Excerpt from:
Identfying Subtle Verbal Abuse LearnBytes

Commentary: One of the modern day “information tragedies” is the decline of the Harvard Business Review (both on and offline) as a source of leading edge thinking on organizations and management, and by and large it’s because HBR publishes a number of blogs from those who seem to have more interest in “having a say” than in actually understanding issues. It’s with this comment that I begin my commentary on this article on stretch goals.

Let’s dispense, once and for all, with the managerial absurdity known as “stretch goals.” While it’s true that renowned psychologists Edwin Locke and Gary Latham described goal setting as “the most effective managerial tool available,” it’s also true that no less a thinker than W.E. Deming insisted that companies, “Eliminate management by objective.” In my opinion, there can be no such debate over the lack of usefulness of stretch goals. Here’s why.

Comment: First, there can be debate, and their should be debate, rather than attempts to squelch it. Secondly, Deming made a number of comments regarding organizations, and he did attempt to incorporate some Psychology into his writings and work, but sadly, it was not his strength, and neither did he have any background in it. Deming’s work on system thinking and statistical analysis is classic. His comments on individuals and how they work is not, in part because he did not believe looking at individual performance was significant except in so far as they contributed to processes that are “out of statistical control”.

Stretch goals can be terribly demotivating. When stretch goals seem overwhelming and unattainable, they sap employees’ intrinsic motivation. The enormity of the problem causes people to freeze up, and the extrinsic motivator of money crowds out the intrinsic motivators of learning and growth.

Commentary: They can be. Yet, that can be said about anything. Skiing down a large mountain is “overwhelming” and can be extremely demotivating. So can running a marathon, which is why you don’t run marathons to train for marathons. But here the author isn’t writing about “stretch goals”, which he doesn’t define anyway. He’s writing about being overwhelmed, and in fact, the idea of stretch goals is to provide reasonable goals that CAN be attained with some stretching. By definition, stretch goals are NOT overwhelming. If they are too “large”, they aren’t stretch goals.

In his classic article, “Small Wins,” psychologist Karl Weick argued that people often become overwhelmed and discouraged when faced with massive and complex problems. He advocated recasting larger problems into smaller, tractable challenges that produce visible results, and maintained that the strategy of “small wins” can often generate more action and more complete solutions to major problems because it enables people to make slow, steady progress.

In their recent book, The Progress Principle, Teresa Amabile and Steven Kramer build on the same argument and clearly demonstrate how even the smallest, most mundane steps forward — for example, achieving clear consensus in a meeting — can motivate and inspire workers. Ever wonder why people will so often write down an item they’ve already completed on their to-do list? It’s so that they can have the satisfaction of immediately crossing it off and experiencing the sense of progress.

Commentary:  The two paragraphs above support the use of stretch goals. Since the article author doesn’t define stretch goals before trying to attack them, it’s hard to figure out what he’s talking about, but it’s sure not about stretch goals.

Stretch goals have a dangerous tendency to foster unethical behavior. In the early 1990s, Sears gave a sales quota of $147 per hour to its auto repair staff. Faced with this target, the staff overcharged for work and performed unnecessary repairs. Sears’ Chairman at the time, Ed Brennan, acknowledged that the stretch goal gave employees a powerful incentive to deceive customers.

In his latest book, Toyota Kata, Mike Rother makes an important distinction between a traditional metric-based outcome (or stretch goal) and a “target condition.” A stretch goal is most often an outcome metric, and is influenced by so many variables that systematic, scientific improvement isn’t possible. A “target condition,” by contrast, describes how we want a process to function — and that description requires that you understand the current condition deeply enough to know where to begin your improvement efforts.

Take the aforementioned Sears example: $147 per hour of revenue per person is an outcome metric that’s influenced by a huge number of factors. Perhaps the service staff spent an inordinate amount of time looking for parts, so it took them twice as long as necessary to do a repair. Or perhaps the process of getting customer information and relaying that to the mechanics took such a long time that mechanics couldn’t work on enough cars during the day. Or perhaps Sears’ reputation was only for simple repairs, and customers would only bring their cars in for low-priced oil changes. Who knows? Without sufficient knowledge of the current condition, there’s no way to make intelligent progress towards the ultimate goal of being a profitable contributor towards Sears’ growth.

However, setting a target condition with knowledge of the current state means solving a problem that will inevitably lead towards increased revenues. In Sears’ case, that might mean changing the layout of the shop and the way parts are supplied so that mechanics could take care of customers faster.

Commentary: What the author is talking about here is the “unintended consequences of using a particular REWARD system”, and has nothing to do directly with stretch goals. Goals (of any type) are what a person is to achieve. Rewards are what the person receives when and if he achieves goals. Two separate things that must be considered separately. What IS true that when you offer large monetary rewards for the achievement of ANY goal, you will get some people who play by the “rules”, and some people who will do anything, including cutting corners, cheating, and even interfering with other employees to GET THE REWARD. It’s not the goals that are so problematic, but the rewards.

Goals can also have unintended consequences on their own, but goals and rewards are separate things.

Finally, stretch goals can also — tragically — lead to excessive risk taking. Enron rewarded its executives with large bonuses for meeting specific revenue goals, irrespective of the profitability or the riskiness of the moves. Although the final book hasn’t been written on sub-prime mortgages and the ensuing banking crisis, we do know that stretch goals played a large role in putting the investment banks in serious jeopardy.

Focusing on small wins in combination with process improvement will drive your organization forward without the negative consequences of stretch goals. However, this approach requires a willingness to abandon the “ready, fire, aim” approach to problem solving. The heavy lifting has to be done at the outset — a deep understanding of the current condition is a prerequisite for true improvement. This approach also requires a subtle — but critical — shift in focus from improving outcome metrics to improving the process by which those outcomes are achieved.

Commentary: Again, we see confusion about goals, stretch goals (no, they aren’t the same thing), and the effects of massive rewards. Would the Enron executives have been so “riskful” without any rewards? What if they had goals, but no rewards? We don’t know, of course, but when you offer someone millions of dollars for almost anything, you will increase their willingness to risk, particularly if the money they risk belongs to someone else.

So, in short, the writer isn’t really talking about stretch goals, and there’s no excuse for not understanding what they are, since they have been around for some fifty years. Most of the bad things he talks about have to do with the reward systems, and for both reward systems and goal setting, they are both tools. Use them properly and it works. Use them stupidly, and they backfire. Criticize them without understanding them and you don’t look terribly smart.

Read more from the original source:
The Folly of Stretch Goals

Commentary: As you read this article on engagement, see if you can find flaws with the logic, particularly about the term “engagement”. One of the problems with the “engagement” industry is that a number of assumptions get made, then accepted as truth, without proper research. In addition, there’s one critical aspect that is almost always ignored.

If we want people to be “engaged”, we need to state an object — what we want people to be engaged with, and then, what behaviors we want that would constitute engagement. 

For example, we can talk about employee engagement, but without specifying what we want employees to be engaged with, the concept just becomes empty and useless. The burned out employee who sits in an office and reads the New York Times from cover to cover IS engaged in something. Same for the surfer of adult sites. But that’s not productive workplace behavior. We say we want customers to be “engaged” on corporate websites, but is a customer engaged in playing an online game engaged in the same way that a customer might be if he or she regularly participates in a product forum? Engagement per se is a dangerous term unless we specify WHAT kinds of engagement are “good” and what kinds are “not”.

Most customers now ignore targeted marketing campaigns, avoid responding to offers, and provide minimal feedback when asked. Instead, potential customers interact with each other, bypassing sanitized corporate messages devoid of meaning or value.

Meanwhile, employees increasingly look beyond compensation to non-monetary factors such as advancement, recognition, and corporate social responsibility in choosing where to work. And with the retirement of the Baby Boomers looming, attracting, retaining, and growing the next generation of leaders is an essential task for any organization.

As a result, organizations around the world are rushing to engage with their customers and employees. It’s easy to see why. Without engagement, the influence of brands will continue to decline and big organizations will lose out on the best workers. Our studies at Constellation Research have found that engaged workers — those who participated in a forum, helped out a colleague in a chat, or provided feedback on an enterprise initiative — are 37% more likely to stay with their employers. Meanwhile, engaged customers are three times more likely to recommend or advocate a product or service to a friend. Improved engagement creates business value and strategic differentiation, and technology is enabling a shift from transactions to engagement.

Haphazard approaches to engagement negate good intentions
Unfortunately in the rush to engage, many organizations have taken a haphazard and siloed approach. Based on hundreds of conversations, a common theme emerges of failing to learn from the last Web and ecommerce boom. For example, many organizations have created separate social divisions in the same manner that ecommerce divisions were established a decade back. The result — haphazardly designed customer engagement paradigms doomed to fail. Why? These design points optimize for the company and not for a frictionless and seamless customer experience.

Meanwhile other organizations have built their social strategy using Facebook as the keystone in the same way AOL and Yahoo! central to many companies’ plans last century. The result is overdependence on (and enrichment of) Facebook at the expense of driving traffic and activity onto one’s own platforms. When customers wake up and decide they are the product, they will stop trading privacy for convenience. The result — brands built on Facebook will face a backlash.

On an internal basis, the rush to deploy social business tools matches the hype of the past decade in installing collaboration tools and assuming one’s employees would easily adapt if only the right tool was deployed. The recurring problem — culture always trumps technology in adoption of new tools.

Successful engagement requires nine key components
How do we ensure engagement and avoid the fatal fatigue engendered by every wave of new media adoption? How can an organization and their leaders make the shift? The first step is to think systematically about it, and understand that engagement requires a set of building blocks. I divide them into three categories: people-centric values, delivery and communication styles, and the right time drivers.

People-centric values are the starting point. An organization needs to genuinely understand and relate to its customers and its employees before it can engage them. The key elements here are culture, community and credibility. Culture is about societal norms, communication preferences, and global outlook. At the organizational level, this includes which leadership styles are most effective, and how workers interact with each other. In dealing with customers, it’s about understanding customer segmentation, digital readiness, and inclination to participate. Community focuses on internal and external stakeholders. Each stakeholder may have different needs. For example how you share information with a supplier may be different than what you can tell an internal employee. The last component, credibility, involves earning trust through actions. Credibility is built through influence, reputation, track records, and accumulated expertise.

Values alone are not enough. To engage successfully, organizations also need an understanding of delivery and communication styles. These styles incorporate channel, content, and cadence. Channel refers to the means of engagement: face-to-face, retail, mobile, social, web, kiosk, virtual, and video. Content can be internal, user-generated, re-purposed, paid, news-driven, or analytic. Finally, cadence describes the frequency of engagement — whether it’s ad hoc, scheduled, or continuous.

The last piece is choosing the right time drivers to provide a why, when, and where in engagement. The goal is to inspire action through context, catalysts, and currencies. Context means location, business process, role, relationships, and sentiment, all of which need to be considered to deliver the right offer to the right person at the right time. Catalysts are what inspire action and response: campaigns, offers, advertisements, direct rewards, indirect rewards, and loyalty programs. Finally, currencies influence behavior through an exchange of value. Monetary models include traditional cash, bonuses, rewards, and rebates, but non-monetary currencies such as virtual goods, recognition, access, and influence can often be more powerful.

The nine critical components of stakeholder engagement

New models of engagement herald the death of B2B and B2C
The emergence of extremely viral people-to-people (P2P) networks has changed the notion of the customer and employee forever. Social media, social networks, and mobility also herald the death of B2B and B2C as we know them. A bad experience at work with a particular brand of laptop bleeds over into consumer choices. Great experiences with consumer products have driven the rise of bring-your-own-device-to-work — a key to Apple’s new success in the enterprise.

As organizations master engagement, early adopters will shift to building experiences by filtering massive streams of information through context. Context — in the form of roles, relationships, location, business process, time, and other factors — will transform engagement to experience. Early adopters of augmented reality and gamification already apply these nine Cs of engagement to craft intuitive and natural customer experiences. The drive towards engagement will impact both the future of work and next generation customer experiences. The move to engagement lays out the first step to a P2P world.

See the article here:
How to Engage Your Customers and Employees

When most organizations design new work processes, they assume that team members will make the best possible use of them to improve team performance. That is, they assume that team members will act rationally. In most cases, this assumption is wrong.

Compelling evidence from research in the fields of psychology and behavioral economics suggests that people behave in ways that are far from rational. For instance, we systematically underestimate task-completion times — a tendency known as “planning fallacy” — and postpone tasks repeatedly over time (i.e., procrastinate).

We also tend to overestimate the accuracy of our own thoughts and the odds of our success — that is, we tend to be overconfident. These tendencies are common, yet when we make decisions intended to improve how effectively teams perform tasks, we regularly fail to account for them.

This was brought home to me in my field research. Here’s a case in point:

In 2004, my HBS colleague Gary Pisano and I conducted a project at a leading manufacturer of highly sophisticated production equipment for the electronics industry, which I’ll call “Exotech.” Like many companies, Exotech struggled with serious time delays in its product-development projects. As the market became more competitive and customers more demanding, Exotech’s senior management launched a systematic effort to improve its product-development performance through more rigorous upfront planning, a well-defined process, clear milestones for project reviews, cross-functional project teams with strong leaders, and rigorous post-project reviews to glean lessons learned.

As part of this effort, the company decided to use tools to drive high levels of performance on a new project that required both hardware and software components. The hardware team had employed similar processes in the past and found them helpful. So the company assumed the software team would, too. The project set strict timelines, formulated schedules based on careful analysis of critical paths, and carefully tracked progress using a sophisticated web-based scheduling tool that provided daily updates on progress and early warnings about potential slips. The teams working on this project were given thorough training in these tools and were aided by dedicated project coordinators who collected the appropriate information, ran the analyses, and provided them to the team in weekly meetings.

The results? The project ran successfully for hardware development, and the project management tools worked exactly as expected. But the results were much different on the software side. In fact, the software-development effort began to run late from the beginning and never caught up. The software was finished about six months behind schedule and led to a delay in the shipment of the first commercial systems.

What was puzzling about Exotech’s results was that the project-management tools put in place were designed to provide information — early warning of problems — that could help the project team respond to them and reduce or even eliminate delays. But they didn’t for the software-development team. The reasons: The team members were overly confident of their ability to complete the project on time and ignored the information that the tools provided that suggested that they were falling behind.

This case is not an isolated example. In my research, I have found that these behaviors are common.

Here are three potential solutions to address all-too-human irrational behavior:

1. Educate Team Members

In some cases, learning about our own irrationalities can help us understand why we make decision mistakes and try to correct for them. The members of the software team at Exotech may have used the tools if they understood the psychological tendency people have to resist change even when change will lead to better performance.

2. Encourage Dissenting Views

Unfortunately, even if someone is aware of his or her behavioral tendencies, that’s not enough to overcome them. An antidote is to encourage members of the team to express their dissenting views. Forcing individuals to interact with others who question or challenge their conclusions is likely to reduce overconfidence, combat the natural reluctance to embrace change, and other tendencies that may disrupt team effectiveness.

3. Change the Process, Not the People.

When interpreting the world around us, we often overemphasize our own impact and underemphasize the role of environmental factors. But the environment can greatly influence our behavior and can compensate for our irrationalities. So another way to compensate or minimize the impact of irrational human behavior is to improve the environment or processes. For instance, Microsoft tries to correct for the overly optimistic projections of individual software developers by setting rules about the amount of buffer time that should be added to projects.

Together, these three strategies can help you introduce tools and processes that combat irrational human behavior and enhance team performance.

This post is part of the HBR Insight Center on The Secrets of Great Teams.

Read more:
People Are Irrational, But Teams Don’t Have to Be

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