Robert I. Sutton's Blog, page 3

Phyllis Korkki of the New York Times wrote a piece this Sunday for her Workstation column called Invasion of the Annual Reviews.  It emphasizes the risks and downsides of annual reviews, and she quotes me quite a bit -- I didn't realize how much until the piece came out.  But she got it right, as she always does (I have worked with her before, she is very professional and very careful).  As Phyllis had only so many words to work with, and she weaves in the perspectives of others including an interesting clarifying statement from a Yahoo! spokesperson asserting they are not doing forced ranking, but rather "“Our system lets employees understand how they are performing relative to expectations (exceeding, achieving or missing), and there are no hard and fast rules.” 

I got a couple emails from friends -- one congratulatory and the other that disagreed with me -- suggesting that the piece meant I was opposed to all annual performance reviews, not just bad performance reviews.  I confess that I have raised the question of if they should be abolished before and two parts of the piece may have helped to fuel this impression:

This paraphrase from Phyllis:

Professor Sutton is wary of rankings and yearly evaluations in general. Many organizations, he said, would be better off if they provided continuous feedback, with formal evaluations coming into play mainly if a worker is being eyed for promotion or has shown substandard performance.

And the closing paragraph:

“If performance evaluations were a drug, they would not receive F.D.A. approval,” he said, because “they have so many side effects, and so often they fail.”

These are accurate representations of my perspective.  But I think it is important to make clear that I am not opposed to all performance evaluations, only bad ones. -- and unfortunately, they are done badly more often then they are done well.  So, what are the hallmarks of good performance evaluations?  Consider three:

1. Is what happens during that annual conversation and evaluation woven into the fabric of every day life, or as I was quoted in the piece "“this weird form you fill out every year that has nothing to do with everyday life.”  So if your boss gives you positive feedback all year, or doesn't give you feedback at all over the course of the year, and then you get bad review, the boss isn't doing his or her job.  In organizations that generally do evaluations well, I think of McKinsey and GE, although they do yearly evaluations, there is also an emphasis on teaching and nudging leaders to constantly give their direct reports regular coaching and feedback.  There are two tests here.

If you are a boss, do people often seem surprised by the feedback you give them during annual reviews?

Does the review conversation seem uncomfortable and unnatural, something that bears no relationship between the feedback and coaching (or lack of it) that happens throughout the year. 

2. How is excellent performance defined and measured?  In some firms, even though the goal is to create collaboration and information sharing, "stars" are nonetheless anointed solely on the basis of individual achievements (and for more senior folks, on the basis of their team of department's contribution, not on their contribution to the overall success of the organization).  In too many companies, although leaders hope for cooperation, they reward backstabbing, stomping on others on the way to the top, and other flavors of dysfunctional internal competition.  So the question of "who is a superstar here" is the one I ask leaders all the time, I want to know "are they the people who are great individual performers AND who help others succeed -- or are the people that ignore and even undermine their colleagues?"  This is a theme that Jeff Pfeffer and I wrote about in our books on The Knowing-Doing Gap and Hard Facts, and I revisit in Good Boss, Bad Boss. Note also that both GE and McKinsey are usually very careful to anoint the right kind of stars -- and so are a lot of other organizations I admire including IDEO, P&G, and the Cleveland Clinic. 

3. Finally, while I believe strongly in weeding out bad apples and rewarding good behavior, what are the assumptions about the nature of a human organization?  Do leaders believe that there will always be a certain percentage of losers who will need to be weeded out and a certain percentage of amazing performers who deserve the lion's share of rewards.  This is the assumption that drives many stack ranking and one I don't like and that is contrary to the evidence.  It is also contrary to the logic of the quality movement (which weirdly, GE who at least had this system in the past embraced as well).  Imagine a manufacturing system or worse yet a hospital where you assumed that year over that there would be a 10% defect rate, 70% of the work would only be OK, and only 20% would be great.  Unfortunately, that is the implication of how stack ranking is done in some places, even other wise very well managed places.  

Here is how things can play out when this assumption is implemented in a misguided way.  One senior executive I know had spent years building a great 12 person team.  He hired carefully, he weeded out a few rotten apples, and has the team humming.  Then, the company hired a head of HR who had unwavering faith in firing the bottom 10% each year -- he was required to fire one of his people.  In essence, following the logic of Deming and other quality gurus, he had built a system with no defective parts -- but was required to throw one away.  He refused to do it and quit -- which, as he told them, solved their problem, because now they didn't have to fire a member of his team (which they did anyway, as he "didn't count.") 

I hope this clarifies my views.  Note that the NYT's piece also talks a bit about Adobe's recent efforts to abolish annual reviews and replace them with frequent check-ins.  Huggy Rao and had in-depth conversations with Donna Morris, the brave executive who led this change, and we talk about the details in our forthcoming book Scaling Up Excellence.  The upshot is that Donna and her colleagues worked on shifting the focus from the mechanics of annual reviews to the nuances of daily interactions between leaders and their teams.

I am quite interested in the path that Adobe is taking because the result may be that, indeed, there is a better alternative to yearly performance evaluations.  Indeed, note that, in the places that do them well, they are woven into the fabric of everyday life -- so perhaps an interesting test of how bad  AND how good your annual performance evaluation is "what would happen if we didn't do them?"  Oddly, if you are doing them really badly, then I would argue that doing nothing might be better.  Just give employees an envelope with their yearly raise and skip that stilted dysfunctional disingenuous yearly conversation.  And if you are doing things really well, then perhaps you will find out that you don't need them after all because people are getting such regular feedback and coaching that the formalities are a waster of time in most cases-- think of all the time and money you would save! 

Ed Catmull has been one of my favorite senior executives for a long time.  I admired him from afar after reading about him in David Price's excellent The Pixar Touch.  I admired him even more after talking to people at Pixar about what it was like to work with him (see this story). And then I got to him a little through several interactions I had with him as part of authors' group here in the San Francisco area and also, when Huggy Rao and I interviewed him for Scaling Up Excellence.  

The most interesting, and I think revealing, interactions I have had with Ed, however, have not been in person -- they have come from the process of reading and commenting on an earlier draft of his book, and exchanging emails with him.  And, most recently, reading the finished product.  I won't go through all the twists and turns of the process, but Ed (and obviously his co-writer Amy Wallace, who I did not interact with directly) clearly were dedicated to getting it right,  Even in that early draft, the astounding and intertwined stories of Ed's life and Pixar's development into one of greatest companies on the planet were riveting, as were his insights about building a creative company that run throughout the book. But, as Ed and his Pixar colleagues do, he wasn't just satisfied with just a good book, he took the time and effort, and went through one difficult iteration after another, to make a book that just sings.  You will have trouble putting it down once you pick it up.  And while it may seem like it just rolled out with ease, as with most great things, Ed and Amy wouldn't let it go until it was right. 

It was privilege to get a few glimpses of how Ed's mind works during the process, especially over the Christmas-New Years break last year when I read the book closely and gave Ed several rounds of comments (I would read a few chapters, and then send him another note). My favorite exchange came at one juncture, after reading the section where Ed describes the sequence of events where he, Steve Jobs, and others were involved in selling Pixar to Disney and announcing it to his people in Emeryville, where Pixar is located and those wonderful movies are made.

 It was pretty deep into the book.  And I finally realized that it had a problem I had never seen in any book written by a successful executive, as I put it to Ed "not enough narcissism."  There wasn't ENOUGH information about the influence he was having, the words he was saying, or about how he turned his considerable wisdom into action. There was plenty about other people, folks like Steve Jobs and John Lasseter that reflected his keep empathy and observational powers.  As I read the final version, I saw that Ed perspective and influence is emphasized just enough for my tastes now -- although his trademark modesty persists.

The book isn't out to until April.  But you should pre-order it now, you will want to read it right away. Here is my blurb -- I hope you love this book (and admire Ed's smarts, values, and accomplishments) as much as I did:

“This is the best book ever written on what it takes to build a creative organization. It is the best because Catmull’s wisdom, modesty, and self-awareness fill every page. He shows how Pixar’s greatness results from connecting the specific little things they do (mostly things that anyone can do in any organization) to the big goal that drives everyone in the company: making films that make them feel proud of one another."

P.S. Note that I have revised my list of books that every leader should read to include Creativity, Inc.

P.P.S. When I wrote to Ed how much  I liked the cover, he said something like "well, we have some pretty good artists here." No kidding. Isn't it beautiful? 

Scaling Up Excellence will be published on February 4th, 2014.  We know that is a long time wait.  We want to get some of the main ideas out there before the book comes out to get your reactions and ideas about scaling, and of course, to get people excited about buying the book.  And authors especially love pre-orders -- they are great for setting the stage for a successful book.  So we've spent the last couple weeks working with Justin Gammon (our fantastic cover designer) and Ayelet Gruenspecht at Crown publishing to arrange a "sneak peek" of about 25% of the book for people who pre-order the book.  We worked hard to make the process as painless as possible. 

Here are the steps

1. Pre-order the book online 

2. Go to our new site scalingupexcellence.com and the simple form there (just click "here" it is hard to miss!).

3. Ayelet will send you an email from Random House with the pdf (which you unlock with the password she sends you). 

Scalingupexcellence.com has links to a variety of places where you can order the book, so you can to do everything there. But as long as you have an order number (which comes in the email that all booksellers send after a purchase) it doesn't mater where you buy it. 

You've got 30 days to read it.  The pdf we will send you contains:

 The Table of Contents, so you can see what is in the book.

The Preface "The Problem of More." It describes how we can became interested in the scaling challenge, what we mean by scaling, and several overarching lessons that run throughout the book including "scaling is a problem of more and less" and "scaling starts and ends with individuals."

Chapter 1 "It's a Ground War, Not Just an Air War: Going Slower to Scale Faster (and Better) Later."  This chapter starts with the most important lesson that we learned from the seven years we've spent (so far) studying scaling and digs into seven mantras, themes that pervade the book including "spread a mindset, not just a footprint," "link short-term realities to long-term dreams," and "fear the clusterfug."

 Chapter 7 "Bad is Stronger than Good: Clearing the Way for Excellence."  As Huggy likes to put it, this chapter shows how scaling depends on going from "bad to great" because destructive beliefs and actions are so powerful and contagious that, if they aren't eliminated, or at least tamped way down, excellence can't develop, spread, and persist.  We review evidence and tell stories about methods for "breaking bad" including "plumbing before poetry" and "use the cool kids (and adults) to define and squelch bad behavior."

The book contains eight chapters, so this is about 25% of it. We look forward to your comments and reactions to our ideas,  and to your scaling stories and questions.  Huggy and I would love to hear from you.  You can always leave a comment here or email Huggy or me (see scalingupexcellence.com to send an email to Huggy); if you want to send an email to both of us at once, send it to [email protected]. 

Thanks so much. And please spread the word about our sneak peek. 

P.S. If you tweet or blog about the sneak peek, the short URL for the new scaling site is http://bit.ly/16znToN and we are using #scalingup when we do scaling tweets and such on scaling.  Huggy just started blogging (watching him do his first tweet was really fun, he was so excited) -- and he got @huggyrao!

 

This is reprinted from the Harvard Business Review site. I posted it there last week.  A big thanks to Julia Kirby for the wonderful editing.

Start talking about the challenge of “scaling” with people, and
you’ll find the term gets used to mean a lot of different things. For
example, when entrepreneurs talk about it, they are usually struggling
with matters of organization. Take Citrus Lane
CEO Mauria Finley, whose company was experiencing some growing pains,
appropriately enough; the startup sends monthly packages of great baby
products to moms. After raising $5.1 million in capital in 2012, it grew
from 6 to 20 employees.

Back in 2011, in Citrus Lane’s first six months, its small founding
team worked in a house and ate lunch together every day around a big
table. Any problem or opportunity that arose was dealt with right then
and there, lest misunderstandings fester or business prospects slip
away. Growing to 20 people working in a more traditional office setting
did not strike anyone as extreme change, yet the team found it had to
work a lot harder to unearth problems and opportunities. Even more
tricky, they had to learn to articulate something that had been tacit: a
shared understanding of goals, culture, and what it takes to succeed at
Citrus Lane. Today, they constantly remind each other to spend time
with newcomers and, as Finley emphasized, not just tell them these
things when they are hired or remind them a few times. The scaled-up
organization needs to hear about what matters most at Citrus Lane over
and over, to live these beliefs every day, and to observe her and other
leaders living them, as well. Deliberate effort is required because “it
isn’t something that just happens naturally at lunch every day any
longer. We are too big now.”

A growing employee base represents one type of scaling challenge.
Since my Stanford colleague Huggy Rao and I decided several years ago to
study scaling (it’s the topic of our forthcoming book Scaling Up Excellence),
we have heard about many others – so many that we thought, early on,
that we might need to put a finer point on which form we hoped to shed
light on.

For example, when leaders of much larger organizations talk about
scaling, they’re often talking about something more akin to replication.
In a 2001 interview with HBR, UPS’s then CEO Jim Kelly described the
growth of the company: “For decades, we’ve been able to grow
tremendously simply by expanding our core business geographically.
Really, UPS’s first 75 years was spent expanding across the United
States: first to 13 states, then to nine additional states, and so
forth. We just took our core delivery business and applied for rights in
different states.” Today that kind of marketplace scaling often means a
more complicated process of global expansion– such as IKEA’s opening
stores in China, or Home Depot’s failed efforts to do so.

And then there are the organizational leaders who use the term
scaling to describe their desire to find pockets of excellence in
behaviors and beliefs in the organization and spread them further – a
different challenge than adding new people and locations. We studied how
Wyeth, the large Pharmaceutical firm (now part of Pfizer) made dramatic
improvements in cost and quality across its manufacturing operation. It
first created pockets of excellence in a few small teams in each of
eight plants (calling them “mini-transformations”) and then relied on
mentoring and coaching to spread the superior practices throughout each
plant, from one team to the next.

Still another variation on scaling is when better practices are
transferred across networks of organizations. Between 2004 and 2006, for
example, a Boston-based nonprofit called the Institute for Health Improvement
led an effort called the “100,000 Lives Campaign” to raise awareness in
U.S. hospitals of the importance of some simple practices (e.g., more
frequent and thorough hand-washing) in reducing infection rates.
Ultimately, some 3200 hospitals comprising over 70% of U.S. beds
participated in the Campaign. There is compelling evidence (including
analysis done by members of a Stanford doctoral seminar that Huggy Rao
ran about five years ago) that the number of preventable deaths in U.S
dropped by about 120,000 during this period. (Other factors probably
contributed to that decrease, but the Campaign clearly played a large
role.)

In each of these situations, “scaling” refers to something different.
But as we dug deeper into these and other cases, academic studies, and
stories, we realized what they shared. Scaling challenges nearly always
come down to the same problem: the difficulty of spreading something
good from those who have it to those that don’t – or at least don’t yet.
It is always, in other words, the problem of more.

Finley and her team face the problem of more – and the success of her
growing organization depends on solving it. The need for more of what
was working well also challenged Wyeth, IKEA, and the Institute for
Health Improvement. Have their successful efforts come from the same
mold in terms of what they are spreading and by what method? No – and
yet, we are finding a great deal of commonality in the obstacles that
arise and the decisions that must be made. We’ve discovered guiding
principles that turn out to apply as other leaders and teams go about
building and uncovering pockets of exemplary performance, and spreading
those splendid deeds.

Sometimes the way to learn more about a subject is to focus in more
tightly and become more precise in one’s use of language. But sometimes
the challenge itself is big enough – like the basic problem of spreading
something good to more people and places without screwing up – that it
doesn’t help to narrow its definition. Sometimes, even with the use of a
word, it’s better to scale it up

I am working on other things these days, and indeed, it has been over six years since The No Asshole Rule was published. But as my friends remind me, no matter what else I ever do, or did before, I will be known as "the asshole guy."  Below is an email I got last night.  I think it is legimate, but can't promise it.  Note the headline of this post is taken straight from his email, which is [email protected].

If you contact the guy, I would love a report:

Bob,

My name is Mike and I am casting producer in Los Angeles.
I am working on a show right now that you and your readers should find
interesting.

One of the types of stories we are looking for involve
workplace sabotage. These assholes in the workplace do things to the rest of us
ranging from prank-level to malicious. Sometimes the effects aren't known until
much later.

This show will take a look at the long term consequences
and results of our actions and how they affect others. There will even be a
chance for restoration and reconciliation.

I'd love to tell you more if you'd be interested in
putting a notice on your site or even a Tweet!

Thanks for your time!

Mike Forest

Pitman Casting

818-666-3606

Stanford's James G. March is arguably the most prestigious living organizational theorist.  We are reading his 1981 classic paper "Footnotes to Organizational Change" for my scaling up excellence doctoral class. There is one paragraph in this paper that is especially inspired, in the beautiful style of his, March is explaining (among other things) that what many people (including senior management) see as resistance and rigidity is actually proof of great flexibility and innovation -- but the resulting changes are often what any one group actors don't want or expect: 

What most reports on implementation indicate, however, is not that organizations are rigid and inflexible, but that they are impressively imaginative (Pressman and Wildavsky, 1973; Bardach, 1977). Organizations change in response to their
environments, but they rarely change in a way that fulfills the intentions of a
particular group of actors (Attewell and Gerstein,1979; Crozier, 1979). Sometimes
organizations ignore clear instructions; sometimes they pursue them more
forcefully than was intended; sometimes they protect policymakers from folly;
sometimes they do not. The ability to frustrate arbitrary intention, however,
should not be confused with rigidity; nor should flexibility be confused with
organizational effectiveness…There is considerable stability in organizations,
but the changes we observe are substantial enough to suggest that organizations
are remarkably adaptive, enduring institutions, responding to volatile
environments routinely and easily, though not always optimally.

There is so much wisdom -- and also so much underlying evidence packed into this statement -- that I am going to devote a long time to discussing it with my students later today!  My favorite line is "sometimes they pursue them more forcefully then intended." I once studied a large convenience store chain that spent millions of dollars trying to increase courtesy after the CEO had a temper tantrum about bad service her received in a store -- he was pretty shocked when he learned how strongly the company responded, as they rolled out a far larger a program than he expected, wanted, or believed would be useful!

I've always been interested in situations like this where small signals from powerful people result in much stronger reactions than they intend -- the opposite of resistance to change, if you will.   And in this case it led them to scale up a program that was much bigger, expensive, and time-consuming than he ever intended. 

Earlier in the week, I did my first post at HBR.org in over 2.5 years -- my last was in January 2011. I was pretty shocked that it had been so long -- my last post was about a story I heard at Pixar on how Ed Catmull and Alvy Ray Smith (Pixar's founders) served as "human shields." In the 1980s, they were under pressure from their (then superiors) at Lucasfilm to do a large layoff in the division that eventually was sold to Steve Jobs and became Pixar. Ed and Alvy did somthing remarkable to protect their people --something that people at Pixar still talk about to this day.

As the song goes, ain't it funny how time slips away.  But the last few years have required intense focus from Huggy Rao and me to finish Scaling Up Excellence, as we both gave everything we had to the book -- it isn't up to us to judge the quality, but I can tell you that I worked longer and harder on this effort than any work project in my life. The last year or so, when people asked me what I was doing, I half-joked "I am trying to type my way out of solitary confinement in my garage."

To be clear, although I am delighted to have the book finally done, and both Huggy and I sometimes felt pressure to make progress and were troubled when we hit dead ends, part of me is sorry the writing is over. Huggy is a delight to work with (his speed of idea generation is astounding) and, well, the fact is that I am probably happiest when I am alone in a quiet room writing.  So the book gave me a glorious excuse to indulge in something I love. Now, I will turn that love to writing short pieces about scaling and other management and realted behavioral science topics -- here and elsewhere. And Huggy is getting cranked up to do so as well -- he is a remarkably creative guy, one of the most productive, thoughtful, and prestigious organizational researchers on the planet.

I will reprint the HBR post here in a week or so -- they let me do that after it has been the site for awhile.  The new is called "Scaling:The Problem of More." Julia Kirby, a senior editor at HBR (and a skilled management theorist -- see Standing on the Sun) helped me craft a compact summary of how and why we ended-up with such a broad take on the concept of scaling and what it takes to do it well. Here is the key sentence:

"Scaling challenges nearly always come down to the same problem: the
difficulty of spreading something good from those who have it to those
that don’t – or at least don’t yet. It is always, in other words, the problem of more."

It sounds so simple when I re-read those words. But Huggy and I spent seven years wrestling with this challenge -- and we aren't done yet!  It would be arrogant -- and also not very useful -- to claim that we've got all the answers just because the book is done.  As I will discuss in future posts, the book evolved from a process where Huggy and I believed that we would spend a few years gathering evidence, stories, and scaling techniques and then one day unveil the fully formed "truth"  in the book to a more social process.  Our writing was punctuated by interactions where we described parts of what we had learned to people who were knee-deep in scaling, had been in the past, or had other kinds of expertise related to scaling (especially our academic colleagues). Then we would listen to their reactions, stories, evidence, and advice -- and update our perspective little by little. 

Finishing the book is a milestone in this process, but as Huggy likes to say, "the adventure continues."  So please give us your reactions, tell us your scaling stories, and ask us hard questions. As you will see here and elsewhere, we are continuing to collect new studies, stories, and lessons about what it takes to scale up without screwing up.

 

Huggy Rao and I started working on this book seven years ago.  It has been our main focus for the last two years and, during the last year, when people asked me what I was doing, my answer was "I am trying to type my way out of solitary confinement in the garage." 

The publication date is February 4, 2014. But I will start blogging here and other places about the book now that I am not spending 60 or 70 hours week writing.  It is already available to pre-order on Amazon and we are doing lots of talks, webinars, and workshops on scaling in the coming months.  And we are building a website. Stay tuned! 

P.S. The cover was designed by the amazing Justin Gammon.  We went through many, many concepts and prototypes.  In a  month or two I will write a long post about the process, it was most instructive.  And although it is traditional for authors to complain about publishers, I have to give Crown a lot of credit as, so far, the focus during every decision has been on quality -- not ego and not office politics.  It is a rare and beautiful thing, and has enabled Huggy and I produce a book, and to have a cover, that we truly love.

I was tried
to get this out over Twitter, but breaking it into pieces ruins it.  If
you want to read one of the most spot on, timeless, and funny books about organizational
politics, check out the F.M. Cornford's 1908 classic MICROCOSMOGRAPHIA
ACADEMICA: BEING A GUIDE FOR THE YOUNG ACADEMIC POLITICIAN. 
You can get this short gem here for free.

And here is
my favorite bit:

“The Principle of the Dangerous Precedent is that you should not now do an admittedly
right action for fear you, or your equally timid successors, should not have
the courage to do right in some future case, which, ex hypothesi, is essentially different, but superficially resembles the
present one. Every public action which is not customary, either is wrong, or,
if it is right, is a dangerous precedent. It follows that nothing should ever
be done for the first time.”

It is amazing how over 100 years later, the same principle
is still applied far too often.  See Daniel Kahneman’s book
if you want to see some of the main reasons why – thinking is hard work!

P.S.  Cornford was a famous classicist at
Cambridge around the turn of the 20th century.

Several months back, Scott Berkun's publisher sent me an advanced  copy of "The Year Without Pants" to read; it is a pretty silly title and as you can see, the cover is pretty wild too (I love it).  Scott's last book, Confessions of a Public Speaker, was just splendid, so I thought I would take a look.  I was hooked immediately, as Scott offers a compelling story of the year he spent at Wordpress.com, a fast growing and wildly unconventional company where employees work from wherever they wish, there are few meetings and rules, and many of the conventional trappings are removed.  At the same time, because Scott is such a compelling writer and so honest about things, he doesn't whitewash things, he describes the ups and downs and the tensions. 

And if you read this book, you will also learn that some of the beliefs that people have about the future of work likely won't come true.  Yes, people had enormous freedom and were massively creative -- but at the same time -- they couldn't escape the constraints of being in an organization.They still needed some hierarchy (Scott was a team leader and he had some bosses too), there were agreements about standard ways to do -- and not do -- things, and everyone wasn't always delighted with how things unfolded.  His team was unusually functional and creative, the descriptions are wonderful, and the book also is filled with great pictures and other graphics that show the real people and the places they worked, and the kind of work they produced.

I read, or more accurately, start to read, several business books each week.  Most aren't very good, to tell you the truth.  This is the best book I have read since Adam Grant's Give and Take. If you read this book and Tracy Kidder's classic Soul of a New Machine, you can learn a lot about how work is changing (at least in some places), but also, about how it is still the same too. The technology certainly changes how and where we work, but we are still humans, we are social creatures, we strive for meaning and creativity, and we are all limited (and propelled) by our personal quirks and the attribuites of our species.

P.S. The Year Without Pants comes out in a few weeks, but I suggest that you preorder it, both because you will want it and because preorders will help this book get the attention it deserves. I am going to preorder my copy right now.