Tag Archives: Microsoft

EBM – Doing it for real – Lesson 9 – Culture is the lifeblood of the organisation

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Of all the ‘limbs’, ‘organs’ and ‘life support systems’ on our organisational anatomy chart introduced in Lesson 4 probably the most important, from a human perspective, is culture. This is shown as an overlapping circle but one could easily draw the circle around the whole framework because it influences every aspect of it.

Most human beings understand this intuitively because our evolutionary, survival instinct ensures we manage to survive in whatever cultural environment we find ourselves.  We quickly learn what we can and cannot say aloud, we adapt our behaviour to the norms that are imposed or acknowledged through peer pressure and many other cultural influences.  In a blame culture we avoid taking risks, in an empowered culture we are allowed to make decisions and in an apathetic culture – well, who cares?

We also know that once a culture is established it is the most difficult thing on earth to change for the better because we just get used to where we ‘live’.  Any attempt to change it can often be bloody and brutal and the first one to go is the CEO.  So one role of the evidence-based, strategic HR director is to gather evidence to support the most appropriate culture for the organisation to thrive.

Lesson 9

Using evidence to articulate and influence how culture affects the business.

Practical application

In an ideal world company culture will not change much if there is a good succession plan in place and the values of the organisation are shared and constantly reinforced.  However, as culture is affected by whoever is at the top, and evidence tells us that the average tenure of a FTSE 100 CEO is less than 5 years, we must expect established cultures to be dented and disrupted on a regular basis.

In Lesson 8 we cited Starbucks’ Mission statement so when an interview with its CEO and driving force, Howard Schultz, appeared in last week’s Sunday Times it seemed a perfect opportunity to follow through to a consideration of its culture  and Schultz’s new book  “Onward – How Starbucks fought for its life without losing its soul” which came out in April.

Apparently Schultz, 57, “rises at 4 am every day”, arrives at work at 6.15 am, after squeezing in a workout in the gym and says “I don’t stop till I go to bed”. He also likes riding racing bicycles, averaging 30 miles a time.

Now, I like a nice cup of coffee as much as the next person, and I even ride my bike occasionally, but the amateur psychologist in me thinks Howard might be just, what should we say, a mite obsessive compulsive?  This is not a criticism, just a professional observation and part meditation on how driven some CEO’s are.  It is a well-known fact of life that the runaway success of many organisations is often down to the brilliant but abnormal behaviour of the CEO – let’s not mention any obvious names – especially if they founded the company as well.

Don’t get me wrong, this is great if you really want to go places but in its wake it has a tendency to leave an organisation addicted to one, limited style of management.  This is what appears to have happened at Starbucks.  When Howard stepped down as CEO the business lost direction and started to slide – the share price plummeted from $39 to $7 – so he ousted the replacement CEO in order to take back the reins.

You could say – well that’s life at the top.  Yes, but who was advising Howard? Did nobody point out to him the effect his behaviour was having before he stopped being CEO?  There is plenty of evidence that many baristas at Starbucks think it is a great place to work but the malaise that affected the organisation went much deeper, right into the muscle.  It was not a culture for producing a self-supporting and reinforcing organism.

Admittedly Schultz has now got the business back on track (but see how its doing in the UK) – and a very ambitious growth track at that – but is anyone offering him wise counsel on how not to make the same mistake again?  Is anyone unearthing evidence today that his management style, and the culture it breeds, will still not sustain Starbucks in his absence?  Has anyone managed to explain to him that a personality cult is not the same as a sustainable culture?  Do you think if we all sent him a simple message – ‘hey Howard, wake up and smell your coffee, if you fall under a bus your business is sunk’ – we might just get this point across?

Coincidentally, on the reverse side of the Schultz interview is an assessment of Microsoft CEO, Steve Ballmer’s acquisition of Skype for $8.5 billion, with an unattributed quote that

“He has been a great steward of Windows but he hasn’t done much else“.

Now there’s an interesting case study in monopolistically-obsessive behaviour, culture and business performance just waiting to be written.

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Valuism – an evidence-based alternative

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Now is probably as a good a time as any to introduce a new ‘ism’ to the world – as we start a brand new decade knowing we have yet to find a long-term solution to the catastrophe of the 2008 financial meltdown.  But it is not just the global banking and financial system that is being scrutinised more closely than ever but the very basis on which we run society. The BP oil spill will get paid for by BP continuing to operate as a conventional, capitalistic entity but you don’t have to be a rampant communist to be thinking is this really how we want to run our world – as long as somebody pays the price all is well?  Obviously the green, environmentalist and social responsibility pressure groups will be muttering ‘we told you so’ but they have not put together a complete, holistic, coherent and systemic alternative to move us from where we are now. Communism failed and even democratic socialism is facing its toughest test ever. So maybe we need to start looking for a totally coherent, evidence-based approach to resolving issues of economic regeneration, social policy-making and organisational management simultaneously.  Welcome to the world of valuism.

While capitalism was supposed to create wealth rather than destroy it and socialism was meant to distribute that wealth equitably, at the moment neither side seems to be sticking very closely to their part of the bargain. The goal of valuism, therefore, is much the same as the combination of these two competing forces but without any of the inherent conflict that has always produced an uneasy relationship between the two.  Valuism aims to create as much value as possible for the greatest benefit of as many people as possible.  Under valuism capitalists still have to produce as much profit as they can but socialists will also see that the rewards produced are more evenly and equitably spread.  The only difference is the key part played by the management of people – human capital. Valuism is founded on the simple tenet that value cannot be maximised unless everyone is motivated to do their best to produce as much value as they possibly can.

Of course these arguments are not new (e.g. from each according to their ability, to each according to their need) but the world was not ready for them.  Take Nobel prize-winning economist Milton Friedman’s view that -

“there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

From ‘Capitalism and Freedom’ (1963), but quoted in his seminal New York Times Magazine article, September 13, 1970

Friedman knew exactly what he was saying and equally knew the reaction it would unleash – some of us do take great pleasure in shaking up conventional thinking – and as an economist myself I find I have to agree with Friedman – up to a crucial point.  Where we would part is the word ‘profits’ – I would insert the word ‘value’ instead.  So what’s the difference?

Take Bill Gates (or maybe Steve Ballmer as well) as an example. Bill Gates is one of the richest men in the world and is often described as a philanthropist; as are many successful entrepreneurs and businesspeople who give their money to societal causes.  In Bill Gates’ case one of these is looking for a cure for malaria.  The only problem is that this view of Gates does not sit easily with Microsoft’s reputation as an abusive monopolist (for which it has been fined) and I doubt if anyone would view Ballmer as the epitome of the beneficent philanthropist.  Hence we have a phenomenon I call the ‘Microsoft Paradox’ (see ‘The Value Motive – The ONLY alternative to the profit motive’) – are these people a force for good or evil?  They cannot be both simultaneously – an ‘evil philanthropist’ would be a perfect oxymoron.

So what is the solution to this conundrum? It’s incredibly simple – for Gates and Ballmer to truly earn the love of their fellow citizens they should have subscribed to the goal of value – that is, the most efficient, effective and innovative version of Microsoft without abusing their market position (which fits with Friedman’s view) – then they would be true philanthropists who could happily spend their well-gotten gains on whatever cause they chose.

From an evidence-based perspective there is also a simple lesson here – the only evidence that society should be interested in is value – not profit – and they are not mutually exclusive. We will explore the implications and ramifications of valuism in much more depth as this series continues.

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Is a café the best place to learn?

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Evidence-based management (EBM) is inherently a critical discipline; in every sense of the word.  The perspective it adopts is that of an unapologetic, ‘doubting Thomas’ – until you see convincing evidence you will not be convinced. This presents those who want to become evidence-based managers with a problem – your valid challenges to management ‘orthodoxy’ will often be condemned as a negative attitude by those who prefer intuition and the feelgood factor to proper evidence. As a direct consequence several ‘sacred cows’ have slipped insidiously into mainstream, HR management thinking without sufficient challenge.

There is quite a long list of these shibboleths but some of the worst culprits include ‘diversity’, ‘employee engagement’, ‘leadership development’ and probably most ubiquitous of all – ‘learning’. All of these sound like laudable aims that can only bring positive benefits, and let us hope that most of the time they do, but the evidence-based manager will check out the hypothesis and the expected benefits first, in a specific context, before subscribing to any such concept.

A perfect example of this dilemma has surfaced in a recent publication from Business in the Community – ‘Building the Café Culture Movement’ Cafe culture BITC_BIS_REPORT_07101 – which is endorsed by John Hayes, Minister of State for Further Education, Skills and Lifelong Learning.  So should your organisation aim to become a ‘Café Culture’? If you are a Chief Executive you might want the PR benefits that come with being associated with the words ‘lifelong learning’, ‘community’ and ‘big society’ but would you also want to be associated with the double-think and fuzzy logic with which this document is infected?

In the introduction John Hayes puts the case for “the social and cultural benefits of learning” and invokes Ruskin’s quote that “industry without art is brutality” to imply that learning is more of an art and one that businesses do not master. Yet in trying to get more businesses on board he falls back on claiming that the “benefits of that investment (come) in the shape of a more productive, engaged workforce, reduced operational costs and an enhanced corporate reputation in their communities” (which presumably means more sales?). So what are you promoting here John – art or business results? Let’s look at the evidence presented.

Google

This ‘case study’ reminds me of when Microsoft was booming and every conference was using them as an example of wonderful people management policies. Google has a fantastic product, and a similar, virtual-monopoly so there is an assumption here that its people management practices must also be fantastic, without any obvious connection made between the two.  But if you are a business that lives on tight margins will increasing your own ‘Googliness’ (I kid you not – read it for yourself) bring the benefits that John Hayes suggests stem from being a Café Culture?

Merseystravel

Apparently one of the problems here was that 25% of the workforce had a literacy need (perhaps you should sort that problem out first John?) but whether this improved or not is not mentioned, only more business benefits which appear to be stemming from doing some obvious things like managing staff turnover, absenteeism and complaints but inferring that this is evidence of a Café Culture.

RWE

Similar activities to Merseytravel and similar benefits claimed but little indication that a new ‘Café Culture’ existed or had anything to do with it.

Fletchers Bakery and Marshalls Brookfoot

Without wanting to be unkind, the last 2 case studies show just how desperate ‘big society politicians’ are to ‘prove’ the concept – the vague testimonials offered by these two businesses, without any solid evidence of business benefits on offer, completely undermines the whole document

The main criticism of this whole initiative is that the aim seems to be the process of creating a ‘culture’ instead of value maximisation; a goal that evidence-based managers never lose sight of, almost regardless of the process by which it is achieved.  It should be emphasised here though that while evidence-based managers are more concerned with ends than means they are at least as safe, legal and ethical as anyone else, if not more so. On that point it is worth mentioning that Microsoft is one of the organisations (page 11) that “have already pledged to create learning cultures in their workplaces”. If they do, will one of the benefits for the ‘big society’ be an end to the lawsuits that have resulted in Microsoft being fined for abusing its monopoly position for many years?

Perhaps the CEO’s of the other ‘pledgees’, including Barclays and McDonalds, should reconsider whether a Café Culture really will enhance their “corporate reputation in their communities”?  Or would they be better off providing convincing evidence that their learning culture brings real and significant benefits to all of their stakeholders?

For personal development linked to this topic visit the Consummate Professional Series

 

 

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