A few companies are not counting the hours you take off

Companies' continuing obsession with measuring their employees' input, rather than their output, is one of my pet peeves. "If you're not at your desk, you're not working," and its corollary, "If you are at your desk or at a meeting, you are working," are among the most persistent myths in white-collar corporate America. These myths ignore two facts:

1. Some people who aren't at their desks are, in fact working.
2. Some people who are at their desks are not, in fact, doing anything productive.

A related issue is accounting for vacation time. In today's Times, reporter Ken Belson writes about IBM's policy of leaving it to employees' and their supervisors' discretion as to when they take vacation time. Peer pressure certainly puts bounds on how much time can be taken, and IBM's intense work culture, according to Belson, leads to workers taking less time than they are allowed. Nonetheless, any move to allow workers and direct managers control over how and when time is spent at work is a major step forward in my mind.

Here's my favorite quote from the article:

“When you have a work force of fully formed professionals who have been working for much of their life,” Patty McCord, the chief talent officer of Netflix [which also leaves vacation time to employees' discretion], said, “you have a connection between the work you do and how long it takes to do it, so you don’t need to have the clock-in and clock-out mentality.”

(Photo by smartnetny via stock.xchng)

work ethic balance workaholism management productivity New York Times

The $70MM per year hedge fund trader, my hero (not)

I've been trying to digest the Wall Street Journal's front page story (link - $$) earlier this month on Mike McGoldrick, the Goldman Sachs trader who left because at $70MM per year he felt underpaid. That's puzzling enough, but here are two passages that blew my mind:

In 2002, ...Mr. McGoldrick began frequently working 21-hour days and traveling three weeks each month. He typically would land in Hong Kong at 11 p.m., and go home to work. It would be noon in New York, so he'd participate in three hours of conference calls to review the credit and asset value of U.S. partnerships under consideration. At 3 a.m. Hong Kong time, he'd go to bed until 6 a.m., when he'd rise to review the unit's Asian investments and markets....

Around [the end of 2006], Mr. McGoldrick got sick. Frequently on the phone or on an airplane, he developed severe bronchitis, with a hacking cough. He couldn't get through a phone call without throat lozenges for 100 consecutive days, a person familiar with the matter says. He visited his doctor in London, who ordered him to change his grueling lifestyle.

Just two simple questions here:

1. What was it like to live with this guy?
2. What was it like to work with this guy?

Only in America, I think to myself, can we venerate someone who sleeps three hours a night and needs throat lozenges to get through a phone call, then quits because he's not paid enough.

I'm also trying to understand how someone who took that much on himself could have possibly been a clear thinker. Psychologist Kenneth Nowack's recent blog post cites Alertness Solutions' statistics on the costs of sleep deprivation: for example, a 50% reduction in critical decisionmaking ability with two hours of reduced sleep per night.

With McGoldrick's three whole hours of sleep a night, I wouldn't trust him to make coffee without scalding himself, never mind decide on liquidating an Asian real estate portfolio.

Hopefully whoever hires McGoldrick next has enough compensation dollars left to bring on someone to watch over him.

(Photo: a throat lozenge from jr3 via stock.xchng)

sleep work ethic compensation balance Wall Street workaholism Wall Street Journal

Free information -> lateral networks -> less authoritarianism

Anyone who owns a computer knows that storing and exchanging information has gotten much, much cheaper. I'm in the midst of a full backup, and I have 60 GB (60GB!) of stuff I don't want to lose. Take out the music, and there's still 10GB of spreadsheets, photos, documents, databases, etc., that I'm backing up over the Internet (over the Internet!).

What does that mean to business? To Andrew McAfee of Harvard Business School, it means nothing less than a reordering of power and, eventually, a revolution in the management approach of companies. In his always-excellent blog, McAfee discusses MIT Professor Tom Malone's theory (from his book "The Future of Work") that cheap storage and fast networks create more lateral information flows within companies, and that upends hierarchies. Writes McAfee:

Until recently there was also a pretty simple rule of thumb within hierarchies: information flows followed decision rights. A decision right is exactly what it sounds like: the power to make a call, settle on a course of action, arbitrate a dispute, etc. A Gap store manager has decision rights over who to hire, but not where to open a new location; that decision right resides much higher up in the company.

Information flows have historically followed decision rights for two simple reasons: effective decision-making requires information (often a lot of it), and information has historically been expensive to gather and transmit. As a result, it made sense to be stingy when amassing and sending information, and to only send it where it would be put to best use -- as an aid to decision-making....

Malone’s theory, however, goes much farther than just outlining how information flows change. It also predicts how decision right allocations will change as a result. His thesis is a simple and powerful one: decision rights will also become more lateralized as information costs plummet, leading to greater power and autonomy at lower levels within a hierarchy -- in short, greater decentralization....

The strong form of this hypothesis is that companies will become less hierarchical and authoritarian, and more democratic and autonomous. Command-and-control approaches will become archaic. Pyramids will become pancakes. The fleetest, most innovative, and most competitive companies will be those that push decisions downward and empower the people closest to the action. The information gathering and filtering bureaucracies that most large companies have built up will become superfluous, and will be pruned. They’ll be replaced by networks of interdependent yet autonomous units that are given the decision rights necessary to pursue the company’s goals.

This will be good news to Traci Fenton of WorldBlu, who's been out in front of the workplace democracy movement, leading what seems like a lonely struggle. Traci, technology is on your side.

[I'd be remiss if I didn't point out that McAfee's post is not a wholesale endorsement of Malone's theory of increased workplace democracy and decentralization. If you read the whole thing, you'll see that he isn't quite sure about it, and in fact finds some evidence in favor of increased centralization due to these same technological factors. I hope Malone is right.]

management leadership information technology networks hierarchies

Private equity companies great business strategists? Baloney!

I've been wondering when the private-equitization fad will dissipate, and maybe the current credit squeeze is our answer. Private equity firms treat companies as commodities--buying low, processing and purifying a bit, as if they're iron ore, and reselling, recapitalizing, recombining into something that has enough value to compensate their investors and cover their fees.

In the July/August Harvard Business Review, Walter Kiechel lauds the private equiticians for bringing sound strategic thinking to their acquisitions ("Private Equity's Long View" - free link). I agree on one point--with respect to scrutinizing the capital structure of the company and deploying a pretty limited toolset--leveraging up--they are certainly more creative and strategic than those they acquire from.

And, writes Kiechel,

They identify a strategy that favors the line of business in which the acquisition dominates its competitors, and then they often sell off its other businesses (it was the strategy movement that got companies thinking about their assets as a portfolio of businesses, with some stars and some dogs to be divested).

Yet all the examples Kiechel cites to prove private equity's strategic mastery are all quantitative in nature--use of debt, focus on cash flow, reducing costs and shedding of underperforming assets.

Strategic thinking also involves questions like, "How can we increase our added value with customers? What is the world likely to look like in 10 years and how can we participate in those changes? What new products do we need? What technology investments will be required? How can we keep our best people?"

Quite frankly, it's not stuff that can be captured on a spreadsheet. And, despite their "long view," PE investors have little to offer on those questions. Frankly, most plan to be long gone before those questions are answered. And that's not strategic mastery, it's myopia.

As value in business increasingly shifts from dumb assets (like oil wells, factories, mines, etc.) to smart assets (creative people), the side effects of private equity strategy--personnel displacement, loss of company culture and insight, lack of employee loyalty, poor morale--will prove fatal. Businesses will look more like professional partnerships of today, rather than plain old corporations.

In fact, they'll start to look a lot more like private equity companies, wherein upheaval results in partners and associates leaving and starting their own firms.

What will PE buy then?

(Disclosure: I worked for several years for a private-equity-owned company.)

strategy private equity portfolio management capital structure Harvard Business Review

Sports sponsorships--perhaps not a waste of money

Sponsoring sporting events or teams has always to me seemed more of a CEO ego trip than a serious marketing program. When my wife's old company, Alltel, rented a corporate hospitality box at the BellSouth Classic golf tournament in Atlanta, they had to recruit company spouses (like me and my friend Steve) to fill box space on the weekdays. Great for me and Steve, but great for Alltel? Didn't seem so.

In the September Harvard Business Review, Professors Stephen A. Greyser (Harvard Business School emeritus) and Francis Farrelly of Monash University in Australia argue that sponsoring sporting events has a distinct value for internal marketing--that is, building company identity and culture and enhancing morale (free link). Farrelly and Greyser write:

The French banks BNP and Banque de Paris et des Pays-Bas (Paribas) used sponsorship of the French Tennis Federation as a unifying element in employee communications to promote acceptance of their postmerger identity and to describe the new company’s future direction. Indeed, the logo and livery of the merged bank were launched primarily through the association with tennis; tennis merchandise and posters of tennis events were distributed widely through the combined network of branches. Moreover, rather than sponsoring just the French Open at Roland Garros, the new organization, operating as BNP Paribas, worked with the tennis federation to develop other events, including a masters competition, that would create further opportunities to engage with staff members around the sponsorship throughout the year. The resulting media exposure and the sponsorship’s internal presence inspired many employees to embrace the new identity.

These stories sound entirely plausible; yet I wonder whether there's any measurement of the value of these investments. I'm skeptical that cold, rational evaluation would demonstrate that large sponsorship investments pay off. Marketers, if you have that data, I'd like to see it.

Giving away logoed merchandise reminds me of another story from the Alltel days (I worked there once, too). Each time morale seemed to slip a little, which was more than a few times, we would arrive in the morning to find a piece of clothing decorated with the Alltel logo on our chairs. I don't know if it helped morale, but I didn't have to buy a polo shirt for quite a while.

(Photo: Manchester United players by AtilaTheHun via Flickr Creative Commons. AIG pays more than $20MM per year to get its logo on Manchester United's jerseys.)

marketing sports sponsorship morale communication Harvard Business Review

What are marketers to do, if customers won't accept our messages?

Karl Long at Experience Curve (and fellow Futurelabber) has produced a short but potent post on the shift from "traditional marketing and new conversational, people-driven marketing." (The impetus was the following observation from Hugh McLeod in his blog Gaping Void: "Ironies of Ironies: Companies are forever being told 'You no longer control the conversation', yet from what my buddies in the PR industry tell me, their industry is utterly thriving.)

Karl homes in on the concept of social equity. Through forums like blogs, companies and individuals can accrue value in the eyes of their customer base, post by post, link by link. (And there's no doubt that the rise of blogs has been a great asset to the PR industry. Blogs, even crappy, quasi-advertising-laden ones, are a lot of work and require communications talent.)

My two cents: since we marketers can "no longer control the conversation," we are instead listening to customers, tastemakers, retailers, early adopters, then reading the weak signals, removing the noise, amplifying, and sending the customers' message back out into the world--through blogs and other media. That takes far more creativity (and effort) than creating a catchy name, unique selling proposition, and tagline for a product, then slamming it home via advertising.

marketing public relations blogging listening

Why I don't hate US Airways right now

21 August 2007, 2:30pm UK time. I just arrived in England on US Air Flight 734, five hours behind schedule. The plane was two hours late getting to the departure gate from the maintenance hangar. We then boarded, and sat for nearly two hours while the pilot periodically told us about the progress the mechanics were making on the problem with the brakes. Then we got off the plane, moved down the concourse four gates to get on the other plane. While waiting to board, we heard that the mechanics had fixed the first plane. Finally we reboarded the original plane and took off at around 2:00 am.

Throughout the long wait, I'm saying to myself, "I've been reading about these horror stories all year. Now I'm in one." I waited for the passengers to start to melt down--first the small kids, then the adults, the flight attendants, and finally the crew. We'll be reading about this in the Wall Street Journal Middle Seat column soon, I thought.

So how come it didn't happen?

I've been thinking about this the whole flight. And the only explanation that makes any sense to me is the attitude and poise of the flight attendants, gate agents and crew.

They kept calm during the whole ordeal. They provided as much information as they had, when they had it. They apologized for the inconvenience, yet never got defensive. And once we got on the flight for the last time, it was all business.

Example: I asked for a glass of wine with my dinner, and fully expected them to charge me for it. I was ready with an obnoxious comment. But the flight attendant handed me the cup and the tiny bottle, and moved on without a word. She knew, the whole crew knew (and I should've known) that drinks were on the house for that flight. It didn't need to be advertised.

customer service customer relationships

Miscellaneous means more knowledge for those who want to dive in

If you love the messiness that is the sprawl of information on the World Wide Web, then read "Everything Is Miscellaneous," by David Weinberger. If you hate that messiness, you should read the book, too. It'll teach you a few things.

Weinberger describes how the nonhierarchical, unfiltered, near-chaos of blogs, wikis, Amazon playlists and Digg rankings offers us far more possibilities to learn, engage and converse than we ever had going to neatly-organized libraries and reading our local newspaper. (Disclosure: I happen to like blogs. And newspapers too.)

One concept discussed in "Everything Is Miscellaneous" is "social knowing," in which "connections among people help guide what the group learns and knows." Via the range of comments on a blog post, or the discussion page on a Wikipedia entry, the reader can absorb the information in a posting, plus an array of opinions about it--some nutty, some profound, all passionate. Hyperlinks can lead the reader to source material, and she can draw her own conclusions about the opinions in the text. All in all, there's the ability for a reader to deepen the context, almost infinitely, when gathering information on the Web. And therefore the possibilities to study and grow are similarly endless.

In this Weinberger echoes Richard Ogle in "Smart World," who argued that creative leaps were enabled by the environment in which the creator lived and worked--his world helped think for him. Picasso in creating Cubism had the museums of Paris and dialogue and competition from collaborators such as Braque.

Whereas we've got pretty much the whole world available from our laptop. Who can say what we can do with it?

learning web2.0 reading list knowledge creativity technology

NASA learns to avoid its worst practices in safety

The New York Times today includes an article on how the NASA culture has changed since the Columbia disaster of 2003. By dissecting how the agency has approached the tile-damage problem with the Endeavor shuttle, reporter Kenneth Chang shows how thoroughly studying and understanding what went wrong with Columbia has led to better practices and, more profoundly, an improved "safety culture." An excerpt:

For both the Columbia and the Endeavour, the falling foam did not initially worry mission managers. The day after the Endeavour’s liftoff, John Shannon, chairman of the mission management team, said that three small pieces of foam might have hit, but “nothing significant.”

What changed in the last four years is how NASA managers handle an event they do not consider serious. Michael D. Griffin, the NASA administrator, said he and managers listened to all of the data before making decisions.

In order to get at that data, mission engineers took many steps to examine the damage, including having the shuttle perform a back flip to get a good photograph of the damaged area. Maybe most importantly, the NASA culture had begun to change since Columbia, with one shift being that "senior managers began to make sure that dissenting voices could be heard." Writes Chang in the Times article:

John Allmen, program manager for shuttle support at the NASA Ames Research Center, said the pre-Columbia culture of NASA was sometimes intimidating for an engineer to bring up a concern. “The general culture was that, ‘What are you talking about? Prove to me it will fail,’ ” he said.

Arrogance and confidence in one's own abilities must take a back seat to humility and openness to the opinions of others, especially when people's lives are on the line. It's probably not unexpected that NASA, the product of the "Right Stuff" test pilot and Mercury program culture, would be late to the game when it comes to carefully examining its own mistakes and addressing the root causes. But at least they appear to have made that change now.

UPDATE 21 August 2007: The shuttle lands safely.
learning worst practice New York Times

Sports Analogy week, day 5: shape your strategies to your talent

Here's a rule of thumb about the difference between coaching college sports and pro sports. Successful college coaches bring players in and ask them to conform to a system. Successful pro coaches adapt their systems to the talents of their teams.

This adage is most true in basketball. To the casual observer, Mike Krzyzewski's Duke team looks the same from year to year, no matter who's on the floor. Pat Riley, by contrast, has won with three markedly different approaches: the Showtime Lakers of the 1980's, the slow, defense-oriented Knicks in the 1990's and the Dwayne-Wade-led Miami Heat in 2006.

Riley adapted how he coached to the players he had available. Once he had determined an identity for the team, he filled in with complementary players who fit that identity (e.g., Lakers, Mychal Thompson; Knicks, Anthony Mason; Heat, Gary Payton).

In managing a group in business, the temptation is to be like Krzyzewski. After all, it's easier for a group of ten to adapt to one manager than for a manager to adapt to ten individuals, right? But the truth is, unless you're working in a process business where tasks are routinized and uniformity and consistency are the main goals, it's better to be Pat Riley.

Value in the future will be more determined by how well individual projects are done, not the efficiency of ongoing processes. (See this link for some background on that thought.) X-Teams use the strengths of the individual team members to achieve results, and rely on their creativity and engagement.

In other words, they're more like the Lakers than the Blue Devils.

sports basketball leadership management teamwork