Making a wrong thing righter!

wrong-way-sign“The righter we do the wrong thing, the wronger we become. When we make a mistake doing the wrong thing and correct it, we become wronger.” (Russell Ackoff)

I’ve worked in a few companies over the years, both in the UK and NZ. One thing that I have noticed is what seems to happen with incentive schemes:

  • They start off as a supposedly great management idea to ‘motivate’ (!) employees to do better and are deliberately set up to be simple to understand and simple to operate;
  • After the first annual iteration, feedback is received about the incentive system and much is said about how it isn’t very fair (such as “how come he got a 4.3/5, yet my manager didn’t give anyone more than a 3” or “great, I get marked down for something I have absolutely NO control over” or….you can fill in the blanks!);
  • …so Human Resources are asked by management to go into redesign mode, make it more ‘sophisticated’ (read ‘complicated’), and release ‘Incentives 2.0’…which requires much effort to explain what has changed and why this now makes everything okay;
  • …and then next year yet more feedback is generated…which leads to yet more redesign. This redesign actually makes it;
    • more complicated – “how does it work again?”
    • more onerous – the need for evidence!
    • more inward focused – away from customer work; and
    • more difficult to explain and carry out;

This cycle continues until, if we were to allow ourselves the space to stand back, we would see an ‘industry’ of work surrounding the incentive mechanism, which most people intensely dislike* and mistrust.

* This isn’t a dislike of the eventual monetary reward, but of the game to be played to get there.

A sure sign of reaching such a state is when you see:

  • Fancy presentations/ brochures, and drop-in clinics/ help lines to explain the process;
  • A frenzied state of panic when ‘performance review’ time comes around (with managers ‘in town’ to judge you);
  • Corridor banter discussing what’s happening (“have you been ‘done’ yet?; what evidence did you gather?; if you scratch my back, I’ll scratch yours; how did it go”…again, I’m sure you can complete);
  • Management then having to perform meetings to compare/ contrast and ‘normalise’ the data…“so that it’s all fair”;
  • A feeling of resignation by the employees of “I’m not interested in what I get anymore….just as long as it’s about 66%, I can’t be bothered any further”;
  • Yet more corridor banter discussing who got what, how they feel and what they are going to do about it!;
  • De-motivated employees, instead of the intended motivation;
  •  …and, finally, HR asking for feedback on the process so that “we can make it even better next year!”

There is no ‘perfect incentive scheme’. You can’t keep going until you’ve ‘solved it’ simply for the fundamental fact that contingent rewards drive the wrong behaviours.

So, what am I saying – no money?

Absolutely not! I believe that we should all share in the success of our organisation. But contingent rewards are not the way to go about it.

Now, you may respond with “but that’s what our people are used to…we can’t take it away from them now!” I put forward the following quote:

“No matter how long you have been on the wrong road, turn back.” (Anonymous)

I could put forward a ‘share in the success of our organisation’ method…but that’s not the point. There will be many ways to do this…but first we need to see the need for, and accept, a change in direction.

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Which pill is it?

red-pill-blue-pillAt the end of the ‘Improvement through Systems Thinking’ course I run, I facilitate a conversation about going back out into the real world. I use the ‘blue pill/ red pill’ Matrix analogy.

I got talking with one of my previous course attendees the other day…and neither of us knew whether it was blue or red we should be taking!…so, after looking up the script (thanks H)…here it is:

“You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.”

Just to confirm (in case you weren’t sure), I took the red pill some years ago!

We got to reading a few more quotes and, wow, I’d forgotten what a classic film that is, and how cool some of the quotes are.

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In respect of normative change:

“Sooner or later you’re going to realize just as I did that there’s a difference between knowing the path and walking the path.”

“I’m trying to free your mind, Neo. But I can only show you the door. You’re the one that has to walk through it.”

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On the dominant command-and-control management system:

“The Matrix is a system, Neo. That system is our enemy. But when you’re inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system…you have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.”

Now, I’m not suggesting that corporate life and the matrix are directly comparable but I hope you see the well meaning intent in the comparison.

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And, finally, on showing people the reality of their command-and-control system, and helping them move towards a better (systems thinking) place:

“I know you’re out there. I can feel you now. I know that you’re afraid… you’re afraid of us. You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin. I’m going to hang up this phone, and then I’m going to show these people what you don’t want them to see. I’m going to show them a world without you. A world without rules and controls, without borders or boundaries. A world where anything is possible. Where we go from there is a choice I leave to you.”

The ‘you’ in the above being the dominant command-and-control management system rather than any individual within.

Great film. Great quotes.

Harmony or cacophony

One more time…what is a system?

In the wonderful YouTube clip called ‘If Russ Ackoff had given a TED talk’ (from way back in 1994), we get a really clear explanation about what a system is and, more importantly, why this matters!

A recap from W. Edwards Deming:

“A system is a network of interdependent components that work together to try to accomplish the aim [purpose] of the system.”

“If the various components of an organisation are all optimised, the organisation will not be. If the whole is optimised, the components will not be.”

Dr Deming used to use the example of an orchestra to illustrate this point.

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  • A fine orchestra (the system) is highly interdependent;
  • The musicians (the components) are not there to stand out to the listener in a ‘look at me and what I can do’ manner…can you imagine the outcome of performance incentives – each musician being rewarded for playing faster and louder than the others! Such incentives are the source of cacophony that destroys value;
  • The musicians are there to support each other, to achieve the harmony that comes from the interaction of their specialised instruments adhering to the same fundamental rhythm, towards the same aim;
  • They are usually not ‘the best’ players in the country. They work as a team under the leadership of the conductor.

Another way of looking at this is that someone focused on the ‘efficiency’ of the orchestra would find them very inefficient – some of them are just sitting there waiting, tapping their feet! If the efficiency specialist would have their way, all the musicians would be playing all their instruments all the time!

Note that Deming considered a business to be even more interdependent than an orchestra and that, without real teamwork across the components, chaos is rampant.

It has been said that command-and-control companies get ordinary results after extensively searching, and fighting, for the limited supply of extra-ordinary people (what was coined as ‘the war for talent’ by McKinsey) whilst the likes of Toyota (and other ‘Systems thinking’ organisations) consistently obtain extraordinary results from ordinary people.

The point is that it is about optimising the system, not its components…and, to do this, we need to understand the obstacles that our current management system puts in the way and replace them with something better!

Anointing heroes

super-heroDr Deming’s red bead experiment simply yet brilliantly shows that, when we rate and rank people, we are mostly rating and ranking the effect of the system on the people.

“Apparent performance is actually attributable mostly to the system that the individual works in, not to the individual…the so-called merit system introduces conflict between people and destroys co-operation. Emphasis goes to achievement of rank, merit, not on the work…judging a person, putting them into slots, does not help them to do a better job.” (Deming)

To illustrate this point – compare two people performing two different roles:

  • If you give me a job (let’s say focused 100% on ‘improvement’) in which I can look good and am enabled to help people then, guess what, I’ll be their hero;
  • If you give me a job in which I have to ‘shovel the proverbial sh1t’ (let’s say as an over stretched ‘worker’ being asked to achieve the impossible) then, guess what, I will hardly be noticed….unless I’m not making my arbitrarily-set numerical activity targets…in which case I will be dealing with even more pain.

…who’s the real hero?!

I think anointing certain people as heroes because of what the system enabled them to achieve is a very unhealthy practise (for the supposed heroes’ and for the rest).

After explaining to a colleague how ‘the system’ has a huge influence over what someone can achieve, she made a really great ‘aha’ comment back to me:

It goes something like this:

“…that explains why I couldn’t work out whether that project manager working for me was any good!    

  • on one project he was superb: great communications, fantastic results on time/ within budget etc.
  • on another project he seemed terrible: nothing was going right, completely off track and seemingly no ability to do anything about it.

I now understand that I was judging him when, in fact, I should have been considering what the system was allowing him to achieve – the first project had a clear sponsor and much backing, the second project was an organisational orphan with difficult people and many historic issues, a virtual hospital pass!”

I am a mathematician at heart and Dr Deming used a wonderful formula to explain the above…bear with me:

  • Let x be the contribution of an individual
  • Let y(x) be the effect of the system on his/ her performance
  • Finally, let’s suppose we could measure the complete result of a person’s performance – a dubious idea in itself….but for the sake of this post, let’s suppose we have a number for his/ her apparent performance, such as 8 mistakes in the year or sales of $800,000.

Then we have the equation        x + y(x) = 8

(i.e. the individual’s contribution combined with what the system enabled him/ her to accomplish will determine the outcome s/he can achieve)

Deming goes on to explain

“To rate the individual we need to know x. Unfortunately, there are two unknowns and only one equation. Johnny in the sixth grade knows that no one can solve this equation for x.

Yet people that use the merit system think that they are solving it for x. They ignore the other term y(x), which is predominant.”

Now, a standard response to the above from people working in a command-and-control system is as follows:

“…but some people really are rubbish and/or lazy… and the above allows them to use the ‘it’s the system’ thing as an excuse!”

A couple of thoughts back:

  • If someone isn’t capable of performing the role they are being asked to perform, then:
    • are we failing to develop them into this role? or, if we’ve (truly) done what we can here;
    • have we incorrectly put them into this role?
  •  If someone hasn’t got any interest in their role, then:
    • has this been ‘beaten out of them’ by the system? (a very common reality) or, if not;
    • have we misunderstood or, worse, not (properly) considered what motivates this person?

Rating and ranking them ignores and hides the above. It tries to make it their problem….but who is responsible for the environment in which they work?

The difference between…

tree+bookA short and, hopefully, light hearted post for you:

For those of you who have been on an improvement course with me you will know that I start off by saying that it isn’t a training course, it is about education (with the same being true about this blog).

I use Deming’s quote of:

“We’re not here to learn skills; we’re here for education – to learn theory.”

If you are uncertain about the difference between training (learning skills) and education then I think Alfie Kohn (leading education psychologist) makes the distinction  really clear with the following:

“Would you want your kids to be provided with Sex Training or Sex Education?”

…I don’t think I need to say anymore to explain that!

Too busy to improve?!

Buisness_Man_AQIf you are interested in improvement, and you love stuff being explained using Lego (I do!) then Hakan Forss is your man!

Hakan is a Lean/Agile coach in Sweden and runs a blog using Lego to get his thinking across.

Now there are many of his posts worthy of sharing but, for starters, here’s a short but great one about improvement called ‘are you too busy to improve’.

…now that you’ve read that, and had a good chuckle at his Lego examples (the first picture needs to be a poster on all organisations’ walls!), I summarise what I see as the key points:

  • we shouldn’t be planning for 100% utilisation of our people (or anything near to this). The two primary reasons for this are:
    • demand is variable and the closer to 100% utilisation we are at then the worse our ability to cope with this variety (i.e. the longer our queues will be, the more frustrated our customers will be, the more our potential customers will go elsewhere)
    • we want our people to have time to see the defects, consider their causes, experiment with improvement and improve the current method (and associated standard)…which will free up capacity!
  • improvement should be part of the daily work, not seen as a separate parallel activity that people get ‘assigned to’. The process owner (with his/her process performers) should be constantly gardening the process, not waiting for some saviour project to come along and ‘solve’ all our known problems in one big “transformational” batch.

A caveat:

If you read this and think “we need to set some objectives regarding being too busy, agree on some metrics, set some targets and then measure people’s performance against these”…then you will be creating a great deal of waste (requiring more capacity*), likely distort your knowledge of what is happening (i.e. what is being reported will not be reality) and generally head in the wrong direction.

* capacity will be used in time spent on objective setting, performance appraisals, rating/ ranking…and (perhaps) the four-fold time spent preparing for and then ‘debating’ each of these with our managers and then informally yet emotively ‘discussing’ (polite word used) with our peers…and then carefully crafting management communications to ‘explain’ their judgements upon people.

Everybody’s talking about it…

5366I am amazed (amused?) about how often ‘Purpose’ (or other such words) is being put forward at the moment as THE thing, and from just about every management thinker/ business article I am coming across.

Examples are:

  • John Seddon’s ‘Purpose, from the customer’s point of view’
  • Simon Sinek’s ‘Start with why’ to inspire others
  • Clayton Christensen’s ‘Job to be done’… the higher purpose – the human need you are trying to fulfil
  • Aaron Dignan’s ‘Purpose as the no. 1 element’ of an organisation’s operating model, with everything else (process, product, people) nested within

 …and on and on

I am absolutely sold that it should be all about purpose…and I would expect that you are as well…but why does this obvious point need to be said?

Note that the aim of the system (which, to be clear, “should always relate to a better life for everyone”) was THE starting point for W. Edwards Deming i.e. there is nothing really new in this…and the fact that it is being constantly re-stated and re-framed suggests that we don’t properly understand the underlying point!

Are we stating the obvious (again) and then just paying it lip service? What does it actually mean to be focused on purpose?

I went looking for the purpose statement of the company I work for when I was writing a course recently and was really pleased to come across a crisp, clear and (to me) totally relevant purpose statement on our intranet.

It set out the purpose of our two primary value streams. It’s worth reflecting that it doesn’t talk about the method or the results…just why we are here:

  • it’s not about selling things or retaining business;
  • it’s not about market share or size;
  • it’s not about leakage, efficiency ratios or returns on investment
  • it’s not about awards, bonuses and other carrot dangling;
  • it’s not about the rating and ranking of our people;
  • it’s not actually about customer advocacy scores…though some valid (and undistorted) capability measures of satisfaction levels would provide an indication as to how we are doing against our purpose in the eyes of the customer.

If an organisation has a purpose, but is struggling to move towards it, then we might question why this is so. Note that a command-and-control management system replaces the actual purpose of ‘serve customer’ (as generically written) with the de facto purpose of ‘make targets’…which end ups clashing with/ defeating the actual purpose.

I believe that I would struggle to find the well-written purpose statement being actively/ obviously used within the business: to manage our two primary value streams, to guide and challenge our decisions, to measure our capability against.

Instead, I see a lot that is used to command-and-control the method within. We shouldn’t have to re-state our purpose, we shouldn’t have to chase new ways of saying the same thing….our purpose should be within our DNA!

We need our management system to enable our people to be motivated by this purpose, not frustrate them.

Command-and control constrains. Being truly focused on purpose liberates method!

As a final thought, you might ask ‘so what if a business is clear on its purpose and has a management system that allows people to continuously work towards it…what about me?!’

To tie organisational purpose back to us as human beings, note that Victor Frankl wrote in his classic book ‘Man’s search for meaning’:

“The greatest need of the human being is for a sense of meaning and purpose in life”

If an organisation states its purpose clearly (a good start) but then pays it lip service, it is missing out on the phenomenal potential of providing its people with meaning in their work….imagine what could be achieved if all your people (and you) wanted to come to work, not for the money, but for themselves!