Creating a Creative Climate

Creativity does not happen in an intellectual vacuum nor in the emotional icebergs that many companies fashion for themselves.

Research around creative culture and general climate has led to the identification of key areas on which companies can focus to develop an effective climate in which people are not only creative, but where they are motivated to develop these ideas into value-adding contributions to the success of the whole organization.

If a company wants to become more creative, rather than just encouraging people or teaching tools, then perhaps the best way is to develop the organizational climate. Rather than telling the plants to grow, this is about tending to the soil in which they can become what they are capable of becoming.

Motivation

To do anything, people must feel motivated, an internal need to act. The climate of the organization thus must provide the cues and forces that lead people into the deep motivation that is required to push through from idea to end product.

Challenge
People feel challenged, that there is a basic drive to extend their personal boundaries, develop latent talents and explore new possibilities.

People who feel challenged emotionally engage in their work. It becomes a part of them, not just something they do. They feel the need to get out there and act, not just to sit back and dream or mope.

Organizations can challenge people by linking a deep understanding of individual talents, potential and motivation with the strategic intent of the company. MBO (Management By Objectives) got itself a bad name in the 1980s, mostly because it was done badly. Done well, it means telling people what is wanted (the Objectives) and then letting them do it in any way they see fit. The trick also is in giving high-enough level of objectives that people feel excited and challenged, not constrained and directed.

Fun
Having fun is not always realized as being a productive state. Yet look at little children. Their 'fun' is almost all learning and discovery. We get this beaten out of at an early stage in school, where learning is supposed to be serious.

A climate where a certain (child-like, but not childish) playfulness is in the air lets people try things out without knowing what will happen.

Another important characteristic of a fun-loving culture is humour. You can see such climates simply through the smiles that people almost always seem to wear on their faces as they tease and joke with one another. Jokes are about unexpected things, as are creative ideas. Making jokes is, in itself, a very creative activity, and develops the 'creative muscle' needed to constantly innovate.

Empowerment

Once people are motivated to be creative, they need the environment in which they can be creative.

Freedom
People empowered to act in ways that are not tightly constrained by narrow job descriptions and management oversight. They have the personal freedom of choice and resource that gives them true authority to achieve the challenge they have been given.

Empowerment has been slated and abused, for example where the power is retained by managers whilst individuals are asked to achieve things without the power to act. Done well, however, it truly delegates power and the freedom to choose what to do and how to do it within a significant part of people's jobs.

Time
Discovering and developing ideas takes time. They need to incubate in your subconscious for a while, like hatching an egg or a dastardly plan. When people are tightly constrained, working a full nine-to-five (or more) job, then they will not have the ability to go beyond basic ideas, which in their base state are usually not valuable, but would be with a certain amount of developmental effort.

When people have a certain amount of unallocated time in their timetables, then if they feel challenged and feel freedom to act, then they will use that time productively to develop those ideas. Some companies deliberately leave a proportion of time, even up to 10% or more (and particularly in some parts of the organization) in which ideas may be developed.

Support
When I have spent time and freedom in working to achieve the challenges I have found, then I will at some time reach the stage when I need further help, for example to allocate additional resources for development or in presenting the idea to people who may not be that ready to change their entrenched viewpoint.

In these situations, the person developing the idea needs the gravitas, the authority, the wider capability of more senior managers. In fact the more valuable the idea, the more support it is likely to need, as it may lead to entire changes in direction for the whole company.

Dynamism

Alongside a motivated and empowered organization, a harder edge is needed that drives forward towards towards success.

Energy
Getting an idea from first notion to final product can be a long and arduous process. This requires a dynamic environment in which people are energized and constantly pushing forward. You can walk into many workplaces and feel the lack of energy and enthusiasm, whilst others have a definite, almost palpable buzz about them.

Buzz and energy comes from the leaders of the organization. This includes the formal management and informal social leaders. People look to these leaders for cues in how they behave. If the leader is full of energy and enthusiasm, then this emotion will 'infect' others and the motivation will spread through the organization.
Conflict
Ideas in action almost always bump into other ideas as well as natural conservatism that seeks to preserve the status quo. People attach themselves to idealistic positions and will act to defend them, sometimes by pre-emptively attacking what they see as threats.

A climate where conflict is allowed, enables these felt challenges to be voiced and for people to argue their cases. In a creatively supporting climate, the conflict is mostly about the problems of the organization and the viability of ideas, and is most certainly not about personalities and the value of different characters. When conflict turns to personal attack, then ideas and their value go out of the window.

Creating healthy conflict requires both an openness to challenge and then a focus on the problem, not the people. A respect for the individual thus is a fundamental element of creative cultures.

Debate
Conflict and debate are very close, and again the basic concern is to focus first on the idea. In debate, the pros and cons of ideas are discussed openly and challenges are welcomed and analyzed to see what additional benefits they may bring.

Debates can also go on across boundaries of time and space, and thinking about an idea can engage an entire company.

Openness

Experimentation
It is one thing to think up a idea, it is another to put it into practice. Ideas that are not explored and experimented with will either never see the light of day or may well fail on their first outing.

An experimenting culture has a strong bias for action in trying things out. It does not expect things to work first time but it does expect to learn through careful trials and subsequent analysis.

Experimental companies often extend this culture out into the marketplace. They do many trials with customers. They release many different products to see what sells and what does not.

Trust
Trust is the bedrock of human interaction. If I do not trust others then I will not believe them and will put a lot of my effort into protecting myself from their potential attacks or callous lack of concern.

In the development of ideas, trust is needed on both sides of the house. The person with the idea must feel they can speak their minds without fear of criticism or punishment. The person on the other side also needs to trust that the person with the idea has the company's best interests at heart and will not abandon their other work in the sole pursuit of a very shaky idea.

Trust thus has to develop across the organization. It is a fragile thing, that when lost through betrayal of trust is not easily restored, and thus needs very careful management.

Risk
Offering ideas and trying out experiments requires the ability and motivation to take risks. Individuals and the entire company need to be able to stick their necks out and 'give it a go'. Personal risk is thus reduced so people can be open and experimental.

Rather than blind risks, successful cultures manage these in a way that takes a realistic view of the real exposure of the company. Big risks are mitigated carefully. Small risks are recognized as such and may more easily done as 'blinders' to see what happens. Risk and potential reward are thus balanced and managed carefully as a single unit.

Source: http://creatingminds.org/articles

A Word of Advice During a Housing Slump: Rent

Homeownership may be the American dream, but the real estate downturn is calling into question the view that it is a can’t-miss investment.
By DAVID LEONHARDT
The New York Times April 11, 2007

A promotional spot for the National Association of Realtors came on the radio the other day. The spot, introduced as something called"Newsmakers," was supposed to sound like a news report, with theassociation's president offering real estate advice.

"This is the best time to buy," Pat Vredevoogd Combs, the president, said cheerfully. "There's a lot of inventory in the marketplace. Interest rates are low. It's a wonderful tax deduction."

By the Realtors' way of thinking, it's always a good time to buy. Homeownership, they argue, is a way to achieve the American dream, save on taxes and earn a solid investment return all at the same time.

That's how it has worked out for much of the last 15 years. But in astark reversal, it's now clear that people who chose renting overbuying in the last two years made the right move. In much of thecountry, including large parts of the Northeast, California, Florida and the Southwest, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It's almost as if they have thrown money away, an insult once reserved for renters.

Most striking, perhaps, is the fact that prices may not yet have fallen far enough for buying to look better than renting today, except for people who plan to stay in a home for many years.

With the spring moving season under way, The New York Times has done an analysis of buying vs. renting in every major metropolitan area. The analysis includes data on housing costs and looks at different possibilities for the path of home prices in coming years.

It found that even though rents have recently jumped, the costs that come with buying a home - mortgage payments, property taxes, fees to real estate agents - remain a lot higher than the costs of renting. So buyers in many places are basically betting that home prices will rise smartly in the near future.

Over the next five years, which is about the average amount of time recent buyers have remained in their homes, prices in the Los Angeles area would have to rise more than 5 percent a year for a typical buyer there to do better than a renter. The same is true in Phoenix, LasVegas, the New York region, Northern California and South Florida. In the Boston and Washington areas, the break-even point is about 4 percent.

"House prices have to fall more before housing becomes a clear buy again," says Mark Zandi, chief economist of Moody's Economy.com, a research company that helped conduct the analysis. "These markets aren't as overvalued as they were a year ago or two years ago, but they're still unfriendly. And that's one of the reasons the market is still soft - people realize it's not a bargain."

There is obviously no way to know what home prices will do in the next few years. But there are two big reasons to doubt the real estate boosters who insist that it's once again a great time to buy.

The first is history. After the last big run-up in house prices, in the 1980s, a long slump followed. In the New York area, prices peaked in early 1989 and then fell 9 percent over the next three years, according to government data. (Adjusted for inflation, the drop was much bigger.) Not until 1998 did prices pass their earlier peak.

Keep in mind that the 2000-5 boom was even bigger than the '80s boomand that house prices on the coasts, according to the official numbers at least, have fallen only slightly so far. So it is hard to imagine that prices will rise 5 percent a year, or another 28 percent in all, over the next five years.

The second reason for skepticism is that buying has never been quiteas beneficial as Realtors - and mortgage brokers, home builders and everybody else who makes money off home purchases - have made it out to be. Buyers have to pay property taxes on top of their mortgage, while renters have the taxes included in their monthly rent bill. Buyers also face thousands of dollars in closing costs (and, in Manhattan, co-op charges). Renters, meanwhile, can invest what they would have spent on closing costs and a down payment in the stockmarket, which hasn't exactly delivered a bad return over the last 20 years.

And that famous mortgage-interest tax deduction? Yes, it reduces the borrowing costs that come with a mortgage, but it doesn't eliminate them. Renters don't face any such borrowing costs.

Almost two years ago, I interviewed a thoughtful 37-year-old man named Tchaka Owen, who happens to be a real estate agent. (Whatever the sins of the Realtors' association, there are a lot of smart, helpful agents out there. Just remember that they have a financial interest in getting you to buy a house.)

Mr. Owen and his girlfriend, Polly Thompson, had recently moved from the Washington suburbs to the Miami area and decided to rent a two-bedroom apartment with spectacular bay views. "You can get so much more for your money, renting instead of buying," he said at the time.

Sure enough, house prices soon began to fall in South Florida, and Mr.Owen and Ms. Thompson started to think about buying a place. A three-bedroom Mediterranean-style house that they liked was originally listed for $620,000 last year, but the price was later cut to$543,000. They bought it in June for $516,000. Since then, the markethas fallen further, but Mr. Owen said he didn't mind, because theyplan to stay in the house at least a decade. "We love it," he told me.

Clearly, there are benefits to owning a house beyond the financial, like the comfort of knowing you can stay as long as you want or can fix the roof without permission. But real estate has been sold as more than a good way to spend money. It has been sold as a can't-miss investment. Back in 2005, near the peak of the market, the chiefeconomist of the Realtors' association, David Lereah, published a bookcalled "Are You Missing the Real Estate Boom?" The can't-miss argumentwas wrong then, and it may still be wrong today.

After hearing that radio spot, I called Ms. Combs and asked her whether she thought there was any chance that she and her fellowRealtors had gone a bit too far in promoting the boom. "I absolutely disagree," she said, still cheerful. "We help people look at the marketplace."

So I asked what advice she gave her own clients in Grand Rapids, Mich., where she is an agent. "We often tell people that they need to stay in a house five to six years for it to make sense," she said.

That's a nuance that didn't make it into her "Newsmakers" interview. In Grand Rapids, where the median home costs $130,000, it is probably good advice. In a lot of other places, it may still be too optimistic.

Bank of America To Buy
U.S. Trust
Josh Lipton 11.20.06, 5:02 PM ET

Bank of America announced Monday will that it will buy U.S. Trust, the wealth-management subsidiary of Charles Schwab in all cash deal for $3.3 billion. The resulting entity will be the largest manager of private wealth in the U.S.

Based on assets under management by private banks, Bank of America is currently the second largest manager of private wealth in the U.S., while U.S. Trust is the fourth. The combined entity will be first, according to Bank of America, with a total of $261 billion in assets under management.

Schwab first bought U.S. Trust for about $2.8 billion in 2000, but the purchase never worked out well for the mass discount brokerage, according to Goldman Sachs analyst William Tanona.

“The sale of U.S. Trust will be viewed very positively by the street,” the analyst wrote in a client note. “Schwab has long struggled to turn this business around since it acquired the firm and the segment has the worst pretax margins of any of Schwab’s three business segments.”

U.S. Trust’s return on equity was paltry according to Tanona, “generating only mid to upper single digit returns.” He described the sale as “positive news.”

Standard & Poor’s Equity Research analyst Frank Braden agreed that the purchase made good sense. He reiterated a “strong buy” recommendation on shares of Bank of America. “We view the proposed acquisition favorably, as Bank of America has been seeking to expand its more profitable private banking business,” Braden wrote in a client note. “However, we believe there may be some short-term difficulties as Bank of America integrates the two cultures.”

Schwab estimates that it will record a pre-tax gain on the sale of about $1.9 billion and that after-tax proceeds will total approximately $2.5 billion. Closing is expected on March 31, 2007, pending approvals.

Bank of America wasn’t the only company gobbling up money managers. In other news, Lehman Brothers announced that it is buying New York-based money manager H.A. Schupf & Co. H.A. Schupf, which has $2.5 billion of assets under management, will merge into Lehman’s Neuberger Berman unit, which has $50 billion of assets. Terms of the deal were not disclosed.

"No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't"
by Robert I. Sutton, Ph.D.

Chapter 1

Who deserves to be branded as an asshole? Many of us use the term indiscriminately, applying it to anyone who annoys us, gets in our way, or happens to be enjoying greater success than us at the moment. But a precise definition is useful if you want to implement the no asshole rule. It can help you distinguish between those colleagues and customers you simply don't like from those who deserve the label. It can help you distinguish people who are having a bad day or a bad moment ("temporary assholes") from persistently nasty and destructive jerks ("certified assholes"). And a good definition can help you explain to others why your coworker, boss, or customer deserves the label-or come to grips with why others say you are an asshole (at least behind your back) and why you might have earned it.

Researchers such as Bennett Tepper who write about psychological abuse in the workplace define it as "the sustained display of hostile verbal and nonverbal behavior, excluding physical contact." That definition is useful as far as it goes. But it isn't detailed enough for understanding what assholes do and their effects on others. An experience I had as a young assistant professor is instructive for understanding how assholes are defined in this little book. When I arrived at Stanford as a twenty-nine-year-old researcher, I was an inexperienced, ineffective, and extremely nervous teacher. I got poor teaching evaluations in my first year on the job, and I deserved them. I worked to become more effective in the classroom and was delighted to win the best-teacher award in my department (by student vote) at the graduation ceremony at the end of my third year at Stanford.

But my delight lasted only minutes. It evaporated when a jealous colleague ran up to me immediately after the graduating students marched out and gave me a big hug. She secretly and expertly extracted every ounce of joy I was experiencing by whispering in my ear in a condescending tone (while sporting a broad smile for public consumption), "Well, Bob, now that you have satisfied the babies here on campus, perhaps you can settle down and do some real work."
This painful memory demonstrates the two tests that I use for spotting whether a person is acting like an asshole:

Test One: After talking to the alleged asshole, does the "target" feel oppressed, humiliated, de-energized, or belittled by the person? In particular, does the target feel worse about him or herself?

Test Two: Does the alleged asshole aim his or her venom at people who are less powerful rather than at those people who are more powerful?

I can assure you that after that interaction with my colleague-which lasted less than a minute-I felt worse about myself. I went from feeling the happiest I'd ever been about my work performance to worrying that my teaching award would be taken as a sign that I wasn't serious enough about research (the main standard used for evaluating Stanford professors). This episode also demonstrates that although some assholes do their damage through open rage and arrogance, it isn't always that way. People who loudly insult and belittle their underlings and rivals are easier to catch and discipline. Two-faced backstabbers like my colleague, those who have enough skill and emotional control to save their dirty work for moments when they can't get caught, are tougher to stop-even though they may do as much damage as a raging maniac.
There are many other actions-sociologists call them interaction moves or simply moves-that assholes use to demean and deflate their victims. I've listed twelve common moves, a dirty dozen, to illustrate the range of these subtle and not subtle behaviors used by assholes. I suspect that you can add many more moves that you've seen, been subjected to, or done to others. I hear and read about new mean-spirited moves nearly every day. Whether we are talking about personal insults, status slaps (quick moves that bat down social standing and pride), shaming or "status degradation" rituals, "jokes" that are insult delivery systems, or treating people as if they are invisible, these and hundreds of other moves are similar in that they can leave targets feeling attacked and diminished, even if only momentarily. These are the means that assholes use to do their dirty work.

The Dirty Dozen
Common Everyday Actions That Assholes Use

01. Personal insults
02. Invading one's "personal territory"
03. Uninvited physical contact
04. Threats and intimidation, both verbal and nonverbal
05. "Sarcastic jokes" and "teasing" used as insult delivery systems
06. Withering e-mail flames
07. Status slaps intended to humiliate their victims
08. Public shaming or "status degradation" rituals
09. Rude interruptions
10. Two-faced attacks
11. Dirty looks
12. Treating people as if they are invisible

The not so sweet thing that my colleague whispered in my ear also helps demonstrate the difference between a temporary asshole and a certified asshole. It isn't fair to call someone a certified asshole based on a single episode like this one; we can only call the person a temporary asshole. So while I would describe the colleague in my story as being a temporary asshole, we would need more information before labeling her as a certified asshole. Nearly all of us act like assholes at times; I plead guilty to multiple offenses. I once became angry with a staff member who I (wrongly) believed was trying to take an office away from our group. I sent an insulting e-mail to her and a copy to her boss, other faculty members, and her subordinates. She told me, "You made me cry." I later apologized to her. And although I don't demean one person after another day in and day out, I was guilty of being a jerk during that episode. (If you have never acted like an asshole even once in your life, please contact me immediately. I want to know how you've accomplished this superhuman feat.)

Copyright © 2007 by Robert Sutton

About the Author
Robert I. Sutton is Professor of Management Science and Engineering in the Stanford Engineering School, where he is Co-Director of the Center for Work, Technology, and Organization, an active researcher and cofounder in the Stanford Technology Ventures Program, and a cofounder and active member of the new "d.school," a multi-disciplinary program that teaches and spreads "design thinking." Sutton is also an IDEO Fellow and a Professor of Organizational Behavior, by courtesy, at Stanford Graduate School of Business.