Organization and Management

Today on his popular blog, Boing Boing, science-fiction author Cory Doctorow published an abysmal experience he had yesterday with United Airlines on the final leg of his U.S. book tour. I’m not going to repeat his account, but it is sadly typical of the experiences many of us have with big-company customer service.

In a nutshell, United Airlines screwed up and the customer service representative dealing with the problem refused to do the right thing for the customer. I’ve had similar experiences time and time again, and it is the primary reason that I am constantly searching for providers of all kinds who will treat me better than the communications company, bank, technology provider, regulated utility, retailer, or government agency I am currently stuck with.

Usually when I get mistreated by a big company I don’t blame the customer service rep who refused to help. I assume that that person is stuck with the rules, training, supervision, and other constraints imposed on them by their company. I try to avoid blaming the rep, but I always encourage the person to pass along to his or her masters the reason for my dissatisfaction with their company. Most big companies have people who sit around a table and discuss why their customers leave them, and I always have hopes that if enough feedback filters up from the front line, it might make a difference in the way the company treats its customers.

In short, my message to big companies is: Empower your front-line people to do the right thing for your customer.

ARB — 2 March 2013

What should companies be doing to prevent disasters such as the ongoing catastrophe in the Gulf of Mexico, with its tragic loss of life and environmental devastation? Granted, some disasters are just ‘Black Swans’ (see Nassim Nicholas Taleb’s writings on this topic) and can’t be predicted. But company safety procedures can go a long way toward mitigating the risks of accidents and their potential effects.

Having served as a company safety officer and having written about industrial safety some years ago, I was very interested in the experience published today by Robert X. Cringely on his I, Cringely blog — see “Doing the Right Thing.”

Cringely republishes a comment from one of his readers, a Monsanto engineer, who recounts how Monsanto learned from the calamitous April 16, 1947, industrial accident at Texas City harbor. That accident was caused by a fire on a ship, not by Monsanto. However, the resulting explosion destroyed Monsanto’s plant, along with other facilities at the port and thousands of homes. Almost 600 people were killed. (See the Wikipedia article on the Texas City Disaster and the series of photos at the Portal to Texas History.) Here’s an aerial view of the Monsanto plant and the port after the accident:

Monsanto plant and Texas City port after 1947 disaster

As a result of Texas City, Monsanto developed a stronger culture of safety, says Cringely’s reader:

They developed technology to better control chemical process. They developed standards to built safer facilities. They didn’t do this alone. They worked closely with other chemical companies. The whole industry invested in best practices and shared what they learned. When I started my job [in the 1970s] I was given a set of “standards” consisting of 3 binders, each 6 inches thick — serious reading.

Union Carbide’s terrible accident in Bhobal, India, in 1984 also became a crucial lesson for industry players. Soon after Bhopal, Monsanto officials had “reverse-engineered” the disaster and reiterated company policy, emphasizing that “all plants are to be built to USA or local country safety standards, whichever is better.”

Further studies within Monsanto after Bhopal had a profound effect on the company’s business:

The result of the study was sweeping changes in how much material was stored in each facility. Many processes and lines of business were deemed too risky to continue and were shut down. Monsanto walked away from tens of millions in business to reduce risk and improve safety.

Monsanto also instituted new programs to train and equip local first-responders where its plants are and to reduce emissions “far exceeding EPA rules.”

These comments emphasize the value of adopting the stance of a “learning organization.” What kinds of company policies and practices can go the furthest in preventing accidents, loss of life, and environmental damage — and in minimizing the effects when accidents do occur?

AB — 17 June 2010

Not only has the music group the Grateful Dead created a musical and cultural phenomenon, but as a very successful business, they make a good case study in management.

That’s the conclusion drawn by Joshua Green, writing for The Atlantic — see “Management Secrets of the Grateful Dead,” March 2010.

American Beauty album cover at NY Historical SocietyGreen’s article is inspired by the recent announcement that the members of the Grateful Dead would be donating their archives to the University of California at Santa Cruz. UCSC will be using the archives to create extensive publicly-available resources. The institution is currently processing the materials, but you can read about their progress at The Grateful Dead Archive. Initial materials from the archive are on exhibit now through July 4, 2010, at the New-York Historical Society — see “Grateful Dead: Now Playing at the New-York Historical Society.”

Green reviews the curious and controversial history of academic scholarship focused on the Grateful Dead but highlights an interesting truth of the Dead’s story — they were and are a very successful business, and much of that is due to their enlightened focus on providing customer value. Green writes that,

Without intending to—while intending, in fact, to do just the opposite—the band pioneered ideas and practices that were subsequently embraced by corporate America. One was to focus intensely on its most loyal fans. It established a telephone hotline to alert them to its touring schedule ahead of any public announcement, reserved for them some of the best seats in the house, and capped the price of tickets, which the band distributed through its own mail-order house. If you lived in New York and wanted to see a show in Seattle, you didn’t have to travel there to get tickets—and you could get really good tickets, without even camping out. “The Dead were masters of creating and delivering superior customer value,” Barry Barnes, a business professor at the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University, in Florida, told me….

As Barnes and other scholars note, the musicians who constituted the Dead were anything but naive about their business. They incorporated early on, and established a board of directors (with a rotating CEO position) consisting of the band, road crew, and other members of the Dead organization. They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time.

In the early days of Internet marketing, I remember reading the article by Dead songwriter John Perry Barlow, in Wired magazine of March 1994, “The Economy of Ideas: A framework for patents and copyrights in the Digital Age. (Everything you know about intellectual property is wrong.)” I was impressed at the time by his prescient grasp of the intellectual-property issues presented by the Internet and online commerce.

In that article, Barlow wrote:

With physical goods, there is a direct correlation between scarcity and value. Gold is more valuable than wheat, even though you can’t eat it. While this is not always the case, the situation with information is often precisely the reverse. Most soft goods increase in value as they become more common. Familiarity is an important asset in the world of information. It may often be true that the best way to raise demand for your product is to give it away….

In regard to my own soft product, rock ‘n’ roll songs, there is no question that the band I write them for, the Grateful Dead, has increased its popularity enormously by giving them away. We have been letting people tape our concerts since the early seventies, but instead of reducing the demand for our product, we are now the largest concert draw in America, a fact that is at least in part attributable to the popularity generated by those tapes.

True, I don’t get any royalties on the millions of copies of my songs which have been extracted from concerts, but I see no reason to complain. The fact is, no one but the Grateful Dead can perform a Grateful Dead song, so if you want the experience and not its thin projection, you have to buy a ticket from us. In other words, our intellectual property protection derives from our being the only real-time source of it.

Insights from thinkers like Barlow led me to write my 1995 e-book, The Smart Business Guide to Internet Marketing, one of the first e-books published and sold online (now archived for free at Optimization Marketing). In fact, Barlow was one of the people who bought a copy, although I don’t flatter myself by thinking there was much in it that he hadn’t already thought of.

I think a key insight from the Grateful Dead case study is that a successful business ultimately has to rest on customer relationships. Interactive media and technologies place unprecedented control in the hands of customers, and the smart business these days is the one that realizes that the success of its brand will rest on its customer experience.

In the Atlantic article, Barlow tells Green,

What people today are beginning to realize is what became obvious to us back then—the important correlation is the one between familiarity and value, not scarcity and value. Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully. But we couldn’t regulate [taping at] our shows, and you can’t online. The Internet doesn’t behave that way. But here’s the thing: if I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead.

AB — 16 May 2010

Reading Andrew Robinson’s fascinating book Lost Languages: The Enigma of the World’s Undeciphered Scripts (2002, McGraw-Hill), I recently learned the amazing story of the decipherment of the Linear B script by amateur philologist Michael Ventris in the 1950s.

The story brings home some important lessons about innovation:

  • Be willing and eager to collaborate
  • Take advantage of cross-fertilization by bringing in perspectives and skills from diverse disciplines
  • Fight against your personal prejudices and keep yourself open to new ways of looking at things

Linear B is a script discovered on the island of Crete by archaeologist Sir Arthur Evans. Evans never deciphered Linear B, as he had fallen too much in love with certain precious ideas, chiefly his belief that the culture he had uncovered through his excavations at Knossos was a great noble civilization (which he called “Minoan”) that had dominated the Aegean in ancient times.

As it turned out, Linear B was a syllabic script used to write ancient Greek. However, the decipherment of the script was delayed by many decades because Evans was reluctant to share the inscriptions with other scholars.

When death finally wrested the inscriptions from Evans’s hands in 1941, other scholars were able to begin a concerted effort at decipherment.

Although it was Ventris’s genius primarily that cracked the script, he didn’t do it alone, which is a crucial point.

Although a brilliant scholar with a lifelong fascination for Linear B, Ventris was in fact not a professional philologist or linguist.

Ventris was an architect, and I think his architectural training, discipline, and practices were an important contributing factor in his success with Linear B.

It’s interesting to note that Ventris’s grid-based system for decipherment is reminiscent of the schedules architects use to lay out information in their drawings.

But more important for Ventris’s success with Linear B was his value of collaboration, also an important architectural practice.

Robinson quotes classicist Thomas Palaima describing Ventris’s practice of “group working, hypothesizing and brainstorming” and adds that

In other words, he did not believe in the idea of the genius who works solo and finally solves a problem by his own sheer unaided brainpower …

Ventris explained in writing and in tremendous detail each stage of his attack on Linear B, and then circulated these neatly type “Work Notes” (Ventris’s name for them) to other scholars for comments and contradictions.

Much of what he hypothesized turned out to be irrelevant or wrong, but this did not stop him from showing it to the professionals. And it appears that he did take this whole approach from his work as an architect.

To me this stresses the immense value of multi-disciplinary teams, cross-fertilization, and collaborative approaches in all kinds of innovation work.

Also important was Ventris’s humility and willingness to recognize his own errors, in contrast to Evans’s stubborn insistence on his Minoan theory.

Ventris and other scholars had for a time favored the idea that Linear B was used to write the Etruscan language. However, after it became evident that the Linear B language was Greek, writes Robinson,

… in a measured and slightly diffident voice [Ventris] announced his discovery on BBC radio, publicly renouncing his long-cherished Etruscan hypothesis … As John Chadwick much later said of Ventris: “The most interesting fact about his work is that it forced him to propose a solution contrary to his own preconceptions.”

This is a worthy example for all experts, who are far too inclined to hop on a particular hobby-horse and just keep on riding it for their entire careers.

These lessons bring to mind some research that we have done at the Institute for Innovation in Large Organizations in the area of cross-functional teaming, a valuable process for innovation work.

(Most of our reports are limited-circulation and confidential. However, we do sometimes quote them as I will do here, and a few of our reports are available on request.)

Here are some points on the value of team diversity in product design from one of our reports:

Bringing people from many disciplines and functions together in design teams offers great potential as a strategy to produce innovative products. However, such diversity also lays the groundwork for conflict. Thus team leaders and company management need to manage team diversity so all members can be effective and make their contribution.

Mitzi Montoya, Zelnak Professor of Marketing at North Carolina State University (NCSU) and executive director of the Services and Product Innovation Management Initiative at the school, says that companies need to recognize the likelihood of conflict and miscommunication and “put processes in place that will manage that inevitable consequence.” The problems that arise from team diversity “have to do with how the organization is structured, who those people report to. It often has nothing to do with the project itself.”

Bob Pagano of Red Sky Insights points out that diversity can bring value to the product design process by putting blue-sky innovators in the same room with more hard-nosed practical players.

You’re going to have some people around the table who are really creative and are going to look at the assignment with a really open mind. You want to have some very creative people early on who might see something outside the normal way of doing things. If they say something really bizarre, we don’t necessarily want to discourage that.

But you also need some enforcers, the ones who are going to put up the barriers, the ones who will push back, but trying to reach a common ground. They might say, ‘Well, that’s interesting. Let’s see if we can do that within the rules on the retail end.’ It’s kind of a give and take to see that nothing gets overlooked.

In our ILO report, we also found that, aside from their contributions from a functional perspective, individual team members contribute different personal qualities to the life and work of a product design team. These different characteristics can offer value in unique ways and can come into play at different stages in the process:

Innovation consultant Stephen M. Shapiro, previously an Accenture consultant, believes that it is important to “understand the various innovation styles of team players” to make use of their distinctive strengths.

Speaking with ILO researchers, Shapiro explained how he classifies these styles:

Analytical people tend to be more focused on intellectual activities and often find flaws in everything.

Structured people want to know the plans and how things will be carried out. They also are a bit more critical but are more action oriented.

Creative individuals are cerebral yet like to think broadly. They are enthusiastic and generators of new ideas. But they are often poor at implementation.

Relationship-oriented people are needed to get anything done as they can engage the organization. But they often are too focused on consensus, which is a barrier to innovation.

Shapiro believes that “once people understand their styles and the associated strengths and weaknesses, they can be more effective in how they work together.” In his view:

The innovation process goes from analytical—define the problem . . .

to creative—define solutions . . .

to structured—define plans . . .

to relationship-oriented—engage the organization.

Thus, the various players’ personal styles can come to the fore at different stages of the group’s work.

But do team diversity and cross-fertilization translate into financial results?

Our work on this report suggested that that less diverse teams tend to produce better financial results overall than highly diverse teams. However, if the company is seeking high-value breakthrough results, it is more likely to achieve those through greater diversity in design team membership:

Lee Fleming, business administration professor at Harvard Business School, writes in Harvard Business Review that highly diverse, cross-disciplinary innovation teams introduce certain risks (“Perfecting Cross-Pollination,” September 2004). After researching 17,000 patents, he believes that

The financial value of the innovations resulting from such cross-pollination is lower, on average, than the value of those that come out of more conventional, siloed approaches. In other words, as the distance between the team members’ fields or disciplines increases, the overall quality of the innovations falls.

However, he adds a big but:

But my research also suggests that the breakthroughs that do arise from such multidisciplinary work, though extremely rare, are frequently of unusually high value—superior to the best innovations achieved by conventional approaches.

Fleming comments that “when members of a team are cut from the same cloth,” as with a group of all marketing professionals, “you don’t see many failures, but you don’t see many extraordinary breakthroughs either.”

However, as team members’ fields begin to vary, “the average value of the team’s innovations falls while the variation in value around that average increases. You see more failures, but you also see occasional breakthroughs of unusually high value.”

AB — 21 Nov. 2009

A couple of years ago while working on a project. I thought of the idea of “lenses and levers” as a simple but valuable way of thinking about organizational development tools. At the time, I just noted it down on the outside of the project file folder (I’m cleaning out old files today) and thought I should capture it in a more permanent location.

“Lenses” are methods and tools that allow you to view and understanding what’s going on in the organization. Reports, surveys, metrics, analytics, and dashboards are examples in this category, as well as more qualitative approaches like ethnographic research.

“Levers” are tools that allow you to alter or control what goes on in the organization. These might include governance, strategic planning, management, training and development, communications, and incentives.

AB — 29 May 2009