Transkrypcja
Zapraszamy na serię podcastów MIT Management Review Polska. W każdym odcinku rozmawiamy z najważniejszymi osobami działającymi na styku biznesu i technologii – od prezesów spółek giełdowych, przez badaczy z uczelni biznesowych i technologicznych, po właścicieli start‑upów. Naszym zadaniem jest przybliżanie praktycznych aspektów budowania innowacyjnych organizacji. Nazywam się Paweł Górecki i jestem redaktorem prowadzącym MIT Sloan Management Review Polska. Moim dzisiejszym gościem jest Michael Schrage z MIT Sloan School of Management. Zajmuje się on wpływem technologii cyfrowych na kapitał ludzki i innowacyjność firm. Dzisiaj rozmawiamy o tym, jak w erze cyfrowej zmienia się zarządzanie wydajnością. Podcast zrealizowany jest w języku angielskim.
Zanim rozpoczniemy rozmowę, zapraszam do udziału w kongresie MIT Sloan Management Review Polska oraz do subskrybowania naszego kanału. Poznawaj kolejnych prelegentów i zagadnienia poruszane podczas najważniejszego wydarzenia biznesowo‑technologicznego w Polsce. Jako jego uczestnik spotkasz współtwórców sukcesów takich marek jak Netflix, Asymco czy IBM, prześledzisz najnowsze trendy, zdobędziesz biznesowe rekomendacje bezpośrednio od twórców przełomowych idei w zakresie cyfrowej transformacji biznesu, cyberbezpieczeństwa, sztucznej inteligencji fin‑tech, przemysłu 4.0., mikromobilności, e‑commerce, biotechnologii i wielu innych.
Paweł Górecki: Hi, Michael! Thank you so much for having time for us. Welcome to our podcast.
Michael Schrage: My pleasure.
P.G.: Maybe we can start with introduction. Could you briefly describe your body of work and tell us about your professional interests?
M.S.: Oh my Goodness! That is a trick question because it’s difficult for me to be brief in describing my body of work. I would say that my greatest interest is in the future of advice, agency, economy and accountability. I’m very interested in how organizations innovate. I’m also very interested in the design and facilitation of network effects. But I think that the thing that would be of greatest interest to the listeners here is that I used to be most interested in how people would collaborate to come up with effective innovations. Now I’m interested more in how innovation transforms how people collaborate and transforms human capital.I’m very, very interested in how technology transforms the capability and accountability of people – that’s really the focus of my work.
P.G.: A couple of weeks ago you and your colleagues published an article entitled Performance Management’s Digital Shift. I would like to talk about it with you today. In that paper you wrote that the traditional approach to performance management simply doesn’t work. The compensations, promotions or terminations are ineffective when it comes to stimulating better performance. Is it that these tools worked before and now stopped because of new business models or maybe they never worked but we had no other tools at hand?
M.S.: That’s actually a very subtle and profound question and it ties into the way I answered your first question. We really didn’t have technology or analytics, or underlying data that adequately assess performance and performance management. And to further compound and complicate that question I will say this about the United States – I would be careful about speaking about Poland or Central Europe – and that is that performance management in HR had a compliance – follow the rules, follow the regulations – emphasis and ethos – and so efficiency, effectiveness, productivity, professional development are often secondary to box‑ticking around performance management or around compliance. When we talked about the digital shift, we’re not just talking about the fundamental shift to technology. 15 years ago who carried around the supercomputer – now, who doesn’t have one or two supercomputers in their pockets and an AirPod in their ear whispering to them. The change in technology, the change in the economics of technological innovation have provoked and evoked a change in culture, a change in behaviour and a change in expectations. I think increasingly discussions that we had about performance management in the year 2000 or even in the year 2010 are very, very different in 2020 because the tools and the technologies and the way we share and analyse information – Skype, Zoom and text are all fundamentally different. How individuals and teams collaborate because of the digital media and platforms are fundamentally different and that forces us to revisit the fundaments of performance and a performance management.
P.G.: You’ve said that in this digital age the old ways of stimulating productivity are not only ineffective but they also alienate workers and managers. What are the other negative effects associated with sticking to the old model?
M.S.: Ties back to the cultural issues – when you say “the old model” we have to be clear that “the old model” isn’t just a monolith – it’s a series of pillars and silos. But I give you the most obvious example – and you’re talking to a guy whose first book was on collaboration, like Watson and Craig, Braque and Picasso …, and because we’re in Poland I should say the Curries, Pierre and Maria – the issues is in performance management traditionally you give people individual performance reviews but in most organizations value creation is a function of effective cooperation, coordination and collaboration not the aggregate or the sum of individual performances. I have literally been with organizations that people individually got very good rankings but the sum of the parts were less the than the whole because what really needed to be optimize and maximized was coordination and collaboration but that was not what performance management did! By the way, just give me last moment on this. I’m in the process of reading the book about the history of performance analytics in soccer. What you discover what hurts teams – one of the most important finding exists – the bad players you have are more of the threat than the talented players you have are an opportunity. That’s a big deal! In most of organizations teams are better of getting rid of their bad player first than acquiring stars or their underperformers. That’s a profound insight. It’s not the function of individual assessment, it’s a function of examining how people work together holistically and coherently. That’s just one example of the inertia of doing things “the old way” getting in the way of value creation.
P.G.: So the solution to all of these problems is more data‑driven approach, right?
M.S.: I wanna be careful because I don’t like the word “solution.” I would prefer that whenever you’re asking me a question instead of using “solution” say “approach.” I think that the data‑driven approach is better than the data‑driven solution. I believe that individuals and organizations have the right and indeed the obligation to have judgment. There are times when being the data‑driven is just the exact right thing to do. There are other times when personal and professional judgement matters. The values of the individuals and the organizations matter. Maybe somebody is underperforming because their taking care of a sick spouse or a sick child. I’m sorry – if the data suggest that this person should be fired, I don’t think that person should be fired. Do I think it might be useful whether this person should be on leave for two weeks or work for half‑days instead? Yes! Maybe data should inform that sort of decision. But I think that one should be very, very careful about making data God. Data is not God. Data is stuff that we measure and try to use to inform decision and then some circumstances drive decision.
P.G.: So manager intuition is still important and relevant.
M.S.: Yes, but you know what? If your intuition is that bloody good, you should be able to find data that support it, don’t you think?
P.G.: Sure.
M.S.: By the way let’s be fair. 20 years ago expensive and time‑consuming to find and analyse that data. Now – not so much. As the cost of data collection and analysis gets cheaper and easier, our willingness to say: “That intuition is very provocative. That’s really interesting. Can you find me data that challenges it and supports it?” That doesn’t seem like an unfair question in 2019 as it might have been in 2012.
P.G.: Sure. One of the most important aspects of data‑driven approach facilitated by technologies continuous feedback that allows manager to monitor performance in real time. Could you explain why exactly this sort of feedback is much better than other kinds like annual reviews for example?
M.S.: Actually I have to tweak your questions a little bit. I believe that continuous and continual feedback is better on average than annual review or quarterly review. What you are framing to me is a really interesting experiment, because I think some people should not be getting feedback instantaneously. If you got a Facebook thumbs up or down, or a smiley face or a frowny face after every human interaction you had during the course of the day, I think it would be stress inducing and make you feel self‑conf. So how instant should instant feedback be? My personal belief which is testable I think we’re gonna tool these things. I think some people should be getting their feedback at the beginning of the day to stimulate and inspire them. But other people should be getting their feedback at the end of the day. I think some people if they’re sort of going beyond the bounds, they should be getting a warning or an alert in the midday saying: “Hey, shape up!” or “Throttle back!”. You need to be aware that you’re interrupting a lot of people or that your energy seems to be really low compared to last 15 or 20 days on the average. Maybe some people get their best at the beginning of the week versus the end of the week. I don’t know. Performance management 2.0. means this is what the reality of management and leadership is going to be in the next 15 to 20 years. We use, customize and personalize data to support the balance of motivating individual performance and team performance. Team performance and process performance. I don’t know the answer but I will stick with the word I used earlier. I think that’s a good approach.
P.G.: Aren’t you afraid that in some cases continuous monitoring of employee performance will be perceived as violation of privacy? And that this would backfire creating less motivated team?
M.S.: Yes. That’s said I think there’s a new contract around privacy. Let me ask you an unfair question. You’re a smart, hardworking, articulate guy. I am prepared to give a rise or bonus up to 50% of your salary if you’re prepared to be open and transparent about your time and how you make certain decisions. If you’re not prepared to share your schedule and data and openness with me, I’m still gonna pay you for your work but I will give you only 15% to 20% bonus because frankly I think what you’re keeping private is getting in the way of productivity. I’m prepared to give you a bonus based on greater transparency. By the way I’ll reciprocate how I make my decisions about recognizing and rewarding you more transparent less opaque. Are you prepared to cut that deal with me?
P.G.: Yes, I would accept the deal, definitely.
M.S.: There you go! So what you’re telling me – privacy is negotiable. And that’s the key here. It has to be a negotiation not an imposition, not a command, not a dictatorship. And that is going to be the social contract – negotiated work. If you will forgive my reference, that is what we need to build new solidarity around information and control of one’s own information and the right to determine how one shares one’s information not for free but for fair exchange.
P.G.: How exactly can companies can collect data about their employees performance to get real time feedback? What tool do they have under their disposal?
M.S.: There are all kinds of tools. I do not know the law in Poland or in the EU. I’m not a lawyer. Actually my brother is a lawyer in Facebook so he dealt with a lot of these issues for better and often times for worse. But does the employer have the right, indeed the obligation, to look at all of the non‑personal emails of its employees? I would say yes. What would you say?
P.G.: Yes, I agree.
M.S.: And we can infer from that what portion of the employee’s emails are personal because the individual may have the right to declare something personal. So we can see proportions. Now we can get more complicated. Do we run sentimental analysis algorithm over our workers emails and see where they are motivated, bored, lazy or where they’re paying more attention? Do we have the right to use those kind of algorithms? That’s a topic of debate. I wanna go back to first principles. I think it’s important to collect information and to have data, but data is a means to an end. Here’s what I would encourage leaders of organizations to think about and to debate and discuss with their direct reports and with their people and with their best and smartest investors – what do we want productivity to mean? Is it simply producing more goods and services for less money with less people? Is it providing better experiences, more valuable experiences for customers and clients? What trade so we’re prepared to accept? In the same way the industrial revolution transformed the economics of manufacturing goods and in the same way the Internet transformed transaction costs. The rise of machine learning in AI and data‑rich environments and analytic‑rich environments gives us a new vocabulary to discuss and describe how we want to create value for people and with people. I think that’s a big deal. In my experience that conversation is not happening often enough. It’s one of the reasons why magazines like the “Sloan Management Review” exists and should exist.
P.G.: Managers generally admit that data‑driven performance management improves performance. But at the same time nearly 70% of the companies you surveyed stick to the old model.
M.S.: Actually I would say that that was a disappointing finding. I’m going to challenge your interpretation of the findings. The thing that really leapt out at us – there were really several things that leapt out at us – is that really barely a quarter of the senior executives surveyed said that key performance in the … were really key, that they were really aligned with the strategic objectives in the organization. Let’s be blunt. We’re dealing with human beings here – if I tell you that I’m judging you on 50 KPIs (Key Performance Indicators) – that’s ridiculous! How can there be 50 key performance indicators?! … and it means that what I am doing is I’m delegating to matrix. What I should be prioritizing is a manager as a leap. And my inference from the statistics that you sided is that there are a lot of managers – too many managers who are lazy in respond to react to inertia rather than thinking through the fundamentals of… you know the Pareto principal: What’s the 20% of the causes that generate the 80% of the results? What are the 20% of KPIs that are most responsible for the real value or desired outcome being created? I believe that one of the most important byproducts of the data‑driven approach is that it makes it harder for managers to be lazy. Let me be clear – it makes it harder for managers to be lazy. I think that people are very good at being lazy. I think people work very, very hard to be lazy. That has been my experience. I fell it is a global phenomenon. I think if some of the energy that was put into being lazy was being put into driven analytics or performance management improvement, I think everybody would win. But my background – I’ve two serious spec of economic background: one is computer science, the other is behavioural economics. And the key finding of behavioural economics: inertia can carry you a long way – laziness can carry you a long way and less there are fundamental changes and disruptions. And let’s be absolutely bloody clear! One of the reason for economic upheaval in Europe and in the USA and yes – Asia – is not necessarily that people are lazy but the people who run traditional legacy organizations around inertia, allowed tradition a guide investments and priorities a lot longer than it should have. And that’s got to change. That’s why we’re doing this. That’s got to change.
P.G.: So when the manager has the real time feedback from the employees what could or should he or she do? How should he act on that knowledge to affectively boost productivity?
M.S.: Again – if the employees look at that manager as an enforcer as somebody who is trying to mandate compliance, as somebody who is pushing and nudging to get out greater productivity from the employees, it is a natural human reaction to be resentful or resistant. The flip side is – if those employees, collaborators, colleagues believe that that manager cares about them as people, cares about their professional development, they may be more open to suggestion, to advice, to partnership, to collaboration. To really answer the question you have to tell me what’s the manager’s brand, what’s the culture of the organization?
P.G.: So it really depends on the relation that the manager has with people?
M.S.: You’ve put your finger on the exact word. Let’s improve relationships, because if we do that, it makes it easier to improve performance. That doesn’t mean that everybody has to like each other, hold hand and sing Kumbaya, but if my view is when you approach me is that you’re going to ask me for something for your benefit not for my benefits, my immediate reaction is not going to be positive.
P.G.: Assuming that this relation is good – between the team and the manager – what should he or she do to introduce the new model? What are the key steps here?
M.S.: Great question. There needs to be a consensus, there needs to be an alignment, and there needs to be some sort of actionable agreement as to what good outcomes, what key performance looks like. More time with customers, better feedback from customers or if it’s an internal team – better feedback from colleagues, reduced coordination costs, improved quality about put, etc. And you have a conversation or a simulation, rehearsal or a use case when the manager in collaboration with that employee or a group of employees says: “This is the path. This is the hypothesis and the approach we want to test. The data suggest the odds are in our favour. If we make these kinds of changes, we’re likely to get these kinds of better outcomes. Let’s give it a shot. Here’s the time period. Here’s what we think the outcome will be if we make these kinds of changes.” And that’s what you do. And so you do with a bit more formalism and rigor what often times was improvised, impromptu or accidental. And that’s going to be the tension. What do us do that’s improvised and spontaneous, and what we do that is more data‑driven and done as a functional introspection, analytics, retrospection and review? Do I know exactly how this is gonna to be? No, I don’t. I know some organizations like Google or Amazon… Look, I’ve done advisory work for Amazon. Do you know how Amazon begins major meetings?
P.G.: No.
M.S.: People literally are asked to read the six page memo.
P.G.: I’ve hear about it, yes.
M.S.: That’s not a fairy tale. That’s true. And the rigor of preparing that memo, sharing that memo, having people read that memo and having it framed context of discussion makes everybody feel aligned that they’re using the same words mean the same things around an outcome and agenda that there’s an agreement on that rather than a little too slapdash and spontaneous. I’m sorry. This is what culture looks like and I will tell you without violating any confidences that Amazon is a company that takes KPIs and metrics very, very seriously. As does Google. They treat very seriously performance management as well. So you got to ask yourselves – do you think the future of value creation in business success is going to look more like Amazon and Google or more like a comedy improvisation team. Yeah, for certain kind of projects it may be the later. But for repeatable, scalable business impact worldwide or for high‑demand clients who are looking for reliability and quality, I think you’ll probably are better of paying more attention to what Amazon or Google does, what data driven companies are doing or to date myself what companies are dated the sixth sigma area when we will begin to take quality and statistical process control seriously.
P.G.: Could you name some other companies that stand out and that really did well when it comes to changing their approach to performance management? What is their story?
M.S.: That’s a very good question. What’s difficult about answering that question is that in large organizations there are always pockets or groups that are doing very good job. We were having a casual exchange about how performance analytics transformed premier league football. I mentioned Amazon and Google, I think I would take top tier sports, seriously. I think performance management for world class or competetive athletes in basketball, soccer in swimming or tennis, they’re looking at videos of themselves. They’re tracking what worked and what didn’t. All of a sudden diet is fuel not just food, you know? Exercises is not just about getting stronger for a particular reason. Again, I don’t want to say that everybody needs to become a fulltime slave or subordinate to “performance analytics.” I think individuals and their managers have to change the way they talked about what it means to improve performance overtime. And that means you have to define performance and improvement. And then say if this is what performance means and what improved performance means, what data should I be collecting? And then it’s, Geez, If this is what performance means and what improved performance means, what behaviours do I need to explore, change, modify or learn more about? Should I get that data by videoing, by acoustics, by having extra people observe me, by establishing a base line? Yes, are we going to have to more rational about performance management? Sure. Do I apologize for that? No. Do I think this is going to disrupt a lot of traditional organizations? Yeah. The most disruptive I’ve seen in American hospitals where nurses have one role and doctors have another role. Well, that’s changed. Because what matters more than a nurse and a doctor? Patient.
P.G.: In sport context you motioned team work is extremely important. Several times you’ve mentioned that also when it comes to performance management, assessing performance of team is much more important that individual performance in business.
M.S.: Exactly right.
P.G.: Why does it happen now? Why wasn’t like this before in business?
M.S.: That’s a terrific question. Let me begin by giving you the most cynical possible answer I can and tell you and your listeners that I hope that my wife doesn’t hear this podcast. My wife is about to become a CEO of a major marketing services organization. In her current role she was interviewing various candidates to aka senior position in a global company that has a decent reputation. Several people were interviewing this candidate. My wife was giving advice to this candidate to build on some of the things he had said in an interview with her that has impressed her. And this candidate’s response to my wife was: “It’s funny that you say that because what I was told by the other people interviewed me, that I need to get closer to my colleagues first. That I need to play the game and be seen as a good colleague before I introduce these kinds of innovative ideas.” And my wife response was: “Actually, I think it’s more important to get the organization talking about these innovations then getting along or playing the political game. And how you have the great took at Gemeinschaft versus Gesellschaft issue, what values more in value creation? Getting along, the politics or the value creation?” I think that’s going to be one of the fundamental issues. You can have a world‑class player but if everybody dislikes him, that’s gonna be tough to be world‑class. I have a nice simple rule about what makes a real superstar. A real superstar isn’t just “the best performer on the field”, a real superstar makes everybody on the field, on their team, play better. All known footballers who were brilliant strikers, but the other people don’t score as often or pass as sharply, and we all know people who were brilliant strikers who makes everybody on the field – the midfielders, the goalkeepers – plays better when they were on the field. That’s a superstar. Sometimes it’s not just a superstar but it’s a couple of players who have complimentary skills. That’s what a manager needs. You give me the data that demonstrate that some people may not be individually the best players but when these three players are on the field we defend better and we score more. I think that’s the way I’m gonna go.
P.G.: Your advice for the companies would be to be more like sport teams.
M.S.: No, slightly different. My advice to companies it to take data, to take team work, to take performance improvement data as seriously as the best team sports do.
P.G.: Thank you so much Michael. It’s been a pleasure to talk to you.
M.S.: It’s my pleasure. I very much look forward to seeing you in person when I come to Poland sooner rather than later.
P.G.: Yes, see you in June in Poland. Thank you very much.
Nasz dzisiejszy gość będzie prelegentem kongresu MIT Sloan Management Review Polska. Zapraszam do udziału w tym wyjątkowym wydarzeniu oraz do subskrybowania naszego kanału. Poznawaj kolejnych prelegentów i zagadnienia poruszane podczas najważniejszego wydarzenia biznesowo‑technologicznego w Polsce. Jako jego uczestnik spotkasz współtwórców sukcesów takich marek jak Netflix, Asymco czy IBM, prześledzisz najnowsze trendy, zdobędziesz biznesowe rekomendacje bezpośrednio od twórców przełomowych idei w zakresie cyfrowej transformacji biznesu, cyber bezpieczeństwa, sztucznej inteligencji fin‑tech, przemysłu 4.0., mikromobilności i e‑commerce, biotechnologii i wielu innych.
