Link: Long-term vs short-term thinking

Great article by Seth Godin: The Interim Strategy.

This interim strategy, the notion that ideals and principles are for later, but right now, all the focus and resources have to be put into the emergency of getting successful—it doesn’t work.

It doesn’t work because it’s always the interim. It never seems like the right time to stop doing what worked and start doing what we said was important.

Tags: strategy

Book Review: Cómo mandar bien. Consejos para ser un buen jefe, por Manuel Alcázar

Note to english subscribers: This a review of the book Cómo mandar bien by Manuel Alcázar Garcia. At the time of this writing, the only edition of the book is in Spanish, I’ve decided to post the review in Spanish.

Manuel Alcázar García, autor del libro Cómo mandar bien: consejos para ser un buen jefe, es profesor del Área de Gobierno de Personas del PAD —la Escuela de Dirección de la Universidad de Piura. Licenciado en Filosofía y Letras, Máster en Economía y Dirección de Empresas, PhD en Gobierno y Cultura de las Organizaciones.

Cómo mandar bien no está elaborado a modo de how-to o guía práctica, si no que profundiza en los principios antropológicos del mando. Este libro lo apreciarán especialmente quienes estén familiarizados con otros libros del autor o hayan asistido a sus clases. Para los que no, el texto puede ser más denso de lo que uno está acostumbrado a leer en libros de management. Como es de esperar, Alcázar refiere con frecuencia textos y conceptos de Juan Antonio Pérez-López.

El libro está dividido en tres partes: (I) Consejos para mandar bien, (II) Problemas, dirección y políticas de la organización, y (III) Nueve puntos que el directivo debe tener en cuenta

La finalidad del mando

El primera parte, Consejos para mandar bien, es un resumen de los conceptos básicos de Gobierno de Persona siguiendo las enseñanzas de Juan Antonio Pérez-López. El autor explica de modo práctico la finalidad del mando, que es servir a los que han de sacar adelante la organización:

Es la primera finalidad del mando: servir a las personas que han de sacar adelante la organización: las operaciones, el servicio a los clientes, usuarios (…) Un buen jefe debe, en primer lugar, entender esto, que es el sentido y el fin de su trabajo.

La organización camina mejor cuando la gente que la saca adelante decide y actúa mejor, dentro de lo que el entorno permita.

Por tanto, las razones por las que existen jefes, explica el autor, son repartir tareas y coordinar; asegurarse de que los subordinados tengan los medios necesarios para hacer su trabajo; sepan hacerlo —sepan qué hacer y cómo hacerlo—; y estén motivados, es decir, que quieran hacerlo.

El que obedece, por su parte, debe saber escuchar lo que se le pide y si no entiende, preguntar. Si no, ¿cómo va a cumplir lo que se le pide? Luego debe preguntarse: ¿puedo hacerlo? ¿sé hacerlo? Y, finalmente y más importante, ¿estoy de acuerdo? ¿quiero hacerlo? Los subordinados en una organización, explica el autor, tienen la obligación de hacer lo que se les pide aunque no esté de acuerdo, salvo que se les pida algo inmoral o ilegal.

La comunicación debe ser clara, y despersonalizada. Con despersonalizada se refiere el autor a que el que manda debe evitar usar frases como “porque lo digo yo”, “porque a mí me gusta”, “porque yo prefiero”, “porque yo necesito”, o peor, “porque aquí mando yo”, que confunden respecto a los motivos para realizar la acción.

A la vez, hay que asumir las propias responsabilidades y no esconderse detrás del organigrama cuando hay que comunicar decisiones difíciles. Por eso, es preferible decir, por ejemplo, “he decidido” —o hemos decidido, si es el caso— a decir “la empresa ha decidido”.

Motivos y motivación

Una dificultad que pueden encontrar algunos menos familiarizados con los escritos de Juan Antonio Pérez-López es el uso que hace Alcázar de los tipos de motivos, en especial la motivación racional por motivos trascendentes. Más adelante en el libro, al hablar de liderazgo, Alcázar da un buen resumen de la teoría de la motivación, pero parece oportuno revisarlo ahora para estar familiarizado con la terminología del libro.

El esquema es el siguiente: Las personas tienen necesidades de diversos tipos. Las empresas buscan resolver estos distintos tipos de necesidades que, a su vez, se corresponden con determinados tipos de motivos de la acción humana.

Los motivos son las razones objetivas —es decir, independientemente de la persona concreta— que tiene cualquier persona para actuar de modo determinado en una situación. La motivación son las razones subjetivas que tienen una persona concreta para actuar de un modo determinado en esa misma situación.

En palabras del autor:

En primer lugar, las necesidades humanas. (…) se puede decir, de manera rápida, que son tres: necesidades psicocorpóreas, cognoscitivas y afectivas. Las psicobiológicas están claras, y se solucionan con el tipo de cosas que el dinero puede comprar, y la salud proporcionar. Las cognoscitivas (el afán de saber). (…) Las afectivas: ser útil y sentirse querido; son las que dan sentido a la vida. Las dos primeras son necesarias para la supervivencia; las afectivas son las que hacen que merezca la vida sobrevivir. (…) La empresa está para resolver esas necesidades. (…) ellas son, a su vez, los motivos de la acción humana. Los famosos motivos extrínsecos, intrínsecos y trascendentes, de que hablaba Pérez-López. Los tres son buscados por todas las personas, también en la empresa y en las organizaciones políticas.

Y desde el punto de vista de la empresa u organización:

Las dimensiones de la empresa también son tres: eficacia, es decir, beneficio, rentabilidad, que es la capacidad de satisfacer los motivos extrínsecos (…); el saber distintivo, el know how diferencial con el que se satisfacen los motivos intrínsecos (necesidades cognoscitivas). Y la tercera, unidad, todos empujando en una misma dirección, que se basa en la confianza, capacidad de la empresa de satisfacer las necesidades afectivas de sus miembros. Lo importante es darse cuenta de que todo el mundo en la organización (…), cada vez que toman una decisión producen un impacto en estos tres planos: afectan para bien o para mal a la cuenta de resultados [eficacia], incrementan el patrimonio de ideas buenas [saber distintivo] y se hacen más dignos de confianza [unidad].
(…) Por tanto, los TRES son criterios a tener en cuenta en cualquier decisión dentro de la empresa, y no solo el beneficio.

Diagnosticar las fallas en la ejecución

Cuando alguien no hace lo mandado, no hay que reaccionar precipitadamente sino diagnosticar la causa. Y para hacerlo, el autor propone seguir el esquema que ya ha explicado anteriormente: preguntarse por qué el subordinado no ha hecho lo que se le pidió: ¿porque no ha podido? ¿porque no ha sabido? ¿porque no ha querido?

Si no ha querido, ¿ha sido por motivos extrínsecos? ¿por motivos intrínsecos? En este caso, el jefe puede considerar usar el poder persuasivo o coactivo para que el empleado cumpla con su deber.

En cambio, si no ha obedecido por motivos trascendentes, hay que considerar si el empleado tiene razón y lo que se le pide es injusto o va contra los fines de la organización, y en ese caso lo que corresponde es rectificar lo que se pide.

La función del jefe es subsidiaria a los subordinados, y por eso ejercita la prudencia en lo que respecta a sus intervenciones. Ni cae en el micro-management, ni se conforma con orientaciones vagas o deja a los subordinados a la deriva. El buen jefe deja trabajar:

Si las personas ya saben lo que han de hacer, saben hacerlo, pueden hacerlo, quieren hacerlo y lo están haciendo, entonces el jefe no ha de hacer nada ni mandar nada, salvo estar cerca y disponible sin molestar.

El uso del poder

Alcázar insiste en que el buen jefe debe mandar poco y por excepción. En esa misma línea, el uso del poder coactivo debe ser el último recurso. El uso del poder es innecesario cuando se tiene autoridad, cuando el que gobierna actúa sostenidamente con intención recta y competencia, es decir, conoce su oficio.

En todo caso, cuando hay que usar el poder, debe hacerse de modo oportuno —es decir, a tiempo—, proporcional —a faltas leves corresponden sanciones leves, a faltas graves sanciones fuertes— y justo. La motivación para usar el poder debe ser motivación racional por motivos trascendentes, es decir, velar por la unidad en la organización y el bien de las personas.

Malos usos del poder son el uso injusto, por ejemplo los atropellos, murmuraciones, humillaciones, calumnias, ya sean originadas por el jefe o permitidas; el uso en exceso; y, el uso en defecto, por ejemplo no corregir, no impedir abusos, o no elogiar o reconocer cuando es debido.

Cuando se manda en exceso se priva a la gente de la legítima autonomía y flexibilidad (motivos intrínsecos) que a todos nos agrada tener al hacer las cosas; se resta atractividad a la organización. Hay que dejar que la gente haga las cosas a su manera, dentro de un orden, y saber que no tienen por qué hacerlas a la manera del jefe.

La responsabilidad de las propias acciones

El autor dedica un buen número de páginas a explicar las acciones libres y no libres. Por acción libre entiende aquella acción que una persona realiza con consciencia— sabiendo lo que hace— y voluntariedad —queriendo hacer lo que entiende que está haciendo.

Somos responsables de nuestras acciones libres. Es equivocado tanto culparse por cosas de las que moralmente no somos responsables, como exculparnos de las cosas de las que sí somos responsables.

A veces uno quiere para sí un premio que no se merece y no quiere para sí una sanción que sí se ha ganado. Como recuerda Pablo Ferreiro, “a la hora de poner medallas sobran cabezas, pero a la hora de cortar cabezas faltan cuellos”.

Se deben premiar o castigar, por tanto, las acciones libres. Tiene tan poco sentido premiar al empleado que logra resultados sin esfuerzo —por ejemplo, por el crecimiento vegetativo del mercado—, como castigar al que no logró una meta excesiva imposible de lograr.

Si uno piensa que lo que manda o le mandan no es ético o es ilegal, entonces no debe hacerlo. Quien manda decide mandar, y quien obedece decide obedecer. No exime de responsabilidad al que obedece, por tanto, decir que sólo hacía lo que le indicaron.

Cuando uno se halla profesionalmente en un tipo de actividad donde no sabe si va a ser capaz de ser eficaz con asequible facilidad sin corromperse, tal vez sea mejor dedicarse a otra cosa, para no estar en peligro de cavar la tumba de la propia felicidad. (…) Si alguien no sabe hacer negocios sin corromperse él ni corromper a los demás, o aprende cuanto antes a ser eficaz y justo a la vez, o mejor que se dedique a otra cosa.

Cómo motivar

El primer paso para motivar, sostiene Alcázar, es conocer a los propios subordinados. Más en concreto, conocer qué saben, qué pueden, y qué quieren (qué les motiva). Hay algunos criterios básicos que el jefe debe tener en cuenta al mandar:

  1. No apelar a motivos que no motivan (para eso, hay que conocer a la gente)
  2. No apelar a motivos de inferior calidad. Apelar a motivos superiores. De lo contrario los subordinados se desalientan y frustran.
  3. Ser ejemplar. No apelar a motivos que a uno mismo no lo motivan. Si la jefa apela a la solidaridad, pero ella misma no es solidaria…

Para mejorar la “calidad motivacional” de sus subordinados, el jefe debe empezar por no impedir los motivos trascendentes. (Por ejemplo, se impiden los motivos trascendentes cuando se mira o premia solo el logro de la meta sin fijarse en el cómo se ha logrado.) El segundo paso es enseñar. Y el tercero, dar ejemplo. El mínimo de buen ejemplo que se espera de un buen jefe es que sea justo.

El verdadero liderazgo

El verdadero líder se mide, según el autor, de acuerdo a los tres ejes ya mencionados: eficacia, saber distintivo, y unidad.

El líder es eficaz. No sirven de nada los líderes “carismáticos” pero que no logran resultados:

Sin eficacia, todo lo que se diga es palabrería vacía. La cuenta de resultados eficaces es la primera obligación del directivo. (…) En eso se nota el estratega, que es la primer dimensión del directivo. (…) De nada sirve un general que pronuncie maravillosas arengas si no gana las guerras.

El saber distintivo, es igualmente importante:

No es sensato descubrir muchas oportunidades de negocio si al llevarlas a cabo se pierde de vista aquello que sabemos hacer bien de modo diferencial (con respecto a la competencia)

Así como en la eficacia se nota al estratega, en el saber distintivo se nota al ejecutivo, que es la segunda dimensión del directivo.

Hay directivos que son buenos estrategas. Otros son buenos ejecutivos. Algunos tienen ambas cualidades. Pero siempre “es preciso que sean líderes, si no cuanto más talento tengan como estrategas o ejecutivos mayor será el daño de su tiranía o su demagogia. Tirano es un estratega que no es líder. Demagogo es un ejecutivo que no es líder.”

El liderazgo es la tercera dimensión del directivo:

Líder es el directivo o gobernante que incrementa la eficacia siguiendo a la ruta de la competencia distintiva, siendo digno de confianza para su gente. Utiliza su talento como estratega y ejecutivo para satisfacer sus necesidades, satisfaciendo las de los demás.

Por último, el líder no solo actúa en las tres mencionadas dimensiones, sino que las usa también para medir y evaluar a su gente.

Problemas, dirección, y políticas de la organización

El autor empieza el segundo capítulo del libro explicando los problemas ocasionados las teorías de la organización y concepción de la persona inadecuadas que podemos manejar. “Los hombres de acción se creen al margen de cualquier condicionamiento, pero son esclavos de algún economista muerto.” Citando al premio Nobel Herbert Simon, continúa: “nada es más esencial para determinar nuestras áreas de investigación e informar nuestros métodos de investigación que nuestra concepción de la naturaleza de los seres humanos“.

El papel de las políticas en la organización

La acción directiva tiene aspectos formales e informales. Los formales —las políticas— no especifican acciones, sino que se espera que las personas actúen de modo “compatible” con ellas.

El jefe debe asegurar el trato personal a todos en la organización. Las políticas, en cambio, sirven para los problemas que atañen a muchos (por ejemplo, remuneraciones, sanciones, evaluación). “Es un error pretender solucionar un caso particular cambiando una política o sistema”. Para los problemas particulares hay que buscar soluciones particulares. Y el que debe hacerlo es el jefe inmediato, la instancia más cercana al problema.

Para entender cómo deben diseñarse las políticas de una organización —no simplemente pretendiendo convencer, pero tampoco simplemente pretendiendo obligar— , hay que distinguir entre fin subjetivo y fin objetivo.

El fin subjetivo es la formulación del propósito, las satisfacciones buscadas por el decisor. (Por ejemplo, saciar la sed.) El fin objetivo es la definición “operacional” del fin subjetivo. (Por ejemplo, comprar una botella de agua.) Es el fin que, si se alcanza, produce el fin subjetivo. El fin subjetivo es necesariamente amplio y no especifica la acción concreta —no es operativo. Un fin subjetivo puede concretarse operativamente en fines objetivos muy diversos, pues puede haber muchos modos de alcanzar un mismo fin.

Las políticas son fines objetivos de la organización que deben permitir alcanzar los fines subjetivos. Las acciones concretas que se espera de los miembros de la organización para lograr los fines subjetivos dependen, pues, del fin objetivo definido.

Mientras más concretamente se haya definido el fin objetivo, más concretamente se señala la acción y, por tanto, menos iniciativa le queda al que lleva a cabo lo mandado. Un directivo sensato quiere que su subordinado haga lo que él quiere (fin subjetivo), pero no necesariamente del modo exacto en que él lo pide (fin objetivo). Cuanto menos “operacional” sea una petición —mientras menos estrecho sea el fin objetivo— , mayores capacidades directivas se exige a quien la deba cumplir. Por eso, salvo que las políticas sean perfectamente operacionales —cosa nada deseable— el directivo debe tener en cuenta que todos los miembros de la organización son tomadores de decisiones.

Las buenas políticas son definiciones operacionales y no solo definiciones de propósitos. Pero no especifican totalmente el cómo, sino que dejan margen de acción a las personas que tienen que cumplirlas.

Nueve puntos que el directivo debe tener en cuenta, según Leonardo

El último capítulo del libro reproduce y comenta un artículo de Juan Fernando Sellés sintetizando nueve enseñanzas de Leonardo Polo que afectan al directivo. No reseño aquí el contenido, pues se trata más propiamente de un anexo.

Conclusión

Como digo al comienzo, este libro es recomendable para cualquiera que tenga interés en la dirección de organizaciones. Además del tema del mando en sí, es un buen resumen de una serie de conceptos básicos de Gobierno de Personas. Pero lo apreciarán especialmente quienes estén familiarizados con otros libros del autor o hayan asistido a sus clases.

Pienso que el texto se hubiera beneficiado mucho pasando por la mano de un editor profesional. Por ejemplo, la edición electrónica (Kindle) que leí tiene algunas fallas de diagramación. También se notan variaciones de estilo de capítulo a capítulo, o se dan por conocidos conceptos que no son de uso tan común y que ameritan cierta introducción.

Puedes comprar Cómo mandar bien: Consejos para ser un buen jefe en Amazon.

Tags: Gobierno de personas, liderazgo, Juan Antonio Pérez-López

Link: Words are cheap. It’s what you do and allow what matters

From Conor Neill’s article When you lead there is no such thing as a trivial act:

What do you know that is “wrong” but tolerate? What behaviours annoy you, but you don’t address them? If somebody arrives 4 minutes late to a meeting, are they allowed to attend? If somebody sends the report an hour later than agreed, are they sanctioned?
If you allow bad behaviour this is who you are. Words are cheap. What you allow is real.
What are your intolerables? What are the behaviours that you absolutely will not sanction? If you are not clear on this list, then you will allow bad behaviours to creep into your culture.

Tags: leadership, consistency

Link: Abandoning perfection

Seth Godin on perfection as a defense mechanism:

It’s possible you work in an industry built on perfect. That you’re a scrub nurse in the OR, or an air traffic controller or even in charge of compliance at a nuclear power plant.

The rest of us, though, are rewarded for breaking things. Our job, the reason we have time to read blogs at work or go to conferences or write memos is that our organization believes that just maybe, we’ll find and share a new idea, or maybe (continuing a run on sentence) we’ll invent something important, find a resource or connect with a key customer in a way that matters.

So, if that’s your job, why are you so focused on perfect?

Perfect is the ideal defense mechanism, the work of Pressfield’s Resistance, the lizard brain giving you an out. Perfect lets you stall, ask more questions, do more reviews, dumb it down, safe it up and generally avoid doing anything that might fail (or anything important).

You’re not in the perfect business. Stop pretending that’s what the world wants from you.

Truly perfect is becoming friendly with your imperfections on the way to doing something remarkable.

Tags: creativity, perfection, resistance

Link: Non-obvious startup ideas can yield the largest results

Amazon business started by selling books online. But for Jeff Bezos, selling books was just the starting point. Once Amazon had its infrastructure in place, it extended its business from books to electronics, toys, apparel, and almost any retailer category you can think of.

As Mark Suster points in his article Here is Why Non-Obvious Startup Ideas Can Yield the Largest Results, Amazon is emblematic of the sort of company that mostly disrupts industries behind the scenes, winning through distribution, logistics, inventory management, warehousing, customer support, etc. It never intended to disrupt just the book seller’s market… it intended to disrupt the selling of all kind of goods.

MakeSpace

Mark Suster’s article is not about Amazon, however. It’s about MakeSpace. If you haven’t heard of MakeSpace, they define themselves as your closet in the cloud:

MakeSpace is New York’s #1 consumer rated storage company. We deliver free bins (or boxes if you’re outside of NYC, Washington D.C. or Chicago) for you to pack with items you’d like to store. We pick up, store, and deliver your stuff back when you want so you never have to visit a storage unit again.
At our secure storage facility, we upload high-quality overhead photos of your bins or boxes so you know what you have in MakeSpace at all times. This makes ordering your things back simple.

He makes a great analysis of MakeSpace’s business model, market opportunity, and the disruption of an existing but stagnant industry. And they are doing something similar to Amazon:

What tech has our capital raised gone into? Driver routing systems, scheduling, inventory management & tracking, warehousing systems, photography automation, customer service applications as well as the obvious front-end apps such as our consumer apps for keeping track of your goods. We have an amazing team of W2 drivers in NYC, Washington D.C, and Chicago with regional warehouses in each territory and our technology makes it more efficient for them to do their daily pickups with least-cost routing. But as you can imagine we’ve also built technology to allow third-party drivers in markets where we don’t want our own vans. We have built UPS integration to allow a product called “MakeSpace Air” to allow us to do national pickups.
We are building a national business and a beloved brand in a category that is large, fragmented and universally hated. I know that storage sounds unsexy to most but in terms of disrupting a large market where competitors can’t respond? It’s a market made in heaven.

The real question, as Suster points, is which markets will MakeSpace move into the future.

This article is also available in other languages:
Tags: disruption, innovator's dilema, entrepreneurship, startups

What is Facebook’s motivation in Internet.org?

In a recent video, Facebook’s Mark Zuckerberg defends Internet.org and its freemium model. Internet.org is Facebook’s initiative to bring the Internet to the two thirds of people in the world who are unconnected. They work by establishing partnerships between companies, governments, and mobile operators, and offering free access to a number of basic applications on the Internet. Additional access is offered through regular paid-channels.

Earlier today we announced we're expanding Internet.org to give people around the world even more choice of free basic internet services. We're doing this in a way that respects net neutrality and is also effective in connecting the 4 billion people who need access.Here's my full video explaining our approach and what we announced today.

Posted by Mark Zuckerberg on Monday, May 4, 2015

An excerpt from the video:

Are we a community that values people and improving people’s live above all else? Or are we a community that puts the intellectual purity of technology above people’s need? As we are having this debate, remember that the people this affects most, the 4 billion unconnected, have no voice on it. They can’t argue their side in the comments below, or sign a petition for what they believe. (…) History tells us that helping people is always a better path than shutting them out.

I think connecting every person in the world is a great initiative, but there are some questions. For starters, opposing the “intellectual purity of technology” against “people needs” is just plain manipulation and rings an alarm in my head. Are they really opposed? I think not. Pragmatism has its dangers. Imagine if the original Internet had expanded around the World under an Internet.org-like business model.

What is more controversial, however, is that the free service in Internet.org’s offering consists of access to the Internet mostly through Facebook. This is a classic situation of conflict of interest1. Sure, Internet.org also offers free services like Wikipedia, access to job boards, and newspapers. But there is no Facebook-sized company offering, for example, free email services or other services that compete with Facebook’s messaging.

As Zuckerberg puts it, maybe this better than having no internet access at all, and they had to start somewhere. There is the old proverb —Don’t look a gift horse in its mouth. But I can’t help but also remember that if you are not paying for the product, then you are the product.

How can we be sure that Facebook’s main motivations are altruistic and not commercial? Are mobile operators’s intentions as pure as Facebook’s? An essential requirement for Facebook should be renouncing publicly to recollect, store or exploit their free-tier “customer’s” social data. I think Bill Gates solved this the right way. Instead of involving Microsoft operations directly in his quest for improving quality of life for individuals around the world, he founded the Bill&Melinda Gates Foundation, which operates independently of Microsoft’s business endeavours.


  1. cfr Wikipedia, Conflict of interest: a situation in which a person or organization is involved in multiple interests (financial, emotional, or otherwise), one of which could possibly corrupt the motivation of the individual or organization.  

This article is also available in other languages:

Link: Kevin Spacey’s Three Key Elements to a Compelling Story

Conflict. Authenticity. Audience. Three elements of good storytelling.

I discovered this great Kevin Spacey’s closing keynote at the 2014 Content Marketing World Conference thanks to Connor Neil’s website.

This video of the complete keynote is 35 minutes long. You can find a shorter version here.

This article is also available in other languages:
Tags: storytelling, public speaking, content marketing, Kevin Spacey

Book Publishing, ebooks, and Independent Authors

Book Publishing is a topic I’ve been following for sometime now. Books always have had enormous influence on people and in culture. One of the big revolutions in history was Johannes Gutenberg’s invention of the printing press around 1439. Gutenberg’s movable type press introduced an era of mass communication in Europe that permanently altered the structure of society1.

While e-books are not an invention of Amazon, their massive consumption was widely popularized with the introduction of Amazon’s Kindle reading device in November 2007. Even if print books won’t disappear anytime soon —as of 2014 the number of global print books sold still outsold e-books2— the influence of ebooks cannot be ignored. Consider that since May 2011 Amazon, the biggest bookstore on Earth, sells more ebooks than print books3.

Ebooks are disruptive. And business-wise, they have undeniable benefits over their printed cousins. Unlike print media, ebooks can be available for sale essentially forever. Authors don’t need to beg their publisher for a reprint. Electronic publishing dilutes publishing costs, making the marginal cost to sell one more ebook effectively zero. Independent writers can pursue the long-tail strategy and have a portfolio of books that drip income every day.

Digital publishing makes it also possible to publish ebooks only interesting to a small niche of people. This was impossible before in the minds of big publishing houses because they saw no business in such small volume editions. And more important, as Clay Shirky writes, ebooks make the wealth of culture of humanity available to anybody with a reading device:

The traditional industry belief — if you don’t live in a big city and have a lot of money, you deserve second-class access to books — is being challenged by a company [Amazon] trying to say “If you have ten bucks, there’s not a book in the world you can’t read.”

Insights about the Publishing Industry

Industry Consolidation

During the last decade, the publishing industry has gone through an important consolidation process. Big publishing houses bought small imprints and publishers, or merged among themselves to form bigger companies. As of today, the industry is dominated by five companies, often referred to as the Big Five. In no particular order, they are:

  • Penguin Random House, owned 51% by Bertelsmann and 49% by Pearson. Bertelsmann is a giant media company with revenues around $20 billion. Penguin itself has revenues of $3.9 billion, around 10,000 employees, 250 imprints, and publishes 25% of the world’s English-language books.
  • Hachette, owned by Lagardère Publishing – the biggest publisher in France and the second biggest in the UK. It is the world’s second largest trade publisher overall. Lagardère Publishing is itself part of Lagardère Group, a giant worldwide media company – magazines, radio, television, online, digital, and books – with annual revenue of approximately $10bn dollars. (cfr David Gaughran, Amazon v Hachette: Don’t Believe The Spin.)
  • HarperCollins, a subsidiary of NewsCorp.
  • Macmillan, corporate parent of the Georg von Holtzbrinck Publishing Group, which has 50% ownership of Die Zeit.
  • Simon & Schuster, property of CBS Corp., owner of the most watched network in the US with revenues over $14bn.

Seth Godin writes that the role of the publishing houses is to find good authors and books. They are the gatekeepers of print media, the ones who decide which selected authors will be published. While this closes the doors to lots of potentially good and even great authors, they also make sure that what gets published meets a minimum level of quality.

The business of publishing houses is not unlike the Venture Capital (VC) industry. With the exception of best-selling authors, nobody can predict if a new book will be a success or a flop. But publishing houses don’t need all their titles to be bestsellers. They only need one bestseller in ten, and maybe three out of ten regular sellers. The rest, the other six, they can afford to be complete flops. Like the VC business, lots of potentially good books or authors get discarded because there is not enough time to read them all. (Who hasn’t heard the story of the number of reject slips some later-famous authors got from publishers before they were “discovered”?)

Publishing houses put their part in the making of a great book —print or electronic— by making sure that it goes through certain stages. For example, they take care of providing essential services for authors like editors, copyediting, book design, in some cases book promotion, etc. Even with a great manuscript, these steps are essential for having a professional quality book at the end of the process.

While print books —specially hardcovers— sell at higher prices than e-books and have higher margins, selling physical books to bookstores and retailers requires demand planning, some heavy logistics, stock provisions, rebates… Big companies are best suited for these tasks than independent writers, because they can obtain important savings thanks to economies of scale.

Pricing models for selling books and price fixing

Even if the big publishers sell some books directly to customers through their websites, their most important sales come through traditional channels like bookstores and retail stores. There are two models for pricing books and ebooks: the wholesale model, and the agency model.

Under the wholesale model, publishers set the list price of books and sell them to retailers at a substantial discount. The retailer then sell the books to customers at the price they choose, keeping the profit or assuming the losses. (For example, as a way to bring in customers, Amazon often sold popular books at heavy discounts.)

Under the agency model, publishers set the book’s final price. Retailers sell the book to customers at that price, and receive a commission on sales. The agency model doesn’t allow for discounting. Retailers become “agents” for the publishers, hence the name of the model.

The wholesale model is the pricing model used for selling print books. Some years ago, electronic books were sold under this model too.

In 2010, Apple negotiated a deal with the Big Five publishing houses to make their ebooks available on Apple iBookstore. One of Apple’s concerns was that Amazon’s aggressive pricing strategy was eroding the market’s margins on ebooks. According to Apple, ebooks should cost at least $12. (Amazon was selling them at $9.99 or less.)

Clay Shirky, in his article Publishing and Reading, explains why publishers were worried about Amazon too:

Back in 2007, when publishers began selling large numbers of books in digital format, they used digital rights management (DRM) to lock their books to a particular piece of hardware, Amazon’s new Kindle. DRM is designed to transfer pricing power from content owners to hardware vendors. The publishers clearly assumed they could hand Amazon consolidated control without ever having to conspire with one another, and that Amazon would reward them by passing cost-savings back as inflated profits. When Amazon instead decided to side with the customer, passing the savings on as reduced price, they panicked, and started looking around for an alternative conspirator.

Under the wholesale model, publishers had no say over Amazon’s final pricing. After closing deals with Apple, these publishers switched simultaneously from the wholesale model to the agency model. Because all of the big houses changed pricing model simultaneously, retailers —even Amazon— had no option but to accept the publishing houses’s conditions.

Some time later, in April 2012, the Department of Justice (DOJ) sued Apple and the Big Five publishing houses and accused them of conspiring to set e-book prices4. After reaching a settlement with the DOJ, the Big Five publishers have continued to sell ebooks under the agency model. However, they are required to renegotiate deals with Amazon and other retailers independently.

Self-published authors are outearning all authors published by the Big Five

There are more and better tools available today for self-publishing than a couple of years before. Market numbers confirm that authors are using these tools for good.

According to Author Earnings’s January 2015 Author Earnings Report, 33% of all paid ebook unit sales on Amazon.com are indie self-published ebooks. In mid-2014, indie-published authors as a cohort began taking 40% of all ebook author earnings generated on Amazon.com, while authors published by all of the Big Five publishers combined slipped into second place at 35%. (Amazon controls 67% of the US ebook market.) The Write Life reports that 40% of all dollars earned by authors from e-books on Amazon.com are from sales of independently published e-books.

Author Earning’s comments:

Only seven months ago, the idea that indie self-published authors and their ebooks were outearning all authors published by the Big Five publishers combined was jaw-dropping heresy. Today, it’s boring —a widely-acknowledged fact among knowledgeable authors, if not industry pundits. Many authors who publish both ways point out their earnings disparity in favor of their self-published titles, and so this data is no longer surprising.

This doesn’t mean that an author’s life has become suddenly easier. The effect of more publishing options, better tools, lower costs, and no gatekeepers, is that the barrier to new incumbents to this market is lower that it has ever been. It has become a more crowded space than ever for the indie author. Like Tim O’Reilly said years ago, obscurity is a far greater threat to authors and creative artists than piracy5.

Aside from obscurity, there are other threats. Books —specially ebooks— now compete for attention against mobile games, television, movies, social media like Facebook or Twitter. Because nowadays it’s increasingly difficult to engage in activities that require long attention spans, a large number of people favor short format reading. Think about it. When was the last time you could spend a quiet, interruption-free hour or two reading a novel from your favorite author?

Going the indie-road doesn’t exonerate authors for doing the work that traditionally publishers took care of. Having great content is essential. But for a good book to become a great book you still need an editor, good cover design, beta readers, etc. These steps are important, and they are not difficult to fulfill. But it is surprising of how many talented people neglect them.

Book promotion is also crucial if authors plan to sell their work. Writing about non-fiction books, Seth Godin says that “publishing a book is really nothing but a socially acceptable opportunity to promote yourself and your ideas far and wide and often.6“. But books require the user to read them for the idea to spread. He suggests you should try other things first:

Build an asset. Large numbers of influential people who read your blog or read your emails or watch your TV show or love your restaurant or or or…
Then, put your idea into a format where it will spread fast. That could be an ebook (a free one) or a pamphlet (a cheap one—the Joy of Jello sold millions and millions of copies at a dollar or less).
Then, if your idea catches on, you can sell the souvenir edition. The book. The thing people keep on their shelf or lend out or get from the library. Books are wonderful (I own too many!) but they’re not necessarily the best vessel for spreading your idea.

The Last Gatekeeper

Ebooks are changing the publishing industry. The power of ebooks is that they have opened the doors for independent authors. Anyone can who can write a book can now publish her or his work without relying on an established publishing house and without fear of rejection slips.

Aspiring independent writers should consider ebooks as their first option. With print books, even if the costs of physical publishing going down, you still have to convince the gatekeepers to let you in. With ebooks, the are essentially no gatekeepers.

PS: If you are interested in writing fiction and going the indie-road, I can recommend David Gaughran’s Let’s Get Digital: How to Self-Publish, and Why You Should. Gaughran explains the tools needed for going from manuscript to ebook, discusses several publishing options, and includes several case-studies.


Photo Credits: Dariusz Sas, George Tsartsianidis/123RF Stock Photo

Tags: book publishing, business models, disruption

Services for sharing large files (MEGA is still not a Dropbox killer)

Two years ago I wrote an article comparing Mega to Dropbox, two file sharing services. The point of the article was that Mega was not a Dropbox killer. Mega had just launched, and maybe because all the hype around Mega’s owner, Kim Schmitz, many sites were proclaiming the end of Dropbox. Mega’s main offer was generous storage space and very strong file encryption. Back then, it didn’t offer native file synchronization (which now does).

Bauke Roesink has published a very complete roundup of file sharing services titled Transfer Big Files. He asked 44 professionals about their favorite service for sending large files. The article is worth reading. It offers not just the poll’s results but the actual insights. (You can read mine, also published in his article, following this link.)

Based on Roesink’s poll, the most used service for sharing large files is Dropbox (44% votes), followed by Google Drive (13%) and OneDrive(6%). While Mega now offers native file syncing and probably better file encryption than the other services, less than 3% said they used Mega, and none as their first option.

A strong argument for using Dropbox was simplicity. If you want to share a file in your Dropbox folder, just right-click the file to get a link that you can send by mail or using your favorite messaging app.

With Mega, there is no easy right-click action to share your data. You’ll need to log into Mega’s web page. What’s more, MEGA’s cryptographic security model depends on the confidentiality of the keys needed to decrypt the files. But to share a file with someone else, you need to share this confidential key. As Mega’s site warns you, by sharing a file you could be compromising the security of your Mega folder.

I still think that Dropbox and Mega are trying to solve different problems. If you need very strong encryption, Mega is a solid choice. You will be able to sync your files to your machines, but beware of the security implications of trying to share your files with third parties. On the other hand, if you want reliable and simple file sharing with a reasonable level of security, then Dropbox is the service of choice.


Photo Copyright: 3dfoto / 123RF Stock Photo

Tags: file sharing

Silent data and evaluating employees’s performance

Nassim N. Taleb, author of The Black Swan: The Impact of the Highly Improbable Fragility, has this concept of silent evidence. That is, we tend to make decisions mistakenly taking a limited subset of the information as the whole dataset.

It is not that we don’t acknowledge the existence of silent data. We do. The thing is that, in practice, we unconsciously ignore it again and again.

Silent evidence is what events use to conceal their own randomness, particularly the Black Swan type of randomness. (Nassim N. Taleb, The Black Swan)

Something similar can be said about evaluating people’s performance in an organization. Managers often have to consider if their reports are ready to be promoted. Depending of the company, a more or less formal processes for this may exist. But in the end, it is the manager’s responsibility to judge if the employee is ready to be promoted or not.

If you are a manager, do you pause to think if there is silent data about your candidate that you are not considering? Is her “success” a consequence of chance? In the light of someone consistently exceeding her sales goals, other considerations may not seem important. How did she achieve her goals? How were the goals set?

Perfect information is rarely available.

Developing the habit of looking for silent data is a really important asset.

Tags: silent evidence

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