Systematic Consensus – It is Great but It is Not New

In the February 2012 issue of the Internet-based Eco-villages newsletter, Diana Leafe Christian, the editor, published a piece called “Systemic Consensus – Fast, Visual and Hard to Deal With”.  In it, she described the development of an extension of consensus decision-making called Systematic Consensus. Diana  praised many of its features, based on real experience that she has had with it.

Systematic Consensus has two main features. First, it allows participants in a decision-making group to express their degree of support for the options being considered. They use a scale – typically a scale running from 0 to 10 – 0 meaning no support, 10 indicating full support. They indicate their degree of support for each option on this shared scale. As a result, individuals can move beyond simple binary decision making – support or do not support. They can express nuances – degrees of support – that are far more thoughtful, and revealing, than simple binary choices.

Systematic Consensus’s second main feature is the collation and public posting of each individual’s level of support for each option on a group flip chart, poster or white board. The facilitator leads this process. As she or he does so, dynamically, in front of the group, the facilitator is creating a real time group profile that displays the range of support for the various options under consideration. As a result, the dialogue in the group is enhanced, leading to more productive outcomes.

Dinah goes on to explain how all of this works. She provides some concrete examples drawn from real involvement with a number of community groups. She demonstrates that is not simply a mechanical process, but one that requires real process leadership skill on the part of the facilitator.  It’s a fascinating article. I recommend that you have a look at it. It’s available at the following URL – http://www.ecovillagenewsletter.org/wiki/index.php/Systemic_Consensus_%E2%80%94_Fast,_Visual,_and_Hard_to_Argue_With.

As I read it, I was reminded of the power of, and difficulty inherent in, facilitating productive consensus in groups. I remembered some of the difficulties that I had experienced when facilitating a group dedicated to achieve consensus early in my facilitator life. I learned through hard experience that great consensus building sessions make deep contributions to building a highly functioning team or a strong sense of community among individuals. But I also learned that skillful individuals can block or sabotage consensus in groups, bending other members to their own point of view through sheer self-centered determination. Achieving productive consensus is not always easy.

The two core concepts that underlie systematic consensus are important ones. They address some of the problems that can occur in consensus seeking groups. But these ideas are not new. They are a great contribution to the dialogue about the dynamics needed to build intentional communities. I have been working with very similar processes for years when facilitating problem solving groups in  more conventional environments, both community and business. Some I developed myself. Others entered my facilitation took kit as a result of mentoring and coaching from facilitators who has struggled with the difficulties inherent in facilitating consensus long before I start to do so.

I hope that you will go take a look at Diana’s article. It provides background for following insights about facilitating group decision making and consensus.

Building Dynamic Group Profiles in Real Time

I have been using the visual charting technique in working with groups for several decades.  Hedley Dimock[1], one time Director of the Centre For Human Relations and Community Studies, first introduced me to the idea of visually developing group profiles in front of a group.  Since those days, I have learned that there are a couple of critical things to do when a facilitator chooses to use this technique.

1. First, I get individuals to make a personal decision about where they stand on the issue or the options under consideration. I direct them to move into a “personal” space while they are doing so. As a result, they experience a physical separation between the space they are working in as a group and the place in which they make these personal decisions. This physical separation aligns with the cognitive distance that I want them to experience.

Often this is as simple as getting them to move around the room in some way that results in them being in different physical location from where they would be when the group is in its normal “working in group” configuration.

1. I ask them to record their decision in some way, often by requesting that they do something as simple as writing down their stand on each option – e.g. simply recording the relevant number of the scale if we are using one. I always ask them to label this recording with their name. If multiple options are on the table, they record where they stand on each one in a way that clearly identifies each of the options.

I have found that this “personal recording step” is crucial in avoiding “group think”. Without it, people often change their “judgments on the fly” as they see the pattern of individual results being recorded on the publicly visual group profile. For some people, “belonging” is far more important than taking a personal stand. They “conform” to group patterns, even though the group pressure they are feeling is implicit and indirect..

By asking group members to make these judgments personally, and recording them, I decrease the likelihood of such a “spontaneous” personal change in judgment. When I am really concerned about this dynamics happening in a particular group, I will even “collect” the individuals’ judgments before starting to build the group profile with the whole group. I do so by simply asking people to give me a copy of what they have recorded. I then ask them to refer to their copy as I record their personal results on the group profile. If individuals do verbally provide a different input on an item from what is recorded on their / my copy, I record what they say. I take these steps in order to decrease the likelihood of this happening, not force it not to happen.

1. Although I may create a version group profile for my own insight[2] before I facilitate the “profiling” group session, I always build a group profile dynamically in real time with the group. By collecting, collating and recording the individual judgments in real time, in front of the entire group, I achieve the following.

• Each individual verbally expresses their personal decision in front of the other members of the group. Every group member experiences each person doing so. This creates an implicit sense of each person “owning” their judgments within the dynamic context of the whole group.

 

• Each member of the group sees the group profile being built. They can see the evolving patterns in the group profile. They can see where they are personally with reference to each of the other members of the group.

I am well aware that implicit “sub-grouping” around similarities can start to occur at this stage. But they do anyway in normal group discussion.

Underlying Psychological Dynamics

Recording individual judgments in a way that creates a publicly available group profile has many benefits for team and group development. It takes advantage of a number of well-known psychological dynamics.

1. Both the foreground and the background[3] of the group’s current decision-making are available to everyone in the group at the same time.

Each individual can see the patterns that exist in the group, whatever they might be – whatever degree of consensus or difference currently exists. At the same time, each individual can see where they stand with respect to the other members of the group.

1. A tremendous amount of information about the underlying dynamics in the group moves from being “implicit, private” knowledge to “explicit, shared, public” knowledge. This allows the members of the group to focus more of their energy on the content under consideration, and less on figuring out where they stand with respect to the other members of the group on the issues.

Underlying Democratic Dynamics

Charting group patterns in this visual public manner reinforces the basic sense of democracy in the group.

1. Each individual is shown to be an equally valued individual contributor in front of the whole group.
2. The similarities and differences between the group members are also being made public. The degrees of similarity or difference are apparent to all.

This is the other side of democracy. Differences exist in democratic groups. Making this explicit allows individuals to deal openly with it. It removes much of the covertness that often exists in democratic situations. Sub-groups do form. Alliances are created.

The public group profile provides explicit insight into these possibilities. As individuals participating in a democratic process, each group member has a responsibility to deal with these similarities and differences. Making their personal stands public in a way that provides open insight into similarities and differences encourages people to do so.

The Benefits of the Psychological Disassociation

When I create a group profile in this fashion, I am actively working with the principle of “psychological disassociation”.[4]

1. I take great care in making sure that each individual has an opportunity to make a personal record of the decision about the issue before I create the group profile.  I ask them to record it. That’s extremely important. It allows individuals to experience the results of their internal decision making process, whatever it may be, from the outside in. The record of their decision making is step one in the disassociation process. They are moving from experiencing the process of making the decision to looking at a record of the result of that experience. That implicitly from them from a first position stance – experiencing – to a second position stance – looking at the results of their experience.
2. I also create a public version of the group profile, in real time, in front of the entire group. That is step two in the disassociation process. The person’s decision about each option is no longer simply being “something which I have personally experienced inside myself, and then recorded to that I can see the results of my personal experience”. When the individual verbally declares each of their decision in front of the group, and I record it on the profile, they experience another level of disassociation.  Their decision becomes “a decision that I have presented to others and seen publicly placed in the context of what others have done when they made the same personal decision.” The minute I record it, the individual experiences it from a third position, seeing it on the group profile. As result, individuals move from a “me” stance to a “my decision in the context of others’ decision” stance.[5]

The degree of psychological disassociation achieved by these actions reduces the likelihood that individual will engage in “flight – fight” personality dynamics when experiencing differences with other individuals in the group.  Differences becomes “idea or issue” focused, not person to person focused.  As a result, the possibilities for creativity within the group are deeply enhanced. The likelihood that the group will move to some level of eventual shared and creative consensus is increased. The possibility that the consensus when it occurs, is about new, creative possibilities that develop from the patterns of similarity and differences in the group is greatly enhanced.

Moving Beyond Simple Binary “Yes / No” Decisions

Starting with decisions that move beyond simple binary decisions is essential to all of this. The originators of Systematic Consensus use a scale to achieve this. I also used scales to achieve this. But based on work that I have done with Q-Sort methodologies in individual research, but I have also use option card ranking methods which I will describe later.

The technique chosen to move beyond simple binary stance must reflect

• the nature of the problem under consideration by the group,
• the time available for group work,
• and the skill / past experience / comfort level of the facilitator.

What is important is that the facilitator uses a technique that adds depth and nuance to the personal and group decision making process.

When working with problem solving groups, I often use these following steps. These steps become more and more difficult to manage as the size of the group starts to exceed small group limits (12 to 20 participants).[6]

1. I introduce overall steps we will follow to the participants in an initial group meeting. This meeting usual follows some start up dialogue with a number of the members of the group to ensure that I understand their concerns and that I am the “right fit” person to be working with them.
2. I meet with each person, in interview mode. I am trying to get a sense of each person perspective on the issues and options that the group is facing. I also start to build the rapport with each person which will make my involvement with them as a group a richer and more dynamically valuable experience.
3. Based on these meetings, I organize / summarize my understanding in a set of issue / problem statements. The language that I use reflects what I have heard. I take great care to use their language, not my own.
4. I circulate these statements to the group members as individuals for input and comment.  I incorporate their responses into a final set of statements, and circulate them once more, asking if they are an accurate depiction of the issue or options that the group needs to address.
5. I place the each statement on a card, often a simple 4” by 5” (or 4” by 8”) index card. I end up with a set of cards that define the issue or problem or options with which the group is dealing.
6. I meet with each person and ask them to rank order these cards in a way that reflects their personal perception of importance or urgency or suitability. Again, the precise language I use in these instructions comes from the group’s context.

Card sorting moves individuals beyond the verbal. They engage fully – cognitively, emotionally and physically – in this process. As they sort the cards, they are paying attention to where they place in card in relation to all of the other cards – taking advantage of our human ability to consider foreground / background patterns at the same time.

Once they are through with the card sort, I ask them to verbalize their reasons for placing the cards in the way that they did. Essentially, this provides an opportunity for them to verbalize / rehearse things they might say later in the group. I record the results of their card sort, showing the individuals how they ranked the cards from “most to least”. This becomes their personal record.

1. When the group reconvenes, I use some highly visual method to publicly record the results of each individual’s card sort into the group profile. Again, I make sure that they “verbalize” their input to me in front of the entire group.

Sometimes I do this as simply as possible, building a group profile, individual by individual, on flipchart or poster paper. At times, I get more technological, recording the individual’s input into a pre-prepared excel spreadsheet, using a computer and computer projector to project the process of building the profile on a wall or screen[7].  It depends on the group. Rapport is key. Using technology with a non-technology comfortable group is a problem, as is using paper based methods with a technology using group.

I am more likely to use 0 to 10 scales used in Systematic Consensus when I have to work with the group in a single session. I use a break out period to allow them to do the personal decision making. Using scales is easier to explain to a whole group in real time. They understand it, and need less personal direction than using card sorts. The time needed to “develop” the issues / options out of personal interaction is not needed.

Working Through Differences

Once the group profile has been built and is publicly apparent to everyone, the profile itself becomes a resource that I as the facilitator can use to encourage and to focus dialogue in the group. I can use it to explicitly move conflict from people to issues. I work with the group as follows.

1. On the group profile, I visually identify two individuals who are “at opposite ends” on an item.  I ask each person to talk to the whole group about the reasons they made the personal decisions they did. My verbal directions to each person indicate that I’m asking them to talk as a resource to the group, helping the group understand how and why they as a person came to the judgments that are apparent in the group profile.
2. I create the opportunity for the other members of the people to ask the presenting individual questions. But I manage this to ensure that these are understanding questions, not personal statements in the form of questions that are really an indirect form of disagreement.
3. Once both individuals have described their personal reasons, I turn to the group. I ask if, based on what each person has heard from these two individuals, does any member want to make a change in the judgments that is been recorded for them on the group profile.

If any individual does indicate a desire to do so, I first record the changes on the group profile in a way which is immediately apparent to the whole group. Then I ask the person who has made the change to tell the whole group their reasons for making this change. I facilitate this “change in judgment” process until no one indicates a desire to change their recorded judgment.

Clearly group dynamics, and interpersonal pressure, impact what is happening in the group during this activity. However, because each individual is changing a personal judgment which has been recorded in a disassociated fashion in a group profile, the change tends to be about the content of the ideas, not the implicit and explicit interpersonal alignments in the group. People usually provide content credible reasons for their changes.

Sometimes, the group members start to engage in discussions which lead to consideration of blended or new options that do not exist on the group profile. Often this creativity leads to clear and readily apparent consensus in the group.

What Happens Next

My experience indicates that the dialogue in the group at this point is a function of many different and interacting factors The length and intensity of this dialogue will depend on the issue, the history of the group, the nature of the individual personalities, the patterns in the group profile (large degree of similarity, bi-polar or tri-polar or … sub-groupings,) and the feelings that individual group members about the likely outcome.

But this dialogue now occurs in an environment which is deeply enriched by the amount of data about the group dynamic that is available to each individual. Groups seldom stay stuck; regardless of the difficulty of the issues they are dealing with, when this information is available to them. If consensus does not emerge from within the group, the new options can be clarified as a new place from which to recycle and start the individual judgment over again. “Stuck groups” often welcome this way of moving beyond their lack of progress.

What Happens to Individual Outliers

There is one other consequence of this type of group profile based consensus seeking that facilitators must be aware before they start using these processes. Individuals whose personal perspective on issues is dramatically different from the pattern that emerges during the group profiling are immediately identified in a public way as being different from most or all of the other members of the group. This individual must now deal with the consequences of being “distant” from the group in this way. This person can come to feel isolated, even blocked out from fruitfully participating in the groups’ further dialogue.

Sometimes such individuals simply treat this being related to the issues at hand, and continue their active participation in the life of the group or community. At other times, such persons feel alienated from the group.

People who end up with these feelings may do one of two things – withdraw from the life of the group or take a public stance of agreement with the group even when the person does not feel this. Facilitators need to be aware of this possibility, and when it occurs respond dynamically in a way that is respectful both to the individual, and to the whole group. These consensus seeking / facilitating techniques are not mechanical. They require facilitators to have deep skills, both as group process leaders and as sensitive human beings.

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[1] Hedley is long retired, although some of his books on group process continue to help and to inspire folks who work with groups.

[2] Doing so often helps me decide on the exact format to use during the real time profiling session with the group. I tend to do it this “self step” if the timing and the dynamics of working with a particular group allow me to do so. If not, I develop the profiling format on-the-fly with the group.

[3] From Gestalt psychology, see http://en.wikipedia.org/wiki/Figure%E2%80%93ground_%28perception%29

[4] Severely disassociated personal states are considered sub-optimal by psychologists (see http://en.wikipedia.org/wiki/Dissociation_%28psychology%29). However, a level of disassociation from the immediacy of one’s feelings and judgments can allow an individual to be more productive in group situations. See Robert Kegan”s “In Over Our Heads” for insight into this type  of disassociation. Google Robert Kegan for much more on these “mature adult processes” when participating in public/ social life.

[5] Robert Kegan’s classic 1994 book “In Over Our Heads” for more insight into the benefit of moving from 1^st to 2^nd and 3^rd position, and the importance of this ability in our journey through life to mature adulthood.

[6] The modification of these facilitation techniques for large groups is beyond the scope of this article. But it can be done. Google “large group methods” to gain some insight into the richness possible.

[7] At one point in my facilitation career, I “decreased the time needed for this process” by preparing these profiles in advance of the group and simply distributing or projecting them to the group. I learned that the time I saved led to unanticipated consequence. Because each group member no longer went through the process of publicly providing their input to the profile, there was far less ownership of personal stances. The subsequent dialogue in the group was often far less rich and creative. I now resist the personal temptation, and often the urging of one or more group members, to do “save” this time. The process of publicly verbalizing personal decisions, and seeing them recorded as they are verbalized, is important to the dynamics among the group members.

xxx

The Jobs and Technology Elephant in the Room No One Wants to Talks About

A Little History

It’s 1965. I am working as a junior clerk in the research and development department of a national railway in Montreal, Quebec, Canada. My main task is to type up the results of pricing estimate calculations done by one of the approximately 125 men who sit in 10 ranks of desks behind me, 12 to a rank. They all work on the most advanced Friedan mechanical calculators. Their job is to use the local knowledge that they developed through practical train handling experience on parts of the cross country rail network to work up price estimates for the point to point potential movement of goods for customers.

These men share some important traditions. For the most part, they are all older men with a long career working around freight trains on the railway. When one of them retires, they all move up a desk. Understanding your career path is easy in this department.

Whenever this happens, a new recruit is found out on the rails. Many men out there want this desk job. It pays better, and the work is warm – office work. But not all of the who want the job have the math skills needed to do the job. Only the ones that can demonstrate them get a chance.

The department chief clerk also takes care to ensure that knowledge of the rail configuration for entire railroad is always present in the room. Understanding your career path is easy in this department.

Once here, the new man rapidly learns to take part in the group’s Friday afternoon tradition.  They called it “the train leaving the station”. At 4:30, the most junior of them, sitting at desk one in rank one, entered 999999999 times 111111111 into his calculator. As his Friedan started chugging out the calculation, the man behind him did the same, and then the next man and so on. The sound in the room sounded just like an diesel engine picking up speed as it started out of a train station. By just before 5PM, the last calculator sighed to a stop. The men got up and go home for their weekend.

Then along came a young engineer called Russ. He has just learned FORTRAN at a special course for engineers at the local university. He thought he could program an IBM 60s mainframe computer to do these calculations.

It took Russ just three months to write a computer program which estimated pricing for movement of various goods from point to point in the network. It took him another 3 months or so to capture the local knowledge of the 125 men in the desks behind me in a variety of tables that he used in the program.

The men and the program work side by side for a month. At the end of the month it is clear.  The program can produces results at least as accurate as the calculations done by the men. And the program can do it must quicker, even in a batch card mainframe computer environment. Beside speed of calculation is not that important. Overnight results are perfectly acceptable. That is faster than the fastest of the men, who usually took two days to complete a pricing estimate.

The computer program is implemented_. 126 jobs disappear overnight (theirs plus mine). It’s the first first time in my career that I experience the ability of technology to destroy jobs. My response is simple. I learn how to program computers.

Since Then, I Have Been in the Business of Destroying Jobs

First as a computer professional, and then as an IT executive, I have delivered on countless technology project. Every time, the business case was based on replacing the cost of people time with far less expensive, and often much more reliable, machine time And I am not the only person to do so. Business has been doing this steadily since the beginning of the industrial revolution. But computers made it possible to extend this from the factory floor to every aspect of enterprise.

At First, We All Benefited

The tremendous increase in productivity that we have experienced in the Western world since the Second World War is the result of the applying technology to making of things, the growing of food, the harvesting of useful things from nature, and the management of information in offices. The resulting productivity growth has driven a dramatic increase in our quality of life. Every thing became cheaper at the same time as average income increased. To most of us who grew up after the Second World War, it seemed like this would never stop.

But I never forgot that first lesson. The economics of technology investment is simple. Replace something that costs more in the long run – human labor – with some that cost less in the long run – machine labor. As long as we lived in a world where we could endlessly expand – because we were trading with the underdeveloped economics that were far behind us – or because there seemed to be no ecological cost to exploiting natural resources, our societies just boomed along.

Technology Ruled, and Had a Hugh Impact on Defining our Society’s Culture

We live in societies where jobs, as well as being the source of family income needed to maintain the family’s members, are an important part of our identity as social beings. More and more, after the beginning of the 20^th Century, a job defined who a person was. Job based income was the primary way to support a family. Sometime during the 19^th century, for most people, who you were socially became less a function of the land you owned and more a function of the work that you did.

And this trend continued during the 20^th Century. By the end of the century, this was true for most of the women in Western societies as well. Women entered the labor force in large numbers after the Second World War. Their jobs, as well as the job based income they contributed to their families, became an important part of their personal identities as well.

Increasing Productivity, and Aggregate Growth In the Size of the Gross Domestic Product, Became the Core Way We Defined Progress in the 20^th Century

Throughout the 20^th century, we kept finding new ways to use technology to reduce the hours of labor (which translates to the number of jobs) needed to produce the products we needed, the food we eat, the raw resources we harvest, and the services we consume. As we were doing so, we were also constantly increasing the “quality of our lives”, measured largely by disposable family income, and an ever increasing supply of products, food and services. We knew that we had it good. And in the short term, year over year, we did.

Human Beings are Not Great Long Term Anticipators

We are human. Our evolved strength as individuals is to look out over this season, and do some planning for next one, and maybe the one after that. A few of us think about over longer periods of time – as measures by generations and decades. But most of this is speculation. Of all of the speculation that was done in the 20^th Century about the future, only a very small percentage turned out to be accurate, as evaluated by the passage of historical time.

Even when those of us who speculate about the future share their speculations in writings and other forms of communication, most of us don’t act on what they say, either as individuals or as societies.

The Consequences of the Destruction of Jobs by Technology Has Built Up Steadily

In the last five decades, we destroyed jobs in manufacturing, in agricultural, and in harvesting natural resources. When we first realized that this was happen, we talked about becoming a service based economy. The productive use of technology in manufacturing, agriculture and harvesting allowed us to create more jobs in the service sectors in our economics.  We took some of the economic “wealth”[1] created by this growth in productivity, and used it to “finance” the creation of these jobs.

Then toward the end of the 20^th century, we started to apply technology to office and other service jobs. We began to have some sense of what the inevitable impact of this trend. But we were not clear about it. So we talked about becoming a knowledge based economy.

We still needed jobs, both for the identity they created, and for the job based income we needed to support families. As we used technology to destroy office and service jobs in the public sector, we created more and more new jobs in government. We also expanded tax financed service sectors such as health care and education. To pay for it all, through the magic of money, we also started to accumulate growing government debt. We used money to put off the real bill for all of this somewhere into the future. We believe that the growth boom we had been on for the past 100 or so would never come to an end. We believed that future productivity increase would somehow allow us to cope with this debt.

The Internet and the Export of Jobs

Then in the last decade of the 20^th century, we created a technology which made distance largely irrelevant to doing work with information focused work – the Internet.

The relentless economic logic of our short term, year over year, profit maximizing capitalistic investment models led to us continued to kick in. We use the Internet to export more and more of our remaining manufacturing and agricultural jobs to “offshore” economies where the lower cost of living generated a short term profit maximizing advantage.  Communication over the Internet, combined with the technology of air travel, allowed us to effectively manage these distance jobs.

We are now doing the same with public sector information based and other service jobs. Only political pressure, exerted through lobbying on our politicians, has slowed the pace at which we export agricultural, health care, education and government jobs to the lower cost of living parts of our globe.

A Short Term Blessing, Long Term Pain

Our dedication to the relentless economic logic of short term, year over year, profit maximizing investment that has helped us become more productive over the past 5 decades is being to catch up with us. It had huge benefits. We expanded technology under its logic. We increased the quality of life for most Western people under its influence. It is a classic example of the vision strength that our evolution has given us – the ability to act energetically this year’s seasons, and to look ahead to next year’s seasons, and perhaps the year beyond. Sure, the theory for looking longer is there. We do 5 and 10 and 20 year return on investment calculations. But we act in much shorter time frames. We are not really very good at anticipating the longer term consequences of our short term smart actions. Most decision makers did not want to create global warming and environment destruction and resource deletion. But we did anyway.

The Same Pain is Now Starting to Happen With respect To Jobs.

As we destroyed jobs in manufacturing, agricultural and natural resource harvesting, we compensated by creating more jobs in government and tax-finances services. The consequences of doing so are now become dramatically clear.

• The more government jobs we created, the more government gets involved in the day to day detail of our commercial and private lives.

• The more health care and education jobs we created, the larger their proportionate cost when compared to our gross domestic product became apparent. We are being to become concerned about our ability to pay for all of them out of tax based finances.

• The more jobs we exported to lower cost of living economies, the less national family income there is to support our families and the smaller our tax base for paying for those government, education and health care jobs.

No One Openly Talks about this “Elephant in the Room”

We don’t talk about this “Jobs and Technology Elephant in the Room” dilemma in our public discourse. We can’t blame anyone for it, tempting as it is for some of us to blame big business or political leaders. It is simply another consequence of our evolved strength as human beings – act to shape this year’s seasons, and next year’s, and maybe the seasons after.  We might talk about longer time frames.  But we find it almost impossible to collectively come to consensus about how we should act in the short term to avoid negative impact of job destruction in the longer term[2].

Instead, our politicians talk about investing in innovation or in small business or in new infrastructure programs as ways to create new jobs, and solve the loss of job problem.  They are out of touch with the longer term dynamic inherent in investing in increasing productivity through the use of technology.

It is a Deep Structural Problem that Comes From Being Human

None of our current political talk will solve these basic underlying structural problems.

Some people reading this essay will respond by saying “your logic is too simple”. But like all such logical simplifications, it has one great value – it illuminates.

Because the logic used here is rather simple, you can point out lots of specific counter instances. Unfortunately, doing so does not invalidate the relentless reality of the following logic.

1. As human beings, we extract things from nature, through harvesting or through growing, to meet the needs of our lives – sustaining ourselves and creating and supporting our next generation.
2. As tribally evolved creatures, we have invented complex forms of social collaboration to make that process more productive – the sum of what we accomplish in groups through specialization of labor and trade of goods / services is far greater than what we can produce as individuals.
3. We now use work based income as the main means to distribute the economic results of that social collaboration. We use jobs to allow individuals to get the income they need to participate in the highly symbolic societies that we have created in the past 10,000 years or so.
4. We participate in those societies because we evolved as human beings to develop ourselves (I-Me), take part in relationships (We Two), live in families to nurture the next generation (Our Family) and belong to tribes in order to define our social identities (My Tribe).

Of course, we no longer do all of these things as simply as our ancestors did millions of years ago. Most of us belong to more than one tribe for instance. But the underlying psychodynamic of being a human being has not changed all that much in that time.

1.  In the past 150 years or so, our ability to develop and to apply technology in an ever more productive ways has resulted in the integration of our societies into a global network, inter-dependent on trade in goods and services to ensure our collective well being.
2. In the past 50 years or so, the relentless logic of our short term, year over year, capitalistic pursuit of profit in our integrated global economy has led us to substitute technological labor for human labor, or to export human labor to the lowest cost part of the global.

We will of course eventually use substitute technological labor for human labor there as well, once the cost of living standards become more equal across the global.

But this whole approach to managing technology – substituting technological labor for human labor while using job based income to support individuals and families – is no longer sustainable in its current form. It is destabilizing our societies, both nationally and globally. The signs of this are all around us.

The Signs of Global Destabilization

1. The global debt crisis threatens international stability and personal well being.
2. The growing loss of employment opportunities for our youth threatens the stability of our societies.
3. The growing pension crisis threatens the well being of the older part of our population. This will undermine the stability of our societies.
4. Global warning, which is the result of the unanticipated consequence of our current ways of producing and using energy to mobilize our societies,  can undermine our societies.
5. Our collective inability to control our societies’ dependence on the limited natural resources like oil and gas and the ocean’s clearly declining fish stocks will undermine our societies.
6. The unlimited exploitation / destruction of forests could have a negative impact in the natural process that refreshes the air that we breathe. Our collective inability to address that and institute a substantial approach to the harvesting of resources form our forests can undermine our societies.
7. The growing political instability in parts of our world and the associated confrontation dynamics engaged in by leaders at the national level fuels the constant nagging concern that that we could experience fuel nuclear based confrontations that could dramatically alter the nature of our globe, at least in part.
8. The growing distrust of the average citizen in the ability of their governors / governments, whether elected or imposed or hired, to address these dynamics, never minds solve these problems is undermining our societies.

So what is the solution? 

I have ideas, but I fully accept that I DO NOT KNOW. I also do not believe that any other INDIVIDUAL knows. The issues need collective responses. The only thing that I can do is express my ideas on these issues in order to contribute to this collective dialogue. If others agree, then I have done what I can do. If others have been ideas, then I need to listen and be persuaded by them.

I believe that we need new forums (and also forms) of dialogue that bring people together, both within and across societies, to talk about these issues and invent new ways of address them collaboratively[3].

Collectively, we have evolved as collaborating tribal creatures.[4] We need to come up with new shared models – ways of thinking – new forms of culture – new shared ethical norms –  which allow us to tackle the following challenges.

1. Move beyond the relentless short term, year over year, pursue of profit, while retaining the positive aspects of capitalism – its fostering of innovation, its creative destruction of old ways of doing things so that they are replaced with new ways that produce more with less and do so in a way that is not destructive of either people or the ecology of our globe.
2. Create ways of living that allow human beings to live as dignified family members that are committed to the successful rearing of next generations, however the family is defined and takes into account personal sexual preferences.
3. Create models of work that allow human beings to excel as individuals while as the same time recognizing the vast variety and variability of individual capacity, motivation, and drive, which at least in part results from the differences in the genetic and rearing endowment we each receive before we can exercise effective personal choice.
4. Create political institutions that recognize limitations of our “I-Me, We Two, Our Family, My Tribe” psychodynamic inheritance from our evolutionary history, while more effectively dealing the needs to plan and to anticipate the consequences of our social decisions on our ecology over time spans that exceed the current and next generation, so that we don’t inadvertently destroy the future quality of life of our descendants not yet born.
5. Replace the current societal definition of personal identity as being partially dependent having (or having had) a job that is current in at least Western societies with one that is more focused on making a contribution to society over the course of one’s life in a variety of ways.
6. Replace the current use of job based income as the way in which the majority of individuals get the economic resources they need to support themselves and their families with an alternative that still fosters personal initiative and a sense of responsibility for self (i.e. not living out of your neighbor’s “wallet” by saying that the “government should” support” your or provide services and resources you need at no cost to you).
7. Create forms of economic, governmental, and personal accountability, based on complete transparency of information, that essentially eliminate the large amount of intended fraud and societal posturing that allows those of us who are most self serving to take advantage of those of us who are more narrowly focused on the meeting the needs of our personal and family lives.

None of this will be easy. But we better start, or we will lose control of our future, both as individuals and as members of our societies. If we start to do this, we will also come up with solutions that make the “Job and Technology Elephant No One Wants to Talk About” go away of its own accord.

I believe that the Internet, and talent from the so called underdeveloped world, will be a large part of meeting this challenge.

I also believe that our understanding of the nature of leadership will need to be completely redefined, moving from a model that is based on “I am the leader of the tribe and therefore you follow” to one that asserts “I am highly skilled at facilitating, both through my personal persuasion of others and through my use of Internet  to facilitate dialogue which allows people to collectively invent and communicate new ways of thinking and acting about how we live on our globe”.

We are an amazing species. We have the ability to recognize our limitations. At our best, we cope with any long term dynamic our short term strengths create for us. At our worse, we engage in mutual destruction (e.g. war) fuelled by fantasies[5] of what the world and others are like.

We have a choice. We have free will when it comes to the future.  We can create solutions out of collective dialogue that will also get beyond all of this. Or we will not. It is simply a question of choosing in our personal lives. The other amazing thing is that we now have a technology, the Internet, where personal expression has the potential to persuade others in a way never before experienced on our globe.

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[1] The role and nature of money, a form of shared social meaning created by human beings to facilitate the development of ever more complex forms of social organization, really needs to be part of this story. But this is beyond the current scope. As a result, I use worlds like income, wealth, finance, and economy knowing full well that I am avoiding explaining how the human creation and use of the idea and social reality of money impacts this all.

[2] Our ongoing collective failure to respond in a coordinated fashion to climate change and the over exploitation of the ocean’s natural resources are the two clearest examples I know of this dynamic result of our evolution.

[3] These forums and forms of dialogue must be much more effective that the current international set of meetings in which politicians and bureaucrats (the governors) engage (e.g. on international trade, climate, regulation of the oceans …). These current gatherings are really just meetings of the privileged. Unless they become far transparent and far more accountable to the world at large, not nation’s internal political elites, their only real result will be to continue to convince the globe’s people at large that politicians and governments are completely ineffective in dealing with the globe’s real dynamics.

[4] As well as warring ones – but that is a topic for another day.

[5] I wanted to say “paranoid fantasies”.

How do you use performance contracting to pick “good”, rather than “bad” organizational leaders?

“Why Are We Bad At Picking Good Leaders” is 5th on Harvey Schachter’s Toronto Globe and Mail Ten Best Business books of 2011. In it, Jeffrey Cohn and Jay Moran present the 7 characteristics that they correlate with good leaders.

1. Integrity
2. Empathy
3. Emotional Intelligence
4. Vision
5. Judgment
6. Courage
7. Passion

These qualities have been praised by many other “leadership” writers over the years. Cohen and Moran tell organizations to select for organizational leaders who demonstrate these qualities. They provide “stories” which illustrate how they believe that organizations can do so.

But all of this advice may be missing an essential point. Finding a person who is exceptional on these 7 qualities may be a next to impossible task for most organizations.

Suppose that a “good” leader needs to demonstrate possession of all 7 qualities at a level that is at least 2 standard deviations above average. Simple math will shows that the likelihood of finding, i.e. selecting, such a person is very slight.

The normal distribution graph shows that only 2.4% (=2.2% + .2%) of the population will be 2 standard deviations above average when you consider 1 characteristic. If you expect an individual to be 2 standard deviations above average on 7 qualities, you have to multiply 2.4% by itself 7 times. If you do this on your calculator or in Excel, you will get a very small number indeed. The following table shows the probability of finding a person who is 2 standard deviations above average on a progressively greater number of qualities. As you can see as you want people to have such outstanding levels on more and more qualities, the less likely you are to find them.

Let’s make it easier. Say that a good leader only needs to demonstrate these 7 qualities at a level that is 1 standard deviation above average. Even in this case, the chances of finding individuals who demonstrate most or all 7 of these qualities at this above average level are still pretty slim (2.7 people in each 1,000,000).

But we need to move beyond statistics. Cohn and Moran’s 7 qualities are not “simple” human behaviors. They are human characteristics that depend on a complex interactive mix of genetics, up-bringing, experience and education. This is the reason why years of time and millions of dollars of organizational investment in “leadership” training and development have not really produced an abundance of “effective leaders” who posses these 7 qualities at these levels.

Does this mean that most organizations might as well forget the process of “finding” or “developing” good leaders? I don’t believe so. What can an organization do find and to develop better leaders?

Organizations certainly need the succession planning processes that Cohn and Moran advocate. But organizations need to be base their decisions about individuals in such succession planning processes on an underlying performance management process that is strongly based on forward-looking, metric-based performance contracting.

An individual who consistently achieves or betters metric based performance targets over a number of years, in a variety of executive positions, is a potential future organizational leader. That person is demonstrating that she or he can apply the “right” personal characteristics to stand out from the average performer in “this” organization. Useful leadership is always demonstrated in the context of an organization’s shifting specific economic, technological, social and cultural conditions over a number of years.

The abstract “leadership characteristic” labels used by Cohn and Moran, and many other writers on leadership, tend to ignore this. Executive search consultants and academic writers turn “leadership” into an abstraction precisely because they are removed from the day-to-day performance of people in their client organizations. They do not have to deal with leadership as a concrete set of behaviours demonstrated by a specific individual that lead to valued results in a specific organization as over a significant period of time.

Executive search consultants perpetuate this tendency to relate “leading” to these kinds of highly abstract personal characteristics. It is a core assumption necessary to the continuation of their business. Unless clients believe that leadership is “transferable” from one organization to another, retained executive search for leaders from outside an organization makes no business sense.

If we approach “leading” in a less abstract way, and focus more on demonstrated “in context” performance, organizations are more likely to succeed at picking “good” leaders. Organizations that seriously want to “pick and develop” the leaders they need for the future will do the following.

1. Organizations will take care to develop their internal performance contracting competencies. They will use forward-looking performance contracts. These contracts will include a process by which boss and subordinate contract to use metrics to track subordinate progress. These metrics will derive from the automated business applications the organization uses to track and to manage the work done on a day-to-day basis.

Once such a forward looking contract is “signed” by both boss and subordinate, these metrics will be delivered independently to both boss and subordinator over the course of the performance period. As a result, the power relationship between them will shift. Bosses are more likely to become coaches when subordinate performance goes off-track. Subordinates are more likely to “ask” for help when they see that they are under achieving.

This performance contracting and progress monitoring process will be in place for at least the “manager of others” levels and above in the organization.

2. The senior most executives in such organizations will systematically review actual performance on such performance contracts to identify top performers: – individuals who consistently achieve and deliver at or beyond their contracted performance metrics.

3. These organizations will promote such top performing individuals so that over the years their job scope becomes more complex and wide ranging. As a result, maintaining “top performance” status will become harder and harder over time. This will refine the identification of potential leaders based on actual performance, not personal loyalty or personality fit between boss and subordinate.

4. These organizations will “move” such top performing individuals to a variety of assignments over the course of their career. This will allow the organization to see if their ability to deliver at or beyond contracted performance levels remains consistent in a variety of organization environments (functional, operational and geographic).

”Picking good leaders” in this way will take commitment over a number of years. The performance contracts for the CEO and the CEO’s immediate reports will consistently require the presence of metrics that “show” that this is being well done.

Organizations that do this will not be “bad” at picking good leaders. Instead, they will be shaping their futures in way that increase their probability of long lasting competitive success over a number of executive generations.

“Shape The Future, don’t appraise the past.”™

Engage your staff – start performance contracting and stop performance appraising

Are you, like thousands of managers, dreading the performance appraisals that you need to do at the end of every year? You are not alone. Just about every survey of working professionals that asks questions about performance appraisal document the discontent that people feel with the performance appraisal process.

So how do you make this better? How do you avoid the year end performance appraisal blues? Simple, really. Make a resolution to move from performance appraisal to performance contracting in 2012. Here’s how to do it in seven easy steps.

1. Start by making a list of each of the people for work for you. Then for each one, brainstorm the things that they do for you. Use the outline facility in Word or a software tool like Inspiration or paper and pencil, whatever works for you.

2. Once you have an initial list, re-organize it until you have between 3 and 7 main responsibilities for each person. It’s hard to work with more. if your list is longer, group things together until you have the 3 to 7 you need.

3. Now imagine that this person is going to do a great job on each of these 3 to 7 items throughout 2012. Visualize this. Run an internal film or set of pictures if that works for you. Ask yourself the following questions about each of the 3 to 7 responsibilities. Use the following script to help you do this.

“Jack (or whatever the person’s name is) is doing a great job at xxxx (fill in one of the responsibilities in your list). So what will I be:

◦ Seeing – what’s showing me that … (the person’s name) … is doing a great at this?
◦ Hearing – who’s telling me that that …. (the person’s name) … is doing a great job at this? What are they telling me?”

4. Translate what you are imagining – seeing and hearing – into a single statement – a measure or metric that lets you and others know that this person is doing a great job at this item. Ask yourself the following question as you do this.

“Will I be hearing and seeing this every day, every week, every quarter, …?”

That adds an important time dimension. The shorter, the better. Keep then under a quarter.

5. Organize your results into a single page. List the 5 to 7 responsibilities. Put the appropriate measure or metric below each one. Title the page “Draft performance contract for … the person’s name.” Make two copies.

6. Now you are ready to have a meeting with the person. Give the person a copy of the draft performance contract. Work through it together. See if the individual is clear about each item and each measure. Listen to any issues the individual has about any item. If these concerns help clarify things and make the measures even more concrete and specific, modify the page to reflect these concerns.

7. When the two of you are through, you negotiated a straight forward performance contract between you. Turn the modified draft into a final version. Make two copies of it. Each of you sign both copies, and then take one for yourself. Doing so finalizes the contracting process between you.

Only 1 more thing to do and you are on your way a hassle free performance appraisal at year end.

Schedule a meeting once a month with each person who works for you. Bring your copies of the performance contract. As you go through your one page together, ask yourselves:

“Am I seeing and hearing what we thought we would be seeing and hearing? Are the measures being met?”

“If yes, great -.let’s keep going.”
“If no, what can we do to get back on track?”

There, you have stopped performance appraising and become a performance contractor. Instead of looking back and evaluating, you are looking ahead and coaching.

You will find that your folks appreciate knowing what they have to and how it will be measured. They will probably surprise you by exceeding some of the measures.

If performance problems do occur, then the two of you have become collaborative problems solvers. Together, you will focus on fixing performance problems as they occur, not evaluating them after the fact.

“Shape The Future, don’t appraise the past.”™

You Can’t Manage What You Can’t Measure – More From the C-Level Consultants Discussion on Linked In

Incorporating Management Measurements into Managed Work Flow

Let’s take the point of view of an innovative manager. I have a bunch of software in place in my organization that manages workflow. That is, for transaction-based events that must be handled inside the organization, we developed piece of software which routes activities from person-to-person based on the contents of the previous event. Data or documents flow along this this workflow as appropriate. Scheduling events allow individuals to assign pieces of work to either the next available person in a role, or to specific individuals. Decision events route the work down one sub path or another. Essentially this is a managed workflow. With some thought and care it can be implemented in a variety of ERP or other packages.

Now let’s add a measurement component.First, let’s lay out some some basic principles or values on which we want to base our measurements.

1. Not every occurrence of an event in the workflow will take the same time. Some will take longer than others on both the actual time put in any calendar elapsed basis. This will be a function of both the content of each actual occurrence of the event, and on outside events (e.g. vacations).

2. Individuals who do a particular event in the workflow are the best judge of how long a particular occurrence should take based on the knowledge they bring to the doing of the event.

3. The point is to provide feedback which helps them complete the task, as well as aggregated measures which help management decide if intervention of some kind is necessary either with an individual(e.g. coaching) or with the structure of the work flow itself.

So how would you do that? Remember you can’t manage what you can’t measure. What do you can measure here? And how would you do that in a way that is not obnoxious and over rigid, but still respects the capability of the individuals doing the work during the particular events in the workflow.

Here is how I would do it.

1. Add a component to the software which measures the elapsed calendar time between the initiation of an event in the completion of that event. That’s reasonably easy to do.

2. Store this information in a database.3. Provide periodic reports to the individuals who complete events in the workflow which show:

a. Their distribution of completion times,

b. as compared to the average distribution of completion times for all of the people who do this event,

c. as compared to the normal curve.

Why provide these three levels of feedback in this way?

1. It respects the fact that many things can affect the completion of a particular instance of the event – some of which may be beyond the control of the person completing it.

2. It provides individual with feedback that compares their distribution of completion times against the average distribution of completion times. It provides them with direct information about their level of performance, not subjective judgments by others.

3. It provides a norm, a normal distribution, which says that management expects variation in completion times. We are not just providing you with this feedback to try to drive you into completing events in the shortest time possible.

So, if we implement this we have a very sophisticated measure and manage system which is really not beyond the capacity of much of the software we have today.

The point I’m making here is that it’s not just about what we can measure and not measure, but also about the values we bring into the process of implementing measures in a management context.

I built primitive versions of feedback mechanisms like this and have been deeply impressed by the willingness of the people handling the events in the workflow to take this feedback and find ways to improve the quality of what they do.

“A Measure What You Manage” System that Works

Sandy Pentland’s book “Honest Signals” ( http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=11532 ) makes it clear how much our evolved internal psycho-dynamics are still functioning as if we were living in tribal and other “survival” situations.

I personally think that management has to “consciously” work with and “against” our evolved interpersonal judgment mechanisms. I believe that this has deep application in recruiting and in performance management.

Our evolved psycho-dynamics precondition us to “rapid judgment of others” and to “action”. That made sense in a tribal, hunter-gatherer world, where meeting a new person required “instant” assessments and “flight / fight” reactions. It does not in modern society, and certainly not in modern management.

Performance management in organization must move us beyond the inappropriate use of our evolved human “natural” abilities. Our performance management processes must meet the requirement of managing complex organizations and technologies that populate our world. (The subject of my last blog.)

But we can move even further down this path. I once worked for a CEO who said three things.

“1. I need to get the folks who work for me thinking about the same things that I am. I need a way to convey that to them without having to tell them in talk all the time.

2. What counts is not the past. Explanations about the past don’t help me any. What counts is commitment on the part of the folks working for me  to doing something which changes non-positive trends – trends starting in the past that will continue to happen if my people don’t do something to keep these trends from continuing to happen.

3. The numbers which are important to me today are not the numbers which may be important to me 6 months from now. Sure, some numbers are perpetually important, but I need others as I and my folks do things to manage and to change the business and make it better.”

He said these things to an innovative systems chap who happened to be a physicist working for his organization as a lead business application designer. That chap said:

“I don’t understand management. It is like a big cloud bubble chamber experiment in particle physics to me. You get all kinds of data and the best that you can do is look for patterns which you think explains some things.”

This systems chap worked with the CEO to implement a “measurement system” that was based on the following ideas and principles.

1. Each person can only get as many numbers from the “system” as will fit on one 8/2 by 11 inch page.

2. You can only get numbers that already exist in one of the transaction processing business systems that are already used to run the business. If you want new numbers, you can only get them through the process of improving the functioning of these systems.

3. All the numbers that are available are listed in a data catalog which the system made available to each individual executive. (Getting this data catalog up and maintaining was a real “roll up your shelves and catalog” effort in meta-data management.

4. Librarians and public relations people provided input on how to “structure” the presentation of this data catalog to executives so that they would find it “user friendly”, and could navigate through it in ways that made sense to them, not systems analysts.

5. Each executive could pick the numbers they wanted to see. They would get a personalized report of their numbers every day, even though not all the numbers changed every day. Changed numbers were highlighted. Individuals could request supporting graphs showing the historical patterns of any of the numbers on their personalized report. These “supporting” graphs also showed the trend lines that were being used to predict the “at year end” projections of these numbers. (See point 8 below.)

6. An individual’s immediate reports would get a copy of that executive’s personalized report at the same time that the individual got the report. Usually, they were delivered to all of these folks in-boxes at the same time. That meant that people in the top three or four ranks of this company got the following each day.

• A copy of their boss’s personalized report.
• Their own personalized report.
• Any support “graphs” of any numbers on their personalized report they had requested. Everything was always printed out on 8½ by 11 inch paper.

7. Executives did not have to explain their choice of numbers to their bosses.

The physicist-systems chap trained in physics believed that management was a process that depended a great deal on individual intuition and experience. He did not understand management. He believed that many executives did not either. He thought that executives often acted on “intuitions” that were beyond rational explanation before the fact. He did feel that he should in any way interfere with their personalized approaches to the “bubble chamber” experiment called management.

The CEO thought his job was to get his folks to produce results, not do this in ways that reflected his own approach to problems.

This combination of beliefs was extremely important in setting up this system. I believe that it was also key to its success.

8. Once an executive asked for a number in the data catalog, that person would get the following versions of that number:

• Actual to date
• Budgeted ( if available),

and

• Projected to year end.

These projections were based on estimating systems that the physicist developed for each of the entries in the data catalogue. The physicist and his system team developed statistical processes which they used to project these numbers. These process were based on “curve fitting” technologies, as well as dialogue with folks responsible for operating the source transaction processing systems about the nature of each of these numbers.

This team regularly reviewed the success of their projection routine by comparing their projections against actual numbers as they became available. As they learned to from these regular comparisons, they updated these prediction- to-year-end mechanisms.

Regular updates to the data catalog communicated the results of this assessment and updating process. This also quelled the inevitable debate about “how to predict” among the executives.

9. Each number in the data catalog was classified as either an output number the result of effort put in) or an input number (some kind of effort put in to produce some output). The data catalog preparation team based this on dialogue with the individuals responsible for the source transaction processing business applications.

Although there was a little bit of flurry among the executives about this classification in the beginning, it rapidly settled down, once the daily reports started going out.

It took the best part of a year for this “measure what we manage” system or application to settle in. The CEO’s sponsorship of it was extremely important in its initial “acceptance”, even if this acceptance was less than enthusiastic on the part of some of the executive team.

The system really took off when the CEO insisted that his report consist entirely of ratios – of outputs over inputs. He explained his reasoning for his choice for this in his personalized report. The first part of it simply reflected long term ratios that he considered important to his understanding of the up and the downs of the business They were stable.

The second part of his personal report he regarded as “experimental”. He chose ratios for it that reflected his current attempt to delve deeper into the dynamics in the business that he thought could be improved or were changing. They were his way of gaining insight into some of the dynamics of the business about which he had preliminary, unconfirmed hunches.

Others in the executive group started to experiment with similar approaches on their personalized reports. Again, they never had to explain their choices to anyone other than their direct reports. Before long, the personalized reports of the top 1 or 2 ranks of the executive group consisted almost entirely or ratios.

Again and again, the CEO in this organization emphasized what he wanted to hear from folks when things were considered less than positive. He asked them to tell him what they were going to do to attempt to change that, not provide explanations about the past. He considered simple focus on understanding the past as a form of “analysis paralysis”. He wanted such “insight” linked to actions they were taking to change the projected trends in raw numbers being taken from the transaction processing systems used to run the business.

As the CEO changed the some of the ratios that made up his personalized report, this reports able to follow the things he was concerned about in the business. Often, these changes were based on intuitions or hunches or curiosities he had. They did not always make sense. They did not always provide “useful” information after a couple of days or weeks. He simply dropped them when he die not find them helpful to him, and replaced them with other things which intrigued him. As his direct reports followed these changes, they “started to read his mind more accurately’, based on following the patterns of his changes in his personalized report.

The projections-to-year end focused people lower down in the executive ranks, who often did not interact with the CEO on a day-to-day, basis on doing things rather than explaining things. The culture became less concerned about blame and more focused on doing. Over time, the executive ranks “got” that not doing something about a “downward productivity” trend was the real thing for which they got into trouble with their bosses.

In some cases, an individual executive’s dis-satisfaction with the quality of some of the ratios on a personalized reports led to that executive taking an interest in the source transaction processing business application and requesting upgrades to it. Over a number of years, there was a commonly noticed improvement in the quality of both operational and customer facing transaction processing applications.

This system became known as the “management daily”. The CEO attributed a year-over-year annual 10% increase in the operational productivity and profitability of his organization for the period that he was CEO directly to the “management daily”. He claimed that it created an “cascading alignment of thinking and concern” in the executive ranks of the organization – a pulling towards constant productive improvement that he had never experienced before.

To me, this is a “you can’t manage what you don’t measure” system which makes sense for an organization.

1. It respects the fact that individual executives have different insights and intuitions about what is important in management.

2. It encourages dialogue between an executive and his or her immediate reports. At the same time, it allows these immediate reports to shape a different kind of dialogue with their own immediate reports.

3. It insists that the numbers – the measures – come from the transaction processing systems used operate the organization.

4. It builds feedback loops from the management team back to these transaction processing systems.

No additional measurement effort, other than the collation and reporting system itself, is required to generate numbers. The transaction processing systems can be used to handle internal operational activities or be used to manage customer centric ones.

5. It follows change over time, as the management team makes change to improve the organization.

6. It focuses management dialogue on the future, and on acting to change the future, not explaining the past.

7. It focuses management dialogue on productivity, on outputs over input, where it should be, and on trends in productivity, not point in time measures.

This point in time focus is one of the weaknesses of many external investment analysts who focus on quarter by quarter results. Their time frame is simply too limited to truly “get” what is happening inside an organization.

Some of the features of this “management daily system” have found their way the balance scorecard systems. Unfortunately, I believe that in many cases balance scorecard implementations have lost two of the great strengths of this management daily system.

• First, balanced scorecards are often static – reflecting one individual’s point of view about what counts, or a consensus of individuals ‘view about what’s important at a certain point in time. Balanced scorecards may include ratios, but they often lack the “experimental component” of the management daily. They are not “personalized” to each executive like the management daily

• Second, balanced scorecard systems seldom implement the projection element of the management daily system. The lack the “learning element” – comparing projections against actuals – which the physicist-systems chap implemented in the management daily. As a result, balanced scorecards often become systems which focus executives on explaining the past rather than achieving value results in the future.

Link such a “management daily “measure what you manage” system to appropriate performance management incentive schemes. Let the incentives consist of a thoughtful mixture of individual, business area team and organization wide incentives. Get this linkage right, and you create the environment needed to focus people on creating extraordinary organizational excellence.

I have implemented “management daily or weekly” approaches in each organization unit that I have managed since my exposure to this organization. It has been relatively straight forward to set up the necessary data extract and numbers processing systems, given the advances in business intelligence and business analytic software.

In each case, I have been deeply impressed by the change in thinking that resulted in my direct reports. They became future action oriented, rather than past explanation bound. We achieved significantly enhanced performance results as a team, and as individuals. This is a form of “measure what you manage” that works.

You Cannot Manage What You Cannot Measure

The C-Level Consultants Network on Linked In led by Frank Feather has been having a very powerful discussion on “You Can’t Measure What You Cannot Measure”. (see http://linkd.in/gt57Ox if you are on Linked In and have the ability to follow this group.)

The discussion got me going on one of my core beliefs: performance contracting and appraisal, particularly at the senior level, are a waste of time without two factor metrics. So I posted this comment in this group.

This continuous debate about “You Can’s Manage What You Don’t Measure” has been around since Alfred Sloan. To some extent, we forget what the core of his message. “You cannot manage managers unless you have clear insight into the measures that you are going to use to measure their performance.”

As an individual who has managed managers and consulted to them at all levels, including the C level, I know how true Sloan’s prescription is. At the same time, as a work place psychologist, I know how counter intuitive measures are to our evolved “individual-relationship-family-tribal” internal psycho-dynamics. We did not evolve to measure. We evolved to act.

But management is not day-to-day life. Although it is strongly impacted by the evolution of the tribal component of our internal psycho-dynamics, and our need to act, we can also use the rational parts of our mind to provide structure to management action.

In my own career, I developed the following approach to managing managers through performance contracting and appraisal.

One:

Focus on metrics that are relevant to what they are expected to produce.

Two:

Use only output / measures – what I call two factors measures – something that manager are expected to produce over something they are expected to use to produce it. Revenue per employee and lines of software code / developer hours are two examples that I have used.

Three:

Never have more than 3 to 7 of these – remembering that short term memory really only holds only about 5 things in its view and with two factor measures we are already dealing with complex things.

Four:

Focus on the trend over time, not the absolute measure at any point in time.

Five:

Focus on the pattern of results in the trends over the whole set of measures, not any particular one.

Over the years, I have received lots of comment about how this too complicated – takes too much energy etc., often from very senior executives.

That always sounds like an excuse for me from people who prefer to drop back to our evolved “individual – relationship – family – tribal” ways of doing things rather than actually managing thoughtfully. Often, they invoke the “ASS” principle as their justification.

Who ever said that management was simple. Take Fukushima for instance, and many of the other things we do in our world today. They are not simple. “ASS” simply does not apply to such things.

It constantly amazes me how experienced managers and executive search professionals persist in their belief that somehow a desire to act before thinking is the sign of a “good manager”.

It constantly amazes me how many times I get a vague answer to the question – “how do you intend to measure this person’s success in this new job: in the first three months, in the first year, in the next year” – during the lead up interviews to search and recruitment at the senior level.

And finally, I have come to accept that the consistent resistance to two factor metric based performance contracting and appraisal that characterizes our executive and management culture is based in our evolutionary history. We evolved as tribal creatures whose internal psycho-dynamics lags behind the needs of management in today’s world. We like to think that acting is more important that thoughtful action. In management, thoughtful and successful, action requires at least two things:

◦ knowing what to measure,
◦ and actually measuring it over time.

Enterprise Leaders: Who is Good At What?

Back in the early 1990’s, I used MacDraw on a Macintosh to prepare the presentation on leadership for an academic audience. The following slide summarizes its primary point: leadership enterprise effectiveness is a matter of fit between a leader’s personal competencies and the enterprise’s business context.

The Fit Between A Leader and the Enterprise Determines Success

(See “Effective Leadership Performance: A Question of Ability or A Question of Fit” for the full presentation.) My fascination with what makes a person an effective leader in the workplace has continued since then. Since making this presentation, my experiences as a leader and as a follower in all four enterprise contexts – production, innovative, creative, and turn-around – has not changed my basic belief that leadership effectiveness is first and foremost a question of fit. This is especially important to remember as our economy is undergoing fundamental change. We need to deal with the harsh realities which lead to the current recession. We will need innovative, creative and turnaround leaders rather than production leaders. I do not think that we will really see an end to the current recession under many of the people who led us into it, have changed. They are leaders whose competency profile is closer to the production profile above, in my view. Much of the economic activity in the last twenty five years has been in production organizations, both commercial, not-for-profit and political. Movement out of this recession will be led by the leaders of creative, innovative and turnaround organizations, as it has in the recessions of the past. Recessions are a time in which many organizations which eventually become established as household names first start up. Many of our existing human resource and executive search professionals do not think about leadership in these terms. By and large, their experience is with production enterprises in times of economic stability. As a result, they do not think critically about the crucial differences in this chart. Sometimes they talk them, but that is different from behaving them. Their business experience, and the intuitions they have built on it, is largely with production enterprises in a time of economic stability or growth. They use these intuitions in their subjective “chemistry and fit” judgment of leadership candidates. As a result, they are not really the best predictors of who will be tomorrow’s outstanding enterprise leaders. I believe that the recent down turn in the executive recruiting industry is partially the result of this “future discounting” of this dynamic. These thoughts started when I participated in a recent Linked In group exchange on the competencies required for Break Out and Turn Around executives in the Green Tech Economy. I went back to the chart above to clarify my ideas on this. I found that it applied partially. I needed to combine it with the schematics which follow a little later in this blog to really get clear on these issues. Break Out and Turn Around are very different enterprise situations. Unlike business as usual, organic growth, or growth through acquisition in production enterprises, they place very specific demands upon an enterprise leader. Turn Arounds involve cleaning up messes. (See a white paper on these dynamics). They involve doing more with less. The dollars needed to fund turn around activities have to be found somewhere. Tough people and business decisions need to be made about what to stop doing, as well as what to continue doing in different ways. The prime competencies required by Turn Around Leaders are analytical conceptual and unifying / integrating people skills. Turn Around enterprise leaders need to be destroyers as well at change agents. They must replace what they destroy with ways of doing the remaining things in an enterprise in that inspire people to contribute. They must inspire confidence when times are bleak. They must achieve constant visible progress towards goals that both insiders and outsiders value. Turn Around Leaders must have an ability to disrupt the status quo, but do so in a way that people believe will work. This mean applying already proven ways of doings things to existing enterprise processes and work flows. Break Outs involve getting an enterprise beyond a current plateau. Many small startup enterprises with exceptional products and services languish at a level far below their market potential. They become “life style” organizations, generating a decent living for their owners and employees. But they never get beyond this.

The Stages of Technology Development and Commercialization

(Source for this figure – and the one following below – The Clean Technology Report – see http://cleantechnologyreport.ca/.) Product development has a life cycle. The first three phases are ones that require deep personal belief and product development vision on the part of the enterprise leader. The best leaders for these stages are often individuals who believe so deeply in the potential of their ideas that they ignore negative feedback from the outside. They push ahead based on their inner beliefs. The strength and conviction of those beliefs inspires both investors and early stage employee. Technical and cognitive skills predominate in such leaders’ competency profiles. People skills are extremely important in the latter stages – product commercialization. Generating and paying attention to feedback is a key component of success in these stages. Effective enterprise learning requires structuring early, tentative operational and marketing initiatives so that they create actionable production and market feedback. Learning how to do new things in “big” ways successfully is the core skill demonstrated by enterprises that commercialize new products and services.

Product Development / Commercialization Risk Profile by Stage

It’s all a question of effectively managing different kinds of risk at different points in the technology and product development life style. The strong personal inner beliefs of early stage enterprise leaders are precisely what are required to overcome the technology risk that predominates in the fundamental research, applied research and technology development stages. During the last two stages –  product development /commercialization and market entry / market volume-  the risk profile changes. The financial stakes increase as well. The investment required in the first three stages is relatively smaller than that needed for the last two. (If I were doing the schematic above, financial risk would be proportionately larger, probably somewhere between market and operational risk.) Consequently, the required leadership competencies are very different. The ability to innovate is still key, but a different kind of innovation is now required. It’s no longer about developing a product or service. Instead, it’s about bringing a product to market. It’s about developing, servicing and holding customers. This is especially important in the face of success. Success means rapid operational expansion, done in financially prudent ways. Such success breeds imitation. Imitators have one major advantage. They are imitators rather than developers and innovators. They can compete without having had to make the financial investment in first three stages. Consequently, they are able to compete on price. Financial prudence is essential to being able to meet such early competition. In the first three stages, the driving product developer is the single most important human resource in the enterprise. In the last two stages, the enterprise leader is still important. But this individual is no longer the only really important human resource. Enterprise leaders need to do “through others”. There is two much going on, and the kinds of expertise / experience needed are to broad to allow micro-management to succeed. The unifying and integrating people skills are now essential. These skills are needed to inspire and to motivate, so that the leader can delegate to others in a time of constant growth pressure and of extremely limited resources. The enterprise leader must integrate the activity of these others in a way that ensures that they continually generate and respond to the feedback needed to adapt the new operational and marketing approaches. Many innovative firms successfully start up, make it to the end of the technology development and demonstration stage, and languish. They become life style enterprises, generating a reasonable living for their owners and employees. A group of initial customers stays loyal to them, based on the business value they are receiving, and the emotional investment they have made in being early adopters of the technology. The underlying reason for this has to do with this change in required competency profiles on the part of the enterprise leaders. The startup leaders are smart people. They have an intuitive sense that the skills which successfully brought them through the first three stages are not the ones needed in the future. They know, in a pre-rational, pre-conscious way, that they do not have the ability to manage successful commercialization. They accept, without ever articulating it, that they will ignore market and operational feedback in favor of their own opinions and beliefs. They rationalize away the fact that they do not have the people skills to do through others by pointing to themselves as being more creative and more determined than average. They sense that the immediate micro-managing form of control that has been key to their past success will not work in future. Besides, they liked things the way they were in the first three stages. There was a great “fit” between their competency profiles and enterprise success. Most of them will not give over “their baby, their creation” to another leader. If they do, they will only do so to a “hand picked” person whom they sense they can still control. As long as the enterprise generates enough money to afford the “life style” of key players, things stay stable until market pressures undermine revenue, or outside investors force the issue. Investors however have a different set of requirements. They want the financial success which comes with market entry and market volume. However, they often prefer to avoid the turbulence and the difficulties required to work through a successful change of enterprise leadership. As a result, many formulate “exit” strategies that are focused on “acquisition” by a larger, already existing company. This creates an environment in which these leadership transition issues are handled as a result of the acquisition, rather than in pre-thought and planned way. Leadership change, especially startup enterprise leader change, involves much emotional energy. Not all investors have the desire or the perseverance to work through it. The down size of course is that the acquirer gets most of the financial benefit of the eventual break out. A better understanding of these dynamics, by startup entrepreneurs and investors, could help foster transitions to Break Out Leaders who can more effectively lead enterprises during the last two stages of commercialization. The financial benefits of Break Out can then accrue to the startup leaders, the investors and the employees of the enterprise.

Enthusiasm is not Enough – Especially in E-Health

The commentary below hit my inbox today. There have been almost two weeks of constant media coverage over the supposed scandal at the Ontario Government’s E-Health agency. All of the media coverage, and this commentary, miss the point in my opinion. It does so badly.

First, let me say that I do not know Sarah Kramer or Alan Hudson. I also don’t know David Caplan. As always, in my view, the focus on the media is in personalities, instead of the underlying root causes for affairs like this.  As a species, we just love the allure of gossip and speculation.

My own view of why Kramer and Hudson failed has little to do with the things that have received so much time in the media. I believe that they were simply not qualified to this job. I also believe that the people who put them in these positions did not really understand what competencies are required in the successful leaders for e-health implementation.

The current Ontario E-Health strategy is clear. It  has real targets with associated measurables. Kramer and Hudson, and everyone else associated with its creation, deserve to be complimented for their willingness to be concrete and tactical in formulating their plans.(see http://www.ehealthontario.on.ca/pdfs/About/eHealthStrategy.pdf)

Lots and lots of money has been spent on information technology in health in Ontario over the past ten years. International collaboration over many years has lead to architectures such as Health Level 7 (http://www.hl-7.org/). It is not a question of inventing new IT architectures.  Technical innovation is necessary. But it is no longer the key.

The implementation of a strategy is not the same thing as the formulation of it. Implementing technically based change strategies is especially difficult. The implementers must accept and recognize that they are changing a culture , not just implementing technology. Success at cultural change requires many things, including an ability to understand the secondary benefits of that the current culture has for people. Without a willingness to go beyond the surface level, and deal with this aspect of cultural change, failure is inevitable.

Kramer’s and Hudson’s tale is about the failure to recognize that E-health is a deep cultural change. On the surface, they came across to me as individuals who are technical specialists, insensitive to cultural nuances. Their attitude to the governmental culture in which they were working is my best evidence for this. In fact, in listening to Kramer on TV and radio, I often got the sense that she was somewhat contemptuous of it.  This struck me as a bad sign about someone who was going to lead a major cultural change.

As I listened to the media coverage of this affair over the weeks, I became more and more sad. We need successful e-health badly. It has great promise for reducing the unit costs of health care delivery, as well as improving the lot of individual patients. But it is not going to succeed if we keep pretending that e-health is a MEDICAL TECHNOLOGY and INFORMATION TECHNOLOGY issue. These aspects of the problem are secondary to the cultural change issues involved. The currently ongoing belief on the part of our senior politicians that e-health can only achieved by leaders who have medically related information technology expertise is not helping the situation.

Successful implementation of e-health means convincing doctors to change a fair number of their personal practices. Even more importantly, it means getting their office assistants to change theirs. They do a fair deal of the record keeping and administrative work in doctor’s offices and in hospitals. That will not be easy.

Lots of information technology implementations have failed over the years, in many industries. People need to change the way they do things to successfully use new information technology. Achieving this is not easy in the “command and control” culture that characterizes financial services and manufacturing.

Medicine has far less of “command and culture” in its culture. Effective collaboration between relatively independent professionals who use a common infrastructure is a far better description of its culture. Cultural change is this environment is more difficult than culture change in “command and control” that characterizes many of commercial organizations in our society.

The successful implementation of e-health is first and foremost a cultural change issue. It needs short term tactics such as the one spelled out in the E-Health strategy document. But it also needs a much broader social vision in its leaders. It needs leaders who can work with existing colleges and universities to change the medical education curriculum so that we start producing doctors, nurses, medical technicians and administrators who look forward to using e-health approaches. It needs leaders who will collaborate with medical professional bodies to incorporate e-health exposure into on-going professional education programs. It needs leaders who are respectful of the huge contribution to medical record keeping that is made by office assistants and hospital administrators. It needs leaders who recognize that the first step in changing a culture is respect for it, and the people who live it.

What it does not need is leaders who so convinced of their own superiority that they feel justified in ignoring the simple and straight forward rules of procedure that have served government agencies well for years. Kramer and Hudson failed in their leadership. The people who put them in their positions failed to appreciate that e-health is not about techniques first, and people second.

E-health is about the convincing independently minded professionals to undergo the personal change needed to use new e-health technologies. When the leaders of Ontario’s E-Health Agency demonstrate that they understand how to undertake such cross institutional cultural change, we may begin to benefit from the technology underlying e-health.  When the politicians who have the ultimate responsibility for the delivery of health care in our society recognize that implementing e-health needs cultural wisdom more than its needs technical prowess, we may begin to succeed.

Maybe we will get lucky and such leaders will emerge without deeper insightful on the part of politicians and media commentators. But I doubt it. I suspect that I will have more reason to be sad in future.

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Here is the link to the article that I am commenting on … …

http://www.chmonline.ca/news/article.jsp?content=20090618_162815_7368

Selecting Senior Leaders: Is “Good Enough” good enough?

April has been a discouraging month. You would think that is would be different. Spring is finally here. Flowers are coming up in the yard. The grass has turned from brown to green. But … …

Anyone who has been listening to the news in North America is likely to share this feeling. This is especially true as the month ends off with the consistent news attention to the H1N1 (or swine flu) virus.

However, that is not what is discouraging me. During the month, I read two excellent reports published in Ontario. The first was the “Ontario Clean Technology Report”. I had a chance to listen to John Mertl, one of the co-authors of the report, speak at Guelph Partnership for Innovation monthly breakfast (Ontario, Canada), and then meet with John. It’s an impressive piece of work.

As well, I read the “Ontario in the Creative Age” report published by the Martin Prosperity Institute at the School of Management at the University of Toronto. Another impressive piece of work. (The Institute has a really innovative web site as well.)

All of this first class thinking should be inspiring. It is. But I was discouraged by it. Both reports commented on the lack of needed top management talent, and the risks that it created for Ontario’s future economic prosperity.

While I have been doing this reading, I have attending a lot of executive networking sessions. I have been visiting a number of the local college campuses. I have been learning more about Health Care Informatics, a topic that I have long been interested in. (See the COACH web site for some insight what’s happening there.) Talent, creativity and the willingness to learn at all ages were ever present in the time I spent in these activities.

What I am left with an impression that we as a society do not really know how to operationally step up to the challenges which face us. We do not know how to get the right people in the right top management spots to allow us to innovate in a risk managed way. As a result, we end up moving from economic crisis to societal crisis. Some part of this cycle is fueled by an inability of our top managers to see further than next quarter’s P & L or next year’s operating budget.

We are bound by the tribal nature of our social psychology. Our approach to leadership and top management is deeply conditioned by the genetics underlying our brain’s functioning. We depend more on implicit, emotional processes in these activities, than on rationally chosen ones.

The dialog at the executive networking sessions consistently comments on the fact that the executive search industry almost never present candidates who are not “true to type”. Executive recruiters who attend these sessions comment that their clients insist on “exact fit”, especially in these times, when there are so many candidates on the job market. The people who sponsor the networking sessions point out time and time again that the majority of executive jobs are filled through through networking, not the executive search industry or media advertising.

All of this sounds and feels like “a lot more of the same”, at the exact time when we need “different results and visions”. As an individual who has benefited from leading truly innovative, high performing management teams, and coaching superb individual managers, I find this discouraging.

Maybe it just the fact that it is a late spring. Maybe it is the fact that the world remains a very competitive and unpredictable place. Maybe it is the fact that we seem better at “commenting on” our social situation than at doing things which produce lasting and effective change. But all and all, April has been a month which has left me wondering if we are really ready as a society to tackle the massive amount of day to day concrete change that we must undertake to leave the world a better place for future generations. It has to start with doing a better job of aligning innovative proven performers with the change work that needs to be done in our institutions and enterprises. We will not face our challenges with “more of the same”.

Decades of leadership research, emotional intelligence work, competency modeling and employment interviewing research do not seem to have altered our fundamental commitment as a species to informal social processes for placing individuals into the majority of the leadership jobs in our society. We continue to do so even while we talk about more effective hiring processes. Something deep in our tribally based social psychology seems to lie behind these facts. Our rational fore minds cannot seem to get beyond the guidance of the more emotional parts of our brains.

We know that interview results are not an effective predictor of on-the-job performance. We know that hiring mistakes are costly in both real dollar and lost opportunity terms. We know that the “the tough interview questions” and the ways of preparing for them, have not changed in decades (see this link from January 1983). We know that on-the-job performance and peer ratings of past on-the-job performance are among the best, most consistent indicators of future on-the-job performance. (Ever since the OSS – Office of Strategic Services – conducted research on this during the Second World war). Yet we continue to use social networking and face-to-face conversations for selecting and placing people into most leadership jobs.

Are better ways? Yes. I attend networking sessions to watch people interact with other people, not to experience them interacting with me. The people with the capacity to listen accurately and to integrate what they hear into their interaction with others stand out. The ones who can present ideas clearly and persuasively stand out. The ones who can truly facilitate the interaction of the others there stand out.

Observation turns out to be a better tool than interviewing for me. It was in my own past recruitment practice as an executive. Watching a candidate interact with other people in the organization, especially if I could arrange short working sessions for them, turned out to be a very effective way of picking top flight candidates. It beat my recruitment interview ratings of candidates hands down.

Assessment center techniques, role play techniques and group interviewing techniques, coupled with structured ratings from with trained observers, do a better job than interviewing at identifying top performers and fit to an organization. Short on-the-job assignments followed by systematic data collection from those folks who worked with the candidate, work better than one-on-one interviewing too. Yet the people who seem to have least understanding of this are recruiters, both in HR departments and in search firms. By and large, they just offer us more of the same when it comes to recruiting and hiring.