A few years ago we offered our employees the option to work 20% less in exchange for a 10% pay-cut. The results and reactions surprised us.
A few years ago Fresh Air Educators performed an HR experiment: We offered all our full time salaried employees the option to pick between 2 work schedules:
Status quo: 5 days @ 7.5hrs at current pay
4-day work week: 4 days @ 7.5hrs – Every Friday off Work 20% less but take a 10% pay cut
For me, this seemed like a no-brainer:
Very Little Change to Take-Home Pay
The 10% of salary that was being given up would have been taxed at highest tax rate if it was earned (in Canada). So the net “take-home” amount was probably closer to 95% of what the employee was making previously.
Better Hourly Pay
Employees would now be getting 90% of their salary for only 80% of the work, so the pre-tax hourly wage was higher.
Happier, more rested, more productive
The 4 day work week gives employees a long weekend every weekend. That’s 52 extra days off a year.
Obvious Employee Perk
Offering a 4 day work-week is an obvious perk which should make it easier to hire top talent, and should lead to less employee turnover.
Cost Savings for the Business
The 10% salary savings for the business goes directly towards profits.
Very Little Productivity Loss
Working 20% less DOES NOT mean 20% less productivity. The 80/20 rule kicks in: The most important things still get done while the 20% dropped will be the least important things (which probably only account for 5% of weekly productivity). By only working 80% of the time, you will still reap 95% of value.
Negatives: No Work Gets Done on Friday
The only negatives seemed to be that no work would get done on Friday. This was an issue for departments such as Customer Service, but most of those employees were hourly and already working non-standard work hours.
Employee Reactions to the Proposal
I was extremely surprised that we had almost zero adoption of the 4-day work week. A few employees tried it for a few months during the summer, but everyone eventually switched back to the 5 day work week.
Ultimately it seemed that:
Many of our employees were living paycheck to paycheck, and the reduced income simply wasn’t feasible for them.
Some employees were suspicious that this was some long-term scheme to permanently reduce their salaries
Some employees thought that they would be forced to make up the 20% of missing time for free.
So in the end, I am sad to say that this experiment was a failure, and we cancelled the program 12 months after starting it due to non-adoption. (However, I still believe in it, and I think I will try to implement this from the get-go in my next startup)
Some random takeaways from the Business of Software conference in 2012: Product vs Customer Focus; Cognitive Resources and Willpower; A/B Testing; Profit Sharing; and the Question Sales Pitch
Don’t Focus on your Product; Focus on your Customers Instead
Don’t focus on making your product awesome, instead focus on making your customers awesome. This may seem like a small semantic difference, but what triggers the word-of-mouth snowball is when your customers can impress their friends because of something you enabled. To encourage your customers to spread your product via word-of-mouth, your product should make your customers “badass”.
Try this: Write a fictional product review WITHOUT mentioning your product or company. Write it solely with a focus on what your product allowed your customer to accomplish
The Power of Simplicity
…and the Scarcity of Cognitive Resources
Cognitive resources are scarce and easily depleted. If you present multiple choices to your users early on, they eventually run out of cognitive resources at a later time. Simplify the things that are not important and save the complexity for critical tasks.
Example:A complex registration process can impact the ability of your user to successfully accomplish tasks later on in your workflow (such as payment).
Your willpower resources share the same part of the brain as your cognitive resources. By depleting cognitive resources, you are also depleting willpower resources. This theoretically means that if you are selling vices or guilty pleasures, there may be an evil strategy where you purposely deplete your customer’s cognitive resources via complexity in order to weaken their willpower and sell them a guilty pleasure.
The Evils of Gamification
Gamification works only in very narrow verticals and in general will not produce sustainable or desired results. Gamification triggers similar brain functions to those experienced during slot machine use and is not something that promotes long-term loyalty in your customers.
Start with a Theory and Test it
When running an A/B Test, ALWAYS start with a theory and then use the A/B test to prove or disprove the theory. Don’t run random A/B tests hoping to stumble upon a magical winning combination.
Don’t trust your A/B Testing Toll to determine statistical significance. Use this formula instead:
Define N as the total # of conversions in A + B
Define D as the difference in # conversions between A and B divided in half
The test result is statistically significant if D squared is bigger than N.
Here is the profit sharing strategy that is implemented at Balsamiq.com (circa 2012)
All employees have a base salary that is better than market value
10% of all profits are shared with employees
25% (of the 10%) is divided equally among all employees
75% (of the 10%) is divided based on seniority (with the more senior employees receiving more)
Additionally, 2% of all profits are divided equally among employees for them to donate to the charity of their choice
If there are more interactions than this, then you are not spending enough time either understanding the problem or finding the perfect solution for the problem.
Sitting down is Killing You
Sitting down for more than 3 hrs a day decreases your lifespan on average by at least 2 years. Try to stand up and move around for a few minutes at least once every hour, or consider getting a standing desk.
The Question Sales Pitch
If there is a question you can your customers, and you know the answer they will come up with, and it’s a favorable answer, then asking this question is a much more compelling sales pitch than just leading with the answer.
The tow truck business is a $5 Billion dollar annual market. However finding a tow truck (if you are not a member of AAA or CAA) is usually a very painful experience.
If you are broken down in the middle of an intersection your number one priority is to find someone who can come rescue you quickly. Unfortunately doing a search on Google will only find you the closest Tow truck office and not the actual tow truck. This usually means that you need to call a few tow truck operators before you find someone with an available truck that can come get you in less than an hour.
Price is usually a secondary concern and you are not in a great position to negotiate anyway. Not surprisingly most tow trucks have a 100% close rate on incoming calls for help (if they have an available truck).
The solution to these problems is to use an “Uber for Tow Trucks” app. Here are the currently available options:
RapidTow – Canada only (currently only available in Toronto but expanding nationwide). Subscription based model that requires 48 hours for account activation. Forces you to plan ahead for the unexpected.
Tow Trucks are a $5Billion market
…and uber-like towing apps benefit all the players involved:
The consumer looking for a tow gets a tow truck in the shortest time possible and sees the fares/rates before they commit to the tow truck.
The Tow Truck has shorter tows as most of their tow calls are nearby. More tows per day means more revenue in their pocket.
The environment is happy because shorter tows means less environmental impact.
AAA or CAA (in canada) – Although both Urgent.ly and Honk seem to want to disrupt these automobile associations more than partner with them. AAA and CAA could also be strong competitors if they ever get their stuff together.
Apple Maps and Google Maps – Either of these two partnerships would be huge. Integrating directly into Google or Apple maps would open up access to millions of smartphone users without the customer ever needing to install the app (since it would be integrated into the Maps software installed on your phone). I suspect that Google is holding off partnering with anyone until Uber enters the towing space.
Uber – Probably more of an opportunity to be acquired by Uber once they decide to enter the towing space, but it’s hard to resist getting access to their existing customer base. Uber is also a killer competitor if and when they enter this space.
Right now it seems to be a 2 horse race between Urgent.ly and Honk. However there are some big questions looming on the horizon:
Will Uber enter the towing space? I believe it is just a matter of time before they do.
Will Google Maps / Apple Maps integrate with any of the providers? I believe Google Maps is going to wait until Uber enters the space (since they already integrate with Uber for ride sharing).
Back in early 2014 my car broke down and I was faced with a task that I had actually never attempted before: Call a tow truck. At first I was confused and not sure how to proceed.
Who do I call?
How do I get them here the fastest?
How do I know they are reputable?
I eventually went the Google Maps route and found the nearest locations (this was the nearest tow truck OFFICE and not the nearest tow truck). After being bounced around a bit, I was finally referred to a towing company that was available, and 20 minutes later they showed up.
Turns out that this tow truck operator converts 100% of incoming calls into sales. When you are stuck in the middle of an intersection you don’t care about price, you just want a tow ASAP. (There is also an opportunity here to setup click to call AdWords campaigns for tow truck operators)
Millions of people around the world lack access to clean water. Here is an amazingly simple method to purify water using an empty pop bottle.
The Simple Way to Purify Water
Take an empty transparent bottle
Fill it with water
Leave it out in the sun for 6 hours
Drink the water
SODIS is a simple procedure for disinfecting drinking water. Contaminated water is poured into transparent water bottles (glass or plastic) and placed in the sun for six hours. During this time, the UV rays of the sun kill all the germs.
Does anyone else feel that we’ve been wasting a lot of resources building solar panel powered water purification plants? All this time we could have harnessed the sun’s rays directly.
Polyphasic sleep is the practice of replacing 8 hours of sleep per day with multiple shorter naps. If you’re a new parent, here is how to leverage polyphasic sleep to catchup on missing sleep.
Polyphasic sleep is the practice of replacing a single 8 hour sleep with multiple shorter naps. This is done maximize your “awake” hours: The claim is that you can achieve the same level of rest with less sleep, and have more hours in the day to do stuff.
When my daughter was born, I was forced into a polyphasic sleep routine (i.e.: I was woken up at night a lot). So I decided to try and continue the polyphasic sleep pattern during the day (i.e.: take power naps). Unlike traditional polyphasic sleepers, my focus was NOT on maximizing my awake time. My focus was on maximizing sleep time.
My plan was to try and sleep as much as possible during the night (with the expectation that I would be frequently woken up). During the day, I would take regimented power naps to catch up the the sleep I’ve missed.
There needs to be at least two parents
You need a flexible work schedule
You need a private place to take naps during the day
My Polyphasic Sleep Routine
Nightime (~10PM to ~7AM)
Try to get as much sleep as possible
Don’t force yourself to stay awake
Don’t force yourself to wake up at a specific time
Take a 20-45 minute power nap every 3-4 hours. If you wake up at 6AM, you take a nap at 10AM, 2PM, 6PM. If you wake up an hour earlier or later, the schedule gets shifted appropriately.
Capitalize on nap opportunities: If it’s only 3 hours since your last nap, but you have an opportunity for a power nap now, take the nap. Don’t wait another hour.
Don’t oversleep. Once that 45 minute alarm goes off, get up!
Don’t forget to nap. If you skip a nap, try to nap at the next opportunity and reset your nap schedule from that point.
Carry an “instant-anywhere-nap-kit”: a blanket, inflatable pillow, eye blind, and ear plugs to allow for instant naps anywhere.
Did it work?
Yes — it actually worked really well for me. I got into a routine of taking two power naps at work, and then another power nap shortly after I got home. How much or little I slept during the night didn’t really affect my day-time productivity, as I could catchup on the missing sleep.
I only followed this routine for 2-3 months, as our daughter started sleeping full nights very early on (which I am very grateful for).
Everything you do in life can be classified by its urgency and by its importance. We often spend our lives focused on the Urgent things instead of the Important things. It is important to learn to distinguish between the two.
Important and Urgent
Crises and Emergencies
Important but Not Urgent
Prevention, Planning, and Improvement
Not Important but Urgent
Interruptions and Busy Work
Not Important and Not Urgent
We often spend our lives focused on the Urgent things instead of the Important things. In business as in life it is extremely important to ask yourself: “Am I doing this because it is truly important or am I doing this because it is simply urgent?”
Important and urgent things, such as crises and emergencies, should not be ignored. However, the more time you can spend on the non-urgent but important things (prevention, planning, improvement) the less crises and emergencies you will experience..
Below is a more detailed explanation of each quadrant along with some examples:
Quadrant 1: Important and Urgent
Fire fighting mode: Crises, real hard deadlines for important project, health & family emergencies, etc…
Quadrant 1 is the urgent important quadrant: Things that you should definitely NOT ignore. However, spending too much time in fire fighting mode will lead to stress and burn out. You will be caught in a never-ending cycle of crisis management.
The only way to reduce the time spent in this quadrant is to be proactive by spending more time on the important things BEFORE they become emergencies (see Quadrant 2 below).
Quadrant 1 Example Dealing with a heart attack is an Urgent and Important problem that cannot be ignored (but perhaps by living a healthier lifestyle such health emergencies can be reduced or avoided all together).
Quadrant 2: Important but not Urgent
This is where you should spend most of your time.
Quadrant 2 tasks are all about planning, prevention, capability improvement, relationship building, recognizing new opportunities, etc…
Spending time on these important things should lead to a clear vision and a balanced life, discipline, control, and fewer and fewer crisis situations.
Quadrant 2 Examples
Frequently buying flowers for your significant other “just because”
Eating healthy and exercising to avoid future health issues
Preventative maintenance on your home or car
Reading, learning, and education
Forming bonds and strengthening relationships with your friends and family
Self renewal and spending time on things that inspire and uplift you
Quadrant 3: Not Important but Urgent
Many of us spend a big portion of our time in this Quadrant confusing the Urgent things for the Important things.
Interruptions, ringing phones, most emails, etc… Spending too much time on the unimportant urgent things leads to a very short-term focus with continual crisis management. Your plans and goals will seem increasingly useless since you are unlikely to have time to devote to them. Your relationships and reputation will suffer and you will feel victimized with no control over your life.
Quadrant 3 Example
You have scheduled an important meeting with a coworker 2 weeks ahead of time. This person has very limited time and so you carve out a 30 minute window to deal with a very important matter. As you sit down and start the meeting, your phone rings.
The phone is screaming: “Pick me up! Pick me up! Pick me up!” Most people will pickup the phone and sacrifice the very important meeting for the likely not important but urgent ringing phone.
Quadrant 4: Not Urgent and Not Important
These are the time wasters in your life.
Spending too much time on non-urgent and not important things can lead to dependence on others for your basics, loss of jobs, irresponsibility, etc…
Quadrant 4 Examples
Trivial busy work
Mindless web surfing
Watching too much TV
Lots of pleasant activities
How do I use this to make my life better?
A. Identify Quadrant 2 activities.
Write down all the Quadrant 1 and 3 activities you routinely do (all the Urgent stuff)
Write down how you can prevent these things from reoccurring or from becoming emergencies in the first place: These are your new Quadrant ii activities.
B. Free up time for Quadrant 2 activities
Look at all the things in Quadrant 4 and STOP DOING THEM!
Look at all the things in Quadrant 3 and stop doing them too. This is more difficult as it involves saying NO to people.
You should now have time to spend on Quadrant 2
C. Schedule time for Quadrant 2
Schedule time to do Quadrant 2 activities. (Put them in your calendar just like a meeting).
DO THE THINGS YOU SCHEDULED!
D. Reduce Quadrant 1
The beauty with spending more time in Quadrant 2 is that it should slowly chip away at all your Quadrant 1 activities.
As you reduce your Quadrant 1 activities you have more time for Quadrant 2, creating a fly-wheel effect.
Not quite. The Question “What is important to me?” usually does not have a simple answer.
What Quadrant Am I?
Example 1: Going to a Sporting event (Hockey, Baseball, Football game, etc…)
Which quadrant does this fall into? The answer is it depends on YOUR priorities and what is important to YOU. On the surface it looks clearly like a Q4 item – a time waster. Not urgent and certainly not important.
But, it could be a Q2 event (important) if you consider the event to be an opportunity to spend quality time building relationships with your parents, children, or friends .
Example 2: Watching TV
Clearly another Q4 item: A time waster. Or is it? If watching TV is a stress reliever for you and serves as a way to wind down and chill out after a hectic day, it could very well be a Q2 activity. Just as long as you frame it correctly and consume it in the right way.
To be successful with this method you must have a very clear understanding of what is important to you, what your long term goals are, etc… For more information about how to plan your week around this framework, see my blog post on How I Plan My Week.