Thursday, July 20, 2023

Why Too Many Goals Can Be Counterproductive

Increasingly, organizations face pressure to achieve a range of goals, extending well beyond profitability and shareholder value maximization.  Many people note the benefits of this broader perspective.   Interestingly, though, Dartmouth Professor Pino Audia's work highlights one potential negative effect of defining too many goals as an organization.  Here's an excerpt from Kirk Kardashian's feature on the Dartmouth Tuck School of Business website regarding Audia's research:

Conventional wisdom says setting goals is a good practice, because it helps people and organizations accomplish their priorities. But it’s not that simple.  “Ironically,” says Pino Audia, Professor of Management and Organizations at Tuck, “having too many goals can make corporations less accountable.”   Audia has come to this perspective after 15 years of researching when organizations learn from failure, including writing a new book on the topic: Organizational Learning from Performance Feedback: A Behavioral Perspective on Multiple Goals (Cambridge University Press, 2021). One of his main contributions to the field of organizational behavior is his discovery that people show a tendency to form self-enhancing assessments of their performance. This tendency thrives in situations where performance metrics are ambiguous, giving people the latitude to see their own performance in a good light, even if others might assess it more harshly. “The proliferation of corporate goals creates greater ambiguity,” Audia explains, “and that creates greater latitude for self-enhancing assessments of performance.”

What does Audia mean by self-enhancement?  He argues that many business leaders don't learn effectively from failure because they find ways to convince themselves that they did not fail.  They try desperately to maintain their positive self-image in the face of disappointing results.  The establishment of a diverse range of objectives facilitates this self-delusion!  If many goals have been defined, they might point to the strong performance on a few of those goals, while trying to ignore or downplay poor performance on a range of other objectives.  Kardashian writes that, "a key feature of self-enhancing decision makers is that they are cognitively agile in the sense that they change the parameters used to assess performance to reach more favorable assessments."   Sadly, this "cognitive agility" means that leaders and organizations don't learn from failure as effectively as they should.  

Monday, July 17, 2023

Do Leaders Know What Employees Really, Really Want?


Fortune's Phil Wahba has written an intriguing article titled, "Too many CEOs don’t know what their workers need. Employee ‘engagement’ surveys can make the problem even worse." Wahba starts by giving an interesting example from Starbucks. He points out that former CEO Howard Schultz often took great pride in the tuition assistance program offered to company employees. Wahba writes:

It turns out that for many Starbucks “partners,” as the company calls its employees, tuition help at an online university wasn’t that crucial. They’ve proven to be far more interested in prosaic matters such as flexible scheduling, work conditions, and more predictable hours—the kinds of issues that have a much greater short-term impact on their income and quality of life.

Wahba goes on to critique employee engagement surveys administered annually by many organizations.  He notes that many questions are fuzzy and unclear.  The responses do not necessarily provide clear direction as to how leaders should change policies or behaviors.  At times, companies present the data in ways that make things appear better than they actually are.  He gives the example of firms that sometimes lump "4" and "5" responses together when reporting the data.  Of course, a "4" might be quite different than a "5" response.  Moreover, while the overall mean might look good on a particular question, certain subsets of the employee population might be responding much more negatively.  Finally, leaders don't always close the loop by communicating clearly to employees how they are making changes based on the survey results.  Employees think to themselves, "Why are we doing this? Are they actually taking our views into consideration? Is it just a waste of time?"  

Wharton's Peter Capelli offers a simple suggestion: ask managers to talk to their reports! He tells Wahba, "You could have supervisors actually go talk to people. Employees are usually not shy about telling their direct boss what’s going on."  In short, there's no substitute for one-on-one communication in which managers listen to employee concerns and then circle back to address them.  No survey can replace those valuable conversations.  

Friday, July 14, 2023

Will Disney Sell ABC, Other TV Networks?

Source: NBC News

In an interview with CNBC yesterday, Disney CEO Bob Iger acknowledged that Disney may divest its struggling legacy TV businesses. It may also seek a "strategic partner" for ESPN.  Reporting for CNBC, Lillian Rizzo and Alex Sherman wrote:

Disney is going to be “expansive” in its thinking about the traditional TV business, leaving the door open to a possible sale of the networks. “They may not be core to Disney,” Iger said, adding the creativity that has come from those networks has been key for Disney.

The press coverage regarding Iger's statement has focused on the decline in the traditional television business, particularly as more and more people "cut the cord" regarding cable television.   I think that's only part of the story though.  One can ask whether the legacy TV networks, such as ABC, ever belonged in the Disney portfolio.  

I've been teaching case studies about the Disney corporate strategy for two decades.  For the most part, Disney has always been a positive example of an effective diversification strategy with powerful synergies among the various divisions.  However,  the ABC acquisition (mid-1990s) has always been a more contentious issue.  What is the argument for Disney owning ABC?  Does Disney have a more powerful competitive advantage because it owns ABC?  It's not easy to see why it would.  If you examine Disney's stock performance during Michael Eisner's tenure, you can see two contrasting eras.  Prior to the ABC deal, the Disney stock outperformed the S&P 500 by a wide margin during Eisner's tenure.  After the deal, Disney stock underperformed the market during the second half of Eisner's tenure as CEO.  

While ABC does have studios that develop programming, it's first and foremost a broadcast network.   Acquiring a broadcast network is essentially forward integration for Disney.  My students and I have always debated whether there is a persuasive argument for vertical integration here.  Does Disney need to own ABC to have effective ways to distribute its content?  Hardly believable.  Disney has highly attractive content that clearly would be of interest to many different distribution partners.   Does Disney have negotiating leverage with other distribution partners because it owns ABC?  One might think so, but on the other hand, Disney may have some challenges when it comes to selling content to outside partners.  If you were another broadcast network, wouldn't you wonder why Disney was trying to sell great content to you, rather than putting that content on its own broadcast network?  When you forward integrate, you create potential conflicts of interest because you are now competing with your own customers.  Finally, could Disney achieve many benefits of collaboration without having to own ABC outright?  It would seem so.  After all, Disney and ABC worked together for years on a contractual basis when the network aired the Disney movie each Sunday evening for years.  Disney CEO Michael Eisner even used to introduce the movies on the network long before the company acquired ABC.  It would seem that contracts, partnerships, licensing deals, and the like could enable the Disney and ABC to collaborate effectively without having to be part of the same corporation.  

In sum, Disney divesting the legacy networks might be the right strategic move, but not because people are cutting the cord.  It might be the right move because the case for synergies was far weaker than ever acknowledged.  

Thursday, July 13, 2023

Calculating the Cost of Meetings

Source: Getty Images

Kaz Nejatian, Chief Operating Officer of Canadian e-commerce company Shopify, has created a meeting cost calculator for his organization. Nejatian developed the software program to calculate the cost of meetings during a company hack-a-thon. According to Nejatian, meetings per worker have declined by 14% this year, and productivity has risen.  Bloomberg's Matthew Boyle describes this innovative new approach to curtailing excessive meetings:

The Canadian e-commerce company has rolled out a calculator embedded in employees’ calendar app that estimates the cost of any meeting with three or more people. The tool uses average compensation data across roles and disciplines, along with meeting length and attendee count, to put a price tag on the event.

A typical 30 minute endeavor with three employees can run from $700 up to $1,600. Adding an executive — like Chief Operating Officer Kaz Nejatian, who built the program during a company-wide hack day — can shoot the cost above $2,000.

As I read about this article, I contemplated why excessive meetings sometimes take place.  Many reasons exist - positive and negative.  For example, sometimes leaders really are trying to give a range of people an opportunity to provide input, and they are involving others to build buy-in for a course of action.  On other occasions, though, leaders are simply engaging in what Michael Watkins calls the "charade of consultation." In other words, they hold the meeting to make it seem as though they are soliciting input, but in fact, they have already made up their mind.  It's all a show.  Another reason we have excessive meetings in many organizations is that managers want to avoid accountability and responsibility.   They call others to meetings so as to avoid being put on the spot if a plan goes awry.  They intentionally create a "when everyone is responsible, no one is responsible" culture.  Without a doubt, many unnecessary or unproductive meetings take place every day in organizations.  

Is there any danger though in trying to reduce the number of meetings?  First and foremost, some issues are better hashed out as a group, rather than in one-on-one conversations or email threads.   If we eliminate meetings, but simply replace them with a long set of email threads, we may not truly be increasing productivity.  In fact, we just be shifting our time from one form of communication to another, and one that is perhaps more inefficient.  Second, successful implementation of key initiatives requires a great deal of coordination.  Moreover, it requires a strong shared understanding of the plan, something that may not be achievable without critical meetings.  Third, employees may come to feel as though decision-making processes are not fair, if they are left out of the deliberation process.  If they don't feel as though they have been given voice, then they may not commit and buy into the plans being enacted.   Finally, plenty of learning can take place in meetings, as junior employees soak in knowledge from discussions and analysis undertaken.  Moreover, they watch how others conduct themselves, make presentations, and answer hard questions.  This on-the-spot learning may be lost if too many meetings are eliminated.  

In sum, the goal is admirable.  We all can identify many unproductive meetings we have attended.  However, we need to remember that most things we do require input, support, and collaboration with others.  We do few things alone in organizations.  Meetings serve as important coordination mechanisms in many cases. 

Thursday, July 06, 2023

A Gen Z Board of Advisers at The Body Shop

Source: HR Exchange Network

What's the average age of the Board members of your company?  For many companies, that average is much higher than the average age of their customers, and higher than the employee population as well.  You can see where decisions made by the Board might not always be informed by up-to-date thinking about the values, goals, beliefs, and needs of Gen Z and Millennials.  What can companies do to bridge this gap?  Orianna Rosa Royle has written an interesting piece for Fortune about one firm's attempt to address this issue.   In her article, she describes The Body Shop's Youth Collective advisory board. 

Other companies have tried similar structures, but not always with as much success as anticipated.  In the worst cases, employees view these advisory boards as all for show, without any real substance.  The Body Shop has structured the board and its process in ways that increase the likelihood of securing valuable input and constructive criticism, while building trust with employees.   First, 50% of the members come from within the company, while the other half are from external organizations.  This balance seems very important.  The internal members have a strong vested interest in the organization's success.  Meanwhile, the external members provide a valuable outside perspective, and they perhaps feel safer speaking up with their concerns or feedback.  

Second, not every issue comes before the advisory board. Royle writes that The Body Shop "avoids drawing on their expertise unless a problem needs out-of-the-box thinking that the older leadership team can’t crack."  In other words, align the issues brought before the advisory board with the core purpose of that group.  Don't simply try to replicate the conversations that a board of directors might have.

Third, and perhaps most importantly, The Body Shop has outlined the ground rules and shared norms for this group in a very clear manner. Most importantly, everyone has a voice, and there's a commitment to listen and consider each opinion in a genuine manner.  That doesn't mean the group always gets their way.  The Body Shop executive and board of directors member Chris Davis notes, “Do we always listen? Yes. Do we always act? No. When we don’t, we explain why. When we do, we explain why—that’s part of the deal.  There will always be feedback and full transparency so it’s clear that everybody is heard.”  In short, The Body Shop has tried to create a fair and legitimate consultation process.  Fair process means giving people voice and considering their views genuinely, but not taking a vote and making decisions democratically.  In the end, creating a strong perception of procedural fairness means explaining decision rationale, and specifically why leaders acted on the group's recommendations or why they chose not to do so.  If you don't create this perception of a fair and legitimate process, people will stop offering their input.  Trust will be broken.