Tag: management

greatness and lateness

~ ginsu ~ Leave a comment

The late, great Bill Campbell passed away this week, and there is no shortage of encomia from the technorati about him. He was the greatest coach in Silicon Valley, and the list of leaders that have paid tributes is appropriately star-studded. Some of the most successful people in the business world have benefitted from his wise counsel and friendship. It’s not hard to find stories of some pearl of advice that Bill gave to change the direction of a company, or even a life. I’d like to share a story that’s different, though no less illustrative of his greatness, because it’s a story of what happens when you don’t listen to Bill Campbell.

Back when Linden Lab was one of the most hyped companies in the world, in the interregnum between Google and Facebook, we had typical growing pains that were no less painful for being typical. Through the extraordinary pleading of one of our board members, we had the good fortune to receive some time from Bill Campbell. It was a tough time to get his time. He’d recently found out that his close friend was suffering from a terminal disease, and he knew that supporting his friend and his friend’s family would soon becoming an all-consuming task. He could not agree to a team-wide mentoring relationship. But even in the face of this tragedy and his many other commitments, he agreed to spend some one-on-one time with our CEO in several sessions, and just one round of discussions through the rest of the exec team.

I was very excited when my turn came, having known not only of The Coach’s legendary reputation, but having heard and seen his sharp advice to our CEO implemented on a few occasions in our company already. We sat down in a fishbowl conference room, centrally located on the company’s main floor, with a view out across the desks on an otherwise normal day. As I began responding to his initial questions about my background and context, I saw his attention drawn sharply away to the window.

In just a few seconds of observation, he saw something he didn’t like outside the conference room. “Do you see that?” he asked me. Yes I did, I responded, I knew exactly what he was talking about. “What’s it about?” he probed. I gave my best explanation, no doubt biased, certainly incomplete, filled with my caveats and allowances for things that I perhaps did not understand completely. “Nonsense,” he said, “Your job is to take care of that situation. Do you think this company is going to make or break on the new markets you’re after, on the business deals you’re trying to swing? No. You are here for that, no one else on the team is going to do it. Fix it. That is your most important job.”

I’m sorry I’m being vague about the details of the problem that Bill saw. The details don’t matter in this particular telling of the story. What matters is how quickly Bill could see a critical problem in barely more than a glance, how few questions he had to ask to understand the nature of the problem, how firmly he could direct action where it was needed, how incisively he could assess character and roles on a team. That he could do all this in seconds was simply stunning.

The sad, though hopefully instructive, remainder of the story is how poorly I executed on his insight. Fixing the problem immediately would require an extreme action that would disrupt the company in a sudden and unwelcome manner. I thought that the safer course of action was to confine the problem to a tight but explosive space, allowing it to self-destruct in a formidable container, like a bomb going off under a fortified blast dome. In retrospect, of course this was the wrong choice. The problem lingered longer than it should have, was not completely isolated or contained, and rather than have an explosion in the air that the winds could blow away, I had poison in the ground that was now part and parcel with the soil on which the company was built.

I wish we’d had more time than we got with Bill, I don’t think I would have handled things the same way with just a little bit more counsel. It was not the difference in our company’s success or failure, but it was the best advice for the moment and for the team in place. The lesson, I suppose, if there must be a lesson here, is that when you are fortunate enough to access the wisdom of the great, act on it decisively before it’s too late.

like a boss

~ ginsu ~ Leave a comment

“Zappos says goodbye to bosses” is a recent entry in a long string of articles about decentralized management practices. In the popular press, the implicit message is that decentralization is a nonstandard practice compared to strict hierarchy (if it were standard, why report on it at all?) – and if there is a comment section it is often filled with bitter vitriol about the dumbass management hippies who would rather chant kumbaya than actually do the hard work of telling employees what to do.

Almost 10 years ago, Thomas Malone wrote a book called The Future of Work that summarized twenty years of research on organizational structure, concluding that decentralized management was, well, the future of work. This is no longer a controversial theory, and many different kinds of companies have instituted varying degrees of decentralization with great success. So why are there still so many critics, and why are some of them so bitterly opposed?

One reason is that decentralization isn’t always the right choice. Most employees probably work in enterprises for which a strong degree of hierarchy is a better choice, or at least not an obviously worse choice. This is because the majority of employees in many countries work in SMBs (small-to-medium sized businesses), where there is often little difference in outcome between decentralized and hierarchical management. When you have, say, 5 equally committed people working in the same room together, the information they receive is so similar, and the communication between them so frequent and unmediated, that the employees would probably make the same decisions with or without formal management. In addition, the single largest employer in many countries is the government, where hierarchy is highly beneficial or required due to the nature of the service or because of laws and regulations.

So most people work in SMBs that don’t need decentralization even if they have it, or in large organizations that benefit from a lot of hierarchy. This leads to the common misconception that decentralized management doesn’t scale. “Oh sure, rinky-dink startups and mom-and-pop shops can get by without managers, but when you get to the really big efforts, you gotta have hierarchy to be a great company.”

That is not just wrong, it is perversely wrong. Decentralized management is, for certain kinds of enterprises, actually required in order to scale. The right way to decide whether your company needs decentralized management is to ask yourself these two questions:

How many people are required for my company to achieve our vision?

You have to have a pretty strong idea of your vision to answer this, which is harder than it seems, but let’s assume you know your vision. If you need less than about 150 people (because that’s Dunbar’s number), then decentralized management isn’t required. It might be more fun, more engaging for everyone involved, but it’s not required – unless you’re on the extreme side of the next question …

How well-known and stable is the path to achieving our vision?

If you know exactly how to get to the mountaintop, and that path is set in stone, then you have no need for decentralization. A single leader can just tell everyone what to do. A lot of decentralization could also work, so long as everyone is aware of the well-known and stable path – and this would probably be more fun for everyone involved, but it’s not required. However, if the path is unknown, or even if it’s known but subject to change before the full vision is achieved, then decentralized management is required. Failure is guaranteed under these circumstances due to the Innovator’s Dilemma – in large organizations, strict hierarchy will inevitably serve the needs of the current business model, leaving the company open to disruptive innovators that eat the large company’s future. The only hope to avoid the dilemma is to have decentralized management: employees with enough freedom to ignore the dictates of management might – with the right resources and a lot of luck – find the disruptive innovation within the company before it’s found outside.

So, to summarize in the obligatory 2×2:

decentralized management 2x2

I’ve noted the fun factor because it’s an important driver of employee criticism of distributed management. It’s not hard to find people who worked in places with “no bosses” and absolutely hated it, comparing the experience to high school and worse. And the truth is, in a large organization with an unknown and unstable path to a big vision, distributed management is definitely not fun for the employees, because:

  1. It is intellectually and emotionally draining. If everyone is supposed to make their own decisions, a lot of information and communication is required, and there is no way of getting around the time demands that this imposes, especially compared to the job you would be doing in a hierarchical company. Worse, making so many decisions is very stressful for most people, especially when you believe in the vision and you are close to your colleagues. You don’t want to let down your dreams and your friends, and it is very hard to face the possibility that every day may be the day you screw it all up for everyone.
  2. It is unrewarded by compensation. People start to think, “Hey waitaminute – I thought managers were supposed to make these decisions. If I’m making them now, why aren’t I being paid like a manager?” Most companies do not adjust their compensation schemes to account for this additional responsibility, because doing so would likely require a complex mechanism for collecting all possible projects, allowing everyone in the company to contribute to decisions on which they are knowledgable, and rewarding both successes and noble failures with monetary compensation commensurate to the effort of the people who implemented the project as well as those who contributed decisionmaking weight to the project. An attempt build this kind of compensation scheme would be regarded as insane, both internally and externally to the company. So most companies don’t try.
  3. The rewards for this kind of system extend beyond the likely employment period, possibly even beyond the lifetime of the employee. The Innovator’s Dilemma takes a long time to become a real threat. A small company first has to grow to a market leader and have such dominance that it is blinded to the threat of disruptive innovation – that can take years, possibly better measured as generations. So people are doing hard, uncompensated work, for the benefit of preventing a problem that might not happen during the lifetime of anyone that works at the company. That is a tough, tough ask of anyone. Even employees who understand the problem wish that the company could be hierarchical until the problem is apparent, and then switch over to this distributed bullshite. But the problem of course is that at that point, it’s too late.

So … should you like a boss or be a boss? Should you like your boss, and should that even be a question when your boss is you?

drive me crazy

~ ginsu ~ Leave a comment

Bob Lutz was a product development executive at BMW, Ford, Chrysler and GM over a 47-year career in the auto industry. His book Car Guys vs Bean Counters focuses on his second stint at GM, from 2001-2010.

In an excerpt in the WSJ, Lutz phrases a classic question of executive management, about the tension between leading by example or by autocratic demand:

I had to ask myself, and still do today, if it is the proper role … to get down in the trenches for hours on end, teaching the love of perfection in the smallest details when perhaps a more impatient autocrat would simply have ordered—nay, demanded—that it happen ….

This question has been asked and debated across many industries over many years. In information technology, we’ve seen different answers at HP, Intel, Microsoft, Google, Apple and Facebook. Often within the same company, the story swings between democratic (“emergent” is the trendier term) and autocratic over time, but you could roughly say that HP and Google have been known for emergent corporate cultures, and Intel, Microsoft, Apple and Facebook have been thought of as more autocratic. The public imagination tends to favor stories based on a single personality as leader, so it is likely that every tale of an “autocratic” workplace radically overstates the effect that any one person can have on a large organization.

But still, leaders matter even in the most emergent management styles, and Lutz’s question is a deep one. The tension exists because when a leader is right, autocratic demand will always lead to the best outcome in the shortest possible time – but no one is always right, and the flip side is that autocratic demand leads to the most disastrous failures very quickly when the leader is wrong. Emergent management is an attempt to institutionalize greatness over a long period of time, a period exceeding the career length of any single leader. Lutz asks the right questions again:

But does the autocrat, no matter how gifted, create sustainable success? Or does his style drive away other capable leaders who would form a leadership team after the great man’s departure? . . .

The fact is, though, that my effort to instill into the organization a drive for perfection and customer delight in all things was successful. And still I wonder—was I right? Did I change the core of the product development culture by teaching, or did I rely too much on my own will and my considerable influence to get what I wanted?

Strikingly, Lutz is haunted by the failure of his lessons to stick at Chrysler. He had left that company secure in the knowledge that his standards and principles were permanently embedded in the corporate culture. But it didn’t work – new leadership quickly shifted the company into a bean-counting mentality, and the passion he’d invested there evaporated as easily as spilled alcohol. He thinks there will be a different outcome at GM, but it’s not clear why there’s any reason to believe this.

I find some divisions in Lutz’s dichotomy questionable: an autocratic leader can certainly get down in the trenches, and an emergent leader can certainly demand great results. I agree that sustainable success is the ultimate arbiter of greatness – but if the company doesn’t succeed through crisis points, which sometimes require an autocratic hand, then it will not have the chance to measure a track record over generations of leadership. So I would say that a company – and its leaders – have to be able to master both styles, and most crucially, know when and how to switch from one to the other.

love the machine

~ ginsu ~ Leave a comment

The Wall Street Journal reported that Google is working on an algorithm to predict which of its employees is likely to leave. Putting aside for the moment whether there is some creepy aspect to the machine anticipating personal career choices, there are two aspects to this that I find interesting.

First, exactly how and why did this make it into the news? I’m not questioning whether it’s newsworthy (it is), I’m wondering about the exact path that this took from fact to front page. Was this program broadly announced at Google, and a random employee alerted the media? That would be one typical path. Was it an unannounced program, and someone in the HR department leaked it to the press? Or perhaps the HR folks proactively fed this to the press. If one of the latter two, what’s the motivation? Does it make Google look smart as a company? Does it comfort employees to know that Big Brother is watching and cares whether or not you leave? I don’t think any answer to any of these questions is necessarily a bad thing, I’m just wondering what the answers are.

Second – and more answerish this time than questioney – it’s really interesting to consider the reported inputs to the algorithm. According to the WSJ, “data from employee reviews and promotion and pay histories” comprise the formula. At first glance, this might seem logical: you would hope that reviews and compensation have some correlation to job performance and satisfaction.

Ah but then – you’ve been hoping that all your life, haven’t you? And haven’t you found that the content of employee reviews is often radically disconnected from actual performance, that the “wrong” person often gets promoted, that compensation has at best a tenuous connection to performance and satisfaction?

So the data set might not be as logical as it first seems; fortunately the magic of the sample size means that this isn’t a logic problem, but simply a correlation exercise. There is certainly some correlation between the content of that data and the incidences of employee departure, or Google wouldn’t be trying this.

But I’d bet that the correlation is much weaker than you’d think, and much weaker than Google would like. Any manager knows that reviews and compensation are blunt tools, and these are likely to be trailing indicators rather than the leading indicators of dissatisfaction that you want for real predictive power.

I worked at a company that somewhat famously had a “Love Machine” – a simple tool for employees to express appreciation for each other. Basically, as an employee, if a colleague did something that you appreciated, you could send them a point of Love, along with a one-line comment as reason for the gift. It was just a neat little way to say Thank You, and people really appreciated both giving and getting Love. And as very minor benefit, periodically the accrued Love points would be paid out to employees as a cash bonus.  (Distribute that on a Friday and watch people really spread the love around.)

When this was reported externally, some people misunderstood the corporate purpose of the Love Machine. Which is to say, some people thought it had no purpose at all, except as some gross hippy dippy vibe. Those people not only misunderstood the effect on morale, but also vastly underappreciated the value of the data from the Love Machine.

Think about it: as a manager, is it valuable to know which of your employees is appreciated, and which is not? The Love Machine is certainly not the sole source of information on this, but the data gives at least some general information on both specific and aggregate cases. You can see not only who is appreciated, but who gives appreciation. You can see which departments are praised and which toil without recognition. You can see who works across departmental boundaries and who only interacts upwards or downwards in their own reporting silos.

All this is phenomenally powerful data that gives factual indication of matters that you might otherwise pay significant amounts to guess about through expensive organizational consultants. I was convinced back then and I still am today that if HR departments and managers understood the power of this data, every company would have a Love Machine. Most would call it something else, but that part is just internal marketing.

Back to Google: as far as I know, they don’t have a Love Machine. But that doesn’t mean that they are feeding the best data they have into their Who’s Leaving? algorithm. Nearly every company has somewhat similar data in their email traffic, and certainly in a big data set, email traffic would work quite well. Now, I’m not saying that the email content should be analyzed – even though many companies actually do that, I find it unacceptably creepy. I just mean the fact of communication. Every manager knows that communication is a powerful indicator (and motivator) of job satisfaction.

Who’s talking to who? Who’s on how many email lists? What is the response rate and timing and length? Is communication cross-functional, up and down and across reporting levels, inside and outside the company?  All of that information is available in company email – I guess you could call it the email graph.

I would bet almost anything that this kind of data from email traffic provides a more powerful indicator of who’s leaving the company than the data from reviews and compensation. In fact, I’d bet that the email graph has better correlation to actual job performance than performance reviews!

Of course, the combination of those data sets could be even more powerful, and it’s entirely possible that Google is already doing this, though that wasn’t reported in the Journal piece.