So many people think that money is what motivates people. Surprisingly, it’s far from the truth. The old thought system to motivation is reward and punish. The stick and the carrot. Alfie Kohn writing in the Harvard Business Review points out that offering rewards to change set behaviours like eating less or quitting smoking does not work. Numerous psychological studies back up his thesis. Dan Pink in his outstanding book Drive showed that the carrot and stick works for short-term motivation but not for long-term engagement or long-term results. “Incentives ... do not alter the attitudes that underlie our behaviours,” Kohn says. “They do not create an enduring commitment to any value or action. Rather, incentives merely – and temporarily – change what we do.” “It is plausible to assume that if someone’s take-home pay was cut in half, his or her morale would suffer enough to undermine performance … but it doesn’t necessarily follow that doubling that person’s pay would result in better work,” Kohn postulates. Simon Sinek in his book Start with Why shows that the reason behind what we do really motivates us to put in more effort long term. If someone identifies with the company value of what you are doing and the why behind it, they are more likely to adhere long term to fulfilling the role with passion and enthusiasm. As Harvard Business School professor Teresa Amabile has found, a sense of progress is crucial to actually staying engaged. In an experiment detailed in her book The Progress Principle she asked 238 employees across seven companies to keep daily diaries of their workdays. She found a pattern. A close analysis of nearly 12,000 diary entries, together with the writers’ daily ratings of their motivation and emotions, shows that making progress in one’s work – even incremental progress – is more frequently associated with positive emotions and high motivation than any other workday event. During Pink’s TED talk in 2009, he says there is a mismatch between what science knows and what business does. Rewards, he says, make us single-focused, which leads to incorrect solutions. The solution is autonomy rather than top down, which he says is great for automated mechanical processes but not for the more creative processes required in this century. Tony Hsieh, the chief executive Zappos, in his seminal book Delivering Happiness is clear that creating the why and a culture that backs it up, is the only way to get long-term motivation. Given he built the company from a revenue of $1.8m in 2001 to $1 billion in 2009, maybe we should be heeding the message. Brett Jones is CEO of The Entrepreneur Tribe by Cre8 and frequent author on entrepreneurial matters. @cre8australia
The 11 rules of highly profitable companies From the man who brought us the four-hour work week, self-described human guinea pig Tim Ferriss, is this pretty insightful list on what drives profitability. “How do you generate the most profit with the least effort? How do you maximise margins without sacrificing quality?” Ferris asks. There’s some strong advice here, that’s probably worth listening to: “Many companies will sell direct-to-consumer by necessity in early stages, often through a simple website. Only later do they realise that their margins can’t accommodate resellers and distributors when they come knocking. This is true whether your ‘distributor’ is iTunes, a worldwide widget distributor, or Orbitz.” The five competitive forces that shape strategy In a follow up to his 1979 essay How Competitive Forces Shape Strategy, economist and associate professor, Michael E. Porter discusses the forces that shape strategy in a video interview for the Harvard Business Review. He addresses common misunderstandings, provides practical guidance for users of the framework, and offers a deeper view of its implications for strategy today. “The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious.” Why the Trix rabbit looks down on you: FiveThirtyEight, the new data blog by Nate Silver, looks at how marketing works. “…[you] might not have thought much about the eye contact of cereal-box cartoon characters. Don’t fret: a new study investigated precisely that.” Indeed, the study found comic characters depicted on the boxes of children’s breakfast cereals are almost always looking downwards. That’s because in supermarkets the boxes are typically displayed on shelves above a child’s eye-level; the characters, by looking downwards, appear to be looking at the children – in effect, making eye-contact, as a device for gaining attention and increasing trust. How Gmail happened: The inside story of its launch 10 years ago Gmail is 10 years old, and Time takes a look back at how it all happened. When Google launched Gmail on April 1, 2004, the offer of 1GB free storage per user – 500 times what Microsoft’s Hotmail offered – seemed so implausible that some mistook it for a prank. And so begun a revolution of sorts. “If you wanted to pick a single date to mark the beginning of the modern era of the web, you could do a lot worse than choosing Thursday, April 1, 2004, the day Gmail launched.”
Lessons from the catwalk: Models in skyscraper heels on New York Fashion Week runways may seem a far cry from running a boots-on-the-ground business in Australia, but there is a big lesson to learn from how the world’s best style-setters use social media. Writing for inc.com, Stephanie Meyers unearths six of the best tricks they use to keep their fans, far and wide, captivated on their every move. Embrace rejection and five other business lessons: Columnist and New York Times bestselling author A.J. Jacobs writes on LinkedIn that some of the best things we can learn and do for our businesses can be inspired from the most unlikely places and figures from history. Soap in a pump, who thought of that? The man’s name was Robert R. Taylor, and his simple idea revolutionised people’s behaviour across the world. He was also behind Calvin Klein’s famous fragrance, Obsession, and the ground-breaking advertising style that promoted it. The New York Times reports that he died this week aged 77, but his entrepreneurial spirit has certainly left a mark. Forget the four-hour work week, 72 is the new norm: Most people respect and admire Tim Ferriss, author of The 4-hour work week for encouraging businesspeople to work smarter, not harder. But Jennifer J. Deal writes for Harvard Business Review Blog Network that, in the US, some professionals are connected to work 72 hours a week. Demands by the boss to have meetings at 9pm on Friday night or be responsive to communication on weekends are key to this. As a business owner, where do you draw the line?
Family lives of entrepreneurs: In her last column for the print version of Inc., Meg Cadoux Hirshberg reflects on her time charting the ways entrepreneurship impacts upon families. She writes that because entrepreneurs owe the best of themselves to their businesses and families, work-life balance is impossible – but that doesn’t mean they shouldn’t try. How snacking became respectable: It may be hard to believe, given the much publicised problem with obesity in the US, but snack foods were once looked upon with suspicion and even scorn. But this essay in The Wall Street Journal describes how commercialisation altered the image of snack foods to become respectable. Richard Branson on taking an inspiration vacation: How does one of the world’s most recognised entrepreneurs nurture inspiration? He makes sure he disconnects from the office and carries a notepad and pen for whenever an inspiring thought comes to him. In this article for Entrepreneur, Richard Branson also suggests asking whether staff return from their own holidays inspired and recommends group holidays. Six skills for triple-strength leadership: The Harvard Business Review has identified an emerging, but rare, brand of leader – one with three distinct sets of strengths. This leader is seen as someone who can engage across the private, public and social sectors. The magazine sets out the six skills that set these leaders apart, including balancing competing motives, acquiring transferable skills, and building networks.
With the constant demands business owners face each day, it’s hard to harness new opportunities in the market, and find the best way to put innovations in place. Are tight deadlines, big teams and micro-management the key to launching new ideas and measuring results quickly? Apparently not, according to writer Scott Antony. For the Harvard Business Review Blog Network, he explores five ways to do things better, and they may not be quite what you expect. Most people spend a lot of time weighing up options, but in business, deliberation is impractical. For the Farnamstreet blog, writer Shane Parrish draws on the world of elite baseball to consider how we can use our “strikezone” to make the best choices. He also tells us how to know when we’re not fit to call shots. The world of high finance, computers and crime always allures, particularly the case of the Goldman Sachs programmer accused by the company of lifting proprietary computer code. The case, which saw the man jailed for eight years, has raised questions over exactly what he did wrong. Michael Lewis delves into it for Vanity Fair. With their red-striped poles and no frills interiors, barber shops verge on ‘historical relic’ when it comes to the hairdressing industry. But a mysterious attraction keeps them alive. To a female, they feel like a no-go-zone – a secret place for men to groom and chat with the barber they become friends with over the years. For The Spectator, Henry Jeffreys gives his view on why barber shops are booming, and why he keeps going back. This story first appeared on SmartCompany.
The US-founded Startup Grind event series continues to grow in Australia, with the Sydney and Melbourne chapters set to host the founders of Atlassian and Zendesk respectively.
Once the brainchild of Harvard classmates, Facebook is now a multi-billion dollar company connecting everyone and everything.
A number of new start-ups have likened themselves to US-based company Airbnb, the leader in travel rentals, which has booked more than 10 million nights of accommodation worldwide.
Yes, I promised that this week, I'd share tips on raising capital in Silicon Valley. But I've postponed that post.
Facebook founder Mark Zuckerberg has imparted some new words of wisdom to start-ups, insisting the desire to solve a problem must always be greater than the desire to start a company.
The business world is littered with inspiring tales of entrepreneurs who, through their innovation and hard work, overcame humble beginnings to strike it rich.
Australia’s innovation performance is “appalling” compared to other countries in the Organisation for Economic Cooperation and Development, according to a former chief scientist.
I’m thinking about applying for a start-up accelerator program, but it seems like a lot of equity for not much funding. How can I be sure that the program will be worth it?
Iconoclast, by Gregory Berns (Harvard Business Press, 2010, 250pp, RRP$29.99) According to author Gregory Berns, an iconoclast is a person who does something that others say can’t be done.
We all know that in order to establish a successful business you need to focus on delivering a solution to your target market.
Start-up incubator Y Combinator has held its 14th demo day for 65 start-ups, with many start-ups fielding investment offers following their presentations.
Kevin Rose had everything going for him. A strong personal brand and network, $1.7 million in funding and a team of super smart people that could probably build any consumer web/mobile concept you threw at them – and build it well.
Many businesses have strived to bolster their green credentials by reducing the amount of packaging they use, but what about eliminating the need for plastic packaging for food products entirely?
Move over coffee and Red Bull, people could soon be inhaling their caffeine fix from a lipstick-sized tube. The AeroShot product went on the market late last month in the US for $3.
A new iPhone app uses fines to get people into the gym, literally making people pay every time they skip a workout, in order to keep them motivated.