Not everybody can

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“Anybody can pour a cup of coffee, rent out cars, sell pairs of jeans. Except, of course, they can’t. The [businesses] that are the best at these things take ‘anybodies’ off the street and make them their own ‘somebodies”

I found this quote, by Alex Frankel (from his book Punching In: The Unauthorized Adventures of a Front-Line Employee), in a great post by John Moore from the Brand Autopsy Blog. Here is another part from the post that talks about the same point:

Turns out the quality of the employee is the difference-maker between an energetic store and a lifeless one. It can also make the difference between a loyal customer and an infrequent customer.

I really like these quotes because they touch upon a few powerful ideas I really believe in. More than anything else, it means that not everybody is equipped to do every job. I know it is not popular to say this, but we are not equal. And I mean this in the most wonderful way possible. Yes, most people can do any work, but they can’t excel at everything. They can’t create Art in the Seth Godin sense of the word. And excellence and Art is what is needed to create true engagement.

I can pour and prepare coffee. But I will never make connections with a customer in a way that makes him feel good about him or herself. And while I am sure I will make a very good employee and do everything needed, be on time and whatever else the “rule book” says, I will never be able to do the things that really matter in such a situation. I can learn how to “talk the talk” with customers, but inside, I would never “walk the walk”. I will never truly enjoy such an engagement with strangers. It is not in my character or personality. But others can. It doesn’t say anything bad about me or them. It just the wonderful differences between us.

A manager’s job is to make these connections between roles and people and in a way that contributes to the employee’s sense of self and to the goals of the business. It starts by choosing good people but it continues into listening to them, talking to them, asking the right questions and helping them find their strengths and flow.

Do that and the customers will follow.

Elad

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Input or output?

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Business thinking is always focused on outputs. On results. On measurable things. And usually, it is a good thing (at least when you are measuring the right thing). But we should not let our focus on results prevent us from acknowledging that sometimes, results are not the most important factor. Effort is.

I was reminded of this while I was reading this paragraph from Eduard De Bono Six Thinking Hats:

With white hat thinking we do expect a definite input of neutral and objective information. With black hat thinking we do expect some specific criticisms… With green thinking, however, we cannot demand an input. We can demand an effort…

You cannot order yourself (or others) to have a new idea, but you can order yourself (or others) to spend time trying to have a new idea.

And I think this is the problem many managers have with some of the “soft skills”. They judge it according to the outputs. Like a computer program. “If I acknowledge or recognize my employees x  times a week, they should be engaged”. But it does not work like that. First, because there are many things in life that are a function of probability. You can improve the probabilities if you follow a good process, but you can never make sure. Creative thinking is one. Employee engagement is the other. Second, because human beings are so special and unique, we can’t expect one system to work. Thus we need to put in the effort and do the adaptations according to the specific person and circumstances.

The question, of course, is more general: when do you measure using outputs and when do you measure using inputs? While there will never be a definitive answer, I think stopping and asking the question once in a while is beneficial by itself.

Elad

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Did we fire anybody?

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I never bought anything from Zappos. I actually haven’t heard about it until last year. I came to learn more about it when it was bought by Amazon a while ago and we had an interesting debate among my classmates at AGSM MBA 2010 class about whether it was a smart move or not. But the more I hear about the company (and I wrote about it before: 1, 2) the more I come to appreciate it.

It turns out that a few days ago, Zappos had a little problem with pricing in one of their sister websites. The pricing issue meant that many products were sold for a small percentage of their original price for about six hours. This meant a loss of … wait for it… $1.6 million (gasp!).

Now, mistakes happen. Even big ones. The question is as managers and leaders, how do we cope with mistakes and prevent them in the future. Look what Zappos CEO, Tony Hsieh, writes about the incident:

To those of you asking if anybody was fired, the answer is no, nobody was fired – this was a learning experience for all of us. Even though our terms and conditions state that we do not need to fulfill orders that are placed due to pricing mistakes, and even though this mistake cost us over $1.6 million, we felt that the right thing to do for our customers was to eat the loss and fulfill all the orders that had been placed before we discovered the problem.

I see two amazing things here. First, a company that understands that values and a belief in something means difficult tradeoffs. Zappos is built around customer service and customer satisfaction. It is not always about going with the letter of the law or the contract. It is about acting right according to the principles that the company is built upon. They decided to fulfill the orders basically saying to the customers – “good for you!”

Second, they decided not to play the blaming game. Yes, there was a mistake. Somebody made it. Maybe even a number of people were responsible. But, that is in the past. The question is what do we do in the future. Susan Scott writes in Fierce Leadership that people should Model accountability and hold people able:

… Accountability begins (and in this case, ends) with you. You being accountable in front of everybody else. Not talking about it, not bragging about it, just modeling it. Doing what you said you’d do. Taking responsibility for disappointing results. Focusing on taking action. Asking, given this result what will I do about it? And if things go wrong with others, asking the same question. Given this result what are you going to do? And you must give up blaming.

Zappos decided to look at this as a learning opportunity. I am sure this kind of mistake will never happen again. Will we never see other mistakes? Not likely. And I ask you, what does that do to the confidence of employees? To their willingness and ability to take risks? And their willingness to make sure nothing like this ever happens. To go the extra mile to make share it will never happened. I think it will be a lot bigger than if heads would have rolled. Not only because it is the right and human thing to do. But also because it fits so well with the entire culture of Zappos.

Employee engagement does not start over night. It is about being consistent with every action and decision. Especially the hard ones. I agree with every word Paul Hebert writes about this:

The company decided that the process was the problem – not the people. From what I can read into this they started by deciding the people were competent, the people didn’t do this because they were stupid, lazy, disengaged, or malicious. They started with a positive view of the people.

I’ll ask you this… in your organization would this happen?  Would a $1.6 million error be handled the same way? That my dear readers is a quality organization.  If you want to know what a role model looks like – this is a role model.

Elad

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Gain segregation in management

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In the last few weeks I have been studying about Daniel Kahneman and Amos Tversky famous Prospect Theory. This theory has many applications and many interpretations. One of the most important of these interpretations is that losses loom larger than gains. Meaning, all else being equal losing something will hurt us more than winning the same amount (when I say amount it is not necessarily money. It could be joy, pain or anything that has value to us). If you look at the graph that represents this theory, you would notice how the graph is steep at the beginning in both directions, but steeper in the loss area.

One of the insights of this idea is that we need to aggregate pains but segregate gains. In other words, when we talk about gains, it is better to be closer to the zero point of the axis but in the case of loses it is better be as left as possible on the graph.

Imagine going to the dentist. You need to take a four-hour operation. Your dentist offers you to do it in two sessions of two hours or in one session of four hours. Prospect Theory suggests, maybe counter-intuitively, that it is better for you to have a 4 hour operation than a two hour one.

That got me thinking about how this idea is manifested in managerial environments.

Have you ever heard the advice to celebrate small victories? Prospect Theory suggests that this is very good advice. However, in many managerial setting we are so busy dealing with current issues that we forget to celebrate small successes. We wait to the end of the period and have a huge event celebrating the last year. However, celebrating frequently turns out to be a much better way to in recognizing people’s efforts. So, instead of giving them a week off at the end of the project, give them 5 days over the duration of the project, as a reward for good work. Instead of throwing a huge party that will cost you 100,000$ dollars at the end of the project, have ten parties with a cost of 10,000 every now and then. This approach also seems to coincide with Dan Pink’s advice in Drive, that rewards should follow a “now that” pattern instead of a “if then” pattern.

I know that these examples are to literal a translation of the theory and that in real life, things work a little differently. However, I do believe that by understanding the idea of gain segregation, we can make our efforts to engage and recognize employees much more effectively and allow them, without changing our cost structure or the total sum of what they are gaining, to enjoy more of what we are already giving them.

How do you think the ideas of loses aggregation and gains segregation play out in our managerial decisions?

Elad

Stupid Rules Contest

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Bob Sutton writes that it is time to do a “Stupid Rules Contest” at Stanford. This is where his idea came from:

I once met the CEO of a large bank in New England who explained to me how they had made things much better by running such a contest and taking the suggestions seriously. For example, they got rid of a rule that people waiting outside a branch could not be let in until official opening time.  They changed things so, if it was 10 or 15 minutes before opening time and, say, people were waiting outside in the cold, employees could open the door and let them wait in the warm lobby.

And I want us to take the idea one step further. Don’t do it once in a while or when the “time is right”. Do it every week. Do it all the time. Have a post-it area or a whiteboard somewhere on in your office or an email address where people can write-up ideas –anonymously or not – about stupid rules that need to be canceled, reversed or improved. It is not only a great crowd-sourcing idea, a great way to engage your employees and great way to let them feel that they are in control of their environment. It is also an imperative in today’s business world.

It is imperative today’s business world to be able to kill things. It is imperative to stop and ask why (sometimes ignoring the how). It is imperative to reflect and to challenge our assumptions.

Yes, it will start with the really stupid rules, but it is a mindset, a culture and an environment. It starts with rules about the shared kitchen, then it moves to rules about the work area and before you know it, people are changing how they interact with the customers and more importantly, the rules of their market.

This idea is a little scary. Because it implies loose of control. You know what, that is probably why it such a good idea.

Elad

From homogeneity to heterogeneity through loss of control

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I was reading Jon Gordon’s blog yesterday:

We had a good laugh but Cary’s customer service was no laughing matter. I go there all the time and have bought hundreds of meals because I know when I go there I’ll get what I want. It’s no wonder that Aqua Grill has been open for 20 years while every week it seems another restaurant in my area has opened and closed.

Success is simple. Give customers what they want and they’ll come back. You don’t have to give away the house. In fact Aqua Grill and Pappasito’s cost a little more than their nearby competition but they are busier and more successful.

If it is so simple, why is it so hard? Why is it so hard to give people what they want? One word. Control.

Control is a way to deal with heterogeneity. To produce homogeneity. If I only give one type of dish, I can make more of it, faster. It is based on yesterday’s world of thinking – where productivity was king and we standardized everything in order to produce more.

Those days are gone.

We are slowly but surely moving away from a world of productivity and mass production, to a world of creativity and customization. And trying to use the same mechanisms of control that were used to stifle heterogeneity in a world where heterogeneity needs to thrive, is crazy.

But we still do. Maybe it is our human nature. Maybe it is just bad habits or our resistance to change. It does not matter. The rules, regulations and other forms of control, all these things that deny people their autonomy and freedom in the work place have an expiry date. We don’t that date yet, but they do.

Read this example Gary Hamel’s post in the Management Lab about unshackling employees where he explains how by letting local employees set the opening times of their bank branches (at night, during the weekend or whenever), a bank created not only engaged employees, but more business. Here is a little excerpt (read the whole thing, it’s worth it):

Blair summarizes the changes at BNZ with a telling anecdote. “I was walking by one of our stores on a Sunday morning with my kids, and my son said, “Dad, the doors on the bank are open.” And I thought, crap, someone forget to close the doors. But then I looked in, and saw that the entire store was open. No one is forced to roster on Sunday, but team members had come in from other branches in order to swap their hours. One mom was there working on Sunday because she wanted to take Wednesday off. And it hit me: no one at head office even knows when the stores are open.” Adds Chris, “The freedom to open when you want may not be the biggest thing we’ve done, but it’s the most symbolic in terms of telling our people, ‘we trust you, and we’re serious about empowering you.’”

It is the same process. Same hours for all branches. A mechanism of control that is supposed to create homogeneity that is supposed to lead to productivity. However what the bank realized is that by losing control and succumbing to the heterogeneity they enable creativity that leads to the customization that customers wanted.

Elad

Minus two and a half cheers for sticks and carrots – my short answer to The Economist

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Let’s say you were born just a little before the car started to be a really useable means of transportation. You grew up watching everybody around you use horses. In fact, you know how people, who don’t have horses, are suffering. With a horse you can do so much more. Get to places faster. Be more productive. Hell, you stick a cart to it, and you can almost do anything with it. It sure allows you to have more time to do other stuff. And you look at this new invention, the car, and you say to yourself – “well, it has its merits, but horses work for me and they are have done so well for civilization, I think I would keep with horses”.

How would you describe this type of thinking? I know human are slow to adapt to change, but looking back from our comfortable place up history’s line, this guy just seems ridiculous to us. Well, I am not sure people in the future would not look at The Economist’s Schumpeter article from January 14th titled: Driven to distraction – Two and a half cheers for sticks and carrots the same way.

In this article, The Economist goes against what they call “… [The] Eminent management theorists [That] have been dismissing payment-by-results as simplistic and mechanical ever since Frederick Taylor tried to turn it into the cornerstone of scientific management in the early 20th century”. Their wrath is turned  especially against Daniel H. Pink new book, Drive. Their claim? The system of sticks and carrots, actually works. So please, don’t bother us with all this “new-age”  Autonomy, Mastery and Purpose propaganda:

How convincing is all this? Mr Pink insists that all he is doing is bringing the light of science to bear on management: “There’s been a mismatch between what science knows and what business does.” But this argument depends on a highly selective reading of the academic literature. Four reviews of research on the subject from the 1980s onwards have all come to the same conclusion: that pay-for-performance can increase productivity dramatically. A study of an American glass-installation company, for example, found that shifting from salaries to individual incentives increased productivity by 44%. More recent research on workers at a Chinese electronics factory also confirms that performance-related pay (especially the threat of losing income) is an excellent motivator (see article).

I had to re-read this paragraph several times to believe my eyes. The argument is: It works, thus it is good and we should reject anything else. Is it only me, or does it sound a little totalitaristic? Yes, Stalin’s rule worked, for a time, but was it a good thing? Personally, I don’t believe so. To me it sounds like this is focusing on the how and forgetting to ask why?

Carrots and sticks might work, but its underlining assumption is that people are jackasses (that is stubborn, stupid, willful, and unwilling to go where someone is driving him). Carrots and sticks might boost productivity, but they lead to a society where almost half the people are unhappy with their jobs. Carrots and sticks might is measurable, but great things come out of processes that we cannot measure.

It is not the first time I was shocked to see The Economist supporting the conventional wisdom. And while I don’t blindly buy into everything Dan Pinks says (as skillfully as he says it) and I do believe that his approach should be supplemented with other approaches, it hurts me to see such idolism of carrots and sticks and Taylorism.

The past will always to try to prevent the future. I don’t think this future could be prevented for long…

Elad