by Nilofer Merchant | 8:55 AM June 20, 2011
Human stuff — the soft stuff — is rarely valued. We talk about it, sure. But we don’t change it. We don’t reinvent it. We give lip service to it but, when times are tough, we focus on the hard stuff.
We manage numbers because it’s easier. We say we value people but we focus on the things we can track, we can inventory, we can show, and we can log in and out of. We focus on stuff that matters, surely, but we are doing the thing of managing the measurable, rather than the meaningful.
In a recent post, called “People are Not Cogs,” I argued that we still think performance or people, when we ought to think performance through people. Management experts, marketplace results, and thorough research all proves that people are central to what we produce today and how well we can produce results.
But we continue to talk about people like cogs and numbers and inputs and outputs. The cost of that is that we’re missing how to harness the power of people in our businesses. We need to recognize the need for both performance-based decision-making and people-based decision making. The former creates efficiencies and propels markets; the latter drives creativity and innovation. Both are important to the health of an organization, and to growth, and to viability. Yet given the current focus on performance-based data, how might we bridge the gap?
Maybe, as a start, we ought to describe peopley stuff in more economic language, by putting it in some context that will help our CFO and engineering friends better understand how things relate to one another.
Here is a proposal for a bridge-the-gap model:
S(uccess) = P(urpose)T(alent)C(ulture)
Or: S = (PT)C
Let’s talk about each one in turn.
Purpose. Purpose is when people come together because they believe in what they are there to do. A friend was interviewing for a firm where at first they said, “This guy’s asking too many questions.” He challenged their thinking, asking as many questions during the interview as they were asking him. Knowing that he was going to apply his creative energies, he inquired about purpose and mission and vision. And the reason that the team struggled with this is that they were looking to fit him into a box.
But when you look around, notice that failure today rarely happens because Employee X failed at their part, their box. Failure today happens between the boxes. It’s when engineering doesn’t deliver what marketing said the consumers want. When we have shared purpose, when we know why we joined the company and what that company hopes to do, people own the commons and we don’t let things fall between the gaps. Organizations need to be able to index how well we are communicating, and thereby understanding purpose.
Talent. Then there’s talent. Jim Collins told us many years ago to focus on getting the right people on the bus. He didn’t say shove them in the back seat and ask them to sit down and shut up and let us drive. But, at too many organizations, we live in a hierarchical bus where one group largely tells the other groups what to do.
We need to think about what we do with people after we get them on the bus. Google acts like a modern company in that way. They don’t just define box-like roles then try fill them; they hire talent as they find it. It’s the 21st century way of thinking about talent. Secondly, they enable their people to know the big picture. In most companies, only 5% of people know the strategy. That’s absurd. We ought to have 100% of our people to know the direction we’re going. Why? Because then each of us, not some manager for an hour, can work on aligning what we are working on to the big picture. This makes each of us more responsible, it’s necessary. Does it require each of us to step up? Yes, of course it does. It’s the reason Google attracts talent, as do so many companies that say: we don’t want to be told to sit down and shut up, but we do want to join organizations where we can add our strengths to co-create the future. Organizations ought to ask their people how their work ties to the big picture.
Culture. Culture’s all that invisible stuff that glues organizations together. If you follow me here at Harvard’s blog, you likely already know that I believe culture will trump strategy every time. Culture mostly comes down to two things, which are flip sides of the same coin:
Do We Trust Each Other? A team I was recently working with reminded me of 6-year-olds playing soccer, where every team member simply surrounds the issue much like a team of kids surrounds the ball. I worry that as this team grows, and they’re not all in the same room, they will fail. By always huddling, they’re signaling that they don’t know how to trust one each another to do their unique parts. They — like many teams — simply don’t know how to “let go” to and with others, thus risking their ability to scale results.
Do We Trust Each Other? A team I was recently working with reminded me of 6-year-olds playing soccer, where every team member simply surrounds the issue much like a team of kids surrounds the ball. I worry that as this team grows, and they’re not all in the same room, they will fail. By always huddling, they’re signaling that they don’t know how to trust one each another to do their unique parts. They — like many teams — simply don’t know how to “let go” to and with others, thus risking their ability to scale results.
Who Cares About the Baby? A team recently described an issue where they do their best right up to a hand-off milestone, then relinquish any part of the project’s ultimate success. They described their discomfort with a baby analogy: “Will you take care of my [baby] the same way I would, knowing our shared goal is to [get this kid to a good college]?” When the “baby,” or in this case, business performance, isn’t co-owned by everyone, things can easily fall through the cracks. And truth be told, that’s where most business problems happen in our high velocity world — between the cracks of divisions or silos or the “white space” no one owns.
A healthy culture allows us to produce something with each other, not in spite of each other. Measuring that has multiple elements to be sure. The bottom line is that this is how a group of people generates something much bigger than the sum of the individuals’ outputs.
Let’s take another look at our equation. Success is a function of Purpose, Talent, with a Culture accelerant. Or: S = (PT)C
Why arrange these terms like this? Why not add them all together? Because these characteristics have multiplicative and exponential effects on each other. If you have zero purpose or zero talent, you’ll get zero product. But if you’ve got a modicum of each, you’ll get something, even if culture is zero. As you improve culture, the chances of success increase dramatically — and there’s no limit to how high they can go. That’s why I put such a focus on building cultures that fuel innovation. Culture is the exponential element that has eluded us for so long. It’s the key velocity factor for how companies outpace everyone else.
No, people are not cogs. Our job is not about measuring inputs and outputs, our job is to reinvent work to bring in purpose and talent and culture and create the kind of value that can happen when we allow it to happen.
We know enough to know people matter. But we’ve got to find a way to define how well we are doing against objective measures of purpose, talent alignment, and culture. Building a bridge means developing a common language so each of us understands that everyone else is acting out of shared interest. The equation is a first step, but certainly not the last. There’s more work to be done to create standards to let companies measure their purpose, talent alignment, and cultural norms over time and against their competitors. It could do for the world what NetPromoter did to the soft fuzzy stuff of customer love. So while I know this preliminary equation isn’t nearly complete in our ability to quantify our work fully, it’s a start for how to talk and measure what we’re doing inside our organizations.
Ultimately, blending performance and the “peopley stuff” will let us build the organization of our future, respecting all the factors affecting performance.
Nilofer Merchant is a corporate advisor and speaker on innovation methods. Her book, The New How, discussing collaborative ways to have your whole company strategize, was published in 2010. Follow her on Twitter @nilofer.
NILOFER MERCHANT
Nilofer Merchant has personally launched 100 products amounting to $18B in revenue. Her blue-chip career includes Apple, Autodesk, GoLive/Adobe. She's served on both public and private boards. Today, she lectures at Stanford. She’s an expert on collaborative leadership and author of The New How and 11 Rules for Creating Value in the Social Era.
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