2010-07-28T20:22:20Z

Ben Franklin's MBA Oath

Is it necessary for us to agree that management is a profession before we can have a meaningful discussion about creating a "code" of business ethics?

Maybe not. Consider America's first code of business ethics, that contained in Benjamin Franklin's Autobiography. Written in fits and starts over the years leading up to Franklin's death, the Autobiography does not chronicle the life and times of the famous Philadelphian in exhaustive detail. Instead, it focuses on his early years as a runaway apprentice turned successful small businessman. Franklin believed that these years would be more valuable to his readers for, he says, they show how he rose from "Poverty and Obscurity" to "a State of Affluence & some Degree of Reputation in the World." Indeed, he presents his life as an object lesson to his readers, a rags-to-riches story that, he claims, is "fit to be imitated."

As such, Franklin's Autobiography is a prototype for the "How to Succeed in Business" books that keep printing presses running the world over. It includes a colorful cast of characters, especially the villains — Keimer, the vulgar, disorganized shopkeeper; David Harry, the dandified, dissolute apprentice; his brother James, the mean spirited, abusive boss — all of whom provide models of bad business behavior. The hero, of course, is Franklin, who made such a fortune in the printing business that he was able to retire at 42 and devote the rest of his life to the activities for which he is still celebrated: writing, inventing, and serving the public good.

What was the secret to his success? In his early 20s, shortly after opening his printing house, Franklin embarks upon his "Project of arriving at moral Perfection." He settles on 13 principles that make up his colonial code of business ethics. Some of these principles will be very familiar to modern readers: Industry, Order, Sincerity, Justice. Others now seem a little quaint: Humility, Frugality, Temperance. A few — Cleanliness, Silence, Chastity — remind us how much has changed since Ben's day.

Franklin credits his code of business ethics with, among other things, the "Acquisition of his Fortune" and the opportunity to become a "useful Citizen" and gain "some Degree of Reputation" among the colonial elite. In these respects, it achieves the primary goal of a modern code of business ethics, namely, creating a set of principles by which the pursuit of private gain and the public interest seem not at odds with each other but commensurate, even indistinguishable.

This was certainly how Franklin saw it, and he tailored his code to the particular circumstances of his own world, a world of small-town trade where personal and professional associations were closely intertwined. Certainly, he thought these principles could be generalized — the Autobiography is not a personal history so much as a book of instruction — but the takeaway lesson of Franklin's code is not that the aspiring entrepreneur should take it for gospel, but that he should take account of his own circumstances and attempt to write a code that applies to them.

By this light, Franklin's code may not have not have much to add to the current debate over whether management can properly be called a profession, but for those who say the answer is "No," it does provide another way of thinking about a code of business ethics apart from the set conventions of a formal profession. It suggests that the goal may not be to write a code of business ethics, but to teach students how to write codes of business ethics, each student her own. This is an exercise that will not only teach business school students how to apply the tools of moral decision-making to the particularities of their own professions, but also to compare across codes and to learn from one another.

If they do, they will probably find that their views of what makes for "business ethics" aren't all that different from one another. The real question will be whether they can find the courage to implement them.

John Paul Rollert teaches leadership and business ethics at Harvard Summer School. He is a doctoral student at the Committee on Social Thought at the University of Chicago and will graduate from Yale Law School in the fall.

2010-07-28T19:15:51Z

Start with an Idea

When I was 24 I moved from Boston to L.A. in search of a record deal. Never got one, but Edgar Winter did record a song I wrote called, "Stranger to Love," for a B horror movie called Netherworld. Those songwriting days taught me something important about new ideas, where they come from, when they surface, and how to relate to them.

Night after night I would go into my loft and bang away on my guitar, trying to coerce a song out of it. It would take me months to write each song. This method we might call How Not to Write Songs. I was going about it the wrong way, and I notice a lot of entrepreneurs and businesses doing the same thing. They create businesses without an idea, or without a strong idea (which is why you can't understand what the hell they're talking about when they describe it to you). They build form around the absence of an idea and call it a business.

Much smarter to build form around the substance of an idea.

Charlie Rose once asked Bruce Springsteen, "When do you write?" His reply: "When I have an idea." As opposed to when he doesn't have one. What a brilliant use of his time!

John Denver used to say (for you Millennials, he was RCA's second-biggest record seller after Elvis) that, "the songs come when they've a mind to." The idea for "Annie's Song," his biggest hit, came to him while he was on a chair lift during a day of skiing.

Springsteen and John Denver were both wise enough to know that you wait and watch for ideas, you don't force them into being. Well, actually, you can hear instances where each of them did try to force it — and got lousy songs as a result.

Steve Jobs was asked years ago about how he planned to compete with the Wintel monopoly. He said, "I'm going to wait for the next big thing." He didn't say "I'm going to personally create the next big thing." Neither iTunes nor the iPod was his idea. The iTunes idea came from a small company called SoundJam MP, and the genesis of the iPod was a design inside the head of Tony Fadell, a tech consultant who went to work for Apple. Steve Jobs's brilliance was in keeping his eyes open for the ideas, recognizing the moment, connecting the dots, and "creating" iTunes and iPod as a system that worked together, adding Jonathan Ive's designs, and marketing it all brilliantly. He wasn't sitting at his desk banging his head against the wall trying to force an idea out of the universe.

In fact, to the extent that you are punishing yourself for the lack of an idea, or torturing yourself to come up with one, you may very well miss the idea that's right under your nose, waiting to be acknowledged.

There are two simple rules I have learned about ideation: Look and wait.

Look. For years my company struggled to come up with the right slogan for our AIDS Rides. "Challenge yourself and you will grow." Yuck. "The adventure of a lifetime." Yawn. The more frustrated we got, the more the answer eluded us. Then one day we said to ourselves, "These events are impossible. You have to ride for grueling distances. You have to sleep in a tent and raise huge amounts of money from your friends. Most people look at them and think, 'Impossible.'" Having admitted the truth, we stared at that word "impossible" for about an hour. And we noticed two words inside there. "I'm" and "possible." "I'mpossible." Our new slogan. It had been staring us in the face for four years. We just weren't looking.

And as for waiting...This is tragic but instructive. In 1999 someone very close to me committed suicide. My grief and aching sadness wanted expression, and they found it in music. Ideas for songs about the tragedy started coming to me in rapid succession. On long walks. In the car. Without me asking for them. They were asking for me. In about eight weeks I wrote 13 songs, each of them based on an idea, and each of them better than most anything I had forced while banging away on my guitar in my loft years earlier. And they became my first album.

On top of that, an idea came for a suicide prevention event — called, "Out of the Darkness" — that has now raised millions for the cause. That idea would never have come to us sitting in our conference room at Pallotta TeamWorks trying to force an event into being. It came from a confluence of tragedy and emotion and timing. And, as a result, it was authentic, not a contrivance.

The idea may not come when you want it to, but when it does, it will be right on time. And it will be true to who you really are.

So, my advice to you: Go get an ice cream. Go ride your bike, or whatever it is you like to do. Relax a little bit. You can't create the next big idea at will anymore than you can make the love of your life walk into the room in the next half hour.

Look. And wait. And while you're at it, have a little faith — in life, in God, in the universe, in whatever you believe in. The universe is pregnant with ideas. Your passion for them is enough. They don't go where they're not wanted. But ideas have lives of their own. They have their pride. And they don't reveal themselves to the impatient or the distracted.

That song I wrote, "Stranger to Love" — it was actually a good song. For one reason. It started with an idea.

2010-07-28T18:33:58Z

Fire Your Marketing Manager and Hire A Community Manager

Okay, maybe that's going too far. I don't really recommend firing your marketing manager. I do however believe that most companies will eventually need to hire or contract with a community manager, if they haven't already. A recent BusinessWeek article called "Twitter Twitter Little Star," describes social media as a booming industry which has caught the attention of corporations everywhere, and suggests the role of a "social media director" and what that person should do. I'd like to dig a bit deeper into why this core function is necessary to create to what's becoming known as social engagement. I'll call the role the community manager.

A community manager actively monitors, participates in and engages others within online communities. These communities can be on Twitter, Facebook, message boards, intranets, wherever groups of people come together to converse and interact with each other. A traditional marketing manager is likely to have little experience with this function. Historically, community management developed outside marketing, in areas such as community organizing (politics) or in niche verticals such as the video game or software industry, which are no strangers to digital outposts such as message boards.

A community manager acts as an ambassador for your organization, whether that person is an employee or contracted to manage your social web presence. A good community manager gives a human form to the faceless corporation. On Facebook Whole Foods, for example, community managers have created a forum that impels customers to respond to its posts. They also often informally engage their customers in the process.

A community manager must be a good or great communicator. He or she of course needs to be social, and understand the social mores of the communities served, and have a strongly developed sense of ethics. He or she should know, for example, when deleting a member's comment is wrong or justified and be prepared to explain why. Enthusiasm is also required. Finally, a good community manager will be well connected, forming relationships with the right people in your communities, the individuals and groups you want on your side.

No doubt companies are flocking toward non traditional job descriptions like community manager. If I were building my my all-star business team, I'd think about how community management works and why I might need a few good ones on my roster.

David Armano is a Senior Vice President at Edelman Digital, the interactive arm of global communications firm Edelman. He is an active practitioner and thinker in the worlds of digital marketing, experience design, and the social web. You can follow him on Twitter.

2010-07-28T16:08:03Z

Advanced Entrepreneurship: Your Every Move, Your Culture

Culture. It's subtle, it's everywhere, and it can make or break you. Zefer Corp was an internet consulting start-up whose CEO, Tony Tjan (also an HBR.org blogger), deliberately created a culture of youth, hipness, and hard work. Everything from the loftlike space with translucent-walled meeting areas to the young workforce went into the mix. High-caliber job candidates came to Zefer, despite better offers, because the culture itself was such a strong draw.

Culture determines who will work for you, who stays, and who quits. Once formed, culture is nearly impossible to change. People who work well within the culture quickly self-select. And those who don't fit leave.

In growing companies more than anywhere else, culture is tightly tied to the CEO.

The CEO Sets the Culture.
In a hierarchy, people look up for approval. When a frontline store clerk sneezes, people hand him a tissue. When a CEO sneezes, people rush to the water cooler. "What did that sneeze mean? Was she bored, and sneezing to cover it up?" Deliberately or not, the CEOs actions send constant signals that begin shaping everyone's behavior.

"Walking the talk" is critical for a CEO because people imitate the CEO. If they say one thing and do another, people will follow their actions, not their words. They need to be a living example of the culture they want to create. In a start-up, since everyone has regular contact with the CEO, everything she does signals what is and isn't OK.

Good CEOs Attend to Visible Culture
CEOs also influence culture with visual cues, for example, the design of the office. Take a home products company that started life in an extremely nice space. It became easy for employees to think they were already successful, and to rather cavalierly burn through their seed money. In contrast, LA-based Evolution Robotics's CEO stocked the warehouse office with desks made from doors atop filing cabinets. The space itself said "lean and mean," better than any lecture about cash flow.

Dress codes also shape culture. Scott Cook, co-founder of Intuit (makers of Quicken) set a casual tone by wearing jeans and a windbreaker, while tech pioneer Charlie Bachman wore a suit every day at his company. Clothing choices visibly signal attitudes toward formality and conduct.

Other visible signs of culture include work-hour flexibility, telecommuting ability, and so on. In entrepreneurial companies, all policies comprising the visible culture are created with the CEO's involvement.

Great CEOs Attend to Invisible Culture
Much of culture is invisible, however, in the form of the processes the company uses to get things done. These aspects of culture can be shaped only with deliberate attention. Great CEOs shape the invisible culture.

Decision making. Decision making is where a company's values come to life (or death, depending). When a company is forced to choose between two alternatives, that choice sends everyone a powerful signal about how to behave. It's easy to say, "we care about quality and we care about profit." But when forced to choose between shipping a low-quality product to make profit numbers and slipping a ship date until a product is ready for prime time, what actually happens will speak volumes about what this company values most. The CEO is almost always party to such difficult decisions, and can shape them to help shape the culture.

Who participates in decisions also sends a signal. If one function (marketing, finance, customer service) regularly gets their way, the others gradually take second place. If one person speaks just loudly enough to shut everyone else down, you get a culture that values heat over light.

When a company regularly preaches one set of values, and the CEO condones decisions that trumpet a different set of values, you'll create a cynical culture. One high-tech CEO preached quality but knowingly released defective products and simply budgeted for the subsequent recall. Employees circulated articles extolling the company's commitment to customers, with handwritten margin comments tallying up the lies.

Compensation. People do what you pay them for, which makes money, titles, and responsibility powerful shapers of culture. A CEO who promotes friends and family member sends a clear message: if you're a high performer, great. But family comes first, regardless. Young companies are just forming compensation systems. Thoughtful design is important. Tying customer service bonuses to number of calls per hour can cause reps to shortchange customers just to make call quotas. A culture will develop that's time oriented, rather than customer oriented.

One way compensation warps a culture is by rewarding outcomes over process. For several years in the early 2000s, mortgage lenders's compensation was tied to outcomes — mortgages written — rather than process (quality underwriting). Oops. Compensation has huge cultural implications, and the CEO has final say on compensation.

Mistake Management. The final piece of invisible culture is how mistakes are handled. If mistakes are punished, you'll build a risk-averse, sycophantic culture that plays it safe rather than thinking outside the box. If mistakes are treated as learning and supported by the reward systems, you'll grow a culture that is willing and eager to experiment and innovate.

Stever Robbins is a serial entrepreneur, top-10 iTunes business podcaster ("The Get-it-Done Guy"), and CEO of Stever Robbins, Inc., an entrepreneurial consulting and coaching firm. He teaches at Babson College on building social capital. His first book, The Get-it-Done Guy's 9 Steps to Work Less and Do More, is coming out this September.

2010-07-28T14:51:32Z

Does Outsourcing Destroy IT Innovation?

Andy Grove penned a fascinating commentary about the impact of outsourcing on American job creation, and the subsequent ability to innovate in the sectors that have been outsourced. He challenges the belief that as long as knowledge work stays in the United States, it doesn't matter what happens to factory jobs. Grove believes that, "not only did we lose an untold number of jobs, we broke the chain of experience that is important for technological evolution." Grove makes a good argument that, over time, companies lose the ability to innovate in the sectors they outsource.

Does this argument apply at a lower level to IT outsourcing? Consider whether or not this statement has merit: With extensive outsourcing, over time, companies lose the ability to innovate IT.

Successful outsourcing requires strong internal leadership. Question is, how can an organization attract, develop and retain IT-smart leaders in an environment where many of the developmental assignments are outsourced? In the case study outlined in the last blog, the organization needed leaders with expertise if they had any hope of realizing:

1. The project was buried under too many layers of management.
2. Even though there were multiple managers involved, the project lacked the level of management expertise and clear delineation of accountabilities and authorities.
3. The process for defining requirements consisted of too much paper and not enough hands-on prototyping.
4. The project team did not have any practical way to manage scope given that success factors were not defined.
5. The recommended technology approaches were too risky.
6. In spite of strong senior level commitment, the level of front line organizational churn and user dissatisfaction necessitated cancelling and restarting the project.

Relying solely on external service providers for this expertise isn't the answer. Even if our case study vendor knew everything listed above (and, believe me, they did not), vendors often don't know how to be heard and are conflicted about the messages they should send in light of the fact that these messages could negatively impact their relationships and, potentially, their revenue.

Some researchers are questioning the value of broad-based outsourcing. Research on IT management practices within the banking industry found that top-performing companies outsource less, and those that outsource IT on a wholesale basis "struggle to use IT to drive value and have limited strategic flexibility as the business context evolves and hardware prices plummet."

What do you think? Is it possible that large scale outsourcing not only limits strategic flexibility but also the capability to innovate with IT and therefore use IT as a strategic asset?