How to Give Feedback that Changes Lives

August 26, 2009

I loved a quote I read recently in the NYT by Maigread Eichten, president and chief executive of FRS, a maker of energy drinks:

One of the most memorable things one of my bosses at Pepsi told me was that if you really care about somebody, you give them constructive feedback. And if you don’t care about somebody, you only say positive things.

In my experience, a deep sign of respect is to help someone overcome the obstacles to their effectiveness.  These obstacles usually show up in the form of small, but persistent personality tics.  I find it heartbreaking when these things go unaddressed because of some kind of social norm.  We need our colleagues at their best.  Helping them to sweep away the pebbles on their path to impact, pebbles that are often visible to everyone but them, is a gift we can give, an obligation we have.

Much has been written about how to give feedback.  The advice that has stuck in the popular imagination is to be careful about sequencing the hard messages.  Sandwich the bad between the good.  I’m largely indifferent to these kinds of tactics, and I’m predisposed to be more direct than most.  I’ve found that it’s the intent that really matters.  If you show up to the conversation truly committed to helping someone become more effective, then the structure and content will take care of itself.  You won’t be inclined to make the most common mistake, which is to focus on managing your own discomfort with the interaction.

I often get asked about timing difficult feedback.  When should you do it?  When it is truly in the best interest of someone, when your input can make them better.  When should you not do it?  When it is more about you than it is about them.  How do you know the difference?  When you’re dreading it.  Feedback is your chance to change a life.  When you honor it for what it is, the task is trust-building and restorative.

The Accidental Entrepreneur

August 23, 2009

The NYT recently published an article describing the growing phenomenon of job seekers giving up on traditional employment and deciding to start their own businesses.  Here’s my advice to these first-time, “accidental” entrepreneurs.

As I often tell my students, spend plenty of time upfront on the logic of the new enterprise.  Step one is to decide whether you’re filling an open gap in the competitive landscape or doing what someone else is already doing in a superior way.  The distinction makes a big difference to step two.

For the open gap strategy, try to understand why the space exists — is it because no one has been as clever as you or because the economics aren’t viable?  Until you’re convinced that it’s the former, don’t move forward.  As a cautionary tale, I often use the example of very high-end daycare, which I’ve written about before.  I’m repeating it here because it really brings the issues to life, and because every year students talk to me about wanting to fill this space.  Their logic is that professional parents would have a very high willingness-to-pay for the exquisite care of their pride and joy.  Their analysis eventually reveals, however, that a service like this costs about the same as a nanny.  And while new parents might, at equal cost, choose daycare over a nanny for the first child, they’re unlikely to do so for the second child, when the cost of daycare doubles, and the cost of that nanny stays the same.

Alternatively, for a beat-someone-at-their-own-game strategy, the task is to build either a better or cheaper mousetrap.  If you want to compete on price, be brutally clear about how your own cost structure is lower than the incumbent’s, both at a small and larger scale.  A risk here is not counting your own labor as cost, even if you won’t draw a salary in the beginning.  While that may be viable at a small scale, at some point, someone will need to be paid for their work, and it’s important to understand these costs in the design phase.

I have seen lots of ventures fail because the founders’ labor was not incorporated into the cost structure since it would be “made up for” in equity.  It’s OK to not take a salary as the founder, but it’s unwise to exclude your labor from the economic logic of the enterprise.  Only after you can perform at a lower cost — inclusive of labor — do you have a scalable idea.

If you’re competing on non-cost dimensions, first figure out how to reliably deliver higher performance.  If you can do it faster, make sure you reliably have control over the speed bumps.  If you can deliver higher quality, make sure you have reliable access to higher quality inputs.  If you’ve figured out how to perform better with the same cost structure as the incumbents, then you’re well on your way.  But if you’re better as a result of higher costs, you also have to determine whether customers really are willing to pay you more.  There are other ways to fund premium inputs, but this is the most common.  As with the daycare service, designing better quality is often relatively straightforward, but driving up customers’ willingness to pay is rarely simple.

I resist peddling guarantees, but I do promise that if you wrestle with these questions in the conceptual phase of your new business, then you’ll increase your probability of success.  By the time your venture launches, I guarantee that it will feel much less accidental.

Explore vs. Exploit

August 18, 2009

Alison Gopnik, a Berkeley psychology professor, described how babies learn in a recent NYT op-ed she provocatively titled, “Your Baby is Smarter Than You Think.”  The article shot to the top of the paper’s “most popular” list, partly for its challenge to the widespread investment in trying to get babies to behave like Type A adults — goal-oriented, focused, socially motivated to achieve.

I was struck by her observation that babies are most engaged when they’re exploring new things, while adults prefer exploiting known skill sets:

Very young children imagine and explore a vast array of possibilities. As they grow older and absorb more evidence, certain possibilities become much more likely and more useful. They then make decisions based on this selective information and become increasingly reluctant to give those ideas up and try something new. Computer scientists talk about the difference between exploring and exploiting — a system will learn more if it explores many possibilities, but it will be more effective if it simply acts on the most likely one. Babies explore; adults exploit.

This distinction matters in organizations, too.  Despite our best managerial intentions, most organizations are primarily designed to do one or the other well.  In our business, we call it “organized to execute” or “organized to learn.”  The concept is the brain child of Frances’s HBS colleague, Amy Edmondson.  A firm’s strategy, operations and culture generally line up to either explore or exploit opportunities, rarely both.

But success often requires pivoting from one to the other (and sometimes back again) over the life span of a company.  This is a clear pattern in start-ups, which usually require a high experimental capacity in the beginning, but then have to shift to head-down execution once the business model falls into place.  The transition can be painful, as explorers often have to cede control to exploiters before they’re emotionally ready. And the young firm’s culture, built to dwell in possibility and manage significant risk, can often be one step behind. Similarly, market leaders faced with a disruptive competitor often have to learn how to learn again.  This pivot can be even more wrenching.

Great organizations learn to do both before their survival is on the line, but it often means separating the explorers from the exploiters.  Just as babies and adults rarely play well together, world-class exploiters and outstanding explorers are different animals that need different environments to thrive.  Practically, this often means walling them off from each other, as many firms do with separate R&D shops.

The biggest risk here is that these departments are not separate enough.  Each function needs its own rules and inputs to perform well — think of it as the kids’ table at Thanksgiving dinner — and companies often resist these separations. The exploiters at the top don’t like the messiness of multiple systems, and the idea feels vaguely unfair to someone.  If staying power is your goal, however, the lessons are clear.  A few ruffled feathers and some added complexity are worth it.

Self-Service Innovation at USAA

August 13, 2009

The NYT recently described an innovative new iPhone “app” that allows customers to use their phones to deposit a check.  Take pictures of the front and back of the check with the phone’s camera, and then use its email function to send the pictures to USAA.  Now discard the check.  No trip to the bank necessary. 

The application is a great model for self-service innovation.  USAA customers get a solution they prefer to the existing alternatives.  Instead of going to an ATM, they can now deposit a check from anywhere.  Customers get the enhanced convenience of mobile banking without having to sacrifice functionality.  In fact, the mobile deposit service increased the functionality of the traditional online banking experience, essentially overcoming the classic tradeoff between functionality and convenience.

USAA didn’t just transport the same services to a new channel — it designed new services for a new channel.  Bank of America, in contrast, created an iPhone application that only performs a limited set of transactions, all of which can be performed through its online banking program.  This type of solution is far more common and creates far less value for customers, a concession to the tradeoff between convenience and service.  USAA reminds us that great service innovation occurs when we challenge our employees (and often customers) to overcome persistent assumptions.

Katrina’s Environmental Subplot

August 11, 2009

I am a reluctant environmentalist.  I like people more than animals, animals more than plants.  I’ve come around to caring about our mismanagement of the environment because of the devastating effects of that mismanagement on human beings.

There is not a more vivid metaphor for the human costs of environmental incompetence than the direct links between the destruction of Gulf Coast wetlands and the horror show that unfolded in the Superdome on 8/29/05.  As Time’s Michael Grunwald wrote in 2007, in his scathing exploration of Katrina and her enablers:

….FEMA was the scapegoat, but the real culprit was the U.S. Army Corps of Engineers, which bungled the levees that formed the city’s man-made defenses and ravaged the wetlands that once formed its natural defenses. Americans were outraged by the government’s response, but they still haven’t come to grips with the government’s responsibility for the catastrophe.

Ravaged wetlands are not a central part of the narrative we’ve built around Katrina, at least not up North.  When we do acknowledge the human missteps leading to the not-so-natural disaster, we invoke Brownie’s “heckuva job” and W vacationing while whole neighborhoods drowned.  That’s the story we like to tell around Boston.  Sometimes we bring the Corps into it, usually for its engineering mistakes with the levees themselves.

But Grunwald and others have made a powerful case that the most tragic leadership failures can be traced to the “U.S’s cockamamie approach to water resources,” a decades-long, pork-filled drama that doles out responsibility across generations, sectors and Congressional aisles.  Everybody got it wrong by razing wetland barriers, and the most vulnerable among us paid the ultimate price.

One of the challenges of mainstreaming the environmental movement is its lingering sentimentality.  Another is its emphasis on valuing the future more than the present, a message that is often heavy with moral authority.  Katrina reminds us that smart, strategic stewardship of the environment matters right now.  I’m unlikely to ever hug a tree for the tree’s sake.  But when that tree starts teetering towards my fellow citizens, I find that my affection for it grows.

Lean Thinking at Starbucks

August 5, 2009

The WSJ wrote an article about the recent adoption of “lean thinking” at Starbucks.  Lean thinking is a philosophy popularized by Toyota’s famous Toyota Production System (TPS) that emphasizes rooting out waste in its many forms.  At Toyota, waste might be excess inventory.  At Starbucks, waste might be baristas taking too many steps to travel from the coffee beans to the espresso maker.  After reading the article, I’m not optimistic about the process of Starbucks trimming down.

Scott Heydon has the title Vice President of Lean Thinking at Starbucks, and two of his quotes set off alarm bells for me.  The first suggests that the impetus for the change is to free up the time and space for employees to deliver a better service experience.  The quote:

Mr Heydon says reducing waste will free up time for baristas – or “partners,” as the company calls them — to interact with customers and improve the Starbucks experience.

But Heydon follows quickly with this quote:

If Starbucks can reduce the time each employee spends making a drink, the company could make more drinks with the same number of workers or have fewer workers.

At first glance, this may not sound like an impending disaster.  After all, who doesn’t want better service and lower costs?  The danger lies in the ambivalent framing of the initiative, which is often good enough for the C Suite, but doesn’t fly on the front lines.  If the objective is to enhance the service experience, then a set of activities will reinforce that goal, and the definition of success will be fairly straightforward.  Alternatively, if the objective is to reduce costs, then a different set of activities will be required.  Eventually, these activities will be at odds with each other, and employees will get caught in the tension.

This is a well-worn path that can easily lower performance and increase employee cynicism.  The typical sequence of events is as follows: A manager sets out to make changes with the stated intention of improving the service experience.  Compelling rationale is used, invoking the experience as a driver of premium pricing.  Then, under the banner of improved service, the same manager starts talking about the efficiency gains of the changes.  You’re a barista with more time on your hands? Serve more customers!  Say good-bye to your colleagues!

This is dangerous for two reasons.  First, if your employees believe your commitment to service and then watch you measure productivity gains, you sacrifice focus and trust.  Not only do you breed confusion, but as clarity emerges, employee cynicism is not far behind.  Second, when senior executives begin to prioritize labor productivity over service, they often start to erode the competitive distinction that led to the premium pricing.  It’s one thing to purposefully pivot away from a premium position.  It’s another to creep away from it without making a clear strategic choice.

To be clear, I have seen companies achieve great success through cost-cutting initiatives.  But they were internally branded as cost-cutting initiatives, as a competitive rallying cry for employees and sometimes even customers.  Similarly, I have seen spectacular success when companies commit to enhancing their service experiences — again, internally branded commitments with the requisite decisions and activities in alignment.  I have even seen success with initiatives designed to improve both cost and service.  These typically work when a company is performing poorly compared to its peers and can make improvements on both dimensions, or when a company is in an innovative phase and looking for breakthrough ways to do things.

The problem is the disingenuous internal framing.  By far the most common approach is to try to dress up cost-cutting initiatives as service improvements, which breeds disappointment among employees, customers and owners.  And a tell-tale sign of this charade is shifts in messaging, particularly for multiple audiences.  Starbucks contradicted itself within minutes for the WSJ, which doesn’t make me optimistic that they’ll be an exception to the rule that these initiatives tend to cause more harm than good.

Avoiding Common Ground

August 3, 2009

John Chambers, Chairman and CEO of Cisco Systems, recently recalled advice he received from Sandy Weill, which essentially supports the prescription to always search for common ground with people:

“…when you’re interfacing with people who have dramatically different views from yours, you immediately gravitate to the areas that you share in common, and then focus on those. That’s how you build relationships, even with people who might have different views or different attitudes toward business than you.”

We would like to offer an alternate approach to collective progress.  Focus on what’s different, not on what’s common.  You likely already understand the logic and beliefs that got you to your current views.  Engaging someone with different views is an opportunity to understand the logic and beliefs driving a completely divergent position — which is where the breakthroughs in behavior are more likely to live.  Our advice is to challenge yourself with the question, how would a reasonable, intelligent, honorable person reach a diametrically opposed point of view?

It’s not an easy exercise. For it to work, you must genuinely believe that the person sitting across from you is as reasonable, intelligent, and honorable as you are.  In our observations, this is a significant stumbling block because it is tempting to conclude that someone who feels differently — particularly about an important or emotional topic — is somehow morally or intellectually flawed.  The political process is a constant reminder of how falling into this trap yields stagnation and mediocrity on both sides.  The search for consensus rather than understanding regularly produces incremental change, but rarely significant progress.  This is not good enough for many issues.  Healthcare is just one.

The insight that breaks open learning is more likely to be found in uncommon ground, in the presence of differences not similarities.  Consider the analysis of data, where learning occurs by exploring variation.  Indeed, if there is too much consistency in the data, it is difficult to produce any insights at all.  The same is true, in our experience, for human behavior.