For the sixth day of Christmas, in memory of George Mair, long-time professor of economics at Smith College, here are the words to one of the hymns he chose for his memorial service ...
Not Alone for Mighty Empire
Not alone for mighty empire, Stretching far o'er land and sea; Not alone for bounteous harvests, Lift we up our hearts to Thee. Standing in the living present, Memory and hope between, Lord, we would with deep thanksgiving Praise Thee most for things unseen.
Not for battleship and fortress, Not for conquests of the sword But for conquests of the spirit Give we thanks to Thee, O Lord; For the priceless gift of freedom, For the home, the church, the school; For the open door to manhood In a land the people rule.
For the armies of the faithful, Souls that passed and left no name; For the glory that illumines Patriot lives of deathless fame; For our prophets and apostles, Loyal to the living Word; For all heroes of the Spirit Give we thanks to Thee, O Lord.
God of justice, save the people From the clash of race and creed, From the strife of class and faction; Make our nation free indeed. Keep her faith in simple manhood Strong as when her life began, Till it finds its full fruition In the brotherhood of man.
The 1:16 film below was made in 1898 by G. A. Smith, described in the accompanying note at YouTube as "one of the first British filmmakers to make extensive use of special effects to create fantastical scenes."
Two recent interviews, one with the CEO of the Brazilian company Mundivox Communications published on December 18, and the other with the CEO of the online shoe seller Zappos published on December 22, share an important theme.
Alberto Duran launched Mundivox in 2000, and is currently overseeing growth that is steaming along at 100% per year. The company's 1000 employees build networks and provide voice and data services, mostly to small and medium-sized businesses. (About 10% of revenue comes from residential work.)
Before getting to the aforementioned theme, just for a general sense of how Duran thinks, here is part of what he has to say in response to a question about the current volatility in the world's financial markets:
The question for me would be: Why is the [stock] market driving all this? The managers of a company and the board of directors are in charge of the long-run situation, [but] the health of a corporation is measured mostly by the stock market. That was supposed to be for the long-run growth of the company and to align [it] with the shareholders and their interests. In reality, what I have seen is companies taking short-term decisions to create short-term mini-bubbles or to please the expectations of bankers who often do not understand exactly what they are doing. I have seen it in my industry. I see the major telecom companies acting like banks. I do not see them acting like telecom companies. I benefit greatly from that. I do not know about society, but personally I could not be more pleased because I actually compete with banks instead of competing with telecom companies.
So, you see that Duran is a vigorous strategic thinker and quite articulate.
Now on to the theme I was struck by. When asked about his top priorities for the next couple of years, Duran says:
The first priority, believe it or not, it is creating new management in the company. I find the biggest problem is to create middle management. They are extremely smart; they are extremely capable in their field technically. But their view of the world and their view of what is right and what is wrong may be sometimes different. Diversity to me is not in race, it is in the way you think. And that is where the biggest focus and the biggest challenge lie, because without those managers we cannot grow to have 10,000 peple. I need more managers to move into different areas, to lead more people and to influence those people like I would.
Duran recounts how he asked Craig Barrett, currently chairman of the board at Intel, how Intel had grown successfully to the point of having thousands of employees. Barrett pointed to the importance of culture. Duran says:
That is when I started going back to my books and my management theories. ... I started paying more attention to the soft issues and to psychology, than the tools that I had learned to use at the beginning of my career.
Which brings us to Tony Hsieh of Zappos (discussed in a previous post). Asked why culture is so important for him and his company, Hsieh says:
Our whole belief is in today's world companies are becoming more transparent whether they like it or not. One disgruntled or happy employee can write something on a blog and have that read by millions. It's the same thing with a customer. Our belief is a company's culture and brand are two sides of the same coin. The brand may lack the culture but eventually it will catch up. You can't control evey touch point like you could 50 years ago. The only way to do it is instead of trying to "control the touch points" is to get the right people with the right attitude, build the right culture and the rest will take care of itself.
In part, Hsieh's view comes from trial-and-error. Asked about his biggest mistake, he responds:
With my first company it was not paying attention to the culture. We hired the right people with the right experience and skills sets, but we didn't know to look for a culture fit. By the time it was 100 people, I didn't want to go into the office anymore. That was a weird feeling. That's why we ended up selling the company.
Finally, in response to a question about how Zappos maintains its culture while rapidly adding employees, Hsieh says:
It comes down to whether employees view it as part of their job description. If they don't that's not going to scale. The only way it can is if every employee feels it's part of their responsibility. We make it a part of the hiring process and we actually fire people if they're not living up to the Zappos core values even if they're doing their job function. It's 50 percent of every performance review. That's the only way I think it can scale.
Any organization would be well-advised to examine their own degree of success in building a cohesive, productive culture and in recruiting new employees who are motivated to fit in and contribute to meeting shared goals.
Positive deviance, discussed in a couple of recentposts, is the brainchild of the husband and wife team, Jerry and Monique Sternin.
In May 2005 Jerry Sternin (who, sadly, passed away on December 11) published an article (pdf) in the Harvard Business Review co-authored with Richard Pascale1 that describes how the principles of positive deviance apply in the business world.
The basic idea is the same as in the context of development economics: When seeking a solution to a problem look for "positive deviants" people who seem already to have solved the problem despite having access to no more resources than others in the community.
An exhibit in the article summarizes the differences between the traditional approach to change and the positive deviance approach. These differences (here, somewhat edited) are:
Leader as path breaker vs. Leader as facilitator
In the traditional approach, the leader has primary ownership, and the momentum for change comes from above.
In the positive deviance approach, the leader guides the positive deviance process, while the community takes ownership of the quest for change.
Outside in vs. Inside out
In the traditional approach, experts identify and disseminate best practices.
In the positive deviance approach, the community identifies pre-existing solutions and amplifies them.
Deficiency-based vs. Asset-based
In the traditional approach, leaders deconstruct common problems and recommend best practice solutions, with the implicit reproach that the company's or unit's employees aren't as good as their peers.
In the positive deviance approach, the community leverages pre-existing solutions practiced by those who succeed against the odds.
Logic-driven vs. Learning-driven
In the traditional approach, particpants think themselves into a new way of acting.
In the positive deviance approach, participants act themselves into a new way of thinking.
Vulnerable to "transplant rejection" vs. Open to self-replication
In the traditional approach, resistance arises to ideas imported from, or imposed by, outsiders.
In the positive deviance approach, latent wisdom is tapped within the community, which helps forestall rejection. "The trick is to introduce already existing ideas into the mainstream without excessive use of authority."
Moving from problem-solving toward solution identification vs. Moving from solution identification toward problem-solving
In the traditional approach, best practices are applied to problems defined within the bounds of existing parameters.
In the positive deviance approach, the solution space is expanded through the discovery of new parameters.
Focus on the protagonists vs. Focus on enlarging the network
The traditional approach engages stakeholders who would conventionally be associated with the problem.
The positive deviance approach identifies stakeholders beyond those directly involved with the problem.
As a final note, I'd mention the emphasis the positive deviance process places on reframing. Pascale and Sternin outline three steps to reframing a problem:
Identify the conventional presentation of the problem. (E.g., "We don't have enough proper food for our children.")
Find out if there are exceptions to the norm, people in identical circumstances who seem to be coping especially well. (E.g., Yes, Mrs. X and Mrs. Y have healthy, well-fed children.")
Reframe the problem to focus on the exceptions. (E.g., "What are Mrs. X and Mrs. Y doing that's different?")
Reading the whole article will provide you with a range of helpful examples of reframing and of other aspects of the positive deviance process.
__________ 1 Richard Pascale is currently an associate fellow of Oxford University. Previously, he served for twenty years on the faculty of Stanford University's business school.
As a follow-on to yesterday's post, I'd like to cite another example of how the positive deviance approach to problem-solving has been used successfully.
The example in question is the story of how the Veterans Administration Pittsburgh Healthcare System (VAPHS) substantially tightened control of MRSA (Methicillin-resistant Staphylococcus aureus) infections in their facilities.
A particularly interesting aspect of the story is that VAPHS began their campaign against MRSA by adopting techniques borrowed from the Toyota Production System (TPS). As explained by Arvind Singhal and Karen Greiner in a long article detailing the VAPHS story, though TPS techniques notably, standardization and continuous improvement were effective in pilot efforts in two surgical units, the TPS approach didn't scale.1
TPS had two shortcomings it required dedicated staff to manage the process, and there was an over-dependence on the TPS leaders, instead of having broad ownership of the anti-MRSA efforts throughout the staff.
To extend the anti-MRSA program cost-effectively to more of its thirteen units, VAPHS decided to adopt the positive deviance (PD) approach, with excellent results in terms of reduced infection rates. Ira Richmond, associate director for patient care services, notes:
The evolution of the PD program has been phenomenal in helping to support a model of what in nursing we call "shared governance." The clinical practice issues are back in the hands of the frontline workers where they belong. The traditional management paradign of "You need to do this or that" or force-feeding top-down solutions has been replaced with all staff taking responsibility for MRSA prevention and control. And because the staff owns the solutions they propose, they comply with them. [emphasis in original]
Drawing on the experience of VAPHS, the VA has now rolled out the anti-MRSA initiative to all its hospitals.
[You can read a shorter version of the VAPHS positive deviance story here.]
__________ 1 Arvind Singhal is currently a professor of communication at the University of Texas-El Paso. Karen Greiner is a graduate student in communication studies at Ohio University.
The Positive Deviance Initiative (PDI), based at Tufts University, has as its mission promoting implementation of solutions to community problems including seemingly intractable problems that build on practices already proving effective for people in the community who are "positive deviants." As explained in a 2004 PDI presentation (ppt), the central idea is that
In every community there are certain individuals whose uncommon practices/behaviors enable them to find better solutions to problems than their neighbors who have access to the same resources.
Define the problem and what a successful outcome would look like. For example: There is a problem of malnourishment among children of poor families in a community. A successful outcome would be achieving good nutrition levels among all children from poor families.
Determine if there are any individuals or entities in the community who already exhibit the desired behavior or status. For example: It turns out that some children from poor families are well-nourished.
Discover what uncommon practices or behaviors enable positive deviants to outperform, or find better solutions to the problem, than others in their community. For example: The poor families who are positive deviants use active feeding (as opposed to just leaving food within reach of the children), feed their children uncommon but nutritious foods, and feed them more frequently.
Design and implement an intervention that enables others in the community to access and practice new behaviors. For example: Create a nutrition program to which parents of malnourished children bring daily contributions of uncommon foods and practice active feeding. (Note that PDI emphasizes actually doing, rather than simply relying on transfer of knowledge.)
Discern the effectiveness of activities or projects through ongoing monitoring and evaluation. For example: Measure the change in the nutritional status of children in the nutrition program, and the spillover effect on all children in the community over time.
Disseminate successful processes to other communities where there is a good fit. For example: Create a "Living University" where others wishing to replicate the nutrition program come for hands-on participation.
A key to success of the positive deviance approach is having the community discover their own solution, based on their own resources. This creates a sense of ownership which promotes sustained improvement over time.
[The item in the December 12 edition of the New York Times Magazine that introduced me to the Positive Deviance Initiative is here. A Fast Company article describing the experience with malnutrition in Vietnam on which the example used above is based is here.]
The Crew Advancement Program (CAP), was launched in January 2007 as a way of providing a career path for deckhands to advance to mate (officer) positions without having to take time off from their current jobs in order to get the necessary training. The expectation is that this approach will improve crew retention at a time when the maritime industry is having trouble finding skilled personnel in adequate numbers.
CAP covers the skills mariners need in order to qualify for a US Coast Guard 500 or 1600 Gross Ton Mates License. Students' classwork and practical training (simulation and at-sea) is scheduled around their regular responsibilities.
In the two-year program "designed for the mariner who has been actively sailing and has the famililiarization and knowledge of what it takes to be a competent deck-hand," the first year is devoted to nautical science, shiphandling, navigation, navigational law and communication, and cargo handling and stowage.
At the end of the first year, students take an aptitude test which determines whether they continue into the second year. The second year covers meteorology, further modules on ship handling and navigation, fire fighting, emergency medical care, and ship construction, stability and trim.
By adding 30 credits of general education courses during CAP, a student can also earn an associates degree from American Military University.
The December 2008 issue of Maritime Reporter contains an interview with Kelly Curtin, Program Dirctor in the Nautical Science Division of GMATS. Curtin explains:
Employee/Company loyalty is something which needs a strong foundation. By companies offering paid training to their employees they are working to build a foundation of trust and invesment in one another.
Curtin also comments on lessons he and his GMATS colleagues have learned so far concerning how best to structure CAP:
We plan to incorporate a placement/entrance examination for us to better determine the level of math and reading skills the students have. Also, at the very beginning of the next program we will have [a] one-week seminar focusing on study skills, class preparation, and [a] basic math refresher. Finally, we incorporated review classes in between the courses to keep the students current and on track for their exam preparation.
Further details about CAP and similar programs are available here (current as of early 2007).
John Halamka, CIO of the CareGroup Health System and Chief Information Officer and Dean for Technology at Harvard Medical School, among other responsibilities, maintains an active blog called "Life as a Healthcare CIO" in which he covers a range of topics, most but not all related to healthcare IT.
I came upon the blog as I was researching the question of how providers are trained in the use of electronic medical records. Once I arrived at the blog, I couldn't resist reading through Dr. Halamka's recent posts, and would suggest his October 28 post "Removing Complexity" as a sample of how he shares the benefit of his experience.
The basic proposition is that if the IT team goes too far in accommodating user requests for various features, the software that IT installs (whether written in-house, or customized after purchase from a third party) tends to become so complex that it presents daunting usability, security, and maintainability issues.
After offering several examples of how complexity degrades the value-in-use of software, Dr. Halamka outlines the steps he himself takes to resist creeping complexity:
Using the fewest number of vendors possible
Minimizing customization of commercial software
Using enterprise-wide generalizable tools whenever possible
As you can see from reading Dr. Halamka's predictions concerning "Winners and Losers in 2009," he expects controlling complexity to be a theme.
My book group watched David Lean's 1946 production of Great Expectations last night and were quite happy with the experience. The film was nominated for the Best Picture Oscar in 1948, but lost to Gentleman's Agreement. Other nominations were for Best Director and Best Writing, Screenplay. The two Oscars the movie actually won both well-deserved were for Best Art Direction-Set Direction, Black & White (John Bryan and Wilfred Shingleton) and Best Cinematography (Guy Green).
Alec Guinness as Herbert Pocket and John Mills as Pip in the 1946 movie version of Great Expectations (nerf-herders-ananymous.net)
My favorite discovery from reading up on the film is that playing Herbert Pocket was Alec Guinness's first major role (and first speaking role) in a movie. (Another bit of trivia: Guinness's wig annoyed him no end.)
[A couple of vintage illustrations of scenes from the novel are here and here.]
BPM Magazinedefines business performance management (BPM) as
... a set of management and analytic processes, supported by technology, that enable businesses to define strategic goals and then measure and manage performance against those goals. Core BPM processes include financial and operational planning, consolidation and reporting, business modeling, analysis, and monitoring of key performance indicators linked to strategy.
What does BPM look like in practice? There is no short answer to that question because how BPM is implemented depends both on the maturity of a company's management systems and the details of its business.
One quite fascinating account of how BPM works is "A Personal Perspective on Business Performance Management," first published in BPM Magazine in 2003. A slightly reworked version (pdf) appeared at www.CROProject.com in 2007.
The author is Blythe McCarvie, who began her career in accounting, advanced to broader responsibilities in finance, and is now a consultant. In her narrative she describes the evolution of BPM as she herself experienced it:
During the 1970s and 1980s, mainframe-based multidimensional technologies drove decision support systems (DSS), which created rough models for future planning. Functional managers in finance, accounting, operations and marketing were limited in their analysis to considerations of distribution channel, customer and product line. The evolution of DSS into executive information systems allowed companies to analyze and evaluate their organizational strengths and weaknesses. By the 1990s, business intelligence accelerated developments and improved planning, reporting and analytical processes. Greater data accessibility through client/server and, now, internet-enabled technology has increased efficiency, yet challenged managment in the areas of data integrity, uniformity and control. As we move to an even more dynamic and open environment, balancing performance management benefits with controls becomes even more challenging.
McGarvie goes on to describe her firsthand experience at each stage of this evolution. Reading the four-page story is well worth the time it takes because you come away with a vivid picture of the issues and intentions behind the gradual advances in techniques for using data to align operations with business strategy.
Back in October 2007, Chief Learning Officer published a two-page compilation of "The CLO's Top 11 Successful Practices." It was written by Tamar Elkeles, QUALCOMM's VP of learning and development, and I flipped right by it because it was so generic perfectly reasonable, but also predictable.
Now, about a year later, I've read a brief write-up concerning a particular learning program at QUALCOMM, spearheaded by Elkeles, that is quite impressive, and I realize I should have paid more attention to what Elkeles had to say concerning do's and don'ts of structuring and performing a company's learning function. (I should add that QUALCOMM shows up as #90 on the Training magazine's Top 125 list for 2008.)
... the Employee Communications team a group within the QUALCOMM Learning Center developed an Online Employee Tradeshow [for remote employees] that mirrors the live technical learning event held at the corporate campus [in San Diego].
The Online Employee Tradeshow's launch page includes an interactive map that emulates the floor layout of the live event. Employees can navigate through the various technologies and company divisions represented at the tradeshow, or visit the "Information Booth" for more tips. All of the virtual booths sport the look and feel of their real-world progenitors, and include interviews with key QUALCOMM personnel and even video demonstrations filmed during the live event.
What caught my eye was the clarity and persuasiveness of the tips Elkeles offers other companies considering doing something similar:
"... my biggest piece of advice is to highlight the specific technologies, innovations, ideas, and topics that your employees care about." QUALCOMM does this "by maintaining open, clear channels of communication between management and staff. We also have an advisory group that feeds many ideas and suggestions in to us, and we feature an Amazon.com-like 'rate it' feature as part of the tradeshow experience, which gives us a very good sense of what attendees like and want to see more or less of in the future."
Make the tour self-guided, i.e., "we let attendees control where they go and which information they take in. Allowing them to pick what's important to them not only personalizes the experience, it also drives attendance."
Enable people to take the virtual tour in a group. "In some of our international offices, groups of employees gather in a conference room to go through the tradeshow together online, with a manager or executive facilitating the experience. If you can rally your international managers and executives to fill the role of event facilitator, it can increase event attendance and create a richer experience for attendees."
It is clear from an article about Elkeles published in Training in May 2001 that she has been pursuing her sophisticated philosophy of how to run the learning function effectively from the time she first arrived at QUALCOMM in 1992 as a doctoral student intern.
A few weeks ago a friend attending a training conference in California found herself in a session being led by a woman who delighted in the fact that her computer screen, projected for all to see, was regularly showing incoming tweets greeting her audience. The speaker had invited people following her on Twitter to send these mini-messages, and they were obliging.
My friend found the experience of constant interruption a negative. Later, when she was back home, we spent some time talking about situations in which 140-character broadcast messages would be useful in a business setting. Right on cue, I began to notice newspaper articles addressing this question.
First was a November 23 article by Sarah Milstein in the New York Times in which Milstein described how Twitter and Twitter-like software is being used in offices.
With its base of 3 million users, Milstein explains, Twitter can be a good means of being in touch with customers and staying in touch with people in your network of professional colleagues. On the other hand, because Twitter messages, generally speaking, are public (though users can elect to require that people request permission to follow their tweets), it is not well-suited to fully internal messaging.
For internal messaging, Milstein cites Yammer and Present.ly, which enable private networks, and subgroups within those networks. People can do things like posting project status updates, asking questions, sharing weblinks, and passing along news and other information. Each person creates a profile with such information as their professional background and expertise and their current projects. The database of messages is searchable, so people can find out who is discussing a topic of interest and what they are saying. Present.ly allows attachments. (For a comparison of Yammer and Present.ly, you can see this October 21 post by Dan York.)
Workers say several aspects of microblogging make the medium well-suited to internal communication. The messages are very quick to write and read, replies are optional, and there is nothing to delete or file. Moreover, people can glance at posts as they come in or read a batch during breaks. ...
Companies that have adopted microblogging internally say a surprising benefit is the ease with which employees can learn relevant information across departments. The sales staff, for instance, may get wind of projects in development long before it otherwise would. ...
Companies with many employees who work from home or in far-flung offices [can use] internal microblogging [to] help fill the inherent social gaps among remote workers.
Next up was a "basic Twitter guide" published by Katherine Boehret in the December 3 edition of the Wall Street Journal. Boehret offers this answer to the fundamental question, "Why use Twitter?":
While some people primarily use Twitter to post updates about their activities or comments on the news, I use the service more as a follower, allowing me to see quick snippets of news as it occurs. Most tweets are written by real people, while others, such as updates from news organizations that you've selected, are automatically generated. Many tweets include the addresses of Web sites with relevant articles that tell readers more on a topic.
From Boehret's perspective, the key benefit of Twitter is access to fast information.
The final item I encountered took me on a return visit to the dark side of Twitter from a business perspective its enabling of posting of time-wasting trivia.
The instance in question was reported by Al Kamen in the December 10 edition of the Washington Post. Deputy Assistant Secretary of State for Public Diplomacy Colleen Graffy was off on a final round of overseas visits to Iceland, Croatia, and Armenia before the change in administrations in Washington, and she was using Twitter to keep the world informed of her activities. Although the substance of her tweets improved after Kamen weighed in with his report of tweets like "Dashing in to State Dept to pick up tickets, briefing books white knuckle time gotta catch that flight!" and "Renting a bathing suit and getting ready to take the plunge into the geothermal hot springs and smear silica mud on my face," you have to wonder why she ever thought sharing trivia was a good way to earn her salary.
I have to admit that I myself am not yet feeling a need to follow anyone at Twitter since I already get plenty of news from the sites I visit daily. However, my mind is open, and I wouldn't be surprised to find that there are a few people whose twittering I want to track. I definitely do not have the time or the need at the moment to do my own twittering, but that too could change.
As a follow-on to my recent post on how to write white papers, I'd like to cite another example of good practice.
This is a white paper (pdf) Oracle published in November 2004 that I came upon as I was looking through material dealing with operation of contact centers, an area of particular interest for me in the coming year.
"Usability in Enterprise Customer Service Applications: The Impact to Productivity, Customer Satisfaction, and Profitablility" addresses the usability criteria that are central to the design of the software that customer service representatives use:
An interface that is intuitive and easy to navigate
Access to complete enterprise-wide customer information
Convenient creation and updating of an easy-to-use knowledge base
Intelligent guidance to the CSR on how to work through the steps in a task
From these criteria, the paper derives the questions a company investigating options for CSR software (or customer relationship/experience management software) should investigate: How was the application designed? Who was involved? Users?
How easy is the application to learn and use?
Does the application support enterprise-wide business processes?
Can the application support your specific business processes? Is it configurable to match your processes (as opposed to your having to adjust your processes to fit the software)?
Does the application provide intelligent guidance to the CSR as he/she works with a customer?
Has the application been thoroughly tested? What were the results in terms of efficiency, effectiveness, and user satisfaction?
The final section of the white paper makes the case that the Oracle's PeopleSoft Enterprise CRM products fulfill the aforementioned usability criteria at a high level of fidelity.
Salman Khan, an investment professional based in California, has created the Khan Academy, "a not-for-profit organization with the mission of providing a high quality education to anyone, anywhere." The main activity of this online academy, basically a one-man operation, is creating quite helpful tutorial videos and posting them at the Kahn Academy YouTube channel.
As of now, there are almost 650 videos available, organized into the following topical areas:
Finance and macroeconomics
Banking and money
GMAT data sufficiency problems
(The list of topics is slightly different at the Khan Academy website, where you will also find videos listed for Geometry and Singapore Math.)
Having missed out on trigonometry in high school, I decided that that was where I would start in sampling Khan's offerings. I watched the two videos below, a problem solution that has a total running time of about thirteen minutes. (Khan had to split his presentation to avoid exceeding the 10-minute YouTube limit on video length.)
As you can see from watching the videos yourself, Khan uses a simple presentation technique and a calm speaking voice to walk the learner through the solution. (By the end of the second video he has slipped into talking about "miles" instead of "kilometers," but that's a minor issue.)
I would say these videos are instructive not only for their content but also for their demostration of how a simple presentation technique, combined with a clear audio explanation, can work well in teaching math, science, and business concepts, in clarifying how to apply the concepts, and in answering likely learner questions.
The Logic Behind Regulating Financial Institutions
The January 2009 issue of Vanity Fair has a short article by Joseph Stigliz (2001 winner of the Nobel Memorial Prize in Economics) presenting his take on the mistakes and misperceptions that underlie our current severe financial troubles. Regardless of your political inclinations, I believe you can benefit from reading what Stiglitz has to say, especially his comments on the consequences of allowing financial institutions to engage in both commercial banking and investment banking:
In November 1999, Congress repealed the Glass-Steagall Act ... Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest. For instance, without separation, if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely? An ensuing spiral of bad judgment is not hard to foresee. I had opposed repeal of Glass-Steagall. The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”
The most important consequence of the repeal of Glass-Steagall was indirect it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking.
There were other important steps down the deregulatory path. One was the decision in April 2004 by the Securities and Exchange Commission, at a meeting attended by virtually no one and largely overlooked at the time, to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process. In agreeing to this measure, the S.E.C. argued for the virtues of self-regulation: the peculiar notion that banks can effectively police themselves. Self-regulation is preposterous, as even Alan Greenspan now concedes, and as a practical matter it can’t, in any case, identify systemic risks the kinds of risks that arise when, for instance, the models used by each of the banks to manage their portfolios tell all the banks to sell some security all at once.
As we stripped back the old regulations, we did nothing to address the new challenges posed by 21st-century markets. The most important challenge was that posed by derivatives. In 1998 the head of the Commodity Futures Trading Commission, Brooksley Born, had called for such regulation a concern that took on urgency after the Fed, in that same year, engineered the bailout of Long-Term Capital Management, a hedge fund whose trillion-dollar-plus failure threatened global financial markets. But Secretary of the Treasury Robert Rubin, his deputy, Larry Summers, and Greenspan were adamant and successful in their opposition. Nothing was done.
Stiglitz's reference to the stark cultural difference between commercial banking and investment banking reminds me of an article I read in Business Week some years ago. The reporter had attended a training class in which commercial bankers were learning how to be investment bankers. Their degree of discomfort was extreme. They were being asked to develop a whole new appetite for risk, and this went against just about everything they had learned in their careers theretofore.
Some of mypreviousposts have looked at social entrepreneurship people coming up with new solutions to social problems and then implementing them on a large scale, often in a profit-making way (as opposed to mostly depending on government subsidies and grants for funding).
Continuing in this vein, I'd like to highlight a project in Mexico whose story is particularly well-documented and thus can serve as an instructive case example of how some social entrepreneurs work to achieve their objectives in a sustainable fashion.
The project (pdf) in question involves combining the efforts of two non-governmental organizations and a for-profit firm to supply affordable irrigation systems to impoverished small-scale farmers. As described by Ashoka, an umbrella organization for social entrepreneurs that is facilitating the project, it involves
... a partnership between a leading water distribution and irrigation company [Amanco] and a group of selected Ashoka Fellows with strong local presence in rural communities in Mexico. Together, they are inventing a new type of rural distribution channel, not only to deliver irrigation systems appropriate to the needs of small farmers, but also to bring value-added services such as affordable technical assistance in production, crop certification and marketing and financing mechanisms needed by most clients at the grassroots level as well as other critical products. The partners are committed to developing sound business solutions that will ensure impact at the farmer level by increasing household incomes, position [Amanco] to lead in this underserved market representing hundreds of millions of dollars in potential sales, and enable social entrepreneurs to generate new sources of income for their organizations and further their social mission.1
Amanco (pdf) is supplying the irrigation technology on preferred distribution terms to the non-governmental organizations, along with promotion materials and training; the company is "committed to long-term product innovation in order to further decrease the cost and tailor the irrigation systems to small farmers' needs."
Ashoka points to three principles that have emerged from their experience in working with social entrepreneurs on projects like the irrigation project in Mexico. A business firm must:
Design products and services that tap into the wealth of the poor (e.g., land, livestock, saving capacity).
Adopt a radically altered business model, one in which engaging in a large number of small transactions is profitable.
Leverage the power of communities as both consumers and producers, i.e., design a business model that takes into account how boosting income from production increases family buying power, which can then further raise income in a virtuous circle.
After a year or so of running their two pilot projects in Mexico, Ashoka had drawn several lessons:
Successful partnering of social entrepreneurs and traditional profit-making companies is not simple. The partners should expect to take time to get to know each other and to refine their approach.
It is essential "to intricately link the products sold (i.e., irrigation systems) with the mission of the social entrepreneurs." (Note that not all social entrepreneurs will benefit from partnering with a profit-making company.)
There is a steep learning curve for most organizations. External financial resources and specialized human resources, as well as appropriate systems and work processes, are required.
All partners will need to shift their mindsets to some degree. Ashoka found that this shift in perspective can be promoted through such factors as:
Involvement of an outside facilitator to accelerate the trust-building process.
Systematic reflection on lessons learned, achievements, and bottlenecks.
Evaluation metrics that are periodically revisited.
External mandates and incentives that create pressure to perform.
At the business firm, designate a team leader reporting directly to the CEO and dedicate human resources that can focus exclusively on the new business model.
It takes time to reach critical mass and capture the interest of key players in the business firm.
Expect to learn as you go, e.g., the business firm can expect to make technical changes as it gains field experience, and the social entrepreneur can expect to have to explore a variety of possibilities for mobilizing financing.
Note that the Ashoka irrigation project can also be seen an example of the profit-driven strategy for alleviating poverty that C.K. Prahalad calls for in his influential 2004 book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Prahalad argues that it is entirely feasible to create wealth among the 4 to 5 billion severely impoverished people of the world by using innovative business models. The idea is to balance positive social impacts and profit-making goals in a way that fairly benefits all participants.
__________ 1 From ashoka.org, retrieved 12/9/08. (Ashoka is named after "the Indian leader who unified the Indian subcontinent in the 3rd century BC, renouncing violence and dedicating his life to social welfare and economic development. For his creativity, global mindedness and tolerance, Ashoka is renowned as the earliest example of a social innovator.")
A 2007 update on progress with the Mexican irrigation project is here.
Credited to BNET's editorial staff, the article defines "business white papers" they "provide information that enables readers to evaluate products, services, or technologies" and then walks you through these guidelines for putting a white paper together:
Understand user needs.
Choose the appropriate type of white paper (e.g., technology guide, position paper explaining a trend or technology, guide to the business benefits of a product or service, etc.).
Set an objective (e.g., educating potential customers, moving toward thought leadership by sharing valuable expertise, etc.).
Provide reliable information that is relevant to the reader.
Write at the appropriate technical level.
Assure professional quality writing by bringing in an editor, if necessary.
Structure the white paper carefully (e.g., choose an informative title, open with an overview, etc.).
Make the white paper visually interesting.
Make it easy to access the white paper.
Market your white paper. (But don't make your white paper too much in the way of a marketing piece. The paper should clearly be educational, and it should be written in a neutral tone.)
An example dealing with HR outsourcing that fits the above guidelines well is here (PDF, reg req).
Having had my own unhappy experiences with clients who could not manage budgets without contracting for services at specified hourly rates, I was taken with a column by Tim Williams, a consultant to marketing communications agencies, that appears in the December issue of Communication Arts.
Williams outlines seven things to do to get away from pricing based solely on hourly rates to pricing based on value:
Sell the result you are going to deliver, not the activities you and your team are going to undertake in order to produce the result.
Negotiate the price for the job before you begin working. Pre-kickoff is when your work "has the highest perceived value with the client."
Go ahead and ask the client what they think the assignment is worth. They'll mention a high figure, or a figure that's in the same ballpark as your own estimation, or a figure that undervalues your work, in which case you need to provide evidence of why the value is more than they think (or let on).
Offer options, and structure them bearing in mind that the client's typical inclination is to go with a choice that falls in the middle.
"Never lower your price. Instead, add value." I.e., don't leave the client with the impression that you produce discount services.
Be flexible in the terms you set (e.g., the timing of payments) so that you make a value-based price workable for the client.
Be willing to walk away. This is the only way to maintain leverage in the price negotiation.
Williams emphasizes the importance of teaching all employees about pricing for value and of learning from experience. He recommends:
Conducting postmortem analyses at the end of major client assignments and relationships in order to assess what was learned, how adequate the compensation was, the value that was created and how the agency might have priced it better.
The upshot will be steady improvement in your organization's ability to set and sell prices that reflect the value you deliver.
The Information Management Skills that Employers Want
Some years ago, I published an article about Michel Fokine, an important choreographer active in the first decades of the twentieth century. I worked my way through huge amounts of archival material and primary and secondary literature to get as clear a picture as I could of this person who died before I was born.
One of the most memorable recollections I came upon offered by someone whose name escapes me at the moment was that pupils who came to classes Fokine taught found the classes mostly devoted to his choreographic ideals and ideas, with little direct attention to dance technique. The person in question explained that Fokine took it for granted that students would obtain technical training elsewhere and arrive at his classes with their technique already well-honed.
Something similar seems to prevail in the world of IT. The Society for Information Management (SIM) recently reported results of an online survey of senior business technology executives that included questions concerning the skills that are most important to them when recruiting for entry-level and midlevel positions. As Rob Preston, editor in chief of Information Week, explains in a column in the November 24 issue,
... in a global economy where technical functions are often handed off to contractors, and where companies increasingly are aligning their IT with suppliers, partners, and customers, employers are looking for people who can manage relationships and excel as part of far-flung teams, not just hammer out internal system and project requirements.
Preston's comment is his interpretation of the results of the SIM survey. It turns out that, when asked about skills most desired in entry-level and midlevel hires, the top items the executives cited are almost entirely non-technical:
Ethics and morals topped both employer wish lists, followed by such attributes as critical thinking and problem solving, collaboration and team-building, oral and written communication, and user relationship management.
Preston concludes, "Employers what well-rounded business pros with a deep technology grounding."
It is my own observation that employers in a wide range of industries where steady increases in productivity are an important component of growth are looking for a similar mix of business, interpersonal, and technical skills in the people they hire. As with IT and some dance companies the basic technical skills may be treated as table stakes, with the business and interpersonal profile of candidates becoming the main determinant of who gets hired.
The trade magazine eventDV is addressed to professionals who produce videos of social events, notably, weddings. Most of their articles are at least somewhat relevant to any videographer's work, and some are explicitly directed to helping their videographer readers branch out.
An example of the latter type of article appears in the December issue. Stuart Sweetow, a California-based videographer offers a primer for event specialists who have opportunities to produce videos for corporations, e.g., for training or marketing. (The advice and guidelines are at the overview level, so a reader wanting more depth will probably want to consult an alternate source such as MediaCollege.com.)
A particularly useful part of Sweetow's article is the "Production Planning Guide" sidebar, in which he recommends discussing the following topics with the client before putting your treatment and script together. (The items are listed here in edited form.)
A description of the program in which the video will be used.
The audience What do they already know about the subject, and what are their attitudes toward the subject?
Knowledge objectives What the client wants the audience to know after watching the video.
Behavioral objectives What the client wants the audience to do after watching the video.
An outline A list of key elements to be included in the video.
A compilation of specific facts, data, and details that are important background and/or will be used in the script.
Visual elements E.g., buildings, equipment, people, graphs, props.
Key words and phrases.
As for script itself, the single most important consideration though by no means the only thing to think about is to ensure that your video has a good hook.
As a follow-on to yesterday's post concerncing Jay Conger's views on use of persuasion in internal decision-making, a process I suggested he might better have termed "advocacy," I'd mention that David Garvin (Harvard Business School) and Michael Roberto (Bryant University) go a step further in their 2001 Harvard Business Review article, "What You Don't Know About Making Decisions" (pdf).
Garvin and Roberto argue that advocacy which they define as a more singleminded effort than Conger's notion of persuasion is the wrong approach for a group working toward a decision. In its place they would have people use a process of "inquiry."
Garvin and Roberto summarize the differences between advocacy and inquiry as follows:
Concept of decision making Advocacy: a contest Inquiry: collaborative problem solving
Purpose of discussion Advocacy: persuasion and lobbying Inquiry: testing and evaluation
Participants' role Advocacy: spokespeople Inquiry: critical thinkers
Patterns of behavior Advocacy: strive to persuade others, defend your position, downplay weaknesses Inquiry: present balanced arguments, remain open to alternatives, accept constructive criticism
Minority views Advocacy: discouraged or dismissed Inquiry: cultivated and valued
Outcome Advocacy: winners and losers Inquiry: collective ownership
I believe the Garvin-Roberto analysis reinforces my own view that Conger uses "persuasion" in an ambiguous way because, the fact is, Conger would probably agree that what Garvin and Roberto call "inquiry" is the way to go.
To some extent, it's a question of who's doing the persuading/advocating/inquiring. Conger's analysis assumes one or two individuals working to build support for a course of action they believe advisable, while Garvin and Roberto are thinking in terms of a group collectively working toward making a decision.
I'm not entirely comfortable with the way in which Jay Conger, now the Henry R. Kravis Research Chair in Leadership Studies at Claremont McKenna College, defines the concept of "persuasion" in a useful 1998 article in the Harvard Business Review. Still, I have no problem agreeing with the process he describes for winning the support of an internal audience for an initiative one is trying to move forward.
I generally use the term "persuasion" in the same way Robert Cialdini does in his book, Influence: The Psychology of Persuasion (included in the suggested readings listed at right). Cialdini conceives of persuasion as what a person does in order to induce someone else to comply with a request.
Conger conceives of "persuasion" in the specialized context of getting others in an organization to join in a collaborative effort to achieve a goal, such as proceeding with development of a new product. In Conger's view:
Effective persuasion becomes a negotiating and learning process through which a persuader leads colleagues to a problem's shared solution.... it involves careful preparation, the proper framing of arguments [to show those you are seeking to persuade how they will share in the benefits of what you are advocating], the presentation of vivid supporting evidence, and the effort to find the correct emotional match with your audience.
An important implication of Conger's concept of persuasion is that it involves considerable dialogue and eschewing of any sort of dogmatism:
Before the process begins, effective persuaders use dialogue to learn more about their audience's opinions, concerns, and perspectives. During the process, dialogue continues to be a form of learning, but it is also the beginning of the negotiation stage. You invite people to discuss, even debate, the merits of your position, and then to offer honest feedback and suggest alternative solutions. ... the best persuaders not only listen to others but also incorporate their perspectives into a shared solution.1
Conger wraps up by reiterating that "people must understand persuasion for what it is not convincing and selling but learning and negotiation." Somehow, I believe Conger would be better off if he called this process "advocacy" or "gaining buy-in" rather than "persuasion," but I nonetheless admire the cogency of his explanation of the best way to mobilize support for a proposal or recommendation.
__________ 1 In retrospect, one of Conger's examples the push two Microsoft employees made to persuade colleagues to support development of the ill-fated BOB interface actually illustrates a situation Conger doesn't explicitly address, namely, cases in which dialogue with colleagues should lead persuaders to abandon the idea they're advocating.
Most people involved with business training are more or less familiar with the Myers-Briggs model of personality. Based on Jungian theory, the Myers-Briggs Personality Type Indicator assesses a person using four dichotomies:
Extroversion (E) Introversion (I) Focus on the outer world vs. Focus on one's own inner world.
Sensing (S) Intuition (N) Focus on the basic information one takes in vs. Focus on interpreting and adding meaning.
Thinking (T) Feeling (F) When making decisions, first look at logic and consistency vs. First look at the people and special circumstances.
Judging (J) Perceiving (P) In dealing with the outside world, aim to get things decided vs. Stay open to new information and options.
It is important to know that psychologists have been migrating to an alternate model of personality over the last twenty-five years or so. This "Five-Factor Model" (aka the "Big Five" model) assesses personality in terms of five research-based (as opposed to theory-based) dimensions (or traits):1
Extroversion Measures cheerfulness, initiative and communicativeness. Those who score high are companionable, sociable, and able to accomplish what they set out to do. Those who score low are introverted, reserved, and more submissive to authority. Facets: Warmth, Gregariousness, Assertiveness, Activity, Excitement Seeking, and Positive Emotions
Agreeableness Describes how a person deals with others. Those who score high are friendly, empathetic, and warm. Those who score low tend to be shy, suspicious, and egocentric. Facets: Trust, Straightforwardness, Altruism, Compliance, Modesty, and Tendermindedness
Conscientiousness Measures a person's degree of organization. Those who score high are motivated, disciplined, and trustworthy. Those who score low tend to be irresponsible and easily distracted. Facets: Competence, Order, Dutifulness, Achievement Striving, Self-Discipline, and Deliberation
Openness Measures a person's receptiveness to new information and experiences. Those who score high relish novelty and are generally creative. Those who score low are more conventional in their thinking, prefer routines, and have a pronounced sense of right and wrong. Facets: Fantasy, Aesthetics, Feelings, Actions, Ideas, and Values
Neuroticism Measures emotional stabiity. Those who score low are calm, confident, and contented. Those who score high are anxious, inhibited, moody, and less self-assured. Facets: Anxiety, Hostility, Depression, Self-Consciousness, Impulsiveness, and Vulnerability to Stress
Pierce and Jane Howard, business consultants, provide a business-oriented overview of the Five-Factor Model (FFM) that, among other things, outlines the differences between the Myers-Briggs model, which they used to use in their work, and the Five-Factor model, which they adopted in 1991. Drawing on a 1989 article by two of the developers of the Five-Factor model2 the Howards list these points concerning how the two models compare (presented here in edited form):
The Myers-Briggs Thinking vs. Feeling dimension is unstable because it does not separate Neuroticism from Agreeableness. The concept of thinking vs. feeling does not map precisely to the FFM; in order to measure the thinking/feeling trait, one would need to piece together several different facet scores from among the thirty facets of the FFM.
Because the distribution of scores is normal and not bimodal (binary), the practice of dichotomizing respondents is unjustified. For example, dealing with just the two categories Extrovert and Introvert is not appropriate; better to follow the FFM practice of measuring degrees of extroversion.
The Judging vs. Perceiving preference does not identify one's "primary function," i.e., does not identify the approach sensing, intuiting, thinking, or feeling that a person uses most often and most proficiently. One should be able to assume that a person's primary function would be the function with the highest score, but it turns out that the J/P preference picks the highest function score at a rate no better than chance.
The "type" concept is invalid. Assuming the integrity of the sixteen four-letter Myers-Briggs types, one would expect to find consistent correlations among the types and other behavioral measures, but this is not the case. Rather than reporting a five-letter type, the FFM simply reports five trait scores, while recognizing that many behaviors are explained by the combined effect of two or more FFM traits. For example, authoritarian behavior is generally associated with high Neuroticism, low Openness, and low Agreeableness.
Introspection, or reflection, is not associated with introversion, but rather with the trait called Intuition by the MBTI, and Openness by the FFM.
The Judgment/Perception scale does not measure one's decisiveness, but rather appears to measure one's need for structure.
The definitional problems with the Thinking/Feeling dimension are many, but they are resolved by adopting the two FFM dimensions, Neuroticism and Agreeableness. A preference for reason and logic belongs to the low end of the Neuroticism trait, while a preference for harmony belongs to the high end of the Agreeableness trait.
You can take a version of the FFM test here. A shorter version is available here.
__________ 1 The definitions given here are adapted from those in "Set in Our Ways: Why Change is So Hard," by Nikolas Westerhoff, Scientific American Mind, December 2008/January 2009, p. 48.
The facets for each dimension are taken from a summary published by the Association for Assessment in Counseling and Education.
2 "Reinterpreting the Myers-Briggs Type Indicator From the Perspective of the Five-Factor Model of Personality," by Robert R. McCrae and Paul T. Costa, Jr., Journal of Personality, Vol. 57, No. 1 (March 1989), pp. 17-40.
The well-respected blogger, Tanta the family nickname Doris Dungey used to sign her posts at Calculated Risk died yesterday. Tanta was an ex-mortgage banker who developed deep expertise in the field before giving up her job in 2006 in order to be treated for ovarian cancer.
You can get the flavor of Tanta's expertise and style from this September post in which she takes on Gretchen Morgenson, financial columnist at the New York Times. You can read the Times obituary here.