If you lose the Millennials – you lose!

Corporations with long tenure in mature industries often operate based on a number of principles that is reasonably stable. The most important one is that the future success of the corporation is based on the same principles as the historic success. The leads to an operating principle focusing on continuous improvement: Evolution over revolution or small incremental changes to what was done last year. The model is also based on a view of the market as a place with stable boundaries and actors that are quite similar and unchanging - a place of competition.With the rise of first the internet and later the revolution of social networks, unlimited power of the cloud and the rapid move to mobile technologies, no industry is immune to disruptive changes.It is well known that the disruption can come from a change in product offerings, like the iPhone changed the mobile industry. It can also come from outside the market boundaries like Google’s absorption of advertising budgets or it can be a disruption of the supply chain the way Blockbuster died from Netflix competition. Most mature companies are aware that they need to keep an eye on changes in the market structure, customer preferences.
There is however a significant change underway that will fundamentally change the way corporations has to operate in order to succeed independent of what industry or market they operate in. The rise of the Millennials or generation Y as people born in the 1980 -2000 time span has been categorised. This is not a surprise to the marketing departments of consumer based corporations – they know Millennials are different customers to the prior generations (generation x and baby boomers) and work hard to position offerings attractive to them.
What seems to come as a surprise is that Millennials are also becoming a significant factor as employees. 

Before 2020 Millenials and younger generations  will become the dominant part of the labour market everywhere, and most of them will work in an environment designed by generation X for generation X. This is likely to fail, just ask your marketing department.

Beyond.com survey, 2013

A survey done by beyond.com shows that the gap between Millennials perception of themselves and that of HR professionals are very different, This indicates the expectations of the corporations based on Gen X thinking and that of Millennial employees are very different – a recipe for disaster.

The problem has still not become visible as very few corporations has been in talent acquisition mode since the financial crisis but as Gen X moves towards retirement it will become an issue

It is easy to point fingers at HR and HR policies and blame them for not adapting to attract and retain the new employees but the problem goes a lot deeper. Millenials don’t see work as a chore like the baby boomers and they don’t see it as means to an enjoyable life outside work like generation x. They are hard workers but not motivated the same way as earlier generations.  Millennials want freedom, trust, support, fun and they need a higher level purpose to really engage. Corporations need to develop a purpose above and beyond profit and revenue. To attract and keep Millenials, it is imperative to create an environment of personal growth, equality, Social/Environmental responsibility, freedom and team spirit.

Are your company’s policies designed to enable employees or limit them?

This might sound alien to companies firmly based in command and control thinking but it is already being implemented by successful companies in the new economy. Google, Amazon, Netflix, Tesla and similar companies are ahead and design their people policies very different.

You are not only competing with these companies for the consumer

 You are also competing with them for the employees.

Decisions – The true meaning of consensus. Chapter 4 of "How Google works"

Google’s decision to enter China was easy from a business perspective but much more difficult when using the “Don’t be evil” indicators. When present in China Google sometimes experienced that their traffic where completely rerouted to Baidu – their filtered search competitor in china. Even though Sergey Brin was against entering China, the decision was made. The idea was to work inside China to change the system of censorship so Google informed the user when censorship happened. Surprisingly many censorship requests from the government was made against sites that where not illegal according to Chinese law. When Google later came under a very serious hacker attack from China that targeted Gmail accounts – especially from dissidents, the decision was reviewed. Google decided to leave. For leaders, decisions are when the hard work begins. Google’s approach to decisions is that it is not sufficient to take the right decision. The process of decision making, the timing and the way it is implemented is just as important as the decision itself. Even though the decision in reality has been taken, it is important to hear people out and respect their opinions.

Decision that used to be made based on opinions and anecdotal evidence could now be made based on data. Google’s don’t seek to convince – they seek “ let me show you” with data. Those closest to the data are normally best equipped to make decisions and management should let them.

Google don’t believe in supporting decisions with a myriad of financial KPIs , Eric Schmidt is known for stating “Revenue solves all known problems.” Google are against what they call “Booblehead yes” or the “Novell Nod” which is agreeing in public but undermining afterwards. It is not about getting to consensus or yes – it is about getting to the best solution that everybody wants to rally around.

Decisions should be inclusive, cooperative, equal and solution orientated. “Be interested in finding the best way, not in having your own way” Coach Wooden. Deadlines are important – especially with incomplete information. In a deadlock it is the responsibility of the most senior person to make the decisions – a bias for action. Eric Schmidt uses the PIA rule: Patience, Information, Alternatives to help make decisions.

In Google it is know that smart arguments do not convince people – to convince people you need to touch their hearts. This they call the Oprah Winfrey rule. In Google this is done by ending arguments or discussion with “You are both right” to acknowledge the input and value from everybody. Once a decision is made it is important that people are able to “Disagree and commit”. If this is not possible people have to escalate the issue in public and state why. This removes a lot of dissent.

Well run meetings can be very effective. Google has a number of rules to ensure effectiveness: An owner with hands-on experience of the topic, not a matter of being important, easy to kill, manageable in size, time kept and participants involved.

Google needs lawyers like all other companies – but they do not need lawyers like most US corporations are employing: Backward looking and risk adverse.  Instead they are using what they call “horseback law” where lawyers are expected to ride in like a cowboy in a western movie, access the situation and do something or leave. Most of the time simple advice is needed rather than a full 50 page legal brief.

Talent – Hiring is the most important thing you do. Chapter 3 of "How Google Works"

The most important thing you do is to hire talent – every sports coach knows this is more important than strategy. Scouting is like shaving – if you don’t do it every day it shows. Every leader in Google spends a lot of time with in the hiring process, not just for senior positions, at all levels.

Sergey Brin’s favorite interview question is: “Could you teach me something complicated I don’t know?” To be hired in Google it was not enough to be able to teach or simplify –you also had to be interesting. Explained dating instead of economic theory was one way of getting hired.

Hierarchical hiring does not work in Google. Despite intentions to hire people smarter than them self, managers most often surrender to human nature and hires people that will not threaten them. Google’s hiring practices originates from academia rather than corporate. As most academics rarely leave, the academic hiring process has to work and is elaborate. Peer based committee’s works better for ensuring high quality candidates enter Google – even if there is no specific job at the time. The right people will create their own jobs.

As Google grew and senior managers were not able to control what everybody did but they made a conscious decision about deciding to control whom they hired. As Google managers are expected to find the right people and not be “fighting for headcount”, the hiring manager is not the one making the final decision.

Hiring great people not only creates great work – it also attracts other great people like a herd. “You are brilliant, we are hiring” was the advert which attracted Marissa Meyer to Google. The objective is to create a hiring culture that can resist the siren song of compromise, a song that only grows louder amidst the whirlwind of chaotic hyper growth.

Google wants passionate people, but not people that wear passion on their sleeve – people that live it.  They are also looking for people able to learn – what they call having a growth mind-set. People that decide to set themselves learning goals rather than performance goals. Everybody is a recruiter, Google expects all employees to bring at least one great candidate. The most important skill for a leader is interviewing skills: Prepare, push the limits of the candidate

Google don’t hide that they are elitist – they want the best because they believe there is a big difference between good and great people. Equal hiring is not seen as only the right thing to do but also the most effective: Homogeneity in an organisation breeds failure. It is seen as important how the candidate treat other people in all situations. The interview process is long enough to judge and involves dinner and other activities. In the exponential internet world knowledge and specialisation deteriorate fast and learning becomes increasingly important – much more important than knowledge.

Apart from Passion, Intelligence and the ability to learn, Google is also looking for Googleyness. Integrated in to the word Googleyness are: Knowledge, leadership, ambition, drive, team orientation, service orientation, listening and communication skills, bias to action, effectiveness, interpersonal skills and integrity. You don’t need to like the people you hire, but they do have to be interesting.

Strategy – your plan is wrong. Chapter 2 of "How Google Works"

MBA style business plans are always flawed. This is why venture capitalists always invest in the team and the people - not the plan itself. It is ok to have plans as long as it is understood that things will change and we will figure it out down the path. Iterations are more important than plans.

Even though the plan is fluid, it is important to make the foundation of the plan stable. Give smart people the foundation and let them figure out the rest.

Products should be defined by how much value they provide the user, not how much value they provide Google. Revenue streams can be figured out later. Rely on creating technical insight that drives cost of existing product down or increases usability or functions. Don’t use MBA or Porter logic of figuring out what you are good at and leverage that to expand into adjacent markets.

Google resisted placing ads on their search site and focused on the user experience itself. When noticing accelerated advertising by customers trying to meet their forecast numbers, Google warned them that it would negatively affect their user experience. Google’s focus is growth over revenue.

Competitors are important but you should not follow them too closely. You cannot innovate though imitation. Competitors can however be powerful motivators like Bing was for Google.

Market research is ok but not more important that technical insights. The best things about market research consultants. They are easy to blame and fire when they are wrong.  Google products have always been based on technical insights. This has been proven in a 2009 review of all products. All great products had technical distinction.  A number of perceived popular products that eventually flat lined, were also found to lack technical distinction. Focusing on number of users can trick you into believing you have created a good product.

We have entered an age of combinatorial innovations – the building blocks of new technology. You need to find out who the geeks are in your company.  The areas they are working on is where you find your technical distinction

Most new innovations enter the world in a primitive state focused on a narrow problem and needs to be refined.  The first effective porn filters that Google invented where based on behaviour of people searching for porn. These users effectively defined porn so Google where able to filter it for others. This later developed into technology that was able to define the content of all images on the internet based on the search people used to find them.

Defining products based on technical insights instead of market research prevent me too products. Henry ford: “If I had listened to customers I would have been looking for faster horses.”

In order to achieve something big it is not enough to grow - you need to be able to scale. This is what Google calls a “grow big fast strategy”. It is based on creating platforms that bring together users and providers (much like YouTube) in multisided markets. The power is in creating the network.

Open platforms are more capable of disruption because it attracts other companies and talent to help co develop to drive down cost and increase functionality. All of this disrupts the owners of closed platforms business.

Rather than locking in the customer, Google has a team that is working towards making it easy for user to leave Google.  Google believes that user freedom is in the best interest of the company.

Culture - Believe your own slogans. Chapter 1 "How Google works"

Culture needs to be in place early. It stems from the founders but is best reflected in the trusted team the founders form to launch their venture.  It is not only about making people do great things but also about attracting people that can do great things.  Attraction, selection and attrition is part of culture.

Google has a “no blame” culture meaning a yellow post-it sticker with “These ads suck” from the founder is taken as a challenge not blame. The challenge can be taken by anybody.  The sticker also points out those results were not in line with the mission of “organising the world’s information and make it universally accessible and useful. It is not culture if it is designed to look good on a wall. It is important that it reflects what you do – that you believe your own slogans.

The IPO letter was contested by Wall Street for including words like “Long term focus”, “serving end users”,” don’t be evil” and “making the world a better place”. Despite warnings the document was not changed.

Google offices are designed like a dorm to invite to university style work ethics and creativity. Plenty of perks but crowed with no individual offices.  Closeness and lack of title is important. A petri-dish for creativity.

Google fight against the culture of the Highest Paid Persons Opinion (Hippo) matters the most.

Google encourage a culture of Meritocracy – where the quality of the idea matters more than who it came from. They are inspired by the McKinsey & Company’s culture where employees are obliged to dissent if it is in the best interest of the company or customer.

Equal opportunities employee although groups often proudly display their associations (Like Gayglers – LGBT in Google). “It doesn't matter who you are, just what you do.”

The organisational structure is aimed to be flat, informal and without perks. Dis-Org has been tried but did not work. Now organisation is built around rule of 7 meaning leaders have a minimum of 7 reports. The high number of reports makes it impossible to micromanage and direct. Organisations or reorganisations are not seen as solution to problems, more a fight of interests. If they indeed has to happen they will be implement fast, preferably a day – even if the details have not been worked out.  Google want to organise around people with performance and passion, not people with functions and title.

The company try and use the Bezos (Amazon) two pizza rule – keep teams small enough that you can feed them with two pizzas. Team effectiveness drops with number of members.

Don’t believe in work life balance but individual’s responsibility for both work and home life. Don’t believe in people being indispensable and workload should be shared. Focus is on making sure that both work and family life contributes positively. There is a culture of fun and a belief in saying yes as the default.

The culture is egalitarian and leadership is be example embodied in “Israeli Tank Commanders” that don’t lead with “Charge” but with “Follow me”.

The Google dress code:  You must wear something

Don’t be evil is not just a corporate policy, it is seen as an empowerment of employees, a way of letting them check their moral compass.

Introduction. "How Google works" review

Eric Schmidt and Jonathan Rosenberg’s introduction describes how it was to join Google in the early days. It describes a company that has rejected most of the existing management philosophy and centred activity on talent, skills technology, learning and culture.

Even though they were hired to lead, S&R had to take the approach of students to learn from the people that had been part of the founding team. This is embodied in the quote from coach John Wooden: It is what you learn after you know it all that counts.

The aversion against planning and allocation of resource that is the foundation of most large corporations is seen as an asset for Google.  Focus was on creating products that would beat any conceivable plan or schedule. The only real management tool used was a spread sheet with the top 100 project ranked from 1 to 5 in importance.

The philosophy in the company was to hire the very best engineers and get out of their way. Their products and product development had an intense focus on the user. Income streams would follow if the product was good enough.

Microsoft was the gorilla in Google’s jungle. Not only were they seen as a dangerous competitor but also as a potential acquirer of Google and as a  powerful motivator. “When we gets noticed they will come after us – wave after wave” and they did.

Schmidt and Rosenberg outlines why they believe the old industrial thinking needs to be replaced with thinking more appropriate for the internet century. They see the internet century being defined by 3 major developments:

-          Information through the internet: It is free, copious and ubiquitous

-          Global reach though mobile devices and networks: Low cost and widespread

-          Infinite computing, storage and applications through Cloud computing : No investment need

They believe that this has lowered the cost of production through 3 factors: Information, Connectivity and computing power. As a result of lower production cost power that has been with the manufacturer and has moved to the distributor is now moving to the customer as predicted by Drucker. It is not possible to fake customers though marketing – the product has to be excellent to compete. As Jeff Bezoz (Amazon) puts it: : In the old world you spent 30% of your time on creating a product or a service and 70% of your time shouting about it – In the new world, that inverts.

The product development is also changing from the old stage gated system with strict resource control and minimisation of risk as the controlling paradigm to a system of experimentation. With new 3D print technology and access to cloud computing experimentation has become low cost and low risk. The Google Glass prototype was made in 90 minutes.

Google want to attract and develop “smart creative” people with engineering skills.  You cannot tell people like that how to think. You have to learn to manage the environment where they think and make that place where they want to come every day.

Act like you are alone and in a start-up scenario (Because you probably are)

Working in large companies in mature industries you are likely to feel a degree of safety and security in your employment. There is an illusion that it is a lot safer than being on your own in a start-up situation. This might not be the case at all and you could benefit changing your mind to think like an entrepreneur.

The illusion of safety

In mature industries, companies often follow a red ocean strategy of direct competition with like minded competitors – deliver more for less – every year – until somebody changes the rules. The company is likely based on a long and glorious history of growth, results and acquisitions and is founded on the logic that history success guarantees future success. This logic works fine until somebody decides to change the rules of the market through disruption. Size and capital is not the guarantee for survival it used to be.

Even if you are a great employee and the company want to keep you they might not be able to in their fight for survival. Maybe it is time to pretend that you are on your own and fighting for relevance in an environment that is changing faster than ever (because you probably are)

Is your behavior locked in the logic of your industry?

Many employees follow a strategy similar to the red ocean inside the corporation. The impression of collaboration coexists with hidden competition amongst co workers: Deliver more for less until you get chosen for promotion.  This competition for reward and promotion is rarely expressed but nevertheless very real and permeates the decision making processes:  Who are favored and gets the power. You are not likely to get your promotion by competing: Doing more for less. There is no logic in promoting hard workers.  If you don’t find yourself in this situation, you won’t feel envy when your colleagues get promoted instead of you – you will keep working hard until it is your turn or you don’t want promotion at all.

Is there another way?

If you do have ambition, it can be worth looking at the company the way many start-ups look at the market they want to engage. Rarely do they choose to battle the industry leaders head-on in a red ocean strategy but rather follow a blue ocean strategy.

Red Ocean Strategy	Blue Ocean Strategy
Compete	Complement
Beat Competition	Make competition irrelevant
Exploit exiting demand	Create new demand
Work with value cost trade off	Break value cost trade off

Rather than competing with your co-workers – find ways of complementing what they are already doing. Explore new ways of creating value for the organisation outside the current scenarios. It might not be easy but this is what new start-ups face every day and you can learn from that. You will have to challenge the existing thinking and the rules they are based on, and you are likely to face resistance. But if you don’t, you might find yourself competing with somebody willing to do your job cheaper or you will be competing with a machine.

If you can’t win – change the rules

Peter Diamandis