Examine the System, Don't Look to Blame a Person

Stress Solutions, Not Blame by Kevin Meyer

A couple years ago I told you how the organization had created a nonpunitive reporting system for air traffic controllers to report incidents. That led to a dramatic change, which might initially be seen as a scary negative but as most of us immediately realize is a huge positive:

New numbers released by the Federal Aviation Administration show reports of air-traffic errors have nearly doubled in three years. The number of reported incidents in 2007 was 1040, and that number rose to 1887 in 2010, an 81 percent increase. This cultural change in safety reporting has produced a wealth of information to help the FAA identify potential risks in the system and take swift action to address them.

The point of using in-process and process result measures on well functioning processes is often overlooked. You don't want to spend too many resources collecting data that has little value, but proper process measures are very useful and should be monitored. Also this helps when you decide to improve (or radically change something somewhat related) and can catch things (unintended consequences) very quickly. The point of understanding the data (in context) is critical. Brian Joiner did a very good job of emphasizing this idea I think. If you want to reduce complaints it is usually pretty easy to do so, by making it really hard to complain. When you really care about customer focus, understanding if complaints are up do to better processes to encourage complaints or because your service is lousy is critical. Related: Find the Root Cause Instead of the Person to Blame - Dr. Deming, 94% belongs to the system (responsibility of management) 6% special - European Blackout: Not Human Error (System Failures)

Expressing Your Concerns and Opinions Publicly

Former Company Bashing

But somehow it doesn't seem quite right for these high level folks to take vicious and very public parting shots at their former employers' leadership on the way out.  We all have our opinions.  Often they differ from those above us.  And sometimes the difference is severe enough to make us leave.  But you know what?  That's life.  Why can't we respectfully accept a difference of opinion and move on?    I suppose I'm naive, but this kind of public and one-sided bashing of a firm and of those entrusted to run it seems  needless and unproductive.

It seems to me that is exactly what is going on. Those companies are constantly pushing their position. I don't see anything wrong with former employees sharing their thoughts. Why is what they say considered "bashing." They are expressing their opinion. People can chose to pay attention to that person or not.  I hardly think one person's blog post is pushing around companies like Google and Goldman Sachs unfairly.  The only way there is any impact at all on those companies is if the comments resonate with the general public due to many other pieces of supporting evidence found elsewhere.  A crazy rant will not have any impact.  Expressing concerns about serious failures may have an impact.  Even then it is going to be pretty small.

Some people want followers that don't question authority. Leading high technology thinkers don't take kindly to the "follow authority" and don't question authority idea. Where this line is drawn varies, there is a certain amount of following that has to be done, and their is a point at which expressing a contrary opinion should be silenced.

In my experience the point at which contrary opinions are normally silenced is far too soon. I see nothing at all wrong with what these people said. I am very happy they did so. It is a very positive contribution to the discussion that should be taking place.

Finance people do see pretty comfortable with the model of shutting up, not ruffling feathers and cashing big checks. For that reason a Goldman Sachs former employee expressing their opinions that might make authority uncomfortable is a bit unusual.

I think silicon valley is perfectly comfortable with people expressing their opinions. And I think that is the right approach. If the person does take stupid parting shots they will damage their credibility. If they express sensible differences of opinion with the current practices of the company they left they will likely gain more respect than they lose.

Related:  Ignoring Unpleasant Truths is Often Encouraged - Taking What You Don’t Deserve, CEO Style - Respect for People

The Potential Benefits, Risks and Folly of Stretch Goals

Some excepts from, The Folly of "Stretch Goals", visit the link to see the full discussion:

Jon Miller: Stretch goals are fine, but gaming the system, sandbagging, achieving the stretch goals through heroic effort, etc. are bad because this is not sustainable. In terms of excessive risk taking, this is a question of the risk-reward calculus and the person’s degree of risk aversion. It doesn’t take a stretch goal to make Enron leaders cheat when their auditors are turning a blind eye. They stole because they could, not because a leader set stretch goals for them. If the governance around the goals are solid and the downside of risk are significant, people will pursue stretch goals in a way that is not destructive. ... 

Dan Markovitz: However, if you had the opportunity to make a HUGE bonus — millions or tens of millions of dollars — for achieving certain stretch sales targets in China, for example, you might be sorely tempted to act differently... 

Jon Miller: But my point was that cheating is not caused by stretch goals, it is caused by poor governance around the performance and rewards process... The more interesting question is why leaders continue to set up such systems. Are they stupid? Evil? Or do such systems produce results?

I think stretch goals are fine when people understand - they are giving scope to the effort. If I want breakthrough improvement quickly it may mean considering radical solutions. That can be helpful to shape people's vision. But there are risks. As Brian Joiner said there are 3 ways to improve figures ("results")

• distorting the system
• distorting the data
• improving the system (which tends to be more difficult though likely what is desired)

Improving the system is far more difficult than the first 2. Cheating can be encouraged by managers. Stretch goals can increase this encouragement. A culture that pushes the right values and discourages the wrong ones can discourage cheating. Understanding variation is very helpful (it both dramatical reduces silly reaction to variation - the fear of those silly reactions often cause people to cheat "distort the figures or system" ).

An understanding data is only a proxy for the real situation (the number is not real situation) is helpful as is understanding the arbitrary goal is essentially meaningless (it exists to give scope to efforts not to be met - 67.3% improvement when 75% improvement was the "goal" is not failure - an understanding of variation would assure this mistake was not made).

The problem is many organizations are ruled by spreadsheet managers that don't understand variation, are ruled by the tyranny of arbitrary targets (bonus and promotions)... In these situations goals do often become a big part of the reason for cheating. Stretch goals can help shape the effort. The risk (and much more common result, I think) is that they result in distortions of the system and data to achieve those results.

To answer Jon's question I think you can use goals and incentives to reach numerical targets. The risk, as Gipsie Ranny says is the organization may be ruined in the long term. But if the executives are fearful and have large enough incentives to achieve numerical targets they goals and targets can achieve the goal - but at a great cost, I believe. I believe they are more ignorant than evil (though some know the damage they are risking or causing).

A strong management system reduces much of the potential negative consequences of targets. A big problem is those organizations that most rely on targets are those that are least protected from the risks of using them.

Related: The Defect Black Market - Targets Distorting the System - The Problem with Targets