“I hear what you say…but I don’t want to change my world”

Upton Sinclair quoteSo, for this post, I’m going to use a ‘true story’ as explained by Daniel Kahneman in his mind-bending book ‘Thinking fast and slow’.

(Kahneman is a Nobel prize winning giant in the field of human psychology and I will be adding him to my group of giants soon).

Some years ago, Kahneman was invited to speak at an investment firm whose advisors provide financial advice to wealthy clients. I can almost hear them shouting “buy, sell…buy” across the trading floor.

Pre-meeting preparation.

Kahneman asked the firm’s executives for some data so that he could prepare for the talk he was due to give.

He was provided with a spreadsheet containing the investment outcomes of 25 of the firm’s advisors, for each of 8 consecutive years. No names, just anonymous identifiers.

The firm used the investment outcome success of each advisor as the main determinant of their (potentially large) year-end bonus.

…so what was Kahneman interested in understanding about this data set? And what did he do to interrogate it?

His thinking: That investment outcomes will be a combination of skill (on the part of the advisor) and luck1

His question: How much of the outcome in this ‘providing expert investment advice’ work was down to skill and how much to luck?

How to determine the answer: Kahneman was interested in understanding whether any apparent differences in skill were persistent i.e. did the same adviser consistently achieve better (or worse) returns year on year?

postive corelation pictureTo work this out he calculated the correlation coefficients2 between the advisor rankings in each pair of years: year 1 with year 2, year 1 with year 3….all the way along to year 7 with year 8. This gave him 28 correlation coefficients from which to calculate the average.

  • An average score close to 1 would mean that it was a very highly skilled job and the best (and worst) advisors were easy to identify – in this scenario, luck plays virtually no part;
  • A score midway between 0 and 1 would mean that skill mattered a bit but that luck also had a huge part to play.
  • Anything nearing 0 would mean that it was really just about luck.

So what were his findings and what does this mean?

Drum roll…he was surprised to find that the score was…0.01 or put more simply ‘zero’.

In Kahneman’s words “The consistent correlations that would indicate differences in skill were not found. The result resembled what you would expect from a dice-rolling contest, not a game of skill.”

Clarification: Just in case you are thinking “hey, that’s just one set of data. He got lucky!”…Kahneman knew roughly what he was going to uncover because this ‘person or system’ type analysis has been done many times by many people. He knew the theory and the evidence….he expected it to be low but he didn’t expect it to be soooo close to zero!

So what happened next?

Well, he ended up having dinner with the investment firm’s executives the night before he was due to give his talk.

He explained the question he had asked of the data they had provided to him and asked them to guess the year-to-year correlation in the rankings of their advisers.

The executives (being intelligent and self-protecting people) thought they knew what was coming and calmly accepted that performance certainly fluctuates and, yes, there was an element of luck…however, none of them expected the average correlation to be zero.

Kahneman gave them the clear message that “the firm was rewarding luck as if it were skill”.

This should have been a major shock, but it created no great stir…they calmly went on with dinner as if nothing of note had been said.

Kahneman goes on to write about The illusion of skill: Facts that challenge such basic assumptions – and thereby threaten people’s livelihood and self-esteem – are simply not absorbed….people consistently ignore statistical studies of performance when it clashes with their personal impressions from experience.”

Why write this post?

There are two key points within the case above:

The first is that Kahneman’s story is an (extreme) example of the system vs. the individual. Yes, some people may be outstanding but a great deal of ‘performance’ can only be ascribed to the system in which they operate. (You might perhaps take note that investment advice is little more than a game of chance.)

But perhaps the second (and main) point is clearly expressed in the phrase “I don’t want to change my world”. The executives may very well accept ‘the maths’ and the conclusion…but that doesn’t mean they are about to change anything.

Consider that executives are probably also on a (larger) bonus structure which will have a similarly dubious rationale. We can expect little change unless and until those ‘at the top’ of an organisation understand, agree and want it.

People (such as me) can bang on about performance reviews and contingent rewards, providing ever increasing evidence and logic…yet (and this is an open question) what will cause a change?

1 This is another way of stating Deming’s x + y(x) = the result equation. i.e. the result is partly down to the person and a large part down to the system in which they operate (which is simply luck from the person’s perspective).

2 A correlation coefficient (usually denoted with the letter R) is a statistical measure of the strength of the relationship between two sets of data.

Correlation coefs

R = 1 means that the two sets of data are a perfect positive fit.

R = -1 indicates a perfect negative fit

R = 0 indicates that there is no relationship i.e. any relationship is purely random.

A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally described as weak. 

 

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I’m just a spanner!

spannerSo there’s a TV programme that I love called ‘How it’s made’. It takes the viewer through the manufacturing journey of a unit of production. An episode might focus on something small, like making a can of fizzy drink. Another episode might focus on something HUGE, like building a cruise ship…but there is a similarity within.

The other day I watched an episode that showed how a spanner was made (a ‘combination wrench’ if we are being techy). Watch it here (it’s only 5 mins).

Once you’ve watched it, I’d ask you to put yourself in the place of one of those wonderful spanners (call yourself Sammy if you like and have a think about yourself)….I did, and here’s what I thought:

“I’m just a spanner….

  • I don’t have a brain
  • I’m not purposeful – I just ‘am’
  • I don’t have a genetic make-up passed on to me – I don’t have a mum and dad!
  • I have no memory of my past experiences from which to form opinions
  • I’m not capable of emotion
  • I can’t respond to things that happen to me or make choices for myself

In short: I cannot think or communicate, which is ironic given that I appear to be writing this post J.

Further, all of this is relatively static – it doesn’t change over time…other than perhaps the ever-so-slow process of entropy as I likely corrode.

…and so, given this I really don’t mind that:

  • my destiny (to be ‘that spanner’) is predetermined for me, and completely specified ‘up front’ by my makers…without any input from me;
  • there is nothing unique/ special about me: I am treated exactly the same as every other ‘standardised’ spanner;
  • I am bundled together with other spanners in convenient batches as and when my makers see fit;
  • I am passed from process to process as my makers determine, for their benefit;
  • I sit around (in piles) waiting for when the next process is ready for me
    • which may be days or even weeks…in fact whenever my makers wish
    • …and nothing really happens to me whilst I am waiting
  • …and so on

Each process knows exactly what it is getting from the last one and knows exactly what to do (e.g. I will arrive at process ‘x’ as a blank and I will then have a hole stamped through me, ready for process ‘y’)

It doesn’t really matter what mood each worker on my production line is in, how they are presented…even what language they speak or views they hold. They will ‘process me’ and move on with their lives!

This arrangement may very well work out just fine for our Sammy the spanner…but now let’s turn our attention to service organisations (and service value streams):

If you go back to the monologue above and substituted a customer into the role of our hero, the spanner, you would find that all is most definitely NOT okay! Go on, take a short minute to do it – it’s a good exercise in realising how and why service and manufacturing are VERY different.

Treating customers as brain-less, purpose-less, emotion-less and lacking in memory is not recommended. “Fine”  I hear you say ”….we’d never do that!”

But, now consider whether many (most?) service organisations:

  • attempt to standardise customers into a service ‘straight jacket’;
  • pass customers through rigid pre-defined processes (e.g. from front office to back office; through vertical silos of order taking – assessment – solution – payment and closure…and then ‘after care’)
  • juggle customers between multiple members of staff (with no-one really taking responsibility);
  • put customers into queues to process at the service’s convenience (perhaps using computers to elicit ‘data attributes to classify, sort, prioritise and schedule’*)
  • treat the customer’s time and effort as free; and
  • decide when the customer’s need has been fulfilled (rather than allow the customer to determine this for themselves)

* If that sounds awfully boring and techy, it’s meant to because that’s what computers are good at – algorithms, not people.

Now, you might yawn and say “Steve, you are on your ‘service is different’ band wagon again” and you’d be right! You might even point me at some posts that I have already written in a similar vein.

But the fact is that every single day we, as customers, experience service organisations treating us more like a spanner than a person. This likely causes huge frustration, failure demand and negativity towards the service being experienced.

I want a service organisation to understand:

Many a service has gone down the wrong path. It is time for them to wake up…

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

Do you sometimes feel like you are being treated like a spanner instead of a customer?

Conversely, if you work in a service organisation (or service value stream), what do you think your customers feel like?

A final reflection:

It’s worth considering the following quote: “In service, the best hand-off is no hand-off.”

I’m not saying that this is necessarily achievable…it’s more of a challenge towards which we should be pointing. At its most basic it is a sobering antidote to all those out there running in the other direction whilst chanting the ‘standardise and specialise’ mantra.

Getting Away from Pyramid Selling

Mgmt pyramidSo I wrote my recent ‘Farmers and Facilitation’ post on who should be promoted and why…but that wasn’t the end of it. Here’s ‘Part 2’:

Rethinking the ‘Promotion’ idea

Not everyone can ‘get to the top’. In fact hardly anyone can! Yet many (most?) of us spend our working lives striving to reach the next rung of the ladder…and then find ourselves eyeing the next one. It’s a bit like a pyramid selling scam!

As ever, Alfie Kohn has some interesting things to say:

“In thinking about promotion, we take for granted that an organisation must be shaped like a pyramid, with many people clamouring for a very few desirable and lucrative jobs at the top, as if this arrangement had been decreed by God. In fact, both how many such positions are available and how many people want them are the result of institutional decisions.

We create a climate in which employees are made to feel like failures if they are not upwardly mobile, and we arrange the majority of jobs so that those who hold them are given very little money and responsibility. Were these things to change, the competitive scramble for promotions might be eased and we would be obliged to rethink the whole issue of who does what in an organisation.”

Kohn is challenging us to think differently…so let’s have a go at this by winding back to what’s happening in our brains:

‘Threat and Reward’ response

One of the core areas of research on the brain has understandably been about threat vs. reward. The Neuroscientist Evian Gordon refers to this “minimise danger, maximise reward response” as “the fundamental organising principle of the brain.”

The ‘Neuro-Leadership’ scientist David Rock explains that the threat response “is mentally taxing and deadly to the productivity of a person…[the threat response] impairs analytical thinking, creative insight and problem solving.” …and so it would be a very good idea to understand and avoid triggering our threat response1..

Rock explains a set of five social qualities that enable employees and executives alike to minimise the threat response and instead enable the [intrinsic] reward response.

These five qualities are: status, certainty, autonomy, relatedness, and fairness. I expect you will understand, and concur with these basic human desires.

Status

For the purposes of this post, I’m looking at the status social quality:

“As humans, we are constantly assessing how social encounters either enhance or diminish our status. Research shows that when people realise that they might compare unfavourably to someone else, the threat response kicks in…we are biologically programmed to care about status because it favours our survival.”

David Rock goes on to observe that “organisations often assume that the only way to raise an employee’s status is to award a promotion.”

Here’s the punch line: it isn’t that we want promotion as such – we want what we think promotion implies – we want a feeling of status.

Personally, I couldn’t care less what title you give me* or how many people ‘report to me’ or how long I’ve been in my current position…but I understand and accept that (as a human being) I care about status just like the next person.

(* as long as it is logical and isn’t derogatory!)

So, if the number of management positions is (and always will be) limited AND it isn’t actually about promotion…then what can we do/ how can we act to look after everyone’s feeling of status?

I don’t (and shouldn’t) have a perfect answer for this…but some starters for ten are that our perceptions of status increase when:

  • We have meaningful work to perform (because it aligns to a purpose that we care about2.);
  • The organisation demonstrably values the role we play (which implies that the work we are doing is fully understood and that we feel valued, included and listened to by those put in place to manage us);
  • We constantly master new skills3. (where we have a degree of freedom as to what these might be, and where they take us)
  • …and these new skills are then used in yet more meaningful work….and back round the virtuous circle.

If I am doing meaningful work (to me and the organisation), I am constantly growing as a person and I am being suitably valued then I’ll be fully engaged and pretty damn happy with things.

This now links nicely back to ‘part 1’ : If I am able to self-develop then perhaps I have achieved the first step of eligibility for promotion.

Some final comments from David Rock to close:

Value has a strong impact on status. An organisation that appears to value money and rank more than a basic sense of respect for all employees will stimulate threat responses among employees who aren’t at the top of the heap.

Similarly, organisations that try to pit people against one another on the theory that it will make them work harder reinforce the idea that there are only winners and losers, which undermines the standing of people below the top 10 percent.”

In short: The practises of judging people and making them compete with each other aren’t going to help!

To conclude:

If ‘status’ in an organisation is all about your position within a hierarchy then this creates a limited and circular line of thinking, within management and employees, whereby promotion is the aim (rather than a responsibility).

Rather than spending our time talking to everyone about transparent promotion paths and career development “so you too can get to the top”, let’s spend it ensuring that everyone has a feeling of status.

A healthy feeling of status should be attainable by everybody in every position. Whether this is the case will depend upon the management system in place, and the resultant environment that it produces.

“Um, okay Steve…but I still want promotion to look good’

A personal thought: For those of you comparing yourself to those around you (at work, family, friends, and connections), here are a few lines from one of my favourite song lyrics:

“Sometimes you’re ahead, sometimes you’re behind
The race is long and in the end, it’s only with yourself”

(Baz Luhrmann – Sunscreen)

Notes:

  1. It is worth noting that ‘Performance reviews’ provoke the threat response because the person ‘passing judgement over us’ puts us on the defensive and appears, to us, to be claiming superiority over us. We find ourselves fighting for survival.
  2. I suspect that a really good ‘test’ of the meaningfulness of work to you is how you feel when someone outside of your working life (say your partner, children, family or friends) asks you what you do. Is it painful or easy to respond?!
  3. David Rock notes that “paying employees for the skills they have acquired, rather than for their seniority, is a status booster in itself. This is a very different logic to ‘incentive pay’.

Farmers and Facilitation

FarmerI’ve been meaning to write a post about promotion (into, and through the hierarchy of management) for a while now…it’s taken me a bit to frame it. Here’s ‘part 1’:

Before considering promotion we should ask ourselves…

What is the work of management?

A great deal has been written on this question. Womack’s essay ‘The work of management’ gives us an all too familiar view as to what management actually means in practice:

“Most managers I observe spend most of their time with incidental work – box ticking, meetings that reach no actionable conclusions, report writing, personnel reviews that don’t develop personnel, etc. And in the time left over they do rework. By the latter I mean the fire fighting to get things back on course as processes malfunction. Most managers seem to believe that this is their ‘real’ work and their highest value to their organisation.”

Is this what we actually want our managers to be doing? Does this create value or is it just about survival?

Who do we hire/ promote into management?

In another of his essays, ‘Fewer Heroes, More Farmers’, Womack explains that when he asked a Command & Control CEO at a very large American Corporation about his management hiring/ promotion logic he got the following in reply: “I search for heroic leaders to galvanize my business units. I give them metrics to meet quickly. When they meet them they are richly rewarded. When they don’t, I find new leaders.”

Womack went on to ask this CEO, given the very high level of turnover of his business unit heads, “why does your company need so many heroes? Why don’t your businesses consistently perform at a high level so that no new leaders are needed? And why do even your apparently successful leaders keep moving on?”

He got the usual answers in reply: “business is tough, leadership is the critical scarce resource, and that a lot of turnover indicates a dynamic management culture.”

…and yet such businesses preside over:

  • A confusion as to its purpose (a mismatch between what is stated and reality);
  • The constant rolling out of the latest ‘revitalising’ programme from the top;
  • Poorly performing processes, that tend to get worse instead of better;
  • Dispirited people operating these broken processes at every level of the organisation; with
  • Mini-heroes everywhere devising workarounds.

Rather than heroes, Womack suggests that we need farmers whose role is to steadily tend every important process, continually asking three simple questions:

  1. Is the business purpose of the process [in the eyes of the customer] correctly defined? [and Seddon would add ‘is its capability measured?’]
  2. Is action steadily being taken to create value, flow and pull in every step of the process while taking out waste?
  3. Are all of the people touching the process actively engaged in making it better?

“This is the gemba mentality of the farmer who, year after year, plows a straight furrow, mends the fence and obsesses about the weather, even as the heroic pioneer or hunter who originally cleared the land moves on.

Why do we have so many heroes and so few farmers, and such poor results in most of our organisations? Because we’re blind to the simple fact that business heroes usually fail to transform businesses. They create short-term improvement, at least on the official metrics. But these gains either aren’t real or they can’t be sustained because no farmers are put in place to tend the fields. Wisely, these heroes move on before this becomes apparent.

Meanwhile, we are equally blind to the critical contribution of the farmers who should be our heroes. These are the folks who provide the steady-paced continuity at the core of every lean enterprise”.

Now, after reading the above back to myself, I can feel a back lash from the current cool management buzz of ‘everything today is about innovation!’…as in “but the world is ever changing Steve! We can’t just rely on Continuous Improvement – we’ve got to constantly reinvent ourselves or else we will get left behind!”

I agree! What is written above isn’t confined to making small step changes and doesn’t constrain discontinuous (breakthrough) improvements. Womack’s 3 questions equally apply for the seeds of innovation to blossom within a healthy working environment.

Conversely, hero management with financial targets and contingent rewards can seriously damage the chances of true and meaningful innovation from happening. (Both Alfie Kohn and Dan Pink explain the research showing the harm that incentives do to innovation).

If your purpose is clear and everyone is working together towards it (not towards individual targets) then you will likely alternate between many small steps and infrequent leaps as new ideas and technologies come along and existing ones are steadily improved.

Who should we want as our managers?

“The greatness in people comes out only when they are led by great leaders” (Akio Toyoda)

Liker, in his excellent book ‘The Toyota Way to Lean Leadership’, explains Toyota’s leadership development model. He explains it in four building blocks:

(Note: whilst I am mixing the words ‘leader’ and ‘manager’, there is a big difference between them. Please reflect on Confusion over two words)

First, to be considered for leadership, a person has to be committed to self-development i.e. to constantly seek to improve themselves and their skills. This is enabled and assessed by those ahead1 of them providing suitable challenges, space and coaching to allow self-development to occur.

Clarification: You may have years of experience and/or rolls of qualifications…but this doesn’t demonstrate that you have, or can, self-develop:

“What is often mistaken for 20 years’ experience is just 1 year’s experience repeated 20 times” (Source unknown)

Not everyone will be up for self-development2. Clearly, Toyota are looking for those who can and want to grow. This is in stark contrast to organisations that want merely to bring in people from outside to ‘implement here what they have done to people elsewhere’ (but now appear to be running away from this!)

Second: Once a person has suitably demonstrated their ability and desire to self develop, then they need to show the development of others. To be clear: this does not mean merely coaching (supposedly) star performers or favourites (the ‘chosen few’)…it means developing everyone. In fact, your ability to develop someone where this appears challenging* is a sure sign of your development capabilities. Liker uses the Toyota quote that “the best measure of a leader’s success is what is accomplished by those they trained3.” It’s not about what you can do; it’s about what they can now do because of you (even though they may not comprehend this link).

(*The greatest case study I know of this is what Toyota achieved at NUMMI with ex-GM employees who were considered the worst of the worst. They re-hired them and turned them into the best. The problem wasn’t a shortage of talent, as we are so often led to believe, but an inability to engage and develop the talents lying dormant within people).

Third: So you are a self-developer and can develop others. It now becomes about your ability to enable daily improvement – facilitating groups of people through constant improvement: being a farmer as described above.

The focus is not on attempting to force improvement (top down) but in enabling, encouraging and coaching improvement from the bottom up.

Clarification: This is NOT about that ’empowerment’ word!

…and, finally, Fourth: It is now about ensuring that the right big-picture challenges are set, pursued and accomplished by the people and, in so doing, that this causes much experimentation, reflection and learning.

None of this leadership development logic is about being promoted because you are the best at performing your current job or that you are a hardened ‘go get ’em’ management hero. All of it is about your ability to facilitate improvement through others.

Managers instead of Consultants

…this leads me to observe that many a ‘command and control’ manager brings in consultants (or ‘Black Belts’) to facilitate his/her team through the likes of a Kaizen/ Rapid Improvement Event.

  • Worse still, such facilitators often prefer that the manager isn’t involved in these improvement events (except as ‘statesman’ at the beginning and ‘rubber stamper’ at the end) because their presence would seriously hinder what the people can achieve.
  • To add insult to injury, such an absent manager has attempted to delegate their improvement responsibilities and thus finds themselves even further from the work (the gemba) and with new/ higher barriers between themselves and their people.

…owch! If this is the case (and, sadly, it often is) then this is a very poor state to be in.

At Toyota, facilitation of improvement is what their managers are for! And, rather than a week-long ‘point improvement’ event performed every (say) 6 months, this facilitation should be ongoing.

You might respond that “Nice idea Steve…but our managers don’t have very good facilitation skills. We need expert practitioners to come in”. And that is precisely why Toyota looks for those people within its ranks that have the potential as facilitators of improvement…and then develops them into leaders.

Rother makes clear that The primary task of Toyota’s managers and leaders does not revolve around improvement per se, but around increasing the improvement capability of people. That capability is what, in Toyota’s view, strengthens the company. Toyota’s managers and leaders develop people who in turn improve processes through the improvement kata [pattern].

Developing the improvement capability of people at Toyota is not relegated to the human resources or the training and development departments. It is part of every day’s work in every area…”

Sense-check: It may be that your current managers are (or could be) great facilitators. However, if they have to use a ‘command and control’ management system on their people then it is unlikely that such fantastic skills will get a chance to blossom and deliver the potential value within. Worse, their efforts will likely clash with all that commanding and controlling going on.

Next time you feel the need to bring in facilitators, reflect on why. Is it because your managers:

  • don’t have the capability? or
  • do have the potential, but are constrained by the management system that they are required to operate within?

If your answer is a), then develop them. If it’s b), you have far bigger fish to fry…but don’t let this stop you from doing anything – remember the Two Parallel Tracks.

______________________________________________________________________

To close:

  • this post (Part 1) considers who we should be promoting, and why;
  • Part 2 will turn this all on its head and question the promotion career ladder logic. In short: we can’t all ‘get to the top’ and neither should we all want to.

Notes:

  1. Ahead: I use the word ‘ahead’ rather than ‘above because I’d like the reader to get out of a ‘superiors in the hierarchy’ mindset and, instead, think about people who happen to have been promoted to more senior positions because they are more advanced on this leadership development journey. This is merely a matter of timing, rather than importance.
  2. Fixed vs. Growth mindset: Professor Carol Dweck’s research suggests that we can judge how good people will be at learning new skills – our capacity to learn is determined by our beliefs as to whether our abilities are innate or can be learned. Dweck suggests a continuum with two extremes: A Fixed mindset and a Growth mindset. Don’t despair of those already in leadership positions that appear to have ‘fixed’ mindsets. This may very well be down to the environment in which they work (and have always worked) within. The important bit is to assess them once their environment is changed to encourage self-development and growth.
  3. Trained: the use of the ‘trained’ word in this quote applies to its meaning as is used in sport. Rother notes that “The concept of training in sports is quite different from what ‘training’ has come to mean in our companies. In sport it means repeatedly practicing an actual activity under the guidance of a coach. That kind of training, if applied as part of an overall strategy to develop new behaviour patterns is effective for changing behaviours.”