Enough with the “How Did We Do?” surveys

When I returned a rental car, recently, I received a bit too friendly service, followed by a request for a favor to rate the agent a 5 on the survey that would be sent to me shortly.

I chuckled. The agent asked why.

I said, I used to work on the other side of these surveys and they lose effectiveness when you lead the customer on how to answer.

She replied, “But that’s how we get promoted and I want a promotion!”

Fair point. The problem is the incentives her company gives her. They are managing to the wrong outputs. In this case, they are promoting people who are really good at asking for 5’s rather than people who may be really good for their business.

As a customer, I feel I’ve held up my end of the bargain when I decided to use that company and paid.

It puts me off to be made to feel I owe the company and agent more of my time to rate the experience or that I should donate my time to help them make their business better.

I’ve seen these types of surveys become infiltrate the business world like buzzwords. It’s just a foregone conclusion that they must be done.

In my experience, little benefit comes from them. When I’ve asked folks at companies I’ve worked with for examples of how these types of surveys have led to changes that resulted in significant and tangible benefits, crickets.

But, they continue with the surveys because they have become conventional business wisdom and the folks whose job it is to conduct the surveys have become vested interests protecting their turf.

Advertisement

Resume builders vs value builders

Bureaucracies are filled with people more interested in building their resume than building value for the company.

Resume builders are good at making it look like they are valuable, but when you step back and ask what have they contributed to make the company better that has resulted in more revenue or more efficient operations, you come up empty.

They use a lot of tricks, though, to keep people from thinking that far. Here are a few.

Check the box. These folks seek activities where they are told what to do. From this, they can create a list of actions and check the box when each action is completed and claim success. And, if those actions generate value, they can claim credit for that. If not, they can deflect and claim success for having completed tasks.

Busy schedules. These folks like to keep busy schedules. Busy makes them look valuable. But 80% of this busy-ness is vaporware.

Noise making. They will say something in all meetings that they are in. If you pay close attention, they rarely say anything of value. But, they know that’s not what’s remembered. People just remember if you said anything at al. Say something and think you were actively engaged and therefore adding value.

Empty actions. When all else fails, do something and claim credit for it. This may be better to illustrate with an example. When one manager was starting to be found out that he was adding little value, he created a training program for his associates and sold it that he was upgrading his teams skills. That diverted attention away from the questions of what value he was adding.

Now, did any of his team actually get better at any of their new skills? Not really. Did their new skills help the organization in any way? No. Just more vaporware.

Buzzword and buzz phrase bingo. By mastering the current buzzwords, they create the perception that they are in the know with the latest and greatest. A recent example of this is “we’re standing up a group do address” such and such. All the resume builders seem to be going crazy ‘standing up’ groups lately. Somehow ‘standing up’ sounds better than ‘starting’. Also, it somehow keeps people from asking basic questions, like how exactly is that new group going to add value? It is just assumed it will.

I think there are a couple reasons this can persist. First, the tricks work. People are fooled into conflating the stuff above with adding value.

Second, for those who do notice the tricks, they won’t call them out because they are pulling the same tricks and also do not want to be called out.

Note on innovation: Fatal flaw

To add to my previous post, I do think it is a good practice on any project to identify and attempt to address fatal flaws and even not-so-fatal flaws.

In his book, How to Fail at Almost Everything and Still Win Big, Scott Adams says that many times if you are onto something, the signs are clear from early on. His example sticks with me: cell phones. In the early days, they were really bad, but there still was enough demand to keep it going. That is a great early signal that cell phones was onto something big.

I’ve worked on a couple of projects that similarly had early signs of success that turned out to be good predictors of what happened when we scaled.

Before we scaled, however, we “red teamed” them. While the project were big wins, it required a bunch of folks in the organization to buy into something that seemed a little crazy and against what your gut would tell you.

When we red teamed these ideas, we flew in some of the most vocal critics we knew in the organization and spent a week with them identifying their objections and work shopping ways to address them.

We didn’t try to BS them. We just tried to figure out ways we could show them how these things were winners in ways they made sense and addressed their objection.

The red team efforts turned out to be a big success because it got 96% of their peers to buy in and participate.

But there was a lot of tense discussions and a lot of setting your own biases aside to listen to what other folks thought and why they thought it, which doesn’t happen when the rah-rah culture forms around a project and doesn’t allow for such critical feedback.

It was awesome to see how those efforts paid off. When we presented the initiatives to the larger audiences, all the objections identified by the red team were raised and we were ready to address them head-on. It was like magic. You could feel the tension leave the room as the body language went from “no way in hell!” to head nods and, “okay, this sounds pretty good.”

A corporate Shark Tank that might work

In the previous post, I covered what folks miss when they want to implement a corporate shark tank.

This post covers some ideas on how to bring shark tank into a company that might work.

First, folks with ideas should do groundwork to prove an idea, just like the contestants on Shark Tank

In one place I worked, field leaders presented lots of promotion ideas because they were rewarded for presenting ideas. They got kudos for being forward-thinking, engaged and thinking about the success of business, even though many of their ideas had been tried and failed. So, they tossed plenty of ideas over the wall, not caring whether the business actually tried them or not.

Because so many of those ideas never went anywhere once thrown over the wall, we started asking the field leaders if they would fund the trial on their own P&L to prove it out for the business.

We were surprised with how that changed things.

It cut the number of ideas down by 80%. Talking about an idea is one thing. But, it turns out, putting some stakes on the table to prove your idea is another.

When people were forced to think through how an idea might impact their own wallet, much like founders on Shark Tank, they filtered their ideas more carefully and were more interested in learning about why some ideas had failed.

It also resulted in a few brave souls some ideas that were different and they signed up to try it at their own risk, achieving the original results we were after, bypassing red tape to test more ideas.

One of those ideas ended up being a grand slam home run and a few were pretty good.

Second, everyone is a shark

Most folks envision a corporate Shark Tank as an innovation committee made up of mid to high level managers who will act as gatekeepers.

But, I think this will result in the same red tape as the typical innovation methods they have now, but it will just be more showcased.

I would open the Shark Tank to anybody in the organization, to create an idea marketplace that can connect up the idea generators and champions with folks that want to try them in the real world and on larger scales, on their own P&L, or contribute their own time, effort and expertise.

I do see a need for a committee, just not as a gatekeeper.

The committee would collect the ideas, help idea generators conduct early testing and connect the idea folks with people who want to try them in the business or contribute more.

The committee could maintain an online, searchable list of ideas, like Kickstarter, so folks in the organization can search them when they are looking for ideas, along with organizing regular meetings where ideas that have shown good signs in early testing are pitched to gain champion for larger scale trials.

I think the committee can also enforce some key principles of innovation

Ideas don’t die until they’ve been tried. The primary criteria for product and marketing ideas is how customers respond to it. I’ve seen lots of ideas killed for lots of other reasons, like management didn’t like the idea, it was thought the idea didn’t fit with the vision of the company and so on.

Remind everyone that the the odds success are very low, somewhere between 1-in-10 and 1-in-10,000. That’s why we don’t kill ideas until tried, why we try as much as possible on very small scales and encourage as much trial as we can. Good innovation is much more about playing the odds than beating them. It’s a lot like fishing. Even the best fisherman don’t catch a fish on every line.

Corporate Shark Tank?

I’m a big fan of Shark Tank and so are folks I work with. Though, I’m surprised when we discuss it what they don’t see.

Some co-workers want to bring a shark tank-like process into the company to generate and vet new ideas.

In their corporate version of Shark Tank, they see employees pitching their ideas to a committee of leaders, who ask pointed questions, like the Sharks, to ferret out the best ideas and then cast votes for the best ideas to proceed, ‘just like Shark Tank.’

I think they miss key incentives from Shark Tank that make it work.

I suspect their version of Shark Tank would end up looking a lot like the political and bureaucratic processes that already govern capital and resource allocation in large companies.

For those who like the Shark Tank committee idea, consider the following questions.

What do folks pitching the ideas have at stake? What groundwork have they done? Who is on the committee? What do the folks pitching ideas have at stake? How do ideas advance?

What do the folks pitching the ideas have at stake?

These Shark Tank fans haven’t seemed to notice that the folks pitching ideas on Shark Tank have a good deal of their own money, creativity and effort at stake. It’s well beyond idea stage.

Their idea passed an important first filter: the founders thought enough about it to sacrifice their time and money for it, over all the ideas they may have had.

Ideas without proof are just talk and talk is cheap.

What groundwork have they done?

They also miss that startup founders have done a good amount of groundwork of proving their ideas — often into prototype or full product mode with real sales, which means the ideas have been put through a second important filter — do customers actually want it?

One of the classic speeches on Shark Tank was given by Barb Corcoran, directed at a founder from the corporate world who spent all of his time making sure the operations of his business would be ready to fulfill when the orders started rolling in.

Corcoran said something like, you are like many we see from the corporate world. You’re very smart, but you spend all your time solving getting the back office set up that you skipped checking the most important step: is it something customers actually want?

The Sharks hone in on many signs of early sales, customer demand and the cost of acquiring paying customers. Products that people want have a very low or zero cost of acquiring paying customers because customers instantly see the value prop, then they tell their friends and family (word of mouth) and they also repeat purchases.

These are products that sell themselves. Most successful products are products that sell themselves. Chipotle, for example, didn’t spend much on advertising until after it had already saturated the market with restaurants. Prior to that, simply opening new Chipotles was enough to get new customers.

Sales signals are 1,000 times more telling than whether or not the idea just sounds good and the sharks know this.

All the Sharks have changed their mind on a product where the idea didn’t sound good to them but the sales said otherwise. They know enough to know that their personal assessment of the merits of the product isn’t as good as the market’s assessment.

So, by the time the ideas see the Shark Tank, most have passed two important filters — the founder’s sniff test and markets/customer tests, in some form or fashion.

On occasion, Sharks do invest in products that are still in the idea phase. It might be a product that complements another product in their portfolio well, so they have a read on potential sales from that.

More often, Sharks dismiss the idea saying it’s “too early” for them. That means, they don’t have enough of a read on the second filter and it’s just too big of a guess for them.

Who is on the committee?

The corporate shark tankers envision executives on this internal Shark Tank committee.

These Shark Tank fans haven’t noticed that the sharks earned their way onto the panel with their own startup and business performance.

Most corporate executives do not have this experience. They may be good at delivering projects on time and under budget and playing office politics, but that doesn’t mean they can sniff out a good idea as good as a Shark, especially when they don’t have much at stake.

This is an easy mistake to make. Business leaders are often confused as good business people, but that’s not true.

It’s also important to notice that the Sharks are betting their own money on the businesses. They aren’t just giving a simple yay or nay vote with no consequence on whether the idea succeeds. That changes the decision-making considerably.

Without these incentives, the corporate shark tank would turn into more or less a venue for mental tennis.

How do ideas advance?

In the corporate shark tank, ideas advance through committee by majority vote.

Again, these folks miss that it only takes one shark in Shark Tank to buy-in. In this sense, the bar on this filter is lower on the real Shark Tank.

But, it’s balanced out that the Shark is putting their own money, time and expertise into the deal, which causes them to be a lot more careful in their decision.

Compare to the executive committee majority vote. Nothing is on the line for anyone. If a project they voted for fails, it costs them nothing.

When a Shark is wrong, it hits their pocketbook.

But, I do like the idea of bringing Shark Tanks in corporate worlds as one avenue of ideas. But, here’s what I would recommend to execute it to keep the incentives and filters that make Shark Tank (and venture capital) work.

More on that in the next post.

Subscription Fatigue

What gives? Everybody seems to want $4.99/month from me. “It’s just a cup coffee,” they prod.

I get it. A few businesses did well with the ‘subscription model.’ A classic example is Netflix vs. Blockbuster. Stitch Fix subscription-fied clothing.

The case sounds good to managers. Subscriptions get more of their company’s revenue onto a recurring basis where customers, once signed up. face behavioral barriers to canceling. It feels like this reduces the exposure company revenue has to the whims of customers on a transactional nature.

But, as a customer, I’m at that point where each new subscription, even though it’s ‘just a cup of coffee,’ is too big of a hurdle for me to agree to. Subscription fatigue.

I’m guessing I’m not the only one.

Just as they are a barrier to cancelling, I wonder if subscriptions are becoming a barrier to adoption?

Also, I think subscriptions act as a veil that keeps managers from thinking about what really matters: what customers want.

They see Stitch Fix and think customers want to buy their clothes on subscription.

They miss that maybe Stitch Fix customers really want to get new clothes without having to to go through the trial-and-error process to become an expert shopper.

Update: It seems like businesses should explore mixed models, so customers can transact how they choose. Some may prefer subscription, some may prefer transactional.

Stitch Fix makes it easy to do both.

Discovery+ does not. Subscription is the only option.

Nudge, sludge and silver bullets

I recommend this Freakonomics podcast with Richard Thaler on Nudge and sludge.

I had a few thoughts while listening.

We don’t know it before we know it

In one part, they were talking about one of the most successful outcomes of nudging, changing the choice to participate in a 401k from opt-in when you become eligible to opting out. That simple flip increased participation from something like 10% to 90%.

Host Dubner thinks its a problem that the choice to participate in a 401k shouldn’t have been designed the way it was in the first place, that it was just dumb.

I was surprised by that, because Dubner strikes me as smart enough to understand that things evolve and emerge as they are discovered. For the 401k choice to be designed better in the first place would have taken knowledge that didn’t exist yet.

I mean, it would be awesome if we all could just think of successful things from the start, but it’s really more of a trial-and-error, tinkering process.

Silver bullets

I feel like the concept of nudging became the shiny object, silver bullet, clever sounding tool du jour. It spawned “nudge” units in government and businesses, that usually fail to meet expectations.

I’d say that like most shiny objects and ‘silver bullets’ it’s because the expectations are too high. The 401k choice is the case that sells nudging, but it’s absolute best case.

Other nudge tactics aren’t nearly has successful. They might move the success rate a few points, but not from 10% to 90%, more like 25% to 29%.

I think then managers become frustrated. They thought they had a clever trick up their sleeve to expand their market penetration to 100% and it only moves it a few points and not enough to pay for the cost of employing the nudge tactics.

I think governments made the same mistake. They used nudges in pandemic messaging and politicians seemed to become frustrated because they didn’t achieve 100%, even though they never have.

Sludge

I like the idea of calling barriers that keep you from doing things, sludge, which was also discussed. That’s easier than ‘barriers.’

I’m going to use that.

Don’t overly rely on clever tactics

While I think choice architecture should be considered, it’s good to keep expectations in check. If you a running a mature company that is already well-penetrated, you may get some marginal results from playing with choice architecture, but if you want real growth, you need to innovate to find things that people value.

Strange business model, if you stare at it too long, part 2

Media is another strange business model if you stare at it too long.

What other business gets a pass for double dipping from its customers?

I noticed this while flipping channels late one night on my regular lineup of about 100 channels. I couldn’t find anything worth watching and I noticed every channel that I pay for also gets paid to show me ads.

What’s more, ,any of the channels started streaming services and have moved ‘premium’ content to those services to encourage more people to pay more to watch it, while they let their buggy whip programmed channels rot on the vine.

The base levels of the premium services that people pay extra for, like Discovery+, also runs ads, unless you pay $2 more.

I get the same feeling when I click on a link of an article that looks interesting on some site I’ve never heard of and before I read a word, I get a popup asking me to subscribe, while I also notice that they have ads on the site.

I guess, more power to them. Double dipping seems to be working for them.

Hidden Profit Part 2: Bureaucratic Profit

One form of hidden profit is bureaucratic profit, which is what keeps bureaucracies going.

The familiar example is a government bureaucracy that survives on taxes. But, bureaucracies can crop up wherever there is a flow of cash to sustain it like businesses, charities, churches, trade organizations, governing bodies and so on.

A bureaucracy is a group of folks that don’t necessarily add value to the organization, even though they are expert at making it look like they do.

When you scratch past the surface, what they contribute to the success of the business is elusive. But, they are masters are filling their calendars to look important and busy, being engaged in meetings and claiming credit for successes that “couldn’t have happened without their input.”

I can’t tell you how many times I’ve seen such folks leave organizations and the organization didn’t miss a beat without them.

It kind of reminds me of that moment in a musical, just after a big song and dance, where the characters go on to the next scene and act as if the big song and dance never really happened, like it took place in someone’s head.

The organization keeps chugging. Sometimes, the remaining bureaucrats reminisce about a departed bureaucrat’s big song and dance, that’s the main mark they left — stories of their song and dance.

When I’m feeling a mischievous, I like to interrupt these remembrances with something like, “Yes, he was a character, but do you have any examples of what he did to move the business forward? The revenue trajectory seemed to remain on course during his career here and has remained so since he left.”

Bureaucrat jobs exists more for the bureaucrat than for the organization. They might be interested in the steady income the job brings, the title it gives or the way the job can help them build their resume so they can get to the next rung on their career ladder.

Over years and decades, these bureaucracies become entrenched and tough to spot because the value they bring is assumed and there’s nothing to disrupt or put into question that assumption. It’s just assumed the company needs a VP of such-and-such, because it has had one for the last twenty years. Nobody has had to do a true cost-benefit analysis on the position, so it keeps going.

Bureaucracies are only threatened when there’s a massive disruption to the flow of cash that sustains. I can’t say for sure, but I assume Eastman Kodak had a massive bureaucracy before smartphones made the film and photo paper industry nearly go poof and the cash flow that sustained it also went poof. I would also venture a guess that many of the folks that were part of that bureaucracy, found other bureaucratic profits elsewhere to survive on.

The key point of this post is to introduce the concept of bureaucratic profit so you can recognize it.

There is a big spotlight on bottom line profits in our society while hidden profit, like bureaucratic profit, avoids detection.

Put another way, we often hear how bad it is for investors and founders to earn profits, but don’t hear much about all the folks that skim the bureaucratic profit before what’s left makes it to the owners, with the notable exception of CEOs.

CEOs aren’t the only bureaucrats that deserve attention. SVPs, VPs, and Directors in company management are common positions for bureaucrats, as well as boards of directors.

If innovation isn’t easy, you’re doing it wrong

After some time working in mature companies it occurred to me how difficult companies make their innovation.

There is more action in just getting ideas through the political and operational hurdles. Ideas compete for executive approval and company resources. Ideas that win executive buy-in are then treated as if success is a fore drawn conclusion.

That’s how it worked at one of my former employers. My group went to the executives each year during planning with a list of 10 ideas to have them pick the 2-3 they wanted to try.

One year, we had a new CEO from a company with a healthier innovation culture (though he didn’t know it and neither did I, at the time).

We presented our 10 ideas and sat there with an awkward silence. He broke the silence after a bit, “So, what do you want from me?”

“Which 2 or 3 should we try?”

He responded, “Is there a reason you can’t try them all? I don’t know which one is going to work. Figure out ways to try them, even if on small scales, to find out.”

That completely changed how we approached our work. While he was there over the next three years we tried lots of stuff and found a lot of success. We spent zero time on the politics of trying to get buy in and almost all of time trying to figure out how to market research, proof of concepts, pilots and tests to figure out what would work for customers.

I now call this the ‘discovery innovation culture.’ It has some basic underlying principles, like the chances of success of any one thing is low, so try lots. Also, an ounce of customer reaction is worth 5 pounds of executive politics.

Sadly, I don’t think he knew the impact his innovation culture had on the business. He also did the typical CEO, top down ‘5 point plan’ like his predecessors and when that failed to make an impact, as most of such plans do, the board soured on him.

Ironically, the month after he left, the board approved rolling out one of the projects we discovered under his discovery innovation culture. It had a major impact on the business. He didn’t get a lick of credit for it.

It wasn’t his idea. It was a crazy idea that wouldn’t have seen the light of day in the political innovation culture. But, he didn’t stand in its way when one of the field leaders wanted to test it, like his predecessors would have.

Thinking back, I think he could have bought himself more time as CEO if he recognized what was happening and told the Board, Look, when I got here the innovation pipeline was bureaucratic and anemic. Innovation is the way to grow, but you have to be extremely lucky to grow if your pipeline only has 1 or 2 projects in it at a time. No wonder you have been struggling. I’m going to change that, but it’s going to take 3-5 years to see scalable projects coming out the other end of the pipelin. This is how we did it at the company I’m from and it works. Be patient.

After he left, his replacements brought back the political innovation culture.

In the 3 years under him my group alone rolled out about a half a dozen things that has stuck with the business.

Since he left about 10 years ago, the business has been going sideways and they’ve just been tweaking the stuff we rolled out. The energy has gone back to the politics of getting executive buy-in rather than just trying stuff and nothing new has come of it.

When I see organizations that are struggling to stay relevant, I tend to see the political innovation cultures that result in anemic innovation pipelines that usually do not produce enough successes to keep the business ahead of its evolving competition, which is innovating at faster rates in more discovery innovation cultures.