Why Invent What You Can Copy?

Wednesday, April 07, 2010

My wife is thinking about buying one of the new Apple iPads. After putting the kids to bed on Sunday evening, she read me one of the technology reviews of this heavily marketed innovation (I get bed time stories too).

The reviewer did a great job of summarizing the niche the iPad will likely fill in the market and what type of person will find it most beneficial, but that’s not what caught my attention. He went on to describe how Apple is known for being an innovative company…but in reality their engineers are great imitators.

The tablet PC was actually originally introduced by Microsoft in 2000, but never really took off (we’ll see if the iPad changes that). Digital music players were available before the iPod, and smart phones were available long before the iPhone. If you think about it, Apple was the innovator behind the original graphical user interface (GUI) for a computer and fumbled it away to another great imitator—Microsoft.

Oded Shenkar, a professor at Ohio State University’s Fisher College of Business, has started to study this phenomenon. His findings are quite remarkable:

“It’s true—copying others’ ideas is good business. Sometimes it’s great business. And it happens more often than people think. In one study I reviewed, the researchers looked at 48 innovations and discovered that 34 of them—almost three-quarters—were copied.

The research also shows that the rate of imitation is accelerating. For example, Chrysler invented the modern minivan, with front-wheel drive and a carlike unibody, in 1984. It took almost a decade for another carmaker to copy it. But after GM introduced its Spark minicar, a Chinese imitation, the QQ, came out within a year and outsold the original by six to one in China. In fact, nearly 98% of the value generated by innovations is captured not by the innovators but by the often overlooked, despised copycats.”

Think about Dr. Shenkar’s last statement. If this is true, doesn’t it make sense to spend the majority of our time and effort trying to improve upon the items and/or systems that others have created? Some of the most successful companies in the country seem to think so:

“If you take the leading player in many sectors, you’ll be surprised to see that it’s not the pioneer but the able and creative imitator. Think McDonald’s, which imitated a system pioneered by White Castle; think Visa, MasterCard, and American Express, which all borrowed from the efforts of Diners Club to introduce the plastic card to a then-skeptical audience of consumers and merchants. Think Wal-Mart. Its founder admitted that it had borrowed most of its practices from its predecessors but then improved on them and combined them into a winning formula. Today’s lions are the descendants of copycats.”

So, if it’s so easy, why don’t more companies focus on being imitators rather than innovators? That’s a complex question. I’ll invite you to read the Harvard Business Review write-up to explore the answer… If you’re further interested, you may even want to buy Dr. Shenkar’s book on this subject when it is released this summer.

Before you invest more time learning about the details of this topic, take some time to start thinking through how all of this may apply to your business. Here are some important questions you may want to ask yourself:

Are there innovative things your competitors are doing that could be copied and used in your business?
Do you have a “not invented here” syndrome (i.e. if your company did not think of a particular idea, it is deemed inferior and often discarded) at work in your company? If so, this is deadly and has killed many companies.
How fast can you bring new ideas (created by others) into your company and produce a result? One of the things that differentiate successful imitators from “cheap, also rans” is the speed with which they can implement a popular idea.

So, are we going to buy an Ipad? Probably not right now… We’re going to wait until all the bugs are worked out and Apple introduces their next version. Who knows, there may be some 2nd-tier imitators who by then, have created something cheaper and better!

Editor’s Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you’re an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the “comments” link below.

Finding the Next Inefficiency…and Beating the Competition to It

Monday, April 05, 2010

A few months ago we published a blog highlighting the work of Billy Beane (GM for the Oakland A’s), as reported through the lens of the fascinating book, Moneyball. Sports Illustrated referenced the book in a recent article:

“The book is about how Athletics G.M. Billy Beane and the Oakland A’s exploited market inefficiencies by incorporating a statistics-based approach to running a baseball team. The undervalued asset in the late ’90s and early 2000s was on-base percentage; the small-market A’s, kings of OBP, won at least 91 games in five straight seasons.”

This article is a must read for any serious business owner, as it details the importance of constant surveillance for improved efficiencies to stay ahead of the competition. Here are some excerpts from this eye opening article:

“In Moneyball’s aftermath OBP became valued—perhaps even overvalued—by teams, but by then the A’s and a handful of other front offices in baseball had turned to the next inefficiency: defense…

Seattle scored an American League–low 640 runs in 2009. The team was last in on-base percentage, second-to-last in slugging and tied for 11th in home runs. Yet the Mariners won 85 games, a 24-win jump from ’08, the largest improvement in baseball. No team in the history of the AL had scored so few runs and won so many games. Of all the teams since 1893 with a winning record, only two (the 1913 White Sox and the 2003 Dodgers) had scored fewer runs relative to the league average, according to sabermetrician Tom Tango, author of The Book: Playing the Percentages in Baseball and a consultant to the Mariners.”

Assistant G.M. in Seattle, Jeff Kingston states:

“[Seattle] won games because they were first in the league in run prevention, but other than Felix Hernandez, you really didn’t know who else was on the pitching staff… You wondered: How were they so good with a bunch of people you’ve never heard of?”

The reason?

“The Mariners were Death to Things Hit in Play. According to John Dewan, author of The Fielding Bible, a publication devoted to defensive statistical analysis, the Mariners defense last year saved a staggering 110 runs, 45 more than any other team and the most by any club since Dewan began tracking defensive data in 2003. Seattle’s season was the answer to a riddle: In an era when power and on-base percentage were paramount, just how bad can you be at scoring runs and still be a successful team? The answer: When you have wizards like Franklin Gutierrez in the outfield, you can be the worst offensive team in the league…

[The story of the shift in Major League Baseball from valuing on-base percentage to valuing defensive analysis] begins in 2004 at baseball’s trade deadline, when the Red Sox, in the midst of a three-month .500 funk, unloaded Boston icon Nomar Garciaparra in a trade that netted them a Gold Glove shortstop (Orlando Cabrera), a Gold Glove first baseman (Doug Mientkiewicz) and an above-average outfielder (Dave Roberts). Three months later, the Red Sox were dancing in St. Louis, celebrating a World Series championship…

Jack Zduriencik, who in October 2008 inherited a franchise coming off a disastrous season (the Mariners that year were the first team in history to lose 100 games with a $100 million payroll), has been hailed as the second coming of Billy Beane. (Among the headlines in the baseball blogosphere this winter: MONEYBALL II: ATTACK OF THE ZDURIENCIK!)…

‘Defense might be the new OBP,’ says [Assistant Director of Amateur Scouting], Tony Blengino…’but at some point it’s going to be something else that will be underappreciated. Who knows what the next inefficiency in the marketplace is going to be.’

But the shift hasn’t happened yet. The defensive revolution is still young. And the Mariners will ride the wave as long as they can. ‘We’re not smarter than anyone else, I can promise you that,’ says Zduriencik. ‘But I can promise that we’ll always be trying to find that edge. We’ll always try to be a step ahead.'”

A few days ago, I spoke to the Director of recruiting at one of the largest real estate companies in the nation. After some discussion, I asked her three questions:

What is the ratio of candidates contacted to interviews with managers?
What is the percentage of actual hires converted from managers’ interviews?
What is your total cost per hire?

She didn’t begin to know how to answer any of these questions. My guess is that they will not stay a “step ahead.”

This story drives the point again: Measure everything – and be unrelenting in improving inefficiencies.

So long for now… I have to buy my tickets for those Mariners games…

Editor’s Note: This article was written by Dr. David Mashburn. Dave is a Clinical and Consulting Psychologist, Partner at Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you’re an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the “comments” link below.

Are You Doing At Least One Interview Every Day?

Wednesday, March 31, 2010

Kevin Ryan does. Ryan is the CEO of AlleyCorp, a variety pack of internet start-ups he founded in New York City. Inc. Magazine recently featured him in a series of articles about the secrets of business leaders who are highly productive. While the whole series is worth reading, I found the interview with Kevin Ryan the most intriguing.

How does a guy who runs five start-up companies have time to conduct daily interviews? According to Ryan, he doesn’t have time not to:

“I used to think business was 50 percent having the right people. Now I think it’s 80 percent. The best way to be productive is to have a great team. So I spend more time than most CEOs on human resources. That’s 20 percent of my week.”

He goes on to talk more specifically about his work at the Gilt Groupe, a website for bargain-priced luxury brands, that will grow to 500 employees this year.

“I interview a potential employee literally every day, for about an hour. Gilt, the company that currently occupies me most, hired 300 people last year, and I interviewed 50 of those — plus all the candidates we didn’t hire. I heavily over-invest in recruiting.”

Ryan states that he maintains contact with more than 2,000 people solely for the purpose of attracting the best talent to the businesses he manages. He puts special emphasis on first level managers because he doesn’t want the good people under them (many of whom he has hired) leaving. He’s found that people will put up with a lot if they like their manager, but they’ll most definitely leave if they don’t.

If you are a business owner or responsible for managing a team, ask yourself this question: Do you put this much emphasis on recruiting? More specifically, do you put this much emphasis on interviewing? Do you see the value of sitting face-to-face with people (for an hour a day) who could potentially make your team better?

If not, Kevin Ryan thinks you’re missing something:

“Intensive as all this is, I ultimately save time, because I can delegate with confidence. I don’t feel compelled to have weekly one-on-one meetings with senior managers. We’ll meet once a month, but otherwise, I just ask them to send me an e-mail with a few paragraphs about whatever they think I should know. I’m also comfortable being away from the office more often. I take six or seven weeks of vacation a year, though I’m always connected. When you’ve got the best people running things, you can take your kids skiing in France.”

Hmmm…interview more and take six to seven vacations a year. I think this guy is onto something!

Closing The Interview: Ideas From A Top Manager

Monday, March 29, 2010

We have received some great feedback from several of our readers in response to The Power Of Good Interviewing. We are fortunate to work with many talented and inspirational managers. Among them is a manager who leads one of the most productive offices in a major nationwide real estate franchise. In comparison to hundreds of offices across the country, her office has ranked #1 in production seven of the last ten years.

We recently learned that this particular manager practices her own brand of asking and listening that apparently works very well. In addition to having a natural way of communicating, having a clear mission, and setting the example of ambition (that is contagious), she has developed a well-honed interview process that involves asking the right questions and being a good listener.

I asked her to share with us what she asks and what she listens for during the interview process. Here are some of her secrets:

First of all, she believes that the foundation of a productive office is ensuring that everyone is there to contribute to something bigger than themselves…that the entire office operates with a “higher purpose.” She calls it “creating an environment of contribution.”

Transferring this objective to the interview process takes careful asking and listening. The goal is to paint a picture that integrates both the candidate’s goals and the greater goals of the office and company.

She elaborates:

“As important as asking questions, there is an exact group of questions I ask at the end of the interview that recruit to the vision I have for my office/company. This has always engaged the type of people I want to work with who will fit the culture of the office…. In addition, if possible, I use these questions in a phone interview prior to meeting with the candidate to more fully listen and feel the energy the person has, without being influenced by their body language, physical presence etc.”

Instead of just giving you the list of questions she asks her prospective candidates, I urge you to draw up a list of your own. It’s really not rocket science. Ask open-ended questions that allow candidates to elaborate. By the end of the interview, both parties should have a realistic view of what a mutually professional relationship would entail. The idea is for the candidate and the manager to get a taste of what they will be doing together. Roles should be clarified and expectations communicated by both parties. But remember, more asking and listening….less telling and lecturing.

As a result of routinely asking questions and actively listing during interviews, this manager has built consistent office performance and incredible retention. If you have slowly gravitated toward settling for mediocre performance, perhaps the above ideas from one of the best among you, will help inspire you toward reaching for more.

Lastly, she ends the interview by asking her candidates to consider that, if hired, they will have an impact on the office, and urges them to take responsibility for that impact. This can be as simple as saying hello to a new agent in the elevator. She believes that clarifying this vision for a higher purpose sets the stage for the future.

If you want to build an office that has a powerful impact, think beyond the menial tactics of sell, sell, sell…and inspire while you interview. To pull this off credibly, you may have to revisit your own purpose and mission. According to this top manager, it is worth it!

How Candidate Abuse Impacts Your Organization – Part 2

Thursday, March 25, 2010

Last week, I shared an article written by Dr. John Sullivan regarding the consequences many organizations experience due to treating their candidates disrespectfully. Of course, the reason this pattern continues is that the negative impact of this behavior is not felt directly. The candidates leave the interviews and the hiring managers never hear from them again.

But, that doesn’t mean the impact doesn’t exist. Like a low-level infection or difficult-to-diagnose illness, it is the type of thing that saps a person’s energy. For organizations, it often results in missed opportunities. Missed opportunities are doubly hard to swallow because they cause your competitors to grow while you stagnate.

This discussion prompted quite a bit of feedback from WorkPuzzle readers. I received permission to share* one of these responses from a business owner who I respect a great deal. I like his response because it demonstrates how treating candidates with respect and dignity (what we all should be doing) resulted in his company capturing additional opportunities.

“Ben, What a great article! I have two stories that reinforce the positives of treating candidates right. Both involve [my previous company]. As I’m sure you know, in almost any consulting business, today’s employees (or job candidates) are almost ALWAYS tomorrow’s prospects and customers.

In the first case, we interviewed one particular candidate for a senior leadership position. While the candidate was a great cultural fit, the tasks the job required didn’t match his experience. As much as everyone liked this guy, I couldn’t extend an offer.

Avoiding my natural inclination to call him up and give him the bad news over the phone, I invited him back to my office. My message to him was simple- everyone strongly wanted him on the team, but the position wasn’t a good match. We all felt that we’d just be putting him in a no-win situation had we made him an offer. He was disappointed, but he seemed to take it well.

Two months later, I got a voice mail from him indicating he had changed positions and asked me to call him at his new employer. I remember the details like it was yesterday…I called him back at 3:30 on a Thursday afternoon. He explained that he had, just that previous Monday, started a new position with a large customer of ours. Then he floored me:

‘Look, here’s why I’m calling. I’d like you to assemble a team of eight consultants for a project. If you can assemble that team and have the profiles of the team members to me by 8am Monday morning, the project is yours.’

I couldn’t believe it. We absolutely could assemble the right team, but I asked him why he was calling us and not his former employer (one of our competitors). His answer:

‘I was so impressed with the way you and your team handled my interview, that I said to myself that day…I hope I get a chance to hire them some day.’

We went on to win that project, which would eventually grow to produce $2.5 million in revenue over the following two years.

Here’s the second story: I got a call from one of our East Coast offices, asking me to interview a job candidate who was thinking of re-locating. Before the firm spent the money to fly the candidate out, they wanted our office to interview the candidate. Since the position was a senior-level position, we scheduled a full day of interviews.

Over lunch, it became apparent to me that the candidate had the right background, however, he made many negative comments about former bosses. I suspected he may have some attitude issues. Regardless, he seemed like a nice enough guy and, again, it was very likely he could end up as a potential customer. So, we completed the interview and committed to following-up with our sister office. My feedback to them was, essentially, ‘He seems to have the right skills, but there were some red flags.’

Our East Coast office eventually chose to fly him out for an in-person interview, but did not extend him an offer. Three weeks later, one of our sales executives received a voice mail from this interviewee who ended up working for one of our company’s key prospects (this was a company whom we’d been trying to meet with, but couldn’t get past the various screens). The voice mail stated:

‘I know you’ve been trying to schedule a meeting with our company. Would you please call my assistant and get on my calendar? We have three projects we’d like you to start on immediately.’

Unbelievable. I personally went to the meeting and when I asked why we were being given the opportunity to do not one, but three projects, she said:

‘A friend of mine just interviewed with you and he was so impressed with the people and the process, that I decided to give you a chance.’

Those three projects lead to a steady stream of work (totaling well over $1 million) over a five year period with one of the area’s highest profile companies. What we had failed to do in months of cold-calling, we were able to accomplish with one candidate interview- even though the candidate did not get the job.

Both stories, I have told over and over both as encouragement and as a warning to those on my team – An encouragement about how we could impact our sales just by treating job candidates respectfully, and a warning since in both cases, had we handled things poorly, we would never have known why we were not given the opportunity to work on these very large and very high profile projects.”

Think about it–$3.5 Million in revenue that would have likely gone to this company’s competitors if his company had failed to impress their candidates. Wow–who can afford not to apply this lesson!

*Note regarding providing feedback on WorkPuzzle discussions: We don’t receive a lot of open commentary regarding our blogs because many of your are (appropriately) concerned about posting public comments. If you have feedback or want to make private comments, you’re always welcome to email Dave Mashburn or me directly (workpuzzle_at_hiringcenter.net (replace the _at_ with a normal @)). Your comments will be kept private unless you give us permission to autonomously share, as today’s reader did.

The Power Of Good Interviewing

Monday, March 22, 2010

Thanks to Ben for some exceptionally written material over the past two weeks around the topic of drive. I hope you have all digested the information and found ways to apply it. I can tell you that on this end of the relationship, we have. We spend a great amount of time discussing and implementing many of the ideas we present to you in WorkPuzzle.

Sometimes we forget to write about what you probably need most… reminders of the fundamentals of managing a real estate office! Yesterday, I spent a great deal of time on the phone with an executive of one of our biggest clients, and pondered once again the nuts and bolts of great interviewing.

So here are some thoughts (some repeat from earlier blogs) and insight from yours truly:

As you know, it’s almost impossible to find any relevant or useful information specifically about interviewing for the recruitment of experienced real estate agents. And when you do find something, there might be some fairly good information about building a solid pipeline and following up regularly….the usual stuff.

But I have noticed that two vital components are typically lacking. These vital components are what separates the great from the mediocre recruiting managers.

The best recruiting managers are those who exercise these two essential components so naturally, they probably don’t even know that they do it. On the other side of the fence…a manager who doesn’t put into practice the two things I’m about to tell you, can have 100 agents in their pipeline and follow up regularly, but their recruiting efforts will always fall short.

Before I tell you what the mystery components are, ask yourself what you do personally. My guess is that you try to sell. No matter how many times you have heard that this doesn’t work, it’s hard to break the habit. If you’re accustomed to closing, that’s what you’ll do.

We’ve written about it before, but here’s the key: Ask and Listen! These two factors are more important than anything else. It might be easy to sign lower caliber agents to the sell method, but anyone of any substance wants to know that you understand their story and their needs. They want to know that you are deeply interested in them as people first, and agents second. They need to feel that you sincerely want the best for them, and if the best is working for your company, then you’ll only be able to articulate that once you’ve exhausted all relevant questions pertaining to them.

As most of you know, I am a clinical psychologist and still operate a private practice, seeing clients two days weekly. I am trained to listen to the stories people tell me. I can’t begin to help anyone until I understand their story and their greatest challenges. It’s only in the context of understanding the entire picture that anything I say about their course of therapy will have any relevance to them.

Recruiting is no different. Do a lot of asking and listening, and I guarantee that you will be doing more for your candidates than the majority of managers and recruiters out there. That is the central competitive advantage.

As I said, the best managers among you are already doing this…because they do it naturally. The rest of us have to be trained to do it… and that’s OK too.