas and be inspired by different ways of doing the work?
Prioritisation and planning
Does your job give you enough insight to figure out which ideas should be tried quickly (hares), versus which should be driven through consensus (tortoises)?
Performing
Does the role clearly delineate where tactical performance is required and where adaptive performance is required?
Is the zone of adaptive performance (the playground) designed to solve for the VUCA of the role?
Reflection
Does the role give you time to reflect?
Does the role give you clarity into your performance and impact?
Manifesto for the fire watchers
What we do
We own the adaptive performance of our organisation
We increase adaptive performance by building cultures that inspire total motivation
How we do it
We own or influence the aspects of our culture that affect total motivation
We continuously iterate our culture through routine measurement and experimentation
We work in monthly performance cycles with two weeks of integrated design and two weeks of execution
We constantly study how mindset and motivation drive performance
We develop new knowledge and contribution to our craft
We organise ourselves to maximise our own adaptive performance and total motivation
How we choose
We prioritise creation integrated and consistent culture even if the design takes longer to create
We prioritise creating sustainable cultures versus cultures that require constant oversight
We prioritise fast execution provided we learn from mistakes
We prioritise learning over knowing
We prioritise grass roots change over big branded change programmes
Zero to One: Notes on Start Ups, or How to Build the Future by Peter Thiel and Blake Masters 
Primed to Perform: How to Build the Highest Performing Cultures Through the Science of Total Motivation