Organization Design

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What’s really wrong with performance reviews

Posted by John Foster on July 30th, 2009

I’m sure many of you have seen the recent column by Jeff Pfeffer in BusinessWeek. It’s a very nice analysis of the flaws in corporate performance reviews. I respect and agree with everything he says in that article. And, I think there’s a more fundamental issue underlying the failure of performance reviews. The whole concept is backwards.

Photo by Charlie//Alexandra White on Flickr

It’s designed to manage performance as if it could actually be managed. In order to actually manage performance, a manager would have to be present while the employee works a great deal of the time. When a person starts to veer off “best practices,” the manager could then intervene with helpful comments and suggestions, or in extreme cases simply whack the person with a ruler to keep him in line.

Sounds crazy doesn’t it? Managers can’t do that, they’ve got better managerial things to do. Performance reviews are designed as if people were machines that need annual maintenance to fix broken parts or an upgrade to new software.

In a human-centered model, we’d assume that an adult worker of normal abilities would be able to understand the task at hand, and apply skill and judgment to meet work goals. In this system, we’d assume that the person would be motivated to do a good job and be curious about how to do it better. This might be a stretch too, but given the choices, I think this approach has more potential.

Yes, it’s a major shift in paradigm, but it’s one that aligns with the people who are already doing well, not with the people who are not. That is, people who are successful at work and in life tend to ask questions, learn, and grow. Why don’t we design processes, tools, and practices that support the more successful people, not prop up the weakest links? Call me Darwin if you will, but I believe this approach will help those who aren’t behaving in the most successful strategies shift towards them (not get left behind).

For a great example of this approach (helping successful people do what they already do better) is Rypple. It’s a platform for asking questions and giving feedback that’s driven by the only person who really cares about your performance… you.

Popularity: 28% [?]

Tags: Feedback, Organization Design

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The economics of discomfort

Posted by John Foster on July 20th, 2009

There’s a great post on CNET about the Future of Capitalism. I won’t retell the whole thing here, but it provides a great answer to my previous post, If feedback is so great, why is it so hard? It’s not a direct answer, but see if this makes sense: feedback is hard because it acknowledges that control of your future involves lots of other people. And this feels scary, arbitrary, and unpredictable.

source: wikipedia

If you are working in a job with a boss, you can work with that one person to agree on your future. If you have a bad boss, this isn’t so great, but you can go find another more agreeable one and move on up. This is the source of much of the negative political behavior in today’s stereotypical corporate environment.

If the future of capitalism involves recapitalizing assets that have been undervalued, then behavior strategies popularized by characters like Michael Scott of The Office are doomed.

Your talent represents a great asset… something you can trade, hedge, remix, or share to generate value that others will buy. So you can use your talent to work in Chris Anderson’s “Free Economy” to earn a living. But you have to invest with your asset and add value to the abundant, free resources through aggregation, synthesis, distribution, and other means of improvement. You must use your knowledge, skill, attributes, and experience as a unique lever to create new things like a service experience, an insightful article, an assembled computer, or beautiful music.

In the days when a person worked a lifetime for a company (or a land-owner), the responsibility to take care of your talent belonged to them. And all benefits of using your talent went to them. In this emerging new economy, technology has enabled you to benefit directly from your talent like never before. I won’t get into all the political scenarios being mentioned out there, but the bottom line is that individuals have increasing freedom to make something happen in their lives if they aren’t happy with the more traditional approaches to work.

But freedom comes with responsibility (darn). And this is where the answer on feedback comes in… markets are really good at finding stuff that works, and even better at culling out stuff that doesn’t. Feedback is hard because it involves finding out what parts of your offer are not working for others, and often represents resistance to your aspirations. And it’s not only your opinion that counts, it’s the opinions of the social group around you that assemble into a shared reality-of-you that count. And feedback is the only way to discover and make sense of those opinions.

Investing with your talent in this kind of economy can be extremely uncomfortable. As the saying goes, The truth will set you free, but first it will make you miserable.

Popularity: 24% [?]

Tags: Feedback

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If feedback is so great, why is it so hard?

Posted by John Foster on July 17th, 2009

photo: NUT by .Luca-Italy, Flickr

Is it just me or does this strike you as odd? I have a Google feed that sends me a daily digest of messages that include the term feedback. I get hundreds of them! Many people have suggestions for how to ask for and give feedback (including me) and many people talk about why it’s so important (like this post). I’m curious why it’s such a hot topic, yet why it’s so infrequently discussed in a positive light. So, I’ve been trying to apply design thinking to this nut to see if I can crack open some new insights and ideas. Here’s some of what I’m gathering. Feel free to join in, and I’ll keep you posted as it moves along.

Observations:

I have a friend who shares completely about what she’s thinking and seems to be very provocative in how she “pushes people’s buttons.” For example, she has her young son get his toenails painted and lets everyone know that it’s important to do so… She rarely asks what other people think, mostly she tells stories.
I work with someone who rarely states his opinion, but asks amazing questions to get people to explain more about their initial comments. When he starts to form an opinion about something he often presents it as a question (but not in an annoying, “what I hear you saying is…” kind of way).

Patterns:

Feedback is all around us, from facial expressions, to body posture, to words (and sounds).
People shy away from telling “the full truth” about their opinions.
Some people are tuned-in to other people’s reactions, suggestions, behaviors.
Some people seem oblivious to how they affect other people.

Experiments:

I put some post-it notes on our door at work to get people to ask questions about things I care about. It seemed to work, and be fun. It seems that not overstating something is more inviting to others than presenting a complete or definitive thought.
I’ve used Rypple to ask others questions before a meeting to help me understand what they care about and expect. It was very easy and helped me create the agenda.

To improve my diversity of input and thinking, I’ve been reaching out to other people interested in exploring this topic, and have started a new “learning collaborative” with my friends at Rypple. We are hosting our first design session in August and have gotten some great people from some great companies to join us. At the first session, we’ll have folks from IDEO, Mozilla, Pixar, Method Home, the Federal Reserve Bank, Electronic Arts, Kiva.org, and more. I hope this amazing collection of people working in a design process can helps get some real traction on feedback.

Popularity: 13% [?]

Tags: Feedback

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United Breaks Guitars

Posted by John Foster on July 8th, 2009

Now this is how to leverage the web! Check out a new song by Dave Carroll called United Breaks Guitars. And for more on the story behind the song visit Dave Caroll Music. We’ve all had frustrating experiences with poor service and it’s really amazing that such a scene can actually occur. I myself had a small tiff with a stewardess… I mean flight attendant… on United recently. She wanted my 2 year-old son to leave the seatback phone in the holder and I thought the relative value of the inflight phone service (nearing zero) and the distinct advantage of having a 2 year-old entertained while the flight boards (priceless) were a good trade off. My wife was worried I’d get us kicked off the plane for an FAA safety violation (see Ben Stiller in Meet the Parents) but I backed down.

It is quite fun to poke at these people for being so mean, difficult, or otherwise ornery. But the real issue isn’t the person involved, these incidents are symptoms of a much larger core issue. Bad service comes from companies that don’t take care of people. United isn’t about “destination management” they are about airplane management, so they emphasize mechanical and safety issues, not human ones. Sure, they say they are there for “your safety” but really they are there to control things. When Southwest Airlines hit the scene with an emphasis on people and the customer experience, they immediately became the most profitable airline around.

Another example is the battle between Microsoft and Apple. While Microsoft has a clear advantage in revenue and profitability (so far), it is clear that customers prefer the Apple experience. When a single business can dominate an industry so fully like Microsoft or United, they can get away with poor service because customers can’t vote with their wallets. But as soon as that advantage is removed, the crash and burn is inevitable (and fast)… as in Kmart versus Walmart.

I think this is so obvious I can’t imagine why other businesses don’t pull it off. But just in case it’s not that clear to everyone, here’s a few reasons it works:

1. People make buying decisions, so treating people well leads to more favorable buying decisions.

2. The loyalty effect is an important driver of sustained profitability.

3. If you want your customers to be treated well, you MUST treat your employees well. See the Service Profit Chain for more on how this works.

Got any more points to add?

Popularity: 9% [?]

Tags: leadership, Organization Design, Service Excellence

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Free advice for GM #3-Put SAAB back on the edge

Posted by John Foster on June 23rd, 2009

I was going to go with Saturn next, but a tweet from Diego on Metacool got me motivated to play with SAAB. He says, SAAB should get back into rallying, which lends support to my understanding of this brand.

Rally to the edge

Technology, cool, edgy, unique. Born from jets. Svenska Aeroplan Aktie Bolaget is Swedish Airplane Company in Swedish. Somewhere it all fell apart and they ended up another mediocre GM-mobile that had no style, no technology, and poor quality.

The organization behind an edgy car has to be edgy. This is called brand integration (the outside and the inside have to align). To create edgy things, people have to take risks and push the envelope. Edge is by definition NOT THE MAINSTREAM. Okay, I’m ranting… but it’s amazing to me how something edgy can get so rounded off to fit into a corporate model, that it’s no longer viable.

The interdependent organization archetype is a great model for SAAB because it could bring together an array of people and companies from many centers of excellence to work on the coolest automotive technology in the world. There would need to be lots of experimentation (and failure) going on to find out what new ideas work and what theories don’t hold water. You just can’t pull this kind of behavior off, if you are trying to please heads of engineering and design at the top of a corporate pyramid.

Key traits of the new SAAB organization:

1. Ad hoc reciprocal structure- each car should be viewed as a project, with full design-build responsibilities. The designs should connect to the heritage of SAAB (e.g. efficient drag coefficient) but the technology should represent the best of what’s possible in the current market. These teams should work under temporary agreements with other companies to bring resources necessary for manufacturing.

2. Each model is an experiment- transparency while prototyping (instead of secrecy) promotes involvement from others and improves quality. Check out Martin Eberhard’s post on how blogs helped at Tesla Motors. Instead of a long line of reductionist designs, hidden in secrecy while the companies round off the edges to save money, the clean slate approach gives the model team a chance to be truly innovative. An open process pushes everyone to solve the complex tensions between viability, feasibility, and desirability. The prototypes should be rallying all over the world to show off and test the new ideas.

3. Entrepreneurial leaders- leadership in today’s auto market is coming from disruptors like Tesla and Fiskar Automotive. These are entrepreneurial ventures with something to prove and lots of backing to get there. Each model should be considered and investment and live up to a market based promise of innovation. Leadership teams should have to start over again with each model to prove this new idea is worth making (and buying).

Popularity: 7% [?]

Tags: GM, innovation, Organization Design

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Free Advice for GM #2- A Chevy for Everyone

Posted by John Foster on June 15th, 2009

Continuing in a series of posts about GM and organization design, let’s take a closer look at creating the right organization for Chevrolet. I know restructuring is not this simple; so take this as the first installment in a high level comparison of organization design options, not a comprehensive plan of action.

A return to the Chevy brand essence?

Let’s start with Chevrolet, because that’s the easiest to imagine given their current situation.

To me, Chevy is Americana. This is the car that represents the American Dream, value, performance, and accessibility.

Chevrolet should help people get their first car, the family car, and have a competitive truck option. This market means head-to-head competition with Toyota and Honda, so it has to be efficient and cost competitive and produce top quality, reliable, desirable vehicles. Check out this post on The Truth About Cars for a quick review of the Chevy brand.

Key Traits of the new Chevrolet organization:

1. Efficient hierarchical structure. Clean lines of authority to provide clear direction, efficient decision-making, speed to market, and drive focus on customer needs as the basis for every action. This market is not about sexy cars, it’s about helping people feel good while they get places safely and manage household costs.

2. Make each model a business. Get past the silos of design, engineering, marketing, etc. and organize each model around a General Manager, with a P&L outcome and a target consumer to drive functional integration. Fidelity Investments organizes this way (dozens of P&L units), and it works really well. Develop a rabid consumer orientation as a rallying point, rather than being fractured by functional expertise.

3. Restructure the supply chain. As pointed out by Charles Mann in Beyond Detroit, source great parts from the best suppliers by developing a modular platform. Don’t try to own everything, focus on total design, build, and sell.

4. Engage employees. Focus on great leadership and build pride (See Jon Katzenbach). The days of management v. labor must be left behind. This organization needs every single person engaged in a mission to deliver cost competitive, high quality vehicles. Organize production around manufacturing teams provide job rotations to help employees learn, grow, and develop as a natural component of work. Use the portfolio of models to allow employees career movement.

5. Reward performance. Pay individuals, teams, and business units more when they meet performance goals in revenue, quality, and costs. Create healthy internal competition between the businesses.

Next up, how to recover the SATURN brand through an open-source organization.

Popularity: 7% [?]

Tags: design, GM, innovation, leadership, Organization Design

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Announcing the Rypple LC

Posted by John Foster on June 10th, 2009

Check out my post on the Rypple blog about our new learning project called the Rypple Learning Collaborative.

Popularity: 2% [?]

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Free Advice for GM #1

Posted by John Foster on June 9th, 2009

If you are interested in organization design, you should read Beyond Detroit in the 17.06 issue of Wired magazine. Chris Anderson offers a great introduction arguing that a new era of global business (long heralded) is really here. The point is, that with the Big Three disintegrating, it’s time for the “little guys” to proliferate in a market of automotive technologies that includes many, many more players and will produce much better results.

Saturn Wrecked Despite the deep malaise in the auto industry and the lackluster efforts by the federal government, articles like this show there is light at the end of the tunnel with practical ideas and solid advice. I thought I’d join the fray with an idea for how GM might move forward to a better place. I’m not claiming to be an auto industry expert, but my distance from it might be an advantage (at IDEO we call this the “naïve mind”).

Awhile back, I shared a framework for organization design inspired by the animal kingdom. Fundamental to that approach is the concept of biodiversity in an ecosystem. Changing circumstances require entities within the system to evolve and adapt or they will die. And evolution is about letting an existing trait emerge and thrive when new conditions emerge and demand it. See this interesting blog post by Robert Patterson for more on this line of thinking.

While GM has had dozens of brands and even some difference in their range of businesses, they have sought to keep everything operating on the same model and use scale as a lever to create efficiencies. This “no variance” strategy crushed Saturn, one of their best hopes for survival.

So a mortal enemy of a sustainable organization is homogeneity, and GM is the poster child of homogeneity. Using this framework, we can explore how GM might diversify their organizational structures to be more successful in four different consumer categories, with four different auto brands. It’s likely that these different consumers want different things from their cars, so the organizations should operate differently to meet those needs.

Below you can see four GM brands plotted on the “organization ecosystem” model to guide our exploration. Based on their unique brand attributes, and the demands of the market and consumers of those brands, each of the companies could be structured and operate quite differently. It’s funny to me that two of these brands are being jettisoned in the current restructuring actions.

Check back here for my next several posts and deeper descriptions of each example.

How could GM have an ecosystem of companies and brands?

Popularity: 5% [?]

Tags: GM, Organization Design, Organization ecosystem

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Getting Leverage for Change

Posted by John Foster on May 28th, 2009

I just saw a great post on Seth’s blog about challenging convention. I really admire how he generates cool insights and puts them simply so they are easy to remember. As I was reading his tips for challenging convention, it occurred to me that there’s a deeper issue below such challenges. He refers to the convention as “it” and I began to wonder about the possibilities of “it”.

One of my favorite movie lines is “there could be anything in there!” (from: A Christmas Story), and this statement is so true here. It really matters in his third point about leverage. If “it” is a simple change to a control knob, your leverage challenge is relatively straightforward and concrete. If “it” is a new paradigm of consumption, your leverage challenge requires a whole different level of challenging. Some types of leverage are more powerful than others, but most importantly you should use the right one for the task at hand.

For example: are you trying to challenge the convention of a controlling music volume (Seth’s example)? By shifting the convention from a physical knob to a digital slider you can focus on the physical parameters of the human/machine interaction. But if a person is not already of the mindset to interact with music via a computer, your users will experience a disconnect. The more effective leverage point would be to focus on the mindset of listening to music via a computer first, then shifting your focus to the digital interaction.

I believe this is what Apple did with the first iPod. The early generation machines still had familiar physcial controls. Now the iPhone has a completely digital touch screen. If they had not first gotten people to listen to music via the iTunes system, I would think the adoption of the touch screen may have struggled.

For more ideas about leverage points, Dana Meadows provides a great spectrum in her article: Leverage Points: Places to Intervene in a System. Check out the summary on Wikipedia.

Popularity: 3% [?]

Tags: behavior change, change

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Which animal are you?

Posted by John Foster on May 19th, 2009

Are all animals hierarchical by nature? Are humans? Bob Sutton posted a great topic comparing managers to baboons. And of course the easy inclusion of the Office character Michael Scott shows the ubiquity of our “dominant mindset” thinking about organizations. It is clearly the case that most organizations we know are hierarchical.

Some of you may know about biomimicry and how it can inspire great design. I read the Starfish and the Spider and had a few chats with Ori Brafman awhile back and it got me really interested in the idea of organizations as animals. With animals there are thousands of strategies for “survival of the fittest” and many of them don’t involve hierarchy. So couldn’t there be many types of organizations that don’t involve hierarchy? What advantages would the organization have if it was built from a different fundamental structure?

The real lesson from biomimicry here, is that animal adaptations come from interacting with the environment. That is, they are not internally developed as a strategy, but they are externally evolved based on the forces around them. So given the business environment you are in, what animal could inspire your organization design so you could succeed better?

By the way, this is not like adopting a mascot because it’s cool or cuddly, it’s about understanding the different mechanisms that help animals function and thrive and (wait for it, a big word is coming..) making isomorphic design choices for your organization.

Here’s a design device that provides three ideas to stretch your thinking about systems, tools, processes, and behaviors, using three animals for inspiration:

Animal Inspirations for OD