Our evidence-based management website has been up for a week, and thanks largely to the hard work by Daphne Chang and Paul Reist at the Stanford Graduate School of Buinsess Library, a lot of new content has been added. We have a guest column posted by past Academy of Management President Denise Rousseau, who has written two recent articles on evidence-based management and gave her presidential address last year ont he subject. We will add a new column every week or so, and are expecting contribtions from people including Michael Dearing, a former eBay marketing executive (and now Associate Consulting Professor in Stanford d.school) and Iowa Sociology Professor Michael Lovaglia — you may recall my blog about Lovaglia’s Law . There are also quite a few new articles and news updates. Please visit and make comments and suggestions as the site is brand new.
Author: supermoxie
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STVP Podcasts Closing in on 500,000 Downloads
I
recently reported that the Stanford Technology Ventures Program was ranked #1
for podcast downloads on iTunes. I
was curious what that meant in terms of numbers and asked Forrest Glick, the
STVP web guru, what this meant. I was pleased to hear that my Weird
Ideas That Work podcast was now
over 11,000 (11,645), but stunned to hear that STVP’s total number of podcast
downloads was over 400,000 (438,095). This is as testimony to the both the
foresight and hard work put in by Forrest, Tina Seelig, and many others at
STVP, who started talking about the potential of podcasts for higher education
a couple years ago, when iPods were just becoming popular. -
Why Organizations Suffer from the Otis Redding Problem
I exchanged emails with a manager I know today who
was concerned that her company might be heading toward the Otis
Redding Problem in its compensation system. As I said in my post last week, “ We call this The
Otis Redding Problem. Recall the line from his old song: Sitting By the Dock of the Bay,
“Can’t do what ten people tell me to do, so I guess I’ll remain the same.”
That’s the problem with holding people, groups, or businesses to too many
metrics: They can’t satisfy or even think about all of them at once, so they
end-up doing what they want or the one or two things they believe are important
or that will bring them rewards (regardless of senior management’s strategic
intent).”There are lots of reasons that this problem happens
in organizations, but – at least based on those I’ve studied and worked with –
four jump-out:1. There are too many groups that have medium power
– so everyone gets a metric to show that what they do is important, but no one
has the power to kill a metric.2. Senior management does not understand its
strategy, especially is strategic priorities. So they treat everything as
moderately important – the result is that employees can justify virtually
anything they do as important.3. Senior
management does not really understand what the organization’s actual business
model is or what it should be. This means that they can’t figure out the few
key elements that drive many things, so they keep adding more and more items to
the list in hopes that they will figure it out eventually.4. Senior management can’t say no. Even if they can articulate their priorities, senior
management lacks the courage to make enemies. So they cave-in when people act hurt or
threaten to leave the organization unless metrics are added that make them and
their kind look important. The result is that everyone ends-up being unhappy. At one organization I worked with, there was
endless argument over compensation because each general manager would focus on
the subset they performed well on and ignore those metrics where performed did
poorly. Everyone seemed to be #1 at something and everyone used that as
argument that they deserved more compensation.Leaders who lack such courage might recall the old
Bill Cosby quote:
“I don’t know the key to success, but the key to failure is trying to please
everybody.” Otis Redding’s solution was to “remain the
same” because he couldn’t please 10 different people. That is a rational
response to a bad system. Things get
even worse when you try to please everyone – at least Otis pleased himself! -
Joi Ito: Using World of Warcraft to Prototype New Organizational Forms
Diego Rodriguez has been telling me for about a year now that, as an organizational researcher, I needed to learn more about this amazing guy Joi Ito. I need to listen to Diego more closely. I just read an article about Joi in Strategy+Business called The Ambassador for the Next Economy. I was generally intrigued by both Joi’s life and how he lives it, but that part I am fascinated by is the work he is doing to use his World of Warcraft guild as a way of prototyping a better from of innovative organization.
I too have been struck by how inadequate the modern organizational form — which seems to stem partly from arbitrary traditions and the natural tendency for just about creatures to form steep hierarchies where those on top have all or nearly all the power. I’ve proposed solutions over the years that are pretty mundane when I see what Joi is doing. Here is what the article says in one place:
Long frustrated by the fairly conventional hierarchies in even the most
innovative technology companies, Mr. Ito says he sees in his Warcraft
guild a new way to organize, manage, and motivate people. With his
guild doubling in size every month, he does a lot of learning on the
fly. “Every week or so, I have to add a new rank, build a whole bunch
of new rules, and throw in kind of ad hoc structures,” Mr. Ito says.
“I’m playing with all the different kinds of management ideas I’ve had
for companies with a bunch of people who are actually very dedicated.
They will set their alarm clocks for 3 a.m. to run a raid of 40 people.
They are committed to each other like people in a normal company
wouldn’t be committed to each other. So as a test bed for these ideas,
this is actually pretty amazing.”On Friday, a group of us at the d.school were having a conversation about how you create a world where people can do rapid prototyping of a real organization, to learn quickly about variations of organizational form and its effects on performance and emotional engagement. There are some in-person simulation games that are pretty useful for learning such lessons. Starpower comes to mind. It is an instructive game that can be used to create a hierarchical world — in a matter of minutes — where the top dogs often become incredibly abusive of those at the bottom. But the way that Joi is doing it strikes me as far more powerful, and in fact, the structure of an online game is, increasingly, not just an analogy for how companies are organized, since more organizations are now spread throughout the world — and even when people work in the same building — people increasingly do everything over the web and phone.
So modern organizational life is increasingly an online game, but the modern organizational form hasn’t caught up yet. I know that Joi isn’t the only one using games and online communities as a place to prototype different organizational forms, and I would be curious to hear about others.
Finally, the other hint that I got that the web makes possible alternative forms that traditional theorists and consultants wouldn’t have imagined came when I gave a little talk at Mozilla earlier in the Summer. I’ve known John Lilly for years (he just moved to COO), and have had some conversations and listened to CEO Mitchell Baker and open source marketing maven Asa Dotzler now and then over the past year. But the difference didn’t really strike me until I gave a talk to the whole company. There was just 60 or so people in one room, and I realized that those few people were key nodes in a huge network that got many things done and yielded an enormous amount of power. Sure, they have some organizational problems at time. But my comment to Mitchell Baker was that I wasn’t surprised that they sometimes has management challenges (so do General Motors and Apple), but what surprised me as a career organizational researcher was that the organization not only exists, it continues to thrive by multiple effectiveness criteria — see Mitchell’s post positive reinforcement for creativity.
In short, following that old line in the Jimmy Buffett song, I tend to divide what I see into the world into two rough categories: Those things that are still a mystery to me, and those things that are much to clear. The question of how to identify and implement a better organizational form for innovation remains a mystery to me (although I think there are some good hints out there about the paths to travel down). In contrast, as you’ve heard me say, it is far too clear to me that too many organizations let too many assholes in the door, let them continue to abuse others, and even reward these creeps for their dirty deeds.
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The Otis Redding Problem
The strong reactions to Marge’s Asshole Management Metric not only got me thinking about the difficulties of managing nasty people (and the times when there might be a need for people to get nastier to defend themselves, an excellent if unfortunate point that Marge made), it started me thinking about metrics. I have also been thinking about metrics lately because one of my doctoral students has been struggling with the problem of how to measure the effectiveness of user-centered design practices.
Both Hard Facts and The Knowing-Doing Gap review a lot of research about metrics. I confess that wading through the "best practices" claims, theory, and evidence in this area isn’t easy. There is so much written and so many strong beliefs about how performance should be measured and how to motivate people (most unaffected by evidence) that figuring-out how to design an optimal measurement and incentive system is tough, perhaps impossible. We’ve even had compensation consultants tell us that it is such a great area to work in because clients always call you back for more work — because no matter what kind of system you help them design or that they install, it never works quite right.
I can’t claim to have any magic answers either (and don’t believe anyone who tells you they do, like the authors of Topgrading or The War for Talent). But there is one guideline that few companies follow, even though they nearly all know they should (there is a reason we wrote a book called The Knowing-Doing Gap): If you measure and reward people on too many different dimensions, they are pulled so many different different directions (since different criteria are often unrelated or negatively related), that it is simply impossible to adjust 10 — or in some cases — 100 diverse behaviors in response to the system. The result is that that your measurement system becomes useless or worse.
We call this The Otis Redding Problem. Recall the line from his old song: Sitting By the Dock of the Bay, “Can’t
do what ten people tell me to do, so I guess I’ll remain the same.” That’s the problem with holding people,
groups, or businesses to too many metrics: They can’t satisfy or even think about all of them at once, so
they end-up doing what they want or the one or two things they
believe are important or that will bring them rewards (regardless of senior management’s strategic intent). Yet many organizations fail to
implement this well-known and common sense principle.And the rise of balanced score cards –- which have
many virtues when done right -– have made this problem even worse. As we say in The
Knowing-Doing Gap “In principle, the balanced scorecard makes a great deal of
sense. Rather than just measuring and evaluating
managers on the financial performance of their units, which largely reflects
what has happened in the past, the scorecard emphasizes getting ready for the
future.” But one of the most common unintended side-effects is that people are assessed and rewarded with an absurdly long list of metrics. This happens because so many different groups in the organization want “their” metric to be
measured and linked to incentives and because the groups that design and implement these
systems (often in HR) often don’t have enough
power or will to say “no.” Although HR certainly doesn’t deserve all the blame. I once
went to a talk at Stanford where a supply chain consultant and his client
proudly announced they had just added their 100th metric to the
performance evaluation system (and this was just for supply chain performance). I gently asked the executive who was trying to use the system if it created problems and he admitted that it was confusing and he ended-up focusing on just one or two.Similarly, we describe another example of the Otis Redding problem in The
Knowing-Doing Gap:A Harard Business School Case study reported that branch managers at Citibank [now part of Ctigroup]faced the following scorecard measures in 1996:
Financial:
Revenue
Expense
Margin
Strategy Implementation:
Total households
New to bank households
Lost to bank households
Cross-sell, splits, mergers households
Retail asset balances
Market share
Customer Satisfaction
Control:
Audit
Legal/Regulatory
People:
Performance Management
Teamwork
Training/Development
Self
Other
Employee Satisfaction
Standards:
Leadership
Business Ethics/Integrity
Customer
Interaction/FocusCommunity Involvement
Contribution to Overall
BusinessEach component
of the Scorecard was scored independently into one of three ratingcategories: “below par,” “par,” or “above par”.
Pfeffer and I did an interview with a New York-based Citibank branch manager around that time — we met him because bank executives reported that
he was one of their best managers. The manager told us that, although it required a lot of time to
fill-out all the forms and go to all meetings held under the balanced score-card system, he viewed it as a flavor of the month. He described it as just another program that he had to pretend to care about until management tired of it and became enamored with the next fad (which he would have to pretend to care about as well). This manager also told us that – despite all of the hype from executives about the importance of the new balanced-score card system – he believed
that only one thing still mattered at the bank was generating short-term profits. So that
was what he focused on doing, which was why he was so highly regarded.Part of the problem was that he didn’t believe that management was committed to the system, because he had endured one internal program after another. But this program also wasn’t taken seriously because, when a system tries to measure and link rewards to everything, it means nothing because human beings can only think about and do so many things at once.
The upshot of all this is that I don’t know the secret to designing a successful performance management system
and I am not sure that anyone else does either. But I do know that if you fall
prey to the Otis Redding problem, your system is doomed to fail. -
Evidence-Based Management.com is Live
I am pleased to announced that www.evidence-basedmanagement.com went live earlier this week. Jeff Pfeffer and I have been working on this all summer with two fantastic librarians from the Stanford Business School, Daphne Chang and Paul Reist (see my post In Praise of Librarians) and the equally fantastic Ralph Maurer, a doctoral student in the Department of Management Science & Engineering who works with me at the Center for Work Technology and Organization.
The site contains information about what evidence-based management is,examples of evidence-based research and practice, a blog (which has a couple posts and will soon have more),links to information about evidence-based movements in other areas such as medicine and education and course outlines from faculty who are teaching management courses that take an evidence-based management perspective. Along those lines, you can see the draft outline for the course the Ralph Maurer and I will be teaching in Winter, Organizational Behavior: An Evidence-Based Perspective, which includes links to articles and examples as well. We also will start having regular guest columns from both academics and practioners about topics that are pertinent to evidence-based management.
I hope you will visit the website for a few reasons. First, as it is a new website, we would be grateful for suggestions about how to make it more compelling and useful. We just view this as a prototype and will work to make ever better. Second, if you have any materials or information about evidence-based approaches, please pass them our way, and will organize the information and pass it on to others. Third, finally, please visit the blog and make some comments.
Pfeffer and I have been working together for years, and our motto is "when two people agree, one of them is unnecessary! So please, feel free to explain — using logic and facts of course — why we and others have spouted half-truths or total nonsense. We don’t promise to accept your point of view, but we do promise to respect it!
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Update: Clicks-n-Bricks: Creating Mass Market Experiences
I’ve written about the new d.school class that we are teaching in Fall. We’ve got more details about the class, and if you are a Stanford masters students (from any department on campus, we select a mix of students and you work in teams), we hope you will consider applying. These are intense classes with a large element of realism. They are also really fun. We also have more d.school classes coming this year.
I realize that most of you aren’t Stanford students. But there some interesting lessons from these classes about how to do creative work and to prepare students to work on teams that do creative work, and I’ll tell you about the interesting ones as they arise.
Clicks-n-Bricks: Creating Mass Market
ExperiencesMS&E 289 – Fall Quarter 06
Clicks-n-Bricks: Creating Mass
Market Experiences is the lead-off in a series of project-based classes taught
by Stanford’s Hasso Platner Institute of Design(“The d.School”)this year. This
class will focus on innovating On-Line and Off-Line experiences for customers
and employees, working with real executives, industry experts, and companies to
find solutions to real problems.The projects will be tackled in
teams. The class will be made up of graduate students from varied backgrounds
and programs. Students will do most of their work in interdisciplinary teams.
Students will get out in the field, make observations of users in context, and
quickly iterate prototype experiences, organizational design changes, and other
solutions aimed at improving customer and employee experiences. In addition to intense interactions with the
teaching team, students will be guided, coached, and judged by a cast of
industry executives, managers, and experts.The class will focus on two
projects. The first will be on improving the “theme park” experience for
customers as an introduction to design thinking and methods. Students will
visit and study local theme parks and apply the design process to identify
problems and quickly iterate solutions. They will be advised and receive feedback
about their work from managers and executives in the industry, as well as
members of the teaching team. The second project will entail using the design
process to work with Wal-Mart on its sustainability initiative, specifically to
spread knowledge, network connections, and enthusiasm among Wal-Mart employees
about this initiative. Wal-Mart executives and managers will work with students
to explain the company’s commitment to sustainability, guide students efforts
to engage Wal-Mart employees more fully and effectively in this effort, and
(along with other experts), give feedback to students about their work.Student teams will present work
periodically in the class as well as complete their design projectTeaching Team:
Professor
Robert SuttonAssociate
Consulting Professor Perry KlebahnAssociate
Consulting Professor Michael DearingInstructor
Liz Gerber, PhD Candidated.school Fellow Alex Ko
3-4 Units
Class Location: Birch
Time:
Class
– 3:15PM-6:15PM ThursdaysLab
Session – 5:15-6:15pm Mondays (as scheduled)Class Size: 24
Prerequisites: Masters standing
and permission of instructorIf you want to be notified about
the application process, click here and then click on the “contact us” link.http://www.stanford.edu/group/dschool/participate/program_information.html
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Brilliant But Cruel
Kent Blumberg (who
writes a very thoughtful blog on leadership, strategy and performance) wrote me
a couple emails this morning about the Fox TV show House. If you’ve seen it, you will recall it is about the grumpy
and sometimes downright abusive Dr. Gregory House, who
uses evidence-based medicine to find causes and cures where other doctors fail. Kent sent me this great snippet of dialog (from an episode called “Sex Kills”) that
demonstrates how and why we continue to let assholes get away with their
demeaning ways.
He wrote me:
“I just listened to the
dialogue again, and wrote it down a bit more accurately than I had remembered
it. The husband of a patient is talking with one of House’s team members:Husband: “I assume that House is a
great doctor.”Dr. Chase: “Why would you assume
that?”Husband: “Because when you’re that
big a jerk, you’re either great or unemployed.”I’ve written before about
how, in many organizations, if you are really big star, you are allowed to get
away with being a really big jerk. But Kent’s dialog reminds me that, if you
look at the evidence on the kind of people that we see as powerful and
intelligent, that –- independently of how smart a person actually is –- when
they act like an asshole, they are seen as smarter. This “Brilliant but Cruel” effect was demonstrated
in a study by Harvard Business School’s Teresa
Amabile. She did a controlled experiment with book reviews; some reviews
were nasty and others were nice. Amabile
found that negative and unkind reviewers were seen as less likeable but more
intelligent, competent, and expert than those who expressed the same messages
in kinder and gentler ways. She
summarized her findings by noting, “Only pessimism sounds profound. Optimism sounds superficial.”I chafe against the notion
that mean-spirited reviewers seem smarter than nice reviewers, but it also
rings true. I confess that I’ve always admired the wit displayed in the
nastiest book review I’ve ever read: Professor David P. Barash’s attack on
Professor J. Philippe Rushton’s Race,
Evolution, and Behavior,
published in Animal Behavior about 10
years ago (Volume 49, pages 1131 to 1133 if you want to look it up). Barash trots-out numerous factual criticisms,
but the review is filled with delightfully snide comments, some that border on
personal attacks. Take this gem “Rushton argues at length for what he calls the
‘principle of aggregation,’ which, in his hands, means the pious hope that that
by combining numerous turds of variously tainted data, one can obtain a
valuable result; but, in fact, the outcome is merely a larger than average pile
of shit.” Or take the very last sentence, “Bad science
and virulent racial prejudice drip like pus from nearly every page of this
despicable book.”I don’t know about you,
but I find these sentences brilliant, but cruel!So, if you want people to
think you are smart, apparently you can feed their stereotypes by demeaning others. In Barash’s case, the attack might
have been justified, but there are other times when people turn cruel for no
good reason, except perhaps for personal gain. I should also warn you that
although unleashing your inner asshole may help persuade people of your
intellectual superiority, we also show in The
Knowing-Doing Gap and Hard Facts that
the climate of fear created by such nastiness undermines team and
organizational effectiveness. Potential
victims become afraid to try (or even mention) new ideas and hesitate to report
mistakes or problems out of fear that the resulting anger and humiliation will
be aimed at them.PS: The reference is: Teresa
Amabile, “Brilliant but Cruel: Perception of Negative Evaluators,” Journal
of Experimental Social Psychology, 19 (1983), 146-156. -
Podcast of My Weird Ideas Talk: 6000 Downloads and Counting
MP3 File | Subscribe via iTunes
I recently
wrote about how the Stanford Technology Venture’s podcast from the Entrepreneurial
Thought Leaders had risen to #1 on the iTunes for higher education
rankings. I didn’t quite understand how
popular they were until this week, when Forrest Glick, STVP’s web guru, made
available a talk that I gave on my book,Weird
Ideas That Work: 11 and ½ Practices for
Promoting, Managing, and Sustaining Innovation. It was just made available on Tuesday and
there already have been over 6000 downloads. I am stunned. You can get or listen to the
podcast from this link at STVP’s
Educator’s Corner or download it at iTunes – all for free. -
What Do Santa Claus and Attila the Hun have in Common?
The answer is that both have had books written about their “leadership secrets.”
When Jeff Pfeffer and I were writing Hard Facts, Jeff put “leadership secrets
of” into the Amazon search engine, and these were the first two to books to
pop-up. I just did it again, a few months ago, and Leadership
Secrets of Attila the Hun came up #1 and The
Leadership Secrets of Santa Claus came up #2. The idea of getting leadership advice from
either an infamous tyrant or a fictional character is strange enough as it is, but
(I haven’t read the books, I confess) but the contrast between the two is
pretty funny. Jeff and I took to
collecting other contrasting titles, with my one of my favorites being
Love is the Killer App versus Business
is Combat. And don’t forget Tony
Soprano on Management: Leadership Lessons Inspired By America’s Favorite Mobster.
How on earth is a manager supposed
to know who to believe?All
this would be pretty funny if it wasn’t for the fact that badly managed organizations
do so much harm. Badly managed hospitals have higher mortality rates. Badly
managed military operations waste soldier’s and civilian’s lives. Badly managed organizations put people out of
work and lose money for shareholders. And
a growing literature on bullying shows that leaders who act like Attila the Hun
damage the physical and mental health of their people, reduce their motivation,
and drive them to find other jobs.AsJeff
and I argue, there actually is decent evidence out there about how to make many
managerial decisions; the problem is that is routinely ignored and managers,
boards, and consultants are almost never held accountable for ignoring it. For
example, research
by Columbia’s Joel Brockner and others documents that displaying lack of sensitivity
during layoffs not only has negative effect on those who lose jobs, it also
damages survivors who witness the unfair treatment: These studies suggest that
Radio Shack’s to decision to notify
400 employees VIA EMAIL that they were being laid-off will undermine the
motivation and productivity of those who survive the cuts and their mental
health too. Or as I discussed in an earlier
post on mergers, rather than listening to investment bankers who want
mergers to happen because they make money no matter how things turn out,
perhaps the time has come for executives and boards to document – – based on
the large literature on mergers –- why (other than their irrational
overconfidence) a proposed merger is likely to succeed even though most do not.
If
you go to a doctor and he or she recommends a procedure that existing studies
show will make you sicker or increase your chance of dying, they call it malpractice.
Isn’t it time to start holding managers and their advisors to the same
standards?