Steven Levitt has been looking at some classic business books lately. In his post on the Feakonomics blog yesterday, Levitt discussed the fact that the companies held up as models in two classic books, Good to Great and In Search of Excellence, have, as a group, underperformed the market since the books were published. Most strikingly, Fannie Mae, one of the Good to Great companies, has lost over 80% of its value since the book was published and looks like it may need a government bail-out.

What does that say about the value of the advice in these books? Here’s what Levitt concludes:

These business books are mostly backward-looking: what have companies done that has made them successful? The future is always hard to predict, and understanding the past is valuable; on the other hand, the implicit message of these business books is that the principles that these companies use not only have made them good in the past, but position them for continued success.

Business would be easier with a nice clear set of rules: just do these ten things and success is guaranteed. But markets change, technology changes, the economy changes–everything changes every day. That makes it pretty hard to find rules that work all the time under all circumstances.

That doesn’t mean that the guidance offered by a book like Good to Great is without value. If we don’t learn from experience, we don’t learn at all. And if we only learn from our own direct experience, there is an awful lot we’ll never know.

The challenge, of course, is to take valuable lessons from past experiences–those of others as well as our own–and apply them thoughtfully to the future.

In other words, lessons from experience may give us guidelines for future action. They don’t provide clear rules. If they did, the only difficult thing about running a successful business would be deciding which books to read.

AI came across this list on Keith Sawyer’s blog, Creativity & Innovation. He took it from a 1983 book on business innovation: The Change Masters, by Rosabeth Moss Kanter.

1. Regard any new idea from below with suspicion-because it’s new, and because it’s from below.
2. Insist that people who need your approval to act first go through several other levels of management to get their signatures.
3. Ask departments or individuals to challenge and criticize each other’s proposals. (That saves you the job of deciding; you just pick the survivor.)
4. Express your criticisms freely, and withhold your praise. (That keeps people on their toes.) Let them know they can be fired at any time.
5. Treat identification of problems as signs of failure, to discourage people from letting you know when something in their area isn’t working.
6. Control everything carefully. Make sure people count anything that can be counted, frequently.
7. Make decisions to reorganize or change policies in secret, and spring them on people unexpectedly. (That also keeps people on their toes.)
8. Make sure that requests for information are fully justified, and make sure that it is not given out to managers freely. (You don’t want data to fall into the wrong hands.)
9. Assign to lower-level managers, in the name of delegation and participation, responsibility for figuring out how to cut back, layoff, move people around, or otherwise implement threatening decisions you have made. And get them to do it quickly.
10. And above all, never forget that you, the higher-ups, already know everything important about this business.

Anything look familiar?

I don’t know about you, but every so often I look up from whatever I’m doing and think, “Some things have got to change around here.” It might be that I notice the pile of bills and invoices indicating that I’m a week or two behind in the bookkeeping, and I think, “I’m going to clean that pile up tomorrow and then I’ll enter everything as soon as it comes in.” And of course I don’t. I hate bookkeeping. I put it off whenever I can, and then the pile gets so tall that I can’t bear to face it.

Jim Canfield, President of Renaissance Executive Forums, introduced me to a book the other day: One Small Step Can Change Your Life: The Kaizen Way by Dr. Robert Maurer. Kaizen is the Japanese concept of continuous improvement through many small steps. The key is small steps: very small steps.

Here’s an example. Dr. Maurer was conducting a physical for a middle-aged, overweight patient. He was about to tell him the same thing he had told hundreds of patients before: go on a diet and start an exercise program or you’ll die. But he realized that there was very little chance that the patient would make that kind of change. Instead, he asked the patient, who watched TV every evening, to stand up during one commercial break and walk in place. The patient protested that he could do more than that, but Dr. Maurer insisted that he simply commit to walking in place for one break each day.

At his next appointment, the patient proudly reported that he had met his commitment and Dr. Maurer asked him to start walking during two commercial breaks. And so on. Very small steps. Extremely small steps.

Jim Canfield tells me that any regular behavior carried out daily for about six weeks becomes a habit. And it would be nice to turn any change, no matter how small, into a habit.

So here’s what I’ve committed to doing. For my business, I’m going to make one tough phone call a day (I hate talking on the phone). For my mental health, I’m going to write for ten minutes every day.

What change would really help your business? What small–very small–steps could you commit to that would initiate that change?

We’ll see how my plan goes. So far it’s been four days, and I’ve met my commitment each day

After a few weeks of success, maybe I’ll think about the bookkeeping.

There’s an interesting story on InnoCentive in the New York Times today. InnoCentive is a company which “links organizations (seekers) with problems (challenges) to people all over the world (solvers) who win cash prizes for resolving them.”

According to the Times, “the approach is catching on” because prizes are now routinely offered for solving problems (think of John McCain’s offer a prize of $300 million to anyone who invents a battery compact enough, powerful enough and cheap enough to replace fossil fuels). But the prize money is not the real story. Of course big money can motivate people, and public offers of big money can attract lots of people: think of the lottery.

But the real power of InnoCentive is not that it offers big prizes, it’s that it provides an “open-source” model of innovation. InnoCentive works because of diversity, not because of money.

Solutions to tough problems can come from anywhere, and from people with seemingly unrelated work. Dr. Karim R. Lakhani, a Harvard professor who has studied InnoCentive, found that “the further the problem was from the solver’s expertise, the more likely they were to solve it,” often by applying specialized knowledge or instruments developed for another purpose. In other words, the more diverse a group of solvers is, the more likely a solution will be found.

What does this mean to you?

1. Use the diversity in your organization to discover better solutions to your business challenges. If you’re trying to develop a new product, don’t leave all the work to the engineers, or the chemists, or the R&D folks. Don’t be afraid to give people from marketing or shipping or even accounting a shot. InnoCentive’s experience shows that solutions can come from unexpected quarters.
2. Don’t be afraid to reach outside your industry for ideas. Trade groups are great at some things, not so good at others. When you have a tough business challenge, it may be better to look for help from people in other industries. You’ll get fresh ideas and new perspectives.

Sure, offering prizes may motivate people to try solve tough problems. But bringing a wide variety of experience and perspective to bear is likely to lead to real solutions.

You can increase productivity significantly by increasing the size of your monitors according to John Sviolka. In Want to Boost Productivity? Give Workers Bigger Screens Sviolka writes:

The easiest way to increase the productivity of people working on computers is to increase the size of their monitors. I recently suggested that a firm add an additional screen for all its customer service workers and you can see below that in a month’s time, the time per call decreased from about three minutes and fifty seconds down to three minutes and twenty seconds – a 12% improvement — with no additional training or change in the work load or work design.

Most people don’t know that you can add an additional screen to any laptop and, by changing the desktop settings, which takes less than a minute, create a continuous work space from one screen to the next. The mouse moves across; you can drag applications to the other screen seamlessly. (Windows can drive up to 10 screens.)

Why bother? Well, two screens lets you open two full-sized windows or applications at once, so if you are looking at your email, you can also see your calendar, or open a document. With the trivial cost of 15-to-19-inch screens, many now under $100, every knowledge worker should have at least two screens. They will pay for themselves almost immediately.

It’s easy, it’s cheap. It might be worth a try. A 12% increase in productivity isn’t bad.

I came across a post by Brian Clark of Copyblogger on ten mental blocks to creative thinking. Here’s the first one:

1. Trying to Find the “Right” Answer
One of the worst aspects of formal education is the focus on the correct answer to a particular question or problem. While this approach helps us function in society, it hurts creative thinking because real-life issues are ambiguous. There’s often more than one “correct” answer, and the second one you come up with might be better than the first.

When I was working in Europe, I spent a lot of time with a great book by Fons Trompenaars and Charles Hampden-Turner called The Seven Cultures of Capitalism. After surveying more than 15,000 managers from around the world they found that Americans are more likely than anyone else to believe that there are correct and incorrect answers to most questions. In other words, Americans, and specifically international managers from the U.S., are not likely to find much gray in a black-and-white world.

I’m not interested in whether our view of the world is right or wrong: it’s possible, of course, that everyone else sees way too much gray. But Clark’s point is still a good one, I think. If you single out one answer to a question as correct, if you identify one solution to a problem as right, you’re likely to stop looking. And you don’t find fresh ideas and creative solutions when you’re not looking.

Next time you’re sure you’ve found the right answer, maybe you should stop to make sure that you’re not overlooking a better one.

If you find yourself with a few minutes to expand your mind, visit TED. This annual conference brings together the world’s most fascinating thinkers and doers, who are challenged to give the talk of their lives (in 18 minutes). The web site has more than 200 videos of these talks. They cover a huge range of topics, from modern architecture to human origins, from Zulu wire art to positive psychology.

There are quite a few talks that are directly related to business: good stuff from Malcolm Gladwell and Steven Levitt. But don’t limit yourself to business as usual. Everything on this site cause you to look at the world in a new way. And that’s good, no matter what your business is.