I've argued that organizations can drive high performance by managing their people using kind of partnership type structure. What I want to do is go into a little bit of detail about what that means in practice, what does it mean to develop that kind of partnership management style? In order to do so, I think it's useful to use a framework, not my own described as ability, motivation, opportunities. What does this mean? Let's start with the individual, right? So when psychologists try to understand why do some people perform better than others? And why do I perform better at some tasks and others some days of the week than others? What shapes my ability to perform at that individual level? What is it? Well, psychologists think ability, motivation, opportunities is a good place to start, right? So we can think about abilities. My performance reflects various things like my innate talents. So you can think about kind of intelligence, strength, physical dexterity, social skills is a bunch of things that kind of just seem to be very innate to us, our personalities. And then there are things that we learn. So either kind of skills that we hone over time or knowledge that we acquire. All of those things obviously are going to make the difference between high performance and low performance. But they're not the only thing, right? In addition, we know that there are some people who may be not the most skilled, but they're incredibly motivated and that matters too, right? And so that can be partly just, you know, are we willing to exert effort? How much do we enjoy or are we prepared to work hard? But on top of that, it's also kind of what do we want to exert effort on? So there may be some tasks where, we're really motivated, we're interested in other tasks that you this doesn't really do it for me, it just doesn't meet any of my goals, so I'm not going to work very hard, that's going to shape my performance. So ability matters, motivation matters. There's a third thing as well, which is our opportunities, how easy is it for us to perform, given the external environment? We can think about various things here. So if we think about different salespeople, obviously their ability to sell their motivation matters, but also if one sales person is in a store with a lot of wealthy people coming in, chance are they're going to end up selling more than somebody who's in a store without those kind of opportunities. On top of that, if somebody is given a lot of help by the organization. So if I'm in a store where we've got a lot of promotional displays, where it's nicely set up, all of those sorts of things, that's going to matter. In addition, just how much discretion I have. So if I'm in a role where what I do is incredibly tightly controlled, then if I'm high ability of low ability, doesn't matter that much. If I'm high motivation, low motivation doesn't matter that much. As long as I'm just following the script, I'll get exactly the same performance. If on the other hand, I'm in a role where I have a lot of discretion, then my own contributions are going to matter a great deal, okay? So when we think about the differences in individual performance, understanding a person's abilities, understanding their motivation, and understanding the overall opportunities facing them, all of that shapes their performance. Well, turns out that we can take this framework upper level to the organization and use it to think about what are the kind of practices that organizations can use in how they manage people that will also shape, how those people perform and how by extension, the organization performs as well. And there's a nice book by Eileen Appelbaum Peterburg and Arnie caliber really again, lays out this abilities, motivation, opportunities, framework. But as way of understanding those organizational practices. So abilities, we want to do things as an organization that's going to increase the abilities of the people that work for us. So what could that be? It's in how we hire people. We call selective hiring. If we're just prepared to hire anybody who walks in off the streets, chances are we're not going to have a great workforce. There are some organizations that, even though it's not work that requires highly educated people are still incredibly selective. So if you take someone like Costco, it's a low cost retailer in the US, they may have thousands of applications, but only maybe 100 jobs trader joe's similarly many more applications than people. Some of these organizations even actually say that they're hiring, it's harder to get into their stores than it is to get into a selective University when you look at the ratio of the people who apply to the ones that they hire. Professor at the selective University, I take umbrage of the comparison. But certainly the point is that in some of these organizations, they really make a big effort to not just take the first person that walks in, but really figure out all the people that could be hiring, who's going to help them perform best. That contributes the abilities of the people in the organization and ultimately performance. Obviously, just like innate ability isn't the only thing that drives performance, but kind of the skills and knowledge that we learn to do also, similarly, development matters, right? Even if we have great hiring, we also want to make sure that we're doing the right training to make sure our people have skills to succeed. And so that's the second piece that really drives up organizational capacity. What about motivation? There are many things that organizations do here that really contribute to their performance. So one piece, generous pay and benefits, the opposite of what we're talking about with cost minimization. So there we were suggesting, well, profits equal sales minus cost, let's drive down those costs. We can do that, but we have to understand it is going to have an impact on how motivated people are. People feel grateful for the opportunities and the rewards that they're being given. They feel good about working hard, when on the other hand, they feel vaguely like they're being cheated. You may not get such such outstanding performance after them. So we can do that, we can even tie their pay to performance, either on individual level, sometimes at the store level or an organizational level. A third thing that we can do to ensure that people are motivated is also think about long term career opportunities. So if you're here and you do well, do you progress in the organization? Do we see kind of promotion from within? There are some stores I think of Chipotle. Chipotle is an American-Mexican food, quick service chain, places, great stories, I'll talk about and kind of about 80% of their managers being promoted from within and they see this in the kind of opportunities that it offers, something else that people value will make them want to work hard. Finally, even just an organization which is able to express purpose and values and where those align with the people who work for it, they're going to have people are more motivated. So each of these things as well increases organizational capacity. And then the final piece is opportunities and specifically opportunities to participate. And this is really going back to the heart of this partnership model. Nobody really understands each store, like the people who work in it. Nobody understands any of these processes in the warehouse, moving things back and forwards between various different locations, so nobody understands those process quite like the people who are actually carrying them out. And the more that we can actually get them to help us improve those processes, the better. That can be various things. Self-managing teams is a popular one, really pushing a lot of the decision making down the front lines. If you look at a book retailing, for example, Waterstones is I think the largest chain in the UK. It's part of their turn around a few years ago, one of the things that they did was they stopped having kind of the central headquarters decide what was going to be displayed where and all those sorts of things, just pushed it down to the stores. You know, the location, you know, who comes into your store, you figure out what books we want to be promoting, how we want to display them and so on. Very effective. Another thing is suggestion systems, right? So how do we improve what we're doing? One of my favorite stories here. So in detects a Spanish retailing chain, Zara is their leading brand, which many of you may be familiar with. They place great store and really listening to their customers through the people in their stores to understand what they should be making. Zara's thing is this kind of fast fashion. This idea of really very quickly changing their stars, bringing what people want. How do they know what people want? They listen. And so there's a nice story about people coming into several stores over a couple of days all around the world, people just coming in and saying, do you have any pink scarfs? And the sales people like, I'm sorry, we have no pink scarfs, but they also low corporate. People were asking for pink scarfs and suddenly they're hearing it from a bunch of different places. Within days to weeks, they were producing pink scarfs and getting them in their stores where they were a huge seller. And so actually using your front line people to understand what's happening and to improve and improve your offering is effective. And then finally using them to design your processes. I think one of the tensions between the partnership system and this terrorist model is we kind of like this idea of terrorism. Let's have a process and let's have everybody follow up, processes are efficient. People are doing things the best way, then we should be more efficient together. Even within partnership systems this happens. So Zeynep Ton, who's a professor at MIT. I've drawn on a lot of her excellent work actually in designing this course. She writes about a convenience store in the south of the US called Quiktrip, which really prides itself very fast, very efficient. People there are expected to follow processes. This is terrorism. Not exactly because people they are expected to help design the process, right? So when they sit down and figure out what's the best way to do this? They involve the frontline workers, right? And those a frontline workers actually work in the store. They can figure out a better way to do this if they think this process okay but I can improve it. People will listen to their suggestions, trial it, and if that works, then roll that out into all of the other different stores. And so ultimately, opportunities to participate is about leveraging that knowledge and that willingness to help the frontline workforce. And when organizations were able to do it, it substantially increases their performance.
