I’m always interested in how business owners and department heads manage the people that work for them.

Over time, I’ve discovered one approach is very common.

1. Define the job

2. Find someone to fill it

3. Wait for something to happen

This approach is then put into practice in a number of ways that look like pro-active management, but aren’t.

The most significant of which is the concept of regularly scheduled raises.

A practice which encourages management to be passive in guiding the development of each employee until the next date comes along. Or something goes wrong.

And ensures that your emerging stars will regularly surprise you with better offers from your competitors who aren’t restricted by a calendar in your HR department.

A better management approach also incorporates three elements.

1. A willingness to look first for people’s strengths.

2. Regular development reviews with each employee that are separated from compensation increases.

3. An organizational structure capable of adapting to the potential of individuals by providing tools that take care of the day to day needs of the business - reliably and instinctively.

People want to be paid fairly. But more than that, they want to be given a chance to fulfill their potential.

Putting practices in place that encourage managers to focus on helping them do so costs much less than losing a talented and trained employee.

And ensures that you are building your business on ever expanding strengths.

This is Gertie.

She spent the first 14 years of her life in a crate in a puppy mill, giving birth to hundreds.

She spent the last 15 months at home with her family, Valerie and Valerie Rae.

Gertie died on Wednesday night.

Loved at last.

Which make her one of the lucky ones.

A definition of luck we need to change.

http://www.pawschicago.org

Godspeed Gertie.

We miss you so, so much.

The first electronic calculator was built in 1961. It used vacuum tubes. And a lot of your desktop.

Twenty years later, credit card calculators were promotional giveaways on a par with wall calendars. And most people would have taken the calendar, so ubiquitous had portable maths become.

The Kindle hasn’t had a twenty year run. More like twenty months. And just as it began to move from the ‘Early Adopter’ to the ‘Early Majority’ phase, people are beginning to write its epitaph.

Too small. Too grey. Too late.

Courtesy of better technology created by a company with a plan.

I blush not at all at being an Apple evangelist. They are an extraordinary company in their ability to conceive, design and deliver.

Amazon, on the other hand, has struggled since its inception to differentiate strategically between ‘can’ and ‘should’. A shortcoming that required hundreds of millions of dollars in losses to discover that selling clicks to other vendors at 5 cents each is more profitable than building infrastructure and inventory.

The Kindle is a good product whose time has come and almost gone before it arrived.

A reactive creation by a reactive company.

As evidence I offer you this.

Apple’s iPad uses touch screen technology evolved from three years and 42.48 million units of experience with the iPhone. The iPad screen contains 1000 sensors over its 80 square inches. Anywhere you touch you’re in contact with six or seven.

Amazon’s response? Yesterday, they acquired a company called Touchco. A New York start-up that specializes in touchscreen technology.

Touchco has ‘roughly six employees’ and has yet to turn its technology into a commercial product.

I believe in technology, innovation and possibility. I believe David can beat Goliath on a regular basis these days. And I believe in dreams.

I also believe that if you own a Kindle, you should use it a lot between now and late April.

After that, it’s a doorstop.

I probably learn more from Fred Wilson's blog than any other source that I read regularly. However, a couple of days ago he blogged about an interview given by Mark Pincus in the New York Times this week.

Mark has built a number of successful web businesses, and like all entrepreneurs who turn start-ups into success stories he has learned that his ability to personally manage every employee only works while the company remains small. His threshold is somewhere between 50 and 150 people. A range that matches our own experience.

As Mark points out, you have to find ways to scale the organization, “to find some way to keep everybody going in productive directions when you’re not in the room.”

With this perspective, I could not agree more.

Mark’s solution is “to have everyone be the CEO of something.” An experience he illustrates with a description of his receptionist buying the company’s new phone system.

A practice that I would strongly suggest you avoid at all costs.

In running my own companies I have erred both by creating too rigid a hierarchy, and then by providing too few parameters. The first limits imagination and innovation. The second guarantees that either the individual or the organization will eventually fail through an absence of perspective. And experience.

I have learned to avoid both extremes.

Organizations, in my experience, do not manage themselves towards collective success. No matter how well-intentioned, talented or selfless its employees may be.

Instead, I believe scaling a business requires a management approach that has eight elements:

1. The ability to articulate why what the business does is important. An evangelical mission that gives your staff both a reason to build the company and a way to measure their progress - both critical to our species.

2. A clear understanding of the essential structural elements of the business. Pick from sales, customer service, financial management, operations, technology, manufacturing, and the process by which you make or provide the thing you sell. Sometimes one may blend with another (for instance, sales and customer service overlap significantly in some businesses). Defining your operational model creates not only scalability but also a way to measure what’s working and what’s not.

3. An emotional willingness to hand responsibility for the success of each area to others.

4. An appreciation of the skills needed to be successful. Nothing is more destructive than letting an enthusiastic staff member jump in the deep end, only to discover they don't know how to swim.

5. A definition of success for each area. And for the company as a whole. Supported by the awareness to redefine both as required by evidence and evolution.

6. An atmosphere that encourages those responsible for each area to use their initiative. And makes them accountable for their decisions.

7. The instinct to recognize talent and to empower it quickly, regardless of seniority or process. Putting your best people where they can have most impact is critical to creating a vibrant, innovative and effective organization.

8. An information management system that creates an early warning of problems in any area by highlighting bad news as well as good.

To go back to Mark's example, the receptionist buying the phone system in an organization of 50+ people is making a decision that can cost $200,000 in the short-term. And well over $1,000,000 over ten years. Getting it right requires understanding: telco politics and regulations; bandwidth; firewalls; data requirements and pricing analysis; packet-loss; financing alternatives; the tax impact of each alternative; the communication needs of every department; of other offices; the company's customer service philosophy (which is frequently defined for the first time at moments like this); the financial robustness of every manufacturer, vendor, installer and service providor; the pros and cons of maintenance and training plans, and the time to do all that. And answer the phones.

Creating a model in which your best people have wide-ranging responsibility and the opportunity to grow quickly is essential.

Which includes challenging them in ways that they might not instinctively choose for themselves.

But asking them to be micro CEOs is unfair to them.

And to the organization.

And both will fail.

Most business owners spend a lot of time figuring out how to give their customers more of what they want.

At various points in the business cycle they add better and cheaper to the analysis. An approach that creates productivity and efficiency. But little originality.

It is a strategy that also systematically undermines the value of those businesses. By turning the unique into the common and individuality into commodity.

My brother-in-law showed me a quote last week that described Steve Jobs’ approach to building his business.

“First he creates black holes. Then he fills them with stars.”

If we seek to only do better that which has been done before, we will eventually optimize ourself out of business.

But if we focus instead on what makes us magical to our customers, we will be irreplaceable.