Local Business Is Better For Your Health Than Big Business

Every town salivates when a giant corporation glances in their direction to maybe build a facility there. It turns out those giants are not good for the health of the people who live there.

Big is not healthy in business, either.
A comprehensive study of all 3,007 counties in America shows a direct and consistent correlation between a higher density of locally owned businesses, and the health of everyone living there. Want to be healthy? Ask your city counsel to stop chasing giant corporations to come to your town, and ask them to promote local small businesses instead.

It turns out the health benefits of Giant Corporation, Inc. aren’t anywhere near as helpful as a high density of locally owned and very small businesses. Research now confirms that the counties with the fewest locally owned businesses have the highest mortality, obesity, diabetes and other bad health indicators, and those with the most locally owned businesses have the best health rates in America.

Isn’t big, better, though?
One of the many assumptions of the Industrial Age was that Giant Corporation, Inc. could provide better for your family and your community than a bunch of local-yocal small businesses. So why doesn’t it work out that way?

Giant corporations are the best at talking a good game. They point to better individual health benefits as proof they take better care of you than the locals. But what they don’t point to is where their heart is, and it’s not in the local community. It’s not even where their corporate headquarters is. It’s with their investors.

Where is the heart of the local business owner? Right where they live. They are much more inclined to build a community infrastructure that makes life better for all of us than Giant Corporation, Inc. And everyone who lives there is healthier as a result.

Ownership is Powerful Voodoo
We all understand that locals take pride in their communities. But it’s much deeper than that worn phrase. They take ownership. Everyone who lives there takes ownership, not just the business owners. They all “own” the local community in a very real way. It’s their brand, their identity, their view of the world, their “team”. People who live locally give back to their local communities.

Local Business is the Benefactor
Why does little Toledo, Ohio have the #1 zoo Releases/2014/TZ_best_zoo_in_US.pdf in the entire U.S.? Why are there such fantastic world-class museums in Kansas City, Missouri? What makes one county in Colorado the healthiest community in America, with no giant corporations? All of these have come about because of locally involved business owners, not big companies with headquarters somewhere else.

With rare exceptions, the new wing on a local hospital is going to be named after some local business owner or doctor who donated their personal wealth to make it happen. The same is true of countless parks, museums, playhouses, live theaters, and soup kitchens. And service oriented clubs like Rotary, Kiwanis, Elks, Lions, the farmers market and the local flower club are all started and led by people who have a deep commitment to the health and beauty of their local communities.

The research also shows small businesses with fewer than five employees are more likely to promote great local hospitals, recruit physicians, promote community health programs/activities and support local farmers’ markets.

Not so much
Your mother told you to work for Giant Corporation, Inc. so you could have great health benefits and a pension plan. But benefits, salaries and pension plans from large companies have dropped 33% in the last 30 years and the LSU research says there isn’t much of a gap anymore between big and small businesses. Professional Employment Organizations—PEOs, who provide benefits to small businesses, have done a lot to fill that gap.

Challenge your local government
Do you want a healthy community? Make sure your local government isn’t worshiping at the altar of big business tax breaks, special land deals and exceptions to rules that local business owners will never see. The study shows all that only hurts your community in the long run.

We’re made to live locally. It’s great to see research proving it. Again.

Article as seen on Inc.com

College Grads Forego MBAs To Pay a Company $25,000 To Work For Them

In 2010, Peter Thiel, co-founder and former CEO of Paypal, made headlines by paying some college kids $100,000 to leave school. Starting next month, students will be doing just the opposite – skipping MBAs to pay our company $25,000 as Apprentices, to lea

Phil Randazzo, an Nevada native who will graduate from Elmhurst College in a few weeks, has opted to pay to learn from me for one year instead of getting a traditional MBA. This may be the first time since the end of the apprentice system in the 19thcentury that someone paid a company to go to work for them. I believe we’re just going back where we came from.


Phil is the first student to choose Crankset Group’s new Mastery of Business Application program, which encourages students to learn in-the-trenches, directly from a businessperson, instead of from professors. There isn’t a whit of correlation between MBAs and success, and the data backs that up. Only 29 of the top 100 CEOs in America have an MBA, and an exponentially lower percentage of successful entrepreneurs have MBAs, or even finished college. The correlation isn’t between education and success, but life-long learning and success – two very different things.

Randazzo found out about our program listening to an interview where I challenged students to do it. Phil had to decide whether it made sense to pay a lot more than $25,000 for an MBA from a traditional college. He told me, “In the end it seemed to be a lot better investment to spend a year shadowing an actual entrepreneur and learn how it’s really done, and also benefit from a great network of relationships.”

There is a growing debate on whether higher education is giving students the return on investment that colleges claim. I’ve never been a fan of it for anyone with an entrepreneurial spirit. I believe if you want to learn to start, build and run a business, you’ll have to unlearn most of what you would learn from an MBA, which, with some very notable exceptions (like Kennesaw State), just teaches people to be cogs in giant corporations. We decided Crankset Group, which helps businesses grow on three continents, needed to develop an alternative MBA in the trenches.

Our Mastery of Business Application focuses on learning while doing, and from those doing it, not those theorizing about it. It’s not an accredited MBA, it’s much more valuable than that to someone learning how to start and build a business. As with the books I’ve written on starting and growing businesses, our stuff isn’t created to work in theory, it only works in practice. The program is a twelve-month, rigorous apprenticeship including meaningful work and a formal syllabus of business fundamentals the Apprentice will learn while applying them.

We didn’t invent this. Before the Factory System of the late 1800s interrupted meaningful work, for centuries English families paid a master craftsperson to place a family member under their tutelage, who then paid them a small stipend for adding value to his business while they learned from him. We’re just closing the loop and going back where we came from.

Crankset Group Apprentices will be encouraged to create a permanent position for themselves or figure out how to extend Crankset Group’s business products and services. Everyone who works here is challenged to find something they could start and maybe lead, and in the process, create ownership for themselves in the venture. We have a new ecommerce initiative Phil will probably help start up. If it flies as we expect, it could be a permanent position with equity for Phil. As with all startups, no promises—just a lot of promise of world-class experience and learning.

Crankset Group will offer similar financial terms as traditional MBA programs. If there is any hardship, we will defer payments on the $25,000 apprenticeship fee until after the end of the twelve-month period, similar to most education loans. We will also help our Apprentices secure meaningful, above minimum wage employment with others if we don’t have a place for them in our business. They’re paying us $25,000 for the learning experience, but as with pre-Factory System Apprentices, they’ll also get paid for any value they bring to our business while they learn how to start and run one.

For every ten Apprentices that go through the program, we intend to take on two without payment. “This won’t be an elitist program”, says Krista Valentine, our Chief Relationship Officer. “We’re in the trenches and we expect to take some kids with proven ambition but no means, and help them become entrepreneurs, too. Being able to learn directly from Chuck, other Crankset Group leaders, and our strategic alliance partners is a tremendous alternative to an MBA. And they really can’t put a price on the network of relationships they can build during the program.”

Phil’s apprenticeship starts June 22, but others will join the program for their own customized twelve-month rotation at any time. He is the first of many we believe will forego traditional MBAs and pay for real-life learning experiences like this. We’re excited to build an alternative that teaches everything someone will need to start, build and lead the business of their dreams. My life vision is To Live Well By Doing Good, and this is right in line with living that out.

This is disruptive to the traditional approach to education. Let the disruption begin.

Article as seen on Inc.com

What Zappos’ Self-Managed Teams Should Look Like When They’re Done

Traditionalists dismiss self-managed teams as woo-woo crap. But they are a central strategy for the emerging work world of the Participation Age. How do you know you have self-managed teams? The test is simple.

Why Self-Managed Teams?
The data is in — companies built around self-managed teams grow faster, have higher profit, higher productivity, and exponentially higher employee retention. I’ll be highlighting one in the coming weeks that went from less than 50% retention to 98% retention within months of instituting self-managed teams. This isn’t a fringe idea, a new idea, or an industry-specific idea. Going forward, companies that adopt self-management will thrive. Those that don’t will be left behind.

What Do They Look Like?
Self-managed teams look a lot like teams in sports such as soccer, hockey, lacrosse, or basketball. As you look at the following picture, ask yourself, “Who’s in charge here?”

The answer, of course, is the guy with the ball. And who is in charge here?

Whoever gets to the ball first is in charge.

Where’s The Ball?
Self-managed people are always looking for the ball and taking the lead with any ball that is near them. In self-managed companies, leadership isn’t a top-down thing, it’s a “where’s the ball?” thing. There might be four or five balls on the field at once, but everyone is taking the lead to grab each ball and make the right decision as to where it should go next. Self-management results in much less chaos than in a traditional top-down hierarchy full of managers telling people what to do at every step.

These two pictures are perfect examples of what a self-managed team should look like. Companies in all industries are racing to embrace this vital emerging work world concept, and are forming their self-managed teams around the above pictures. Zappos is among the most recent adopters of self-management who have announced they are headed in this direction.

Where’s The Coach?
One of the most telling indicators of self-management lies in the answer to this question. When you look at the above pictures, ask yourself, “Where is the coach?” If the answer in your company is, “On the field,” you do not have self-managed teams. Imagine a soccer game where the players stand in their positions and the coach runs out onto the field, kicks the ball from player 1 to player 2, then runs over, grabs the ball from player 2 and kicks it to player 3, etc. What would that communicate about the coach’s confidence in the players?

The more savvy managers don’t actually kick the ball, they just tell every player exactly where to kick the ball, and then the player pretends to have the freedom to kick it there.

A key principle of self-managed teams is at play here: When you give people tasks (Kick this ball from here to there), they feel used. But when you give them responsibility (Win the game), they take ownership.

Self-managed people take ownership. Traditional employees understandably simply complete the task, and feel more like characters tied to a foosball table than autonomous players in a meaningful game.

Tasks = Feeling Used
Responsibility = Taking Ownership
The Coach’s Role
Is the coach important? Yes, but in a very different way than a manager. Managers direct the ball-kicking, and are deeply involved in managing the process itself. But coaches are focused on the end result, not the process. They train, guide, encourage, provide resources and champion the success of others. Then they get out of the way. Managers never get out of the way.

Managers focus on making decisions and managing the process,
and they stay intimately involved.
Coaches focus on training, and on the result,
then they get out of the way.More Confirmation
In his book, Drive, Daniel Pink identified the three main motivations people want to express at work; autonomy, mastery, and purpose. People who are self-managed have autonomy. They are empowered to make progress with the ability to make meaningful decisions on a regular basis about how, what and when they do things at work. Mastery is found in teamwork that is always challenging but not overwhelming, where people find themselves living stretched out, not stressed out. And purpose is about connecting teamwork and self to a cause that is much bigger than accomplishing simplistic tasks, that drives our deepest motivations.

There is no other entity structure that accommodates autonomy, mastery and purpose better than self-managed teams. Zappos is focused on getting there as fast as they can, with coaches on the sidelines supporting the players, and everyone making good decisions with whatever ball is nearest to them.

No Room For Ego
When building self-managed teams in the emerging work world, there is no place for big egos. Leaders who want to make others successful and then get out of the way are building remarkable companies everywhere. Those who want to use people to make themselves look better will be left behind. Zappos will know they have arrived when people at Zappos see themselves in the pictures above, and there are no managers in sight.

Do you have foosball figurines, or real players? Let everyone play the game in self-managed teams, and watch your company grow.

Article as seen on Inc.com

Why You Need to Eliminate All of Your Company’s Managers

Companies without managers are the present and future of work. In the emerging work world of the Participation Age, the most successful ones will do away with managers completely. That’s right – completely.

Managers are the core problem in business

People don’t leave companies. They leave managers—it’s their number one reason to leave. The U.S. Department of Labor says the average tenure of an employee is now only 1.5 years. Salary.com says 75 percent of the reasons workers give for leaving a company have to do with their manager. Eliminate managers and you do away with almost all of the reasons why people leave. Zappos is just one company that has figured that out.


Managers were invented
There’s a good reason why people are so manager-averse. We’re not built to be managed. For thousands of years, 80 to 90 percent of all adults in the world owned their own businesses. Managers were invented for the Industrial Age factory system. They were a bad idea then and a worse one today.

One man, Frederick Winslow Taylor, had more to do with the invention of managers than any other. Peter Drucker says Taylor had as much impact on the 20th century as Darwin, Freud, and Marx. Taylor proposed a fatally flawed definition of the modern employee that Industrialists found very convenient. In his paper Scientific Management, published in 1911, Taylor defined employees as 1) stupid and 2) lazy.

So if people were, for the first time in history, all of a sudden widely stupid and lazy, how did you solve that? Taylor made it easy. You simply find the very few smart and motivated people and place them “over” the stupid and lazy ones to make them productive. In this way management was born.

Modern business structures are built on a fundamental system of mistrust, division, and antagonism I call LCD management to the lowest common denominator. Taylor’s definition required that companies ask, “What’s the stupidest and laziest thing a person could do here, and how do I create a system where they can’t act that stupid and lazy?”

Of course no modern manager would say the people who work “under” them are stupid and lazy. But the fact is managers exist because they are assumed to somehow be smarter and more motivated—better at creating solutions, leading, motivating, monitoring processes, communicating, etc.

If they can do it, so can you

Yet all of these assumptions have been proved wrong time and again by companies of all sizes, in every industry, that have operated without managers for decades, including our own, Crankset Group. Huge tomato processors like the Morning Star Company, medical device companies like Davita, manufacturers like Semco, GE Aviation, and W. L. Gore, service companies like Buurtzorg and Precision Nutrition, and scores of newer and technology-oriented companies like Zappos, Menlo Innovations, Valve Software, and Appster—all of them are highly profitable with lower turnover because they have self-managed people who don’t report to managers.

How to build a company without managers

In short, replace every five to 10 managers with one leader, to whom no one reports directly, and who exists to serve, champion, guide, train and connect others with the resources they need to be successful.

Remember, managers were invented just over a century ago. Leaders have been around for thousands of years. We conflate the two, when in fact they are radically different. Businesses that run without managers have great leaders, and a lot fewer of them. They don’t hire, fire, or solve problems like managers. And they lead only because people are following, not because they have a title that demands people follow them. Here are a few clear distinctions between managers and leaders.

If you want great creativity, leadership that serves the team, higher profitability, the highest employee retention in your industry, and the most tightly run processes, you just need to give everyone their brains back. They will create a better system that runs without managers.

Dispelling the myths

1. This isn’t new or a fad—many companies, of every size, have been doing it with smashing success since the 1950s.

2. It isn’t chaotic—every managerless company I know runs with tighter processes, better communication, and greater stability and longevity than their managed competition, which only makes sense since they have more committed and engaged people at every level.

3. It isn’t for specific industries—there isn’t an industry out there that hasn’t been doing it for decades.

4. Management still exists—self-managed people manage themselves.

Why your company isn’t doing this yet

So why aren’t all companies running without managers? Because the only ones who have anything to lose in the transition are the managers, the ones with the power to make it happen. They fear they will lose control and be shown to be unnecessary. And because they are presently in control, it is the managers who must either make the transition, or get out of the way. And it is not in their nature to get out of the way.

Tony Hsieh has recognized that managers have been holding back his company. On its way to being managerless, Zappos has just offered all its managers a severance package if they leave by the end of April. Hsieh says the company should have done this sooner. The nature of managers is to build fiefdoms to demonstrate their value and to justify their promotion to bigger fiefdoms. In contrast, the nature of leadership is to serve and train others, then get out of the way.

It’s inevitable

The data is too compelling not to join the emerging managerless work world. But it threatens a 150-year-old legacy system that won’t go down without a fight. Those who want control and authority will continue to resist this, even though it’s better for everyone, including them. But managers who want to become leaders will run to, and embrace the emerging work world of the Participation Age, and thrive. Those who don’t will be left behind. Your choice.

Article as seen on Inc.com