Grateful Dead – Business Lessons

I recently finished one of the best books
that I have read this year:

“Everything I know about BUSINESS I learned from the GRATEFUL DEAD”

In this book, Barry Barnes describes the lessons
that the Grateful Dead can teach to businesses.

In this video:
http://www.youtube.com/watch?v=5Bh4ce1c97o

Barnes talks about the highlights of the business wisdom of the Grateful Dead.

The business wisdom emerged from the understanding that the band and
their fans were part of a single community, as opposed to being linked by a
producer-consumer relationship.

Certainly, a counter-culture rock band might be an unusual place to look for
advice on how to run a business, particularly considering the way the band
lived through the 60’s and how their experimentation with drugs may have
disrupted their lives. However, Barnes is clear in stating that a lot of the
wisdom from the band was not the result of foresight, but rather something
to be appreciated in retrospective.

Here are some remarkable points made in the book, that hopefully will motivate
you to put this fascinating book on your reading list.

Strategic Improvisation

Business plans are good initial versions, but are only valuable until the first
unexpected event happens. From that point on, your business is better enabled
to survive if you can display the flexible behavior of strategic improvisation: Plan,
Act and make adjustments in Real Time. In other words, apply the same principles
of Agile programming to businesses practices.

To do this right, it is important to continuously disrupt old habits, question common
practices, and be suspect of the “tyranny of common sense“. It is also important to
embrace errors, since in an environment of continuous adaptation to circumstances
the entire system will never be perfectly fit to the environmental conditions. However,
the flexibility of being able to adapt to the changing conditions is what empowers
your business to survive in a dynamic environment. To achieve flexibility, it is important
to minimize the internal structure, which is what introduces rigidity and inertia in an
organization, and prevent it from adapting fast enough to external changing conditions.

Live your Values

Embracing strong corporate values rooted in the understanding of the social mission
of the organization, as opposed to confusing profits with organizational purpose, is
one of the features that paradoxically leads to truly profitable businesses. In particular,
dedication and commitment to the social mission of a business organization ensure that
its customer base will embrace the organization as a preferred provider of goods and
services, creating a symbiotic relationship with the organization. When your customers
turn into fans, they bring more customers, they do your marketing, and they show you
the way to solid growth. Barnes eloquently describes this as “Enlightened Self-Interest”.
The realization that the long term survival of an organization relies on creating a positive
relationship with those who pay for the goods and services. Also summarized as:
“An organization will do well, by doing good”.

Be Kind to Your Customers

By offering quality products and services, and ensuring that customer interactions
result in win-win situations, an organization will further solidify the symbiotic relationship
with their customer base, and build upon a culture of loyalty to their brand.

Share your Content

This is probably the lesson that most businesses missed to understand with the
advent of the Information Age. In contrast, the Grateful Dead understood that it
is familiarity, not scarcity, that creates economic value. As Cory Doctorow
put it: “The problem for authors is not Piracy, but Obscurity”.

By generously sharing content, and allowing their fans to record their concerts and
trade the tapes of the recordings, the Grateful Dead grew the pie of their fans,
and cultivated in them a feeling of belonging to a community. They understood that
what they were selling were not tapes or vinyl records, but the experience of sharing
the music you enjoy, with like-minded people. As John Perry Barlow described it:

“… a lot of what we are selling is community.
That is our main product, it’s not music”

There was, of course, a balance here. The band still sold albums and built a
business around branded merchandise. Allowing fans to record their concerts
was an illustration that they put first their mission to share a musical experience,
and not to simply “sell records”. But, back to the “enlightened self-interest”, it
turns out that most of the band income was the result of concerts ticket sales,
for which it was more important to ensure attendance. Allowing content sharing,
turned out to become a mechanism for inexpensive marketing that brought more
fans to their concerts.

Create a Business Tribe

Again quoting John Perry Barlow:

“Good communities are tribes.
They have rituals and myths
and those kind of deeper realities
that light up everyday reality and
give it some substance”.

This is consistent with the points that Jono Bacon makes in his book:
“The Art of Community”. This involves: encouraging inclusiveness,
avoiding micromanaging, promoting values, and building a sense of
belonging. It builds in one of the strongest and more primal human
feelings: “nobody wants to be alone”. To make sense of the
apparent absurdity of life, we all need to be part of something
larger than ourselves. When we sell community, we all hunt together,
and long term prosperity is secured. This is certainly a very natural
lesson for open source businesses.

Insource

Building a culture of Do It Yourself (DIY) inside an organization has
multiple positive effects. It empowers the members to realize that
they are in control of their destiny. It builds a culture of pride in
what you do, it may not be perfect, but it was done with your own
means, and it was done by someone who really cared about it.
All of which contributes to raising the value of the organization for
its tribe.

Innovate Constantly

“To stay ahead, a business must keep reinventing itself,
keep working to change things for the better.”

This continuous adaptation empowers the organization to be
ahead of the curve. It is indeed harder than it sounds. Business
would have to be willing to move out of cozy spots that have
comfortable profitability, in the name of avoiding being trapped
by practices that do not have long term viability.

An example that comes to mind is the transformation of Red Hat,
when the company moved away from selling Linux distributions,
to selling subscriptions to services. In that move, Red Hat
abandoned what at the time was its most profitable product,
and they did it with the vision that the subscription model
would evolve into the more profitable product that it is today.
With such changes Red Hat may become the first company
based on a fully Open Source business model to reach the
$1 Billion mark in revenue by early 2012. In their last quarter,
85% of their revenue resulted from subscriptions, and
15% from services.

Transform Through Leadership

Barnes tell us that:

“Jerry Garcia mastered the art of transformational leadership,
the ability to inspire greatness and bring about profound change”.

Along the lines of “Grow your People“, or “Grow your Tribe”, the
principle here is to build up the sense of belonging inside your
own organization, and to raise the level of mastery, or at least
the level of incremental mastery in its members. We all want
to feel that we are becoming better at something every day. It
gives us a sense of purpose. By creating a culture that celebrates
self-improvement, and that challenges people to achieve greatness
the organization becomes a very cohesive tribe, with empowered
individuals that are able to handle strategic improvisation.

Share the Power

“Sharing leadership through horizontal organizational structures
leads to better decision making and more loyal employees”.

This is a principle well known and well understood in Open Source
communities, but that has taken some time to take root in many
organizations. In the book “Freedom Inc“, Brian Carney and Isaac
Getz illustrate many examples of organizations that successfully
implemented horizontal structures and flattened hierarchies, that
resulting in higher economic efficiency, and energetic innovation.

For example, Tony Hsieh, CEO of Zappos argues that:
“It’s actually possible to run a values-based business
that also focuses on everyone’s happiness.”

It may sound like the 60’s,… but the fact remains that it results
in profitable and innovative business. When employees refer to
the company as “We” as opposed to as “They“, you will know
that you have succeeded.

Exploit the Experience Economy

This one was probably the biggest revelation I found in the book.
The concept of the “Experience Economy“, according to which,
what many organization sell is the service of creating a memorable
Experience.

For example, restaurants, do not just “sell food”. Instead, they sell
the setting, the environment, the music, and the cultural context
that comes with the food that is served in their premises.
The Grateful Dead understood that what they were selling, was
not music, but the the experience of belonging to a tribe in which
the appreciation for music was a common shared value.
To build on this concept, companies must provide an authentic
experience that improves the lives of their tribe. This also involves
begin transparent, keeping the passion for what you do, and
keeping it real.

I can’t recommend Barnes’ book enough…

It has the rare combination of an easy read, fascinating content,
and transformational philosophy.

Now, if you were brave enough to read thus far in this blog post,
your reward is to enjoy some of the Grateful Dead music:

“…You who choose to lead
   must follow…
   but if you fall
   you fall alone,
   If you should stand
   then who is to guide you?…”

~~ Ripple ~~