Menlo Innovations: No Bosses, No Titles, and No Offices, Just Trust, Relationships and Pure Joy

In 2001, two tech guys decided to build a company around the daring vision, “to end human suffering in the world as it relates to technology.” It isn’t a tech story at all, rather a story every company in the world should study and embrace, to end their own corporate suffering.

Great companies always coalesce around a few simple, clear values to find their true north. Others wander in the deserts of competition, market fluctuations and reactive business models seeking revenue. Menlo Innovations, with a staff of around 50, in downtown Ann Arbor, Michigan, is as focused on a few simple values as any company in the world, and their results reflect that tenacity.

Joy in the Workplace

James Goebel, the operations leader, put it succinctly to me. Menlo Innovations is about, “Joy, for us, and most importantly for the end user of every software product we build. Joy is a necessary workplace ingredient. Happiness is geared around pleasant feelings, but joy can be achieved by common suffering around a common obstacle. Like how to build a product that creates joy.” James compared it to a friend who ran a marathon – “He wasn’t happy while he ran, he was in pain. But he was joyful through the whole process.”

Deep, but true. Happiness is based on a positive emotion, joy is based on a positive experience, no matter how hard. Menlonians focus on a positive work experience and a positive experience for the people they serve in the world, not ping-pong tables or outrageous desk displays. They are all expected to work a maximum of 40 hours a week and go home. Joy in the workplace means working more on joy at home.

The company founder, leader and architect of such joy, Rich Sheridan, wrote the book on joy, literally. His best-seller Joy, Inc., How We Built a Workplace People Love, should be mandatory reading for anyone in leadership in any company. It describes a company built on trust, transparency, and self-managed teams, with no bosses, titles, offices, promotions or other traditional corporate trappings.

Joy in Leadership

Rich told me, “We differentiate between bosses and leaders. There are no reporting relationships. But bossless doesn’t mean leaderless. People have to learn to lead through influence, not command and control. Bossing creates a false illusion. It’s easier, but the reality is that even though they are doing what they are told, I’ve lost them.”

Joy through Trust

Trust is a big deal to Rich Sheridan, and to all Menlonians. Rich sits right out in the bullpen with everyone else. No offices means no offices. The focus is always on building relationships. James agreed, “We have to identify sources of fear and drive them out. It’s amazing how often we do something that creates fear, and people then will not operate at high levels of intelligence.” If only most companies understood this.

Outdated factory system hierarchy does not lend itself to trust, by the very nature that the boss can fire you any time they want. Nobody at Menlo Innovations carries that power. Teams hire, teams give feedback, teams promote, and teams fire. At Menlo Innovations, teams have taken over everything that classic command and control managers used to do for them.

Joy in Pairing

Menlo has a unique team structure, even for self-managed companies. Kealy Opelt and Ted Layher were two programmers who talked with us together, because at Menlo, programmers don’t do anything as individuals, even interviews. I asked, “What’s something your company does that makes your culture unique?” and the answers came pouring out.

Kealy jumped right in, “Rigor around programmer pairing. Many companies suggest pairing, but we live by it. Ted agreed, “It’s always two people on the same task, programming together, billing together, and reviewing code together. Two brains are always better. In the past if I got stuck, I would just sit and be stuck. But at Menlo, my pairing partner always has an idea to keep us moving.”

Partners are assigned every week. Nobody gets picked last to play softball. Ted explained, “We transfer our knowledge to the next pair, or sometimes one of us stays on the code we wrote the week before. We’re all in one big room, sitting together, with chairs on wheels so we can transition easily.”

Joy in Babies

Kealy mentioned crying babies. “Moms and dads can bring their newborns to work for the first few months. Everyone thinks it will be a big distraction, but a crying baby is a problem for a minute, then they are in the parenting room for a change, then when they are happy again, they are back with us. Parents are sensitive.”

Joy in Hiring

Hiring is simple. No resumes and no interviews. Applicants work in three different situations with three other applicants for a couple of hours while Menlo staff members watch for good kindergarten skills, then the next step is a whole day with Menlo staff, doing work. It’s all about pairings. “The prima donna programmer doesn’t work here.” Ted explained.

Joy in Self-Management

In classic self-managed fashion, the teams vote on everyone’s salaries, and they do it in front of everyone, something that only deep trust could sustain. Kealy elaborated, “If I think it’s time for Ted to move up (there are 15 pay grades and everyone knows what everyone makes), I need to get with a lot of other team members to agree. It’s all by conversation. Or ‘improve here, then move up.’”

They don’t claim the self-managed process is perfect, just a lot better than having a manager decide things. Peer evaluation and peer review. No bosses. It’s more work, but they feel strongly that it’s worth it.

Joy in Results

All this focus on joy, trust, and self-management has worked well for Menlo. The four founders wrote checks up front and never had to again. They’ve been profitable for 15 straight years, and without outside investors.

The hard numbers are great indicators of self-managed success, but Rich unsurprisingly points to other joy-based factors. “I was at a conference the other day and during my talk, one of our folks was sitting in the back listening, and she told me later she had texted her husband to tell him how proud she is to be a Menlonian.”

And then a reference to a recent customer note, “I love our software. What you did for us was wonderful.”

Rich Sheridan didn’t just write a book about joy, it’s a life all Menlonians are living.

Menlo Innovations sets a great example, and begs a great question – What could every company achieve if there was more joy in the workplace?

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Yesterday I Met a Rich, Self-Made Hostage. Are You Becoming One?

I was stunned when I heard it: “It’s our 30th anniversary, and I’m finally planning a full two weeks off work to celebrate.” This proud declaration from a man who owns a $30 million company is just sad. This is a man who lives in abject poverty, with no freedom and no clue he’s been doing it wrong for 30 years.

I see it all the time. Business owners whose personal lives are train wrecks, with no time to invest in their kids, spouse, or non-existent hobbies, and no time to even think about creating meaning in their own lives. They are hostages to their businesses with no end in sight for their incarceration.

People think this guy is a great business owner because he works all the time and has a lot of toys he doesn’t have time to use. I think he lives in abject poverty.

Riches vs. Wealth

Riches is just money. Wealth is freedom. Freedom is the ability to choose what to do with my time. Time is more valuable than money. It usually takes money to buy time, but unless the specific goal is to buy time, money can make us hostages.

Money does not bring freedom. Time brings freedom. This man has millions and has no freedom. He readily admits that if he is gone from his business for a few days things begin to go awry. He has built a $30 million business that depends on him personally being there every day! He is not a business owner; his business owns him. He lives in abject “time poverty”.

Intending to receive time, not just money

You get what you intend, not what you hope for. You can just hear this man starting his business. He intended to do two things:

  1. “I’m going to work really hard” and
  2. “I’m going to make me some money.”

He got exactly what he intended – hard work and some money. And he is trapped by the hard work. He did not go into business intending to get both time and money from his business, just money. He hoped that getting money would give him time and create freedom, but we don’t get what we hope (wish) for; we get what we intend to get.

A Day a Week, a Week a Month, a Month a Year

I built five businesses like he did and was trapped as a hostage every time. With Crankset Group I intended to do something different – I decided this next business was going to give me both money and time, and everything I did from the beginning was driven by forcing my business to produce both.

As a result, I now have every Monday and every Friday off, the last week of every month off, and a month in the summer – it adds up to 73% of the work week.

I use only a few weeks for vacation, and choose (freedom) to invest the rest helping others build businesses around the world, including for-profit businesses to solve poverty in central Africa.

Vacation? What Vacation?

A recent American Express OPEN survey found 66% of business owners haven’t taken time off in several years. And of those few who do take vacation, 68% of them check in daily to try to run things from their beach chair (we don’t call in at all during our month off).

It’s important to get away from your business. The famous Framingham Heart Study found those who took regular vacation are 32% less likely to die from heart disease and 20% less likely to die from anything else. Besides  being healthier, time away from the day to day grind will help you see the big picture and make you a better leader. And you’ll be more productive when you return.

The objective of your business should be to build your Ideal Lifestyle. If you’re proud that you finally get two weeks off, you need to reassess how you are running your business and your life, and refocus on wealth (time/freedom), not just riches (money).

Is this just for special people? No. I built five businesses and never got off the treadmill. The sixth time I simply decided/intended to do it differently, and – what a surprise – it turned out different.

You get what you intend, not what you hope for.

What are you intending to do with your business and your life?

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Want Exponentially Better Production? Focus on People Instead

Traditional business training focuses the leaders on production. But research shows that focusing on the people instead is more likely to help your production.

95% of companies are still organized around the outdated Industrial Age factory system model that taught a focus on production. People were an ancillary, necessary evil to be managed, but the message of MBA courses and the factory system model was clear: production equals profit, and people are just overhead.

People Are Profit, Not Overhead

It’s easy to make a correlation between the speed of the assembly line and the number of widgets produced. We like direct correlations; it’s easier for the human brain to comprehend.

But research is now consistently showing that when you focus on the people, all the production numbers that command and control businesses mistakenly focus on get better. Capitalism, it turns out, works a lot better when you build great relationships, have a great culture, and encourage community at work than when you focus on trying to get your assembly line to run faster. Focus on the people, and they will make your assembly line run faster.

Focus on People and Grow Well

James Heskett and John Kotter, Harvard Business School professors, did a decade long study of companies focused on performance-enhancing culture, and companies with more traditional focuses. Their findings, published in a book called Corporate Culture and Performance, are shown in the graph below:

Performance-Enhancing Cultures Graph

Look at the stunning differences: companies focused on culture grew six times faster, increased their value over ten times faster, and had 756% faster income growth. Data like this sadly highlights the fact that most executives don’t like facts. They want to keep doing what they’ve always done because it’s what they know, not what will help the company succeed. Any leader looking at the above graph should immediately focus every resource they have on getting their culture right. Instead, they will go right back to oiling the machinery and trying to make a better deal with a shipper. Nero fiddles while Rome burns.

Here’s another angle showing similar results. Raj Sisodia, in his book, Firms of Endearment, found twenty-eight Fortune 500 companies, what we call Participation Age companies, that valued purpose and making meaning, over production and simply making money. Here are the results:

Firms of E graph

Again, stunning. These companies focus on something bigger than making money that coalesces their people around a vision of how they can each individually make a difference inside their companies and in the world around them. This emphasis on getting people motivated to make meaning resulted in these twenty-eight companies growing four times faster than Jim Collins’ oft-referenced Good to Great companies, and ten times faster than the norm.

The Emerging Work World Executive

These are just two of a long line of studies showing that when you take care of people, they take care of the company’s numbers. It’s tempting to find this interesting and then just go make another widget. But what this means to the emerging work world is that the most valuable leaders going forward will be those who know more about how to take care of people than how to take care of production.

It also means that HR will likely no longer be a department; it is already extinct in many Participation Age companies. Instead it will be a core responsibility of executives throughout the company to care for people more than machines. Experts will focus on production, and leaders will be chosen not because of their production expertise, but because of their people expertise.

Companies like Davita, with 65,000 Stakeholders are shining examples of this focus on people. Their story of rags to riches is one small proof that if you take care of people, they will take care of production. Davita went from near bankruptcy in 1999 to 1,200% growth through 2015, by moving away from command and control hierarchy to an emphasis on great culture and distributed decision-making. Read their story and get motivated to leave the factory system behind.

The bottom line: Focus on your people even more than your production, and your production numbers will jump off the charts.

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Why You Can Never Empower People, but You Absolutely Must Engage Them

Leaders have wasted a lot of time and money on two of our favorite Business Buzzword Bingo terms for the last three years: empowerment and engagement. Here’s the real skinny.

Gallup says a whopping 70% of people are disengaged from their work. That’s critical because the very few companies with high engagement enjoy much higher net profit margins and five times the shareholder return.

Engage People By Empowering Them?

The standard answer is that if you empower them, they will become engaged. But that is an answer developed within a command and control mindset, which is not the place to find out how people are empowered. As Einstein said, “Problems cannot be solved with the same mindset that created them.”

In a recent discussion with an elderly billionaire who had made his money in the 80’s and 90’s, he was convinced that, “It is the job of the CEO to empower people.” He bristled dismissively when I suggested people might not need him to empower them. Einstein’s quote came to mind, and I realized he was trying to solve the problem from the mindset that had created it. He was well known as a top-down, command and control manager, and he was taking special delight in having the power to empower people, by sharing a little of his power with them.

Thank You, But I’m Already Fully Empowered

But empowering someone this way is a subtle way of communicating, “I’m still in power, and the only reason you have any power at all is because I granted a little of mine” – a patronizing and perhaps even belittling view of empowerment. The message is, “You don’t show up fully equipped to contribute – without me, your personal empowerment is insufficient.”

The reality is, we can’t empower people. They show up empowered and all we can do is suffocate their innate ability and desire to contribute, innovate, make decisions and generally be self-managed adults. Empowerment is the absence of the heavy hand, just like an apple seed only grows where you don’t put down plastic. The seed shows up empowered and ready to sprout. I can’t add anything. All I can do is smother it and keep it from sprouting.

But Give Me a Reason I Should Engage With You

Engagement, however, is all on us. While people show up empowered – it’s who they are, the seed is complete – they are likely to show up not engaged in any way. The apple seed can remain just a seed for a very long time if the conditions aren’t right to grow. In the same way, people will be in neutral until you give them a reason to use their empowerment to make the company better. Engagement is the addition of leadership, principles, resources, guidance, training, community, teams and incentives – like the addition of water, sun, fertilizer, and good soil are to growing the apple seed. The seed shows up fully complete and ready to grow, but won’t until it sees the right conditions to do so.

How To Engage People

Engagement requires that we do a very few things right. We must engage everyone in building a clear vision of where we are going, and require that they play a part in creating a plan to live it out.

Engagement also requires that we build an organizational model that encourages distributed decision-making and other forms of participation formerly reserved only for hierarchical managers. And if we expect people to be fully engaged, we need to invite them to have more control over their time, and to be treated like self-managed adults. We also need to be more deliberate about recognition, rewards, relationship-building experiences, and participation in incentives programs directly related to agreed upon results.

The Bottom Line

Empowerment is the absence of the heavy hand; the absence of black plastic over the seed. Engagement is the addition of reasons to get involved – leadership, vision, tools, values, resources, guidance, training, metrics, and relationships. Get out of the way and people will show you how empowered they already are.

Don’t waste time trying to empower people. They already are. Just give them a reason to be engaged, give them the resources they need to grow, and get out of the way. And watch your company take off.

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Why Solving Problems Always Leads to More Problems, and How to Stop the Madness

Business leaders are taught to be relentless problem solvers. But that focus traps them in a downward spiral of reactive problem-solving that feels more like a hostage situation than leading. There is a better way.

Problem-solving skills are at the top of everybody’s list of what makes for a great leader. The mindset is that if you can solve problems, you’re going to go far. But in reality, only people who solve specific kinds of obstacles are truly successful. The rest, who focus on solving any and every problem that comes their way, just get tired and eventually quit or settle for a lousy, busy existence. They don’t make good leaders at all.

It turns out that solving problems generically isn’t all that valuable. Figuring out which issue to address is the real skill, and it’s much rarer than basic problem-solving skills.

Problems vs. Obstacles

There are two levels of issues that we deal with every day: problems and obstacles. Successful leaders spot the difference and invest all their energies in the second level, obstacles. This ability separates great leaders, who focus only on obstacles, from poor managers, who focus largely on problems.

The difference is simple, but profound.

A problem, once solved, merely restores the status quo. Solving it gets you back to where you were before the problem arose, but brings no lasting difference to the situation. A staff member quits, we recruit a new one, and now we’re right back where we were. The customer gets angry, we send them flowers and give them a credit, and we’re back on an even keel with them. But nothing has changed.

An obstacle, when solved, measurably changes the situation, or even the business as a  whole; things are never the same again after we solve it. And because we solved the obstacle, it dramatically reduces the number of problems we will have going forward. That’s one way you know you’re solving obstacles, because the number of related problems are permanently reduced.

Solving problems is playing whack-a-mole. Solving obstacles is unplugging the whack-a-mole machine.

Managers Solve Problems. Leaders Solve Obstacles.

Great leaders don’t solve problems. They solve obstacles. If someone quits, the harried manager goes to work, doggedly pursuing a replacement until the hole is filled. The leader does something quite different, they ask a question, “Why did that person quit? What can we learn from this problem so we can solve the true obstacle behind it, and prevent the next person from quitting?”

Solving for the obstacle focuses our attention on the broader strategic infection that caused them to quit; was it pay, advancement opportunities, a lousy manager (75% of the reasons people will quit are about the manager), or a generally poisonous company culture? Fixing these obstacles goes well beyond solving the problem.

Don’t Solve a Quitting Problem, Solve a Hiring Obstacle

A client complained regularly that constantly rehiring because of a 65% turnover problem was wearing him out. Once we got that CEO focused on fixing the obstacle (their culture) the problem went away. Wegman’s grocery store chain has about 3% staff turnover in an industry that normally experiences 35% turnover. They solved the obstacle while everybody else is just solving the problem. And look at the hidden cost of solving problems – it is astronomically higher than solving obstacles.

Solving obstacles saves us both time and money, increases productivity, and because it permanently solves what used to be ongoing problems, it allows us to focus on things that will help us build a great business, not just playing wack-a-mole.

It’s All About Long Term Decision-Making

Why do we focus on problems when it is so clear that solving obstacles takes care of the problems, too? The answer is always the same – short-term decision-making. We are too busy filling that staff vacancy to think about how to stop losing people. We’re too busy responding to customer complaints to develop solid processes that would make our customers love us. In short, we see that solving obstacles will cost us both time and money up front, while solving the problem can be done quickly, and maybe get us a little more short-term money.

Take The Long Road – Be Ambitiously Lazy

I’m ambitiously lazy. Through ten businesses I have gradually learned to solve for obstacles, because I can’t stand the thought of dealing with the same stupid problem over and over. I’d rather work hard up front on the obstacles. We’ve focused on building a great value system, a great culture, creating great processes, training great people, building great products, and focusing heavily on where we are headed – all so we can avoid as many problems as possible. Solving obstacles is actually harder up front. But in the long run, it’s so much easier because the number of ongoing problems is reduced exponentially.

Every time you are faced with a problem, see if you can instead solve the obstacle behind the problem. It will likely keep you from having to ever solve that problem again, and it will free you up to lead (ask questions) and stop managing (solving problems).

Get off the treadmill – solve obstacles instead of problems.

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4 Steps to Fixing Your Weaknesses by Focusing on Your Strengths

In business, one of the worst things you can do is spend a lot of energy on fixing weaknesses. You can actually fix them better by getting better at your strengths. Here’s how.

In my first five businesses I spent a lot of time trying to get everyone focused on what we were lousy at, and how to get better. It didn’t work. We just wasted a lot of time and energy, and demotivated people in the process. I’m a slow learner, but in our sixth business I finally tried something else that ignored our weaknesses, but ironically worked much better to fix them. I started focusing on our strengths.

The simple principle is that we’re good at things that we love doing. We’re highly motivated to get better at our good stuff, and completely demotivated to fix our messes. And we found out that focusing on getting a lot better at our good stuff helped us fix our bad stuff. Here’s a four-step process you can use to do the same.

Take a few hours or even a whole day (2-3 hours is usually enough) as a team and answer these simple questions. This applies to teams of any type, anywhere in a company, not just leadership teams. But certainly leaders will benefit from answering these questions:

1) What are we really good at?

List 10-15 things or so in 10-15 minutes. You shouldn’t need a lot of time to pull out the few things that make you stand out. They are things you love doing, and make you different than anybody else out there. It could be your products, customer service, relationships, teamwork, processes, passion, solid culture, etc. Once you have the list, pare it down to the top 3-4 things you are best at doing.

2) Why are we good at it?

It’s really important to ask and answer this question. It’s at the core of what motivates you as people, teams, and as a whole company. And that motivation about your good stuff will help you fix the bad stuff.

3) How can we get even better at the good stuff?

Come up with anything you think can help you get better at each one of the 3-4 things you think make you shine. Pare it down to 1-2 things that you could do to get better at each of the 3-4 good things.

At this point in the process, you might begin to see some of the negatives being addressed. If you think being a fast boat is your biggest asset, you might decide that one thing that could make you even faster is making sure the anchor isn’t in the water. Pulling up the anchor is boring and nobody wants to do it. But if you connect it directly to getting better at being fast, people can be very motivated to do it. A negative should only be addressed in light of how it will make you better at the good things. Otherwise, no one wants to tackle it. That’s how it became a bad thing in the first place – it was isolated from what makes you great.

Develop one simple, practical, measurable strategy you can employ to get better at your 3-4 good things, and make sure you put a date on when you expect to complete them.

3a) What outside forces could get in the way of getting better at our strengths?

Sometimes the challenges aren’t internal, many times they are both internal and external. Think about the external challenges that could keep you from getting even better at your good stuff, and develop a simple, measurable strategy to tackle these.

4) What resources do we need to get even better?

This is critical to help you understand that if you’re going to get better at your good stuff, you’ve got to allocate the resources to doing that. Too often we’re throwing resources at every loud weakness that comes at us, which just perpetuates the problem of focusing on weaknesses. It’s a downward spiral.

So, figure out the good stuff and what will make you even better at the good stuff, and throw your resources at becoming that. In the process, you will have to fix some bad stuff, but your motivation for doing so will be infinitely better than just “fixing bad stuff”.

By the way, I believe this works for us as individuals as well.

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A Stunning 92% of Companies Want to Reorganize This Year. Here’s Why You Need to Be One of Them.

92% of companies recognize it is time to do something about the dusty old Factory System hierarchy we’re still clinging to. Some amazingly successful companies have already left it behind.

In a 2016 paper predicting the focus of company leaders this year, Deloitte University Press shares this eye-opening conclusion,

After three years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives see a need to redesign the organization itself, with 92 percent of survey participants rating this as a critical priority. The “new organization,” as we call it, is built around highly empowered teams.”

The Factory System Still Reigns

The corporate organizational positions we inherited from the Factory System of the Industrial Age exist whether there is a human being attached to them or not. They are power slots in a hierarchy that are to be reached for and accumulated under you.

This model reflects a direct military heritage, communicating exactly which role has more power, command and control than the role below it–CEO (4-Star General), President (1-3 Star General), Vice President (Colonel), Director (Major), Manager (Captain), and Supervisor (Lieutenant).

Giving Everyone Their Brain Back

The Participation Age organization model is quite different. It is based on the idea that people are smart and motivated and don’t need to be managed. Therefore we can flatten the hierarchy, distribute decision-making, and get rid of unnecessary layers of command and control, such as managers:

Factory vs Participation

We know intuitively that this tired old Factory System model we dragged into the 21st century is broken. Our first attempts have been to tweak it, attempting to solve its inherent problems by nibbling around the edges and focusing on red herrings like “empowerment” and “engagement”. But while we’re treating these symptoms, the cause, a medieval military model, remains intact.

The good news is that the early adopters of the Participation Age organization smashed the military model decades ago, and the long-term data is now indisputable. In the emerging work world, those who dissolve the traditional hierarchy and give everyone their brain back will thrive, and those that don’t, will be left behind.

They’re Everywhere

Hundreds of very large companies with 5,000 to 65,000 Stakeholders and thousands of smaller ones have been operating without a military model for 60 or more years. And their numbers are growing quickly. These companies are identified by a rejection of command and control hierarchy, and by distributing decisions to the levels at which they will have to be carried out.

Leading Without Managing

Such organizations don’t have any people who manage other people. Instead, they organize around teams of people who, in the absence of a manager over them, take over all the traditional functions of management, and distribute them to members of the team.

These teams decide who they will hire and fire, how to discipline themselves, and their metrics for success. They agree with leadership on the result needed, then design their own processes to get that done, something a manager used to do. In many cases they even determine how to distribute pay amongst the team members.

Old Eyes, New Eyes

Anyone looking at this through the lens of a traditional business hierarchy sees chaos and anarchy. Yet every example of it in the real world results in faster growth, better margins, higher productivity, exponentially lower staff turnover, tighter processes, and better products. And yes, people with no business education, such as dock workers at The Morning Star Company, can manage themselves to higher levels of success than if they had a supervisor. There is no data on the side of the traditional military hierarchy in a business setting (even the military is questioning it these days).

So why do companies still do it?

First, because they don’t know what else to do. For over a hundred years, colleges have taught the Factory System model as if it was the only and best way to do business. It is neither. Rehumanizing the workplace and giving everyone their brains back works better.

Second, those who love command and control fear losing it, even though the result would be undeniably better for the companies they run (it’s not about the company, it’s about me).

Third, leaders fear a big dip in performance on the way to cleaning up the hierarchical mess. They are thinking, “It may not be optimal, but it’s working well enough as is, and we have pressure to perform this quarter.” The reality is that it doesn’t have to be disruptive at all. In most cases, if implemented correctly, a Participation Age model can result in immediate upticks in all the traditional metrics of success.

A Better, Simpler Way

The Deloitte research has revealed the obvious; we know that hanging on to the tired Factory System hierarchy isn’t working. It isn’t the only, or the best way to organize. There is decades of data that proves a flatter, more distributed model of power, decision-making and leadership works better, for both the organization and the people who work there.

There is a tidal wave of companies moving in this direction. Will you be one of them? The data is in–those who adopt the Participation Age model will thrive, and those that don’t will be left behind.

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New Study: Stop Chasing Money. You’ll Be More Successful Pursuing a Big Why

The Industrial Age factory system designed work around making money. But people who work for a bigger reason are happier and better paid.

A new study, the 2015 Workforce Purpose Index, reveals that 28 percent of people are purpose-oriented, identifying them as “the most valuable and highest potential segment of the workforce, regardless of industry or role.” We call this a Big Why: something that is bigger than making money, that you can never check off as complete.

The 28 percent who express this Big Why approach to life are motivated by two things:

1) Personal fulfillment

2) Serving others

In contrast, the other 72 percent are motivated by

1) Status

2) Advancement

3) Income

Everybody Can Be Purpose Oriented

Some surprising things stand out in the study. The 28 percent don’t make less money than the 72 percent that are money-motivated. They also come from across every industry, every imaginable job type, and every age demographic.

The research says, “By every measure, they have better outcomes than their peers.” They:

– Are much more fulfilled at work

– Do better work and get higher evaluations

– Have much longer tenure in their companies

– Are bigger fans of the company

– Are much more likely to become leaders (and make more money)

The Joy Is in the Pursuit

People in the 72 percent can and do change, but that change usually comes quickly, not over time. A lot of people in midlife seem to wake up and decide they need a bigger reason to be alive than just making money or having a fancy title. The study points to a life principle that too few of us discover. In our business, we say it like this:

The joy is in the pursuit, not in the acquisition.

In grade school, I remember buying a tiny battery-operated beach radio. It was cool for about three months. Then I wanted a bigger one. Over 20 years, I bought a half dozen or more stereos, with increasingly more power, features, and quality. I continue to look at more expensive ones, but I have had a lot more fun pursuing the next one than acquiring it.

A Big Why gives you reasons to do things that you’ll never be able to check off as complete–be a great mother, get involved in a nonprofit, help others get to where they need to be in life. A Big Why isn’t necessarily a huge Why, like solving world hunger (although it can be). Instead it’s a continuous Why–one that will get you out of bed when making money won’t.

Workplace Engagement Is Unrelated

The study also clarified that purpose-orientation is much different than the too-often-used buzz phrase “workplace engagement.” People with a Big Why don’t need anyone to motivate them to be engaged. You really can’t motivate them; all you can do to them is keep them from being engaged at work (they’ll leave if the work environment stifles their purpose.)

Three Reasons to Be Purposeful

In my first book, Making Money Is Killing Your Business, I outlined why purpose-orientation works better than stuff orientation:

1) Making money is not an empowering vision. People who have a bigger reason to work than making money tend to make a lot more of it.

2) A goal realized is no longer motivating. The joy is in the pursuit, not in the acquisition.

3) We are made to be and to do something significant, our whole lives, not just the first two-thirds. There is something for everyone to chase that will get them out of bed every day, that is bigger than making money.

What Does This Mean for Business?

The study recommends that you create partnerships with people, not treat them like “resources.” And employers should measure how work is helping their people in the areas of relationships, personal impact, and growth, not status, advancement, and income.

The bottom line: There is a new war brewing for a very different kind of talent–purpose-oriented people–and companies are scrambling to figure out how to develop hiring mechanisms to find these people.

You could be one of them. This year, intend to be purpose driven. Get a reason to go to work that is much bigger than making money, that is motivating both at work and at home, and that drives you to get out of bed during the tough times. You’ll be more fulfilled, build better relationships, be more likely to advance, and still make as much or more money than someone chasing status, advancement, and income.

The joy is in the pursuit, not in the acquisition. Get your Big Why in 2016, something you can never check off as completed, and run with it.

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2 Words That Will Change Everything About New Year’s Resolutions

I hereby resolve… yeah, there’s a better way.

First the bad news on New Year’s resolutions – Only 8% of people who make a New Year’s resolution keep that commitment. Worse yet, if you’re making a dieting resolution, you have a 5% chance of keeping the weight off, but an 83% or higher chance of gaining back more than you lost. Research shows that resolving to lose weight is actually an indicator you are going to GAIN weight!

Now the good news. You get what you intend, not what you hope for. Change can be real and lasting.

The Random Hope Strategy

Most New Year’s resolutions are built on the random hope strategy of life–if I think and feel something, who knows, I might get motivated enough to do something about it. A very few resolutions, 5-8% are built on something very different than random hope–intention. Intention is different than expectation. Intention assumes I’m going to have to work my ass off, but if I do, I’m very likely to get what I am chasing.

Conation

There are two words that describe why 92% of people don’t keep their resolutions and why the 8% do. First, if you really want to keep your resolution, you’ll learn and embrace the word “conation”.

Conation is the most important, least known word you’ll ever learn about success (we use it as a foundation for helping business owners succeed). Conation is

the will to succeed that shows up in single-minded pursuit of a goal,

or, “Get out of my way, I have somewhere I need to be.” Conative people actually don’t have to tell people to get out of their way. You can see the determination in their eyes, and you just step aside.

In the 1970s my Mom was a three pack a day smoker. A doctor told her she had pre-cancerous lesions on her larynx from smoking, so that day she quit and never smoked again. She didn’t need a New Year’s resolution or another week to get her last few smokes in. There was even a full case of Kools in her smoking drawer for another few years before she finally threw it away.

Mom’s actions were classic conation. As soon as she knew what she should do, she did it. No ceremony, no waiting period, no walking on coals, chanting at a vision board, or hypnosis. Conation is defined by this–as soon as we know what we should do, we start doing it. Realizing the need is directly followed by action.

Velleity

Can you see why New Year’s resolutions don’t work? We “resolve” in early December that we need to do something on New Year’s day, while binging on whatever we know we should stop; a sort of extended Mardi Gras that clearly demonstrates we don’t actually want to do what we say we want to do. This brings us to the second word–velleity (vah-lay-ity).

Velleity is the second most important word around being successful and is the direct cause of why 92% of resolutions fail. Velleity is,

the desire, with no intention of doing anything.

Wouldn’t it be nice if…? Someday I’m going to… I sure hope that… – It’s all velleity. We fool ourselves into thinking we actually want change because the emotional desire is so strong–“I really do want it!”. But it’s just emotional desire, with no intention of actually doing anything.

Just Priorities

I can see why Mom was able to be so conative. She once told me, “Chuck, there is no such thing as excuses, there aren’t even reasons, there are only priorities.” Conation is built on deciding that something (losing weight, stopping smoking, being a better husband, etc.) is more important than something else (food, nicotine sedation, being self-absorbed, etc.). It’s all about priorities.

For every well-intentioned resolution to lose weight, stop drinking, call Mom, get sober, be more helpful, control your temper, or finish installing the molding in the kitchen, there are unconscious commitments to keep things exactly the way they are right now. But velleity gives us the cover we need to think we actually want change. The emotional desire to see things differently (velleity) passes for real desire to change something, which results in immediate action (conation).

The Only New Year’s Resolution That Will Actually Change Something

Here it is:

I hereby resolve that going forward, I will never again wait for some future date, including New Year’s Day, to do something I know I should do. I will be conative and decide that anything worth changing, is worth changing as soon as I recognize it, and that any time I want to put off that change, I will remind myself of velleity–the emotional desire, with no intention of doing anything.

Or the short version:

I know I want to change something, because I’m already doing it. Everything else is just velleity/desire.

Remember, there are no such things as excuses or reasons, just priorities. If it’s important enough to change, I will do it now, not later.

Conate!

Be part of the 8% who succeed – resolve to be conative in 2016. It can change your life!

(Pssst – Don’t wait for New Year’s Day to resolve to be conative. Waiting is just velleity.)

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9 Sure-Fire Ways to Give Yourself the Finger and Wreck Your Business

You might be giving yourself the finger and not even know it. Don’t look back and realize all you needed was to get the other four in line with the one in the middle.

In 2000 we were building a fast-growing fulfillment and logistics business. I was a minority partner and had expressed my concern that we should get some backing. The majority partner felt no need to do it, even though we had an angel investor who wanted a very reasonable piece of the action.

We had some pretty nice names on our customer list, Sun Microsystems, TAP Pharmaceuticals, Johns Manville, Seagate, and a host of other not-so-large companies. After I landed a huge contract with Microsoft my partner came into my office and said, “See, aren’t you glad we didn’t take on an investor?” I replied, “No, in fact, if we don’t get one soon, we could go out of business.” The angel investor brought back an even sweeter deal my partner refused to take.

The business had grown by 420% in three years, yet even with a great profit and loss statement, we had to sell the business within nine months of landing the Microsoft contract. It was a bitter lesson. Even in a great business with wonderful growth, when one part of the business is out of balance with others, it can sink you.

Giving Ourselves The Finger

For us, it was cash flow. We had great profit on paper, but it was stretched out all over the business, and we learned the faster you grow, the less cash you will have in your bank account. It’s the most common killer of businesses.

But there are plenty of ways to spike your business, most of which will sneak up on you by looking like a plus, when they are really a minus. It’s all about balance.

Contrary to common belief, most businesses don’t go under for lack of customers. In fact, it’s almost always the opposite. The number one reason businesses fail is because they grow too fast, or more specifically, some element of the business outpaces the others. Unbalanced growth will put you out of business faster than anything else.

Krispy Kreme has been selling donuts since 1934. In 2000 the company went public and grew 840% in just three years. The stock peaked around $50 per share and then in 2003, started a free fall because the market was over-saturated with Krispy Kreme donuts. In 2009 the stock was at $1.09. The company’s production had outstripped the market demand.

Imbalance Has No Bias

I’ve seen this “unbalanced growth” issue with companies of every size. It respects no boundaries. A real estate agent can get in trouble with too much marketing and not enough cash flow. An Internet store can get in trouble with too many customers and too few suppliers. The entire airline industry is despised because of its focus on profit and a complete abandonment of customer service. This has resulted in huge growth for Southwest Airlines, which balances profits and customer service.

Ways to Give Yourself The Finger

Here’s just a partial list of things that, if not in balance with each other, can put you out of business:

Cash flow – never too much; feel free to be out of balance and be flush!

Staff – very costly to have too many OR not enough–balance!

Production – too much is expensive; too little hurts quality and/or growth

Customers – too many will cause all kinds of bad decision-making

Suppliers – production can be halted by a simple missing part

Cash flow – the #1 way to be out of balance

Facility Space – don’t bite off more than you need (or less)

Products – most often, too many can kill you; rarely, the issue is not enough

Leadership – stop micro-managing, allow & require others to decide things

Culture – “Culture eats strategy for lunch.”–Peter Drucker

Management – gut the management layers; rely on self-management

Cash flow – yes it’s on here three times; it’s that important

Cashflow Finger - the good one

Are You Paying Enough Attention?

What is your imbalance? We’re always fighting one–it’s never not an issue. No matter where you are in the business cycle, you have too much of something, and not enough of something else. And it’s not always easy to see. Take leadership as an example. Too much micro-management and not enough distributed decision-making causes good people to leave, leaving behind unmotivated “responders” who do only what they are told. It could take a year or more to wake up to that.

Grow, Baby, Grow!

Fast growth by itself is never a problem. You can grow incredibly fast as long as you make sure all aspects of your business are growing in balance with each other. But remember, lack of cash flow will put you out of business faster than any other type of imbalance.

By the way, all of this applies to your personal life, too. Read The Power of Full Engagement.

Watch Your Shop

Only the paranoid survive. Don’t give yourself the finger. Stay vigilant, stay balanced, and you can grow as fast as you want. Keep growing!

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