Book Review: Management Rewired by Charles S. Jacobs

Management Rewired by Charles S. Jacobs

People often ask me, "what do you do in your spare time?" My first response is, "what spare time?" However, I do spend some time reading. Usually I read books that might help me with other things I am working on. I've recently finished reading Management Rewired by Charles S. Jacobs. Using Greek mythology, the latest brain science and a myriad of other approaches, Charles Jacobs's book is a whirlwind tour of concepts from organisational behavior.

About two-thirds of Management Rewired was familiar to me, from the courses I've taken during the MBA, so reading the book was a useful review of these concepts. The other third was insightful and really made me stop to think. It's difficult to do justice to the book. My key "take-aways" from the book follow.

• We've all heard that when we make decisions, we tend to follow our emotional instincts and then rationalize why we've made those decisions. However, where do these emotional instincts come from? It transpires that past experiences carry an emotional charge that is encoded in our memories. A similar enough situation summons those past experiences and emotions. The emotions we feel in a situation are the culmination of past decisions and reactions - this is where our "instinct" comes from. So it is often reasonable to go with our emotional instincts.
• Everything from exercise to our mood has the potential to change the way we think - to change the synaptic network of connections in our brain. After five repetitions, structural changes occur in this network to create long term memory. The world we know is a network of ideas that have been reinforced over time - high level networks are deeply held values and beliefs.
• Stories are the way that the brain naturally thinks. Different points of view, relationships and motivations are built into the structure of stories, so stories do a better job of capturing human interaction than any other way of explaining something to another person.
• Unsolicited feedback often does not work. We we receive such feedback, we will likely rationalize such feedback away. This is so that we can maintain the self-image we have of ourselves as competent and capable. Unsolicited feedback rarely causes us to change our world view.
• Often people only think of the short-term gain in a situation. When we think of the long-term, we can understand relationship-effects that will occur. For example, if we reduce the price of our price products, we might reach next quarter's financial goals. However, customers will now expect lower prices. Competitors will lower their prices also. We become stuck in a prisoner's dilemma.
• Our expectations of anticipated rewards and punishments greatly affects how we view the actual rewards and punishments we receive. For example, if we are rewarded a bonus of $20k when we expected a bonus of $50k, this "reward" could have the same effect as a punishment. On the other hand, a punishment that is tactically withheld could engender loyalty to you and have the same effect as a reward.
• When a small reward is offered for changing a behavior, those changing their behavior attribute the reason for change to intrinsic motivation. When the reward is larger, the behavior is attributed to extrinsic motivation. To remove unwanted behavior, perhaps we should reward the unwanted behavior and then remove the reward? Conversely, when the punishment is mild, people are more likely avoid punishment and attribute the reason for change to intrinsic motivation.
• Effective management of people is about supporting them, rather than controlling them. We must resist our hard-wired alpha tendencies. Organisations that do not have "I need to lead" alpha-types tend to be the most successful when coalitions are required to overcome large obstacles. People work most effectively in small, self-managed teams. Such teams work best when they believe they are motivated against external competition and are told stories that target the individuals' highest aspirations.
• People who make decisions based on the long-term view, rather than the short term view, generally have more success in life (see this article).
• Successful businesses eliminate frustrations, rather than attempt to meet needs.
• People operate in paradigms - their own personal version of reality, with its own rules and cause-effects. When things happen, we try and fit the what has happened into these rules and cause-effects of our reality. So, for a person to really change as a person - to change their behavior - that person needs experience a counter-intuitive response to some action: a respone that does not fit the rules and cause-effects of their reality. Only then will a person rethink whether their version of reality is correct and formulate a new version.
• To bring about change, we need to figure out the current rules of the reality that people hold. We then need to figure our the desired rules. Finally, we need to use stories to help people experience the counter-intuitive response that changes their understanding of the rules.
• Most people operate through transactional leadership: I compensate you with $X in exchange for you doing Y. Transformational leadership is more effective. It paints for people a picture of a better future, and their role in making that happen. Transformational leadership gets the participation of those involved, creates an aspirational future, tells a story, shifts the paradigm of the game played and creates focus and urgency. In this respect, an idea is powerful and can be a motivational force.
• While for leading people and for strategic thinking we need to think about the future and painting a picture of the future, our own personal long-term enjoyment will come from enjoying the present - enjoying the every day activities. "Happiness is a journey, not a destination". So we need two modes: one for when we lead, and another that enables us to get on with our everyday work.

Week 6 of 13: Piecing Together The Business

Starting a business means piecing together buyers, suppliers, operational systems and all sorts of other bits.

One of the really interesting aspects of business school is that you're thrown in with people from all over the place: people who have done all sorts of different things in their career to date. Even casually speaking to these people, I get a lot of useful feedback on what I'm doing from a variety of different angles. Though a lot of my classmates have fled town for the Summer, to pursue their internships, a fair number are still around Evanston. I have also started to get to know some of the students from the One Year Program. This is a four quarter program that starts in the Summer. Talking to a student from the One Year Program this week, I realized I really need to get a solid product working, and that I need to have all the other pieces around it in place, so that it works as a business.

With time ticking away, I get an urge to just call potential customers up and start doing some kind of selling. However, I know this will be disastrous. How do I know this? Because I've already tried it in little drips. Without anything to show, I find it difficult to even know how to broach the subject: "Erm, so we're building a product that looks a bit like X and does Y... is there anything preventing you buying right now?". I inevitably end up explaining why it's not like ten other things available right now. So we've been beavering away at getting a version of the product ready for sales purposes. The plan is to get something completed by the end of July, ready for showing around during August.

Another activity this past week has been testing whether it's going to be possible to get some of the non-customer parts of the business in place. Getting a startup going is like piecing together a system of different parts. In some senses, the business plan is written to try and describe how these parts fit together. But hypothesizing on paper is different to actually getting the parts together in real life. In real life, there are egos to be massaged and hidden personal incentives to be accounted for. I've spent some time this week meeting a few people and checking things over. Will I be able develop relationships with universities? After the summer, who could help run this business on an ongoing basis, given that I have another year of school left? Should the company be incorporated as an LLC or C-Corp? I've been fortunate in making some positive strides in answering some of these questions, at least tentatively until revenue starts flowing through the machine.

In the meanwhile, the scent of Fall quarter is already apparent. Bidding for courses has finished, and the free-for-all for unclaimed class spots has started. Some student clubs are starting to think about their plans for the next year, including one I look after - The Merger, Kellogg's school newspaper. The deadline for CMC's resume book looms just over a week away. I've said before that I feel the only significant obstacle that I face is a lack of time. With Fall quarter on the horizone, it's difficult to not feel the grains of sand falling through my fingers.

Week 5 of 13: Building A New Prototype

We don't seem to be going fast enough. ©

We've now burned through five weeks and are quickly approaching the half-way point of the Summer. I'm starting to worry about how much can be accomplished. Everything seems to be taking longer than I anticipated; perhaps I've been too much of an optimist? The change of direction following Week 3 has meant starting from scratch in some areas. While this has slowed us down, I still believe this was the right thing to do. We now have a clearer idea of what it is we are building. We now also have a clearer idea of who we are looking to sell to.

During the early part of the Summer, we completed a prototype that an undergraduate software engineering class had started during Spring quarter. This is the prototype that we then showed to prospects during Week 3. Following the change in direction, we are now working on building a new prototype for the product we are now building.

However, progress on building this second prototype has been slower than I've expected. This is partly because we've switched to a new programming language - Ruby. The switch has come about because we think we'll be better able to reduce some overheads by leveraging the the Rails framework and targeting EngineYard as an deployment platform. While I say that we're working on a new "prototype", it is looking likely what we're building now is going to be the final product: we're not going to have time for too many more changes.

On the customer side, the target segment for the product we are now producing is very specific - much more specific than the previous target of "R&D labs". Because of all the interviews with potential clients that we completed, we now know the size of company that our product might be most attractive to: medium sized of around 100 to 500 employees. We even know the rough job titles of the type of person in the R&D labs who would buy the product. This kind specificity means we can tailor the product very specifically to our audience. However, it also means that finding these target customers is difficult: it's not like I can buy an address book listing these people. I spent the early part of the past week searching through LinkedIn for these types, with no success. I'm going to quickly have to find new years to determine leads.

This is also a personal journey, where I'm constantly learning "on the job". I feel I am always pushing to do what needs to be done, as opposed to what I am accustomed to doing. I also find myself asking whether I'm going about all this the right way. Am I presenting this business persuasively enough? Should I be "selling" to this person, or seeking their advice? Through all this, I sometimes hear echoes in my mind of things I've heard from VCs, from my internship with one last summer, as well as from meeting them on treks and elsewhere. For example, I recall from the winter trek, "the VC invests in people who they think can solve the problem in the area, not in a specific business plan". Only now do I really know what this means.

Week 4 of 13: Distractions and Alterations

The old look. Unavoidable blog changes were among this week's distractions.

The twin advantage and disadvantage of working for yourself is that you get to set your own schedule. At school, there are multiple deadlines, determined by the course schedule. You effectively have to work to these deadlines. In the Fall quarter of the first year, working to these deadlines meant that you didn’t even get time to finish unpacking. At work, there are also deadlines, but not as predetermined, frequent or granular as those during business school. Working for myself, as I am now, I am mostly setting my own deadlines.

The disadvantage of setting my own deadlines is that it’s easy to succumb to distractions. These are distractions that would normally be set aside during the business school term. During the summer period – the only time during the two year program when you can catch up with life – it not even desirable to ignore these distractions. If I’m not going to pay attention to them now, when will I?

The "distractions" have included a long July 4th weekend hosting family, as well as making preparations to move apartments at the end of July. I even carelessly let a squatter take over the old domain of this blog (managingmagic.com), accelerating some changes to moving everything over to this domain (blog.dinogane.com). Another time sink has been a project with Playboy. This was a group project completed for MEDM431 during the Spring Quarter, but it was only this past week that we presented back to them what we developed. Add to all this the progression through the World Cup of a team I’ve followed since the late 1980s, Holland, and I almost feel the momentum this past week has not been as strong as in past weeks.

However, it’s difficult to drive forward at full momentum all the time. The advantage of working to your own schedule is that you can slow down. You can regroup and take a reality check, asking that all important question: are we really building the simplest thing someone will pay money for? Taking on board the feedback from potential clients during the previous week, the nature of the business has now changed. So this week has also been a period of accounting for these changes and change in identity: "we thought we were building X, but we’re actually building Y". This week has been about making adaptations.

The two interns, both software developers, working on this project with me are now adapting the software we’ve been developing. Some of the previous work is now not as critical, while other features are now more important. It’s been a confusing time for them, so I’m conscious of providing a clear vision of what it is that we are doing. “You need to work on your elevator pitch” says a professor who is advising me, so complete clarity might not be quite there yet. In the meanwhile, a team from the SBOC has taken on my case. This provides some relief in taking care of some of the legal aspects, such as company formation. Despite the distractions, we are still moving forward.

Week 3 of 13: Hypothesis Testing

Until you test the hypothesizes on which your business plan is based, you don’t know how crazy these hypothesizes really are.

This week, I managed to finally get some interviews with consumers completed. These were the interviews that I had set up during last week’s emails and phone calls. Speaking to both researchers in industry and in academia, it was a whirlwind week. I laid out my hypothesizes for these consumers, the ultimate judges of my proposition. How did they respond?

This was not the first time I was speaking to consumers. I had previously spoken to some end consumers in March. A Marketing Research Methods class had also done further interviews during the Spring Quarter. Both of these sets of interviews were more exploratory in nature. In this third iteration of interviews, my main goal was to present some fleshed out ideas and also, where appropriate, demo the prototype that a software engineering class from the Spring Quarter had completed.

I spoke to researchers in industry both in person and over the phone. One these researchers had recently become a victim of the downsizing that many R&D labs have been undergoing due to the recession. Meanwhile, another firm boasted that they were spending more on R&D than ever before. A particular woman I spoke to on the phone exclaimed that she had an awful employer – her only reason for speaking to me must have been to warn me away from ever working there. Perhaps most extraordinary was meeting someone who had attended the same middle school as me in the UK. The varieties of circumstances were fantastical. Driving on the "wrong side of the road", the travel was exhausting too.

Perhaps because all the academics I spoke to were based at Northwestern, there was less variation in the circumstances of the academics. It was clear that some professors were superstars and had carte-blanche autonomy to do as they pleased. The administrative staff seemed at times to struggle with this. It transpires that consulting is something that is discouraged, though in some areas parts of the university it is rampant. Academia also has interesting and divergent priorities to industry, particularly with respect to publishing intellectual property.

I’m still digesting what I’ve learned from all these interviews, but one thing is clear: the hypothesizes that my business idea is based on do completely hold. The incentives are not completely aligned. For some people the conflicting priorities of what academia and industry prefer stifles the creation of value that I propose for both parties. However, I am not completely dismayed. I believe this is part of the process. After a previous iteration of talking to consumers, I refined my target customers from anyone in industry to researchers in industry. Following this set of interviews, and the latest feedback, I now need to refine another part of the business plan. My only worry is whether I'll run of time and money before I have a business that holds up when the hypothesizes it is based on are tested.