When You Hire on Price You Pay For It

October 8, 2013

calculatorRed Adair, the oil well firefighter, once said, “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

Over the years, I’ve learned this the hard way.

When I’ve hired freelancers based primarily on price, the quality suffered. I paid dearly in terms of iterations and rework. Something that could have been completed in a week, might take 2 or 3. Instead of the work being done with limited involvement on my part, “amateurs” require a lot of handholding.

I now value my time more than anything else. Hiring talent requires less support from me. Each hour I spend helping someone figure something out, is one less hour I have to invest in something that can substantially grow my business.

I’ve found that truly gifted individuals can work magic. Their long-term value is significantly greater than those who are less skilled.

In my world, I see so many mediocre speakers. Event planners with financial constraints sometimes hire based on fee rather than quality. But the cost of the speaker is quite small compared to the time invested by the attendees. 100 people sitting in a room for an hour is a big payroll burn. But the bigger cost is the opportunity cost. Each hour they spend listening to a presentation that does not provide real value, is an hour they can’t invest in growing your business.

Or, if you hire a consultant, the real cost is not their fee. The real cost is the impact of their advice on your business. Most consultants who give you their two cents are overcharging. If you implement their recommendations, you could waste time and money. Or worse, you could negatively impact your business.

When investing time or money in anything, consider the total cost.

There’s on old Yiddish proverb, “He who marries for money earns it.”

In the world of business, I believe there is a corollary. “He who hires based on price pays for it.”

What to Ditch to Improve Your Life and Business

October 7, 2013

You’ve heard it before: To get more done, work smarter, not harder. One business innovator reveals what 3 things you can eliminate to help you do just that…

For the past year, I’ve been experimenting with the concept of working less by telling myself that I only have one hour a day to get things done. This has helped me reduce the number of hours I work from 100 a week to just 20 per month. (If you want more details on how I’ve accomplished this, read my last article, “How To Work One Hour A Day And Have A Thriving Business.”)

If you’re looking for ways to effectively cut back, think about this: Sometimes the key to getting more done is simply to do less. Think about ditching these three things in order to free up more time:

Ditch Your Worst Customers

Admit it: You’ve got customers who generate less income than others, yet take up more of your time than they should. Maybe instead of trying to get more customers, it’s time to ask, “Which customers should I eliminate?”

For me, the customers who are price-sensitive tend to be the most difficult to work with. Oscar Wilde once said, “A cynic knows the price of everything and the value of nothing.” I no longer work with cynics. Instead, I give time to my value-oriented customers who prefer to focus on results rather than fees.

One strategy to consider: Ditch the 20 percent of your customers who are sucking up your time but not producing commensurate returns. This not only frees up some hours in your day; it also frees up your mental energy. I realize that when money is tight, cutting customers loose can seem like a risky proposition. But you intuitively know that attempting to keep 100 percent of your customers happy 100 percent of the time will keep you working 100 hours a week, limiting your true growth potential.

Ditch Your Lowest Return Activities

Look at the amount of work you do. Look at your to-do list. You will never get 100 percent of the work done, even if you had 200 hours in a week. And we know that, yet we still strive to get 100 percent of the work done….

Read the rest of this article on the American Express OPEN Forum site

Webinar with InnoCentive

September 11, 2013

innocentive logoFor those of you interested in making internal collaboration a reality within your organization, I am conducting a free webinar in conjunction with InnoCentive, the premier open innovation platform.

Although some of the content will be similar to what I have presented in the past, there will be some new content specific to internal cultural issues. Here’s a brief description:


Live Webinar: Innovate Your Internal Collaboration

Featuring Innovation Speaker and Author – Stephen Shapiro

September 24, 2013 11:00 AM Eastern | 8:00 AM Pacific | 4:00 PM London

Although many organizations have become enamored with idea management systems, this approach may in fact be killing your innovation efforts. With over twenty years of experience, Stephen Shapiro has discovered that the key to accelerating innovation is to “ask the right challenge, the right way, to the right people.” This three-step process reduces the noise in your innovation systems and helps you focus on what matters most.

In this webinar, you will learn specific strategies for improving your internal collaboration and problem solving capability to generate meaningful results for your organization. Key concepts will include:

  • Innovate where you differentiate . Although it is valuable to have all of your employees involved in the innovation process, it is critical that they be focused on the challenges that provide the greatest opportunity for growth
  • Asking for ideas is a bad idea. Unstructured ideas and suggestions don’t have a “home” and create noise. On the other hand, well-articulated questions, structured as innovation challenges, start with ownership, sponsorship, and necessary resources.
  • Don’t think outside the box; find a better box . Instead of giving your employees a blank slate, provide them with “positive constraints,” proven methods, and incentives that increase creative output and relevance.

Register here

Line Thinking at 3M

September 9, 2013

3mFrom my experience, 80% of innovations within most companies are “dot solutions.” That is, innovations are typically developed by individuals from a single domain of expertise. Deep expertise is valued. Dig deep wells.

(for more on my perspectives on dot vs line thinking, please read my article from a while back – this is a critical concept for innovation – I discuss it further in “Best Practices Are Stupid”)

While spending time recently at 3M, I learned that 80% of their innovations are “line solutions.” That is, multiple domains of expertise are involved. For example, they might blend expertise from adhesives with expertise from abrasives to develop a new solution. Although this may be unusual within other organizations, at 3M, this is the norm. They are masterful at connecting dots.

But is this connected approach valuable?

They shared with me some recent research they’ve been conducting. The results are fascinating.

In a nutshell, they found that…

Line thinkers within 3M – based on the number of patents they contributed to in different areas of expertise – contributed significantly higher financial returns for the organization.

In other words, the people who became exceptionally deep experts and never used that expertise to contribute to different parts of the business were less valuable than those who made contributions to a wide range of products.

The financial impact of line thinking is staggering.

And although this approach is not the norm in most organization, it can certainly be encouraged through shifting the culture to one that recognizes and rewards these types of contributions.

P.S. I’ll share more detail when the 3M research is officially published. But trust me, the results are impressive.

Book Review by Gartner

August 12, 2013

Best Practices Are Stupid 3D CoverJake Sorofman, a Research Director at Gartner, just reviewed “Best Practices Are Stupid.”

His review started…

Don’t let its compact size—or snarky title—fool you. It’s a worthwhile read.

Unlike so many other books in this particular genre, it doesn’t disguise otherwise straightforward concepts with overwrought explanation. Shapiro gets straight to the point with 40 often counterintuitive tips on how to strengthen your innovation muscles, served up with respect for your time and intelligence.

Read the entire book review here.

Avoid Technology for the Sake of Technology

August 9, 2013

It seems that all too often, innovation has become synonymous with technology.

I was recently working with a company that had a number of challenges they wanted to solve. Most of them looked something like this…

“How can we use big data in order to better understand customer needs?”

Of course, this is a common challenge in today’s world of analytics.

The problem is, as it is worded, this question implies a particular solution: big data. It assumes that a technological answer is the best approach.

However, what this company really wants to do is understand its customers’ needs. There are many ways to do this that don’t involve technology.

For example, ethnography is a powerful tool for understanding latent customer desires. This requires very little technology, although technology may enable it. Regardless, the technology involved is not big data, but rather observational tools.

Another approach would be to understand subconscious needs. This can be accomplished through a variety of story telling methods that involve metaphors (see my book, “Best Practices are Stupid” for more on this). And if technology is used, it again would not be big data oriented, but might be something like an “implicit association test” (I developed a personality-based implicit association test as a means of testing subconscious beliefs about yourself and your personality).

I am currently working on a new tool to help organizations better define their challenges. And although there may be a technological component in the future, the primary solution uses a deck of cards and other “physical” (versus digital) items.

When innovating, ask yourself, “How could I solve this problem without technology?”

Look for as many different possible solutions. Only add in technology after you have considered other approaches.

Technology can be sexy. But it can be  complex and messy.

Technology for technology sake is not the way to go.

Free Quick Reference Card

July 20, 2013

Innovation ROI CardOn my Monday July 22 at 11AM EDT free webinar, I will be giving attendees my latest creation: The 10x Innovation ROI Quick Reference Card.

This 2-page checklist summarizes four important innovation concepts:

  • Ask the Right Challenge [FOCUS]
  • Frame Challenges the Right Way [FRAME]
  • Ask the Right People for Solutions [FIND]
  • Treat Innovation as an Experiment [FAIL]

Applying these approaches can massively improve your innovation ROI.

If you did not yet register, go here to reserve your free seat now.

NOTE: This event is oversubscribed. Therefore, we suggest you sign into the webinar 10 minutes early to ensure your slot.

P.S. For my international friends, here is a convenient time zone converter

P.P.S. This webinar will not be recorded. 

Do Not Develop Breakthrough Innovation

June 11, 2013

A client recently asked me why large companies never develop “breakthrough” innovations, and instead rely on buying small companies or licensing their technologies.

He felt that the game changing innovations were always the result of someone “tinkering in a garage,” like Michael Dell or Mark Zuckerberg.

He wondered how his organization could replicate the innovation style of start-ups as a way of developing these major innovations in-house.

I told him this was a bad idea.

For every Facebook, there are thousands of companies that invested millions of dollars, but were ultimately terrible failures.   But we don’t see those failures.  Why?

There is a concept (discussed here previously) called the under-sampling of failure. This theory states that we tend to focus on the successes produced, but rarely examine the failures. This occurs in part due to our limited exposure to those who have tried and failed.

As a result, we can’t predict which technologies or business models will be successful.

This presents a dilemma for large companies….

Because we can’t predict what will be successful, if you try to develop major breakthroughs in-house, you have to be prepared to fund all of the failures, as well as reap the rewards of the success.

Why is that?

A famous quote attributed to Thomas Edison, gives us a clue. “I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work.”

Because Edison could not predict which of the 700 filaments, he needed to try 700 variations.

The same is true for any new technology. We cannot predict which will be successful.

As a result, if you attempt to develop a new technology in house, you need to be prepared for a potentially long line of failures before you discover the one that works. This process is serial, meaning you try one technology until it fails and then you try another, working until you are ultimately successful. This can be an extraordinarily time consuming process.

serial conventional innovation

This model is expensive. You pay for all fixed costs of payroll and facilities. In a nutshell, you are paying based on the time it takes, not the value of the result.

Remember, this is a serial process.  Let’s assume that while you, Big Innovation Company, are attempting to create this new technology, there are 1,000 small companies also working simultaneously on the same problem, each investing in a different version of the technology. Most of them will fail, but one will most likely succeed. Given this, the odds are that someone else will discover a workable technology before you, because the 1,000 companies are working in parallel. We just can’t predict who it will be.

Because we can’t predict what will be successful, perhaps a better model is to postpone our decision until the market (the 1,000 small companies) sorts out the winning technology.

If we look at how this “market” actually works, you will see a parallel process of successes and failures (see model below). Everyone is working on the same problem with a different solution at the same time. Most technologies will fail. Many of the small companies will go bankrupt. It is (almost) a winner-takes-all model.

parallel innovation

If you have 1,000 companies with 100 employees each working on this at the same time, you have 100,000 people working on the problem in parallel. The amount of time and money invested in this market is enormous.

Are you, Big Innovation Company, prepared to pay these kinds of costs to replicate this market?

If you postpone your technology decision and wait for the market to sort out the winner, you can save yourself a lot of time and money.

With this strategy, the failures are funded by the market, not you (i.e., investors in the start-ups take the risk). And, when a successful technology is found, you only pay for the value created, not the hours it took to create the innovation.

Although your organizations should be investing in innovation, it should avoid internally developing radical/breakthrough innovations that could better be developed by the market. These types of “inventions” should be done leveraging open innovation, crowdsourcing, partnerships, or even acquisitions.



This post generated a fair amount of debate. That was my intention. I chose a provocative title for the article. It would be more appropriate to say “think twice before investing in breakthrough innovation.” I would never suggest that a company only invest in incremental innovation. But I also think that companies often underestimate the complexity associated with game changing innovation.

The undersampling of failure is a critical concept that is overlooked all too often.

If it costs a company $1M to successfully bring a new technology to market, you can be certain that the “market” invested at least $100M in failures. We know this to be true just by looking at a number of widely publicized open innovation competitions. The team that successfully developed the winning solution and won the $10M Ansari X Prize invested $100M in their developing their solution. We also know that many other teams invested a massive amount in developing unsuccessful solutions. The same is true with the Netflix Prize. Dozens of teams invested time and energy in ultimately unsuccessful solutions.

It is also important to discuss different types of innovations. There are two primary factors to consider: technical uncertainty and market uncertainty.

For market uncertainty, there are clearly things we can do in order to predict success. Having said that, often the winners in the market are not the best but rather the ones that somehow rose to the top. No one could have predicted that Facebook, for example, would end up dominating the social media market. Google has learned that even having the brightest minds (with a great product) does not guarantee market success. The market often decides; and the market is not always rational. But at least for innovations with market ambiguity, we can learn by conducting experiments (which, by the way, is very different than running pilots of proofs of concept).

For technical uncertainty, this can be more difficult. Many people are trying to develop new technologies (better batteries, new fuels, etc). Most attempts will fail, because it is impossible to predict which ones will give the best results. This is where you can leverage open innovation as a means of paying for success rather than time. This does not mean you can not attempt to put some of your energy into internal development efforts in these areas. However, don’t assume your internal efforts will be successful. Hedge your bets. If the technology is not in your sweetspot (your differentiator), then certainly consider looking externally for solutions so that you don’t divert your energies.

To be clear, I am not advocating M&A as an innovation strategy. That never works. However, I am a huge fan of various forms of open innovation, crowdsourcing, alliances, licensing and other techniques as a way of augmenting your internal innovation efforts.

I will be writing more about this concept in the near future. Stay tuned.

Types of Crowdsourcing

February 27, 2013

Today’s Wednesday Work Wisdom

Yesterday I spoke at an event called Crowdopolis. The topic was crowdsourcing. This has become one of the hot buzzwords in business. Companies of all sizes are dipping their toes into crowdsourcing.

But what is it really? Well, crowdsourcing is a lot of different things and can’t easily by lumped into one small bucket.

Here are a few of the crowdsourcing variations (and this is not a complete list):

  • Solution Finding: This is where you use a crowd to solve a complex problem. Are you looking to develop a glass for the next iPhone that won’t smudge? Ask a crowd to see if they have a solution. InnoCentive and BrightIdea are two platforms that help` companies solve these types of problems (the latter is the engine behind GE’s ecoimagination initiative).
  • Opinion Seeking - Crowds can be used, of course, to provide input and suggestions on how to improve your product. SurveyMonkey is a low-end version of this in action. MyStarbucksIdea.com is a more sophisticated version that runs on SalesForce.com’s “ideas” platform.
  • Content Creation – Want to create an advertisement for your company but don’t want to hire a single design agency? Why not hire the world? Companies like Doritos have done this for their Super Bowl commercials with great success. Platforms like Tongal help companies crowdsource the creation of videos. News broadcasters are also doing this to help collect videos from individuals who shoot newsworthy footage on their iPhone.
  • Design Competitions – Need a new logo? You don’t need to hire just one person from an agency or eLance.com (which is also a form of crowdsourcing, even though you only get one person doing the work, you get multiple people to bid on the work), you can use 99designs.com or logotournament.com to get hundreds of designs for the price of one. You select the one logo you like and pay only that one designer.
  • Data Collection - This is a growing area of crowdsourcing. Instead of sending your employees out to inspect buildings, shelves in super markets, or potentially even read meters, get anyone to do it. For example, when someone is in a supermarket, have them snap a picture of your product on the shelves. This gives you insights into stocking levels and product placement, and the GPS tracking will give you the location without the need for tagging. Think of this as more data for your big data.
  • Manual Tasks - This is outsourcing on steroids. Amazon.com’s Mechanical Turk is an example of this. Break up your work into bite-sized chunks and get people to do these activities for pennies. There are many platforms for doing this in all shapes and sizes. Although it is not technically a crowdsourcing platform, one of my favorites websites is fiverr.com; a site where people will do almost anything for $5.
  • Testing – Do you have something you want to test? uTest is a great platform for this. They can beat the heck out of your website looking for bugs, usability issues, or anything else. You can get hundreds of people banging on your system to stress it and test it.
  • Customer service – What if you could get your fans to be customer service employees? Platforms like CrowdEngineering.com allow your most knowledgable customers to provide help to your entire customer base. If your customers have a technical problem, instead of speaking to an employee, they can be routed to one of these knowledgable fans. Think of this is a virtual “geek squad” or “genius bar.”
  • Programming – One of my favorite crowdsourcing platforms is TopCoder. This is truly amazing. They have nearly a half million programmers, designers, testers and program managers who compete to create wireframes, designs, code, and algorithms, and then test everything for customers. This is one of the best end-to-end solutions out there.
  • Crowd funding – Need money for an initiative or cause? Crowdfunding may be the way. Platforms like kickstarter.com enable people to raise money for their projects. There are platforms for raising money for non-profits. And now there is the emerging version which can allow for micro-angel investing.

As you can tell, crowdsourcing can be leveraged in many ways.

It is important to note that crowdsourcing is not THE answer. It is only a tool. You need to make sure you understand what you want to achieve and then determine if this approach is appropriate. Too many organizations have tried crowdsourcing, thinking it was a silver bullet, only to be wildly disappointed. Having said that, when used properly, it can reduce costs, timeframes, and risk, while providing high quality solutions.

Innovating Masterminds (transcript)

February 19, 2013

Here is a transcript of yesterday’s Monday Morning Movie

When I started my business 12 years ago, one of the first things I did was join a mastermind group. Basically “mastermind” is just a fancy word for a group of people who come together that work on each other’s business.  So we learn from each other.  I’ve learned a number of things over the years in terms of what makes a good mastermind group. If you’re in a business and you want to learn from others, this is an awesome way.

For most of my career, I decided to mastermind with other professional speakers.  In the early days of my career this was great because I learned some of the basics and I learned some of the things that would have taken me much longer to learn. I was able to learn from people who’ve already done what I wanted to do.

But then I recognized something.  There is a point in every business where only hanging out with people who are in the same business is actually going to hold you back, because you start breathing the same oxygen.  You start thinking the same way.

Sometimes you want to breathe fresh ideas into your business; to think differently.

Just last weekend I got together with four other people in Las Vegas.  We had this great two-day mastermind.  We spent about an hour and a half on each person’s business and we dug really deep.

What was particularly cool about this mastermind is that instead of being composed of a bunch of speakers, we had a diverse group: someone who is in real estate, someone who works in multilevel marketing, someone who is in the printing business, and someone who had his own creativity space. And then there was me, the speaker. We also invited someone in who was an executive at Zappos for a while.  So we got a very interesting mix of people.  I learned a lot about business, and what would be valuable to my business, from this group of people.

Although I was shocked at how useful the input was, it really shouldn’t surprise me since my message around innovation is that we need to hang out with people who aren’t like us. But I have to say, I was still amazed to see the real power of getting a divergent group of people together that have a deep trust for one another and can share their open and honest opinions.  It was fantastic.

The other thing that we learned, which is an extremely important part of not just masterminding but innovation in general, is you have to know what question to ask.  Anybody who’s seen my work knows that I love to quote Einstein who reputedly said, “If had an hour to save the world, I would spend 59 minutes defining the problem and one minute finding solutions.”  This is really important.  Even in a mastermind it is critical to make sure we’re asking the right question.  Sometimes even a small change in language can have a huge impact.

For example, one person might be thinking about starting a restaurant.  Now, that question – “What do I need to do to start a successful restaurant?” – implies the individual needs to worry about everything associated with starting a new business.  If we change the language slightly and ask – “What do I need to do to buy a successful restaurant? I don’t want all of the hassle of starting one from scratch.” – very different suggestions and ideas will pop up with that.  Or if the question is – “Instead of buying a restaurant, what if I became an advisor to other restaurants?  I want to be involved in restaurants but I don’t necessarily want all of the day to day work.” – well, that’s again a fundamentally different question.

What we found over and over in the course of the weekend is that if you’re asking the wrong question, all the advice you might get from someone is irrelevant.  So you want to make sure that you’re taking the time to really think about what matters.  What’s important?  What do you value?  Make sure your questions are framed accordingly.

The other thing that we learned is that sometimes, when you want to improve your business, you don’t want to hang out with people who are even in the world of business.

We spent a fair amount of time talking about personal development: things that have nothing to do with the success of our company but are about our own internal success.  How do we become better people? Live better lives? Be happier? Be more compassionate?

It is amazing how these types of things, these non-business activities, can have a huge impact on your business.  That’s why it’s really important for you – whatever your business, whatever your role is in business – to recognize that you don’t want to spend all of your time hanging out with people who think like you.

Don’t just go to industry conferences.  Don’t just go to conferences with people who have the same role or function as you.  Instead, find people who have fundamentally different types of businesses.  Find people who are in different parts of your business.  If you’re in HR, hang out with people who are in sales.  Learn from people who think differently.

And again, don’t just spend all of your time thinking about business.  Think about your life and what you want out of your life.  This will make you more powerful in everything you do.  This will then help you create a more successful business because you will be able to define success on your terms.

This is Stephen Shapiro, and I hope that you find a group of people who together will change your business and change your life through divergent points of view together.

P.S. I still mastermind with other speakers, and get incredible value. The point isn’t to stop spending time with people from your industry. I am suggesting that you need to balance that with individuals/groups from different industries, different functions, and different disciplines.

Next Page »