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The Science of Fear

'The Science of Fear' by Daniel Gardner (ISBN 0452295467) Confirmation bias leads us to accept more readily perceived facts that keep to our existing worldview more willingly than objectively considering all of the evidence. Many corporate leaders leverage disruptive change by making targeted, courageous moves toward new market opportunities. Many companies face up to risk with a strategic framework based on extenuating and managing the probable consequences but that line of attack might build bigger protective walls without guarding against the greatest risks—the ones that are unidentified. The uncertainty advantage is something different: an approach that compels managers to recognize the unknown as a market differentiator and an opportunity to give a free rein to innovative solutions that appeal to customers, investors, strategic partners, regulators, and competitors. Concisely, it is an opportunity to go well beyond the characteristic meaning of risk management—that is, seeking ways to achieve the best of the worst outcomes—to create new and sustainable value out of confusion.

In his book, The Science of Fear: How the Culture of Fear Manipulate Brain, New York Times bestselling author Daniel Gardner describes some of our pitfalls when it comes to framing risk properly:

Once a belief is in place, we screen what we see and hear in a biased way that ensures our beliefs are “proven” correct. Psychologists have also discovered that people are vulnerable to something called group polarization—which means that when people who share beliefs get together in groups, they become more convinced that their beliefs are right and they become more extreme in their views. Put confirmation bias, group polarization, and culture together, and we start to understand why people can come to completely different views about which risks are frightening and which aren’t worth a second thought.

It’s also much easier to simply be afraid of that with which we can easily recall to memory. Gardner uses Daniel Kahneman’s two systems of thought to explain:

You may have just watched the evening news and seen a shocking report about someone like you being attacked in a quiet neighborhood at midday in Dallas. That crime may have been in another city in another state. It may have been a very unusual, even bizarre crime—the very qualities that got it on the evening news across the country. And it may be that if you think about this a little—if you get System Two involved—you would agree that this example really doesn’t tell you much about your chance of being attacked, which, according to the statistics, is incredibly tiny. But none of that matters. All that System One knows is that the example was recalled easily. Based on that alone, it concludes that risk is high and it triggers the alarm—and you feel afraid when you really shouldn’t.

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Posted in Investing and Finance Philosophy and Wisdom

Six Drivers of Creativity and Risk-Taking

Six Drivers of Creativity

It is not enough to want to become more creative and to take more risks. To do so means challenging yourself, your team, and the organization. Moving out of our comfort zones is something we rarely do. Yet when we do, we gain insights into our own character. We can then reshape ourselves to the way we want. This is also the case with organizations and teams. But it means changing the culture.

The culture is reflected in what the organization or team values and how it does its business, as well as its propensity for risk taking and creativity. How does your organization view risk taking? Does your culture punish or reward people for taking risks? How willing are you to take risks at work?

Your propensity for risk taking is, in part, a function of the culture. If your boss doles out punitive measures for anyone who fails at a task, you play it safe. Or, if eyes roll when you offer an idea at a brainstorming session, you think twice about offering ideas.

The creativity or risk taking in a culture is consistent with the characteristics of one of seven orientations: Challenger, Innovator, Drean1er, Sustainer, Planner, Modifier, or Practicalizer. This composite profile becomes the group’s norm. Changing the group norm is difficult.

We need to focus on what we can influence directly: our immediate work teams and ourselves. Our efforts in these areas can yield powerful results.

Use these drivers of creativity and risk taking to build innovative capacity:

  1. Creativity driver 1: Ambiguity and its opposite, predictability. Operating in an ambiguous situation means dealing with uncertainty and vagueness. Those who function effectively in ambiguous circumstances don’t require highly structured situations, goals, or objectives to accomplish or create things, ideas, services, or products. Growth in this area yields innovative solutions. Since dealing with ambiguity is challenging, many people try to control variables, chart alternative courses of action, and eliminate the impact of uncertainty. The opposite of ambiguity is predictability. People who demand predictability require structure, clarity, and definition.
  2. Creativity driver 2: Independence and its opposite, dependence. Independence means not being subject to the control, influence, or determination of others. People who are independent will not subordinate themselves to others. They don’t like to be managed by others. They are self-empowered. They don’t have to be given direction. They don’t like to ask for help, believing their way to be the best way. Dependent people need direction from someone. They do not take action without prior approval.
  3. Creativity driver 3: Inner-directedness and its opposite, other-directedness. Inner-directed people and teams feel a great sense of purpose. They often have clear vision of the future. People who are inner-directed believe that they are responsible for determining their own destiny, expectations, and norms. They are guided by their own set of values. They sometimes believe that no one really understands them. Often, they have difficulty reconciling personal agendas to corporate directives. People who are other-directed are always concerned about what everyone else thinks or is doing. Other-directed people don’t take the lead without input from others.
  4. Creativity driver 4: Uniqueness and its opposite, conformity. Uniqueness is appreciating and valuing differences. People and teams that value uniqueness look for creativity in themselves and others. They foster it. They first look for the differences, not to accentuate them, but appreciate and take advantage of them. The opposite of uniqueness is conformity, acting in ways that conform to current styles, norms, or expectations.

Six Drivers of Risk-Taking

  1. Risk-taking driver 1: Authentic and its opposite, political. Authentic means being what you purport to be. Authentic people and teams live by their core beliefs; they mean what they say and say what they mean. Their actions are congruent with their espoused values. They “walk their talk” and “tell it like it is.” They take stands on issues. They are true and genuine. Its opposite is being political. Political people don’t communicate with others directly. They are always navigating or positioning for self-advantage.
  2. Risk-taking driver 2: Resiliency and its opposite, rigidity. Resiliency is the ability to rebound, adapt, and learn, even in the face of adversity and stress. Resilient people pick themselves up after being knocked down. They believe that something good always comes out of a bad experience. They create options. They persevere. They get the job done, sometimes by the force of their will. Its opposite is rigidity or inflexibility in response to change, rejection, or setbacks.
  3. Risk-taking driver 3: Self-acceptance and its opposite, victimization. Self-accepting means to be approving of one’s own behaviors or actions. Self-accepting people like themselves and their situations. They exhibit self-confidence. They are unlikely to say they’re sorry about much, because they have few regrets. They don’t try to be perfect. They like themselves, in spite of themselves sometimes. Its opposite is victimization. Victimized people complain and blame others.

If everyone on your team cultivated these drivers, your innovative capacity would accelerate rapidly.

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Posted in Mental Models and Psychology

Best Books on Creativity

Inspire Greater Creativity

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Posted in Mental Models and Psychology

Books on Creativity Recommended by Ted Leonsis

Creative people often retain a capability to adopt a number of diverse stances or perspectives. When they look at their own work, they focus interchangeably on the technical aspects, the visual design, the ideas, and so on. They develop a set of standards or a checklist that leads their attention and helps them to scrutinize the creative process. Moreover, they master a lexis that enables them to assess their work in multiple dimensions, so that they can pass more qualified judgements than just ‘good’ or ‘bad.’

A multidimensional valuation gives students feedback, which helps them determine their strengths and detect areas in which they need to improve. The scores on such valuations can also help an educational program to review its results, contemplate its position and modify the course if necessary. Although creativity can only make the most of as originality, utility, and surprise all approach unity, the same description indicates that there are seven different ways that creativity can minimize. These alternatives were identified as

  • routine, reproductive, or habitual ideas,
  • accidental response bias,
  • irrational perseveration,
  • problem finding,
  • rational suppression,
  • irrational suppression, and
  • blissful ignorance.

According to conventional wisdom, creativity is somewhat done by creative people. Even creativity researchers, for several decades, seemed to direct their work by this principle, converging predominantly on individual differences: What are creative people like, and how are they different from most people in the world? Although this person-centered tactic yielded some important findings about the backgrounds, personality traits, and work styles of marvelously creative people, it was both limited and limiting. It presented little to practitioners related with helping people to become more creative in their work, and it virtually ignored the role of the social environment in creativity and innovation. In contrast to the long-established approach, the Componential Theory of Creativity assumes that all humans with normal capabilities are able to produce at least judiciously creative work in some domain, some of the time-and that the social environment (the work environment) can manipulate both the level and the incidence of creative behavior.

Books on Creativity Recommended by Ted Leonsis Ted Leonsis, the Internet entrepreneur, former AOL senior executive, and owner of the Washington Wizards and Washington Capitals recommends the following books on creativity.

  • Ed Catmull’s Creativity : 1970s computer animation pioneer and Pixar co-founder Ed Catmull‘s appealingly comprehensive explanation of how the studio he co-founded generated hits such as the Toy Story trilogy, Up, and Wall-E. Catmull closes that it is a leader’s responsibility to stop ambitious and perfectionist staff destroying their health and that of others. Aiming for zero mistakes is the worst possible goal for a creative project. He argues that a company has to appreciate the work of creativity and learn how to navigate the failures that will happen along the way.
  • 'Crossing the Chasm' by Geoffrey A. Moore (ISBN 0062292986) Geoffrey A. Moore’s Crossing the Chasm: Author Geoffrey A. Moore is managing partner of TCG Advisors, a consulting practice that delivers business and marketing strategy assistances to well-known high-technology companies. Moore declared that the greatest change in the marketing approach happens at the chasm—the organizations to the right of the chasm have meaningfully different opportunities than those on the left. Many ideas fail in the marketplace because their enthusiasts are not capable to cross the chasm.
  • Elmira Bayrasli’s From the Other Side of the World: Journalist Elmira Bayrasli posits that brilliant people around the world are conquering insoluble obstacles to build high-growth businesses that are driving wealth and building communities, regions and countries. By means of seven noteworthy stories, Bayrasli shows the next set of successful entrepreneurs could come not only from the as Silicon Valley but also from Nigeria, Pakistan or Mexico. She writes, “Entrepreneurs, by the very nature of what they do—disrupt and innovate—provide a necessary check and balance on government that no one else can—not businesspeople, not NGOs, not civil society organizations. They help remake the social order and help move progress forward, giving rise to new ideas, new industries, and new possibilities and forcing change. That is what has made them both heroes and villains that many in power feel the need to keep in check.”
  • 'Stop Playing Safe' by Margie Warrell (ISBN 1118505581) Margie Warrell’s Stop Playing Safe: When people confront a challenge, they often recoil into inaction. Drawing from the latest research plus dialogues with highly successful leaders and entrepreneurs, Warrell offers practical tools and inspiration needed to enjoy greater confidence, accomplishment and success in work and life. Outline your sense of purpose and engage in more inspiring goals. Circumnavigate uncertainty with clarity and be more decisive in adversity. Surmount the fear of failure and bounce back from setbacks with superior flexibility. Toughen your leadership ability and expand your influence regardless of position. Build a culture of courage in your office that advances bottom line results. As you strive to reach your goals, as you make those tough choices and take risks, look for your enthusiasm, find your power, and aim to make a difference. And know that this attitude—this mindset, this entrepreneurial way of looking at the world—runs though the lives of all successful people.
  • Linda A. Hill, et al.’s Collective Genius: The perpetual organizational challenge is to develop an organization capable of inventing over and over. Outdated, direction-setting leadership can work well when the resolution to a problem is known and forthright. The role of a leader of innovation is not to set a vision and stimulate others to follow it. It’s to create a cooperative spirit that is enthusiastic and capable to innovate. Collective Genius addresses (1) how leaders generate a willingness to do the hard work of innovation, and (2) how leaders can generate the ability to do the hard work of innovation.
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Posted in Management and Leadership Mental Models and Psychology

Read to Find Investment Ideas

Read to find investment ideas The secret of finding investment ideas can be summarized in one word: READ.

Of course, in order to spend a lot of time on business news, you must be interested in economic and financial affairs. But as you become more accustomed to accumulating and storing financial information, you will find the subject increasingly interesting, particularly if your interpretation of events leads to profits.

Nothing can motivate you more than your own success. The turbulence in the financial markets underscores the importance of becoming your own analyst. This will insulate you from other people’s opinions and will give you the confidence to pursue your own ideas and goals by checking out the facts.

The way to do this is with a disciplined system of reading and information gathering. Over time, you should acquire a financial file or library of companies, ideas and trends that warrant investment attention. To sniff out opportunities from the financial news requires an understanding of what to look for.

Two people might read the same article, one of whom may spot a nuance that suggests an important opportunity, while the other person sees nothing of significance.

What we aim to provide in this chapter are some hints and clues on what to look for in the financial news, what to read and how to accomplish all this in the least amount of time.

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Posted in Investing and Finance

Creativity: Difference between Innovation and Invention

Creativity: Difference between Innovation and Invention

Creativity involves the creation of a goal-directed novelty. Creativity results in the purposeful production of new things, either ideas or physical objects; the creative process or creative thinking is the psychological means whereby such novelty is brought about. Assuming that the individual’s purpose and meaning is critical in creative production necessitates that one cannot be called “creative” if one creates something new by accident. The consequent utilization of that accidental novelty might comprise processes that we could label as creative. The initial “discovery” did not, according to the delineation assumed here, come about through the creative process. It is normally not useful to contain value in this definition. Defining creativity as the production of novel products that are of value (no matter how one defines value) causes in complexities that represent the definition unusable. The invention process covers all efforts aimed at creating new ideas and getting them to work. Most important, the value of some product can change over time, which means that, if we take account of value in our definition of creative, the products or persons that one generation classifies as creative might not be so classified by the next. That prospect means that our database would be constantly shifting as we tried to mature our interpretation of creativity and associated concepts—an unacceptable set of circumstances.

Innovation involves a product that meets some benchmarks beyond those of intention and novelty; an innovation is a new product that serves some objective. It is here that questions of value become important. Building on the definition of creativity just given, an innovation is a new product that was intentionally produced to achieve some purpose and that succeeds, to a scale that is adequate, in doing so. Design is the process whereby innovation is brought about. So the design process encompasses creativity (the generation of novelty) as well as something more (the correction of that novelty so that it serves some specific purpose).

Innovation, design, and invention are directly related concepts; an invention is also a novel product that has been intentionally developed to achieve some purpose (that is, an invention is also an innovation as defined above). As opposed to innovation the term invention was regarded in the early 19th century as a positive attribute of an endeavor or product. Law protected inventions and patents were issues on the name of the inventor.

But an invention is the first innovation within some class of objects. In other words, a new member of an already existing category of objects is an innovation, but the first of the objects within that category is an invention. The invention process covers all efforts aimed at creating new ideas and getting them to work. The cognitive, conative, and affective processes of the mind are the bases for our perceptions and for our sorting, synthesizing, categorizing, ignoring, discarding and recombining all our sensory input into new configurations.

So, for example, it seems sensible to say the following of the Wright brothers:

  • they invented the airplane
  • they designed the first airplane, and
  • they designed an airplane.

Wright Brothers First Flight: Difference between Innovation and Invention

The individuals who successfully followed the Wrights only succeeded in designing airplanes. Those individuals may have invented things in their work-components of their successful airplanes but they did not invent the airplane. The airplane—or any artifact—can only be invented once.

Thus, the processes of invention and innovation might be the same, excepting the fact that the former results in production of the first of some class of objects (i.e., the first airplane) while the latter results in additional members of the previously populated category (i.e., other airplanes). It is an empirical question as to whether the process of invention is the same as the process of innovation. Experience provides the qualities of the prototypes we employ for interpreting the present. That is, is the same process (or processes) involved in producing the first member and subsequent members of some class of objects?

Invention is not a random process but is the result of research, study or repeated attempts. Invention must be distinguished from discovery. The latter involves finding or highlighting conditions or facts still unknown. The model of the invention system and the downstream commercialization system make it possible to provide some clear answers to important questions. An invention has to be unique worldwide where as an innovation has to be unique locally, in a certain region or area.

Invention represents a worldwide novelty while innovation is a local novelty. Innovation is an improvement or a refinement while invention is a completely new entity. Society is interested in both innovation and invention as innovation is an economically viable invention that can be exploited in order to generate benefit or to obtain profit.

Innovation is a generic term, whose meaning includes both having a new idea and putting it into action. The definition of innovation used here is appropriate when discussing research in science and engineering. It includes both process and product innovations, in both the goods and services sectors. Finer shadings of these innovations into incremental vs. revolutionary, disruptive vs. sustaining is not pursued in the present discussion.

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Posted in Mental Models and Psychology

How to Cross-Fertilize Ideas?

How to Cross-Fertilize Ideas?

Managers can kindle creativity by helping employees to cross-fertilize in their thinking, to think across subjects and disciplines. The traditional office environment often has separate classrooms and classmates for different subjects and seems to influence employees into thinking that learning occurs in discrete boxes—the math box, the social studies box, and the science box. Creative ideas and insights often result, however, from integrating material across subject areas, not from memorizing and reciting material.

Teaching employees to cross-fertilize draws on their skills, interests, and abilities, regardless of the subject. If employees are having trouble understanding math, managers might ask them to draft test questions related to their special interests. For instance, they might ask the baseball fan to devise geometry problems based on a game. The context may spur creative ideas because the student finds the topic (baseball) enjoyable and it may counteract some of the anxiety caused by geometry. Cross-fertilization motivates employees who aren’t interested in subjects taught in the abstract.

One way managers can promote cross-fertilization in the office is to ask employees to identify their best and worst professional areas. Employees can then be asked to come up with project ideas in their weak area based on ideas borrowed from one of their strongest areas. For example, managers can describe to employees that they can apply their interest in science to social studies by analyzing the scientific aspects of trends in national politics.

Allow time for Creative Thinking

Managers also need to allow employees the time to think creatively. Often, creativity requires time for incubation. Many societies today are societies in a hurry. People eat fast food, rush from one place to another, and value quickness. One way to say someone is smart is to say that the person is quick, a clear indication of an emphasis on time. This is also indicated by the format of many of the standardized tests used – lots of multiple-choice problems squeezed into a brief time slot.

Most creative insights do not happen in a rush. People need time to understand a problem and to toss it around. If employees are asked to think creatively, they need time to do it well. If managers stuff questions into their tests or give their employees more homework than they can complete, they are not allowing them time to think creatively.

Instruct and Assess for Creativity

Managers also should instruct and assess for creativity. If managers give only multiple-choice tests, employees quickly learn the type of thinking that managers value, no matter what they say. If managers want to encourage creativity, they need to include at least some opportunities for creative thought in assignments and tests.

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Posted in Mental Models and Psychology

Many Award-winning Inventions Are Re-inventions

Innovation

We like to think that invention comes as a flash of insight, the equivalent of that sudden Archimedean displacement of bath water that occasioned one of the most famous Greek interjections, Eureka. Then the inventor gets to rapidly translating a stunning discovery into a new product. Its mass appeal soon transforms the world, proving once again the power of a single, simple idea.

But this story is a myth. The popular heroic narrative has almost nothing to do with the way modern invention (conceptual creation of a new product or process, sometimes accompanied by a prototypical design) and innovation (large-scale diffusion of commercially viable inventions) work. A closer examination reveals that many award-winning inventions are re-inventions.

Most scientific or engineering discoveries would never become successful products without contributions from other scientists or engineers. Every major invention is the child of far-flung parents who may never meet. These contributions may be just as important as the original insight, but they will not attract public adulation. They will not be celebrated by media, and they will not be rewarded with Nobel prizes. We insist on celebrating lone heroic path-finders but even the most admired, and the most successful inventors are part of a more remarkable supply chain innovators who are largely ignored for the simpler mythology of one man or one eureka moment.

Source: Vaclav Smil’s “The Myth of the Innovator Hero” in The Atlantic, 15 Nov. 2011

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Posted in Philosophy and Wisdom

Working with Creative and Non-Creative People

Working with Creative and Non-Creative People

Tips for Working with Non-Creative People

  • Play to their strengths. Have a 7-to-1 ratio of positive to negative comments. When people feel good, it empowers them to take risks.
  • Give them a design buddy. Managers should have a deep understanding of the nuances of each team member, then pair up those with different skill sets.
  • The worst kind of feedback: “That’s bad” or “That’s ugly.” If you’re not a professional creative, it’s not your place. If you don’t trust the person you hired to make visual decisions, they’re just a pixel-pushing monkey.
  • Use “I feel” or “I experience.” Feelings are real. Taste is illusory.
  • Establish design principles. You can bring up these attributes, and that way you’re not complaining—you’re just mentioning concepts that have been mutually agreed upon.
  • Speak unarguably. Say what’s not working and avoid phrases like “Did you consider …”
  • Resist pulling rank. Instead, say things like, “My suggestion would be X, but you have to solve this problem.” If they can’t, let them go.

Tips for Working with Creative People

  • The work should speak for itself. When presenting your idea, say what problem it’s trying to solve, but don’t walk co-workers through the hows and whys.
  • Pick your battles. When a co-worker tells you how she feels, you may be able to straight up ignore her, as long as you solve all major problems.
  • You could iterate forever. Move on once it’s good.
  • Even if someone gives you ridiculous feedback, treat it as valid. His pain is real, even if his issue makes no sense.
  • Avoid a design conversation when receiving feedback. The critique is never a good place to be creative. You can’t design on your feet, so take the feedback to your desk and consider solutions.
  • Ask follow-ups. Phrases like “Tell me why” will get to the root of the problem. When you dig deeper, you’ll find managers want something different than what they’re saying.
  • Annoyed? Explain you want the feedback process to be more open. If bosses refuse, quit.
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Posted in Management and Leadership Mental Models and Psychology

Ex-Google’s Marissa Mayer on Nine Principles of Innovation

The last decade’s most remarkable business story has been the rise of Google as a dominant force in computing. Whenever a company becomes wildly successful in a brief span of time, it naturally becomes an object of fascination for corporate executives and even the general public.

Marissa Mayer on CreativityMarissa Mayer, then Vice-President for Search Products and User Experience at Google, and presently CEO of Yahoo, shared nine guiding principles of innovation that have helped her succeed with Fast Company:

  1. Innovation, Not Instant Perfection. “The Googly thing is to launch it early on Google Labs and then iterate, learning what the market wants—and making it great. … The beauty of experimenting in this way is that you never get too far from what the market wants. The market pulls you back.
  2. Ideas Come from Everywhere. “We have this great internal list where people post new ideas and everyone can go on and see them.
  3. A License to Pursue Your Dreams. “We let engineers spend 20% of their time working on whatever they want, and we trust that they’ll build interesting things.
  4. Morph Projects Don’t Kill Them. “Any project that is good enough to make it to Labs probably has a kernel of something interesting in there somewhere, even if the market doesn’t respond to it. It’s our job to take the product and morph it into something that the market needs.
  5. Share as Much Information as You Can. “People are blown away by the information you can get on MOMA, our intranet. Because there is so much information shared across the company, employees have insight into what’s happening with the business and what’s important. … It allows us to share what we know across the whole company, and it reduces duplication.
  6. Users, Users, Users. “In a truly virtual business, if you’re successful, you’ll be working at something that’s so necessary people will pay for it in subscription form. Or you’ll have so many users that advertisers will pay to sponsor the site.
  7. 'The Google Guys: Inside the Brilliant Minds of Google Founders Larry Page and Sergey Brin' by Richard L. Brandt (ISBN 1591844126) Data is Apolitical. “Run a test on 1% of the audience and whichever design does best against the user-happiness metrics over a two-week period is the one we launch. … We probably have somewhere between 50 and 100 experiments running on live traffic, everything from the default number of results to underlined links to how big an arrow should be. We’re trying all those different things.
  8. Creativity Loves Constraints. “People think of creativity as this sort of unbridled thing, but engineers thrive on constraints. They love to think their way out of that little box: ‘We know you said it was impossible, but we’re going to do this, this, and that to get us there.’
  9. You’re Brilliant? We’re Hiring. “There is this amazing element to the culture of wanting to work on big problems that matter, wanting to do great things for the world, believing that we can build a successful business without compromising our standards and values.

How Google Fuels its Innovation Factory

  1. Innovation, not instant perfection.: Google launches early and often in small beta tests, before releasing new features widely
  2. Ideas come from everywhere.: Google expects everyone to innovate, even the finance team
  3. A license to pursue dreams.: Employees get a “free” day a week. Half of new launches come from this “20% time
  4. Don’t kill projects—morph them.: There’s always a kernel of something good that can be salvaged
  5. Share everything you can.: Every idea, every project, every deadline—it’s all accessible to everyone on the intranet
  6. Worry about usage and users, not money.: Provide something simple to use and easy to love. The money will follow.
  7. Don’t politic, use data.: Mayer discourages the use of “I like” in meetings, pushing staffers to use metrics
  8. Creativity loves restraint.: Give people a vision, rules about how to get there, and deadlines
  9. You’re brilliant, we’re hiring.: Founders Larry Page and Sergey Brin approve hires. They favor intelligence over experience
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