Reading notes by Yan Tougas
Identity is your reason for existing.
Identity comprises a set of values and behaviors that guide an organization’s decisions, heritage, and traditions. Without a compelling and convincing identity, cultures become weak and organizations become less adaptive. Companies with a strong identity also have the highest levels of brand loyalty. Identity turns jobs into callings.
To create a strong identity, organizations need a clear and compelling objective. When all parties trust each other to act appropriately, a clear objective frees the leaders from the need to create complicated rules and allows people to adapt when the original plan fails. Because benevolence is ranked as the most important human value, objectives with a prosocial purpose are most compelling.
Once the objective is determined, organizations need a behavioral code to help employees solve problems, prioritize, resolve conflicts, motivate others, and respect the organization’s heritage. When it comes to identity, actions truly speak louder than words. Identity must be credible and omnipresent. Real examples (heritage) must be shared over and over again. Traditions create a common bond for all employees. You can’t “set and forget” your identity. It requires constant work and must be embodied in all employees.
Weak identity? Ponder these questions:
- What objectives unites and inspires my organization?
- What behavioral code empowers people to make decisions and solve problems in a consistent, values-based way?
- What pieces of heritage will help celebrate and maintain our unique identity? Which new traditions should be seeded for tomorrow?
Aristotle taught that a person’s character (identity) was the most effective means of persuasion he or she possesses.
Reading notes by Yan Tougas
Fire Starters are leaders who ignite total motivation in their teams and across entire organization. The necessary leadership skills can be taught and learned. Systems can be put in place to build leaders at every level.
There are 4 leadership styles:
Quid pro quo. Leaders use indirect motivators only. Good behavior is rewarded and bad behavior is punished. This creates high levels of emotional and economic pressure.
Hands-off. Leaders do not use any motivators. They get involved only when there is a problem, not realizing that teams perform best when leaders build play, purpose, and potential in the work.
Enthusiasts. Leaders use all motivators, including indirect motivators, which decrease performance. These leaders score at about the same level as the hands-off leaders.
Fire starters. Leaders encourage direct motives and discourage indirect motives. They balance tactical and adaptive performance. They maximize total motivation, primarily through 14 behaviors:
Play. Inspires curiosity and encourages experimentation:
1. Provides you with time, space, and encouragement to experiment and learn.
2. Makes it clear what it means to be performing well.
3. Challenges you to solve problems yourself.
Purpose. Removes the blame bias by focussing on the purpose of the work:
4. Helps you see that your work is important and meaningful.
5. Role models and and expects you to live by positive, consistent values and a common sense of purpose.
6. Puts the customer’s interests first.
Potential. Shows you that investment in your work is an investment in yourself:
7. Actively links the work with your personal goals
8. Helps you to develop and focus your time on your strengths rather than your weaknesses.
9. Provides you with more responsibility as your skills grow.
Emotional pressure. Removes fear, shame, guilt, or peer pressure:
10. Ensures targets and goals are fair and reasonable.
11. Is fair, honest, and transparent.
12. Enables friendships at work.
Economic pressure. Avoids rewards or punishments:
13. Ensures you are evaluated holistically.
Inertia. Removes obstacles and makes sure the work has an impact:
14. Makes it easy to get things done and ensures you don’t waste effort.
To become a fire starter, one should embed these behaviors and ToMo into every aspect of the rhythm of performance management. Avoid “effort goals” and “tactical goals”, and replace them with adaptive goals Tactical performance goals focus people on just the appearance of competence. Adaptive goals focus people on becoming competent.
Once a week, (1) review tactical goals and think about how they can be translated into adaptive goals; (2) have a team huddle to discuss what was learned during the week, how we progressed against our goals, and what we need to learn next week. For the team huddles, have a leader and a scribe, and rotate the roles every week. The topics covered in team huddles allows you to cover all 14 behaviors.
Great organizations are deliberate about building leaders. They have systems with two primary components:
Training. Provide ToMo and leadership training to your employees.
Feedback. Very few people are good leaders, in part because they don’t get feedback about how bad they are. Conducting 360 reviews is critical.
Building a world-class culture starts with you. Practice. Then find a friend to join you. Huddle with your team. Develop training and feedback. Get more people to join you on your journey.
Reading notes by Yan Tougas
If organizations managed their finances like they manage their culture, there would be no CFOs, no GAAP, no forecasts, no plans. Culture – something we claim to be a highly valuable asset – is unmanaged. There is no Chief Culture Office, no metrics, no common language, no way to tell if a new initiative is helping or hurting the culture, no way to know if we are dealing with root causes or symptoms.
ToMo analysis can help. It includes 5 steps:
- Calculate the organizations’ ToMo factor. Ask everyone to complete the survey. Keep answers anonymous. ToMo is a diagnostic tool, not a score (scores are used to judge performance; judging increases emotional pressure and reduces play – it hurts performance). If you link ToMo to other metrics, make sure they are long-term and holistic metrics. Calculate ToMo every 6 to 12 months.
- Test your theory. Choose areas of the organization where adaptive performance is most critical, e.g. customer-facing employees, product quality, extreme risks, areas where “cobra farms” would be most dangerous.
- Choose the right keys. The ones that matter most are below (and each has its own chapter later in the book):
- Leadership. A person’s boss can make or break her experience. It is easier for a leader to destroy ToMo than to create it.
- Identity. The second most powerful key, which includes the organization’s mission, behavioral code, traditions.
- Role design. The most powerful key. Designing each and every job to balance tactical and adaptive performance to maximize ToMo. Like identity, almost never actively managed.
- Career paths. When only the strongest employees survive the fight up the ladder, ToMo suffers.
- Compensation. Compensation must celebrate growth.
- Community. Strong work communities inspire play and purpose, allowing vulnerability, which reduces emotional pressure.
- Performance management. Traditional systems focus on tactical performance only, using emotional and economic pressure to produce results.
- Set an aspirational ToMo. A good goal is 15 points above industry/competitors.
- Develop a plan and business case. ToMo can be measured and linked to business outcome. We can calculate the impact of ToMo on these outcomes. With this economic connection, we can set investment levels that can be tracked to better performance.
Reading notes by Yan Tougas
Organizations reach four (4) crossroads in each of their life cycles. These crossroads create uncertainty and, in search of predictability, many leaders inadvertently adopt practices that limit their adaptability.
Crossroad 1 – The foundation. Focus entirely on building a product, or focus on building a product and a culture?
Crossroad 2 – The scale-up. As the organization grows and becomes desperate for talent, do you opt for skills and warm bodies over cultural fit?
Crossroad 3 – Institutionalizing. When the organization is too large for informal HR processes, it must choose between implementing indirect motivators to manage the growth or scale the existing ToMo culture.
Crossroad 4 – Renewal. Eventually, every organization hits a plateau. Leaders can either ratchet up indirect motivators with rigid performance management systems, incentive compensation, cost reductions, etc., or choose a high ToMo path of renewal. The urgency of everyday challenges usually leads to indirect motivators, which decrease total motivation, and with it adaptive performance, and eventually total performance as well. It’s a death spiral. The mortality of companies is less than human beings. Just like humans, companies must adapt to survive.
The Medallia case study:
At Medallia, culture is not secondary to the mission. It’s the only way to achieve the mission. The two founders, Hald and Pressman, brought their own high ToMo to the company. During the 10-year startup phase, “we were very focussed on getting food on the table,” Pressman recalled. “So when I talked about culture, people’s eyes glazed over.” [Editorial note: We can easily replace the first sentence with “While publicly traded, we were very focussed on meeting quarterly earnings…]
But they remained true to the vision. They personally hired new candidates, looking for the right culture fit. When they got too big, they hired a psychology doctoral student to find out why candidates were applying (because why you work drives how well you work). Eventually, they created a culture interview team and they now have one culture leader for every 250 employees. They learned that you need people who are not afraid of not being perfect, because trying to be perfect is counterproductive to learning, growth, and reaching full potential. Trying to be perfect increases emotional pressure and reduces play, thus limiting the organization’s ability to adapt. They understand that “winning” means having a winning record, not winning 100% of the time.
Their goal is to prime people’s why from their very first moment in the company. Medallia’s week-long onboarding program is designed to reduce emotional pressure and create a sense of play. It starts with a welcome letter explaining the culture. Then, the very first task of an employee is to do something to make the company a better place to work. Finally, employees are asked to be vulnerable, which often leads to a tearful room. The program ends with each new hire reading a paragraph written by his or her hiring manager, describing the special spark that led Medallia to extend a job offer.
Leaders are then taught to actively combat the blame bias, to sustain the high ToMo that was created during onboarding. Performance reviews are designed to reduce indirect motivation. Career ladders help employees understand the skills they need to build. Medallia’s Associate General Counsel is clear about the culture: “We assume good intent. We assume competence. We work collaboratively to solve problems.” Not the typical adversarial relationship that legal teams face in most organizations. Looking at the cost per hire, the culture programs more than pay for themselves.
The objective of a high-performance culture is to maximize adaptability. Adaptive organizations require adaptive individuals. Individuals adapt when they have high ToMo. Organizations create high ToMo with direct motivators.
Research has found no relationship between ToMo and size of the organization.
Reading notes by Yan Tougas
Studies have shown that people tend to blame individuals, and not the situation, when something goes wrong. Teachers who teach in terrible conditions blame the students for not learning. Managers blame employees who get hurt in dangerous conditions. Salespeople miss their targets because they are lazy. Coworkers cheat because they are unethical. Because of this bias, few of us focus on improving the context, the culture.
We invest in hiring the right people and then underestimate the influence of our culture once they arrive.
In many studies, leaders were tricked into believing that their followers were exceptional individuals. Because leaders believed that their followers could do no wrong, they assumed that the context was at fault when something didn’t go as planned. The leaders then worked on the context (because, they assumed, there was nothing wrong with the followers). Witnessing this work, the followers felt motivated and valued, and ended up excelling. The Pygmalion effect is the antidote to the blame bias. Once blame is eliminated, expectations increase all around.
Everyone is subject to this bias. Before anyone can remove the bias from an organization, they must remove it from themselves. The easiest way is to learn how to give feedback to others (“REAP”):
Remember to assume a positive intent. Assume the other person means well.
Explain – Come up with 5 scenarios that could explain the behavior, scenarios that do not place the blame on the individual. Consider that culture could have contributed to the outcome.
Ask the other person why they behaved that way (ask assuming positive intent).
Plan – Identify the root cause and create a plan of action
One of Toyota’s values is genchi genbutsu – the actual place, the actual part – reminding managers to go to the worksite to assess a situation in context and ensure a good solution based on objectivity and open mind.
The Yin and Yang of Performance
Strategy: A plan of action designed to achieve a long-term or overall aim. Success depends of tactical performance.
Culture: Determines how well your team can diverge from the plan when VUCA requires it. Success depends on adaptive performance.
The two are complementary. Yin and Yang.
There are high-performing individuals and then there are high-performing organizations. An organization filled with high-performing individuals is not necessarily high-performing. The individuals must be able to work together in a specific way. A high-performing culture emerges from a system that maximizes adaptive performance through total motivation (because VUCA is always present). This emergence requires two conditions:
- The individual members of the organization must be adaptive, encouraging novelty and allowing experiments and fluctuations. Also known as play (individuals can “play” different roles depending on the circumstances).
- Emergent organizations must encourage citizenship, defined as helping each other out.
When these two conditions are not met, you end up with either a rigid organization that does not adapt to changing customer needs, or one where well-meaning individuals are unable to shape their immediate surroundings. The traditional, hierarchical views of leadership are less useful in our complex modern world.
You should never use employee satisfaction survey as the measure of your culture’s strength. What people say and what they do are different things. Satisfaction does not always lead to adaptive performance. In fact, being satisfied enough can create inertia, the most harmful of motives.
The species that survives is the one best able to adapt and adjust to the changing environment. Humans have a natural instinct to adapt. While most species adapt over generations, humans can adapt many times within a lifetime. Humans exist because of VUCA.
There are two types of performance: tactical performance, or the ability to execute a plan, and adaptive performance, or the ability to diverge from plan.
Today, when organizations measure performance, they typically measure only tactical performance, mostly because adaptive performance is very difficult, sometimes impossible, to measure. But only measuring tactical performance is an incomplete measure of performance.
When the work requires only tactical performance (e.g. placing an item in a box on an assembly line), the presence of indirect motives may not decrease performance, and may in fact increase it. Assembly line workers who have been boxing an average of 10 items per minute without a financial incentive may actually box a few more if you offer a bonus for every additional item they box over 10.
Work that requires only tactical performance is rare. Most work is subject to some volatility, uncertainty, complexity, and ambiguity (known as “VUCA” in the military). VUCA demands that workers diverge from the plan, that they adapt. They need adaptive performance, which is negatively affected by indirect motives, as demonstrated by the distraction, cancellation, and cobra effect.
Distraction effect – Hundreds of studies have demonstrated that emotional and economic distractions reduce overall performance. If you ask math students to complete a series of problems as quickly as they can while sitting alone in different booths, they will perform better than if you place them all in the same room, standing up at the same board, and asking them to sit when they are done. The last ones standing are often unable to solve the last problems as everyone else is looking on; the emotional pressure is too high. Similarly, if you offer these students a large sum of money (hundreds of dollars) to complete as many problems as possible within a given time, they will solve fewer than when a small reward (or no reward) is offered. In both cases, the students have two things to focus on: solving problems and looking smart/making money. The more distracted they are, the more performance suffers.
Cancellation effect – Studies have shown that rewards cancel out the natural sense of play – that part of us that does the work for the pure joy of it, and the strongest of direct motives. Experiments have shown that workers who are naturally helpful (i.e. helpful without promise of a reward) cease to be helpful when a reward is introduced and later withdrawn. Additionally, when you reward one thing you often create a trade-off. Rewarding quantity often affects quality. A focus on near-term can affect long-term results. And so on.
Cobra effect – When India was a British colony, the Brits tried to reduce the number of cobras roaming the streets by offering a reward for every dead one brought in. It didn’t take long for someone to build a cobra farm. That’s when the Brits realized that they didn’t want more dead cobras, they wanted fewer live ones. But dead cobras are much easier to count, so that’s what they measured. Every job creates the opportunity for maladaptive performance. When motivation is low enough (i.e. when levels of emotional and/or economic pressure are high), people find the easiest way to relieve that pressure (think fraud triangle). Call center workers hang up in the middle of a call to get on the next one simply to meet their duration or volume goals. Sales people kill the margin at the end of the quarter to meet revenue goals. When cobra farms are discovered, organizations can either eliminate the indirect motive and build a better culture; or they can keep the reward system in place and add controls. Most organizations choose the second option because it is easier to create. They also assume that nothing is wrong with their culture and that the wrongdoers, however numerous, are simply bad apples.
These three effects reduce adaptive performance until it produces maladaptive performance. Meanwhile, tactical performance can remain high (the sales person will shift all of her attention to selling and stop being helpful to colleagues – individuality/teamwork trade-off). Those who only measure tactical performance don’t notice the crippling effects on adaptive performance, and ToMo goes down “inexplicably”. We should be alarmed because adaptive performance is the secret sauce behind innovation, creativity, great customer service, distinctive salesmanship, etc.