Forget planning, embrace the chaos of the market

Jason Fried and David Heinemeier Hansson, founders and directors of the IT company 37signals, are breaking all previous business postulates: from planning and competition relations to meetings and working hours.

Written by: Kristina Kardum
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If someone advised you to stop making long-term business plans, abolish office meetings, ignore competition, and avoid foreign investors, would you listen to them? Probably not, not only because it would contradict everything you have learned so far but also because it has nothing to do with the way business has been successfully conducted until now, and all indications are that you would not fare very well. The authors of these ideas, Jason Fried and his business partner David Heinemeier Hansson, founders and directors of the IT company 37signals, are doing quite well. They have turned their experiences into a new, popular book ‘Rework’. To avoid any confusion, these young entrepreneurs live what they preach. 37signals is a successful company that produces business internet tools. It is not overly exciting – it is recognizable for its specific way of doing business. Its minimalist approach to capitalism has won over the masses and gained fervent followers: its blog Signal vs. noise is read by a hundred thousand people a day.

They want to stay small
Hansson was still living in Copenhagen when he met Fried online in 2001. He offered him free help in solving some programming issues, but Fried hired him instead. Since then, they collaborated across the ocean for five years, separated by seven time zones. Soon they achieved numerous successes. In 2004, their workshop 37signals released Basecamp, their most famous product used by companies of all profiles, from startups to leading global multinationals. That same year, they designed the web application Ruby on Rails, which served as the backbone for mega-sites like Twitter and Hulu. Although they do not publish financial reports, it is estimated that this company with 16 employees earns several million dollars a year.

Of course, it could be bigger. However, its founders stubbornly refuse external investors because they believe that such money would corrupt them, just as people behave differently towards rented cars than they do towards their own. So far, they have only attracted one single investor – Jeff Bezos, the founder of Amazon. After hearing Fried speak at a conference, he invited the guys to a meeting and assured them that he would never force them to go public, sell the company, or tell them how to do their job. For his investment, he did not even get a seat on the board – 37signals, in fact, has no board.

A program for revolution
‘Rework’ is Fried’s and Hansson’s manifesto for revolution. They despise the old guard, its business customs, and goals. A new time has come for a new way of doing business. The first advice provided by 37signals is to discard long-term planning. – Big long-term plans are intimidating. And they are usually wrong. If you do not predict the future well, planning only makes sense as a mental exercise. So many things in the market change every day in unpredictable ways: market conditions, new products, competitors… Moreover, making big decisions keeps people awake at night, which is not healthy at all – Fried and Hansson write in their book. They make their decisions on the go, and they are honest about it. If you ask them, other entrepreneurs should be honest too, and if they enjoy making long-term strategies, they should call them by their real name: long-term, strategic, and financial guessing and possible strategies. A weekly plan is quite sufficient.
– Working without a plan may seem daunting, however, working according to a plan that has nothing to do with reality is even scarier – the duo advises.

Workaholics are pointless
– I hate meetings – said Fried. Accordingly, office meetings at 37signals are very rare. Besides not liking meetings, the founders of the company have a rational explanation for it. – Meetings are very expensive and a huge waste of time. They do not cost one hour of work, but ten hours, for each participant an hour. In a minute, very little useful information is conveyed, and there is always an idiot who disrupts. Moreover, they break up the workday so there is no time to be creative, and creative people are not creative on a schedule. The authors of the book ‘Rework’ advocate for letting workers be. One should eliminate distractions and interruptions as they are the real enemy of productivity. Instead of meetings, they propose using chat tools. They allow questions to be answered when one has time, everyone in the company has access to other colleagues without everyone needing to be in the same place. Therefore, the leaders of 37signals are not concerned about where and when their employees work, nor at what pace.

In general, they do not like companies that treat their employees like children, banning them from social networks, limiting internet use, and timing breaks to force them to work productively for eight hours. As a result, they do not achieve productivity but frustration.
Most employers are happy when they find hardworking ambitious employees with their noses buried in important projects outside working hours. If such a person were to get a job at 37signals, they would have to explain their presence in an empty office well. In fact, workaholics are not liked by Fried and Hansson at all.
– Not only is workaholism unnecessary – it is also stupid. Just because someone works more does not mean they accomplish more or care more. Workaholics are not heroes; they do not save the day, they waste it. Real heroes have long been at home because they solved problems before breakfast – conclude Fried and Hansson. Moreover, workaholics are more prone to sudden burnout, and they are bad for morale because workers who do what is necessary feel worse because they do not turn off the lights in the office. 

Work less than the competition
Conventional wisdom about competition says that one should outdo the competitor. If they invest 500,000 kuna, you invest 600; if they employ 20 engineers, you hire 25; if they produce 15 types of agricultural products, you produce 18. It is all about outdoing. This ‘out’ is problematic if you ask Fried and Hansson and is actually a remnant of the Cold War mentality that needs to be abolished. They believe that it is not necessary at all. Not only would it be good to completely ignore the competition and ‘do it your way’, it would be smart to work less than them. Produce less, hire less, and invest less – that is the right path. The success of Google, Twitter, Palm, or the Flip camera are examples of this. A small simple thing that has fewer functions but enough good ones will always find an audience, if not global followers.

Moreover, there is no need to avoid warring with the competition. If someone thinks their competitor is pointless, it is better to say so because in that way everyone who agrees with them automatically joins the ranks. Being anti-something is excellent, especially when a company is just fighting for its place in the sun. It automatically stands out, and people are interested because, after all, everyone loves conflict situations. Apple branded itself as anti-Microsoft, 7UP is not Coca-Cola. Coincidentally, the book ‘Rework’ appeared on the shelves at the same time as a new book by Karl Rove, Bush’s senior advisor and deputy chief of staff. The guys immediately took a combative stance by publishing a hilarious ad on YouTube explaining that their book is better because, among other things, it weighs less, has pictures, is quicker to read, which does not affect productivity, and is half the price. In general, old ideas about promotion must be discarded. Instead of promotion, it is better to be like a drug dealer: let the ‘people’ taste, they will ask for more.

Only profit matters
The advice given in ‘Rework’ is demonstrated by Fried and Hansson through their own example. Chaos is probably the only word that can describe such a business in conventional categories. Thirty-five-year-old Fried has embraced and capitalized on chaos, and he lives as he works. As he described on his blog, he does not use an alarm clock, in the morning he first drinks tea and relaxes instead of immediately checking email. Sometimes he has breakfast, sometimes he does not; sometimes he goes to work, sometimes he does not. He knows he can work from home all week until he gets bored. And just like him, all other employees do. A large part of his day is spent thinking about complicated things that should be simplified.

How does he achieve business success in that chaos, the old guard wonders. Simply, at 37signals one thing is always in focus – profit.
– It annoys me that success nowadays is not measured by profit, but by the number of followers on Twitter and friends on Facebook. Profit is important, not popularity or size – says Fried.