#coolfarming

I think that time has come to fundamentally rethink the way we train and reward managers. While social entrepreneurship has become a popular buzzword at management schools, and Andrew Cuomo, the new governor of the state of New York asked all his senior staff to take an ethics class in the first sixty days of his tenure, this is still just lip service. My proposal is far more radical: Make managers redundant! Let me explain what I mean. 4 Motivational Phenotypes of Knowledge Workers When trying to understand the behavior and motivation of knowledge workers, it helps to group them into four phenotypes. These four types of knowledge workers, vastly differing in skill set and motivation, are: (1) the artists, (2) the scientists, (3) the teachers, and (4) the managers. Artists want to create something new and beautiful, to touch the lives of people interacting with their art. Whether it is painters, sculptors, actors, singers, or orchestra musicians, they do what they do mostly not because they are paid to do it, but because they love what they do. Scientists want to discover something new, to further the state of the art in their chosen field of science. Whether it is pure science like physics or astronomy, or applied science like medicine or engineering, their goal is to create something new by taking what is there, and combining it in new, innovative ways. Teachers want to impart knowledge to their students. They want their pupils to understand, to become lifelong learners, and to be self-sustaining members of society. The creativity of teachers consists of developing new ways and methods of conveying and transferring knowledge. Managers want to increase the success of the organization they are leading. Their creativity consists of taking the output of scientists, artists, and teachers to make the organizations they lead succeed. The main motivation of managers, as stipulated by proponents of the free market theory, is to increase the revenue of the organization they are leading, and thus also their own paycheck. While artists and scientists want to create something radically new, either a new piece of art, or a new scientific insight, managers and teachers are mostly executors. Most of the time they do not really excel in creating new things, but in executing project plans, or executing curricula. Our education system rewards teachers to produce managers, not artists and scientists. Income is negatively correlated to intrinsic motivation Artists do what they do because they love it. They are the most intrinsically motivated of the four phenotypes – followed by the scientists and the teachers, who are scientists and teachers because that’s what they like, and not to get rich quick. This is very different for the managers, who most of the time chose their profession to be successful. They expect their success to be rewarded by fat paychecks and high status in society. The income of artists, on the other hand, shows a definitively long-tail distribution, meaning that there are very few Picassos and Brad Pitts getting rich and famous. Rather, the vast majority of artists can expect to make very little money over the course of their careers. Salaries of scientists and teachers show a similar distribution with most of them living off quite modest salaries. Income distribution of managers, on the other hand, shows a fat tail, meaning that many can expect to make a substantial income, and a still sizeable number can expect to make a lot of money. The most popular way for scientists, artists, and teachers to increase the size of their salaries is to accept “managerial” roles. The key difference therefore between managers and the three other phenotypes is that artists, scientists, and teachers are intrinsically motivated, while managers are motivated extrinsically. On a side note I would like to emphasize however that this discussion is about phenotypes. This means that this distinction into four categories is about oversimplified role types. Artists, scientists, and teachers don’t mind getting rich and famous, and managers might genuinely want their company to succeed in making the world a better place. Reality is never black or white, but rather somewhere in the middle, and most managers also have traits of an artist, scientist, or teacher, and the other way round. So what are my recommendations for a manager? The answer is very short: Forget about being a manager! Trust your emotions. Become an artist, teacher, and scientist. Discover the joys of creating something new, of coaching your employees and help them grow. This will help you start doing what you love, and not what you are paid to, becoming intrinsically motivated in your job. This will also make you much happier. In short, become a coolfarmer!

I am delighted to announce that – finally - my new book "Coolfarming - Turn Your Idea Into The Next Big Thing" just came out. “Coolfarming” is about how to grow your own trends by creating an environment where COINs (Collaborative Innovation Networks) flourish; then - once a product has become established - extend the creative pool into a Collaborative Learning Network, or CLN, whereby a targeted group of interested people are brought in to learn the basics of the product, make suggestions for improvements, point out deficiencies, and push the idea forward. When this feedback gets incorporated, things get really interesting, expanding the process further outward to a Collaborative Interest Network (CIN) that encompasses thousands or even millions of users, building what hopefully turns into a loyal fan base…and virtually guaranteeing the success of the idea. Based on case studies and examples from Linux to the Twilight series, from Procter & Gamble to Apple, this book lets you in on the practical, step-by-step processes that will allow you to successfully cultivate the kind of swarm creativity that generates hot new trends . . . and then push them over the tipping point to commercial success. Get it from the publisher Get it from Amazon If you are interested in hearing about it firsthand, I will be teaching a workshop about coolfarming at the 2nd International COINs (Collaborative Innovation Networks) 2010 conference in Savannah, it would be cool to see many of you there. Insightful review by Barry Richardson

Little did I know when I was attending one of the evening events of Swissnex that I was about to meet a truly impressive creator. After filling a heaped plate of food at the sumptuous buffet after the talks, I was looking for a place to eat when I noticed two attractive women in the back of the room. As soon as we started talking I noticed that they were not just a pleasure to look at and talk with but real creators. In my discussion with Magdalena, she told me that she was a graphic artist producing digital art. When she invited me to visit her in her studio I jumped at the opportunity. On a sunny afternoon the next week I climbed the stairs to her studio in Revere outside of Boston. The studio doubles as a gallery, displaying really cool art. When we sat on her couch in the middle of art books and framed digital pictures, Magdalena told me a bit about her life. She was born in Poland to parents of German descent, as a young adult she moved to Germany, later after she had married an American she moved to Boston, where initially she continued working as a biologist for a research company. Ten years ago, however, she decided to quit natural science and to exclusively focus on art. In her art she takes digital photographs of people, dressing them in medieval cloth and embedding them in a renaissance style environment, giving her digital pictures the feel of Rubens or Boticelli paintings. For her digital paintings she needs lots of models, whose pictures she takes on the floor of her living room. She has a wide circle of models and friends, drawn from fellow artists, painters, photographers, and actors but also including scientists from her previous work. One of the more interesting ones is Niki the crossdresser with large wig at night - Nick the scientist during the day. Her masterpiece until now is “the sleepers” (extract pictured below), a digital composition of 35 models, combining 35 digital photographs of 25 different people into a surreal nightly landscape of ethereal beauty. When I asked her how she finances her art, she told me that she works seven days a week, only now it’s not work anymore but her passion and labor of love. She explained “I want to spend my time to become a better artist, and not wasting my time selling art”. This of course means, that besides creating art, and occasionally selling art, Magdalena is doing all sorts of odd jobs. She has folded towels in “bed & bath”, and she worked as a temp usher during the entire last stay of Cirque du Soleil in Boston. During these jobs she never stops promoting her art. While working at Cirque du Soleil, she produced one of her signature large digital artistic creations with some models from Cirque du Soleil, and asked for permission to put it up in the tent. When her temp manager denied the request she found another employee of Cirque du Soleil who put it up for her in the break room of the internal employees of the Cirque. She even succeeded in having some of her art shown in the ICA – the Institute of Contemporary Art in Boston. This happened when one day she learned that next Saturday morning the ICA would show 100 pieces of art from local artists. Needless to say she was the first one at the door next Saturday at six in the morning, not only assuring a premium spot for her piece of art, but even winning an award for the best picture. For a change, Magdalena likes to go out to art shows and cultural events like the one from Swissnex at the Harvard Business School where we met. Another favorite of hers are the events from the Goethe Institute in downtown Boston. Not only is there good food at these events, but also good company, and the opportunity to recruit more models for her masterpieces, and perhaps even a customer or two. When I asked her what motivates her, the first thing I noticed was a fierce sense of independence and self-determination. This reminded me of the famous quote of Perikles, politician during Athen’s golden age of democracy: “Make up your mind that happiness depends on being free, and freedom depends on being courageous”. Magdalena put her own principle into the following words “You end up where you want to go if you let go without knowing how you will get there.” Her main motivation to do what she does is twofold: seeing the happiness of people when they acquire her art, and the big satisfaction she draws from the process of creating new art. One of her ways of increasing dissemination of her art is to choose her models well. If they like her art and their own representation in Magdalena’s pictures, they will spread the word. Usually this works very well, at least it worked for me. At the end of my visit she had successfully recruited me as a model for her next masterpiece, tentatively named “the wall”, which will combine a large number of people building up and tearing down a wall. I think every member of a COIN can learn a lot from Magdalena!

Why do people collaboratively engage in innovative tasks? What’s the motivation to work together to develop something new? After all, if I do everything by myself, I will reap all the rewards for myself, and don’t have to share. Nevertheless, humans are the most social species of all, and progress is only possible by collectively creating new things “standing on the shoulders of giants”, by learning from what others have done, and apply it in novel ways. According to my colleagues at the MIT Center for Collective Intelligence Tom Malone, Rob Laubacher, and Chris Dellarocas there are three main reasons why people engage in collective intelligence systems: Money – financial gain is a strong motivator for people participating in markets and traditional organizations, either for direct payment, or for future payment, e.g. acquiring new skills. Glory – getting recognition and building up a reputation can be an important motivator. Love – love can be an important motivator, be it because people intrinsically enjoy an activity, because they like to socialize with others, or because they feel they are contributing to a cause larger than themselves. Randall Collins links together these motivators in his theory of interaction ritual chains. He extends Emile Durkheim’s concept of effervescence, the energy that groups of people experience when they are together at a sporting event, a rave, or a riot. For Collins the mechanisms that drive society are nothing but interaction rituals. Interaction rituals consist of 4 components: 1. the people need to be bodily present at the same place. Through mutual feedback they will charge up the situation with excitement and significance. 2. there needs to be a boundary that demarcates the insiders from the outsiders, giving insiders a feeling to be privileged. 3. all insiders have a shared focus of attention, by communicating this focus to each other they become mutually aware of this focus. 4. by experiencing 1 to 3, all participants share a “common mood or emotional experience”. When these 4 components combine successfully, participants are infused with emotional energy, the feeling of excitement, achievement, and enthusiasm – in short they are happy! Applying the concept of interaction ritual chains to the above three motivators "money", "glory", and "love" means that "love" as experienced in ritual interaction chains is the key motivator at the core, glory and money are simply enablers to obtain "love". Just look at Tiger Woods, who used his money and glory to buy love. What motivates scientists? To explain how love is the main motivator for people interested in collaborative innovation, let’s look at what motivates scientists, people whose profession it is to innovate. At the outset, scientists are motivated mostly by glory: it’s all about publish or perish, i.e. getting one’s papers into highly-ranked journals, and then be quoted by others. Swiss researchers Margrit Osterloh and Bruno S. Frey - himself a highly-cited researcher - analyze the deficiencies of the current academic ranking system based on peer review and citation count. Currently academics are ranked first by how many papers they get into top-ranked scientific journals. The decision on which paper makes it into a journal is based on peer reviews. The second criterion of success is citation count of their paper, i.e. how many other researchers cite the papers in their own academic work. Unfortunately both of these ranking systems have serious deficiencies, even leading to what Frey calls “academic prostitution”: As has been shown repeatedly, peer reviews have very low to no correlation with future citation, and citation count by other authors is seriously biased towards authors choosing articles they quote to increase acceptance of their own papers. Frey therefore proposes to revise peer review and quote-based ranking to reward intrinsic motivation. After all intrinsic motivation is what usually gets young researchers started on their career path: factors such as curiosity, flow experience in a fascinating activity, self-image, compliance with civic virtues, social or professional norms. In other words, all factors based on love with what they do. While scientists therefore make a good role model for people involved in collaborative innovation, there is an even better one, which has been tried and tested for well over a thousand years, and has been analyzed by the same Bruno S. Frey: Benedictine monasteries (recently profiled in NZZ). Why monks are coolfarmers (c) In a paper on management principles of monastic life, Katja Rost, Emil Inauen, Margit Osterloh and Bruno S. Frey study corporate governance at 134 Benedictine Abbeys in Southern Germany and Switzerland with an average age of nearly 500 years per monastery. It turns out COIN members can learn a lot from the monks. Benedictine monks organize their monastic life around three pillars: Self-management: normally monks choose their own abbots from among their own ranks. Among the democratically elected abbots, only 11% turned out to be incapable, while among the externally imposed abbots, 67% were judged bad leaders. The Benedictine monks also have a lot of say in daily monastic life: there is a democratically elected “executive board” working with the abbot, a “consilium” advising and supervising the executive board, and there is also the full “parliament” of all monks convening multiple times per year and making fundamental decisions. Core value system: Benedictine monks adhere to core values such as fairness, justice, mutual respect, mutual agreement, and forgiveness. Monasteries invest a lot of time into carefully selecting their new brothers, which join brotherhood over a well-calibrated multi-step multi-year process. Spending a lot of time with older monks, the young learn core values by example from the old. Additional learning happens through institutionalized readings during the meals. External control: All the Benedictine monasteries are members of the congregation, lead by the archabbot. A visitation committee from the congregation inspects each monastery every five years, checking financial and spiritual health, with focus on advice, not on control. Daily life in the Benedictine monasteries is governed by core values instead of control. This autonomy and self-organization increase intrinsic motivation, leading to higher quality results. Comparing average lifetime of a monastery (500 years) with the lifetime of large companies, which rarely survive 50 years, monks easily beat company executives. Love, the main motivating factor in Benedictine abbeys, therefore again trumps money and glory as corporate motivator. What motivates creativity? So far it seems that “love” is the main motivating factor for collaborative innovation. So is there a difference between love-driven “good creativity” and “bad creativity”? Creativity defined as “creating new things by combining existing things and processes in novel ways that have not been done before" is neither good nor bad. But thinking this through further raises the question if e.g. creating a new derivative product for a Wallstreet bank is creativity also. After all, the Wallstreet banker is applying existing thinking to a new area to create value – mostly for himself. And that’s why I think that this is NOT sustainable creativity. The Wallstreet banker is entirely extrinsically motivated – he does what he does to make a lot of money, preferably for himself. Enron employees were highly creative in trading energy options, and even more creative in gaming the Californian energy system – all to create value, towards the outside for Enron and its shareholders, in the end, however, it all boiled down to optimizing their own bonuses. As history has shown, this was not and will never be sustainable! For some time, Enron revenue and share price went up, all to come down with an ugly crash after a few years. All that Enron employees did, was create one heck of a Ponzi scheme. As it now turned out, the real estate bubble in the US, created by “genius traders” at Wallstreet, was just yet another Enron, only at a vastly larger scale. Enron employees did not break the laws of the United States, what they broke is the laws of good and ethical behavior. The schemes the Enron employees cooked up might have been legal, but they ripped off the majority – all of the users of electricity, i.e. all of us, to the advantage of a tiny minority: firstly the shareholders of Enron, and more importantly, the inventors of the energy trading systems. And that’s why free markets don’t work. The underlying premise of Adam Smith’s invisible hand is that if everybody is off to fend for himself, trading on an unrestricted market will make society at large to be better off also. Well, this would only be true if there were total transparency, and no law of the bell curve, i.e. of smarter people trying to profit from not-so-smart people. And that’s why I think that only collaborative innovation motivated by “love” leads to sustainable progress. What is better: banker or monk?

Today's NYT describes a list of computer programmers turned entrepreneurs, creating cool apps for the iPhone. With the barriers to entry as low as they are here: one basically just needs a computer to download the app developer kit, plus of course programmer skills, this is the perfect opportunity for swarm business. People like Ethan Nicholas, a (former) Java developer at Sun, making $800,000 with a shooter game, are the new members of the swarm. Apple, handling sales and marketing including money collection though its App store, proves once more superb coolfarming skills.

Recently (see my previous blog post) I was interviewed by a journalist from the Washington Post about how cool Washington is. Her conclusion was that DC is not cool. This led to a backlash of negative reactions - I got my share of it also, see the post here and the comments on the original story. I would like to point out there are very cool places in Washingon. There is for example the hotel I stayed in one of my last trips to DC, the Tabard Inn, a very cool boutique hotel. But there are also less cool things in DC, like when I was scheduled to give a presentation on Collaborative Innovation at the World Bank, and was not let in for 45 minutes because security was so tight they could not find anybody with the right credentials to identify me. But actually it would be quite easy to make Washington very cool. Cool places are made by cool people, and one of them just started in his new job last week. It’s now up to all of us to get more of the same to Washington!

Yesterday the Washington Post published a timely opinion piece on “how to make D.C. cool”, pondering the question whether Washington D.C. could ever be cool. The journalist had interviewed me for this article, and the discussion with her got me thinking about what it takes to make a place “cool”. Why is it that NYC, SF, or Boston are cool, while D.C, a popular tourist destination, seems in dire want of coolness? Let’s first look at what makes things cool. “Cool” things have four properties. First, they need to be fresh and new, we don’t want yesterday’s stale old ideas, but radically new and better ones. Apple is cool, Microsoft is not. Why? By ushering in a new era in computers with the Macintosh, in music players with the iPod, or in mobile phones with the iPhone, Apple has shown a unique knack in coming up with beautiful new things. Microsoft may be more profitable, and having grown to much bigger size with its copycat strategy, but nobody has ever accused it of being cool – that’s reserved for creators of radically new things. Microsoft’s technology does the job, but it’s clunky, arcane, clogged with features that nobody wants. Apple, on the other hand, consistently defined new markets with superbly designed innovative products. Second, cool things make us part of a community, they help us be with people like us. As psychologists and sociologists have found out, if we have the chance, we would like to be with as many people “like us” as possible – the more the merrier. Why was it that two million people trekked to Washington, to the inauguration of President Obama? Why did people stand in line for eight hours to get to the Mall to Obama’s inauguration, and not just watch it on TV? Simple answer: other people. It was the chance to be part of something cool and new, to witness change, jointly with two million likeminded souls. Even something as simple as owning the latest iPhone or Blackberry makes the owner part of a community, a sister and brotherhood , with the token of entry being the iPhone or Blackberry. Third, cool things are fun. Owning an iPhone is fun, because it looks so well-designed and cool. Going to a musical on Broadway is fun and relaxing. Making calls and surfing the Web on an iPhone is fun, playing music on an iPod is fun. Drinking coffee in Starbucks is fun too, not the least because every Starbucks customer is in good company with other people who are enjoying a good cup of coffee in a relaxing atmosphere. It’s not for nothing that Starbucks carefully selects and trains its barristas to provide a superior customer experience. Finally, cool things give meaning to our life. Cool things make people happier and feel good. Owning a cool thing can become a goal all by itself, whether it is the new iPhone, the bag from Adidas, or the car we always wanted, or joining an activist group fighting global warming. For many people the thing that gives meaning to their life is making the world a better place – the ultimate in cool. Now that we know why something is cool or not, the next question is what makes up – or does not – the coolness of a place like Washington. The main thing that makes a place cool is cool people. For cool people to show up at a place, they must find cool things there, not the least other cool people. Once a place is bustling with stars, actors, models, artists, movie stars, or star entrepreneurs, more of them will show up. What are the external landmarks of a cool city? There are three parts to it: a recreational, educational, and a business part. Recreational components of a cool city are funky cafes, elegant boutiques, artistic shops, art galleries, all sorts of restaurants from cheap and greasy to organic and healthy, theaters, museums and parks to stroll around. The second ingredient of a cool place is educational institutions such as universities, colleges, or art schools, bringing the droves of students who provide the social glue of the cool city. A third mark of a cool place is a dense organic mix of business life, scores of startups combined with larger well-established companies. The more of these three things – recreation, education, and business – there are compressed within a city, the cooler it is. That’s why NYC is cool, or Boston and San Francisco. One of my recent favorites among cool places is Savannah, a port city in Georgia, which until just a few years ago was in serious decay. But when I was visiting Savannah last fall, I found a city bustling with life, full of artists, students, and tourists. Talking with locals I found there is one institution that heavily influenced this conversion to coolness: SCAD – the Savannah College of Art and Design, founded in 1978, with 9000 students as of today. SCAD has renovated many of the old mansions and historic buildings that had been rotting for the last fifty to hundred years into lecture halls and student dorms. During my visit in Savannah I noticed all components of a cool city – coffee shops and art galleries, theaters and music festivals, educational institutions, and an active business life, ranging from numerous startups to Gulfstream Aerospace, a large manufacturer of jets.

While shoppers might go to buy a jumbo pack of toilet paper and laundry detergent at Costco, the world’s largest wholesale retailer, they are more likely to also walk out with a pair of fashion jeans, an iPod, or a large plasma TV – in addition to the toilet paper and laundry detergent. While a Wal-Mart stocks 100,000 items, a Costco makes 58 billion of annual revenue with just 4,000 items. It has become a terrific coolhunter, enticing its shoppers who came for daily necessities to also walk away with the latest and coolest gadgets, usually spending a couple of hundred dollars at every shopping expedition. According to its own words, Costco is “..trying to figure out what customers really want.” For that Costco only stocks the most well-liked, trendy, and fast-moving items. It also gets it known that each of its items which is usually offered at a very attractive price is only available in very limited supply. This way, Costco combines its coolhunting efforts for the trendiest products with creating its own culture of cool. By having new items every time a customer comes to its store, it even tries to create a “treasure-hunt atmosphere”. By discovering items at a deep discount right before they get off the shelves, customers experience an emotional thrill. But besides offering an emotional shopping experience, Costco also treats its workers well: a typical cashier, after having worked for four years at Costco, according to an article at last Sunday’s New York Times makes about $40,000 plus benefits. Costco even has created a community of shoppers by countering conventional wisdom and charging its customers $50 per year to be allowed to shop at Costco. So far 24 million shoppers have signed on. Coolhunting and coolfarming combined!