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Brainstorming Doesn’t Work
New research indicates that it's better to let people go off on their own and think.
Here are today’s highlights:
Ami Kassar goes to Washington.
Jason Fried warns against overkill.
Some business owners think ChatGPT will recession-proof their businesses.
Michael Lewis already has a book coming on Sam Bankman-Fried.
Yesterday, Ami Kassar told Congress what he thinks of the SBA’s planned changes: “This morning, I testified in front of the House of Representatives Small Business Committee about changes to the SBA program. The SBA is making wholesale changes to the program's plumbing, infrastructure, and wiring. While change is good, too much too quickly in an uncontrolled environment can be dangerous. Like an experiment in science class in high school, you need to change variables one at a time to understand the impact.” READ MORE
Brainstorming doesn’t work, according to new research: “OK, people, let’s spitball some topics for this column. Annoying co-workers you would like to replace with artificial intelligence? Office wardrobe malfunctions? Bosses’ secret TikTok accounts? Go ahead, shout ’em out. There are no bad ideas. This brainstorming exercise is, in fact, a terrible idea—not only because I can’t hear you. The value of gathering to swap loosely formed thoughts is highly suspect, despite being a major reason many companies want workers back in offices. ‘You do not get your best ideas out of these freewheeling brainstorming sessions,’ says Sheena Iyengar, a professor at Columbia Business School. ‘You will do your best creative work by yourself.’”
“Pitfalls include blabbermouths with mediocre suggestions and introverts with brilliant ones that they keep to themselves. She argues that the ethos of brainstorming—reserve judgment and build on what others say—is better applied to polite conversation at a dinner party than to key decisions in a conference room.
“Business teams ought to collaborate, of course, but she interprets the evidence to mean that colleagues should compare notes after extensive, independent thinking.” READ MORE
Jason Fried says what you don’t do can be as important as what you do: “Overkill is the dust that settles on the stuff that took a lot of energy to build or buy, but turned out not to be necessary. The over-engineered, over-designed, over-hired, over-litigated, the over-spent, over-promised, over-deliberated. Overkill is the policy that was written but never enacted. The technology that was purchased that was never used. The seven steps that could be handled in two. The nine people in a meeting made for three. The business equivalent of the 12 bedroom house for a family of four. The cooks when you don't even have a kitchen. Overkill is using five different products to run a single project.”
“Overkill is a seven-stage interview process that exhausts everyone involved. Overkill is acting like a company 100x your size. Overkill is buying what they bought but that you don't need. Overkill is paying thousands for something worth hundreds. Overkill is hoping that losing more will turn into a win.”
“In our 24 years, there's nothing we've tried to avoid more at 37signals than overkill.” READ MORE
Some business owners think ChatGPT could recession-proof their businesses: “The survey also found business owners are hopeful AI tools like ChatGPT will keep their business running longer in the event of a recession — although experts say businesses need to be careful with how they implement the technology. About 28 percent said they believe ChatGPT could help them keep the lights on in the event of a downturn, while 30 percent have already started automating tasks to save money. Businesses that have automated have saved an average of around $4,000, with the top tasks automated including accounting and bookkeeping; invoicing and bill payments; and social media management.”
“Just 13 percent said they have automated HR tasks such as payroll and employee onboarding — an area in which experts believe companies should tread carefully.”
“‘What we’re learning with all the chatter around ChatGPT is the historic method of scaling business output through growing headcount can now be shortcut with a handful of AI tools,’ said Steven Rydin, CEO at B2B Reviews.” READ MORE
Another company reports that moving to a four-day workweek has been a win: “The year ThredUp started its new work schedule, 88 percent of the company’s employees said the four-day week was a ‘positive change’ for the company. Last year, a company survey found that 93 percent of employees thought the four-day workweek was beneficial to their overall productivity. It has also helped the company recruit and retain workers. Last year, ThredUp’s corporate employee retention rate was 96 percent. Company executives said they’ve also seen a high ‘boomerang’ rate of people who leave the firm for other gigs and then return within six months. ‘Especially during a really hot job market, we didn’t see a lot of our team depart,’ said Natalie Breece, chief people and diversity officer. ‘In terms of recruiting, it has really enhanced our efforts.’”
“‘I thought, let’s experiment with four days where people are really on, working hard — and the expectation is you’re working super hard — and then three days of recovery,’ said [CEO James] Reinhart, who co-founded ThredUp in 2009. ‘Could you imagine a world where people come back to the office on Monday, and they’re rested and recharged?’”
“Employees said that the shortened week forces them to reprioritize work responsibilities and focus on the most important things to get done right now. Meetings are scrutinized — a small sign in several conference rooms encourages workers to identify the purpose of the meeting, along with specific outcomes, a set agenda and expected completion time.”
“‘I think it’s a fantastic thing to try, and I don’t think it will work for everyone,” said Kim Scott, author of the business leadership book ‘Radical Candor.’ ‘But I don’t think any one thing will work. I don’t think a five-day workweek works for everyone, either.’” READ MORE
A new study finds that a higher minimum wage actually creates jobs: “A 2010 op-ed from Michael Saltsman of the Employment Policy Institute provides a characteristic rendition of the argument. Saltsman warned that if state legislatures raised the minimum wage for fast food workers, ‘The BurgerTron 3000’ would soon take their jobs. ... Over the next thirteen years, a long list of cities and states enacted minimum wage increases of unprecedented size. Between 2014 and 2022, California increased its minimum wage by 56 percent in inflation-adjusted terms. Over a similar time period, New York raised its wage floor by 72 percent. Permanent double digit unemployment did not ensue. In fact, not only did these historically large minimum wage hikes fail to put all fast food workers out of job, but a new study indicates that they actually induced job growth.”
“In ‘High Minimum Wages and the Monopsony Puzzle,’ a team of economists at the University of California, Berkeley examined 47 large U.S. counties where the minimum wage had reached $15 an hour by the first quarter of 2021, and compared their wage levels and employment figures to those of similar counties that hadn’t raised the minimum wage since 2009.”
“They focused specifically on fast-food workers, so as to avoid the complexities introduced by the tipped-wages common among servers at more upscale restaurants. Their results will shock Saltsman and his ideological sympathizers.”
“First, raising the minimum wage successfully increased hourly pay for workers in the bottom 10 percent of the income distribution without reducing wages for those in the middle.”
“Second, the implications for employment were very slightly positive: Counties that enacted minimum wages saw more job growth, not less.” READ MORE
Gas prices have fallen dramatically:
Michael Lewis had already been tracking Sam Bankman-Fried before FTX brew up: “Michael Lewis wasn’t planning to write a book about cryptocurrency. He stumbled into the subject in the fall of 2021, when a friend who was planning to do business with FTX — one of the world’s largest cryptocurrency exchanges — asked Lewis, as a favor, to check out its young founder, Sam Bankman-Fried. A couple of weeks later, Lewis met with Bankman-Fried for the first time. The pair took a hike in the hills near Lewis’s home in Berkeley, Calif., and Lewis was enthralled by the eccentric young man with untamed hair who was worth tens of billions of dollars and was sought after by powerful investors and politicians. ‘After a couple of hours, I said, I don’t know what’s going to happen to you, but I just want to watch,’ Lewis recalled.”
“Lewis didn’t realize it at the time, but he had secured a front-row seat to a sprawling scandal with huge financial, political and legal implications. ... When Bankman-Fried was arrested in the Bahamas last December, Lewis was there, and had been shadowing him for roughly a year.”
“In a recent interview from the Bahamas, where he was reporting, Lewis spoke about his upcoming book on Bankman-Fried, ‘Going Infinite: The Rise and Fall of a New Tycoon,’ which Norton will release on October 3.”
“He’s the ideal subject. He’s locked up in his house an hour from my house with an ankle monitor. He can’t go anywhere. It’s unbelievably convenient, as long as they keep him there. So, as long as he welcomes me into the house, it’s fine. I’ve been seeing him roughly every two weeks.” READ MORE
THE 21 HATS PODCAST
Marketing Workshop: I Didn’t Know It Was Going to Work: This week, Shawn Busse and Loren Feldman talk to John Garrett about his contrarian approach to newspapers, marketing, and competition. Garrett has built a Texas-based chain of print newspapers that has managed to outcompete established news organizations and digital platforms for both community engagement and local advertising. Not surprisingly, when he first took out a $39,000 credit card loan in 2005 and started telling people that his business model would feature a monthly print publication that he would mail to everyone in his target communities for free, he didn’t get a lot of congratulations. And not everything he’s tried has worked. An expansion into Arizona, Tennessee, and Georgia, for example, failed early in the pandemic. But almost 20 years after its debut, a period during which most local publications have been in retreat, Community Impact is thriving.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren