Venture capitalist Fred Wilson shares a friend’s take on how success and failure can lure both companies and individuals into distinct — yet both undesirable — mental ruts:

The winner’s curse is Microsoft…It happens when a company is so good at one thing that they win big. But when its time to change, they just can’t stop doing the things that made them so successful in the past that no longer work.
The loser’s curse is when you fail at something so badly that you never want to try it again even if there are other and better ways to do it that may result in a better outcome.

Re-inventing yourself, even when things are going peachy, is the solution to the former. Desire, persistence, and ego subordination seem to be the top prescription for the latter.

Simple, but not easy. Yet absolutely necessary in a competitive, always-evolving environment.

A must-read article in a recent issue of Fortune magazine: Managing in chaos.

I don’t proclaim “must-read” very often, but was compelled to do so here after reading these words (bold italics are mine):

Across sectors — retailing, brokerage, software, publishing, computers — business models that produced profits for decades have shut down. In most cases managers aren’t sure what the new model will be, but they’re absolutely certain it won’t have a multi-decade lifespan.

We are going through a transition that will interest historians centuries from now. It’s partly a result of globalization, partly the digital revolution and the information-based economy it spawns.

Author Geoffrey Colvin explains what’s driving this transition:

By freeing companies from physical assets, it has made them both more flexible and more vulnerable to competitors.

The digital revolution also makes business more chaotic by shifting information and power toward customers.

I’m well aware of the media’s propensity for hype, but I found it difficult to disagree with Colvin. Some big changes are going down in the world of commerce. Paradoxically, “staying the course” is likely to take you off-course. Seth Godin agrees:

[D]oing what you’re doing now is wacky. Because what you’re doing now is certain to become obsolete, possibly sooner rather than later.

Ed Sim points to Judy’s Book CEO Andy Sacks, who offers these questions for management teams to ponder once every few months:

1. What are the hardest problems in our current business approach - the market issues that we keep struggling with over and over?
2. What’s (surprisingly) easy about our business – the things that are working better than expected?
3. Where’s the parade? What major trends are we trying to get in front of with our business?

What would our business look like if we:

- Stopped trying to do what’s hard,
- Did more of the things that are easy, and
- Made sure we were in front of the biggest parade we can find?

“I do not accept personal responsibility for what happened.”
— Patricia Dunn, former Chairman, Hewlett-Packard, sworn testimony before the United States House of Representatives on 28 September 2006.

Tom Peters shares his grief about HP:

HP [has] made its full share of marketplace slips. But its character (HP’s true “core competence”) was our collective bellwether and fog-cutting lighthouse in a raging sea.

[W]ith a resounding thud [on September 28], HP fell from grace—departed the thin ranks of Big Business at its best.

HP hasn’t been “iconic” for a while now, I suppose. But, I contend, until last week, when the former Chairman denied responsibility and several others “took the Fifth,” the certifiable end to a Dynasty of Character & Excellence had not occurred. Thud.

Tom Peters talks about effort in this video:

Highlights:

If I ever finish a speech and I can still stand up, then it was a lousy speech.

If you don’t fall over [after your performance – whatever it is], then you weren’t going hard enough.

Robert Scoble is shaking a finger at business leaders again in Printing For Less in the middle of nowhere:

[M]ost businesses don’t give tours and, even if they do, you don’t get an idea of what makes that business special.

I’ve lost count of how many salespeople have told me over the years that a facility tour was key to them sealing the deal with a big customer. Same thing with recruiters courting prospective new hires. Problem is, everyone is busy these days, and plane tickets cost money, so it can be tough to convince folks from distant lands to pay you a visit.

Enter the Virtual Business Tour. Scoble conducted one at Printing For Less (PFL) during a vacation last month in Montana.

Granted, neither Scoble’s interviewing technique nor the video quality in the PFL tour (about 29-1/2 minutes long) are up to par with what your local TV news station can produce, but that’s not the point. You get a look at their new facility, find out how the organization is structured, meet some of their people, learn what customers can do to make their print jobs go smoothly, and hear about CEO Andrew Field’s open book management approach to running the business.

It’s an authentic, informal, [mostly] unscripted tour. I personally felt like I was really there while watching it, and I was actually able to see the company’s capabilities. Mission accomplished for PFL.

Update: I’m not the only one mesmerized by the power of video. Jacob Bowser comments on The ScobleShow episode Photowalking with Thomas Hawk:

I don’t know if it’s the way Scoble shoots it, or what, but once again it felt like you were right there, part of the conversation.

Steve Shu points to this article, which reports on a recent study titled “Academic Dishonesty in Graduate Business Programs: The Prevalence, Causes, and Proposed Actions”. The study found that 56% of graduate business students admitted to cheating in the last year.

David Maister saw the article while hearing a story about cheating in the professional services sector:

[T]he “20-something” daughter of some good friends was telling us about her new job as a personal assistant in the world of public relations. She pointed out, with great discomfort, that it was not unusual for her boss to say “I worked on the XYZ account for 4 hours but bill them for 20.” There’s even a word for this form of lying in PR firms, accounting firms, consulting firms and law firms: “value billing.”

This may be why I hold high respect for occupations which require part- or full-time performance on some kind of public stage. In professional golf, a foot wedge would never fly. A line forgotten by an actress in theater can produce awkward silence [unless she reverts to creative improvisation]. An executive’s speech delivered without passion fails to inspire the corporate troops.

Global business is a highly competitive game these days, so the pressure to perform at the individual level has increased. Most of us toil not on a public stage, but in relative isolation much of the time. Too many respond to the increasing pressure by cutting corners when the world isn’t watching.

Like Maister, I can’t say that I’ve never padded a handful of hours. Truth be told, most of us have one or two “young and stupid” moments in our past.

Here’s a recommendation for about half of today’s recently minted MBAs — and anyone else who wants to sleep better at night: In every situation, conduct yourself as if your five-year-old child were watching you.

Marketing headhunter Harry Joiner confesses that he’s hired to fix problems that are totally preventable.

One of his latest candidates, a talented Internet marketer, tells her boss that others in her field are earning up to 50% more than her current paycheck. Her boss replies, “[I]f you can get that kind of money elsewhere, go for it…Take [your current pay level] or leave it.”

Pogo said it best: “We have met the enemy and he is us.”

Harry tells us how such stories usually play out:

The best way to keep your recruiting costs low is to not lose good people. [Her] defection is totally unnecessary. She’s trained. She has solid intercompany relationships. She’s well-respected by her peers outside of the company. And her desk is very cash-flow positive. Replacing Susan will be a costly hassle if the company does it without my help. And if the company does it with my help, I’ll charge them 20-25% of the replacement’s base salary…The total cost to clean up this mess will be $60-70K.

Trust me, if I get an unsolicited call from one of your A-players, I will remind them that you don’t appreciate them. That’s my job: I’m a management recruiter, and I’m pretty good at it.

Joiner even provides the simple fix which, if adopted globally, would dent his own paycheck:

[I]f you want your company to go from Good to Great, for each employee under review ask “Would I hire this person again?” If the answer is yes, then keep in mind the total cost to replace that person and assign their bonus accordingly.

According to this news story, Sir Richard Branson (a.k.a RB) just pledged $3 billion towards renewable energy initiatives. The money will reportedly come from all profits derived from the Virgin Group’s airline and rail businesses over the next 10 years. RB explains:

What we’ve decided to do is to put any dividends, any profits, any shares, sales from those businesses, into tackling environmental issues.

Hopefully this contribution will help our children experience our beautiful world and encourage others to also do what they can.

How cool is that?

Granted, his move surely isn’t purely philanthropical. I suspect that RB sees future business opportunities in the renewable energy space. But actions like this only solidify his standing as my favorite entrepreneur in the world.

One should note that Branson’s announcement comes one day after the Bush administration said it was committing $3 billion to climate technology research & development. Check that math: One multinational corporation commiting as much money as the world’s economic superpower to [hopefully] reduce global warming. Isn’t that interesting?

Too much money can actually stifle innovation in business. Seth Godin explains:

First rule: great product development and marketing almost always comes from organizations that don’t have enough money. Having less money keeps you from trying to buy your way out of trouble.
Second rule: learning to live with less money means you will develop skills and resources instead of buying them. And it means that when you have less money (again), you’ll be prepared.
Third rule: When you need money for something specific, go get it. But just for that. With good terms. As soon as you spend money to protect your money or leverage your money or account for your money or send a message about your money, the money is not only wasted, it hurts you.

Sounds like a paradox. What profit-oriented business — or individual, for that matter — doesn’t strive to create a boatload of cash? Yet once you’ve filled the boat and carved out your share of the market, it’s all too easy to become fat, dumb and happy. And as Seth suggests, that mentality can hurt you more than ever before — and quicker than you may think.

It takes discipline to live lean — thus maintaining the best conditions for innovation — when [seemingly] easy fixes are affordable. It also takes discipline to continue increasing individual and organizational capabilities when what you’re doing today is generating major cash.