Earning not winning

Photo: Dave Bullock (eecue)

I am a regular reader of the Incentive Intelligence blog and enjoy it very much. Today, I read a really interesting post about the negative use of the word “but” titled: Incentives AND Recognition – Forbes Article AND Some Thoughts. You should read it. I was distracted by one sentence in the post, representing an idea Paul writes about in his blog a lot:

Incentive programs are NOT contests and awards are earned NOT won

The last part of the sentence is so important and so powerful I get blown away by it every time I read it. Some might say this only semantics. But semantics have power. I wrote this in my e-book:

In her book, “Mindset: The New Psychology of Success“, Psychology Professor Carol Dweck, describes a study she and her colleagues conducted with adolescences. They gave a few hundred students a non verbal IQ test. When the students finished the test, they praised them for their results. Some students were praised for their ability: “Wow, that is a really good score, you must be really smart“. Other students were praised for their effort: “Wow, that is a really good score, you must have worked really hard“. Both groups had equal scores to begin with, but after the praise the groups began to differ.

Students who were praised for their ability were not inclined to taking on new tasks. They did not want to expose their flaws. They wanted to keep their smart appearances. In contrast, the group that was praised for their effort showed a different behavior, they actually asked for new challenging tasks to handle!

After interviewing the groups, the researchers gave a new test, much harder this time. The ability group reported feelings of failure. Most of them, when asked to describe their feelings of failure, said: “We are not so smart after all”. More importantly, the ability group, who reported enjoyment of the first test, told the researchers they did not enjoy the second one. In contrast to the ability group’s reaction to the second difficult test, the effort group did not see their lesser results at the second test as failure. When confronted with their failure in the second test they mostly said: “we will just need to put in more effort in order to succeed”. More importantly, they reported enjoyment from both tests. Even the one they failed!

Later, both groups were given an easy test again. The ability group performed worse than it did in the first test. They lost their faith in their ability. The effort group actually performed better than it had done in the first test. They used the harder test to enhance their skill. Not only did they enjoy the ride, in the long run, it improved their outputs.

We need to acknowledge, everyday, the results are not a windfall. They do not just happen. They come out of hard work. And it is the hard work that we want to incentivize. Not every type of hard work off course, but hard work that leads, in the long term, to desired results.

A few days ago I wrote about the difference between decisions and outcomes. And while I believe in outcome management I am also a big believer in the idea of processes. Not standardized processes that confine people in bureaucratic prisons. Individualized processes that are the product of experience, thinking and the understanding of our own uniqueness. And the only way to do that is focus on the effort and the work we put in the created the desired results.

Nothing worth gaining is ever gained without effort. And the effort is the important part of gaining it. As usual, my epic fantasy readings give me another perspective. In Best Served Cold Joe Abercrombie writes:

…It was what you gave out that made a man, not what you got back…

Elad

Bad decisions and bad outcomes

Photo by jeffwesse

I was reading this post today in the Nudge Blog about something that happened in the NFL league this week (a decision made by Bill Belichick). Honestly, I don’t really understand the NFL lingo, but one quote in the post caught my eyes:

“Well, he went for it and it didn’t work. Then his team lost a game it was winning by six points with two minutes left.  We don’t need any more proof then that to know it was a dumb decision, no matter what any stat geeks claim.  This isn’t calculus calls. This is the NFL.”

In my blog I wrote a number of times about the idea of outcome management. Instead of telling your employees how to do the job you need them to do, just explain to them what the final needed outcome is and let them do it their way. Then judge them according to the results.

But judging results does not mean that we should ignore efforts or processes. In a football game, just like in real life, people have to make many decisions under pressure. Sometimes the outcomes of those decisions are positive and sometime their not. But even if the outcome is negative it does not necessarily mean that decision was wrong. It just means it led to an unwanted outcome. And vice versa. Good decisions could lead to bad outcomes.

Failure is an important part of growing, learning and improving (also see here). As long as we learn from it. If we only look at the outcome, we might miss the real lesson for next time. The problem is, only decisions are under our control, while outcomes are always subject to chance. So while determining the process for our employees is not the best of ideas, helping them learn to improve their process, by assessing it together, is the right way to go.

So, before you decide that your employees made a “dumb decision” look for more evidence than the mere fact that team lost the game.

Elad

 

The forest, the trees and the process of management

Photo by ~Sage~

Today, I was listening to a podcast episode of “This American life” called: “Return to the giant pool of money“. It is a fascinating podcast going back, a year later, to the characters of the This American life’s most listened to podcast: “The giant pool of money“. That episode tried to explain, in layman terms, some of the major causes for the global financial crisis. Both podcasts are highly recommended (especially the original one), but the thing that caught my eyes (or actually, ears) is one sentence in the entire podcast. When interviewing one of the experts about what caused some of the brightest people in the world to create financial tools that almost brought the world economy down, he says something like this (this is not an accurate quote as I write it out of my memory):

I think what happened to these people is that they suffered from the trunk phenomena.  They were so focused on what they did, that they could not see the bigger picture. To paraphrase the famous sentence, they were not only missing the forest, they were actually missing the trees.

Have you ever felt like that? Have you even been so concentrated on doing your part in the best that you can, that you forgot the big picture or even the small picture around you? I know it happened to me. And I think it happens to all of us all the time.

As our world is becoming more specialized and more focused, as we go from knowing everything about a single tree to knowing everything about a single trunk, it becomes even more important to stop and look at the bigger picture.

We are all part of a complex system and nothing we do is done in vacuum. It always has ripple effects. And understanding how our work connects with the rest of the system, be that system what it may be, should be a consistent part of doing our jobs. Part of the process of the doing the job. This is something that we need to be responsible to do for ourselves. But as managers, it is even more important that we help our teammates do it. Because they are not always able to do it alone. So it has to become part of the process management.

I don’t know what would have happened if the people in Wall Street or working with Wall Street would have stooped and looked at the trees or at the forest. They may have or may have not stopped doing what they did. But I do know that stoping to remind ourselves and our teams that there is a bigger picture is starting to be an important part of each professional process.

So, how can we make sure not to forget the big and bigger picture?

Elad

The process of effectiveness

photo by grahambones

One the bloggers I follow regularly is the cartoonist Hugh MacLeod in his blog gapingvoid.  This week he wrote a post titled: “artists are entrepreneurs and marketers, too“. The subject of the connection between art and business is a subject he writes a lot about and I think this a worthy cause, as the two are not as different as we usually think. But what this post made me think about is something bigger, due to a comment on one of his other posts that he quoted in this post, which goes like this:

The thing about working as an artist is that you never realize how much of the work is on top of making the actual art. I was remembering how when I started out, I would visit the studios of more established artists and couldn’t begin to grasp how they ran the show. It’s taken years to slowly put each piece in place. Every day there’s new problems to solve, but if you can solve them in a way that sticks— so that from now on that issue is covered, eventually you come up with an efficient system for supporting the most important work you do, which is the art.

An artist is like every professional. He is very good at something. He has his strengths. But the problem is that he has to do so much work around that doesn’t use those strengths. It may be administrative. It may be marketing. Or it could be anything else. And every second he is not doing what he is good at is a waste of time, effort and a moment where we all miss on his art.

I am sure you felt it before. I know I have. Working as a law intern is all about wasting your time and doing things that are under your potential. Work that can be easily done by someone who did not study law for 4 years. And when somebody complains about it, the answer is usually something like: “this the way it has always been, it’s part of the territory”.

Well, it is not. Because great managers know that this is a conventional wisdom that must be ignored. Managers need to help each employee excel at his job. This means that they should do everything they can to make sure the employees use their strengths as much as they can. So a great manager will create a process that allows his professionals to concentrate as much of their time on what they do best. It just like the second phase according to theory of constraints:

“Decide how to exploit the constraint (make sure the constraint’s time is not wasted doing things that it should not do)”.

Employees being the constraints in the good sense of the word, of course. But the idea is still the same.

I believe it is all about the process. The way your business or team operates, should support the people in it and their strengths. You need to decide which employees are your priorities, your valuable assets, your constraints, and build the business around making sure they have the ability to employ their strength if not all the time, most of the time. The process should not only be effective by itself, it should support and make sure that the right people are effective.

Elad

Intuitive Vs. Analytical

I was watching Mae Jemison’s TED talk today about the connection between science and art. In this interesting talk she explains why she thinks the perception of many people that science is analytical while art is intuitive is wrong. Actually, she claims, they are both a manifestation of the same idea. You can find analytical thinking in art and you can find intuitiveness in science.

That made me think. This debate is relevant to business as well. How should businesses be run? According to intuition or analysis? The answer, of course, is both.

 In the last few weeks I have been preparing for interviews with management consulting firms. One thing you understand when you practice solving business cases and reading about how these firms operate, is that there is a tremendous importance to analytics. You are expected to be structured in the way you approach each problem, you are expected to think about all the problems while at the same time paying attention to the little details. But at the same time you see how important intuition in their work and thinking process is. You are also expected to hypostasise and prioritise. Go with your basic logic, gut feeling and intuition.

I heard many people in the past say: “I am a numbers guy” or “I am a big picture – go with my gut – kind of guy”. Hell, I said it myself a few times. And I think knowing what you are is an important part of success. At the same time, it is also important to understand that the fact that you have a certain point of view, a bias if you will, does not make the other way wrong. It means that we should actively try to seek out the other way.

It seems to me that success, in art, science or business, comes out from integrating intuition and analytics. That is one of the reasons diverse teams have trouble working in the short term (they speak different languages – one of intuition while the other analytics) but in the long term, they tend to outperform homogeneous teams (which do not take the full picture).

Thus, if we are unable to use both (and most people will struggle doing it consistently) we need to complete our own biased point of view, with the opposite point of view. Or just remind ourselves to re-check the other point of view every once in a while.

So, how do you integrate both intuition and analytics in your everyday work?

Elad

Silence, “I don’t know” and problems & solutions

Photo by said&done

This week we had workshop on Adaptive Leadership as part of our integrative experience in the AGSM MBA. Part of the workshop entailed peer consultation regarding dilemmas the students are facing. We formed grouped of five people and in the group we had a very specific process that we had to follow. First, the person presenting the dilemma had five minutes to present without anybody interfering. Then the group had ten minutes to ask open-ended questions. Then, for 15 minutes, the group had to discuss the problem. At this point, two rules were put in place. The first is that the presenter should be absolutely silent. The second is that the discussion of the dilemma should not be about solutions, but only an attempt to understand the situation and what is the dilemma made of. The next stage was a ten minute discussion regarding possible courses of action. And finally, the presenter had five minutes to recap what he found useful.

As someone who likes to focus on the process and its importance, this exercise defiantly appealed to me. I think some bigger insights can be gained from it:

The importance of silence – I think that this is a great reminder to the importance of silence. When you sit silently while other are discussing you become attuned and aware of other things that you usually miss. Your mind is focused on listening and not on the next sentence you will try to push into the discussion. Silence and listening are important tools for communication that are usually underused. I just finished reading the book: “The McKinsey Mind” where one of the tips the writers prescribe is: “we have one mouth and two ears”. This is especially important in feedback sessions and in today’s managerial setting where the manager usually is not the content expert. Listen as twice as much as you talk. This relates to a concept I really believe in: “MBWA – management by walking around”. Go around the office, firm, plant, company. Be silent and listen. What do people say? What do they do? What do the customers say? I grantee, you will learn plenty.

Don’t accept “I don’t know” as an answer – in the same book the authors talked about not accepting “I don’t know” as an answer. They claim that if you go and interview somebody, let’s say, about the causes of a certain problem, many times he will answer: “I don’t know”. But people do know. Maybe they don’t have the entire answer, but they always have opinions, knowledge and theories. And theses sometimes might be more valuable than they think. I believe that the silence is important here is as well. Try this next time you interview someone or give feedback to someone. Ask a question. Listen to the answer. Then wait. Don’t go to the next question. In high percentage of the cases, that person will, after a short uncomfortable silence, will continue talking. People don’t like being silent. You would be surprised how much they will tell you just to avoid being silent.

Problems and solutions – people in the business world tend to be practical. They want to see and reach the bottom line. They ask: “So what?” all the time. But in our race to be active and create an impact we sometime bark up the wrong tree. We miss focusing on the real problem and create solutions which don’t really solve it. We keep trying to deal with fires and don’t ask ourselves how they were caused and why. I mentioned here in this blog that I believe we should be more focused on preventing problems then on solving them. Understanding the real problems is an important part of that. In order to do that, it could be beneficial to limit the discussion to the problem without talking about solutions. It allows us to talk about concepts. To take the balcony view. To think about the underlining rationale. Then, the discussion of the solutions will be much more effective.

Elad

The service economy, kaizen, bear shaving and standards

Photo by Six Million Dollar Dan

I was studying for an exam in operations management today. I don’t know if this is commonplace for courses on this subject, but it sure feels like we concentrated a lot on manufacturing ideas. As most western states are becoming more service dependent, and as my own experience lies in more service like organizations, I am constantly trying to think about how to apply concepts from the manufacturing world to service world.

One of the most interesting concepts is we discussed is kaizen, the Japanese philosophy that focuses on continuous improvement throughout all aspects of life. In the business sense, kaizen means continuous improvement of all functions of a business, from manufacturing to management and from the CEO to the assembly line workers. This concept is off course very transferable to service as it is to life. I actually think that without knowing the concept I wrote about something similar in my e-book. But, the fact that it is easy transferable, does not mean it is practiced. Hence, bear shaving.

One important part of kaizen is the concept of standardization. Because kaizen is about improvement, a lot of effort is dedicated into standardizing the improvement to keep it in place.  Because an improvement by itself will not contribute to kaizen unless in the end it can be maintained when the people directly involved leave. Moreover what can be continually improved if there are no strong standards for how things are carried out? Without standardised work kaizen becomes something practiced by the individual employee and not by the company as a whole.

And that got me thinking. I remember when I was a course leader in the Israeli Air-force. After every course we de-briefed the course and came up with all kinds of recommendations for improvement. The problem was we had trouble making sure that the instructors who will come after us will learn from our mistakes and implement our recommendations. Because some of the lessons we learned were about day to day activities, course planning or just small thoughts about how to make the course more effective. We wrote in a manual, but, if the people who come after us don’t read the manual, guess what happens. Because I later served as a reserve duty soldier in the same place, I saw in my own eyes, how lessons disappear and every generation of instructors have to learn things from the beginning or come up with ideas, that we already came up with five, six or seven years before.

In a service environment, the reliance on people is even greater than in a manufacturing environment. But creating standards for service is harder. However, harder does not mean impossible. It just means that you have to be more creative about the ways you change the process. In service environment it might even be a good idea to remind people about things they already know on a regular basis. And today, in contrast to my situation in the Israel Air-force more than ten years ago, you have technology to help you. After all, we do leave in a period of “combinatorial innovation“.

So, let’s try an invent ways to standardize service kaizen.

Elad

What can learn from the marshmallow?

photo by bill barber (very sporadic)

I have been watching this fascinating six minute lecture by Joachim De Posada from TED. In it, he describes the famous experiment with kids and marshmallows. They took a group of four year old kids and gave them a marshmallow. Then, they told them that if they will wait for 15 minutes without eating the marshmallow, they will get an extra marshmallow. About two thirds of the children ate the marshmallow right away.

15 years later those same kids, now adults, were invited again. This time the researchers surveyed their status in life. It turned out that the kids who did not eat the marshmallow right away were all very successful, had great grades and were doing very good socially. The kids who ate the marshmallow right away, were generally doing much worse, many of them, dropped out of school.

I heard about this experiment a number of times and I find it fascinating, but, I am not sure what the immediate implications of it are. If I am a parent you young children, what should I do to make sure that my child is in the group that waits?

But in this talk, De Posada explains, that this ability to postpone gratification, is predictive of success, because many times in life, if you wait, your success is bigger. He gives the example of a salesman not going for the quick deal, but sitting diligently with the clients to find out their real needs, thus making a more profound and sustainable sale.

I think there is a great lesson here. In a world ruined with havoc because of short term goals and gains the inclination to wait, to think things through, to try one more check, is increasingly important. And it is growing in importance even more, as are world is getting faster and faster. We hear a lot about flexibility of firms, their ability to respond quickly to the markets and the importance of constant change management. I am not saying all of that is wrong. But I am advocating, at least as part of some process, to be more patient. To learn to postpone our immediate gratification.

The problem is that it is extremely hard. Most people have a lot of trouble dealing with the unknown future and taking risk is part of the game. But there is a difference between taking a calculated risk and just taking a risk. So, how can me incorporate flexibility and risk taking and still think things through.

As usual, I think the answer lies in creating a better process, which will enable quick decisions within a more general framework, which keeps some kind of boundaries and keeps evaluating and re-evaluating decisions. This is, off course, easier said than done. I have a thought. Maybe, firms fail because they try to be both risky and prudent? What if we would allow our employees to be risky and flexible, but will create a better debriefing process. Create a process that checks every decision with milestones, ignoring sunk costs. Maybe, because we know the problems, the solution should be different?

Elad

The process of doubting

photo by ktylerconk

“I doubt, therefore I am” René Descartes

Today, I was part of a practice debate. The subject of the debate was: “that executives’ bonuses should be slashed”. I was part of the negative team that is supposed to argue that the claim is wrong. The positive team, which is the first to argue, started by claiming that they do not think that bonuses, which they defined as stock options and monetary compensation, should be totally slashed, but they should be taken down to a reasonable level. Now, I can talk about the subject itself (which I guess I pretty hot in today’s economy), the arguments (who determines what is reasonable?) and about the experience (I recommended it) but I want to talk about something else. Why didn’t they claim that bonuses are ineffective?

I admit that I did not think about this straight away. Like the positive team and without any relation to what my team was supposed to argue, I also took it for granted, that such bonuses are effective in creating productivity and results. I thought about this question later when I was reading an article called “Evidence Based Management” by Jeffery Pfeffer and Robert I. Sutton. In it, the writers claim that managers often take decisions without considering relevant and available evidence. One of the examples they give is the following:

There is, in fact, little evidence that equity incentives of any kind, including stock options, enhance organizational performance. A recent review of more than 220 studies complied by Indiana University’s Dan R. Dalton and colleagues concluded that equity ownership had not consistent effects on financial performance

In this blog I write from time to time about the fact that there are conventional wisdoms of management which are just wrong. As times goes by, I am surprised to see how many are there and how widespread they are. I don’t know if the incentive idea is wrong or right. It might be that the inconsistency is part of the fact that there isn’t one way to create motivation. But the fact remains the same. I think most of the managers you will ask will say it is a good idea. It is a conventional wisdom.

Just today, Seth Godin, in his post, writes about another example of a conventional wisdom: bigger and not better. A short quote:

You’re at a conference, talking to someone who matters to you. Over their shoulder, you see a new, bigger, better networking possibility. So you scamper away. It’s about getting bigger. Compared to what? You’re never going to be the biggest, so it seems like being better is a reasonable alternative.

So, why does this happen? I don’t know. But from my limited experience and according to Pfeffer and Sutton’s article, it happens all the time. So, as managers, what can we do? My answer? Doubt. We need to cast doubt all the time.

The problem is it is harder than it sounds. Besides all the regular hurdles, like pride, the sense that we know better, our preference to our own experience over others experience and more, new brain research actually shows that our brain is such a lazy machine, that it does everything it can not to think about new ideas and concepts. This means we have to make it. We have to create processes that will make us cast doubt. All the time.

So, as managers, we should create processes that facilitate the casting of doubt on a regular basis. I am sure you know better than I do how to do it at your place of work. The question is when is the last time you cast doubt on what you take for granted?

Elad

Outcome management

photo by The Comic Shop

I wrote a number of times in this blog about the fact that I believe managers should not dictate to their employees how to do their job, but concentrate on defining the desired outcome and let people find their own way to reach the desired outcome. In my E-book I write about the importance of processes, developing them and learning form other people’s processes. But that does not mean that as a manager you have to dictate the process to your employees. Most of the times, they will produce better results when left to develop the process themselves.

The last few days had me thinking about this concept again.

Though I believe this is the right way to bring about great results from people, it is important to recognize that it does not always work. Some people need and look for specific prescriptions on how to their job. Some people are not into empowerment, thinking and challenge. Or at least not in the workplace. Because people are different, even in this regard, we should be careful not to make generalizations as managers.

You must be asking “But, how can you know?” Well, the simple solution is to ask your employees. The problem is people will more often than not tell you that they want you to tell them what to do. The conventional wisdom that a manager needs to say to its employees how to do their work is already intertwined into peoples expectations. Just the same way people think that there is one best way to write a speech, give a presentation, use notes or get the audience attention, while there isn’t, people expect their manager to tell them how to their work. So as a manager you should ask them, but you should also use a little trial and error with a bias towards giving them just the desired outcome and see how it works out for them. Then ask them again.

Note that this does not mean that you should not offer support or advice. If they come and ask you for how you do things, tell them. They need your hear your advice. But don’t force them to use your advice (or get offended if they don’t).

The second problem is explaining the outcomes. I used to believe this is quite simple, but as time passes and with the experience I had in the last few weeks of working in a diversified (professionally and nationally) MBA team, I now understand that this is the real challenge for managers. This is part of the “curse of knowledge” described in the great book “made to stick”. Basically it means that we have problems explaining things because we already know them, which makes it hard for us to imagine how someone who does know what we know see it. So, articulating the outcome in simple and coherent way is the biggest challenge managers have. You usually have a picture of the outcome you want in your head. Your employees don’t. Bare that in mind while explaining the outcome.

Elad