The Productivity Paradox

The media is alive this morning regarding the long standing issues we have on productivity. Emphasis is on how lack of productivity is restricting income growth which is restricting the economy. First port of call is whose fault it is, and the default route that it’s all about low cost labour.

Probably, all of these things have a degree of truth to them, but in the scheme of things are secondary.

Productivity is low because we are still trying to improve the things we have been doing or making, rather than doing or creating new things.

at GrowHouse, we understand the power- and the limitations – of improvement better than most. We keep our process excellence ninjas keen and hungry, but in the end, improvement is an exercise in diminishing marginal returns. Get even close to six sigma measures, and getting incremental improvement on 97%+ levels of efficiency is an exercise in rock breaking.

Innovation on the other hand creates a class of activity that resets the game. Not only do we start with new services and products, but we have a whole new field on which to let loose the ninjas.

But innovation – and it’s big ugly sibling invention – require different skills, mindsets, and leadership. they have higher levels of risk, and require purpose and passion.

We have a paradox – most of the measures we take to motivate improvement kill the creativity on which innovation thrives:

  • Have people work for an expected reward.
  • Focus people on the expectation of being evaluated.
  • Deploy lots of checking and surveillance.
  • Make them follow a limited range of processes
  • And make it a competitive exercise.

(a major nod to Margaret Heffernan – “A bigger prize”)

If we really want to improve productivity, we need to innovate at every level. To explore possibility, and let people’s imagination loose.

Most of our structures, management processes and leadership practice pay lip service to this, and fall back on an evaluation mindset. It is the same principle that applies to the way we are educating tomorrows staff – and it’s substantially flawed and counterproductive.

The fast growing economies have cottoned on to this – China, Korea, and the like. they are changing the way they collaborate, create and lead. We need to do the same. Doing more of what we’re doing won’t solve it.

We’re running a series of exploratory conversations with people to explore possibility. The first is in Derby on 28th May, and we’ll be running the next in London. If you want to explore that space where knowledge ends, and possibility begins, we’d love you to join us.

Every business needs a Jester

One of the key challenges we face is the “inattentional blindness” that is created by working under pressure.

One of the most effective ways of becoming (notionally) efficient is to allow our ability to label things full rein. We do most of it naturally and unconsciously, and has been the subject of much research and publications – my own favourites include Margaret Heffernan (Willful Blindness) Daniel Kahnman (all of his work, most recently “Thinking Fast and Slow”) Adam Morgan (A Beautiful Constraint) and Gerd Gigerenzer (Risk Savvy).

The point is this – unless we are attentive to this tendency, we end up stuck in a rut.

As we become successful, we focus on what works well, and that quickly becomes a preferred way of working, which morphs into “the way we do things around here” which very quickly becomes our culture. What started out being exciting and vibrant becomes set in the aspic of what worked in the past.

In the connection economy, where everything is linked, and inherently dynamic this is not only a dangerous thing to allow, it positively cuts us off from the next stage of growth.

There is an aspect of the creativity that drives today’s successful business that, to borrow from Adam Morgan’s book, requires us “to walk in stupid every morning” – in other words, to take nothing for granted, and to test the assumptions that we make – consciously and unconsciously.

The best protection against the rigidity that comes with habit is diversity – gender, race, culture, background. More than ever we need the equivalent of the “Jesters” in the courts of the Middle Ages – the only ones in the court who could speak (or act or parody) truth unto power. They were key to bringing those inconvenient truths out into the open.

We can access this in so many places, from Linkedin Groups to Professional Coaches.

It takes effort, and sometimes money, but the opportunity cost of inattentional blindness makes it a key investment.

In my own work with a wide range of businesses, there is often much attention paid to strategy, but much less to questioning the assumptions upon which those strategies are based. The difference that can be made by engaging with these assumptions is often huge, and drives breakthrough insights.

Every business needs a Jester.

Image Credit

Signal to Noise

In physics, the SNR – signal to noise ratio is the basically the power of signal (the information we want) divided by the power of noise (the information we don’t want).

In our business and personal lives, maybe the same principle applies. And therein lies a challenge.

The signal we look for – things that are meaningful to us – the art, relationships, meaning and the contribution we can make, amongst many others, is pretty much a constant. when we have clarity of purpose, when we are loved, we don’t go round saying I need more of it. These things are not consumables.

On the other hand, the noise in amongst which we look for signal has increased exponentially. The ability to communicate , social media, advertising, a drive to consume, and spam in all it’s forms has changed our signal to noise rations out of all proportion in the last twenty years. When we don’t understand that, we can lose signal altogether in trying to deal with the noise.

But there’s an upside. Without noise, we wouldn’t be able to identify signal. It provides the contrast, the background that allows us to separate one from the other.

But we have to give signal a chance. Processes to get rid of noise are all very well, but they may just take signal with them. Penzias and Wilson in 1964 tried for three years to get rid of background noise in their experiments, only to find that it contained the information that would win them a Nobel Prize.

To separate signal from noise we need to give it space. Time out. An opportunity to reflect. The time to discuss with others without an agenda – time to let our brilliant brains do what they do best – make connections that computers can’t. As yet, digital devices process brilliantly, but don’t wonder about things.

It’s Sunday. Use it to advantage.

Have a great week ahead.

The power of small numbers.

There is a real challenge for those of us who are in a services business (and the reality of course, is that we are all in a services business to a greater or lesser degree). It is this; we can now make more contacts, reach more people, and be more visible than at any time in history, but it is extraordinarily difficult to build relationships with more than around 150. The number is pretty solid, and the 5 min video here shows an extract from Robin Dunbar talking about it.

I think that creates both opportunity and challenge. Try this exercise for a day. For every email, text, or other communication you get or send, give it an AQ, an Authenticity quotient from 1-10.

1 signifies little or no sense of connection, whilst 10 is total understanding and empathy – a real and deep sense of connection.

At the end of the day, consider how much of your time has been wasted on contacts with little depth, who you will not remember, and who will not remember you.

Your biggest asset is your connections with other people, not in number, but in quality. These are the people who you bring out the best in, and who in turn bring out the best in you. Authentic connectivity, and no matter how many Facebook friends you have, if Robin Dunbar is right (and he’s a very smart guy) you have a ration of 150.

In an age of hyperconnectivity, we can dilute our authenticity to the point where we are indistinguishable from every body else in an attempt to reach ever more people. We are reduced to making decisions on the basis of shallow marketing messages. As individuals, we become invisible.

What if we considered our closest, most authentic relationships and focused on them. Those people who really know you and what you stand for, what you believe in and who really trust you. Now you have a tribe, a following. They might convey who you are to their 150. The compound effect of that is a high degree of credibility to 22,500 people who might connect with you, your values and your purpose – not a marketing message of dubious provenance. How many contacts do you need again?

How might you spend your time tomorrow?

New Games

Rohit Talwar was speaking today NextGen in Derby – appropriately at the Silk Mill – the world’s first factory.  The core of his message is similar to the conversations we have with clients – how to entertain the possibilities that are emerging, and to hold in mind both the need to maximise today’s performance whilst leapfrogging to the new games we can play that make our (and our competitors) current models obsolete..Here’s a presentation from him released earlier this year.  If the one from today is released, i’ll post it.

Growth vs. Impact

A quick twenty minutes scanning LinkedIn blogs reveals a number of commonalities.

  • Many blogs shout a sales message related to the business of the person posting it without reference to the needs of the likely target.
  • Very few ask the challenging questions that are far more valuable than contextless statements.
  • Like traditional marketing, they seek to generate a dissatisfaction that will create a need, rather than a connection.

What if we made some different assumptions?

  • That right now, quality of connection is more important than growth?
  • That generosity of contribution is more important than selling?
  • That asking is more important than telling?

The connection economy is changing everything, and here are some thoughts that I’ll cover in the following weeks, based on research and discussion.

  • Growth beyond a certain point is a sea anchor that can hold us back.
  • That the future belongs to small teams, not organisations.
  • That the best businesses employ less than 150 people, and that any business with more than 5,300 people is likely to be dysfunctional.

I cannot of course prove I’m right, but there’s enough evidence out there for you to form your own conclusions, and make up your mind as to what, if any, of the conventional wisdom presented by those with an obsession with growth, rather than impact to pay attention to.

In the Midlands? – Three things to reflect on this week.

For those of us in the Midlands, here are three things to think about over that CostaBucks as you start the week:

  1. There was a brilliant TEDx Brum event on Saturday. Lots of local, great speakers, and an exceptional one by Emma Mulqueeny. If you have millenials, anywhere in your world, visit her blog on “97ers”.
  2. There is a NextGen 14 conference here in Derby on Tuesday and Wednesday. Amidst all the routine, unexciting bits will be some insights that may just affect the way every business in Derby works.
  3. Bearing in mid what might emerge from this, here’s a trend that is frightening the tech companies, that also has implications for the rest of us.

These are the sort of things we normally pass by when we’re busy. Understandable, but we probably shouldn’t.

Have a great week.

Beyond the SME Hype

There’s a great piece of research just released by NESTA. In essence, it has four messages:

  1. Most startups were not particularly special from an economic point of view.
  2. Many good companies go out of business.
  3. Existing businesses were by far the biggest contributors to economic growth.
  4. The British economy became significantly worse at allocating resources to the best businesses over the period.

This ties in with other data. Including the fact that the best “high growth” businesses are not start ups – they are, on average, 18 years old.

I think it suggests a message; if you’re going to start a business doing what is already done, it’s a high risk. In the end, scale wins. You may have a better offer, a better service, even be better looking – in the end though, the slower, more boring, uglier businesses at scale are likely to get you.

If you’re going to start a business, launch something new, then make it NEW. The attrition rates may still be high – but if that worries, you probably shouldn’t be reading this. Go NEW – you’ll learn more, meet more interesting people, and have more fun. The risk of failure is not to be feared – it’s part of the price of doing NEW stuff, a part of the process, and recognising it early – before it becomes a problem – is a key element of good business model design.

We all have something inside us we want to make real. There has never been a better time to do it.

Frog Soup

I find it fascinating what seems to happen in plain sight, but that we let pass by. We know why – working under pressure, our ability to create heuristics – rules of thumb – to ease our workload means we concentrate on the most pressing issues. They allow us to be more efficient. At the same time, our biases – many hard wired – mean that we misinterpret many of the “out of the ordinary” things that do make it to our attention. The result is that, like the apocryphal experiment of boiling frogs, we don’t notice until it’s mostly too late, and we end up with a “Black Swan” event. Obvious in hindsight, totally unexpected at the time it happens.

Two pieces of information arrived in my inbox this morning that have a degree of froggy quality.

The first was one of Boston Consulting Group’s excellent summaries. It’s main article relates to their survey on the most innovative firms of 2014, and the issues facing many executives that they feel their teams are not up to it.

employee-outlook-infographic

The second was one included the latest CIPD “Employee Outlook”– this one included the infographic shown here. It concerns the nature of our engagement with work – or more accurately, the lack of it. The question it triggered was when two thirds of employees are ambivalent, or worse regarding their work, how do we expect to harness their potential to drive the innovation and original thinking on which progress tomorrow depends, and maybe worse, when we know that our business today depends on how we make people feel, what message goes out to our clients?. I have clients who froth at the mouth over waste rates in single digits, and spend millions on process efficiency – but who let these figures go by them almost without comment. I think that’s just odd.

With the work I do with clients, there is clear evidence that the most powerful unit of differentiation is motivated small teams. On this basis, SME (small businesses) and MSB (medium sized) have a distinct advantage – mostly, they are at an early stage in their growth cycle, they all know each other, and the politics are less developed than in their large company brethren. Their traditional disadvantages – communication, access to knowledge and training, and even access to capital – are being eroded through social networks, online learning, and initiatives like “Kickstarter”.

Larger clients also have powerful small teams. Sometimes they are aware of them, sometimes not. One Games company I know has a team of dedicated, almost obsessive designers and coders who are dedicated to what they do. The interesting thing is, only a few of them work for the company; the rest are friends, suppliers, and others who form a strong, but informal development ecosystem. I find myself wondering what would happen if this team found a backer…….

We are all part of systems like these, which offer the possibility of breakthrough ideas. They rarely match our business structures or organization charts, but unless we recognize them, and learn how to work with them, I suspect we will find ourselves becoming frog soup.