The Trouble with Bright Kids

It's not easy to live up to your fullest potential. There are so many obstacles that can get in the way: bosses that don't appreciate what you have to offer, tedious projects that take up too much of your time, economies where job opportunities are scarce, the difficulty of juggling career, family, and personal goals.

But smart, talented people rarely realize that one of the toughest hurdles they'll have to overcome lies within.

People with above-average aptitudes — the ones we recognize as being especially clever, creative, insightful, or otherwise accomplished — often judge their abilities not only more harshly, but fundamentally differently, than others do (particularly in Western cultures). Gifted children grow up to be more vulnerable, and less confident, even when they should be the most confident people in the room. Understanding why this happens is the first step to righting a tragic wrong. And to do that, we need to take a step back in time.

Chances are good that if you are a successful professional today, you were a pretty bright fifth-grader. You did well in several subjects (maybe every subject), and were frequently praised by your teachers and parents when you excelled.

When I was a graduate student at Columbia, my mentor Carol Dweck and another student, Claudia Mueller, conducted a study looking at the effects of different kinds of praise on fifth-graders. Every student got a relatively easy first set of problems to solve and were praised for their performance. Half of them were given praise that emphasized their high ability ("You did really well. You must be really smart!"). The other half were praised instead for their strong effort ("You did really well. You must have worked really hard!").

Next, each student was given a very difficult set of problems — so difficult, in fact, that few students got even one answer correct. All were told that this time they had "done a lot worse." Finally, each student was given a third set of easy problems — as easy as the first set had been — in order to see how having a failure experience would affect their performance.

Dweck and Mueller found that children who were praised for their "smartness" did roughly 25% worse on the final set of problems compared to the first. They were more likely to blame their poor performance on the difficult problems to a lack of ability, and consequently they enjoyed working on the problems less and gave up on them sooner.
Children praised for the effort, on the other hand, performed roughly 25% better on the final set of problems compared to the first. They blamed their difficulty on not having tried hard enough, persisted longer on the final set of problems, and enjoyed the experience more.

It's important to remember that in Dweck and Mueller's study, there were no mean differences in ability between the kids in the "smart" praise and "effort" praise groups, nor in past history of success — everyone did well on the first set, and everyone had difficulty on the second set. The only difference was how the two groups interpreted difficulty — what it meant to them when the problems were hard to solve. "Smart" praise kids were much quicker to doubt their ability, to lose confidence, and to become less effective performers as a result.

The kind of feedback we get from parents and teachers as young children has a major impact on the implicit beliefs we develop about our abilities — including whether we see them as innate and unchangeable, or as capable of developing through effort and practice. When we do well in school and are told that we are "so smart," "so clever," or "such a good student," this kind of praise implies that traits like smartness, cleverness, and goodness are qualities you either have or you don't. The net result: when learning something new is truly difficult, smart-praise kids take it as sign that they aren't "good" and "smart," rather than as a sign to pay attention and try harder.

Incidentally, this is particularly true for women. As young girls, they learn to self-regulate (i.e., sit still and pay attention) more quickly than boys. Consequently they are more likely to be praised for "being good," and more likely to infer that "goodness" and "smartness" are innate qualities. In a study Dweck conducted in the 1980's, for instance, she found that bright girls, when given something to learn that was particularly foreign or complex, were quick to give up compared to bright boys — and the higher the girls' IQ, the more likely they were to throw in the towel. In fact, the straight-A girls showed the most helpless responses.

We continue to carry these beliefs, often unconsciously, around with us throughout our lives. And because bright kids are particularly likely to see their abilities as innate and unchangeable, they grow up to be adults who are far too hard on themselves — adults who will prematurely conclude that they don't have what it takes to succeed in a particular arena, and give up way too soon.

Even if every external disadvantage to an individual's rising to the top of an organization is removed — every inequality of opportunity, every unfair stereotype, all the challenges we face balancing work and family — we would still have to deal with the fact that through our mistaken beliefs about our abilities, we may be our own worst enemy.

How often have you found yourself avoiding challenges and playing it safe, sticking to goals you knew would be easy for you to reach? Are there things you decided long ago that you could never be good at? Skills you believed you would never possess? If the list is a long one, you were probably one of the bright kids — and your belief that you are "stuck" being exactly as you are has done more to determine the course of your life than you probably ever imagined. Which would be fine, if your abilities were innate and unchangeable. Only they're not.

No matter the ability — whether it's intelligence, creativity, self-control, charm, or athleticism — studies show them to be profoundly malleable. When it comes to mastering any skill, your experience, effort, and persistence matter a lot. So if you were a bright kid, it's time to toss out your (mistaken) belief about how ability works, embrace the fact that you can always improve, and reclaim the confidence to tackle any challenge that you lost so long ago.

Register now for a free webinar with Heidi Grant Halvorson to learn what successful people do to reach their goals.

What I Learned Building the Apple Store

When I announced that I was leaving Apple to take the reins as CEO of J.C. Penney this month, the business press (and lots of others) began speculating about whether I could replicate the Apple Store's success in such a dramatically different retail setting. One of the most common comments I heard was that the Apple Store succeeded because it carried Apple products and catered to the brand's famously passionate customers. Well, yes, Apple products do pull people into stores. But you don't need to stock iPads to create an irresistible retail environment. You have to create a store that's more than a store to people.

Think about this: Any store has to provide products people want to buy. That's a given. But if Apple products were the key to the Stores' success, how do you explain the fact that people flock to the stores to buy Apple products at full price when Wal-Mart, Best-Buy, and Target carry most of them, often discounted in various ways, and Amazon carries them all — and doesn't charge sales tax!

People come to the Apple Store for the experience — and they're willing to pay a premium for that. There are lots of components to that experience, but maybe the most important — and this is something that can translate to any retailer — is that the staff isn't focused on selling stuff, it's focused on building relationships and trying to make people's lives better. That may sound hokey, but it's true. The staff is exceptionally well trained, and they're not on commission, so it makes no difference to them if they sell you an expensive new computer or help you make your old one run better so you're happy with it. Their job is to figure out what you need and help you get it, even if it's a product Apple doesn't carry. Compare that with other retailers where the emphasis is on cross-selling and upselling and, basically, encouraging customers to buy more, even if they don't want or need it. That doesn't enrich their lives, and it doesn't deepen the retailer's relationship with them. It just makes their wallets lighter.

So the challenge for retailers isn't "how do we mimic the Apple Store" or any other store that seems like a good model. It's a very different problem, one that's conceptually similar to what Steve Jobs faced with the iPhone. He didn't ask, "How do we build a phone that can achieve a two percent market share?" He asked, "How do we reinvent the telephone?" In the same way, retailers shouldn't be asking, "How do we create a store that's going to do $15 million a year?" They should be asking, "How do we reinvent the store to enrich our customers' lives?"

It's not easy, of course. People forget that the Apple Store encountered some bumps along the way. No one came to the Genius Bar during the first years. We even had Evian water in refrigerators for customers to try to get them to sit down and spend time at the bar. But we stuck with it because we knew that face-to-face support was the very best way to help customers. Three years after the Genius Bar launched, it was so popular we had to set up a reservation system.

There isn't one solution. Each retailer will need to find its own unique formula. But I can say with confidence that the retailers that win the future are the ones that start from scratch and figure out how to create fundamentally new types of value for customers.

Why You May Be Blind to a Good Idea (and What to Do About It)

Several years ago I attended a lecture on attention blindness, the basic feature of the human brain that means when we concentrate intensely on one task, we miss almost everything else happening around us. Since we can't see what we can't see, the speaker showed us a video designed to catch us in the act. Six people pass basketballs back and forth and viewers are told to count the number of tosses only between the three wearing white t-shirts, not black. Many people correctly count fifteen tosses. Yet nearly 60 percent fail to see someone in a full gorilla suit stride in among the tossers, then walk away. In some situations with a lot of peer pressure, 90 percent of an audience has missed the gorilla.

I saw the gorilla. I'm dyslexic and knew I wouldn't be able to count tosses on the grainy, confusing video so I didn't try. And that's the lesson of attention blindness. Because I wasn't focused on counting basketballs, I saw what most of my colleagues missed.

A cognitive scientist would say the experiment demonstrates a structural limitation of the human brain. But, for me, the management takeaway is that since we all see selectively but we don't all select the same things, we can leverage the different ways we slice and dice the world. The trick, though, is we can only do this by first accepting that we each have limits: Everything we see means we're missing something else. It's that simple. And impossible to see. So we have to use lessons from the science of attention blindness to construct teams in a way that eliminates group think (where the group rallies around one idea oftentimes at the expense of others that may have been "blind") and yields innovative new ideas they might be missing if they're not actively addressing blind spots.

I see two particularly important practical lessons.

Lesson One: just because you don't see it, doesn't mean it isn't there. It was odd seeing the gorilla in a room filled with smart people who were proud of their toss-counting ability. It wasn't easy convincing them they had missed something as dramatic as a gorilla. It required rewinding the tape, disrupting their confidence in their own expertise and ability. To get the same result, a team has to structure its interactions in a way that disrupts attention blindness. One way to do this is by ensuring that outliers are assigned the task of speaking up. I'm cofounder of an organization that develops innovative learning practices and technologies. When our team meets, we put on the agenda: "What are we missing?" Someone is then randomly selected to begin the discussion of that agenda item. And it can be anyone. Don't rule out the cranky person, the intern, or the assistant who usually just takes notes, or the new guy who "doesn't get it." The puzzled person may be the only one who can see what the pros miss.

Lesson Two: I'll count — if you take care of that gorilla. This principle acknowledges that, no matter how we try, no one person ever sees the whole picture. Our brains aren't built that way. But as a group, we can select the right partners and the right tools to distribute expertise and assignments to compensate for what we lack. My organization calls this method "collaboration by difference." Or, as one member of our quirky team likes to say, difference isn't our deficit, it's our operating system.

Like most organizations, in ours we need to keep an eye on the bottom line and we need to see the big gorilla. So we also have meetings designed to see what we're missing. Each member has the floor for twenty minutes. They present a problem for others to tackle, then shut up, and it's a free-for-all, with everyone else pitching in ideas. The others might not have a clue about the progress, methods, or solutions being worked on already. We use this method whether we're talking about technical matters such as performance speed on a state-of-the-art Drupal site in development, workplace issues such as reconfiguring office space, or grant or program opportunities. The point is that each project manager proposes a topic in order to see what others not charged with counting the basketballs are seeing and what they might be missing.

The downside of these methods based on disrupting our attention blindness is they can derail you when you are speeding efficiently along. On the other hand, they can serve as an early-warning signal when you're heading fast in exactly the wrong direction.

Facebook Is Making Us Miserable

When Facebook was founded in 2004, it began with a seemingly innocuous mission: to connect friends. Some seven years and 800 million users later, the social network has taken over most aspects of our personal and professional lives, and is fast becoming the dominant communication platform of the future.

But this new world of ubiquitous connections has a dark side. In my last post, I noted that Facebook and social media are major contributors to career anxiety. After seeing some of the comments and reactions to the post, it's clear that Facebook in particular takes it a step further: It's actually making us miserable.

Facebook's explosive rate of growth and recent product releases, such as the prominent Newsticker, Top Stories on the newsfeed, and larger photos have all been focused on one goal: encouraging more sharing. As it turns out, it's precisely this hyper-sharing that is threatening our sense of happiness.

In writing Passion & Purpose, I monitored and observed how Facebook was impacting the lives of hundreds of young businesspeople. As I went about my research, it became clear that behind all the liking, commenting, sharing, and posting, there were strong hints of jealousy, anxiety, and, in one case, depression. Said one interviewee about a Facebook friend, "Although he's my best friend, I kind-of despise his updates." Said another "Now, Facebook IS my work day." As I dug deeper, I discovered disturbing by-products of Facebook's rapid ascension — three new, distressing ways in which the social media giant is fundamentally altering our daily sense of well-being in both our personal and work lives.

First, it's creating a den of comparison. Since our Facebook profiles are self-curated, users have a strong bias toward sharing positive milestones and avoid mentioning the more humdrum, negative parts of their lives. Accomplishments like, "Hey, I just got promoted!" or "Take a look at my new sports car," trump sharing the intricacies of our daily commute or a life-shattering divorce. This creates an online culture of competition and comparison. One interviewee even remarked, "I'm pretty competitive by nature, so when my close friends post good news, I always try and one-up them."

Comparing ourselves to others is a key driver of unhappiness. Tom DeLong, author of Flying Without a Net, even describes a "Comparing Trap." He writes, "No matter how successful we are and how many goals we achieve, this trap causes us to recalibrate our accomplishments and reset the bar for how we define success."And as we judge the entirety of our own lives against the top 1% of our friends' lives, we're setting impossible standards for ourselves, making us more miserable than ever.

Second, it's fragmenting our time. Not surprisingly, Facebook's "horizontal" strategy encourages users to log in more frequently from different devices. My interviewees regularly accessed Facebook from the office, at home through their iPads, and while out shopping on their smartphones. This means that hundreds of millions of people are less "present" where they are. Sketching out a mind-numbing presentation for the board meeting? Perhaps it's time to reply to your messages. Stuck in traffic? It's time to browse your newsfeed. Recounted one interviewee, "I almost got hit by a car while using Facebook crossing the street."

Leaving the risk of real physical harm aside, the issue with this constant "tabbing" between real-life tasks and Facebook is what economists and psychologists call "switching costs," the loss in productivity associated with changing from one task to another. Famed author Dr. Srikumar Rao attributes mindfulness over multitasking as one of his ten steps to happiness at work. He argues that constant distractions lead to late and poor-quality output, negatively impacting our sense of self-worth.

Last, there's a decline of close relationships. Gone are the days where Facebook merely complemented our real-life relationships. Now, Facebook is actually winning share of our core, off-line interactions. One participant summed it up simply: "We Facebook chat instead of meeting up. It's easier."

As Facebook adds new features such as video chat, it is fast becoming a viable substitute for meetings, relationship building, and even family get-togethers. But each time a Facebook interaction replaces a richer form of communication — such as an in-person meeting, a long phone call, or even a date at a restaurant — people miss opportunities to interact more deeply than Facebook could ever accommodate. As Facebook continues to add new features to help us connect more efficiently online, the battle to maintain off-line relationships will become even more difficult, which will impact their overall quality, especially in the long-run. Facebook is negatively affecting what psychology Professor Jeffrey Parker refers to as "the closeness properties of friendship."

So, what should we do to avoid these three traps? Recognizing that "quitting" Facebook altogether is unrealistic, we can still take measures to alter our usage patterns and strengthen our real-world relationships. Some useful tactics I've seen include blocking out designated time for Facebook, rather than visiting intermittently throughout the day; selectively trimming Facebook friends lists to avoid undesirable ex-partners and gossipy coworkers; and investing more time in building off-line relationships. The particularly courageous choose to delete Facebook from their smartphones and iPads, and log off the platform entirely for long stretches of time.

Is Facebook making you miserable? What other tips can you share?

This post is part of a series of blog posts by and about the new generation of purpose-driven leaders.

On Social Media Becoming Social Business

For a clue to social media's future, we need not look much further than Washington. On the one hand, you have "Weinergate," former NY Senator Anthony Weiner's Twitter fiasco, which was essentially user error. He failed to negotiate the thin line between digital communication and social communication, between private and public.

On the other hand you have President Obama's announcement that he will do his own Tweeting. I'm fairly confident that while Obama may be the one that hits the "Tweet" button, it's highly unlikely that his tweets will go out into the wild without planning and, for the lack of a better word, design. He's no Anthony Weiner.

These two events signal the shift that's coming. The age of social media as something spontaneous that reflects how we behave in the real world (the Weiner approach) is coming to an end. We are entering an age of social business: a purposeful, planned, orchestrated, and integrated way of doing business in a social context which may feel personal to the outside world but combine complexities internally within organizations that will need navigating. As further evidence to the shift, one can look to technology for yet another clue.

Over the past several years, forward-thinking companies have begun to understand the value of monitoring conversations, so they have purchased software licenses from platforms like Radian 6. Recently, Enterprise software behemoth Salesforce acquired the startup, sending the signal that listening to social conversations is only one slice of the bigger pie for business. The true opportunity lies in scaling and operationalizing "social". If the next phase of social media is operating as a scalable social organization or business, then expect to see an explosion of activity in the following areas:

Organizational Design: While social media is focused on parts of an organization or business where communications and marketing demand social media tactics, a social business is redesigned as it moves through key phases of its evolution. All business functions have to undergo several iterations of change. Looking at your organization from a social business lens means looking at it more holistically. For further proof here, we can look to Facebook, where business and brand pages deal not only with customer "likes" but also with complaints and attacks from activist groups such as Greenpeace. Corporate Facebook pages are great examples of the need for marketing, PR, customer service, and even HR to all figure out how to work together because users on Facebook don't make the distinction behind which department is running what. To them, a company page represents all departments.

Social Business Intelligence: The rise of social media led to a gold rush in technology solutions, which allowed organizations to eavesdrop on conversations happening across multiple social ecosystems and digital public spaces such as the blogosphere, message boards, and Facebook. Organizations that have become accustomed to listening in on conversations are now positioned to take the next step and convert listening into organization-wide business intelligence. Dell, for example, has a "social command center", a baby step in the emerging area of social intelligence. Socially intelligent organizations will not only be able to adapt to conditions in their environment, but they will eventually be able to predict and plan for future scenarios.

Cultures of Collaboration, Co-Creation & Shared Value: Perhaps the most significant recent business case, which illustrates the business side of social, comes from a notoriously anti-social brand. When Apple first designed the iPhone, it did not plan for phones to be jailbroken and applications to be developed ad hoc, but that's what happened. The App Store was born by an early understanding that certain aspects were out of Apple's control and therefore a system needed to be planned and designed if Apple were to extract value in the long run. The end result is what's commonly known in the business world as an ecosystem in which value is entered into it and extracted by multiple stakeholders for mutual gain. An ecosystem, by definition, is sustainable.

The tenuous relationship between social media and social business represents a chasm that must be bridged. On one hand, the public desires authentic interactions in social spaces from real people. There is now an expectation for real-time response. On the other, a business or organization requires a system to be in place that coordinates activities. In short, it means knowing that Obama is pressing the Tweet button at times, but making sure he's not Tweeting anything inappropriate. The shift to come is moving from a focus on external media consumption to the internalization and business integration of what it means to become social or connected. Organizations that integrate social into how they do business will embrace social as a layer that's woven into the fabric of each business function over time. In the era of social business, external media will always play a role, but it will be the tip of the iceberg.

To Get Paid What You're Worth, Know Your Disruptive Skills

I'm not paid what I'm worth."

Who hasn't said this at least once?

I certainly have.

But if we subscribe to classical economics — which says that the price paid for any given service is the price at which the quantity supplied equals the quantity demanded — aren't we paid precisely what we're worth? And if we still believe we're trading at a discount to our intrinsic value, is it possible to change the market's mind?

In a recent conversation with a colleague of mine about our respective strengths, he identified as one of my strong points an ability to connect the dots between people and ideas, where others see no possible connection. Developmental psychologist Howard Gardner would describe this as searchlight intelligence, an intelligence that readily discerns connections across spheres and sees opportunities to cross-pollinate. My colleague then surprised me by wondering aloud, "I don't understand why you don't value what is such an apparent strength."

I do value my ability to think across silos, I countered, but it's true that I value my skill of building a financial model more, because it was so painstaking to acquire.

A tendency to obfuscate our strengths should not be surprising. If we've really applied ourselves to achieving competency, we are justifiably proud. Yet we often overlook our best skills — our innate talents — simply because we perform them without even thinking. As publisher Malcolm Forbes put it, "Too many people overvalue what they are not and undervalue what they are."

As we look to close the gap between what we're paid and what we're worth, there is a lesson to be learned from the stock market. In my experience, the stocks that trade at fair value or even a premium to their peers are those that know what kind of stock they are, and then deliver, whether "disruptive innovation — emerging growth," "sustaining innovation — best-of-breed," or "being-disrupted — but dividend-paying."

Not surprisingly, the stocks that lead with their unique or disruptive capabilities command the highest absolute multiples. The market historically rewards "disruptive innovation — emerging growth" stocks with multiples of 30x or more. The market pays top dollar, applying a premium multiple to disruptive innovations, because the odds for disruptors are much better — 6x greater in terms of success, 20x greater in terms of revenue opportunity, as Clayton M. Christensen wrote in The Innovator's Dilemma.

Translating this to our careers, when we proffer to the marketplace a disruptive skill set, focusing on our distinctive innate talents rather than 'me-too' skills, we are more likely to achieve success and increase what we earn. For example, consider the outcomes for two presidential candidates: on the one hand, Mitt Romney, who highlighted his political views rather than his business acumen; on the other, Bill Clinton, who understood that, as smart as the former Rhodes scholar is, his real skill was interpersonal intelligence. In my own case, I may not get paid top dollar if I'm hired to sequester myself every day, constructing financial models: I build models well, but not remarkably so. But if I lead with my unique skill set of searchlight intelligence, following with "can build a model/value a company," the calculus changes dramatically.

We all want to get paid what we believe we are worth, which may be even more than what we currently estimate. The trick then is to lead with unique or disruptive skills, offering the hard-won skills as a kicker. When you know exactly what your value proposition is, rather than perpetually trading at a discount, you'll command the premium you deserve.

Better Time Management Is Not the Answer

Managers tell us all the time they have "a time management problem." Their days, they say, are often hijacked by unplanned events, interruptions, crises — matters that can't be ignored. They go to work planning to do certain things as a boss and at day's end they realize they've done none of it.

"How do I cope?" they want to know. "How do I do what I'm supposed to do in the middle of chaos? When do I do the work of being a boss — things like working toward goals, developing people, building a team, and creating and sustaining a network?"

Does this sound familiar? Do you have this kind of time problem?

The answer isn't what you probably expect or hope to hear. Even if you push off less important demands, delegate better, and are stingy in your expenditure of time — all good time management practices — you would still have a problem.

The reality is, management is fragmented and reactive by nature. The problem isn't you, and it's not a lack of time management skills. It's management itself. It's a problem even for senior managers. Those who head major business units also struggle to stay ahead of daily events.

Great bosses have discovered the right approach. They don't focus merely on managing their time better. They don't think about their work as comprising two different parts — handling unexpected, daily problems versus doing what they should do as bosses. They don't try to do their daily work and also the work of management. Instead, they use the chaos — unplanned events, crises, obligations — to do managerial work. To do this, they use an approach we call "Prep-Do-Review" in every activity they undertake.

In a nutshell, Prep-Do-Review calls on you to think of every activity not as one step — doing — but as three steps: preparing to act, acting, and then reviewing the outcome. It works this way:

• Prep: Before you do anything, prepare. Ask yourself questions like these: What am I going to do? Why — what's my goal or purpose? How will I do it? Who else will be involved or affected?
• Do: Do what you prepared to do.
• Review: When you're done, think about what you did and what happened. What did you learn? How would you do it differently next time? (Don't assume the right lesson is obvious; it often is not.)

The wisdom of Prep-Do-Review may be simple and obvious, but how often do you just react to what's in front of you? In the name of time management, how often do you deal with something that's come up in the quickest way possible, just to resolve it and get it out of the way so you can go on to what you're supposed to do as a boss?

Great managers use Prep-Do-Review (whether they call it that or not) to convert every activity into a means of pursuing some management purpose — to make progress toward a goal, to develop someone, to reaffirm work standards, to strengthen bonds among members of their team, to model the behavior they want, and on and on. In their minds, every activity contains some seed of progress, and Prep-Do-Review is how they find that seed and nurture it .They use a crisis to reconnect with an important colleague in their network. They use a customer service problem to begin working through a broader issue with their boss. They use a "pointless" meeting as an opportunity to brief a colleague during the break about a change in plans. They use a production problem to develop the skills of a key employee.

If you don't Prep — spend a a minute or two, or even just a few seconds — before dealing with a problem, you won't see the possibilities in what you thought was some mundane activity. If you then don't carry out the action as planned, and if you don't step back afterwards to crystallize what you and others learned, you'll spend your days struggling to get to your work as a manager.

Make Prep-Do-Review a practice that you consistently, systematically, and routinely pursue. By using this simple but powerful approach, you can convert many of the activities that crowd your days into management tools for moving your people forward individually and as a group.

What Venture Capital Can Learn from Emerging Markets

Editor's Note: This post was written with Justin Chakma, an undergraduate student at the University of Toronto (Canada).

Venture capitalists are increasingly interested in emerging markets, and in working with local funds based in those markets (despite the fact that reverse innovation in venture capital seems counterintuitive). The reason for the interest in in part because the industry has suffered from poor returns on investment over the last decade; indeed, some sectors, including biotechnology, report negative aggregate returns. China and India, in particular, offer attractive liquidity and investment opportunities VCs haven't seen for a while.

The interesting part of this shift is that VCs are taking a more holistic or "systems" approach to investing than they typically do in developed markets. Traditionally, VCs evaluate each investment as a discrete entity; the firms in their portfolio rarely interact with one another. In contrast, emerging-market VCs such as Nadathur Holdings (established in 2000 by N.S. Raghavan, one of Infosys' co-founders) create intentional links between firms. Nadathur's portfolio includes firms operating in drug discovery research, companion diagnostics, pharmaceutical analytics, reimbursement claims processing, patient relationship management, and specialty healthcare delivery for running clinical trials — and they all work together. In effect, the VCs at Nadathur Holdings serve as the executive team for a miniature healthcare innovation ecosystem.

Why do VCs in emerging markets take a systems approach? Because of three significant challenges innovators face in emerging markets:

1. Innovation ecosystems are not well-developed. The supporting industries that an early-stage tech start-up needs simply don't exist locally. VCs encourage upstream and downstream, often service-based, investments. These can be exited at lower multiples, with the trade-off of higher success rates for the R&D-intensive high-multiple investments.
2. Technology-intensive firms are expected to generate revenues before they make an exit; local investors are reluctant to put money into start-ups centered on intellectual property. Portfolio firms upstream or downstream can help establish commercial proof, generate retained earnings and make it easier to get additional customers.
3. Few local financial intermediaries (including VCs) exist. A portfolio that contains an entire ecosystem helps to decrease risk by allowing inferior business models to be refined or killed faster.

We believe that this holistic, systems approach to venture capital is highly relevant to developed markets, as well; it can speed things along in three specific ways:

1. VCs need to be able to demonstrate the value in new products or innovations, and to do that they often need scaled-up facilities. Investing in a specialty hospital or HMO can accelerate the process of demonstrating value. For example, famed VC John Doerr realized that his electronic health record start-up would be difficult to scale up from the physician group he'd started with. In 2007, he invested in Essence Healthcare, a Seattle-based HMO; this larger facility allowed him to establish scaled-up proof of concept for the electronic health record. He followed up with an investment in a medical analytics start-up to track health outcomes.
2. Investing in linked ventures simultaneously can get VCs in and out more quickly, at a time when global markets are not highly liquid and IPOs are delayed for long periods. For example, it's possible for a drug discovery start-up to identify the most relevant patients, and improve clinical trial success and reimbursement rates, if the VC invests in diagnostics or biomarkers at the same time.
3. Many current therapeutic innovations require iterative feedback from the clinic to the lab and back again. These same therapies tend to require highly-trained specialists available in the developed world only at state-of-the-art academic hospitals. Prescient VCs may make global investments in low-cost, high-volume specialty hospitals to complement their R&D start-ups.

The emerging complexity of the global healthcare industry presents investors with a need to solve non-linear, complex problems and to accelerate technology adoption. Investing in a portfolio of linked businesses is already helping to solve these problems in emerging markets, and is poised to do the same in developed markets. Reverse innovation of venture capital is a powerful illustration of how emerging markets can drive healthcare innovation.

Groupon Doomed by Too Much of a Good Thing

"Alright, you caught us. We're actually not making any money. In fact, we are really losing a lot of money."

This is the essence of Groupon's declaration last week that it will remove the controversial accounting metric called Adjusted Consolidated Segment Operating Income (ACSOI) from its financial statements. ACSOI essentially measures Groupon's profits before subtracting its subscriber-acquisition costs and stock option-based compensation. The metric was an attempt to put a thin veneer of respectability on what are extremely disconcerting profitability numbers for the company. In the first quarter of 2011, Groupon posted a net loss of $113.9 million. Yet, the company reported ASCOI of positive $80.1 million. In most recent quarter, Groupon's losses continued to mount as it begrudgingly abandoned the ACSOI metric amidst criticism and incredulity from the SEC.

But what is most interesting about its emphasis on the ACSOI metric is that, deep down, Groupon knows what we all know: good investments are profitable investments. It was simply not enough for the firm to report earnings and explain that it was investing for growth. Rather, Groupon felt the need to include a metric of profitability, no matter how contrived, that was actually positive.

Clayton Christensen would agree with the intuition that Groupon displays but ignores: businesses should become profitable before they become big. The best way to manage a fledgling business is for managers to be impatient for profit but patient for growth. Such a strategy limits an early venture's funding in order to force the business to develop a profitable business model and then invests heavily in growth once such a model is identified — Christensen terms such investments "good money" for incubating growth businesses and extols the strategy for three reasons.

• First, when a business is impatient for profit, managers are forced to validate their assumptions and demonstrate that customers are fundamentally willing to pay an acceptable price for the company's offering.
• Secondly, expecting a business to be profitable quickly forces it to keep its fixed costs low. Because a business's cost structure determines which customers it finds profitable, keeping these fixed costs low preserves strategic options for the company when it is choosing which customers to target.
• Finally, reaching profitability quickly ensures that when outside financing dries up, the venture can succeed on its own.

Groupon's fundamental problem is that it has not yet discovered a viable business model. The company asserts that it will be profitable once it reaches scale but there is little reason to believe this. The financial results of Groupon's traditional business continue to deteriorate, especially in mature markets, and new ventures such as Groupon Now also have failed to drive profits. And unlike the very few successful companies that scaled before they were profitable (think Facebook or Amazon), Groupon's business model does not benefit from significant network effects. The company's product is not more valuable to users as more people adopt the platform. If anything, the fact that Groupon is witnessing decreasing revenue per merchant and fewer Groupon purchases per subscriber in its maturing markets suggests that growth may actually decrease Groupon's value to its customers. Yet, Groupon maintains a blind faith that growth will be its salvation. As Pets.com learned in the last bubble, such a strategy works just fine until you run out of other people's money to spend on growth.

The real cause of Groupon's problem is that it had too much of a good thing. With over $1 billion of venture capital money to invest in growth, what manager has time to worry about profitability? Groupon's "bad money" — investments that were patient for profit but impatient for growth — did not instill the discipline needed to enable the company to emerge as a successful standalone venture. Now, the venture capital markets cannot supply more capital and the company must depend on the IPO market to finance its money-losing operations. Eventually, investors will be unable to sell their shares to a greater fool and Groupon will be added to the list of companies that had immense potential but died because they did not find a successful profit formula in time.

The story would be much different if Groupon did not have nearly unlimited access to funding so early in its corporate life. A successful financing strategy would have provided Groupon with incremental investments to enable the development of a profitable business model around a product that had obvious appeal to customers and merchants. In such a world, Groupon would have stuck to its home market of Chicago until it developed a business model that was profitable at scale in one market. Armed with a viable profit formula, Groupon could have scaled aggressively — confident that much larger profits awaited it.

But it is now too late. Groupon needs another $750 million to keep the lights on and to keep growing while it prays for profitability that will perpetually lay just one funding round away. Groupon's venture investors and executives need a way to cash out before everyone realizes that the emperor has no clothes. I will probably buy a Groupon every now and again — I have no problem letting investors finance my cheap consumption. But as far as an investment goes, Groupon is looking about as profitable as giving away your merchandise for 90% off.

Great People Are Overrated

Last month, in an article in the New York Times on the ever-escalating "war for talent" in Silicon Valley, Facebook CEO Mark Zuckerberg made a passing comment that has become the entrepreneurial equivalent of a verbal tick — something that's said all the time, almost without thinking.

"Someone who is exceptional in their role is not just a little better than someone who is pretty good," he argued when asked why he was willing to pay $47 million to acquire FriendFeed, a price that translated to about $4 million per employee. "They are 100 times better."

Zuckerberg's casual calculation reminded me of a conversation with Marc Andreessen, the legendary cofounder of Netscape, and now one of Silicon Valley's most high-profile venture capitalists. "The gap between what a highly productive person can do and what an average person can do is getting bigger and bigger," he told Polly LaBarre and me for our book, Mavericks at Work. "Five great programmers can completely outperform 1,000 mediocre programmers."

Now, I admire what Mark Zuckerberg has built, and I consider Marc Andreessen without peer as an entrepreneur and a thinker, but do we take seriously what these two Silicon Valley giants claim about talent?

If you are building a company, would you prefer one standout person over one hundred pretty good people?

If you were launching a technology or developing a product, would you rather have five great engineers rather than 1,000 average engineers?

Have we become so culturally invested in the allure of the Free Agent, the lone wolf, the techno-rebel with a cause, that we are prepared to shower millions of dollars (maybe tens of millions) on a small number of superstars rather than a well-assembled team that may not dazzle with individual brilliance, but overwhelms with collective capability?

Isn't that what we see time and again with athletic competition, perhaps the closest thing we have these days to the frenzied competition in Silicon Valley? I spent Father's Day at Fenway Park, as the Red Sox hosted the Stanley Cup champion Boston Bruins to celebrate their victory. Nobody would suggest the Bruins had the best individual players in the NHL — throughout the year, the stars of the Vancouver Canucks shone much more brightly. But it was the Bruins' work as a team, a collective show of commitment and determination, that won the day. And what won on the ice won on the hardwood as well — LeBron James vs. the Dallas Mavericks, anyone?

Or think about the soccer pitch. Recently, The Economist published a brilliant little essay on the "management secrets" of FC Barcelona, universally considered the best soccer team in the world, perhaps of all time. "How has a club that is based in one of Europe's unemployment blackspots turned itself into the ruling power in the world's most popular sports?" the magazine asked. "An obvious answer is that Barca plays as a team in a sport that has far too many prima donnas...Barca has provided a distinctive solution to some of the most contentious problems in management theory. What is the right balance between stars and the rest of mankind?"

I'm with The Economist — and the Boston Bruins and the Dallas Mavericks. Yes, a big part of the transformation of business over the last 20 years has been a pendulum swing in the logic of success. The strong no longer take from the weak; the smart take from the strong. From an organizational and competitive standpoint, raw power, brand incumbency, and sheer size, have lost their luster as sources of success.

But it's possible for the pendulum to swing too far in the other direction. The latest trend in Silicon Valley, and the subject of the New York Times article in which Mark Zuckerberg explained his talent calculus, is called "acqhiring" — shelling out big bucks to acquire a company, not to buy a product or a piece of technology, but to hire a few (or even one) software programmer or engineer who will arrive at the acquiring company and make a huge impact. Facebook, according to the Times, is the pioneer of this new phenomenon, acquiring a slew of companies, killing their products, but keeping their developers.

Star-gazing entrepreneurs who are reluctant to look to sports for lessons in the limits of individual talent might instead look to Wall Street, and the research of Harvard Business School professor Boris Groysberg, captured in Chasing Stars, which was cited in The Economist essay.

Here's how Groysberg's publisher distills his insights: "After examining the careers of more than 1,000 star analysts at Wall Street investment banks, and conducting more than two hundred frank interviews, Groysberg comes to a striking conclusion: star analysts who change firms suffer an immediate and lasting decline in performance. Their earlier excellence appears to have depended heavily on their former firms' general and proprietary resources, organizational cultures, networks, and colleagues. There are a few exceptions, such as stars that move with their teams and stars that switch to better firms. Female stars also perform better after changing jobs than their male counterparts do. But most stars who switch firms turn out to be meteors, quickly losing luster in their new settings."

I'm certainly not suggesting that leaders who are growing companies or building teams should settle for mediocrity. But I am suggesting that there is more to long-term performance than the excellence of your individual players. Great teams, great companies, great organizations of all kinds are as much about character as credentials, about what makes people tick as much as what they know. Most of business life isn't really a choice between one great person and 100 pretty good people, but if that is the choice, I'm not sure I'd make the same choice as Mark Zuckerberg — especially if those 100 pretty good people work great as a team.

(Editor's note: The response to Bill's post has been so overwhelming, as you'll see from the comments below, that he's written a followup: Great People Are Overrated, Part 2.")

Was Marx Right?

In case you've been on Mars (or even just on vacation), here's a surprising idea that's been making the rounds lately: there might have been something to Marx's critiques of capitalism after all.

Now, before you leap into the intertubes, seize me by the arm, perform a citizens' arrest, and frog-march me into the nearest FBI office, exclaiming "See this suspicious looking brown guy? He's a card-carrying communist!!" please note: I'm, well, not. I'm a staunch believer in capitalism (hence, the title of my book.)

Yet, I do think — and after reading the dismal, dreary headlines every day, not to mention checking the value of your 401K, house, job, economy, society, and future lately, I'd bet you do too — that prosperity as we know it might be lazily circling the glowing inner rim of the burbling event horizon of a massive supergalactic black hole. And when it comes to doing much about it (wave hello to your new friend, "double-dip"), well, the status quo's pretty much out of options, out of ideas, and running out of time (hey, is that a Congressional "super-committee" being stalked by lobbyists I see? Who came up with this brain-melter of an idea?).

Hence, indulge me for a paragraph or two. Now, please note: This is a hugely divisive topic, and by "was Marx right?" I don't mean "Communism is the glorious future of humankind, my brothers in arms!! (And I am your leader — bow!!)". For, of course, I think we've had plenty of compelling demonstrations that it wasn't. Rather, I mean: "Was there maybe a tiny mote of insight or two hidden in Marx's diagnoses of the maladies of industrial age capitalism?"

Let's take Marx's big critiques of industrial age capitalism, one by one (and with a grain of salt: since I'm far from a Marxist economist, it's entirely possible my quick, partial descriptions leave much to be desired).

Immiseration. Marx claimed that capitalism would immiserate workers: he meant that labor would be "exploited" — not just in a purely ethical sense, but in a narrower economic one: that real wages would fall, and working conditions would deteriorate. How was Marx doing on this score? I'd say middlingly: wages in many advanced economies — notably, the most purely capitalist in a financialized sense — have failed to keep pace with productivity; not for years, but for decades. (America's median wage has been stagnant for roughly 40 years.) In macro terms, labor's share of income has plummeted, while the lion's share of growth has accrued to those at the very top.

Crisis. As workers were paid less and less, capitalism would be prone to chronic, perpetual crises of overproduction — for they wouldn't have the means to purchase or invest in enough goods to keep the economy humming. As Marx put it, there was likely to be "poverty in the midst of plenty." How's Marx doing on this score? Not bad, I'd say: the last three decades have in fact been characterized by global crises of what you might crudely call overproduction (think: too little demand chasing too many disposable widgets, resulting in a massive global debt crisis, as vanishing middle classes took on more and more debt to compensate for stagnant real wages).

Stagnation. Here's Marx's most controversial — and most curious — prediction. That as economies stagnated, real rates of profit would fall. How does this one hold up? On first glance, it seems to have been totally discredited: corporate profits have broken through the roof and into the stratosphere. But think about it again, in economic terms: Marx's prediction concerned "real profit," not just the mystery-meat numbers served up by beancounters, and chewed over with gusto by "analysts." When seen in those terms, Marx might be said to have been onto something: though corporations book nominal profits, I'd suggest a significant component of that "profit" is artificial, earned by transferring value, rather than creating it (just ask mega-banks, Big Energy, or Big Food). I've termed this "thin value" and Michael Porter has described it as a failure to create "shared value." Replace "declining real profit" with "shrinking real value" and it's analogous to what Tyler Cowen and I have called a Great Stagnation (though our casus belli for it differs significantly from Marx's).

Alienation. As workers were divorced from the output of their labor, Marx claimed, their sense of self-determination dwindled, alienating them from a sense of meaning, purpose, and fulfillment. How's Marx doing on this score? I'd say quite well: even the most self-proclaimed humane modern workplaces, for all their creature comforts, are bastions of bone-crushing tedium and soul-sucking mediocrity, filled with dreary meetings, dismal tasks, and pointless objectives that are well, just a little bit alienating. If sweating over the font in a PowerPoint deck for the mega-leveraged buyout of a line of designer diapers is the portrait of modern "work," then call me — and I'd bet most of you — alienated: disengaged, demoralized, unmotivated, uninspired, and about as fulfilled as a stoic Zen Master forced to watch an endless loop of Cowboys and Aliens.

False consciousness. According to Marx, one of the most pernicious aspects of industrial age capitalism was that the proles wouldn't even know they were being exploited — and might even celebrate the very factors behind their exploitation, in a kind of ideological Stockholm Syndrome that concealed and misrepresented the relations of power between classes. How's Marx doing on this score? You tell me. I'll merely point out: America's largest private employer is Walmart. America's second largest employer is McDonald's.

Commodity fetishism. A fetishized object is one which is more than a symbol: it's believed to have actually the power the symbol represents (like an idol, or a totem with magical properties). Marx claimed that under industrial age capitalism's rules, commodities became revered talismans, worshipped through transactional exchanges, imbued with mystical powers that give them inherent value — and obscuring the value of and in the very people who've worked labored over them in the first place. It's one of Marx's most subtle and nuanced concepts. Does it hold water? Again, I'll merely pointing to societies in furious pursuit of more, bigger, faster, cheaper, nastier, now, whether it's the retail temples of America's mega-malls, or London rioters stealing, not bread, but video games.

Marx's critiques seem, today, more resonant than we might have guessed. Now, here's what I'm not suggesting: that Marx's prescriptions (you know the score: overthrow, communalize, high-five, live happily ever after) for what to do about the maladies above were desirable, good, or just. History, I'd argue, suggests they were anything but. Yet nothing's black or white — and while Marx's prescriptions were poor, perhaps, if we're prepared to think subtly, it's worthwhile separating his diagnoses from them.

Because the truth might just be that the global economy is in historic, generational trouble, plagued by problems the orthodoxy didn't expect, didn't see coming, and doesn't quite know what to do with. Hence, it might just be that if we're going to turn this crisis upside down, we're going to have to think outside the big-box store, the McMansion, the dead-end McJob, the bailout, the super-bonus, and the share price.

The future of plenitude probably won't be Marxian — but it won't look like the present. And if we're going to trace the beginnings of better, more enduring, more authentic, more meaningful, fundamentally more humane paradigm for prosperity, perhaps it's worthwhile exploring — even when we don't agree with them — the critiques and prophecies of those who already challenged yesterday's.

NB: This is a divisive topic. Let's stay civilized, enlightened, and keep a sense of humor. Let's discuss the issues and ideas in the comments — not just defend ideologies by pointing fingers and calling one another names.

11. Steve Jobs Solved the Innovator's Dilemma

In the lead up to today's release of the Steve Jobs biography, there's been an increasing stream of news surrounding its subject. As a business researcher, I was particularly interested in this recent article that referenced from his biography a list of Jobs's favorite books. There's one business book on this list, and it "deeply influenced" Jobs. That book is The Innovator's Dilemma by HBS Professor Clay Christensen.

But what's most interesting to me isn't that The Innovator's Dilemma was on that list. It's that Jobs solved the conundrum.

When describing his period of exile from Apple — when John Sculley took over — Steve Jobs described one fundamental root cause of Apple's problems. That was to let profitability outweigh passion: "My passion has been to build an enduring company where people were motivated to make great products. The products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything."

Anyone familiar with Professor Christensen's work will quickly recognize the same causal mechanism at the heart of the Innovator's Dilemma: the pursuit of profit. The best professional managers — doing all the right things and following all the best advice — lead their companies all the way to the top of their markets in that pursuit... only to fall straight off the edge of a cliff after getting there.

Which is exactly what had happened to Apple. A string of professional managers had led the company straight off the edge of that cliff. The fall had almost killed the company. It had 90 days working capital on hand when he took over — in other words, Apple was only three months away from bankruptcy.

When he returned, Jobs completely upended the company. There were thousands of layoffs. Scores of products were killed stone dead. He knew the company had to make money to stay alive, but he transitioned the focus of Apple away from profits. Profit was viewed as necessary, but not sufficient, to justify everything Apple did. That attitude resulted in a company that looks entirely different to almost any other modern Fortune 500 company. One striking example: there's only one person Apple with responsibility for a profit and loss. The CFO. It's almost the opposite of what is taught in business school. An executive who worked at both Apple and Microsoft described the differences this way: "Microsoft tries to find pockets of unrealized revenue and then figures out what to make. Apple is just the opposite: It thinks of great products, then sells them. Prototypes and demos always come before spreadsheets."

Similarly, Apple talks a lot about its great people. But make no mistake — they are there only in service of the mission. A headhunter describes it thus: "It is a happy place in that it has true believers. People join and stay because they believe in the mission of the company." It didn't matter how great you were, if you couldn't deliver to that mission — you were out. Jobs's famous meltdowns upon his return were symptomatic of this. They might have become less frequent in recent years, but if a team couldn't deliver a great product, they got the treatment. The exec in charge of MobileMe was replaced on the spot, in front of his entire team, after a botched launch. A former Apple product manager described Apple's attitude like this: "You have the privilege of working for the company that's making the coolest products in the world. Shut up and do your job, and you might get to stay."

Everything — the business, the people — are subservient to the mission: building great products. And rather than listening to, or asking their customers what they wanted; Apple would solve problems customers didn't know they had with products they didn't even realize they wanted.

By taking this approach, Apple bent all the rules of disruption. To disrupt yourself, for example, Professor Christensen's research would typically prescribe setting up a separate company that eventually goes on to defeat the parent. It's incredibly hard to do this successfully; Dayton Dry Goods pulled it off with Target. IBM managed to do it with the transition from mainframes to PCs, by firewalling the businesses in entirely different geographies. Either way, the number of companies that have successfully managed to do it is a very, very short list. And yet Apple's doing it to itself right now with the utmost of ease. Here's new CEO Tim Cook, on the iPad disrupting the Mac business: "Yes, I think there is some cannibalization... the iPad team works on making their product the best. Same with the Mac team." It's almost unheard of to be able to manage disruption like this.

They can do it because Apple hasn't optimized its organization to maximize profit. Instead, it has made the creation of value for customers its priority. When you do this, the fear of cannibalization or disruption of one's self just melts away. In fact, when your mission is based around creating customer value, around creating great products, cannibalization and disruption aren't "bad things" to be avoided. They're things you actually strive for — because they let you improve the outcome for your customer.

When I first learned about the theory of disruption, what amazed me was its predictive power; you could look into the future with impressive clarity. And yet, there was a consistent anomaly. That one dark spot on Professor Christensen's prescience was always his predictions on Apple. I had the opportunity to talk about it with him subsequently, and I remember him telling me: "There's just something different about those guys. They're freaks." Well, he was right. With the release of Jobs's biography, we now know for sure why. Jobs was profoundly influenced by the Innovator's Dilemma — he saw the company he created almost die from it. When he returned to Apple, Jobs was determined to solve it. And he did. That "subtle difference" — of flipping the priorities away from profit and back to great products — took Apple from three months away from bankruptcy, to one of the most valuable and influential companies in the world.

10. Five Things You Should Stop Doing in 2012

I recently got back from a month's vacation — the longest I've ever taken, and a shocking indulgence for an American. (Earlier this summer, I was still fretting about how to pull off two weeks unplugged.) The distance, though, helped me hone in on what's actually important to my professional career — and which make-work activities merely provide the illusion of progress. Inspired by HBR blogger Peter Bregman's idea of creating a "to ignore" list , here are the activities I'm going to stop cold turkey in 2012 — and perhaps you should, too.

1. Responding Like a Trained Monkey. Every productivity expert in the world will tell you to check email at periodic intervals — say, every 90 minutes — rather than clicking "refresh" like a Pavlovian mutt. Of course, almost no one listens, because studies have shown email's "variable interval reinforcement schedule" is basically a slot machine for your brain. But spending a month away — and only checking email weekly — showed me how little really requires immediate response. In fact, nothing. A 90 minute wait won't kill anyone, and will allow you to accomplish something substantive during your workday.
2. Mindless Traditions. I recently invited a friend to a prime networking event. "Can I play it by ear?" she asked. "This is my last weekend to get holiday cards out and I haven't mailed a single one. It is causing stress!" In the moment, not fulfilling an "obligation" (like sending holiday cards) can make you feel guilty. But if you're in search of professional advancement, is a holiday card (buried among the deluge) going to make a difference? If you want to connect, do something unusual — get in touch at a different time of year, or give your contacts a personal call, or even better, meet up face-to-face. You have to ask if your business traditions are generating the results you want.
3. Reading Annoying Things. I have nearly a dozen newspaper and magazine subscriptions, the result of alluring specials ($10 for an entire year!) and the compulsion not to miss out on crucial information. But after detoxing for a month, I was able to reflect on which publications actually refreshed me — and which felt like a duty. The New Yorker , even though it's not a business publication, broadens my perspective and is a genuine pleasure to read. The pretentious tech publication with crazy layouts and too-small print? Not so much. I'm weeding out and paring down to literary essentials. What subscriptions can you get rid of?
4. Work That's Not Worth It. Early in my career, I was thrilled to win a five-year, quarter-million dollar contract. That is, until the reality set in that it was a government contract, filled with ridiculous reporting mechanisms, low reimbursement rates and administrative complexities that sucked the joy and profit out of the work. When budget cuts rolled around and my contract got whacked, it turned out to be a blessing. These days, I'm eschewing any engagement, public or private, that looks like more trouble than it's worth.
5. Making Things More Complicated Than They Should Be. A while back, a colleague approached me with an idea. She wanted me to be a part of a professional development event she was organizing in her city, featuring several speakers and consultants. She recommended biweekly check-in calls for the next eight months, leading up to the event. "Have you organized an event like this before?" I asked. "Can you actually get the participants? Why don't you test the demand first?" When none materialized, I realized I'd saved myself nearly half a week's work — in futile conference calls — by insisting the event had to be "real" before we invested in it. As Eric Ries points out in his new book The Lean Startup , developing the best code or building the best product in the world is meaningless if your customers don't end up wanting it. Instead, test early and often to ensure you're not wasting your time. What ideas should you test before you've gone too far?

Eliminating these five activities is likely to save me hundreds of hours next year — time I can spend expanding my business and doing things that matter. What are you going to stop doing? And how are you going to leverage all that extra time?

9. Why I Hire People Who Fail

A few weeks ago, I wrote about avoiding social media failures. I briefly mentioned our company's "Failure Wall" and was surprised by the number of comments and questions I received about it. What's the purpose? How does it work? And what other kinds of things do you do in that crazy office of yours?

The failure wall was part of our efforts to create a company culture where employees can take risks without fear of reprisal. As NPR's Here and Now reported earlier this year, we started by collecting inspirational quotes about failure. Among my favorites:

• "Success is going from failure to failure without loss of enthusiasm." – Winston Churchill
• "I have not failed, I've just found ten thousand ways that won't work." – Thomas Edison
• "Mistakes are part of the dues one pays for a full life." – Sophia Loren

One random Thursday night, I returned to our corporate headquarters afterhours with a bottle of wine and a box of acrylic paints. My assistant and I used stencils to paint about three dozen such quotes onto a large white wall in our break room. As first time stencilers, this project itself seemed destined to end up a byline on the (slightly gloppy) failure wall until we gratefully accepted some much-needed painting assistance from my wife.

After we finished painting around 1:00AM, we fastened a dozen Sharpies to the wall alongside these simple instructions: (1) describe a time when you failed, (2) state what you learned, and (3) sign your name. To set the tone, I listed three of my own most memorable (and humbling) failures.

In the beginning, the wall was met with surprise, curiosity and a bit of trepidation. We didn't ask anyone to contribute and we didn't tell people why it was there, but the wall quickly filled up. Some of the entries are life lessons: "After 7 years of practicing, I quit playing violin in high school to fit in. Lesson learned — who cares what other people think." Some are financial mishaps: "I thought buying Yahoo at $485 a share was a good idea." Many are self-deprecating: "My successful failure is working in online marketing when I came to LA to work in showbiz." Some are more than a little amusing: "I thought it was spelled 'fale.'"

I've said this before but it bears repeating: success by failure is not an oxymoron. When you make a mistake, you're forced to look back and find out exactly where you went wrong, and formulate a new plan for your next attempt. By contrast, when you succeed, you don't always know exactly what you did right that made you successful (often, it's luck).

We don't just encourage risk taking at our offices: we demand failure. If you're not failing every now and then, you're probably not advancing. Mistakes are the predecessors to both innovation and success, so it is important to celebrate mistakes as a central component of any culture. This kind of culture can only be created by example — it won't work if it's forced or contrived. A lively culture is nebulous, indefinable, ever-changing. Try to package it in a formal mission statement and you just may suffocate it.

The best way to shape culture is of course to focus on hiring the people who will ultimately make up that culture. Yet this is often overlooked, replaced with corporate values, slogans, and mission statements. It took billions of years to create and define all of the world's great cultures — through failure after failure — so it is with arrogance alone that we executives think we can create and define one for our company. To be blunt, cultures are not created or defined by executives; they evolve around the people who make up a company.

I personally interview every candidate at our corporate headquarters. By the time a prospective employee's resume reaches my desk, the department heads are convinced that the candidate can do the job. But for each person we end up hiring, I still end up interviewing countless other highly qualified candidates who were vying for the job. I'm mainly looking for cultural fit, and there is no more important job for a CEO.

If we hadn't hired people who cherish failures, my entries on the failure wall would be very lonely. Often when interviewing, I poke around and see if I can get the candidate to acknowledge a failure. It's a red flag to me if a candidate can't admit a mistake with a bit of self-deprecating humor. The tendency to dodge direct questions with a Miss America-style answer may indeed be a great asset to someone else's company, but it's not a great fit for success at mine.

8. How to Accomplish More by Doing Less

Two people of equal skill work in the same office. For the sake of comparison, let's say both arrive at work at 9 am each day, and leave at 7 pm.

Bill works essentially without stopping, juggling tasks at his desk and running between meetings all day long. He even eats lunch at his desk. Sound familiar?

Nick, by contrast, works intensely for approximately 90 minutes at a stretch, and then takes a 15 minute break before resuming work. At 12:15, he goes out for lunch for 45 minutes, or works out in a nearby gym. At 3 pm, he closes his eyes at his desk and takes a rest. Sometimes it turns into a 15 or 20 minute nap. Finally, between 4:30 and 5, Nick takes a 15 minute walk outside.

Bill spends 10 hours on the job. He begins work at about 80 percent of his capacity, instinctively pacing himself rather than pushing all out, because he knows he's got a long day ahead.

By 1 pm, Bill is feeling some fatigue. He's dropped to 60 percent of his capacity and he's inexorably losing steam. Between 4 and 7 pm, he's averaging about 40 percent of his capacity.

It's called the law of diminishing returns. Bill's average over 10 hours is 60 percent of his capacity, which means he effectively delivers 6 hours of work.

Nick puts in the same 10 hours. He feels comfortable working at 90 percent of his capacity, because he knows he's going to have a break before too long. He slows a little as the day wears on, but after a midday lunch or workout, and a midafternoon rest, he's still at 70 percent during the last three hours of the day.

Nick takes off a total of two hours during his 10 at work, so he only puts in 8 hours. During that time, he's working at an average of 80 percent of his capacity, so he's delivering just under 6 ½ hours of work — a half hour more than Bill.

Because Nick is more focused and alert than Bill, he also makes fewer mistakes, and when he returns home at night, he has more energy left for his family.

It's not just the number of hours we sit at a desk in that determines the value we generate. It's the energy we bring to the hours we work. Human beings are designed to pulse rhythmically between spending and renewing energy. That's how we operate at our best. Maintaining a steady reservoir of energy — physically, mentally, emotionally and even spiritually — requires refueling it intermittently.

Work the way Nick does, and you'll get more done, in less time, at a higher level of quality, more sustainably.

Create a workplace that truly values a balanced relationship between intense work and real renewal, and you'll not only get greater productivity from employees, but also higher engagement and job satisfaction.

There's plenty of evidence that increased rest and renewal serve performance.

Consider a study conducted by NASA, in collaboration with the Federal Aviation Administration, of pilots on long haul flights. One group of pilots was given an opportunity to take 40 minute naps mid-flight, and ended up getting an average of 26 minutes of actual sleep. Their median reaction time improved by 16 percent following their naps.

Non-napping pilots, tested at a similar halfway point in the flight, experienced a 34 percent deterioration in reaction time. They also experienced 22 micro sleeps of 2-10 seconds during the last 30 minutes of the flight. The pilots who took naps experienced none.

Or consider the study that performance expert Anders Ericcson did of violinists at the Berlin Academy of Music. The best of the violinists practiced in sessions no longer than 90 minutes, and took a break in between each one. They almost never practiced more than 4 ½ hours over a day. What they instinctively understood was the law of diminishing returns.

The top violinists also got an average of more than 8 hours of sleep a night, and took a 20-30 minute nap every afternoon. Over a week, they slept 16 hours more than the average American does.

During my 30s and 40s, I wrote three books. I sat at my desk each day from 7 am to 7 pm, struggling to stay focused. Each book took me at least a year to write. For my most recent books, I wrote in a schedule that matched the great violinists — three 90 minute sessions with a renewal break in between each one.

I wrote both those books in six months — investing less than half the number of hours I had for each of my first three books. When I was working, I was truly working. When I was recharging — whether by getting something to eat, or meditating, or taking a run — I was truly refueling.

Stress isn't the enemy in the workplace. Indeed, stress is the only means by which we can expand capacity. Just think about weightlifting. By stressing your muscles, and then recovering, you gradually build strength. Our real enemy is the absence of intermittent renewal.

7. Four Ways Women Stunt Their Careers Unintentionally

Having combed through more than a thousand 360-degree performance assessments conducted in recent years, we've found, by a wide margin, that the primary criticism men have about their female colleagues is that the women they work with seem to exhibit low self-confidence.

Our gut says that this may partly be a perception issue — we've observed that men sometimes interpret (or misinterpret) an inclination in women to share credit or defer judgment as a lack of confidence. Still, perception or not, there is some research to suggest that women themselves feel less self-assured at work than men. A study released in 2011 by Europe's Institute of Leadership and Management revealed that women report having lower confidence in regard to their careers:

• Men were more confident across all age groups, with 70% of males having high or very high levels of self-confidence, compared to 50% of the women surveyed.
• Half of women managers admitted to feelings of self-doubt about their performance and career, but only 31% of men reported the same.
• The study also found that this lack of confidence extends to a more cautious approach to applying for jobs and promotions: 20% of men said they would apply for a role despite only partially meeting its job description, compared to 14% of women.

Looking back through scores of interviews we've conducted in the course of training and coaching engagements, and returning to the 360 reports, these are the four specific low-confidence behaviors cited by managers (male and female alike):

Being overly modest. We see that men are more willing to take public credit for their successes. Women believe their accomplishments should speak for themselves, and they spend less effort ensuring they get the gold star next to their name. While modesty is a nice character trait, it's naive to believe that your boss, your clients, or your colleagues will recognize your accomplishments if you fly under the radar.

Not asking. We've seen it over and over again: women fail to get promoted because they fail to step up and apply. It feels personally risky to step-up and ask for a big job or assignment — but there's really no other way. Not asking means you've lost the chance to influence the outcome.

When Sharon Allen became chairman of Deloitte & Touche USA in 2003, she not only became the highest-ranking woman in the firm's history, she also became the first woman to hold that role at a leading professional services firm. It may seem surprising, then, that even Allen learned this lesson the hard way. As a rising manager in her thirties, she was taken aback when she received a memo announcing the promotion of several close colleagues. She wondered why she didn't make the list. Allen stewed about it for a day or two, and then went in to see her boss.

"I was surprised to see my name not included on the promotion list," Sharon said to him. "I have accomplished A, B, C, D and E and I think I deserved that promotion." Her boss replied, "Sharon, I had no idea you had accomplished all of those things. You didn't let me know." When Sharon tells the story today, she laughs and shakes her head. As she told us, "That's the very last time I ever let that happen."

Blending in. Some women go to great lengths to avoid attention. They don't want to stand out — in meetings, in the boardroom or even in the elevator. A client from one of our workshops told us that her greatest fear was riding the elevator with the CEO. What would she say to him? Would they talk about the weather? But blending in means you are missing opportunities — every single day — to stand out and sell your ideas. Another client we know (also a women) waits in the lobby many mornings in order to ride the elevator with the CEO. Her confidence has never been questioned.

Remaining silent. It's not easy to get a word in during meetings, especially when six other colleagues are all fighting for the floor. But failing to speak up and express yourself when you have something relevant to add is a missed chance to get in the game. Getting your point of view across during important discussions is essential for your career.

What we've found in our work is that career momentum for women is not about adding job skills but about changing everyday thinking and behaviors. We don't think the majority of high-performing women need to make major changes. Small adjustments in how they think and act can improve not only how confident they seem, but how confident they feel.

6. The Twelve Attributes of a Truly Great Place to Work

More than 100 studies have now found that the most engaged employees — those who report they're fully invested in their jobs and committed to their employers — are significantly more productive, drive higher customer satisfaction and outperform those who are less engaged.

But only 20 per cent of employees around the world report that they're fully engaged at work.

It's a disconnect that serves no one well. So what's the solution? Where is the win-win for employers and employees?

The answer is that great employers must shift the focus from trying to get more out of people, to investing more in them by addressing their four core needs — physical, emotional, mental and spiritual — so they're freed, fueled and inspired to bring the best of themselves to work every day.

It's common sense. Fuel people on a diet that lacks essential nutrients and it's no surprise that they'll end up undernourished, disengaged and unable to perform at their best.

Our first need is enough money to live decently, but even at that, we cannot live by bread alone.

Think for a moment about what would make you feel most excited to get to work in the morning, and most loyal to your employer. The sort of company I have in mind would:

1. Commit to paying every employee a living wage. To see examples of how much that is, depending on where you live, go to this site. Many companies do not meet that standard for many of their jobs. It's nothing short of obscene to pay a CEO millions of dollars a year while paying any employee a sum for full time work that falls below the poverty line.
2. Give all employees a stake in the company's success, in the form of profit sharing, or stock options, or bonuses tied to performance. If the company does well, all employees should share in the success, in meaningful ways.
3. Design working environments that are safe, comfortable and appealing to work in. In offices, include a range of physical spaces that allow for privacy, collaboration, and simply hanging out.
4. Provide healthy, high quality food, at the lowest possible prices, including in vending machines.
5. Create places for employees to rest and renew during the course of the working day and encourage them to take intermittent breaks. Ideally, leaders would permit afternoon naps, which fuel higher productivity in the several hours that follow.
6. Offer a well equipped gym and other facilities that encourage employees to move physically and stay fit. Provide incentives for employees to use the facilities, including during the work day as a source of renewal.
7. Define clear and specific expectations for what success looks like in any given job. Then, treat employees as adults by giving them as much autonomy as possible to choose when they work, where they do their work, and how best to get it accomplished.
8. Institute two-way performance reviews, so that employees not only receive regular feedback about how they're doing, in ways that support their growth, but are also given the opportunity to provide feedback to their supervisors, anonymously if they so choose, to avoid recrimination.
9. Hold leaders and managers accountable for treating all employees with respect and care, all of the time, and encourage them to regularly recognize those they supervise for the positive contributions they make.
10. Create policies that encourage employees to set aside time to focus without interruption on their most important priorities, including long-term projects and more strategic and creative thinking. Ideally, give them a designated amount of time to pursue projects they're especially passionate about and which have the potential to add value to the company.
11. Provide employees with ongoing opportunities and incentives to learn, develop and grow, both in establishing new job-specific hard skills, as well as softer skills that serve them well as individuals, and as managers and leaders.
12. Stand for something beyond simply increasing profits. Create products or provide services or serve causes that clearly add value in the world, making it possible for employees to derive a sense of meaning from their work, and to feel good about the companies for which they work.

In more than a decade of working with Fortune 500 companies, I've yet to come across a company that meets the full range of their people's needs in all the ways I've described above. The one that comes closest is Google. I'm convinced it's a key to their success.

How does your company measure up? What's the impact on your performance? Which needs would your company have to meet for you to be more fully engaged?

Editor's Note: If you've just discovered Tony Schwartz and want to read more, start here: "The Only Way to Get Important Things Done."

5. Seven Personality Traits of Top Salespeople

If you ask an extremely successful salesperson, "What makes you different from the average sales rep?" you will most likely get a less-than-accurate answer, if any answer at all. Frankly, the person may not even know the real answer because most successful salespeople are simply doing what comes naturally.

Over the past decade, I have had the privilege of interviewing thousands of top business-to-business salespeople who sell for some of the world's leading companies. I've also administered personality tests to 1,000 of them. My goal was to measure their five main personality traits (openness, conscientiousness, extraversion, agreeableness, and negative emotionality) to better understand the characteristics that separate them their peers.

The personality tests were given to high technology and business services salespeople as part of sales strategy workshops I was conducting. In addition, tests were administered at Presidents Club meetings (the incentive trip that top salespeople are awarded by their company for their outstanding performance). The responses were then categorized by percentage of annual quota attainment and classified into top performers, average performers, and below average performers categories.

The test results from top performers were then compared against average and below average performers. The findings indicate that key personality traits directly influence top performers' selling style and ultimately their success. Below, you will find the main key personality attributes of top salespeople and the impact of the trait on their selling style.

1. Modesty. Contrary to conventional stereotypes that successful salespeople are pushy and egotistical, 91 percent of top salespeople had medium to high scores of modesty and humility. Furthermore, the results suggest that ostentatious salespeople who are full of bravado alienate far more customers than they win over.

Selling Style Impact: Team Orientation. As opposed to establishing themselves as the focal point of the purchase decision, top salespeople position the team (presales technical engineers, consulting, and management) that will help them win the account as the centerpiece.

2. Conscientiousness. Eighty-five percent of top salespeople had high levels of conscientiousness, whereby they could be described as having a strong sense of duty and being responsible and reliable. These salespeople take their jobs very seriously and feel deeply responsible for the results.

Selling Style Impact: Account Control. The worst position for salespeople to be in is to have relinquished account control and to be operating at the direction of the customer, or worse yet, a competitor. Conversely, top salespeople take command of the sales cycle process in order to control their own destiny.

3. Achievement Orientation. Eighty-four percent of the top performers tested scored very high in achievement orientation. They are fixated on achieving goals and continuously measure their performance in comparison to their goals.

Selling Style Impact: Political Orientation. During sales cycles, top sales, performers seek to understand the politics of customer decision-making. Their goal orientation instinctively drives them to meet with key decision-makers. Therefore, they strategize about the people they are selling to and how the products they're selling fit into the organization instead of focusing on the functionality of the products themselves.

4. Curiosity. Curiosity can be described as a person's hunger for knowledge and information. Eighty-two percent of top salespeople scored extremely high curiosity levels. Top salespeople are naturally more curious than their lesser performing counterparts.

Selling Style Impact: Inquisitiveness. A high level of inquisitiveness correlates to an active presence during sales calls. An active presence drives the salesperson to ask customers difficult and uncomfortable questions in order to close gaps in information. Top salespeople want to know if they can win the business, and they want to know the truth as soon as possible.

5. Lack of Gregariousness. One of the most surprising differences between top salespeople and those ranking in the bottom one-third of performance is their level of gregariousness (preference for being with people and friendliness). Overall, top performers averaged 30 percent lower gregariousness than below average performers.

Selling Style Impact: Dominance. Dominance is the ability to gain the willing obedience of customers such that the salesperson's recommendations and advice are followed. The results indicate that overly friendly salespeople are too close to their customers and have difficulty establishing dominance.

6. Lack of Discouragement. Less than 10 percent of top salespeople were classified as having high levels of discouragement and being frequently overwhelmed with sadness. Conversely, 90 percent were categorized as experiencing infrequent or only occasional sadness.

Selling Style Impact: Competitiveness. In casual surveys I have conducted throughout the years, I have found that a very high percentage of top performers played organized sports in high school. There seems to be a correlation between sports and sales success as top performers are able to handle emotional disappointments, bounce back from losses, and mentally prepare themselves for the next opportunity to compete.

7. Lack of Self-Consciousness. Self-consciousness is the measurement of how easily someone is embarrassed. The byproduct of a high level of self-consciousness is bashfulness and inhibition. Less than five percent of top performers had high levels of self-consciousness.

Selling Style Impact: Aggressiveness. Top salespeople are comfortable fighting for their cause and are not afraid of rankling customers in the process. They are action-oriented and unafraid to call high in their accounts or courageously cold call new prospects.

Not all salespeople are successful. Given the same sales tools, level of education, and propensity to work, why do some salespeople succeed where others fail? Is one better suited to sell the product because of his or her background? Is one more charming or just luckier? The evidence suggests that the personalities of these truly great salespeople play a critical role in determining their success.