Two Yardsticks for Measuring Risky Decisions

How Women Decide: What’s True, What’s Not, and What Strategies Spark the Best Choices by Therese Huston is a fascinating book. How do you make decisions? Do you know the risk in making your decision? Below is an excerpt from the book:

Two Yardsticks for Measuring Risky DecisionsHow women decide.jpg

Are there strategies for figuring out when to take a risk? I was torn on whether to include this advice because I don’t want to send the message that women are, underneath it all, fearful of risk. The data doesn’t support that. But whether you’re a man or a woman, someone who takes too many risks or too few, you need strategies for evaluating new opportunities. There are any number of risky decisions you might be considering. Maybe you’re thinking about taking a new job or quitting your current one. Maybe you’re trying to decide whether to invest your time in a project that your friends think is a dead end but that you believe is just beginning. I’m going to offer two tools, two yardsticks you can use to measure a daring move and whether it’s headed in the right direction.

The first tool is the 10-10-10 rule, developed by the journalist and author Suzy Welch. The purpose of this strategy is to help you look at a decision from three angles, with the hope that one of those vantage points will provide a pop of clarity. In her book 10-10-10, Welch offers three easy-to-remember questions: “What are the consequences of this decision in 10 minutes? In 10 months? In 10 years?” Simple, yes, but potentially quite powerful. The goal isn’t to constrain you to those exact numbers – you could think about two days, six months, and seven years from now. The goal is for you to think about the immediate consequences, the impact your decision will have in the foreseeable and imaginable future and in a distant part of your life, a time far enough in the future that you can’t predict the intervening details or events but you still have clear hopes for yourself. Imagining forty years out is probably too far. The idea is that all too often when we’re trying to make a decision, we’re focused on one, maybe two of these time frames, but wisdom might lie in considering all three.

The second tool for sizing up a risk is something called a premortem, a strategy discussed in the bestseller Thinking, Fast and Slow, by Daniel Kahneman, a Princeton University professor and Nobel Prize- winning economist who has been studying reasoning and decision- making for over forty-five years. You may be familiar with a postmortem, which is what you do when a project or event is over, but a premortem is just what its name suggests – a step you take before the project launches, before you’ve committed to a plan of action and the risks that come with it. The concept is simple. Once you have a concrete plan on the table, bring together the key people who know about the decision you’re making and say, “Imagine that it’s a year into the future and we’ve gone ahead with our current plan. The result was a disaster. Take five to ten minutes and write down a brief play-by-play of that disaster

You might not be immediately impressed with this strategy. You’re thinking, But I’ve already asked “What could go wrong?” a dozen times. But that question involves looking forward, to possible events in the future, whereas the premortem involves looking back. (A premortem is similar to the look-back we discussed in chapter 1.) Looking back may not seem like much of a shift, especially since it’s all in your imagination, but this small shift in perspective can be profound.

Consider these two questions: “How likely is it that an Asian American will be elected president of the United States in 2024? Why might this happen? List all the reasons that come to mind:’

Before you read on, take a moment to think about this future possibility and generate some ideas.

That was looking forward. Now consider these two questions: “It’s 2024 and an Asian American has just been elected president of the United States. Why did this happen? What events might have preceded this one? List everything that comes to mind.”

If you’re like most people who’ve been asked these questions, a wider variety of vivid details come to mind in the second, hindsight scenario. It’s not just that you’re getting a second chance to think about the same event – people generate better answers to the hindsight questions even if they never heard the first ones. Deborah Mitchell at the University of Pennsylvania, J. Edward Russo at Cornell University, and Nancy Pennington at the University of Colorado collaborated on a project and found that people who are given the second, hindsight scenario generate 25 percent more reasons than people given the first, foresight scenario.” Perhaps even more important, people generated more specific and concrete reasons in the hindsight scenario. When we think about future events, we’re content to think in broad generalities, but when we think about something that has already happened, we feel a need to provide more convincing explanations. This is why the premortem is so effective- it’s looking back at a fictional event as though it’s happened. You’ve always heard that hindsight is better than foresight, and that, remarkably, includes imaginary hindsight.

 

How to Conduct a Business Meeting

Business meetings are often unproductive. The following outlines some tips to help ensure a productive meeting. There are three importance things to determine before scheduling a meeting: purpose, agenda, and people.

Purpose

The purpose of the meeting should be clearly stated and communicated to participants. Both the agenda and materials should be sent to all members before the meeting. Let everyone know that the materials should be reviewed prior to the meeting and to come prepared to discuss the topics at hand. Discussions at meetings are important and silence may denote that you’re in agreement with the topic. Ground rules should be made clear.  These may include things such as no cellphones or laptops allowed in the meeting. Also, the meeting should start on time, so arrive 5 to 10 minutes early to network beforehand.

Agenda

The agenda is used to guide the meeting. Each agenda item should have a designated amount of time noted on the agenda either written in minutes or beginning time (3:15pm). An alternative approach is to use a shot-clock which is a timer used to countdown the minutes.

You may want to assign someone to take notes for the meeting. These notes can be either formally typed up and distributed after the meeting or simply make a copy or take a picture of the handwritten notes and email them to the group.

The notes should include the agreed upon action items and assignment of those task s to a responsible party. As a group leader you will need to follow up with the individual responsible for all action items before the next meeting.

People

The last item, but perhaps the most important is deciding who should attend the meeting. There isn’t any magic number on the number of attendees. However, many recommend no more than 6-8 people or you can use Jeff Bezos’s two pizza rule; limit participants to the number two pizzas would feed. Involve those who have a stake in the agenda and will add value. Finally, at the end of the meeting there should be a recap of the results of the meeting, next time steps to be taken, and the responsible party for those actions.

A little extra planning can go a long way to increasing the productivity of any meeting.

HBR: 4 Ways to Be More Effective at Execution

Do you have an execution problem? Below is a blog from the Harvard Business Review by Jack Zenger and Joseph Folkman.

4 Ways to Be More Effective at Execution

Most people recognize that execution is a critical skill and strive to perform it well, but they may a) underestimate how important it is to their career advancement or b) not realize that you can improve on execution without working longer hours.

On the first point, bosses place a premium on execution, which we define as the ability to achieve individual goals and objectives. In fact, when we asked senior managers to indicate the importance of this ability, they ranked it first on a list of 16 skills. Other raters in the organization ranked it fourth, behind inspiring and motivating, having integrity and honesty, and problem solving. We recognize that there are many parts of your job that are important, but if you want to move ahead in your career, it might be time to double down on simply getting more stuff done – it’s what your boss wants to see.

Which brings us to the second point. Many managers react with defensiveness or despair to this news; after all, most of the managers we know already feel like they’ve got too much to do. People who are lethargic, slow, or unfocused are rarely (at least in our experience) promoted to upper management positions. The leaders we know already work hard and long – and working harder and longer is not a viable option. In the short term this typically yields improved results, but in the long term leaders burn out. And if they’ve pushed their teams to do the same, team members quit.

But our data – gleaned from tens of thousands of 360-degree performance reviews — tells us that there are more sustainable methods of improving execution. We looked at thousands of leaders who were rated as being highly effective at execution and looked for the coinciding behaviors that enabled this skill. We found a set of behaviors that improve execution. Four behaviors in particular stood out:

Be clear and methodical

Many people who are energetic about execution tend to jump into activities and take action before they get organized, create a plan, or connect what they’re doing to the strategy of the organization. Having the discipline to organize people, assemble resources, and then generate a plan that others can commit to will collectively improve execution. So will making clear who is doing what; we have learned that when everyone is collectively responsible, that no one is responsible. Providing others with clear direction and a sense of connection to the strategy of the organization helps people understand how the work they are doing dovetails with the organization’s mission.

If you are quick to jump into action and tend to start project without a well-organized plan of attack, or if you get feedback on your lack of planning and organization, this suggestion might be one to focus on. An individual contributor might be able to get away with being disorganized, but it rarely works out well at the senior management level.

Set stretch goals and deadlines

Setting stretch goals helps the group achieve their objectives and generates greater engagement and satisfaction in team members. To push the group to achieve those goals, pair them with deadlines. While we may not like it, when someone gives us a deadline, our behavior changes. Simply setting deadlines for goals and objectives goes a long way toward achieving those goals and objectives! If you resist setting stretch goals for your team, start by asking your team questions like, “What would it take to accomplished this goal two weeks earlier?” We find that by challenging your team and supporting them in accomplishing a difficult goal, team members actually feel more engaged and satisfied with their jobs.

But don’t go overboard; we’ve also found that too much pushing can erode trust, which will hurt execution in the long run. When an untrusted leader asks for additional effort, people question their motives and resist their requests. Moreover, involving your team in the process of setting goals deadlines will increase their sense of commitment and autonomy.

Give more feedback, especially more positive feedback

This is all about improving execution through intrinsic motivation, rather than through goals and deadlines. Leaders who are great executors are skilled at giving feedback. Specifically, the leaders who rate most highly are those who deliver critical feedback by taking the time to listen to and understand their employees’ perspectives, rather than simply dropping a difficult message on someone and ending the conversation as quickly as possible.

But where we really saw a major difference was with positive feedback. Specifically, we found that leaders who are great at execution give a lot more positive recognition. Our research indicates that while giving a little more recognition did not affect execution, being above the 65th percentile on this skill had a major impact.

Resolve conflict and build team unity

Have you ever been part of a team so great that you love coming to work? Teams like this probably do all or most of the above – work assignments are clear and processes make sense, deadlines are ambitious but fair, and feedback is plentiful – but they also do something more. On these teams, it’s not just the boss motivating team members — the expectations of peer team members are powerful motivators, too. Creating this kind of team culture is an important element of good execution. While there’s a lot that goes into building high-performance teams, in our experience, perhaps the biggest single thing for leaders to focus on is resolving conflict. That’s because many of the problems within a team come from differences and conflict between team members; on high-performing teams, team members trust each other and conflict is constructive, not destructive or personal.

As you think about your ability to execute we feel that all three of these dimensions are critical. You may focus on one or two and find that one is lacking. But our research shows that balancing all four of these factors is the strategy that will improve execution most of all.

Finally, if you’ve made it this far and you really feel like you’re already doing all of these things, and yet somehow you’re still perceived as having an “execution problem,” consider this: in our research, we also found that there’s almost a one-to-one relationship between leaders who are seen as fast, and those who are seen as great executors. Previous work we’ve done has shown that some of the above things – setting stretch goals, having clear processes in place, and building trust, for example – will help you move faster. But you may also need to give your peers and bosses more evidence of your speed by, for example, being more transparent about how many projects you’re working on and where they are in your pipeline.

 

HBR: Treat Employees Like Business Owners

Are you teaching your employees what it means to run a lumberyard? And are your employees committed to reducing your cost of goods sold (COGS). Below is a blog from the Harvard Business Review by John Case.

Treat Employees Like Business Owners

Employee loyalty and engagement are hot topics, and for good reason. Companies want to attract and retain talented people who really dig into their work. But most employers ignore two of the most powerful tools for making that happen.

Tool #1 is enabling employees to build real ownership in the business.

Of course, many public corporations offer stock-purchase plans or the like as part of their retirement benefit. And everyone knows about the options collected by a select few in Silicon Valley and other tech centers. But meaningful ownership — sizable grants of stock to rank-and-file employees year after year, to help them acquire a significant stake in the company — is all too rare.

It doesn’t have to be. Many large corporations manage to find big bundles of shares (and huge amounts of cash) for executive compensation, even though there’s little relationship between senior-management pay and financial results. A portion of those assets can be redirected to regular stock grants for employees. And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. So long as it’s sufficiently generous, either approach gives employees the kind of stake that makes them feel like true owners.

Just look at the supermarket industry to see such ownership in action. H-E-B, the big Texas-based chain, recently announced that it would give up to 15% of company shares over time to 55,000 of its employees, distributed according to a formula based on salary and seniority. That’s a chunk of stock estimated at more than $1 billion. Publix, a large chain headquartered in Florida, is majority owned by its employees and regularly makes the annual “best companies to work for” lists. And there’s WinCo, a grocery retailer based in Boise, Idaho, with 14,000 employees and 86 stores spread across eight western states. Every WinCo employee is an owner. Cathy Burch, who has worked there for 20-some years as an hourly employee, now has close to $1 million in her retirement account.

You don’t think that kind of generosity builds commitment and passion? “We work our tails off,” an employee with 28 years at WinCo told Forbes. “We’re more of a team than just working for a typical company. There’s a carrot out there you’re working for, for the rest of your life.”

Tool #2 goes by different names: open-book management, economic transparency, ownership culture. Whatever you call it, it means encouraging employees to think and act like businesspeople rather than like hired hands.

If you work for a conventional organization, your job is to show up at the appointed time and perform certain tasks. At open-book companies, it’s part of everyone’s job to contribute to the success of the business. Managers help employees understand, track, and forecast key numbers. They welcome ideas for improvement. They reinforce the ownership mindset by sharing profit increases with everyone, usually through bonuses funded by the increase itself. Many of these businesses also have a stock plan in place.

The approach is easiest to understand in a small company. The Paris Creperie, a Boston-area restaurant that’s about the size of a McDonald’s outlet, recently adopted open-book management. Creperie employees learned the basics of the restaurant business, including determinants of profit such as cost of goods sold (COGS). Then, last summer, they launched an initiative to reduce COGS, cutting food waste, reconfiguring some dishes, and coming up with ways to operate more efficiently. COGS dropped from roughly 30% of revenue to 26.5% over a four-week period, and continued to hold in the mid-20s. Operating profit rose by more than 10 percentage points in just four months and has stayed in the 18% to 20% range, compared with a restaurant-industry average of less than 4%.

This year, employees there are on track to get bonuses averaging $6,000. “Any other restaurant, I would just be scraping by,” shift supervisor Amanda Norton told the Boston Globe. “Seeing those bonuses really helps me breathe easier, knowing that it’s not the end of the world when I have to pay bills.”

You can imagine what all this does for employee loyalty and commitment. “Actually,” says Harvard Business School professor Leonard A. Schlesinger, “when employees know more about the business and have an economic stake in the outcome, there’s a high probability that turnover rates would go down exponentially.”

These tools also address two fundamental challenges of today’s free-enterprise system. An ownership nest egg helps mitigate inequality by putting more money in the hands of rank-and-file employees. And open-book management teaches people the basics of business, so they can thrive when they have to change jobs, as most inevitably will in our fast-changing economy. “People are learning what it means to run a business,” says Joe Grafton, a consultant who works with the Creperie. “That’s something they can take with them as they move forward with their careers.”

Both measures give people a stake in the system and the wherewithal to live a more secure life. A company that puts these tools to work helps its community while helping itself.

 

Give and Take

I’ve read good book called Give and Take by Adam Grant. The book’s website has this to say: “Give and Take changes drivers of success: passion, hard work, talent, and luck. But in today’s dramatically reconfigured our fundamental ideas about how to succeed—at work and in life. For generations, we have focused on the individual world, success is increasingly dependent on how we interact with others. Give and Take illuminates what effective networking, collaboration, influence, negotiation, and leadership skills have in common.” Below is an excerpt from the book which you might find useful:

ACTIONS FOR IMPACTGive and Take

If you’re interested in applying the principles in this book to your work or your life, I’ve compiled a set of practical actions that you can take. Many of these actions are based on the strategies and habits of successful givers, and in each case, I’ve provided resources and tools for evaluating, organizing, or expanding giving. Some of the steps focus on incorporating more giving into your daily behaviors; others emphasize ways that you can fine-tune your giving, locate fellow givers, or engage others in giving.

  1. Test Your Giver Quotient
  2. Run a Reciprocity Ring
  3. Help Other People Craft Their Jobs-or Craft Yours to Incorporate More Giving
  4. Start a Love Machine.
  5. Embrace the Five-Minute Favor.
  6. Practice Powerless Communication
  7. Join a Community of Givers
  8. Launch a Personal Generosity Experiment
  9. Help Fund a Project
  10. Seek Help More Often

Marshall Goldsmith: Turning a Negative into a Positive

Now is the time to set next year’s goals. Marshall Goldsmith talks about making positive change by eliminating destructive comments. Below is a great way to improve your leadership.

Turning a Negative into a PositiveLeaders Can Turn Gray Into Great

“Fining” people for making destructive comments (and giving the money to charity) will help your company and people in need.

by Marshall Goldsmith

I have helped more than 70 major organizations identify and profile desired leadership behaviors. Almost every company I work with wants to encourage collaborative leadership and has in its inventory of desired behavior such things as “effectively builds teamwork,” “develops positive partner relationships with co-workers,” or “creates synergy with other parts of our business.”

One specific item that I encourage my clients to include in their leadership profiles is “avoids destructive comments about other people or groups.” This is a bad and all too common habit!

While we all support the theory of building partnerships across our organizations, our day-to-day behavior can create the opposite result. Let’s face it; we have all stabbed our co-workers in the back in front of other employees at one time or another. And when we bash our colleagues, what message are we sending about our commitment to be their partners?

Failing Your Own Test

I don’t want to sound as if I’m preaching at you. I also get feedback – and like all of my clients, I also try to get better. My best feedback comes from my customers. I was certainly not ranked as one of the “top 10 executive educators,” “top five coaches,” or “most credible thought leaders” by my staff or my family!

(In fact, after reading about one of my awards, my daughter smiled and said: “Daddy, I want to go into your field.” “Kelly,” I replied, “that makes me proud. Why do you want to go into my field?” She laughed and said: “The standards are low!”)

I used to manage a small consulting business. I will never forget the first time I received 360-degree feedback from my own staff. My score on “avoids destructive comments” was in the eighth percentile – meaning that 92% of the world was doing a better job than I. I failed a test that I wrote!

I immediately had one-on-one conversations with each member of our staff. I said: “I feel good about much of my feedback. Here’s one thing that I want to do better – quit making destructive comments. If you ever hear me make another one about a person or group, I’ll pay you $10 each time you bring it to my attention. I’m going to break this bad habit!”

We’re All Human

Then I launched into an emotional pep talk, encouraging them to be honest and diligent in “helping” me. As it turns out, my pep talk wasn’t needed. They tricked me into making nasty comments to pick up the 10 bucks.

By noon of day one I had already lost $50, locked myself in the office, and refused to speak to anyone for the rest of the day. The next day I lost $30. The third day: $10.

Do I still make unnecessary, destructive comments on occasion? Of course, I’m still human. But I know in this area I am better than I used to be. The score I earned on that item the last time I received 360-degree feedback was 4.8 out of a possible 5!

I had moved up to the 96th percentile. What does this prove? Pay a few thousand dollars in fines – and you can get better!

In my executive education courses, my clients are “fined” $2 for each destructive comment they make. These can either be comments made directly to another person, or comments made behind someone’s back. They also may be unnecessary, negative comments about the company, other divisions, or functions (e.g., lawyers, accountants, HR, IT).

The money is all donated to a charity of their choice. How much money have we raised for good causes playing this little game with my clients over the years? More than $300,000!

Think Before You Speak

When I suggest that my clients should avoid destructive comments, I am not saying that they should avoid all negative comments. Companies, teams, and individuals have to get honest feedback so that they can know what to improve and begin to create positive change.

A simple test can help you determine whether the comment that you are about to make is merely negative or is unnecessarily destructive.

Before speaking ask yourself:

Will this comment help our customers?

Will this comment help our company?

Will this comment help the person I am talking to?

Will this comment help the person I am talking about?

If the answers are “no,” “no,” “no,” and “no,” here’s a strategy that doesn’t require a PhD to implement: Keep quiet!

We often confuse honesty with disclosure. We can be totally honest without engaging in destructive disclosure. For example, I may think that my co-worker is a complete idiot. There is no moral, legal, or ethical reason that I have to share this opinion with the rest of the world.

If you want to stop destructive comments in your own organization, institute the $2 rule. The amount of money you collect won’t hurt people very much, negative behavior will be reduced, your office will be more positive, and you may be helping people who need the money more than you do.

(originally published in BusinessWeek)