afr.comWhy Google ditched the MBA playbook

In a new book, How Google Works, two of the company’s architects have analysed what they think worked and why. Photo: Tamara Voninski

As a service, Google has become indispensable to people’s interactions online. As a business worth $400 billion after 16 years, its success has been breathtaking. Yet in terms of management, it has set up radically different ways of organising itself from those of traditional businesses. Few people have focused on this.

Now two of Google’s architects have analysed what they think worked and why. Eric Schmidt, the current chairman and former chief executive (and also a board director of The Economist Group), and Jonathan Rosenberg, a former senior manager, decrypt the firm’s methods for other business leaders to learn from.

Most important is thinking extremely big — the “moonshot”, as it is called in Silicon Valley.

Google’s leaders often have to wrest employees away from seeking a 10 per cent improvement and towards finding one that is “10X” (that is, ten times better) — something that requires them to do things in an entirely new way, not just optimise what already exists. Most 10X attempts will fail, but that is accepted.

The second insight of the Google method is to “fail fast”. That way, people can learn from failure and move on, perhaps turning some aspect of the setback into the seedling of a new success. In this respect, “learning” trumps “knowing”, since nobody can foresee the future. “Iteration is the most important part of the strategy,” the authors advise.

The third element is the primacy of data over experience, intuition or hierarchy in the making of decisions. Other books have explored Google’s data fetish, for everything from hiring to choosing the shade of blue in its toolbar, but they have only scratched the surface. Sadly, How Google Works also treats this topic superficially. And it passes too fast over the way employees measure their output through a system called OKRs (for “objectives and key results”, adapted from Intel, a chipmaker).

The core of Google’s method is the empowering of employees. Bosses at all firms talk of this, but the search giant takes it to heart. It has devised systems to enable good ideas from any quarter to get an airing. Many of Google’s biggest products and features (like Gmail) have emerged from this, and also from a policy that lets staff work on pet projects for 20 per cent of their time.

Such a culture places huge emphasis on the quality of employees. Among the authors’ best pieces of advice is that companies should ape academe and form hiring committees to vet candidates and make offers. This helps eliminate the biases of line-managers and encourages the staff to think as a team; new hires owe their allegiance to their peers, not only their supervisors. Unlike firms in most other industries, Google has to enfranchise its employees: if they feel stymied, they will simply take their creativity and ambition elsewhere.

… reprinted from The Economist

The Australian Financial Review

 

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By Ian Maxwell, RMIT University

Australia’s Senate Economics Committee is currently undergoing a review of the National Innovation System in light of the “challenges to Australian industries and jobs posed by increasing global competition in innovation, science, engineering, research and education”.

It comes as the government prepares to finalise its “competitiveness agenda”, with a reported focus on agribusiness, energy, mining technology, medical technology and advanced manufacturing.

The idea of a national innovation system was first conjured up in the 1980s. According to the OECD:

“The concept of national innovation systems rests on the premise that understanding the linkages among the actors involved in innovation is key to improving technology performance.”

In using the noun “actor” they gave the game away; ever since the concept was invented countries have been reviewing their innovation systems and the results are pretty much used solely to adjust government handouts to universities, service providers and businesses involved in “innovation”. These are the same actors that make all the submissions to the reviews in the first place.

In the disciplines of science, technology and business, “innovation” generally refers to a process or outcome that is novel, at least to the actors involved. Usually innovation also imparts benefits upon the innovator. The trouble with a focus on innovation is that almost anything can be labelled as innovation — all an actor has to do is claim prior ignorance.

The invention test

Invention, on the other hand, refers to the creation of something – an idea, a result, a product or a method – that is completely novel to mankind and also unexpected and valuable.

The key point is that all inventions are innovative but very few innovations are inventive.

In the patent world the definition of the term “invention” is a little more rigorous. In order to get a granted standard patent in Australia a patent specification must fully describe an invention and must satisfy at least the following criteria: the invention must be useful, novel, non-obvious, and must meet certain other disclosure thresholds including that it should have a detailed enough description that anyone working in the appropriate field should be able to make use of it.

The tricky one of these criteria is the “obviousness” test. This is supposed to be limited by what the skilled person would have found “obvious” before the patent application was filed in the light of the common general knowledge. When considering who is a skilled person one is supposed to look at to whom a patent specification is directed to, and look for the reasonable and uninventive common person(s) in the technical area (let’s call this person the “diligent operative”) and ask, or imagine, what he or she could be reasonably expected to think about how obvious the supposed invention in a patent specification is.

If one was to come up with the least practical definition of the obviousness of an invention this would be it. And in fact it is mostly ignored in practice. Patent attorneys and patent examiners mostly just use precedents and prior art patents to make decisions on inventiveness during the examination process. This approach somewhat bypasses the obviousness test which partially explains why there are so many uninventive patents.

In reality, there is not a binary step function between innovation and invention. Different people and groups, viewing the same proposed invention will have a different opinion on the degree of inventiveness. The patent system forces us into making binary decisions on these matters and the threshold for inventiveness that is used has, in my opinion, slipped far below any defendable limit, primarily because patent attorneys and their clients have more incentives to push the limit than patent examiners have to push back.

Measuring true inventiveness

My personal definition for true invention is that it must satisfy these requirements:

Novelty: Invention must be the result of serendipity or blinding insight, normally only by the highly-trained and the ready mind. To others in the field an invention is likely to be “obvious” but only after the fact — this can be compared to the emotional concept of “sour grapes”.

Not obvious: The true invention is one idea amongst an infinite set of possibilities and not one idea amongst a finite set of possibilities — the latter can be arrived at by systematic experimentation and possibly this search can even be automated.


Knowledge creation: Invention can accompany knowledge creation but I see no requirement for new knowledge to be created by the creation of an invention other than the idea itself. Conversely when genuine new scientific knowledge is created it is often many years before someone has the inventive insight as to how to put that knowledge to practical use.

Useful: Of course the invention must be useful. In the commercial environment this converts to “lucrative”. In general, there is a much greater probability that any single invention will be more valuable than any number of related innovations.

Sufficiency: A patent is a temporary government-granted monopoly right on an invention. The historical purpose of patent systems has been to encourage the development of new inventions, and in particular to encourage the disclosure of the details of new inventions in the interests of technology development in general. If a party wants patent protection for an invention then the “price” that is paid for the limited period of monopoly granted by a patent is that they provide sufficient description that would allow others to understand and potentially be able copy the invention (but not until the patent is expired).

Time for a pivot

There is an index that suggests Australia, the 12th largest economy in the world, is the 17th best place in the world to innovate — this is based on a scoring system that is so complex that it could only be labelled as “innovative”.

Despite this I would assert that Australia’s problem is not a lack of innovation – we have that in spades. Our problem is a dire shortage of useful invention.

My suggestion to the Senate Economics Committee is to shift its efforts to a review of the National “Invention” System where any resulting investment of taxpayers dollars would have far greater benefit to the economy. Invention is also much easier to measure than innovation, making the effectiveness of any recommendations that are implemented able to be more meaningfully measured.

The Conversation

Ian Maxwell owns a shares in a number of technology start-up companies, a patent brokerage firm and also provides consulting advice related to business strategy, technology and patents.

This article was originally published on The Conversation.
Read the original article.

WHAT IS SUCCESS?

 

There are two basic meanings of success:
1. You-Lose, and
2. I-Win.

You-Lose is the kind of success a boxer enjoys in an Olympic Champion title fight.

For him to win the title – be Olympic Champion of the World – and collect the Gold Medal he has to see that the other fighter fails to win.

This kind of situation is called, by games theorists, a ‘zero-sum game’ and is where success for one player inevitably means failure for the other.

Backgammon is also a zero sum game as are Olympic sports and professional sporting competitions like cricket, football, basketball, baseball and tennis. That’s OK. That’s competitive sport.

However, I-Win is more like what happens in life itself.

At home (whether in a relationship between lovers or families), or at school, or at work, I can be successful by playing I-Win without anyone having to lose or fail.

– I-Win can happen without my mate having to fail.
– I-Win can happen without my customer having to lose.
– I-Win can happen without my neighbour having to suffer.

That is because in the ‘game of life’ there is always a third party which we will call The Banker.

When there is a banker who always pays out and collects after each encounter, two players can co-operate and laugh all the way to the bank.

Mountain-climbing is a non-zero-sum game where I-Win can happen without my partner having to fail, or fall.

Blackjack at the casino is a non-zero-sum game and a novice player can always be spotted because they do not yet understand the difference between playing You-Lose and I-Win with their fellow players, against The Banker.

In a non-zero-sum game there are only consequences.

The Banker always pays and always collects according to how you play the game or, more precisely, according to which strategy you choose.

There are many strategies in the game of life and some succeed more than others but there is only ONE dominant strategy which ALWAYS succeeds in beating any other strategy. It is The #1 Law of Success and the one we’ll explore in this masterclass.

THE GAME

Here we explore a new zero sum game to mimic life and called The Game. Those who become skilled in this simplest of all games will become skilled in the #1 Law of Success which is more successful in life than any other strategy.

In The Game the Banker makes the following payoffs:

NICE/NASTY = WINNER

Banker Pays 1 million points

NASTY/NICE = SUCKER

Banker Fines 200,000 points

NICE/NICE = REWARD

Banker Pays Both 600,000 points

NASTY/NASTY = PUNISHMENT

Banker Fines Both 20,000 points

OK. What’s the science behind all of this? The Game has its biological origins in what scientists now call Game Theory.

We see how succeeding in life–survival & making a living–is largely a strategic matter. So which strategy will you choose?

Success in life consists of how well we manage the unfolding series of encounters with others. In each encounter we can cooperate and be NICE or we can defect and be NASTY.

We see examples of those who always play NASTY, others who always use NICE and still others whose strategy is a mix of NICE and NASTY.

We are introduced to the Rules of The Game and also to the risks and rewards of life which are represented by REWARDS and PUNISHMENTS: a series of points paid out or deducted as fines which the Banker always pays out after each encounter or round of the game.

We are now ready to play and try out different strategies.

With instant feedback from the Banker we soon see that there are always four inevitable outcomes which, in Game Theory, are called: WINNER, SUCKER, PUNISHMENT and REWARD.

nasty-nice

WINNER

TACTIC:  AVOID THE TEMPTATION TO WIN

The Temptation to Win is one with which we are all familiar. Exemplified so well by Gordon Gecko in the movie Wall Street, this tactic is all about Victory. It’s the I-Win-You-Lose philosophy where for you to win the other loses; you beat the opponent, you conquer the adversary.

“Greed is Good” is the motto of this strategy and in the Game it is the strategy where the other played NICE and you played NASTY.

He becomes the Sucker and you become the Winner. Your Temptation to Win has paid off and you collect the Banker’s highest payment, 1 million points.

In Australia, the Skase’s and Bond’s of the eighties were high profile players of the Temptation to Win strategy and the Adlers, Vizards, Pratts and Rineharts may be more recent examples.

Perhaps the Murdochs are the most striking example of all the story of which is soon to become a movie by George Clooney.

The chance of having the biggest possible payout attracts many people to this NICE/NASTY strategy called the Temptation to Win. It seems, intuitively, to be the best strategy and in Game Theory it’s called ALL NASTY or always play NASTY.

If life consisted of only one round or one encounter, it would be the one to always use. But life is unfolding. There are always consequences. And, in The Game the consequences are payed out by The Banker.

There are many encounters and repeated rounds in the game of life. We see that this iteration of the game, its repetition, soon shows Temptation to be a flawed strategy with only short term gains and much greater long term losses.

HrE7qGsEFv_1397081629269

 

WHY WINNERS ALWAYS END UP SUCKERS
All Winners eventually become Suckers and Suckers always suck. How can this be? How can a WINNER like Rupert Murdoch end up becoming a SUCKER?

HackAttackThe reason for this is because ‘what goes around comes around’ and ‘those who live by the sword die by the sword’. In Murdoch’s case the sword was wielded by an investigative journalist called Nick Davies.

If you are NASTY to me in this round, then you can be sure that I will be NASTY to you in the next round.

This is how the Temptation strategy, which seemed so attractive in Round I, always becomes a problem to the Winner in later rounds when revenge is sweet and the other side gets their ‘payback time’.

In Game Theory, the sure knowledge that there will always be ‘payback time’ in future rounds of the game is called The Shadow of the Future.

16_600

 

This Future Shadow is the key to the game. Only those who understand this inevitable cybernetic feedback feature of the game can have access to the most successful strategy of all which we call the #1 Law of Success.

The problem with the Temptation strategy is that its short term upside is soon diminished by the long term downside. This is why obsessed Winners eventually become losers.

SUCKER

TACTIC: AVOID THE SUCKER’S PAYOFF

The Sucker is the biggest loser of all in the Game. You become a Sucker when you play NICE and the other plays NASTY. You get ‘caught with your pants down’ and you’re ‘a sitting duck’.

The Banker saves his biggest fine for the Sucker, a hefty 200,000 and it’s called the Sucker’s Payoff.

Yet, there are those who actually play a strategy called ALL NICE or ‘Always play NICE’. These Suckers always suck. They actually reward Temptation. They make it intelligent behaviour for the other to always play NASTY and collect their 1 million prize.

In Darwinian evolution, Suckers are altruistic and help other members of the species to pass on their genes to the next generation always at their own expense. In biology, Suckers always suck, they die a Darwinian death.

THE BLIND SUCKER
In a sense, all Suckers are blind. That is, they are blind to consequences. They cannot see the Shadow of the Future. They fail to understand the impact of payback time. The greedy Sucker who gives her savings to the Get-Rich-Quick-Merchant is blind to the consequences. The Bloody Idiot (portrayed so effectively in TAC ads) who drinks then drives is a blind Sucker. The smoker who heeds the Marlboro man but not the Cancer Society is a blind Sucker. Blind Suckers who stay blind always end up losers.

THE RIGHTEOUS SUCKER
This is a fatal disease. Most Righteous Suckers die. They may die in battle or are put to death at the whim of their victorious Winners. They are conquered and crushed by their opponent.

Many Righteous Suckers are suffering from PTV, the Plato Truth Virus. I have written in depth about PTV in Software for Your Brain.

PTV causes the host brain to believe that they are ‘uniquely right’, that they have a certain and absolute ‘truth’. Righteous Suckers have usually contracted PTV through any religious or political movement which claims to be the ‘True Religion’ or the ‘Right Majority’. They also are blind to the Shadow of the Future.

Some become martyrs, others become dictators. All end up dead. Suckers always suck.

THE SAD SUCKER
We have all been Sad Suckers and hopefully we learn from the experience. The Sad Sucker played NICE and was tricked. The Sad Sucker played NICE on the understanding that the other was going to play NICE too. He was wrong. She was sucked in. Each reader will have his or her own bitter memories of childhood abandonment, broken trust, emotional betrayal. The young draftee who returns from Vietnam to find no welcoming parade, no grateful public is a Sad Sucker. The faithful wife who trusts her unfaithful husband is a Sad Sucker.

Children are often Suckers because they are so vulnerable and trusting. Whether they trust the pedophile who offers “to take them to mummy” yet is their mortal enemy or their older sister who always takes the bigger slice of cake, children are often suckers.

The important point about the Sad Sucker is to learn from the experience. Children grow up and become players in the Game of Life. They can then choose whatever strategy they wish.

They don’t have to remain Sad Suckers and fortunately, most don’t.

 

PUNISHMENT

TACTIC: ALWAYS PUNISH NASTY
 

8-reciprocateThe Game always punishes winners. Whatever the outcome of today’s round there will always be future rounds to play and that’s where the Winners get punished. Because the game of life is unfolding it is a cybernetic or feedback loop.

There are many rounds of the game and each player has multiple encounters. There’s always a payback whether you call it karma or feedback or revenge or reprisal or reciprocation or retaliation. This brings us to the best strategy of all:  tit4tat

HOW TO PUNISH WINNERS
Tit-for-tat means payback.

The Dutch call it ‘dit vor dat’ and the French ‘tant pout tant’. Caesar called it ‘quid pro quo’. To Shylock it was a ‘pound of flesh’ and the Hebrews called it ‘an eye for an eye’.

In the Game it is NASTY/NASTY. If you play NASTY then I’ll play NASTY, too.

The Banker calls this The Punishment and both players are fined an inconvenient 20,000. But, wait a moment, how can this be the #1 Law of Success? Surely not! It seems very wrong and counter-intuitive.

In both the Game and in real life this is the best strategy of all yet it is one which has a very poor reputation because it is so widely misunderstood. tit4tat is usually considered childish at best and uncharitable, even heartless, at worst.

Yet it is the fairest strategy of all and, as it turns out, the most successful strategy in life and, therefore, the only one which qualifies as the #1 Law of Success.

In Game Theory, t4t or the tit4tat strategy is also called the NICE Strategy and has two basic rules: 1 Always play NICE first, then  2 Always match the other’s play thereafter.

 

In other words, you start by playing NICE then whatever move the other plays, you match it. If he plays NASTY then so do you. If she plays NICE, you play NICE. You never cheat and you never waver.

There are several outcomes for those who use this strategy. Obviously, you always punish Winners.

Whenever a Winner plays NASTY you ALWAYS play NASTY, you ALWAYS punish NASTY with matching NASTY. That’s what is meant by ‘an eye for a eye’ but there’s more to Tit-for-Tat than just returning NASTY with NASTY.

Tit-for-Tat also means you ALWAYS return NICE with NICE!

This always leads to NICE/NICE. The Winner soon realises that to play NASTY will immediately produce the same retaliation so that he is virtually playing NASTY on himself. To win the 1 million, he has to achieve NASTY/NICE and he now understands that, in Tit-for-Tat, he never can.

In Tit-for-Tat there are only two possible outcomes, NASTY/NASTY, the Punishment which will cost him 20,000 every time. Or, NICE/NICE.

This paradox is the nut of the masterclass and takes a little getting used to. The members must fully come to grips with this insight: that tit4tat or an eye for an eye always ends up leading to NICE/NICE.

It is hard for the Western mind to grasp simply because we have been taught that ‘turn the other cheek’ is the better strategy. It isn’t. Turn the other cheek always leads to NICE/NASTY because if one is always going to be NICE then the other is rewarded more for being NASTY than for being NICE.

REWARD

TACTIC: ALWAYS REWARD NICE

NICE/NICE is called The Reward in Game theory. NICE/NICE is when both players play NICE and the Banker pays out his second highest payment of 600,000 to each player. It’s not a million but it’s a very nice reward. Only tit4tat or t4t can produce this outcome.

If the players are intelligent and are not Suckers who are blind to the Shadow of the Future then there is nothing to stop them playing NICE/NICE in every round of the game and picking up their Reward of 600,000 points every time.

This is the I-Win-You-Win philosophy and ALWAYS scores the highest points. t4t is the ultimate strategy and those that ALWAYS play t4t, or NICE/NICE, will ALWAYS be successful in life. Win/Win is the #1 Law of Success.

HOW TO REWARD NICE GUYS
Tit-for-Tat is how you reward a nice guy. When he or she plays NICE you always play NICE. You NEVER play NASTY. You NEVER yield to the Temptation to Win the million. You build trust and you ALWAYS both succeed.

In selling, the traditional American model, which I have called oldsell is the Temptation strategy. Close the sale and win! Contrast this with the newsell model which is based on the relationship of trust built up by the NICE/NICE t4t strategy.

The Chinese use this model (Confucian) and have been much more successful at selling for a much longer period of time than Americans.

CONCLUSION:

t4t IS THE #1 LAW OF SUCCESS

 

This masterclass offers participants a unique strategy called t4t. t4t is the #1 Law of Success.

Yes, t4t is counter-intuitive for the Western mind but it’s a very powerful strategy to help you to succeed in the unfolding Game of Life. Whenever you decide to use the tit4tat strategy you:

 

– Always REWARD NICE tit4tat

(NICE/NICE)

– Always PUNISH NASTY tit4tat

(NASTY/NASTY)

– Always avoid the TEMPTATION to WIN

(NICE/NASTY)

– Always avoid the SUCKER’S PAYOFF

(NASTY/NICE)


(These are notes from The Advanced Strategy Masterclass with Dr Michael Hewitt-Gleeson © 2012)

Science is not about proof it’s about evidence.

That’s why science moves ahead much faster than any other branch of human knowledge. Why? Because there is always more and more evidence, more and more reasons to escape from our CVS and move to a BVS.

It’s the uncertainty of science that gives it speed. Certainty only slows us down.

No-one expresses the intrinsic uncertainty of science better than the great American physicist Richard Feynman. In this very brief video he says:

I have approximate answers and possible beliefs in different degrees of certainty about different things, but I’m not absolutely sure of anything.

 

First Law of Thinking

cvs ≠ bvs

 

“the current view of the situation (cvs)

can never be equal to

the better view of the situation (bvs)”

 

cvs x10 = bvs

JACK WELCH, CEO of GE used cvs2bvs as an enterprise solution to accelerate the transformation of GE from a 100-year-old slow-thinking monolith to a fast-thinking modern business with a growth surge of 4000% in shareholder value.

He said, “cvs2bvs is the simplest idea in the world!” Jack understood the power of cvs2bvs as a killer business management app. He wrote: “I wish I had a management team that really understood the cvs2bvs equation because it is the value-added role in the management process”.