We're all Doubting Thomases

Last week I sat on an airplane waiting for it to take off, and as I looked out my window I noticed a couple of maintenance techs staring at a small puddle of fluid beneath the wing. Over the course of time more people came out to look at the puddle and I noticed one guy leaning down and drawing his fingertip through the puddle, then rubbing his fingers together, to check and see what the liquid was.

A few minutes later a couple of more guys came out they talked with the other people for a little bit and then each of them separately tested the fluid with a finger again. I imagine that the first guy told them what he had found with his finger tests and nonetheless they had to bend down and try it themselves.

This told me a lot about how people operate. Despite what anyone tells us usually we have to experience things for ourselves in order to trust what the answer is. Similarly, showing my son George how to tie his shoes isn't very effective. He has to try and fail for a while in order to truly learn it--even if he doesn't much like the process.

[Postscript: the liquid on the ground was hydraulic fluid, and we had to change to different flights to get where we were going.]

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Friday Haiku #4 - Sprint searches for a new CEO

Gary Forsee's out
Third place and sliding won't do.
But who'd want the job?

Friday haiku leadership telecommunications

A look back at this week--value of dissent, getting value from mistakes

Further to the post about the value of dissent, Max Boisot wrote a riotously funny post on how rows (pronounced the British way, raows, and meaning fights) between him and a collaborator improved the quality of their work together.

And on the idea of publicizing and learning from mistakes, the Wall Street Journal Informed Reader pointed out an article in Wired Magazine by deputy editor Thomas Goetz advocating that data from failed or abandoned studies be made available to researchers. One repository of this type of information, Mr. Goetz points out, is the lusciously named Journal of Negative Results in Biomedicine.

(The above also reminded me of the HBR article stating that finding uses for output of terminated R&D projects is one way to improve R&D cost-benefit.)

organizational behavior learning mistakes teamwork product development

Fearful of negotiating? Better get over it

Time was, we used to be product developers and manufacturers. We created designs for products, manufacturing groups figured out how to produce them, and we built them in our own factories.

Those days might as well be a million years ago. Now we are systems integrators. We create designs (or concepts we send to ODMs to flesh out), then hire companies to build components, assemble, ship and even service them.

The upshot is that we need a new skillset in this new world. Instead of design skills, we need partnership skills. Instead of building, we are buying. And instead of demanding or ordering, we are negotiating.

It's a much more uncertain world as a result. Outside parties don't necessarily see things our way, and we have limited tools to force them to see our point of view (read this recent Wall Street Journal article to learn more). Instead, we need to understand, to cajole, to threaten when necessary, but most of all to create scenarios where when our partners do what's in their interest, it helps us too.

As a result, I'm very interested in reading "Negotiation Genius" from Deepak Malhotra and Max Bazerman of Harvard Business School. I've discussed some of their work in a previous post. (And here's a recent reference in HBS Working Knowledge.) The book just came across my desk. I'll provide a full report after I'm finished with it.

(Photo from just4you via stock.xchng)

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Great innovation requires great teams, candor, and acceptance of mistakes

While preparing yesterday's post on the business value of dissent, I stumbled upon some research by Harvard Business School professor Amy Edmondson on team learning. The research centered on explaining a paradox--why in her studies did excellent teams make more errors than poor teams?

The answer, as you might expect, was greater candor and its corollary, greater confidence and openness to learning. Better teams simply communicated better, and, in a learning environment, that meant surfacing and talking about mistakes.

In a discussion about the topic with HBS Working Knowledge, professor Edmondson summarized her findings thusly:

In well-led teams, a climate of openness could make it easier to report and discuss errors—compared to teams with poor relationships or with punitive leaders. The good teams, according to this interpretation, don't make more mistakes, they report more. When I suggested this to physicians involved in the study, they were skeptical. Their response was understandable: With a research grant for the purpose of identifying the error rate, this idea was decidedly unwelcome. My interpretation of the data suggested that we might not be finding the definitive error rate—and further errors might be systematically underreported in certain units but not others. Their skepticism forced me to work hard to develop ways to support my proposition, which ultimately they came to see as reasonable, if not obvious in retrospect.

Once again, we see that learning in adults means supressing instincts for self-protection, defying organizational incentives to conform and be "team players," and ignoring ingrained concepts like division of labor and roles/responsibilities.

This is from a working paper on the subject, "When Learning and Performance Are At Odds" from Professor Edmondson and her collaborator, Sara Singer:

...Effectively conducting an analysis of a failure requires a spirit of inquiry and openness, patience, and a tolerance for ambiguity. Such an inquiry orientation is characterized by the perception among group members that multiple alternatives exist, frequent dissent, deepening understanding of issues and development of new possibilities, filling gaps in knowledge through combining information sources, and awareness of each others’ reasoning and its implications(Argyris et al., 1978). Such an orientation can counteract common group process failures. Learning about the perspectives, ideas, experiences, and concerns of others when facing uncertainty and high stakes decisions, is critical to making appropriate choices.

Looking at this through the prism of innovation, you can see how using the whole disorderly team, how arguing and soliciting dissenting views is essential. Innovation means confronting the unknown, the complex, the ill-defined. Mistakes are to be expected, not avoided. Confronting, embracing failure, then gathering the entire teams's viewpoints on what didn't work and how to fix it, then stepping back and trying a different tack, is essential. Locating dead ends and understanding failure quickly and changing course leads to faster innovation development, lower cost and higher probability of eventual success.

learning mistakes teamwork innovation HBS Working Knowledge

The dissent-free organization: a worst practice

There's an excellent item by Garry Emmons in Harvard Business School's Working Knowledge site this week on candor--or more accurately, a lack of it, and what damage it can do to organizations. Here's a quote:

Consider the costs to organizations, large and small, when dissent does not or cannot surface: Abjuring rigorous debate about its merits, a youthful president John F. Kennedy essentially rubber-stamped a 1961 plan to invade Cuba at the Bay of Pigs, resulting in one of the biggest U.S. foreign policy fiascoes in decades. During a 1996 commercial expedition to the summit of Mt. Everest, several climbers, including two of the world's most experienced professionals, died in part because junior team members didn't speak up when their expert leaders ignored their own core operating principles surrounding safety. In 2003, NASA engineers were reluctant to challenge long-held beliefs that foam strikes incurred during the launch of the space shuttle Columbia posed no risk to its fuselage.

I can't count how many times in my career I have swallowed what I should have said--and I was always considered a loudmouth. How many mistakes could have been avoided? Lack of dissent is terribly frequent within senior management teams, where respect for (or fear of) the CEO, or an unwillingness to step into colleagues' sandboxes, results in meetings full of good feelings and no debates. (We know that X-Teams don't do this.)

Why do people shut down when they should pipe up? It's entirely rational. Writes Emmons:

[HBS Professor Amy] Edmondson says this reluctance to speak up stems variously from fears that superiors will not like the idea or that it may appear to criticize the status quo, which most people find reassuringly familiar or dangerous to challenge. Edmondson sums up the mental calculation this way: "The potential costs to me for speaking out seem reasonably certain and somewhat immediate; the potential benefit to me for speaking out seems rather uncertain and definitely long-range."

I've also been responsible for quashing dissent. Whether due to wishing to move faster, or to protect my turf, I didn't create a very good environment for those who disagreed with my ideas. It's appalling, in retrospect. It should be somewhat comforting that I've got a lot of company in this. But it's not.

So, to improve your business, get your team debating, disagreeing, even arguing. Here's former Medtronic CEO Bill George quoted in the Working Knowledge article:

During the decision-making process, George explains, this means asking probing questions and insisting that managers present each situation in objective terms, rather than with a positive spin.

"You must acknowledge and thank those who disagree by telling them that they made the discussion, and hence the ultimate decision, much better," George says. "You need to reward and promote the mavericks or else the organization will lose its creative edge. You try to create tension inside because the outside challenge is so great."

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The next great businesses will be able to create passionate employees AND make profits

I recently read this quote in "Business and the Buddha" by Lloyd Field, and it summed up a lot of what I've been thinking about for the past year:

I have encountered very little "joy" in the thousands of workplaces I have visited during my more than thirty years as a management consultant. Joy, happiness, satisfaction with one's life and career, or pleasure in the intrinsic value inherent in the work being performed: these all seem to be rare indeed.... This does not mean, of course that well-intentioned business leaders and employees prefer dissatisfaction. It means that, once we finish wishing for empowerment or satisfaction to be part of everyone's job, including our own, we face the reality that we are in the profit business, not the employee-satisfaction business.

Here's another observation, from Gary Hamel's upcoming "The Future of Management":

According to [a 2005 Towers Perrin study], a mere 14 percent of employees around the world are highly engaged in their work, while 24 percent are disengaged. Everyone else is somewhere in the tepid middle. In other words, roughly 85 percent of those at work around the world--from Montreal to Munich, from Pittsburgh to Paris--are giving less of themselves than they could. This is a scandalous waste of human capability, and it helps to explain why so many organizations are less capable then the people who work there.


Tom Redburn, the New York Times reviewer of "The Shock Doctrine," points out that alternatives to capitalism haven't worked well either:

While Ms. Klein occasionally nods to Scandinavian-style social democracy as an alternative to the “neo-liberal” American-style model she condemns, it turns out that nothing short of a socialist utopia — an economy of worker collectives running environmentally benign enterprises with nationalized banks to direct investment — will actually do.

What she is most blind to is the necessary role of entrepreneurial capitalism in overcoming the inherent tendency of any established social system to lapse into stagnation, as all too many socialist countries — and some nonsocialist ones, too — have shown. Like it or not, without strong economic growth and its inevitable disruptions , there is little hope for creating the healthy middle classes necessary to sustain democracies, much less an improvement in the lot of the poor and dispossessed Ms. Klein seeks to represent. And yes, that means some people will become rich and powerful.

So, herein is the problem. If private-equity-based restructuring is not the ideal future of business, what is? If the pure, unadulterated "profit business" is not the answer, and "socialist utopias" have been anything but, what will the new bargain look like?

This seems to me one of the most important problems of the next ten years.

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Is there a huge business opportunity at the bottom of the telecommunications market?

Everyone has a cellphone, right? Some of us have two or more. Nobody needs cable or satellite; we all have that. Maybe there's an opportunity to sell more people broadband, who knows?

At any rate, it seems as if every American who uses telecom services has more than they need. But averages can be deceiving. America's roughly 70% wireless penetration rate includes upper-income rates of 100%--everybody has a cellphone...and lower-income rates below 50%.

Hamilton Sekino, partner in Diamond Consultants' telecom practice, explored opportunities selling telecom service to the lower and lower-middle income brackets at this month's Next Generation Mobile Partnerships Conference presented by Informa Telecoms & Media.

It was a fascinating presentation. Hamilton pointed out that marketing for most telecom and cable operators focused on high-end customers. And while prepaid cellular in the US appeals to low-income customers, its high churn rates make it a daunting business.

Diamond's proposition involves someone reselling a modest bundle of telecom services (video, broadband, wireless, wireline) at a discount to this market. An example package is:

$99.99 monthly fee
unlimited local wireless (a la Cricket or MetroPCS)
unlimited local wireline using VoIP
40 channels of video
1.5Mbps broadband

The key success factor is to be able to minimize cost of acquisition (to 1 to 1.5 times monthly subscriber revenue) and maximize discounts from underlying operators. (I'd add that it would also be important to keep operational costs low, by sticking to very simple plans, billing and payment.)

Who can do this? According to Diamond, a retailer like Wal-Mart would be a perfect fit, given its appeal to low-middle income segments and ability to distribute cheaply. Or perhaps an internet portal like Google or Yahoo, or a video company like DirecTV or Dish. In the right hands, it could be a multi-billion dollar business, according to their analysis.

The response by the conference attendees: much skepticism. But I find something very intriguing about this idea. There's a market, with money (not a lot) to spend, whose needs are not being met. There are companies that could provide service to this market. Stay tuned to see if this proposition becomes a product, and if the product becomes a success.

wireless mobile telecommunications strategy innovation

Use your strategy to drive your acquisitions, and vice versa

It's often seemed to me that following a corporate strategy is like driving a car at night. You must decide what direction you want to go, but you have also to pay close attention to what you can see ahead of you--and adjust if necessary. As you progress, more is revealed, and you approach your destination. If you drive too fast, or focus too much on the route you've predetermined, you get into trouble.

I thought of this metaphor again when I read the article "Rules To Acquire By," in the September Harvard Business Review (link - $$). The author, Bruce Nolop, is CFO of Pitney Bowes, and in the article he describes his company's method for assessing and executing acquisitions, refined over seventy acquisitions in the past six years. It's a fascinating read, and instructive if, like me, your companies' corporate acquisition strategies were less than rigorous.

I was particularly struck by this passage in a sidebar:

In the traditional model, a company identifies—either on its own or with a consultant’s help—a new business strategy or a new space and then buys something. By contrast, we work with our board of directors to develop a general sense of our strategic direction and then refine our strategy along the way through the process of acquisitions.

It's as perfect an example of driving-at-night strategy as I've read anywhere.

(Photo: "Driving at Night" by cpurcell via stock.xchng)

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Friday Haiku #3: A last lecture

If you gave a last
Lecture, what would you relate?
Watch Prof. Randy Pausch.

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