Zero-to-One: Post #6--Monopoly Secret

The Monopoly Secret. Competition and capitalism are opposites. “A great company is a conspiracy to change the world.”  The author warns being careful about who you tell your secret to…because mankind has always been unkind to people who expose their forward thinking to the world. Also, remember Thiel’s Law: “A startup mess up at its foundation cannot be fixed.” Bad partners in the beginning can haunt you forever. Carefully study “founding teams” before making investments into their company. For example, such teams should share a “prehistory” before starting a company; otherwise, it’s like investing in a blind date. However, you can’t go from Zero to One without a team. He distinguishes between ownership (who owns the company), possession (who runs it), and control (who governs it).

Zero-to-One: Post #5--Money

 Money. There’s an interesting discussion of venture capital, citing that it takes about 10 years for a company to grow up and be sold. However, most venture backed companies fail—so VCs are like lotto ticket buyers. Venture capital is what Thiel calls a “spray and pray” approach. But they bet on the few that will blow it out and make it worth all their failed investments. The winners are Zero-to-One firms!

Zero-to-One: Post #4--Value

Value and Companies. Key entrepreneurial question: What valuable company is nobody building? Need to create AND capture value. In a highly competitive market, no company does well because value gets commoditized. But a unique monopoly (like Google) can set its own price. Google went from Zero to One in 2000. Entrepreneur Lesson: “If you want to create and capture lasting value, don’t build an undifferentiated, commoditizable business.” Monopoly makes successful businesses. If you get wrapped up in competition, you lose. Competition is an outdated ideology—starting with school where competition “beats their dreams out of them.” Competition pushes us down a conformist track. Monopolies have several things in common: 1. Proprietary technology (hard to replicate); 2. Network effects (the more the merrier); 3. Economy of scale (leverage reduces costs); and, 4. A strong brand (people pay a premium for brand).

Zero-to-One: Post #3--Lessons Learned

Contra-Lessons Learned from the 1990s.

Silicon Valley learned some dysfunctional lessons from the Dot-Com Bust: 1. Make incremental advances [Thiel recommends the opposite~It’s better to risk boldness than play it safe with triviality]. 2. Stay lean and flexible [Thiel~A weak plan is better than no plan]. 3. Improve on the competition [Thiel~Competitive markets destroy profits]. 4. Focus on products, not sales [Thiel~Sales matters just as much as product].

Zero-to-One: Post #2--The Future

The Future. “What important truth do very few people agree with you on?” This is the question Thiel asks entrepreneurs. He’s looking for disrupters—contrarians (not miscreants) who don’t follow the crowd. His best answer(s): “Most people believe in X, but the truth is the opposite of X.”  Progress can be incremental and horizontal—copying what others do—or transformative and vertical—doing very new things that create the future.  And technology can lead us to transformational change.

Zero-to-One: Post #1--Overview

Bottom Line of Zero to One.  If you copy another business, you’ll
never create the next Apple or Microsoft. Creating something unique and new is Zero to One. Unless we invent such companies in America, we will fail the future.

Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel with Blake Masters (Crown Business, 2014), reviewed by Steve Gladis, January 2015.

Talent Management: FINAL Post-- A Better Society

A Better Society. CEO transition is critical—start early, 3-4 years before he or she expects to leave. Develop a list of key CEO competencies. Build an internal bench of strong candidates and look externally. Require the Board to do emergency succession drills—because most transitions are unplanned. When it comes to Boards, it’s more about how they work together than a strict set of rules and regs. You want results orientation and strategic orientation, as well as collaboration, integrity and independence. The most successful companies invest in talent—no matter the economic climate. Don’t lay off talent in tough times; you won’t be able to get them back when the economy rebounds. Companies that don’t overreact come out of recessions much better. Don’t freeze hiring during a crisis—it’s a great time to get high-value employees from the competition. Millennials will soon be the largest employee group—70 million. Conclusion: we’re moving toward an era of “potential” selection—people who can adapt to uncertain environments.

Talent Management: Post #5--Thriving Teams

Teams that Thrive. Six critical team functions: Balance (diversity of skills and strengths), Alignment (purpose and actions), Resilience (holding together in stress), Energy (ambition and initiative), Openness (building connections), Efficiency (optimizing resources). Rate teams on these 6 team functions [Team Effectiveness Review (TER)].  Different teams need different things: Turnaround—Efficiency and Resilience; New Venture—Openness, Energy, Resilience; Post-merger Integration—Balance and Alignment. Women make up only 15% of Fortune 500 companies and only 4% of CEOs but are 46.6% of the labor force. Of the two systems of pay—lockstep (equal pay) and eat-what-you-kill—lockstep produces better reputation, profitability and nicest culture! However, in lockstep you need a rigorous people process and a strong culture. Lockstep produces more collaboration (such as sharing leads) and strong values. Otherwise, you have lone wolves starving.

Talent Mangement: Post #4--The Future

The Bright Future. Incoming execs need good integration, development, coaching. However, a study at Princeton shows that fewer than 4% of companies devote enough resources to onboarding despite all the research that shows the importance of such transitions. Have new execs meet everyone (up, down, across, outside) who can impact on their success or failure. Do a 360 in 90 days to take the organization’s temperature on the transition. All high potentials (HIPOs) are high performers, but most high performers are not high potentials—most people don’t grow to the next level. High potential traits: motivation, curiosity, insight, engagement and determination. Most companies don’t have a tested methodology for selecting high potentials. Companies that tell their best people that they are the HIPOs are likely to have better retention. “We are our choices,” said Jeff Bezos at a Princeton graduation. A good development approach: Get assessment of strengths and weaknesses and focus on strengths and working toward the “ideal self.”

Talent Management--Post #3--The Right People

The Right People. Corporation execs make decisions 70% of the time based on only one alternative to choose from, and they make errors 52% of the time. Can have choice overload—we’re better selecting from 6 offerings than from 24. Too many alternatives are as bad as too few. Checklists work! Surgeons have found checklists, just like the ones pilots use, work very well in preventing errors. Simple stats based on performance measures can better predict success than intuition. In fact, emotional intelligence (managing self and others) is the most important factor in predicting success of execs. Performance is less portable than we believe. Performance = processes, products, people and politics—most of which you can’t take with you. Assess “fit” with your culture, people, and strategy when hiring an outsider. In an uncertain world, adaptability—especially in non-linear environments—should count bigtime, just like performance. Don’t compromise on values, cultural fit and potential. Egon Zehnder has developed several general high-potential traits (motivation, curiosity, insight, engagement and determination) as well as 8 leadership  competencies: Strategic, Market insight, Results oriented, Customer focused, Collaborative, Develops talent, Team leadership, Change leadership—based on a massive study with McKinsey that was validated.