Hello my name is Julian Beckenshaw. I'm here to offer you some thoughts on the third week of the MOOC, Managing the Company of the Future. So we had a couple of interesting discussion questions which we asked you to, to focus on. I'll get to those in a second. There was also some interesting additional threads in the discussion, which hopefully a few of you picked up on when mom was around and do we actually enjoy work or not. And then ultimately I'm afraid there were more people who were saying actually they don't enjoy their work than those who said they did. That's obviously got a lot to do with the nature of the work that you're actually doing. There, there was also some interesting questions about the extent to which we actually believe our mission statements. Whether they're actually just empty rhetoric or whether there's something a little bit more substantial behind them. So, two discussion questions. The first one was based on a video by Professor Jeffery Pfeffer at Stanford. And he had this rather sort of challenging view that. That, our performance management systems are, the things that we measure in our organizations. Are basically getting in the way of good, of good behavior and good outcomes, and we should basically ditch the performance evaluation methods, and just move away to systems with, with no measures. Look, I think. Look he's deliberately playing around with us a little bit. I don't think he believes for a second that we should throw out all the performance measures. I mean, he has the luxury of being able to kind of provoke us in that way. But he is absolutely right that the problem is that we have way too many measures. These measures are often measuring the wrong things at the wrong points in time. The whole notion of a key performance indicator, which is meant to be about the key things that we're focusing on. Become corrupted and when an organization has twenty key performance indicators for each person, then clearly none of those are key performance indicators. So I think he's absolutely right to say that we've got too many measures and that by having so many measures we are creating problems. He, he's wrong to say that that we should just throw them out. But I think there's a smart way forward, is absolutely to say, what would be the one or two much simpler measures that we could use that would help us to perform better. And I'll just give you kind of three or four categories of what those things, I think, look like, in terms of what is, shall we say, best practice or good practice, picking up on some of the points that a few people made. One of them is matching, shall we say, the measures with the time horizon that we care about. So when banks nowadays defer bonuses for five or seven years with crawl back rules. That's actually good practice because it's only over five or seven years that you really know whether you've actually made a, a difference or not. Another aspect of, of, of performance measures I like is the social of group based performance measures. Most organizations have way too much focus on the individual outcomes, where as, of course the reality is that is for us to work effectively we need to collaborate. So I would much prefer organizations to have many more group-based incentives. So for example, the famous John Lewis in the UK a big retailer gives the same bonus as a percentage of salary to every employee whether the chief executive or whether its somebody working on, on the checkout, and that is good practice. And the third point I'll make is this notion of measuring customer outcomes. This is what I've been calling the oblique principle. So this, this measure of net, net, net promoter score, this measure of customer satisfaction that many, many companies use, I think that is a very good measure. And in fact, if you get that right. There's a good chance that a lot of other things, including all the financial stuff will, will flow from that. So, I think Feff has got, he's he's on to an important thing, which is that we obsess about measuring everything based on this notion that if you can't measure something, you can't improve it. Well, I actually don't completely buy that. I think you've actually gotta deliberately measure fewer things in order to get the, the broader outcomes that you want. The second observation I will make is about the second video, which is what I call motivational puzzle. Which is that most companies spend all their time focusing on extrinsic measures whereas, in fact we know that the intrinsic drivers of performance typically work better. And if you actually do focus on intrinsic drivers you get better outcomes. So there's some links back to the Jeffery Pfieffer video, of course there are. A couple of quick observations to make on this are first of all, and I think pretty much everybody figured this out. Which is that look the answer about motivation is that it depends, there is no right or wrong way. Every individual varies in terms of what motivates them, every organization to some degree is looking for different attributes of different times. But cutting across all of that we can certainly say that the primary reason that companies focus on extrinsic measures is because it is just so much easier. It is so much easier to design a compensations system. Whereby we evaluate what is produced and we pay people as a function of what is produced. And not only is it easier to do in terms of quantifying things, but it is also easier to do because we've got lots of good examples out there. We've got lots of good models of companies which are actually done pretty well. And we just take what they've done and we kind of apply to our organization. So a couple of further observations on that. One is that even though we want to move in many cases to a model which is a little bit more focused on intrinsic drivers of motivation. It's actually really hard to do that at a systemic level. I'll just give you the example of the banks. Every banker I've talked to, every senior banker I've talked to admits that they're being paid too much. That the bonus systems have gotten way out of line. With the bonus systems if you like of other professional services. But the trouble is, you know, you can't just change your bonus system and bring it down to a normal level. Because if you do that, all of your best people will leave and go to the next bank. The one that's still using a traditional, very leveraged bonus system. So there is a sort of a, almost a game theory problem here, which is that even if everyone agrees that they should move to a system much ba, much more based around intrinsic drivers. It's actually quite difficult to move from the current, you know, bad equilibrium to a better equilibrium. We're starting to see some progress. All the banks are gradually, gradually changing their systems. Normalizing their systems downwards as it, is, is, is the, is the term that they use. So look, lots of stuff going on here. It's a complicated subject. We could have an entire MOOC purely on the issue of how to motivate people, but hopefully what we've done in this, in this segment is to give you a bit of a flavor for what is possible. Not easy, but what is possible in terms of more oblique ways of setting objectives and more intrinsic ways of motivating people. As you start work on the fourth week of the program, what you'll see is that all these pieces come together. We'll start talking about how you actually start to make a shift from you know from one model to another. From a traditional way of managing, to a more optimistic and, and forward looking model of management. I will speak to you again this time next week.
