In 2014 Business will embrace the intangible.
The first step is to measure whatever can be easily measured. This is OK as far as it goes. The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can’t be measured easily really isn’t important. This is blindness. The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide.
– Robert McNamara as attributed by Thomas Handy in The Empty Raincoat
In the 20th century business success sprang from the combination kind of property rights (intellectual or physical), process and efficiencies of scale.
But in the 21st century we are rapidly accumulating data that suggests that the new competitive advantages are both much simpler and more complex. (Not that value chains, and differentiation don’t still matter, but scale is now definitely a matter of debate.). The new, primary source of competitive advantage is customer satisfaction and innovation. Studies suggest that the most effective way to ensure customer satisfaction is to have employees who give a darn and are empowered to act.
There’s another 20th century reality as well. Complexity. Complexity is (a lot of things, some of them very precise, but for the purposes of this discussion…) the state of being which is either intrinsically impossible to understand by traditional rationalist methods, or where the cost or time involved in such analysis makes it impractical for the time being.
It is these two big truths – the shift in competitive advantage, and the paradigm-shifting complexity that now defines our world, that are the real motivators behind the shift in business toward new humanistic models.
There are a few unacknowledged side effects of the shift, but perhaps the weirdest is the fact that business is now highly dependent on intangibles. We must accept things we do not understand, act in environments where cause and effect are nearly impossible to discern, and deal with the paradox of needing to think holistically and intuitively while existing in a constant state of data saturation.
So – what kind of intangibles, and what do we do about it?
My prediction is that in 2014, you’ll see these words at the center of important conversations, along with research and experimentation that leads to deeper, more actionable understanding of each. (Send in the philosophers for some of this).
In 2013 I wrote about the importance of intention, how it colors our perspective and nuances every decision and every act. Moreover, intention is a uniquely human (or at least organic) capability to both set and discern. This is why authenticity rapidly became so important. Authenticity is a very specific intention and people are viscerally capable of detecting it, like we can symmetry.
How do we understand wickedly complex situations? Through narrative. People are exceptionally good at inferring patterns and meaning. Narrative can frame a wicked problem in a way that we can share it, discuss it, make inferences, and create a vision of the future. The trick of course is that narrative takes some intangible skills to build, and is not absolute. There is no one narrative, there can be many. But the way a certain narrative frames the problem (is light a wave or a particle, is data a privacy or a property issue?) can profoundly affect what we are able and willing to do with those ideas.
The overused and very poorly understood emergent behavior of a human community. It matters. You know why? Because customer satisfaction and innovation depend heavily on it. And yet we are incapable of talking about it intelligently – yet. A recent HBR blog suggests a not terribly unique but inarguably correct list of things many good cultures have, but makes no suggestion as to how we achieve those things. There are some theories. I have some myself, but we’re going to start to get serious on this issue. We have to.
Seriously. Leadership of the advanced seeker mentality. Leadership that asks questions, inculcates values and intention, narrates intention, mission, and purpose, that constantly balances confidence and humility. Leadership with the intention of building more leadership. The Charlene Li 2,0 leadership, will begin to emerge from myth and legend and the yeah, but what about Steve shadows, and start to get serious. How do we build it, recognize it, and most importantly install and sustain it. Other forms of leadership will be failing at a pace that becomes noticeable.
Yikes. Who am I? What is human? How much of my identity do I own? Do I have identity rights? Are they the same or different from privacy rights? Singularity, transhumanism… these topics leave the world of freaks, sci fi, “Futurists” and other fringe places and become an important part of civic dialog.
These topics, among others, will stop being airy-fairy stuff. They will be the stuff that business is investing in. Whether we can measure it (now) or not. This century will depend on the immeasurable, the intangible, the unpredictable. Business will develop a… kind of faith …. In the complex systems and the wondrous things that (can) emerge.
The best is yet to come.
Perhaps the most welcome business innovations in century 21 is the realization that the 1990’s CEO pablum, “People are our greatest asset” is actually true, and that this means that business must rebalance its structures and processes to support and enable people rather than to control and contain them in boxes, while they service the processes and infrastructure. A flipped business if you will. A humanized rather than mechanized ideal of the perfectly efficient organization. It has finally been proved – what everyone already knew is true – employees who give a darn [sic] do better work, which makes their lucky employers more successful.
So we are thrilled that work will finally evolve away from what has often been a negative experience, and start becoming place where people thrive – along with the economy and society at large. It all sounds great. But it is an earth-shifting change that leaves many management teams uncertain and uncomfortable and many employees frustrated. A human-centric business questions some of the fundamental tenets of traditional enterprise design and operation, and it will take some time to sort it out. Being human is complex and being a business is complicated and so growing together is sure to be a precarious but altogether magnificent undertaking.
As yet however, many of us are still in a hard place.
Drivers of Disengagement
There are three ways that work becomes a soul-crushing, disengaging job that leads to “its fine like that”, what-kind-of-shortcuts-can-i-take, and the-least-I-can-get-away-with effort.
1. Work that asks people to do stupid stuff.
This can be menial work, in which the person doing the work has no stake or impact on the outcome. Think fast food, factory work, mail delivery, or other work that is heavily routinized and automated. A craft is different, because it involves mastery – these jobs do not. This also happens when the policies or processes of work are flawed in ways that are obvious to employees, but aren’t likely to change as a result.
2. Work that prevents people from doing good stuff
Many knowledge workers suffer in this camp, though often craftsmen (builders, etc) and service providers (nurses, consultants) do too. [My housekeeper quit her company for this reason and started her own, so my house is cleaner.] They have ideas, aspirations, curiosity, commitment to quality, but their management is so focused on maintaining the status quo that it is nearly impossible for these people to do any of the good work that they want to do. [This status-quo fetish is a frequent and sometimes unintended consequence of command and control hierarchies. The antidote is leadership.]
3. Work that takes undeveloped souls and keeps them in the dark
Hire people to do something, and never invite or enable them to develop their skills or to do more than they were hired for, and what you will get is glassy eyed mushrooms. These people disengage because they don’t know anything better. There can be many causes of stagnation, but simply accepting it is a losing strategy.
So how do we go from unintentionally soul-crushing to the labor’s Valhalla we seek? (Intentional soul-crushing is another matter altogether.)
Dan Pink showed us that intrinsic motivation is vastly superior to external motivation (do this, get that) to drive effort and outcomes for all but the most mechanical of tasks. Pink’s model shows that people are engaged (intrinsically motivated) when their work has three elements – Mastery – the ability to demonstrate and constantly improve one’s craft, Autonomy – the ability to solve problems and make decisions on their own, and Purpose – the idea that their work matters as part of a greater whole. (Click here If you haven’t seen his classic TED talk.).
Pink focuses on the individual, however, and what we need to understand here is how to make that work for organizations. There are those that claim the drivers of employee engagement are “Relationship with immediate supervisor, Belief in senior leadership, Pride in working for the company.” But normal people will recognize those as markers (KPIs), rather than drivers of engagement.
Drivers of Engagement (the human enterprise)
If I don’t believe that my company is valuable, then my work is not valuable, and therefore I don’t value it, so I don’t invest in it, I am not engaged. Duh. Purpose, however, is not limited to green and eleemosynary causes (thanks for tolerating my nerdy words. it means charitable). A corporate purpose is an understanding of the change you want to make in the world – whether it is to make people happier, richer, more entertained, more constructive in their work, etc. Purpose must be deeply authentic, and not just a carefully crafted-by-committee Mission Statement. I talked more about why it matters here. In order to scale beyond small business size, purpose must be accompanied by narrative – that expresses that purpose to your customers, your market and your employees. This gives everyone the ability to connect with tell and build his or her own part of the story.
2. Transparency and Impact
You may find yourself with a purpose, and you may mean it, and you may find yourself with a marketing plan that expresses it and a roadmap that builds it (congrats to you) (if you’re saying to yourself, this is not my beautiful purpose, this is not my beautiful roadmap, then read on). But to make it work, to make it great, you need a team of people who have full, mutual awareness of what they are doing and what the leadership is worried about.
If people can’t see the drivers of their work (why) , and the impact of their work (how’d I do?), they can’t be engaged. If R&D doesn’t know what marketing is pushing and marketing doesn’t know about the latest innovation, and the plan to re-architect the customer support program, and the team in Europe’s new experiment and the recent customer loss or win and the 6 major decisions that the executive team is working through, then they are probably not very engaged.
When people don’t know what is going on, they can not consciously affect its outcome. They are not engaged. Transparency is not just about soaking in each others intellectual and emotional effluence (though that has its advantages too), its about knowing what’s going on around you so that you can constantly align, connect, consider and matter.
The flip side of transparency is “impact”. With the right kind of transparency, i can see what is going on, and understand the impact that my best work makes. I can see who and how I help. That matters.
3. Mutual Dependence
When we work together as a team, we help unpack each other’s intellectual boxes, we refine one another’s ideas and discover new ones. We improve each other. We build a continually improving, communal memory, experience, and insight (to riff on a William Gibson quote). Members of such a team take ownership of their responsibilities seriously, but invite and relish in the fact that they can rely on their colleagues to help them work through sticking points and make their best work better.
A collaborative environment helps sustain energy, focus, and purpose. But to get here, you must be aligned, you must have a mutual respect that leads to mutual compassion and curiosity that makes it fun to air challenges, problems and failure and a joy to bash and hash it out together.
If you do not have a “culture” of mutual dependence at work, technology will not change that fact. Generally this is about aligning around common goals, and offering one another respect as a conduit to trust, which enables you to do what teams do best – amplify strengths, and minimize weaknesses. If you’ve ever been a part of that team, you know.
Some social media-ites believe that in the future, organizations will be purely emergent and collaborative, with no leadership required. I am not of that school – though certainly the nature of leadership will change.
Leadership matters, and there are two things that great leaders do 1) communicate without ceasing (leading to that transparency and inclusion thing) and 2) Listen without ceasing by asking lots of questions. Dear leader, if you aren’t both sharing your vision and listening to your workforce, then there is at least an organization’s worth of people who think you are a fool. This perpetual telling and listening looks like a subtle and dynamic balance between confidence and humility.
There is a third thing, and that is that you must be authentic. The human nose can detect the scent of patronizing palaver in micro-parts per million.
It is important to note that real leadership is recursive. Great leaders are constantly building the value and capability of communicating, owning, questioning and listening in all of their team members. Constantly.
[A fascinating counter-indicator here is the Valve thing. The billion dollar company with no formal hierarchy whatsoever. This merits study. There’s learning to be done to ensure that our egalitarian aspirations go more Jeffersonian than Orwell-Golding-esque.]
Related Topics – Gamification and Wall Street
5. Gamification as driver?
Gamification is a topic that has become tightly wrapped around the engagement axel. Gamification has two faces. The first is manipulative, the second is about forming positive habits. Most customers I talk to actually want the first, though I don’t think they quite realize it. This is disturbing faux-engagement, and is, I think, primarily a side effect of metrics abuse. Getting people to juice their numbers via manipulative performance metrics is not engagement. Just like company picnics aren’t a bad thing, but also don’t in and of themselves improve morale – same with badges and leaderboards. They don’t necessarily hurt (though they can), but they never address root cause.
The forming good habits thing is different – it uses gamification theory to say – hey – I know how people work, i know how habits are formed so I’m going to use that insight to help transition people to new habits. The new habits may be ones we think will build a more transparent, richly communicating, mission-aligned collaborative environment – like adopting collaboration software. Or maybe they are about digging through training material. They can support engagement, but they can’t create it where there isn’t any.
Gamification is not engagement, its habituation, and generally will promote small, mechanical types of interactions (check ins, etc) but is in no way a substitute for more substantive types of engagement. If you want to game the cash register, that might work. If you want to game your R&D, marketing, business development, or any other kind of “knowledge” work, you may want to rephrase the answer in the form of a question.
There is third, deeper meaning of gamification that transforms complex problems into multi “player” solution spaces . This is darned interesting, but is not what your average CIO is asking for, and can’t be acquired as a checkbox feature of social intranet software.
6. Shareholders take note
Though hard evidence was a long time coming, the basic argument goes like this. When employees give a hoot, they do better work, which leads to better outcomes across all measures. This chart from the 2012 Towers-Watson report is but one of several eye-popping bits of evidence to emerge last year. It shows that businesses with high levels of engagement have 3x the operating margin of those with low engagement. THREE TIMES THE OPERATING MARGIN. Three. What do you think happens to companies with a third of the operating margin of their competitors?
Bruce Temkin has also developed some relevant research. He backed into the topic as part of his methodical work on Customer Experience, because he could not help but notice the profound effect engagement has on customer satisfaction. He has a good model that is driver, not marker focused, and connects some of the dots between Engagement, Revenue and Customer Experience.
In fact, the benefits that accrue to the organization are so great that CV Harquail wonders if it isn’t the greatest management scam of the decade.
The Big Fat Marker
If you are looking for a marker (KPI), rather than a driver, its this. Engagement IS the marker. If you are looking for a leading indicator of performance, if you are looking for a leading indicator of how well your board and your management team are performing, how delighted your customers will be, and your shareholders thereafter, look at engagement. Perhaps it should become the new 10K reporting requirement right next to cost of goods. (Can you imagine the metrics abuse that would ensue?)
Engagement is the outcome of earning the respect of your employees, and encouraging and enabling them to do work that matters together. Increasingly, your employees are your business. Not your natural resources, your massive infrastructure, your intellectual property, your distribution channels or your processes. Its your employees. Respect them, include them, don’t patronize them. Earn their engagement and win.
If we succeed at humanizing the workplace, we will reinvent work as a place for personal fulfillment, a radical new engine for the economy, and a more sustainable society. For at least this generation and perhaps 5 or 100 more, our combined (but not homogenized) human capabilities and aspirations will be the most powerful force on earth.
The best is yet to come. Or, fulfilling a promise to @krcraft, #GSD!
So we all talk about the benefits of collaboration (or at least all of us within a very narrow circle), but I rarely hear any discussion of one of the most critical components to unlocking potential productivity.
Most knowledge workers I know (and this varies widely with where they work) do not feel as though they are living to their potential.
When people have a sense of mission, that they are striving toward something meaningful, and that their contribution is making a significant difference along that path, then they are motivated and focused. They make decisionss, they don’t waste time, they are excited to be there.
This is the role of leadership. To ensure tht people have a mission and a vision that makes sense to them and that it is clear to them how their work forwards those goals.
Another great thing this does is to help people make the many decisions they need to in a way that will always tilt toward the goal. Including finding problems or challenges that would prevent the organization from reaching that goal, and sharing them in a way that they can be addressed and solved.
FOr example. I’ve never seen a team get really excited about “we’re going to launch these 10 features by March or else!!” Woohoo! rallying cry. Nope. And every one of you knows it.
Now try “We’re going to take this product to the next level, and become the most useful widget this market has ever dreamed of. And we can do it by getting these 10 things done”. Better.
A collaborative environment helps people get constant affirmation that their expertise is useful and their work is valuable. A well lead collaborative organization has a fine set of leaders at every level who understand that their role is to have a mission and include their team in it.
A collaborative environment keeps people engaged and focused on the work at hand – and that makes people happy. Really. There are several books on the subject. One of the most readable is called “Flow: The Psychology of Optimal Experience“, though there are many academic articles and books on the subject.
So imagine a workplace where the vast majority of people are engaged, valued, “Flowing”, toward your corporate mission. Would that be more productive than what you have today?
This is the goal of enterprise 2.0. A fully engaged workforce where the product of that work is instantaneously available where its needed anywhere in the organization.