Two Lessons from Elon Musk

Elon Musk. It’s hard to read any business publication and not run across some story of the Thomas Edison/Henry Ford of our time.  I read two particular stories – one where Elon was used to inspire action, and the other where Elon himself pledged to take action. Let’s see what we can learn from both examples.

The first example, curiously, is a BMW employee meeting. As detailed in this article, BMW employees were brought to an airplane hanger and Elon’s sinister face was used to put the fear of …well…Elon into the assembled throng:

“Inside a bright auditorium at an abandoned airfield near Munich, rows of men and women gaze at images flashing by on a giant screen: a Mercedes sedan; Porsche and Jaguar SUVs; the face of Elon Musk. “We’re in the midst of an electric assault,” the presenter intones as the Tesla chief’s photo pops up. “This must be taken very seriously.”

The audience is composed of BMW Group employees flown in for a combination pep rally/horror film intended to make them afraid about the future of the industry. The takeaway: The market is shifting in ways that were unimaginable just a few years ago, and BMW must adapt. The subtext is a recognition that the company has gone from leader to laggard.”

The scene above sounds a bit like the horror scenes force-fed to Alex in A Clockwork Orange, or perhaps the iconic George Orwell-themed Apple TV Ad introducing the first Macintosh. I like to believe the film was accompanied by some thrilling Wagner music.

My take:

  • BMW is smart to pick a villain. People respond better when they can envision an external threat (something, sadly, that political leaders know too well).
  • If you’re Elon Musk, you know that when the competition is using you to scare their employees you’re doing something right. Not that Elon really cares.
  • That said, the truest barriers to established brands’ success in the new era are seldom external.  As Clayton Christensen and others have pointed out, the eating of existing market share is consumed in small bites and enabled by business models that are constructed on new technologies and business processes.

My guess is that BMW spent quite a bit producing their internal horror flick, flying people in for the pep rally and feeding them excellent German sausages and beer.  Meanwhile, back at Tesla….

How To Respond To Job Offers

This is a story about when I almost blew it.

I had moved to be closer to my girlfriend (now wife!) and was looking for work. I had graduated from college a couple years earlier and during the interim had attended Military Intelligence Officer School (as part of my Army Reserve commitment following college) and had spent a a year and a half in a giftware importing business in the Chicago area.

As I looked for work, I was closing in on two opportunities: one was a sales position for a successful business telecommunications firm where I would be given a territory, a quota and would sell long-distance telecommunications services (voice and data) to large businesses in my territory, the other a “management trainee” position in a local bank, where I would spend several weeks in various bank departments before settling on one particular area.

The obvious choice these many years later was to take the sales role in the telecommunications firm. It was a better fit for my work style (on the move throughout the day instead of going to the same office every day, more room for improvisation, etc) and – again this is more clear in retrospect – it was a tiny but important part of the big technology revolution that was sweeping through society.

But the bank thing had a certain respectability about it, and many of my friends were in the banking space and doing well (I didn’t stop to consider the fact that they had majored in finance and I had majored in International Business for good reasons).  Anyhow, and THANK GOD, the telecommunications company called me first to offer me a job.

This was where my mistake happened. When I got the call offering me the job, I wasn’t sure this job was the right one for me (not really considering that I was unemployed and without significant work experience).  The guy who called me was a senior guy in both age and experience, and I could tell he was thrilled to be offering me the job. I was the guy they chose.

And I played it very cool.

What Are You Incenting?

When I was first introduced to economics, I found that I enjoyed the history of economic thought – the great writers such as Adam Smith, John Stuart Mill, Keynes, Galbraith, etc.  But then my econ classes turned more toward math and graphs. I eventually lost my original enthusiasm for the field but gained some appreciation for why it can be referred to as “the dismal science”.

Economics has once again become interesting to me as a number of excellent books have been published that approach economics from the standpoint of psychology and incentives. The study of incentives has always been key to economic thought – that isn’t anything new. However, it feels to me that there has been a lot of fresh writing in this area – examples include everything from Malcolm Gladwell to Daniel Kahneman to the Freakonomics books, Dan Ariely’s writings, and others. Truly, whatever behavior you subsidize or incent you will get more of.

Since I’m confounded by the morass of the American healthcare system and what passes for “debate” on this issue in Washington, I have a tendency to pick up books that help me understand different points of view on the problem. Books that fit this category include Catastrophic Care by David Goldhill and America’s Bitter Pill by Steven Brill (for the essay that launched Brill’s book, go here).

I just finished An American Sickness by Dr Elisabeth Rosenthal, a new and powerful book that I highly recommend. Keep in mind that I’m not recommending it because it’s always fun to read. Since Dr. Rosenthal relates a number of stories about people being caught in a web of overcharges and diminishing competition, it reads more like a horror novel than some of the Stephen King books I’ve read. I almost had to sleep with the light on.

Since this is a blog about leadership, innovation and personal effectiveness, I’ll leave the healthcare debate aside. However, this one section caught my attention:

“Cataracts can be detected during an eye exam long before they become a real bother to patients, so there is much discretion about when to perform surgery. Studies have shown that the rates of cataract surgery are highly dependent on how much doctors are paid to do the procedure. In one study in St. Louis, the number of cataract surgeries performed dropped 45 percent six months after a group of doctors went on salary and were no longer paid per surgery.”

I don’t know about you, but I find that to be a bit alarming. It’s a pretty good indicator that doctors who are incented to do cataract surgeries will do borderline cases to pump up their income.  And this got me to thinking about incentives in general.

The Warrior Ethos for Business Leaders

A year or two ago I heard a radio program about a group of distraught British parents whose children had joined ISIS. The parents themselves had emigrated from the Middle East to the UK and had built successful lives over the ensuing years – successful enough to send their children to medical school in London.  Everything seemed to be going great until the students left school and went to Iraq and Syria to join ISIS as doctors.

The parents were grief stricken. Why would their bright children, who were on the cusp of successful careers in the developed world, drop it all to join terrorists in a inhospitable land?

The parents were eventually pointed to an American psychologist who works with governments and national security agencies to understand the psychology of young people who join terrorist organizations.

He explained to the parents that all humans seek meaning in their lives and can feel the deep need to pursue an objective greater than themselves to find that meaning. Hardship faced in pursuit of the objective can add to it’s allure, it’s meaningfulness.  He said that just as these young people were looking to devote their lives to something big and important, what they saw being offered by modern society were shorter working hours and greater physical comfort.

This interview came back to me as I was reading a short book from Steve Pressfield called The Warrior Ethos. The book is a collection of vignettes and reflections that Pressfield uses to describe common traits among warrior cultures, ranging from the Spartan warriors of Thermopylae to the US Marine Corps.

The book references one of the great “help wanted” ads in history. But before we get to that, let us consider that employee recruitment today is primarily centered around appeals to candidates’ naked self interests. “How can we attract your temporary services in exchange for pay?” a company might ask.

Can You Go Around a Leaf?

Among the greatest innovations over the past few decades – greater perhaps than Pumpkin Spice Latte – are the rise of animated movies that provide lessons for children and adults alike. The movie Toy Story sticks out in my mind as the movie that changed it all. Pixar (now part of Walt Disney) created movies that were fun for kids but also provided great gags that sailed over the heads of the little ones but got a laugh from Mom and Dad.

One of those movies is A Bug’s Life, which gives Aesop’s fable The Ant and the Grasshopper the full Pixar treatment. I have always loved A Bug’s Life because it intersperses profound lessons about hard work and innovation with some hilarious scenes.

The ants in the movie are diligent in their efforts to collect enough food for the grasshoppers, who are bullies demanding ever-greater production from the ant colony (pause here to consider themes of slavery and mafia “protection” rackets). The ants work hard, as ants do, but aren’t particularly innovative – that is, until a self-styled innovator and rugged individualist ant named Flick decides to look at the grasshopper/ant divide through a different lens.

Although Flick isn’t featured in this scene, it represents a hilarious metaphor for those of us who panic when our normal routines are interrupted by the unexpected obstacle. Enjoy….

Desert Storm, Or: How I Learned to Stop Worrying and Love the Lentil

As I write this I am eating a bowl of lentil soup, which reminds me of a story. Let me set the stage….

It’s winter of 1991, and I’m in Kuwait City. As you recall, this is when coalition forces entered Kuwait City as part of a multinational effort to evict Saddam Hussein’s forces from the city – aka “Desert Storm”. Although few US forces actually entered into the city itself, there were some unique US troops running around the city during/after the short ground war. I was in Civil Affairs – the part of the Army that is a liaison between local civilians and governments. Our much cooler colleagues from Special Forces served as liaisons between our military and the local military elements on the ground.

I was part of “Task Force Freedom“, a small task force set up to work through the complex – and impossible to anticipate – challenges that arose during the operation. As the ground war quickly came to an end, our mission turned to getting Kuwait City on the road to recovery.

Our immediate concerns related to basics like security, sanitation and food distribution. The previous months of Iraqi occupation of Kuwait City had been hard on some city residents, so in the early days, along with our other missions, we were in the city making sure large trucks filled with food were distributed to neighborhoods as requested by the Kuwaiti government.

The Era of Benevolent Deception

New technology can be great for customers – sometimes too great. In an era when companies strive to “amaze” and “delight” their customers, they sometimes are forced to de-amaze and un-delight the user experience because their customers have a hard time adjusting to the change.  Consider….

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Turbo Tax is able to return results in a fraction of a second. That would be awesome, except it turns out that people don’t trust something that is that awesome. I mean, how do you calculate taxes that quickly? There must have been a mistake.

So the Turbo Tax developers created a series of animations that tell users that the program is “look(ing) over every detail” while an animation shows a tax form lighting up line after line.  The animation is really bogus – its only reason for existence is to make you feel confident in the results. As the animation plays, you think to yourself: “look at that animation – this Turbo Tax thing is working hard!”.

This is a form of “benevolent deception“, a term coined by University of Michigan researcher Eytan Adar and his co-researchers from Microsoft, which is a practice of designing experiences that “deceive” users but leave them better off in the process.

Here’s another story, courtesy of my friend John.

You Have an Execution Problem

I’m in a Mastermind group. You might think that a Mastermind group is comprised of villains who are hatching fiendish plans of world domination, or even superheroes planning to thwart them, but you would be wrong. In fact, it’s much cooler than that.

No capes!

No capes!

Mastermind groups have been around for a long time, and are small groups of peers who come together to hold each other accountable toward their respective objectives and help members solve problems.

Recently, our group has been discussing and (imperfectly) practicing the concepts found in the book The 12 Week Year – a concept where annual objectives are tossed out the window in favor of 12 week objectives. I’ll be writing more about this concept in a later blog post.

There’s more to the 12 week year than compressed time horizons. I won’t cover it all here, but obviously recommend you check it out. However let’s focus on just one aspect from the book, and what I like and don’t like about this powerful quote:

Two Different Ways to Lose $1.6B

I admit it: it’s unlikely that you’re trying to figure out different ways to lose $1.6B. After all, you have to have a lot of money to lose that much money in the first place. Billions.

I ran across two unrelated stories in the retail space where that sum was central, so I thought I’d call your attention to them. At the very least, there’s a symmetry and a lesson in these stories.

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The first story is here. It talks about how physical retailers are getting fleeced by shoplifters – to the tune of about $30B.  So where’s the $1.6B number?  Read on:

“Oh, and just in case you’re sitting there shedding zero tears for the Targets of the world — this affects all of us.

Since large-scale shoplifting can drive up prices for both the manufacturer and retailer, the US loses roughly $1.6B in sales tax revenue per year (money that could be spent on parks and schools) thanks to ORC (Organize Retail Crime).”

This story was in my head when I read an amazing statistic about Amazon.

The Power of Applied Hope

If you read my About Me page, you will see that it ends with this:  “Finally, I am an optimist.  It’s an exciting time to be alive”.

I thought that now would be the perfect time to revisit optimism – not just as a way of viewing external events and avoiding despair, but as a way to impact events.  Let’s start with three well-known characters:  Bill Gates, Melinda Gates, and Warren Buffet.

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Last week, the Gates Foundation released their annual letter. Since Warren Buffet gave the bulk of his wealth – $30B or so – to the Gates Foundation in 2006, Bill and Melinda addressed this year’s letter directly to Warren. I recommend you read through the letter in its entirety.

In one part of the letter they touch upon why they remain optimistic about many of the major health challenges facing the world.  This optimism runs contrary to rampant pessimism. For instance the statistic below:

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Bill puts it well here:

“One of my favorite books is Steven Pinker’s  The Better Angels of Our Nature. It shows how violence has dropped dramatically over time. That’s startling news to people, because they tend to think things are not improving as much as they are. Actually, in significant ways, the world is a better place to live than it has ever been. Global poverty is going down, childhood deaths are dropping, literacy is rising, the status of women and minorities around the world is improving.”

Optimism (and pessimism) perpetuates itself. While the political world has become practiced in leveraging fear, that approach doesn’t work as well in the private sector, where leaders create outcomes based upon the shared belief and passion of their teams.

Which leads me to a related point: the importance of active optimism, or “applied hope”.  Before I get into the provenance of this phrase, let me drop one last (telling) quote from the Gates letter, this line specifically from Melinda: