Montag, 20. Februar 2017

Seriously, what is a Pull System?

Almost 5 years ago, I‘ve published a blog post called What the F*** is Pull? The distinction between Pull System and Pull Behavior, that we‘d come up with earlier at the Kanban Leadership Retreat still makes a lot of sense to me. Yet I keep seeing a lot of confusion around the concept of pull, and I myself often had troubles explaining it in a crisp, comprehensive way. A couple of months ago, I was fed-up, freed up some time and thought about it a little bit more. After a little bit of scribbling and googling, I wrote down a short definition, which I am quite happy with. And like with most things, I did not invent this definition, it had all been written down before. It‘s just that I did not read the right resources before and that the wording of many texts did not convince me. Often, the definitions are too detailed for my taste and too focused on manufacturing systems. So here's how I define a Pull System as opposed to a Push System in a context of Kanban - maybe it‘s useful for others, as well.

Definition of Push vs. Pull

In a Push System, new input is determined by a plan or event. Output has to be adjusted accordingly.




In a Pull System, new input is determined by the system‘s capacity/capability. Input has to be adjusted to the output.

Pull Systems and WIP Limits

Now the connection between Pull and WIP limitation becomes evident. As Don puts it: "WIP limits are inherent to Pull Systems." If the input is to be determined by the system‘s capacity/capability, we 1) have to know this capacity/capability (therefore Lean‘s notion of studying the system and Understanding as one of Kanban‘s core values); and 2) we have to make sure that we never load the system beyond its capacity/capability. The easiest way of doing this is to only allow a new work item to enter the system, after another one has been finished. We have to "read" our system from right to left - just as we should "read" our Kanban board from right to left - hence the slogan Stop Starting, Start Finishing! 


Pure Pull Systems?

It‘s worth mentioning that pure Pull Systems probably do not exist. As Don Reinertsen points out in his brilliant presentation The Science of WIP Constraints, even the leanest system has a push-pull-boundary, meaning that the pull mechanism only starts after a certain process step. Before this step, work is pushed into the system. Even at Toyota, there is a minimum of planning and buffering involved - they don‘t melt new steel for every new car.
What‘s probably more important to knowledge work is the fact that want to achieve as much pull as possible in our system, but we also want our system to be able to absorb some push. Sounds strange, but it enables us to cope with major unforeseen events. In Kanban lingo, most expedite tickets will be pushed into the system. Ideally, our system is under-utilized, so that it provides spare capacity to deal with this extra work. But even if it does not, we might be willing to accept the push, because the cost of waiting for a free slot would be much higher than the cost of temporally overburdening the system. But that should be discussed further in a separate blog post...

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Like this post? Then you should check out my previous post Keep the Ball Rollin‘


Dienstag, 7. Februar 2017

Keep the Ball Rollin‘


This is a translated (and slightly modified) version of my article "Der Ball muss rollen!", which was published online at Projektmagazin in May 2014. If you prefer German, you can find the original article here.

Yet another sports analogy

Once I was with a company, where every conference room was soccer-themed. Not only were the rooms named after famous soccer clubs, but they were also decorated with "devotional objects" like jerseys, balls, pennants, etc. Of cours,e you would also find those funny quotes like "Soccer is like chess, only without the dice" all over the place.
I recall one meeting, where people were vividly discussing how effective software development teams should be set up. Probably influenced by the environment, I started thinking about soccer teams and what we could learn from them. Okay, sports analogies are not really new in software development, but let‘s give it a shot...

How (not) to manage a soccer team

Let‘s start with the composition of a soccer team. We‘ll find a goalie, defending players, midfielders, and of course the strikers. Looks trivial at first glance, because in order to win a match, there are "tasks" that need to be done in each of these areas. And obviously, a goalie needs completely different skills than a striker.
But wait a minute! If we think about it a little bit harder, we‘ll find an incredible waste of resources here! Even if midfielders support the defense every now and then and strikers fall back occasionally, it‘s very clear that all players are extremely poorly utilized! What‘s the ball possession of an average striker? Two to three minutes? And if we look at the goalie, it‘s even worse! It looks like he‘s just standing there and waiting for something to happen at least 99.9% of the time. Now think about the ridiculously high salary level of professional soccer players and you‘ll probably be close to a nervous breakdown.
Needless to say, that we as experienced project manager instantly understand the disastrous management we‘re dealing with here! If a striker is only needed, let‘s say, 30% of the time (we also calculate things like zone defence here), then why not have him play three matches in parallel? We would still have a 10% buffer if something goes wrong. Looking at the goalie, we‘ll find even more to optimize, because he‘s "needed" even less often. So he could easily play ten matches simultaneously. That‘s good, because our amateur teams are desperately looking for a better goalie...
Now let‘s take a quick look at the substitution bench! Here we‘ll find plenty of great resources that are not utilized at all. They are paid for doing nothing! So let‘s reduce the number of substitutes dramatically. How many of them do we really need? Three should be more than enough. All the others could be used way better outside of the bench: They could play in other teams, train our junior teams, give out autographs at the mall, etc.

How (not) to manage a project

All this is, obviously, nonsense! Nobody would even consider optimizing a soccer team in the way just described. But why not? Why exactly is it common in professional soccer teams to under-utilize extremely expensive "resources", while it scares us to death to do the same thing in knowledge work? One major difference lies in the fact that in soccer it‘s really easy to see the damage that‘s done, when a player is not at the right spot at the right time: the other team scores! In professional soccer, the difference between scoring a goal and allowing the other team to score, is probably worth a 6- or 7-digit number. Given this order of magnitude, who cares if a player is not fully utilized?
And a second point comes into play: In soccer, it‘s clear to everyone, that what the coach can do is to train the team and provide them with a viable strategy. What he can not do, though, is to come up with a detailed plan for the whole match - or even the first ten minutes. If this would work, we could indeed create plans for every individual player, and we could even have them play several matches simultanously. The plans then would read something like: "At 15:53 pass the ball to player 8...At  15:57 prevent the ball from being lost on field 3...At 15:59 score a goal on field 2..." Of course it‘s ridiculous to even try this, because we know a soccer match is way too complex to even try to plan at this level of detail (1). And we all know that not everything goes according to our plan in a soccer match, and we have no chance of predicting what the opposing players will do at any time.

Comparing projects to soccer?

Let‘s summarize what we‘ve got so far: When it comes to professional soccer, we‘ve long accepted the fact that the high degree of uncertainty makes it useless to come up with detailed plans upfront. In addition, it‘s relatively easy to access the risk of a player not being at the right spot at the right time. This enables us to make reasonable trade-off decisions: How high are the costs of under-utilized players compared to the cost of a delay, because the team has to wait for a player, who‘s not ready to take-over the ball or block an opponent? In soccer, this cost of delay is so enormous, that dramatic under-utilization is accepted even for players who earn millions of Euros.

If we keep this in mind, perhaps the comparison to project work is not that absurd after all! Just as in soccer, in many projects we have to deal with great uncertainty, that often renders our beautiful plans useless. Also, in project work cost of under-utilization and cost of delay are factors that should be taken into consideration (2).

A fresh view on resource planning

Just to be clear: under-ultilization of people and machines does matter, because it can lead to lost opportunities: When a highly skilled expert is idle, she might do something of great value elsewhere instead. That‘s the reason why it seems totally normal to us to come up with plans that make sure this person wil never be idle. What we ignore, though, is the fact that costs also occur when a project (or even a supposedly small milestone) is blocked, due to an expert, who is not instantly available.
If we would have more clarity on these two different types of costs, we would certainly make different decisions and our resource planning would appear in a different light. For instance, in some contexts it now might make a lot of sense to build and keep stable, cross-functional product teams, consisting of developers, testers, analysts and designers. There might be times when a designer or a tester is not fully utilized. But when she is needed, she will be there to help the team immediately (just like the soccer player when a ball is passed to him). This is a major advantage and solves a lot of problems we witness in our daily project work: low quality due to frequent context switches; rework due to long feedback loops; poor transparency on our project‘s progress, because all work packages are "80% done", just to name a few.
It‘s true in project work as much as in soccer: We must keep the ball rolling (3)! If we manage to do this, it‘s way less relevant, how many players are moving at which pace. This, by the way, is the difference between resource efficiency and flow efficiency: When we focus on resource efficiency, we make sure that everyone is busy; when we focus on flow efficiency, we make sure that we make progress on the most important tasks at any time. For several decades now, we only took resource efficiency into account. It‘s time to give flow efficiency priority now (4)!

P.S. I‘ve just learned that there‘s an old song called "Keep the Ball Rollin‘" by a band called Jay & the Techniques. Looking at the lyrics, I don‘t think the song has much in common with this blog post;-)

(1) Funny enough, I‘ve just finished the book Team of Teams by General Stanley McChrystal. To illustrate one of his points, McChrystal describes, how the coach of a fictional basketball team tries exactly this level of detailed planning and fails miserably, despite the fact that the team comprises of the world‘s finest athlets.
(2) For more details on cost of delay, look into see the brilliant analyses of Don Reinertsen.
(3) The idea is not new, neither is explaining it with sports metaphors:-) Years ago, Don Reinersen  coined the phrase: "Watch the baton, not the runner!"
(4) Niklas Modig brilliantly illustrates the difference between resource efficiency and flow efficiency in his book This is Lean: Resolving the Efficiency Paradox and in this Ted Talk.

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Like this post? Then you should check out my previous post Thoughts on groupthink and my newest post Seriously, what is a Pull System?

Sonntag, 20. November 2016

Thoughts on groupthink

During the past couple of months I‘ve done quite some reading on cognitive biases. Wikipedia states that “[a] cognitive bias refers to a systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.” As I read more about biases and how our brain works, I had to realize that humans are incredibly bad in making rational decisions. We often believe that we analyze a situation carefully, then evaluate the pros and cons of a decision and decide for the option with the best cost-benefit-ratio. In fact, that‘s not true. And even worse: Our brain tricks us into thinking that it is true! If we can believe the many findings of neuroscience and social psychology, our decisions are heavily influenced by factors that we are not even aware of.


What is groupthink?

One of these factors is the very strong human need of relatedness. When people feel that their belonging to a group is in danger, it‘s very threatening to them. In fact, our brain works pretty much in the same way it did 10,000 years ago. And back then, it actually was a death threat when someone was excluded from a group. The thing is: When we feel threatened, a couple of very archaic mechanisms kick in, which tend to overrule all rational reasoning.
So humans have a very strong tendency to conform with a group. This leads to groupthink, where “the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome. Group members try to minimize conflict and reach a consensus decision without critical evaluation of alternative viewpoints, by actively suppressing dissenting viewpoints, and by isolating themselves from outside influences."
Groupthink is also called the Bay-of-pigs-effect, because the disaster of the invasion to Cuba is believed to be caused by groupthink: People self-censored their doubts about the plan, because they felt it was not appropriate to contradict the predominant opinion in the group. Fortunately, Kennedy learned his lesson and - less than one year later - had mechanisms in place to avoid groupthink and make much smarter decisions during the Cuban Missile Crisis. Other really severe incidents like the explosion of the Challenger Space Shuttle have also been linked to poor decision making based on groupthink.
Some people say that World War III has been avoided during the Cuban Missile Crisis, because Kennedy had learned how to avoid groupthink and embrace dissent. Image credit: doe-oakridge on flickr
Now think about a group in the context of knowledge work - could be a team at a planning meeting or retrospective; could be a management group talking about strategy; could be a committee organizing the next christmas party. When you use the same approach I used to use in my role as a moderator, chances are that the decisions of these groups are flawed. Why is that? Common moderation techniques rely on writing topics on cards, clustering them and eventually having the group dot voting the topic they want to tackle. Nothing wrong with this, but the devil‘s in the details!


A real-life example

Let‘s look at a real-life example of a workshop I was observing. The group had been talking about areas for improvement and how good they thought they already were (from 1=excellent to 5=very bad). You can clearly see big clusters and very little variation.
When the moderator saw this, he said something like: “Excellent, you are all very aligned here. Let‘s go on with the topic you‘ve rated worst.”
The problem was that people dot-voted one after the other or in small groups. So the later a person voted, the more votes were already visible. In such a situation, according to neuroscience, it becomes more and more difficult to give a completely different vote. In this context it‘s extremely interesting to look at Asch‘s Conformity Experiment, where people gave obviously wrong answers to a simple task, because they wanted to conform with the group.
When I think back to the moderations I did, I did not take this much into consideration (and probably others don‘t, as well). So what can we do about it? I think first it‘s important to acknowledge that groupthink (like all cognitive biases) is not a bad thing in itself. It serves an extremely important purpose. But in many of our modern contexts, it becomes an obstacle.

What can we do about it?

Because of their evolutionary importance, biases seem to be hard-wired into our brains. Therefore it‘s of little help to tell people not to groupthink. Here‘re some things I think are more useful to reduce the effects of groupthink:
  • Let people vote simultaneously, if possible.
  • Let people think about the topic individually or in small groups. Let them write down their opinions/votes and only after that collect all the individual votes. This gives them the space to think about the issue with very little influence from the big group. Also, if people have written down their preference on a piece of paper one minute ago, it‘s quite hard for them to deviate from this preference shortly after.
  • When you decide to do a circle, where every group member voices his/her opinion, make sure that the boss and obvious opinion leaders speak last.
  • Try to make the group as diverse as possible. Diverse groups have proved to be less vulnerable to groupthink.
  • Try to add people to the group, who are likely to have a different opinion than the majority of the group.
  • Invite an outside expert to the group. Outsiders are less vulnerable to groupthink (especially when they know they are only temporarily a member of this group). This is one big advantage of consultants, especially when you tell them they are paid, because they are less likely to conform with the group.
  • Observe closely, which members are quiet during a workshop or meeting and explicitly encourage them to voice their opinion, even if it‘s controversial. Usually we assume that the quiet ones agree with the group. But what if they are the ones who disagree but are afraid of isolating themselves from the group? Think about what would help those people to gain confidence and openly disagree.
  • Explain the role of devil‘s advocate to the group and assign this role to one person. The explicit role makes it much easier to speak up, because people know it‘s “the role” speaking, not necessarily the person (and people might dislike the role, but they won‘t dislike the person who disagrees). Actually I think the “10th Man Doctrine” was the one cool thing in the movie World War Z. It says: “whenever 9 people looking at the same information come to the same conclusion, it's the 10th's duty to disagree and actively look for evidence to the contrary.” Although this doctrine is not a real thing, I was surprised to learn that the Israeli military seems to have a devil‘s advocate office, which task it is to ensure that “intelligence assessments are creative and do not fall prey to group think.” (see this thread on Quora).
  • Think about rules and processes that help dealing better with groupthink. One such rule could be: “If everyone in the group agrees, we assume we have overlooked something and we should actively look for different angles.”
  • Be very aware of signs of pressuring dissenters. Phrases like “Are you with us or not?”, “Are you a team player or not?”, “You‘re either in or out!” should get all alarm bells ringing.
  • Brief someone to wear the clown suit. I stole this metaphor from this blog post about lonely dissent. The author states that “[l]onely dissent doesn't feel like going to school dressed in black. It feels like going to school wearing a clown suit.” Modifications of Asch‘s experiment have shown that chances to disagree with the group grow dramatically as soon as at least one other person has disagreed before. This first person is the one with the clown suit. Look for someone with enough confidence and standing to wear the clown suit. And if you consider yourself a leader, think about wearing the suit yourself.
  • As a leader, reward deviating from the group‘s opinion. I am not talking about monetary incentives here. I think it can be extremely powerful to praise someone in front of the group for wearing the clown suit.
What are your experiences with groupthink? I am happy to read your comments below!

Dienstag, 19. April 2016

An Alternative View on Company Structures

For years my thinking about company structures went like this: “The more structure a company has, the more it sucks.” So I was arguing against putting new structures in place, whenever I heard of such ideas. Of course I knew, that no company could exist without any sort of structures. So my credo was: Let‘s only have structures, where it is absolutely necessary. And in my mind it only became necessary when we were growing and the new size made it necessary to come up with new structures, because otherwise things break down..
Potential downsides of rigid org structures are well known: Less freedom for the workforce, and hence less engagement and less innovation; Dilbertesque policies that might make sense for some part of the organization but not for the rest of it; single points of failure due to hierarchical pyramid structures etc.

Back to my credo: “Let‘s only have structures, where it is absolutely necessary”. I still think it‘s valid, but here comes the catch: I‘ve realized that there are other things than sheer growth in headcount that can make it necessary to add more structure! Here are three things I think are worth taking into consideration: Diversity, Fairness and Health.

Diversity
There‘s plenty of research (see this article for more resources) that shows how more diverse groups make better decisions. When people think about diversity, they mostly think about gender. While gender is very important and there is a lot to improve, especially in the tech industry, we should also think of diversity in terms of age, race, cultural and economic background, sexual orientation, political preferences, family situation, etc.
When I talk about diversity with my colleagues, we very often end up with the idea that we should have more structures. There are two reasons for this:
  1. If we want to have a more diverse workforce, we have to change the way we recruit and hire people. For a long time the way I did job interviews went something like: Let‘s have a coffee together and afterwards we do a thumb vote if we want to work with this person or not. If you use a process like this, you can be 100% sure, that your decision is affected by all sorts of cognitive biases and that you are biased against diversity. Like one of my colleagues put it nicely: “Having more diversity in a group feels like a grain of sand in the gear.” It feels uncomfortable. Humans are hard-wired to prefer being with people who are like them. And this is exactly what we want to avoid when we talk about diversity. One countermeasure for this are structured job interviews. Google does this rigidly, as Lazlo Bock (Head of People Operations at Google) presents in his book and this article. What are structures interviews? Not only are the questions for a job  interview formulated beforehand, but there‘s also a definition of the types of answers that are considered to be good/mediocre/bad. Or, as Bock puts it, a structured interview is “a consistent set of questions with clear criteria to assess the quality of responses”. And Google even goes one step further: The hiring decision is not made by the people, who did the interview, but by an separated committee. Sounds like a lot of structure, right? It certainly does to me and I was terrified, when I heard this for the first time. But if we take diversity and de-biasing seriously, this might be the (or at least one) way out.
  2. As soon as we become more diverse in our workforce, we might also need more structure. My colleague Boris just shared his thoughts on this with me: “If we were all clones of each other, we wouldn‘t need any structures. Everyone knew exactly what the others think, how things work and what the next steps are. But this would be zero diversity. If we have people with different backgrounds, we need more explicit structures, otherwise people get lost.” This totally makes sense to me. If all your employees are 30-year old, left-winged white male surfer dudes without kids, you probably don‘t need much structure, because their thinking might be very aligned. And if they face a problem, they will find a way to work around it easily, because every evening they‘re drinking beer together. So this scenario is very comfortable, and although it‘s intentionally exaggerated, I think a lot of start-ups work in a similar way. It might be okay, or even necessary for a small company to operate in such a way, but if the company is growing, and especially if it‘s critical to improve the quality of decisions, increasing diversity becomes very important. And that increased diversity comes with the need for more structures.
Fairness
Every organization has implicit and explicit structures. And probably it‘s a good heuristic to say that the less explicit structures you have, the more important the implicit structures become. That can be considered unfair, because it favours those who are good in navigating through blurry structures. Often the best (or even the only) way to get things done in such a context might be having good personal relationships with the most influential people in the company. For new people it can be really hard to join this game, because the rules are...implicit. And it gets even worse, as soon as you get more diversity. Imagine that, for the first time, a single mother joins the company. She probably does not have the time nor the interest to hang out every other evening with her colleagues.
In this classic feminist article from the 1970s, Jo Freeman argues that so-called structure-less groups are undemocratic, because they tend to be dominated by elites, who are not accountable to the larger group: “For everyone to have the opportunity to be involved in a given group and to participate in its activities the structure must be explicit, not implicit.”
I am not very familiar with the feminist movement, and the groups Freeman talks about are political groups, not companies. Still the argument makes a lot of sense to me and made me think.

Health
While organizations with little (explicit) structure provide a lot of opportunities, they also might make it easy for people to jeopardize their health. The reason for both, the good and the bad aspect of little structures, is what I would call “anything goes”. If responsibilities, decision-making-mechanisms, team structures, career paths etc. are unclear, the organization might be able to exploit the advantages of fast decision-making (“if it‘s not clear, who makes this decision, let‘s just decide in this group - right now”) and fluid teams (“let‘s team up and build this thing”). On the other hand, the same context might encourage people to work in an unhealthy way. By this I not only mean the sheer amount of hours they work, but also the effect of over-commitment and mental overload. Because it‘s unclear, where my responsibility ends and what the company expects from me, I might take on everything I find interesting or important. Of course I can only do so many things, but I am very ambitious, and nobody stops me from starting all these exciting things. So maybe I should start working a little bit longer every day and think about all the interesting problems at the weekends and during my holidays?

What now?
I think it‘s important to realize that structures in itself are neither good nor bad. And I am not making the case for excessive structures. Like with many things, it‘s a permanent trade-off decision we have to make. Instead of falling in the trap of binary thinking (“all structures are good/bad”) we should think about the pros and cons of adding more structure and then find a healthy balance for our context. My impression is that in the Agile/Lean community we have very much focused on the downsides of structures in the past. Maybe it‘s time now to take the upsides into consideration a little bit more.

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Like this post? Then you should check out my previous post Radical Transparency? and one of my newer posts Seriously, what is a Pull System?

Montag, 21. September 2015

Learning Track at LKCE15

At this year‘s LKCE15 conference (Lean Kanban Central Europe 2015) I will be chairing the learning track. Without exaggeration I can say I am more than satisfied with the five sessions in the track. What I especially like is the diversity amongst the speakers and the topics - we managed to go beyond “the usual suspects” and the well-known topics. Also most of the sessions are really hands-on from practitioners, who present their real-life experiences.



Wendy Robinson from Etsy will kick off the track. I met Wendy in New York this year, where we exchanged ideas and experences about how to best train managers. Wendy holds a Harvard degree in adult education, and she‘s awesome! Esty created a program for education 200 managers. It includes e-learning, studio groups and coaching sessions, and I‘ve rarely heard of such a sophisticated effort when it comes to in-house education. Wendy will give deeper insights on how the program works and share her experiences with the program.

The second speaker is Marian Willeke, who also has a background in adult education. In her session Cultivating the Learning Mindset she will talk about the learning needs of adults and how we can foster a learning mindset.

After lunch my colleague Eike-Marie Eiting will continue with her talk Moving desks to facilitate the in-house cultural dialogue at Jimdo Eike works as Head of Global Support at Jimdo, and she‘s totally into the Kaizen mindset. She will present her experiences with splitting a huge team into four smaller ones and relocating the teams to different floors, in order to foster inter-team communication and continuous improvement

After Eike it‘s my turn, and in my session A Salary Experiment I will talk about two experiments on remuneration we did earlier this year. We wanted to learn more about fair salary setting, transparent salaries and self-managing teams. I would say this was one of the most sophisticated things I was part of, and I am quite thrilled about what we‘ve learned - both regarding salaries and designing experiments.

Last but not least, Håkan Forss, who now is with King Games, will give his talk Experimentation is King, in which he shares his experiences on how to create a culture, which enables both continuous improvement and disruptive innovation.

The learning track is just one track, besides other tracks like leadership, strategy, and (of course) Kanban. Also I am very thrilled about the main stage sessions and the keynotes (especially the one by Chet Richard, author of Certain to Win). If you haven‘t purchased your ticket until now, I strongly recommend that you do it quickly, as fees will go up soon: Register for LKCE15


Freitag, 11. September 2015

Radical Transparency?

In the Lean and Agile community, there’s a lot of talk about the value of transparency. Often the takeaway is „the more transparency, the better“, followed by the advice to provide more transparency inside of your company: Make business numbers transparent, make salaries transparent, videotape all meetings and make them available to the whole company etc. I see all the advantages transparency brings and I agree that companies could and should be more transparent in certain areas. I disagree, however, with the notion that we should aim for radical transparency in all areas.
My main argument (of course I haven’t come up with it myself) for this is:

While transparency breeds trust, it tends to hinder innovation.

Real innovation (and I am not talking about optimizing an existing thing, but coming up with a very different thing) requires secrecy. You need to try crazy things, throw things away, and iterate on the same problem over and over again. This is a very wasteful process, the efficiency is extremely low. On the other hand, the operating system of an organization (eg most software development teams) are optimized for velocity, efficiency and high quality. Innovation and optimization can really be considered as two different worlds, they operate by different rules. Rules like „you build it, you run it“, „if you break it, will you notice?“ or „build quality in“ are proven to be really useful in the world of optimization, but they are poisonous to the world of innovation. We don’t want to write high quality code here, we don’t want to write code at all. We only use it to learn things – and only if we don’t find a way to do it cheaper than writing code. The code should be written in a quick-and-dirty-manner, and nobody should expect that it’s tested and monitored and maintained afterwards. (It should, however, be removed after the testing is over).

Now let’s look at transparency. In the world of optimization, transparency is oftentimes really helpful, because it fosters communication and collaboration and breeds trust („Oh, they have that much on their plate. I wasn’t aware of this and was wondering what they were doing the whole day.“) It also creates a certain (often healthy) tension towards accountability and getting stuff done. And this is exactly the problem in the world of innovation. You don’t want this tension here. You don’t want people focusing on getting stuff out of the door quickly. Instead, they need to feel comfortable playing around with seemingly stupid ideas, and it’s not helping when people tell them: „That’s not working, everybody knows that“ all the time.

What does this mean? The world of innovation is very different from the world of optimization – neither one is better than the other. Companies need both, but they need to be treated differently. Transparency is one of many examples where we tend to throw out the baby with the bathwater when we demand things like radical transparency. We should think about how to create healthy environments for optimization and innovation – and be aware of the fact that they will look very different. Unfortunately this comes with a tradeoff: In many cases you will trade trust for innovation. You can certainly minimize the negative effects of this, but you cannot eliminate them completely.
Another thing we need to think about is how we bridge the two worlds, because at a certain point we need to transfer innovation into the operating system of the company. And we should not do this by throwing our brilliant innovation over the fence to those who now have to implement and maintain it.

This all is not very new. 
  • My friend Markus Andrezak talks about it for years, for example in this great talk from LKCE13
  • Nonaka/Takeuchi wrote the book The Knowledge-Creating Company, which deals with the differences between the two worlds 20 years ago (thanks to Stefan Roock for pointing me to this). 
  • The concept of Skunk Works is 70 years old and does very similar things to what I was describing: Creating an environment that’s decoupled from the rest of the organization and operates by different rules. 
  • In 2004, Charles O’Reilly and Michael Tushman published an HBR article named The Ambidextrous Organization, which is – again – about the differences between the two worlds and ideas how to bridge them.
  • And there’s scientific evidence that the statement „the more transparency the better“ is plain wrong. Read for example the HBR article TheTransparency Trap by Ethan Bernstein (yes, he studied other areas than software development)
Again, I am not saying transparency is bad or we should have less transparency. What I am advocating is that we should have a closer look at different contexts and evaluate transparency according to these contexts, instead of beating the same „transparency is good“ drum over and over again.

Addendum: Christoph Poyault pointed me to this interesting (German) article So wirkt sich Lohntransparenz auf die Zufriedenheit aus

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Like this post? Then you should check out one of my newer posts An Alternative View on Company Structures

Montag, 22. Dezember 2014

The Salary Dilemma

The last couple of months my colleagues and I have been evaluating different alternatives for „Personalverantwortung“ (I’ve asked several native English speakers and it seems like there is no appropriate translation, so I will use the German term).
We’ve talked about what exactly we mean by referring to Personalverantwortung at Jimdo and we came up with seven different elements. One of these elements is, obviously, remuneration. People want to get salaries, and there needs to be some kind of mechanism in place to decide upon the salary level. The „traditional“ mechanism for doing this is some kind of line manager who does (mostly annual) performance reviews with individual salary negotiations. Perhaps that’s the best (or the least bad) solution in many contexts, but as I mentioned, we wanted to evaluate other options. So what we did was 1) read different articles on this topic (eg [1],[2],[3]), 2) talk to a lot of our teams about this topic. The conversations were very insightful in many different respects. What I found most interesting was a thought that was expressed in almost every conversation. It goes like this:

„The person/group who decides on my salary need to be very close to me, so that they can evaluate the quality of my work. At the same time this person/group cannot be on my team, because my behaviour towards this person/group will be different as soon as he/she sets my salary. Oh wait a minute...“

This is what I call the salary dilemma: Whoever decides on the salary of a person needs to be close and not close to this person at the same time.

A line manager has to deal with exactly this problem: He/she is supposed to evaluate people. In most cases he/she is either very close to the team and therefore might cause disfunctional behavior (eg people not asking for help when their annual review is close) or he/she is far enough from the team to avoid this kind of disfunction. But then the remuneration will most likely become very similar to roulette („Haven’t heard anything bad about you. What about a 3% raise?“) Both options don’t look very promising. I am not saying that it’s impossible to find a good balance, and I have seen very good managers doing a great job in creating a high-trust environment with their teams. But I believe it’s very challenging.
Of course we can replace the line manager with a different person or some kind of committee, eg a peer group. This might be better in some respect, but the dilemma stays in place.

I am aware that there are many very different models for renumeration like self-selected salaries, uniform salaries, salary formulas etc. And we’ve been thinking about ways to avoid or minimize the effects of the salary dilemma. At this point we are close to run a couple of experiments to learn more about not only remuneration, but the whole topic of Personalverantwortung. I might blog about this (and all the other insighst I’ve had so far) later.

But for now I am asking for your input:

How do you deal with the salary dilemma?

Please leave a comment or send me an email to arne[døt]roock[ät]jimdo[døt]com


P.S. I would like to thank all the smart people with whom I’ve had the opportunity to discuss this topic: Not only my great colleagues from Jimdo, but also Russell Healy, Simon Marcus, and Jim Benson. You guys rock!

References
[3] How salaries, career progression and reviews work in a #NoManager company


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Like this post? Then you should check out my previous post Stop bashing managers! and one of my newer posts Radical Transparency?