mercanix

The Engagement Gap

We define employee engagement (a term that is widely used and misused) as an employees’ willingness and ability to contribute to company success. And the current level of employee engagement isn’t good.

An excerpt from Gary Hamel’s blog at the Wall Street Journal, entitled Management’s Dirty Little Secret:

“Consider the recent “Global Workforce Survey” conducted by Towers Perrin (now Towers Watson), an HR consultancy. In an attempt to measure the extent of employee engagement around the world, the company polled more than 90,000 workers in 18 countries. The survey covered many of the key factors that determine workplace engagement, including: the ability to participate in decision-making, the encouragement given for innovative thinking, the availability of skill-enhancing job assignments and the interest shown by senior executives in employee well-being.

Below you’ll find some supporting graphics taken directly from Towers Watson’s most recent (2012) instalment of the study:

 

TW_Workforce2012.png

Unfortunately, these results aren’t uncommon or new. Peter Drucker was quoted some time ago as saying, “Most of what we call management consists of making it difficult for people to get their work done.”

But the path to addressing this problem is under our control according to research conducted by Teresa M. Amabile and Stephen J. Kramer:

“Ask leaders what they think makes employees enthusiastic about work, and they’ll tell you in no uncertain terms. In a recent survey we invited more than 600 managers from dozens of companies to rank the impact on employee motivation and emotions of five workplace factors commonly considered significant: recognition, incentives, interpersonal support, support for making progress, and clear goals. “Recognition for good work (either public or private)” came out number one.
Unfortunately, those managers are wrong.
Having just completed a multiyear study tracking the day-to-day activities, emotions, and motivation levels of hundreds of knowledge workers in a wide variety of settings, we now know what the top motivator of performance is—and, amazingly, it’s the factor those survey participants ranked dead last. It’s progress. On days when workers have the sense they’re making headway in their jobs, or when they receive support that helps them overcome obstacles, their emotions are most positive and their drive to succeed is at its peak. On days when they feel they are spinning their wheels or encountering roadblocks to meaningful accomplishment, their moods and motivation are lowest. 
GreatWorkday_Amabile.gif
“You can proactively create both the perception and the reality of progress. If you are a high-ranking manager, take great care to clarify overall goals, ensure that people’s efforts are properly supported, and refrain from exerting time pressure so intense that minor glitches are perceived as crises rather than learning opportunities.
Cultivate a culture of helpfulness. While you’re at it, you can facilitate progress in a more direct way: Roll up your sleeves and pitch in. Of course, all these efforts will not only keep people working with gusto but also get the job done faster.”

Teresa M. Amabile is the Edsel Bryant Ford Professor of Business Administration at Harvard Business School. Steven J. Kramer is an independent researcher and writer based in Wayland, Massachusetts

In short, we believe Towers Waston summarized it best in their report:

Companies are running 21st-century businesses with 20th-century workplace practices and programs. 

 

beacon and the Engagement Gap

How does beacon help battle the Engagement Gap? We simplify, support and automate a set of complementary, evidence-based, high-performance work practices, which includes; ensuring that goals are clear, people’s efforts are properly supported, progress is easy to measure and see, and that collaboration occurs to execute the most important work.

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Death By Growth

There is no easy way to say this, organizations don't scale well using traditional management practices. In fact, the returns on productivity for adding more people are actually sublinear; which means adding a person doesn't get you a full person's contribution. Just listen to what Geoffrey West, Distinguished Professor and Past President of the Sante Fe Institute has to say about it:

"After buying data on more than 23,000 publicly traded companies, Bettencourt and West discovered that corporate productivity, unlike urban productivity, was entirely sublinear. As the number of employees grows, the amount of profit per employee shrinks. West gets giddy when he shows me the linear regression charts. "Look at this bloody plot," he says. "It's ridiculous how well the points line up." The graph reflects the bleak reality of corporate growth, in which efficiencies of scale are almost always outweighed by the burdens of bureaucracy. "When a company starts out, it's all about the new idea," West says. "And then, if the company gets lucky, the idea takes off. Everybody is happy and rich. But then management starts worrying about the bottom line, and so all these people are hired to keep track of the paper clips. This is the beginning of the end."
The danger, West says, is that the inevitable decline in profit per employee makes large companies increasingly vulnerable to market volatility. Since the company now has to support an expensive staff -- overhead costs increase with size -- even a minor disturbance can lead to significant losses. As West puts it, "Companies are killed by their need to keep on getting bigger."

TalentAsProfitDriver.png

As the graphic, excerpted from a McKinsey study, illustrates exactly what West and Bettencourt found. As companies grow, their profit per employee drops. Yes, these are very large enterprises. Does this occur on a smaller scale? Our first-hand experience working with enterprises as small as 25 would indicate it does.

The next obvious question is how can you contain the "burdens of bureaucracy" so growth doesn't kill your organization? If so, how?

Something to consider as you grow your team or enterprise.

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Closing the Science-to-Business Gap

 If you think of the items we have outlined in the Noise section as symptoms, the Science-to-Business Gap should be classified as one of the diseases that causes these symptoms. I'll write about four other diseases in future posts (Sublinear Productivity, Strategy-to-Performance Gap, The Engagement Gap and Organizational ADHD). Each of these produces a number of unwanted symptoms and impediments to good performance in your organization. If you can head these off before they take root then you'll be ahead of your competitors.

“If we want to strengthen our companies, elevate our lives, and improve the world, we need to close the gap between what science knows, and what business does.”

Daniel Pink

Drive: The Surprising Truth About What Motivates Us

Closing the gap between research and practice (or what science knows and what business does) represents a change from the dominant approach to management behaviour – which operates more on intuition, anecdote and experience. 

“Most managers are notoriously subjective, prone to manage by anecdote, quick to adopt best practices, and fond of big, visible initiatives...” McKinsey Quarterly, 2006, Number 3

And if we want to move away from commonly used management practices, we need to understand that change itself is a difficult process.

According to the authors of Switch and Made to Stick, “the primary obstacle is a conflict that's built into our brains. Psychologists have discovered that our minds are ruled by two different systems—the rational mind and the emotional mind—that compete for control. The rational mind wants a great beach body; the emotional mind wants that Oreo cookie. The rational mind wants to change something at work; the emotional mind loves the comfort of the existing routine. This tension can doom a change effort—but if it is overcome, change can come quickly.”

The second part of the challenge is answering the question, “what do we change TO?” If you are operating based on experience and intuition now, what approach do you rely on? Do you just pick one of the billion books out there trying to sell you on the latest management fad (while selling out theatres on the rubber chicken circuit)?

Our goal is to avoid any whiff of a fad and stick to the properly-researched territories. So, rather than follow any “model” which espouses particular techniques, we like the approach of Evidence-Based Management, which “is a commitment to finding and using the best theory and data available at the time to make decisions.” We see this as a practical way to bridge the gap between science and business.

The 5 Principles of Evidence-Based Management

  1. Face the hard facts, and build a culture in which people are encouraged to tell the truth, even if it is unpleasant.
  2. Be committed to "fact based" decision-making -- which means being committed to getting the best evidence and using it to guide actions.
  3. Treat your organization as an unfinished prototype -- encourage experimentation and learning by doing.
  4. Look for the risks and drawbacks in what people recommend -- even the best medicine has side effects.
  5. Avoid basing decisions on untested but strongly held beliefs, what you have done in the past, or on uncritical "benchmarking" of what winners do.

There is a significant movement in medicine to apply Evidence-based Management. We think it's time for businesses to catch up.

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Okay, Bosses Suck. But Why?

There have been some fairly depressing findings being published over the last couple years about the failure of managers/bosses in business. One such study undertaken by Michelle McQuaid was particularly bleak.

The study found that: 

  • Only 36% of Americans are happy at their job.
  • 65% say a better boss would make them happy while 35% choose a pay raise
  • 31% of employees polled feel uninspired and unappreciated by their boss, and close to 15% feel downright miserable, bored and lonely.
  • Only 38% of those polled describe their boss as “great,” with 42% saying their bosses don’t work very hard and close to 20% saying their boss has little or no integrity.
  • Close to 60% of Americans say they would do a better job if they got along better with their boss.
  • Close to 70% of those polled said they would be happier at work if they got along better with their boss, with the breakdown equal amongst men and women, but younger workers in their 20s and 30s skewed even higher (80%).
  • Over half (55%) of those polled, think they would be more successful in their career if they got along better with their boss, with 58% in managerial and professional careers saying so, and only 53% in service and manual labor positions feeling that way.
  •  In terms of the impact a boss has on employee health, 73% of those in their 20s and 30s said their health is at stake, while only 40% of those 50 and older felt that way.
  • When stress levels rise at work, a disturbing 47% say their boss does not stay calm and in control. Although 70% of boomers polled say their boss doesn’t lose his/her cool in times of stress.
  • Only 38% of Americans will thank their boss on National Bosses Day with most believing that their boss wouldn't care enough to bother. Close to 10% said they would use the day as an opportunity to talk to their boss and improve the relationship.

Studies like this are important in identifying and baselining the situation at work. Clearly there is much to be done. But I can't help but think that rather than blaming "bosses" and working to avoid them or "manage" them, that we need to think about the systemic reasons why they are failing their teams? What are the root causes?

If we understand the root causes, perhaps we can help change the conditions for managers and the managed? Rather than just creating strategies for finding a less-crappy manager.

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No Ambiguity with Ambiguity

We're big fans of Dan and Chip Heath's work. You'll see it referenced in our materials frequently as they undertake very solid research and present their findings in readable and interesting ways.

We were especially pleased when they highlighted one of the behaviours we have identified as organizational Noise which waste people's time, resources and potential:

Good leaders excel at converting something ambiguous into something behavioral. Take Terry Leahy, one of the leaders responsible for reversing the fortunes of Tesco, now the U.K.'s No. 1 grocer. One of Tesco's ambiguous goals was to do a better job "listening to customers." Leahy broke down that goal into a set of specific actions. For instance, cashiers were trained to call for help anytime more than one person was waiting in the checkout line. In addition, Tesco received 100,000 queries per week from customers. Leahy's team made sure that all Tesco managers had access to customer concerns. (If you want to listen to customers, you had better make sure your managers can hear what they're saying.) As a result, they learned counterintuitive lessons, such as that customers dislike stainless-steel refrigerators, which remind people of a hospital -- not an ideal association for a grocer.

Ambiguity simply isn't good for individuals, teams or entire enterprises. Read the full article at Fast Company here:

http://www.fastcompany.com/1676957/dan-and-chip-heath-say-nix-ambiguity-and-focus-lasting-change

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Five Forces vs. The Customer?

You may have seen the reports of Monitor Group's recent demise. Steve Denning of Forbes wrote a forceful blog post entitled, "What Killed Michael Porter's Monitor Group? The One Force That Really Mattered." This article has been the basis of a lot of bandwagon jumping lately. Not in a good way in my view.

I like strong opinions. As such, I like the Denning piece. But as a skeptical consumer of information, I'm not convinced that the conclusions he's drawn are correct.

Are we to believe the very approach that Porter and Monitor were famous for was exactly what lead to their demise? It may be a poetic and clever assertion, but I don't buy it for a second. You'd also have to forgive me for questioning the motive of the article itself, since Denning is clearly a management consultant. It feels a tad righteous and self-promotional as well.

But that's not my real beef with the article.

I take umbrage with anyone who thinks they can stand back from a safe distance and accurately assess why a particular business succeeded or failed. Looking retrospectively at any event, whether it is a game of schoolyard basketball or the management of a multinational, is incredibly problematic. Suggesting you have the definitive viewpoint is just plain fatuous.

There are thousands of moving pieces, decisions, people and contributing and conflicting influences that we could never appreciate or comprehend. Even if we are intimately involved in the enterprise we still don't know the totality of things that were going on around us. If you’ve ever worked in a dissolving business you’ll know what I’m talking about. Everyone on the outside has an “expert” opinion as to why the company failed. And yet, I doubt any of them are fully correct.

Just as the validity of predictive forecasting is suspect, so is the validity of retrospective analysis of business failure. It would be nice if things were as cut and dried as some would have us believe.

“When the number of factors coming into play in a phenomenological complex is too large scientific method in most cases fails. One need only think of the weather, in which case the prediction even for a few days ahead is impossible.”
― Albert Einstein

“The cord that tethers ability to success is both loose and elastic. It is easy to see fine qualities in successful books or to see unpublished manuscripts, inexpensive vodkas, or people struggling in any field as somehow lacking. It is easy to believe that ideas that worked were good ideas, that plans that succeeded were well designed, and that ideas and plans that did not were ill conceived. And it is easy to make heroes out of the most successful and to glance with disdain at the least. But ability does not guarantee achievement, nor is achievement proportional to ability. And so it is important to always keep in mind the other term in the equation—the role of chance…What I’ve learned, above all, is to keep marching forward because the best news is that since chance does play a role, one important factor in success is under our control: the number of at bats, the number of chances taken, the number of opportunities seized.”
Leonard Mlodinow, The Drunkard's Walk: How Randomness Rules Our Lives

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The Enterprise Software Sh*t Show

hansons-slap-shot.jpg

Happy New Year.

I'm getting all the same "really excited it's 2011" tweets, blog posts and emails you are. I'm really pleased that so many people are looking forward to the new year. It's also cool to see others being zen and thankful as well for what 2010 brought them...we all have a lot to be thankful for.

I'm an optimist at heart...really...I don't think you can be a true entrepreneur if you're not an optimist. Sometimes, you have to smoke your own rope just to keep going. But after 20+ years of doing this, I have also developed a fair degree of "cautious optimism" and a healthy degree of paranoia (see Andy Grove). My personality definitely consists of large doses of both Grumpy Old Men and the Dude (minus the drug abuse, "man").

So, it strikes me as somewhat lighthearted, and perhaps a bit foolish that I see signs of bubble-like frothiness in the software business again. I'm no Noriel Roubini, but things feel a little wonky to me.

Here's why my knickers are bunching-up:

The Consumerization of Enterprise Software
It used to be that the software we employed for work was dictated by our organization, and the procurement process was somewhat orderly (read slow and cumbersome) and predictable. Selling into these organizations required skill, patience and experience (and the resulting bag-carrying, highly-commissioned salesperson).

Just like other industries that are being upended (music, publishing, television, advertising, etc.), enterprise software is changing due to software now being pulled into the organization by end-users and adopted at work because of the ease of acquisition/adoption/use and the low (if any) cost.

This represents a complete 180 from the "olden days" (as my 9 year-old likes to say). Or, as I've heard a little too much in the past year a "total 360." [Never quite understood how people miss the fact that a doing a 360 represents landing where you started...oh well, another blog post perhaps.]

Generational Differences within the Enterprise
The web has been around long enough now that you can see clear differences between people in their 40's and 50's and the next youngest cohorts. Growing up with the personal computer (Jesus, does anyone call it that anymore?), the web, mobile phones, Skype, and the like have created different expectations of autonomy, privacy, engagement, leadership...you name it. And settling for the previous era's enterprise software tools doesn't sit very well.

Minimum Viable Products for the Enterprise
While there is a huge opportunity to revisit mature enterprise software segments to gut them of their feature-fat and value-lacking complexities, there still needs to be enough thought and base-level of feature functionality so as to actually deliver meaningful value for the organization. I love the simplicity of many of the mobile and web apps I'm seeing out there today, but if I have to cobble 10 of them together to actually get something useful done at work, then I think we might be trending a little too far toward the Minimum part of Minimum Viable Products.

Importance and Influence of Mobile and Tablet Software
I think I read somewhere that 50% of Fortune 500 companies had purchased iPads for piloting enterprise implementations in 2010. Not sure of the source, or even if that's true. But if it is remotely correct...holy flying pails of cow dung.

Regardless of the veracity of those figures, there's no doubt the take-up of mobile applications has been huge, and the influence and importance of that movement has huge implications for enterprise developers like us.

The Insignificant (and continuously falling) Barriers to Market Entry
Given the global level of connectivity and the (seemingly) zero cost of the tools of production it doesn't take much for someone to launch themselves into the software business. Any barrier to entry that used to exist 10 years ago (other than market knowledge/subject matter expertise) should probably be seen as zero.

The Instability of the Global Economic Recovery
Okay, I'll admit it. Sheepishly. I have some post secondary education in Economics. Fairly useless mind you, but some theoretical understanding (hence useless) of how economic systems are supposed to work. And this makes me very nervous about our current global situation. I just don't see how societies around the world can amass such huge levels of personal and government debt without long-term implications. I guess I skipped that part of my undergrad classes.

Despite the above, there are many reasons to be optimistic about opportunities in the Enterprise Software market. But I think you'd be equally daft to ignore the signs that it isn't all rosy and there are significant challenges to succeeding in these turbulent times.

So, a cautiously optimistic Happy New Year to my Enterprise Software brethren.

(Wow, that was a crazy stream of consciousness post....I'll have to elaborate on each of these items in future posts as I've just skimmed the surface).

 

 

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Hustle As Strategy

I was scanning through a stockpile of saved research/articles that I have accumulated on my drive over the past 25 years, and came across Amar Bhide's HBR article from September-October 1986 entitled, "Hustle as Strategy."

While I don't think this is Amar's best work (to be expected as he was a doctoral candidate at the time), it contains a nugget that I love:

"The competitive scriptures almost systematically ignore the importance of hustle and energy. While they preach strategic planning, competitive strategy, and competitive advantage, they overlook the record of a surprisingly large number of very successful companies that vigorously practice a different kind of religion. These companies don't have long-term strategic plans with an obsessive preoccupation on rivalry. They concentrate on operating details and doing things well. Hustle is their style and their strategy. They move fast, and they get it right."

It's a nice idea that you could spend your time as an executive creating and managing strategy. I've even seen fancy titles that suggest someone is the "Chief Strategy Officer." Sounds incredibly cool and rarefied.

In my experience though, it doesn't seem to matter if you've chosen to use a Competitive (Porter), Resource-based (Hamel & Prahalad), Blue Ocean (Kim & Mauborgne), Disruptive (Christensen & Raynor) or Emergent (Hamel, Mintzberg)...it does all come back to execution.

Reminds me of that old saw, "Great ideas are a dime a dozen; only execution counts."

 

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Did We "Launch" Yesterday?

Nope. We didn't "launch" yesterday.

We only have one excuse. We're not going to "launch" at all. We've decided to do our best to keep to the best practices espoused in the Lean Startup/Customer Development frameworks and start rolling-out the application first to a private beta group.

There was an excellent presentation I read the other day by one of the founders of Xobni, Matt Brezina. It is aptly entitled, No One Cares About Your Stupid Little Startup. In the presentation, Matt explains that Xobni (inbox spelled backwards), went through the following stages over a 3.5  year period:

Stealth - 1.5 years
Private Beta - 2 months
Nerd Scarcity - 3 months
Invite Beta - 3 months
Iteration - 3 months
Public Beta - 1 year
Exit Beta/GA (General Availability) - 3 months
Paid Drivers (Growth to Profitability) - 6 months

Could this be right? 3.5 years? Oh god, say it isn't so? So far, we're tracking exactly to their timing with our Stealth operation being 1.5 years old. Eeesh.

One step at a time, I guess. On to the Private Beta.

 

 

 

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I Suck at MVP

[WARNING: Stream of consciousness blog post. Reader discretion is advised.]

I'm pretty sure I understand the concepts and frameworks; both Customer Development and Lean Startup. And we try to incorporate their ideas (in our own way - for our business/market/product). But I'm left feeling like we're completely missing the boat. Feeling guilty because we're not following the "canonical" examples.

It would be nice if I could pass it off as my innate Catholic (or insert other more suitable religious reference) guilt. But I'm not Catholic. Just can't seem to shake the feeling that we're not doing it "right" way.

I've read the books and keep up with the blogs:

Four Steps to the Epiphany
Steve Blank
Startup Lessons Learned
Certain to Win
The Toyota Production System
Agile Development
500 Hats

I'm part of the right group (Lean Startup Circle) and I try to post something of value so I don't end up just being a lurker and leeching ideas from everyone else. I've watched all of Steve Blank's, Eric Ries' and Dave McClure's presentations on the web. I've watched them so many times, I could probably tell you what version of the presentation they are presenting and in roughly what time period they've made adjustments and refinements.

I try to follow the right people on Twitter:

Sean Ellis @seanellis
Dave McClure @davemcclure
Hiten Shah @hnshah
Andrew Chen @andrew_chen
Sean Murphy @skmurphy
Venture Hacks @venturehacks

And I know there are exceptions to when you need an MVP and when you don't. I think I understand that an MVP isn't a minimal product. I get that people use the MVP idea to help build a great product, increase the chances of success or launch, and maximize the information about customers per dollar spent...but I still feel like I'm building too much when I hear countless stories about "we just put up a web page with some prototype screen shots and then ran AdWords campaigns...split test this and that...built three features, yada yada...success!

Seriously? And people paid you for that?

Crap. It all just feels cheap to me. In a good way.

Believe me, I want to be cheap. I don't like spending more than 12 months on a beta and leveraging my family's financial well-being to build too much of a product when less would do...but I just can't do it. Damn.

I get that it's potentially misguided of me to assume I know what customers want. But we did "get out of the building" to test our hypotheses. We did over 100 interviews, presentations, demos...and the ideas that underpin the feature set aren't even ours! We've co-opted them from what we feel is the best research available on high performance enterprises.

Doesn't help. I still feel like we're building too much.

But I can't stop.

It's definitely more difficult because we are utilizing a foundation of code we have built in the past and invested more than 5M in. But maybe that's wrong too? Maybe we should have just built a few screens and forgotten about the industrial-strength code base we'd built. Maybe we got stuck in the Sunk Cost decision trap?

Minimum feature set...that's the goal...so you can iterate once the
minimum feature set is released...problem is I can't seem to cut any
further and we have a pretty huge feature set...am I weak, deluded, or
just obsessed about delivering exactly what I think is required?

But we haven't heard anything that tells us we're way off the map...but maybe
we're not really hearing what people are saying?...are they just being
polite because they are in my network or friends of friends....?

Perhaps it's because we're building it to scratch our own itch, and as
we use it we think "oh man, you know what we HAVE to include..."

Maybe it's because we're getting responses that range from "it's really cool, but I don't think we'd use it at our size" right up to "It's fantastic, when can I have it?"

Some people definitely already want this...the question is how many others will
feel the same? Is it tens, hundreds, or maybe even thousands? Mother...it's a leap of faith. A sphincter-puckering sized leap of
faith, actually.

Then I hear myself (in my head only fortunately) say, "stick to your vision, don't compromise, don't dilute what you think is right...did I have lunch?...jeez, that's a nice car outside my office...oh crap, where was I?"

Is it an MVP if we still have a list of 50 things we can think of that we'd like to add, but haven't?

Yeah, didn't think so.

Perhaps it's because we are good at building things and it makes us feel good...so we  just keep building instead of launching...maybe we're afraid of launching? Maybe, but we've got little choice now as we need to see if we're going to get any return on our sizable investment...there just isn't any more strap left on this boot.

My stomach is in knots...maybe I didn't have lunch.

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