Last week, Seth Godin wrote this in reply to Harvard Business School students seeking advice on how to find a job:

“Go to a small company, work for the CEO, get a job where you actually get to make mistakes and do something”

Brilliant advice.

But what’s the next step?

Well, I’m one of the CEOs (we have two) of Red Gate Software. We’re the 14th best small company to work for in the UK. We were featured in this month’s Wired UK magazine as one of twenty businesses worldwide reinventing the way people work.

I’m looking for somebody smart and hardworking to work with me for the next twelve months. You’ll take on a number of projects, but the first two will be:

• Making Springboard, our incubator program, a success in 2010
• Setting up and running a million dollar challenge

Interested? Get in touch with me and persuade me that we should chat. You need to be able to work in the UK, and be willing to relocate to Cambridge.

I’m about to start promoting Business of Software 2010. It’s in Boston, October 4th to 6th. The speakers are going to be fantastic.

Here’s a sneak preview of the summary video from last year:

(You can see a longer, higher resolution video here).

If you want to sneak in before I officially announce registration and grab the special early-bird price ($1,595 for the first 100 registrants) then go to the conference web site.

(P.S. Next week I’m going to start posting up videos of last year’s speakers. The first one to go up will be Geoffrey “Crossing the Chasm” Moore. Follow me on Twitter or subscribe to the RSS feed to stay up to date).

Three months ago, four Red Gaters volunteered to lock themselves into a converted barn on the Suffolk coast for a week, ate pizza, drank beer and coded. When Alex, Dom, Nagashree and Rob stumbled back into the office, they’d conceived, gestated and birthed SQL Search.

Last week, we launched the product – a free tool to search SQL Server databases.

But this blog post isn’t about that.

It’s about an idea that popped into my head after reading Dan Pink’s excellent book Drive. One section talks about Atlassian and their FedEx days: the company takes a day off, splits up into adhoc teams, and delivers something in 24 hours.

Rather than describing what we’re planning here at Red Gate, here’s the e-mail I sent round internally:

From: Neil Davidson
Sent: 28 January 2010 14:51
To: Product Development
Subject: "Down tools" week

The upcoming SQL Search release has shown how valuable taking some time out to work on side projects can be. Many people have spent much time finishing the project, but it would never have happened if Nagashree, Rob, Alex and Dom hadn’t locked themselves in a house by the seaside for a week.

We’d like to extend this experiment. For four days, starting on March 29th, we’d like everybody involved in building products (both for our customers and internal development) to down tools and work on something different. You can work by yourselves, in your current teams or form new teams – it’s entirely up to you. The only aim is to create something relevant to Red Gate that you wouldn’t have created otherwise. You can build a new product, a prototype for a product, a tool for use by another department, fix some bugs in a current product that would otherwise have gone unfixed – anything really. The only rule is that you have to complete something by Thursday lunchtime. During Thursday afternoon we’ll have a show and tell – a chance for you to demonstrate to other people at Red Gate what you’ve been up to.

If you’re working in product development you should put this in your diary and cancel all meetings for those four days. You can work from home, in the office or somewhere else – wherever you’ll be most effective.

You can take part in down tools week if you’re a permanent (not contract) developer, tester, author, designer, project manager or product manager. If you’re not in these groups but want to take part then you’ll need to get your divisional or functional head’s permission and persuade a team you can contribute.

Each team will have a discretionary budget of £500 for hardware / software / other stuff we don’t already have in the building (but please check first).

Ideally you’ll have a clear idea of how you’ll spend the four days before they actually arrive.

Neil

Down tools week doesn’t start for a while, but merely announcing it has produced extraordinary results. The forum post announcing it has been read 1,350 times (that’s almost ten views for every person in the company). It has 64 replies. People are hyped. Ideas are flowing. Stuff is happening.

I’m not entirely sure what the outcome will be. I’m hoping that we’ll end up with a slew of prototyped ideas and a bunch of happy people. I’m sure there’ll be a lot more hard work until we can turn those embryonic proofs of concept into living, breathing, releasable software, but it will be worth it. Whatever happens, it will be fun. Even more importantly – and this is what it’s all about – we’re doing the right thing.

I’ll write up the results once the week is over.

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P.S. We’re hiring. Check out our jobs page.

Have you ever wondered what pulling a pint of English ale can tell you about software interfaces? Or are you curious about Steve Jobs's magic ability to create news from a vacuum*?

These are just two of the topics our user experience folk (they're the people who design Red Gate's software) have covered in our new UX blog. You can read more in pride and preference by Adam Walker and the empty magic of Steve Jobs by Marine Barbaroux.

Browse the blog posts, and then put faces to the names.

*The iPad is cool, but this is cooler.

I’m sitting in my doctor’s office. I’ve described my symptoms and he’s asked a few questions. For a few seconds, he seems puzzled. He starts typing at his computer. I shift my chair so I can see what he’s typing into which expert medical database.

He’s on Google.

This episode from a couple of weeks back illustrates the ever increasing importance of experts. As information swells in quantity but shrinks in quality, people who can sift through the muck to find the gold become more important and more powerful. People who can judge and interpret; who tell us, the public, what is worth paying attention to and what we can ignore; experts and gatekeepers; journalists, editors, doctors, lawyers and scientists: they are all more important now than ten years ago. And they’ll be more important in ten years than now.

I wonder what the implications of that are.

P.S. I lied about the lawyers.

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In 1989 this tiny oil painting of the Virgin Mary was valued at some $9000.

On November 29th 1991 it was worth $180,000.

A day later, on November 30th, it was valued at between $36 million and $54 million.

The valuation proved accurate. In 2004, the UK’s National Gallery bought it for some $50m.

What changed in those 24 hours? Clearly the physical painting didn’t change. It had the same brushstrokes and the same paint made from the same chemicals. It was painted with the same degree of technical skill. The subject matter was the same. It was as pleasing to look at after as it was before. It was no better a painting on November 30th than it was the day before.

The one factor that pushed the price up overnight to a staggering $540,000 per square inch of paint was the word of a single man. Nicholas Penny, a curator at the National Gallery, announced that this painting was not, as had previously been thought, by an unknown artist. It was, instead, an original Raphael. In Penny’s opinion (and this is only an opinion, and a disputed one at that), the science – the infrared scans, the microscopic analysis of the under drawing and the pigment analysis – proves it.

This is fascinating. The price that people (both the National Gallery and the Getty Museum in Los Angeles who made an identical bid) were prepared to pay for this painting wasn’t determined by the physical painting. It was determined by something else – a belief; a mere perception of value. One day, the perception was that this painting was worth under $200,000. The next, the perception had changed and the painting was worth millions. Tomorrow, somebody yet more expert than Penny might announce that it is not, after all, a Raphael. Our perceptions will change and its value will plummet.

Whether you’re selling paintings, apples, bottled water or word processors there’s a valuable lesson here:

Your product’s fair price is determined not by what your product is, but by what your customers think. The two may not be linked.

I will explore this more in a future blog post. For now, you can follow me on Twitter or download “Don’t just roll the dice: a usefully short guide to software pricing” (it’s a free eBook)

Inbound marketing – get found using Google, social media and blogs is a great book. It’s not the book I expected, but it’s a great book nonetheless. Dharmesh Shah, Brian Halligan and their company, Hubspot, are creating the digital wave. They’re throwing giant twitter and facebook rocks into the sea of traditional marketing. This book isn’t, of course, targeted at the impossibly thin market of people who, like Dharmesh and Brian, are creating this wave. But neither is it targeted at people like myself; those of us who are surfing the wave with differing levels of skill and success.

Instead, this book is aimed at everybody else. It’s aimed at the 99% of the business world who are faintly befuddled by the strange world of youtube and delicious that they find themselves living in. It’s aimed at plumbers, hairdressers, lawyers and oil company executives who, if by some fluke they ever find this blog post, are still wondering what the @ signs in the title mean. It’s aimed at people in large corporations and small businesses alike who are dimly aware that their working lives are about to change – indeed, have already started to change in disconcerting ways – and who don’t know what to do. It’s aimed at the people standing at the shore, too scared to dip their toes into the water. “Inbound marketing” takes them gently by the hand, leads them to the water, reassures them that everything is going to be OK, and teaches them how swim.

The premise of the book is that the old marketing is dead or dying. Gone are the days where simply throwing money at print or radio advertising guaranteed succees. Instead, you need to engage your customers. Give them reasons to come to visit your web site, and once they are there give them reasons to come back again and again. Turn your web site into a hub, stuffed with remarkable blog posts, videos and interviews. As the authors put it (they have a pleasing way with words) “ten years ago, your marketing effectiveness was a function of the width of your wallet. Today, your marketing effectiveness is a function of the width of your brain.”

“Inbound marketing” is clearly – and explicitly – inspired by authors such as Seth Godin and David Meerman Scott. But where this book differs is in its emphasis on hands-on advice. Not only is it inspirational, but it’s also brimming with practical wisdom. Sure, it talks about the power of Twitter. But then it gives you advice on how to choose a twitter handle. Sure, it talks about the rise of the superstar blogger and the death of the press release. But then it talks about how to decide whether you need a PR agency and, if you do, then how you should hire one. Sure, it stresses that your employees will need to learn new skills if they are to survive in this new world. But then it talks about what those skills are, what steps your employees need to take to get them and how you can track how they’re doing. Each chapter contains a checklist of things you should do, right now, to start improving your inbound marketing.

This is no dry textbook. It’s full of anecdotes, some from the usual suspects (Whole Foods, Zappos and Barack Obama) but from others too: accounting software, a shutter manufacturer and a PR firm among others. It’s well written, and there are cartoons too.

Inbound marketing – get found using Google, social media and blogs is an excellent, mainstream introduction to new marketing. If you want to dip your toes into the cold water of social media then buy a copy. If you’re already surfing the waves, you almost certainly know people who are standing dazed on the shore. Buy them a copy from Amazon. They’ll love you for it. This book deserves enormous success – keep an eye out for it at an airport near you.

Enjoyed this post? You should follow me on Twitter (I’m @neildavidson)

This is a guest post by Jason Cohen, founder of Smart Bear Software
and blogger about startups, marketing, and geekery.
Jason gave a Pecha Kecha speach at BoS 2008 and has this advice for 2009 attendees.

So you’re going to Business of Software 2009! It’s going to be awesome.

There’s a 100% chance you’ll get your time and money’s worth from
the speakers alone, but that’s not the only benefit of the conference.
In fact, most of the folks I’ve talked to agree that getting to know
the other attendees is half the experience.

This conference is unlike any other, and you should take full advantage of it, especially if you’re working on a small business.

Here are some ways to get the most from your time:

1. Practice your 30-second pitch (w/extension).
   This is an amazing chance to hone your pitch. Getting your entire
   business down to a 30-second sound-bite is a wonderful technique anyway
   — it forces you to clarify what’s truly important, what sets you
   apart, who your customers are, and exactly why they give you money.

   Start by honing it before the show. Airports and airplanes are good
   places to practice under your breath. Use a stopwatch — really force
   yourself into 30 seconds. Also develop a 60-second extension in case
   the listener wants more detail.

   Then pitch at the show, all day long. Watch people’s faces: What do
   they react to? When are they bored and look around? Where do they
   interrupt you for more questions? Use this to hone further.

   Remember that the point of a 30-second pitch is not to tell them everything about your business! It’s to get them to be interested enough to keep talking. That makes it easier to cut words.

   Not only will you walk away with a crisp pitch and a well-defined business concept, you’ll have the perfect marketing fodder for your home page and advertisements!

2. Be direct and respectful.
   Everyone there will be smart, no-nonsense, small business folks. Many
   are founders, most are close enough. Sure there’ll be some shills from
   big soulless corporations, but not many. On the one hand this means acting
   like you’re the smartest, most experienced one at the table won’t get
   you anywhere. On the other hand it means you can jump directly into
   deep conversations about business operations, philosophy, customers,
   growth, hiring, raising money, selling the company, or whatever else is
   on your mind. You’re in extraordinary company, so take advantage!

3. Reveal your fears and commiserate.
   Because we all share your pain, being direct and genuine means you can
   “talk shop” about anything — even normally taboo subjects like
   charging more, firing customers, or being completely sick and tired of
   your business.

   You can talk to people about stuff you can’t even talk to your
   employees about (e.g. “Hey everyone, I’m totally burned out. Just
   wanted you to know I hate coming to work. Cheers.”). So open up.
   Sometimes a 5-minute hallway therapy session can give you real
   perspective, even if it’s just knowing that everyone else goes through
   this too.

4. Promote yourself. Don’t be afraid
   to pitch your business or yourself. This is a business conference with
   business people. Of course you don’t want to be an asshole either, so
   here’s a tip: ask the other person about their business first. Then
   follow up with more questions — dig, figure out what’s interesting
   about them. Then you can pitch without looking like that’s
   why you struck up the conversation. Additional benefit: You can tune
   the pitch to that person!

5. Don’t stop at business cards.
   Everyone gets a pocketful of business cards. They’re stuck in a drawer,
   never to be seen again, unless they get tossed immediately. Instead,
   every night go through your cards and connect on LinkedIn (or anywhere
   else). Put a personal message in there so the other person remembers
   who you are. (Remember they met 20 new people today too.) To remember
   who they were, jot down notes on their card while you’re talking to them in the first place.

6. Have a goal. Like a trade show, it
   helps to define a result you want by the time you head home. Depending
   on the stage and nature of your business, a goal could be:

   • Pitch your idea 30 times and see what people say.
   • Get 5 really good critiques of your idea.
   • Get 10 new people to trial your software.
   • Get 20 warm leads for your consulting services.
   • Determine the 5 “keywords” that everyone is talking about.
   • Demo your product to 5 people (after hours).
   • Find a co-founder.
   • Find a whiz at [technology].

7. Take notes. This might sound
   obvious, but I took copious notes from BoS 2008 and I refer to them all
   the time. Sure they eventually put the videos up on the Internet — and
   thanks for that! — but you still don’t want to scan around 90-minute
   talks when you could look at your own notes.

8. Move your seat. Never sit in the
   same place in the auditorium. That way you can meet at least two new
   people (to your left and right) between every talk, which means dozens
   of new chances to meet a friend or make a pitch.

Oh yeah, and have fun too.

What are your tips? Leave a comment and join the conversation!

Enjoyed this post? Follow Jason on Twitter (he’s @asmartbear)

At Red Gate we like to try new things. The million dollar challenge and the accidental incubator are a couple of examples.

Combine this with an occasional but nagging frustration at how long it can take to get stuff done nowadays and a curiosity about how much a small team can achieve if we just leave them alone, we’ve shipped Alex (developer), Dom (designer), Nagashree (tester), Rob (developer), and – oops, I forgot to send a project manager or scrum master – off to a house by the sea for a week.

I’m not entirely sure what they’ll be working on, but take smart people, a fast internet connection, a good house, beer (I should mention that it’s in Southwold – home of Adnams) and shake and I’m sure the cocktail will be good.

If you want to stay up to date with what the guys are up to, then search #codingbythesea on Twitter. There are some photos up and once Rob’s built an antenna they’ll hook up the web cam.

Liked this post? Follow me on Twitter (I’m @neildavidson)

I’ve just posted up the BoS 2009 program (thank you @thatdesigner). You can download it here (.pdf).

It’s going to be awesome. There are still some places left. You can sign up here.

In 1938, two young engineers were ready to launch their first product. They’d struggled with what to build. After considering amplifiers, radio equipment, air controllers, harmonicas and even muscle-building electrodes for housewives, they’d finally decided to create an oscilloscope. Not wanting customers to be put off by a version one product, they sensibly called it the Model 200A.

The next step? Decide the pricing.

They eventually settled on $54.40. Was that because it represented the cost of manufacturing, plus a decent markup? No. These engineers hadn’t taken that into account. In fact, they soon realized that the cost of building each oscilloscope was more than the price they were asking. Was it based on what the competition charged? No. They hadn’t bothered to discover that General Radio charged $400 for an equivalent model.

They chose $54.40 because it reminded them of the 1844 slogan used in the campaign to establish the northern border of the United States in the Pacific Northwest (“54” 40′ or Fight!”).

What a dumb-ass way to price a product.

But these two young engineers recovered from their stumble. The Model 200A went on to become the longest-selling basic electronic design of all time, still selling 33 years later. The company they founded became an institution. Their names? Dave Hewlett and Bill Packard.

If Hewlett and Packard, two Stanford graduates with the rosiest of futures ahead of them, can flounder so badly when faced with the problem of how to price their products, what hope do the rest of us have?

Quite a lot, as it turns out.

You can read more in the free eBook of Don’t just roll the dice – a usefully short guide to software pricing.

This year’s Pecha Kucha finalists have got their work cut out for them. Twenty slides, twenty seconds each, it’s the haiku of presentations. Here they are:

Jurgen Appelo, Chief Information Officer of ISM eCompany on “Managing agility: from complex to simple”

JD Brennan, Distinguished Technologist at HP, on "The 6.6 minute design school”

Daniel Kuperman, Director of Marketing and Product Management of Quadrant Software, on “5 marketing secrets for software success”

Glen Lipka, Director of User Experience and Product Design of Marketo, on “UX design – building products people love”

Dave O’Flynn, Integration Product Manager at Atlassian, on “Learning about teams by jumping out of planes” 

Alex Papadimoulis, President of Inedo and Founder of The Daily WTF on “How not to be featured on The Daily WTF”

Adam Ruth, Senior Software Developer at Admin Arsenal, on “Developer addictions”

Mark Stephens, CEO of IDR Solutions, on “Asteroid impact – are you a big lizard or small and furry?”

For an example of pecha kucha, here’s Alexis Ohanian (co-founder of Reddit) on how to start, run and sell a web 2.0 startup. Alexis won last year’s contest.

Enjoyed this post? Follow me on Twitter (I’m @neildavidson)

"Sales people are different from you and me."

"Yes, they want money more."

A year – a few months, even – ago, I would have agreed with this. It’s common knowledge that sales people are motivated differently to the rest of us. You need to keep them hungry, drive them with low basic salaries and hefty commissions. The best sales people are not only hungry, but greedy too. Harnessing that greed is the key to succeeding in sales.

Unfortunately, like much common knowledge – that we only use ten percent of our brain, that if you build a better mousetrap then the world will beat a path to your door – it’s wrong.

Simon (the other founder of Red Gate) and I believe this so strongly that we’ve stopped paying commission to all our sales people.

We’ve experimented with sales commissions for the best part of a decade. We’ve never found one that really worked. Every compensation structure can be gamed, and has its unintended consequences. Pay people a percentage above a target and you encourage a sawtooth pattern – there’s a pressure for sales people to undersell one month and save up the sales for the next month. It makes more sense to be 25% under target one month and 15% over target the next month rather than being 5% under target each month. You can fix this – you can play around with the thresholds, add ratchets and fiddle around with commission debt – but the compensation structure gets increasingly complex.

The ancients believed that the earth was the centre of the universe and that the planets and stars rotated around it. This didn’t quite fit the facts, so they shifted the centre of the universe slightly off the earth. There were still discrepancies between theory and observation so they put the planets on circles within circles: Venus didn’t circle the earth, but it circled a circle that circled the earth.

That’s what our sales salary system felt like – a gigantic, complex and medieval spirograph centred on an assumption that wasn’t true.

So we decided to fix it. First, we tried to persuade our business unit heads to stop paying commission. “Interesting idea,” they told us. “We think we should try it, but not right now. We’ve got our hands full.”

Jeff Immelt, CEO of General Electric, once said “when you run G.E. there are 7 – 12 times a year when you have to say ‘you’re doing it my way’. If you do it 18 times, the good people will leave. If you do it 3 times, the company falls apart.”

Red Gate is several orders of magnitude smaller than GE, but the principle still holds. Occasionally – once or twice a year – Simon and I need to be dictators. So we stamped our feet and told our business unit heads that we were tearing the old system down. From October 1st we wanted all our sales people to be on flat salaries.

We managed to get everything in place a month early. Now, towards the end of September, the system has been running for three weeks. So far the signs are good.

It turns out that fear is not a good motivator. Sales people have mortgages to pay, kids to feed and bills to settle, just like the rest of us. Would the anxiety of not knowing whether you’d be able to eat at the end of the month help you code better? So why would it help sales people sell better?

Removing commissions allows sales people to behave in more complex ways. Sure, we want sales people to sell more stuff, but only if it’s right for the customer. As a business, do we prefer to sell $100 of software today or $200 of software tomorrow? It depends – on the likelihood of tomorrow’s sale falling through, on whether we’ll make that sale anyway, on many other things. We need our sales people to weigh up complicated situations and make decisions based on their judgement as to what the right thing to do is. Any sales commissions scheme we could come up with would contradict these complexities.

Sales is no longer a zero sum game. Oversimplifying, in any month there are a finite number of leads we can contact; a fixed amount of money to be made. One sales person’s gain is another sales person’s loss. Imagine you could construct a sales robot, programmed solely by the rules in any sales structure. How would it behave? It would steal deals off other sales people, sell customers software they didn’t need, argue with its boss over its commission and backstab its colleagues. That wasn’t the behaviour we wanted, but our commission structure sent a strong signal that it was.

Now that we’ve removed commissions, sales people are sharing more. If Alice is off sick then Bob will cover for him. If Bob is dealing with a customer that Alice would be able to help better, he’ll hand him over to her. If Alice’s product knowledge needs improving, she can spend some time away from selling. None of those things were happening before.

By removing the simplest, crudest and least effective motivational tool of money, we’re forcing our managers to find more powerful, subtle and productive techniques to motivate our sales people. Rather than relying on carrots (sell more and you can buy that new car) and sticks (don’t sell enough and you won’t be able to feed your kids), we are compelled to make our sales people’s work more interesting, to set better goals, to encourage more teamwork.

We’ve removed an enormous amount of management overhead. We no longer have to spend so much time setting targets (sure, we still set targets, but it’s not so important we get them right); we spend less time deciding who worked on which deal and where the commission should go; our managers can spend less time fiddling with spreadsheets and more time making their teams hum.

The idea that sales people are different to the rest of us is based on what psychologists call a fundamental attribution error. We tend to explain other people’s behaviour’s differently to our own. For example, I was late this morning because my alarm didn’t go off. But you were late because you’re lazy. In the first case, I blame the situation. In the second, I blame your personality. Similarly, I come to work because I love what I do. But you – and sales people – come to work because of the money. I am motivated by interesting work, the chance to make a difference and recognition by my peers. But you are motivated by cash.

Of course, some sales people do their jobs not because they enjoy them, but purely for the cash. Those people will, over time, leave. And that will be a good thing, for Red Gate and for them.

But, on the whole, sales people aren’t that different to the rest of us.

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I've decided to offer ten free student tickets to Business of Software 2009. Here's what you need to do to qualify:

• Be in full-time education
• Be a hacker, and show some evidence of this.  E-mail me a link to your blog / an open source project you've worked on / something you've built
• MBAs etc. can apply, but you need to be a hacker too
• E-mail me at neil.davidson@businessofsoftware.org by Saturday 19th September

I'll then choose ten people to get the free tickets. The process will be totally opaque. I might pick people at random, I might not. I might choose the first ten people to e-mail, or I might not. I don't know yet.

Enjoyed this post? Follow me on Twitter (I'm @neildavidson)

Joel Spolsky is running a startup workshop in San Francisco after this year's Business of Software conference. It sounds really cool. You can find out more on Joel's blog.

Back in April I blogged about the Red Gate million dollar challenge. Red Gate is fortunate enough to be profitable and have money in the bank. We've bought companies in the past, and it felt like a good time to do it again. Finding great companies is hard, and we're lazy, so we set up a honey pot. A million dollar honey pot.

Some fifty companies entered. We narrowed it down to a handful over the course of a couple of months, and then to a single company. About a month ago we formally offered to purchase {smartassembly} from Jean-Sébastien Lange (for an amount I can't disclose). Jean-Sébastien negotiated hard and successfully, and then accepted. It took a few weeks to sort out all the legals, but now it's official.

We bought {smartassembly} for a number of reasons:

• It's an awesome product. It takes .net assemblies and applications, merges dependencies, obfuscates and provides exception logging for unhandled errors
• It's making money. It's a mature product, and has proven the market that it's in
• It fits in well with the other .NET tools we have
• It has a lot of potential. It's successful already, but we're hoping that Red Gate can develop it further and encourage even more people to use it.
• Jean-Sébastien is somebody we can work with. He's smart, friendly and laid back. Life is too short to work with people you don't get on with

For now, we're going to run {smartassembly} from its own web site. We've got it building on our servers in Cambridge, but we'll figure out how to integrate it into Red Gate properly over the next few months.

You can find out more about {smartassembly} on its web site. We'll do an official press release tomorrow.

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As the title says. The deadline is 1st September.

See here for more information.

“I know kung fu.”

In the Matrix, when Neo wants to learn kung-fu all he has to do is upload a fighting module. A few seconds later and he’s sparring with Morpheus in a virtual dojo. Living in a computer simulation and being bred as an energy source for a machine master-race has its disadvantages, but at least you get to learn stuff fast. Here in the real world, much knowledge is gained the hard way – by doing. You can’t just upload it. Or store it, index it or e-mail it around.

This is one of the factors behind what Jeff Pfeffer and Bob Sutton call ‘the knowing-doing gap’. In their book of the same name (‘The Knowing-Doing Gap’, available new for under $25 from Amazon), Pfeffer and Sutton examine why companies don’t do what they know they should. The first problem is language. ‘Knowledge’ is a noun, so we treat knowledge as a concrete object we can manipulate, like steel or books. In reality, it’s a process; the process of riding a bike, speaking French or running a company. Hence companies don’t truly know what they claim they do. They might have their mission statements written down on small, laminated cards; and they might say – and even believe – that people are their most valuable assets, but this isn’t true knowledge, and won’t become so until they act.

Pfeffer and Sutton give plenty more reasons too. An emphasis on talk, rather than action, for example. It’s easier to judge people on what they say than what they actually do, and that’s often how we hire, reward and promote. The guy with the quick put-downs, rapid-fire banter and sarcastic comments is perceived as smarter than the quiet one in the corner who bothers nobody, knuckles down and gets stuff done.

The weight placed on talking means that planning, documenting and presenting are considered substitutes for concrete action. They’re certainly easier. Action is difficult, and can go wrong. That’s when another factor comes into play – fear. If people use their initiative, or challenge an assumption, then they often fear they will lose their jobs or the respect of their peers or their boss. Unfortunately, high-profile, charismatic asshole CEOs (Pfeffer and Sutton use the example of ‘chainsaw Al’ Dunlap, but there are plenty more) propagate the myth that fear is a great way to motivate people.

If action is harder than talking, then mindless action is harder than thoughtful action. When organisations hit a problem, rather than think it through afresh they tend to follow the path laid down before, often by people long-gone and in circumstances lost in history. Processes fossilize and are never challenged. Sacred cows get fat when they should be slaughtered, just because “that’s how we do things round here”.

Yet another cause for the gap is that companies send the wrong signals. They might say – and the managers might know – that they should hire great people and spend time developing and keeping them, but they measure short-term financial performance. What are managers expected to do? Free up a good sales person so she can work on a cross-divisional project that will benefit her – and the company – in the long-term, or hit the numbers? By measuring – for example – quarterly revenues, companies signal that they expect the latter, even though the former is what they really want. No wonder it doesn’t get done.

Finally, internal competition, whether it’s bonuses determined by forced-ranking or having an employee of the month, is often a zero sum game that benefits some individuals but that harms entire organisations. In such competitions, there are two ways to succeed. The hard way is to out-perform your coworkers. The easy way is to sabotage them, or belittle their achievements. It’s no surprise that many people settle for the easy option.

This is a fantastic book. Like most of Pfeffer and Sutton’s work, and as you’d expect from two Stanford professors, it’s based on solid research. Case studies are used to illustrate theories and bring them to life, rather than to ‘prove’ them as many business books do. As well as explaining why the knowing-doing gap exists, the book gives ideas on how to fix them. Is your organisation paralysed by internal fighting? Then find an external enemy to focus on – that’s what Apple did with IBM when they launched the first Macintosh in 1984. Is your company trapped by its history? Examine, make explicit and challenge the assumptions that lie behind its sclerotic procedures. Are your people afraid to make mistakes? Make it explicit – with your deeds and not just your words – that there is a soft landing available for those who try and fail.

The beauty of this book – like other works of Pfeffer and Sutton – is that much of it seems like common sense once you’ve read it. Pfeffer and Sutton have a knack of articulating ideas that you feel you already half know, but that are just – but only just – out of your grasp. As you read, you can sense them coming into focus, crystallizing out of the fog of your mind. Of course concentrating purely on short-term financial success can kill a company’s culture. Of course you should commit to metrics that reflect, and don’t contradict, your underlying philosophies. Of course pitting colleagues against each other is going to backfire, and of course the absurd idea that this could ever work is based on sloppy sporting analogies. But it’s only once Pfeffer and Sutton have made these points – and many others – lucid that they become obvious.

This is an excellent book, but as Pfeffer and Sutton acknowledge explicitly throughout, it contains one flaw. A text whose thesis is that knowledge can only be earned through action, and then hopes to teach it through words, is bound to have only partial success. Read this book – and if you’re running, or working in, any organisation larger than a handful of people then you should – and you will only have taken the first step to learning about the knowing-doing gap and how to fix it. The next step?

Action.

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