The Challenge Dividend

Great Book, Great Quote

In the first two days of my end-of-year vacation I burned through an excellent book, The Perfect Pitch, by Jon Steel.  Jon is another one of the nearly 100,000 fellow employees of the WPP organization.  I spoke with him a few months ago to ask about his writing experience as I prepare to start my first agency-sponsored book.  He is a very honest and approachable Brit who provided some great insights for my project. 

The Perfect Pitch is Jon's second book.  It is a guide to improving presentations, especially those for advertising agency new business efforts.  I found it to be one of the best guides to communication I have ever read, and it is incredibly relevant to my day-to-day job leading pitches at my agency.  It's now required reading for my team.

On a broad level it encapsulates the key point of The Challenge Dividend; the book is a product of thousands of hours that Jon and his teams spent perfecting their craft in the face of heated competition with millions of dollars and careers at stake.  This challenge led him to improve, and by sharing his experience, his readers will take their game up another notch. 

But more specifically, there is a great quote that I want to capture, and I think it speaks for itself:

"The most exciting, groundbreaking ideas happen when people are working under extreme time pressure.  It's why a lot of technological advances happen during times of war, and why advertising agencies generally produce their best work under the severe time constraints of a new business pitch."

As I read the book, I was somewhat surprised that Jon was even able to write it.  He shares countless tips with WPP's competitors, who may end up using his lessons against him.  But I think it shows a deeper meaning of The Challenge Dividend: Once we have reached the top, we have a desire to help others find the way.  The fact that WPP didn't quash it is another reason to be proud I work in the company.

So thanks to Jon Steel for an incredible guidebook.  If he told me the name of his secret Cabernet I'd send him a few bottles.

New CMOs Seek Self-Measurement

Perhaps no corporate function is under more pressure than the Chief Marketing Officer (CMO).  Business is more competitive than ever, technology is destroying market leadership and protection that once existed, and the consumer is rejecting mass marketing en masse.  No wonder that headhunting firm Spencer Stuart reports that the average CMO is in her job for 26 months, and falling.

BusinessWeek has a nice article on the plight of today's CMO and how some are managing to succeed in a murky area by embracing the challenge of performance metrics.

In the old days the CMO had only a fraction of the challenge as we see today.  As BusinessWeek puts it nicely:

"As recently as five years ago, the CMO's role was much simpler.  Chief marketers devised a brand message, hired and advertising agency to create clever ads, managed promotions, and then waited for their bonus or pink slip."

Today the simple days are over.  Consumer tastes have fragmented, the mass media market is shrinking, global competition is fierce, and marketing has been the easy department to blame and easiest to sack when the going gets tough. 

But some of the latest generation of CMOs have brought with them a desire to build impartial measures of their results.  For example, Anne MacDonald became CMO at Yahoo! in 2003, and worked with the company's CFO to build a return on investment model for her marketing department.  Her success there allowed her to move to a more desirable position at Nintendo.  And Ford Motor CMO, James Farley, asked CEO Alan Mulally to give him responsibility for U.S. sales results to ensure that he had accountability for real results.

By accepting the challenge of the tough global market, and embracing the pressure of hard performance metrics, CMOs have a better chance to create winning strategies - and have their work recognized by CEOs and shareholders. 

It is somewhat unfortunate that the good old days of formulaic ads and three-martini lunches are gone forever.  I personally never tasted that life either in the client or agency side.  That's probably a good thing, because it would be much harder to embrace the challenge that is forcing all of us to produce better products, services, and marketing.

An Explosion of Evolution

One of my favorite proofs of Challenge Dividend theory is evolution of species.  The survival of the fittest drives genetic diversity and improved adaptation to the environment.  After eons of activity, simple, single-celled organism evolve into a being that can question its own existence.  Challenge leads to improvement.

Scientists have recently discovered that the pace of evolution is quickening among human beings.  By unraveling the history of genetic mutations, they found that our gene pool has made more changes in the past 5,000 years than the 25,000 years before.  And the changes are leading to improvement; the rate of beneficial gene appearance - such as the ability of Europeans to digest milk or Africans to resist malaria - have increased by 100 times over the last 5,000 years as compared to any previous time in our history.

The reason for this surge in evolution is the rise of agriculture, and in turn a global population that has grown from a few million to 6.5 billion in the past 10,000 years.  One could argue that success, not challenge, has led to improvement.  But the reality is that our population explosion has simply multiplied the challenges we are exposed to.  For example, disease is now more widespread; and pressure among societies has pushed populations into every possible niche of habitat.

Interestingly, I find the pattern similar to an event farther back in evolutionary time - the Cambrian Explosion.  The Cambrian Explosion refers to a time in the fossil record when a massive, diverse group of much more complex life spread throughout the planet starting about 580 million years ago.  While there is substantial debate about the cause and scale of the Cambrian Explosion, most theories suggest that some rapid improvement in the prospects for complex life triggered it.  It may have been the end of a major ice age, an increase in the oxygen content of the atmosphere, or the evolution of homeotic genes that allow appendages to form.  Whatever the cause, here again a population explosion triggered life, challenge and diversity.

These recent findings on the evolution of humans now suggests that we will become more, not less diverse in the millennia ahead.  I believe that not only will natural evolution increase our diversity, but science will allow us to take our genes in our own hands as well.  This choice may lead even further diversity and an explosion of improvement as we use the evolution of science and the challenge of death to strengthen our mortal coils.

Grading the VCs

Being an entrepreneur or leading a small business is one of the toughest challenges I can imagine.  You've got to fight against companies 1,000 times your size, figure out how to make money, and overcome hundreds of challenges if you're lucky enough to keep growing.  Another challenge for entrepreneurs is bringing on outside investors, often Venture Capitalists (VCs). 

Historically, there has been a frequent love/hate relationship with VCs.  They bring money and experience to the table, of course.  But these resources come with a demand for rapid payout, heavy decision-making influence, and even a few mega-egos to suffer under.  For decades, VCs had most of the power, but now the tide is turning. 

First, there are more VC dollars in circulation and roughly the same number of strong start-up businesses.  Second, today's start-ups don't need as much cash; cheaper hardware and software along with international outsourced labor is making it easier to prove a business model can work.  Third, VCs now compete with richer friends and family members, as well as big companies like Google and Microsoft who help start-ups skip a stage of funding or two.  These challenges are weakening VCs' grip on power and forcing them to improve.

Last month Wired shared the story of yet another challenge that is driving improvement in the VC world.  It covers a website called TheFunded.com, a social network of entrepreneurs who share ratings and stories of life under their VC investors.  Veteran entrepreneur Adeo Ressi started the site as a place for brothers and sisters in the trenches to vent their frustrations and warn each other of what VCs can do to their companies.

The site lists VC firms along with descriptions, ratings, funding levels, and areas of focus.  Individual investors are even listed with personality descriptions such as, "arrogant but mostly harmless.  "The major downside is that ratings are anonymous, which means some of the stories and ratings may be slanted to the negative.  But the site is rapidly growing in popularity and many VCs are now actively addressing feedback on the site. 

For an entrepreneur betting his life's work and house on an idea, TheFunded.com is gold.  It gives her access to inside scoop based on decades of experience.  It helps them ensure that they are spending their time with the right partner, and improves the quality of interaction.  And while VCs are generally negative to TheFunded, I think the best of them see the opportunity of turning it to their advantage.  They receive feedback on their style and performance, which will help those who listen improve.  And it "makes a market" such that the best ideas will tend to flow to the best-rated VCs.

Mileage Tracking: a Prediction Comes Around

In the past two weeks I've written about tools and techniques that challenge bad behavior by reminding us of their impact.  These included fake fat to remind you of the negatives of snacking, a meeting cost tracker to show you how much money you are wasting in ineffective meetings, and a death clock to remind you to do something important with your life before your time runs out.

This week I found another example from The Challenge Dividend archives.  Back in June 2006 I wrote about an idea to improve gas mileage by giving drivers a feedback gauge to show them their current miles per gallon.  Well, maybe someone in the auto industry is reading, because the USAToday reports that many new cars are now featuring fuel-efficiency gauges.  Examples include:

• Nissan - Efficiency meter is in a few select cars but is coming for all. 
• Ford - Mustang, Edge and Fusion have a "fuel use bar chart like the one denoting signal strength on cell-phones."
• Chrysler - Has a visible "fuel saver mode" that shuts down cylinders whey they are not needed
• Honda - Some models have a "dashboard light that illuminates when gas mileage is optimal."

The impact of such devices is unclear.  Nissan estimates that the gauge can cut gas use by 10%.  While, small, 10% is proof that The Challenge Dividend works here - a small challenge helps people improve their habits in a way that saves gas, money and the environment. 

The other outstanding story here is the fact that this improvement has come from several car makers at once without the government forcing such a move.  This is a big point, as historically we look for government to regulate the automotive industry.  Even big corporations can move quickly to do the right thing.

And going forward, car brands will now compete to give their drivers better and better information about their fuel consumption.  10% here and 10% there, and eventually we're talking about some real improvement in our environment and a reduction in dependence on Mid-East oil.

Weight Loss with a Commitment Device

In my previous two posts I wrote about the value of getting immediate, clear reminders of good and bad uses of time.  The Freakonomics blog highlights a few other examples of how challenges like this can lead to improvement.

In an article in the New York Times, authors Dubner and Levitt describe the use of various new strategies to reduce weight.  They begin with a woman who has a lifelife plastic model of human fat that she keeps on her kitchen counter as a constant reminder of the result of poor eating.  The article goes on to cover the rising popularity of bariatric surgery - the modification of the digestive system to physically limit the intake of food.

Dubner and Levitt place these approaches into the category of "Commitment Devices."  Commitment Devices "lock yourself into a course of action that you might not otherwise choose but that produces a desired result."  They go back to the story of Chinese general, Han Xin, who assembled his soldiers with their backs to the river so that they were forced to fight without retreat.  Other historic examples include Cortes burning his ships on the beaches of Mexico to commit his soldiers to the conquest ahead. You could probably label the use of various chastity belts as commitment devices, and after marriage, the wedding ring is a clear reminder of a commitment to one's partner for life.

Commitment devices seem to abound in the weight loss category.  In addition to those above, there are long-term gym memberships, a cost that adds pressure to get one's money's worth; and various meal subscriptions that put healthy food on your doorstep count as well.

I believe the idea of commitment devices clearly fall into the realm of the Challenge Dividend.  They force us to re-evaluate our actions and choices.  I don't believe such devices alone can solve all issues (especially issues like over-eating which may be genetically driven), but every little step helps.

Watching My Death Clock

Earlier this week I posted about the "Meeting Minder" a tool meant to challenge your team at work to make sure they are spending valuable minutes wisely.  Yesterday I found a similar tool with a much bigger stakes - the Death Clock.

I found this wonderful/morbid tool by way of an article in Wired about the writers from Futurama talking about spoofing a blog post by Kevin Kelly about his creation of a death countdown tool.  Kelly's experience is described here.

I decided to give it a try for myself.  At first, I just looked up the life expectancy table.  It computed by "Death Day" as April 20, 2047, which seemed far too early than I planned.  But later in the day I mentioned the death clock concept to people in a business meeting, and my friend, Steve, pointed me to a different site, which uses some health questions to give you a more accurate estimate.  So I went over to www.deathclock.com and got a new date: November 28, 1965.  Within minutes I was able to add a Google Widget to my desktop that tracks the countdown by the second.

Interestingly, the day after this experiment I went to deathclock.com to re-input my info and get a graphic that I could place in this blog (above).  The output was a completely different Death Day, this one in 2056.  I hit the button a few more times and got a wide range of results.  I have no idea why the estimates changed by the second.  But I ended up updating my Death Day with one of the new results that seemed to fall in the middle of the calculation range.  Fittingly, it is on my actual birthday, December 15, 2069.

My wife thinks I'm way too concerned about getting old and that I'm obsessing about it.  That might be true.  But my rationale for using the Death Clock is that I think I can benefit from having a daily reminder that life is short and I'd better take advantage of every day I am given.  It could be an extra challenge that gets me to do everything from finishing my books in progress to spending more quality time with the kids.

Time will tell if this works or sends me into a mid-life crisis...

Mind Your Meeting Time

If I had the capacity to write the book version of The Challenge Dividend today, one of my chapters would cover the value of getting immediate, clear feedback on a given course of action.  For example, a while back I wrote about how golfers are using computerized swing analyzers to get immediate, repetitive feedback on how practice swings would translate into reality.  And my gushing about Guitar Hero is focused on how its scoring systems helps players see real improvement, which in turn is an incentive for further play.

A recent BusinessWeek article pointed me to another interesting example of the challenge of in-your-face feedback.  A company called PayScale hosts a tool called Meeting Minder, which allows you to estimate the real-time cost of employee activity (or inactivity, as the case may be).  The tool is limited but shows a lot of potential.  Using PayScale's database of 10 million income profiles you add job titles into the tool and hit "Start".  The result is a second-by-second calculation of the cumulative personnel investment in a given task.

The main benefit I see is that with this tracking going, everyone in a meeting is reminded that time is money.  It could motivate the group to end the meeting early, dismiss folks who don't need to be there, or make it more results-oriented.  We've all been in those inefficient meetings - and once in a while someone smart will say, "Hey, we're wasting money here!"  But to see the number moving in real time takes the concept to a new level.

Feedback on the tool seems generally positive.  One person said that he used the tool to show his boss that it was a waste of time to drive 3 hours round trip for a short meeting.  Another person said it helped him think about how large weekly and quarterly join-ups might not need the entire team present.  I'd like to have a version that I could load with my team's actual compensation, rather than some industry salary average.  Or we could track the rate our clients pay to make sure we're better minding their investment. 

The big watchout is that we cannot be a slave to the clock.  That takes the fun and passion out of the work, and our value is much more than an hourly rate.  But it's clearly worth thinking about and experimenting with in the future.