JCL Blog

Winning is More Fun on a Team

I started racing sailboats at the age of 8 and have done just about every type of racing except offshore (crossing oceans).  Some of the boats I have raced only hold one person (Lasers) and others require a dozen or more.  Like most people, I think winning is more fun than losing, and I also think winning on a team is more fun than winning alone. 

There is a certain magic that happens when a team comes together to do a great thing like win a race or accomplish any objective.  You can read books all day long about how to put together a great team, how to motivate and inspire them, and how to drive for success.  Here are my top three thoughts about teams and teamwork:

All About the People:  Teams are made of people and without the right people -- nothing great will happen.  This does not mean that everyone has to be a rock star.  The Seahawks trading Percy Harvin this week is a good example of that.  The chemistry is much more important than the skills or experience.  Fill your team with smart people with big hearts.  Pedigree and experience are secondary.  Here is a little more on the subject.

Make it Safe to Fail:  If someone gets fired every time there is a failure -- experimentation stops, and the winning will stop shortly after that.  Get your team to realize that failure exists in between where you start and where you want to go.  Figuring out how to deal with it when it happens is the key.  Last night the Dongfeng team was leading the Volvo Ocean Race and lost a rudder.  They didn't try to blame anyone, they got right to replacing their rudder (at 2 AM) and only got passed by 2 boats.  That is awesome.  Here is a little more on the subject.

Give Away the Glory:  I hope everyone gets the chance to stand in the back of the room and watch their team take credit for an awesome performance.  I think it is even more fun than taking the podium.  The greatest singular experience is knowing in your heart that it was you that put the team together and kept it from falling apart and pointed it in the right direction. 

These principles apply to winning sailboat races or hitting a revenue number or any other goal.  Winning is definately fun.

Microsoft's Number 3

I remember Microsoft's 25th anniversary vividly because we were struggling to maintain the culture we wanted and Microsoft, even after a quarter of a century and over 50,000 employees, seemed to have sustained an incredible culture.

We saw this first hand because Microsoft was our customer and every day we would meet Microsofties who would make great decisions for their company.  Decisions that were driven by the truth in the data.  From time to time those decisions were not in the decision maker’s personal best interest – but the right decision was made anyway.  It was impressive, awe inspiring even.

Unfortunately, that culture of company first, we are building something great faded after that.  Some people blame Steve Ballmer, and indeed he was on the scene at the time.  In his defense, Microsoft had started bringing in big company talent and simply could not separate the talent from the big company cultural virus attached.   I am not sure anyone could have preserved the culture as the incoming tide of IBM and Walmart drowned Microsoft.

In this next decade, many great things were accomplished even with a me first, lick the cookie, don’t touch my stuff culture.  From our vantage point outside the company, it sure seemed like every year the amount of effort required to accomplish the same result increased and the fun factor was clearly suffering.  Microsoft went from the place everyone wanted to work to the place people came from.

Next year Microsoft will turn 40 and a new CEO will be at the helm.  I don’t know Satya Nadella personally, but I am encouraged by Microsoft’s selection for several reasons. 

Enterprise is the Engine:  Microsoft is amazing at selling its products and services to businesses.  Mr. Nadella knows that business.  The board must have picked him with that at least partially in mind.  I don’t know what the future holds, but the future is not the iPhone – that was yesterday’s future.  Microsoft has to build from a position of strength and it has amazingly strong relationships with businesses.

Inspired, Purpose Driven, and Meaningful:  Mr. Nadella’s first day email hit the sweet spot.  To me it said:  hey, let’s stop chasing our tails and do what we do best: make people more productive.  His language rang true.  One can feel a new brand promise is being formed and it will be true.  People and Microsoft will not be wasting their time fighting on the playground, they will be inspired to do great things.

Why Not Us?  True, this was not one of the questions in his email.  It is also true that this is the moto of another local hero, the Seahawk's Number 3, Russell Wilson.  Passed down from his father who inspired him to ask:  Why not me?  Microsoft is an awesome company with amazing people.  Great things can be expected from them.  Microsoft's third CEO could be just as inspiring as the man from the Seahawks that wears number 3.

Go Microsoft!

Avoiding the Swamp

I am getting sued.  It is not the first time.  My two ex-wives sued for divorce.  Considering the arc of my 49 years, I suppose I should be happy that I have not been sued more.  Nevertheless, it is one of those things that cause introspection.  Why do these people hate me enough to sue me?  Divorces have their own set of problems, and even though the most recent one was fairly recent, luckily they are both in the past.  So it is my former employee suing me that has caused my wheels to spin and has me looking in the mirror and thinking about the choices I have made.  I believe we make our own way in the world and so I must consider what I have done to bring this about.  All roads lead back to me.

I Create False Hope

The world is complicated but I am still attracted to simple ideas.  Why just grow a company when you could double its size?  I would much rather say to my employees that they can have any job they want – as long as they want it badly enough and are willing to work for it.  Surely a step by step advancement path would be more practical and realistic, but it just does not light my fire.   Some employees have left my company angry because they did everything I asked them to do and my grand promises did not come true for them.  I can see their point. 

I am Often Indifferent

I enjoy my employees’ success, but it does not bother me as much as it should when they fail.  I believe that when they succeed it is to their credit not mine, and so it tracks that when they fail it is not my fault.  I have found that most people want it to be someone else that causes their failure so they have an external target for their anger.  There is no question that I could be more empathetic without taking ownership of someone else’s choices.  I am going to have to figure out how to do that.

I Still Believe in Fairness

I really like the structure of the “you split, I choose” method for dividing the last piece of pie.  Even if one of the pie pieces ended up being better, my sister and I always thought the outcome was fair.  The real world is not so simple, and some people do get paid more than other people.  Even though I have tried to approach every pay decision with an eye for fairness, there is no end to the anger and frustration associated with pay issues.  The reality is that there are a finite number of dollars available, and one employees gain is another’s loss, and neither of the parties involved got to participate in the pie splitting.

All relationships are complicated and employment relationships are the worst.  The employer has the power to hire and fire and set pay rates and often employees find it hard to take.  In the movies the hero is always the one that sticks it to the man, so I guess I should not be surprised that even in my little company we have people who consider it heroic to poke me in the eye.  Someday I may grow up and adopt my attorney’s view that that we live in a swamp and despite the putrid smell we must realize that law suits are part of the world we are in.  I plan to avoid this thinking for as long as possible.

Just like in my divorces, in the end the lawyers get the money, and even if there is some money left over for the angry person that hated enough to bring the suit, I believe he ends up the loser because he spent all of his time and energy drinking rotting ooze instead of living life.  Through this experience, I hope I am learning a few things about myself and exit the swamp without any incurable infections.  Time will tell I’m sure.

Sales Incentives, Can't Seem to Live With or Without Them

Steve Jobs talked about the balance between product design and sales/marketing (as recounted in the Walter Isaacson biography) where he describes the arc of company evolution from great product creation to an over dependence on sales and marketing.  The latter being the death of great technology companies like IBM and Xerox.  Jeff Bezos is famous for saying that advertising is for companies that don't have good products.  Of course neither sentiment is completely true.  Great products still need sales and marketing and advertising is often a necessary tool employed to drive demand for a great product. 

In my post Market Like an Engineer I proposed that people running marketing departments should encourage the virtues often found in an engineering culture in their marketing departments.  The desire to create something truly new, the open sharing of knowledge, and the pursuit of critical customer feedback is often missing in the sales and marketing culture.  These virtues suffer when the prevailing mindset is that salespeople are coin operated. 

Over compensating on revenue drives out collaboration and the pursuit of the truth.  Executives are forever tweaking compensation models to discourage these behaviors.  Nevertheless, we regularly see glowing departmental revenue reports that merely chronicle a shift in revenue recognition from one department to another, or the quarterly selection of the "good" numbers cherry picked from pools of mediocre performance.  It is just as common for the company to pay big bonuses the next quarter when this phantom revenue shows up in yet another department -- even though overall sales have not increased at all.  It is no wonder leaders like Steve Jobs and Jeff Bezos want to spend as little as possible on sales and marketing.  Those crazy incentives seem like they always produce unintended consequences, but at the same time seem essential for creating action.

A Strong Finish is Everything

I was one of thousands of people impacted by airline problems this weekend.  United had a computer problem that stranded all kinds of people in the US, and I was in Tokyo where a handful of flights were cancelled by Delta in the poorly organized and poorly communicated fashion we have all come to expect since Delta took over Northwest.

I was frustrated enough to send out some crabby tweets this time and swear off flying Delta - I thought maybe I would just donate all of my miles to charity and call it good.  There has to be another airline out there that actually cares about customers, instead of producing videos about how they value their customers while treating them like cattle.

Then came Miss Yamato. 

Thinking there must be a way to get to Manila faster than Delta offered I checked available airlines and found some seats on Philippine Airlines.  We got to the airport early and asked nicely that Delta fly us out on PAL instead of waiting 12 more hours for the Japan Airlines flight they had lined up.  Our request was turned over to special agent Yamato and she made it happen.  It would have been easy for her to say it was not possible, but she rose to the challenge and overcame no response from PAL, the distance to the other terminal, and a short timeline.  She commandeered a motor coach, marshaled another agent in the office, and even ran through the terminal to get us to the  plane on time.  It was quite an effort and at one point I realized she had rescued the relationship even if the effort came up short and I had to serve out the entire 24 hour sentence.

In the end she prevailed and my girls and I were so elated we asked Agent Yamoto if she would pose with us in a picture.  So thanks to her, I will be back.

The whole episode is a great reminder that a strong finish can really turn around even situations that seem hopeless.  So the next time you catch yourself thinking that a client relationship is beyond rescue and not worth the effort of a diving catch, just think about Agent Yamato and how a strong finish is everything.

Bigger Was Better Until Now

The Factors of Production Disassemble and Big Business Dissembles

Companies have been citing economies of scale as reason to acquire, merge, or grow ever since the beginning of industrialization.  It is not hard to grasp the idea that the cost of each additional unit will drop as more units are produced.  There are every day examples of this from ordering business cards to getting the next bigger bag of popcorn at the theater.  Doubling the size of the order rarely doubles the cost.  In addition to increasing competitiveness by lowering production cost, manufacturers have also been heavily incented to acquire their suppliers to secure raw materials consistently.  In addition, when significant research and development investment is required - large scale is required to justify that investment.  Bringing a new drug, airplane, or car to market can only happen when large scale production is the likely outcome.

Natural monopolies are sometimes formed when new technologies are discovered and more so when large initial investments are required.  The first railroad, telegraph, and electrical grid are good examples of natural monopolies.  Once the track was laid down, the cost of running the train was so much less than the next competitor (who still had to build their track) that protecting the monopoly and remaining profitable was not only conceivable by likely.  In the case of the telegraph, the network effect rewarded the first to market because the usefulness of the network increased as more people were connected to it, further securing the monopoly.

For all of these reasons we have lived our entire lives in a world where bigger was better.  Until now.

Over the past 30 years just about every part of business has been disassembled and the parts can now be purchased as needed, when needed, and for cheap.  Big time computing infrastructure is available for rent.  Enterprise quality business process systems from the mundane (travel expense management) to the exotic (advanced materials management) can be provisioned in a matter of days and delivered economically to large and small teams alike.  Anyone with an idea, some know how, and a credit card can bring it to life and to market faster and cheaper than ever before, and tomorrow it will be even faster and even cheaper. 

The railroad company may still have a monopoly on the use of its tracks, but the customer can pick from any of dozens of carriers that are putting containers on the train, so businesses large and small are able to ship their products anywhere for no initial investment, and very low cost.  Amazon.com may own all of the distribution centers, but anyone can sell their products through Amazon.com.  Apple may own the iPhone, but just about anyone can put an app in the app store.  Google may have the biggest search engine, but anyone can buy an ad.

However, before we get too excited about this new world of entrepreneurship we must look at the remaining barriers.  There are still two large hurdles: government regulation and selling cost.  Any large firm not offering access to its railroad tracks is doomed unless government regulators can be deployed to prevent competition. Also, in selling, some large businesses can prevent their customers from being exposed to new entrants by blanketing the market with salespeople.  Oracle and its mini-me Salesforce.com, dedicate $5B (20% of revenue) and $700M (50% of revenue) respectively to sales and marketing.  They have the reach to simply shout down any competition for customer mindshare. 

These government and selling advantages are significant because to date they have overcome the many large firm disadvantages.  Poor performing employees have many places to hide in big firms, even top performers spend an inordinate amount of time fighting internal battles, and real live feedback from the marketplace rarely makes it through the ranks to the top decision makers.  For these reasons top talent gravitates to smaller firms where the opportunities for advancement and the big payday are greater and there is just plain less brain damage.  The small firms have the smartest people, whose motivations are more closely aligned with business success, who are closer to the customer, and who have access to all of the tools and infrastructure previously only available to the big players. 

Both of these problems are self-correcting. 

Government protection may benefit a business but it kills the market.  More people every day make their residential location decisions based on access to high speed internet.  Taken to the extreme, these decisions may not be between one part of a city and another, but instead over an international border.  People went to Canada to escape Nixon’s draft, why not Australia to escape the reach of Genachowski’s FCC?  It is not hard to imagine a young software engineer with school age children attracted to Australia by fiber to the home and good schools.  Comcast and its lobbyists win in the short term, but even they lose in the end as they ride their shrinking market into the ground.

WikiLeaks may offer a middle ground to the all or nothing proposition of killing the entire economy.  They have announced plans to release documents targeting big business starting with the big banks.  It is suspected that the first target is going to be Bank of America.  This will expose the tactics large enterprises use to protect their positions.  In banking it is likely the manipulation of the bank regulators and deceiving their government and shareholders about their financial condition.  In technology it will probably be the anti-competitive behavior associated with patent trolls, mergers, and the implementation of standards.

In Selling, the small firms need to push forward while gravity does its work.  Salesforce.com spends fifty cents of every dollar of revenue on sales and marketing because they can.  With 95% gross margins, they have the money.  The increased competition from the many small businesses offering sales process automation tools will drive gross margins down. Each bee sting may not seem like much to worry about, but even Microsoft expects its margins to drop from over 80% now to 40% as their customers move to a cloud computing model.  This is happening to the entire industry and the big spenders on sales and marketing are going to either get crushed, or adapt.  Either way, there will be much more oxygen available for the little guy at the customer’s table.

As the disassembly of business offers opportunity to small up starts, the big established firms will dissemble.  Watch for support of entrepreneurial activity while absorbing potential competitors, claims of working with the government to open markets while increasing regulatory burden, and ever increasing attorney headcounts.  Change is hard for anyone and really hard for the big guys.  

10 Reasons to Listen to This American Life 9/10/2010

Sorry to be tardy to the party, but I just today listened to the 9/10/2010 episode of This American Life, titled Right to Remain Silent.  Here are 10 reasons you should listen too.


  1. If you have ever had a bad customer experience at an Apple store.
  2. If you are looking for real life examples of the impact of the Patriot Act on average Americans.
  3. If you are wondering if you can be arrested for posting a joke on Facebook (that you thought was private).
  4. If you want to know if you should fear the police.
  5. If you need some good examples on how performance measures induce the wrong behavior.
  6. If you are wondering if there is anyone left that is trying to do the right thing.
  7. If you think crime is really going up in NYC -- despite the "statistics".
  8. If you think the decline in investigative reporting is important.
  9. If you want to restore your faith in America (because WBEZ and Ira Glass were able to produce this show without fear of going to jail).
  10. If you are looking for a reason to support public radio.


I could go on and on, just listen to it and let me know what you think.

Expectations and the Uncanny Valley

I find myself lucky to be exposed to the most interesting issues as I work on our RetroDex event.  In particular the intersection of virtual worlds and the real world.  Most recently I came across the subject of the Uncanny Valley on one of my favorite radio shows (podcasts), NPR's On the Media.

The Uncanny Valley is the name animators give to the negative correlation between audience acceptance of their craft as it approaches perfection.  In other words, as viewers we much prefer an animated being that looks animated enough to clearly not be human.  For the last decade or so, technology has enabled the creators of animated beings to enter the Uncanny Valley and render an image so lifelike that it disturbs the audience.  As a result, ever since Dreamworks created the first Shrek movie in 2001, technology ceased to be the limitation and the artists had to intentionally back off on the realism of their creations.

What a wild idea.  We like the way animations approximate the human form and are constantly asking for better and better animations.  But at some point the image generated leaves the realm of great animation and enters the realm of a human with flaws -- and we get nauseous.

There are many ways this translates into business.  One is linked to the common quip "Even the worst day [insert favorite activity here] is better than the best day at the office."  We work hard at CSG to create a great place to work and are making pretty good progress.  However, if we slip into a warped expectations zone like the uncanny valley we will never succeed.  After all work is work and not soaking up the sun on the beach.


Events Have Dates

The thing I like the most about events is their concrete connection to a specific date on the calendar.  An event is not an event unless it is actually scheduled for a specific date.  Sure an event can be moved -- but not without considerable pain and public notice.

Little things get accomplished in time for a weekly meeting, medium sized things get accomplished in time for the quarter end, and big things get accomplished in time for events.  The annual sales conference, or the big annual industry trade show, are the Superbowls of business.  Everything somehow ties into those dates.

As time marches relentlessly towards the date of an event, amazing people raise their level of performance to match the challenge and the most incredible things are accomplished.   The next time you really want to get something accomplished -- tie it to an event.


Elegant Solutions

Hang around me long enough and invariably we will end up talking about how even seemingly intractable problems have solutions and how those solutions can be simple.  I believe that with the application of enough creativity and brain power an elegant solution will come to the surface.

To me the test for elegant-ness is whether or not experts and the uninitiated both respond by saying: "Wow, what a cool idea!"  I find exposure to elegant solutions to be one of the most inspiring things in life and I do what I can to expose myself to this type of greatness as much as possible.  Here are a few of my favorite examples:

Rotary International Overhead Funding:  All non profits struggle with the same problem:  how much donated money should they use to pay for overhead?  This is one of those double impact things because any money that goes to overhead does not go to the cause -- and also discourages people from donating.  As a long time Rotarian, I am inspired by Rotary International's policy of placing all donations in the bank for three years before spending them, and then using the interest earned to fund overhead.  With this policy, Rotary can truthfully state that 100% of your donation goes to the cause.  

HBS Case of the Slow Elevator:  While it is mostly an urban legend, there is the story of a business school class with the assignment of justifying the installation of faster elevators.  The best answer -- install mirrors in each lobby so the customers will not mind waiting for slow elevators.  

MicroFinance:  Many organizations worldwide have now copied the model established by Grameen Bank to help raise the standard of living of the poorest people on earth.  Simply, loan small amounts to women with a business idea.  It works and Grameen Bank has now loaned over $7 Billion to 8 million people (in 2009 97% of the recipients were women) in over 83,000 villages.  

Gamers Help Science:  As reported in The Economist, Seth Cooper from the University of Washington created Foldit, a computer game that uses non-scientists to do useful scientific work.  He has attracted 57,000 users who donate their time (while playing the engaging game) to do work that the most sophisticated analytical software tools cannot accomplish.  

Wow, what a cool idea!

I Bet Mark Hurd Wishes Women Would Get Off the Elevator Too

Harry Truman reportedly would get off an elevator if a woman got on it.  I don't think it was discrimination, but rather he thought it too great a risk to be in a confined space without others around where he would find himself in a he said, she said situation.

Yesterday's widely covered resignation of Mark Hurd from HP due to legations of poor judgement in the context of mixed gender relations demonstrates that some sixty years and several waves of liberations later, the interaction of men and women in the workplace is still complicated and explosive.

As the father two incredible daughters, two individuals that are every bit as capable as any male, my response to the Hurd incident is disappointment.  I am disappointed that one of the best performing CEOs in the tech industry got into this situation, and I am disappointed that my daughters may still have to deal with high profile men that will get off the elevator in fear instead of treating them as equals.

Here is the incendiary part:  that still nameless woman, who when exposed to Mark Hurd's poor judgement did not get off the elevator herself, but instead continued to dig the hole deeper and then file a harassment case -- has participated in setting back the march towards gender equality -- no matter how justified she might be.

Here is some of the coverage in the NY Times and WSJ.

How Good is Good Enough?

When building a product, or delivering a service, quality is a very big contributor to buyer/user satisfaction.  Anyone who has ever sought zero defects in either a manufacturing or service delivery context will tell you it is not possible.  True, custom one offs can get pretty close -- but I would argue that a volume of one unit does not a manufacturing process make.

I am sure there is a study out there (let me know if you have one) that shows the increasing investment required to capture each additional percent of quality.  I would bet that once you get over 90% the cost curve turns up pretty hard, that over 95% it is too steep to climb, and that as it approaches 100% it goes nearly vertical.  

So knowing that the extreme cost prevents an outright avoidance of defects, what next?  Here are three ideas:


  1. Communicate that you know the facts of life. It is hard to be credible while saying that you strive for 100% quality.  Such statements do not empower the people in your organization that handle the exceptions.  If five of every 100 products is returned -- just say so.  
  2. Don't pocket all of the money.  Cutting back on the pursuit of 100% quality can sometimes lead to a budget windfall.  After all, each percentage point on the way back down the quality cost curve will reduce costs dramatically.  Make sure to invest some of that money in other customer satisfaction initiatives.  You could even reward customers for finding defects -- i.e. shifting QA cost to the customer.
  3. Be extraordinary at exception handling.  Nordstrom accepts returns of products they don't even sell, Costo accepts returns on electronic items, make sure that when the roulette wheel of defects calls your customer's number -- you are there to make the experience as good as possible.


Customers know products or services cannot be 100% defect free.  They can be satisfied with an exception handling process.  Just admit the problem,  give them something, and do it like a pro.


If metadata is data about data, then I say metawork is data about work.  I am sure this is not most accurate translation, but go with me just for this post.

When working on a team information about what you are doing is almost as important as the work itself.  Your team needs to know what you are accomplishing and when you are accomplishing it in order to synchronize the work of the team effectively.  The faster the pace of work, the more important information about the work becomes -- because more of the work is being done in parallel.  

There are many new tools available to make documenting work in progress as easy as possible.  Blogs, microblogs, and wikis are great ways to capture information quickly and make it accessible to the people you work with.  The two things working against efforts to capture information about work are perception about what work is, and security.

What is Work

I count myself as a person who used to think that writing reports, sharing information about work in progress, going to meetings, and other "corporate" mumbo jumbo is a waste time.  I was the first one to say that stuff was not real work.  Real work was making deals and ringing the revenue bell.  

Every organization has a person or two that does the meta part to the extreme.  Their emphasis on building the file for CYA, or trying to win favor from execs by taking credit for the work of others, is enough to turn anyone off on good documentation.

Somewhere between the gun slinger that wants to ride in with the big deal at the end and the all talk no action kiss up is the person with just the right balance of work and metawork.


Those that want to kill off open communication usually sound the security alarm.  Their organizations have barriers to the free flow of information erected to protect IP, or prevent competitors from gaining an advantage, or something of the sort.

Sensitive information, or even not so sensitive information out of context, can be used by enemies or competitors to do harm.  

I think that if there is someone on your team that wants to do harm -- security measures are not going to do much good.  Loyal employees treated well don't broadcast sensitive information.  Open communication uninhibited by security measures build loyalty in a paradoxical answer to the security naysayers.

Some Quick Rules of Thumb

* Spend a tenth of your time documenting

* If you think a team mate can re-use your work - document

* If you think a team mate is counting on your delivering something - document

* If you want to get feedback on your thinking - document

* If you want to get buy in to your thinking - document

* When in doubt go open (open = trust and loyalty)

* Don't wait until everything is settled to openly communicate

* If you find yourself keeping secrets -- ask why (and then communicate).

What are you NOT going to do?

Leaders spend a good deal of time talking about what they or their organizations are going to do.  At times more effort should be put on what they or their organizations are not going to do.  Everyone listening will code and decode the messages and decide for themselves what the leader is saying.   Without a concrete and credible declaration on what is not happening -- controlling the message is difficult.

Cortez Burned His Ships

When Cortez landed in Mexico his first order was to burn his own ships.  He had long ago proclaimed they were going to Mexico to conquer it, his men already knew that.  Without the ships it was pretty clear they were absolutely committed to winning the conquest.  Do:  Conquer.  Not Going to Do:  Retreat.

Palmisano Sold the PC Division

When Samuel Palmisano took over as Chairman and CEO of IBM in 2002 he engaged in a company wide debate over the values of the company.  He then wrote an email to the entire company proclaiming their newly articulated values.  Then in 2004 he sold the PC division.  Sure IBM had many product lines before the PC.  But for 20 years the PC had been a big part of IBM's image.  For many years the PC was called the IBM PC -- just like copiers were called Xerox machines -- even when made by Ricoh.  Do: Follow our Values.  Not Going to Do: Exempt any part of the company.

When deciding what you or your organization is going to do, articulating what you are not going to do is just as important.

Bank Shopping

Lately I have been shopping for a new bank.  The last time I did this was about seven years ago.  The comparison of the things I consider important in the decision says a lot about how fast our world is changing.

in 2003 my number one criterion was personal service.  I was leaving a large bank's private banking group where I had been for ten years or more.  The service had been amazing, and probably very expensive for the bank.  At that time the service took a noticeable turn for the worse; so either the bank had decided not to continue to invest in amazing service, or not to continue to invest in me as a customer.  Either way I was leaving in search of a replacement.  I also wanted my new bank to have online banking -- this was a Yes/No thing -- either the bank had it or it did not. 

Now my number one measure is online banking, second is security which is closely related on online banking, and third is branch locations, and customer service is fourth.  

Online Banking and Security

We all now know that all online banking experiences are not the same.  We also all know that everyone  "has online banking".  We have also been exposed to many online banking systems as our credit card companies have changed hands.  From this alone, I was able to try out the Bank of America online system because of my Alaska Airlines Visa card, the Chase online system because of my Amazon Visa card, and the US Bank online system because of my Travel Perks Visa card.  This demonstrated that all online experiences are not the same.  

Here is where security comes in.  I want my online banking to be secure.  I also want to be able to use it.  If the security measures are so extreme that I can't understand them -- or cannot get them to work -- that is a problem.  If they are too easy -- then I have to wonder when the Russians are going to get into my account.  I am sure security is a very hard thing to do well.  The measure is simple though.  If I can get in -- then I can use the system.  If not -- not.  

It was over security that I eliminated US Bank for the simple reason that it could never remember my machine -- and made me re-enter my extra security information every time.  I probably would have been OK with this -- after all I can remember 2 passwords and 2 makes it more secure.  But they put that check box about remembering this computer -- so I was trained to expect a better experience and they did not deliver.  There were other smaller functionality things that pushed them out the door.

It was over functionality that I eliminated Bank of America.  Their online banking system is like their bank.  A conglomeration of acquired units that really don't work all that well together.  The checking account group is different from the credit card group, every state is different, business and personal are different fiefdoms.  What a mess.  If you ever get on the phone with someone to help -- it is always the wrong person.  In addition, some parts of the online experience just don't work and without explanation.  At Bank of America it seems that online dysfunction follows real life dysfunction.  Not for me.

So Chase was left standing and I still had not graduated past my first two factors.  

Branches -- Really?

These are modern times, we do most of our banking online, so why do branches matter?  Two reasons:  kids and travel.  I want to teach my kids about banking and I want to do so by walking into a branch with their cash and handing it over the counter.  It is unlikely that they are going to be getting direct deposit of their allowance anytime soon.  

It is true that ATM cards work everywhere and should take care of any banking need that could occur while traveling.  However, being able to walk into a branch anywhere and have my issue addressed is still important to me.  Whether I need to get cash, notarize something, send a wire, get my credit card turned back on -- it seems like these days travel equals credit card suspension-- or exchange currencies, I want a large branch network.

People -- Still Make a Difference

So I opened an account to try it out.  After all, you never really know until you experience it first hand.  The people at Chase were great.  They even gave me their cards with direct phone numbers on them.  They got me all set up and were eager to win other business from me.  A very good experience.  Someone who knows what is important is running that company.

Business Lessons Learned

The business lessons that were reinforced for me through this experience were:

  1. Partnerships matter:  The only banks I evaluated were ones I had been introduced to through the bank's credit card partners.  
  2. Be careful of the Y/N:  Many bank executives probably still think of online banking as something they have. (i.e "We have that").  New innovations tend to get adopted in that way.  The difference in quality is important.  Having a car is different than having a BMW.
  3. People Still Matter:  Customer service fell to number four on my list because my expectations had dropped so far that I was not inclined to make a decision based on it.  I don't think I would be a satisfied customer if I had signed up at Chase and had a bad in person experience.  And I definitely would not be writing this blog post

The Demise of Large Top Down Organizations: Will China Be the Exception?

Sometime during World War II the large centrally controlled organization started to be undermined by the rise of smaller autonomous actors.  While the Americans and the Russians are still arguing over who won the war, everyone agrees that the Germans and the Japanese lost.  And they were defeated by a scattered array of small semi autonomous units from an informally coordinated group of Allies.  D day and Hiroshima were big institutional operations for sure, but the Allies made it happen, and the coordination was minimal or ineffective. 

Ever since then the large organizations has been on the decline. The world was re-ordered and marshaling the resources of an enterprise has been in rapid evolution from centralized to decentralized.

I bring this up now because evidence of this evolution is presented to us every day.  From our ineptitude in every war since WW II, to our inability to manage healthcare cost or quality, to the steady decline in the effectiveness of our education system, or our failure to regulate the financial markets and the protection of the environment, top down administration on a large scale is failing and doing so quite spectacularly.

I have a hard time imagining that China can be exempt from this trend away from large centralized institutions.  One significant contributor to their demise is their ability to deceive themselves about reality.  I don't know about Hitler, but the Japanese Emperor clearly was not getting accurate information towards the end of the war.  Later, the fall of the USSR was sudden and dramatic because those in power were deceiving the public and probably themselves too.  It would be interesting to look into how well China is doing in assessing the effectiveness of its policies.  When in complete control of the information, changing the results reported is often easier than changing the actual outcomes.  

This will be an interesting area to watch.


Working With People You Like

Last night we had a small event for our team leaders and employees participating in our mentor program.  We went out to an informal dinner and then to my house to get a lesson in the making of lemon-cello.  It was a very fun evening and a good opportunity to remember how important it is to like the people you work with.

Our company has been selected as one of the best places to work in Washington State in four of the past five years.  One of the main reasons we achieve that honor is that we just like being in the same room.  Sure it is important to enjoy what you do, and I submit it is just as important to enjoy who you do it with.

Life is too short, and we live a great deal of it at work.  I feel very fortunate to spend that time working with people that I like.

An American Story

Ira Glass did it again, as he has so many times, and created a must listen program about what ails the US auto makers -- particularly GM.  Anyone interested in how labor and management can conspire to create spectacular failure should invest the hour and listen.

The thing that struck me was how the union created an environment that their members did not like and that was clearly not good for the company -- all because they had the power to do so.  

A striking contrast can be found from 80 years ago during the construction of the Empire State Building.  Over 3,400 people built the iconic structure in just 410 days in a heroic but unfortunately futile race against the clock as the country spiraled into what would become the depression.  Anyone with Netflix can rent this amazing story in the PBS series on New York.  DVD number five contains the story of the Empire State Building.

I found myself standing on the top of this most famous of our American buildings this week and even though it was a weekday it was packed full of people who were willing to pay a fair amount to do the same.  It made me proud to be an American and it reassured me that the American dream is alive and well here in New York.  This city at the center of our universe was true to its heritage as the most incredible melting pot on the observation deck deck that day as the English speakers were in a distinct minority.


How Much to Pay the Guy Driving

It is interesting how humans adapt to systems and even more interesting when you consider that humans created the systems.  The idea I outline here has a remarkable parallel in Jaron Lanier’s thoughts about how people react to computers.   It also may translate into thoughts about how much we pay CEOs.

Years ago in sailboat racing there was the International Offshore Rule.  The IOR rule was, like all of the rating rules before and hence, intended to be a fair way to handicap boats that were different so they could race against each other.  And racing rules like the IOR go through a predictable cycle just like businesses and cause people who think they are rational to do the most irrational things.  I submit that the phases for sailboat rating rules are invention, adoption, popularity, optimization, insanity, and retirement; and bear a fair amount of similarity to business cycles.


  1. Invention happens about the same time the prior rule is in the insanity phase and one person wakes up one day and says that the current way of doing things is crazy and there has to be a better way.
  2. Adoption is when that one person comes up with a better way and convinces others to follow.  Of course a better rating rule is no good to one person because the whole idea is to race against other people and without others – there is no point.
  3. Popularity comes about when enough people defect from the old rule to the new rule (in sailing this is usually a process of getting your boat measured so you can get the new rating number, and then switching to sail in races governed by the new rule instead of the old one).
  4. Optimization happens as the stakes get higher.  Now that a lot of people are sailing under the new rule and their natural competitiveness causes them to make changes to their boats to improve their ratings.  The funny thing about this is often the changes make the boats slower or more difficult to handle but the rating benefit more than offsets the performance handicap.  That is right, racing sailboat owners voluntarily make their boats slower in order to be more competitive. 
  5. Insanity comes at the extreme end of this cycle when people spend hundreds of thousands of dollars to have new boats build with extraordinary shortcomings that could only be induced by the rating rule itself.  Strangely, and presumably for the same reasons that Jr. High boys find the outcome of flushing bleach down the toilet an irresistible attraction, this insanity phase can last for some time.  Eventually though the seeds are sown for next rating rule and usually by someone we usually brand as a geek.
  6. Retirement of the old rule happens as the new rule gets to the popularity phase.


Followers of Schumpeter would call this a healthy market and a productive use of resources in the pursuit of higher performance.  And they could be right.  The most insane of the boats under the old rule really cannot convert to the new rule and get sold to outlying markets where the old rule has not yet run its course.  Depending on how insane the insanity was there is a reasonable counterargument that the resources invested at the end of the cycle do not produce anything useful – excepting maybe creating a fertile environment for the new rule.

During the insane period of the IOR era the custom built boats had a distinct hollow section in the shape of their hulls where the measurements were taken that sucked the boat down into the water - so the boats were very squirrelly sailing downwind when it was windy.  This hollow section and other elements of the rule induced the designers to put up massive amounts of sail area downwind with oversized spinnakers.  So here you are going downwind in heavy wind with these giant sails pulling the boat forward while the back of the boat is getting sucked into the water by the hollow section and the combination would induce a death dance of wild rolls from one side to the other - and yes you can put the mast of a 15 ton racing sailboat into the water rather decisively.

There were only a few people on the planet that had the right combination of skill and bravado to drive one of these boats downwind in a breeze.  You had to steer very aggressively and often times at the end of a roll, right before you could wipe out, the rudder would start to lose its effectiveness and the best thing to do was just let go, watch the wheel spin wildly and then decisively grab the wheel to reestablish flow over the rudder and send you down the next wave – if you were lucky.  It was quite a thrill and even with the reverence in the business for accomplished downwind IOR helmsmen, most people were quite glad not to be driving. The strange thing is that the properly designed boats with clean lines needed less sail area, stepped up on a plane going downwind in a breeze, and actually got more stable.  And they could be driven by mere mortals and with very little drama. So, who should get paid more, that crazy guy in the IOR boat driving like a madman while everyone else holds on for dear life, or the guy in the properly designed boat with almost no visible effort and the hearts of his crew beating hard because of the thrill and not the terror? 

Bear in mind that when the IOR boat wipes out the race is pretty much over, and some big checks are going to have to be written to sail makers and the boatyard.  And the boat not designed to the IOR rule?  It would actually be going considerably faster through the water. This is why we pay CEOs so much these days – let’s hope someone invents a new rule soon and makes their skills obsolete.