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#108/111: Punished by Rewards

This is one of the books where I just read the title and bought it. Recently, I talked with a friend about rewards and rules and we noticed that they often lead to out crawling from intrinsic motivations. He said “if I have to do something in 48 hours, I will take at least 48 hours - if I can choose my time freely, I probably will do it immediately.” You probably had similar experiences.

Some of these observations will be true. Alfie Kohen wrote lots of other books about schooling and the use of rewards, so this bit in the book is especially interesting.

His main objective is a critique of pop behaviorism, i.e. you have to give something to get something or equivalent with punishments. If I want the kids to learn about history, I have to get them grades. If I want my kids to eat healthier I have to reward them after eating. Or in business settings: If I want my employees to get three new accounts I have to pay them extra for each one. It’s so inherent in our thinking that it have to be challenged.

So what is Kohn saying about this? I read a great amount of studies and presented his findings. The first and most fundamental is that rewards often don’t work and sometimes they worsen the situation. There are some things to understand.

Firstly, rewards punish. A typical setting is some superior (teacher, boss, parent) who compliments you if you did something great. What is if your superior doesn’t compliment you? It’s basically punishment. Punishment and rewards each side of one coin. There are study that found that even compliments can be bad if they are linked to some objective. That’s important! Unexpected rewards sometimes are better than none but as long as you link it so a objective it basically become some form of punishment.

Secondly, rewards distorts your intentions. If you offer your kid a buck for each carrot she eats, she will eat more carrots because of the buck not because of the carrot. The eating of a carrot is the unpleasant thing to do to get the buck. You wanted to promote eating healthy food and instead promoted that healthy food is unpleasant.

Thirdly, rewards crowd out intrinsic motivation. There’s some kind of myth that you can add motivations, that is if you are intrinsic motivated and someone gives you money/praise/etc for doing this task that you will be even more motivated. Actually, motivation doesn’t work that way. If you are not motivated at all, then of course, extrinsic motivation motivates you to do the task. However, if you already are intrinsic motivated the extrinsic motivation can crowd your complete intrinsic motivation out and replace it with extrinsic motivation. This effect is rather famous in economics and studied in psychology.

You will probably think that extrinsic motivation isn’t good but we don’t have any alternatives. Kohn himself thinks that it’s hard because extrinsic motivators are so easy to create. Just throw some money in and you’re done. But there are alternatives which aren’t so easy to implement but have a less damaging effect.

The first one is collaboration. Work with your subordinate together to solve the problem or let him work with outer people. Alfie Kohn cites an interesting case where a mother went crazy because her child don’t wanted to go to sleep at 9pm. She tried nearly everything but she never tried to understand why her child don’t wanted to go to sleep. The same goes for pupils who come to repeatedly to late to school or unmotivated employees. Talk to them and help to solve them the problem. If you’re employee doesn’t like to work at your place then it’s probably the best for both of you that he looks for another job. It’s not the easy way but it does solve problems instead of treating symptoms.

Secondly, content is important. It’s rather easy in think about it in the schooling field. Don’t let kids learn things that are boring. For example, he talked about dates in history and I agree. The interesting thing about the Franz Ferdinand’s dead isn’t that he died on a Sunday or at June 28 but rather that this coincidence lead to the first World War. You can make probably most things interesting and you should!

The last one is choice. The more freedom you allow the more intrinsic motivated people will be. For example, he shows that for uninteresting work the best one can do is, to let people handle it the way they want. Even for interesting work this has a positive effect and the business literature begins to include it. We let people work from their home or they don’t have to be in office from 8 to 5 but rather just have to get some task done till some date. This exactly the choice which helps to increase people’s motivation.

This book got so many interesting studies in it that I recommend this book to nearly everyone but to everyone who is some form of authority: Parents, teacher, supervisors.

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#100/111: Talent Is Overrated

What is it about?

How did Mozart become to great at composing music? Why does Tiger Woods rock the GPA world tour? Are they more talented that you and me? Geoff Colvin explores if talent matters and how you can achieve extraordinary achievements.

What can I learn?

Talent is overrated: Colvin cited some studies which showed that learning is the critical factor in achieving great performance. You have probably experienced this by yourself. There are kids which can read and calculate with 4 years but 10 years later they are mediocre in reading and calculating. Or the other way around. There were fellow pupils which really sucked in math and three years later they graduated as the best of the class. Generally, talent doesn’t matter. What matters is (deliberate) practice.

You decide: This was my main motivator about four years ago to change my life. Either you accept that you can change your life and that your are responsible for its outcomes or you accept that you are mostly influenced by other actions and can’t really control so much. If you choose the first option, you will be able to achieve extraordinary stuff. You don’t have to think about talent. You can just start and learn. That is, if you think there’s talent and it matters, than this book will be worthless for you.

Deliberate practice: Practice isn’t practice. The most effect turned out to be deliberate practice. This costs of instant feedback, is repeatable and you are focused on learning, i.e. there’s no automation of your actions. It’s quite easy if you think about learning an instrument. But how do you learn, let’s say about marketing? Colvin recommends different things. For once, you can take case studies in marketing, work through them and create solutions. Afterwards, you compare them with actual result. For most effect, you can work on it some months later when you forgot the actual result and do it again. Probably your solution will improve. An other way is to use simulations. There are a lot of business / marketing games out there, which can help you understand mechanics better. Furthermore, it always helps to read basic literature again. Work through marketing books which you read some years ago. Frankly, one thing I learned in this reading challenge is that there isn’t much new information about marketing/business. It’s just old ideas translated into a new medium, nothing else.

Conclusion

It frightening how much I agree with the book. Geoff Colvin did a great job in summing up various research and presenting it to the reader. Some guy named Dan decided about a year ago to try out an experiment. He will put 10,000 hours deliberate practice into golf and plans to become a professional golfer. The hardest part is persistence. Great job, great book. Recommendation!

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#90/111: The C Programming Language

Basics, basics, basics. You could call K&R’s book one basic book which every programmer should read. Nowadays lots of new programmers think that Ruby on Rails is all you need. If you just build basic CRUD web apps this is probably true. However, if you want to understand what’s really going on in your web server, operation system or music player, you should know C. K&R isn’t a introduction course into C programming but it will help you to get better at it, if you have some experience in C / programming.

I really love this book, mostly for its cool exercises (implementing tail, memory management, etc.). Always a recommendation!

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#88/111: Skunk Works

What is it about?

If you never heard of Skunk Works, it is a innovation branch of Lockheed which specialized in building air crafts. Kelly Johnson managed since the creation to 1971 and was succeed by the author Ben Rich. Ben Rich tells about their projects, their philosophy and why Skunk Works was one of the most special projects in the USA.

What can I learn?

Prototype and improve: The Skunk Works was originally built as a prototyping/R&D/innovative branch of Lockheed. Therefore they approached problems differently. Instead of years planing, they built lots of prototypes, tested them and improved them. They never wanted to achieve perfection (80% is good enough). This allowed them to give 3-5 prototypes to their customer (often the CIA or Air force), so their customers could test them in depth without spending hundreds of millions of dollars.

Rapid development cycles: This was an other main advantage of Skunk Works over lots of other innovation branches. Kelly Johnson wanted the engineers to be at most 40 feet away from the shop workers because he wanted them to see how their designs were created. Furthermore, it allowed both sides to communicate more easily and the shop workers felt that they are important.

Bureaucracy is your enemy: Ben Rich tells about two similar projects. One was completed in 6 months and with about 50 people. The second one took 24 month and about 200 people. Why? Thanks to comptrollers, regulations and such. Skunk Works worked independently from Lockheed which was unique and extremely important. Kelly Johnson hadn’t promoted people because of seniority, which is quite normal in most corporations. He also hadn’t allowed outsiders (e.g. gov’ officials) to stay at the Skunk Works for a long time. He managed the shop independently and successful.

Conclusion

Skunk Works is a awesome book but although a bit lengthy. It’s extremely interesting to see how such great air vehicles were built and which methods they used to keep their startup spirit alive. Essentially this book covers so much stuff which was rediscovered recently, like MVPs, lean development, etc. Definitely worth reading. Recommendation!

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#80/111: Built To Sell

What is it about?

It took me fifteen years to build this service company, now I want to retire and spend more time with my kids. But how? Even if you aren’t going to sell your company immediately, John Warrillow will show you how to make your company sellable and your job as a CEO more comfortable. I will focus a bit more on service companies because for most products companies these things are obvious.

What can I learn?

Recurring revenue and a repeatable sales process: A main key to increase the value of your company is to create recurring revenue. It could be subscriptions, consumer goods or long-term contracts. This helps you to create a more consistent cash flow and less short-term liabilities. Furthermore, your sales process should be repeatable. Try to create a product which could be sold without (much) customization and hire at least two sales people. Why two? Because they love competition! In the book, the owner of a creative agency, created a simple five step process to sell and create logos.

Hire managers: If you created your product, you are probably going to scale your business a bit. Besides the two sales people, you may want to focus more on your product and hire more people how are awesome at creating your product. After some time you may increase your sales force and the amount of creators. Instead of managing them by yourself, hire/promote people to managers. Your goal is to sell this company or at least make you dispensable. 

Sell big: If you finally decided to sell your company, you should look for brokers which help your sell your company. Later when talking to the future owners you should emphasize on the possibilities your company offers. You created a great management team, a repeatable sales process and product and it could be scaled to the unlimited. Sell big and sell a superb vision of what could be.

Conclusion

Built To Sell is an awesome book! I love the story about the agency owner who wants to sell his company. It reminded me of the E-Myth but here’s the story is a bit deeper and more interesting. The second part of the book explains each principle again in detail. Awesome book and clear recommendation!

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#77/111: Hitting The Sweet Spot

What is it about?

Why can you convince your parents so easily? Because you know them. You know what they want, who they are and what they value. If you could know your customers as good as your parents, you could create astonishing advertising.

What can I learn?

Hard data first: The first step is to learn about the market in general. Read statistics about the person’s sociodemographic, read trade publications and websites about the market. This should help you to get a big picture about the market and its needs.

Understand your customer: The next step is to actually understand them. A good way is to live like one and talk to others in the same segment. You want to really understand them, i.e. you don’t ask “do you prefer product X over Y?”. You should ask what their goals in life are, whether they prefer freedom over security and what they would do if they don’t have to work. You want insights not just facts.

Connect your customers and your brand: To hit the sweet spot you have to connect your brand/product with the customer insight. A nice example is Harley-Davidson. The customers want freedom, they want to be different and non-boring. Harley-Davidson offers exactly this. They embody these values and that leads to astonishing loyalty among their buyers.

Conclusion

Hitting The Sweet Spot by Lisa Fortini-Campbell is pretty nice. It’s short, concise and full of examples. About the last 100 pages are examples of people using the methods described in this book. I can only recommend reading this book because you are deepening your understanding of successful marketing campaigns. Recommendation.

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#74.0/111: My Life in Advertising

What is it about?

This book is actually two. My Life in Advertising, the autobiography of Claude C. Hopkins and his famous publication Scientific Advertising. In this post I will review My Life in Advertising.

What can I learn?

Fun is subjective: Claude C. Hopkins was raised in a highly religious household. His mother forbid him seeing plays or playing cards, because she believed that these are diabolic activities. Therefore, he looked for other activities and began cleaning at his school and distributing fliers. He said: "The only game I’ve ever learned is business.". It’s his occupation and recreation.

Simple, natural ads with a coupon: His most successful ads followed this scheme. Firstly, he said that he was raised as a simple man, so he could only sell to other simple man, which were the majority. Secondly, the ads were natural, i.e. no lies, no marketing speech. Often he described how something was created and built a campaign on this obvious fact. For example, he created a campaign for Schlitz Beer in which he described how everything was cleaned twice a day and the bottles were washed four times. This was industry standard but nobody ever used it in an ad before. Thirdly, he inserted coupons for free samples because he wants to decrease the prospects risk and truly convince them that the product is excellent.

His great mistake: There is a chapter called My Great Mistake where he talks about don’t starting a company on his own. Many of his former scholars, i.e. which learned from him how to create great advertising, started their own companies and succeeded. He said that he never had enough self-confidence. After many years working for other people and agencies, he finally decided to start his own businesses which were successful. However, he thinks that this isn’t an advice for the majority. Everyone should decide on his own where he fits and what he wants.

Conclusion

I truly enjoyed My Life in Advertising. This is an other vintage classic from 1927 and most observations are still true today. It’s interesting how he worked his way up from a fruit picker. Then decided to get a degree in accounting. There he realized that accounting is just a overhead and costs will always be minimized. Therefore he started to switch to the money earners, i.e. into advertising. In the last chapter he wrote that he helps juvenile delinquents to love work as he do which is impressive for this time.  All in all a great biography. Recommendation.

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#73/111: The Checklist Manifesto

What is it about?

There’s a instrument to decrease deaths rates and infection rates in hospitals significantly. It costs near to nothing. It’s a checklist. Atul Gawande, who is a cancer surgeon, talks about introducing checklists in the medical sector.

What can I learn?

Simple and critical: There’s a lot of research on checklists predominately for aircrafts. These researchers found in over 30 years research that checklists have to be simple and critical. They shouldn’t be detailed instructions. The aim of checklists is to remind the users of critical actions. Like closing the cargo hold on an aircraft or disinfect the working area on a human body before surgery.

Test it: Nobody can think of everything, therefore testing is necessary. Observe your checklists in action and try to improve them. If you checklist is too long, only a few people will use it. If they don’t understand how your checklist will improve anything, they won’t use it. Observe and improve.

Empowering people and discipline: Checklist aren’t about bureaucracy. They empower people and make them more disciplined. You help the practitioners to improve their work.

Conclusion

The Checklist Manifesto is terrific. The stories are thrilling and he got great story telling skills. You can feel how checklists improved their lives and lives of others. Furthermore, it’s pretty short and concise. A similar book on checklists in business is The E-Myth. Recommendation!

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#70/111: Commonsense Direct & Digital Marketing

What is it about?

What is direct marketing? A adequate description is salesmanship-in-print. Drayton Bird is one of the best salesman-in-print and he shows you how to find appropriate prospects, how to write your copy and how to test your results.

What can I learn?

Sell your product, not your designing skills: One of the biggest mistakes in direct marketing is trying to show off your design skills. Why? You should ask yourself: What is the purpose of marketing? Your answer should be generating sales. It isn’t about showing off your creativity, it isn’t about being über clever. It’s simply about generating sales. Tests showed that simple and honest ads sold better than clever ones.

Long copy works: Today, we want everything fast, we don’t take the time to read something, etc. However, people still read long copy, if they are interested. Which leads to the question? Should you care about the people who don’t even consider trying your product? Not at the cost of your future customers. Bird says that marketeers often don’t understand that $100 sales and $30 costs are better than $140 sales and $90 costs. If you are interested in a product/service, you want to read about it. You want to know more about it. Long copy supplies exactly that. It helps your prospect to learn more about your product, to face their fears and to build trust.

Test and go with the winner: If you do online marketing, testing is pretty easy and you should use it. A simple change of the headline can increase your profit threefold. A other call to action may increase your conversion rate about 50%. You can’t guess these things, you have to test them. Every situation is different and there is always a way to improve your ad. However, sometimes decision makers think that you can’t use this headline, although it triples your profit. Or that the ad doesn’t look great, although it works better than the alternatives. Don’t be fooled by your world-view. Test everything and go with the winner.

Conclusion

Commonsense Direct & Digital Marketing is massive. It’s about 420 pages long, covers lots of details of great direct marketing and is written by a real leader in this field. I love how clear Drayton Bird explains the fundamentals and empathizes that the key is in testing and understanding the customer and not in being overly creative. If you want to sell your product/service online, by mail or somehow, you should read this book. Recommendation!

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#69/111: Marketing High Technology

What is it about?

We are in 1986. Windows 1.0 will be released in a year and high technology is mostly the  semiconductor industry. William H. Davidow worked for Intel and fought several wars. He explains what is important and why marketing is civilized war.

What can I learn?

Go for defensible market segments: Unbelievable important principle which executives/entrepreneurs often don’t get. What does defensible mean? Firstly, just releasing a product isn’t entering the market. You have to gain customers and establishing your product. Davidow estimated that it takes about 0.7 times the sales volume of the market leader to enter a market. Visualize this. If the market leader in your market segment makes $25mio in sales, you will need approx. a $17m investment just to enter the market. Secondly, you have to defend your position. In the mid- to long-term the two or three leaders dominate a market. If you can gather at least 20% of the market, you will probably vanish in the mid- to long-term. In conclusion, look for an appropriate market segment (i.e. which you can enter), gain enough customers and fight the war!

Create great products, not just great devices: Devices are your fundamental offering, e.g. the code for your software. However, a product is your device plus its marketing (positioning, usability, UX, etc.). What does this mean? If you know a techie, you probably had a discussion over the iPhone/iPod. He says that they are inferior to product X because they don’t have feature Y and Z. This is device stuff. Does the mass care about that? No. They care about the product. It is easy to use? It is trendy? Who else uses it? This takes us back to Baked in. You’re device and marketing have to work together and create a whole product.

Install Marketing Quality Management: If you read the previous paragraph you know how important marketing is. Therefore you should assure the quality of it. It begins which checking the positioning of each product to helping internal cooperation. Only if your marketing and device development are working hand in hand, you can create a great product.

Conclusion

Marketing High Technology was written in 1986. Yes, it about 25 years old and kicks ass of most books released today. This book showed how awesome Intel works like in Only the Paranoid Survive. If your business creates product, this is a must read. There is so much insight which is seldom used today. Recommendation!

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#60/111: Ice to the Eskimos

What is it about?

So, you got the worst NBA team and now it’s time to fill their stadium and actually make money. Too hard? Ask Jon Spoelstra who achieved this with the New Jersey Nets.

What can I learn?

The Quick Fix Silver Bullet: What would you do first? Buy a new team? Run commercials? There is an easier way. Increase the frequency of purchases of your existing customers. Use direct mailing and send them special offers. Spoelstra created special packages for the top games, i.e. when the NJ Jets played against the Dallas Mavericks or Chicago Bulls.

Make your customer a real-life hero: This idea is ingenious. Jon Spoelstra had to sell sponsorships for a lousy NBA team. Everyone would be considered stupid if they would sponsor such a team. How did Spoelstra did this? He made the people who bought sponsorships real-life heroes. The New Jersey Nets sent the CEOs of the sponsoring companies and their contact person high-quality prints which included pictures of every appearance and showed how much impact they had. This impressed the CEOs and often led to the promotion of the contact person.

Make it too good of a deal: If there’s no recognition of value, price cuts won’t increase your sales enough. However, you can increase the value of your offering. Spoelstra added baseball caps or a meal to the tickets. A all-you-can eat buffet and five tickets for a game for just $29. That’s a deal too good to be true!

Conclusion

I just covered three of nineteen chapters and they are nearly all great. Ice to the Eskimos impressed me extremely and was interesting although I have no clue about the NBA. I think this book is was Attention! wanted to be - clever, unusual and stuffed with actionable advice. Recommendation!