The Culture of Collaboration

Fake Data and the Death of Star Culture

The recent rash of sexual misconduct accusations against prominent men provide a lens through which we can view the death of star culture. For generations, we have bestowed God-like status on so-called stars whether they’re politicians, chefs, entertainers, executives, athletes or show hosts. This exalted status makes “stars” believe they are special.

The #metoo movement is a proxy for rejecting star culture. And now this cultural shift is manifesting in other ways. Viewership for last Sunday’s Grammy Awards dropped 24 percent compared with viewership for last year’s Grammy Awards. We’re tired of stars.

If “stars” like Bill Cosby, Harvey Weinstein, Matt Lauer, Mario Batali, Kevin Spacey, Charlie Rose, Steve Wynn and so many others get a pass on just about everything for being stars, our star culture is responsible for their transgressions. We elevate them to status so rarified that they may believe laws and standards of fairness and decency do not apply to them.

Star culture reinforces the false notion that we achieve great feats by ourselves. Whether the so-called star is a movie producer, chef, tv host, actor or executive, the reality is that he or she succeeds because of others. Nobody achieves great feats entirely on their own. Behind the scenes, many people work to make the movie, the meal, the talk show, the team, the business a success regardless of the “star.”

In The Culture of Collaboration book, I describe the Myth of the Single Cowboy. This is the notion that one self-suf­ficient, rugged individual can achieve smashing success without help from anybody. When we perpetuate this myth, we make so-called stars feel that they’re a breed apart and can conduct themselves without consequences.

Star culture reinforced by the media and society at large also infects organizations. The result is that contributors who are not considered A-listers get sidelined. Their input and ideas are lost, and value creation suffers. Plus internal competition to become a star increases bad behavior such as sabotaging others and hoarding information.

Our excuse for star culture and for tolerating transgressions is that stars supposedly create more revenue. There is evidence, though, that the financial performance of stars is often overstated. NBC’s Today Show picked up more viewers after the network fired Matt Lauer.

Rejecting star culture is nothing short of a fundamental shift in our society. This shift will impact companies, universities, government agencies and organizations of all types. Smart organizations will get ahead of the curve and take the necessary steps to replace star culture with a collaborative culture

People who become stars often cheat to achieve or keep their rarefied status. Social media is a case in point. One way we measure star power is to count the number of followers on social media. Did we really think that stars are so popular that millions of people read their posts and tweets? It turns out that “stars” and wannabe “stars” pay for fake followers which create fake data on which companies base advertising and endorsement decisions.

A reporting team at the New York Times recently investigated a company named Devumi that sells Twitter followers and retweets. The company reportedly has at least 3.5 million automated accounts for rent. Customers include reality television “stars.”

So it turns out that star culture is related to another unfortunate phenomenon that compromises collaboration: measurement mania and the tyranny of data. Fake data is by no means limited to social media. In command-and-control organizational cultures that foster internal competition and information hoarding, team members get the message that the goal is winning at all costs. In this type of culture, numbers get fudged and corners get cut.

Fake data scandals cost these companies plenty. A recent glaring example is the fake bank account scandal at Wells Fargo. Companies that embrace fake data are often the same companies that promote “stars” and minimize the contributions of others.

Many companies have yet to catch up with our evolving society. Successful organizations use real data and replace star culture with collaborative culture.

Does Remote Work Reduce Collaboration?

Some companies are eliminating remote work or “telecommuting” because they believe their people must share the same physical space to collaborate.

I define collaboration as “working together to create value while sharing virtual or physical space.” But apparently some organizations want to get more physical rather than virtual.

According to a recent Wall Street Journal story, companies including IBM, Aetna, Bank of America, Best Buy and Reddit have ended or reduced remote-work arrangements as managers “demand more collaboration, closer contact with customers—and more control over the workday.”

Companies facing challenges are often the first to scrap or reduce remote work programs. In 2013, as Yahoo was struggling, then CEO Marissa Mayer defended her decision to eliminate work from home. Speaking at the Great Place to Work conference in Los Angeles, Mayer reportedly said “People are more productive when they’re alone, but they’re more collaborative and innovative when they’re together.”

No question people are more collaborative and innovative when they’re together, but the point is people can be together virtually as well as physically. Many tools and technologies support high-impact virtual collaboration. Forcing people to endure a daily commute and interfering with their life/work balance reinforces command and control and disrupts collaboration and innovation. Also, remote work lets companies tap expertise regardless of geography. And teams are often comprised of people in multiple regions, so forcing people to work from a company location is unlikely to enhance collaboration within a team. It does make sense to encourage remote workers to spend some time at company locations to spark chance encounters in cafeterias, corridors and break rooms with people outside their teams.

Command and control culture is the opposite of collaborative culture so an organization trying to control team members by keeping them at the workplace short circuits collaboration. Ironically, my research interest in collaboration began in the mid-1990s when I was writing a book on personal videoconferencing. Early telecommuting programs experimented with PC-based videoconferencing so that remote workers could look each other in the eye and talk with colleagues while they were collaboratively working on spreadsheets, documents, design plans and other work. The issue then was whether we could collaborate as effectively at a distance as we could in the same room.

By the time I wrote The Culture of Collaboration book, the tools and technologies supporting remote work had become pervasive and the culture supporting virtual collaboration had become widespread. People at many organizations were becoming accustomed to collaborating spontaneously from almost anywhere. So the challenge was changing. I wrote:

“Today we struggle to collaborate as effectively at a distance as we do in the same room. Tomorrow the challenge becomes the reverse.”

This is because same-room collaboration tools were lagging behind those used at a distance and people were becoming more accustomed to collaborating from applications on their notebook and laptop computers. Also, “presence” technology provided the capability to find colleagues, check their availability and begin collaborating with them on the fly from anywhere.

Spontaneity and organizational culture supporting ad hoc encounters is critical to creating value collaboratively. In some cultures, this means it’s okay to grab people out of meetings or interrupt their work for on-the-fly collaboration. But in mature companies walking back remote work, often this level of spontaneity is a cultural faux pas. So the most effective way to spontaneously connect in these cultures is often through online chat which can escalate into a collaborative group session (CGS). Organizations create far greater value by moving away from command and control and instead enabling team members to connect and collaborate spontaneously regardless of physical location.

As I demonstrate in my book The Bounty Effect, exigent circumstances including disruptive market forces, new competitors, or a regional slowdown are opportunities to accelerate collaboration and emerge stronger from the challenge. Eliminating remote work because of a difficult environment rarely enhances collaboration and instead increases command and control. The more effective approach is to seize the opportunity exigent circumstances provide and adopt a more collaborative organizational structure and culture which transcend physical location.

Is Radical Transparency Collaborative?

I was chatting with Ray Dalio, founder of Bridgewater Associates last Tuesday about the thin line between constructive and destructive confrontation in the workplace. “Confrontation has to be constructive,” the founder of the world’s largest hedge fund told me. "You need to get everything out on the table.” Constructive confrontation is one of the Ten Cultural Elements of Collaboration that I introduced in The Culture of Collaboration book. It’s also an aspect of Bridgewater’s controversial culture.

Ray had just finished an on-stage interview with Charles Duhigg on Bridgewater’s culture at the New York Times New Work Summit in Half Moon Bay, California. Collaboration was a central theme of the conference that brought together a few hundred chief executives, human resources leaders and others to share experiences, insights and challenges involving organizational culture.

“I want an idea meritocracy. I want independent thinkers who are going to disagree,” Ray told the audience. One way that Bridgewater accomplishes this objective is by capturing ninety-nine percent of meetings on video and making the archived video available to each of its roughly 1400 people at any time. The one percent of meetings not recorded involves personnel issues and proprietary trades.

“The most important thing I want is meaningful work and meaningful relationships, and we get there through radical truth.” Ray’s point is that radical truth and transparency build trust and curb hidden agendas and spin. “There’s no talking behind people’s backs,” according to Ray. “Bad things happen in the dark.” Bridgewater’s meritocracy, he explains, produces evidence which decreases bias and increases fact-based decisions.

Information democracy in which organizations widely share data and information is a key principle of collaborative companies. Trust and constructive confrontation are critical to collaboration. Hidden agendas and spin short circuit collaboration. So it would seem that Bridgewater’s brand of radical transparency would enhance collaboration. Right? Well, that depends.

There’s conflicting information regarding whether all confrontation is thoughtful and constructive at Bridgewater. That’s why I engaged Ray about the thin line between constructive and destructive confrontation and the need to keep disagreements thoughtful. Bridgewater makes performance reviews public and encourages team members to examine themselves before accepting areas for improvement, according to an April, 2014 article in the Harvard Business Review.

Performance reviews, whether public or private, can exhaust an organization and compromise value. Meetings, whether captured on video or not, waste time and energy.  A more effective alternative to meetings, which I outline in my book The Bounty Effect: 7 Steps to The Culture of Collaboration, is collaborative group sessions in which people co-create something of value.

Self-actualization seems to play a role in Bridgewater’s culture. Rather than check one’s emotions at the office door, team members are encouraged to recognize their emotional “triggers” and to “recognize the challenge between the logical and emotional self” in Ray’s words. Then people can more easily set aside emotional triggers and baggage.

I was curious how Bridgewater's culture resonated with the conference crowd, so I continued the discussion over lunch. Capturing almost all meetings on video for everybody to see is one cultural attribute that fell flat.   “That would never work in our organization,” one participant at my table insisted. She explained that her company values privacy and offers private drop-in spaces for on-the-fly interactions. Other attendees expressed similar views.  

The down side of capturing almost all meeting video is that people may put on game faces whenever they’re in a “live” meeting room and that formality takes hold.  In contrast, informality enhances collaboration which is why so many businesses have been hatched while doodling on napkins in bars and cafes. Floor proceedings in the U.S. House of Representatives and Senate were once far less formal before these bodies allowed television cameras. Now there’s greater transparency but less collaboration across party lines.

Sometimes collaborators create greater value for the organization during small, private collaborative sessions either through technology or in the same room. Making video capture of these sessions widely available but optional may create the greatest value for collaborative organizations.

Clearly, radical transparency works for Bridgewater. Could the firm’s industry play a role? “You have to be an independent thinker in markets because consensus is built into price,” explains Ray.  Then again, challenging the status quo creates value in many industries.

For organizations adopting collaborative structures and cultures, there’s much to learn from Bridgewater. But what works for one company in a particular industry may fall short for another company in a different business. Trying to implement a carbon copy structure and culture would undoubtedly be a mistake.

Common Sense Trumps Data

I was in northwest Ohio this summer where Trump yard signs were everywhere and Clinton signs were practically nowhere.  

What changed? The increasing role of data.

Most Clinton staffers apparently believed that targeted election canvassing and social media produce greater results than yard signs, campaign buttons and bumper stickers. And the data suggests that physical signs have only a slight impact on campaigns.

The Hillary Clinton campaign favored online ads like this one over yard signs.

The lack of Ohio yard signs was a shock in that I covered presidential campaigns in Ohio during my early career as a reporter for WTOL-TV, the CBS affiliate in Toledo. Yard signs always dominated the landscape during election season. For voters looking around for clues of which way the wind is blowing among friends and neighbors, yard signs matter.

Yard signs illustrate how data and common sense can diverge. Common sense suggests that campaign signs, particularly those on residential lawns, have a significant impact. Many people vote for the candidate their friends and neighbors support. And regardless of ads and chatter on social media, there’s nothing quite like the real-world visual reinforcement of a candidate’s signs dominating one’s street or neighborhood.

And Ohio is by no means the only state that lacked Clinton yard signs.  Published reports indicate that Trump signs dominated rural Pennsylvania. Last January, Wired profiled Edward Kimmel, a part-time campaign photographer and Clinton supporter, who noticed the visual shift from previous presidential campaigns in Iowa. Kimmel voiced concerns about the impact a lack of signs might have on voter turnout. Kimmel was prescient.

A tyranny of data short circuited the Hillary Clinton campaign and contributed to Donald Trump’s victory. From the bubble of its Brooklyn Heights headquarters, the Hillary Clinton campaign apparently viewed yard signs as obsolete in the age of targeted digital canvassing and social media.

The Clinton campaign is just one example of how relying exclusively on data can compromise value. Wells Fargo emphasized measurement over common sense, and its reward system encouraged team members to cut corners and open unauthorized accounts for customers as I detailed in my September 13, 2016 post. The company is now paying the price in fines, lost business and compromised reputation.

A Donald Trump for President campaign yard sign in West Des Moines, Iowa. Photo by Tony Webster. Licensed under CC BY 2.0

Measurement mania and the tyranny of data are nothing new. In my most recent book The Bounty Effect: 7 Steps to The Culture of Collaboration , I write about the myopic approach dubbed “management by measurement” which dates back to the so-called Whiz Kids. In the 1940s, the Whiz Kids were junior faculty from Harvard Business School recruited by Charles “Tex” Thornton to run the Statistical Control unit of the Unites States Army. The group included Robert McNamara, who would later become president of Ford Motor Company, secretary of defense and president of the World Bank. 

The Whiz Kids applied statistical rigor in running the army, and later Henry Ford II hired the team to bring a similar data-driven focus to Ford. The Whiz Kids also introduced bureaucracy and hierarchy and developed rules requiring that, among other things, memos from vice presidents must appear on blue paper to highlight their importance.

The Whiz Kids sacrificed long-term value for short-term targets by limiting investment in new equipment and R&D. Plus Ford’s products suffered when plant leaders failed to prove through numbers the necessity for new equipment. Ultimately, this myopic focus on data led to foreign competition from companies that focused as much on engineering and production as on finance.

The Clinton campaign is by no means the only organization blinded by data. Organizations in every sector and industry suffer from measurement mania that impedes collaboration and value creation. In The Bounty Effect, I detail Five Measurement Counter-Measures to prevent data from short circuiting collaboration and compromising value. One of them is “perform a common sense reality check.”

Had the Clinton campaign used common sense to check its data, yard signs might have sprouted in the industrial Midwest and, more broadly, the campaign might have adopted a message that would have resonated with swing-state voters.

Regardless of level, role, region, organization or sector…never rely on data without a common sense reality check.

Socrates and New York Mayor Bill de Blasio’s City Hall

The in-box culture is dead, but that may be news to the mayor and officials in New York City.

New York’s City Hall apparently never got the message about deserialization. What I mean by deserialization is curbing the in-box or pass-along approach to work and interaction that is critical for collaboration and value creation. But New York Mayor Bill de Blasio has sure received plenty of memos…decision memos, that is.

 

New York City's City Hall reportedly embraces the pass-along approach to work and interaction

Before Mayor de Blasio makes many decisions, his staff prepares memos. And before these decision memos reach the Mayor, they reportedly require the signatures of at least eight officials including the first deputy mayor, the law department, the Mayor’s counsel, the budget director, the press secretary, the head of intergovernmental affairs and the deputy mayor with direct responsibility, according to a recent story by J. David Goodman in the New York Times. This is the antiquated pass-along approach.  

The Wall Street Journal reports that a memo on flight rules for helicopters took at least nine rounds of revisions. Nine rounds! This is pass-along times nine. And we wonder why citizens complain that government is mired in bureaucracy. The Times story quotes the Mayor’s chief of staff Tom Snyder as saying the Mayor’s decision-making process is “extremely granular, engaged, semi-Socratic.”

Actually, Mayor de Blasio’s approach is anything but Socratic. Socrates believed that the way to the truth was through questioning and dialogue. Socrates rejected writing, because writing meant—quite literally in ancient Athens—that ideas were set in stone or wax and that the process of developing those ideas was dead.  Socrates also rejected scripted speeches, because these are essentially the recitation of written words. For organizations making decisions, one form of the truth is accurate information—which is dynamic rather than set in stone. As the situation changes, sometimes hour-to-hour, what can be considered accurate information also shifts.

Using memos or email to make decisions compromises collaboration and disrupts value creation. This approach is a hallmark of command-and-control organizational structure and culture. By the time each department head or official has signed off on the course of action and passed the baton to the next official, the “truth” or facts have often changed. Socrates would roll over. Yet dialogue and questioning without a structure can also pose problems particularly for complex organizations such as New York City government and large, distributed enterprises. So what’s the alternative?

My most recent book, The Bounty Effect: 7 Steps to The Culture of Collaboration, shows how to change the structure of organizations so that they can evolve from command and control to collaborative. And a fundamental element is creating an Open-Access Enterprise which enables the organization for spontaneous dialogue. In the Open-Access Enterprise, everybody has access to everybody else—and that access is immediate.

Using unified communications, we can see who is available and connect instantly. We can bring key stakeholders into collaborative group sessions (CGS) so we can hash out issues in real time, make decisions and create a work product without getting mired in the pass-along approach of memos and meetings. A CGS can occur virtually using unified communications and related tools or the session can happen physically with all participants in the same room.

Mayor De Blasio’s apparent goal of getting broad input into decisions makes sense. Embracing the Socratic method has merit. But the structure and processes of the Mayor’s office appear flawed and are short circuiting the goal. This is typical of many organizations that embrace collaboration as a concept but sabotage collaboration with a command-and-control structure that encourages bureaucracy and reinforces hidden agendas and internal competition. The solution is to adopt a collaborative organizational structure that leaves memos and traditional meetings in the dust. The in-box culture is dead.

Accenture Scraps Reviews, Rankings and Joins The Bounty Effect Bandwagon

Nothing impedes collaboration more than outmoded recognition and reward systems. And replacing annual performance reviews and rankings advances collaborative culture, behavior and organizational structure.

Many organizations promote themselves as collaborative while simultaneously reinforcing internal competition through annual performance reviews and rankings. This process squanders time and distracts the organization while pitting team members against one another. Performance reviews and rankings incent team members to hoard information and maintain hidden agendas rather than share ideas and work together towards common goals.

Accenture is the latest major organization to eliminate rankings and performance reviews. “Massive revolution” is how Accenture CEO Pierre Nanterme characterized the organizational change as quoted in the July 21 edition of The Washington Post.

In the Spring of 2013, Microsoft Co-Founder Bill Gates read an advanced copy of The Bounty Effect: 7 Steps to The Culture of Collaboration® which demonstrates why ranking team members falls short and how a Collaborative Reward System creates greater value than an internally-competitive system. Replacing performance reviews is the first of seven components of the Collaborative Reward Process (CRP) that I outline in the book.  In November, 2013, Microsoft eliminated rankings of team members. You can read more about Microsoft’s reward system shift in my January 20, 2014 post.

Many legacy recognition and reward systems are based on the premise that individuals have different goals and must be motivated using “carrot-and-stick” approaches. But in a collaborative organization, people share the same goals so “carrot-and-stick” performance reviews and rankings are obsolete.

So why do organizations persist in ranking and annually reviewing the performance of team members? The justification is weeding out non-performers and promoting “star” players, but the real reason is clinging to an outmoded command-and-control organizational structure. Remnants of this structure include not only performance reviews and rankings, but also organization charts, meetings and mission statements. These remnants inhibit organizations from maximizing value through collaboration.

Undoubtedly, more organizations will follow Accenture, Microsoft and other major companies in replacing rankings and annual performance reviews—and in adopting a more collaborative organizational structure.

 

 

 

General Motors and the "C" Word

General Motors CEO Mary Barra is taking aim at the “C” word.

“I hate the word culture,” Barra is quoted as saying in an article by Joseph B. White in the September 30 edition of the Wall Street Journal. “Culture is really just how we all behave,” according to Barra. The comments are curious in that Barra testified before a Congressional subcommittee last June that she would

GM CEO Mary Barra outlines new strategic plan  (Image copyright GM)

not rest until GM’s “deep underlying cultural problems” are resolved. The subcommittee was investigating GM’s failure to recall thousands of cars with defective ignition switches for eleven years.

It’s myopic to dismiss the word culture. Merriam-Webster Dictionary’s third definition of culture is “a way of thinking, behaving, or working that exists in a place or organization.” GM would benefit from focusing on these issues plus the broader context of the word culture. In his Tusculan Disputations, the ancient Roman orator Cicero introduced the concept of culture as cultivation of the soul as a farmer cultivates crops. Culture has come to represent beliefs and customs of societies. Cultural anthropologists study social structure and customs in populations ranging from villages to corporations.

Culture is inextricably intertwined with collaboration in that how “we all behave” in Barra’s words determines whether we’re working together towards common goals or working at cross purposes. Ironically, in a July 28, 2014 post, The Culture of Collaboration® blog took General Motors to task for overemphasizing culture change without structural change. Culture change typically delivered as an edict often highlights the desired result without providing a way to get there. This common prescription from leaders, pundits and management gurus often fails, because the shift originates with executives without detail, discussion or broad buy-in. Meantime, the outmoded organizational structure stays the same. To achieve collaborative culture and the payoff that collaboration provides, it’s necessary to change the organizational structure. Then culture change can happen.

On October 1, GM outlined its new strategic plan that focuses on technology and product advances, growth in China, establishing Cadillac as a separate business unit “headquartered” in New York City and delivering “core operating efficiencies.” Incidentally, the notion of headquarters is a relic of Industrial Age command and control. Nowhere does the plan mention structural change, which the automaker sorely needs. Changing GM’s structure requires overhauling everything from how team members share information across levels, roles and regions to how the company recognizes and rewards people as I detail in my book, The Bounty Effect: 7 Steps to The Culture of Collaboration®.

 

 

Pope Francis Promotes Collaborative Structure

The least collaborative organization is changing its structure.

Which organization? Well, here are some of its characteristics. This global enterprise pays a few people to make decisions while everybody else follows orders. The CEO’s direct reports act like a royal court and compete for face time. Senior leaders often live lavishly and consume conspicuously. Headquarters micromanages satellite offices. Bureaucracy and formality reduce efficiency.  Internal competition runs rampant. The command-and-control organizational structure quashes dissent.

Sound familiar? This description fits many global corporations and government entities. This particular multinational spent $170 billion in the United States in 2010, according to The Economist. The organization is the Catholic Church and, more specifically, the Roman Curia, the church’s centralized administrative operation.

Like many corporations, the Catholic Church suffers from an obsolete organizational structure that is compromising value. And like many corporations, reform-minded leaders have tried introducing a new approach. But entrenched interests and a centralized bureaucracy rife with intrigue, fiefdoms, and Machiavellian motivations has frequently derailed change.

Enter Pope Francis setting the stage for change by wearing a simple white robe and black shoes rather than the regal vestments and ruby shoes of his predecessor. He has washed the feet of inmates and has opted to live in a guest quarters rather than the Vatican’s deluxe papal apartments in the Apostolic Palace. There are signs the Pope’s frugal tone is rippling across the Church. In March, the Pope accepted the resignation of Bishop Franz-Peter Tebartz-van Elst of Limburg, Germany who spent the equivalent of $43 million on a new house and office complex.  In April, the Atlanta Archdiocese announced that it would sell Archbishop Wilton Gregory’s $2.2 million mansion.

Beyond Pope Francis’ rejection of the trappings of office, he is taking steps to adopt a more collaborative structure in the Roman Curia and in the global Catholic Church. The Pope has chosen a “working group” of eight cardinals from outside the Curia to collaborate with him on changing the structure.

Cardinal Francesco Coccopalmerio heads the Vatican department that writes the church laws that will codify reforms. The Religion News Service quotes Cardinal Coccopalmerio as saying “The big change is the emphasis on collegiality, on collaboration.” Now Pope Francis, Cardinal Cocopalmerio and other new church leaders are focused on breaking down barriers among silos so that information flows around the organization rather than from top to bottom. Cardinal Cocopalmerio has proposed naming a “moderator of the Curia” to identify inefficiencies and cut through red tape.

Pope Francis participates in meetings without dominating them and embraces broad input. Cardinal Donald Wuerl of Washington, D.C. recently attended one such meeting at the Vatican about appointing new bishops. Typically, popes never attend such meetings. Pope Francis reportedly stayed for three hours. “We’re all sitting around the table, and he comes in and pulls up a chair,” Cardinal Wuerl told Fox News.  At another similar meeting, a senior cardinal asked the Pope what he thought about the topic. “If I told you what I think, you would all agree,” Pope Francis responded according to Cardinal Wuerl. “I want to hear from you what you think.”

Perhaps most significantly, according to Cardinal Wuerl, the Pope has repeatedly advocated a collaborative process through which “the Holy Spirit can be heard.”  And the Holy Spirit isn’t going to be heard if just one person speaks. “He wants all of us to be speaking with him so at the end of the day he can say this truly was the fruit of the work of the Spirit.”

Hallelujah. Many corporations in multiple industries including United States government agencies can learn from the Pope’s example. It takes more than window dressing and a desire for change to create value through collaboration.  The only viable approach is changing the organizational structure which, in turn, shifts the culture. My research on collaboration indicates that changing the structure requires seven steps—plan, people, principles, practices, processes, planet and payoff. Pope Francis has demonstrated that making progress through these steps requires that a leader set the stage for change so that others feel comfortable participating.

In essence, The Bounty Effect has hit the Catholic Church. The Bounty Effect happens when exigent circumstances compel companies, governments and organizations to change their structures from command-and-control to collaborative. For the Catholic Church, exigent circumstances range from sexual abuse scandals to corruption and cronyism at the Vatican. And it’s The Bounty Effect that led to the election of Pope Francis and the structural change now underway.

Rank and Yank or Differentiation?

Sometimes corporate speak or shop talk migrates from cubicles to the front page. This is exactly what happened to the terms “performance review” and “performance appraisal” last November. That’s when Microsoft eliminated its so-called “stack ranking” of team members.

Last spring, Microsoft Chairman and co-founder Bill Gates read an advanced copy of The Bounty Effect: 7 Steps to The Culture of Collaboration®. The book shows how to change organizational structures from Industrial Age command-and-control to Information Age collaborative. Regarding performance reviews, The Bounty Effect demonstrates why ranking team members falls short and how a Collaborative Reward System creates greater value than an internally-competitive system. Ranking is essentially grading on a curve, because the organization often pre-determines which percentage of its workforce must fall into categories such as below target, target, above target and significantly above target. And grading on a curve fosters internal competition rather than collaboration. How encouraged are team members to share information and ideas if they must compete with colleagues for rankings? Not very. More likely, people will try to fake collaboration.

Headlines regarding Microsoft’s shift include “Stack Ranking Falls Outs of Favor” in Computerworld and “Microsoft Kills Its Hated Stack Rankings” in Bloomberg BusinessWeek. Within several days of Microsoft’s elimination of stack ranking, I was on a flight from Taipei to San Francisco reading The Wall Street Journal Asia edition. And I was fascinated to see a condemnation of Microsoft’s shift and a defense of ranking team members from Jack Welch, who once was CEO of a company known for using what Welch calls “differentiation.” That company is General Electric.

Here’s how Welch describes differentiation: “It’s about building great teams and great companies through consistency, transparency and candor. It’s about aligning performance with the organization’s mission and values. It’s about making sure that all employees know where they stand. Differentiation is nuanced, humane and occasionally complex, and it has been used successfully by companies for decades.”

In The Culture of Collaboration® book, I describe “differentiation and affirmation.” The process is more commonly called “rank and yank,” a term that Welch considers “media-invented” and “politicized.”  One company that adopted the approach and created a star culture was Enron, which went bankrupt for many reasons.  Star culture is a hallmark of the Industrial Age command-and-control organization. Such organizations pit people against one another and hidden agendas multiply. In contrast, a collaborative organization encourages team members to work in concert towards common goals.

Welch seems to endorse star culture in describing “feedback and coaching” as one component that makes “differentiation” work. “Your stars know they are loved and rarely leave. Those in the middle 70% know that they are appreciated, and they receive clear guidance about how to improve their performance. And the bottom 10% is never surprised when the conversation sometimes turns, after a year of candid appraisals, to moving on,” according to Welch.

Further, Welch endorses the “bell-curve” grading aspect of “differentiation.” “We grade children in school, often as young as 9 or 10, and no one calls that cruel. But somehow adults can’t take it? Explain that one to me.” Well, here it goes, Jack. Curve grading is no more helpful to children in school than it is to organizations. Our educational systems, particularly in the United States, too often foster unnecessary competition rather than collaboration. It’s no wonder why corporations have difficulty migrating from command-and-control to collaboration. Part of the reason is that team members competed for grades in school, competed for graduate school admissions while in college, and then competed for limited grant money and fellowships while in graduate school. In particular, law schools often grade first-year students on a curve in part to limit merit scholarship awards. Eliminating curve grading in which a fixed percentage must fail is a major step towards reducing internal competition and curbing the “star culture” that complicates collaboration.

Ranking team members is part of the broader recognition and reward process. This process typically features performance reviews, which distract organizations and waste an incredible amount of time. The Bounty Effect describes how to replace performance reviews with a far more collaborative approach. Whether we call ranking team members “differentiation” or “rank and yank,” this Industrial Age command-and-control approach has no place in an Information Age collaborative organization.

 

World Bank, Microsoft Changing Structure for Collaboration

More and more organizations are recognizing that obsolete organizational structures are impeding collaboration. I identify this issue and detail solutions in my new book, The Bounty Effect: 7 Steps to The Culture of Collaboration®.

One of the latest organizations to begin adopting a collaborative structure because of The Bounty Effect is the World Bank. The World Bank has announced that it’s moving away from a command-and-control organizational structure that is compromising value. The World Bank will instead adopt a collaborative structure for greater speed and efficiency. The new structure will enable internal collaboration across functions, groups and regions. Plus the new structure will enhance external collaboration particularly with the private sector.

World Bank President Jim Yong Kim announced the shift after a survey of ten thousand team members revealed a “culture of fear” and a “terrible environment for collaboration,” according to an October 6, 2013 story by Annie Lowrey in the New York Times. Further, Kim told the New York Times he feared the World Bank’s culture and structure might short-circuit its new goals of eradicating extreme poverty by 2030 and ensuring “inclusive growth.”

The Bounty Effect for the World Bank is that the organization, which is financed by 188 member countries, faces increasing competition in supporting developing economies from many groups. One of these is the Bill and Melinda Gates Foundation. Incidentally, Bill Gates also chairs the Microsoft board of directors. In July, Microsoft announced it would change its organizational structure to reduce internal competition, curb silos and enhance collaboration. Bill read an advance copy of The Bounty Effect: 7 Steps to The Culture of Collaboration®. The book shows how to change the structure and culture of organizations from Industrial Age command-and-control to Information Age collaborative.

Microsoft, the World Bank and many organizations suffer from similar shortcomings. While many have embraced collaboration as a concept and have even developed pockets of collaborative activity, the broader organization remains mired in command-and-control.

Remnants of Industrial Age command-and-control compromise value creation. These remnants include 19^th Century vertical organization charts, the need to go through channels, traditional meetings, and recognition and reward systems that reinforce internal competition among many others. The Bounty Effect: 7 Steps to The Culture of Collaboration® identifies these remnants and details how to replace them with infinitely more valuable collaborative building blocks.

As the World Bank, Microsoft and growing numbers of organizations recognize The Bounty Effect’s impact on them, they can use the opportunity to implement the 7 Steps to The Culture of Collaboration® and ultimately create far greater value.