Warren Buffett - The World's Greatest Money Maker - 2016

Überwinde die Emotion der Angst

Warum emotionale Intelligenz der Schlüssel zum Erfolg ist

Ein großer Teil vom Menschsein ist Mensch zu sein. Und Mensch zu sein bedeutet Emotionen zu haben. Wir alle fühlen Angst, Traurigkeit, Wut, Liebe, Hass, Enttäuschung, Glück und vieles mehr. Was uns alle einzigartig macht, ist die Art und Weise, wie wir mit diesen Emotionen umgehen.

Wenn es darum geht Geld zu riskieren, erleben wir alle Angst, selbst die Erfolgreichsten unter uns. Der Unterschied liegt darin, wie jeder von uns mit der Angst umgeht. Bei vielen Menschen erzeugt Angst Gedanken wie: "Gehe auf Nummer sicher. Gehe keine Risiken ein".  Andere haben in der gleichen Situation Gedanken wie: "Stelle es geschickt an. Lerne Risiken zu managen.".

Die selben Emotionen, aber ein anderer Umgang damit, andere Gedanken: Anderes Sein - anderes Tun - anderes Haben.

Die größte Ursache finanzieller Herausforderungen

Ich glaube, dass die größte Ursache für finanzielle Herausforderungen die Angst ist, Geld zu verlieren. Es ist diese Angst, die Menschen oft dazu verleitet, alles zu sicher zu machen. Es ist Angst, die dich davon abhält, deine Träume zu verfolgen. Ich empfehle dir das Buch "Emotionale Intelligenz" von Daniel Goleman zu lesen. In seinem Buch beschreibt er das uralte Rätsel, warum Menschen, die gut in der Schule sind, im echten Leben oft nicht so gut abschneiden.

Golemans Antwort ist, dass dein emotionaller IQ mächtiger ist, als dein akademischer IQ. Aus diesem Grund geht es Menschen, die Risiken eingehen, Fehler machen und sich davon erholen oft besser, als den Menschen, die es vermeiden Fehler zu machen und Angst haben, Risiken einzugehen.

Zu viele Menschen verlassen die Schule mit guten akademischen Noten, aber nicht mit Noten, die sie durch die Ergreifung von Chancen verdient haben. Sie sind emotional nicht vorbereitet Risiken einzugehen, besonders finanzieller Art. Finanzielle Freiheit kommt, wenn du dich frei fühlst, Fehler zu machen und Risiken zu managen.

Emotionaler IQ ist stärker

Nachdem ich Golemans Buch gelesen hatte, habe ich erkannt, dass finanzieller IQ 90% emotional ist und nur zu 10% aus technischen Informationen über Geld besteht.

Goleman zitiert Erasmus von Rotterdam, einen Gelehrten aus dem 16. Jahrhundert und nutzt sein Verhältnis von 24:1, wenn er die Macht des emotionalen und des rationalen Gehirns vergleicht. In anderen Worten, wenn die Emotionen hoch sind, ist die Intelligenz niedrig. Ich weiß nicht, ob dieses Verhältnis wissenschaftlich belegt ist, aber es ist in der Praxis sehr hilfreich. Jeder von uns hat Momente erlebt, in denen die Emotionen die rationalen Gedanken einfach überrollt haben. Es scheint manchmal unmöglich unsere Emotionen zu überwinden und rational zu handeln.

Wenn es um Geld geht, dann übernehmen oft die Emotionen die Kontrolle über uns. Wir wissen was wir tun sollten, aber stattdessen tun wir, wonach wir uns gerade fühlen - und das ist normalerweise der sichere Weg.

Erkenne die Muster

Wie Kim vor einigen Wochen geschrieben hat, ist ein großer Teil auf dem Weg erfolgreich zu werden, die Muster zu erkennen, die uns zurück halten und dann etwas zu unternehmen, um diese Muster zu überwinden. Wenn wir mit der Angst etwas zu verlieren konfrontiert sind, müssen wir imstande sein, diese Angst rational zu erkennen, bevor sie die Überhand gewinnt. Das erfordert Selbersterkenntnis, die das Ergebnis von konstanter Selbstbeobachtung und Selbsteinschätzung ist.

Wenn du deine Emotionen in Schach halten und das tun kannst, was dir logisch erscheint, dann hast du gute Chancen erfolgreich zu werden. Es ist ein Prozess zu erkennen, welche deiner Gedanken auf Emotionen beruhen und welche auf Logik. Die allerwichtigste Unterhaltung ist immer die mit dir selbst.

Ein bisschen Hilfe

Wenn du es mit deinen Emotionen zu tun hast, ist es immer hilfreich, mit jemandem sprechen zu können, der dir objektive Hinweise geben kann - besonders wenn es Hinweise sind, die du nicht hören willst. Wenn Kim und ich durch harte Zeiten gegangen sind, war sie immer für mich da, um mich daran zu erinnern, wofür wir arbeiten. Ihre Führung hat mich motiviert, weiter zu machen und ich habe dasselbe für sie getan. Und wir beide hatten auch andere Coaches, die zu unserem Erfolg verpflichtet waren.

Wenn du bereit bist den nächsten Schritt auf deiner finanziellen Reise zu machen, solltest du überlegen dir einen Coach zu suchen.   Ich empfehle dir , einen Coach zu finden. Es wird dich weiterbringen.

21. JULI 2015  aUS DEM bLOG VON ROBERT KIYOSAKI 

9 Things Warren Buffett Says You Should Do to Be Happy and Successful

The legendary investor wants you to be as successful as he is, and he's willing to tell you how.

Warren Buffett knows a thing or three about becoming wealthy and successful, and the Oracle of Omaha is not averse to handing out mostly excellent advice to others who'd like to follow in his footsteps.

The personal finance site GOBankingRates has pulled together 14 pieces of advice Buffett has given to graduating classes and/or young people. They're all great tips for the young--but also excellent advice that all of us should follow, no matter what age we are. Here are some of the best. You can find the full list here.

1. Invest in yourself before anything else.

"Investing in yourself is the best thing you can do--anything that improves your own talents," Buffett told Good Morning America. That's excellent advice, whether it's getting more education or training, to improve a skill you already have or to learn a new one--or whether it's starting a company of your own. (In case it's the latter, here are 10 Steps to Success as an Entrepreneur.)

2. Change bad habits as soon as you can.

Habits can make or break you, Buffett says. "I see people with these self-destructive behavior patterns," he says. "They really are entrapped by them."

The trick, he says, is to get out of the trap before it closes on you, which is why he advised graduating students at the University of Florida to form good habits as soon as possible. "You can get rid of it a lot easier at your age than at my age, because most behaviors are habitual," he told them. "The chains of habit are too light to be felt until they are too heavy to be broken."

True enough, but if you're older than a college senior, don't despair. Though it may be tougher, habits can be changed at any time in life. Here's the secret of how to do it.

3. Know your own strengths and weaknesses.

Use that knowledge to capitalize on the things that you do well, and avoid the risks of getting in over your head in your weaker areas, Buffett advises. "You don't have to be an expert on everything, but knowing where the perimeter of that circle of what you know and what you don't know, and staying inside of it, is all important," he's said.

4. Never risk something you need to get something you don't need.

It's not that taking risks is wrong--but do it only for the right reasons, Buffett explained to the University of Florida class. He added that he's seen both businesses and individuals take big risks out of greed when they should have held back.

"If you risk something that is important to you for something that is unimportant to you, it just doesn't make sense," he said. "I don't care if the odds you succeed are 99 to 1 or 1,000 to 1."

5. Find work you love.

"You really should take a job that, if you were independently wealthy, that would be the job you would take," Buffett said in that same commencement speech. "You will learn something, you will be excited about it, and you will jump out of bed. You can't miss." Finding work you love is a better bet than doing something because it pays well or because it would look good on your resume, he added. I couldn't agree more.

6. Surround yourself with people you admire.

Buffett has often talked about the importance of mentorship and the role his own mentor, Columbia professor Benjamin Graham, played in his life. But even beyond that, he advised a high school student to spend time with people whose qualities he aspired to. "Pick out associates whose behavior is better than yours and you'll drift in that direction."

7. Face down your fears.

Don't let fear stop you from doing things, especially things you know you must do to be successful, Buffett advises. In fact, he did this himself--he was once terribly afraid of public speaking, so he took a Dale Carnegie course to improve this skill. He's now one of the most sought-after and frequently quoted speakers in the world. You don't need to go that far, but if there are things you're afraid to do, or that you know are your weak points, do what you must to get better at them and become more comfortable doing them.

8. Your time is a precious resource. Use it accordingly.

Bill Gates once wrote that being jealously protective of his time was an important lesson he'd learned from Buffett. "There are only 24 hours in everyone's day. Warren has a keen sense of this. He doesn't let his calendar get filled up with useless meetings." Even though you're not a multibillionaire, you shouldn't either.

9. Never ignore a great opportunity.

Though much of his advice is on the conservative, cautious side, Buffett is a big believer in grabbing opportunities with both hands when good ones arise. "Big opportunities in life have to be seized," he said in a commencement speech at Georgia State. "We don't do very many things, but when we get the chance to do something that's right and big, we've got to do it. And even to do it in a small scale is just as big a mistake almost as not doing it at all. You've really got to grab them when they come, because you're not going to get 500 great opportunities."

The article is from inc.com

Warum braucht Europa mehr Tech- Entwickler?

Die USA sind die Heimat der weltweit führenden Technologieunternehmen, mit Silicon Valley dient als unangefochtenen Start-Hub. Der Zusammenfluss von einem großen Pool von Kapital, Weltklasse-Talent, lebendige Support-Infrastruktur und einer risikofreudigen Kultur hat  einen  sich selbst erfüllenden Zyklus von Innovation und Unternehmergeist gezüchtet.

Als  Valley - Start- ups wachsen sie und  haben  sofort Zugriff auf die weltweit größten Verbrauchermarkt mit einer einzigen Sprache und Kultur verbunden. Dies ermöglicht ihnen, schnell zu skalieren und viel zu erreichen, bevor  sie die kritische Masse benötigen, um ihr Modell auf andere Länder zu exportieren.

Was  verhindert das, das Gleiche  in Europa zu passiert ? Ist  Europa nicht groß genug als Ozean für Start-ups zu gedeihen? Europas Wirtschaft erzeugt 17300000000000 $ in 2013 ,was leicht über dem BIP der USA '($ 16800000000000) ist . Es ist weltweit der zweitgrößte Absatzmarkt für Konsumgüter, die Heimat von mehr als 500 Millionen Menschen, und fast ein Drittel der 100 größten Unternehmen nach Marktkapitalisierung.

Winzig im Vergleich

Wenn es um die Tech-Leiterschaft  geht, Europa aber noch verblasst im Vergleich mit den USA. US-Tech-Riesen besitzen 79 Prozent der Marktkapitalisierung, gegen vier Prozent für europäische Tech-Player. Der Ozean ist groß, aber die Fische sind immer noch klein .... Und in einem Wettbewerbs Meer, kleine ist nicht schön ... es ist riskant.

Um Tech - Führungskräfte aus Europa zu bauen, brauchen Startups  Europa als Binnenmarkt frühzeitig anzugehen. Als Landesmeister in der heutigen "globalen Dorf" ist nur ein Beweis des Konzeptes; echter Erfolg wird durch globale Präsenz eines Unternehmens gemessen. Skalierung in ganz Europa, und seine 20 + Sprachen und Kulturen, kommt mit seiner eigenen Herausforderungen, ob Verwaltungs-, Kultur-, Finanz-, oder im Zusammenhang mit Humanressourcen.

In gewisser Weise den Vergleich der USA und Europa in dieser Hinsicht ist wie der Vergleich eine 100m Sprint mit einem Hürdenlauf. Dies schafft jedoch eine Chance für die europäischen Unternehmen, alternative Management-Modelle zu entwickeln , um Unternehmen in Silicon Valley, die auf nationaler Ebene erste Maßstab  entwickeln, und bauen dann eine Einzel -Vorlage -Unternehmenskultur, die sie dann zu exportieren.

Als europäische Start-ups, vor einem multikulturellen Scale-up Spielfeld können sie schon  früh, mehr "global" Führungsstile entwickeln , die sie auf dem richtigen Weg für die globale Expansion gesetzt nutzen können.

Zeichen des Wachstums

BlaBlaCar, die sich zu den weltweit führenden Langstrecken-Fahrgemeinschaft mit 20 Millionen Mitgliedern in 19 Ländern, entwickelt hat ist sehr früh  in Europa ausgebaut wurden. Unsere Investoren unterstützen  und ermutigen  unsere Mission, um die latente Nachfrage nach erschwinglichen und freundliche Mobilität in allen Ländern zu ermöglichen , die von einem ausgebautes Straßennetz und eine hohe mobile Konnektivität profitieren.

Im Laufe der letzten drei Jahre erweiterten wir unser Geschäft um 16 neue Länder, multipliziert die Größe unserer Gemeinschaft von sechs auf mehr als 20 Millionen Mitglieder, und erhöhten  das die Mitarbeiterzahl um das Fünffache  bis heute auf  300 Personen.

Unsere Wachstumsstrategie basiert auf "Acqui-hires" Schaffung örtlicher Relevanz gebaut. Wir erwarben vier heimischen Teams, die acht Länder, mit einem bewährten Verständnis der lokalen Bedürfnisse und Herausforderungen. Wir haben auch aufgebaute lokale Teams, in denen keine früheren Mitarbeiter dabei sind.

Heute, kommt 75 Prozent unserer Wachstum  von außerhalb Frankreichs, unserem Heimatmarkt, der sehr stark bleibt. Vor einem  Jahr  waren es nur 10 Prozent. Diese schnelle internationale Expansion wurde von unserem Glauben,  angetrieben, das  unserer Service und unsere Marke global nötig ist , unter Beibehaltung der Fähigkeit unseren Service und unsere Produkte , neuen Kulturen und Bedürfnissen  anzupassen.

BlaBlaCar  bildet unter einer gemeinsamen Marke, seine internationale Teams und eine Reihe von gemeinsamen Werten, unter Wahrung ihrer kulturellen Besonderheiten. Wir haben gemeinsame Werte  und  eine einzigartige  Kultur und  am Gelenk 10 umsetzbare Werte, die die  BlaBlaCar DNA verkörpern. Sie werden an unseren Wänden geschrieben, als Aufkleber verteilt, während unseres Rekrutierungsprozesses erläutert und sind Teil unseres Handelns.

Beschäftigte

Die europäische Startup-Ökosystem wird nun von einem starken Netzwerk von Gründerzentren und lokale VC-Fonds  und bedeutet  für Firmen, das sie  die Unterstützung für ihr internationales Wachstum erhalten können , ohne notwendigerweise Unterstützung aus den  USA zu finden . Laut Dow Jones Venturesource, mehr als 6 Milliarden Dollar wurden von VCs in Europa im Jahr 2014 investiert.

Diese Zahl ist immer noch von amerikanischen VC Finanzierungsniveaus in den Schatten gestellt, die stellt  fast 1000000000 $ mehr  zur Verfügung als im Jahr 2013, das  selbst ein Rekordjahr war. Eine sehr erfreuliche Entwicklung durch die zunehmende Zahl von EU-Start-ups, die die Milliarden-Dollar-Bewertung  unterstützt (sogenannte "Einhörner").

Forschungen  von Boutique-Investmentbank GP Bullhound haben festgestellt, dass die in Europa produzierten  30 Technologieunternehmen  einen Umsatz/Wert  von über 1 Mrd. $ haben ,seit Januar 2000, im Vergleich zu 39 US Einhörnern in der Zeit von 2003 bis 2013 (mit Durchschnittswertansätzen von $ 3 Mrd. und $ 3,6 Mrd. beziehungsweise).

Im Durchschnitt entstehen im Jahr  in Europa  drei Einhörner im Vergleich zu  den USA  wo 4 geboren werden. Firmen wie Adyen (Niederlande), Skype (Dänemark / Schweden / Estland), Candy Crush Saga Schöpfer König (Schweden), Spotify (Schweden), Just Eat (UK), und Criteo (Frankreich) haben bewiesen, dass  Welt-Tech-Führer  in  Europa wachsen .

Das Blatt hat sich gewendet, und es ist der richtige Zeitpunkt  für europäische Spieler zu verfolgen  eine EU-Binnenmarkt-Strategie von Anfang an. Europa bietet große Brutstätten für Start-ups, um sich global zu bemühen, sofern sie ihren Kompass auf die richtigen Indikatoren festgelegt haben .

Think big,  auch wenn Sie noch sind immer noch klein sind , und das  Ziel  Europa als Binnenmarkt haben . Denn wie Vinod Khosla ausdrückte, "wenn es nicht zu skalieren ist , spielt keine Rolle"

Nicolas ist Mitbegründer und COO von BlaBlaCar. Er leitet das internationale Wachstum und die  Operationen des Unternehmens. Natürlich  und pragmatisch, nutzt er die  Möglichkeiten. Nicolas ist ein starker Verfechter der lokalen Teams und Acqui-Verleih, eine Strategie, die er durchgeführt, um BlaBlaCars  Fußabdruck auf globaler Ebene zu erweitern. Er führte auch bei Bla Bla Car die 100 Millionen Dollar Finanzierung durch.

Part 2 Why Do Managers Hate Agile?

As Gary Hamel has noted, hierarchical bureaucracy solved two essential problems:

• getting semiskilled employees to perform repetitive activities competently and efficiently;
• coordinating those efforts so that products could be produced in large quantities.

In a stable environment, it had great strengths. It was scalable. It was efficient. It was predictable and it delivered reliable average performance.

It had some liabilities. It was vertical. It was non-collaborative. Its plans were linear. It couldn’t change direction very fast. It was dispiriting to staff but at least people had a job. And the customer was noticeable by being totally absent: the focus was internal.

In a stable environment, these liabilities didn’t matter much.

Change wasn’t important. A firm could go on, grinding out the same basic product for years without much risk of harm. In a stable context, it could predict what customers would buy. It didn’t need to worry about customers. They could be manipulated by advertising.

With semi-skilled employees performing repetitive tasks, collaboration wasn’t important. And who really cared if the workers were dispirited? It was enough that they had their job and their paycheck.

In a world where workers were only semi-skilled and information was hard to come by, it made sense to put the boss in charge. In that setting, managers generally did know best.

Then the world became turbulent

But the world changed and the marketplace became turbulent. There were a number of factors: Globalization, deregulation, and new technology, particularly the Internet. The Internet changed everything:

• Power in the marketplace shifted from seller to buyer. Suddenly the customer was central, not something you could take for granted.
• Now the new norm as “better, cheaper, faster, smaller, more personalized and more convenient.” Average performance wasn’t good enough. Continuous innovation became a requirement.
• In a world that required continuous innovation, a dispirited workforce was a serious productivity problem.

• As the market shifted in ways that were difficult to predict, static plans became liabilities.
• The inability to adapt led to “big bang disruption.”

In this turbulent context, the strengths of hierarchical bureaucracy evaporated.

• Scalability turned into unmanageable complexity.
• The efficiency of economies of scale turned into diseconomies and inefficiency.
• Predictability turned into a crippling lack of agility.
• And reliable average performance wasn’t good enough for customers who wanted “faster, better, cheaper, smaller, more personalized and more convenient.”

The horizontal world of Agile

In the light of these problems, managers began to fundamentally rethink the way organizations are run. And so Agile was born. Scrum was notable among the approaches, but not the only one. The approaches all had certain features in common:

• Work is done by self-organizing teams that could mobilize the full talents of those doing the work.
• Work is focused directly on meeting customers’ needs.
• A “lens” focuses attention on the customers’ needs (when the lens is a person, as in Scrum, the person is known as a “product owner”; in large scale applications, the lens is “a platform.”)
• Work proceeds in an iterative fashion so that it can progressively satisfy customers’ needs better.
The arrangement can be pictured thus





In this way of organizing work, the basic dynamics of the traditional economy are reversed.
Instead of a vertical dynamic of hierarchical bureaucracy with people reporting upwards to bosses, the firm was operating horizontally with a focus on the customer.
Instead of a controlling ideology, the approach is one of enabling self-organization.
Instead of static linear plans, plans are iterative and continuously on the move.
Instead of a workplace that is dispiriting to staff, the workplace is interesting, even inspiring, because people have the autonomy to deliver their best.
Instead of the customer being absent, the customer is now central. The goal of the firm is to delight the customer.
Steve Denning write about radical management, leadership, innovation & narrative! This article is from Forbes  Magazine

Why Do Managers Hate Agile?

Why don’t Agile and management get along? In a poll last Wednesday of some 400 people working in many different firms where the practices known as Agile and Scrum are being implemented, 88% reported tension between the way Agile/Scrum teams are managed in their organization and the way the rest of the organization is managed. Only 8% reported “no tension.Two different worlds

The reality is that “management” and “Agile” are two different worlds.

The world of “management” is vertical. Its natural habitat comprises tall buildings in places like New York. Its mindset is also vertical. “Strategy gets set at the top,” as Gary Hamel often explains. “Power trickles down. Big leaders appoint little leaders. Individuals compete for promotion. Compensation correlates with rank. Tasks are assigned. Managers assess performance. Rules tightly circumscribe discretion.” The purpose of this vertical world is self-evident: to make money for the shareholders, including the top executives. Its communications are top-down. Its values are efficiency and predictability. The key to succeeding in this world is tight control. Its dynamic is conservative: to preserve the gains of the past. Its workforce is dispirited. It has a hard time with innovation. Its companies are being systemically disrupted. Its economy—the Traditional Economy—is in decline.

The Agile world is horizontal. Its natural habitat is in low flat buildings in places like California, although it also spreading rapidly like a virus and has already established footholds in most of the tall vertical organizations. The Agile mindset is horizontal. Its purpose is to delight customers. Making money is the result, not the goal of its activities. Its focus is on continuous innovation. Its dynamic is enablement, rather than control. Its communications tend to be horizontal conversations. It aspires to liberate the full talents and capacities of those doing the work. It is oriented to understanding and creating the future. It believes in banking, not necessarily banks. It believes in accommodation, not necessarily hotels. It believes in transport, not necessarily cars. It believes in health, not necessarily hospitals. It believes in education, not necessarily schools. Its economy—the Creative Economy—is thriving.

The adults in the room?

The vertical world of management likes to position itself as “the adults in the room.” The following from an interview with Sam Palmisano, former CEO of IBM, in June 2014 in HBR is typical:

“You’ve got companies in great runs right now, the Googles and the Facebooks. Good ideas, great returns, but then all of a sudden, you need an act two. Well, jeez, is act two going to propel you from $30 billion to $100 billion? That’s a little tougher. It’s the Microsoft challenge.

“So you have to say, ‘Well, I need a different view. I can still create shareholder value, but I can do it a different way. I can rethink capital allocation.’ Recognize where you are on your maturity curve, as a management team, and behave accordingly. Don’t give a speech as CEO as if you just got out of Stanford and you came up with an iconic interface and you called yourself a piece of fruit.

Sadly, the real world is the opposite of the imaginary world that Palmisano inhabits.

The firms with “names like pieces of fruit” are not “$30 billion firms.” In fact some of them are now much larger than the old 20th Century “giants.” Apple for instance is now more than four times the size of IBM.

Market capitalization
Apple – $660 billion
Google – $362 billion
Facebook – $222 billion
IBM – $155 billion
GM – $54 billion

Whereas firms with a vertical mindset at the top, like IBM, are struggling with declining revenues and bloody cost-cutting reorganizations, firms in the horizontal world of Agile, like Apple and Google, are busy growing and inventing the future. Their second, third and fourth acts are already well under way.

What then is Agile?

For those managers who don’t know what the Agile is (itself a part of the problem), the horizontal world of Agile involves self-organizing teams that work in an iterative fashion and deliver continuous additional value directly to customers.

The practices of Agile that includes names like Scrum, XP, Kanban, DevOps and Continuous Development, grew out of lean manufacturing in Japan in the late 20th Century. As Hirotaka Takeuchi and Ikujiro Nonaka wrote in “The New New Product Development Game” in HBR in January 1986:

This new emphasis on speed and flexibility calls for a different approach for managing new product development. The traditional sequential or “relay race” approach to product development… may conflict with the goals of maximum speed and flexibility. Instead, a holistic or “rugby” approach—where a team tries to go the distance as a unit, passing the ball back and forth—may better serve today’s competitive requirements.

In due course, Agile became a major force in software development, following the Agile Manifesto in 2001. More recently, it has been spreading to all sectors of the economy, not only in digital natives like Apple and Google, but also in significant pockets within large traditional organizations.

Agile was a response to hierarchical bureaucracy

Agile, Scrum and Lean arose as a deliberate response to the problems of hierarchical bureaucracy that is still pervasive in organizations today: falling rates of return on assets and on invested capital, a dispirited workforce, a decline in competitiveness and widespread disruption of existing business models.

Given these problems, it’s easy to forget that hierarchical bureaucracy was a great advance when it was introduced over a hundred and fifty years ago. The basic idea of hierarchical bureaucracy is that work is organized with individuals reporting to bosses who tell them what to do and control their work. The roles, the rules, the plans, and the reports of hierarchical bureaucracy created order where previously there had been chaos.

As Gary Hamel has noted, hierarchical bureaucracy solved two essential problems:

• getting semiskilled employees to perform repetitive activities competently and efficiently;
• coordinating those efforts so that products could be produced in large quantities.

In a stable environment, it had great strengths. It was scalable. It was efficient. It was predictable and it delivered reliable average performance.

It had some liabilities. It was vertical. It was non-collaborative. Its plans were linear. It couldn’t change direction very fast. It was dispiriting to staff but at least people had a job. And the customer was noticeable by being totally absent: the focus was internal.

In a stable environment, these liabilities didn’t matter much.

Change wasn’t important. A firm could go on, grinding out the same basic product for years without much risk of harm. In a stable context, it could predict what customers would buy. It didn’t need to worry about customers. They could be manipulated by advertising.

With semi-skilled employees performing repetitive tasks, collaboration wasn’t important. And who really cared if the workers were dispirited? It was enough that they had their job and their paycheck.

In a world where workers were only semi-skilled and information was hard to come by, it made sense to put the boss in charge. In that setting, managers generally did know best.

Then the world became turbulent

But the world changed and the marketplace became turbulent. There were a number of factors: Globalization, deregulation, and new technology, particularly the Internet. The Internet changed everything:

• Power in the marketplace shifted from seller to buyer. Suddenly the customer was central, not something you could take for granted.
• Now the new norm as “better, cheaper, faster, smaller, more personalized and more convenient.” Average performance wasn’t good enough. Continuous innovation became a requirement.
• In a world that required continuous innovation, a dispirited workforce was a serious productivity problem.
• As the market shifted in ways that were difficult to predict, static plans became liabilities.
• The inability to adapt led to “big bang disruption.”

In this turbulent context, the strengths of hierarchical bureaucracy evaporated.

• Scalability turned into unmanageable complexity.
• The efficiency of economies of scale turned into diseconomies and inefficiency.
• Predictability turned into a crippling lack of agility.
• And reliable average performance wasn’t good enough for customers who wanted “faster, better, cheaper, smaller, more personalized and more convenient.”

The horizontal world of Agile

In the light of these problems, managers began to fundamentally rethink the way organizations are run. And so Agile was born. Scrum was notable among the approaches, but not the only one. The approaches all had certain features in common:

• Work is done by self-organizing teams that could mobilize the full talents of those doing the work.
• Work is focused directly on meeting customers’ needs.
• A “lens” focuses attention on the customers’ needs (when the lens is a person, as in Scrum, the person is known as a “product owner”; in large scale applications, the lens is “a platform.”)
• Work proceeds in an iterative fashion so that it can progressively satisfy customers’ needs better.

The arrangement can be pictured thus.

In this way of organizing work, the basic dynamics of the traditional economy are reversed.

Instead of a vertical dynamic of hierarchical bureaucracy with people reporting upwards to bosses, the firm was operating horizontally with a focus on the customer.

Instead of a controlling ideology, the approach is one of enabling self-organization.

Instead of static linear plans, plans are iterative and continuously on the move.

Instead of a workplace that is dispiriting to staff, the workplace is interesting, even inspiring, because people have the autonomy to deliver their best.

Instead of the customer being absent, the customer is now central. The goal of the firm is to delight the customer.

Yesterday brought bad news for Agile-haters and those, like former IBM CEO Sam Palmisano, who sneer at “firms with names like pieces of fruit.” Apple posted the biggest quarterly profit in history, with a net profit of $18 billion in the quarter, handily exceeding the previous records of $16.2 billion profit by the Russian firm, Gazprom, in 2011 and $15.9 billion profit by ExxonMobil in 2012.

As in my previous article, I am talking here of course about Agile in the broad sense of an ideology in which individuals, teams, networks and ecosystems are continuously delivering new value to customers in an iterative fashion.

It is easy to lose sight of the core ideology of Agile and the Creative Economy when you hear about myriad specific implementations of Agile, as depicted here in this clever graphic by Australian designer Lynne Cazaly.

Obviously there are big differences between, say, an individual Scrum team with its Product Owner and Scrummaster on the one hand, and Apple’s ecosystem of half a million App developers, delivering value to hundreds of millions of customers through a platform.

They are not the same thing, but they are instances of the same larger concept. They are both part of the same ideology and mindset of doing work that draws on the full talents of the people doing the work and gives them a direct line of sight to the customer. It is based on the belief that if you delight by the customer, the organization itself will flourish. Making money is the result, not the goal.

Her you can read part 2 : Why Do Managers Hate Agile