How Entrepreneurs Must Overcome Many False Assumptions

This post by Tim Berry crosses some t’s and dots some i’s in the field of entrepreneurship: ‘7 Very Common False Assumptions in Entrepreneurship‘.

Some key points mentioned in the post that I find very refreshing:

  • going for a high price option is a good way for a start-up, and often less capital intensive than the low cost option
  • It’s very difficult to be the first in a new market
  • a lot lies into commercial and marketing, and not necessarily in having the best product
  • Don’t overwork

On the latter we need to remember that starting a start-up is more like a marathon than a sprint and we need to keep the distance!

I believe this post reminds me how important it is for founder to be accompanied by mentors with experience in creating businesses so as not to fall into basic mistakes.

And I absolutely love the quote at the start of the post: “What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.” — Mark Twain


How Automation Increases Pressure on Basic Production Positions

As part of the current debates about the impact of automation of our work environment, I found this post ‘How Hard Will the Robots Make Us Work (In warehouses, call centers, and other sectors, intelligent machines are managing humans, and they’re making work more stressful, grueling, and dangerous)’ quite interesting.

The point of the article is that in many instances, workers get monitored by algorithms that catch much more than a human manager would do in terms of fine grained performance and efficiency, and that it leads to far more pressure on workers. “These automated systems can detect inefficiencies that a human manager never would — a moment’s downtime between calls, a habit of lingering at the coffee machine after finishing a task, a new route that, if all goes perfectly, could get a few more packages delivered in a day. But for workers, what look like inefficiencies to an algorithm were their last reserves of respite and autonomy, and as these little breaks and minor freedoms get optimized out, their jobs are becoming more intense, stressful, and dangerous”

The article goes on to describe a number of grueling examples, but what has struck me is that most examples relate to production positions that are close to being automated, and based on hourly compensation. The only exception in the article is a software engineer whose productivity and presence is monitored at tight intervals, but apparently he is supposed to provide run-of-the-mill coding. The point is quite clear that for those production positions, automation is stressful because they are increasingly expected to be as good as robots – until they will be replaced. This however does not apply to more complex positions related to creativity and system architecture, where productivity can’t be measured the Industrial-Age way.

Still, this is a warning that for production positions that are close to being automated, the current development of AI and automated monitoring systems will create a stressful environment through closer supervision and this may be an area where regulation may need to intervene to protect workers.


How to Overcome Bias in Project Estimates by Involving Generalists in Systemic Reviews

To finish our current series of posts on our exploration of the excellent book ‘Range: Why Generalists Triumph in a Specialized World‘ by David Epstein, I noted how the concepts developed about generalist vs specialist also applied in the field of project definition. It takes generalists and a diverse set of viewpoints to test the adequacy of a project definition file and associated estimate.

Bent Flyvbjerg, chair of Major Programme Management at Oxford University’s business school, has shown that around 90 percent of major infrastructure projects worldwide go over budget (by an average of 28 percent) in part because managers focus on the details of their project and become overly optimistic. Project managers can become like Kahneman’s curriculum-building team, which decided that thanks to its roster of experts it would certainly not encounter the same delays as did other groups. Flyvbjerg studied a project to build a tram system in Scotland, in which an outside consulting team actually went through an analogy process akin to what the private equity investors were instructed to do. They ignored specifics of the project at hand and focused on others with structural similarities. The consulting team saw that the project group had made a rigorous analysis using all of the details of the work to be done. And yet, using analogies to separate projects, the consulting team concluded that the cost projection of £ 320 million (more than $ 400 million) was probably a massive underestimate

This is a widespread phenomenon. If you’re asked to predict […], the more internal details you learn about any particular scenario […] the more likely you are to say that the scenario you are investigating will occur.”

This is why we observe again and again the immense benefits of having independent reviews of projects by people having a generalist overview and not emotionally involved with the project to get an objective feedback. While this is what we promote, the fact that this review is systemic and performed by generalists is also an essential part of the value delivered. I will highlight it more in the future.


How Organisations Need Both Designed and Emergent Structures

A recommended book about system thinking is the textbook ‘the systems view of life’ by Fritjof Capra and Pier Luigi Luisi. It is a quite enlightening read. One of the topics addressed in the books is emergence. In complex systems, emergence occurs when an entity is observed to have properties its parts do not have on their own. And the point made by the authors is that organisations need to have both at the same time and established formal organisation, and an informal emerging one.

Human organisations always contain both designed and emergent structures. The designed structures, as described in its official documents. Ther emergent structures are created by the organisation’s informal networks and communities of practice. The two types of structures are very different, and organisations need both kinds.”

The future of the organisation is generated by the tension between both types of organisation. “In every organisation there is a tension between its designed structures, which embody relationships of power, and its emergent structures, which represent the organisation’s aliveness and creativity.”

While I have always observed the importance of the informal organisation for the formal to work properly, the new point here is to see it also as part of the emergence. And this also means that somehow, the informal organisation is in some ways the draft of the future organisation.

How is your emerging informal organisation doing? Can we accelerate transformation by leveraging on this informal organisational emergence?


How Large Companies Have a Challenge in Personalizing Service

In this post ‘The Coronavirus Shows Why, if They are to Stay Healthy, Companies Need to Rethink Practices‘, Valeria Maltoni shares her experience with companies struggling to align their communication and practices in the midst of the Covid-19 crisis. She also shares an interesting little illustration which we reproduce here.

Beyond her particular experience, this post inspires me to consider how little companies have grown to develop personalized and responsive experiences, while technology would now allow this. The author gets an automated message from an airline about her oncoming trip while all flights have been cancelled. When events happen, industrial-age systems don’t bother and continue to plough away. They are not flexible and responsive to events. They don’t deliver personalized advice and information.

Large industrial organisations that will manage to develop this level of personalized services will take a lead as that is increasingly what customers expect. They get personalized advertisements and messages from internet platforms. Why do they continue to be treated as a uniform mass by service companies?

When technology changes exponentially and organizations change logarithmically, at some stage there will be a massive disruption. It is coming.


How Remote Work Will Extend But Still Not Become the New Normal

The experience of remote working has dramatically spread this year with the pandemics. As soon as the worst was over however, many employers tried to revert back to the previous normal, but many employees actually enjoyed the experience. Cal Newport in this New Yorker column ‘Why Remote Work Is So Hard—and How It Can Be Fixed‘ provides interesting insights.

In this post we learn that the concept of ‘telecommuting’ was actually created in the 1970s to address congestion. But the concept struggled to spread, ““Flexible work” arrangements tend to be seen as a perk; a 2018 survey found that only around three per cent of American employees worked from home more than half of the time.”

But there were other, entirely legitimate reasons for companies to retreat from [remote work], and they are just as relevant today as they were a decade ago [when Yahoo asked everybody to be back at the office.” The issue is about informal interaction, integration of newcomers into the community, the need for individuals to have interaction. “Face-to-face interactions help people communicate and bond, but that’s only part of their value. The knowledge work pursued in many modern offices—thinking, investigating, synthesizing, writing, planning, organizing, and so on—tends to be fuzzy and disorganized compared to the structured processes of, say, industrial manufacturing.”

Cal Newport continues by seeing the transformation into full remote work being a slow process, and offices – and office time – remaining an important part of everyone’s life in the next decades. Still, there will be more remote work. New personal discipline and habits will need to be introduced, and new collaborative tools and approaches will be perfected as well.

Aligned with Cal Newport views, I observe that during the pandemics some companies commented that remote work would become the new normal, only to relent as soon as restrictions were lifted, most companies seeing only maximum one or two remote days per week being the maximum allowable. Still it will provide knowledge workers with a new rhythm and possibly a new way of living.


How Founder Compatibility Is Essential In Startups and Any Venture

This post ‘Startup Founder Compatibility is Vital‘ reminds us how essential it can be that founders go along well together, both in good and bad times. And it is not easy because often, company founder teams get together only a short time before kicking off the venture.

While the post is specifically geared towards start-ups, this is quite true for any kind of company including taking over an existing company. Differences and mis-alignments will appear in tense times, and can be quite devastating and mentally tiring (I speak by experience).

The relationship among founders of a healthy business is like a marriage. Compatible goals, thinking, values, and decision-making styles is really important.” I can’t agree more, and like marriage it is essential to take the time to know each other well before committing into it.

Don’t confuse compatibility with sameness. It takes a mix of different skills and backgrounds to build a business right.” On this one, I agree that different skills are needed. However I disagree when it comes to values and understanding of business ethics. On those aspects, an alignment is essential because when bad comes to the worst, founders will have to look at their values as a reference. And a misalignment there have quite dramatic consequences.

Founder compatibility is essential, and particularly in terms of shared values, ethics and benevolence. Take the time to know your partners before entering into a venture. It is like marriage.


How Venture Funds Also Deploy Monopoly-Like Behaviors

My attention has been drawn by the behavior of Softbank, probably one of the venture capitalists, or as a minimum the largest investment funds into unicorn start-ups. This sprawling investor has stakes in many companies which are not known by their best ethical behavior( Uber, DoorDash, WeWork…), and does not seem much concerned by those aspects (read particularly recent news that looks like patent troll behavior in ‘A SoftBank-owned company used Theranos patents to sue over COVID-19 tests‘ or ‘SoftBank Owned Patent Troll, Using Monkey Selfie Law Firm, Sues To Block Covid-19 Testing, Using Theranos Patents‘)

The point which seems quite obvious is that while we start complaining about possible monopolistic behavior of companies like the GAFAM, this type of behavior also seems to exist with some major funds. Softbank is allied by the Saudi Arabian sovereign fund in the Vision Fund, the largest venture fund around. And its behavior seems to to try to build companies that could be one day in a sort of monopoly situation and then milk it. Unethical behaviors in the companies in their portfolios do not seem to faze this fund and its main contributors. It takes only public uproar for refraining some of those behaviors.

Therefore, if we manage collectively to do something to curb the monopolistic tendencies of the GAFAM and largest unicorns, we may as well do something about the monopolistic tendencies of some of the largest investors that are behind unicorns and the largest start-ups of the age.


How We Need to Take Time To Know Each Other Before Entering a Business Partnership

Building on our previous post ‘How Founder Compatibility Is Essential In Startups and Any Venture‘, this also obviously applies to other situations such as partnerships, mergers and acquisitions.

I have too often observed partnerships between companies, or plans for merger or acquisition falter because after the operation has been consumed, partners realize that they actually have a low cultural or values compatibility. The root cause is the lack of time taken to get to know each other, and specifically, identify and address misalignment.

When things are not well anticipated, one of the parties will generally take the lead and dominate to the frustration of the other. And it most cases it leads to botched projects with people leaving the resulting organisation.

In my business practice I now try to spend a lot of time getting to know presumptive business partners well, before committing into a more serious relationship where reputations or even survival can be affected. It is not always possible to spend as much time and effort as we would like because of the pace of business. Still there is nothing worse than entering in a partnership and then be anxious that the partner will not play fair, or aligned with our values.

Take enough time to know your counterpart intimately. Partnerships, mergers and other (friendly) acquisitions only will work with benevolence, trust, and minimal cultural and values alignment.


How Companies Manage Hundreds of Employees Remotely

The Covid-19 crisis has highlighted the practice of some modern virtual companies that can source and manage their employees globally. An interesting case study is developed in this post ‘Managing 185 people in 40 countries. How they do it‘.

In this case study the company is typical of those digital companies that have no office space and coordinate hundreds of employees globally. In this case, the company has been built that way since 2010 and seems to be quite successful on its market.

A few take-away points for me from this paper:

  • basically the money that would otherwise be spent on office amenities is spent in having meetings, including a long all-hands meeting every year for people to know each other and exchange in a physical space. Hence, those setups do not preempt the need to invest in building the relationships – and rely also on the ability to travel globally at least once a year!
  • a focus on the right mix of communication (synchronous / asynchronous) seeking the best effectiveness
  • Lots of writing and explicit behavior expectations to compensate for the missing informal expectations transmittal.

There is a strong benefit at being able to hire talent anywhere without any geographical constraint – and not be limited to some hot spots of coding talents. This in turn allows more diversity and apparently also less cost overall.

All in all, an excellent case study to meditate as we enter in a new era of much more frequent virtual remote work.


How Company Culture Is Essential To Prevent Long-Term Catastrophes

This interesting Forbes article ‘Avoid A Company Catastrophe With A Culture-Focused Approach‘ explores the issues of inadequate company culture in terms of long-term catastrophic outcomes, taking the specific example of Boeing and other previous catastrophic failures and major accidents.

A common topic emerges which is the capability for the organization to properly consider divergent opinions. When looking at the changes that are needed within Boeing, the most difficult appears to be “intellectual inclusion — a willingness to actually listen to other people’s opinions. It’s a difficult change that most companies aren’t willing to make. When incorporated correctly, however, it’s very powerful.”

Many organisations I know tend to have a ‘shoot the messenger’ attitude and have tremendous difficulties addressing diverging opinions. However it is quite true that this is an essential capability, even more so today when the world proves unstable and ripe for disruption.

Both on the short term and in the long term, a healthy corporate culture is an essential investment to navigate the hurdles of an uncertain world. It should probably be much more the focus of attention of senior leadership when building a company meant to last.


How Companies Can be Expected to Become Smaller and Decentralized

In this post focused on journalism ‘What will a post-COVID-19 media look like? I asked my students‘, Frederic Filloux makes the point that in the future, media outlets will be smaller organizations increasingly run as a group.

Crisis are known to accelerate natural trends and it is quite interesting to observe that in the current situation which allows to seek new foundations, the idea that with the new technology, smaller outlets could be more successful is quite interesting.

“The media outlets that will emerge from the global crisis will be lightweight, decentralized, less reliant on advertising, and will bring more explanations and expertise to the table”; and probably they will be also more niche and focused.

Add to the discussion that smaller outfits are also more prone to be generative rather than extractive, and this gives a vision of a new organisational ecosystem that is increasingly focused on making people grow rather than to exploit and produce profit. A quite comforting picture of our common future!