A few weeks back when we were visiting our office in India, we took a few days and flew on over to Bangalore to attend the EO India regional event called RIE.  The India EO events are always a great time, as they’re known for bringing in fascinating speakers and holding dinner events in extraordinary places such as castles, old forts or roof top venues.  This year, staying true to their reputation, they brought in Praful Patel, the Minister of State for Civil Aviation, Vijay Mallya, the Chairman of Kingfisher Airlines and Rasmus Ankersen, a self proclaimed high performance anthropologist.

The latter, Mr. Ankersen, was especially intriguing to me.  He has done some very unorthodox research around the world to back up his hypothesis of determining how to spot potential in someone when it may not be presently visible.  Ankersen is a native of Denmark, has written 3 bestselling books and has been in training camps in Moscow, Jamaica, Africa and Brazil (to name a few) to train with and help produce some of the most successful athletes worldwide.

Ankersen traveled to Moscow to study the training of the top tennis players in the world.  He went to Jamaica to study the best sprinters in the world, to Kenya for the best long distance athletes, and Korea for the best female golfers in the world.

Checkout this video of Ankersen discussing his theory.

His research thus far has resulted in some key factors in spotting potential:

1) Always look behind a performance.

To determine what caused a performance, you have to see what was behind the performance itself.  Was it raw talent that can be coached, or was it pure technique and heart without much raw talent?

2) Magnify what you can see.

Look at what you have and don’t let it be static. A vision of what is possible with someone is important to see where the future is with them.

3) Know Yourself.

Know your capabilities, and know the difference between what you can improve and what you can’t change.  If you are gifted at growing managers of people on a business team and have a candidate with amazing analytical skills, but low people skills, you could develop their people skills, but couldn’t contribute much to the growth of their analytical skills.

4) Give hunger greater priority than ability.

Hunger is something that you can’t teach, and is much harder to pull out of someone than the skills necessary to be the best.  If two people have the same basic skills, the one that demonstrates the hunger is the one you should be watching.

5) Stay Open Minded.

In order to do this, it requires that you not judge a candidate that may take more time to mature.  Keep people curious about their potential and don’t feed them negatives that can hold them back.

6)  Have the courage to believe in potential.

It requires courage to believe that you can take someone that is not yet there and ripen them to reach their potential, even if it will take time.  In our India office, we seek the candidates that are hungry to grow and learn, even if they possess less experience in software skills, and bring them along to blossom into their full potential.

Listening to Ankersen’s talk made me see the similarities between being a coach and being a manager.  If you have a camp that consistantly leads with medals, then it says something about the opportunity to grow the talent that is around you.  What are you doing to pull out the best in the people around you? 

Here’s another video of one of Ankersen’s interviews.

Some really great things have been happening on our visit to our India office.  In addition to hiring 2 new developers, 1 tester and a designer, we shared a lot on improving our projects and engaged our R&D team in some awesome discussion on new products. Outside of the office, we broke off into 2 teams and Chris and I enjoyed our first game of Cricket.

A few days ago we had the pleasure of visiting a very unique community called Auroville.  Auroville came to be in February of 1968 when some 5,000 people representing 124 nations came to India and participated in a ceremony.   They each contributed soil from their homeland as a symbol of unity, that Auroville would be a place where people “of all countries are able to live in peace and progressive harmony above all creeds, all politics and all nationalities.”  The place where they joined to perform this ceremony is in the picture below…and it is one of the most amazing things I’ve seen yet.

What do you see?  It looks like a bunch of trees…beautifully and carefully placed to grow together, but looks can be deceiving.  This is a Banyan Tree…and it’s all ONE TREE. How it works is that the tree’s branches grow out, but as they continue to grow out laterally, along the way new roots grow out from the branches and down to the earth to support additional growth.  The new roots can be so thick that they appear to be separate trees.  It’s simply a beautiful sight to behold, and a perfect location for the unity ceremony.

The growth of the Banyan Tree occurred to me as a great analogy to business.  Building anything, whether it’s a business or a house, requires a foundation.  What many companies experience, however, is that their foundation cannot support their growth, causing them to fall.  The reason the Banyan Tree doesn’t fall is because it continues to add to its foundation as it grows. 

Good businesses are built with several layers of support that push information up and down the hierarchy.  Without a good foundation to support those layers, the flow is disrupted and bad information can be shared, usually resulting in bad decisions.  If you’re in the business world, you have probably experience this in some form or fashion.  Small issues can usually be corrected, but bigger issues can easily lead to business failure.  For this reason, having the right people and the right processes in place is vital to creating a strong foundation.  As your business grows, so do your people and your processes. 

After writing the first part of this blog I decided to do a little more research on the Banyan Tree, and what I discovered was pretty interesting.  I found that in the ancient language Gujarati, the word “Banya” translates to “Grocer or Merchant”.  This stems from when long ago, Hindu merchants would conduct business under Banyan Trees because of the shade they provided.

Can your business grow outward and upward like the Banyan Tree?  Does your foundation have layers of support…people and processes…to handle your growth?

Have you thought about the idea of “free” as a business model before? You know…give it away for free and then get paid in some other format. It’s nothing new. The concept has been around for years, but was not accepted until the Google world of today.

It wasn’t until 1902 in LeRoy, NY (the next town over from where I went to high school) that Frank Woodward had an idea for how to create demand for the product. His idea was to give away “free” cookbooks with Jell-O recipes, delivered directly to people’s doorstep. Within 2 years they hit a million in sales. This concept built steam throughout the century with others like Gillette razors, and then free radio and TV.

Now we live in a world made of bits rather than atoms, and economics tells us that cost lies in the R&D. With increasing sales to cover the R&D expense, cost goes to zero for each incremental sale. When the concept of “free” is applied, it provides an opportunity to be creative with where the revenue comes from, and a chance to build a marketplace where most wouldn’t suspect.

Can you imagine flying for free? In Europe it’s common to fly for as little as $20. Ryanair’s CEO Michael O’Leary believes that they’re on their way to free airfare, with operations being totally supported by in-flight gambling. Look around at what else is free: talking internationally in Skype, Stock Trades, Craigslist, and a multitude of products by the king of free, Google.

My company is joining the world of “free” by creating an online software tool that helps you to achieve your goals, free to use, of course. It is called AchieveStreet. By using the accountability found within a forum, business team, board, charity group, or even group members for a school project, getting things done comes more easily. The tool is free, but as with other free online tools (I.e. Facebook), the more users you have, the more revenue you can expect to gain from advertising.

How can you utilize this “free” world to grow your business, or possibly venture into something new?

In the early 1800’s, a new kind of ship was manufactured. It was a leaner, more slender ship, built for speed rather than capacity. Its sharp long prow was made out of expensive oak, and its sails spread 160 feet across. These ships were called clipper ships. They ran wide open, day and night, virtually ignorant of weather conditions, arriving beaten and battered at their destination, but on time no less.

In the 1840’s, still recovering from a 5 year economic depression, the US built 160 of these low capacity, more expensive ships. The reason was that the gold rush was booming out west, and supplies were in high demand. The need for basic materials was so great that supplies could sell for as much as 1000% more than on the depression stricken east coast. These clipper ships were resilient and fast, and could travel the east coast, move down around the tip of South America, and be back up to the San Francisco Bay in a record 89 days.

At Efficience, our Clipper Ship Strategy is having a team in India with the high intelligence and low cost, allowing our clients to create software tools that make them more competitive at prices they can afford. Have you considered what your Clipper Ship Strategy is?

After the last blog post one of our project managers, Taryn, asked me “If you can’t predict a Black Swan, then how do you stay away from the negative ones, and vice versa, how do you put yourself in the path of positive ones?”

To answer this question, you have to understand the two types of environments that exist in the world of the Black Swan. Taleb calls them Mediocristan and Extremistan, and they are defined as:

Mediocristan …”When your sample is large, no single instance will significantly change the aggregate or the total. The largest observation will remain impressive, but eventually insignificant, to the sum.” (p.32, The Black Swan)

Another way to look at this is non-scalable types of events. Examples are those such as a person’s weight and height, or the non scalable income of a baker, beautician, or a massage therapist. You don’t grow 6 inches or gain 100 pounds in a day…and careers where a standard amount of money is exchanged per transaction are Mediocristan, and don’t subject you to a Black Swan event.

Extremistan…”Inequalities are such that one single observation can disproportionately impact the aggregate or the total.”(p.33, The Black Swan) This is a scalable event like wealth, book sales, planet size, and financial markets. Also in this environment, a few can take all the winnings, or a negative might totally wipe you out. The banking losses from the 1982 banking crisis wiped out all the collective profits made by banks in the past 200 years. In Extremistan you are subject to a Black Swan.

What all this means is that, when you know the environment that you are living in and if it is subject to a non-scalable or scalable event, you will know the potential of the risk. If your work is like an orthodontist (non-scalable), you can make a nice living over a long period of time, but no single day will dramatically change your income total. If you are an author (scalable), the masses end up working 2nd jobs while a few will experience Black Swan events like J.K. Rowling.

Our software company makes most of its money from building custom software products for clients, a non-scalable income. About 20% of our efforts, however, are spent building products that we put out in the market place. This is scalable and subjects us to a positive Black Swan if they were to go viral. This is a controlled way to manage for a positive Black Swan.

Now you know what a Black Swan is…it’s time to figure out if you’re living in Mediocristan or Extremistan. If you’re living in Extremistan…what can you do to move away from the negative Black Swans and put yourself in the path of a positive one?

What is the most important duty of a CEO?  Bob Prosen, author of Kiss Theory Good Bye, says “Hiring people smarter than I am and putting them in the right positions!!!!” I have to agree, but creating roles and filling them with people who can play to their strengths in those positions isn’t an easy task.

Last week I did a presentation to my EO chapter on my company’s hiring process, which is built around the Topgrading methodology. It’s hard to express how important this is to us, because we put so much time and effort into taking what we’ve learned from books, speakers, and even bad hires to create something that really works for us. Our process is 13 steps, and has shown us a high success rate of getting the right people in the right places, in turn saving us money. For example, research shows that if you hire someone at 6 figures, and they turn out to be a bad hire (within what amount of time? A year? 6 months?) it can cost you as much as 1.5M in lost productivity and opportunity cost. This is reason enough alone to work harder to get it right the first time, and not just relying on your gut and a resume to make a decision on hiring someone.

In short, this is our process:

This isn’t something that happens in a day, or even a week. I and a few others on the team spend an extensive amount of time with each candidate throughout the screening process, getting to know their background, their work experience and their personality. We hone in on their natural strengths, and match them up to the needs of the company and the position. From another perspective, this also ensures that things they are not good at are not key aspects of the position.

Having a defined process and checklist in place for our hiring process is essential, but it is also extremely beneficial to other areas of business. Think of it this way, thousands of planes take off and land successfully every day. They manage this because they have a checklist to make sure they aren’t missing anything. We don’t want to miss one thing on our checklist, because that one thing could lead to making the wrong hire.

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Death by Meeting by Patrick Lencioni and Mastering the Rockefeller Habits by Verne Harnish.